AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON December 8, 1999
REGISTRATION
NO. 333-
NO. 333- -01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORMS F-4 AND S-4*
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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AMETHYST FINANCIAL COMPANY LTD.
PRIDE INTERNATIONAL, INC.
(Exact name of each Registrant as specified in its charter)
BRITISH VIRGIN ISLANDS 1389 NONE
LOUISIANA 1389 76-0069030
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction Classification Code Number) Identification No.)
of incorporation or
organization)
AMETHYST FINANCIAL COMPANY LTD. CT CORPORATION SYSTEM
C/O ARIAS FABREGA & FABREGA TRUST CO. 111 EIGHTH AVENUE
BVI LIMITED NEW YORK, NEW YORK 10011
325 WATERFRONT DRIVE (800) 624-0909
OMAR HODGE BLDG., SECOND FLOOR
WICKHAM'S CAY, ROAD TOWN
TORTOLA, BRITISH VIRGIN ISLANDS
(284) 494-4977
PRIDE INTERNATIONAL, INC. ROBERT W. RANDALL, SECRETARY
5847 SAN FELIPE, SUITE 3300 PRIDE INTERNATIONAL, INC.
HOUSTON, TEXAS 77057 5847 SAN FELIPE, SUITE 3300
(713) 789-1400 HOUSTON, TEXAS 77057
(713) 789-1400
(Address, including zip code, (Name, address, including
and telephone number, zip code, telephone number,
including area code, of Registrant's including area code, of each
principal executive offices) Registrant's agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable following the effectiveness of this Registration
Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the
"Securities Act"), check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
-----------------------
CALCULATION OF REGISTRATION FEE
- - --------------------------------------------------------------------------------
PROPOSED
MAXIMUM PROPOSED
TITLE OF EACH CLASS OFFERING MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE AMOUNT TO BE PRICE PER OFFERING PRICE REGISTRATION
REGISTERED REGISTERED UNIT (1) (1) FEE
- - --------------------------------------------------------------------------------
11 3/4% New Senior
Secured Notes due
2001 .............. $53,000,000 100% $53,000,000 $13,992
- - --------------------------------------------------------------------------------
Pride Limited
Guarantee of 11 3/4%
New Senior Secured
Notes due 2001 .... $30,000,000 -- -- --
- - --------------------------------------------------------------------------------
(1)Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
-----------------------
*This Registration Statement constitutes a filing on Form F-4 by Amethyst
Financial Company Ltd. and a filing on Form S-4 by Pride International, Inc.
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Subject to Completion, Dated December 8, 1999
PRELIMINARY PROSPECTUS
$53,000,000
AMETHYST FINANCIAL COMPANY LTD.
OFFER TO EXCHANGE
$53,000,000 11 3/4% OUTSTANDING SENIOR SECURED NOTES DUE 2001
FOR $53,000,000 REGISTERED 11 3/4% SENIOR SECURED NOTES DUE 2001
THE OLD AND NEW NOTES ARE
GUARANTEED IN AN AGGREGATE AMOUNT OF UP TO
$30,000,000 BY PRIDE INTERNATIONAL, INC.
AND
BACKED BY A $23,000,000 LETTER OF CREDIT
ISSUED BY REPUBLIC NATIONAL BANK OF NEW YORK.
THE NEW NOTES
- - - will be freely tradeable and otherwise substantially identical to the old
notes
- - - will accrue interest at the same rate per annum as the old notes, payable
semi-annually in cash in arrears on June 30 and December 30 of each year,
commencing June 30, 2000
- - - will be our senior secured obligations which will rank equally with the old
notes and all our existing senior unsecured debt and will have priority over
our senior unsecured debt to the extent of the collateral securing the new
notes
- - - will not be listed on any securities exchange or on any automated dealer
quotation system
THE EXCHANGE OFFER
- - - expires at 5:00 p.m., New York City time, on , 2000, unless
extended
- - - is not conditioned upon any minimum aggregate principal amount of old notes
being tendered
YOU SHOULD NOTE THAT
- - - we will exchange all old notes that are validly tendered and not validly
withdrawn for an equal principal amount of new notes that we have registered
under the Securities Act of 1933
- - - you may withdraw tenders of old notes at any time prior to the expiration of
the exchange offer
- - - the exchange of old notes for new notes in the exchange offer will not be a
taxable event for U.S. federal income tax purposes
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 12 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NEW NOTES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1999.
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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TABLE OF CONTENTS
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About this Prospectus....................1 The Exchange Offer..........................56
Forward-Looking Statements...............1 Description of New Notes....................64
Prospectus Summary.......................2 Book Entry; Delivery, Form and Transfer of
Risk Factors............................12 the New Notes.............................98
Use of Proceeds.........................28 Tax Considerations.........................101
Capitalization..........................28 Plan of Distribution.......................102
Selected Historical Financial Data......29 Legal Matters..............................103
Management's Discussion and Analysis of Experts....................................103
Financial Condition and Results of Independent Public Accountants.............103
Operation.............................30 Independent Engineers......................103
Business................................32 Where You Can Find More Information........103
Management..............................52 Index to Consolidated Financial Statements F-1
Executive and Board Compensation and Appendix A--Pride International, Inc.......A-1
Benefits..............................53 Appendix B--Republic National Bank of New
Certain Relationships and Related York.....................................B-1
Transactions..........................53
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ABOUT THIS PROSPECTUS
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. YOU SHOULD RELY ONLY ON THE INFORMATION WE
HAVE PROVIDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH ADDITIONAL OR DIFFERENT INFORMATION. WE
ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER
IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE ON THE FRONT OF THIS PROSPECTUS AND THAT ANY
INFORMATION WE HAVE INCORPORATED BY REFERENCE IS ACCURATE ONLY AS OF THE DATE OF
THE DOCUMENT INCORPORATED BY REFERENCE.
In this prospectus, references to "U.S. dollars," "dollars" or "$" are to
United States dollars and references to a "REAL," "REAIS" or "R$" are to a
Brazilian REAL or Brazilian REAIS. For your convenience, we have translated some
amounts stated in this prospectus in U.S. dollars from Brazilian REAIS at the
commercial market rate in effect on September 30, 1999. On that date, the
commercial market rate reported by the Brazilian Central Bank was R$1.92 per
U.S. dollar. You should not construe these translations as a representation that
REAIS could have been converted at such rate on such date or any other date or
will be able to be converted at such rate on any future date. You should read
the discussion on Brazilian exchange rate fluctuations under the heading "Risk
Factors" beginning on page __ for further information.
FORWARD-LOOKING STATEMENTS
This prospectus, including the information we incorporate by reference,
includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
You can identify our forward-looking statements by the words "anticipate,"
"believe," "expect," "plan," "intend," "estimate," "project," "budget,"
"forecast," "will," "could," "should" and "may" and similar expressions. These
statements address activities, events or developments that we expect, believe,
anticipate or estimate will or may occur in the future and are based on
assumptions and analyses that we have made and believe are reasonable. We
caution you, however, that these assumptions and analyses are dependent on a
variety of uncertain factors, many of which are beyond our control, so our
actual results may differ materially from those anticipated or projected in our
forward-looking statements. These differences could result from various risks
and uncertainties, including the following:
o prices of and demand for crude oil and natural gas
o the level of petroleum industry exploration and production activity and
expenditures
o the level of drilling activity
o the effect of competition
o world economic conditions
o weather
o governmental policy in Brazil and other countries
o Petrobras
o Organisation of Petroleum Exporting Countries (OPEC) policy
o conflict in the Middle East and other major petroleum producing or
consuming regions
o the development of technology that affects overall finding and
development costs
o the condition of the capital and equity markets
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION FROM THIS PROSPECTUS BUT DOES NOT
CONTAIN ALL THE INFORMATION THAT IS IMPORTANT TO YOU. THIS PROSPECTUS INCLUDES
SPECIFIC TERMS OF THE EXCHANGE OFFER, INFORMATION ABOUT OUR BUSINESS,
INFORMATION ABOUT THE BUSINESS OF PRIDE AND DETAILED FINANCIAL DATA. WE
ENCOURAGE YOU TO READ THE DETAILED INFORMATION AND THE FINANCIAL STATEMENTS AND
RELATED NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS IN THEIR ENTIRETY.
ABOUT AMETHYST FINANCIAL COMPANY LTD.
We were formed in 1998 to construct, own and operate four enhanced
Amethyst-class drilling rigs consisting of the AMETHYST 4, AMETHYST 5, AMETHYST
6 and AMETHYST 7. Each rig is a dynamically positioned, self-propelled,
fourth-generation semi-submersible rig capable of performing drilling and subsea
well intervention and maintenance services in water depths of up to 5,000 feet.
By owning and operating the rigs, we expect to become a significant provider of
deepwater (depths greater than 1,300 feet) drilling and related services in the
Brazilian market, one of the largest deepwater drilling markets in the world.
Each rig is currently under construction and, once completed, will be owned by
one of our four wholly owned subsidiaries. The subsidiaries have entered into
contracts denominated in U.S. dollars to charter the rigs to Petroleo Brasileiro
S.A.--Petrobras, the Brazilian national oil company, for initial terms ranging
from six to eight years. (You should read the discussion under the heading
"--Threatened Cancellation of Our Charters" beginning on page 4 for information
relating to the threatened cancellation of our charters.) Our four rigs
represent approximately 18% of the deepwater, dynamically positioned units
currently contracted by Petrobras to conduct exploration, development and well
service activities offshore Brazil.
The Amethyst design incorporates state-of-the-art technology for deepwater
drilling to create a compact, multi-functional rig that we believe offers a
cost-effective alternative to larger, more costly rigs and vessels. Our rigs
will be enhanced versions of the first Amethyst-class rig, the AMETHYST 1,
which, since 1996, has been conducting subsea well intervention and maintenance
services for Petrobras in the Campos Basin under a long-term contract that
expires in 2001.
Our registered office is located at Amethyst Financial Company Ltd., c/o
Arias Fabrega & Fabrega Trust Co. BVI Limited, 325 Waterfront Drive, Omar Hodge
Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, British Virgin Islands.
ABOUT OUR OWNERS
We are owned 61.7% by affiliates of Maritima Petroleo e Engenharia Ltda.,
a limited liability quota company established under the laws of Brazil, 26.4% by
an indirect wholly owned subsidiary of Pride International, Inc., a Louisiana
corporation, and 11.9% by two investment partnerships managed by First Reserve
Corporation. Maritima and Pride, directly or through affiliates, have primary
contractual responsibility for our operations. Both Maritima and Pride have
significant experience in the construction, operation, management and marketing
of offshore drilling rigs, vessels and related offshore equipment.
MARITIMA
Maritima is a privately owned company headquartered in Rio de Janeiro. It
provides a range of services and equipment to companies participating in the oil
and gas exploration and production sector in Brazil. Maritima's development has
been marked by its relationship with Petrobras. Since 1981, Maritima and its
affiliates have participated in approximately 30 major projects for Petrobras,
ranging from rig and vessel acquisitions, upgrades and conversions to providing
local support services for offshore rig operations. Maritima and its affiliates
have typically participated in these projects through joint ventures,
consortiums and joint operating and agency relationships with leading
international drilling and marine construction companies such as:
o Pride
o Diamond Offshore Drilling, Inc.
o Falcon Drilling Company, Inc. (now part of R&B Falcon Corporation)
o Stena Offshore Ltd.
o Mitsui Offshore Development and Engineering Company (MODEC) Inc.
o Astilleros Espanoles S.A.
Maritima currently provides shore-based facilities and local logistical
support for the AMETHYST 1 and the NYMPHEA, a third-generation semi-submersible
drilling rig. Like the AMETHYST 1, the NYMPHEA currently operates offshore
Brazil under a long-term contract with Petrobras. In addition, Maritima and its
affiliates currently are managing or recently have completed the conversion of
four vessels or semi-submersible platforms for Petrobras to be used as floating
production and storage units offshore Brazil. These projects are expected to
represent approximately 480,000 barrels per day of new production capacity for
Petrobras.
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PRIDE
Pride is a public company listed on the New York Stock Exchange
headquartered in Houston, Texas. It is a leading international provider of
contract drilling and related services, operating both offshore and on land.
Pride has focused its growth strategy on the higher margin offshore and
international drilling markets. Pride is one of the largest and most diversified
drilling contractors in the world. It operates a global fleet of 320 rigs,
including two drillships, three semi-submersible rigs and 52 other offshore
drilling and workover rigs. Pride's deepwater fleet includes the
semi-submersibles AMETHYST 1, NYMPHEA and SOUTH SEAS DRILLER and, through a
51%-owned joint venture, the PRIDE AFRICA and the PRIDE ANGOLA, each of which is
an ultra-deepwater dynamically positioned drillship. Through its subsidiary
Pride-Foramer S.A., Pride has participated in the design and construction of
four drillships and two semi-submersible rigs in addition to the PRIDE AFRICA,
PRIDE ANGOLA and the four new Amethyst-class rigs and has drilled 47 wells in
water depths greater than 1,300 feet. Pride-Foramer has extensive experience
operating offshore Brazil, having drilled at least 15 wells offshore Brazil in
water depths ranging between 1,900 and 3,300 feet and having participated in
several major discoveries in the Campos Basin.
FIRST RESERVE
First Reserve is a private equity firm specializing in the energy
industry. Founded in 1980, the firm has offices in Houston, Texas, Greenwich,
Connecticut and Denver, Colorado and manages a portfolio of energy holdings with
a market value in excess of $1.5 billion. First Reserve has significant
experience as a principal investor in oilfield service companies. Its portfolio
companies include Pride, CalDive International, Weatherford International, Inc.,
and National Oilwell, Inc. Two investment partnerships managed by First Reserve
invested an aggregate $12.5 million in cash in our common equity in September
1999 in exchange for an 11.9% interest. Such investment will be exchangeable
after three years (or earlier in certain circumstances), at First Reserve's
option, for shares of Pride common stock and Pride, in turn, will have the
option to acquire the First Reserve interest for cash or Pride common stock once
such interest becomes exchangeable for Pride stock. If either of such options is
exercised, Maritima will have the right to purchase from Pride such portion of
the First Reserve interest as will enable Maritima to maintain ownership of 70%
of the combined interests of Maritima and Pride.
OWNER GUARANTEE AND LETTER OF CREDIT
Pride will issue in respect of the new notes, and has issued in respect of
the old notes, a senior unsecured corporate guarantee for repayment of up to an
aggregate of $30.0 million of the new and old notes. In addition, our obligation
to repay the new and old notes will be backed by a $23.0 million irrevocable
standby letter of credit arranged by Maritima and issued by Republic National
Bank of New York.
FINANCING OF OUR RIGS
MITSUBISHI FINANCING
In December 1998, affiliates of Mitsubishi Corporation agreed to fund,
through two separate credit facilities, up to an aggregate $340.0 million of the
cost (including accrued interest) of constructing, equipping and mobilizing the
AMETHYST 6 and AMETHYST 7. The credit facility governing the AMETHYST 6 permits
drawings of up to $160.0 million and the credit facility covering the AMETHYST 7
permits drawings of up to $180.0 million. As of November 30, 1999, $66.0 million
remained available under the AMETHYST 6 credit facility and $47.0 million
remained available under the AMETHYST 7 credit facility.
On November 1, 1999, we issued $53 million principal amount of 11 3/4%
senior secured notes due 2001 that were not registered under the Securities Act
of 1933. We used the net proceeds from the sale of those old notes, cash on hand
and additional funds provided by Pride and Maritima to purchase the fully drawn
first tranches of the Mitsubishi credit facilities (representing $47.0 million
in the case of the AMETHYST 6 facility and $53.0 million in the case of the
AMETHYST 7 facility). A 53% undivided interest in the participations purchased
by us, including the right to receive payments of principal and interest and all
rights as a secured party in respect of such interest in those participations,
was irrevocably assigned to Wilmington Trust Company as collateral agent to
secure our obligation to repay the old and new notes.
MARAD FINANCING
In April 1999, Citibank, N.A. and its affiliate Govco Incorporated agreed
to fund, through two separate credit facilities, up to an aggregate $299.8
million of the cost (including construction period interest) of constructing and
equipping the AMETHYST 4 and AMETHYST 5. The credit facility covering the
AMETHYST 4 permits drawings of up to $149.6 million and the credit facility
covering the AMETHYST 5 permits drawings of up to $150.2 million. The United
States of America (through the Maritime Administration or MARAD) has guaranteed
repayment of the borrowings under each credit facility up to 87.5% of the actual
cost of each rig to the extent the other 12.5% of the actual cost has been
funded outside of such credit facility. The lenders are not
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obligated to advance funds not covered by the MARAD guarantee. As of November
30, 1999, $92.2 million remained available under the AMETHYST 4 credit facility
and $106.0 million remained available under the AMETHYST 5 credit facility.
THREATENED CANCELLATION OF OUR CHARTERS
If the shipyards deliver our rigs on the construction contract delivery
dates and our mobilization time to Brazil does not exceed our allowance for
mobilization, we will deliver our rigs to Petrobras between 263 and 433 days
after the delivery dates set forth under their respective charters with
Petrobras. (We currently anticipate that the AMETHYST 6 and AMETHYST 7 will be
delivered by Daewoo Heavy Industries Ltd. on or before the delivery dates set
forth in their construction contracts, but that the AMETHYST 4 and AMETHYST 5
may be delivered by TDI-Halter, L.P. up to two months later than the delivery
dates set forth in their construction contracts.) While each charter states that
it may be canceled by Petrobras if the chartered rig is not delivered within 180
days after the delivery date specified, Petrobras, on May 28, 1998, provided a
letter waiving its right to cancel the charters and related service rendering
contracts on the basis of late delivery unless the delay exceeds 540 days and,
even then, only if best endeavors to make delivery are not being made. On
October 13, 1999, Maritima received a letter from Petrobras stating that
Petrobras will cancel the charters and service rendering contracts for our rigs
when delay in delivery exceeds 180 days as specified in the charters. In its
letter, Petrobras also reserved its right to seek compensation for damages. By
threatening to cancel the charters if delay in delivery exceeds 180 days,
Petrobras indicated an intent contrary to its May 1998 letter. Our Brazilian
counsel, Pedro Calmon Filho & Associados, has informed us that Petrobras' May
1998 letter extending the permitted delay in delivery is an enforceable
obligation of Petrobras; however, specific performance of Petrobras' obligations
under the charters may, as a practical matter, not be an available remedy, and
our rights against Petrobras could be limited to a lawsuit for damages. The
result of any such lawsuit is uncertain, the amount of damages may be limited
and any recovery may be subject to extensive delays.
If Petrobras follows through with its threat and cancels the charters for
our rigs, such cancellation would constitute an event of default under the
credit facilities that are providing substantially all of the financing for
construction of our rigs. Since being informed of Petrobras' October 13 letter,
the credit facility lenders have continued to fund our construction draws. Based
on Petrobras' October 13 letter, however, the credit facility lenders may, at
their discretion, cease funding construction, in which event we would not be
able to complete construction of the rigs unless we obtain new funding from
other sources or an agreement of the credit facility lenders to resume funding
on terms acceptable to them.
Based on its announced deepwater drilling program and the performance
characteristics of the Amethyst design, we believe that Petrobras has
significant needs for our rigs. We further believe that, while Petrobras may
seek to renegotiate certain of the terms of our charters as part of a settlement
of the claims described below in respect of charters for two other
Amethyst-class rigs, there is significant likelihood that Petrobras will not
ultimately cancel our charters. There can be no assurance, however, that this
will be the case.
We believe Petrobras' letter of October 13, 1999 threatening cancellation
of the charters for our rigs was sent in response to claims made by Maritima and
our construction manager, Petrodrill Engineering N.V., in connection with the
cancellation by Petrobras of the charters for two other rigs, the AMETHYST 2 and
AMETHYST 3, that were being constructed concurrently with our rigs. Petrobras
initially awarded Maritima charters for six Amethyst-class rigs, the AMETHYST 2
and AMETHYST 3 and our four rigs. Maritima and Pride organized a joint venture
company, Petrodrill Offshore Inc., with six subsidiaries to own and charter the
rigs to Petrobras. The AMETHYST 2 and AMETHYST 3 were to have commenced
operations in the Campos Basin in late 1999 and early 2000, but the construction
contracts for those two rigs were terminated in November 1998 after the shipyard
at which the rigs were to be constructed filed for protection from its
creditors. In May 1999, Petrobras canceled the charters and service rendering
contracts for the AMETHYST 2 and AMETHYST 3 based on alleged late delivery.
Maritima and Petrodrill Engineering submitted letters to Petrobras alleging that
Petrobras' termination of the charters and service rendering contracts for the
AMETHYST 2 and AMETHYST 3 was wrongful. Petrodrill Engineering's letter asserts
that, because of Petrobras' May 1998 letter, Petrobras had waived its right to
cancel the charters and service rendering contracts unless the delay in delivery
exceeded at least 540 days. In addition, Maritima's letter asserts that the work
stoppage resulting from the bankruptcy of the shipyard for the AMETHYST 2 and
AMETHYST 3 was a FORCE MAJEURE event that did not permit termination and,
further, that the joint venture was prepared to fulfill the contracts by
contracting other available rigs to replace the AMETHYST 2 and AMETHYST 3. The
letters to Petrobras specify damages of approximately $95 million, none of which
involve claims made by us or on our behalf.
Following termination of the construction contracts for the AMETHYST 2 and
AMETHYST 3, Petrodrill Offshore transferred the shares of each of its six
subsidiaries to us for nominal consideration, and we transferred the shares of
the subsidiaries that held the charters for the AMETHYST 2 and AMETHYST 3 to a
separate joint venture company owned by Maritima and Pride. Petrodrill Offshore
has reached agreement with the prime contractor and its affiliates for the
settlement of all claims relating to the construction contracts for the AMETHYST
2 and AMETHYST 3 and their termination. Neither we nor any of our subsidiaries
were or are a party to any of the claims or disputes relating to termination of
these construction contracts.
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SUMMARY OF THE EXCHANGE OFFER
On November 1, 1999, we completed a private offering of the old notes. In
connection with the private offering, we entered into an exchange and
registration rights agreement with the initial purchaser of the old notes. We
agreed to deliver to you this prospectus and to complete the exchange offer for
the old notes within 180 days after the date of the private offering. In the
exchange offer, you are entitled to exchange your old notes for new notes with
substantially identical terms. You should read the discussion under the headings
"--Summary of Terms of the New Notes" beginning on page 7 and "Description of
New Notes" beginning on page 64 for further information about the new notes.
We summarize the terms of the exchange offer below. You should read the
discussion under the heading "The Exchange Offer" beginning on page 56 for
further information about the exchange offer and the resale of the new notes.
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Expiration Date............. The exchange offer will expire at 5:00 p.m., New
York City time, on ______________,2000, or such later
date and time to which we extend the expiration date.
Withdrawal of Tenders....... You may withdraw your tender of old notes at any time
prior to the expiration date. We will return to you,
without charge, promptly after the expiration or
termination of the exchange offer, any old notes that
you tendered but were not accepted for exchange.
Conditions to the Exchange We will not be required to accept old notes for
Offer.................... exchange:
o if the exchange offer would be unlawful
or would violate any interpretation of the
staff of the SEC
o if any legal action has been instituted or
threatened that would impair our ability to
proceed with the exchange offer
The exchange offer is not conditioned upon any
minimum aggregate principal amount of old notes
being tendered. You should read the discussion
under the heading "The Exchange Offer--Conditions
to the Exchange Offer" beginning on page 57 for
more information about the conditions to the
exchange offer.
Procedures for Tendering If your old notes are held through The Depository
Old Notes................ Trust Company (or DTC) and you wish to
participate in the exchange offer, you may do so
through DTC's automated tender offer program. If
you tender under this program, you will agree to
be bound by the letter of transmittal that we are
providing with this prospectus as though you had
signed the letter of transmittal. By signing or
agreeing to be bound by the letter of transmittal,
you will represent to us that, among other things:
o any new notes that you receive will be acquired
in the ordinary course of your business
o you have no arrangement or understanding with any
person to participate in the distribution of the
old notes or the new notes
o you are not our "affiliate," as defined in
Rule 405 of the Securities Act of 1933, or,
if you are our affiliate, you will comply
with any applicable registration and
prospectus delivery requirements of the
Securities Act of 1933
o if you are not a broker-dealer, you are not
engaged in and do not intend to engage in the
distribution of the new notes
o if you are a broker-dealer that will receive
new notes for your own account in exchange
for old notes that you acquired as a result
of market-making activities or other trading
activities, you will deliver a prospectus in
connection with any resale of such new notes
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Special Procedures for If you own a beneficial interest in old notes
Beneficial Owners........ that are registered in the name of a broker,
dealer, commercial bank, trust company or other
nominee and you wish to tender the old notes in
the exchange offer, you should contact the
registered holder as soon as possible and
instruct the registered holder to tender on your
behalf and to comply with our instructions described
in this prospectus.
Guaranteed Delivery You must tender your old notes according to the
Procedures............... guaranteed delivery procedures described in "The
Exchange Offer-- Guaranteed Delivery Procedures"
beginning on page 60 if any of the following apply:
o you wish to tender your old notes but they are
not immediately available
o you cannot deliver your old notes, the
letter of transmittal or any other required
documents to the exchange agent prior to the
expiration date
o you cannot comply with the applicable
procedures under DTC's automated tender
offer program prior to the expiration date
U.S. Federal Income The exchange of old notes for new notes in the exchange
Tax Considerations....... offer will not be a taxable event for U.S. federal
income tax purposes. You should read the discussion
under the heading "Tax Considerations-Material United
States Federal Income Tax Considerations" beginning on
page 101 for futher information.
Use of Proceeds............. We will not receive any cash proceeds from the issuance
of new notes in the exchange offer.
</TABLE>
THE EXCHANGE AGENT
We have appointed Wilmington Trust Company as exchange agent for the
exchange offer. You should direct questions, requests for assistance, requests
for additional copies of this prospectus or the letter of transmittal and
requests for the notice of guaranteed delivery to the exchange agent. If you are
not tendering under DTC's automated tender offer program, you should send the
letter of transmittal and any other required documents to the exchange agent as
follows:
WILMINGTON TRUST COMPANY
(302) 651-1562
BY MAIL (REGISTERED OR CERTIFIED MAIL
RECOMMENDED): BY COURIER OR BY HAND:
Wilmington Trust Company Wilmington Trust Company
Rodney Square North Rodney Square North
1100 North Market Street 1105 North Market Street
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890-0001
Attn: Corporate Trust Operations Attn: Corporate Trust Operations
BY FACSIMILE TRANSMISSION (ELIGIBLE INSTITUTIONS ONLY):
(302) 651-1079
Attn: Corporate Trust Administration
CONFIRM BY TELEPHONE:
(302) 651-1562
6
<PAGE>
SUMMARY OF TERMS OF THE NEW NOTES
Unlike the old notes, the new notes, with limited exceptions, will be
freely tradeable and will not have registration rights or provisions for
additional interest. Otherwise, the new notes are substantially identical to the
old notes. The new notes will evidence the same debt as the old notes, and the
old notes and the new notes will be governed by the same indenture.
EXCEPT WHEN USED AS PART OF THE TERM "NEW NOTES" OR "OLD NOTES," THE TERM
"NOTES" IN THIS SUMMARY DESCRIPTION REFERS TO THE OLD NOTES THAT WILL BE
OUTSTANDING UNTIL THE EXCHANGE OFFER IS CONSUMMATED AND, AFTER GIVING EFFECT TO
THE EXCHANGE OFFER, COLLECTIVELY TO THE OUTSTANDING NEW NOTES AND ANY REMAINING
UNEXCHANGED OLD NOTES.
<TABLE>
<CAPTION>
<S> <C>
ISSUER............................. Amethyst Financial Company Ltd., a company with
limited liability organized under the laws of the
British Virgin Islands.
SECURITIES OFFERED................. $53,000,000 principal amount of registered Senior
Secured Notes due 2001.
MATURITY DATE...................... November 1, 2001.
INTEREST PAYMENT DATES............. June 30 and December 30 of each year, commencing
June 30, 2000, and at maturity.
PRIDE GUARANTEE.................... Our obligation to repay the notes is guaranteed up
to $30.0 million by Pride on a senior unsecured
basis. Pride's guarantee will rank equally with
Pride's other senior unsecured debt.
LETTER OF CREDIT................... Our obligation to repay the notes is backed by a
$23.0 million irrevocable standby letter of credit
issued by Republic National Bank of New York.
REDEMPTION UPON A SALE OR LOSS OF Upon a sale of either the AMETHYST 6 or
A MORTGAGED RIG.................... AMETHYST 7, we will redeem one half of the
then outstanding notes at a redemption price
equal to 100% of the principal amount plus
accrued and unpaid interest to the
redemption date plus a make-whole premium
which is described in "Description of New
Notes--Redemptions" beginning on page 65.
Upon a loss of either the AMETHYST 6 or
AMETHYST 7, we will redeem one half of the
then outstanding notes at a redemption price
equal to 100% of the principal amount plus
accrued and unpaid interest to the redemption date.
OPTIONAL REDEMPTION................ We may redeem the notes, in whole or in
part, at any time or from time to time, at a
price equal to 100% of the principal amount
plus accrued and unpaid interest to the
redemption date plus a make-whole premium
described in "Description of New
Notes--Redemptions" beginning on page 65.
SUBSIDIARY GUARANTEES.............. Any subsidiary that guarantees any of our
indebtedness will be required to guarantee the
notes.
PAYMENT OF ADDITIONAL AMOUNTS...... All payments of principal and interest made
on our behalf under or with respect to the
notes will be made free and clear of, and
without withholding or deduction for or on
account of, any taxes, duties, levies,
imposts, assessments or governmental charges
of whatever nature imposed or established by
or on behalf of the British Virgin Islands,
Brazil, the United States or any other
jurisdiction from or through which payment
is made or in which we are located or doing
business or in which the rigs are located or
any province or territory of any such
jurisdiction or by any authority or agency
in or of any such jurisdiction having power
to tax, unless that withholding or deduction
is required by law or by regulation or
governmental policy having the force of law.
In the event that any such withholding or
deduction is so required, subject to certain
exceptions, we will pay such additional
amounts as will result in receipt by holders
of the new notes of such amounts as would
have been received by them had no
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
such withholding or deduction been required. You
should read the discussion under the heading
"Description of New Notes--Payment of
Additional Amounts and Redemption" beginning on page 66 for
futher information regarding the
payment of additional amounts.
REDEMPTION FOR TAX REASONS......... Upon the occurrence of specified changes in
British Virgin Islands, Brazilian or United
States tax law or the tax law of other
specified jurisdictions requiring the
payment of additional amounts (as described
under "Description of New Notes--Payment of
Additional Amounts and Redemption" beginning
on page 66), we may redeem the notes, in
whole but not in part, at 100% of the
principal amount plus accrued and unpaid
interest to the date of redemption. You
should read the discussion under the heading
"Description of New Notes--Payment of
Additional Amounts and Redemption" beginning
on page 66 for futher information regarding
our right to redeem the notes for tax reasons.
CHANGE OF CONTROL.................. Upon a change of control, you will have the right
to require us to purchase your notes at a purchase
price equal to 101% of the principal amount plus
accrued and unpaid interest to the date of
purchase. A change of control will occur if, among
other things, any of the following events occur:
o Pride ceases to own at least 26.4% of our
voting stock
o a change in control of Pride occurs that
results in a lower credit rating for any
outstanding debt of Pride
o any person (other than our current
shareholders and their affiliates) owns
more than 26.4% of our voting stock
You should read the discussion under the
heading "Description of New Notes--Change of
Control" beginning on page 69 for futher
information regarding your right to require
us to redeem your notes upon a change of control.
RANKING............................ The notes are our senior secured obligations, which
will rank equally with all of our existing
unsecured senior debt and will have priority over
our unsecured senior debt to the extent of the
collateral securing the notes. The collateral
securing the participations in the Mitsubishi
credit facilities purchased with the net proceeds
of the private offering will be shared by the
holders of the notes ratably with the lenders under
the Mitsubishi credit facilities (other than us).
The notes will be effectively subordinated to the
claims of any creditors of our subsidiaries that
will own the AMETHYST 4 and AMETHYST 5. The claims
the lenders under the Mitsubishi credit facilities
will rank equally with the claims of the other
creditors of our subsidiaries that will own the
AMETHYST 6 and AMETHYST 7 with respect to
indebtedness or other liabilities not expressly
subordinated to the loans under those credit
facilities but will rank ahead of the claims of
such other creditors to the extent of the value,
priority and validity of the liens on the
collateral securing those loans.
SECURITY........................... Our obligation to repay the notes is secured by the
following collateral:
o an irrevocable assignment of a 53% undivided interest in the $100 million
of participations in the Mitsubishi credit facilities purchased by us on
November 1, 1999, which participations are themselves secured by, among other
things, security interests over:
- the construction contracts, major
service contracts, charters and
related service rendering contracts
for the AMETHYST 6 and AMETHYST 7
8
<PAGE>
- the shares of capital stock of our
subsidiaries that will own the AMETHYST 6
and AMETHYST 7
- all of the business and assets of those
subsidiaries
- the insurance proceeds and all other
amounts received in respect of the
AMETHYST 6 and AMETHYST 7
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
- the refund guarantees issued by The
Export-Import Bank of Korea related to the
construction contracts for the AMETHYST 6
and AMETHYST 7
- the management and reserve accounts holding
amounts received in respect of the AMETHYST
6 and AMETHYST 7
limited guarantees by Maritima and Pride and
a first priority ship mortgage on each of the
AMETHYST 6 and AMETHYST 7
o a reserve account for the benefit of the
holders of the notes to be funded with 53% of
all principal payments made in respect of the
credit facility participations purchased by
us and a portion of each interest payment on
such participations sufficient to fund the
next succeeding scheduled payment of interest
on the notes
The collateral agent will exercise remedies
with respect to the collateral, including
the sale or other disposition of the
collateral and the enforcement of the
security documents relating to the
Mitsubishi credit facilities, subject to the
rights of the other lenders under the
Mitsubishi credit facilities, upon receipt
of notice of an occurrence of an event of
default under the indenture governing the notes.
COVENANTS.......................... The indenture, among other things, restricts our
ability, and the ability of our subsidiaries, to:
o borrow money
o pay dividends on stock or purchase stock or
make payments on subordinated indebtedness
o make investments
o incur liens
o engage in sale/leaseback transactions
o amend security documents
o sell substantially all of our assets or
merge or consolidate with other companies
o consummate certain sales of assets
o enter into certain transactions with affiliates
o sell or issue stock of subsidiaries
These limitations are subject to important
qualifications and exceptions.
9
<PAGE>
ABSENCE OF MARKET FOR THE NEW NOTES There is no existing market for the new
notes. We cannot provide any assurance
about:
o the liquidity of any markets that may
develop for the new notes
o your ability to sell your new notes
o the prices at which you will be able to sell
your new notes
Further, trading prices of the new notes
will depend on many factors, including:
o prevailing interest rates
o our operating results
o ratings of the new notes
o the market for similar securities
We do not intend to apply for listing of the
new notes on any securities exchange or for
quotation of the new notes in any automated
dealer quotation system.
BOOK-ENTRY SYSTEM.................. The old notes initially offered and sold in
the United States to qualified institutional
buyers in reliance on Rule 144A under the
Securities Act are, and the new notes will
be, represented by one or more global notes
in registered form and deposited with a
custodian for, and registered in the name
of, The Depository Trust Company or its
nominee. Except in specified limited
circumstances, definitive notes will not be
issued in exchange for beneficial interests
in a global note.
</TABLE>
10
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following tables set forth our summary historical consolidated
financial information as of the dates and for the periods indicated:
<TABLE>
<CAPTION>
INCEPTION NINE MONTHS
(MARCH 27, 1998) ENDED
TO DECEMBER 31, 1998 SEPTEMBER 30, 1999
-------------------- --------------------
(IN THOUSANDS)
<S> <C> <C>
Consolidated Statement of Income Data:
Interest income ............................. $ 167 $ 939
Other (income) expense ...................... (109) 11
-------------------- --------------------
Income before taxes ......................... 58 950
Provision for income taxes .................. -- --
-------------------- --------------------
Net income .................................. $ 58 $ 950
==================== ====================
Other Data:
Capital expenditures ........................ $ 210,526 $ 125,798
Consolidated Balance Sheet Data
(at end of period):
Working capital (deficit) ................... $ (18,325) $ (21,915)
Construction in progress .................... 220,666 344,949
Total assets ................................ 343,080 447,945
Long-term debt .............................. 94,738 235,624
Accrued contract penalties .................. 77,885 41,242
Shareholders' equity ........................ 59 106,008
Consolidated Statement of Cash
Flows Data:
Investing Activities ........................ $ (210,526) $ (125,798)
Financing Activities ........................ 228,640 119,969
</TABLE>
We have no operating history and no operating revenue and have been in the
development stage since formation. No ratio of earning to fixed charges has been
computed since it would not be meaningful.
11
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER MATTERS DESCRIBED IN THIS PROSPECTUS, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE PARTICIPATING IN THE
EXCHANGE OFFER. IN PARTICULAR, YOU SHOULD PAY CLOSE ATTENTION TO THE SPECIAL
FACTORS APPLICABLE TO BRAZIL AND TO OUR LACK OF OPERATING HISTORY. IN GENERAL,
INVESTING IN SECURITIES DEPENDENT ON CASH FLOWS FROM BRAZIL OR OTHER DEVELOPING
COUNTRIES INVOLVES A HIGHER DEGREE OF RISK THAN INVESTING IN SECURITIES OF
ISSUERS IN THE UNITED STATES. FOR PURPOSES OF EVALUATING THE CREDITWORTHINESS OF
PRIDE'S SENIOR UNSECURED GUARANTEE OF THE REPAYMENT OF UP TO AN AGGREGATE $30.0
MILLION OF THE OLD AND NEW NOTES, YOU SHOULD ALSO CONSIDER THE INFORMATION ABOUT
PRIDE PROVIDED IN APPENDIX A TO THIS PROSPECTUS.
RISK FACTORS RELATING TO THE NEW NOTES AND THE EXCHANGE OFFER
IF YOU FAIL TO EXCHANGE YOUR OLD NOTES, THE EXISTING TRANSFER RESTRICTIONS WILL
REMAIN IN EFFECT; THE MARKET VALUE OF YOUR OLD NOTES MAY BE ADVERSELY AFFECTED
BECAUSE OF A SMALLER FLOAT.
If you do not exchange your old notes for new notes under the exchange
offer, you will continue to be subject to the existing transfer restrictions on
the old notes. In general, the old notes may not be offered or sold unless they
are registered or exempt from registration under the Securities Act of 1933 and
from applicable state securities laws. We do not intend to register resales of
the old notes.
The tender of old notes under the exchange offer will reduce the aggregate
principal amount of the old notes outstanding. This may have an adverse effect
upon, and increase the volatility of, the market price of any old notes that you
continue to hold due to a reduction in liquidity.
THERE IS NO PUBLIC MARKET FOR THE NEW NOTES, AND WE DO NOT INTEND TO LIST THEM
ON ANY SECURITIES EXCHANGE OR AUTOMATED QUOTATION SYSTEM; AN ACTIVE TRADING
MARKET FOR THE NEW NOTES MAY NOT DEVELOP.
There is no existing public market for the new notes. We cannot provide
any assurance about
o the liquidity of any markets that may develop for the new notes
o your ability to sell your new notes
o the prices at which you will be able to sell your new notes
The liquidity of any market for the new notes will depend on the number of
holders of the new notes, the interest of securities dealers in making a market
in the new notes and various other factors. Future trading prices of the new
notes will depend on many factors, including prevailing interest rates, our
operating results, ratings of the new notes and the market for similar
securities. Historically, the market for noninvestment grade debt (like the new
notes) has been subject to disruptions that have caused substantial volatility
in the prices of securities similar to the new notes. The market, if any, for
the new notes may be subject to disruptions that create price volatility. These
disruptions could adversely impact you.
We do not intend to apply for listing of the new notes on any securities
exchange or for quotation of the new notes in any automated dealer quotation
system.
EXCEPT TO THE EXTENT OF PRIDE'S LIMITED GUARANTEE, NONE OF OUR AFFILIATES WILL
HAVE ANY LIABILITY FOR PAYMENTS OF PRINCIPAL OR INTEREST ON THE NEW NOTES, AND
YOU WILL HAVE NO RIGHT TO RECOVER AGAINST THEM.
Our consolidated cash flow from the charters for the AMETHYST 6 and
AMETHYST 7 will be the principal source of repayment of the indebtedness under
the Mitsubishi credit facilities and the principal source of payment of interest
on the old and new notes. We currently do not intend to conduct any business
other than the construction and chartering of our four rigs and do not expect to
own any material assets other than our four rigs. Our subsidiaries have
contracted with service providers, several of which are affiliated special
purpose entities, for construction management of our rigs, supplies, technical
services, staffing and operation of our rigs. You are not a beneficiary of and
have no right to enforce any of the arrangements between our subsidiaries and
their service providers. Our obligations in respect of the old and new notes
will be secured solely by the limited guarantee of Pride, the letter of credit
from Republic National Bank of New York and an assignment of a 53% undivided
interest in the participations we purchased in the Mitsubishi credit facilities,
including the right to receive payments of principal and interest on such
undivided interest that will be deposited as received in the note reserve
account. Our subsidiaries' ability to make required payments under the
Mitsubishi and MARAD credit facilities and our ability to make required payments
under the old and new notes will be a function of the availability of
sufficient revenues derived from the charters, or, if the charters are
terminated or expire, any replacement charters, after the payment of operating
expenses and other obligations. (You should read the discussion under the
heading "Business--Threatened Cancellation of Our Charters" beginning on page 33
for information regarding the threatened cancellation of our charters.) Upon the
enforcement of remedies available to you following an event of default,
including the
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<PAGE>
remedies afforded by the limited guarantee of Pride and the letter of credit
from Republic National Bank of New York and the foreclosure by the note
collateral agent on the collateral securing our obligations in respect of the
old and new notes, the resulting proceeds will be shared by the holders of old
and new notes. We cannot assure that a foreclosure or exercise of the other
remedies available to you will produce proceeds in an amount that will be
sufficient to repay you and the other holders of old and new notes in full.
Except to the extent of Pride's limited guarantee, you will not have the right
to recover against any of our affiliates. You should read Appendix A beginning
on page A-1 for a discussion of risk factors affecting Pride's senior unsecured
limited guarantee.
WE WILL BE REQUIRED TO REFINANCE MOST OF THE OUTSTANDING PRINCIPAL AMOUNT OF THE
OLD AND NEW NOTES AT MATURITY; IF WE ARE UNABLE TO EFFECT SUCH REFINANCING, THE
REPAYMENT OF THE OLD AND NEW NOTES WILL BE DELAYED AND YOU COULD INCUR A LOSS.
We will not have sufficient cash from the scheduled payments on the
participations in the Mitsubishi credit facilities purchased by us to repay the
old and new notes in full at maturity (including by acceleration or mandatory
redemption), so we will be required to refinance most of the outstanding
principal amount of the old and new notes at that time. Our ability to refinance
the old and new notes at that time will depend upon our financial condition and
results of operations, our business operation and prospects and conditions in
the financial markets. Our ability to raise funds may be adversely affected by
many of the risk factors described in this prospectus and there can be no
assurance that we will be able to refinance the old and new notes at maturity on
satisfactory terms. If we are unable to refinance the old and new notes, we may
attempt to sell assets or seek equity investments or contributions for such
purpose, but there can be no assurance that these efforts will not be adversely
affected by the same risk factors or market conditions that affect our
refinancing efforts. If we are unsuccessful in these efforts, payments on the
old and new notes will be delayed and you could incur a loss.
THE 53% UNDIVIDED INTEREST IN OUR PARTICIPATIONS IN THE MITSUBISHI CREDIT
FACILITIES SECURING THE OLD AND NEW NOTES WILL BE THE PRINCIPAL SOURCE OF
PAYMENT OF INTEREST ON, AND THE PRINCIPAL COLLATERAL FOR, THE OLD AND NEW NOTES;
HOWEVER, OUR ABILITY AND, CONSEQUENTLY, THE ABILITY OF THE NOTE COLLATERAL AGENT
ON YOUR BEHALF TO AFFECT DETERMINATIONS MADE BY THE LENDERS UNDER THE MITSUBISHI
CREDIT FACILITIES ARE SEVERELY LIMITED.
The 53% undivided interest in our participations in the Mitsubishi credit
facilities securing the old and new notes will be the principal source of
payment of interest on, and the principal collateral for, the old and new notes.
We own less than a majority of the loans outstanding under the Mitsubishi
facilities. The remainder of the loans under these credit facilities are
currently held by affiliates of Mitsubishi Corporation. Under the Mitsubishi
credit facilities, the lenders holding two thirds of the loans have the right to
control most determinations to be made by the lenders under the credit
facilities. The Mitsubishi Corporation affiliates, which will, by completion,
collectively hold more than two thirds of the loans, will have the exclusive
right to amend most provisions of the credit facility documents, waive borrower
defaults, declare an event of default and direct the enforcement of rights
against the borrowers.
OUR ABILITY AND, CONSEQUENTLY, THE ABILITY OF THE NOTE COLLATERAL AGENT ON YOUR
BEHALF TO TRANSFER OUR PARTICIPATIONS UNDER THE MITSUBISHI CREDIT FACILITIES ARE
LIMITED; THE INABILITY OF THE NOTE COLLATERAL AGENT TO TRANSFER OUR
PARTICIPATIONS UNDER THE MITSUBISHI CREDIT FACILITIES IN THE EVENT OF OUR
DEFAULT UNDER THE OLD OR NEW NOTES WOULD SIGNIFICANTLY LIMIT THE VALUE OF THE
COLLATERAL SECURING THE OLD AND NEW NOTES.
The Mitsubishi credit facilities permit lenders to assign their rights
under the credit facilities only to a first class international bank
incorporated in an Organisation for Economic Co-operation and Development (OECD)
country or a person approved by an affiliate of Mitsubishi Corporation, which
approval will not be unreasonably withheld. This provision restricts our ability
to transfer our participations under the Mitsubishi credit facilities and limits
the note collateral agent's ability to transfer the participations if there is
an event of default and foreclosure under the old or new notes.
AN EVENT OF DEFAULT UNDER A MITSUBISHI CREDIT FACILITY OR MARAD CREDIT FACILITY
THAT DOES NOT RESULT IN AN EVENT OF DEFAULT UNDER THE OLD AND NEW NOTES COULD
HAVE AN ADVERSE EFFECT ON THE MARKET FOR THOSE NOTES.
An event of default under a Mitsubishi credit facility or MARAD credit
facility will not cause an event of default under the old or new notes unless it
is a payment default, results in an acceleration of such credit facility or, in
the case of either Mitsubishi credit facility, persists for 120 days without
being cured or waived. Such a default under the Mitsubishi credit facilities,
which provide the principal source of payment of interest on, and the principal
collateral for, the old and new notes, would likely have an adverse effect on
the market for the old and new notes and, if such default occurred prior to
completion of the AMETHYST 6 or AMETHYST 7, would result in an inability to fund
the completion of these rigs. Such a default under the MARAD credit facilities
could have an adverse effect on the market for the old and new notes even though
neither the MARAD credit facilities nor the rigs being financed with them are a
principal source of payment for the old or new notes. The MARAD credit
facilities do not provide for funding of owner-furnished equipment prior to
delivery, so we have advanced approximately $22.0 million and expect to advance
an additional $9.0 million to fund owner-furnished equipment for the AMETHYST 4
and AMETHYST 5 prior to delivery. If an
13
<PAGE>
event of default occurs prior to delivery and the MARAD credit facilities cease
funding, we will not be reimbursed for these amounts as currently anticipated.
If we are not reimbursed, we would have less cash available to make principal
and interest payments on the old and new notes and to complete our rigs. This
unavailability of cash could have an adverse effect on the market for the old
and new notes.
IF THERE IS AN EVENT OF DEFAULT UNDER THE OLD OR NEW NOTES THAT DOES NOT CAUSE
AN EVENT OF DEFAULT UNDER THE MITSUBISHI CREDIT FACILITIES, THE NOTE COLLATERAL
AGENT WILL NOT BE ABLE TO PURSUE, ON YOUR BEHALF, REMEDIES AGAINST THE
COLLATERAL FOR THE MITSUBISHI CREDIT FACILITIES.
An event of default under the MARAD credit facilities or other event which
causes an event of default under the old or new notes may not cause an event of
default under the Mitsubishi credit facilities. In this event, the note trustee
may enforce remedies on your behalf against Pride's limited guarantee, the
letter of credit from Republic National Bank of New York and the note reserve
account, but neither it nor the note collateral agent nor the lenders under the
Mitsubishi credit facilities will have any right to pursue remedies under the
Mitsubishi credit facilities against the collateral for such credit facilities,
including the AMETHYST 6 and AMETHYST 7, or the related subsidiaries.
THE GUARANTEES PROVIDED BY US AND OUR AFFILIATES IN CONNECTION WITH THE
MITSUBISHI CREDIT FACILITIES AND THE OLD AND NEW NOTES COULD BE SUBORDINATED OR
VOIDED IF DETERMINED TO BE FRAUDULENT; SUCH DETERMINATION WOULD SIGNIFICANTLY
LIMIT THE GUARANTEES SECURING THE MITSUBISHI CREDIT FACILITIES AND,
CONSEQUENTLY, THE COLLATERAL SECURING THE OLD AND NEW NOTES AND, IF MADE IN
RESPECT OF PRIDE, PRIDE'S LIMITED GUARANTEE OF THE OLD AND NEW NOTES.
The obligations under the Mitsubishi credit facilities are guaranteed by
us and are cross-guaranteed by our subsidiaries that will own the AMETHYST 6 and
AMETHYST 7. In addition, Maritima and Pride have provided limited guarantees on
both a several and joint basis in connection with the Mitsubishi credit
facilities and, in the case of Pride, the repayment of the old and new notes. We
believe that the indebtedness incurred and to be incurred under the Mitsubishi
credit facilities and the old and new notes, whether directly or by virtue of
these guarantees, was incurred and is being incurred for proper purposes and in
good faith, and that, based on present forecasts, asset valuations and other
financial information, each of the guarantors will be solvent, will have
sufficient capital for carrying on its business and will be able to pay its
debts as they mature. Notwithstanding our belief, however, if a court of
competent jurisdiction in a suit by an unpaid creditor or a representative of
creditors (such as a trustee in bankruptcy or a debtor-in-possession) were to
find that, at the time of the incurrence of such indebtedness, any of the
following was true of any guarantor:
o the guarantor was insolvent
o the guarantor was rendered insolvent by reason of such incurrence
o the guarantor was engaged in a business or transaction for which
their remaining assets constituted unreasonably small capital
o the guarantor intended to incur, or believed that it would incur,
debts beyond its ability to pay such debts as they matured
o the guarantor intended to hinder, delay or defraud its creditors
and that the indebtedness was incurred for less than reasonably equivalent
value, then such court could, among other things:
o void all or a portion of such guarantor's obligations, the effect of
which would be that you and the lenders under the Mitsubishi credit
facilities may not be repaid in full
o subordinate such guarantor's obligations to other existing and
future indebtedness of such guarantor to a greater extent than would
otherwise be the case, the effect of which would be to entitle such
other creditors to be paid in full before any payment could be made
on the Mitsubishi credit facilities or on the old and new notes
A legal challenge to a guarantor on these grounds may focus on, among other
things, the benefits, if any, realized by such guarantor as a result of our
issuance of the old and new notes.
The measure of insolvency for purposes of the foregoing considerations
will vary depending on the law applied in any such proceeding. Generally,
however, an entity may be considered insolvent if the sum of its debts,
including contingent liabilities, is greater than the fair market value of all
its assets at a fair valuation or if the present fair market value of its assets
is less than the
14
<PAGE>
amount that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and mature.
THE ENFORCEMENT OF THE MORTGAGES ON THE AMETHYST 6 AND AMETHYST 7 MAY BE
DIFFICULT AND EXPENSIVE; THE INABILITY TO REALIZE SIGNIFICANT VALUE UPON
ENFORCEMENT OF THOSE MORTGAGES WOULD SIGNIFICANTLY LIMIT THE COLLATERAL SECURING
THE MITSUBISHI CREDIT FACILITIES AND, CONSEQUENTLY, THE COLLATERAL SECURING THE
OLD AND NEW NOTES.
The principal collateral securing the Mitsubishi credit facilities will
be, upon completion of our rigs, Bahamian first priority ship mortgages on the
AMETHYST 6 and AMETHYST 7. In the event of default under a Mitsubishi credit
facility, the collateral agent under such credit facility may enforce the
corresponding mortgage for the benefit of the lenders under such credit
facility. We have assigned to the note collateral agent, for your benefit, a 53%
undivided interest in the portion of the proceeds of such enforcement to which
we are entitled as a result of our participation in each Mitsubishi credit
facility.
Rig mortgages generally are subordinate to maritime liens that arise by
operation of law. The priority that such mortgages would have against the claims
of other lien creditors in an enforcement proceeding generally is determined by,
and will vary in accordance with, the laws of the country where the proceeding
is brought. Bahamian law provides that the following liens and claims shall take
priority over rig mortgages registered in the Bahamas and that no other claim
shall take priority over such mortgages:
o any sum awarded by a court as costs arising out of any proceedings
in respect of the arrest of a rig or the subsequent sale thereof,
including such charges or expenses incurred in effecting the arrest
or sale
o wages and other sums due to the master, officers and other members
of the rig's complement in respect of their employment on the rig
o port, canal and other waterway dues and pilotage dues and any
outstanding fees payable under the Bahamian Merchant Shipping Act in
respect of the rig
o claims against the owner in respect of loss of life or personal
injury occurring, whether on land or on water, in direct connection
with the operation of the rig
o claims against the owner, based on tort and not capable of being
based on contract, in respect of loss of or damage to property
occurring, whether on land or on water, in direct connection with
the operation of the rig
o claims for salvage, wreck removal and contribution in general
average
o any lien exercisable by a rig builder or repairer over a rig or the
appurtenance thereof in his possession shall take priority over all
claims arising after such possession was taken but shall be
subordinated to those claims which were created before the time of
taking such possession
The AMETHYST 6 and AMETHYST 7 will be used and operated in international
waters and jurisdictions other than the Bahamas. We cannot assure that, if
enforcement proceedings must be commenced against a particular rig, such rig
will be located in a jurisdiction having the same procedures and lien priorities
as the Bahamas or that the relative lien priority against other maritime liens
will be as favorable as in the Bahamas. During the terms of the charters for the
AMETHYST 6 and AMETHYST 7, such rigs will be located in Brazilian waters.
Brazilian courts would have jurisdiction over any legal action where:
o the defendant, regardless of nationality, is domiciled in Brazil
o the obligation to be enforced must be performed in Brazil
o the lawsuit arises from an occurrence or action in Brazil
The Brazilian courts, therefore, would accept jurisdiction over any action for
possession of a rig while located in Brazilian territorial waters, the exclusive
economic zone of Brazil or the continental shelf of Brazil and any claim arising
under the Petrobras contracts. Any action brought against Petrobras under the
Petrobras contracts, moreover, would have to be filed in the Brazilian courts.
The Brazilian courts will recognize first priority ship mortgages on the
Amethyst 6 and AMETHYST 7 duly registered in the Bahamas in accordance with
their terms to the extent that they do not offend Brazilian national
sovereignty, public order or good morals. Proceedings in the Brazilian courts to
enforce a rig mortgage would be subject to a lengthy delay that could result in
increased custodial costs, deterioration in the condition of the rig and
substantial reduction in the value of the rig. Other jurisdictions may provide
no legal remedy for the enforcement of the mortgages securing the Mitsubishi
credit facilities, or a remedy dependent on court proceedings may be so
expensive and time consuming as to be impracticable. Furthermore, certain
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jurisdictions, unlike the Bahamas, may not permit a rig to be sold prior to
entry of a judgment, resulting in a lengthy delay that could result in increased
custodial costs, deterioration in the condition of the rig and substantial
reduction in the value of the rig.
Since borrowings under the Mitsubishi credit facilities are also secured
by pledges of all the stock of owners of the AMETHYST 6 and AMETHYST 7,
enforcement of these pledges, including foreclosure, may provide in effect an
alternative method to realize upon the rig owned by the related subsidiary and
included in the collateral. However, enforcement by means of foreclosure on the
stock of such subsidiary will not affect the claims of existing creditors of
such subsidiary, which claims would survive any sale of such stock and would
adversely affect the value of such stock.
THE MARKET VALUES OF THE AMETHYST 6 AND AMETHYST 7 WILL FLUCTUATE; THE
COLLATERAL SECURING THE OLD AND NEW NOTES MAY NOT BE SUFFICIENT TO REPAY THE OLD
AND NEW NOTES.
The market value of our rigs can be expected to fluctuate depending upon
general demand for various types of drilling rigs. We cannot assure that the
proceeds from the sale of either the AMETHYST 6 or AMETHYST 7 upon exercise of
remedies following an event of default under either Mitsubishi credit facility
will be sufficient to pay the required principal amount under such facility. We
are not required under the Mitsubishi credit facilities to maintain any minimum
value of any rig, and we cannot assure that the future value of a rig will not
be considerably less than its acquisition cost. Furthermore, in certain
circumstances, the extent to which the mortgage may be enforced and the extent
to which the mortgage will have priority over the claims of other creditors is
limited. If your share of the proceeds from foreclosure and sale of the
collateral pledged to secure repayment of borrowings under the Mitsubishi credit
facilities, enforcement of the Pride limited guarantee and draws on the Republic
National Bank of New York letter of credit, together with accumulated cash and
cash equivalents held by the note collateral agent, are not sufficient to make
all payments due on the old and new notes, you will have only unsecured claims
against our remaining assets, if any.
RISK FACTORS RELATING TO OUR BUSINESS
OUR OPERATIONS ARE DEPENDENT ON THE SUCCESSFUL CONSTRUCTION OF OUR RIGS;
CONSTRUCTION OF OUR RIGS INVOLVES RISKS THAT COULD GIVE RISE TO DELAYS, COST
OVERRUNS, PERFORMANCE DEFICIENCIES OR OTHER CONDITIONS THAT COULD RESULT IN THE
CANCELLATION OF OUR CHARTERS OR OTHERWISE ADVERSELY AFFECT OUR ABILITY TO REPAY
THE OLD AND NEW NOTES.
We currently have no operational rigs. We have contracted to provide our
four rigs to Petrobras as described in this prospectus. Construction of our rigs
commenced in the second quarter of 1998. Each shipyard has agreed to complete
the construction, sea trials and delivery of two rigs meeting specified
performance criteria no later than dates ranging from June 9, 2000 to August 9,
2000.
As with any major construction effort, construction of our rigs involves
risks, including the following events which could give rise to delays, cost
overruns or performance deficiencies or otherwise adversely affect the design or
operation of one or more of our rigs:
o shortages of equipment, materials and labor
o delays in delivery of equipment and materials
o labor disputes
o political events, including local or political opposition to our
construction efforts
o blockades or embargoes
o litigation
o adverse weather conditions
o unavailability of permits
o unanticipated increases in costs
o natural disasters and accidents
o unforeseen engineering, design or environmental problems
o other unforeseen circumstances beyond our control or the control of
our vendors and subcontractors
In particular, the construction of each rig requires a significant amount of
steel. In addition, during the construction process, we must procure significant
amounts of sophisticated equipment in order to equip our rigs to satisfy the
specifications of the charters, which procurement must be coordinated with the
work under the construction contracts. Delays, cost overruns or deficiencies in
performance may result if deliveries of steel or equipment are significantly
delayed or fail to meet the required specifications or if funding for
construction under the MARAD or Mitsubishi credit facilities is not available.
Delays, cost overruns or performance deficiencies for any of the causes
enumerated above or for any other cause may materially adversely affect our
ability to repay the old and new notes. During the period of any delay, we will
continue to accrue
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financing costs while delaying the commencement of operations and the receipt of
revenues. The period for delivery for the rigs under the charters will not be
extended and delays may result in penalties and possibly termination of the
Petrobras charters. Delays, cost overruns or performance deficiencies could, in
addition, result in a default under the MARAD or Mitsubishi credit facilities.
Finally, performance deficiencies could result in reduced income and cash flow.
We currently expect that each rig will be delivered to Petrobras a
significant number of days after the delivery date under its charter. Delays in
meeting a charter's delivery schedule could result in fines of up to 30% of a
rig's daily operating rate (and, in addition, up to 30% of the mobilization fee
in the case of the AMETHYST 5) and the loss of significant revenue during the
period of delay. In addition, each charter states that it may be canceled by
Petrobras if the chartered rig is not delivered within 180 days after the
delivery date specified although Petrobras, on May 28, 1998, provided a letter
waiving its right to cancel the charters and related service rendering contracts
on the basis of late delivery unless the delay exceeds 540 days and, even then,
only if best endeavors to make delivery are not being made. On October 13, 1999,
Maritima received a letter from Petrobras stating that Petrobras will cancel the
charters and service rendering contracts for our rigs when delay in delivery
exceeds 180 days as specified in the charters. In its letter, Petrobras also
reserved its right to seek compensation for damages. By threatening to cancel
the charters if delay in delivery exceeds 180 days, Petrobras indicated an
intent contrary to its May 1998 letter. Our Brazilian counsel, Pedro Calmon
Filho & Associados, has informed us that Petrobras' May 1998 letter extending
the permitted delay in delivery is an enforceable obligation of Petrobras;
however, specific performance of Petrobras' obligations under the charters may
not, as a practical matter, be an available remedy, and our rights against
Petrobras could be limited to a lawsuit for damages. The result of any such
lawsuit is uncertain, the amount of damages may be limited and any recovery may
be subject to extensive delays. If Petrobras follows through with its threat and
cancels the charters for our rigs, such cancellation would constitute an event
of default under the credit facilities that are providing substantially all of
the financing for construction of our rigs. Since being informed of Petrobras'
October 13 letter, the credit facility lenders have continued to fund our
construction draws. Based on Petrobras' October 13 letter, however, the credit
facility lenders may, at their discretion, cease funding construction, in which
event we would not be able to complete construction of the rigs unless we obtain
new funding from other sources or an agreement of the credit facility lenders to
resume funding on terms acceptable to them. You should read the discussion under
the heading "Business--Threatened Cancellation of Our Charters" beginning on
page 33 for further information regarding the effects of the threatened
cancellation of our charters.
Deficiencies in the actual performance of our rigs from the levels
specified in the construction contracts or the charters, whether caused by fault
of the shipyards, design deficiencies or otherwise, could result in any of the
following:
o reduced revenue as a consequence of reduced rates or increased rig
down time under the charters
o increased operating expenses as a consequence of reduced rig
efficiency or increased rig down time
o termination of one or more of the charters if the minimum
performance standards for acceptance of our rigs set forth in the
charters are not timely achieved
We cannot assure that our rigs will be successfully constructed, equipped
and completed on time. If our rigs are not completed on time or are not capable
of operating according to their respective design specifications, the
termination of the applicable construction contract may be our sole remedy for
such failure. The loss of, or any significant reduction in, the rates payable by
Petrobras under one or more of the charters, delays in commencement of
operations or a default under a MARAD or Mitsubishi credit facility could
adversely affect our ability to repay the old and new notes and our
subsidiaries' ability to meet their debt obligations.
We have attempted to mitigate any cost overruns, cash flow deficiencies
and late delivery penalties resulting from construction risks and delays by
budgeting a contingency amount of $46.8 million for the rigs and obtaining,
subject to certain exclusions and limitations, insurance to protect against
various casualty and completion risks during construction and mobilization
including, in certain circumstances:
o failure of the shipyards to meet the agreed-upon delivery schedules
o failure of our rigs to meet the performance criteria established in
the charters
o certain other delays in completion and delivery of our rigs
Our insurance covers only insured events such as traditional fire hazards and
marine peril and there can be no assurance that the contingency funds or
insurance will be sufficient or that insurance proceeds will be available to pay
significant cost overruns, compensate us for any penalties, lost revenues or
cancellation of the charters or to provide sufficient funds to make scheduled
payments on the old and new notes or our other debt obligations.
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THE SUCCESSFUL CONSTRUCTION OF OUR RIGS IS DEPENDENT ON THE ABILITY OF THE
SHIPYARDS TO PERFORM UNDER THE CONSTRUCTION CONTRACTS.
The timely construction of our rigs in accordance with specifications
depends upon the ability of Daewoo Heavy Industries Ltd. to perform under the
construction contracts for the AMETHYST 6 and AMETHYST 7 and TDI-Halter, L.P. to
perform under the construction contracts for the AMETHYST 4 and AMETHYST 5.
Daewoo forms part of an integrated South Korean operation that is
substantially dependent on the South Korean economy. Like any emerging market,
the South Korean economy is subject to the following:
o frequent and occasionally drastic government intervention
o extreme inflation
o changes in trade policy
o currency devaluations
o social instability
o interest rate fluctuations
o other political, economic or diplomatic developments
South Korea experienced an economic crisis following the December 1997
announcement of financial assistance by the International Monetary Fund (IMF) in
response to a severe foreign currency liquidity shortage. The Korean economy
suffered a 100% increase in the exchange rate in the first month following the
IMF announcement, along with increases during early and mid 1998 in interest
rates, unemployment and inflation. The Korean economy stabilized during 1998
with usable foreign currency reserves increasing from under $6 billion to over
$50 billion. In January 1999, Standard & Poor's Ratings Group raised its credit
rating for Korea's sovereign credit from "stable" to "positive." We cannot
assure, however, that another economic crisis in Korea will not occur that will
disrupt Daewoo's construction of our rigs.
In April 1999, Daewoo announced its intention to divest most of its
non-automotive businesses by the end of the year, indicating that the Mitsui
Engineering & Shipbuilding Company of Japan might buy the shipbuilding division.
Following the Daewoo sell-off announcement, the Korea Stock Price Index (KOPSI)
suffered a massive price drop and workers at the shipbuilding division went on
strike. The KOPSI recovered after the South Korean government and Daewoo's
creditors announced new supports for Daewoo, including new loans. The strike was
settled with Daewoo agreeing that it would not sell the shipbuilding division
but would instead seek to attract foreign investment in the shipbuilding
division through a joint venture. In addition, Daewoo guaranteed job security
for the shipyard workers. We do not expect that these recent developments
affecting Daewoo will have any negative effect on the construction of the
AMETHYST 6 or AMETHYST 7, but we can give no assurances to that effect.
In November 1999, Halter Marine Group, Inc., the parent of TDI-Halter,
merged with Friede Goldman International Inc. The events relating to the
integration of the two companies might distract management or otherwise disrupt
the normal business activities of TDI-Halter. Any distraction or disruption
could result in delays in completing the AMETHYST 4 or AMETHYST 5.
We have obtained performance bonds, performance guarantees and refund
guarantees to back the shipyards' obligations under the construction contracts.
We cannot assure, however, that recovery under such bonds or guarantees will be
available or sufficient to compensate us for any penalties, lost revenues or
cancellation of the charters that could result from a shipyard's default or to
redeem a sufficient principal amount of the old and new notes in the event a
shipyard does not perform and a suitable replacement construction contract
cannot be obtained. In particular, Daewoo's obligations under its construction
contracts and related owner-furnished equipment supply contracts are secured by
refund guarantees from the Export-Import Bank of Korea. Being a South Korean
governmental agency, the Export-Import Bank of Korea is subject to governmental
control and influence, as well as the South Korean economy. We cannot assure
that such governmental control and influence or effects of the South Korean
economy will not materially and adversely affect our ability to collect on the
refund guarantees. Our inability to collect from a performance bond, performance
guarantee or refund guarantee in the event of default by a shipyard would
materially and adversely affect our ability to complete the rigs and, therefore,
our ability to repay the old and new notes and our subsidiaries' ability to meet
their debt obligations.
PETROBRAS COULD IMPOSE LATE DELIVERY PENALTIES ON OUR SUBSIDIARIES AT THE TIME
OF DELIVERY OF OUR RIGS; WE CURRENTLY DO NOT HAVE A SOURCE OF FUNDS AVAILABLE TO
PAY SUCH PENALTIES IF IMPOSED; OUR FAILURE TO PAY SUCH PENALTIES IF IMPOSED
COULD RESULT IN THE TERMINATION OF OUR CHARTERS AND, CONSEQUENTLY, ADVERSELY
AFFECT OUR ABILITY TO REPAY THE OLD AND NEW NOTES.
If the shipyards deliver our rigs on the construction contract delivery
dates and our mobilization time to Brazil does not exceed our allowance for
mobilization, we expect to be up to 433 days late in delivering the AMETHYST 4
and AMETHYST 5 and up to 293 days late in delivering the AMETHYST 6 and AMETHYST
7 for commencement of operations under their respective charters. Petrobras is
entitled to impose daily fines for late delivery of up to 30% of a rig's
operating rate (and, in addition, up to 30% of the
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mobilization fee in the case of the AMETHYST 5). Under these expected delivery
schedules for our rigs, the approximate expected penalties are set forth in the
table below:
EXPECTED NUMBER
OF DAYS LATE PENALTY
---------------------
(IN THOUSANDS)
AMETHYST 4 ............................. 392 $11,147
AMETHYST 5 ............................. 433 12,669
AMETHYST 6 ............................. 293 8,997
AMETHYST 7 ............................. 263 8,429
-----
TOTAL ............................. $41,242
=======
We do not currently anticipate further delays with respect to the AMETHYST
6 or AMETHYST 7, but believe that delays may occur under the construction
contracts for the AMETHYST 4 and AMETHYST 5.
Although the charters permit Petrobras to impose these penalties at the
time of late delivery of our rigs, Petrobras has indicated to us in writing that
it has been its policy to negotiate other forms of payment, such as an agreed
installment plan or the discount of the penalties from the end of the contract.
This policy could change, however, given that Petrobras' board of directors has
recently been replaced by new members. Furthermore, we cannot assure that
Petrobras will not impose such penalties at the time of delivery of our rigs. We
currently do not have a source of funds available to pay such penalties. If we
are unable to pay the penalties as imposed, Petrobras would have a claim against
us and the right to terminate the charters. The imposition of the penalties at
delivery and/or the termination of the charters could have a material adverse
effect on our ability to pay the new notes and other debt obligations.
FOLLOWING CONSTRUCTION AND DELIVERY OF OUR RIGS, OUR REVENUES WILL BE DEPENDENT
ON THE PERFORMANCE BY PETROBRAS UNDER THE CHARTERS.
Following construction and delivery of our rigs, the source of revenue for
payment of the old and new notes and our and our subsidiaries' other debt
obligations will be the payments made by Petrobras under the charters. Any of
the following events could have a material adverse effect on our or our
subsidiaries' ability to meet our respective debt service obligations:
o the material failure by Petrobras to fulfill its obligations under
the charters
o the suspension of Petrobras' obligations under the charters
o termination of the charters upon the occurrence of events specified
in the charters, including delays in delivery, delays or
interruptions in operation of our rigs for specified periods as a
result of specified causes, including FORCE MAJEURE events,
necessary repairs, failure of our rigs to perform in accordance with
minimum requirements or our failure to comply with requirements
imposed by Petrobras inspectors
(You should read the discussions under the headings "Threatened Cancellation of
Our Charters" and "The Petrobras Contracts" under "Business" for further
information regarding the threatened cancellation of our charters and Petrobras'
rights and obligations under the charters.) Similarly, the ability of Petrobras
to interpose defenses to, or avoid its obligation to perform under, the charters
could have a material adverse effect on our ability to repay the old and new
notes and our and our subsidiaries' abilities to repay our respective other debt
service obligations. Any action brought against Petrobras under the Petrobras
contracts would have to be filed in the Brazilian courts. Petrobras has no
obligation to renew the charters after their initial terms and, if renewed, the
charter rates upon renewal will depend on market conditions at the time and may
be substantially lower.
Petrobras has significant cash requirements to service its outstanding
indebtedness and to fund its proposed capital expenditure budget. As described
under the heading "Business--Petrobras," Petrobras must make significant
progress in exploiting its acreage in order to retain exploration and production
rights under recent Brazilian oil and gas sector privatization legislation.
Petrobras' ability to incur indebtedness to meet its funding needs is limited by
the Brazilian government's intent to limit debt of Brazilian state controlled
companies. Petrobras is financing some activities through joint ventures and
other off balance sheet arrangements. Limitations on Petrobras' ability to
finance its capital needs may have an adverse affect on Petrobras and on its
desire to utilize our rigs.
PETROBRAS MAY SEEK TO CANCEL OR RENEGOTIATE CONTRACTS DURING DEPRESSED MARKET
CONDITIONS.
During depressed market conditions like those the deepwater drilling
market is currently experiencing, a customer such as Petrobras may no longer
need a rig or may be able to obtain a comparable rig at a lower daily rate. As a
result, Petrobras may
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pressure us to renegotiate the terms of existing contracts. In addition,
Petrobras may seek to avoid their obligations under existing contracts. Since
December 1998, a number of contracts have been canceled in the drilling
industry, including the Petrobras contracts for the AMETHYST 2 and AMETHYST 3.
If Petrobras cancels one or more of the charters, particularly those for the
AMETHYST 6 and AMETHYST 7, it could have a material adverse effect on our
financial condition and our ability to meet our obligations under the old and
new notes and our subsidiaries' ability to meet their debt obligations. You
should read the discussion under the heading "Business--Threatened Cancellation
of Our Charters" beginning on page 33 for information relating to the threatened
cancellation of our charters.
WE HAVE NO OPERATING HISTORY AND ARE SUBJECT TO ALL OF THE RISKS INHERENT IN THE
ESTABLISHMENT OF A NEW BUSINESS ENTERPRISE.
We were organized in 1998 and have no operating history. We are subject to
all of the risks inherent in the establishment of a new business enterprise. The
development of our business, including construction of our rigs, will require
significant capital expenditures, virtually all of which will be incurred before
the realization of revenue.
WE ARE SUBJECT TO THE HAZARDS OF THE OFFSHORE DRILLING INDUSTRY; OUR INSURANCE
AND INDEMNIFICATIONS MAY NOT BE SUFFICIENT TO COVER ALL OF THESE HAZARDS.
The operation of our rigs involves many risks, including, among other
things, the following:
o loss, breakdown or failure of our rigs or other equipment
o problems of production, rig technology and drilling techniques
o deficiencies in the performance of our rigs
o labor disputes
o delays in obtaining or the inability to obtain necessary permits
o blowouts and well fires
o capsizing, sinking, grounding, collision and damage from severe weather
conditions
o other events, such as fires, hurricanes, storms, unforeseen
environmental or geological problems and changes in applicable laws
The occurrence of any of these events could significantly reduce or
eliminate revenues generated by a rig or significantly increase the expenses of
operating a rig or result in the termination of a rig's charter, thereby
(particularly in the case of the AMETHYST 6 and AMETHYST 7) adversely impacting
our ability to make payments of principal or interest on the old and new notes
and our subsidiaries' ability to meet their debt obligations. While we intend to
maintain insurance to mitigate the effects of various operating risks, not all
risks are insured and the proceeds of such insurance may not be adequate to
cover lost revenues or increased expenses.
We and our affiliates are obligated under the Petrobras charters, the
Mitsubishi and MARAD credit facilities and other documents to obtain and keep in
full force and effect insurance providing coverage for physical damage to our
rigs, liability for bodily injury or property damage to employees, customers and
third parties, business interruptions and other risks inherent in the operation
of our rigs. Under the charters, Petrobras has agreed, in specified
circumstances, to hold harmless our subsidiaries that will own the rigs for any
damages to reservoirs and any damages arising from pollution at the well as a
result of kick or blowout. Petrobras has also agreed to limit the liability of
our subsidiaries for spills of petroleum, oil and other residues, other than
when caused by events arising from kick, blowout, surgings or formation testing,
and for direct losses and damages to the equipment of Petrobras and third
parties and damages to wells. We cannot assure that such insurance coverages
will be available in the future on commercially reasonable terms or that the
amounts for which we are insured or indemnified or which we receive under such
coverages or indemnifications will cover all losses or increased expenses. We
cannot assure that we would not be held jointly liable with Petrobras for
environmental liabilities arising as a result of the operation of our rigs. The
occurrence of a significant environmental or other event against which we are
not fully insured or indemnified or a number of lesser events against which we
are insured but subject to substantial deductibles could materially and
adversely affect our ability to repay the old and new notes and our
subsidiaries' ability to meet their debt obligations.
OUR OPERATIONS ARE DEPENDENT ON HIGHLY SOPHISTICATED, COMPLEX TECHNOLOGY THAT
HAS BEEN DEVELOPED RELATIVELY RECENTLY; THE NEWLY ENHANCED AMETHYST DESIGN HAS
NEVER BEEN UTILIZED FOR DRILLING UNDER ACTUAL OPERATING CONDITIONS AND MAY NOT
PERFORM AS INTENDED.
Our rigs are being constructed using an enhanced Amethyst design for
ultra-deepwater operations in water depths of up to 5,000 feet and will
incorporate various items of specialized drilling and subsea well intervention
and maintenance equipment. Drilling in ultra-deep waters involves highly
sophisticated, complex technology which has been developed relatively recently
and accounts for a relatively small percentage of worldwide petroleum
production. We cannot assure that ultra-deepwater drilling technology will be
economic over time or that it will receive broad application. In particular, the
newly enhanced Amethyst design
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has never been utilized for drilling under actual operating conditions. As with
any newly enhanced design, we cannot guarantee that such equipment will function
properly as a whole when employed on a rig and we cannot fully predict the
performance of each rig under actual operating conditions. Our business and
operating results could be materially and adversely affected if any of our rigs
do not perform as intended under actual operating conditions.
WE DEPEND AND WILL CONTINUE TO DEPEND ON SERVICE PROVIDERS FOR THE CONSTRUCTION
MANAGEMENT, OPERATION AND MAINTENANCE OF OUR RIGS; WE HAVE NO EMPLOYEES AND DO
NOT EXPECT TO HIRE EMPLOYEES.
We will be dependent on Maritima and Pride, directly or through
affiliates, and a third party for the construction management, operation and
maintenance of our rigs. While we may terminate a service contract in the event
of substandard performance by a service provider, we cannot assure that, upon
termination, we will be able to obtain replacement services without significant
delays or at comparable prices. Maritima will provide some services related to
our rigs under the service rendering contracts with Petrobras and will be
entitled to payment of the daily rate payable under the service rendering
contracts. We have no ability to replace Maritima as the service provider under
the service rendering contracts without the consent of Petrobras. A default by
Maritima under a service rendering contract triggers a default under, and a
right of termination of, at Petrobras' option, the corresponding charter. In
addition, the substandard performance by any service provider or the extended
unavailability of services could adversely impact performance of the charters
and entitle Petrobras to terminate the charters. While we will maintain
insurance to mitigate the effects of business interruption, such insurance may
not be sufficient to compensate for lost revenues, increased costs or loss of
hire. Any material breach by the service providers of their respective
obligations could adversely affect our ability to make payments on the old and
new notes and our subsidiaries' ability to make payment under their debt
obligations.
We have no employees and do not expect to hire our own employees for the
foreseeable future. We have contracted with the service providers to provide
experienced construction management personnel, ship crews, base personnel and
oil drilling employees. Some but not all of the oil drilling employees, base
personnel and ship crews have been identified, assembled and hired. Once our
rigs become operational, the service providers expect to employ more than 350
people, including employees directly hired and contracted and, in the case of
service providers that are affiliates of Maritima and Pride, employees seconded
from Maritima and Pride. We cannot assure that there will be an adequate source
of trained personnel available to man our rigs. All seconded and direct
employees of the service providers are expected to be exempt personnel and only
contracted employees are expected to be covered by one or more collective
bargaining agreements. While there is currently no reason to expect the labor
relations of the service providers to be adverse to or disruptive of our
operations, labor conflicts could arise and have a negative impact on our
ability to meet our obligations under the old and new notes and our
subsidiaries' ability to meet their debt service obligations.
OUR OPERATIONS ARE DEPENDENT ON THE OIL AND GAS INDUSTRY AND, SPECIFICALLY,
OFFSHORE DRILLING INDUSTRY.
We expect our rigs to be initially operated under long-term charters. (You
should read the discussion under the heading "Business--Threatened Cancellation
of Our Charters" beginning on page 33 for information relating to the threatened
cancellation of our charters.) Petrobras' continued ability to perform its
obligations under the charters is substantially dependent upon conditions in the
oil and gas industry, including the following:
o oil and gas prices
o expectations about future prices
o the cost of producing and delivering oil and gas
o government regulations
o local and international political and economic conditions, including
the ability of the Organisation of Petroleum Exporting Countries
(OPEC) to set and maintain production levels and prices, the level
of production by non-OPEC countries and the policies of the various
governments regarding exploration and development of their oil and
gas reserves.
In the event of termination or expiration of the initial term of the charters,
our ability to obtain renewals or replacement charters and the rates received in
respect of such charters is also substantially dependent upon conditions in the
oil and gas industry and, specifically, the exploration and production
expenditures of oil and gas companies, the level of offshore oil and gas
drilling activity and the supply of suitable offshore drilling rigs. Until
recently when OPEC imposed more restrictive production quotas on its members,
the offshore contract drilling industry was negatively impacted by lower
world-wide oil prices, the principal effects of which were reduced budgets for
exploration and development, lower utilization of offshore drilling rigs and
lower daily rates. Even with the increased prices that have accompanied OPEC's
action, oil and gas exploration and production activity and capital expenditures
for offshore drilling have not returned to the levels achieved in 1997 and 1998.
We anticipate prices for oil and natural gas will continue to be volatile and
affect the demand for and pricing of our services after the terms of the
charters. A material decline in oil or natural gas prices or activities could
materially adversely affect the demand for our services and, therefore, our
results of operations and financial condition.
21
<PAGE>
Historically, the offshore contract drilling market has been a highly
competitive and cyclical business characterized by high capital costs, long lead
time for construction of new rigs and numerous industry participants, none of
which has a dominant market share. Several drilling contractors are upgrading
existing rigs or constructing new rigs that will be capable of competing with
our rigs. During periods when the supply of rigs exceeds demand, as it currently
does, this competition results in significant downward pressure on the daily
rates at which rigs can be contracted. Offshore drilling rigs have few
alternative uses and, because of their nature and the environment in which they
work, have relatively high costs, whether or not operating. Because rig
operating costs cannot be materially reduced, any reduction in daily rates
adversely affects a drilling contractor's results of operations. Even if there
is an increase in drilling activity, construction of new rigs could continue the
current oversupply of rigs and adversely affect daily rates. Drilling contracts
are usually awarded on a competitive bid basis and, while a customer may
consider factors such as quality of service and type and location of equipment,
as well as the ability to provide ancillary services, price is generally the
primary factor in determining which contractor is awarded a job. Many of our
competitors have greater financial resources and less leverage than we have,
which will enable them to better withstand periods of low rig utilization and to
compete more effectively on the basis of price. Although our rigs are being
built pursuant to Petrobras' specifications, there can be no assurance that,
upon the termination of the charters, then-current market conditions will be
favorable, comparable utilization rates or daily rates will continue or our rigs
will be competitive for Petrobras' needs.
GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL LIABILITIES MAY ADVERSELY AFFECT OUR
OPERATIONS.
We and our service providers must comply with the applicable laws,
regulations and statutory and regulatory standards of Brazil and other
jurisdictions relating to offshore oilfield services and will be subject to
their ongoing application and enforcement. The operation of our rigs will
routinely involve the handling of waste materials, some of which are classified
as hazardous substances. The operation of our rigs will be subject to various
requirements such as laws and regulations that:
o control the containment, disposal and discharge of hazardous
oilfield waste and other nonhazardous waste material into the
environment
o require removal and cleanup relating to the protection of the
environment
o mandate certification, licensing and other requirements imposed by
treaties, laws, regulations and conventions in the jurisdictions in
which our rigs operate
These laws, regulations and requirements potentially expose us to civil
penalties, criminal sanctions and closure orders for non-compliance. Some of
these laws impose joint and several liability, without regard to fault, upon
owners of the related mineral interests and the drilling operator for
environmental damage. We will make substantial expenditures to comply with these
environmental laws. We cannot assure that future environmental costs will not
have a material adverse effect on our results of operations or financial
condition. Since environmental laws are becoming more stringent in Brazil, our
environmental capital expenditures and costs for environmental compliance may be
significant in the future. Also, due to the possibility of unanticipated
regulatory or other developments, the amount and timing of future environmental
expenditures may vary widely from those currently anticipated. The application
of these laws, regulations and requirements or the adoption of new laws,
regulations and requirements could have a material adverse effect on our cash
flow and thus our ability to meet our debt service obligations.
In addition, many permits and regulatory approvals are required for the
operation of our rigs under the laws and regulations applicable to such
operation. Many of these permits are not now required and have not yet been
obtained. Of those permits and approvals which have been obtained, some are
subject to certain conditions. Permits and approvals that are still outstanding
may, when issued, similarly be subject to conditions. Delay in receipt of, or
failure to obtain, these permits or approvals and/or failure to satisfy the
conditions of any permit could delay a rig's construction, restrict its
operation or result in additional costs or additional taxes.
WE HAVE SIGNIFICANT DEBT LEVELS AND DEBT COVENANTS THAT LIMIT OUR ABILITY TO
OBTAIN ADDITIONAL FINANCING AND RESTRICT OUR OPERATIONS.
We are highly leveraged. Our high degree of leverage will have important
consequences, including:
o a substantial portion of net cash provided by operations will be
committed to the payment of our indebtedness, including the old and
new notes
o net cash flow after debt service will be more sensitive to
fluctuations in the prices of its services than a less leveraged
company
o we will be more leveraged than most of our competitors in the
offshore contract drilling business
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o our debt covenants restrict the scope of our business
o our ability to obtain additional financing is limited
You should read the discussions under the headings "Capitalization" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" for information regarding our
capitalization and liquidity.
OUR OPERATIONS GENERALLY DEPEND ON TWO OF OUR OWNERS, MARITIMA AND PRIDE, EITHER
DIRECTLY OR THROUGH AFFILIATES; MARITIMA, PRIDE AND THEIR AFFILIATES MAY HAVE
INTERESTS THAT CONFLICT WITH OUR INTERESTS.
We have numerous contractual relationships with two of our owners,
Maritima and Pride, directly or through affiliates. There can be no assurance
that any of these arrangements provide terms that are as favorable to us as
those that might be obtained from unaffiliated third parties. These arrangements
include but are not limited to the agreements described under "Certain
Relationships and Related Transactions" beginning on page 53. In addition to
their investment in us, Maritima and Pride and their affiliates currently
participate in, and have significant investments in other entities engaged in,
the oil and gas services industry and may in the future participate in and/or
invest in other entities engaged in, the oil and gas services industry or in
related businesses (including entities engaged in business in areas in which we
operate). As a result, Maritima and Pride have, and may develop, relationships
with businesses that are or may be competitive with us. In addition, Maritima
and Pride are under no obligation to offer us any investment or business
opportunities of which they become aware, even if such opportunities are within
our primary objectives. It is not, however, our present intention to pursue any
investment or business opportunities other than the construction, equipping,
mobilization and chartering of the four Amethyst-class semi-submersible drilling
rigs described in this prospectus.
WE ARE A HOLDING COMPANY, SO WE DERIVE ALL OF OUR OPERATING INCOME AND CASH FLOW
FROM PAYMENTS, ADVANCES AND DIVIDENDS FROM OUR SUBSIDIARIES; THE ABILITY OF OUR
SUBSIDIARIES TO MAKE SUCH PAYMENTS, ADVANCES AND DIVIDENDS TO PERMIT US TO REPAY
THE OLD AND NEW NOTES MAY BE LIMITED; THE CLAIMS OF CREDITORS OF OUR
SUBSIDIARIES GENERALLY HAVE PRIORITY OVER YOUR CLAIMS ON THE ASSETS AND EARNINGS
OF OUR SUBSIDIARIES.
We are a holding company. We will derive substantially all of our
operating income and cash flow from payments, advances and dividends from our
subsidiaries. In paying the principal of, premium, if any, and interest on the
old and new notes, we will rely principally on our proportionate share of
payments made in respect of our participations in the Mitsubishi credit
facilities and to a lesser extent on income from dividends or other
distributions from our subsidiaries. The ability of our subsidiaries to make any
such distributions or to repay the Mitsubishi credit facilities may be limited
by their financial condition and requirements for cash to conduct their
operations. The ability of our subsidiaries to pay dividends or make
distributions are restricted under the Mitsubishi and MARAD credit facilities
and may be subject to, among other things, applicable laws and, under certain
circumstances, restrictions contained in joint venture agreements and debt
instruments to be entered into in the future. In the event of any insolvency,
liquidation or reorganization of any of our subsidiaries, any creditors of the
subsidiary, including trade creditors and tort claimants, would be entitled to
payment in full from the assets of the subsidiary before we, as a stockholder,
would be entitled to receive any dividends or other distributions.
The claims of all creditors of our subsidiaries, including trade creditors
and tort claimants, effectively have priority on the assets and earnings of our
subsidiaries over your claims except to the extent of your claim to the assets
securing our participations in the Mitsubishi credit facilities.
IN THE EVENT OF A LIMITED MARKET FOR OUR RIGS, WE MAY SUCCESSFULLY REMARKET THE
AMETHYST 4 AND AMETHYST 5 BUT MAY NOT BE ABLE TO REMARKET THE AMETHYST 6 AND
AMETHYST 7.
In the event of a limited market for our rigs following the termination or
expiration of the Petrobras charters, we may not be able to successfully
remarket all of our rigs. If we successfully remarket either or both of the
AMETHYST 4 and AMETHYST 5 but are not able to remarket either or both of the
AMETHYST 6 and AMETHYST 7, the value of the collateral securing the Mitsubishi
credit facilities (which indirectly secure the old and new notes until the
borrowings under those credit facilities are fully repaid) could be materially
diminished (both in absolute terms and relative to the value of the collateral
securing the MARAD credit facilities). Because the old and new notes rank junior
to all debt of our subsidiaries that own the AMETHYST 4 and AMETHYST 5, we may
not have sufficient funds to repay the old and new notes even though we are
successful in marketing the AMETHYST 4 and AMETHYST 5 and repay all indebtedness
related to those rigs in full.
YOUR ABILITY TO ENFORCE CIVIL LIABILITIES IN BRAZIL, THE BAHAMAS AND THE BRITISH
VIRGIN ISLANDS MAY BE LIMITED.
We and our subsidiaries are incorporated under the laws of the British
Virgin Islands and Petrobras is organized under the laws of Brazil. The charters
and certain other documents related to our rigs, including the service rendering
contracts with Maritima, are governed by the laws of Brazil. Our rigs and the
mortgages on our rigs are or will be registered in the Bahamas.
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Some of our directors and officers, as well as those of our subsidiaries and of
Petrobras, and some of the advisors named in this prospectus reside outside of
the United States. Substantially all of the assets of these individuals and
companies are located outside of the United States. As a result, it may not be
possible for investors to effect service of process within the United States
upon such persons or entities or to enforce judgments against them predicated
upon the federal securities laws of the United States in United States courts.
Bahamian counsel, Higgs & Johnson, British Virgin Islands counsel, Dancia Penn &
Co, and Brazilian counsel, Pinheiro Neto - Advogados (Rio de Janeiro), have
advised that there is uncertainty as to the enforceability (1) in original
actions in Bahamian, British Virgin Islands and Brazilian courts, of liabilities
predicated solely upon the federal securities laws of the United States and (2)
in Bahamian, British Virgin Islands and Brazilian courts, of judgments of United
States courts obtained in actions predicated upon the civil liability provisions
of the federal securities laws of the United States. You should read the
discussion under the heading "Description of New Notes--Enforceability of
Judgments" beginning on page __ for further information regarding the
enforceability of judgments not collectible in the United States.
THE BRAZILIAN GOVERNMENT CONTROLS AND REGULATES PETROBRAS; THROUGH ITS INFLUENCE
OVER PETROBRAS, THE BRAZILIAN GOVERNMENT COULD MATERIALLY AFFECT OUR OPERATIONS.
Petrobras, whose payment obligations under the charters will be the
principal source of funds to pay interest on the old and new notes and our
subsidiaries' debt obligations, is engaged in the petroleum industry, which is
important to the Brazilian economy. Traditionally, the Brazilian government has
exerted considerable influence over its domestic petroleum industry and
Petrobras in particular. We cannot assure that such influence of the Brazilian
government will not have a materially adverse affect on our operations and our
ability to repay the old and new notes.
As of October 29, 1999, the Brazilian federal government owned 84.0% of
the voting shares and 52.9% of the total shares of Petrobras. Petrobras' shares
have not been placed into the Brazilian federal government's privatization
program, and Brazilian law requires the Brazilian federal government to maintain
over 50% of the voting shares of Petrobras. The sale of Petrobras shares is a
sensitive political issue in Brazil, and any such sale likely would be opposed
by various interested parties. The members of the Petrobras board of directors,
who are responsible for the daily management of Petrobras, are appointed by the
President of Brazil. The board of directors of Petrobras has recently announced
that it will adopt a new strategic plan for Petrobras. No assurance can be given
as to the contents of such plan, which may include the sale for cash of
Petrobras' interests in some shallow water and on-land leases.
Petrobras' operations are subject to supervision and regulation by
Brazil's National Petroleum Agency, the government department that, pursuant to
the Brazilian Petroleum Law, is responsible for implementing the Brazilian
government's policies on oil and gas. The National Petroleum Agency holds the
power to award exploration, development and production concessions in Brazil and
regulates all aspects of Petrobras' operations, including imports, exports,
profit margins, payment conditions and prices.
Petrobras is required to submit its annual budget to the Minister of Mines
and Energy through the National Petroleum Agency. Such budget then is submitted
to the Brazilian National Congress for approval. In this way, the Brazilian
government regulates the total level of Petrobras' financing and investment, but
specific application of such funds is left in Petrobras' discretion. The
Ministry of Planning, however, supervises Petrobras' strategic objectives and
planning. In addition, although Petrobras' monopoly on the oil and gas industry
has been terminated, Petrobras continues to be responsible for ensuring that the
supply of oil and oil products in Brazil is sufficient to meet all of Brazil's
consumption requirements until the Brazilian government introduces regulations
for the oil and gas industry. The Brazilian government currently restricts the
export of petroleum from Brazil but announced in May 1999 that it expects to
lift these restrictions in the future.
In the first Brazil exploration license auction round held by the National
Petroleum Agency on June 15 and 16, 1999, 12 out of 27 available blocks were
awarded to foreign exploration companies, including Unocal, Texaco, Exxon, BP
Amoco, Amerada Hess, Kerr McGee and Shell, or to their Brazilian subsidiaries.
Several of these concessions involved partnerships between foreign companies and
Petrobras. The National Petroleum Agency plans to hold a second auction of
offshore oil exploration leases for additional blocks in May 2000. The bidding
rounds implement the National Petroleum Agency's stated policy of terminating
the Petrobras monopoly in oil and gas exploration in Brazil and opening the
industry to foreign investors. The National Petroleum Agency auctions and
subsequent foreign investment are expected to decrease significantly the
dependence of Brazil's offshore exploration market on Petrobras. In addition,
concessions granted by the National Petroleum Agency to Petrobras expire three
years following the grant date unless drilling operations have commenced within
such three-year period.
The rights of Petrobras to the mineral interests that our rigs will be
exploiting and, consequently, the utility of our charters to Petrobras, are
subject to political, economic and other uncertainties, including expropriation,
nationalization, renegotiation or nullification of existing contracts, currency
exchange restrictions and international monetary fluctuations. Neither the
indenture governing the old and new notes nor the instruments governing the
Mitsubishi and MARAD credit facilities require us or our operating subsidiaries,
and we do not intend, to maintain insurance against such risks.
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<PAGE>
OUR OPERATIONS WILL BE SUBJECT TO BRAZILIAN GOVERNMENTAL AND ECONOMIC
UNCERTAINTY.
The Brazilian economy has been characterized by frequent and occasionally
drastic intervention by the Brazilian government. The Brazilian government often
has changed monetary, credit, tariff and other policies to influence Brazil's
economy and politics. The Brazilian government's actions to control inflation
and implement other policies have often involved wage and price controls and
other measures, such as freezing bank accounts and imposing capital controls.
Changes in policies affecting tariffs, foreign ownership or operation of
property, exchange controls, ownership of oil and gas interests, remittances,
and other matters could adversely affect the ability of Petrobras to pay its
obligations under the charters which, in turn, would adversely affect our
ability to repay the old and new notes, as well as the market value and
liquidity of the old and new notes. Similar effects could result from inflation,
changes in trade policy, devaluations of Brazilian currency, social instability,
fluctuations in interest rates and other political, economic or diplomatic
developments and the Brazilian government's response to such developments.
EXTREME INFLATION IN BRAZIL COULD ADVERSELY AFFECT PETROBRAS' ABILITY TO MAKE
PAYMENTS UNDER THE CHARTERS AND, CONSEQUENTLY, OUR ABILITY TO REPAY THE OLD AND
NEW NOTES.
Brazil has historically experienced extremely high rates of inflation.
Inflation and certain governmental measures to combat inflation have in the past
had significant negative effects on the Brazilian economy. Inflation, actions
taken to combat inflation and public speculation about possible future actions
have also contributed significantly to economic uncertainty in Brazil and
heightened volatility in the Brazilian securities markets. Recurrence of such
events could adversely affect Petrobras' ability to make payments under the
charters and, in turn, our ability to repay the old and new notes.
The Real Plan, which was adopted in 1994, is an economic stabilization
plan designed to reduce inflation by reducing certain public expenditures,
collecting liabilities owed to the Brazilian government, increasing tax
revenues, continuing the privatization program and introducing a new currency.
On July 1, 1994, as part of the Real Plan, the Brazilian government introduced
the REAL. Since the REAL's introduction, Brazil's inflation rate has been
substantially reduced (although Brazil has experienced some increased
inflationary pressure since abandonment of the REAL exchange rate band in
January 1999). Inflation, as measured by the INPC/IBGE--National Index of
Consumer Prices, was approximately 1,149% and 2,489% in 1992 and 1993,
respectively, 759% in the first half of 1994 (an annual rate of 7,281%), 19.8%
in the second half of 1994 (an annual rate of 43.5%), 22.0% in 1995, 9.1% in
1996, 4.3% in 1997, 2.5% in 1998 and 7.3% in the first ten months of 1999.
Although the payments by Petrobras under the charters are to be made in U.S.
dollars, there can be no assurance that any future increase in inflation in
Brazil will not adversely affect Petrobras' ability to make such payments.
BRAZILIAN EXCHANGE RATE FLUCTUATIONS COULD ADVERSELY AFFECT PETROBRAS' FINANCIAL
CONDITION AND ITS ABILITY TO MAKE PAYMENTS UNDER THE CHARTERS AND, CONSEQUENTLY,
ADVERSELY AFFECT YOUR INVESTMENTS IN THE OLD AND NEW NOTES.
The relationship of Brazil's currency to the U.S. dollar and of rates of
devaluation of Brazil's currency to prevailing rates of inflation in Brazil may
affect Petrobras' financial condition and its ability to make payments under the
charters. There can be no assurance, therefore, that exchange rate movements
will not adversely affect an investment in the old and new notes.
There are two legal foreign exchange markets in Brazil:
o the commercial rate exchange market
o the floating rate exchange market
The commercial market is reserved primarily for foreign trade transactions and
transactions that generally require prior approval from Brazilian monetary
authorities, such as the purchase and sale of registered investments by foreign
persons and related remittances of funds abroad. Purchases of foreign exchange
in the commercial market may be carried out only through a financial institution
in Brazil authorized to buy and sell currency in that market. The rate in the
floating market generally applies to transactions to which the rate in the
commercial market does not apply. Prior to the implementation of the Real Plan
by the Brazilian government the commercial market rate and the floating market
rate differed significantly at times. Since the introduction of the REAL, the
two rates have not differed significantly, although there could be substantial
differences between the two rates in the future. Both the commercial market rate
and the floating market rate are freely negotiated but are strongly influenced
by the Brazilian Central Bank. Both the commercial market rate and the floating
market rate are reported by the Brazilian Central Bank on a daily basis.
On August 1, 1993, the CRUZEIRO REAL replaced the CRUZEIRO as the unit of
Brazilian currency, with each CRUZEIRO REAL being equal to 1,000 CRUZEIROS. In
December 1993, the Brazilian government began implementation of the Real Plan,
which was intended to reduce inflation. On July 1, 1994, the REAL replaced the
CRUZEIRO REAL as the unit of Brazilian currency, with each REAL being equal to
2,750 CRUZEIROS REAIS and having an exchange rate of R$1.00 to $1.00. According
to Brazilian law, the issuance of REAIS is controlled by quantitative limits
backed by a corresponding amount of U.S. dollars in reserves, but the Brazilian
government
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subsequently expanded those quantitative limits and allowed the REAL to float,
with parity between the REAL and the U.S. dollar (R$1.00 to $1.00) as a ceiling.
From its introduction through March 1995, the REAL appreciated against the
U.S. dollar. On March 6, 1995, in an effort to address concerns about the
overvaluation of the REAL relative to the U.S. dollar, the Brazilian Central
Bank introduced new exchange rate policies that established a band within which
the REAL/U.S. dollar exchange rate could fluctuate and announced that it would
intervene in the market and buy or sell U.S. dollars whenever rates approached
the upper or lower limit of the band. Until January 1999, the Brazilian Central
Bank had periodically adjusted the exchange rate band to permit the gradual
devaluation of the REAL against the U.S. dollar. The Brazilian Central Bank
abandoned the exchange rate band in January 1999 and introduced a floating
exchange rate mechanism. Since then, the Brazilian Central Bank has periodically
intervened in the foreign exchange market by buying and selling U.S. dollars to
prevent extreme exchange rate fluctuations.
The following table sets forth information on the Commercial Market Rate
for U.S. dollars for the periods and dates indicated. Amounts expressed in REAIS
have been translated from the predecessor currencies in effect during the
relevant period at the rates of exchange at the time the successor currency took
effect.
EXCHANGE RATES OF BRAZILIAN CURRENCY PER DOLLAR(1)
- - --------------------------------------------------
YEAR ENDED DECEMBER 31, PERIOD END AVERAGE(2) LOW HIGH
- - ----------------------- ---------- ---------- --- ----
1992............................ 0.0045 0.0016 0.0001 0.0045
1993............................ 0.1165 0.0325 0.0045 0.1168
1994............................ 0.8452 0.6419 0.1203 1.0000
1995............................ 0.9720 0.9171 0.8332 0.9790
1996............................ 1.0391 1.0047 0.9712 1.0411
1997............................ 1.1160 1.0778 1.0391 1.1161
1998............................ 1.2082 1.1604 1.1160 1.2082
1999 (through September 30, 1999) 1.9223 1.7833 1.2072 2.1850
- - -----------
(1) The information set forth above is based on information published by Factset
Data Systems.
(2) Simple daily average for the period.
THE BRAZILIAN GOVERNMENT MAY RESTRICT THE REMITTANCE OF U.S. DOLLARS FROM BRAZIL
FOR THE PURPOSE OF MAKING PAYMENTS UNDER THE CHARTERS OR THE CONVERSION OF
BRAZILIAN CURRENCY INTO U.S. DOLLARS; THESE RESTRICTIONS WOULD ADVERSELY AFFECT
OUR ABILITY TO REPAY THE OLD AND NEW NOTES.
Brazilian law provides that whenever there is a serious imbalance in
Brazil's balance of payments or reason to foresee a serious imbalance, the
Brazilian government may impose temporary restrictions on the remittance to
foreign investors of proceeds from their Brazilian investments (as it did for
approximately six months in 1989 and early 1990) and the conversion of Brazilian
currency into foreign currencies. Such restrictions may hinder or prevent the
conversion of Brazilian currency into U.S. dollars and the remittance of U.S.
dollars for the purpose of making payments under the charters. These
restrictions would adversely affect our ability to repay the old and new notes.
You could be adversely affected by such restrictions and any delay in, or
refusal to grant, any required governmental approval for conversion of Brazilian
currency payments and remittances abroad.
Pursuant to Brazilian law, the charters must be approved by, and the
scheduled payments to be made under the charters must be registered with, the
Central Bank to permit the remittances outside Brazil of U.S. dollars. It will
thus be necessary for the Central Bank to issue a Certificate of Registration
authorizing each of the scheduled payments under the charters, pursuant to which
Petrobras will, assuming the availability of foreign exchange, be able to
convert Brazilian currency into U.S. dollars and remit such U.S. dollars to the
restricted accounts established under the Mitsubishi and MARAD credit
facilities. There can be no assurance that we will be able to obtain such
Certificate of Registration from the Central Bank, or, if such Certificate of
Registration is obtained, that foreign exchange will be available for Petrobras
to make payments under the charters in U.S. dollars. In addition, there can be
no assurance that this procedure for converting Brazilian currency into U.S.
dollars will not be affected by future legislative changes or that additional
Brazilian restrictions adversely affecting you will not be imposed in the
future, and there can be no assessment of the duration or impact of such
restrictions if they are imposed.
THE MARKET FOR THE OLD AND NEW NOTES AND OUR ABILITY TO REPAY THE OLD AND NEW
NOTES COULD BE ADVERSELY AFFECTED BY DEVELOPMENTS IN EMERGING-MARKET COUNTRIES.
The market for securities of issuers dependent on the Brazilian economy
is, to varying degrees, affected by economic and market conditions in other
emerging-market countries. Although economic conditions are different in each
country, investors'
26
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reactions to developments in one country can affect the creditworthiness of
other countries, including Brazil, or issuers relying on payments from others
that hold assets in such countries, such as us. For example, in December 1994,
the Mexican government sharply devalued the peso and allowed its value to float,
thereby setting off an economic crisis in Mexico. The Mexican currency
devaluation negatively affected the securities markets in many Latin American
countries, including Brazil. Similarly, the Brazilian financial and securities
markets also experienced significant disruptions, U.S. dollar outflows and
volatility as a result of the recent turmoil in the Asian markets. The Brazilian
government responded with a package of austerity measures for fiscal adjustment,
including public spending cuts and tax increases, and the Central Bank increased
domestic interest rates, which has substantially increased the cost of credit to
Brazilian companies. We cannot assure that similar or other disruptions in other
emerging markets will not cause a recurrence of such volatility in Brazilian
markets or that such volatility will not be accompanied by adverse effects on
the Brazilian economy, the ability of Petrobras to pay its obligations under the
charters, our subsidiaries' ability to repay borrowings under the Mitsubishi and
MARAD credit facilities and our ability to repay the old and new notes and/or
the market value or liquidity of the old and new notes.
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<PAGE>
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes.
In consideration for issuing the new notes, we will receive in exchange an equal
principal amount of the old notes. The old notes surrendered in exchange for the
new notes will be retired and canceled and cannot be reissued. The issuance of
the new notes, therefore, will not result in any change in our capitalization.
We used the $50.9 million of net proceeds from the sale of the old notes,
cash on hand and additional funds provided by Pride and Maritima to purchase an
aggregate $100.0 million of fully drawn participations in the Mitsubishi credit
facilities, consisting of a $47.0 million participation in the AMETHYST 6 credit
facility and a $53.0 million participation in the AMETHYST 7 credit facility.
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
September 30, 1999 and as adjusted to give effect to the issuance of the old
notes and the application of the net proceeds from the sale of the old notes,
cash on hand and additional funds provided by Pride and Maritima. The issuance
of the new notes will not result in any change in our capitalization.
You should read this table in conjunction with "Summary Consolidated
Financial Data," "Use of Proceeds," "Selected Historical Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operation," the financial statements and related notes and other financial and
operating data included elsewhere in this prospectus.
AS OF SEPTEMBER 30, 1999
-----------------------------
ACTUAL AS ADJUSTED
------------- --------------
(IN THOUSANDS)
Cash, Cash Equivalents and Restricted Cash....... $ 40,599 $ 599
======== ========
Related Party Advances........................... $ 29,191 $ 38,291(1)
Long-Term Debt:
Senior Secured Notes.......................... - 53,000
Mitsubishi Financing.......................... 154,300 54,300(2)
MARAD Financing............................... 81,324 81,324
-------- --------
Total Long-Term Debt............................. 235,624 188,624
Shareholders' Equity
Common Stock, 10,500 shares, par value $1.00
per share..................................... 11 11
Additional Paid-in Capital.................... 104,989 104,989
Surplus Accumulated in the Development Stage.. 1,008 1,008
-------- --------
Total Shareholders Equity........................ 106,008 106,008
-------- --------
Total Capitalization............................. $370,823 $332,923
======== ========
- - ----------------------------------
(1) Represents advances by Pride and Maritima. The as adjusted amount reflects
an increase of $9.1 million utilized, together with cash on hand, to
acquire the balance of participations in the Mitsubishi credit facilities
not funded by the net proceeds from the sale of the old notes.
(2) The as adjusted amount reflects the issuance of the old notes and the
application of the net proceeds from the sale of the old notes, cash on
hand and additional funds provided by Pride and Maritima to purchase fully
drawn participations in the Mitsubishi credit facilities in the amount of
$100.0 million.
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SELECTED HISTORICAL FINANCIAL DATA
The following selected consolidated financial information as of the dates
and for the periods indicated has been derived from our December 31, 1998
consolidated financial statements and our September 30, 1999 unaudited interim
consolidated financial statements included elsewhere in this prospectus. It is
not complete and may not contain all of the information that you should
consider. You should read this information in conjunction with the entire
prospectus, including the discussion under the heading "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
consolidated financial statements and related notes included elsewhere in this
prospectus. We have no operating history and no operating revenue, and we have
been in the development stage since our formation. No ratio of earnings to fixed
charges has been computed since it would not be meaningful.
INCEPTION NINE MONTHS
(MARCH 27, 1998) ENDED
TO DECEMBER 31, 1998 SEPTEMBER 30, 1999
-------------------- ------------------
(IN THOUSANDS)
Consolidated Statement of Income
Data:
Net income $ 58 $ 950
Other Data:
Capital expenditures $ 210,526 $ 125,798
Consolidated Balance Sheet Data
(at end of period):
Cash and cash equivalents $ 18,172 $ 13,293
Restricted cash - 27,306
Total assets. 343,080 447,945
Long-term debt 94,738 235,624
Shareholders' equity. 59 106,008
Consolidated Statement of Cash
Flows Data:
Investing Activities $ (210,526) $ (125,798)
Financing Activities 228,640 119,969
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis in conjunction with
the consolidated financial statements and related notes included elsewhere in
this prospectus.
OVERVIEW
We were organized in 1998 to construct, equip, own and charter our rigs.
Since inception, we have been in the development stage and have had no operating
revenues. An aggregate of approximately $336.3 million had been expended on
construction and equipping of our rigs through September 30, 1999. We estimate
that the total cost of constructing, equipping and mobilizing our rigs will be
approximately $655.8 million, including contingencies but excluding late
delivery penalties and financing costs. We had a consolidated net worth of
approximately $106.0 million as of September 30, 1999.
Each of our subsidiaries has been formed as a British Virgin Islands
company with limited liability to construct, equip, own and operate one of our
rigs. As of the date of this prospectus, none of our subsidiaries have any
operating history.
We have entered into service agreements with Maritima and Pride, two
of our owners, their affiliates and Workships for the construction management,
operation and maintenance of our rigs. You should read the discussion under the
headings "Business--Construction Management," "Business--Operating Management"
and "Certain Relationships and Related Transactions" for a description of these
agreements.
RESULTS OF OPERATIONS
Since our inception, we have engaged in no operations other than managing
construction of our rigs and related matters. To date, we have not generated any
operating revenues.
Owing to our lack of operating history, our historical results of
operations are not meaningful or indicative of future results. Our results of
operations in the future will depend on the construction of and earnings from
our rigs and our level of operating expenses.
During the last quarter of 1997, 1998 and the first three quarters of
1999, Maritima and Pride, their affiliates and we have focused our efforts on
the following:
o completing basic engineering, design and financing for our rigs
o designing implementation strategies for constructing, equipping and
mobilizing our rigs
o developing basic policies and operating procedures to govern the
start-up of operations
o structuring our organization and management
o selecting shipyards
o placing orders for owner-furnished equipment
o managing the construction of our rigs
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1999, we had cash on hand (including restricted cash)
of $40.6 million. Of such amount, $40.0 million, together with the $50.9 million
net proceeds of the sale of the old notes and an additional $9.1 million
provided by Maritima and Pride, were used to purchase an aggregate $100.0
million of participations in the Mitsubishi credit facilities.
The indenture for the old and new notes, the Mitsubishi credit facilities
and the MARAD credit facilities place significant limitations on the use of
funds that we now hold and that we may generate in the future.
We estimate that the total cost of constructing, equipping and mobilizing
our rigs will be approximately $714.3 million, including $46.8 million for
contingencies and $58.5 million for construction period interest but excluding
aggregate late delivery penalties currently estimated to be approximately $41.2
million.
As of September 30, 1999, an aggregate of $336.3 million had been expended
on construction and equipping of our rigs, including aggregate payments to
shipyards of $152.4 million and aggregate payments to suppliers of
owner-furnished equipment of $108.8 million. As of such date, $81.3 million had
been drawn on the MARAD credit facilities and $154.3 had been drawn on the
Mitsubishi credit facilities, leaving us additional borrowing capacity of $218.5
million under the MARAD credit facilities and $185.7 million under the
Mitsubishi credit facilities. The total additional borrowing capacity under the
MARAD and Mitsubishi
30
<PAGE>
credit facilities of $404.2 million, together with the $336.3 million expended
to date, yields a total of $740.5 million, representing an excess of $26.2
million over the total estimated cost of constructing, equipping and mobilizing
our rigs. This excess may be applied toward our working capital needs.
We currently contemplate that our current sources of funds will be
sufficient to fund the remaining development, construction, equipment,
mobilization and financing costs of our rigs and any working capital needs
during the construction, mobilization and start-up periods, based on the
assumption that any penalties which may be imposed by Petrobras under the
charters for late delivery of our rigs will not be imposed at the time of
delivery of our rigs. We currently have no other source of funds to pay such
penalties unless such funds are contributed by our owners in their sole
discretion.
Following delivery of our rigs to Petrobras and commencement of operations
under the charters, our subsidiaries are to receive the operating rates and
other amounts payable under the charters. In addition, Maritima is to receive
and make available to us the operating rates and other amounts payable under the
service rendering contracts, which have been committed entirely to pay local
currency expenses incurred in operating our rigs. You should read the discussion
under the heading "Business--Threatened Cancellation of Our Charters" beginning
on page 33 for information about contingencies related to the commencement of
operations under the charters.
In the event we lack sufficient funds to carry out our current operating
plan, we may seek to raise additional capital, either from our owners or other
public or private capital markets. We may also seek additional funding through
strategic partnerships and other financing mechanisms. We cannot assure that
such funding will be available on terms acceptable to us or allowable under the
indenture. If adequate funds are not available, we may be required to curtail
significantly the construction of one or more of our rigs or to obtain funds on
terms which are not optimal. Moreover, we may choose to raise additional capital
due to market conditions or strategic considerations even if we continue to have
sufficient funds for our current operating plan.
You should read the discussion under the heading "Description of New
Notes--Certain Covenants--Limitations on Indebtedness" for information regarding
some of the limitations on our ability to incur additional debt.
We anticipate that we will be required to refinance the old and new notes
at maturity through the issuance of new indebtedness. We cannot assure that such
refinancing will be available on terms acceptable to us.
We analyzed our year 2000 compliance and we do not expect to incur
business interruptions or material costs in this regard.
31
<PAGE>
BUSINESS
ABOUT AMETHYST FINANCIAL COMPANY LTD. AND SUBSIDIARIES
We were formed in 1998 to construct, own and operate four enhanced
Amethyst-class drilling rigs consisting of the AMETHYST 4, AMETHYST 5, AMETHYST
6 and AMETHYST 7. Each rig is a dynamically positioned, self-propelled,
fourth-generation semi-submersible rig capable of performing drilling and subsea
well intervention and maintenance services in water depths of up to 5,000 feet.
By owning and operating the rigs, we expect to become a significant provider of
deepwater (depths greater than 1,300 feet) drilling and related services in the
Brazilian market, one of the largest deepwater drilling markets in the world.
Each rig is currently under construction and, once completed, will be owned by
one of our four wholly owned subsidiaries. The subsidiaries have entered into
contracts denominated in U.S. dollars to charter the rigs to Petroleo Brasileiro
S.A.--Petrobras, the Brazilian national oil company, for initial terms ranging
from six to eight years. (You should read the discussion under the heading
"--Threatened Cancellation of Our Charters" beginning on page 33 for information
relating to the threatened cancellation of our charters.) Our four rigs
represent approximately 18% of the deepwater, dynamically positioned units
currently contracted by Petrobras to conduct exploration, development and well
service activities offshore Brazil.
Our registered office is located at Amethyst Financial Company Ltd., c/o
Arias Fabrega & Fabrega Trust Co. BVI Limited, 325 Waterfront Drive, Omar Hodge
Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, British Virgin Islands.
ABOUT OUR OWNERS
We are owned 61.7% by affiliates of Maritima, 26.4% by an indirect wholly
owned subsidiary of Pride and 11.9% by two investment partnerships managed by
First Reserve Corporation. Maritima and Pride, directly or through affiliates,
have primary contractual responsibility for our operations. Both companies have
significant experience in the construction, operation, management and marketing
of offshore drilling rigs, vessels and related offshore equipment.
The following chart depicts our ownership structure and the principal
agreements relating to the construction and operation of our rigs:
<TABLE>
<CAPTION>
<S> <C>
------------ ------------ ------------
| Maritima | | Pride | | First |
|Affiliates| |Affiliates| | Reserve |
------------ ------------ | Funds |
61.7% | | 26.4% ------------
| | | 11.9%
| | |
-----------------------------------------------
| Amethyst Financial |
| Company Limited |
-----------------------------------------------
| 4 Licensing Agreements ----------------
| --------------------------------------- |Maritima/Pride|--| 2 Marine
| 100% | 4 Construction Management Agreements |Affiliates | | and
| |-------------------------------------- ---------------- | Nautical
--------------------------| 4 Management Agreements ----------- |Agreements
| Four Special Purpose |-------------------------------------- |Workships|--------
| Companies |2 Marine & Nautical Service Agreements -----------
- - ----------- 4 Construction Contracts |are constructing and will|-------------------------------------- ----------
|Shipyards|--------------------------| own and operate the rigs| 4 Charters |Petrobas|
- - ----------- --------------------------|-------------------------------------- ----------
| 4 Service
|Rendering Contracts
-----------
| Maritima|
-----------
</TABLE>
MARITIMA
Maritima is a privately owned company headquartered in Rio de Janeiro. It
provides a range of services and equipment to companies participating in the oil
and gas exploration and production sector in Brazil. Maritima's development has
been marked by its relationship with Petrobras. Since 1981, Maritima and its
affiliates have participated in approximately 30 major projects for Petrobras,
ranging from rig and vessel acquisitions, upgrades and conversions to providing
local support services for offshore rig operations. Maritima and its affiliates
have typically participated in these projects through joint ventures,
consortiums and joint operating and agency relationships with leading
international drilling and marine construction companies such as:
o Pride
o Diamond Offshore Drilling, Inc.
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<PAGE>
o Falcon Drilling Company, Inc. (now part of R&B Falcon Corporation)
o Stena Offshore Ltd.
o Mitsui Offshore Development and Engineering Company (MODEC) Inc.
o Astilleros Espanoles S.A.
Maritima currently provides shore-based facilities and local logistical
support for the AMETHYST 1 and the NYMPHEA, a third-generation semi-submersible
drilling rig. Like the AMETHYST 1, the NYMPHEA currently operates offshore
Brazil under a long-term contract with Petrobras. In addition, Maritima and its
affiliates currently are managing or recently have completed the conversion of
four vessels or semi-submersible platforms for Petrobras to be used as floating
production and storage units offshore Brazil. These projects are expected to
represent approximately 480,000 barrels per day of new production capacity for
Petrobras.
PRIDE
Pride is a public company listed on the New York Stock Exchange
headquartered in Houston, Texas. It is a leading international provider of
contract drilling and related services, operating both offshore and on land.
Pride has focused its growth strategy on the higher margin offshore and
international drilling markets. Pride is one of the largest and most diversified
drilling contractors in the world. It operates a global fleet of 320 rigs,
including two drillships, three semi-submersible rigs and 52 other offshore
drilling and workover rigs. Pride's deepwater fleet includes the
semi-submersibles AMETHYST 1, NYMPHEA and SOUTH SEAS DRILLER and, through a
51%-owned joint venture, the PRIDE AFRICA and the PRIDE ANGOLA, each of which is
an ultra-deepwater dynamically positioned drillship. Through its subsidiary
Pride-Foramer S.A., Pride has participated in the design and construction of
four drillships and two semi-submersible rigs in addition to the PRIDE AFRICA,
PRIDE ANGOLA and the four new Amethyst-class rigs and has drilled 47 wells in
water depths greater than 1,300 feet. Pride-Foramer has extensive experience
operating offshore Brazil, having drilled at least 15 wells offshore Brazil in
water depths ranging between 1,900 and 3,300 feet and having participated in
several major discoveries in the Campos Basin.
FIRST RESERVE
First Reserve is a private equity firm specializing in the energy
industry. Founded in 1980, the firm has offices in Houston, Texas, Greenwich,
Connecticut and Denver, Colorado and manages a portfolio of energy holdings with
a market value in excess of $1.5 billion. First Reserve has significant
experience as a principal investor in oilfield service companies. Its portfolio
companies include Pride, CalDive International, Weatherford International, Inc.,
and National Oilwell, Inc. Two investment partnerships managed by First Reserve
invested an aggregate $12.5 million in cash in our common equity in September
1999 in exchange for an 11.9% interest. Such investment will be exchangeable
after three years (or earlier in certain events), at First Reserve's option, for
shares of Pride common stock and Pride, in turn, will have the option to acquire
the First Reserve interest for cash or Pride common stock once such interest
becomes exchangeable for Pride stock. If either of such options is exercised,
Maritima will have the right to purchase from Pride such portion of the First
Reserve interest as will enable Maritima to maintain ownership of 70% of the
combined interests of Maritima and Pride.
THREATENED CANCELLATION OF OUR CHARTERS
If the shipyards deliver our rigs on the construction contract delivery
dates and our mobilization time to Brazil does not exceed our allowance for
mobilization, we will deliver our rigs to Petrobras between 263 and 433 days
after the delivery dates set forth under their respective charters with
Petrobras. (We currently anticipate that the AMETHYST 6 and AMETHYST 7 will be
delivered by Daewoo on or before the delivery dates set forth in the Daewoo
construction contracts, but that the AMETHYST 4 and AMETHYST 5 may be delivered
by TDI-Halter up to two months later than the delivery dates set forth in the
TDI-Halter construction contracts.) While each charter states that it may be
canceled by Petrobras if the chartered rig is not delivered within 180 days
after the delivery date specified, Petrobras, on May 28, 1998, provided a letter
waiving its right to cancel the charters and related service rendering contracts
on the basis of late delivery unless the delay exceeds 540 days and, even then,
only if best endeavors to make delivery are not being made. On October 13, 1999,
Maritima received a letter from Petrobras stating that Petrobras will cancel the
charters and service rendering contracts for our rigs when delay in delivery
exceeds 180 days as specified in the charters. In its letter, Petrobras also
reserved its right to seek compensation for damages. By threatening to cancel
the charters if delay in delivery exceeds 180 days, Petrobras indicated an
intent contrary to its May 1998 letter. Our Brazilian counsel, Pedro Calmon
Filho & Associados, has informed us that Petrobras' May 1998 letter extending
the permitted delay in delivery is an enforceable obligation of Petrobras;
however, specific performance of Petrobras' obligations under the charters may
not, as a practical matter, be an available remedy, and our rights against
Petrobras could be limited to a lawsuit for damages. The result of any such
lawsuit is uncertain, the amount of damages may be limited and any recovery may
be subject to extensive delays.
If Petrobras follows through with its threat and cancels the charters for
our rigs, such cancellation would constitute an event of default under the
credit facilities that are providing substantially all of the financing for
construction of our rigs. Since being informed of Petrobras' October 13 letter,
the credit facility lenders have continued to fund our construction draws. Based
on
33
<PAGE>
Petrobras' October 13 letter, however, the credit facility lenders may, at their
discretion, cease funding construction, in which event we would not be able to
complete construction of the rigs unless we obtain new funding from other
sources or an agreement of the credit facility lenders to resume funding on
terms acceptable to them.
Based on its announced deepwater drilling program and the performance
characteristics of the Amethyst design, we believe that Petrobras has
significant needs for our rigs. We further believe that, while Petrobras may
seek to renegotiate certain of the terms of our charters as part of a settlement
of the claims described below in respect of charters for two other
Amethyst-class rigs, there is significant likelihood that Petrobras will not
ultimately cancel our charters. There can be no assurance, however, that this
will be the case.
We believe Petrobras' letter of October 13, 1999 threatening cancellation
of the charters for our rigs was sent in response to claims made by Maritima and
our construction manager, Petrodrill Engineering N.V., in connection with the
cancellation by Petrobras of the charters for two other rigs, the AMETHYST 2 and
AMETHYST 3, that were being constructed concurrently with our rigs. Petrobras
initially awarded Maritima charters for six Amethyst-class rigs, the AMETHYST 2
and AMETHYST 3 and our four rigs. Maritima and Pride organized a joint venture
company, Petrodrill Offshore Inc., with six subsidiaries to own and charter the
rigs to Petrobras. The AMETHYST 2 and AMETHYST 3 were to have commenced
operations in the Campos Basin in late 1999 and early 2000, but the construction
contracts for those two rigs were terminated in November 1998 after the shipyard
at which the rigs were to be constructed filed for protection from its
creditors. In May 1999, Petrobras canceled the charters and service rendering
contracts for the AMETHYST 2 and AMETHYST 3 based on alleged late delivery.
Maritima and Petrodrill Engineering submitted letters to Petrobras alleging that
Petrobras' termination of the charters and service rendering contracts for the
AMETHYST 2 and AMETHYST 3 was wrongful. Petrodrill Engineering's letter asserts
that, because of Petrobras' May 1998 letter, Petrobras had waived its right to
cancel the charters and service rendering contracts unless the delay in delivery
exceeded at least 540 days. In addition, Maritima's letter asserts that the work
stoppage resulting from the bankruptcy of the shipyard for the AMETHYST 2 and
AMETHYST 3 was a FORCE MAJEURE event that did not permit termination and,
further, that the joint venture was prepared to fulfill the contracts by
contracting other available rigs to replace the AMETHYST 2 and AMETHYST 3. The
letters to Petrobras specify damages of approximately $95 million, none of which
involve claims made by us or on our behalf.
Following termination of the construction contracts for the AMETHYST 2 and
AMETHYST 3, Petrodrill Offshore transferred the shares of each of its six
subsidiaries to us for nominal consideration, and we transferred the shares of
the subsidiaries that held the charters for the AMETHYST 2 and AMETHYST 3 to a
separate joint venture company owned by Maritima and Pride. Petrodrill Offshore
has reached agreement with the prime contractor and its affiliates for the
settlement of all claims relating to the construction contracts for the AMETHYST
2 and AMETHYST 3 and their termination. Neither we nor any of our subsidiaries
were or are a party to any of the claims or disputes relating to termination of
these construction contracts.
PETROBRAS
Petrobras, the Brazilian national oil company, is a mixed-capital but
state-controlled integrated oil and gas corporation. As measured by the
Petroleum Intelligence Weekly composite index, which includes reserves, output,
refinery capacity and product sales by volume, Petrobras ranked 14th among all
oil and gas companies in the world based on 1997 data. Petrobras is among the
world's leading users of deepwater technology for oil and gas production. In
1999, Petrobras estimates that it will produce an average of 1.3 million barrels
of oil equivalent per day increasing to 2.5 million barrels of oil equivalent
per day in 2005. Much of the increase is attributable to deepwater reserves.
Petrobras has estimated that the proportion of its proven oil reserves located
in deep water (depths greater than 1,300 feet) is approximately 77% of its total
proven oil reserves in December 1998. Petrobras' ultra-deepwater (depths greater
than 3,300 feet) proven reserve base composes 30% of its total proven oil
reserves at December 1998. Petrobras expects that its planned deepwater
exploration and development activities will give rise to further growth in
demand for drilling and subsea well intervention and maintenance services
offshore Brazil as these proven oil reserves become on-line production.
Brazil's oil and gas operations were closed to foreign participants from
the 1950's until recently. Brazil's new Petroleum Law, however, required
Petrobras to relinquish to the National Petroleum Agency exploration and
production rights on any acreage on which Petrobras had not achieved production,
made commercial discoveries or made exploration investments to the extent that
Petrobras did not have the investment and financing capacity to develop such
assets. In January 1999, Brazil's National Petroleum Agency announced a plan to
auction licenses to exploration and development blocks offshore Brazil. Those
blocks have begun to be and will continue to be auctioned to participating
international bidders. In addition, the new Brazilian Petroleum Law has limited
Petrobras to a three-year exploration and development period for retained
undeveloped acreage, after which, only if successful, Petrobras will be allowed
to maintain its rights to such acreage and proceed with production. Petrobras
expects that it will need to increase the number of offshore drilling rigs that
it has operating under contract in order to be able to drill such acreage
successfully within the three-year exploration period. To increase its
development capacity, Petrobras has, in addition, entered into more than 20
joint venture contracts with partners such as Exxon, Texaco, YPF (Repsol), Santa
Fe Energy, Coastal, Unocal, British Borneo, Amerada Hess, Kerr McGee, Shell and
Mobil.
34
<PAGE>
OUR RIGS
Our rigs will be enhanced Amethyst-class, dynamically positioned,
self-propelled, fourth-generation semi-submersible rigs capable of performing
drilling and subsea well intervention and maintenance services in water depths
of up to approximately 5,000 feet. Our rigs are being constructed using the
enhanced Amethyst design, which incorporates state-of-the-art technology for
deepwater drilling to create a compact, multi-functional, self-propelled rig
that we believe offers a cost-effective alternative to larger, more costly rigs
and vessels. Our rigs will be enhanced versions of the AMETHYST 1, which since
1996 has been conducting subsea well intervention and maintenance services for
Petrobras under a contract that expires in 2001.
Semi-submersible rigs are large floating platforms supported by a number
of columns. At the bottom of the columns, the rigs typically have two
ship-shaped hulls, or pontoons. When the rigs are in motion, the columns are
raised, so that only the hulls are in the water, thereby maximizing transit
speeds. Upon reaching their operating location, the hulls are filled with
ballast, and the rigs sink down, so approximately half the columns are in the
water. At this point, the rigs are said to be "semi-submerged," remaining afloat
in a position where the lower hull is below the water line, and the upper deck
protrudes well above the surface. This semi-submerged position provides
stability to the rigs, allowing drilling operations to be carried out in winds
of significant force and wave heights of significant magnitude. Semi-submersible
rigs can be used in areas where weather conditions are poor and water is too
deep for jack-up rigs. While some larger dynamically positioned
semi-submersibles are capable of working in water depths greater than 5,000
feet, the majority of existing semi-submersibles are conventionally moored and
are limited to a working water depth of no more than 3,000 feet.
Being "dynamically positioned," our rigs will not require a fixed mooring
system to stay in position while drilling in the seabed but will, instead, rely
on eight 2,100 horsepower omnidirectional thrusters mounted on the bottom of its
pontoons to remain in position. The dynamic positioning control system will be
fully redundant and will meet all current class requirements for dynamically
positioned operations. Our rigs are designed to be able to conduct drilling
operations in winds of up to 47 knots and wave heights of up to 42 feet when
semi-submersed. Our rigs' dynamic positioning capability will offer them an
advantage over moored rigs that require anchor chains and heavy anchors to
remain on location. The weight of anchors and anchor chains limits a moored
rig's water depth operating capability. In addition, in some areas, like
offshore Brazil, moored units may not be practical due to the presence of
extensive subsea production networks that could be damaged by anchors.
The main working platform of each rig will measure approximately 240 by
160 feet. When in operation, each rig's four columns will support the rig's
platform at approximately 23 feet above the water level. When the rig moves on
its twin pontoons, which will be approximately 250 feet long and 48 feet wide,
the rig's platform will remain approximately 60 feet above water. Each rig will
be self-propelled, capable of moving at speeds of up to 9 knots, and will weigh
approximately 11,000 tons. We believe that these characteristics will enable our
rigs to move between jobs more readily and efficiently than more typical larger,
heavier units that require a tow. In addition, we expect that the smaller size
and weight of our rigs will make them less costly to construct and operate than
traditional, large-displacement semi-submersible rigs.
We expect that our rigs' ability to stay on location and operate in
inclement wind and wave conditions despite their compact size and light weight
will enable them to operate in most offshore oil and gas producing regions in
the world.
The AMETHYST 4, AMETHYST 6 and AMETHYST 7 initially will be equipped to
conduct drilling and subsea well intervention and maintenance services while the
AMETHYST 5, in accordance with its charter, will be initially equipped to
conduct subsea well intervention and maintenance services only. We expect that
the cost of equipping the AMETHYST 5 for drilling services would total
approximately $2.5 million based on current cost. Our rigs will be equipped to
operate in up to 4,000 feet of water. We estimate that the cost of equipping our
rigs to operate in 5,000 feet rather than 4,000 feet would be approximately $2.0
million each based on current cost.
Each rig will be equipped with engines having approximately 28,000
aggregate horsepower to drive the thrusters and operate the drilling and other
equipment. This power will permit our rigs to conduct drilling and subsea well
intervention and maintenance operations at depths of up to approximately 20,000
feet. In addition, each rig will be able to carry a minimum of 3,200 tons of
equipment for drilling or subsea well intervention and maintenance operations in
its columns and on the main deck and will be able to accommodate an operating
crew of up to 115 people in one and two-man cabins.
Although they are being constructed by two different shipyards, all of our
rigs (other than the AMETHYST 5, which will not initially be outfitted for
drilling) and their owner-furnished equipment will be substantially identical,
with many of the major
components being supplied by the same vendors under joint purchase agreements
with all of the shipyards. Accordingly, three of our rigs may be readily
substituted for one another if necessary in order to meet a specified delivery
date or during operations.
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<PAGE>
CONSTRUCTION, MOBILIZATION AND DELIVERY TO PETROBRAS
We have contracted with two shipyards to construct our rigs pursuant to
fixed-price construction contracts. We selected the shipyards based on their
track records, technical capabilities, commitment to delivery schedules,
competitive pricing and financial backing. In addition, we have entered into
firm fixed-price procurement contracts or letters of intent with leading
international suppliers to purchase all major high-specification owner-furnished
equipment that requires relatively long lead times for delivery. Construction of
our rigs commenced in the second quarter of 1998. Completion of our rigs and
delivery to Petrobras are expected to occur at various times in 2000. We
estimate that total cost of constructing, equipping and mobilizing our rigs,
excluding late delivery penalties and financing costs, will be approximately
$655.8 million, classified as follows:
ESTIMATED
COST
---------
(IN MILLIONS)
Shipyard and Basic Design Engineering ........................... $ 346.4
Owner-Furnished Equipment ....................................... 184.2
Spare Parts, Manuals & Training ................................. 17.7
Project Team, Reimbursables and Commission ...................... 36.2
Contingencies ................................................... 46.8
Construction Insurance/Transaction Costs ........................ 24.5
---------
Total ................................................... $ 655.8
=========
THE SHIPYARDS
The AMETHYST 6 and AMETHYST 7 are being built in Okpo, South Korea by
Daewoo Heavy Industries Ltd. The AMETHYST 4 and AMETHYST 5 are being built in
the United States by TDI-Halter, L.P., a wholly owned subsidiary of Halter
Marine Group, Inc. We believe that each of Daewoo and TDI-Halter has the
expertise and resources to construct the rigs in accordance with the
specifications set forth in the construction contracts. We currently anticipate
that the AMETHYST 6 and AMETHYST 7 will be delivered by Daewoo on or before the
delivery dates set forth in the Daewoo construction contracts, but that the
AMETHYST 4 and AMETHYST 5 may be delivered by TDI-Halter up to two months later
than the delivery dates set forth in the TDI-Halter construction contracts.
DAEWOO
GENERAL. Daewoo operates a 1,000-plus acre shipbuilding facility in Okpo,
South Korea. The Okpo site includes 86 acres of covered workshops, two drydocks,
one which can accommodate super tankers weighing up to one million tons, and two
floating docks. Daewoo's covered panel lines, 3D block assembly shops and new
panel block shops are among the largest in the world. In addition, the Okpo site
has state-of-the-art automated panel lines, plasma cutters and paint shops which
can accommodate 200-ton modules. Daewoo's extensive facilities and labor force,
which exceeds 11,000, has given Daewoo the reputation of being one of the
world's most productive shipyards. Daewoo has significant expertise in the
offshore rig market. Since 1983, Daewoo has constructed over 30 offshore
drilling structures and vessels.
RECENT DEVELOPMENTS. In April 1999, the Daewoo group announced its
intention to divest most of its non-automotive businesses by the end of the
year, indicating that the Mitsui Engineering & Shipbuilding Company of Japan
might buy the shipbuilding division. Following a strike in the shipbuilding
division in response to the announcement, however, Daewoo agreed not to sell the
shipbuilding division and stated that it intends to attract foreign investment
through a joint venture. While we can give no assurances, we do not expect that
these recent developments affecting Daewoo will have any negative effect on the
construction of the AMETHYST 6 or AMETHYST 7.
CONSTRUCTION CONTRACTS. Each Daewoo construction contract provides for the
design, construction, launching, equipping, completion, testing and loading out
of a rig for a contract price of $85.0 million, excluding the cost of
owner-furnished equipment and any credits for the cost of builder's risk
insurance. The contract price may be adjusted for modifications to the
specifications of our rigs and will be paid in five installments falling due at
various times throughout the construction period based on specified milestones,
with approximately 20% being due on delivery.
DELIVERY. The AMETHYST 6 has a contractual delivery date of July 30, 2000
and the AMETHYST 7 has a contractual delivery date of June 30, 2000, each of
which may be extended for permissible delays, including force majeure,
modifications to the rig specifications and delays in the delivery of and
defects in owner-furnished equipment. If a delay occurs in the delivery of a
rig, Daewoo will become obligated to pay $42,500 per day in liquidated damages
for the first 150 days after the delivery date.
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TERMINATION. In the event that Daewoo has not delivered our rigs prior to
either 90 days from the contractual delivery date, as extended by permissible
delays, or 180 days from the contractual delivery date extended by such days of
permissible delay as are attributable to our fault, a construction contract may
be terminated at our option. We also have the right to terminate a construction
contract in the event that:
o Daewoo fails, without legal justification, to meet two consecutive
milestones within 90 days of the dates agreed for those milestones
o Daewoo commits a material breach of the construction contract not
remedied within five business days of written notice thereof
o Daewoo is wound up or becomes bankrupt
Daewoo has the right to terminate a construction contract in the event that:
o we fail to make the installment payments due under the construction
contract
o we fail, without legal justification, to take delivery of our rigs
in accordance with the construction contract
o we are wound up or become bankrupt
and any such default continues for 30 days.
DEVIATIONS FROM TARGET WEIGHT. The Daewoo construction contracts have been
structured to create incentives for Daewoo to meet established target weights.
In the event Daewoo fails to meet the target weight for any rig, Daewoo will be
required to pay liquidated damages up to a maximum amount of 5% of the
construction price. In the event that Daewoo builds a rig significantly below
its target weight, Daewoo will be entitled to a bonus.
SHIPYARD WARRANTY. Daewoo has guaranteed our rigs for twelve months after
delivery against all defects, whether attributable to materials, workmanship,
construction or detail design, and against all physical damage caused to our
rigs thereby. Such guarantee does not extend to owner-furnished equipment but
does extend to defects in materials, workmanship or design and physical damage
caused by Daewoo's installation of owner-furnished equipment.
REFUND GUARANTEE. The Export-Import Bank of Korea has issued a refund
guarantee for 100% of the contract price (which includes the cost of
owner-furnished equipment) under each Daewoo construction contract. Under each
Daewoo construction contract, we are entitled, either upon termination of the
construction contract or upon a total loss of the rig prior to delivery, to
repayment of the installments of the contract price paid by us prior to such
event, plus interest on such installments at a fixed rate of 10%. Pursuant to
the refund guarantee, if we provide written notice that Daewoo has not made such
repayment within 30 days after our demand for repayment, the Export-Import Bank
of Korea shall be obligated to make such repayment.
TDI-HALTER
GENERAL. TDI-Halter, a wholly owned subsidiary of Halter Marine Group,
Inc., has based construction of our rigs in Halter Marine's 88-acre site in
Pascagoula, Mississippi. The Pascagoula site recently underwent a $21.0 million
improvement with the primary aim of upgrading equipment for offshore rig
construction. In addition to the Pascagoula site, TDI-Halter will use six other
sites in constructing our rigs, the principal secondary site being Halter
Marine's Gulfport, Mississippi site, which has over ten acres of covered
facilities on its 113 acres. These covered facilities include modern panel lines
and paint shops. TDI-Halter, which specializes in the construction and repair of
offshore drilling units, has eight shipyards and a labor force of 2,300. In
addition, TDI-Halter has access to Halter Marine's 14 other shipyards and over
4,200 employees. Halter Marine has built more than 2,600 vessels in the past 40
years.
RECENT DEVELOPMENTS. In November 1999, Halter Marine Group, Inc. merged
with Friede Goldman International Inc. We cannot assure that the merger will not
have any negative effects on the construction of the AMETHYST 4 and AMETHYST 5.
CONSTRUCTION CONTRACTS. Each TDI-Halter construction contract provides for
the engineering, construction, launching, equipping, completion and testing of a
rig for a contract price of $84.0 million, excluding the cost of owner-furnished
equipment and any credits for the cost of builder's risk insurance. The contract
price may be adjusted for modifications to the specifications of our rigs and
will be paid in eleven installments falling due at various times throughout the
construction period based on specified milestones, with approximately 7.5% being
due on delivery.
DELIVERY. The AMETHYST 4 has a contractual delivery date of June 9, 2000
and the AMETHYST 5 has a contractual delivery date of August 9, 2000, each of
which may be extended for permissible delays, including force majeure,
modifications to the rig
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specifications and delays in the delivery of and defects in owner-furnished
equipment. If a delay occurs in the delivery of a rig, TDI-Halter will become
obligated to pay $20,000 per day in liquidated damages for the first 30 days
after the delivery date and $40,000 per day in liquidated damages beginning on
the 31st day after the delivery date until actual delivery. TDI-Halter's
liability for such liquidated damages is limited to $2.0 million per rig.
TERMINATION. In the event that TDI-Halter does not deliver a rig within
135 days after the contractual delivery date, as extended by permissible delays,
the applicable construction contract may be terminated at our option. We also
have the right to terminate a TDI-Halter construction contract in the event
that:
o TDI-Halter fails, without legal justification, to meet two
consecutive milestones within 135 days of the dates agreed for those
milestones, as extended by permissible delays
o TDI-Halter commits a material breach of the construction contract
not remedied within five business days of written notice thereof
o TDI-Halter is wound up or becomes bankrupt
TDI-Halter has the right to terminate a construction contract in the event that:
o we fail to make the installment payments due under the construction
contract
o we fail, without legal justification, to take delivery of our rigs
in accordance with the construction contract
o we are wound up or become bankrupt
and any such default continues for 30 days.
DEVIATIONS FROM TARGET WEIGHT. The TDI-Halter construction contracts
contain incentives for TDI-Halter to meet established target weights. In the
event TDI-Halter fails to meet the target weight for any rig, TDI-Halter will be
required to pay liquidated damages up to a maximum amount of $2.5 million. In
the event that TDI-Halter builds a rig significantly below its target weight,
TDI-Halter will be entitled to a bonus up to a maximum amount of $3.0 million.
SHIPYARD WARRANTY. TDI-Halter has guaranteed our rigs for twelve months
after delivery against all defects attributable to the labor and workmanship of
TDI-Halter and its subcontractors. Such guarantee does not extend to
owner-furnished equipment but does extend to defects caused by TDI-Halter's
installation of owner-furnished equipment (the approval of the installation by a
supplier or manufacturer's representative on-site being conclusive evidence of
proper installation).
PERFORMANCE BOND AND PERFORMANCE GUARANTEE. Fireman's Fund Insurance
Company has issued a performance bond on a joint and several basis with
TDI-Halter for 100% of the contract price under each TDI-Halter construction
contract. Fireman's Fund also has issued a labor and material payment bond,
jointly and severally with TDI-Halter, which covers suits for non-payment by
TDI-Halter filed by claimants having a direct contract with TDI-Halter or with a
subcontractor of TDI-Halter for labor, material or both used or reasonably
required for use in the performance of the TDI-Halter construction contract. In
addition, Halter Marine has unconditionally and irrevocably guaranteed to us
prompt and faithful performance of, and compliance with, all obligations,
covenants, terms, conditions and undertakings of TDI-Halter under its
construction contracts.
OWNER-FURNISHED EQUIPMENT
During construction, we will purchase from numerous vendors and furnish to
the shipyards various items of specialized drilling and subsea well intervention
and maintenance equipment for our rigs. This equipment includes for each rig, as
appropriate, a drilling derrick, mud pumps, drawworks, a rotary table, blowout
preventers and risers. We also will provide to the shipyards certain marine and
ship system items, including cranes and electrical distribution units for the
drilling equipment. In addition, we will furnish some items outside of the
shipyard package, including drillpipe and handling tools. We estimate that all
of this owner-furnished equipment will represent approximately $184.2 million of
the aggregate $655.8 million budgeted to construct, equip and mobilize our rigs,
including contingencies but excluding financing costs and late delivery
penalties.
We have obtained commitments from leading international suppliers to
provide $166.7 million, or approximately 90.5%, of the budgeted owner-furnished
equipment. As of October 31, 1999, we had paid approximately $112.9 million to
such suppliers and had received delivery of approximately 55% of the
owner-furnished equipment for our rigs. These suppliers will be providing all of
the major high-specification owner-furnished equipment that require relatively
long lead times for delivery. The remainder of the owner-furnished equipment
consists of standard, readily available items. Of the total budgeted
owner-furnished equipment, $130.2 million, or approximately 71%, will be
provided by five major suppliers that have made commitments to us. The following
table lists these five suppliers, the equipment that they will be supplying and
the cost of such equipment:
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COST
SUPPLIER EQUIPMENT (in thousands)
-------- --------- --------------
Maritime Hydraulics A/S Derrick Package $35,498
ABB Vetco Gray U.K. Ltd. Risers and Buoyancy System $31,999
Cooper Cameron Corporation Blowout Preventers and $27,489
Multiplex Control Systems
Huisman Special Lifting Cranes and Substructures $22,033
Equipment B.V.
Continental Emsco Company Drawworks, Mud Pumps and Rotary
Table $13,206
Timely completion of our rigs will depend, among other things, on timely
delivery of the owner-furnished equipment. We believe that our owner-furnished
equipment suppliers have the expertise and capacity to deliver owner-furnished
equipment on time and according to specifications. We do not anticipate any
significant delays in delivery of the owner-furnished equipment that would
materially delay overall construction.
CONSTRUCTION MANAGEMENT
We believe that active management of the construction process is an
important factor in reducing construction risks and avoiding delays.
Construction of our rigs is being managed by Petrodrill Engineering N.V., a
Netherlands Antilles corporation owned 70% by affiliates of Maritima and 30% by
an indirect subsidiary of Pride. (You should read the discussion under the
heading "Certain Relationships and Related Transactions" beginning on page 53
for further information regarding the ownership of Petrodrill Engineering.)
Petrodrill Engineering has agreed to provide the management services described
below in an efficient manner and to protect and promote the interests of each of
our subsidiaries in all matters relating to the construction of its rig.
Petrodrill Engineering will, among other things:
o coordinate with each subsidiary and its representatives regarding
any design modification
o obtain all necessary permits, consents and authorizations with
respect to the design drawings from the relevant classification
society or other relevant agencies
o coordinate with each shipyard throughout the construction period
o monitor each shipyard for compliance with the terms of its
construction contract
o inform each subsidiary of any change in existing laws, rules or
regulations that may require any alteration to the specifications or
drawings of its rig and assess the effects of such changes
o advise each subsidiary whether its rig has been completed in
accordance with the specifications provided in the construction
contract and is ready for delivery
o procure the owner-furnished equipment on behalf of each subsidiary
o prepare monthly budgets for each rig
o ensure that each rig is insured adequately throughout the
construction period
Petrodrill Engineering is being paid by each subsidiary only for actual
expenses incurred by it in rendering the construction management services,
including the full salaries of its personnel and other overhead costs.
The construction management agreement with each subsidiary may be
terminated early in the event of a material breach by either party of its
obligations under such agreement. Each subsidiary and Petrodrill Engineering
have agreed to indemnify Petrodrill Engineering's subcontractors and their
personnel from all actions or liabilities that may be brought against or
incurred by them or their personnel for matters arising out of such subcontracts
unless such actions or liabilities arise from the gross negligence or willful
misconduct of such subcontractors or their personnel.
Petrodrill Engineering has procured the personnel necessary to manage the
construction of our rigs. For this purpose, Petrodrill Engineering has assembled
a central management team based in the Netherlands and separate project teams
that are present at each shipyard to supervise construction and ensure that our
rigs meet the specifications required by Petrobras and applicable classification
societies. A portion of Petrodrill Engineering's personnel has been, and until
completion of all of our rigs
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will be, seconded from Pride-Foramer S.A., an affiliate of Pride, Maritima and
Workships Contractors B.V., an integrated offshore vessel management company
whose personnel were involved in the design and construction of the AMETHYST 1.
Such personnel has been provided to Petrodrill Engineering by Pride-Foramer,
Maritima and Workships at agreed-upon fixed prices that approximate each such
company's cost. In addition, Workships will receive a fee of $2,083.33 per month
per rig.
Petrodrill Engineering's personnel consists of 50 professionals with
highly specialized experience in rig construction who are dedicated exclusively
on a full-time basis to the construction of our rigs. The members of the central
management team, consisting of a project director, deputy project director,
chief financial officer and central construction manager, have extensive
experience in most aspects of the oil and gas industry and, in particular, in
rig and vessel construction and repair. You should read the descriptions under
the heading "Management" beginning on page 52 for biographical information on
the central management team. We believe that the experience of the Petrodrill
Engineering central management team, combined with the experience of specialists
from Maritima, Pride-Foramer, Workships and other third parties, will provide a
high level of specialized expertise for the construction of our rigs that will
enhance the ability of the shipyards to make timely delivery of our rigs and
reduce the likelihood of cost overruns. In addition, Petrobras technicians and
engineers have periodically monitored the construction of our rigs at each
shipyard. Lloyds, the classification society and representative of the Bahamian
Ship Registry, has been involved in the approval of the design and detailed
engineering for the rigs during its regular shipyard visits. Recently, Petrobras
contracted ModuSpec USA, Inc., an independent engineering and construction
consultant, to review the construction of our rigs at the Daewoo and TDI-Halter
shipyards as part of a more extensive review of all of Petrobras' upcoming rig
deliveries. Since receiving the audit report from ModuSpec, Petrobras has made
no comments to us about the report, except to state that ModuSpec concluded, as
we acknowledge and expect, that our rigs will not be delivered by the delivery
dates specified in their respective charters.
INSURANCE
We have obtained insurance from a syndicate of international insurance
companies led by London underwriters to insure against certain risks related to
the construction of our rigs in accordance with their specifications and design
and the timely completion, mobilization and delivery of our rigs to Petrobras
pursuant to the charters. In general, the insurance covers:
o traditional fire, casualty and marine perils causing damage to our
rigs during construction and mobilization
o delays caused by damage to the shipyards or their facilities from
such perils
o damage to our rigs, owner-furnished equipment or other rig
components from such perils
o losses and delays attributable to specified force majeure events
In addition, the insurance provides coverage for faulty materials, parts,
workmanship or design that would delay the delivery of a rig or cause physical
loss or damage to the rig or its equipment.
In the event that there is a delay in the delivery of a rig from its
shipyard resulting from an insured event or events lasting more than an
aggregate of 21 days, the insurance will pay $100,000 per day, beginning after
the 21-day waiting period, for a maximum of 365 days. In the event Petrobras
terminates a charter as a result of an insured event, including faulty
construction or design defect discovered during a 24-month discovery period
following delivery by the shipyard and late delivery to Petrobras caused by an
insured event, loss of hire coverage entitles us to payment of the relevant
rig's operating rate for a maximum of 365 days, subject to a 21-day waiting
period. In the event of a successful remarketing of the relevant rig, the loss
of hire coverage will pay any daily charter rate differential between the
canceled charter and the replacement charter and any mobilization, towing,
reoutfitting or similar expenses incurred in recontracting the rig. Total
recovery under the loss of hire coverage is limited to the value of the relevant
rig's operating rate for 365 days. The late delivery and loss of hire coverage
does not contemplate any deductible other than amounts foregone during the
21-day waiting periods.
The insurance in respect of construction risks expires upon completion of
the construction of each rig, subject to a discovery period of 24 months after
delivery by the shipyard. The builder's risk property coverage generally is
limited in aggregate to the value of each rig, and a $100.0 million limit
applies per event in respect of third-party liabilities. In addition, a $100,000
deductible per event is generally applicable, except that no deductible applies
in the event of a total or constructive total loss.
All rights to insurance proceeds have been assigned to Wilmington Trust
Company to secure the old and new notes. The insurers have waived their right of
subrogation against us, our owners or any of their affiliates, the shipyards,
Wilmington Trust Company and holders of the old and new notes, each of which is
named as a co-insured.
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FINANCING OF OUR RIGS
MITSUBISHI FINANCING
In December 1998, affiliates of Mitsubishi Corporation agreed to fund,
through two separate credit facilities, up to an aggregate $340.0 million of the
cost (including accrued interest) of constructing, equipping and mobilizing the
AMETHYST 6 and AMETHYST 7. The credit facility governing the AMETHYST 6 permits
drawings of up to $160.0 million and the credit facility covering the AMETHYST 7
permits drawings of up to $180.0 million.
On November 1, 1999, we used the net proceeds from the sale of the old
notes, cash on hand and additional funds provided by Pride and Maritima to
purchase the fully drawn first tranches of the Mitsubishi credit facilities
(representing $47.0 million in the case of the AMETHYST 6 facility and $53.0
million in the case of the AMETHYST 7 facility). A 53% undivided interest in the
participations purchased by us, including the right to receive payments of
principal and interest and all rights as a secured party in respect of such
interest in those participations, was irrevocably assigned to Wilmington Trust
Company as collateral agent to secure our obligation to repay the old and new
notes.
FUNDS AVAILABILITY. Drawings under each Mitsubishi credit facility may be
made to pay construction costs under the construction contract for each
respective rig, interest under that credit facility and, subject to certain
limitations, selected operating costs and other construction and mobilization
costs for that rig. In addition, pursuant to an intercompany agreement, up to
$10.0 million of borrowings under the AMETHYST 7 facility may be on-loaned,
without interest, for the completion and mobilization of the AMETHYST 6. The
obligation of the lenders to make advances under each credit facility is subject
to customary drawdown conditions, including the condition that, as of the date
of drawdown, no event of default or potential event of default shall have
occurred and be continuing under the credit facility or any major project
document related to the corresponding rig and that all such project documents
continue to be in full force and effect. As of November 30, 1999, $66.0 million
remained available under the AMETHYST 6 credit facility and $47.0 million
remained available under the AMETHYST 7 credit facility.
INTEREST. Borrowings under each of the Mitsubishi credit facilities bear
interest at 12.5% per year until delivery of the rig at the shipyard and 11.0%
per year thereafter. Interest is accrued as principal until commencement of the
rig's charter, except to the extent that such interest and drawings exceed the
total facility amount; provided that interest payable in respect of the
participations purchased by us will not be accrued but will be payable every six
months in arrears until commencement of each rig's charter. Until commencement
of a rig's charter, drawings may be made on the unused portion of the relevant
credit facility in order to pay interest to us in respect of our participations.
REPAYMENT. Repayment of 85% of the borrowings under each credit facility
is to be made in equal monthly installments over a seven-year period beginning
on the second month following commencement of the applicable rig's charter. The
remaining 15% will be due and payable on the final day of such seven-year
period. Repayments in respect of the 53% undivided interest in the
participations purchased by us will be made directly to the collateral agent to
be invested in short-term U.S. government obligations that will be held as
security for payments of interest on and principal of the old and new notes.
Scheduled repayments of principal on such participations to the maturity date of
the notes will be significantly less than the principal amount of the notes that
will then become due. We will thus be required to rely on a partial refinancing
of the notes or other sources of cash.
PREPAYMENTS; TOTAL LOSS. Either subsidiary may, by notice of at least 90
days, prepay all or any part of the loans made pursuant to its credit facility
by paying the principal and accrued and unpaid interest on such prepaid loans to
the date of prepayment, plus all other amounts that may be payable on such
prepaid loans and any further amount that may be necessary to indemnify the
lenders against all costs incurred as a result of the prepayment. If a rig
becomes a total loss, the insurance proceeds or other compensation received as a
result of such total loss will be applied toward prepayment of the loans made
under the credit facility corresponding to such rig in accordance with the
immediately preceding sentence and any excess will be paid to the subsidiary
that owns such rig. In the event the insurance proceeds and other compensation
received as a result of such total loss is less than the indebtedness
outstanding under the lost rig's credit facility, the subsidiary that owns such
rig will be responsible for the shortfall.
PRIMARY OBLIGORS AND GUARANTORS. Petrodrill Six Limited, which will own
the AMETHYST 6, is the primary obligor under the credit facility covering the
AMETHYST 6. Petrodrill Seven Limited, which will own the AMETHYST 7, is the
primary obligor under the credit facility covering the AMETHYST 7. Both primary
obligors are incorporated in the British Virgin Islands and are wholly owned by
us. Petrodrill Six Limited and Petrodrill Seven Limited have provided
cross-guarantees in respect of each other's obligations, and we have, in turn,
guaranteed each of their obligations. In addition, Maritima and Pride have
guaranteed:
o payments of construction, equipping and mobilization costs for each
rig to the extent that the funds available under such rig's credit
facility are insufficient for completion of such rig up to a total
for both credit facilities of $14.0 million by Maritima and $6.0
million by Pride
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o payments of 70% by Maritima and 30% by Pride of any amounts that are
required by Petrodrill Six Limited and Petrodrill Seven Limited to
perform their respective obligations under the Petrobras charters
and related service rendering contracts
Maritima and Pride have also jointly and severally guaranteed:
o repayment of the amounts by which the outstanding indebtedness under
either rig's credit facility exceeds amounts recoverable under such
rig's construction contract, refund guarantee and builder's risk
insurance in the event the construction contract is terminated or
rescinded, payments under the construction contract are otherwise
refunded or there is a total loss of the rig prior to completion
o payment of the deductibles under the delay-in-delivery insurance
policies and under the loss-of-hire insurance policies upon the
occurrence of an event that gives right to a claim under the
applicable policy
o payment or performance of certain other financial and operating
undertakings of Petrodrill Six Limited and Petrodrill Seven Limited
For the benefit of the Mitsubishi-affiliated lenders only, Maritima and Pride
have guaranteed, from commencement of each rig's charter, repayment of the total
borrowings under such rig's Mitsubishi credit facility up to a total for both
credit facilities of $75.6 million by Maritima and $32.4 million by Pride.
Neither we nor the holders of the old or new notes will share in the benefit of
this guarantee.
The obligations of Petrodrill Six Limited and Petrodrill Seven Limited to
repay funds advanced pursuant to any of the foregoing guarantees are expressly
subordinated to their remaining repayment obligations as primary obligors under
their respective credit facilities.
COLLATERAL ACCOUNTS. Until repayment of outstanding amounts due under each
credit facility, all amounts paid pursuant to the applicable rig's charter or
otherwise in respect of such rig must be deposited into a management account.
The owner of each rig is also required to fund outside of the credit facility,
and to deposit into the management account, the amount of any deductions from
insurance claims made by the insurers for such rig (such funding, in the case of
deductibles for delay-in-delivery and loss-of-hire, being jointly and severally
guaranteed by Maritima and Pride). The funds in the management account will be
applied FIRST to pay the rig's operating and administrative expenses (subject to
certain limitations), SECOND to debt service and to other amounts payable under
the applicable credit facility, and THIRD to fund a reserve account. Subject to
prior withdrawals, the funds in the reserve account will be used to cover cash
shortages in the management account. Funds may be withdrawn from the reserve
account to the extent that, immediately following such withdrawal, the combined
reserve accounts under both credit facilities contain an aggregate amount at
least equal to the next six installment payments due under both credit
facilities.
SECURITY. In addition to the guarantees described above, repayment and
performance of all obligations under the Mitsubishi credit facilities are
secured by, among other things, security interests over:
o the construction contracts, major service contracts, charters and
related service rendering contracts for the AMETHYST 6 and
AMETHYST 7
o the shares of capital stock of Petrodrill Six Limited and Petrodrill
Seven Limited
o the business and assets of Petrodrill Six Limited and Petrodrill
Seven Limited
o guarantees issued by the Korean Export-Import Bank in respect of
Daewoo's obligations to refund installment payments made under the
construction contracts upon Daewoo's failure to perform
o insurance proceeds received in respect of either the AMETHYST 6 or
AMETHYST 7
o the intercompany agreement under which up to $10.0 million of
borrowings under the AMETHYST 7 facility may be on-loaned for
purposes of completing and mobilizing the AMETHYST 6
o any amounts payable in respect of the two rigs, including
requisition compensation, remuneration for salvage and towage
services, demurrage and detention compensation and damages for
breach (or payments for variation or termination) of any charter or
other contract for the employment of either rig
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o the management accounts and reserve accounts created under each
credit facility
and a first priority ship mortgage on each rig.
COVENANTS. Each of the Mitsubishi credit facilities contains covenants
that are customary for such financings, including limitations on the nature and
scope of the businesses of Petrodrill Six Limited and Petrodrill Seven Limited,
the incurrence of additional debt and the distribution of dividends.
EVENTS OF DEFAULT. Each Mitsubishi credit facility contains customary
events of default, including, among others, failure to make payments when due,
breach by us or our affiliates of any term of the credit facilities or related
agreements, cross default to other indebtedness in excess of $500,000,
threatened or actual suspension of operation, threatened or actual substantial
disposition of business, property or assets, change in ownership of either
subsidiary and specified events of bankruptcy, insolvency and reorganization. In
addition, each credit facility contains the following events of default, among
others:
o cross-default to a default by any party to the rig construction
contract, the refund guarantee issued by the Korean Export-Import
Bank, the charter and related service rendering contract and the
major service contracts and subcontracts for construction management
and operation of the rig
o failure to obtain, or revocation of, governmental permits or
approvals required for the operation of the rig, the performance by
us or our affiliates of our or their obligations under the credit
facility and related agreements or the performance by any party of
its obligations under any document listed in the immediately
preceding paragraph
o non-delivery of the rig from the shipyard within 365 days after its
contractual delivery date under its construction contract
o non-delivery of the rig to Petrobras within 365 days after its
contractual delivery date under its charter
o termination of the rig construction contract, the refund guarantee
issued by the Korean Export-Import Bank, the charter or the related
service rendering contract
o failure to maintain required insurance (including for reason of
unavailability)
o any default under the other subsidiary's credit facility
The occurrence of an event of default entitles the facility agent, acting
on behalf of the lender group (which includes us), to declare immediately due
and payable the entire amount outstanding under the applicable credit facility
and to apply the funds in the applicable management account and reserve account
toward the outstanding balance owing under such facility. In addition, the
lenders would not be obligated to fund during an event of default or potential
event of default.
GOVERNING LAW AND JURISDICTION. The Mitsubishi credit facilities,
including the security documents, are governed by English law and the parties
have agreed to submit any disputes to the courts of England.
MARAD FINANCING
In April 1999, Citibank, N.A. and its affiliate Govco Incorporated agreed
to fund, through two separate credit facilities, up to an aggregate $299.8
million of the cost (including construction period interest) of constructing and
equipping the AMETHYST 4 and AMETHYST 5. The credit facility covering the
AMETHYST 4 permits drawings of up to $149.6 million and the credit facility
covering the AMETHYST 5 permits drawings of up to $150.2 million. The United
States of America (through the Maritime Administration or MARAD) has guaranteed
repayment of the borrowings under each credit facility up to 87.5% of the actual
cost of each rig to the extent the other 12.5% of the actual cost has been
funded outside of such credit facility. In addition, Petrodrill Four Limited,
which will own, and is the primary obligor under the credit facility for, the
AMETHYST 4, and Petrodrill Five Limited, which will own, and is the primary
obligor under the credit facility for, the AMETHYST 5, have provided
cross-guarantees in respect of each other's obligations, and Maritima and Pride
have each guaranteed payment of up to $20.5 million for late arrival penalties
to Petrobras and Brazilian ad valorem taxes pertaining to the AMETHYST 4 and
AMETHYST 5. Each of Petrodrill Four Limited and Petrodrill Five Limited is a
British Virgin Islands corporation and our wholly owned subsidiary.
FUNDS AVAILABILITY. Drawings under each MARAD credit facility may be made
to pay construction costs under the construction contract for the corresponding
rig, interest under the credit facility and guarantee fees to the United States
of America. These drawings may be funded by Govco through the issuance of
commercial paper or directly by Citibank. The lenders are not
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obligated to advance funds not covered by the MARAD guarantee. As of November
30, 1999, $92.2 million remained available under the AMETHYST 4 credit facility
and $106.0 million remained available under the AMETHYST 5 credit facility.
INTEREST. Borrowings under each MARAD credit facility funded through the
issuance of commercial paper bear interest at Govco's weighted average cost of
issuing such commercial paper plus 0.40% during construction and plus 0.45%
thereafter. Except in specified circumstances, borrowings under each MARAD
credit facility funded directly by Citibank bear interest at the London
interbank rate plus 0.30%. Interest under each MARAD credit facility is accrued
as principal until February 15, 2001 in the case of the AMETHYST 4 or March 15,
2001 in the case of the AMETHYST 5, except to the extent that such interest and
other drawings exceed the total facility amount. Prior to the first to occur of
August 15, 2002 in the case of the AMETHYST 4 or September 15, 2002 in the case
of the AMETHYST 5 and completion of the second year following commencement of
the corresponding rig's charter, the interest rate must be fixed. On the last
interest payment date, the interest rate applicable to borrowings was
approximately 5.05% under the AMETHYST 4 credit facility and approximately 5.15%
under the AMETHYST 5 credit facility.
REPAYMENT. The borrowings under each credit facility are required to be
repaid in semiannual installments representing over a 12-year period beginning
February 15, 2001 in the case of the AMETHYST 4 credit facility and March 15,
2001 in the case of the AMETHYST 5 credit facility. In addition, the borrowings
may be prepaid with no premium on any semi-annual interest payment date prior to
conversion to a fixed rate or with a premium on any semi-annual interest payment
date after conversion to a fixed rate. The borrowings are required to be prepaid
under specified circumstances.
COLLATERAL ACCOUNT AND SECURITY. The repayment of any amounts advanced
under the guarantee of the United States of America in respect of each credit
facility is secured by first priority security interests in substantially all of
the assets of Petrodrill Four Limited and Petrodrill Five Limited, including
each subsidiary's reserve fund.
COVENANTS. Each MARAD credit facility contains covenants that are
customary for such financings, including limitations on the nature and scope of
the business of Petrodrill Four Limited and Petrodrill Five Limited, the
incurrence of additional debt and the distribution of dividends.
EVENTS OF DEFAULT. Each MARAD credit facility contains customary events of
default and additional events of default relating to ownership, construction,
operation, maintenance, insuring and chartering of the corresponding rig,
including default under such rig's charter. Upon the occurrence of an event of
default under a credit facility, the amounts outstanding under such credit
facility may be declared immediately due and payable. In addition, the lenders
would not be obligated to fund during an event of default.
GOVERNING LAW. The MARAD credit facilities are governed by New York law,
and the parties to such credit facilities have consented to the jurisdiction of
the federal courts in the State of New York.
REPORT OF INDEPENDENT ENGINEERS
THE FOLLOWING SUMMARY OF CERTAIN PROVISIONS OF THE REPORT OF BENNETT &
ASSOCIATES, L.L.C., INDEPENDENT ENGINEERS, IS NOT COMPLETE AND IS SUBJECT TO,
AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, ALL PROVISIONS OF THE REPORT OF
BENNETT & ASSOCIATES, COPIES OF WHICH MAY BE OBTAINED BY PROSPECTIVE INVESTORS
UPON WRITTEN REQUEST TO US.
The initial purchaser of the old notes contracted Bennett & Associates to
perform an independent review of the current technical plans for our rigs, the
technical capability of the shipyards to deliver our rigs on time and the
construction budget. Bennett & Associates concluded that the current technical
plans for our rigs are capable of satisfying the design specifications set forth
in their charters. In addition, Bennett & Associates concluded that Daewoo has
the technical capability to complete the AMETHYST 6 and AMETHYST 7 on the
schedule set forth in their construction contracts. Bennett & Associates
reported that TDI-Halter experienced delays in the initial stages of
construction of the AMETHYST 4 and AMETHYST 5 primarily as a result of issues
relating to TDI-Halter project management. Bennett & Associates expects that
these issues will be addressed in the events following the merger of Halter
Marine Group, Inc. with Friede Goldman International Inc. but that the AMETHYST
4 and AMETHYST 5 will be at least two months behind the schedule set forth in
their construction contracts. Bennett & Associates has concluded that our
construction budget is in order, subject to potential cost overruns resulting
from delays on the AMETHYST 4 and AMETHYST 5.
THE PETROBRAS CONTRACTS
OVERVIEW
Our subsidiaries have entered into contracts denominated in U.S. dollars
to charter the rigs to Petrobras for offshore drilling and subsea well
intervention and maintenance operations. Maritima has entered into related
Brazilian REAL-denominated service rendering contracts with Petrobras. Each
subsidiary has entered into a charter that applies exclusively to its rig, and
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Maritima has entered into a separate service rendering contract for each rig.
These contracts, which are governed by Brazilian law, have initial terms ranging
from six to eight years from the date each rig has been delivered to and
accepted by Petrobras. Each contract may be renewed for successive periods by
prior agreement of the parties. The charters represent approximately 93% of the
aggregate estimated value of the Petrobras contracts. The amounts payable under
the service rendering contracts in Brazilian REAIS will be used entirely to
defray Brazilian REAL-denominated operating expenses of our rigs. The amounts
payable under the charters will be available to pay additional operating
expenses and to service our debt and the debt of our subsidiaries.
The Petrobras contracts were awarded to Maritima following four separate
public offers to bid. Each of eight major international bidders, including
Falcon Drilling Co. Inc., Diamond Offshore Drilling, Sedco Forex and Queiroz
Galvao, participated in at least one of the four public offers to bid. Maritima
assigned its rights and obligations under the charters to our subsidiaries on
July 10, 1998 with Petrobras' consent. In addition, Petrobras consented to the
collateral assignment of the charters by our subsidiaries and the service
rendering contracts by Maritima to secure the Mitsubishi and MARAD credit
facilities.
The Petrobras contracts provide for the payment of operating rates, plus,
for the AMETHYSTS 4, 6 and 7, bonuses based generally on availability for
operation, for each day our rigs operate. In addition, the Petrobras contracts
provide for payments of 95% of the operating rate, plus such performance-based
bonuses, for each day during specified periods when operations are suspended.
This 95% rate applies, for example, during time spent moving our rigs to a new
job location and during suspension of operations resulting from force majeure,
bad weather and other specified causes beyond our control. The bonus, however,
does not apply during force majeure events. There will be no compensation during
suspension of operations for other reasons, including suspension for repairs or
maintenance on a rig or due to unavailability of rig crews or supplies. The
charter for the AMETHYST 5 provides for payment of a flat fee for mobilization.
Subject to specified grace periods, the charters permit Petrobras to
impose penalties of up to 30% of a rig's operating rate, and, in addition, up to
30% of the mobilization fee in the case of the AMETHYST 5, if such rig is not
timely delivered. Based on construction contract delivery dates plus an
allowance for mobilization, the aggregate penalties would be approximately $41.2
million. Although the charters permit Petrobras to impose these penalties at the
time of late delivery of our rigs, Petrobras has indicated to us in writing that
it has been its policy to negotiate other forms of payment, such as an agreed
installment plan or the discount of the penalties from the end of the contract.
This policy could change, however, given that Petrobras' board of directors has
recently been replaced by new members.
We expect our rigs to be delivered to Petrobras during the third and
fourth quarters of 2000. The delivery date of each rig will occur after the
delivery date required under its charter as a result of delays we experienced in
commencing construction of our rigs due to design changes requested by
Petrobras, delays in finalizing construction contracts with qualified shipyards
and delays in obtaining construction financing. While each charter states that
it may be canceled by Petrobras if the chartered rig is not delivered within 180
days after the delivery date specified, Petrobras, on May 28, 1998, provided a
letter waiving its right to cancel the charters and related service rendering
contracts on the basis of late delivery unless the delay exceeds 540 days and,
even then, only if best endeavors to make delivery are not being made. On
October 13, 1999, Maritima received a letter from Petrobras stating that
Petrobras will cancel the charters and service rendering contracts for our rigs
when delay in delivery exceeds 180 days as specified in the charters. By
threatening to cancel the charters if delay in delivery exceeds 180 days,
Petrobras indicated an intent contrary to its May 1998 letter. Our Brazilian
counsel, Pedro Calmon Filho & Associados, has informed us that Petrobras' May
1998 letter extending the permitted delay in delivery is an enforceable
obligation of Petrobras; however, specific performance of Petrobras' obligations
under the charters may not, as a practical matter, be an available remedy, and
our rights against Petrobras could be limited to a lawsuit for damages. You
should read the discussion under the heading "--Threatened Cancellation of Our
Charters" beginning on page 33 for further information regarding the effects of
the threatened cancellation of our charters.
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The following table summarizes the principal financial and certain other
terms of the charters and service rendering contracts and sets forth our
expectations regarding the timing, capital cost and late delivery penalties
associated with the delivery of our rigs to Petrobras:
<TABLE>
<CAPTION>
AMETHYST 4 AMETHYST 5 AMETHYST 6 AMETHYST 7
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Initial Term (years)........................... 6 8 7 7
Daily Charter Operating Rate................... $114,600 $97,200 $120,000 $129,000
Daily Service Rendering Contract Operating
Rate(1)........................................ $7,164 $5,989 $7,578 $8,182
Total Daily Rate............................... $121,764 $103,189 $127,578 $137,182
Maximum Bonus(2)............................... 10.0% 0.0% 10.0% 10.0%
Mobilization Fee............................... None $6,479,900 None None
Charter Delivery Date.......................... June 17, 1999 July 6, 1999 Dec 29, 1999 Dec 29, 1999
Construction Contract Delivery Date Plus
Allowance for Mobilization..................... July 13, 2000 Sep 11, 2000 Oct 17, 2000 Sep 17, 2000
Number of Days of Late Delivery to Petrobras
Based on Construction Contract Delivery Date
Plus Allowance for Mobilization................ 392 433 293 263
Projected Late Delivery Penalties Based on
Construction Contract Delivery Date Plus
Allowance for Mobilization..................... $11,147,000 $12,669,000 $8,997,000 $8,429,000
Projected Capitalized Interest................. $7,800,000 $7,800,000 $21,500,000 $21,400,000
Projected Capital Cost(3)...................... $164,200,000 $164,200,000 $163,700,000 $163,700,000
</TABLE>
(1)This rate has been translated into U.S. dollars but will be payable in
REAIS. You should read the discussion under the heading "About this
Prospectus" beginning on page 1 for information regarding the translation of
REAIS into U.S. dollars.
(2) Percentage of total daily rate.
(3)Consists of construction, equipment and mobilization costs, including
owner-furnished equipment, contingencies, construction management and
commissioning but excluding financing costs and late delivery penalties. Each
rig (other than the AMETHYST 5) will be equipped initially to conduct
drilling and subsea well intervention and maintenance services. In accordance
with the requirements of its charter, the AMETHYST 5 will be equipped
initially only for subsea well intervention and maintenance services.
The daily rates payable by Petrobras will be reduced or payment will be
excused in the case of specified events, including, among others:
o suspension of operations for various prescribed reasons, including
inspection or docking and measures imposed by insurers
o a total or partial failure or malfunction of any equipment which
delays or hinders operations
o low efficiency of drilling operations, as determined in accordance
with preset parameters
o specified occurrences arising as a result of the gross negligence of
our subsidiary (in the case of a charter) or Maritima (in the case
of a service rendering contract)
Petrobras may also levy fines of up to 30% of the operating rate for
non-compliance with the contract.
Under current Brazilian tax law, the daily rate payments made to our
subsidiaries pursuant to the charters will be subject to Brazilian withholding
taxes; however, the Brazilian withholding tax rate that would be currently
applicable to such payments equals 0%. Changes to Brazilian tax law in the
future may increase such rate. If any Brazilian withholding tax is imposed upon
and must be deducted from such a payment because of such a change in law, there
are provisions in the charters that require Petrobras to adjust the amount of
such payments such that, after taking such withholding taxes into account, our
subsidiaries will receive the same net amount they would have received had no
Brazilian withholding tax been imposed upon or deducted from such payment.
PERFORMANCE TESTS
Prior to commencement of operations, each rig must pass a general
performance test, to be completed over three days, to ensure that its equipment
works properly. A rig may begin operations if the performance test demonstrates
the good operating condition of the rig's main systems, including those that
provide and control energy generation and distribution, dynamic positioning,
industrial safety, liquid and bulk storage, fluid circulation and processing,
safety and wellhead, column elevation, rotation and handling, columns,
instrumentation, formation test equipment and communications.
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INSURANCE AND INDEMNIFICATION
The Petrobras contracts require each of our subsidiaries (in the case of
the charters) and Maritima (in the case of the service rendering contracts) to
maintain all-risk and civil liability insurance in amounts sufficient to cover
the risks inherent in the operation of our rigs. The terms and conditions of
such insurance must comply with applicable Brazilian law and certain standard
forms used in the London insurance market. Formaritima Ltd., our operating
manager, is responsible for the procurement of such insurance. In addition, each
charter and service rendering contract includes mutual indemnities for claims
arising out of the parties' respective gross negligence.
We have obtained all-risk insurance for physical loss and damage to each
rig due to insured events, such as traditional fire, casualty and marine perils,
force majeure, terrorism, confiscation, expropriation, nationalization and
deprivation. Specified limits and a $250,000 deductible per event apply.
In the event Petrobras terminates a Petrobras contract as a result of an
insured event, loss of hire coverage entitles us to payment of the relevant
rig's operating rate for a maximum of 365 days, subject to a 21-day waiting
period. In the event of a successful remarketing of the relevant rig, the
insurance will pay any daily charter rate differential between the canceled
charter and the replacement charter and any mobilization, towing, reoutfitting
or similar expenses incurred in recontracting the rig. Total recovery under the
loss of hire coverage is limited to the value of the relevant rig's operating
rate for 365 days. The loss of hire coverage does not contemplate any deductible
other than amounts foregone during the 21-day waiting periods.
TERMINATION
Petrobras may terminate a Petrobras contract as a result of any of the
following:
o non-performance or irregular performance of its terms and conditions
o the total or partial subcontracting of the responsibilities of our
subsidiary or Maritima, as the case may be, under such Petrobras
contract
o an interruption in operations without cause and notice to Petrobras
for more than 60 days
o the bankruptcy or dissolution of our subsidiary party to such
Petrobras contract or Maritima, as the case may be
o the ordering of a suspension of operations by applicable authorities
that lasts for more than 60 days
o the maximum amount of fines, being 10% of the total estimated
contract value, having been levied
o delay in the performance of operations as a result of which
Petrobras can prove the impossibility of completing such operations
within established time limits
o non-compliance with the conclusions and instructions of a Petrobras
inspector
o a change in the corporate purposes or capital structure of our
subsidiary party to such Petrobras contract or Maritima, as the case
may be, either of which, in Petrobras' opinion, hinders such
subsidiary's or Maritima's ability to perform its obligations
o delay in delivery of the relevant rig or commencement of the initial
term exceeding 540 days unless our subsidiary party to such
Petrobras contract or Maritima, as the case may be, can demonstrate
that it is using its "best endeavors" to make delivery
o the termination of the corresponding service rendering contract or
charter, as applicable
o the interruption of operations for maintenance, repairs and certain
other work for a period totaling more than 30% of any six-month
period
o other suspensions of operations for protracted periods
Petrobras may choose to suspend payment under the relevant contract until the
circumstances triggering a termination event have been cured.
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SERVICES PROVIDED
Our rigs will conduct offshore drilling and subsea well intervention and
maintenance operations for Petrobras pursuant to the charters. (You should read
the discussion under the heading "--Threatened Cancellation of Our Charters"
beginning on page 33 for information regarding the threatened cancellation of
our charters.) In order to perform these services, we will provide our rigs,
equipment and crews and generally will be responsible for the payment of
operating and maintenance expenses. Our rigs will require crews of approximately
55 persons whom we will procure through contracts with affiliates of our owners
and Workships. (You should read the discussion under the heading "--Operating
Management" beginning on page 48 for a description of these contracts.) The
AMETHYST 4, AMETHYST 6 and AMETHYST 7 are contracted and have been equipped to
provide offshore drilling services to Petrobras pursuant to their charters. The
AMETHYST 5 is contracted and has been equipped initially to provide only subsea
well intervention and maintenance services to Petrobras pursuant to its charter.
OFFSHORE CONTRACT DRILLING SERVICES
Offshore contract drilling services involve the drilling of wells for oil
and gas located beneath the seabed. Such services are generally provided by
drillships, jack-ups or semi-submersible rigs. The level of demand for offshore
contract drilling services is highly cyclical and is influenced by many factors,
including the current and anticipated prices for oil and gas and the
availability of drilling units. Our rigs can carry out rotary drilling services
for exploratory and development wells in water depths of up to approximately
5,000 feet.
MAINTENANCE SERVICES
Maintenance services are required on producing oil and gas wells to ensure
efficient, continuous operation. These services consist of mechanical repairs
necessary to maintain production from the well, such as repairing parted sucker
rods and replacing defective downhole pumps in an oil well or replacing
defective tubing in a gas well. Maintenance services may be performed on both
oil and gas wells but are more often required on oil wells.
Maintenance services generally are required throughout the life of a well.
The need for these services does not depend on the level of drilling activity
and generally is independent of short-term fluctuations in oil and gas prices.
For these reasons, the demand for maintenance services generally is more stable
than for other well servicing activities. The general level of maintenance,
however, is affected by changes in the total number of producing oil and gas
wells in a region.
WELL INTERVENTION SERVICES
In addition to periodic maintenance, producing oil and gas wells
occasionally require major repairs or modifications called well interventions.
Well intervention services include the opening of new producing zones in an
existing well, recompletion of a well in which production has declined, drilling
out plugs and packers and conversion of a producing well to an injection well
during enhanced recovery operations. Well intervention operations normally are
performed by a well servicing rig with additional specialized accessory
equipment, which may include rotary drilling equipment, mud pumps, mud tanks and
blowout preventers, depending upon the particular type of well intervention
operation. Our rigs are designed and equipped to handle the more complex well
intervention operations. A well intervention may last from a few days to several
weeks.
OPERATING MANAGEMENT
OVERALL MANAGEMENT
Formaritima Ltd., a British Virgin Islands corporation owned 50% by a
subsidiary of Pride and 50% by affiliates of Maritima, will provide the overall
management of our rigs during and after their operation under the charters.
Formaritima has agreed to manage and maintain our rigs in accordance with good
oil industry practice, efficiently and economically, to the best of its
professional ability with respect to performance, safety and shipshape
appearance, and to arrange, at all times, technical supervision to ensure that
our rigs are kept in a seaworthy condition and with valid certificates.
Formaritima's services will include mobilization of our rigs to Brazil, the
operation and maintenance of our rigs under the charters, the remarketing of our
rigs upon termination of the charters, the maintenance of adequate insurance on
our rigs and related equipment at all times and the preparation of budgets and
reports and the performance of other administrative tasks. Formaritima will
maintain at all times all-risk hull and machinery insurance in amounts equal to
the full market value of each rig and third-party liability insurance covering
our subsidiaries and Formaritima. Premiums for such insurance and deductibles
will be paid by each subsidiary. Formaritima will perform its responsibilities
with the support of, and personnel seconded from, Pride-Foramer and Maritima. A
number of drilling employees, base personnel and ship crews that will operate
our rigs have been identified and are currently being trained using simulation
in Maritima's Macae operating base and on Pride's NYMPHEA, a moored,
third-generation semi-submersible drilling rig currently operating offshore
Brazil for Petrobras.
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The management agreement of each subsidiary with Formaritima may be
terminated by such subsidiary if:
o it is dissatisfied for sound reasons with the performance of
Formaritima and Formaritima fails to remedy the matters complained
of within 90 days after receiving written notice thereof
o Formaritima is bankrupt
o Formaritima ceases or threatens to cease to carry on its business
Formaritima may terminate the management agreement with a subsidiary if
such subsidiary fails to pay the fees due Formaritima within 30 days after the
due date and Formaritima gives such subsidiary 30 days' prior notice. The
management agreement in respect of a rig terminates in the event of the total
loss of such rig. Each subsidiary has agreed to indemnify Formaritima for any
actions or liabilities brought by or incurred by Formaritima in connection with
its performance under such subsidiary's management agreement, except to the
extent such actions or liabilities result from the gross negligence or willful
misconduct of Formaritima, in which case Formaritima's liability is limited to
the aggregate amount of management fees received by Formaritima in the preceding
12 months with respect to each rig.
Pursuant to technical services agreements, Pride-Foramer will provide to
Formaritima certain personnel, including, among others, for each rig as
applicable, the general manager, rig manager, site manager, chief engineer,
chief electrician, chief mechanic, blowout preventer engineer, electronic
technician and hydraulic technician. In addition, Pride-Foramer has agreed to
furnish certain technical services to Formaritima, including but not limited to:
o support in provision of non-local insurance and settlement of
non-local insurance disputes
o international freight forwarding
o marketing advice and services
o international procurement services
o head office technical assistance and support for the operation of
each rig
o preparation of monthly budgets on a semi-annual basis
Pursuant to local services agreements, Maritima will provide to
Formaritima Brazilian personnel, including, among others, drill engineer,
driller, barge engineer, bosun and chief mechanic. In addition, Maritima has
agreed to provide certain Brazilian local services that include but are not
limited to the provision of:
o local rig and base personnel
o commercial services
o offices
o customs clearances for our rigs, equipment and spare parts
o local insurance
o marketing advice and service
o visas and work permit applications
o legal assistance concerning rig and base operational health, safety
and environmental issues
o local freight forwarding
o assistance and advice to minimize the impact of customs duties and
import taxes
The technical services agreement and local services agreement in respect
of a rig terminates in the event of the total loss of such rig. Formaritima may
terminate a technical services agreement or local services agreement if
Formaritima is not satisfied for sound reasons with the performance of the
applicable service provider and such service provider fails to correct such
deficiencies within 15 days or such service provider is bankrupt. Formaritima
and each subsidiary have agreed to indemnify Pride-Foramer and Maritima for any
actions or liabilities brought by or incurred by them in connection with their
performance under the technical services agreement and local services agreement,
respectively, except to the extent such actions or liabilities arise from their
gross negligence or willful misconduct. You should read the discussion under the
heading "Certain Relationships and Related Transactions--Compensation of
Owner-Related Parties" beginning on page 54 for information regarding the
compensation of Maritima and Pride-Foramer pursuant to the technical services
agreements and local services agreements.
MARINE AND NAUTICAL MANAGEMENT
Each subsidiary (directly or through Formaritima) has retained Workships
to manage the marine and nautical operations of its rig, including its
mobilization to Brazil. Workships has agreed to manage and maintain each rig in
accordance with good marine practice, efficiently and economically, to the best
of its professional ability in regard to performance, safety and shipshape
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appearance, and to arrange, at all times, technical supervision to ensure that
each rig is kept in a seaworthy condition and with valid certificates. Workships
will:
o arrange for the marine operations of each rig and all marine
equipment used on or from each rig
o procure the supply of all equipment and materials required in
connection with the marine operation and maintenance of each rig
o provide for technical supervision, repairs, classification and
customary maintenance of each rig
o take out and maintain workmen's compensation insurance policies,
comprehensive general liability insurance policies and insurance
policies required to cover Workships' equipment and materials and
those belonging to any service companies for which Workships is
responsible
o prepare and submit budgets and reports and perform other
administrative duties
As compensation for its services, Workships will be entitled to
reimbursement for any costs incurred by it plus a management fee of $1,250 per
day per rig. If a rig is sold and Workships' services are terminated with
respect to that rig, Workships will be entitled to a lump sum termination
payment equal to the net present value of its management fees over the remaining
term of such rig's charter, calculated using a discount factor of 10% per annum.
Each marine and nautical services agreement may be terminated by the
relevant subsidiary or Formaritima, as applicable, if such subsidiary or
Formaritima, as applicable, is dissatisfied for sound reasons with the
performance of Workships and Workships fails to remedy the matters complained of
within 30 days after receiving written notice thereof, Workships is bankrupt or
Workships ceases to carry on its business. Workships may terminate a marine and
nautical services agreement if the fees due Workships remain unpaid within 30
days after the due date. The marine and nautical services agreement in respect
of a rig terminates in the event of the total loss of such rig. Each subsidiary
or Formaritima, as applicable, has agreed to indemnify Workships for any actions
or liabilities brought by or incurred by Workships in connection with its
performance under the corresponding marine and nautical services agreement,
except to the extent such actions or liabilities result solely from the gross
negligence or willful misconduct of Workships, in which case Workships'
liability is limited to the aggregate of the management fees received by
Workships in the preceding 12 months.
Workships has significant experience in providing offshore vessel marine
management services that include vessel financing, purchasing, insurance and
maintenance, general management of hardware and software, vessel engineering and
the procurement of marine personnel. Since its inception in 1988, Workships has
managed vessels throughout the world and presently manages vessels in Brazil,
the Far East, Mexico and the North Sea. Workships' experience includes the
marine management of the AMETHYST 1.
REMARKETING
Formaritima will be the agent for each of our subsidiaries in remarketing
its rig after the expiration of its charter. Formaritima's duties will include,
among others, ensuring the best possible remarketing of each rig upon expiration
of its charter in order to keep it in suitable employment as long as possible
and presenting proposals and conducting negotiations for contracts for the
further employment of each rig. Formaritima will take advantage of the
significant experience of Maritima and Pride in remarketing our rigs.
PERMITS AND REGULATION
We must comply with the applicable laws, regulations and statutory and
regulatory standards of Brazil and other jurisdictions relating to offshore
oilfield services and will be subject to their ongoing application and
enforcement. In addition, many permits and regulatory approvals are required for
the operation of our rigs under applicable laws and regulations, although a few
of these permits are not currently required and have not yet been obtained. Of
those permits and approvals which have been obtained, some are subject to
certain conditions. Permits and approvals that are still outstanding may, when
issued, similarly be subject to conditions. Delay in receipt of, or failure to
obtain, required permits or approvals and/or failure to satisfy the conditions
of any permit could delay a rig's construction, restrict its operation or result
in additional costs or additional taxes.
Our rigs will be constructed in compliance with the rules and regulations
of Lloyds Registry of London. We expect that compliance with these rules and
regulations will allow our rigs to operate with unrestricted service on a
worldwide basis. In addition, our rigs are required under the charters to comply
with the Petrobras safety rules and will be outfitted accordingly.
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Each rig will be registered in the Bahamas. The Bahamian Registry will be
responsible for carrying out the inspections that will allow our rigs to comply
with their class requirements. In this regard, the Bahamian Registry recognizes
a valid certificate from Lloyds Registry of London.
ENVIRONMENTAL MATTERS
The operation of our rigs will routinely involve the handling of waste
materials, some of which are classified as hazardous substances. The laws,
regulations and requirements that will be applicable to the operation of our
rigs include, but are not limited to, laws and regulations controlling the
containment, disposal and discharge of hazardous oilfield waste and other
nonhazardous waste material into the environment, laws and regulations requiring
removal and cleanup under certain circumstances or otherwise relating to the
protection of the environment, and certification, licensing and other
requirements imposed by treaties, laws, regulations and conventions in Brazil.
These laws, regulations and requirements potentially expose us to civil
penalties, criminal sanctions and closure orders for non-compliance. Some of
these laws impose joint and several liability (without regard to fault) on
owners of the related mineral interests and drilling operators (like us) for
environmental damage. We will make substantial expenditures to comply with these
environmental laws. We cannot assure that future environmental costs will not
have a material adverse effect on our results of operations or financial
condition. Since environmental laws are becoming more stringent in Brazil, our
environmental capital expenditures and costs for environmental compliance may be
significant in the future. In addition, due to the possibility of unanticipated
regulatory or other developments, the amount and timing of future environmental
expenditures may vary widely from those currently anticipated. Our management
does not believe that compliance with existing environmental laws will have a
material adverse effect on our financial condition or results of operations.
We are obligated under the documents relating to the old and new notes and
the Mitsubishi and MARAD financings and various other documents to obtain and
keep in full force and effect insurance providing coverage for risks inherent in
the operation of our rigs. Under the charters, Petrobras has agreed, under
specified circumstances, to hold our subsidiaries harmless for any damages to
reservoirs and any damages arising from pollution at the well as a result of
kick or blowout and to limit the liability of our subsidiaries for spills of
petroleum, oil and other residues, other than when caused by events arising from
kick, blowout, surgings or formation testing, and direct losses and damages to
the equipment of Petrobras and third parties and damages to wells. We cannot
assure that insurance coverages will be available in the future on commercially
reasonable terms or that the amounts for which we are insured or indemnified or
which we receive under such coverages or indemnifications will cover all losses
or increased expenses. The occurrence of a significant event against which we
are not fully insured or indemnified or a number of lesser events against which
we are insured but subject to substantial deductibles could materially and
adversely affect our ability to repay the new notes.
EMPLOYEES
We have no employees and do not expect to hire our own employees for the
foreseeable future. Instead, each subsidiary has contracted with Petrodrill
Engineering, Formaritima and Workships to provide experienced construction
management personnel, ship crews, base personnel and oil drilling employees. You
should read the discussion under the headings "--Construction, Mobilization and
Delivery to Petrobras--Construction Management" and "--The Petrobras
Contracts--Operating Management" for further information regarding these
arrangements. Maritima and Pride are undertaking to train the rig crews in
advance of the completion of the construction of our rigs. Some but not all of
the oil drilling employees, base personnel and ship crews have been identified,
assembled and hired. The drilling employees, base personnel and ship crews that
have been identified currently are being trained in Maritima's Macae, Brazil
operating base and on Pride's NYMPHEA. Once our rigs become operational,
Formaritima and Workships will employ more than 350 people, including employees
directly hired and contracted in the case of Workships and employees seconded
from Maritima, Pride and their affiliates in the case of Formaritima. All
seconded and direct employees of Petrodrill Engineering, Formaritima and
Workships are expected to be exempt personnel and only contracted employees are
expected to be covered by one or more collective bargaining agreements. We do
not expect labor relations to be materially adverse or disruptive of our
operations.
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MANAGEMENT
The following table sets forth the names, ages and positions of our
directors and executive officers and the executive officers of Petrodrill
Engineering and Formaritima.
NAME AGE POSITION
- - ---- --- --------
German Efromovich....... 49 Our Director and President
John O'Leary............ 43 Our Director and Vice President
Hamylton Padilha........ 39 Our Director and Vice President
Ricardo Szpigel......... 27 Our Director
Earl W. McNiel.......... 41 Our Treasurer
Robert W. Randall....... 57 Our Secretary
Derek Leach............. 49 Project Director of Petrodrill Engineering
Peter Hickson........... 50 Deputy Project Director of Petrodrill Engineering
Steve Assiter........... 42 Financial Director and Chief Financial Officer
of Petrodrill Engineering
Peter Jeffrey........... 52 Construction Manager of Petrodrill Engineering
Jacques Stokking........ 50 General Manager of Formaritima
German Efromovich has been our Director and President since March 1998 and
is a founder and has been President of Maritima since 1981. Mr. Efromovich has
been involved in the oil and gas business for over 20 years and holds
significant interests in various service companies, including Brasitest S.A.,
which provides inspection services and non-destructive testing.
John O'Leary has been our Director and Vice President since March 1998 and
Pride's Vice President--Worldwide Marketing since March 1997. Mr. O'Leary was
Manager, Marketing and Business Development of Forasol S.A. from June 1993 to
March 1997 (when Forasol S.A. was acquired by Pride), with primary
responsibility for worldwide business development. Mr. O'Leary joined Forasol
S.A. in August 1985.
Hamylton Padilha has been our Vice President since March 1998, our
Director since October 1999 and Maritima's Director--Drilling and Floating
Production Projects since January 1995. Mr. Padilha was Marketing Director for
the Drilling Division of Odebrecht Perfuracoes Ltda., one of Brazil's largest
drilling contractors, from 1990 to 1995.
Ricardo Szpigel has been our Director since October 1999 and Maritima's
Financial Manager since May 1996. Prior to joining Maritima, Mr. Szpigel had
been International Trade Manager for REM--Industria e Comercio Ltda., a supplier
of medical and industrial products and an affiliate of Maritima, since 1994. Mr.
Szpigel received his Masters degree in Business Administration from Universidade
Paulista in 1994.
Earl W. McNiel has been our Treasurer since March 1998 and Pride's Vice
President and Chief Financial Officer since February 1997. He joined Pride in
September 1994 as its Chief Accounting Officer. From 1990 to 1994, Mr. McNiel
served as Chief Financial Officer of several publicly owned waste management
companies.
Robert W. Randall has been our Secretary since March 1998 and Pride's Vice
President and General Counsel since May 1991. He was elected Secretary of Pride
in 1993. Prior to 1991, he was Senior Vice President, General Counsel and
Secretary for Tejas Gas Corporation, a natural gas transmission company.
Derek Leach has been Project Director of Petrodrill Engineering since
February 1998. Mr. Leach has 23 years of experience in the subsea construction
business during which time he has worked for Coflexip Stena Offshore, Whartom
Williams Taylor and Vickers Oceanics. From 1996 to 1998, Mr. Leach was the
Senior Executive Vice President of Coflexip Stena Offshore responsible for
worldwide subsea construction activity and offshore vessel and equipment
operations. From 1995 to 1996, Mr. Leach was Coflexip Stena's Senior Vice
President--North Sea Operations and Offshore Resources. Prior to the merger of
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Coflexip S.A. and Stena Offshore, Mr. Leach had been General Manager of Stena
Offshore N.V. in charge of western hemisphere and offshore resources since 1989.
Peter Hickson has been Deputy Project Director of Petrodrill Engineering
since February 1998. Mr. Hickson has 27 years of experience in the oil and gas
and contract drilling industry. From 1982 to 1990, Mr. Hickson was the Managing
Director of Houlder Offshore. During this period, Mr. Hickson negotiated and
managed the construction of seven offshore drilling rigs in five different
shipyards. Since 1990, Mr. Hickson has been an independent consultant for oil
and gas companies seeking to establish overseas operations or undertake rig
construction projects.
Steve Assiter has been Petrodrill Engineering's Financial Director and
Chief Financial Officer since March 30, 1998. Previously, Mr. Assiter spent
three years as Vice President and Group Controller for Coflexip Stena Offshore.
Prior to the merger of Coflexip S.A. and Stena Offshore, Mr. Assiter had been
Financial Director/CFO of Stena Offshore N.V. since 1986.
Peter Jeffrey has been the Construction Manager of Petrodrill Engineering
since April 1998. Prior to April 1998, Mr. Jeffrey was New Building and
Conversions Manager for Coflexip Stena Offshore. Mr. Jeffrey has 35 years
experience in the marine, shipbuilding, offshore exploration and construction
industries. This experience includes 21 years of construction, conversion and
technical and project management experience for dynamically positioned vessels
and semi-submersible drilling rigs with Coflexip Stena Offshore, Stena Offshore,
Houlder Offshore and Offshore International.
Jacques Stokking was appointed General Manager of Formaritima in August
1999. Mr. Stokking has 23 years of experience in the oil and gas industry. From
1994 to 1999, he was Human Resources Manager for Forasol S.A., which is based in
Paris and was acquired by Pride in March 1997. From 1986 to 1994 he was
Worldwide Operations Manager for Forasol S.A. From 1984 to 1986 he was District
Manager for Forasol's joint venture in Brazil operating dynamically positioned
drillships and semi-submersibles.
EXECUTIVE AND BOARD COMPENSATION AND BENEFITS
Our directors and officers receive no compensation from us. Our operations
are conducted through management agreements with Petrodrill Engineering,
Formaritima and Workships. The compensation structure for such service providers
are set forth in their respective management agreements. You should read the
discussion under the heading "Certain Relationships and Related
Transactions--Compensation of Owner-Related Parties" below for information
regarding the compensation of Petrodrill Engineering and Formaritima and the
discussion under the heading "Business--Operating Management--Marine and
Nautical Management" beginning on page 48 for information regarding the
compensation of Workships.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OWNERSHIP OF AMETHYST FINANCIAL COMPANY LTD. AND AFFILIATED SERVICE PROVIDERS
Maritima's interest in us is held by Drillpetro Inc., which owns 48.5% of
our outstanding capital stock, and Techdrill Inc., which owns 13.2% of such
stock. Drillpetro and Techdrill are special purpose affiliates of Maritima
incorporated in the Bahamas and created by Maritima to contribute equity to us.
Rainier Engineering Ltd., a company incorporated in the Bahamas, owns all of the
stock of Drillpetro and Techdrill and 40% of the stock of Maritima. Rainier's
shareholders directly own the remainder of the stock of Maritima. Westville
Management Corporation, a British Virgin Islands corporation and wholly owned
subsidiary of Pride, owns 26.4 % of our outstanding capital stock. The remainder
of our outstanding capital stock is held by two of First Reserve's investment
partnerships, First Reserve Fund VII, which owns 1.4% of our outstanding stock,
and First Reserve Fund VIII, which owns 10.5% of our outstanding stock. First
Reserve owns approximately 9.5% of the capital stock of Pride. The outstanding
capital stock of each of Petrodrill Engineering (see "Business--Construction,
Mobilization and Delivery to Petrobras--Construction Management" beginning on
page 39 for information regarding the role of Petrodrill Engineering) and BiGem
Holdings N.V. (see "--Compensation of Owner-Related Parties--Licensing
Agreement" beginning on page 54 for information regarding the role of BiGem)
are owned 55% by Drillpetro, 15% by Techdrill and 30% by Westville. Formaritima
(see "Business--The Petrobras Contracts--Operating Management" beginning on page
48 for information regarding the role of Formaritima) is owned 50% by Maritima
and 50% by Westville.
We have been capitalized with initial equity contributions by our owners
aggregating approximately $105.0 million. Petrodrill Engineering, Formaritima,
and BiGem (together with us, the companies of the Amethyst group) have been
capitalized with relatively modest equity contributions. The owners of the
Amethyst group that are affiliates of Maritima and Pride have agreed to
contribute, in proportion to their respective ownership interests, to each
member of the Amethyst group the amounts needed to fund the agreed capital and
operating budgets and any cost overruns. Any amounts so contributed will be
treated as subordinated loans repayable only following amortization of any
amounts due and outstanding in respect of any outside financing obtained by the
relevant member of the Amethyst group, including the financing provided by the
old and new notes; provided that
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if any owner fails to comply with its obligations to make such further
contributions, make-up contributions by the remaining owners will be treated as
equity contributions, entitling the remaining owners to additional shares in the
relevant Amethyst group member.
COMPENSATION OF OWNER-RELATED PARTIES
CONSTRUCTION AND OPERATING MANAGEMENT.
The construction management services being provided to each of our
subsidiaries by Petrodrill Engineering and to Petrodrill Engineering by
Pride-Foramer and Maritima (see "Business--Construction, Mobilization and
Delivery to Petrobras--Construction Management" beginning on page 39 for a
description of those services) are being provided at agreed-upon fixed prices
that approximate each such service provider's cost, including the full salaries
of personnel engaged full time as employees of Petrodrill Engineering and a pro
rata share of the salaries and other overhead costs for personnel who are
seconded from Pride-Foramer and Maritima.
For the operating management services that will be provided to each of our
subsidiaries by Formaritima and to Formaritima by Pride-Foramer and Maritima
(see "Business--The Petrobras Contracts--Operating Management" beginning on page
48 for a description of those services), each of the service providers will be
entitled to a management fee of $1,250 per day per rig, beginning on the first
day of sea trials, and reimbursement of all costs. The reimbursables payable by
each subsidiary to Formaritima will include the management fees and
reimbursables payable by Formaritima to Pride-Foramer and Maritima.
LICENSING AGREEMENT
Rights to the Amethyst design were purchased for $9.5 million in October
1997 from Scheepswerf de Hoop Lobith B.V. by BiGem Holdings N.V. BiGem has
granted each of our four subsidiaries an irrevocable, non-exclusive, perpetual
license to construct or procure the construction of one dynamically positioned
semi-submersible drilling rig based on the Amethyst design. The licensing
agreement provides that BiGem will furnish all necessary documentation
pertaining to the Amethyst design. As consideration for the license, BiGem will
receive $1,583,333 per rig, payable in six installments, the first and second
installments having previously been paid and each of the last four installments
becoming due semi-annually beginning on delivery of the relevant rig.
OTHER COMPENSATION PAYABLE TO AFFILIATES OF MARITIMA
Drillpetro is entitled to a lump-sum amount of $2.5 million (payable in
installments of $500,000, $1.0 million and $1.0 million for the AMETHYST 5, 6
AND 7, respectively, within three days of receipt of the corresponding
mobilization payments under the relevant Petrobras charter or, in the event of
no mobilization fee, within 45 days of delivery and acceptance of the relevant
rig) for services rendered in connection with the development of conceptual and
design engineering, shipyard negotiations and technical negotiations with
Petrobras. In addition, Drillpetro will be paid the following fees: (i) $4,000
in the case of AMETHYSTS 6 and 7 and (ii) $2,000 in the case of AMETHYSTS 4 and
5, for each day the relevant rig works under its charter, plus (i) in the case
of the AMETHYST 4, 1% of the daily rate paid under its charter (excluding
bonuses) and (ii) in the case of the AMETHYST 6 and AMETHYST 7, 2% of the daily
rates paid under their charters (excluding bonuses). Further, two other
affiliates of Maritima will receive agency fees of 3% and 2% of the full
operating rates under the Petrobras contracts (excluding bonuses), respectively,
payable monthly upon receipt of payments from Petrobras, for their assistance in
negotiating the Petrobras contracts and certain amendments thereto.
GOVERNANCE
The following discussion summarizes the shareholders' agreement among
Drillpetro, Techdrill and Westville relating to our governance:
RESTRICTIONS ON ASSIGNMENT OR TRANSFER
Except as described below under "Transfers to Third Parties," each
shareholder generally is prohibited from selling, mortgaging, charging,
assigning, transferring or otherwise disposing of its interest in us without the
approval of the other shareholders. A shareholder may transfer to an affiliate
all of its rights, duties and obligations under certain agreements, provided the
assigning shareholder remains primarily liable for performance by its affiliate.
EXIT MECHANISMS
There are four exit mechanisms by which the shareholders may monetize
their investments after September 2001, subject to the restriction under
"Description of New Notes--Change of Control." Such mechanisms are:
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o the sale of our rigs and/or all of our outstanding shares to a third
party
o the purchase by Westville or its nominee of Maritima's beneficial
interests in any rig or in us
o a public offering of our stock
o the exchange of Maritima's beneficial interests in us for shares of
common stock of Pride on terms to be agreed and based on industry
practice
SHAREHOLDER MEETINGS
No business may be transacted at a meeting of our shareholders unless one
representative of each shareholder is present, provided that the representatives
present may reconvene the meeting at a later date and, at such date, transact
business noted on the agenda for such reconvened meeting by vote of a majority
of issued shares. In lieu of meeting, the shareholders may act by unanimous
written consent, which consent will have the same effect as an action duly taken
at a meeting.
BOARD OF DIRECTORS
Our board of directors consists of four directors. Two directors may be
appointed by Drillpetro and one each are appointed by Westville and Techdrill. A
quorum at a meeting of the board of directors requires the attendance of all
four directors or their alternates, but a director will not be eligible to vote
at a validly held meeting unless the shareholder whom he represents has complied
with all capital contribution requirements. Decisions of the board of directors
must be made by vote of directors representing a majority of the shares issued
and outstanding, subject to certain exceptions requiring unanimity. Our board of
directors is required to meet at least once every two months during the
construction of our rigs and at least once every three months thereafter.
DEADLOCK AT BOARD LEVEL
In the event that our directors are unable to reach a unanimous decision
on a matter requiring unanimity or unable to establish a quorum for a meeting to
discuss such a matter within 10 days after such a meeting has initially been
called (either of these events constituting a deadlock), and senior management
cannot resolve such deadlock, any shareholder may initiate standard buy-sell
procedures.
MANAGEMENT COMMITTEE
The shareholders may form a management committee consisting of one
representative of each shareholder to supervise the construction of our rigs and
subsequent operations. Decisions of such management committee must be unanimous.
In the event deadlock exists in the management committee, the matter will be
referred to the board of directors for resolution.
TRANSFERS TO THIRD PARTIES
After September 2001 and subject to any restrictions imposed by the
instruments governing our indebtedness, a shareholder may transfer all, but not
part, of its interest in us (including any subordinated loans) to a
non-affiliate to the extent such non-affiliate agrees to be bound by all the
terms of the related governance agreements. Such transfer will be subject to the
rights of first refusal of the other shareholders allowing them to purchase the
interests of the selling shareholder under the same terms offered by the
non-affiliate, pro rata in proportion to their existing interests.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the old notes, we entered into a
registration rights agreement with the initial purchaser of the old notes. In
that agreement, we agreed to file a registration statement relating to an offer
to exchange the old notes for new notes and to use our reasonable best efforts
to complete the exchange offer within 180 days after November 1, 1999. We are
offering the new notes under this prospectus to satisfy our obligations under
the registration rights agreement.
RESALE OF NEW NOTES
Based on interpretations of the SEC staff in "no action letters" issued to
third parties, we believe that each new note issued in the exchange offer may be
offered for resale, resold and otherwise transferred by you without compliance
with the registration and prospectus delivery provisions of the Securities Act
if all of the following are true:
o you are not our "affiliate" within the meaning of Rule 405 under the
Securities Act
o you acquire such new notes in the ordinary course of your business
o you do not intend to participate in the distribution of new notes
However, the SEC has not considered this exchange offer in the context of
a no-action letter, so there can be no assurance that the staff of the SEC would
make a similar determination with respect to this exchange offer. If you tender
your old notes in the exchange offer with the intention of participating in any
manner in a distribution of the new notes, you:
o cannot rely on such interpretations by the SEC staff
o must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary
resale transaction
Unless an exemption from registration is otherwise available, the resale
by any securityholder intending to distribute new notes should be covered by an
effective registration statement under the Securities Act containing the selling
securityholder's information required by Item 507 or Item 508, as applicable, of
Regulation S-K under the Securities Act. This prospectus may be used for an
offer to resell, resale or other retransfer of new notes only as specifically
described in this prospectus. Only those broker-dealers that acquired the old
notes as a result of market-making activities or other trading activities may
participate in the exchange offer. Each broker-dealer that receives new notes
for its own account in exchange for old notes, where that broker-dealer acquired
such old notes as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such new notes. You should read the discussion under the
heading "Plan of Distribution" beginning on page __ for more details regarding
the transfer of new notes.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions described in this prospectus
and in the letter of transmittal, we will accept for exchange any old notes
properly tendered and not withdrawn prior to the expiration date of the exchange
offer for new notes. We will issue $1,000 principal amount of new notes in
exchange for each $1,000 principal amount of old notes surrendered under this
exchange offer. Old notes may be tendered only in integral multiples of $1,000.
This exchange offer is not conditioned upon any minimum aggregate principal
amount of old notes being tendered for exchange.
As of this date, $53 million principal amount of 11 3/4% Senior Secured
Notes due 2001 are outstanding. This prospectus and the letter of transmittal
are being sent to all registered holders of old notes. There will be no fixed
record date for determining registered holders of old notes entitled to
participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the provisions
of the registration rights agreement, the applicable requirements of the
Securities Act of 1933 and the Securities Exchange Act of 1934 and the rules and
regulations of the SEC. Old notes that are not tendered for exchange in the
exchange offer:
o will remain outstanding
o will continue to accrue interest
o will be entitled to the rights and benefits that holders have under
the indenture relating to the notes and the registration rights
agreement
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We will be deemed to have accepted for exchange properly tendered old
notes when we have given oral or written notice of the acceptance to the
exchange agent and complied with the applicable provisions of the registration
rights agreement. The exchange agent will act as agent for the tendering holders
for the purposes of receiving the new notes from us.
If you tender old notes in the exchange offer, you will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of old notes. We
will pay all charges and expenses, other than certain applicable taxes described
below, in connection with the exchange offer. It is important that you read the
section labeled "--Fees and Expenses" for more details about fees and expenses
incurred in the exchange offer.
We will return any old notes that we do not accept for exchange for any
reason without expense to the tendering holder as promptly as practicable after
the expiration or termination of the applicable exchange offer.
EXPIRATION DATE
Each exchange offer will expire at 5:00 p.m., New York City time, on ,
2000, unless, in our sole discretion, we extend the expiration date.
EXTENSIONS, DELAY IN ACCEPTANCE, TERMINATION OR AMENDMENT
We expressly reserve the right, at any time or at various times, to extend
the period of time during which this exchange offer is open. We may delay
acceptance of any old notes for exchange by giving oral or written notice of the
extension to holders of old notes. During any such extensions, all old notes you
have previously tendered will remain subject to the exchange offer, and we may
accept them for exchange.
To extend an exchange offer, we will notify the exchange agent orally or
in writing of any extension. We also will make a public announcement of the
extension no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
If any of the conditions described below under "Conditions to the
Exchange Offer" have not been satisfied with respect to the exchange offer, we
reserve the right, in our sole discretion:
o to delay accepting for exchange any old notes
o to extend that exchange offer
o to terminate that exchange offer
by giving oral or written notice of such delay, extension or termination to the
exchange agent. Subject to the terms of the registration rights agreement, we
also reserve the right to amend the terms of that exchange offer in any manner.
Any delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders of old notes. If we amend the exchange offer in a manner that
we determine to constitute a material change, we will promptly disclose that
amendment by means of a prospectus supplement. We will distribute the supplement
to the registered holders of the old notes. Depending upon the significance of
the amendment and the manner of disclosure to the registered holders, we will
extend the exchange offer if the exchange offer would otherwise expire during
such period.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
CONDITIONS TO THE EXCHANGE OFFER
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or to exchange any new notes for any old notes, and we may
terminate the exchange offer as provided in this prospectus before accepting any
old notes for exchange, if, in our reasonable judgment, either of the following
is true:
o the exchange offer, or the making of any exchange by a holder of old
notes, would violate applicable law or any applicable interpretation
of the staff of the SEC
o any action or proceeding has been instituted or threatened in any
court or by or before any governmental agency with respect to the
exchange offer that, in our judgment, would reasonably be expected
to impair our ability to proceed with that exchange offer
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In addition, we will not be obligated to accept for exchange the old notes
of any holder that has not made to us both of the following:
o the representations described under "--Procedures for Tendering" and
"Plan of Distribution"
o such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make
available to us an appropriate form for registering the new notes
under the Securities Act
We expressly reserve the right to amend or terminate each exchange offer,
and to reject for exchange any old notes not previously accepted for exchange in
that exchange offer, upon the occurrence of any of the conditions to the
exchange offer specified above. We will give oral or written notice of any
extension, amendment, non-acceptance or termination to the holders of the old
notes affected as promptly as practicable.
These conditions are for our sole benefit, and we may assert them or waive
them in whole or in part at any time or at various times in our sole discretion.
Our failure at any time to exercise any of these rights will not mean that we
have waived our rights. Each right will be deemed an ongoing right that we may
assert at any time or at various times.
In addition, we will not accept for exchange any old notes tendered, and
will not issue new notes in exchange for any such old notes, if at such time any
stop order has been threatened or is in effect with respect to the registration
statement of which this prospectus constitutes a part or the qualification of
the indenture relating to the notes under the Trust Indenture Act of 1939.
PROCEDURES FOR TENDERING
HOW TO TENDER GENERALLY
Only a holder of old notes may tender such old notes in the exchange
offer. To tender in the exchange offer, a holder must either (1) comply with the
procedures for physical tender or (2) comply with the automated tender offer
program procedures of The Depository Trust Company, or DTC, described below.
To complete a physical tender, a holder must do all of the following:
o complete, sign and date the letter of transmittal or a facsimile of
the letter of transmittal
o have the signature on the letter of transmittal guaranteed if the
letter of transmittal so requires
o mail or deliver the letter of transmittal or facsimile to the
exchange agent prior to the expiration date
o deliver the old notes to the exchange agent prior to the expiration
date or comply with the guaranteed delivery procedures described
below
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at its
address provided above under "Prospectus Summary--The Exchange Agent" prior to
the expiration date.
To complete a tender through DTC's automated tender offer program, the
exchange agent must receive, prior to the expiration date, a timely confirmation
of book-entry transfer of such old notes into the exchange agent's account at
DTC according to the procedure for book-entry transfer described below or a
properly transmitted agent's message.
The tender by a holder that is not withdrawn prior to the expiration date
and our acceptance of that tender will constitute an agreement between the
holder and us in accordance with the terms and subject to the conditions
described in this prospectus and in the letter of transmittal.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
RATHER THAN MAIL THESE ITEMS, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. YOU SHOULD NOT SEND
THE LETTER OF TRANSMITTAL OR OLD NOTES TO US. YOU MAY REQUEST YOUR BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE ABOVE
TRANSACTIONS FOR YOU.
HOW TO TENDER IF YOU ARE A BENEFICIAL OWNER
If you beneficially own old notes that are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and you wish to
tender those notes, you should contact the registered holder as soon as possible
and instruct the registered holder to tender on your behalf. If you are a
beneficial owner and wish to tender on your own behalf, you must, prior to
completing and executing the letter of transmittal and delivering your old
notes, do either of the following:
o make appropriate arrangements to register ownership of the old notes
in your name
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o obtain a properly completed bond power from the registered holder of
your old notes
The transfer of registered ownership may take considerable time and may
not be completed prior to the expiration date.
SIGNATURES AND SIGNATURE GUARANTEES
You must have signatures on a letter of transmittal or a notice of
withdrawal described below guaranteed by an "eligible institution" unless the
old notes are tendered:
o by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions"
on the letter of transmittal
o for the account of an eligible institution
An "eligible institution" is a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States, or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, that is a member of one of
the recognized signature guarantee programs identified in the letter of
transmittal.
WHEN ENDORSEMENTS OR BOND POWERS ARE NEEDED
If a person other than the registered holder of any old notes signs the
letter of transmittal, the old notes must be endorsed or accompanied by a
properly completed bond power. The registered holder must sign the bond power as
the registered holder's name appears on the old notes. An eligible institution
must guarantee that signature.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, those
persons should so indicate when signing. Unless we waive this requirement, they
also must submit evidence satisfactory to us of their authority to deliver the
letter of transmittal.
TENDERING THROUGH DTC'S AUTOMATED TENDER OFFER PROGRAM
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use DTC's automated tender offer
program to tender. Accordingly, participants in the program may, instead of
physically completing and signing the letter of transmittal and delivering it to
the exchange agent, transmit their acceptance of the exchange offer
electronically. They may do so by causing DTC to transfer the old notes to the
exchange agent in accordance with its procedures for transfer. DTC will then
send an agent's message to the exchange agent.
An "agent's message" is a message transmitted by DTC to and received by
the exchange agent and forming part of the book-entry confirmation, stating
that:
o DTC has received an express acknowledgment from a participant in
DTC's automated tender offer program that is tendering old notes
that are the subject of such book-entry confirmation
o the participant has received and agrees to be bound by the terms of
the letter of transmittal or, in the case of an agent's message
relating to guaranteed delivery, the participant has received and
agrees to be bound by the applicable notice of guaranteed delivery
o we may enforce the agreement against such participant
DETERMINATIONS UNDER THE EXCHANGE OFFER
We will determine in our sole discretion all questions as to the validity,
form, eligibility, time of receipt, acceptance of tendered old notes and
withdrawal of tendered old notes. Our determination will be final and binding.
We reserve the absolute right to reject any old notes not properly tendered or
any old notes our acceptance of which, in the opinion of our counsel, might be
unlawful. We also reserve the right to waive any defects, irregularities or
conditions of the exchange offer as to particular old notes. Our interpretation
of the terms and conditions of the exchange offer, including the instructions in
the letter of transmittal, will be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
old notes must be cured within such time as we determine. Neither we, the
exchange agent nor any other person will be under any duty to give notification
of defects or irregularities with respect to tenders of old notes, nor will we
or those persons incur any liability for failure to give such notification.
Tenders of old notes will not be deemed made until such defects or
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irregularities have been cured or waived. Any old notes received by the exchange
agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned to the tendering
holder, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.
WHEN WE WILL ISSUE NEW NOTES
In all cases, we will issue new notes for old notes that we have accepted
for exchange in the exchange offer only after the exchange agent timely receives
both of the following:
o old notes or a timely book-entry confirmation of such old notes into
the exchange agent's account at DTC
o a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message
RETURN OF OLD NOTES NOT ACCEPTED OR EXCHANGED
If we do not accept any tendered old notes for exchange for any reason
described in the terms and conditions of the exchange offer or if old notes are
submitted for a greater principal amount than the holder desires to exchange, we
will return the unaccepted or non-exchanged old notes without expense to their
tendering holder. In the case of old notes tendered by book-entry transfer into
the exchange agent's account at DTC according to the procedures described below,
such non-exchanged old notes will be credited to an account maintained with DTC.
These actions will occur as promptly as practicable after the expiration or
termination of the exchange offer.
YOUR REPRESENTATIONS TO US
By signing or agreeing to be bound by the letter of transmittal, you will
represent to us that, among other things:
o any new note you receive will be acquired in the ordinary course of
your business
o you have no arrangement or understanding with any person to
participate in the distribution of the new notes or the old notes
within the meaning of the Securities Act
o you are not our "affiliate," as defined in Rule 405 under the
Securities Act or, if you are our affiliate, that you will comply
with the applicable registration and prospectus delivery
requirements of the Securities Act
o if you are not a broker-dealer, you are not engaged in and do not
intend to engage in the distribution of the new notes
o if you are a broker-dealer that will receive new notes for your own
account in exchange for old notes that you acquired as a result of
market-making activities, you will deliver a prospectus in
connection with any resale of such new notes
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with
respect to the old notes at DTC for purposes of the exchange offer promptly
after the date of this prospectus. Any financial institution participating in
DTC's system may make book-entry delivery of old notes by causing DTC to
transfer such old notes into the exchange agent=s account at DTC in accordance
with DTC's procedures for transfer. If you are unable to deliver confirmation of
the book-entry tender of your old notes into the exchange agent's account at DTC
or all other documents required by the letter of transmittal to the exchange
agent on or prior to the expiration date, you must tender your old notes
according to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your old notes, but they are not immediately
available or if you cannot deliver your old notes, the letter of transmittal or
any other required documents to the exchange agent or comply with the applicable
procedures under DTC's automated tender offer program prior to the expiration
date, you may tender if:
o the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office
or correspondent in the United States, or an eligible guarantor
institution
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o prior to the expiration date, the exchange agent receives from such
member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., commercial bank or
trust company having an office or correspondent in the United
States, or eligible guarantor institution either a properly
completed and duly executed notice of guaranteed delivery by
facsimile transmission, mail or hand delivery or a properly
transmitted agent's message and notice of guaranteed delivery:
- stating your name and address, the registered number(s)
of your old notes and the principal amount of old notes
tendered
- stating that the tender is being made thereby
- guaranteeing that, within three New York Stock Exchange
trading days after the expiration date, the letter of
transmittal or facsimile thereof or agent's message in
lieu thereof, together with the old notes or a
book-entry confirmation, and any other documents
required by the letter of transmittal will be deposited
by the eligible guarantor institution with the exchange
agent
o the exchange agent receives such properly completed and executed
letter of transmittal or facsimile or agent's message, as well as
all tendered old notes in proper form for transfer or a book-entry
confirmation, and all other documents required by the letter of
transmittal, within three New York Stock Exchange trading days after
the expiration date
Upon request to the exchange agent, the exchange agent will send a notice
of guaranteed delivery to you if you wish to tender your old notes according to
the guaranteed delivery procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
tender at any time prior to 5:00 p.m., New York City time, on the expiration
date.
For a withdrawal to be effective, either of the following must occur:
o the exchange agent must receive a written notice of withdrawal at
one of the addresses listed above under "Prospectus Summary-The
Exchange Agent"
o the withdrawing holder must comply with the appropriate procedures
of DTC's automated tender offer program
Any notice of withdrawal must:
o specify the name of the person who tendered the old notes to be
withdrawn
o identify the old notes to be withdrawn, including the registration
number or numbers and the principal amount of such old notes
o be signed by the person who tendered the old notes in the same
manner as the original signature on the letter of transmittal used
to deposit those old notes (or be accompanied by documents of
transfer sufficient to permit the trustee to register the transfer
into the name of the person withdrawing the tender)
o specify the name in which such old notes are to be registered, if
different from that of the person who tendered the old notes
If old notes have been tendered under the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn old notes and
otherwise comply with the procedures of DTC.
We will determine all questions as to the validity, form, eligibility and
time of receipt of notice of withdrawal, and our determination shall be final
and binding on all parties. We will deem any old notes so withdrawn not to have
been validly tendered for exchange for purposes of the exchange offer.
Any old notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder or, in the case of old notes tendered by book-entry transfer into the
exchange agent's account at DTC according to the procedures described above,
such old notes will be credited to an account maintained with DTC for the old
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notes. This return or crediting will take place as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. You may
retender properly withdrawn old notes by following one of the procedures
described under "--Procedures for Tendering" above at any time on or prior to
the expiration date.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail; however, we may make additional solicitation
by facsimile, email, telephone or in person by our officers and regular
employees and those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses. We may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this prospectus, letters of transmittal
and related documents to the beneficial owners of the old notes and in handling
or forwarding tenders for exchange.
We will pay the cash expenses to be incurred in connection with the
exchange offer. They include:
o SEC registration fees
o fees and expenses of the exchange agent and trustee
o accounting and legal fees and printing costs
o related fees and expenses
TRANSFER TAXES
If you tender your old notes for exchange, you will not be required to pay
any transfer taxes. We will pay all transfer taxes, if any, applicable to the
exchange of old notes in the exchange offer. The tendering holder will, however,
be required to pay any transfer taxes, whether imposed on the registered holder
or any other person, if any of the following are true:
o certificates representing new notes or old notes for principal
amounts not tendered or accepted for exchange are to be delivered
to, or are to be issued in the name of, any person other than the
registered holder of old notes tendered
o tendered old notes are registered in the name of any person other
than the person signing the letter of transmittal
o a transfer tax is imposed for any reason other than the exchange of
old notes in the exchange offer
If satisfactory evidence of payment of any transfer taxes payable by a
note holder is not submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to that tendering holder. The exchange
agent will retain possession of new notes with a face amount equal to the amount
of the transfer taxes due until it receives payment of the taxes.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not exchange your old notes for new notes in the exchange offer,
you will remain subject to the existing restrictions on transfer of the old
notes. In general, you may not offer or sell the old notes unless either they
are registered under the Securities Act or the offer or sale is exempt from or
not subject to registration under the Securities Act and applicable state
securities laws. Except as required by the registration rights agreement, we do
not intend to register resales of the old notes under the Securities Act.
The tender of old notes in the exchange offer will reduce the principal
amount of the old notes outstanding. The corresponding reduction in liquidity
may have an adverse effect upon, and increase the volatility of, the market
price of any old notes that you continue to hold.
ACCOUNTING TREATMENT
We will amortize our expenses of each exchange offer over the term of the
new notes under generally accepted accounting principles.
OTHER
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your decision on what action to take.
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EXCHANGE AGENT
We have appointed Wilmington Trust Company as exchange agent for the
exchange offer. You should direct questions, requests for assistance, requests
for additional copies of this prospectus or the letter of transmittal and
requests for the notice of guaranteed delivery to the exchange agent. If you are
not tendering under DTC's automated tender offer program, you should send the
letter of transmittal and any other required documents to the exchange agent as
follows:
WILMINGTON TRUST COMPANY
(302) 651-1562
BY MAIL (REGISTERED OR CERTIFIED MAIL
RECOMMENDED): BY COURIER OR BY HAND:
Wilmington Trust Company Wilmington Trust Company
Rodney Square North Rodney Square North
1100 North Market Street 1105 North Market Street
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890-0001
Attn: Corporate Trust Operations Attn: Corporate Trust Operations
BY FACSIMILE TRANSMISSION (ELIGIBLE INSTITUTIONS ONLY):
(302) 651-1079
Attn: Corporate Trust Administration
CONFIRM BY TELEPHONE:
(302) 651-1562
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DESCRIPTION OF NEW NOTES
GENERAL
We will issue the new notes, and we have issued the old notes, pursuant to
an indenture dated as of November 1, 1999 entered into by us, Pride, Maritima
and Wilmington Trust Company, as Trustee.
The form and terms of the new notes are the same as the form and terms of
the old notes they will replace, except that, when the exchange offer is
consummated,
o we will have registered the new notes under the Securities Act of
1933
o the new notes generally will not be subject to transfer restrictions
The new notes will be issued solely in exchange for an equal principal amount of
old notes. As of the date of this prospectus, $53 million aggregate principal
amount of 11 3/4% Senior Secured Notes are outstanding. See "The Exchange
Offer."
The old notes and the new notes will together constitute a single class of
debt securities under the indenture. If the exchange offer is consummated,
holders of old notes who do not exchange their old notes for new notes in the
exchange offer will vote together with holders of new notes for all relevant
purposes under the indenture. Accordingly, in determining whether the required
holders have given any notice, consent or waiver or taken any other action
permitted under the indenture, any old notes that remain outstanding after the
exchange offer will be aggregated with the new notes, and the holders of the old
notes and new notes will vote together as a single class. All references in this
summary description to specified percentages in aggregate principal amount of
the outstanding notes means, at any time after the exchange offer is
consummated, the percentages in aggregate principal amount of the applicable old
notes and new notes then outstanding. EXCEPT WHEN USED AS PART OF THE TERM "NEW
NOTES" OR "OLD NOTES," THE TERM "NOTES" IN THIS SUMMARY DESCRIPTION REFERS TO
THE OLD NOTES THAT WILL BE OUTSTANDING UNTIL THE EXCHANGE OFFER IS CONSUMMATED
AND, AFTER GIVING EFFECT TO THE EXCHANGE OFFER, COLLECTIVELY TO THE OUTSTANDING
NEW NOTES AND ANY REMAINING UNEXCHANGED OLD NOTES.
We have summarized below selected material provisions of the indenture,
the notes and the security documents. For a complete description, you should
read the indenture, the security documents and the notes because such documents,
and not this description, define your rights as holders of the notes. The
Trustee will furnish you copies of the indenture, the security documents and the
notes upon your request to its Corporate Trust Administration department by
telephone at (302) 651-1000 or by mail at Wilmington Trust Company, Rodney
Square North, 1100 N. Market Street, Wilmington, Delaware 19890, Attn: Corporate
Trust Administration. Capitalized terms used herein and not otherwise defined
have the meanings set forth below under "--Certain Definitions." Capitalized
terms defined in this section have the definitions ascribed to them in this
section for purposes of this section only. As used in this section, references
to the "Company" exclude the Company's Subsidiaries.
TERMS OF THE NOTES
The notes mature on November 1, 2001 and are senior secured obligations of
the Company.
The notes bear interest at the rate per annum shown on the cover page
hereof from the date of original issuance, or from the most recent date to which
interest has been paid or provided for, payable semiannually to Holders of
record at the close of business on the June 15 or December 15 immediately
preceding the interest payment date on June 30 and December 30 of each year.
Interest will also be payable on maturity to Holders of record as of October 15,
2001. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The new notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. No
service charge shall be made for any registration of transfer or exchange of
notes, but the Company may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection
therewith.
The Company's Subsidiaries have no direct obligation to pay amounts due on
the notes as of the date of this prospectus; however, if a Restricted Subsidiary
guarantees any Indebtedness of the Company, such Restricted Subsidiary will be
obligated to guarantee (a "Subsidiary Guarantee") the notes outstanding, if any.
The Company's obligations to repay the notes have been guaranteed up to
$30.0 million by Pride (the "Pride Guarantee"). The Pride Guarantee is on a
senior unsecured basis and is pari passu with Pride's other senior unsecured
debt. In addition, the
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Company's obligation to repay the notes is also backed by a $23.0 million
irrevocable standby letter of credit arranged by Maritima and issued by Republic
National Bank of New York (the "Letter of Credit").
REDEMPTIONS
REDEMPTION UPON LOSS OF A RIG
If an Event of Loss occurs at any time with respect to a Mortgaged Rig,
the Company shall redeem 50% of the notes (or 100% of the notes in the case of
an Event of Loss with respect to both Mortgaged Rigs) on the earlier to occur of
o 30 days after the receipt of the related Event of Loss Proceeds by
the applicable Rig Owner; or
o 180 days after the date on which such Event of Loss occurred, at a
redemption price equal to 100% of their principal amount, plus
accrued and unpaid interest (including Additional Amounts, if any),
to the redemption date (subject to the right of Holders of record on
the relevant record date to receive interest due on an interest
payment date that is on or prior to the redemption date).
REDEMPTION UPON SALE OF A MORTGAGED RIG
If a Mortgaged Rig or the Capital Stock of a Restricted Subsidiary then
owning a Mortgaged Rig is sold in compliance with the terms of the Indenture,
the Company shall redeem 50% of the notes (or 100% of the notes in the case of a
sale of both Mortgaged Rigs or the Capital Stock of both Restricted Subsidiaries
then owning Mortgaged Rigs) on the earlier to occur of (A) 30 days after the
receipt of the Net Available Cash from such sale and (B) 60 days after the date
of such sale, at a redemption price equal to 100% of their principal amount,
plus accrued and unpaid interest (including Additional Amounts, if any), to the
redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on an interest payment date that is on or
prior to the redemption date), plus the Make-Whole Premium. In no event will the
redemption price ever be less than 100% of the principal amount of the notes
being redeemed plus accrued and unpaid interest (including Additional Amounts,
if any) to the redemption date.
The amount of the Make-Whole Premium with respect to any notes (or portion
thereof) to be redeemed will be equal to the excess, if any, of
o the sum of the present values, calculated as of the redemption date,
of:
(a) each interest payment that, but for such redemption, would have
been payable on the notes (or portion thereof) being redeemed on
each interest payment date occurring after the redemption date
(excluding any accrued and unpaid interest for the period prior
to the redemption date); and
(b) the principal amount that, but for such redemption, would have
been payable at the final maturity of the notes (or portion
thereof) being redeemed; over
o the principal amount of the notes (or portion thereof) being
redeemed.
The present values of interest and principal payments referred to in clause (a)
above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the redemption date
at a discount rate equal to the Treasury Rate (as defined below) plus 50 basis
points.
The Make-Whole Premium will be calculated by the Independent Investment
Banker. For purposes of determining the Make-Whole Premium, the following
definitions apply:
o "Treasury Rate" is defined to mean, with respect to any redemption
date, the rate per annum equal to the semiannual equivalent yield
to maturity of the Comparable Treasury Issue, assuming a price for
the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such
redemption date.
o "Comparable Treasury Issue" is defined to mean the United States
Treasury security selected by an Independent Investment Banker as
having a maturity comparable to the weighted average maturity of
the remaining term of the notes outstanding that would be utilized,
at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of
comparable maturity to such weighted average maturity of such
Notes. "Independent Investment Banker" means the Reference Treasury
Dealer appointed by the Trustee after consultation with the
Company.
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o "Comparable Treasury Price" is defined to mean, with respect to any
redemption date, the average of the Reference Treasury Dealer
Quotations for such redemption date. The "Reference Treasury Dealer
Quotations" means, with respect to the Reference Treasury Dealer
and any redemption date, the average, as determined by the Trustee,
of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by the Reference Treasury Dealer
at 5:00 p.m. (New York City time) on the third business day
preceding such redemption date.
o "Reference Treasury Dealer" is defined to mean Donaldson, Lufkin &
Jenrette Securities Corporation and its successors; provided,
however, that if Donaldson, Lufkin & Jenrette Securities
Corporation shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company
shall substitute therefor another Primary Treasury Dealer.
OTHER REDEMPTIONS
The notes will be redeemable, at the Company's option, in whole or in
part, at any time or from time to time, upon not less than 30 nor more than 60
days' prior notice mailed by first-class mail to each Holder's registered
address, at a price equal to 100% of the principal amount thereof plus accrued
and unpaid interest (including Additional Amounts, if any), to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on an interest payment date that is on or prior to the
redemption date) plus the Make-Whole Premium. In no event will the redemption
price ever be less than 100% of the principal amount of the notes being redeemed
plus accrued and unpaid interest (including Additional Amounts, if any) to the
redemption date.
SELECTION OF NOTES FOR REDEMPTION
In the case of any partial redemption provided for in "Other Redemptions,"
selection of the notes for redemption will be made by the Trustee on a pro rata
basis, by lot or by such other method as the Trustee in its sole discretion
shall deem to be fair and appropriate, although no note of $1,000 in then
outstanding principal amount or less shall be redeemed in part. If any note is
to be redeemed in part only, the notice of redemption relating to such note
shall state the portion of the principal amount thereof to be redeemed. A
replacement note in principal amount equal to the unredeemed portion thereof
will be issued in the name of the holder thereof upon cancellation of the
original note. Partial Redemptions provided for in "--Redemption Upon Loss of a
Rig" and "--Redemption Upon Sale of a Mortgaged Rig" will be applied to all
notes on a pro rata basis, although no note of $1,000 in then outstanding
principal amount shall be redeemed in part.
PAYMENT OF ADDITIONAL AMOUNTS AND REDEMPTION
Except to the extent required by any applicable law, regulation or
governmental policy, any and all payments of, or in respect of, any note shall
be made free and clear of and without deduction for or on account of any and all
present or future taxes, levies, imposts, deduction, charges or withholdings and
all liabilities with respect thereto imposed by the British Virgin Islands,
Brazil, the United States of America or any other jurisdiction with which the
Company, Pride or any Subsidiary Guarantor has some connection (including any
jurisdiction from or through which payments under the notes, the Pride Guarantee
or the Subsidiary Guarantees (if any) are made or in which the Mortgaged Rigs
are located) or any political subdivision of or any taxing authority in any such
jurisdiction (collectively, "Taxes" and any such jurisdiction or political
subdivision or taxing authority, a "Tax Jurisdiction"). If the Company, Pride or
any Subsidiary Guarantor shall be required by law to withhold or deduct any
Taxes, from or in respect of any sum payable under the notes, the Pride
Guarantee or a Subsidiary Guarantee, the Company shall pay the amount
("Additional Amounts") necessary so that, after making all required withholdings
and deductions, the Holder or beneficial owner of a note shall receive an amount
equal to the sum that it would have received had not such withholdings and
deductions been made; provided that any such sum shall not be paid to a Holder
(an "Excluded Holder"):
o in respect of any Taxes resulting from the beneficial owner of such
note carrying on business or being deemed to carry on business in or
through a permanent establishment or fixed base in the relevant taxing
jurisdiction or having any other connection with the relevant taxing
jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such note,
being a beneficiary of the Pride Guarantee or any applicable Subsidiary
Guarantee, the receipt of any income or payments in respect of such
note, the Pride Guarantee or any applicable Subsidiary Guarantee or the
enforcement of such note, the Pride Guarantee or any applicable
Subsidiary Guarantee,
o in respect of any Taxes that would not have been imposed but for the
presentation (where presentation is required) of such note for payment
more than 180 days after the date such payment became due and payable
or was duly provided for, whichever occurs later, or
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o in respect of U.S. federal income Taxes, if such Holder fails to
provide to the Company, within 30 days of a request by the Company, a
complete and valid IRS Form W-8 or other form establishing an exemption
from U.S. withholding Taxes.
The Company, Pride or the Subsidiary Guarantors, as applicable, will also:
o make such withholding or deduction and
o remit the full amount deducted or withheld to the relevant authority in
accordance with applicable law, and, in any such case, the Company will
furnish to each Holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Taxes is due
pursuant to applicable law, certified copies of tax receipts evidencing
such payment by the Company, Pride or the Subsidiary Guarantors, as
applicable.
The Company will, upon written request of each Holder (other than an
Excluded Holder), reimburse each such holder for the amount of:
o any Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Notes, and
o any Taxes so levied or imposed with respect to any reimbursement under
the foregoing clause so that the net amount received by such Holder
(net of payments made under or with respect to such Notes, the Pride
Guarantee or the applicable Subsidiary Guarantees) after such
reimbursement will not be less than the net amount the Holder would
have received if Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment under or
with respect to the notes is due and payable, if the Company will be obligated
to pay Additional Amounts with respect to such payment, the Company will deliver
to the Trustee an Officer's Certificate stating the fact that such Additional
Amounts will be payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional Amounts to
Holders on the payment date.
If any Holder or beneficial owner of any note receives a refund of Taxes
after the Company, Pride or any Subsidiary Guarantor has paid any Additional
Amounts, such Holder or beneficial owner shall reimburse the Company, Pride or
such Subsidiary Guarantor for any amount of such refund.
At the date of this prospectus, no Taxes are imposed, and therefore no
Additional Amounts would be payable in respect of such taxes, in respect of any
sum payable by the Company as principal of, premium or interest on the notes.
The notes may be redeemed, at the option of the Company, at any time as a
whole but not in part, upon not less than 30 nor more than 60 days' prior
notice, at a purchase price equal to 100% of the principal amount thereof plus
accrued and unpaid interest thereon to the date of redemption and all Additional
Amounts, if any, (subject to the right of the Holders of record on the relevant
record date to receive interest due on the relevant payment date), in the event
the Company has become or would become obligated to pay (and the Company cannot
avoid such obligation by taking reasonable measures available to it), on the
next date on which any amount would be payable with respect to the notes, any
Additional Amounts as a result of a change in or an amendment to the laws
(including any regulations promulgated thereunder) of a Tax Jurisdiction or any
change in or amendment to any official position regarding the application or
interpretation of such laws or regulations which change or amendment is
announced or becomes effective on or after the issue date of the notes;
provided, however, that such redemption shall be conditioned upon the Company
being actually obligated to pay such Additional Amounts on the relevant payment
date.
Prior to the giving of the notice of redemption described in the preceding
paragraph, the Company shall deliver to the Trustee an Officer's Certificate
(together with a copy of an opinion of counsel independent of the Company to the
effect that the Company will be or will become obligated to pay Additional
Amounts), stating that the Company is entitled to effect such redemption in
accordance with the terms set forth in the indenture and setting forth in
reasonable detail a statement of the facts relating thereto.
In addition, the Company will pay any present or future stamp, issue,
registration, documentary or other similar taxes and duties, including interest
and penalties, in respect of the creation, issue and offering of the notes
payable in the United States, the British Virgin Islands, Brazil or any
political subdivision thereof or taxing authority of or in the foregoing. The
Company will also pay and indemnify the Trustee and the Holders from and against
all court fees and taxes or other taxes and duties, including interest and
penalties, paid by any of them in any jurisdiction in connection with any action
permitted to be taken by the Holders or the Trustee to create Liens on the
Collateral or to enforce the Obligations of the Company, Pride or the Subsidiary
Guarantors under the notes, the indenture, the Pride Guarantee, the Subsidiary
Guarantees, the Company Loans or the Security Documents.
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Whenever there is mentioned, in any context, the payment of principal,
premium or interest in respect of any note or the net proceeds received on the
sale or exchange of any note, that mention shall be deemed to include the
payment of Additional Amounts provided for in the indenture to the extent that,
in such context, Additional Amounts are, were or would be payable in respect
thereof pursuant to the indenture.
THE SUBSIDIARY GUARANTEES
If a Restricted Subsidiary is required to become a Subsidiary Guarantor,
it will irrevocably and unconditionally guarantee on a joint and several, senior
unsecured basis the Company's obligations for payment of the principal of, and
premium, if any and interest (including Additional Amounts, if any) on the
notes, the other Subsidiary Guarantors' obligations for payment of all sums of
money payable under the Subsidiary Guarantees and/or the Company's and
Subsidiary Guarantor's respective obligations under the Security Documents and
performance of all other provisions contained in the indenture and the Security
Documents (collectively, the "Obligations"). See "--Certain Covenants--Future
Subsidiary Guarantees." Each Subsidiary Guarantee will be limited in amount to
an amount not to exceed the maximum amount that can be guaranteed by the
applicable Subsidiary Guarantor without rendering the applicable Subsidiary
Guarantee voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally
or otherwise being void, voidable or unenforceable under any bankruptcy,
reorganization, insolvency, liquidation or other similar legislation or legal
principles under any applicable foreign law. Each Subsidiary Guarantor that
makes a payment or a distribution under its Subsidiary Guarantee shall be
entitled to a contribution from each other Subsidiary Guarantor in a pro rata
amount based upon the Adjusted Net Assets of each such other Subsidiary
Guarantor. If a Subsidiary Guarantee were to be rendered voidable, it could be
subordinated by a court to all other indebtedness, including guarantees and
other contingent liabilities, of the applicable Subsidiary Guarantor, and,
depending on the amount of such indebtedness, a Subsidiary Guarantor's liability
on its Subsidiary Guarantee could be reduced to zero.
Upon the sale or other disposition, by merger or otherwise, of all the
Capital Stock of a Subsidiary Guarantor or the sale or disposition of all or
substantially all the assets of a Subsidiary Guarantor (in each case other than
to the Company or an Affiliate of the Company) permitted by the indenture and
the redemption of notes as described under "--Redemptions--Redemptions upon Sale
of a Mortgaged Rig" that Subsidiary Guarantor will be released and relieved from
all its obligations under its Subsidiary Guarantee.
Any Subsidiary Guarantee will be senior unsecured obligations of the
Subsidiary Guarantors and will rank
o pari passu in priority of payment with all other Indebtedness and other
liabilities of such Subsidiary Guarantor that are not subordinated by
their express terms to such Subsidiary Guarantee and
o senior in priority of payment to all other Indebtedness of such
Subsidiary Guarantor that by its terms is subordinated or junior in
right of payment to such Subsidiary Guarantee.
PRIDE GUARANTEE AND LETTER OF CREDIT
The notes have the benefit of the Pride Guarantee and the Letter of
Credit.
Pursuant to the indenture, Pride has irrevocably and unconditionally
guaranteed the due and punctual payment of the principal of, premium, if any,
and interest on, and all other amounts payable under, the notes (including any
Additional Amounts in respect thereof) when and as the same shall become due and
payable, whether at stated maturity, by declaration of acceleration or
otherwise, up to a maximum amount of $30.0 million.
Pursuant to the indenture, Pride may not consolidate or merge with any
Person, or sell, lease or otherwise dispose of all or substantially all of the
assets of Pride and its Subsidiaries, taken as a whole, to any Person, unless
(i) Pride is the continuing Person, or the surviving Person (if other than
Pride) under any of the foregoing transactions expressly assumes the due and
punctual payment and performance of Pride's covenants and obligations under the
indenture, including the Pride Guarantee; and (ii) the surviving Person is a
permitted successor to Pride under the indenture dated as of May 1, 1997,
between Pride and The Chase Manhattan Bank, as amended and supplemented.
The Pride Guarantee is a senior unsecured obligation of Pride and ranks
o pari passu in priority of payment with all other Indebtedness and other
liabilities of Pride that are not subordinated by their express terms
to the Pride Guarantee and
o senior in priority of payment to all other Indebtedness of Pride that
by its terms is subordinated or junior in right of payment to the Pride
Guarantee.
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The Company's obligations to repay the notes also is backed by a $23.0
million irrevocable standby letter of credit issued by Republic National Bank of
New York. The letter of credit may be drawn to make any payment due on the notes
to the extent the Trustee has not received sufficient funds from the Company to
make such payment.
OTHER COLLATERAL
In order to secure its obligations under the indenture, the notes and
applicable Security Documents, the Company has pledged in favor of the Trustee a
53% undivided interest in all the Company Loans (together with a collateral
assignment of all Liens securing such undivided interest). Neither the Company
nor the Holders will share in the benefit of the Mitsubishi Floor Guarantee.
In addition, as the principal of the Company Loans is amortized in
accordance with the Mitsubishi Credit Facilities, all amounts received by the
Company in respect of those principal and interest payments will be held in the
Reserve Account for the benefit of the Holders, except that 47% of all such
payments in respect of principal shall be released to the Company immediately
upon receipt and any such payments in respect of interest not required to pay
interest on the notes on the next succeeding interest payment date will also be
released to the Company.
RANKING
The indebtedness evidenced by the notes is a senior secured obligation of
the Company, ranks pari passu in right of payment with all existing and future
indebtedness and other liabilities of the Company that are not expressly
subordinated by their express terms to the notes and is senior in right of
payment to all Indebtedness of the Company that is so subordinated. The notes
are secured by Liens on a 53% undivided interest in the Company Loans (and a
collateral assignment of the Liens securing such undivided interest) and on the
other Collateral; thus, claims of the Holders will rank ahead of claims of
creditors of the Company to the extent of the value, priority and validity of
the Liens securing the notes in such Collateral.
Claims of the Company under the Company Loans will rank pari passu with
claims of the other creditors of the applicable Mortgaged Rig Owner holding
indebtedness or other liabilities that are not expressly subordinated by their
express terms to such Company Loans, but will rank ahead of such claims to the
extent of the value, priority and validity of the Liens on the Collateral
securing the Company Loans. Although the Company should be entitled to payment
of the applicable Company Loan out of the proceeds of the Mortgaged Rig and the
other Collateral prior to the Holders of any general unsecured obligations of
the Mortgaged Rig Owner, any claim attributable to a Company Loan which is not
paid out of the proceeds of the Mortgaged Rig and the other Collateral will be
an unsecured senior obligation of the Mortgaged Rig Owner. To the extent that
any Mortgaged Rig and the other Collateral has a value in excess of the Company
Loan secured thereby, such additional value is not security for any obligations
of the Mortgaged Rig Owner, the Company or a Subsidiary Guarantor. In the event
that the assets and cash flow of the Mortgaged Rig Owner are insufficient to
meet the obligations under the Company Loans, claims of the Company will be
effectively subordinated to the claims of creditors (including trade creditors,
tort claimants, taxing authorities and other creditors) of Subsidiaries.
Although the indenture limits the incurrence of Indebtedness by the Company or
any Restricted Subsidiary, that limitation is subject to a number of significant
qualifications. Moreover, the indenture does not impose any limitation on the
incurrence by the Company or its Restricted Subsidiaries of liabilities that are
not considered Indebtedness under the indenture. Under certain circumstances,
the Company will be able to designate additional Subsidiaries as Unrestricted
Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the
restrictive covenants set forth in the indenture.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), the Company shall make an offer to repurchase all outstanding notes
at a purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest and Additional Amounts, if any, to the date of
purchase (subject to the right of Holders of record on the relevant record date
to receive interest (including Additional Amounts, if any) due on the relevant
interest payment date):
(1) any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable) other than a Shareholder (or any Affiliate thereof) is or
becomes the "beneficial owner" (as defined in Section 13(d) of the
Exchange Act, except that a person will be deemed to have "beneficial
ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 26.4% of
the total voting power of the Voting Stock of the Company, PROVIDED,
HOWEVER, for purposes of this clause (1) there shall not be a Change
of Control with respect to Pride International, Inc.'s "beneficial
ownership" of the Voting Stock of the Company unless
o any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable) is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act,
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except that a person will be deemed to have "beneficial
ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than
50% of the total voting power of the Voting Stock of Pride
International, Inc. and
o within 25 days after the closing of any such transaction either
Moody's or S&P lowers the credit ratings for any outstanding debt
of Pride International, Inc., or in the event Pride
International, Inc. has no outstanding rated debt, the ratings of
Pride International, Inc.;
(2) individuals who on the Issue Date constituted the board of directors
of the Company (together with any new directors whose election by such
board of directors or whose nomination for election by the
shareholders of the Company was approved by a vote of 66 2/3 % of the
directors of the Company, then still in office who were either
directors on the Issue Date or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the board of directors of the Company then in
office;
(3) the adoption of a plan relating to the liquidation or dissolution of
the Company;
(4) the merger or consolidation of any Shareholder or the Company with or
into another Person (other than in the case of a Shareholder, a Person
controlled by a Permitted Holder) or the merger of another Person
(other than in the case of a Shareholder, a Person controlled by a
Permitted Holder) with or into any Shareholder or the Company, as the
case may be, or the sale of all or substantially all the assets of any
Shareholder or the Company to another Person (other than in the case
of a Shareholder, a Person controlled by a Permitted Holder), and, in
the case of any such merger or consolidation, the securities of such
Shareholder or the Company, as the case may be, that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate voting power of the Voting Stock of such Shareholder or the
Company, as the case may be, are changed into or exchanged for cash,
securities or property, unless pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving corporation that represent
immediately after such transaction, at least a majority of the
aggregate voting power of the Voting Stock of the surviving
corporation; or
(5) prior to any Public Equity Offering of the Company, Pride
International, Inc. or a Qualified Substitute Owner ceases for any
reason for more than 10 days to be the beneficial owner, directly or
indirectly, of at least 26.4% of the total voting power of the Voting
Stock of the Company.
Within 30 days following any Change of Control, the Company (with a copy
to the Trustee) or the Trustee shall mail a notice to each Holder stating among
other things:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase such Holder's notes at a
purchase price in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest, and Additional Amounts, if any, to
the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest, and Additional Amounts, if
any, on the relevant interest payment date);
(2) the circumstances and relevant facts regarding that Change of Control
(including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to that Change of
Control);
(3) the repurchase date (which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with the
covenant described hereunder, that a Holder must follow in order to
have its notes purchased.
The Company shall comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of notes pursuant to this covenant
described hereunder. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the covenant described hereunder,
the Company shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.
The Change of Control purchase feature is solely a result of negotiations
between the Company and the initial purchaser of the old notes. The Company does
not have any present intention to engage in a transaction involving a Change of
Control, although it is possible that the Company could decide to do so in the
future. Subject to the limitations discussed below, the Company could, in the
future, enter into certain transactions, including acquisitions, refinancings or
other recapitalizations, that would not constitute a Change of Control under the
indenture, but that could increase the amount of Indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit ratings.
Restrictions on the ability of the Company and its
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Restricted Subsidiaries to incur additional Indebtedness are contained in the
covenants described under "--Certain Covenants--Limitation on Indebtedness,"
"--Limitation on Liens" and "--Limitation on Sale/Leaseback Transactions." Those
restrictions can only be waived with the consent of the Holders of a majority in
aggregate principal amount of the notes then outstanding. Those provisions may
not necessarily afford the Holders protection in the event of a highly leveraged
transaction, including a reorganization, restructuring, merger or other similar
transaction involving the Company, that may adversely affect the Holders because
such transactions may not involve a shift in voting power or beneficial
ownership or, even if they do, may not involve a shift of the magnitude required
under the definition of Change of Control to require the Company to make a
Change of Control offer. In addition, the existence of the Holder's right to
require the Company to repurchase such Holder's notes upon the occurrence of a
Change of Control may or may not deter a third party from seeking to acquire the
Company in a transaction that would constitute a Change of Control.
The Company's ability to repurchase notes pursuant to a Change of Control
offer may be limited by a number of factors. Future Indebtedness of the Company
or its Restricted Subsidiaries may contain prohibitions on the occurrence of
certain events that would constitute a Change of Control or require such
Indebtedness to be repurchased upon a Change of Control. Moreover, the exercise
by the Holders of their right to require the Company to repurchase the notes
could cause a default under such Indebtedness, even if the Change of Control
itself does not, due to the financial effect of such repurchase on the Company
nd its Subsidiaries. There can be no assurance that sufficient funds will be
available when necessary to make any required repurchases. In the event that a
Change of Control offer occurs at a time when the Company does not have
sufficient available funds to pay the purchase price for all notes validly
tendered pursuant to such an offer, an Event of Default would occur under the
Indenture. The failure by the Company to purchase tendered notes would
constitute a breach of the Indenture which could, in turn, constitute a default
under other Indebtedness and could lead to the acceleration of such other
Indebtedness.
One of the events that constitutes a Change of Control under the Indenture
is a sale, conveyance, lease or transfer of all or substantially all of the
assets of the Company. The Indenture is governed by New York law, and there is
no established quantitative definition under New York law of "substantially all"
of the assets of a corporation. Accordingly, if the Company were to engage in a
transaction in which it disposed of less than all of the assets of the Company a
question of interpretation could arise as to whether such disposition was of
"substantially all" of its assets and whether the Company was required to make a
Change of Control offer.
CERTAIN COVENANTS
LIMITATION ON INDEBTEDNESS
(a) The Company will not, and will not permit any Restricted Subsidiary
to, Incur, directly or indirectly, any Indebtedness; provided,
however, that the Company may Incur Indebtedness if the Consolidated
EBITDA Coverage Ratio at the date of such Incurrence and after giving
effect thereto exceeds 2.25 to 1.0.
(b) Notwithstanding paragraph (a), the following Indebtedness may be
Incurred:
(1) Indebtedness of the Company or a Restricted Subsidiary owed to and
held by a Restricted Subsidiary or Indebtedness of a Restricted
Subsidiary owed to and held by the Company; provided, however,
that (a) any subsequent issuance or transfer of any Capital Stock
that results in such Restricted Subsidiary to whom Indebtedness is
owed ceasing to be a Restricted Subsidiary or any transfer of such
Indebtedness (other than to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness and (b) if the Company is the
obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all
obligations with respect to the notes;
(2) the old notes and the new notes;
(3) the Company Loans, the Subsidiary Guarantees, if any, and
Indebtedness incurred in exchange for, or the proceeds of which
are used to Refinance any Indebtedness permitted by this clause
(3); provided, however, that:
o the principal amount of the Indebtedness so Incurred shall not
exceed the principal amount of the Indebtedness so Refinanced
(plus the amount of reasonable fees and expenses incurred in
connection therewith, including any premium or defeasance
costs) and
o the Indebtedness so Incurred
- shall not mature prior to the Stated Maturity of the
Indebtedness so Refinanced and
- shall have an Average Life equal to or greater than the
remaining Average Life of the Indebtedness so Refinanced;
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(4) Indebtedness of the Company or any Restricted Subsidiary (other
than Indebtedness described in clause (1), (2) or (3) above)
Outstanding on the Issue Date and Indebtedness Incurred in
exchange for, or the proceeds of which are used to Refinance, any
Indebtedness permitted by this clause (4) or permitted by clause
(a) above; provided, however, that:
o the principal amount of the Indebtedness so Incurred shall not
exceed the principal amount of the Indebtedness Refinanced
(plus the amount of reasonable fees and expenses incurred in
connection therewith, including any premium or defeasance
costs); and
o the Indebtedness so Incurred
- shall not mature prior to the Stated Maturity of the
Indebtedness so Refinanced and
- shall have an Average Life equal to or greater than the
remaining Average Life of the Indebtedness so Refinanced;
(5) Obligations of the Company or a Restricted Subsidiary under
performance or surety bonds relating to building contracts for the
construction, repair or improvement of drilling rigs, drillships
or similar vessels or contracts for the installation of related
equipment;
(6) Hedging Obligations;
(7) Indebtedness of the Company or any Restricted Subsidiary under the
Mitsubishi Credit Facilities or the MARAD Documents; and
(8) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount which, together with all other
Indebtedness of the Company then outstanding (other than
Indebtedness permitted by clauses (1) through (7) of this
paragraph (b) or paragraph (a)) does not exceed $20.0 million.
(c) Notwithstanding paragraphs (a) and (b), the Company shall not issue
any Indebtedness if the proceeds thereof are used, directly or
indirectly, to pay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations unless such Indebtedness shall
be subordinated to the notes to at least the same extent as such
Subordinated Obligations.
(d) For purposes of determining compliance with the foregoing covenant, in
the event that an item of Indebtedness meets the criteria of more than
one of the types of Indebtedness described above, the Company, in its
sole discretion, will classify such item of Indebtedness and only be
required to include the amount and type of such Indebtedness in one of
the above clauses and an item of Indebtedness may be divided and
classified in more than one of the types of Indebtedness described
above.
LIMITATION ON INDEBTEDNESS OWED TO SHAREHOLDERS
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, Incur or permit to exist any Indebtedness of the Company
or any Restricted Subsidiary owed to a Shareholder unless
o such Indebtedness is subordinated to the notes, in the case of the
Company, or the Company Loans, in the case of a Restricted Subsidiary,
and
o all payments of principal, premium, if any, and interest in respect of
the notes or the Company Loans, as applicable, is required to be paid
before any amounts shall be payable in respect of such Indebtedness
and, prior to such time, the holder of such Indebtedness shall not have any
claim against the Company or such Restricted Subsidiary in respect of such
Indebtedness, provided that payments and prepayments under such Indebtedness may
be made as Restricted Payments to the extent permitted by the covenant described
under "--Certain Covenants--Limitation on Restricted Payments."
LIMITATION ON LIENS
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, Incur or permit to exist any Lien of any nature
whatsoever on any of its properties (including Capital Stock of a Restricted
Subsidiary), whether owned at the Issue Date or thereafter acquired unless, in
the case of property or assets not consisting of Collateral, contemporaneously
therewith effective provision is made to secure the notes equally and ratably
with (or prior to) the obligations so secured for so long as such obligations
are so secured.
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The foregoing restriction does not, however, apply to Permitted Liens.
LIMITATION ON RESTRICTED PAYMENTS
(a) The Company will not, and will not permit any Restricted Subsidiary,
directly or indirectly, to make a Restricted Payment defined as:
o declaring or paying any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection
with any merger or consolidation involving the Company) or to the
direct or indirect holders of its Capital Stock, except:
- dividends or distributions payable solely in its
Non-Convertible Capital Stock or in options, warrants or other
rights to purchase its Non-Convertible Capital Stock,
- dividends or distributions payable to the Company or a
Restricted Subsidiary, and
- pro rata dividends or distributions on the Capital Stock of a
Restricted Subsidiary held by minority stockholders;
o purchasing, redeeming or otherwise acquiring or retiring for value
any Capital Stock of the Company or of any direct or indirect
parent of the Company, or any Restricted Subsidiary (except
Capital Stock held by the Company or a Restricted Subsidiary);
o purchasing, repurchasing, redeeming, defeasing or otherwise
acquiring or retiring for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligation (other than the purchase, repurchase or
other acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of
the date of acquisition); or
o making any Investment other than a Permitted Investment.
If at the time the Company or such Restricted Subsidiary makes such
Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom); or
(2) the Company would not be permitted to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) under "--Limitation on
Indebtedness" after giving pro forma effect to such Restricted
Payment; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the
fiscal quarter during which the notes were originally issued
to the end of the most recent fiscal quarter ending at least
45 days prior to the date of such Restricted Payment (or, in
case such Consolidated Net Income shall be a deficit, minus
100% of such deficit);
(B) 100% of the aggregate net proceeds (including the fair market
value of non-cash proceeds, which shall be determined in good
faith by the Board of Directors of the Company) received by
the Company from the issue or sale of its Capital Stock (other
than Redeemable Stock or Exchangeable Stock) subsequent to the
Issue Date (other than an issuance or sale to a Restricted
Subsidiary or an employee stock ownership plan or similar
trust);
(C) the amount by which Indebtedness of the Company is reduced on
the Company's balance sheet upon the conversion or exchange
(other than by a Restricted Subsidiary) subsequent to the
Incurrence of any Indebtedness of the Company convertible or
exchangeable for Capital Stock (other than Redeemable Stock or
Exchangeable Stock) of the Company (less the amount of any
cash, or other property, distributed by the Company upon such
conversion or exchange); and
(D) to the extent not otherwise included in Consolidated Net
Income, the net reduction in Investments in Unrestricted
Subsidiaries resulting from dividends, repayments of loan or
advances, or other transfers of assets, in each case to the
Company or any Restricted Subsidiary after the Issue Date from
any Unrestricted Subsidiary or from the redesignation of an
Unrestricted Subsidiary as a Restricted Subsidiary (valued in
each case as provided in the
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definition of Investment), not to exceed in the case of any
Restricted Subsidiary the total amount of Investments (other
than Permitted Investments) in such Restricted Subsidiary made
by the Company and its Restricted Subsidiaries in such
Unrestricted Subsidiary after the Issue Date.
(b) The provisions of Section (a) shall not prohibit:
(1) any purchase or redemption of Capital Stock or Subordinated
Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Capital Stock of
the Company (other than Redeemable Stock or Exchangeable Stock and
other Capital Stock issued or sold to a Restricted Subsidiary or
an employee stock ownership plan); provided, however, that
o such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments and
o the Net Cash Proceeds from such sale shall be excluded from
clauses (3)(B) and (3)(C) of Section (a);
(2) any purchase or redemption of Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of the Company
which is permitted to be issued pursuant to the provision of
"--Limitation on Indebtedness" above; provided, however, that such
purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments; and
(3) dividends paid within 60 days after the date of declaration if at
such date of declaration such dividend would have complied with
this provision; provided, however, that at the time of payment of
such dividend, no other Default shall have occurred and be
continuing (or would result therefrom); provided further, however,
that such dividend shall be included in the calculation of the
amount of Restricted Payments (unless already included in
determining the amount of Restricted Payments previously made upon
the declaration of such dividend).
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale/Leaseback Transaction with any Person (other than the
Company or a Restricted Subsidiary) unless:
o the Company or such Restricted Subsidiary would be entitled to incur
Indebtedness, in a principal amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction, secured
by a Lien on the property subject to such Sale/Leaseback Transaction
pursuant to the covenant described under "Limitation on Liens" above
without equally and ratably securing the notes pursuant to such
covenant;
o the net proceeds received by the Company or any Restricted Subsidiary
in connection with such Sale/Leaseback Transaction are at least equal
to the fair value (as determined by the Board of Directors) of such
property; and
o the Company applies the proceeds of such transaction in compliance with
the covenant described under "--Limitation on Asset Sales."
Notwithstanding the foregoing, the Company shall not, and shall not permit
any Restricted Subsidiary to, enter into or otherwise become liable with respect
to any Sale/Leaseback Transaction involving any Restricted Collateral.
LIMITATIONS ON MERGERS AND CONSOLIDATIONS
Neither the Company nor any Subsidiary Guarantor (other than any
Subsidiary Guarantor that shall have been released from its Subsidiary Guarantee
pursuant to the provisions of the Indenture) will consolidate with or merge into
any Person, continue in another jurisdiction, or sell, lease, convey, transfer
or otherwise dispose of all or substantially all of its assets to any Person,
unless:
(1) the Person formed by or surviving such consolidation or merger (if
other than the Company or such Subsidiary Guarantor, as the case may
be), or to which such sale, lease, conveyance, transfer or other
disposition shall be made (collectively, the "Successor"), is a
corporation organized and existing under the laws of the Bahamas, the
British Virgin Islands or Panama (such jurisdiction of organization,
the "Relevant Jurisdiction") and the Successor assumes by supplemental
indenture in a form satisfactory to the Trustee all of the applicable
Obligations of the Company or such Subsidiary Guarantor, as the case
may be, under the Indenture, the Subsidiary Guarantees, the notes and
the Security Documents;
(2) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;
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(3) in the case of the Company, immediately after giving effect to such
transactions, the resulting, surviving or transferee Person would be
able to incur at least $1.00 of Indebtedness pursuant to paragraph (a)
of the "Limitation on Indebtedness" covenant;
(4) immediately after giving effect to such transaction, the Successor
shall have Consolidated Net Worth in an amount that is not less than
the Consolidated Net Worth of the Company or Subsidiary Guarantor, as
the case may be, immediately prior to such transaction;
(5) the Company shall have delivered to the Trustee an Officer's
Certificate and an opinion of counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with the Indenture;
(6) the Company shall have delivered to the Trustee an opinion of counsel
to the effect that the Holders will not recognize income, gain or loss
for U.S. Federal income tax purposes as a result of such transaction
and will be subject to U.S. Federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if
such transaction had not occurred; and
(7) an opinion of counsel in the Relevant Jurisdiction to the effect that
any payment of interest, principal or premium (if any) on the notes by
the Company to a Holder or by a Subsidiary Guarantor on its Subsidiary
Guarantee, as applicable, will, after the consolidation, merger,
conveyance, transfer or lease of assets, be exempt from withholding
tax in the Relevant Jurisdiction and no other taxes on income
(including taxable capital gains) will be payable under the law of the
Relevant Jurisdiction by a Holder who is or who is deemed to be a
non-resident of the Relevant Jurisdiction in respect of the
acquisition, ownership or disposition of the notes, including the
receipt of interest, principal or premium thereon.
The Successor shall be the successor to the Company or the Subsidiary
Guarantor, as the case may be, and shall succeed to, and be substituted for, and
may exercise every right and power of, the Company or the Subsidiary Guarantor,
as the case may be, under the Indenture, but the predecessor in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the notes.
SEC REPORTS
Notwithstanding that the Company may not be required to remain subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall file with the SEC and provide the Trustee and Holders with such
annual reports and such information, documents and other reports specified in
Sections 13 and 15(d) of the Exchange Act.
In addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such filing). In addition, the Company shall furnish to the Holders and
to prospective investors, upon the requests of such Holders, any information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so
long as there are notes outstanding which are not freely transferable under the
Securities Act.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES
The Company shall not, and shall not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to
o pay dividends or make any other distributions, in cash or otherwise, on
its Capital Stock to the Company or any Restricted Subsidiary or pay
any Indebtedness owed to the Company or any Restricted Subsidiary,
o make any loans or advances to the Company or any Restricted Subsidiary
or
o transfer any of its property or assets to the Company or any Restricted
Subsidiary, except:
(1) any encumbrance or restriction pursuant to an agreement in effect
or entered into on the Issue Date;
(2) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Acquired
Indebtedness or Preferred Stock Incurred by such Restricted
Subsidiary on or prior to the date on which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by the
Company (other than Indebtedness or Preferred Stock Incurred as
consideration in, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series
of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by the
Company or other Incurred in anticipation of such acquisition) and
outstanding on such date;
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(3) any encumbrance or restriction relating to any assets acquired
after the Issue Date, so long as such encumbrance or restriction
relates only to the assets so acquired and is not or was not
created in anticipation of such acquisition;
(4) any encumbrance or restriction pursuant to an agreement affecting
a Refinancing of Indebtedness or Preferred Stock Incurred pursuant
to an agreement referred to in clause (1), (2) or (3) of this
covenant or this clause (4) or contained in any amendment to an
agreement referred to in clause (1), (2) or (3) of this covenant
or this clause (4); provided, however, that the encumbrances and
restrictions with respect to such Restricted Subsidiary contained
in any such refinancing agreement or amendment are in the
aggregate no less favorable to the Holders than the encumbrances
and restrictions with respect to such Restricted Subsidiary
contained in such predecessor agreements;
(5) any such encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests
or in license agreements to the extent such provisions restrict
the assignment of such agreement and any rights granted or
property leased thereunder;
(6) in the case of clause (3) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a
Restricted Subsidiary to the extent such restrictions restrict the
transfer of the property subject to such security agreements or
mortgages; and
(7) any temporary encumbrance or restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered
into for the sale or disposition of all or substantially all the
Common Stock or assets of such Restricted Subsidiary pending the
closing of such sale or disposition.
LIMITATION ON ASSET SALES
The Company shall not, and shall not permit any Restricted Subsidiary to,
sell, assign, convey, transfer or otherwise dispose of a Mortgaged Rig or any
other portion of the Collateral (other than an Incidental Asset or Temporary
Cash Investments in the Reserve Account and other than a transfer of a Mortgaged
Rig to a Wholly Owned Restricted Subsidiary that becomes a Subsidiary
Guarantor); provided, however, that the Company or a Restricted Subsidiary may
sell a Mortgaged Rig or the Company may sell all the Capital Stock of a
Subsidiary owning a Mortgaged Rig (any such asset proposed to be sold is
referred to herein as a "Mortgaged Rig Asset") if such sale of a Mortgaged Rig
Asset shall be made in compliance with each of the following conditions:
(1) no Default shall have occurred and be continuing;
(2) the sale shall be effected in a commercially reasonable manner as
determined by the Board of Directors and evidenced by a board
resolution;
(3) the entire consideration for such sale shall be at least equal to the
fair market value of the Mortgaged Rig Asset (as determined in good
faith by the Company's Board of Directors);
(4) at least 85% of the consideration received should be in the form of
cash or Temporary Cash Equivalents; and
(5) the Company shall have complied with the other provisions of the
Indenture applicable to such sale.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any Asset Sales (other than Asset Sales permitted by
the preceding paragraph and foreclosures, deeds-in-lieu of foreclosure or
similar transactions) unless the Company or the applicable Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets sold or otherwise
disposed of (as determined in good faith by the Company's Board of Directors),
and at least 85% of the consideration received by the Company or the Restricted
Subsidiary, as the case may be, from such Asset Sale at the time of such
disposition shall be in the form of cash or Temporary Cash Equivalents. If the
Company or a Restricted Subsidiary engages in an Asset Sale in compliance with
the previous sentence or a foreclosure, deed-in-lieu-of-foreclosure or similar
transaction, then the Company shall or shall cause a Restricted Subsidiary to
apply an amount equal to such excess Net Available Cash within 360 days of the
Asset Sale either
o to repay Senior Indebtedness of the Company or of a Restricted
Subsidiary (other than in each case Indebtedness owed to an Affiliate
of the Company),
o to invest in Additional Assets or
o deposit (no later than the end of such 360-day period) such excess Net
Available Cash (to the extent not applied pursuant to the preceding
clauses) into the Reserve Account.
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Pending application of Net Available Cash pursuant to this covenant, such Net
Available Cash shall be invested in Permitted Investments or to temporarily
reduce Indebtedness.
LIMITATION ON ASSET SWAPS
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any Asset Swaps, unless:
o at the time of entering into the agreement with respect thereto and
immediately after giving effect to the proposed Asset Swap, no Default
shall have occurred and be continuing;
o the aggregate fair market values of the Additional Assets and other
consideration to be received by the Company or the applicable
Restricted Subsidiary is, at the time the Asset Swap is agreed to,
substantially equal to the aggregate fair market value of the property
being disposed of by the Company or the applicable Restricted
Subsidiary (to be determined in good faith by the Board of Directors of
the Company and to be evidenced by a resolution of such Board set forth
in an Officer's Certificate delivered to the Trustee); and
o the cash payments, if any, received by the Company or such Restricted
Subsidiary in connection with that Asset Swap are treated as Net
Available Cash received from an Asset Sale.
LIMITATION ON AFFILIATE TRANSACTIONS
The Company shall not, and shall not permit any Restricted Subsidiary to,
enter into any transaction (including the purchase, sale, lease or exchange of
any property, employee compensation arrangements or the rendering of any
service) with any Affiliate of the Company (an "Affiliate Transaction") unless
the terms thereof:
o are no less favorable to the Company or such Restricted Subsidiary than
those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate;
o for Affiliate Transactions involving an amount in excess of $500,000,
are set forth in writing and have been approved by a majority of the
members of the Board of Directors of the Company having no personal
stake in such Affiliate Transaction; and
o for Affiliate Transaction involving an amount in excess of $10.0
million, have been determined by an investment banking firm of national
reputation or, in the case of the sale or transfer of assets subject to
valuation, an appropriate independent qualified appraiser of national
reputation, given the size and nature of the transaction, to be fair,
from a financial standpoint, to the Company and its Restricted
Subsidiaries.
The provisions of the preceding paragraph shall not prohibit:
o any Restricted Payment permitted to be paid pursuant to the covenant
described under "--Limitation on Restricted Payments,"
o any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of,
employment arrangements of the Company, stock options, stock ownership
and other employee benefit plans approved by the Board of Directors of
the Company,
o the grant of stock options or similar rights to employees, officers and
directors of the Company pursuant to plans approved by its Board of
Directors,
o the payment of reasonable fees to directors of the Company and in
Restricted Subsidiaries who are not employees of the Company or its
Restricted Subsidiaries,
o any Affiliate Transaction between the Company and a Wholly Owned
Restricted Subsidiary or between Wholly Owned Restricted Subsidiaries,
o the arrangements and transactions provided for in the Service
Agreements and other agreements described under "Certain Relationships
and Related Transactions" as in effect on the Issue Date and
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o transactions pursuant to agreements in effect on the Issue Date and
disclosed in the Offering Memorandum pursuant to which the old notes
were originally sold (all of which are disclosed in this prospectus).
LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
The Company shall not sell or otherwise dispose of any Capital Stock of a
Restricted Subsidiary, and shall not permit any such Restricted Subsidiary,
directly or indirectly, to issue or sell or otherwise dispose of any of its
Capital Stock except:
o to the Company or a Wholly Owned Restricted Subsidiary,
o if, immediately after giving effect to such issuance, sale or other
disposition, neither the Company nor any of its Subsidiaries owns any
Capital Stock of such Restricted Subsidiary,
o directors' qualifying shares or
o other than with respect to shares of Capital Stock of a Restricted
Subsidiary which owns a Mortgaged Rig, if, immediately after giving
effect to such issuance, sale or other disposition, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any
Investment in such Person remaining after giving effect thereto would
have been permitted to be made under the covenant described under
"--Limitation on Restricted Payments" if made on the date of such
issuance, sale or other disposition.
FUTURE SUBSIDIARY GUARANTORS
The Indenture provides that the Company may not permit any Restricted
Subsidiary, directly or indirectly, to guarantee any Indebtedness of the Company
("Guaranteed Indebtedness") or any other Obligor unless:
o such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to the Indenture providing for a Subsidiary
Guarantee of payment of the notes by that Restricted Subsidiary and
o such Restricted Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against the Company or any
other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its Subsidiary Guarantee.
IMPAIRMENT OF LIENS
The Company shall not, and the Company shall not permit any Restricted
Subsidiary to, take or omit to take, any action which action or omission might
or would have the result of materially impairing the security interest with
respect to the Collateral for the benefit of the Trustee and the Holders, and
except as permitted by the indenture and the Security Documents, the Company
shall not, and shall not permit any Restricted Subsidiary to, grant to any
Person other than the Trustee, for the benefit of the Trustee and the Holders,
any interest whatsoever in any of the Collateral.
INSURANCE
The Company shall, or shall cause the Mortgaged Rig Owner owning a
Mortgaged Rig to, carry and maintain with respect to each Mortgaged Rig owned by
it insurance payable in United States Dollars in amounts, against risks and in a
form which is substantially equivalent to the coverage carried by other
responsible and experienced companies engaged in the operation of drilling rigs
similar to the Mortgaged Rigs and with insurance companies, underwriters, funds,
mutual insurance associations or clubs of recognized standing. Total property
insurance for the Mortgaged Rigs shall be in an aggregate amount not less than
the sum of the aggregate outstanding principal amount, subject to customary
deductibles, retentions or self-insurance, of the notes and other obligations
under the indenture.
AMENDMENTS TO SECURITY DOCUMENTS
The Company shall not, and the Company shall not permit any of its
Restricted Subsidiaries to, amend, modify or supplement, or permit or consent to
any amendment, modification or supplement of, the Security Documents in any way
that would be adverse to the Holders of the relevant notes.
SEPARATE CORPORATE ENTITIES
The Company shall, and shall cause each of its Subsidiaries to, and each
Shareholder shall, conduct its business in its own name so as to avoid the
appearance of conducting its business on behalf of any other Person or that the
assets of the Company or any such Subsidiaries or any Shareholder (the
"Applicable Entities") are available to pay the creditors of any of the other
Applicable Entities. Without limiting the generality of the foregoing, Each
Applicable Entity shall:
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o maintain corporate records and books of account separate from those of
the other Applicable Entities;
o shall comply with its constitutive documents, including by obtaining
proper authorization from its board of directors of all corporate
action requiring such authorization and holding meetings of its board
of directors as required by its constitutive documents;
o refrain from paying the operating expenses and liabilities of other
Applicable Entities except to the extent such funds have been
contributed as equity or constitute loans and, in each case, documented
appropriately;
o maintain an arm's length relationship with the other Applicable
Entities and shall not hold itself out as being liable for the debts of
the other Applicable Entities; and
o keep its assets and its liabilities wholly separate from the other
Applicable Entities except that operating assets may be pooled in the
ordinary course of the Applicable Entity's drilling business.
The indenture, the Subsidiary Guarantees or the Security Documents or any
permitted Indebtedness or permitted Lien under the Indenture shall not be
considered violations of the above-listed provisions.
The Company shall cause each Unrestricted Subsidiary to provide in any
Indebtedness Incurred by such Unrestricted Subsidiary that the holder of such
Indebtedness will not have any recourse to the Company or any of its Restricted
Subsidiaries with respect to such Indebtedness.
DEFAULTS
An Event of Default is defined in the Indenture as:
(1) a default in the payment of interest (including Additional Amounts, if
any) on the notes or a Company Loan when due, continued for 30 days;
(2) a default in the payment of principal of, or premium, if any, on any
note or Company Loan when due at its Stated Maturity, upon redemption,
required repurchase, declaration of acceleration or otherwise, or the
failure to redeem or purchase notes or the Company Loans when required
pursuant to the Indenture or the Mitsubishi Loan Agreements;
(3) the failure by the Company to comply with its obligations under
"--Certain Covenants--Limitation on Mergers and Consolidations,"
"--Redemptions--Redemption upon Loss of a Mortgaged Rig," and
"--Redemptions--Redemption upon Sale of a Mortgaged Rig" or in the
covenants described above under "--Change of Control" or "--Certain
Covenants--Limitation on Asset Sales;"
(4) the failure by the Company and the Subsidiary Guarantors to comply
with its other agreements contained in the Indenture or in the
Security Documents and such failure or event of default continues for
60 days after notice;
(5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness by the Company or any of its Restricted Subsidiaries (or
the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default
o is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default
unless being contested in good faith by appropriate proceedings (a
"Payment Default"),
o results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or
the maturity of which has been so accelerated, aggregates $10.0
million or more or
o occurs under the Mitsubishi Credit Facilities or the Mitsubishi
Loan Collateral Documents, is not a Payment Default and is not
cured or waived within 120 days;
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(6) failure by the Company or any of its Restricted Subsidiaries to pay
final judgments aggregating in excess of $10.0 million, which
judgments are not paid, discharged or stayed for a period of 30 days;
(7) certain events of bankruptcy or insolvency with respect to the
Company, Pride or any of the Company's Significant Subsidiaries or
group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for the Company and
its Subsidiaries), would constitute a Significant Subsidiary;
(8) any Subsidiary Guarantee ceases to be in full force and effect (other
than in accordance with the terms of the Indenture and such Subsidiary
Guarantee) or a Subsidiary Guarantor denies or disaffirms its
obligations under its Subsidiary Guarantee; or
(9) the Pride Guarantee ceases to be in full force and effect (other than
in accordance with the terms of the Indenture) or Pride denies or
disaffirms its obligations under the Pride Guarantee;
(10) the Letter of Credit ceases to be in full force and effect or the
issuer thereof denies or disaffirms its obligations under the Letter
of Credit; or
(11) the Liens under the Security Documents shall, at any time, cease to
be in full force and effect for any reason (other than by operation of
the provisions of the Indenture and the Security Documents) other than
the satisfaction in full of all obligations under the Indenture and
discharge of the Indenture, or any Lien created thereunder shall be
declared invalid or unenforceable or the Company or any Mortgaged Rig
Owner shall assert, in any pleading in any court of competent
jurisdiction, that any such lien is invalid or unenforceable.
However, a default under clauses (4) and (5) will not constitute an Event
of Default until the Trustee provides a written notice to the Company, or the
Holders of 25% in aggregate principal amount of any notes outstanding pursuant
to the Indenture provide a written notice to the Company and the Trustee, of the
default and, in the case of a default under clause (4), the Company does not
cure such default within the time specified after receipt of such notice.
If an Event of Default occurs and is continuing with respect to the
Indenture (other than certain events of bankruptcy, insolvency, or
reorganization), the Trustee or the Holders of not less than 25% in principal
amount of any notes outstanding pursuant to the Indenture may declare the
principal of and premium, if any, and accrued but unpaid interest (including
Additional Amounts, if any) on all the notes to be due and payable. Upon such a
declaration, such principal, premium, if any, and interest (including Additional
Amounts, if any) will be due and payable immediately.
If an Event of Default relating to certain event of bankruptcy, insolvency
or reorganization occurs and is continuing, the principal of and premium, if
any, and interest (including Additional Amounts, if any) on the notes will
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holders.
The amount due and payable on the acceleration of any note will be equal
to 100% of the principal amount of that note, plus accrued and unpaid interest
(including Additional Amounts, if any) to the date of payment.
Under certain circumstances, the Holders of a majority in principal amount
of all outstanding notes pursuant to the Indenture may rescind any such
acceleration with respect to the notes and its consequences.
A Holder of a note may pursue any remedy under the Indenture only if:
o the Trustee has received written notice of a continuing Event of
Default;
o the Trustee has received a request from Holders of at least 25% in
principal amount of notes to pursue that remedy,
o the Trustee has been offered indemnity reasonably satisfactory to it
and
o the Trustee has failed to act for a period of 60 days after receipt of
such notice and offer of indemnity; however, such provision does not
affect the right of a Holder of a note to sue for enforcement of any
overdue payment thereon.
Subject to certain restrictions, the Holders of a majority in aggregate
principal amount of the outstanding notes are given the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee. The
Trustee, however, may refuse to follow any direction that conflicts with law or
the indenture or that the Trustee determines is unduly prejudicial to the rights
of any other Holder or that would involve the Trustee in personal liability.
Subject to the provisions of the indenture relating to the duties of the Trustee
in case an Event of Default occurs and is continuing, the Trustee will be under
no obligation to exercise any of the rights or powers under the
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indenture at the request or direction of any of the Holders unless such Holders
have offered to the Trustee reasonable indemnity or security against any loss,
liability or expense.
The indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each Holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment
of principal of or interest on any note, the Trustee may withhold notice if and
so long as a committee of its trust officers determines that withholding notice
is not opposed to the interest of the Holders. In addition, the Company is
required to deliver to the Trustee, within 120 days after the end of each fiscal
year, a certificate indicating whether the signers thereof know of any Default
that occurred during the previous year. The Company also is required to deliver
to the Trustee, within five Business Days after the occurrence thereof, written
notice of any event which would constitute a Default or an Event of Default, its
status and what action the Company is taking or proposes to take in respect
thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Company and the Trustee may amend the
indenture and the Security Documents with the consent of the Holders of a
majority in aggregate principal amount of the notes then outstanding (including
consents obtained in connection with a tender offer or exchange for the notes)
and any past Default or Event of Default or compliance with any provisions may
also be waived with the consent of the Holders of a majority in aggregate
principal amount of the notes then outstanding. However, without the consent of
each Holder of an outstanding note affected thereby, no amendment may, among
other things,
(1) reduce the amount of notes whose Holders must consent to an amendment,
(2) reduce the rate of or extend the time for payment of interest on any
note or any Company Loan,
(3) reduce the principal of or extend the Stated Maturity of any note or
any Company Loan,
(4) modify the obligations of Company to make mandatory redemptions or
otherwise reduce the premium payable upon the redemption of any note
or change the time at which any note may be or is required to be
redeemed as described under "--Redemptions" above,
(5) modify the obligations of Pride to make payments under the Pride
Guarantee or modify the obligations of the issuer of the Letter of
Credit under the Letter of Credit,
(6) make any note payable in money other than that stated in the note,
(7) impair the right of any Holder to receive payment of principal of and
interest on such Holder's notes on or after the due date therefor or
to institute suit for the enforcement of any payment on or with
respect to such Holder's notes,
(8) make any change in the amendment provisions which require each
Holder's consent or in the waiver provisions,
(9) make any change in any Security Document or the Mitsubishi Credit
Facilities (in the case of the Mitsubishi Documents, if the Company
has the right to consent to any such change) that would materially
adversely affect the Holders or terminate the Lien of the Indenture or
any Security Document (other than in accordance with the terms
thereof) on any property at any time subject thereto or deprive the
Holder of the security afforded by the Lien of the Indenture or the
Security Documents or the Company of the Liens securing the Company
Loans.
Without the consent of any Holder, the Company and Trustee may amend the
indenture and the Security Documents to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of the Company under the indenture, the Mitsubishi Credit Facilities
and the Security Documents, to provide for uncertificated notes in addition to
or in place of certificated notes (provided that the uncertificated notes are
issued in registered form for purposes of Section 163(f) of the Code, or in a
manner such that the uncertificated notes are described in Section 163(f)(2)(B)
of the Code), to add additional guarantees with respect to the notes, to provide
additional security for the notes, to add to the covenants of the Company for
the benefit of a Holder or to surrender any right or power conferred upon the
Company, to make any change that does not adversely affect the rights of any
Holder of the notes or to comply with any requirement of the SEC in connection
with the qualification of the indenture under the Trust Indenture Act.
The consent of the Holders is not necessary under the indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment. After an amendment under the
indenture or the Security Documents becomes effective, the Company is required
to mail to Holders a notice briefly describing such amendment. However, the
failure to give such notice to all Holders, or any defect therein, will not
impair or affect the validity of the amendment.
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ABILITY TO REALIZE ON COLLATERAL
The proceeds resulting from the enforcement of remedies available to the
Holders, including the remedies afforded by the Pride Guarantee and the Letter
of Credit, and the sale of the Collateral in whole pursuant to the Indenture,
the Mitsubishi Credit Facilities and the Security Documents (including
accumulated cash and cash equivalents from payments received by the collateral
agent under the Mitsubishi Credit Facilities), following an Event of Default
under the indenture will be shared by the Holders and also, in case of the
Mitsubishi Loan Collateral Documents, by the other lenders under the Mitsubishi
Credit Facilities. Such proceeds may not be in an amount that will be sufficient
to repay the notes in full. In addition, the ability of the Holder to realize
upon the Collateral may be limited in the event of a bankruptcy or Insolvency or
pursuant to applicable laws, including securities laws.
The Company's portion of the Mitsubishi Credit Facilities will be the
principal source of payment of interest on, and the principal collateral for,
the notes. The Company will own less than a majority of the loans outstanding
under the Mitsubishi Credit Facilities. The remainder of the loans under the
Mitsubishi Credit Facilities are currently held by affiliates of the Mitsubishi
Corporation. The majority lenders have the right to control determinations to be
made by the lenders under the Mitsubishi Credit Facilities. Accordingly,
Mitsubishi, as the majority lender, will have the exclusive right to amend the
Mitsubishi Documents, waive borrower defaults under the Mitsubishi Credit
Facilities, declare an event of default under the Mitsubishi Credit Facilities
and direct the enforcement of rights against the borrowers.
The Mitsubishi Credit Facilities only permit lenders to assign their
rights under the Mitsubishi Credit Facilities to a first class international
bank incorporated in an OECD country or a person approved by an affiliate of
Mitsubishi Corporation, which approval will not be unreasonably withheld. This
provision restricts the Company's ability to transfer its portion of the
Mitsubishi Credit Facilities and limits the collateral agent's ability to
transfer the Company Loans if there is an Event of Default and foreclosure under
the notes.
If an Event of Default occurs and is continuing and the Company Loans and
the notes become payable in full, the Trustee, on behalf of the Holders, in
addition to any other rights or remedies available to it under the Indenture and
the Security Documents, may take such action as it deems advisable to protect
and enforce its rights in the Collateral, including the institution of sale or
foreclosure proceedings. The proceeds received by the Trustee from any such sale
or foreclosure will be applied by the Trustee first to pay the expenses of such
sale or foreclosure and fees and other amounts then payable to the Trustee under
the indenture, and thereafter to pay amounts due and payable with respect to the
notes.
The right of the Trustee and/or the Company to repossess and, dispose of
the Collateral upon acceleration of the notes and/or the Company Loans is likely
to be significantly impaired by applicable bankruptcy or insolvency law if a
bankruptcy or insolvency proceeding were to be commenced by or against a
Mortgaged Rig Owner, the Company or any Subsidiary Guarantor prior to or
possibly even after such Trustee has repossessed and disposed of the Collateral.
Under the United States Bankruptcy Code, to the extent applicable, a secured
creditor such as the Trustee is prohibited from repossessing its security from a
debtor in a bankruptcy case, or from disposing of security repossessed from such
debtor, without bankruptcy court approval. Moreover, applicable U.S. bankruptcy
law generally permits the debtor to continue to retain and to use collateral
(and the proceeds, products, offspring, rents or profits of such collateral)
even though the debtor is in default under the applicable debt instruments,
provided generally that the secured creditor is given "adequate protection." The
meaning of the term "adequate protection" may vary according to circumstances,
but it is intended in general to protect the value of the secured creditor's
interest in the collateral and may include, if approved by the court, cash
payments or the granting of additional or replacement security for any
diminution in the value of the collateral as a result of the stay of
repossession or disposition or any use of the collateral by the debtor during
the pendency of the bankruptcy case. In view of the lack of a precise definition
of the term "adequate protection" and the broad discretionary powers of a
bankruptcy court, it is impossible to predict how long payments under the notes,
the Mitsubishi Credit Facilities or any Subsidiary Guarantees could be delayed
following commencement of a bankruptcy case, whether or when the Trustee would
repossess or dispose of the Collateral or whether or to what extent Holders
would be compensated for any delay in payment or loss of value of the Collateral
through the requirements of "adequate protection." Furthermore, in the event
that the bankruptcy court determines that the value of the Collateral is not
sufficient to repay all amounts due on the Company Loans or the notes, the
Company or Holders, as applicable, would have "undersecured claims." Applicable
U.S. bankruptcy laws do not permit the payment and/or accrual of interest, costs
and attorneys' fees for "undersecured claims" during the debtor's bankruptcy
case.
DEFEASANCE The Company at any time may terminate all its obligations under
the notes, the Indenture and the Security Documents ("legal defeasance"), except
for certain obligations, including those respecting the defeasance trust and
obligations, to register the transfer or exchange of the notes, to replace
mutilated, destroyed, lost or stolen notes and to maintain a registrar and
paying agent in respect of the notes and except for its optional redemption
rights. The Company at any time may terminate its mandatory redemption and
repurchase obligations under "--Redemptions," "--Change of Control" and under
the covenants described under "--Certain Covenants" (other than the covenant
described under "--Limitation on Mergers and Consolidations"), the operation of
the cross acceleration provision, the bankruptcy provisions with respect to
Significant Subsidiaries and the judgment default provision described under
"--Defaults" above and the limitations contained in clause (3) of the first
paragraph under, and the second paragraph under "--Certain Covenants--Limitation
on Mergers and Consolidations" above ("covenant defeasance").
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The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the notes may not be accelerated because of an
Event of Default specified in clause (3) (other than the covenant described
under "--Limitation on Mergers and Consolidations") or (5) under "--Defaults"
above or because of the failure of the Company to comply with clause (3) of the
first paragraph under, and the second paragraph under "--Certain
Covenants-Limitation on Mergers and Consolidations" above. If the Company
exercises its legal defeasance option, the Company and each Subsidiary Guarantor
will be released from all its obligations with respect to the Subsidiary
Guarantees and the Security Documents, as applicable.
In order to exercise either defeasance option, the Company must
irrevocably deposit in trust (the "defeasance trust") with the Trustee money or
U.S. Government Obligations for the payment of principal, premium, if any, and
interest (including Additional Amounts, if any) on the notes to redemption or
maturity, as the case may be, and must comply with certain other conditions,
including delivery to the Trustee of an opinion of counsel to the effect that
Holders will not recognize income, gain or loss for federal income tax purposes
as a result of such deposit and defeasance and will be subject to federal income
tax on the same amounts and in the same manner and at the same time as would
have been the case if such deposit and defeasance had not occurred (and, in the
case of legal defeasance only, such opinion of counsel must be based on a ruling
of the Internal Revenue Service or other change in applicable federal income tax
law).
CONCERNING THE TRUSTEE
Wilmington Trust Company is the Trustee under the Indenture and the
collateral agent under certain Security Documents and has been appointed by the
Company as registrar and paying agent with regard to the notes.
The Holders of a majority in aggregate principal amount of the outstanding
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that if an Event of Default occurs
(and is not cured), the Trustee will be required, in the exercise of its power,
to use the degree of care of a prudent Person in the conduct of its own affairs.
Subject to those provisions, the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request of any Holder,
unless that Holder shall have offered to the Trustee, security and indemnity
satisfactory to it against any loss, liability or expense and then only to the
extent required by the terms of the Indenture.
GOVERNING LAW
The Indenture provides that the Indenture and the notes are governed by,
and construed in accordance with the laws of the State of New York without
giving effect to applicable principles of conflicts of law, except to the extent
that the application of the law of another jurisdiction would be required
thereby. The Mitsubishi Credit Facilities and the Mitsubishi Loan Collateral
Documents are governed by English law.
CONSENT TO JURISDICTION AND SERVICE
Pursuant to the Indenture, each of the Company, Pride, Maritima and each
Subsidiary Guarantor has appointed CT Corporation System, New York, New York as
its Agent for actions brought under federal or state securities laws brought in
any federal or state court located in the Borough of Manhattan in the City of
New York and will submit to such jurisdiction.
ENFORCEABILITY OF JUDGMENTS
Since all the operating assets of the Company and its Subsidiaries are
outside the United States, any judgment obtained in the United States against
the Company, a Mortgaged Rig Owner or a Subsidiary Guarantor, including
judgments with respect to the payment of principal, interest, Additional
Amounts, redemption price and any purchase price with respect to the notes, may
not be collectible within the United States.
British Virgin Islands counsel, Dancia Penn & Co, has advised that, in
such counsel's opinion, the laws of the British Virgin Islands applicable
therein permit an action to be brought in a court of competent jurisdiction in
the British Virgin Islands on a final and conclusive judgment in personam of a
United States federal court or in a New York Court, respecting the enforcement
of the notes or the Indenture (including the Security Documents), that is not
impeachable as void or voidable under the laws of the State of New York and that
is for a sum certain in money if
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o the New York Court that rendered such judgment has jurisdiction over
the judgment debtor, as recognized by the courts of the British Virgin
Islands and in accordance with the conflict of laws rules of the
British Virgin Islands (and submission by the Company in the indenture
to the jurisdiction of the New York Court will be sufficient for this
purpose);
o such judgment was not obtained by fraud or in a manner contrary to
natural justice and the enforcement thereof would not be inconsistent
with public policy, as such term is understood under the laws of the
British Virgin Islands applicable therein;
o the enforcement of such judgment does not constitute, directly or
indirectly, the enforcement of foreign revenue, expropriator, public or
penal laws;
o no new admissible evidence relevant to the action is discovered prior
to the rendering of judgment by the court in the British Virgin
Islands; and
o the action to enforce such judgment is commenced within six years after
the date of such judgment.
In addition, such counsel has advised that a final and conclusive judgment for a
definite sum of money obtained against the Company or its Subsidiaries in the
courts of England and/or the Bahamas in respect of any of the Mitsubishi
Documents that is governed by English or Bahamian law, as applicable, may be
registered and enforced as a judgment of the High Court of the British Virgin
Islands if application is made within twelve months of the date of the judgment
(or such longer period as the High Court may allow) and if the High Court
considers it just and convenient that the judgment be so enforced or, in the
alternative, such judgment may be treated as a separate cause of action and may
be sued upon in the High Court of the British Virgin Islands within six years of
the date of the judgment without re-examination or re-litigation of the matters
adjudicated upon so that no retrial of such matters would be necessary,
provided, in each case, that
o the English court or Bahamian court, as applicable, had jurisdiction in
the matter and the judgment debtor either submitted to such
jurisdiction or was a resident or carrying on business within such
jurisdiction and was duly served with process,
o the judgment given by the English court or Bahamian court, as
applicable, was not in respect of penalties, fines, taxes or similar
fiscal or revenue obligations of the Company or its Subsidiaries,
o recognition or enforcement of such judgment in the British Virgin
Islands does not contravene British Virgin Islands public policy,
o the judgment was not obtained by fraud,
o the judgment is not inconsistent with a British Virgin Islands judgment
in respect of the same matter and
o the proceedings pursuant to which the judgment was obtained were not
contrary to the principles of natural justice.
The courts of the British Virgin Islands may refuse to enforce obligations or
liabilities on any of the parties incorporated under the laws of the British
Virgin Islands otherwise than for payment of money by way of such equitable
remedies as injunction or specific performance.
Bahamian counsel, Higgs & Johnson, has advised that, in such counsel's
opinion, the laws of the Bahamas (where the first priority ship mortgages will
be registered) applicable therein permit an action to be brought in a court of
competent jurisdiction in the Bahamas on a final and conclusive judgment in
personam of a United States federal court or a court of the State of New York
sitting in the Borough of Manhattan in The City of New York (the "New York
Court") in respect of the enforcement of the notes or the Indenture (including
the Security Documents) that is not impeachable as void or voidable under the
laws of the State of New York, or of a superior court of the United Kingdom in
respect of any of the Mitsubishi Documents that are governed by English law that
is not impeachable as void or voidable under the laws of England, or of a
superior court of the British Virgin Islands that is not impeachable as void or
voidable under the laws of the British Virgin Islands, and that, in each case,
is for a sum certain in money if:
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o the New York Court, English court or British Virgin Islands court that
rendered such judgment has jurisdiction over the judgment debtor, as
recognized by the courts of the Bahamas and in accordance with the
conflict of laws rules of the Bahamas (and submission by the Company in
the Indenture to the jurisdiction of the New York Court or by the
Company or its Subsidiaries in the Mitsubishi Documents to the English
court will be sufficient for this purpose);
o such judgment was not obtained by fraud or in a manner contrary to
natural justice and the enforcement thereof would not be inconsistent
with public policy, as such term is understood under the laws of the
Bahamas applicable therein;
o the enforcement of such judgment does not constitute, directly or
indirectly, the enforcement of foreign revenue, expropriator, public or
penal laws;
o no new admissible evidence relevant to the action is discovered prior
to the rendering of judgment by the court in the Bahamas; and
o the action to enforce such judgment is commenced within six years after
the date of such judgment.
Brazilian counsel, Pinheiro Neto - Advogados (Rio de Janeiro), has advised
that, in such counsel's opinion, any judgment of a non-Brazilian court will be
enforceable in the courts of Brazil if previously confirmed by the Federal
Supreme Court of Brazil, without reconsideration of the merits, and such
confirmation is only given if such judgment
o fulfills all formalities required for its enforceability under the laws
of the country where it was issued;
o is issued by a competent court after service of process in the relevant
action was made personally on the Brazilian party, or on a properly
appointed agent for service for process;
o is not subject to appeal;
o is authenticated by a Brazilian Consulate in the country in which it
was issued and is accompanied by a public sworn translation into
Portuguese; and
o does not offend Brazilian national sovereignty, public policy or
morality.
In addition, the ability of a judgment creditor to satisfy a judgment by
attaching certain assets located in Brazil is limited by Brazilian law. A
plaintiff (whether Brazilian or non-Brazilian) who resides outside of Brazil
during the course of litigation in Brazil must provide a bond to guarantee court
costs and legal fees if the plaintiff owns no real property in Brazil that would
ensure such payment except if the plaintiff is seeking to enforce foreign
judgments that have been fully confirmed by the Brazilian Federal Supreme Court.
This bond must have a value sufficient to satisfy the payment of court fees and
the defendant's attorneys' fees, as determined by the Brazilian judge.
CERTAIN DEFINITIONS
The following is a summary of certain defined terms to be used in the
Indenture. Reference is made to the Indenture for the full definition of all
these terms and for the definitions of other capitalized terms used in this
description of the notes and not defined below.
"Acquired Indebtedness" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, whether or not such Indebtedness is incurred in connection
with, or in contemplation of, such other Person merging with or into,
or becoming a Subsidiary of such specified Person; and
(2) Indebtedness secured by a lien encumbering any asset acquired by such
specified Person.
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"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Capital Stock by the Company or another Restricted Subsidiary or (iii)
Capital Stock constituting a minority interest in any Person that at such time
is a Restricted Subsidiary; provided, however, that any such Restricted
Subsidiary described in clause (ii) or (iii) above is primarily engaged in a
Related Business.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date means the
amount by which the fair value of the assets and property of such Subsidiary
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving affect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under its Subsidiary Guarantee, of such Subsidiary Guarantor at such
date.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purpose of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of Voting Stock, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided, however, that "Affiliate" shall also mean any beneficial owner of
Capital Stock representing 5% or more of the total voting power of the Voting
Stock (on a fully diluted basis) of such a Person or of rights or warrants to
purchase such Capital Stock (whether or not currently exercisable) and any
Person who would be an Affiliate of any such beneficial owner pursuant to the
first sentence hereof.
"Asset Sale" means any direct or indirect sale, capital leases, transfer
or other disposition (or series of related sales, capital leases, transfers or
dispositions) by the Company or any Restricted Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "disposition") in one
transaction or a series of related transactions, of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Restricted Subsidiary), (ii) any drillship or drilling rig or all or
substantially all the assets of any division or line of business of the Company
or any Restricted Subsidiary or (iii) any other assets of the Company or any
Restricted Subsidiary outside of the ordinary course of business of the Company
or such Restricted Subsidiary (other than, in the case of (i), (ii) and (iii)
above, (u) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly Owned Restricted Subsidiary, (v)
for purposes of the covenant described under "--Certain Covenants--Limitation on
Asset Sales" only, a disposition that constitutes a Restricted Payment permitted
by the covenant described under "--Certain Covenants-Limitation on Restricted
Payments," (w) Asset Swaps permitted under "--Certain Covenants-Limitation on
Asset Swaps," (x) dispositions of Incidental Assets, (y) dispositions of
Temporary Cash Investments and (z) a disposition of assets with a fair market
value of less than $100,000).
"Asset Swap" means a substantially concurrent purchase and sale, or
exchange, of assets constituting Additional Assets described in clause (i) of
the definition thereof between the Company or any Restricted Subsidiary and
another Person or group of Persons; provided, however, that the cash and other
assets to be received by the Company or such Restricted Subsidiary which do not
constitute Additional Assets do not constitute more than 25% of the total
consideration to be received by the Company or such Restricted Subsidiary in
such Asset Swap.
"Attributable Indebtedness," when used with respect to any Sale/Leaseback
Transaction, means, as at the time of determination, the present value
(discounted at the rate set forth or implicit in the terms of the lease included
in such transaction) of the total obligations of the lessee for rental payments
(other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for property rights)
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Board of Directors" means the Board of Directors of a Person or any
committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capitalized Lease Obligation" of any Person means any obligation of such
Person to pay rent or other amounts under a lease of property, real or person,
that is required to be capitalized for financial reporting purposes in
accordance with generally
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accepted accounting principles and the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, rights to purchase, warrants or options (whether or not currently
exercisable), participations or other equivalents of or interests in (however
designated) the equity (which includes, but is not limited to, common stock,
preferred stock and partnership and joint venture interests) of such Person
(excluding any debt securities that are convertible into, or exchangeable for,
such equity).
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all the collateral subject to the Security Documents.
"Company Loans" means loans under the Mitsubishi Credit Facilities
purchased by the Company.
"Consolidated EBITDA Coverage Ratio" as of any date of determination means
the ratio of (a) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (b) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that:
(1) If the Company or any Restricted Subsidiary has incurred any
Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to calculate
the Consolidated EBITDA Coverage Ratio is an issuance of Indebtedness,
or both, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been issued on the first day
of such period and the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of
such new Indebtedness as if such discharge had occurred on the first
day of such period,
(2) if since the beginning of such period the Company or any Restricted
Subsidiary shall have made any asset disposition, the EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such
asset disposition for such period, or increased by an amount equal to
the EBITDA (if negative), directly attributable thereto for such
period, and Consolidated Interest Expense for such period shall be
reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, defeased of otherwise
discharged with respect to the Company and its continuing Subsidiaries
in connection with such asset dispositions for such period (or, if the
Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company
and its continuing Subsidiaries are no longer liable for such
Indebtedness after such sale),
(3) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted
Subsidiary) or an acquisition of assets, including any acquisition of
assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business (which shall
include the acquisition or construction of a vessel or drilling rig,
provided the Company has paid 75% or more of the cost thereof and such
vessel or drilling rig is reasonably expected to be delivered within
90 days), EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto (including
the issuance of any Indebtedness) as if such Investment or acquisition
occurred on the first day of such period, and
(4) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company
or any Restricted Subsidiary since the beginning of such period) shall
have made any asset disposition or any Investment that would have
required an adjustment pursuant to clause (2) or (3) above if made by
the Company or a Restricted Subsidiary during such period, EBITDA and
Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such asset disposition or
Investment occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given
to an acquisition of assets, the amount of income or earnings relating thereto,
and the amount of Consolidated Interest Expense associated with any Indebtedness
issued in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest of such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any Interest Rate Protection Agreement
applicable to such Indebtedness if such Interest Rate Protection Agreement has a
remaining term in excess of 12 months).
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For purposes of this definition, in the case of the acquisition since the
beginning of such period of a drilling rig or drillship (or of a Restricted
Subsidiary owning same) by the Company or by a Restricted Subsidiary pursuant to
a binding purchase agreement or the delivery at the beginning of such period of
a drilling rig or drillship to the Company or a Restricted Subsidiary pursuant
to a binding construction contract, which drilling rig or drillship has been
subject for at least one full fiscal quarter to a binding drilling contract
constituting a Qualifying Contract, then, for purposes of making the pro forma
calculations provided for in the first sentence of the preceding paragraph, the
financial or accounting officer of the Company shall give pro forma effect to
the earnings (losses) of such drilling rig or drillship as if such drilling rig
or drillship were acquired on the first day of such period, by basing such
earnings (losses) on the annualized (x) historical revenues actually earned from
such Qualifying Contract and (y) actual expenses related thereto, in each case
for each quarter during such period in which the Qualifying Contract is in
effect.
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, plus, to
the extent not included in such interest expenses:
(1) interest expense attributable to Capitalized Lease Obligations,
(2) amortization of debt discount and debt issuance cost,
(3) capitalized interest,
(4) non-cash interest payments,
(5) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing,
(6) net costs under Interest Rate Protection Agreements (including
amortization of fees),
(7) dividends in respect of any Redeemable Stock held by Persons other
than the Company or a Restricted Subsidiary,
(8) interest expense attributable to deferred payment obligations, and
(9) interest expense on Indebtedness of another Person to the extent that
such Indebtedness is guaranteed by the Company or a Restricted
Subsidiary.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(a) any net income of any Person if such Person is not a Restricted
Subsidiary, except that (1) the Company's equity in the net income of
any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by
such Person during such period to the Company or a Restricted
Subsidiary as a dividend or other distribution (subject, in the case
of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (c) below) and (2) the Company's
equity in a net loss of any such Person for such period shall be
included in determining such Consolidated Net Income;
(b) any net income of any Person acquired by the Company or a Restricted
Subsidiary in a pooling of interests transaction for any period prior
to the date of such acquisition;
(c) any net income of any Restricted Subsidiary to the extent such
Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions
by such Restricted Subsidiary, directly or indirectly, to the Company,
except that (1) the net income of a Restricted Subsidiary shall be
included to the extent such net income could be paid to the Company or
a Restricted Subsidiary by loans, advances, intercompany transfers,
principal repayments or otherwise; (2) the Company's equity in the net
income of any such Restricted Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Restricted Subsidiary during such
period to the Company or another Restricted Subsidiary as a dividend
or other distribution (subject, in the case of a dividend or other
distribution to another Restricted Subsidiary, to the limitation
contained in this clause) and (3) the Company's equity in a net loss
of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income;
(d) any gain (but not loss) realized upon the sale or other disposition of
any property, plant or equipment of the Company or its consolidated
subsidiaries (including pursuant to any sale/leaseback arrangement)
which is not sold or otherwise disposed of in the ordinary course of
business and any gain (but not loss) realized upon the sale or other
disposition of any Capital Stock of any Person;
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(e) extraordinary, unusual or nonrecurring charges; and
(f) the cumulative effect of a change in accounting principles.
"Consolidated Net Worth" of a Person means the consolidated stockholders'
equity of such Person and its Subsidiaries, as determined in accordance with
GAAP.
"Default" means any act, event or condition which is, or after notice or
passage of time or both would be, an Event of Default.
"EBITDA" for any period means the Consolidated Net Income for such period,
plus the following (but without duplication) to the extent deducted in
calculating such Consolidated Net Income for such period: (a) income tax
expense, (b) Consolidated Interest Expense, (c) depreciation expense and (d)
amortization expense.
"Event of Loss" is defined to mean any of the following events:
(i) the actual loss of a Mortgaged Rig;
(ii) the agreed, arranged or constructive total loss of a Mortgaged Rig;
(iii) requisition for title or other compulsory acquisition of title of a
Mortgaged Rig by any governmental or other competent authority,
agency or instrumentality otherwise than by requisition for hire; or
(iv) capture, seizure, arrest, detention or confiscation of a Mortgaged
Rig by any government or person acting or purporting to act on
behalf of any government unless such Mortgaged Rig is released and
restored to the Mortgaged Rig Owner from such capture, seizure,
arrest or detention within six months after the occurrence thereof
or such other period as may be specified in the insurance policies
taken out or entered into in respect of the Mortgaged Rig.
"Event of Loss Proceeds" is defined to mean all compensation, damages and
other payments (including insurance proceeds) received by the Mortgaged Rig
Owner, the Company, any Restricted Subsidiary, the Security Agent under the
Mitsubishi Loan Collateral Documents or the Trustee, jointly or severally, from
any Person, including any governmental authority, with respect to or in
connection with an Event of Loss.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchangeable Stock" means any Capital Stock which is exchangeable or
convertible into another security (other than Capital Stock of the Company which
is neither Exchangeable nor Redeemable Stock).
"GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect from time to time.
"guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of such
Indebtedness or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "guarantee"
used as a verb has a corresponding meaning. The term "guarantor" shall mean any
Person guaranteeing any obligation.
"Hedging Obligations" of any Person means the net obligation (not the
notional amount) of such Person pursuant to any interest rate swap agreement,
foreign currency exchange agreement, interest rate collar agreement, option or
futures contract or other similar agreement or arrangement relating to interest
rates or foreign exchange rates.
"Holder" or "Noteholder" means the Person in whose name an old note or a
new note is registered on the Registrar's books.
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"Incidental Asset" is defined to mean any equipment, outfit, furniture,
furnishings, appliances, spare or replacement parts or stores owned by the
Company or a Restricted Subsidiary that have become obsolete or unfit for use or
no longer useful, necessary or profitable in the conduct of the business of the
Company or such Restricted Subsidiary, as the case may be. In no event shall the
term "Incidental Asset" include a drilling rig or a drillship or a Mortgaged
Rig.
"Incur" means issue, assume, guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning.
"Indebtedness" of any Person at any date means, without duplication:
(1) all indebtedness of such Person for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof),
(2) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments,
(3) all obligations of such Person in respect of letters of credit or
other similar instruments (or reimbursement obligations with respect
thereto), other than standby letters of credit and performance bonds
issued by such Person in the ordinary course of business, to the
extent not drawn or, to the extent drawn, if such drawing is
reimbursed not later than the third Business Day following demand for
reimbursement,
(4) all obligations of such Person to pay the deferred and unpaid purchase
price of property or services, except trade payables and accrued
expenses incurred in the ordinary course of business,
(5) all Capitalized Lease Obligations of such Person,
(6) all Indebtedness of others secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person, to
the extent of the fair market value of all the assets of such Person
subject to such Lien,
(7) all Indebtedness of others guaranteed by such Person to the extent of
such guarantee,
(8) Redeemable Stock, and
(9) all Hedging Obligations of such Person.
For purposes of clause (8) of the preceding sentence, Redeemable Stock
shall be valued at the maximum fixed redemption, repayment or repurchase price,
which shall be calculated in accordance with the terms of such Redeemable Stock
as if such Redeemable Stock were repurchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture; provided, however,
that if such Redeemable Stock is not then permitted to be redeemed, repaid or
repurchased, the redemption, repayment or repurchase price shall be the book
value of such Redeemable Stock. The amount of Indebtedness of any Person at any
date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any guarantees at
such date; provided that for purposes of calculating the amount of any
non-interest bearing or other discount security, such Indebtedness, shall be
deemed to be the principal amount thereof that would be shown on the balance
sheet of the issuer thereof dated such date prepared in accordance with GAAP but
that such security shall be deemed to have been Incurred only on the date of the
original issuance thereof. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date.
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Restricted Subsidiary against
fluctuations in interest rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary," the definition of "Restricted Payment" and the
covenant described under the "Limitation on Restricted Payments" covenant (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in such Subsidiary at the time of such
redesignation in the amount of such Investment immediately prior to such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by the
Company's Board of Directors.
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"Investment Grade Rating" means BBB- or above, in the case of S&P (or its
equivalent under any successor rating categories of S&P), Baa3 or above, in the
case of Moody's (or its equivalent under any successor rating categories of
Moody's), and the equivalent in respect of the ratings categories of any Rating
Agencies substituted for S&P or Moody's.
"Issue Date" means November 1, 1999, the date on which the old notes were
originally issued.
"Legal Holiday" means a Saturday, Sunday or other day on which commercial
banks in The City of New York, Brazil, the Bahamas, the British Virgin Islands
or the city in which the corporate trust office of the Trustee is located are
authorized by law to close.
"Lien" means any mortgage, pledge, hypothecation, charge, assignment,
deposit arrangement, encumbrance, security interest, lien (statutory or other),
or preference, priority or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
agreement to give or grant a Lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing). For the purposes of the Indenture, the Company or any of its
Subsidiaries shall be deemed to own subject to a Lien any asset which the
Company has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, Capitalized Lease Obligation or other
title retention agreement relating to such asset.
"MARAD Documents" means the credit facilities provided by Citibank, N.A.
and Govco Incorporated with respect to the AMETHYST 4 and AMETHYST 5.
"Mitsubishi Credit Facilities" means the loan agreements providing for the
AMETHYST 6 and AMETHYST 7 credit facilities.
"Mitsubishi Documents" means, collectively, the Mitsubishi Credit
Facilities and the Mitsubishi Loan Collateral Documents.
"Mitsubishi Floor Guarantee" means the guarantee provided by Maritima and
Pride, for the benefit of the Mitsubishi-affiliated lenders only, of repayment,
from commencement of each Mortgaged Rig's Charter, of the total borrowings under
such Mortgaged Rig's Mitsubishi Credit Facility up to a total for both
Mitsubishi Credit Facilities of $75.6 million by Maritima and $32.4 million by
Pride.
"Mitsubishi Loan Collateral Documents" means the security documents
relating to, and providing security for, the Mitsubishi Credit Facilities, but
excluding the Mitsubishi Floor Guarantee.
"Moody's" is defined to mean Moody's Investor Service, Inc. and its
successors.
"Mortgaged Rig" means any Rig subject to the Lien of the Security
Documents.
"Net Available Cash" from an Asset Sale means cash payments or Temporary
Cash Equivalents received therefrom (including any cash payments received by way
of deferred payment of principal pursuant to a note or installment receivable or
otherwise and proceeds from the sale or other disposition of any securities
received as consideration, but only as and when received, but excluding any
other consideration received in the form of assumption by the acquiring Person
of Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form), in each case net of (i) all legal, title
and recording tax expenses, commissions and other fees and expenses incurred,
and all federal, state, provincial, foreign and local taxes required to be
accrued as a liability under GAAP, as a consequence of such Asset Sale, (ii) all
payments made on any Indebtedness which is secured by any assets subject to such
Asset Sale, in accordance with the terms of any Lien upon or other security
agreement of any Lien with respect to such assets, or which must by its terms,
or in order to obtain a necessary consent to such Asset Sale, or by Applicable
law, be repaid out of the proceeds from such Asset Sale, (iii) all distributions
and other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Sale and (iv) the
deduction of appropriate amounts provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the property or
other assets disposed in such Asset Sale and retained by the Company or any
Restricted Subsidiary after such Asset Sale.
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"Net Cash Proceeds" means, with respect to any issuance or sale of Capital
Stock, the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Convertible Stock" means, with respect to any Person, any
non-convertible Capital Stock of such Person and any Capital Stock of such
Person convertible solely into non-convertible common stock of such Person;
provided, however, that Non-Convertible Capital Stock shall not include any
Redeemable Stock or Exchangeable Stock.
"Pari Passu Indebtedness" means any Indebtedness of the Company, whether
outstanding on the date on which the notes are originally issued or thereafter
created, incurred or assumed, unless, in the case of any particular Indebtedness
the instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Indebtedness shall be subordinated in
right of payment to the notes.
"Permitted Holder" means any Shareholder or any Affiliate of a
Shareholder.
"Permitted Investments" means:
(a) certificates of deposit, bankers acceptances, time deposits,
Eurocurrency deposits and similar types of Investments routinely
offered by commercial banks with final maturities of one year or less
issued by commercial banks, having capital and surplus in excess of
$100.0 million;
(b) commercial paper issued by any corporation, if such commercial paper
has credit ratings of at least "A-1" by S&P and at least "P-1" by
Moody's;
(c) U.S. Government Obligations with a maturity of three years or less;
(d) repurchase obligations of instruments of the type described in clause
(c);
(e) shares of money market mutual or similar funds having assets in excess
of $100.0 million;
(f) payroll advances in the ordinary course of business;
(g) other advances and loans to officers and employees of the Company or
any Restricted Subsidiary, so long as the aggregate principal amount
of such advances and loans does not exceed $1.0 million at any one
time outstanding;
(h) Investments in any Person in the form of a capital contribution of the
Company's common stock;
(i) Investments made by the Company in its Restricted Subsidiaries (or any
Person that will be a Restricted Subsidiary as a result of such
Investment) or by a Restricted Subsidiary in the Company or in one or
more Restricted Subsidiaries (or any Person that will be a Restricted
Subsidiary as a result of such Investment);
(j) Investments in stock, obligations or securities received in settlement
of debts owing to the Company or any Restricted Subsidiary as a result
of bankruptcy or insolvency proceedings or upon the foreclosure,
perfection or enforcement of any Lien in favor of the Company or any
Restricted Subsidiary, in each case as to debt owing to the Company or
any Restricted Subsidiary that arose in the ordinary course of
business of the Company or any such Restricted Subsidiary;
(k) Investments made in exchange for Indebtedness permitted by Section
(b)(4) of the "Limitation of Indebtedness" covenant;
(l) Investments in a Person other than a Restricted Subsidiary for the
purpose of financing the construction or upgrade of new drilling rigs,
drillships or similar vessels and related equipment, in an aggregate
amount not to exceed at any time outstanding $100 million; provided,
however, that at the time of such Investment; the Company or such
Person has entered into a Qualifying Contract with respect thereto;
and
(m) Investments represented by that portion of the proceeds from Asset
Sales that is not required to be cash or Temporary Cash Equivalents by
the covenant described in "--Certain Covenants--Limitation on Asset
Sales."
"Permitted Liens" means, with respect to any Person,
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(a) pledges or deposits by such Person under worker's compensation laws,
unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for
the payment of Indebtedness) or leases to which such Person is a
party, or deposits to secure public or statutory obligations of such
Person or deposits of cash or United States government bonds to secure
surety or appeal bonds to which such person is a party, or deposits as
security for contested taxes or import duties or for the payment of
rent, in each case Incurred in the ordinary course of business;
(b) Liens imposed by law, such as maritime, carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet due or being contested
in good faith by appropriate proceedings or other Liens arising out of
judgments or awards against such Person with respect to which such
Person shall then be proceeding with an appeal or other proceedings
for review;
(c) Liens for property taxes not yet subject to penalties for non-payment
or which are being contested in good faith and by appropriate
proceedings;
(d) Liens in favor of issuers of surety bonds or letters of credit issued
pursuant to the request of and for the account of such Person in the
ordinary course of its business; PROVIDED, HOWEVER, that such letters
of credit do not constitute Indebtedness;
(e) minor survey exceptions, minor encumbrances, easements or reservations
of, or rights of others for, licenses, rights-of-way, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of real property or Liens
incidental to the conduct of the business of such Person or to the
ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially adversely
affect the value of said properties or materially impair their use in
the operation of the business of such Person;
(f) Liens securing Indebtedness Incurred to finance the construction,
equipping, mobilization, transportation, installation, purchase or
lease of, or repairs, upgrades, improvements or additions to, property
of such Person; PROVIDED, HOWEVER, that the Lien may not extend to any
property owned by such Person or any of its Subsidiaries at the time
the Lien is Incurred (other than the property affected), and the
Indebtedness (other than any interest thereon) secured by the Lien may
not be Incurred more than 180 days after the later of the purchase,
acquisition, completion of construction, equipping, mobilization,
transportation, installation, repair, improvement, addition or
commencement of full operation of the property subject to the Lien;
(g) Liens existing on the Issue Date;
(h) Liens on property or shares of Capital Stock of another Person at the
time such other Person becomes a Subsidiary of such Person; PROVIDED,
however, that such Liens are not created, incurred or assumed in
connection with, or in contemplation of, such other Person becoming
such a Subsidiary; PROVIDED FURTHER, however, that such Lien may not
extend to any other property owned by such Person or any of its
Subsidiaries;
(i) Liens on property at the time such Person or any of its Subsidiaries
acquires the property, including any acquisition by means of a merger
or consolidation with or into such Person or a Subsidiary of such
Person; PROVIDED, HOWEVER, that such Liens are not created, incurred
or assumed in connection with, or in contemplation of such
acquisition; PROVIDED FURTHER, however, that the Liens may not extend
to any other property owned by such Person or any of its Subsidiaries;
(j) Liens securing Indebtedness or other obligations of a Subsidiary of
such Person owing to such Person or a wholly owned Subsidiary of such
Person;
(k) Liens securing Hedging Obligations so long as such Hedging Obligations
relate to Indebtedness that is, and is permitted to be under the
Indenture, secured by a Lien on the same property securing such
Hedging Obligations;
(l) any charter or Qualifying Contract;
(m) judgment liens not giving rise to an Event of Default;
(n) rights of off-set of banks and other Persons;
(o) deposits made to obtain insurance;
(p) Liens or equitable encumbrances deemed to exist by reason of a
negative pledge or other arrangements to refrain from permitting Liens
or fraudulent transfer law;
(q) Liens to secure any Refinancing (or successive Refinancings) as a
whole, or in part, of any Indebtedness secured by any Lien referred to
as in the foregoing clauses (f), (g), (h) and (i); PROVIDED, HOWEVER,
that
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(x) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements to or
on such property); and
(y) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed amount of
the Indebtedness described under clauses (f), (g), (h) and (i) at
the time the original Lien became a Permitted Lien and (B) an
amount necessary to pay any fees and expenses, including
premiums, related to such refinancing, refunding, extension,
renewal or replacement; and
(r) Liens created under the MARAD Documents or the Mitsubishi Documents.
Notwithstanding the foregoing, "Permitted Liens" will not include any Lien
described in clauses (f), (h) or (i) above to the extent such Lien applies to
any Additional Assets acquired directly or indirectly from Net Available Cash
pursuant to the covenant described under "--Certain Covenants--Limitation on
Asset Sales." For purposes of this definition, the term "Indebtedness" shall be
deemed to include interest on such Indebtedness.
"Person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
"Public Equity Offering" means an underwritten primary public offering of
common stock of the Company or a Shareholder pursuant to an effective
registration statement under the Securities Act or pursuant to applicable laws
of any jurisdiction outside the United States but, in the case of a Shareholder,
only to the extent the net cash proceeds therefrom are contributed as equity
capital to the Company.
"Qualified Substitute Owner" means, as of the date of acquisition of
beneficial ownership, directly or indirectly, of at least 26.4% of the total
voting power of the Voting Stock of the Company, a corporation (x) whose long
term senior unsecured debt has an investment grade rating by either Moody's or
S&P and (y) which derived at least 50% of its revenue during the most recent 12
month period for which financial statements are publicly available from offshore
drilling operations.
"Qualifying Contract" with respect to a Rig means the charters or any
other contract for the use of such Rig (i) between the Company or a Restricted
Subsidiary and a counterparty that, as certified in an Officer's Certificate
delivered to the Trustee in connection therewith, is, or has a performance
guarantee from a third party that is, (a) a company that is either generally
recognized as a major oil company, (b) an oil company, a gas producer or an oil
and gas service company, in each case at the time such contract is executed
having a Total Equity Market Capitalization of at least $1.0 billion if such
entity is a public company, or if such entity is not a public company, having a
consolidated net worth of $500.0 million or (c) a company that has an investment
grade rating on its long-term debt from Moody's or S&P, (ii) having a minimum
term of three years and (iii) containing a minimum day rate for such Rig.
"Rating Agencies" means (a) S&P and Moody's or (b) if S&P or Moody's or
both of them are not making ratings of the notes publicly available, a
nationally recognized U.S. rating agency or agencies, as the cases may be,
selected by the Company, which will be substituted for S&P or Moody's or both,
as the case may be.
"Redeemable Stock" means, with respect to the notes, any Capital Stock
that, by its terms (or by the terms of any security into which it is
convertible, or for which it is exchangeable, in each case at the option of the
holder thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the notes mature. Notwithstanding the preceding sentence, any Capital
Stock that would constitute Redeemable Stock solely because the holders thereof
have the right to require the Company to repurchase such Capital Stock upon the
occurrence of a change of control or an asset sale shall not constitute
Redeemable Stock if the terms of such Capital Stock provide that the Company may
not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with the covenants described above
under the caption "--Change of Control," "--Certain Covenants--Limitation on
Asset Sales," "Redemptions" and "--Certain Covenants--Limitation on Restricted
Payments."
"Related Business" means any business related, ancillary or complementary
to the businesses of the Company and the Restricted Subsidiaries on the Issue
Date.
"Reserve Account" means the account established and designated as such
pursuant to the Reserve Account Agreement.
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"Reserve Account Agreement" means the Reserve Account Agreement among the
Company, the Trustee and the Reserve Account Agent named therein.
"Restricted Collateral" means (1) any Rig made subject to the Lien of the
Security Documents, (2) the Capital Stock of each Restricted Subsidiary owning a
Mortgaged Rig, (3) each Qualifying Contract subject to the Lien of the Security
Documents and (4) the Reserve Account and the cash and investments credited
thereto.
"Restricted Subsidiary" means any Subsidiaries other than an Unrestricted
Subsidiary.
"Rig Owner" means any of Petrodrill Four Limited, Petrodrill Five Limited,
Petrodrill Six Limited or Petrodrill Seven Limited.
"S&P" is defined to mean Standard & Poor's Ratings Group, a division of
McGraw-Hill Companies, Inc. and its successors.
"Sale/Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company of any of its Restricted Subsidiaries,
for a period of more than three years, of any real or tangible personal
property, which property has been or is to be sold or transferred by the Company
or such Restricted Subsidiary to such Person in contemplation of such leasing.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Security Documents" means, collectively, the Mitsubishi Loan Collateral
Documents, the Reserve Account Agreement, and the Security Agreement between the
Company, the Trustee and the collateral agent named therein.
"Senior Indebtedness" of any Person means (i) Indebtedness of such Person,
whether outstanding on the Issue Date or thereafter Incurred, and (ii) accrued
and unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company to the
extent post-filing interest is allowed in such proceeding) in respect of (A)
indebtedness for money borrowed and (B) Indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable unless, in the case of (i) and (ii), in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are subordinate in right of
payment to the notes, the Company Loans or the Subsidiary Guarantees, as
applicable; provided, however, that Senior Indebtedness shall not include (1)
any obligation of such Person to any Subsidiary of such Person, (2) any
liability for federal, state, local, foreign or other taxes owed or owing by
such Person, (3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities), (4) any Indebtedness of such Person
(and any accrued and unpaid interest in respect thereof) which is subordinate or
junior in any respect to any other Indebtedness or other obligation of such
Person or (5) that portion of any Indebtedness which at the time of Incurrence
is Incurred in violation of the Indenture.
"Shareholder" means any one of the Shareholders.
"Shareholders" means Drillpetro Inc., a company organized under the laws
of the Bahamas, Techdrill Inc., a company organized under the laws of the
Bahamas (each of the foregoing an affiliate of Maritima Petroleo e Engenharia
Ltda., a company organized under the laws of Brazil), Westville Management
Corporation Inc., a company organized under the laws of the British Virgin
Islands (an indirect wholly owned subsidiary of Pride International, Inc., a
company organized under the laws of Louisiana), and First Reserve Corporation,
individually or collectively as the context requires.
"Significant Subsidiary" means any Subsidiary Guarantor and any other
Restricted Subsidiary that would be a "Significant Subsidiary" of the Company
within the meaning of Rule 1.02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
which security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Company or a
Subsidiary Guarantor, as the case may be (whether outstanding on the Issue Date
or thereafter Incurred) which is subordinate or junior in right of payment to
the notes, the Company Loans or the Subsidiary Guarantee, as applicable, whether
pursuant to a written agreement to that effect or by operation of law.
"Subsidiary" means, with respect to any Person:
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(1) any corporation of which more than 50% of the total voting power of
all classes of the capital stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors is
owned by such Person directly or through one or more other
Subsidiaries of such Person, and
(2) any entity other than a corporation of which at least a majority of
the capital stock or other equity interest (however designated)
entitled (without regard to the occurrence of any contingency) or vote
in the election of the governing body, partners, managers or others
that will control the management of such entity is owned by such
Person directly or through one or more other Subsidiaries of such
Person.
"Subsidiary Guarantor" means each Subsidiary of the Company, whether now
owned or hereafter formed, which shall be required to execute and deliver a
Subsidiary Guarantee as described under "--Certain Covenants--Future Subsidiary
Guarantors".
"Subsidiary Guarantee" means a guarantee of the Company's obligations with
respect to the notes issued by a Subsidiary of the Company.
"Tangible Property" means all land, buildings, machinery and equipment and
leasehold interests and improvements which would be reflected on a balance sheet
of the Company prepared in accordance with GAAP, excluding (a) all rights,
contracts and other intangible assets of any nature whatsoever and (b) all
inventories and other current assets.
"Temporary Cash Investments" means Investments described in clauses (a),
(b), (c) and (d) of the definition of "Permitted Investments."
"Total Equity Market Capitalization" of any Person means, as of any day of
determination, the sum of (i) the product of (A) the aggregate number of
outstanding primary shares of common stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such person) multiplied by (B) the
average closing price of such common stock over the 20 consecutive Business Days
immediately preceding such day, plus (ii) the liquidation value of any
outstanding shares of preferred stock of such Person on such day.
"Unrestricted Subsidiary" means:
(a) any Subsidiary of the Company that at the time of, determination will
be designated an Unrestricted Subsidiary by the Board of Directors of
the Company as provided below and
(b) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Company may designate any Subsidiary of the
Company as an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries (x) owns any Capital Stock or Indebtedness of, or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated or (y) owns any of the
Collateral; provided, however, that either (A) the Subsidiary to be so
designated has total assets of $10,000 or less or (B) if such Subsidiary has
assets greater than $10,000, such designation would be permitted under the
covenant described under "--Certain Covenants--Limitation on Restricted
Payments."
Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by filing a resolution of the Board of Directors with
the Trustee giving effect to such designation. The Board of Directors of the
Company may designate any Unrestricted Subsidiary as a Restricted Subsidiary if,
immediately after giving effect to such designation, (A) no Default or Event of
Default shall have occurred and be continuing and (B) the Company could incur
$1.00 of additional Indebtedness under paragraph (a) of the "Limitation on
Indebtedness" covenant.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or one or more Wholly Owned Restricted Subsidiaries.
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BOOK-ENTRY; DELIVERY, FORM AND TRANSFER OF THE NEW NOTES
The new notes initially will be in the form of one or more registered
global notes without interest coupons (collectively, the "Global Notes")
deposited with the Trustee, as custodian for DTC, in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to the
accounts of DTC's Direct and Indirect Participants (as defined below).
Transfer of beneficial interests in any Global Notes will be subject to
the applicable rules and procedures of DTC and its Direct or Indirect
Participants (including, if applicable, those of Euroclear and Cedel), which may
change from time to time.
The Global Notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee in certain
limited circumstances. Beneficial interests in the Global Notes may be exchanged
for notes in certificated form in certain limited circumstances. See "--Transfer
of Interests in Global Notes for Certificated Notes."
Initially, the Trustee will act as Paying Agent and Registrar. The new
notes may be presented for registration of transfer and exchange at the offices
of the Registrar.
DEPOSITARY PROCEDURES
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Participants. The Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, including Euroclear and Cedel. Access to DTC's
system is also available to other entities that clear through or maintain a
direct or indirect, custodial relationship with a Direct Participant
(collectively, the "Indirect Participants").
DTC has advised the Company that, pursuant to DTC's procedures:
(1) DTC will credit the accounts of the Direct Participants with portions
of the principal amount of the Global Notes allocated to such Direct
Participants, and
(2) DTC will maintain records of the ownership interests of Direct
Participants in the Global Notes and the transfer of ownership
interests by and between Direct Participants.
DTC will not maintain records of the ownership interests of, or the
transfer of ownership interests by and between, Indirect Participants or other
owners of beneficial interests in the Global Notes. Direct Participants and
Indirect Participants must maintain their own records of the ownership interests
of, and the transfer of ownership interests by and between, Indirect
Participants and other owners of beneficial interests in the Global Notes.
The laws of some states in the United States require that certain persons
take physical delivery in definitive, certificated form, of securities that they
own. This may limit or curtail the ability to transfer beneficial interests in a
Global Note to such persons. Because DTC can act only on behalf of Direct
Participants, which in turn act on behalf of Indirect Participants and others,
the ability of a person having a beneficial interest in a Global Note to pledge
that interest to persons or entities that are not Direct Participants in DTC, or
to otherwise take actions in respect of those interests, may be affected by the
lack of physical certificates evidencing those interests. For certain other
restrictions on the transferability of the new notes see "--Transfers of
Interests in Global Notes for Certificated Notes."
Except as described in "--Transfer of Interests in Global Notes for
Certificated Notes," owners of beneficial interests in the Global Notes will not
have notes registered in their names, will not receive physical delivery of
notes in certificated form and will not be considered the registered owners or
Holders thereof under the indenture for any purpose.
Under the terms of the indenture, the Company and the Trustee will treat
the persons in whose names the new notes are registered (including new notes
represented by Global Notes) as the owners thereof for the purpose of receiving
payments and for any and all other purposes whatsoever. Payments in respect of
the principal, premium, Additional Amounts, if any, and interest on Global Notes
registered in the name of DTC or its nominee will be payable by the Trustee to
DTC or its nominee as the registered holder under the indenture. Consequently,
neither the Company, the Trustee nor any agent of the Company or the Trustee has
or will have any responsibility or liability for:
(1) any aspect of DTC's records or any Direct Participant's or Indirect
Participant's records relating to or payments made on account of
beneficial ownership interests in the Global Notes or for
maintaining, supervising or reviewing any of DTC's records or any
Direct Participant's or Indirect Participant's records relating to
the beneficial ownership interests in any Global Note; or
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(2) any other matter relating to the actions and practices of DTC or
any of its Direct Participants or Indirect Participants.
DTC has advised the Company that its current payment practice (for
payments of principal, interest and the like) with respect to securities such as
the notes is to credit the accounts of the relevant Direct Participants with
such payment on the payment date in amounts proportionate to such Participant's
respective ownership interests in the Global Notes as shown on DTC's records.
Payments by Direct Participants and Indirect Participants to the beneficial
owners of the new notes will be governed by standing instructions and customary
practices between them and will not be the responsibility of DTC, the Trustee or
the Company. Neither the Company nor the Trustee will be liable for any delay by
DTC or its Direct Participants or Indirect Participants in identifying the
beneficial owners of the new notes and the Company and the Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee as the registered owner of the new notes for all purposes.
The Global Notes will trade in DTC's Same-Day Funds Settlement System and,
therefore, transfers between Direct Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in immediately available
funds. Transfers between Indirect Participants (other than Indirect Participants
who hold an interest in the notes through Euroclear or Cedel) who hold an
interest through a Direct Participant will be effected in accordance with the
procedures of that Direct Participant but generally will settle in immediately
available funds. Transfers between and among Indirect Participants who hold
interests in the new notes through Euroclear and Cedel will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Cross-market transfers between Direct Participants in DTC, on the one
hand, and Indirect Participants who hold interests in the new notes through
Euroclear or Cedel, on the other hand, will be effected by Euroclear's or
Cedel's respective nominee through DTC in accordance with DTC's rules on behalf
of Euroclear or Cedel; however, delivery of instructions relating to
cross-market transactions must be made directly to Euroclear or Cedel, as the
case may be, by the counterparty in accordance with the rules and procedures of
Euroclear or Cedel and within their established deadlines (Brussels time for
Euroclear and UK time for Cedel). Indirect Participants who hold interests in
the new notes through Euroclear and Cedel may not deliver instructions directly
to Euroclear's or Cedel's nominee. Euroclear or Cedel will, if the transaction
meets its settlement requirements, deliver instructions to its respective
nominee to deliver or receive interests on Euroclear's or Cedel's behalf in the
relevant Global Note in DTC, and make or receive payment in accordance with
normal procedures for same-day fund settlement applicable to DTC.
Because of time zone differences, the securities accounts of an Indirect
Participant who holds an interest in the new notes through Euroclear or Cedel
purchasing an interest in a Global Note from a Direct Participant in DTC will be
credited, and any such crediting will be reported to Euroclear or Cedel during
the European business day immediately following the settlement date of DTC in
New York. Although recorded in DTC's accounting records as of DTC's settlement
date in New York, Euroclear and Cedel customers will not have access to the cash
amount credited to their accounts as a result of a sale of an interest in a
Global Note to a DTC Participant until the European business day of Euroclear or
Cedel immediately following DTC's settlement date.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder only at the direction of one or more Direct Participants to
whose accounts interests in the Global Notes are credited and only in respect of
such portion of the aggregate principal amount of the notes as to which such
Direct Participant or Direct Participants has or have given direction. However,
if there is an Event of Default under the notes, DTC reserves the right to
exchange Global Notes (without the direction of one or more of its Direct
Participants) for notes in certificated form, and to distribute such
certificated notes to its Direct Participants. See "--Transfers of Interests in
Global Notes for Certificated Notes."
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures
to facilitate transfers of interests in the U.S. Global Notes among Direct
Participants, Euroclear and Cedel, they are under no obligation to perform or to
continue to perform such procedures, and such procedures may be discontinued at
any time. Neither the Company nor the Trustee will have any responsibility for
the performance by DTC, Euroclear and Cedel or their respective Direct and
Indirect Participants of their respective obligations under the rules and
procedures governing any of their operations.
The information in this section concerning DTC, Euroclear and Cedel and
their book-entry systems has been obtained from sources the Company believes to
be reliable, but the Company takes no responsibility for the accuracy thereof.
TRANSFERS OF INTERESTS IN GLOBAL NOTES FOR CERTIFICATED NOTES
An entire Global Note may be exchanged for definitive notes in registered
certificated form without interest coupons ("Certificated Notes") if:
(1) DTC notifies the Company that it is unwilling or unable to continue as
depositary for the Global Notes and the Company thereupon fails to
appoint a successor depositary within 90 days or has ceased to be a
clearing agency registered under the Exchange Act;
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(2) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of Certificated Notes; or
(3) there shall have occurred and be continuing a Default or an Event of
Default with respect to the notes.
In any such case, the Company will notify the Trustee in writing that,
upon surrender by the Direct and Indirect Participants of their interest in such
Global Note, Certificated Notes will be issued to each person that such Direct
and Indirect Participants and the DTC identify as being the beneficial owner of
the related notes.
Beneficial interests in Global Notes held by any Direct or Indirect
Participant may be exchanged for Certificated Notes upon request to DTC, by such
Direct Participant (for itself or on behalf of an Indirect Participant), to the
Trustee in accordance with customary DTC procedures. Certificated Notes
delivered in exchange for any beneficial interest in any Global Note will be
registered in the names, and issued in any approved denominations, requested by
DTC on behalf of such Direct and Indirect Participate (in accordance with DTC's
customary procedures).
Neither the Company nor the Trustee will be liable for any delay by the
Holder of the notes or the DTC in identifying the beneficial owner of notes, and
the Company and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the holder of the Global Note or DTC for all
purposes.
SAME DAY SETTLEMENT AND PAYMENT
The indenture will require that payments in respect of the notes
represented by the Global Notes (including principal, premium, if any, and
interest) be made by wire transfer of immediately available same day funds to
the accounts specified by the holder of interests in such Global Note. With
respect to Certificated Notes, the Company will make all payments of principal,
premium, if any, interest, and Additional Amounts, by wire transfer of
immediately available same day funds to the accounts specified by the holders
thereof or, if no such account is specified, by mailing a check to each such
holder's registered address. The Company expects that secondary trading in the
Certificated Notes will also be settled in immediately available funds.
CERTIFICATED NOTES
The notes represented by the Global Notes are exchangeable for
Certificated Notes in definitive form of like tenor as such notes in
denominations of $1,000 and integral multiples thereof if:
(1) the Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for the Global Notes or if at any time the
Depositary ceases to be a clearing agency registered under the
Exchange Act, and the Company fails to appoint a successor Depository
within 90 days of such notice;
(2) the Company in its discretion at any time determines not to have all
the notes represented by the Global Notes; or
(3) an Event of Default entitling the Holders of the notes to accelerate
the maturity thereof has occurred and is continuing.
Any Global Note that is exchangeable pursuant to the preceding sentence is
exchangeable for Certificated Notes issuable in authorized denominations and
registered in such names as the Depositary shall direct. Subject to the
foregoing, a Global Note is not exchangeable for Certificated Notes, except for
a Global Note of the same aggregate denomination to be registered in the name of
the Depositary or its nominee. Upon the transfer of a note in definitive form,
such note will, unless the Global Note has previously been exchanged for notes
in definitive form, be exchanged for an interest in the Global Note representing
the principal amount of notes being transferred.
SAME-DAY PAYMENT
The indenture requires that payments in respect of notes (including
principal, premium, if any, interest, and Additional Amounts, if any) be made by
wire transfer of immediately available funds to the accounts specified by the
Holders thereof or, if no such account is specified, by mailing a check to each
such Holder's registered address.
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TAX CONSIDERATIONS
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Baker & Botts, L.L.P. is our special U.S. tax counsel. The following
discussion is Baker & Botts, L.L.P.'s opinion concerning all material U.S.
federal income tax consequences of the exchange of old notes for new notes
pursuant to the exchange offer. This discussion is based upon the provisions of
the Internal Revenue Code of 1986, as amended, Treasury Regulations promulgated
under the Code and judicial and administrative interpretations thereof, all as
in effect and available as of the date of this prospectus and all of which are
subject to change, possibly retroactively, or different interpretation. The
opinion of Baker & Botts, L.L.P. is not binding on the Internal Revenue Service.
We cannot assure you that the Internal Revenue Service will not challenge one or
more of the tax consequences described in this prospectus. We have not obtained,
nor do we intend to obtain, a ruling from the Internal Revenue Service with
respect to the U.S. federal income tax consequences of the exchange offer. This
discussion does not purport to address all aspects of U.S. federal income
taxation that may be relevant to particular Holders in light of their specific
circumstances or to Holders subject to special treatment under the Code. This
discussion does not address the effect of any applicable U.S. federal estate and
gift tax laws or state, local or foreign tax laws. INVESTORS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO
THEM OF THE EXCHANGE OFFER UNDER U.S. FEDERAL AND APPLICABLE STATE, LOCAL AND
OTHER TAX LAWS.
The exchange of old notes for new notes pursuant to the exchange offer
will not be a taxable event for U.S. federal income tax purposes. A holder will
not recognize gain or loss upon the receipt of new notes in the exchange offer,
and a holder who is otherwise subject to U.S. federal income tax will be subject
to such tax on the same amount and in the same manner and at the same times as
such holder would have been under the old notes. A cash-basis exchanging holder
will not recognize in income any accrued and unpaid interest on the old notes by
reason of the exchange. The basis and holding period of a new note will be the
same as the basis and holding period of the corresponding old note.
YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR CONCERNING THE U.S. FEDERAL
INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER WITH RESPECT TO YOUR PARTICULAR
SITUATION, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN
INCOME AND OTHER TAX LAWS.
MATERIAL BRITISH VIRGIN ISLANDS TAX CONSIDERATIONS
Dancia Penn & Co is our special British Virgin Islands tax counsel. The
following discussion is Dancia Penn & Co's opinion concerning all material
British Virgin Islands tax consequences of the exchange of old notes for new
notes pursuant to the exchange offer. This discussion is based upon the tax laws
of the British Virgin Islands and interpretations of such tax laws by the
relevant tax authorities that are in effect as of the date of this prospectus
and is subject to any changes therein that may occur after such date. HOLDERS OF
OLD NOTES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
BRITISH VIRGIN ISLANDS TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF
THOSE NOTES THAT ARE APPLICABLE IN THEIR PARTICULAR TAX SITUATIONS, INCLUDING
THE EFFECTS OF POSSIBLE FUTURE CHANGES IN THE APPLICABLE TAX LAWS.
The mere exchange of old notes for new notes in the exchange offer will
not be a taxable event for British Virgin Islands income tax purposes. A holder
will not recognize gain or loss upon the receipt of new notes in the exchange
offer. A holder who is subject to British Virgin Islands income tax will be
subject to such tax on the same amount, in the same manner and at the same times
as such holder would have been under the old notes.
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PLAN OF DISTRIBUTION
Based on interpretations by the staff of the SEC in no action letters
issued to third parties, we believe that you may transfer new notes issued under
the exchange offer in exchange for the old notes if you both
o acquire the new notes in the ordinary course of your business
o are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of new notes
Broker-dealers receiving new notes in the exchange offers will be subject to a
prospectus delivery requirement with respect to resales of the new notes. The
letter of transmittal states that by acknowledging and delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker dealer in connection
with resales of new notes received in exchange for old notes where the old notes
were acquired by the broker-dealer as a result of market-making activities or
other trading activities.
We believe that you may not transfer new notes issued under the exchange
offer in exchange for the old notes if you are either
o our "affiliate" within the meaning of Rule 405 under the Securities Act
o a broker-dealer that acquired old notes directly from us
o a broker-dealer that acquired old notes as a result of market-making or
other trading activities without compliance with the registration and
prospectus delivery provisions of the Securities Act
To date, the staff of the SEC has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements with respect
to transactions involving an exchange of securities such as this exchange offer,
other than a resale of an unsold allotment from the original sale of the old
notes, with the prospectus contained in the exchange offer registration
statement. Broker-dealers who acquired the old notes from us may not rely on SEC
staff interpretations. They must comply with the registration and prospectus
delivery requirements of the Securities Act, including being named as selling
noteholders, in order to resell the old notes or the new notes. In the
registration rights agreement, we have agreed to permit participating
broker-dealers' use of this prospectus in connection with the resale of new
notes. We have agreed that, for a period up to 180 days after the expiration of
the exchange offer, we will make this prospectus, and any amendment or
supplement to this prospectus, available to any broker-dealer that requests
these documents in the letter of transmittal. In addition, until , 2000,
all dealers effecting transactions in the new notes may be required to deliver a
prospectus.
If you wish to exchange your old notes for new notes in the exchange
offer, you will be required to make representations to us as described in "The
Exchange Offer--Purpose of the Exchange Offer" and "The Exchange
Offers--Procedures of Tendering--Your Representations to Us" of this prospectus
and in the letter of transmittal. In addition, if you are a broker-dealer who
receives new notes for your own account in exchange for old notes that were
acquired by you as a result of market-making activities or other trading
activities, you will be required to acknowledge that you will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale by you of new notes.
We will not receive any proceeds from any sale of new notes by
broker-dealers. Broker-dealers who receive new notes for their own account in
the exchange offer may sell them from time to time in one or more transactions
either
o in the over-the-counter market
o in negotiated transactions
o through the writing of options on the new notes or a combination of
methods of resale
o at market prices prevailing at the time of resale
o at prices related to prevailing market prices or negotiated prices
Any resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any broker-dealer or the purchasers of any new notes. Any broker-dealer
that resells new notes it received for its own account in the exchange offers
and any broker or dealer that participates in a distribution of new notes may be
deemed to be an "underwriter" within the meaning of the Securities Act. Any
profit on any resale of new notes and any commissions or concessions received by
any persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
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We have agreed to pay all expenses incidental to the exchange offers other
than commissions and concessions of any brokers or dealers. We will indemnify
holders of the old notes, including any broker-dealers, against some
liabilities, including liabilities under the Securities Act, as provided in the
registration rights agreement.
LEGAL MATTERS
Baker & Botts, L.L.P., Houston, Texas, our special U.S. counsel and
counsel for Pride International, Inc., has issued an opinion about the legality
of the new notes and the Pride guarantee.
EXPERTS
Our financial statements as of December 31, 1998 and for the period from
inception (March 27, 1998) to December 31, 1998 included in this prospectus have
been so included in reliance on the report (which contains an explanatory
paragraph relating to our ability to continue as a going concern as described in
Notes 1 and 5 to the financial statements) of PricewaterhouseCoopers N.V.,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
INDEPENDENT PUBLIC ACCOUNTANTS
With respect to our unaudited consolidated financial information for the
nine months ended September 30, 1999 included in this prospectus,
PricewaterhouseCoopers N.V. reported that they have applied limited procedures
in accordance with professional standards for a review of such information.
However, their separate report dated October 15, 1999 (not included herein)
states that they did not audit and do not express an opinion on our unaudited
consolidated financial information. Accordingly, you should limit your reliance
on their report on such information in light of the limited nature of the review
procedures applied. PricewaterhouseCoopers N.V. is not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their report on our
unaudited consolidated financial information because that report is not a
"report" or a "part" of the registration statement in which this prospectus is
included prepared or certified by PricewaterhouseCoopers N.V. within the meaning
of Sections 7 and 11 of the Securities Act.
INDEPENDENT ENGINEERS
The references to the report (and the opinions contained therein) of
Bennett & Associates, L.L.C., independent engineers located in New Orleans,
Louisiana, are made herein in reliance upon the authority of such firm as
experts in respect of such matters.
WHERE YOU CAN FIND MORE INFORMATION
Neither we nor our subsidiaries are required to file reports with the SEC
under the Securities Exchange Act of 1934. In connection with the effectiveness
of the registration statement in which this prospectus is included, we will
become subject to the reporting requirements of the Securities Exchange Act of
1934 that apply to foreign private issuers. We will file reports, including
annual reports on Form 20-F, and other information with the SEC. Those reports
and other information may be obtained, upon written request, from Wilmington
Trust Company, as the note trustee. You can read and copy any materials we file
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can also obtain copies of filed documents, at
prescribed rates, by mail by writing the SEC Public Reference Section in
Washington D.C. at the address listed above or by calling the SEC at
1-800-SEC-0330 or electronically through the SEC's Web Site at
http://www.sec.gov.
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AMETHYST FINANCIAL COMPANY LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Accountants....................................................F-2
Consolidated Balance Sheet as of September 30, 1999 and December 31, 1998............F-3
Consolidated Statement of Income for the period from inception (March 27, 1998)
to September 30, 1999, for the nine months ended September 30, 1999 and for the
period from inception (March 27, 1998) to December 31, 1998........................F-4
Consolidated Statement of Shareholders' Equity for the period from inception
(March 27, 1998) to September 30, 1999, for the nine months ended September 30,
1999 and for the period from inception (March 27, 1998) to December 31, 1998.......F-5
Consolidated Statement of Cash Flows for the period from inception (March 27,
1998) to September 30, 1999, for the nine months ended September 30, 1999 and
for the period from inception (March 27, 1998) to December 31, 1998................F-6
Notes to the Consolidated Financial Statements ......................................F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Amethyst Financial Company Ltd.:
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, shareholders' equity and cash flows
present fairly, in all material respects, the consolidated financial position of
Amethyst Financial Company Ltd. as of December 31, 1998 and the consolidated
results of their operations and their cash flows for the period from inception
(March 27, 1998) to December 31, 1998 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audit. We
conducted our audit of these financial statements in accordance with auditing
standards generally accepted in the United States of America which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion expressed above.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is currently constructing four offshore
drilling rigs pursuant to contracts with Petrobras. As discussed in Note 5 to
the financial statements, Petrobras has threatened to cancel the Charters for
the rigs should delay in delivery exceed 180 days. If Petrobras follows through
with its threat and cancels the Charters, such cancellation would constitute an
event of default under the Company's credit facilities. The Company's ability to
realize the carrying value of its assets is dependent on its ability to
successfully complete construction of the offshore drilling rigs and obtain
contracts that provide cash flows sufficient to meet its obligations as they
become due. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
described in Notes 1 and 5 to the financial statements. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
PricewaterhouseCoopers N.V.
Rotterdam, The Netherlands
October 15, 1999
F-2
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ................................ $ 13,293 $ 18,172
Prepaid expenses ......................................... 672 --
--------------- ---------------
Total current assets .................................. 13,965 18,172
RESTRICTED CASH ............................................. 27,306 --
ACCOUNTS RECEIVABLE ......................................... 4,177 10,200
RELATED PARTY RECEIVABLE .................................... 16,306 16,157
CONSTRUCTION IN PROGRESS .................................... 344,949 220,666
DEFERRED COSTS .............................................. 41,242 77,885
--------------- ---------------
$ 447,945 $ 343,080
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ......................................... $ 18,118 $ 32,570
Accrued liabilities ...................................... 17,762 3,927
--------------- ---------------
Total current liabilities ............................. 35,880 36,497
RELATED PARTY ADVANCES ...................................... 29,191 133,901
LONG-TERM DEBT .............................................. 235,624 94,738
ACCRUED CONTRACT PENALTIES .................................. 41,242 77,885
--------------- ---------------
Total liabilities ..................................... 341,937 343,021
--------------- ---------------
COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY:
Common stock, $1.00 par value; 15,000
shares authorized; 10,500 and 1,000 shares
issued and outstanding, respectively ..................... 11 1
Additional paid-in capital ............................... 104,989 --
Surplus accumulated in the development stage ............. 1,008 58
--------------- ---------------
Total shareholders' equity ............................ 106,008 59
--------------- ---------------
$ 447,945 $ 343,080
=============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
INCEPTION NINE MONTHS INCEPTION
(MARCH 27, 1998) ENDED (MARCH 27, 1998)
TO SEPTEMBER 30, SEPTEMBER 30, TO DECEMBER 31,
1999 1999 1998
-------------------- -------------------- --------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
INCOME AND EXPENSES:
Interest income ............................... $ 1,106 $ 939 $ 167
Other income (expense) ........................ (98) 11 (109)
-------------------- -------------------- --------------------
Total income and expenses .................. 1,008 950 58
-------------------- -------------------- --------------------
INCOME BEFORE TAXES .............................. 1,008 950 58
PROVISION FOR INCOME TAXES ....................... -- -- --
-------------------- -------------------- --------------------
NET INCOME ....................................... $ 1,008 $ 950 $ 58
==================== ==================== ====================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SURPLUS
ACCUMULATED
IN
ADDITIONAL THE TOTAL
PAID-IN DEVELOPMENT SHAREHOLDERS'
SHARES CAPITAL STAGE EQUITY
------ ------ --------- --------- ---------
NUMBER PAR VALUE
<S> <C> <C> <C> <C> <C>
Inception (March 27, 1998) to
December 31, 1998:
Issuance of common stock at
inception ($1.00 per share). 1,000 $ 1 $ 1
Net income..................... $ 58 58
--------- ---------
BALANCE AS OF DECEMBER 31, 1998 1,000 1 58 59
Conversion of related party
advances to capital ($11.21 per
share) 8,250 9 $ 92,490 92,499
Issuance of common stock ($1.00
per share) 1,250 1 12,499 12,500
Net income..................... 950 950
--------- --------- ---------
BALANCE AS OF SEPTEMBER 30, 1999
(UNAUDITED).................... 10,500 $ 11 $ 104,989 $ 1,008 $ 106,008
====== ====== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
INCEPTION NINE MONTHS INCEPTION
(MARCH 27, 1998) ENDED (MARCH 27, 1998)
TO SEPTEMBER SEPTEMBER 30, TO DECEMBER
30, 1999 1999 31, 1998
--------------- --------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income .............................. $ 1,008 $ 950 $ 58
--------------- --------------- ---------------
Net cash provided by operating activities 1,008 950 58
--------------- --------------- ---------------
INVESTING ACTIVITIES
Capital expenditures for construction in
progress ............................. (336,324) (125,798) (210,526)
--------------- --------------- ---------------
Net cash used in investing activities ... (336,324) (125,798) (210,526)
--------------- --------------- ---------------
FINANCING ACTIVITIES
Proceeds from long-term borrowings ...... 227,224 132,486 94,738
Issuance of common stock ................ 12,501 12,500 1
Restricted cash ......................... (27,306) (27,306) --
Related party advances .................. 136,190 2,289 133,901
--------------- --------------- ---------------
Net cash provided by financing activities 348,609 119,969 228,640
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN CASH ............... 13,293 (4,879) 18,172
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD ........................ -- 18,172 --
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD .............................. $ 13,293 $ 13,293 $ 18,172
=============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
Amethyst Financial Company Ltd. ("AFCL" and together with its wholly owned
subsidiaries for purposes of these financial statements only, the "Company") was
incorporated in the British Virgin Islands on March 27, 1998 to construct, own
and operate offshore drilling rigs which, upon their completion, will be
contracted to Petroleo Brasileiro S.A. ("Petrobras"), a Brazilian oil and gas
company, pursuant to chartering agreements (the "Charters").
In December 1998, ownership of the six subsidiary companies (Petrodrill 2
through 7) was acquired from an affiliated common-controlled company, Petrodrill
Offshore Inc. ("POINC"), at historical cost. The Charters between the subsidiary
companies and Petrobras set out the terms for the renting and operating of the
drilling rigs.
In May 1999, two of the subsidiaries (Petrodrill 2 and 3) were transferred to
another affiliate company at historical cost (see Note 4).
As of September 30, 1999, AFCL is owned 61.7% by affiliates of Maritima Petroleo
e Engenharia Ltda. ("Maritima"), 26.4% by a wholly-owned subsidiary of Pride
International, Inc. ("Pride"), and 11.9% by affiliates of First Reserve
Corporation ("First Reserve") (such owners of AFCL collectively, the
"Shareholders"). Maritima and Pride, either directly or through affiliates or
subsidiaries, have primary contractual responsibility for the operations of the
Company. During 1999, there were changes in the relative percentages of
ownership interests due to capital contributions and share purchases by First
Reserve (see Note 8).
The Company has operated as a development-stage company since its inception,
devoting substantially all of its efforts to designing, engineering and
contracting with shipyards and vendors for the offshore drilling rigs and in
raising financing. In order to exit the development stage, begin operations and
begin to realize the carrying value of its rigs under construction and deferred
costs, the Company must obtain substantial additional capital, complete
construction of its drilling rigs in a timely manner, including procuring
owner-furnished equipment and equipping the rigs in a manner acceptable to
Petrobras, mobilize the rigs to Brazilian waters and successfully begin drilling
operations. The Company does not expect to commence commercial operations until
the third quarter of 2000. Accordingly, it does not expect to generate
significant revenues until 2000, after the rigs have been completed.
The unaudited consolidated financial statements included herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and note disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
of AFCL included in these financial statements for the year ended December 31,
1998. In the opinion of management, all adjustments, consisting only of normal,
recurring adjustments considered necessary for a fair presentation, have been
included.
2. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of AFCL and its
wholly owned subsidiaries and have been prepared in conformity with accouting
principles generally accepted in the United States of America using the U.S.
dollar as the reporting currency. All material intercompany balances and
transactions have been eliminated.
DEVELOPMENT-STAGE COMPANY
The Company is a development-stage company as defined in Statement of Financial
Accounting Standards No. 7, "Accounting and Reporting by Development Stage
Enterprises," and will continue to be so until it commences commercial
operations of the offshore drilling rigs, which is currently anticipated to
occur in the third quarter of 2000. Future operating results will be subject to
significant business, economic, regulatory, technical and competitive
uncertainties and contingencies. The construction of the offshore drilling rigs
is a complex undertaking and there can be no assurance that cost overruns or a
further delay in delivery of the rigs will not occur. Depending on their extent
and timing, these factors, individually or in the aggregate, could have an
adverse effect on the Company.
F-7
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid financial instruments purchased with an
original maturity of three months or less to be cash equivalents.
ACCOUNTS RECEIVABLE
Accounts receivable consist of advances to shipyards for which terms of
repayment have been agreed. The Company provides allowances for potential credit
losses when necessary. However, management considers such credit risk to be
limited.
CONSTRUCTION IN PROGRESS
Construction in progress represents all costs incurred for the construction of
the enhanced Amethyst-class, dynamically positioned, self-propelled,
fourth-generation semi-submersible drilling rigs.
IMPAIRMENT of LONG-LIVED ASSETS
The Company assesses the impairment of long-lived assets in accordance with SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of". SFAS No. 121 prescribes that an impairment loss is
recognized in the event facts and circumstances indicate that the carrying
amount of an asset may not be recoverable. Management reviews long-lived assets
for impairment whenever events or changes in circumstances indicate the assets
may be impaired.
DEFERRED COSTS AND ACCRUED CONTRACT PENALTIES
Contract penalties represent amounts contractually required to be paid to
Petrobras and are expected to be amortized on a straight-line basis over the
term of the applicable Charters.
CAPITALIZED INTEREST
Interest costs related to debt incurred during the construction projects are
capitalized. Total interest costs capitalized amounted to $13.8 million at
September 30, 1999 and $0.2 million at December 31, 1998.
INCOME TAXES
The Company is not subject to income tax in the British Virgin Islands.
Accordingly, no income taxes are included in the consolidated statement of
income for the reported periods.
Under current Brazilian law, payments made to the Company after delivery of the
rigs will be subject to Brazilian withholding tax. Such withholding tax, as
provided in the Charters, will be covered by Petrobras, resulting in an
effective tax rate to the Company of 0%.
Deferred income taxes are accounted for using the asset/liability method for
temporary differences between the accounting and tax measurements and
liabilities. Valuation allowances are established on deferred tax assets when
management estimates that it is more likely than not that the related benefit
will not be realized. The Company does not have any deferred tax assets and
liabilities.
REPORTING CURRENCY
The functional currency of the Company is the U.S. dollar as the majority of its
transactions are denominated in U.S. dollars. When there are transactions in
foreign currencies, exchange gains and losses resulting from foreign currency
transactions are recognized in earnings.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities, if any, at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. While it is believed that such estimates are reasonable,
actual results could differ from these estimates.
F-8
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, trade receivables and payables
approximates fair values because of the short maturity of those instruments. The
carrying value of the Company's long-term debt is considered to approximate the
fair value of those instruments based on the borrowing rates currently available
to the Company for loans with similar terms and maturities.
COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting Standard No. 130,
"Reporting Comprehensive Income", which establishes standards for reporting and
display of comprehensive income and its components in a full set of financial
statements. Comprehensive income includes all changes in a company's equity,
except those resulting from investments by and distributions to owners. There
was no difference between comprehensive income and net income for the reported
periods.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities", which
requires that companies recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
The FASB has subsequently issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities--Deferral of the Effective Date of FASB
Statement No. 133," that defers the requirements of SFAS No. 133 for one
additional year. The Company did not hold any derivative or hedging instruments
during the reported periods.
3. RESTRICTED CASH
The Company deposited approximately $27.3 million with a financial institution.
The deposit was placed as collateral for the Mitsubishi financing related to the
AMETHYST 6 and 7. Such deposit was returned to the Company and has been used in
meeting the Company's obligation to obtain additional capital by October 29,
1999 (see Note 7).
4. CONSTRUCTION IN PROGRESS
Construction in progress as of December 31, 1998 included $18.7 million of costs
relating to the construction of the AMETHYST 2 and 3, the charters which were
subsequently canceled by Petrobras. In May 1999, AFCL and its shareholders
transferred the ownership of the two wholly owned subsidiaries to a related
party which is not part of the Company. In connection with the transfer and
cancellation of the related charters, the Company transferred $36.6 million of
deferred costs and accrued contract penalties relating to the AMETHYST 2 and 3.
5. PETROBRAS CONTRACTS
The Charters have initial terms ranging from six to eight years from the date
the drilling rigs are accepted by Petrobras. The Charters are renewable
thereafter by agreement of both the Company and Petrobras. The Charters provide
for payment of daily operating or non-operating rates based on the terms. The
Charters also provide for penalties in the event of late delivery of the
drilling rigs to the operator and include cancellation and termination clauses.
Based on the scheduled delivery dates and the current project completion, each
drilling rig will be delivered to Petrobras approximately 345 (ranging from
263-433) days on average beyond the date of delivery under their respective
Charters. As a result of these delays, Petrobras, in accordance with the
Charter, is permitted to impose penalties of up to 30% of the drilling rigs'
operating rates (and, in addition, up to 30% of the mobilization fee in the case
of one rig). If the penalties were imposed in full at the commencement of each
chartering agreement, the penalties would aggregate approximately $41.2 million
in 2000. If paid equally over the initial term of the chartering agreements,
penalties would aggregate approximately $1.5 million in 2000, $5.9 million in
2001, 2002, 2003, 2004 and 2005, $5.2 million in 2006, $3.7 million in 2007 and
$1.3 million in 2008. Although the Company expects to pay the penalties over the
life of the Charters, the timing of payment could be accelerated.
There is no assurance that further delays and related penalties will not occur.
These costs have been recorded as deferred costs and accrued as penalties. As
costs will not become payable before the fourth quarter of 2000, the respective
asset and liability has been classified as long-term. After delivery of the rigs
to Petrobras, and if these penalties are imposed by Petrobras, they will be
amortized on a straight-line basis over the terms of the applicable charter
agreements.
F-9
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
While each Charter states that it may be canceled by Petrobras if the chartered
rig is not delivered within 180 days after the delivery date specified,
Petrobras, on May 28, 1998, provided a letter waiving its right to cancel the
Charters and related service rendering contracts on the basis of late delivery
unless the delay exceeds 540 days and, even then, only if best endeavors to make
delivery are not being made. On October 13, 1999, Maritima received a letter
from Petrobras stating that Petrobras will cancel the Charters and related
service rendering contracts for the rigs when delay in delivery exceeds 180 days
as specified in the Charters. In its letter, Petrobras also reserved its right
to seek compensation for damages. The Company's Brazilian counsel, Pedro Calmon
Filho & Associados, has informed the Company that Petrobras' May 1998 letter
extending the permitted delay in delivery is an enforceable obligation of
Petrobras; however, specific performance of Petrobras' obligations under the
Charters may, as a practical matter, not be an available remedy, and the
Company's rights against Petrobras could be limited to a lawsuit for damages.
The result of any such lawsuit is uncertain, the amount of damages may be
limited and any recovery may be subject to extensive delays.
If Petrobras cancels the Charters for the rigs, such cancellation would
constitute an event of default under the credit facilities that are providing
substantially all of the financing for construction of the rigs. Since being
informed of Petrobras' October 13 letter, the credit facility lenders have
continued to fund our construction draws. Based on Petrobras' October 13 letter,
however, the credit facility lenders may, at their discretion, cease funding
construction, in which event the Company would not be able to complete
construction of the rigs unless the Company obtains new funding from other
sources or an agreement of the credit facility lenders to resume funding on
terms acceptable to them.
Based on Petrobras' announced deepwater drilling program and the performance
characteristics of the Amethyst design, AFCL believes that Petrobras has
significant needs for AFCL's rigs. AFCL further believes that, while Petrobras
may seek to renegotiate certain of the terms of the Charters, there is
significant likelihood that Petrobras will not ultimately cancel the Charters.
There can be no assurance, however, that this will be the case. In order to
continue as a going concern, the Company must complete construction of the rigs
on a timely basis and within budget and either Petrobras must honor its present
Charters or the Company must obtain similar contracts for its rigs and remain in
compliance with its debt agreements. The financial statements do not contain any
adjustments to the carrying amounts of assets or the recorded amounts of
liabilities as a result of these uncertainties.
6. ACCRUED LIABILITIES
Accrued liabilities as of September 30, 1999 and December 31, 1998 consist of
the following (in thousands):
SEPTEMBER 30, DECEMBER 31,
1999 1998
---------- -----------
(UNAUDITED)
Accrued financing costs......... $ 3,600 $ 3,600
Accrued interest................ 5,616 327
Other accrued expenses.......... 8,546 -
---------- --------
Total accrued liabilities $ 17,762 $ 3,927
========== ===========
During 1999, and in accordance with the financing arrangements, the Company
converted $8.2 million of accrued interest to long-term debt.
7. LONG-TERM DEBT
On December 16, 1998, the Company completed two financing packages with
Mitsubishi Corporation, which provide financing for the construction of the
drilling rigs AMETHYST 6 and 7. The facilities allow the Company to draw down
the required funds over the period of the rigs' construction when the specified
goals set out in the contract have been reached. After delivery of the rigs, the
loans will be paid in eighty-four equal monthly installments totaling 85% of the
outstanding loans. The payments begin on the 5th day of the second month after
the Charters with Petrobras commence. A final balloon payment of 15% is payable
with the 84th installment. The Mitsubishi financing agreement includes a
stipulation that the Company obtain an additional $100.0 million of capital by
October 29, 1999 from another source. Maritima and Pride have guaranteed to
Mitsubishi that they will either arrange for or provide such additional capital.
The facilities provide for interest, calculated at 12.5% on a 360-day basis
during the construction period. After delivery of the rigs, interest is at 11%.
Interest is payable monthly with the loan payments. The facilities contain
various debt covenants customary for such financings, including limitations on
the scope of the businesses of Petrodrill 6 and 7.
F-10
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
On April 9, 1999, the Company received two financing packages supported by
guarantees from the United States of America Maritime Administration or MARAD to
fund the construction of the drilling rigs AMETHYST 4 and 5. The facilities
allow the Company to draw down the required funds over the period of the rigs'
construction when the specified goals set out in the contract have been reached;
however, only 87.5% of the construction project has been financed. The loans
will be paid in twenty-four equal semi-annual installments starting in 2001. The
facilities provide for interest on a floating rate basis during construction and
for a maximum of two years after delivery. After this time, the interest rate is
fixed. The MARAD agreements contain various debt covenants customary for such
financings.
Both the Mitsubishi and MARAD facilities include security, which provide the
lenders, in certain cases, with an assignment over the rig construction
contracts, the Petrobras Charters, the insurance and a first priority ship
mortgage on the vessels.
The Company's long-term debt as of September 30, 1999 and December 31, 1998 is
as follows (in thousands):
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -------------
(UNAUDITED)
Mitsubishi financing ................ $ 154,300 $ 94,738
MARAD financing ..................... 81,324 --
------------- -------------
Total long-term debt ..... $ 235,624 $ 94,738
============= =============
Remaining maturities of long-term debt as of September 30, 1999 are summarized
as follows (in thousands):
SEPTEMBER 30,
1999
----------
(UNAUDITED)
2001 .................................................. $ 44,930
2002 .................................................. 47,330
2003 .................................................. 50,030
Thereafter ............................................ 93,334
----------
Total long-term debt ....................... $ 235,624
==========
As noted in Note 5, Petrobras has threatened to cancel the Charters, which could
lead to an event of default under the Company's financing arrangements.
8. SHAREHOLDERS' EQUITY
At inception, AFCL was owned 70% by Maritima and 30% by an indirect wholly owned
subsidiary of Pride which, either directly or through affiliates or
subsidiaries, had primary contractual responsibility for the operations of the
Company.
In accordance with a shareholders' agreement, at inception the shareholders were
required to make initial equity contributions to the Company, in proportion to
their respective interests, of approximately 10% of the total construction
budget of the drilling rigs.
On September 14, 1999, the Company's existing shareholders entered into an
agreement with First Reserve Fund VII and First Reserve Fund VIII, whereby the
existing shareholders agreed to proportionally recapitalize the Company by
converting $92.5 million of their related party advances to the Company into
additional equity consisting of 8,250 shares. On the same date, First Reserve
Fund VII and First Reserve Fund VIII agreed to pay $11.0 million for 1,100
shares and $1.5 million for 150 shares, respectively. As a result of the
completion of the agreement, the Company's share capital increased to $105,000.
Based on the above transaction, the proportional ownership interest of the
shareholders changed to 61.7% - affiliates of Maritima, 26.4% - subsidiary of
Pride, and 11.9% - affiliates of First Reserve Corporation.
F-11
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
Pride has entered into a "Put and Exchange Agreement" with First Reserve, and
granted repurchase rights to Maritima, the consummation of which could result in
the original shareholders resuming their original ownership interests.
9. RELATED PARTIES
RECEIVABLE
As of September 30, 1999 and December 31, 1998, the Company has a receivable
from a related party, POINC, of $16.3 million. The shareholders of the Company
have provided a letter that in the event that POINC is unable to repay such
amount, the shareholders would allow such amount to be offset against amounts
advanced by the related parties.
ADVANCES
Related party advances are composed of advances received from shareholders. In
connection with the obtaining of additional capital as discussed in Note 7, the
advances have become subordinated to the financing arranged to obtain such
additional capital.
CONTRACTS
In early 1998, POINC entered into contractual agreements with three shipyards
for the construction, sale and delivery of six drilling rigs for a total
estimated cost of approximately $489.0 million, payable in installments under
the terms set forth in the construction contracts.
During August 1998, POINC terminated two of the construction contracts with the
Canadian Shipyard, Davie Industries, as a result of the yard and its parent
company Dominion Bridge filing for protection under Canadian Bankruptcy laws and
being in breach of the contract. The operating companies associated with the
construction of these two rigs were transferred from AFCL to a related party
(see Note 4). Furthermore, the remaining four construction contracts, for a
total estimated cost of approximately $338 million, with the Korean Shipyard,
Daewoo Heavy Industries, and the USA Shipyard, TDI-Halter L.P., were transferred
by POINC to the Company under novation agreements during December 1998. It is
estimated that these four drilling rigs will be delivered to the Company over a
period between July and October 2000. The construction contracts contain
penalties for late completion and delivery of the drilling rigs and, in certain
cases, incentives for early completion and delivery.
MANAGEMENT AGREEMENT
In connection with the design, engineering, construction and management of the
drilling rigs, the subsidiaries have entered into various agreements for
services with related parties. Licensing of the Amethyst design and services
related to the design, engineering and construction of the drilling rigs are
provided under agreements with BiGem Holdings N.V. and Petrodrill Engineering
N.V., corporations incorporated in the Netherlands Antilles, owned 70% by
affiliates of Maritima and 30% by a wholly owned subsidiary of Pride. The
licensing agreement provides for a one-time licensing fee to BiGem Holdings of
approximately $1.6 million for each drilling rig. Engineering and construction
services provided under the construction management agreement are required to be
charged to the Company at actual cost incurred by Petrodrill Engineering N.V.
(which includes a management fee to a third party under a related subcontract
aggregating approximately $0.1 million per year).
Management services, including operation support and other technical services,
will be provided by Formaritima Ltd., a company incorporated in the British
Virgin Islands, owned equally by Maritima and by a wholly owned subsidiary of
Pride. In addition to reimbursements for actual costs incurred, the operating
management agreement and related subcontracts provide for daily management fees
(excluding management fees to be paid pursuant to the marine and nautical
agreements discussed in Note 10) aggregating approximately $5.5 million per
year, commencing upon the delivery of the drilling rigs to the Company by the
shipyards.
Unless otherwise provided by the terms of the agreements, the construction
management agreement remains in effect until the drilling rigs have been
delivered to the Company by the shipyards, and the operating management
agreements commence on delivery of the drilling rigs to the Company by the
shipyards and remain in effect through the terms of the applicable Charters. The
costs of certain of these services are being capitalized during the construction
period. As of September 30, 1999, rigs under construction include capitalized
cost of services from related parties as follows (in thousands):
F-12
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
Petrodrill Engineering N.V............................ $12,985
BiGem Holdings N.V.................................... 4,500
-------
$17,485
=======
10. COMMITMENTS AND CONTINGENCIES
SUPPLIER COMMITMENTS
The Company has entered into purchase commitments and letters of intent with
various equipment vendors, to supply drilling equipment, for a total cost of
approximately $164.6 million.
MARINE AND NAUTICAL AGREEMENT
The Company (either directly or through Formaritima Ltd.) entered into
agreements with a third party to provide marine and nautical services to the
drilling rigs beginning upon delivery of the drilling rigs to the Company by the
shipyards and continuing through the terms of the Charters. Such agreements
provide for daily management fees aggregating approximately $1.8 million per
year. If a rig is sold and the corresponding marine and nautical services
agreement is terminated, the third party will be entitled to a lump sum
termination payment equal to the net present value of its management fees over
the remaining term of such rig's charter, calculated using a discount factor of
10% per annum.
LICENSING AGREEMENTS AND CONTINGENCY PAYMENT
The Company has entered into licensing agreements for the design of the drilling
rigs with BiGem Holding N.V., which bought the design from De Hoop, a third
party Netherlands shipyard. BiGem Holdings N.V. is in dispute with De Hoop over
the contract deliverables and has withheld payments of $2.3 million and
furthermore does not intend to make further payments. This dispute is now in
arbitration and BiGem Holding N.V. firmly believes that no further payments will
need to be made. The Company has deemed the probability of payment as remote.
The Company has not recorded the above costs in its accounts.
OTHER COMPENSATION
Affiliates of Maritima shall be entitled to the fees and compensation from the
Company as follows. The Company will pay to an affiliate of Maritima a lump-sum
amount of $2.5 million (payable in three installments of $0.5 million, $1.0
million, $1.0 million for the AMETHYST 5, 6 and 7, respectively) within three
days of receipt of the corresponding mobilization payments under the relevant
Charter or, in the event of no mobilization fee, within 45 days of delivery to
and acceptance of the relevant drilling rigs, for services rendered in
connection with the development of conceptual and design engineering, shipyard
negotiations and technical negotiations with Petrobras. In addition, in
consideration of the assignment of the Charters to the Company, an affiliate of
Maritima will be paid the following fees: (a) $4,000 in the case of the AMETHYST
6 and 7 and (b) $2,000 in the case of the AMETHYST 4 and 5, for each day the
relevant drilling rig works under its Charter, plus (c) in the case of the
AMETHYST 4, 1% of the daily rate paid under its Charter and (d) in the case of
the AMETHYST 6 and 7, 2% of the daily rates under their Charters. In addition,
additional affiliates of Maritima will receive agency fees of 3% and 2% of the
full operating rates under the Charters, respectively, payable monthly upon
receipt of payments from Petrobras, for their assistance to the Company in
negotiating the Charters and certain amendments thereto.
In the ordinary course of its business affairs and operations, the Company is
subject to possible loss contingencies arising from federal, state and local
environmental, health and safety laws and regulations and third party
litigation. There are no matters, which, in the opinion of management, will have
a material adverse effect on the financial position or results of operations of
the Company.
11. CONSOLIDATING FINANCIAL INFORMATION (UNAUDITED)
The following summarizes certain consolidating financial information of the
Company as of September 30, 1999 and December 31, 1998:
F-13
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
AFCL
AFCL PETRODRILL 4 PETRODRILL 5 PETRODRILL 6 PETRODRILL 7 ELIMINATIONS CONSOLIDATED
--------- ----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 13,293 -- -- -- -- -- $ 13,293
Prepaid expenses ......... 672 -- -- -- -- -- 672
--------- ----------- ----------- ----------- ----------- ------------ ------------
Total current assets ..... 13,965 -- -- -- -- -- 13,965
Restricted cash .............. 27,306 -- -- -- -- -- 27,306
Accounts receivable .......... -- -- -- $ 3,925 $ 252 4,177
Related party receivable ..... 40,836 -- -- -- -- $ (24,530) 16,306
Construction in progress ..... 456 $ 93,038 $ 81,417 82,979 87,059 -- 344,949
Deferred costs ............... -- 11,147 12,669 8,997 8,429 -- 41,242
Investments in subsidiaries .. 52,912 -- -- -- -- (52,912) --
--------- ----------- ----------- ----------- ----------- ------------ ------------
$ 135,475 $ 104,185 $ 94,086 $ 95,901 $ 95,740 $ (77,442) $ 447,945
========= =========== =========== =========== =========== ============ ============
Current liabilities:
Accounts payable ......... $ 277 $ 5,048 $ 5,639 $ 4,005 $ 3,149 -- $ 18,118
Accrued liabilities ...... -- 4,416 2,982 5,451 4,913 -- 17,762
--------- ----------- ----------- ----------- ----------- ------------ ------------
Total current liabilities 277 9,464 8,621 9,456 8,062 35,880
Related party advances ....... 29,190 11,655 10,482 1,999 395 $ (24,530) 29,191
Long-term debt ............... -- 45,464 35,859 75,448 78,853 -- 235,624
Accrued contract penalties ... -- 11,147 12,669 8,997 8,429 -- 41,242
--------- ----------- ----------- ----------- ----------- ------------ ------------
Total liabilities ........ 29,467 77,730 67,631 95,900 95,739 (24,530) 341,937
--------- ----------- ----------- ----------- ----------- ------------ ------------
Shareholders' equity:
Common stock ............. 11 1 1 1 1 (4) 11
Additional paid-in capital 104,989 26,454 26,454 -- -- (52,908) 104,989
Surplus accumulated in the
development stage ............ 1,008 -- -- -- -- -- 1,008
--------- ----------- ----------- ----------- ----------- ------------ ------------
Total shareholders' equity 106,008 26,455 26,455 1 1 (52,912) 106,008
========= =========== =========== =========== =========== ============ ============
$ 135,475 $ 104,185 $ 94,086 $ 95,901 $ 95,740 $ (77,442) $ 447,945
========= =========== =========== =========== =========== ============ ============
</TABLE>
F-14
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
AFCL Petrodrill 2 Petrodrill 3 Petrodrill 4 Petrodrill 5 Petrodrill 6
------------ ------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents.......... $ 18,172
---------
Total current assets........... 18,172
Accounts receivable.................... - $ 5,100
Related party receivable............... 115,591 -
Construction in progress............... 458 $ 11,988 $ 6,749 $ 51,946 $ 35,089 55,266
Deferred costs......................... - 19,546 20,239 9,070 11,077 9,269
Investment in subsidiaries............. 6 - - - - -
------------ ------------- ------------- ------------- -------------- -------------
$ 134,227 $ 31,534 $ 26,988 $ 61,016 $ 46,166 $ 69,635
========== =========== ========== ============ ============ =========
Current liabilities
Accounts advanced.................. $ 198 $ 4,811 $ 728 $ 8,796 $ 6,185 $ 4,117
Accrued liabilities................ - 9 9 9 9 1,909
------------ ------------- ------------- ------------- -------------- -------------
Total current liabilities...... 198 4,820 737 8,805 6,194 6,026
Related party advances................. 133,970 7,167 6,011 43,140 28,894 8,851
Long-term debt......................... - - - - - 45,488
Accrued contract penalties............. - 19,546 20,239 9,070 11,077 9,269
------------ ------------- ------------- ------------- -------------- -------------
Total liabilities.............. 134,168 31,533 26,987 61,015 46,165 69,634
------------ ------------- ------------- ------------- -------------- -------------
Commitments and contingencies..........
Shareholders' equity:
Common stock....................... 1 1 1 1 1 1
Additional paid-in capital......... - - - - - -
Surplus accumulated in the
development stage.................. 58 - - - - -
------------ ------------- ------------- ------------- -------------- -------------
Total shareholders' equity..... 59 1 1 1 1 1
------------ ------------- ------------- ------------- -------------- -------------
$134,227 $31,534 $26,988 $61,016 $46,166 $69,635
------------ ------------- ------------- ------------- -------------- -------------
</TABLE>
<TABLE>
<CAPTION>
AFCL
Petrodrill 7 Eliminations Consolidated
------------- ------------- --------------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.......... $ 18,172
-----------
Total current assets........... 18,172
Accounts receivable.................... $ 5,100 10,200
Related party receivable............... - $ (99,434) 16,157
Construction in progress............... 59,170 - 220,666
Deferred costs......................... 8,684 - 77,885
Investment in subsidiaries............. _ - (6) __ -
------------- ------------- --------------
$ 72,954 $ (99,440) $ 343,080
========= ============= ===========
Current liabilities
Accounts advanced.................. $ 7,735 $ 32,570
Accrued liabilities................ 1,982 3,927
------------- ------------- --------------
Total current liabilities...... 9,717 36,497
Related party advances................. 5,302 $ (99,434) 133,901
Long-term debt......................... 49,250 - 94,738
Accrued contract penalties............. 8,684 - 77,885
------------- ------------- --------------
Total liabilities.............. 72,953 (99,434) 343,021
------------- ------------- --------------
Commitments and contingencies..........
Shareholders' equity:
Common stock....................... 1 (6) 1
Additional paid-in capital......... - - -
Surplus accumulated in the
development stage.................. - - 58
------------- ------------- --------------
Total shareholders' equity..... 1 (6) 59
------------- ------------- --------------
$72,954 $(99,440) $343,080
------------- ------------- --------------
</TABLE>
F-15
<PAGE>
APPENDIX A
PRIDE INTERNATIONAL, INC.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus incorporates important business and financial information
about Pride International, Inc. that we have not included in or delivered with
this prospectus. This information is available without charge upon written or
oral request. You should make any request to Robert W. Randall, Vice President
and General Counsel, 5847 San Felipe, Suite 3300, Houston, Texas 77057,
telephone number (713) 789-1400. To ensure timely delivery, you should request
the information no later than , 2000.
Pride files annual, quarterly and special reports, proxy statements and
other information with the SEC. You can read and copy any materials Pride files
with the SEC at the SEC's Public Reference Room 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can obtain information about the operation of the
SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a Web Site that contains information Pride files electronically with
the SEC. You can access the SEC's Web Site over the Internet at
HTTP://WWW.SEC.GOV. You can also obtain information about Pride at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
We are "incorporating by reference" information Pride files with the SEC,
which means that we are disclosing important information to you by referring you
to those documents. The information we incorporate by reference is an important
part of this prospectus, and later information that Pride files with the SEC
automatically will update and supersede this information. We incorporate by
reference the documents listed below and any future filings Pride makes with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 (file no. 1-13289) until the offering made by this prospectus terminates:
o Pride's annual report on Form 10-K for the year ended December 31, 1998
o Pride's quarterly report on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999 and September 30, 1999
o Pride's current reports on Form 8-K dated January 12, 1999 and May 25,
1999
You may request a copy of these filings (other than an exhibit to these
filings unless we have specifically incorporated that exhibit by reference into
this filing), at no cost, by writing or telephoning Pride at the following
address:
Pride International, Inc.
5847 San Felipe, Suite 3300
Houston, Texas 77057
Attn: Robert W. Randall
Vice President and General Counsel
Telephone (713) 789-1400
PricewaterhouseCoopers LLP has audited the financial statements of Pride
included in Pride's annual report on Form 10-K for the year ended December 31,
1998, which we incorporate by reference in this prospectus. We have incorporated
by reference those financial statements in reliance upon the opinion of
PricewaterhouseCoopers LLP appearing in Pride's annual report, which opinion was
given upon the authority of that firm as experts in accounting and auditing.
RISK FACTORS RELATED TO PRIDE
IN CONSIDERING THE CREDITWORTHINESS OF PRIDE'S SENIOR UNSECURED CORPORATE
GUARANTEE OF THE REPAYMENT OF UP TO $30.0 MILLION OF THE OLD NOTES AND NEW
NOTES, YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED BELOW.
LOW OIL AND GAS PRICES HAVE NEGATIVELY AFFECTED PRIDE'S FINANCIAL RESULTS, WILL
RESULT IN A LOSS FOR 1999 AND MAY CONTINUE TO AFFECT PRIDE'S RESULTS IN 2000 AND
BEYOND.
Depressed market conditions may adversely affect Pride's results of
operations and its liquidity and thus its ability to make payments on its
limited guarantee of the notes. The profitability of Pride's operations depends
significantly upon conditions in the oil and gas industry and, specifically, the
level of ongoing exploration and production expenditures of oil and gas company
customers. The demand for contract drilling and related services is directly
influenced by many factors beyond Pride's control, including:
o oil and gas prices
o expectations about future prices
o the cost of producing and delivering oil and gas
A-1
<PAGE>
o government regulations
o local and international political and economic conditions
o the ability of the Organisation of Petroleum Exporting Countries (OPEC)
to set and maintain production levels and prices
o the level of production by non-OPEC countries
o the policies of various governments regarding exploration and
development of their oil and gas reserves
In spite of increased prices that have accompanied OPEC's recent
imposition of more restrictive production quotas on its members, both offshore
drilling activity, particularly in the U.S. Gulf of Mexico, and international
land-based activity have been relatively depressed. During 1999, a significant
number of companies exploring for oil and gas have curtailed or canceled some of
their drilling programs, thereby reducing demand for drilling services. This
reduction in demand has significantly eroded daily rates and utilization of
Pride's rigs, particularly in offshore Gulf of Mexico and onshore South American
operations. This erosion in daily rates and utilization is currently having a
negative impact on Pride's financial results. In addition, there are a number of
deepwater rigs currently under construction, some of which are not under
contract. If demand for deepwater drilling services does not increase to meet
this increased capacity, Pride could face competition from these and other rigs
for future deepwater contracts.
As of September 30, 1999, five of Pride's 11 mat-supported jackup rigs in
the Gulf of Mexico were idle, and nearly all of the remainder were working under
contracts that expire by the end of the year. Approximately 60% of Pride's
platform rigs in that area were idle, with the remainder working at
substantially lower daily rates than during 1998. Pride is also continuing to
experience weakness in land drilling and workover operations in South America,
particularly Venezuela where private-sector exploration and production activity
levels have been reduced. As a result, Pride's EBITDA in the first six months of
1999 was insufficient to cover its interest expense in that quarter, and its
earnings (consisting of earnings before income taxes plus fixed charges less
capitalized interest) were insufficient to cover its fixed charges (consisting
of interest expense, capitalized interest and that portion of operating lease
rental expense deemed to represent the interest factor) for the quarter. Pride
expects to realize substantially less revenue from the assets working in these
areas in the near term than in recent periods. Pride's operating costs will not,
however, decrease proportionately. This revenue decrease will adversely affect
results of operations for at least the near term, substantially reducing
revenues, cash flows, EBITDA and earnings and resulting in losses for 1999 and
potentially beyond. In addition, earnings in future quarters may be insufficient
to cover fixed charges in those quarters, and further deterioration in market
conditions may result in EBITDA being insufficient to cover interest expense in
those quarters.
INTERNATIONAL EVENTS MAY HURT PRIDE'S OPERATIONS.
Pride derives a significant portion of its revenues from operations in
South America, the Middle East, Southeast Asia and other international areas.
Risks associated with operating in international markets include the following:
o foreign exchange restrictions and currency fluctuations
o changes in foreign tax rates
o political instability
o foreign and domestic monetary and tax policies
o expropriation
o nationalization
o nullification or modification of contracts
o war and civil disturbances
Additionally, Pride's ability to compete in international contract
drilling markets may be adversely affected by foreign governmental regulations
that favor or require the awarding of contracts to local contractors or by
regulations requiring foreign contractors to employ citizens of, or purchase
supplies from, a particular jurisdiction. Furthermore, Pride's foreign
subsidiaries may face governmentally imposed restrictions from time to time on
their ability to transfer funds to Pride.
DELAYS OR COST OVERRUNS IN CONSTRUCTION AND REFURBISHMENT PROJECTS COULD
MATERIALLY AFFECT PRIDE'S RESULTS OF OPERATIONS.
Pride has expended, and in 1999 will continue to expend, significant
amounts to complete construction of new rigs, including two drillships, and, to
a lesser extent, to upgrade and refurbish other rigs. In addition, Pride has
made and may continue to make equity contributions to us.
All of these construction projects are subject to the risks of delay or
cost overruns inherent in construction projects. These risks include:
o unforeseen engineering problems
o work stoppages
A-2
<PAGE>
o weather interference
o unanticipated cost increases
o delays in receipt of necessary equipment
o inability to obtain the requisite permits or approvals
Significant construction cost overruns could have a material adverse
effect on Pride's financial position and cash flows. Significant delays could
also have a material adverse effect on contract commitments for such rigs.
Petrobras has recently cancelled contracts with another contract drilling
company that experienced significant delays in a major rig construction project.
PRIDE'S CUSTOMERS MAY SEEK TO CANCEL OR RENEGOTIATE SOME DRILLING CONTRACTS
DURING DEPRESSED MARKET CONDITIONS OR IF PRIDE EXPERIENCES OPERATIONAL
DIFFICULTIES.
During depressed market conditions, a customer may no longer need a rig
that is currently under contract or may be able to obtain a comparable rig at a
lower daily rate. As a result, customers may seek to renegotiate the terms of
their existing drilling contracts or avoid their obligations under those
contracts. In addition, customers may seek to terminate existing contracts if
Pride experiences operational problems. The deepwater markets in which Pride
operates require the use of floating rigs with sophisticated positioning, subsea
and related systems designed for drilling in deep water. If this equipment fails
to function properly, the rig cannot engage in drilling operations, and
customers may have the right to terminate the drilling contracts. The likelihood
that a customer may seek to terminate a contract for operational difficulties is
increased during market downturns like the one currently being experienced. The
cancellation of a number of Pride's drilling contracts could adversely affect
Pride's results of operations.
PRIDE'S SIGNIFICANT DEBT LEVELS AND DEBT AGREEMENT RESTRICTIONS MAY LIMIT
PRIDE'S FLEXIBILITY IN OBTAINING ADDITIONAL FINANCING AND IN PURSUING OTHER
BUSINESS OPPORTUNITIES.
As of September 30, 1999, Pride had approximately $1,188.5 million in
long-term debt and capital lease obligations. Excluded from this amount are
certain financial and other guarantees, including the limited guarantee of the
notes, and certain other obligations relating to Pride's 26.4% equity interest
in the Amethyst joint venture. This joint venture has significant indebtedness
that is nonrecourse to Pride and thus is not reflected on Pride's balance sheet.
The level of Pride's indebtedness will have several important effects on future
operations, including:
o a significant portion of Pride's cash flow from operations will be
dedicated to the payment of interest and principal on debt and will not
be available for other purposes
o covenants contained in some of Pride's existing debt arrangements
require Pride to meet certain financial tests, which may affect Pride's
flexibility in planning for, and reacting to, changes in its business
and may limit its ability to fund capital expenditures, dispose of
assets, withstand current or future economic or industry downturns and
compete with others in the industry for strategic opportunities
o Pride's ability to obtain additional financing for working capital,
capital expenditures, acquisitions, general corporate and other
purposes may be limited
Pride's ability to meet its debt service obligations and to reduce its
total indebtedness will be dependent upon its future performance, which will be
subject to general economic conditions, industry cycles and financial, business
and other factors affecting operations, may of which are beyond Pride's control.
PRIDE'S LIMITED GUARANTEE OF THE NOTES WILL BE EFFECTIVELY SUBORDINATED TO ALL
OF PRIDE'S EXISTING AND FUTURE SECURED DEBT AND ALL OF THE DEBT OF ITS
SUBSIDIARIES
Pride's limited guarantee of the notes will be effectively subordinated in
right of payment to all of its existing and future secured debt, including debt
Pride may incur under its credit facilities. If Pride is involved in any
dissolution, liquidation or reorganization, its secured debt holders would be
paid before there are payments of any amounts due under Pride's limited
guarantee of the notes to the extent of the value of the assets securing its
debt. In that event, holders of the notes may not be able to recover any amounts
due under Pride's limited guarantee of the notes.
In addition, Pride's limited guarantee of the notes is effectively
subordinated to all of the creditors, including trade creditors and tort
claimants, of its subsidiaries. Pride conducts substantially all of its
operations through both U.S. and foreign subsidiaries, and substantially all of
its assets consist of equity in such subsidiaries. Accordingly, Pride is and
will be dependent on its ability to obtain funds from its subsidiaries to
service its debt. Financing arrangements to which Pride's subsidiaries are
parties impose restrictions on Pride's ability to gain access to the cash flow
or assets of its subsidiaries. In addition, Pride's foreign subsidiaries may
face governmentally imposed restrictions on their ability to transfer funds to
Pride.
A-3
<PAGE>
As of September 30, 1999, Pride had $169.8 million of secured debt and its
subsidiaries had $324.0 million of debt and other liabilities outstanding to
creditors other than Pride. In addition, Pride had another $36.5 million of
borrowing availability under its revolving credit facility.
PRIDE IS SUBJECT TO HAZARDS CUSTOMARY IN THE OILFIELD SERVICE INDUSTRY AND TO
THOSE MORE SPECIFIC TO MARINE OPERATIONS. PRIDE MAY NOT HAVE INSURANCE TO COVER
ALL THESE HAZARDS.
Pride's operations are subject to the many hazards customary in the
oilfield services industry. Contract drilling and well servicing require the use
of heavy equipment and exposure to hazardous conditions, which may subject Pride
to liability claims by employees, customers and third parties. These hazards can
cause personal injury or loss of life, severe damage to or destruction of
property and equipment, pollution or environmental damage and suspension of
operations. Pride's offshore fleet is also subject to hazards inherent in marine
operations, either while on site or during mobilization, such as capsizing,
sinking and damage from severe weather conditions. In certain instances,
contractual indemnification of customers or others is required of Pride.
Pride maintains workers' compensation insurance for its employees and
other insurance coverage for normal business risks, including general liability
insurance. Although Pride believes its insurance coverage to be adequate and in
accordance with industry practice against normal risks in its operations, any
insurance protection may not be sufficient or effective under all circumstances
or against all hazards to which Pride may be subject. The occurrence of a
significant event against which Pride is not fully insured, or of a number of
lesser events against which Pride is insured, but subject to substantial
deductibles, could materially and adversely affect Pride's operations and
financial condition. Moreover, Pride may not be able to maintain adequate
insurance in the future at rates or on terms Pride considers reasonable or
acceptable.
GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL LIABILITIES MAY ADVERSELY AFFECT
PRIDE'S OPERATIONS.
Many aspects of Pride's operations are subject to numerous governmental
regulations that may relate directly or indirectly to the contract drilling and
well servicing industries, including those relating to the protection of the
environment. Laws and regulations protecting the environment have become more
stringent in recent years and may impose strict liability, rendering Pride
liable for environmental damage without regard to negligence or fault on Pride's
part. These laws and regulations may expose Pride to liability for the conduct
of, or conditions caused by, others or for acts that were in compliance with all
applicable laws at the time the acts were preformed. The application of these
requirements or the adoption of new requirements could have a material adverse
effect on Pride. In addition, the modification of existing laws or regulations
or the adoption of new laws or regulations curtailing exploratory or development
drilling for oil and gas could have a material adverse effect on Pride's
operations by limiting future contract drilling opportunities.
From time to time, certain of Pride's foreign subsidiaries operate in
countries such as Libya and Iran that are subject to sanctions and embargoes
imposed by the U.S. Government. Although these sanctions and embargoes do not
prohibit those subsidiaries from completing existing contracts or from entering
into new contracts to provide drilling services in such countries, they do
prohibit Pride and its domestic subsidiaries, as well as employees of Pride's
foreign subsidiaries who are U.S. citizens, from participating in or approving
any aspect of the business activities in those countries. These constraints on
Pride's ability to have U.S. persons provide managerial oversight and
supervision may adversely affect the financial or operating performance of such
business activities.
A-4
<PAGE>
APPENDIX B
REPUBLIC NATIONAL BANK OF NEW YORK
THE INFORMATION CONTAINED IN THIS APPENDIX TO THIS PROSPECTUS HAS BEEN
OBTAINED FROM SOURCES MADE PUBLICLY AVAILABLE BY REPUBLIC NATIONAL BANK OF NEW
YORK AND REPUBLIC NEW YORK CORPORATION AND IS NOT TO BE CONSTRUED AS A
REPRESENTATION BY AMETHYST FINANCIAL COMPANY LTD. OR ITS AFFILIATES.
Republic National Bank of New York is a wholly owned subsidiary and the
principal asset of Republic New York Corporation. Based on Republic New York
Corporation's annual report on Form 10-K for the year ended December 31, 1998,
Republic National Bank and its consolidated subsidiaries had, at December 31,
1998, total deposits of approximately $33.5 billion, total assets of
approximately $46.5 billion and stockholder's equity of approximately $3.1
billion and accounted for approximately 90% of the consolidated assets,
approximately 90% of the consolidated revenues and more than 100% of the
consolidated net income of Republic New York Corporation for the year ended
December 31, 1998.
Republic New York Corporation has entered into an agreement to be acquired
by HSBC Holdings, plc for approximately $9.85 billion. The stockholders of
Republic New York Corporation approved the transaction on November 30, 1999, but
the transaction remains subject to regulatory approval. The recent death of
Republic New York Corporation founder Edmond Safra may, but is not expected to,
affect the transaction.
WHERE YOU CAN FIND MORE INFORMATION
Republic New York Corporation files reports and other information with the
SEC. You can read and copy any materials Republic New York Corporation files
with the SEC at the SEC's Public Reference Room 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can obtain information about the operation of the
SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a Web Site that contains information Republic New York Corporation
files electronically with the SEC. You can access the SEC's Web Site over the
Internet at HTTP://WWW.SEC.GOV.
Republic National Bank files reports and other information with the
Federal Financial Institution Examination Council. You can obtain the publicly
available portions of those reports and other information by writing to the
Federal Deposit Insurance Corporation's Disclosure Group at FDIC, Department
0691, Washington, D.C. 20073-0691 or by calling the Federal Deposit Insurance
Corporation at 1-800-945-2186. The Federal Financial Institution Examination
Council also maintains a Web Site that contains the publicly available portions
of those reports and other information. You can access the Federal Financial
Institution Examination Council's Web Site over the Internet at
HTTP://WWW.FFIEC.GOV.
We refer you to the documents listed below and any future filings Republic
New York Corporation makes with the SEC under Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 (file no. 1-7436) or Republic National
Bank makes with the Federal Financial Institution Examination Council until the
offering made by this prospectus terminates:
o Republic New York Corporation's annual report on Form 10-K for the year
ended December 31, 1998, which includes, on page 61, the December 31,
1997 and 1998 audited Consolidated Statements of Condition of Republic
National Bank
o Republic New York Corporation's quarterly reports on Form 10-Q for the
quarters ended March 31, 1999, June 30, 1999 and September 30, 1999
o Republic New York Corporation's current reports on Form 8-K dated May
11, 1999 (as amended by Republic New York Corporation's current report
on Form 8-K/A May 14, 1999), August 5, 1999, September 3, 1999,
September 7, 1999, September 27, 1999, October 1, 1999, October 22,
1999 and November 8, 1999
o the publicly available portions of the Consolidated Reports of
Condition of Republic National Bank and Consolidated Reports of Income
of Republic National Bank as of and for the years ended December 31,
1997 and 1998 and for each subsequent quarter for which such a report
has been prepared, in each case, as submitted to the Federal Financial
Institution Examination Council
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 57 of the British Virgin Islands International Business
Corporations Ordinance provides as follows:
1. Subject to Subsection 2 and any limitations in its memorandum or
articles, a company incorporated under this Ordinance may indemnify against all
expenses, including legal fees, and against all judgments, fines and amounts
paid in settlement and reasonably incurred in connection with legal,
administrative or investigative proceedings any person who:
a. is or was a party or is threatened to be made a party to any
threatened, pending or completed proceedings, whether civil, criminal,
administrative or investigative by reason of the fact that the person is
or was a director, an officer or a liquidator of the company; or
b. is or was, at the request of the company, serving as a director,
officer or liquidator of, or in any other capacity is or was acting for,
another company or a partnership, joint venture, trust or other
enterprise.
2. Subsection 1 only applies to a person referred to in that subsection if
the person acted honestly and in good faith with a view to the best interests of
the company and, in the case of criminal proceedings, the person has no
reasonable cause to believe that his conduct was unlawful.
3. The decision of the directors as to whether the person acted honestly
and in good faith and with a view to the best interests of the company and as to
whether the person had no reasonable cause to believe that his conduct was
unlawful is in the absence of fraud, sufficient for purposes of this section,
unless a question of law is involved.
4. The termination of any proceedings by any judgment, order, settlement,
conviction or the entering of a nolle prosequi does not, by itself, create a
presumption that the person did not act honestly and in good faith with a view
to the best interests of the company or that the person had no reasonable cause
to believe that his conduct was unlawful.
5. If the person referred to in Subsection 1 has been successful in
defense of any proceedings referred to in Subsection 1, the person is entitled
to be indemnified against all expenses, including legal fees, and against all
judgments, fines and amounts paid in settlement and reasonably incurred by the
person in connection with the proceedings.
In addition, Section 58 of the British Virgin Islands International
Business Corporations Ordinance provides as follows:
A company incorporated under this Ordinance may purchase and maintain
insurance in relation to any person who is or was a director, an officer or a
liquidator of the company, or who at the request of the company is or was
serving as a director, an officer or a liquidator of, or in any other capacity
is or was acting for, another company or a partnership, joint venture, trust or
other enterprise, against any liability asserted against the person and incurred
by the person in that capacity, whether or not the company has or would have had
the power to indemnify the person against the liability under Subsection 1 of
Section 57.
Regulations 90 through 95 of the Articles of Association of Amethyst
Financial Company Ltd. provide as follows:
90. Subject to Regulation 91 the Company shall indemnify against all
expenses, including legal fees, and against all judgments, fines and amounts
paid in settlement and reasonably incurred in connection with legal,
administrative or investigative proceedings any person who
(a) is or was a party or is threatened to be made a party to any
threatened, pending or completed proceedings, whether civil, criminal,
administrative or investigative by reason of the fact that the person is
or was a director, an officer or a liquidator of the Company; or
(b) is or was, at the request of the Company, serving as a director,
officer or liquidator of, or in any other capacity is or was acting for,
another company or a partnership, joint venture, trust or other
enterprise.
91. Regulation 90 only applies to a person referred to in that Regulation
if the person acted honestly and in good faith with a view to the best interests
of the Company and, in the case of criminal proceedings, the person has no
reasonable cause to believe that his conduct was unlawful.
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92. The decision of the directors as to whether the person acted honestly
and in good faith and with a view to the best interests of the Company and as to
whether the person had no reasonable cause to believe that his conduct was
unlawful is in the absence of fraud, sufficient for purposes of these Articles,
unless a question of law is involved.
93. The termination of any proceedings by any judgment, order, settlement,
conviction or the entering of a nolle prosequi does not, by itself, create a
presumption that the person did not act honestly and in good faith with a view
to the best interests of the Company or that the person had no reasonable cause
to believe that his conduct was unlawful.
94. If the person referred to in Regulation 90 has been successful in
defense of any proceedings referred to in that Regulation, the person is
entitled to be indemnified against all expenses, including legal fees, and
against all judgments, fines and amounts paid in settlement and reasonably
incurred by the person in connection with the proceedings.
95. The Company may purchase and maintain insurance in relation to any
person who is or was a director, an officer or a liquidator of the Company, or
who at the request of the Company is or was serving as a director, an officer or
a liquidator of, or in any other capacity is or was acting for, another company
or a partnership, joint venture, trust or other enterprise, against any
liability asserted against the person and incurred by the person in that
capacity, whether or not the Company has or would have had the power to
indemnify the person against the liability under Regulation 90.
Section 83 of the Business Corporation Law of the State of Louisiana gives
corporations the power to indemnify officers and directors under certain
circumstances. Article IX of Pride International's Amended and Restated Articles
of Incorporation and Section 13 of Pride International's Bylaws contain
provisions that provide for indemnification of certain persons (including
officers and directors).
ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES
(a) EXHIBITS.
The following instruments and documents are included as Exhibits to
this Registration Statement. Exhibits incorporated by reference are so
indicated by parenthetical information.
EXHIBIT NO. EXHIBIT
- - ----------- -------
3.1 Memorandum of Association of Amethyst Financial
Company Ltd.
3.2 Articles of Association of Amethyst Financial Company
Ltd.
4.1 A/B Exchange Registration Rights Agreement dated
October 28, 1999 among Amethyst Financial Company
Ltd., Pride International, Inc., Maritima Petroleo e
Engenharia Ltda. and Donaldson, Lufkin & Jenrette
Securities Corporation.
4.2 Purchase Agreement dated October 28, 1999 between
Amethyst Financial Company Ltd. and Donaldson, Lufkin
& Jenrette Securities Corporation relating to $53
million aggregate principal amount of 11 3/4% Senior
Secured Notes due 2001.
4.3 Indenture dated November 1, 1999 among Amethyst
Financial Company Ltd., Pride International, Inc.,
Maritima Petroleo e Engenharia Ltda. and Wilmington
Trust Company.
*4.3(a) First Supplemental Indenture dated , 2000 among
Amethyst Financial Company Ltd., Pride International,
Inc., Maritima Petroleo e Engenharia Ltda. and
Wilmington Trust Company.
*4.4 Form of New Note (attached to the First Supplemental
Indenture dated , 2000 among Amethyst Financial
Company Ltd., Pride International, Inc., Maritima
Petroleo e Engenharia Ltda. and Wilmington Trust
Company filed as Exhibit 4.3(a) to this Registration
Statement).
4.5 Senior Secured Note Security and Pledge Agreement
dated November 1, 1999 between Amethyst Financial
Company Ltd. and Wilmington Trust Company.
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<PAGE>
4.6 Reserve Account Agreement dated November 1, 1999
between Amethyst Financial Company Ltd. and
Wilmington Trust Company.
4.7 Deed of Consent dated November 1, 1999 among Amethyst
Financial Company Ltd., Petrodrill Six Limited,
Petrodrill Seven Limited, Pride International, Inc.,
Maritima Petroleo e Engenharia Ltda., Petro Dia Three
S.A., Petro Dia Four S.A., Mitsubishi Corporation
(UK) PLC and Wilmington Trust Company.
4.8 Loan Agreement dated December 1998 among Petrodrill
Seven Limited, Petro Dia Three S.A., Petro Dia Four
S.A. and Mitsubishi Corporation (UK) PLC.
4.9 Loan Agreement dated December 19, 1998 among
Petrodrill Six Limited, Petro Dia Three S.A., Petro
Dia Four S.A. and Mitsubishi Corporation (UK) PLC.
4.10 Deed of Guarantee and Undertaking dated December 19,
1998 among Petrodrill Seven Limited, Pride
International, Inc., Maritima Petroleo e Engenharia
Ltda., Petro Dia Three S.A., Petro Dia Four S.A. and
Mitsubishi Corporation (UK) PLC.
4.11 Deed of Guarantee and Undertaking dated December 19,
1998 among Petrodrill Six Limited, Pride
International, Inc., Maritima Petroleo e Engenharia
Ltda., Petro Dia Three S.A., Petro Dia Four S.A. and
Mitsubishi Corporation (UK) PLC.
4.12 Floor Guarantee dated December 19, 1998 among Pride
International, Inc., Maritima Petroleo e Engenharia
Ltda., Petro Dia Three S.A. and Petro Dia Four S.A.
4.13 Inter-Company Cross Guarantee dated December 19, 1998
among Amethyst Financial Company Ltd., Petrodrill Six
Limited, Petrodrill Seven Limited and Mitsubishi
Corporation (UK) PLC.
4.14 Transfer Certificate dated November 1, 1999 among
Amethyst Financial Company Ltd., Petro Dia Three
S.A., Petro Dia Four S.A. and Mitsubishi Corporation
(UK) PLC, relating to the Limited Loan Agreement
dated December 19, 1998 among Petrodrill Seven
Limited, Petro Dia Three S.A., Petro Dia Four S.A.
and Mitsubishi Corporation (UK) PLC.
4.15 Transfer Certificate dated November 1, 1999 among
Amethyst Financial Company Ltd., Petro Dia Three
S.A., Petro Dia Four S.A. and Mitsubishi Corporation
(UK) PLC, relating to the Loan Agreement dated
December 19, 1998 among Petrodrill Six Limited, Petro
Dia Three S.A., Petro Dia Four S.A. and Mitsubishi
Corporation (UK) PLC.
4.16 Commitment to Guarantee Obligation by the United
States of America accepted by Petrodrill Five Limited
dated April 9, 1999.
4.17 Commitment to Guarantee Obligation by the United
States of America accepted by Petrodrill Four Limited
dated April 9, 1999.
4.18 Credit Agreement dated April 9, 1999 among Petrodrill
Five Limited, Govco Inc., Citibank, N.A., Citibank
International PLC and Citicorp North America, Inc.
4.19 Credit Agreement dated April 9, 1999 among Petrodrill
Four Limited, Govco Inc., Citibank, N.A., Citibank
International PLC and Citicorp North America, Inc.
4.20 Security Agreement dated April 9, 1999 between
Petrodrill Five Limited and the United States of
America.
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<PAGE>
4.21 Security Agreement dated April 9, 1999 between
Petrodrill Four Limited and the United States of
America.
4.22 Trust Indenture dated April 9, 1999 between
Petrodrill Five Limited and FMB Trust Company,
National Association.
4.23 Trust Indenture dated April 9, 1999 between
Petrodrill Four Limited and FMB Trust Company,
National Association.
4.24 Guaranty Agreement dated April 9, 1999 in favor of
the United States by Petrodrill Five Limited.
4.25 Guaranty Agreement dated April 9, 1999 in favor of
the United States by Petrodrill Four Limited.
4.26 Guaranty Agreement dated April 9, 1999 in favor of
the United States by Pride International, Inc.
4.27 Payment Undertaking in Favor of the United States
dated April 9, 1999 by Maritima Petroleo e Engenharia
Ltda.
4.28 Interguarantor Agreement dated April 9, 1999 between
Pride International, Inc. and Maritima Petroleo e
Engenharia Ltda.
4.29 Title XI Reserve Fund and Financial Agreement dated
April 9, 1999 between Petrodrill Five Limited and the
United States of America.
4.30 Title XI Reserve Fund and Financial Agreement dated
April 9, 1999 between Petrodrill Four Limited and the
United States of America.
4.31 Amended and Restated Credit Agreement dated as of
December 22, 1997 among Pride International, Inc.,
each of the banks that are or may be a party thereto,
Bank One, Louisiana, N.A. (formerly named First
National Bank of Commerce), as arranger and
syndication agent, and Wells Fargo Bank (Texas),
National Association, as administrative agent and
documentation agent (incorporated by reference to
Exhibit 4.8 to Pride International, Inc.'s Annual
Report on Form 10-K for the year ended December 31,
1997, File No. 1-13289).
4.32 First Amendment to Credit Agreement dated as of April
24, 1998 among Pride International, Inc., certain of
its subsidiaries, Bank One, Louisiana, N.A. (formerly
named First National Bank of Commerce), as arranger
and syndication agent, Wells Fargo Bank (Texas),
National Association, as administrative and
documentation agent, and the lenders named therein
(incorporated by reference to Exhibit 4.2 to Pride
International, Inc.'s Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1998,
File No. 1-13289).
4.33 Second Amendment to Credit Agreement dated as of
September 17, 1998 among Pride International, Inc.,
certain of its subsidiaries, Bank One, Louisiana,
N.A. (formerly named First National Bank of
Commerce), as arranger and syndication agent, Wells
Fargo Bank (Texas), National Association, as
administrative and documentation agent, and the
lenders named therein (incorporated by reference to
Exhibit 4.3 to Pride International, Inc.'s Quarterly
Report on Form 10-Q for the quarterly period ended
September 30, 1998, File No. 1-13289).
4.34 Third Amendment to Credit Agreement dated as of
December 21, 1998 among Pride International, Inc.,
certain of its subsidiaries, Bank One, Louisiana,
N.A. (formerly named First National Bank of
Commerce), as arranger and syndication agent, Wells
Fargo Bank (Texas), National Association, as
administrative and documentation agent, and the
lenders named therein (incorporated by reference
to Exhibit 4.6 to Pride International, Inc.'s
Annual Report on Form 10-K for the year ended
December 31, 1998, File No. 1-13289).
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<PAGE>
4.35 Indenture, dated as of May 1, 1997, by and between
Pride International, Inc. and The Chase Manhattan
Bank, as trustee (incorporated by reference to
Exhibit 4.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, File Nos.
0-16961 and 1-13289).
4.36 First Supplemental Indenture, dated as of May 1,
1997, by and between Pride International, Inc. and
The Chase Manhattan Bank, as trustee, relating to
$325,000,000 principal amount of 9 3/8% Senior Notes
due 2007 (incorporated by reference to Exhibit 4.2 to
Pride International Inc.'s Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, File Nos.
0-16961 and 1-13289).
4.37 Indenture, dated as of April 1, 1998, between Pride
International, Inc. and Marine Midland Bank, as
trustee, relating to subordinated debt securities
(incorporated by reference to Exhibit 4.1 to Pride
International, Inc.'s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1998, File
No. 1-13289).
4.38 First Supplemental Indenture, dated as of April 24,
1998, between Pride International, Inc. and Marine
Midland Bank, as trustee, relating to Zero Coupon
Convertible Subordinated Debentures Due 2018
(incorporated by reference to Exhibit 4.2 to Pride
International, Inc.'s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1998, File
No. 1-13289).
Pride International, Inc. is a party to several debt instruments under
which the total amount of securities authorized does not exceed 10% of the
total assets of Pride International, Inc. and its subsidiaries on a
consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of
Regulation S-K, Pride International, Inc. agrees to furnish a copy of such
instruments to the SEC upon request.
*5 Opinion of Baker & Botts, L.L.P. as to the legality
of the new notes and the Pride guarantee.
8.1 Opinion of Baker & Botts, L.L.P. regarding U.S. tax
matters.
8.2 Opinion of Dancia Penn & Co. regarding British Virgin
Islands tax matters.
10.1 Chartering Contract for the AMETHYST 7 (Contract No.
101.2.155.97-9) between Maritima Navegacao e
Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
10.1(a) Rider No. 1 to the Chartering Contract for the
AMETHYST 7 (Contract No. 101.2.155.97-9) dated July
10, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Seven Limited.
10.2 Service Rendering Contract for the AMETHYST 7
(Contract No. 101.0.156.97-1) between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
10.2(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 7 (Contract No. 101.2.156.97-1) dated August
21, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Seven Limited.
10.3 Letter Agreement dated January 15, 1998 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 7 (Contract No.
101.2.155.97-9) and the Service Rendering Contract
for the AMETHYST 7 (Contract No. 101.2.156.97-1).
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<PAGE>
10.4 Letter Agreement dated January 15, 1998 between
Maritima Petroleo e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 7 (Contract No.
101.2.155.97-9) and the Service Rendering Contract
for the AMETHYST 7 (Contract No. 101.2.156.97-1).
10.5 Chartering Contract for the AMETHYST 6 (Contract No.
101.2.159.97-1) dated January 12, 1998 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras.
10.5(a) Rider No. 1 to the Chartering Contract for the
AMETHYST 6 (Contract No. 101.2.159.97-1) dated July
10, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Six Limited.
10.6 Service Rendering Contract for the AMETHYST 6
(Contract No. 101.2.160.97-0) dated January 12, 1998
between Maritima Navegacao e Engenharia Ltda. and
Petroleo Brasileiro S.A.--Petrobras.
10.6(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 6 (Contract No. 101.2.160.97-0) dated August
21, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Six Limited.
10.7 Letter Agreement dated January 15, 1998 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 6 (Contract No.
101.2.159.97-1) and the Service Rendering Contract
for the AMETHYST 6 (Contract No. 101.2.160.97-0).
10.8 Letter Agreement dated January 15, 1998 between
Maritima Petroleo e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 6 (Contract No.
101.2.159.97-1) and the Service Rendering Contract
for the AMETHYST 6 (Contract No. 101.2.160.97-0).
10.9 Chartering Contract for the AMETHYST 5 (Contract No.
101.2.100.97-8) dated December 5, 1997 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras.
10.9(a) Rider No. 1 to the Chartering Contract for the
AMETHYST 5 (Contract No. 101.2.100.97-8) dated July
10, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Five Limited.
10.10 Service Rendering Contract for the AMETHYST 5
(Contract No. 101.2.101.97-0) between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
10.10(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 5 (Contract No. 101.2.101.97-0) dated August
21, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Five Limited.
10.11 Letter Agreement dated December 5, 1997 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 5 (Contract No.
101.2.100.97-8) and the Service Rendering Contract
for the AMETHYST 5 (Contract No. 101.2.101.97-0).
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<PAGE>
10.12 Letter Agreement dated January 15, 1998 between
Maritima Petroleo e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 5 (Contract No.
101.2.100.97-8) and the Service Rendering Contract
for the AMETHYST 5 (Contract No. 101.2.101.97-0).
10.13 Chartering Contract for the AMETHYST 4 (Invitation to
Bid No. 101.2.063.97-8) between Maritima Navegacao e
Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
10.13(a) Rider No. 1 to the Chartering Contract for the
AMETHYST 4 (Invitation to Bid No. 101.2.063.97-8)
dated July 10, 1998 among Maritima Petroleo e
Engenharia Ltda., Petroleo Brasileiro S.A.--Petrobras
and Petrodrill Four Limited.
10.14 Service Rendering Contract for the AMETHYST 4
(Invitation to Bid No. 101.2.064.97-0) between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras.
10.14(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 4 (Invitation to Bid No. 101.2.064.97-0)
dated August 21, 1998 among Maritima Petroleo e
Engenharia Ltda., Petroleo Brasileiro S.A.--Petrobras
and Petrodrill Four Limited.
10.15 Letter Agreement dated December 5, 1997 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 4 (Contract No.
101.2.063.97-2) and the Service Rendering Contract
for the AMETHYST 4 (Invitation to Bid No.
101.2.064.97-0).
10.16 Letter dated May 28, 1998 from Petroleo Brasileiro
S.A.--Petrobras to Maritima Navegacao e Engenharia
Ltda. regarding the Chartering Contracts and Service
Rendering Contracts.
10.17 Shipbuilding Contract dated April 9, 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3015
(AMETHYST 7).
10.17(a) Side Letter No. 1 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3015
(AMETHYST 7).
10.17(b) Side Letter No. 2 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3015
(AMETHYST 7).
10.17(c) Novation Agreement dated December 4, 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd.,
Petrodrill Offshore Inc. and Petrodrill Seven Limited
for Hull No. 3015 (AMETHYST 7).
10.17(d) Main Contract Amendment dated December 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Seven Limited for Hull No. 3015 (AMETHYST
7).
10.17(e) Main Contract Amendment II dated January 28, 1999
among Daewoo Corporation, Daewoo Heavy Industries
Ltd. and Petrodrill Seven Limited for Hull No. 3015
(AMETHYST 7).
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<PAGE>
10.18 Refund Guarantee issued by The Export-Import Bank of
Korea to Petrodrill Construction Inc. dated April 16,
1998 for Hull No. 3015 (AMETHYST 7).
10.18(a) Novation Agreement in respect of the Refund Guarantee
dated December 4, 1998 among The Export-Import Bank
of Korea, Petrodrill Offshore Inc. and Petrodrill
Seven Limited for Hull No. 3015 (AMETHYST 7).
10.18(b) Letter of Amendment of Refund Guarantee issued by The
Export-Import Bank of Korea to Petrodrill Seven
Limited dated April 6, 1999 for Hull No. 3015
(AMETHYST 7).
10.19 Shipbuilding Contract dated April 9, 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3016
(AMETHYST 6).
10.19(a) Side Letter No. 1 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3016
(AMETHYST 6).
10.19(b) Side Letter No. 2 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3016
(AMETHYST 6).
10.19(c) Novation Agreement dated December 4, 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd.,
Petrodrill Offshore Inc. and Petrodrill Six Limited
for Hull No. 3016 (AMETHYST 6).
10.19(d) Main Contract Amendment dated December 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Six Limited Inc. for Hull No. 3016
(AMETHYST 6).
10.19(e) Main Contract Amendment II dated January 28, 1999
among Daewoo Corporation, Daewoo Heavy Industries
Ltd. and Petrodrill Six Limited for Hull No. 3016
(AMETHYST 6).
10.20 Refund Guarantee issued by The Export-Import Bank of
Korea to Petrodrill Construction Inc. dated April 16,
1998 for Hull No. 3016 (AMETHYST 6).
10.20(a) Novation Agreement in respect of the Refund Guarantee
dated December 4, 1998 among The Export-Import Bank
of Korea, Petrodrill Offshore Inc. and Petrodrill Six
Limited for Hull No. 3016 (AMETHYST 6).
10.20(b) Letter of Amendment of Refund Guarantee issued by The
Export-Import Bank of Korea to Petrodrill Six Limited
dated April 6, 1999 for Hull No. 3016 (AMETHYST 6).
10.21 Shipbuilding Contract dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
10.21(a) Side Letter No. 1 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
10.21(b) Side Letter No. 2 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
10.21(c) Side Letter No. 3 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
10.21(d) Side Letter No. 4 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
II-8
<PAGE>
10.21(e) Side Letter No. 5 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
10.21(f) Novation Agreement dated December 9, 1998 between
TDI-Halter, L.P., Petrodrill Offshore Inc. and
Petrodrill Five Limited for Hull No. 1829 (AMETHYST
5).
10.21(g) Amendment No. 1 to Semi-Submersible Drilling Vessel
Construction Contract dated April 9, 1999 between
TDI-Halter, L.P. and Petrodrill Five Limited for Hull
No. 1829 (AMETHYST 5).
10.22 Performance Bond dated April 13, 1998 between
TDI-Halter, L.P. and Fireman's Fund Insurance Company
in connection with the construction of Hull No. 1829
(AMETHYST 5).
10.23 Labor and Material Payment Bond dated April 13, 1998
between TDI-Halter, L.P. and Fireman's Fund Insurance
Company in connection with the construction of Hull
No. 1829 (AMETHYST 5).
10.24 Parent Guarantee dated April 15, 1998 by Halter
Marine Group, Inc. in connection with the
construction of Hull No. 1829 (AMETHYST 5).
10.25 Shipbuilding Contract dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(a) Side Letter No. 1 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(b) Side Letter No. 2 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(c) Side Letter No. 3 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(d) Side Letter No. 4 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(e) Side Letter No. 5 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(f) Novation Agreement dated December 9, 1998 between
TDI-Halter, L.P., Petrodrill Offshore Inc. and
Petrodrill Four Limited for Hull No. 1828 (AMETHYST
4).
10.25(g) Amendment No. 1 to Semi-Submersible Drilling Vessel
Construction Contract dated April 9, 1999 between
TDI-Halter, L.P. and Petrodrill Four Limited for Hull
No. 1828 (AMETHYST 4).
10.26 Performance Bond dated April 13, 1998 between
TDI-Halter, L.P. and Fireman's Fund Insurance Company
in connection with the construction of Hull No. 1828
(AMETHYST 4).
10.27 Labor and Material Payment Bond dated April 13, 1998
between TDI-Halter, L.P. and Fireman's Fund Insurance
Company in connection with the construction of Hull
No. 1828 (AMETHYST 4).
10.28 Parent Guarantee dated April 15, 1998 by Halter
Marine Group, Inc. in connection with the
construction of Hull No. 1828 (AMETHYST 4).
II-9
<PAGE>
10.29 Construction Management Agreement dated November 5,
1998 between Petrodrill Seven Limited and Petrodrill
Engineering N.V. for the AMETHYST 7.
**10.30 Construction Management Agreement dated November 5,
1998 between Petrodrill Six Limited and Petrodrill
Engineering N.V. for the AMETHYST 6.
**10.31 Construction Management Agreement dated January 25,
1999 between Petrodrill Five Limited and Petrodrill
Engineering N.V. for the AMETHYST 5.
**10.32 Construction Management Agreement dated January 25,
1999 between Petrodrill Four Limited and Petrodrill
Engineering N.V. for the AMETHYST 4.
10.33 Supply Agreement for the AMETHYST 7 dated November 5,
1998 between Pride-Foramer S.A. and Petrodrill
Engineering N.V.
***10.34 Supply Agreement for the AMETHYST 6 dated November 5,
1998 between Pride-Foramer S.A. and Petrodrill
Engineering N.V.
***10.35 Supply Agreement for the AMETHYST 5 dated January 25,
1999 between Pride-Foramer S.A. and Petrodrill
Engineering N.V.
***10.36 Supply Agreement for the AMETHYST 4 dated January 25,
1999 between Pride-Foramer S.A. and Petrodrill
Engineering N.V.
10.37 Supply Agreement for the AMETHYST 7 dated November 5,
1998 between Maritima Petroleo e Engenharia Ltda. and
Petrodrill Engineering N.V.
***10.38 Supply Agreement for the AMETHYST 6 dated November 5,
1998 between Maritima Petroleo e Engenharia Ltda. and
Petrodrill Engineering N.V.
***10.39 Supply Agreement for the AMETHYST 5 dated January 25,
1999 between Maritima Petroleo e Engenharia Ltda. and
Petrodrill Engineering N.V.
***10.40 Supply Agreement for the AMETHYST 4 dated January 25,
1999 between Maritima Petroleo e Engenharia Ltda. and
Petrodrill Engineering N.V.
10.41 Supply Agreement for the AMETHYST 7 dated November 5,
1998 between Workships Contractors B.V. and
Petrodrill Engineering N.V.
***10.42 Supply Agreement for the AMETHYST 6 dated November 5,
1998 between Workships Contractors B.V. and
Petrodrill Engineering N.V.
***10.43 Supply Agreement for the AMETHYST 5 between Workships
Contractors B.V. and Petrodrill Engineering N.V.
***10.44 Supply Agreement for the AMETHYST 4 between Workships
Contractors B.V. and Petrodrill Engineering N.V.
10.45 Management Agreement for the AMETHYST 7 dated
November 5, 1998 between Petrodrill Seven Limited and
Formaritima Ltd.
**10.46 Management Agreement for the AMETHYST 6 dated
November 5, 1998 between Petrodrill Six Limited and
Formaritima Ltd.
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<PAGE>
**10.47 Management Agreement for the AMETHYST 5 dated January
25, 1999 between Petrodrill Five Limited and
Formaritima Ltd.
**10.48 Management Agreement for the AMETHYST 4 dated January
25, 1999 between Petrodrill Four Limited and
Formaritima Ltd.
10.49 Technical Services Agreement for the AMETHYST 7 dated
November 5, 1998 between Formaritima Ltd. and
Pride-Foramer S.A.
***10.50 Technical Services Agreement for the AMETHYST 6 dated
November 5, 1998 between Formaritima Ltd. and
Pride-Foramer S.A.
***10.51 Technical Services Agreement for the AMETHYST 5 dated
January 25, 1999 between Formaritima Ltd. and
Pride-Foramer S.A.
***10.52 Technical Services Agreement for the AMETHYST 4 dated
January 25, 1999 between Formaritima Ltd. and
Pride-Foramer S.A.
10.53 Local Services Agreement for the AMETHYST 7 dated
November 5, 1998 between Formaritima Ltd. and
Maritima Petroleo e Engenharia Ltda.
***10.54 Local Services Agreement for the AMETHYST 6 dated
November 5, 1998 between Formaritima Ltd. and
Maritima Petroleo e Engenharia Ltda.
***10.55 Local Services Agreement for the AMETHYST 5 dated
January 25, 1999 between Formaritima Ltd. and
Maritima Petroleo e Engenharia Ltda.
***10.56 Local Services Agreement for the AMETHYST 4 dated
January 25, 1999 between Formaritima Ltd. and
Maritima Petroleo e Engenharia Ltda.
10.57 Marine and Nautical Services Agreement for the
AMETHYST 7 dated November 5, 1998 between Formaritima
Ltd. and Workships Contractors B.V.
***10.58 Marine and Nautical Services Agreement for the
AMETHYST 6 dated November 5, 1998 between Formaritima
Ltd. and Workships Contractors B.V.
**10.59 Marine and Nautical Services Agreement for the
AMETHYST 5 dated November 5, 1998 between Petrodrill
Five Limited and Workships Contractors B.V.
**10.60 Marine and Nautical Services Agreement for the
AMETHYST 4 dated November 5, 1998 between Petrodrill
Four Limited and Workships Contractors B.V.
10.61 Licensing Agreement for the AMETHYST 7 dated November
5, 1998 between BiGem Holdings N.V. and Petrodrill
Seven Limited.
**10.62 Licensing Agreement for the AMETHYST 6 dated November
5, 1998 between BiGem Holdings N.V. and Petrodrill
Six Limited.
**10.63 Licensing Agreement for the AMETHYST 5 dated January
25, 1999 between BiGem Holdings N.V. and Petrodrill
Five Limited.
**10.64 Licensing Agreement for the AMETHYST 4 dated January
25, 1999 between BiGem Holdings N.V. and Petrodrill
Four Limited.
10.65 Amethyst Financial Company Ltd.'s Shareholders'
Agreement dated November 5, 1998 among Drillpetro
Inc., Techdrill Inc. and Westville Management
Corporation.
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<PAGE>
10.66 Agency and Brokerage Agreement for the AMETHYST 7
dated April 30, 1998 among Petrodrill Seven Limited,
U.K. Guaranty & Bonding Corp. Limited and Rapisardi
Investment Limited.
**10.67 Agency and Brokerage Agreement for the AMETHYST 6
dated April 30, 1998 among Petrodrill Six Limited,
U.K. Guaranty & Bonding Corp. Limited and Rapisardi
Investment Limited.
**10.68 Agency and Brokerage Agreement for the AMETHYST 5
dated April 30, 1998 among Petrodrill Five Limited,
U.K. Guaranty & Bonding Corp. Limited and Rapisardi
Investment Limited.
**10.69 Agency and Brokerage Agreement for the AMETHYST 4
dated April 30, 1998 among Petrodrill Four Limited,
U.K. Guaranty & Bonding Corp. Limited and Rapisardi
Investment Limited.
10.70 Minutes of Agreement Relating to the Petrobras
Contracts dated July 2, 1998 among Drillpetro Inc.,
Techdrill Inc. and Westville Management Corporation.
15 Awareness Letter of PricewaterhouseCoopers LLP.
21 Subsidiaries of Amethyst Financial Company Ltd.
23.1 Consent of PricewaterhouseCoopers N.V.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Baker & Botts, L.L.P. (contained in
Exhibit 8.1).
23.4 Consent of Pedro Calmon Filho & Associados.
*23.5 Consent of Pinheiro Neto - Advogados (Rio de
Janeiro).
23.6 Consent of Dancia Penn & Co. (contained in Exhibit
8.2).
23.7 Consent of Higgs & Johnson.
23.8 Consent of Bennett & Associates, L.L.C.
24.1 Power of Attorney for Amethyst Financial Company Ltd.
(included on the signature page of this Registration
Statement).
24.2 Power of Attorney for Pride International, Inc.
(included on its signature page of this Registration
Statement)
*25 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939, as amended, of
Wilmington Trust Company under the Indenture, on Form
T-1.
99.1 Form of Letter to Clients for Tender of Notes.
99.2 Form of Letter to The Depository Trust Company
Participants for Tender of Notes.
99.3 Form of Notice of Guaranteed Delivery.
99.4 Form of Transmittal Letter for Tender of Notes.
* To be filed by amendment.
** Substantially identical to the corresponding document for the AMETHYST 7
except as to the parties and the rig.
*** Substantially identical to the corresponding document for the AMETHYST 7
except as to the rig.
II-12
<PAGE>
(b) FINANCIAL STATEMENT SCHEDULES
Not applicable.
(c) REPORTS OR APPRAISALS
Not applicable.
ITEM 22. UNDERTAKINGS
(a) Each of the undersigned registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) of the
Securities Act if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) To file a post-effective amendment to the registration statement
to include any financial statements required by Rule 3-19 of Regulation
S-X at the start of any delayed offering or throughout a continuous
offering. Financial statements and information otherwise required by
Section 10(a)(3) of the Securities Act need not be furnished, provided
that the registrant includes in the prospectus, by means of a
post-effective amendment, financial statements required pursuant to this
paragraph (a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not
be filed to include financial statements and information required by
Section 10(a)(3) of the Securities Act or Rule 3-19 of Regulation S-X if
such financial statements and information are contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Form F-3.
(b) Each of the undersigned registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrants' annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-13
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) Each of the undersigned registrants hereby undertakes: (i) to respond
to requests for information that is incorporated by reference into the
Prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means; and (ii) to arrange or
provide for a facility in the U.S. for the purpose of responding to such
requests. The undertaking in subparagraph (i) above includes information
contained in documents filed subsequent to the effective date of the
Registration Statement through the date of responding to the request.
(e) Each of the undersigned registrants hereby undertakes to supply by
means of a post-effective amendment all information concerning the Exchange
Offer, that was not the subject of and included in the Registration Statement
when it became effective.
II-14
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below appoints Paul A. Bragg, Earl W.
McNiel and Robert W. Randall, and each of them severally, each of whom may act
without joinder of the others, as his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any or all amendments
(including pre- and post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully and for all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, and
each of them, or the substitute or substitutes of any or all of them, may
lawfully do or cause to be done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of Rio
de Janeiro, State of Rio de Janeiro, Federative Republic of Brazil, on December
8, 1999.
AMETHYST FINANCIAL COMPANY LTD.
By /s/ GERMAN EFROMOVICH
German Efromovich
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on December 8, 1999.
SIGNATURE TITLE
/s/ GERMAN EFROMOVICH President and Director
German Efromovich (Principal Executive Officer)
Treasurer
/s/ EARL W. MCNIEL (Principal Financial and
Earl W. McNiel Accounting Officer)
/s JOHN C.G. O'LEARY
John C.G. O'Leary Vice President and Director
/s/ HAMYLTON PADILHA
Hamylton Padilha Vice President and Director
Secretary
/s/ ROBERT W. RANDALL (Authorized Representative in
Robert W. Randall the United States)
/s/ RICARDO SZPIGEL
Ricardo Szpigel Director
II-15
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below appoints Paul A. Bragg, Earl W.
McNiel and Robert W. Randall, and each of them severally, each of whom may act
without joinder of the others, as his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any or all amendments
(including pre- and post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done,
as fully and for all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, and
each of them, or the substitute or substitutes of any or all of them, may
lawfully do or cause to be done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of
Houston, State of Texas, on December __, 1999.
PRIDE INTERNATIONAL, INC.
By /s/ PAUL A. BRAGG
Paul A. Bragg
Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on December __, 1999.
SIGNATURE TITLE
Chief Executive Officer, President
/s/ PAUL A. BRAGG and Director
Paul A. Bragg (Principal Executive Officer)
Vice President, Chief Financial Officer
/s/ EARL W. MCNIEL and Treasurer
Earl W. McNiel (Principal Financial Officer)
/s/ ROBERT W. RANDALL Vice President
Robert W. Randall and General Counsel
/s/ TERRY VANDAL Controller
Terry Vandal (Principal Accounting Officer)
/s/ JAMES B. CLEMENT
James B. Clement Chairman of the Board
/s/ RALPH D. MCBRIDE
Ralph D. McBride Vice Chairman of the Board
________________________
Christian J. Boon-Falleur Director
II-16
<PAGE>
SIGNATURE TITLE
/s/ REMI DORVAL
Remi Dorval Director
/s/ JORGE E. ESTRADA MORA
Jorge E. Estrada Mora Director
/s/ WILLIAM E. MACAULAY
William E. Macaulay Director
________________________
James T. Sneed Director
II-17
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
- - ----------- -------
3.1 Memorandum of Association of Amethyst Financial
Company Ltd.
3.2 Articles of Association of Amethyst Financial Company
Ltd.
4.1 A/B Exchange Registration Rights Agreement dated
October 28, 1999 among Amethyst Financial Company
Ltd., Pride International, Inc., Maritima Petroleo e
Engenharia Ltda. and Donaldson, Lufkin & Jenrette
Securities Corporation.
4.2 Purchase Agreement dated October 28, 1999 between
Amethyst Financial Company Ltd. and Donaldson, Lufkin
& Jenrette Securities Corporation relating to $53
million aggregate principal amount of 11 3/4% Senior
Secured Notes due 2001.
4.3 Indenture dated November 1, 1999 among Amethyst
Financial Company Ltd., Pride International, Inc.,
Maritima Petroleo e Engenharia Ltda. and Wilmington
Trust Company.
*4.3(a) First Supplemental Indenture dated , 2000 among
Amethyst Financial Company Ltd., Pride International,
Inc., Maritima Petroleo e Engenharia Ltda. and
Wilmington Trust Company.
*4.4 Form of New Note (attached to the First Supplemental
Indenture dated , 2000 among Amethyst Financial
Company Ltd., Pride International, Inc., Maritima
Petroleo e Engenharia Ltda. and Wilmington Trust
Company filed as Exhibit 4.3(a) to this Registration
Statement).
4.5 Senior Secured Note Security and Pledge Agreement
dated November 1, 1999 between Amethyst Financial
Company Ltd. and Wilmington Trust Company.
II-18
<PAGE>
4.6 Reserve Account Agreement dated November 1, 1999
between Amethyst Financial Company Ltd. and
Wilmington Trust Company.
4.7 Deed of Consent dated November 1, 1999 among Amethyst
Financial Company Ltd., Petrodrill Six Limited,
Petrodrill Seven Limited, Pride International, Inc.,
Maritima Petroleo e Engenharia Ltda., Petro Dia Three
S.A., Petro Dia Four S.A., Mitsubishi Corporation
(UK) PLC and Wilmington Trust Company.
4.8 Loan Agreement dated December 1998 among Petrodrill
Seven Limited, Petro Dia Three S.A., Petro Dia Four
S.A. and Mitsubishi Corporation (UK) PLC.
4.9 Loan Agreement dated December 19, 1998 among
Petrodrill Six Limited, Petro Dia Three S.A., Petro
Dia Four S.A. and Mitsubishi Corporation (UK) PLC.
4.10 Deed of Guarantee and Undertaking dated December 19,
1998 among Petrodrill Seven Limited, Pride
International, Inc., Maritima Petroleo e Engenharia
Ltda., Petro Dia Three S.A., Petro Dia Four S.A. and
Mitsubishi Corporation (UK) PLC.
4.11 Deed of Guarantee and Undertaking dated December 19,
1998 among Petrodrill Six Limited, Pride
International, Inc., Maritima Petroleo e Engenharia
Ltda., Petro Dia Three S.A., Petro Dia Four S.A. and
Mitsubishi Corporation (UK) PLC.
4.12 Floor Guarantee dated December 19, 1998 among Pride
International, Inc., Maritima Petroleo e Engenharia
Ltda., Petro Dia Three S.A. and Petro Dia Four S.A.
4.13 Inter-Company Cross Guarantee dated December 19, 1998
among Amethyst Financial Company Ltd., Petrodrill Six
Limited, Petrodrill Seven Limited and Mitsubishi
Corporation (UK) PLC.
4.14 Transfer Certificate dated November 1, 1999 among
Amethyst Financial Company Ltd., Petro Dia Three
S.A., Petro Dia Four S.A. and Mitsubishi Corporation
(UK) PLC, relating to the Limited Loan Agreement
dated December 19, 1998 among Petrodrill Seven
Limited, Petro Dia Three S.A., Petro Dia Four S.A.
and Mitsubishi Corporation (UK) PLC.
4.15 Transfer Certificate dated November 1, 1999 among
Amethyst Financial Company Ltd., Petro Dia Three
S.A., Petro Dia Four S.A. and Mitsubishi Corporation
(UK) PLC, relating to the Loan Agreement dated
December 19, 1998 among Petrodrill Six Limited, Petro
Dia Three S.A., Petro Dia Four S.A. and Mitsubishi
Corporation (UK) PLC.
4.16 Commitment to Guarantee Obligation by the United
States of America accepted by Petrodrill Five Limited
dated April 9, 1999.
4.17 Commitment to Guarantee Obligation by the United
States of America accepted by Petrodrill Four Limited
dated April 9, 1999.
4.18 Credit Agreement dated April 9, 1999 among Petrodrill
Five Limited, Govco Inc., Citibank, N.A., Citibank
International PLC and Citicorp North America, Inc.
4.19 Credit Agreement dated April 9, 1999 among Petrodrill
Four Limited, Govco Inc., Citibank, N.A., Citibank
International PLC and Citicorp North America, Inc.
4.20 Security Agreement dated April 9, 1999 between
Petrodrill Five Limited and the United States of
America.
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<PAGE>
4.21 Security Agreement dated April 9, 1999 between
Petrodrill Four Limited and the United States of
America.
4.22 Trust Indenture dated April 9, 1999 between
Petrodrill Five Limited and FMB Trust Company,
National Association.
4.23 Trust Indenture dated April 9, 1999 between
Petrodrill Four Limited and FMB Trust Company,
National Association.
4.24 Guaranty Agreement dated April 9, 1999 in favor of
the United States by Petrodrill Five Limited.
4.25 Guaranty Agreement dated April 9, 1999 in favor of
the United States by Petrodrill Four Limited.
4.26 Guaranty Agreement dated April 9, 1999 in favor of
the United States by Pride International, Inc.
4.27 Payment Undertaking in Favor of the United States
dated April 9, 1999 by Maritima Petroleo e Engenharia
Ltda.
4.28 Interguarantor Agreement dated April 9, 1999 between
Pride International, Inc. and Maritima Petroleo e
Engenharia Ltda.
4.29 Title XI Reserve Fund and Financial Agreement dated
April 9, 1999 between Petrodrill Five Limited and the
United States of America.
4.30 Title XI Reserve Fund and Financial Agreement dated
April 9, 1999 between Petrodrill Four Limited and the
United States of America.
4.31 Amended and Restated Credit Agreement dated as of
December 22, 1997 among Pride International, Inc.,
each of the banks that are or may be a party thereto,
Bank One, Louisiana, N.A. (formerly named First
National Bank of Commerce), as arranger and
syndication agent, and Wells Fargo Bank (Texas),
National Association, as administrative agent and
documentation agent (incorporated by reference to
Exhibit 4.8 to Pride International, Inc.'s Annual
Report on Form 10-K for the year ended December 31,
1997, File No. 1-13289).
4.32 First Amendment to Credit Agreement dated as of April
24, 1998 among Pride International, Inc., certain of
its subsidiaries, Bank One, Louisiana, N.A. (formerly
named First National Bank of Commerce), as arranger
and syndication agent, Wells Fargo Bank (Texas),
National Association, as administrative and
documentation agent, and the lenders named therein
(incorporated by reference to Exhibit 4.2 to Pride
International, Inc.'s Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1998,
File No. 1-13289).
4.33 Second Amendment to Credit Agreement dated as of
September 17, 1998 among Pride International, Inc.,
certain of its subsidiaries, Bank One, Louisiana,
N.A. (formerly named First National Bank of
Commerce), as arranger and syndication agent, Wells
Fargo Bank (Texas), National Association, as
administrative and documentation agent, and the
lenders named therein (incorporated by reference to
Exhibit 4.3 to Pride International, Inc.'s Quarterly
Report on Form 10-Q for the quarterly period ended
September 30, 1998, File No. 1-13289).
4.34 Third Amendment to Credit Agreement dated as of
December 21, 1998 among Pride International, Inc.,
certain of its subsidiaries, Bank One, Louisiana,
N.A. (formerly named First National Bank of
Commerce), as arranger and syndication agent, Wells
Fargo Bank (Texas), National Association, as
administrative and documentation agent, and the
lenders named therein (incorporated by reference
to Exhibit 4.6 to Pride International, Inc.'s
Annual Report on Form 10-K for the year ended
December 31, 1998, File No. 1-13289).
II-20
<PAGE>
4.35 Indenture, dated as of May 1, 1997, by and between
Pride International, Inc. and The Chase Manhattan
Bank, as trustee (incorporated by reference to
Exhibit 4.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, File Nos.
0-16961 and 1-13289).
4.36 First Supplemental Indenture, dated as of May 1,
1997, by and between Pride International, Inc. and
The Chase Manhattan Bank, as trustee, relating to
$325,000,000 principal amount of 9 3/8% Senior Notes
due 2007 (incorporated by reference to Exhibit 4.2 to
Pride International Inc.'s Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, File Nos.
0-16961 and 1-13289).
4.37 Indenture, dated as of April 1, 1998, between Pride
International, Inc. and Marine Midland Bank, as
trustee, relating to subordinated debt securities
(incorporated by reference to Exhibit 4.1 to Pride
International, Inc.'s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1998, File
No. 1-13289).
4.38 First Supplemental Indenture, dated as of April 24,
1998, between Pride International, Inc. and Marine
Midland Bank, as trustee, relating to Zero Coupon
Convertible Subordinated Debentures Due 2018
(incorporated by reference to Exhibit 4.2 to Pride
International, Inc.'s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1998, File
No. 1-13289).
Pride International, Inc. is a party to several debt instruments under
which the total amount of securities authorized does not exceed 10% of the
total assets of Pride International, Inc. and its subsidiaries on a
consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of
Regulation S-K, Pride International, Inc. agrees to furnish a copy of such
instruments to the SEC upon request.
*5 Opinion of Baker & Botts, L.L.P. as to the legality
of the new notes and the Pride guarantee.
8.1 Opinion of Baker & Botts, L.L.P. regarding U.S. tax
matters.
8.2 Opinion of Dancia Penn & Co. regarding British Virgin
Islands tax matters.
10.1 Chartering Contract for the AMETHYST 7 (Contract No.
101.2.155.97-9) between Maritima Navegacao e
Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
10.1(a) Rider No. 1 to the Chartering Contract for the
AMETHYST 7 (Contract No. 101.2.155.97-9) dated July
10, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Seven Limited.
10.2 Service Rendering Contract for the AMETHYST 7
(Contract No. 101.0.156.97-1) between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
10.2(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 7 (Contract No. 101.2.156.97-1) dated August
21, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Seven Limited.
10.3 Letter Agreement dated January 15, 1998 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 7 (Contract No.
101.2.155.97-9) and the Service Rendering Contract
for the AMETHYST 7 (Contract No. 101.2.156.97-1).
II-21
<PAGE>
10.4 Letter Agreement dated January 15, 1998 between
Maritima Petroleo e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 7 (Contract No.
101.2.155.97-9) and the Service Rendering Contract
for the AMETHYST 7 (Contract No. 101.2.156.97-1).
10.5 Chartering Contract for the AMETHYST 6 (Contract No.
101.2.159.97-1) dated January 12, 1998 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras.
10.5(a) Rider No. 1 to the Chartering Contract for the
AMETHYST 6 (Contract No. 101.2.159.97-1) dated July
10, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Six Limited.
10.6 Service Rendering Contract for the AMETHYST 6
(Contract No. 101.2.160.97-0) dated January 12, 1998
between Maritima Navegacao e Engenharia Ltda. and
Petroleo Brasileiro S.A.--Petrobras.
10.6(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 6 (Contract No. 101.2.160.97-0) dated August
21, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Six Limited.
10.7 Letter Agreement dated January 15, 1998 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 6 (Contract No.
101.2.159.97-1) and the Service Rendering Contract
for the AMETHYST 6 (Contract No. 101.2.160.97-0).
10.8 Letter Agreement dated January 15, 1998 between
Maritima Petroleo e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 6 (Contract No.
101.2.159.97-1) and the Service Rendering Contract
for the AMETHYST 6 (Contract No. 101.2.160.97-0).
10.9 Chartering Contract for the AMETHYST 5 (Contract No.
101.2.100.97-8) dated December 5, 1997 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras.
10.9(a) Rider No. 1 to the Chartering Contract for the
AMETHYST 5 (Contract No. 101.2.100.97-8) dated July
10, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Five Limited.
10.10 Service Rendering Contract for the AMETHYST 5
(Contract No. 101.2.101.97-0) between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
10.10(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 5 (Contract No. 101.2.101.97-0) dated August
21, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Five Limited.
10.11 Letter Agreement dated December 5, 1997 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 5 (Contract No.
101.2.100.97-8) and the Service Rendering Contract
for the AMETHYST 5 (Contract No. 101.2.101.97-0).
II-22
<PAGE>
10.12 Letter Agreement dated January 15, 1998 between
Maritima Petroleo e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 5 (Contract No.
101.2.100.97-8) and the Service Rendering Contract
for the AMETHYST 5 (Contract No. 101.2.101.97-0).
10.13 Chartering Contract for the AMETHYST 4 (Invitation to
Bid No. 101.2.063.97-8) between Maritima Navegacao e
Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
10.13(a) Rider No. 1 to the Chartering Contract for the
AMETHYST 4 (Invitation to Bid No. 101.2.063.97-8)
dated July 10, 1998 among Maritima Petroleo e
Engenharia Ltda., Petroleo Brasileiro S.A.--Petrobras
and Petrodrill Four Limited.
10.14 Service Rendering Contract for the AMETHYST 4
(Invitation to Bid No. 101.2.064.97-0) between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras.
10.14(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 4 (Invitation to Bid No. 101.2.064.97-0)
dated August 21, 1998 among Maritima Petroleo e
Engenharia Ltda., Petroleo Brasileiro S.A.--Petrobras
and Petrodrill Four Limited.
10.15 Letter Agreement dated December 5, 1997 between
Maritima Navegacao e Engenharia Ltda. and Petroleo
Brasileiro S.A.--Petrobras relating to the Chartering
Contract for the AMETHYST 4 (Contract No.
101.2.063.97-2) and the Service Rendering Contract
for the AMETHYST 4 (Invitation to Bid No.
101.2.064.97-0).
10.16 Letter dated May 28, 1998 from Petroleo Brasileiro
S.A.--Petrobras to Maritima Navegacao e Engenharia
Ltda. regarding the Chartering Contracts and Service
Rendering Contracts.
10.17 Shipbuilding Contract dated April 9, 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3015
(AMETHYST 7).
10.17(a) Side Letter No. 1 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3015
(AMETHYST 7).
10.17(b) Side Letter No. 2 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3015
(AMETHYST 7).
10.17(c) Novation Agreement dated December 4, 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd.,
Petrodrill Offshore Inc. and Petrodrill Seven Limited
for Hull No. 3015 (AMETHYST 7).
10.17(d) Main Contract Amendment dated December 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Seven Limited for Hull No. 3015 (AMETHYST
7).
10.17(e) Main Contract Amendment II dated January 28, 1999
among Daewoo Corporation, Daewoo Heavy Industries
Ltd. and Petrodrill Seven Limited for Hull No. 3015
(AMETHYST 7).
II-23
<PAGE>
10.18 Refund Guarantee issued by The Export-Import Bank of
Korea to Petrodrill Construction Inc. dated April 16,
1998 for Hull No. 3015 (AMETHYST 7).
10.18(a) Novation Agreement in respect of the Refund Guarantee
dated December 4, 1998 among The Export-Import Bank
of Korea, Petrodrill Offshore Inc. and Petrodrill
Seven Limited for Hull No. 3015 (AMETHYST 7).
10.18(b) Letter of Amendment of Refund Guarantee issued by The
Export-Import Bank of Korea to Petrodrill Seven
Limited dated April 6, 1999 for Hull No. 3015
(AMETHYST 7).
10.19 Shipbuilding Contract dated April 9, 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3016
(AMETHYST 6).
10.19(a) Side Letter No. 1 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3016
(AMETHYST 6).
10.19(b) Side Letter No. 2 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Construction Inc. for Hull No. 3016
(AMETHYST 6).
10.19(c) Novation Agreement dated December 4, 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd.,
Petrodrill Offshore Inc. and Petrodrill Six Limited
for Hull No. 3016 (AMETHYST 6).
10.19(d) Main Contract Amendment dated December 1998 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Six Limited Inc. for Hull No. 3016
(AMETHYST 6).
10.19(e) Main Contract Amendment II dated January 28, 1999
among Daewoo Corporation, Daewoo Heavy Industries
Ltd. and Petrodrill Six Limited for Hull No. 3016
(AMETHYST 6).
10.20 Refund Guarantee issued by The Export-Import Bank of
Korea to Petrodrill Construction Inc. dated April 16,
1998 for Hull No. 3016 (AMETHYST 6).
10.20(a) Novation Agreement in respect of the Refund Guarantee
dated December 4, 1998 among The Export-Import Bank
of Korea, Petrodrill Offshore Inc. and Petrodrill Six
Limited for Hull No. 3016 (AMETHYST 6).
10.20(b) Letter of Amendment of Refund Guarantee issued by The
Export-Import Bank of Korea to Petrodrill Six Limited
dated April 6, 1999 for Hull No. 3016 (AMETHYST 6).
10.21 Shipbuilding Contract dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
10.21(a) Side Letter No. 1 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
10.21(b) Side Letter No. 2 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
10.21(c) Side Letter No. 3 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
10.21(d) Side Letter No. 4 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
II-24
<PAGE>
10.21(e) Side Letter No. 5 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1829 (AMETHYST 5).
10.21(f) Novation Agreement dated December 9, 1998 between
TDI-Halter, L.P., Petrodrill Offshore Inc. and
Petrodrill Five Limited for Hull No. 1829 (AMETHYST
5).
10.21(g) Amendment No. 1 to Semi-Submersible Drilling Vessel
Construction Contract dated April 9, 1999 between
TDI-Halter, L.P. and Petrodrill Five Limited for Hull
No. 1829 (AMETHYST 5).
10.22 Performance Bond dated April 13, 1998 between
TDI-Halter, L.P. and Fireman's Fund Insurance Company
in connection with the construction of Hull No. 1829
(AMETHYST 5).
10.23 Labor and Material Payment Bond dated April 13, 1998
between TDI-Halter, L.P. and Fireman's Fund Insurance
Company in connection with the construction of Hull
No. 1829 (AMETHYST 5).
10.24 Parent Guarantee dated April 15, 1998 by Halter
Marine Group, Inc. in connection with the
construction of Hull No. 1829 (AMETHYST 5).
10.25 Shipbuilding Contract dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(a) Side Letter No. 1 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(b) Side Letter No. 2 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(c) Side Letter No. 3 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(d) Side Letter No. 4 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(e) Side Letter No. 5 dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for
Hull No. 1828 (AMETHYST 4).
10.25(f) Novation Agreement dated December 9, 1998 between
TDI-Halter, L.P., Petrodrill Offshore Inc. and
Petrodrill Four Limited for Hull No. 1828 (AMETHYST
4).
10.25(g) Amendment No. 1 to Semi-Submersible Drilling Vessel
Construction Contract dated April 9, 1999 between
TDI-Halter, L.P. and Petrodrill Four Limited for Hull
No. 1828 (AMETHYST 4).
10.26 Performance Bond dated April 13, 1998 between
TDI-Halter, L.P. and Fireman's Fund Insurance Company
in connection with the construction of Hull No. 1828
(AMETHYST 4).
10.27 Labor and Material Payment Bond dated April 13, 1998
between TDI-Halter, L.P. and Fireman's Fund Insurance
Company in connection with the construction of Hull
No. 1828 (AMETHYST 4).
10.28 Parent Guarantee dated April 15, 1998 by Halter
Marine Group, Inc. in connection with the
construction of Hull No. 1828 (AMETHYST 4).
II-25
<PAGE>
10.29 Construction Management Agreement dated November 5,
1998 between Petrodrill Seven Limited and Petrodrill
Engineering N.V. for the AMETHYST 7.
**10.30 Construction Management Agreement dated November 5,
1998 between Petrodrill Six Limited and Petrodrill
Engineering N.V. for the AMETHYST 6.
**10.31 Construction Management Agreement dated January 25,
1999 between Petrodrill Five Limited and Petrodrill
Engineering N.V. for the AMETHYST 5.
**10.32 Construction Management Agreement dated January 25,
1999 between Petrodrill Four Limited and Petrodrill
Engineering N.V. for the AMETHYST 4.
10.33 Supply Agreement for the AMETHYST 7 dated November 5,
1998 between Pride-Foramer S.A. and Petrodrill
Engineering N.V.
***10.34 Supply Agreement for the AMETHYST 6 dated November 5,
1998 between Pride-Foramer S.A. and Petrodrill
Engineering N.V.
***10.35 Supply Agreement for the AMETHYST 5 dated January 25,
1999 between Pride-Foramer S.A. and Petrodrill
Engineering N.V.
***10.36 Supply Agreement for the AMETHYST 4 dated January 25,
1999 between Pride-Foramer S.A. and Petrodrill
Engineering N.V.
10.37 Supply Agreement for the AMETHYST 7 dated November 5,
1998 between Maritima Petroleo e Engenharia Ltda. and
Petrodrill Engineering N.V.
***10.38 Supply Agreement for the AMETHYST 6 dated November 5,
1998 between Maritima Petroleo e Engenharia Ltda. and
Petrodrill Engineering N.V.
***10.39 Supply Agreement for the AMETHYST 5 dated January 25,
1999 between Maritima Petroleo e Engenharia Ltda. and
Petrodrill Engineering N.V.
***10.40 Supply Agreement for the AMETHYST 4 dated January 25,
1999 between Maritima Petroleo e Engenharia Ltda. and
Petrodrill Engineering N.V.
10.41 Supply Agreement for the AMETHYST 7 dated November 5,
1998 between Workships Contractors B.V. and
Petrodrill Engineering N.V.
***10.42 Supply Agreement for the AMETHYST 6 dated November 5,
1998 between Workships Contractors B.V. and
Petrodrill Engineering N.V.
***10.43 Supply Agreement for the AMETHYST 5 between Workships
Contractors B.V. and Petrodrill Engineering N.V.
***10.44 Supply Agreement for the AMETHYST 4 between Workships
Contractors B.V. and Petrodrill Engineering N.V.
10.45 Management Agreement for the AMETHYST 7 dated
November 5, 1998 between Petrodrill Seven Limited and
Formaritima Ltd.
**10.46 Management Agreement for the AMETHYST 6 dated
November 5, 1998 between Petrodrill Six Limited and
Formaritima Ltd.
II-26
<PAGE>
**10.47 Management Agreement for the AMETHYST 5 dated January
25, 1999 between Petrodrill Five Limited and
Formaritima Ltd.
**10.48 Management Agreement for the AMETHYST 4 dated January
25, 1999 between Petrodrill Four Limited and
Formaritima Ltd.
10.49 Technical Services Agreement for the AMETHYST 7 dated
November 5, 1998 between Formaritima Ltd. and
Pride-Foramer S.A.
***10.50 Technical Services Agreement for the AMETHYST 6 dated
November 5, 1998 between Formaritima Ltd. and
Pride-Foramer S.A.
***10.51 Technical Services Agreement for the AMETHYST 5 dated
January 25, 1999 between Formaritima Ltd. and
Pride-Foramer S.A.
***10.52 Technical Services Agreement for the AMETHYST 4 dated
January 25, 1999 between Formaritima Ltd. and
Pride-Foramer S.A.
10.53 Local Services Agreement for the AMETHYST 7 dated
November 5, 1998 between Formaritima Ltd. and
Maritima Petroleo e Engenharia Ltda.
***10.54 Local Services Agreement for the AMETHYST 6 dated
November 5, 1998 between Formaritima Ltd. and
Maritima Petroleo e Engenharia Ltda.
***10.55 Local Services Agreement for the AMETHYST 5 dated
January 25, 1999 between Formaritima Ltd. and
Maritima Petroleo e Engenharia Ltda.
***10.56 Local Services Agreement for the AMETHYST 4 dated
January 25, 1999 between Formaritima Ltd. and
Maritima Petroleo e Engenharia Ltda.
10.57 Marine and Nautical Services Agreement for the
AMETHYST 7 dated November 5, 1998 between Formaritima
Ltd. and Workships Contractors B.V.
***10.58 Marine and Nautical Services Agreement for the
AMETHYST 6 dated November 5, 1998 between Formaritima
Ltd. and Workships Contractors B.V.
**10.59 Marine and Nautical Services Agreement for the
AMETHYST 5 dated November 5, 1998 between Petrodrill
Five Limited and Workships Contractors B.V.
**10.60 Marine and Nautical Services Agreement for the
AMETHYST 4 dated November 5, 1998 between Petrodrill
Four Limited and Workships Contractors B.V.
10.61 Licensing Agreement for the AMETHYST 7 dated November
5, 1998 between BiGem Holdings N.V. and Petrodrill
Seven Limited.
**10.62 Licensing Agreement for the AMETHYST 6 dated November
5, 1998 between BiGem Holdings N.V. and Petrodrill
Six Limited.
**10.63 Licensing Agreement for the AMETHYST 5 dated January
25, 1999 between BiGem Holdings N.V. and Petrodrill
Five Limited.
**10.64 Licensing Agreement for the AMETHYST 4 dated January
25, 1999 between BiGem Holdings N.V. and Petrodrill
Four Limited.
10.65 Amethyst Financial Company Ltd.'s Shareholders'
Agreement dated November 5, 1998 among Drillpetro
Inc., Techdrill Inc. and Westville Management
Corporation.
II-27
<PAGE>
10.66 Agency and Brokerage Agreement for the AMETHYST 7
dated April 30, 1998 among Petrodrill Seven Limited,
U.K. Guaranty & Bonding Corp. Limited and Rapisardi
Investment Limited.
**10.67 Agency and Brokerage Agreement for the AMETHYST 6
dated April 30, 1998 among Petrodrill Six Limited,
U.K. Guaranty & Bonding Corp. Limited and Rapisardi
Investment Limited.
**10.68 Agency and Brokerage Agreement for the AMETHYST 5
dated April 30, 1998 among Petrodrill Five Limited,
U.K. Guaranty & Bonding Corp. Limited and Rapisardi
Investment Limited.
**10.69 Agency and Brokerage Agreement for the AMETHYST 4
dated April 30, 1998 among Petrodrill Four Limited,
U.K. Guaranty & Bonding Corp. Limited and Rapisardi
Investment Limited.
10.70 Minutes of Agreement Relating to the Petrobras
Contracts dated July 2, 1998 among Drillpetro Inc.,
Techdrill Inc. and Westville Management Corporation.
15 Awareness Letter of PricewaterhouseCoopers LLP.
21 Subsidiaries of Amethyst Financial Company Ltd.
23.1 Consent of PricewaterhouseCoopers N.V.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Baker & Botts, L.L.P. (contained in
Exhibit 8.1).
23.4 Consent of Pedro Calmon Filho & Associados.
*23.5 Consent of Pinheiro Neto - Advogados (Rio de
Janeiro).
23.6 Consent of Dancia Penn & Co. (contained in Exhibit
8.2).
23.7 Consent of Higgs & Johnson.
23.8 Consent of Bennett & Associates, L.L.C.
24.1 Power of Attorney for Amethyst Financial Company Ltd.
(included on the signature page of this Registration
Statement).
24.2 Power of Attorney for Pride International, Inc.
(included on its signature page of this Registration
Statement)
*25 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939, as amended, of
Wilmington Trust Company under the Indenture, on Form
T-1.
99.1 Form of Letter to Clients for Tender of Notes.
99.2 Form of Letter to The Depository Trust Company
Participants for Tender of Notes.
99.3 Form of Notice of Guaranteed Delivery.
99.4 Form of Transmittal Letter for Tender of Notes.
* To be filed by amendment.
** Substantially identical to the corresponding document for the AMETHYST 7
except as to the parties and the rig.
*** Substantially identical to the corresponding document for the AMETHYST 7
except as to the rig.
II-28
EXHIBIT 3.1
1
TERRITORY OF THE BRITISH VIRGIN ISLANDS
THE INTERNATIONAL BUSINESS COMPANIES ORDINANCE
(NO. 8 OF 1984 AS AMENDED)
MEMORANDUM OF ASSOCIATION
OF
AMETHYST FINANCIAL COMPANY, LTD.
NAME
1. The name of the Company is Amethyst Financial Company Ltd.
REGISTERED OFFICE
2. The Registered Office of the Company will be at Arias Fabrega & Fabrega
Trust Co. BVI Limited, 325 Waterfront Drive, Omar Hodge Building 2nd
Floor, Wickhams Cay, Road Town, Tortola, British Virgin Islands.
REGISTERED AGENT
3. The Registered Agent of the Company will be Arias Fabrega & Fabrega Trust
Co. BVI Limited, 325 Waterfront Drive, Omar Hodge Building 2nd Floor
Wickhams Cay, Road Town, Tortola, British Virgin Islands.
GENERAL OBJECTS AND POWERS
4. (1) The object of the Company is to engage in any act or activity that
is not prohibited under any law for the time being in force in the
British Virgin Islands.
(2) The Company shall have all such powers as are permitted by law for
the time being in force in the British Virgin Islands, irrespective
of corporate benefit, to perform all acts and engage in all
activities necessary or conducive to the conduct, promotion or
attainment of the object of the Company.
(3) The Company may not
(a) carry on business with persons resident in the British Virgin
Islands;
(b) own an interest in real property situated in the British Virgin
Islands, other than a lease referred to in paragraph (e) of
subclause (4);
(c) carry on banking or trust business unless it is licensed to do
so under the Banks and Trust Companies Act, 1990;
(d) carry on business as an insurance or reinsurance company,
insurance broker or insurance agent, unless it is licensed under
an enactment authorising it to carry on that business;
(e) carry on the business of company management unless it is
licensed under the Company Management Act, 1990; or
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
2
(f) carry on the business of providing the registered office or the
registered agent for companies incorporated in the British
Virgin Islands.
(4) For purposes of paragraph (a) of subclause (3), the Company shall
not be treated as carrying on business with persons resident in the
British Virgin Islands by reason only that
(a) it makes or maintains deposits with a person carrying on banking
business within the British Virgin Islands;
(b) it makes or maintains professional contact with solicitors,
barristers, accountants, bookkeepers, trust companies,
administration companies, investment advisors or other similar
persons carrying on business within the British Virgin Islands;
(c) it prepares or maintains books and records within the British
Virgin Islands;
(d) it holds, within the British Virgin Islands, meetings of its
directors or members;
(e) it holds a lease of property for use as an office from which to
communicate with members or where books and records of the
Company are prepared or maintained;
(f) it holds shares, debt obligations or other securities in a
company incorporated under the International Business Companies
Ordinance or under the Companies Act; or
(g) shares, debt obligations or other securities in the Company are
owned by any person resident in the British Virgin Islands or by
any company incorporated under the International Business
Companies Ordinance or under the Companies Act.
CURRENCY
5. Shares in the Company shall be issued in the currency of the United States
of America.
AUTHORISED CAPITAL
6. The authorised capital of the Company is $1,000.00
CLASSES, NUMBER AND PAR VALUE OF SHARES
7. The authorised capital is made up of one class of shares divided into
1,000 shares of $1.00 par value with one vote for each share.
DESIGNATIONS, POWERS, PREFERENCES, ETC. OF SHARES
8. The designations, powers, preferences, rights, qualifications, limitations
and restrictions of each class and series of shares that the Company is
authorised to issue shall be fixed by resolution of directors, but the
directors shall not allocate different rights as to voting, dividends,
redemption or distribution on liquidation unless the Memorandum of
Association shall have been amended to create separate classes of shares
and all the
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
3
aforesaid rights as to voting, dividends, redemption and distribution
shall be identical in each separate class.
VARIATION OF CLASS RIGHTS
9. If at any time the authorised capital is divided into different classes or
series of shares, the rights attached to any class or series unless
otherwise provided by the terms of issue of the shares of the class or
series) may, whether or not the Company is being wound up, be varied with
the consent in writing of the holders of not less than three-fourths of
the issued shares of that class or series and of the holders of not less
than three-fourths of the issued shares of any other class or series of
shares which may be affected by such variation.
RIGHTS NOT VARIED BY THE ISSUE OF SHARES PARI PASSU
10. The rights conferred upon the holders of the shares of any class issued
with preferred or other rights shall not, unless otherwise expressly
provided by the terms of issue of the shares of that class, be deemed to be
varied by the creation or issue of further shares ranking pari passu
therewith.
REGISTERED SHARES AND BEARER SHARES
11. Shares may be issued as registered shares or to bearer as may be determined
by resolution of directors.
EXCHANGE OF REGISTERED SHARES AND BEARER SHARES
12. Registered shares may be exchanged for bearer shares and bearer shares may
be exchanged for registered shares.
TRANSFER OF REGISTERED SHARES
13. Registered shares in the Company may be transferred subject to the prior or
subsequent approval of the Company as evidenced by a resolution of
directors or by a resolution of members.
SERVICE OF NOTICE ON HOLDERS OF BEARER SHARES
14. Where shares are issued to bearer, the bearer, identified for this purpose
by the number of the share certificate, shall be requested to provide the
Company with the name and address of an agent for service of any notice,
information or written statement required to be given to members, and
service upon such agent shall constitute service upon the bearer of such
shares until such time as a new name and address for service is provided
to the Company. In the absence of such name and address being provided it
shall be sufficient for the purposes of service for the Company to publish
the notice, information or written statement in one or more newspapers
published or circulated in the British Virgin Islands and in such other
place, if any, as the Company shall from time to time by a resolution of
directors or resolution of members determine. The directors of the Company
must give sufficient notice of meetings to members holding shares issued
to bearer to allow a reasonable opportunity for them to secure or exercise
the right or privilege, other than the right or privilege to vote, that is
the subject of the notice. What amounts to sufficient notice is a matter
of fact to be determined after having regard to all the circumstances.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
4
AMENDMENT OF MEMORANDUM AND ARTICLES OF ASSOCIATION
15. The Company may amend its Memorandum of Association and Articles of
Association by a resolution of members or by a resolution of directors.
DEFINITIONS
16. The meanings of words in this Memorandum of Association are defined in the
Articles of Association annexed hereto.
We, ARIAS FABREGA & FABREGA TRUST CO. BVI LTD., of Wickhams Cay, Road Town,
Tortola, British Virgin Islands for the purpose of incorporating an
International Business Company under the laws of the British Virgin Islands
hereby subscribe our name to this Memorandum of Association the 27th day of
March, 1998 in the presence of:
Subscriber
/s/ Illegible
ARIAS FABREGA & FABREGA TRUST CO. BVI LTD.
Witness
Nadia Harrigan
/s/ NADIA HARRIGAN
Wickhams Cay
Road Town, Tortola
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
EXHIBIT 3.2
1
TERRITORY OF THE BRITISH VIRGIN ISLANDS
THE INTERNATIONAL BUSINESS COMPANIES ORDINANCE
(NO. 8 OF 1984 AS AMENDED)
ARTICLES OF ASSOCIATION
OF
AMETHYST FINANCIAL COMPANY LTD.
PRELIMINARY
1. In these Articles, if not inconsistent with the subject or context, the
words and expressions standing in the first column of the following table
shall bear the meanings set opposite them respectively in the second
column thereof.
WORDS MEANINGS
- - ---------------------------------------------------------------------
capital The sum of the aggregate par value of
all outstanding shares with par value
of the Company and shares with par
value held by the Company as treasury
shares plus
(a) the aggregate of the amounts
designated as capital of all
outstanding shares without par value
of the Company and shares
without par value held by the
Company as treasury shares, and
(b) the amounts as are from time to
time transferred from surplus to
capital by a resolution of directors.
member A person who holds shares in the
Company.
person An individual, a corporation, a
trust, the estate of a deceased
individual, a partnership or an
unincorporated association of
persons.
resolution of directors (a) A resolution approved at a duly
constituted meeting of directors or
of a committee or directors of the
Company by the affirmative vote
of a simple majority of the
directors present who voted and
did not abstain where the
meeting was called on proper
notice or, if on short notice,
if those directors not present
have waived notice; or
(b) a resolution consented to in
writing by all directors or by all
members of the committee, as the case
may be.
resolution of members (a) a resolution approved at a duly
constituted meeting of the members of
the Company by the affirmative
vote of:
<PAGE>
2
(i) a simple majority of the
votes of the shares which were
present at the meeting and were
voted and not abstained, or
(ii) a simple majority of the
votes of each class or
series of shares which
were present at the
meeting and entitled to
vote thereon as a class or
series and were voted and
not abstained and of a
simple majority of the
votes of the remaining
shares entitled to vote
thereon which were present
at the meeting and were
voted and not abstained;
or
(b) a resolution consented to in writing by
(i) an absolute majority of
the votes of shares entitled to vote
thereon, or
(ii) an absolute majority of
the votes of each class or
series of shares entitled
to vote thereon as a class
or series and of an
absolute majority of the
votes of the remaining
shares entitled to vote
thereon.
securities Shares and debt obligations of every
kind, and options, warrants and
rights to acquire shares, or debt
obligations.
surplus The excess, if any, at the time of
the determination of the total assets
of the Company over the aggregate of
its total liabilities, as shown in
its books of account, plus the
Company's capital.
the Memorandum The Memorandum of Association of the
Company as originally framed or as
from time to time amended.
the Ordinance The International Business Companies
Ordinance (No. 8 of 1984 as amended).
the Seal The Common Seal of the Company.
these Articles The Articles of Association as
originally framed or as from time to
time amended.
regulation The reference to any individual
paragraph within these Articles or as
from time to time amended.
treasury shares Shares in the Company that were
previously issued but were
repurchased, redeemed or otherwise
acquired by the Company and not
canceled.
"Written" or any term of like import includes words typewritten,
printed, painted, engraved, lithographed, photographed or represented or
reproduced by any mode of representing or reproducing words in a visible
form, including telex, telegram, cable or other form of writing produced
by electronic communication.
Save as foresaid any words or expressions defined in the Ordinance shall
bear the same meaning in these Articles.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
3
Whenever the singular or plural number, or the masculine, feminine or
neuter gender is used in these Articles, it shall equally, where the
context admits, include the others.
A reference in these Articles to voting in relation to shares shall be
construed as a reference to voting by members holding the shares except
that it is the votes allocated to the shares that shall be counted and
not the number of members who actually voted and a reference to shares
being present at a meeting shall be given a corresponding construction.
A reference to money in these Articles is a reference to the currency of
the United States of America unless otherwise stated.
REGISTERED SHARES
2. The Company shall issue to every member holding registered shares in the
Company a certificate signed by at least a director and an officer of the
Company or if under Seal signed by either a director or an officer
specifying the share or shares held. The signature of the director or
officer and the Seal may be facsimiles.
3. Any member receiving a share certificate for registered shares shall
indemnify and hold the Company and its directors and officers harmless
from any loss or liability which it or they may incur by reason of
wrongful or fraudulent use or representation made by any person by virtue
of the possession thereof. If a share certificate for registered shares is
worn out or lost it may be renewed on production of the worn out
certificate or on satisfactory proof of its loss together with such
indemnity as may be required by a resolution of directors.
4. If several persons are registered as joint holders of any shares, any one
of such persons may give an effectual receipt for any dividend payable in
respect of such shares.
BEARER SHARES
5. Subject to a request for the issue of bearer shares and to the payment of
the appropriate consideration for the shares to be issued, the Company
may, to the extent authorised by the Memorandum, issue bearer shares to,
and at the expense of, such person as shall be specified in the request.
The Company may also upon receiving a request in writing accompanied by
the share certificate for the shares in question, exchange registered
shares for bearer shares or may exchange bearer shares for registered
shares. Such request served on the Company by the holder of bearer shares
shall specify the name and address of the person to be registered and
unless the request is delivered in person by the bearer shall be
authenticated as hereinafter provided. Such request served on the Company
by the holder of bearer shares shall also be accompanied by any coupons or
talons which at the date of such delivery have not become due for payment
of dividends or any other distribution by the Company to the holders of
such shares. Following such exchange the share certificate relating to the
exchanged shares shall be delivered as directed by the member requesting
the exchange.
6. Bearer share certificates shall be signed by at least a director and an
officer of the Company or if under Seal signed by either a director or an
officer and shall state that the bearer is the owner of the shares therein
specified and may provide by coupons, talons or otherwise for the payment
of dividends or other moneys on the shares included therein.
7. Subject to the provisions of the Ordinance and of these Articles the
bearer of a bearer share certificate shall be deemed to be a member of the
Company and shall be entitled to the same rights and privileges as he
would have had if his name had been included in the share register of the
Company as the holder of the shares.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
4
8. Subject to any specific provisions in these Articles, in order to exercise
his rights as a member of the Company, the bearer of a bearer share
certificate shall produce the bearer share certificate as evidence of his
membership in the Company. Without prejudice to the generality of the
foregoing, the following rights may be exercised in the following manner:
(a) for the purpose of exercising his voting rights at a meeting, the
bearer of a bearer share certificate shall produce such certificate
to the chairman of the meeting;
(b) for the purpose of exercising his vote on a resolution in writing,
the bearer of a bearer share certificate shall cause his signature to
any such resolution to be authenticated as hereinafter set forth;
(c) for the purpose of requisitioning a meeting of members, the bearer of
a bearer share certificate shall address his requisition to the
directors and his signature thereon shall be duly authenticated as
hereinafter provided; and
(d) for the purpose of receiving dividends, the bearer of the bearer
share certificate shall present at such places as may be designated
by the directors any coupons or talons issued for such purpose, or
shall present the bearer share certificate to any paying agent
authorised to pay dividends.
9. The signature of the bearer of a bearer share certificate shall be deemed
to be duly authenticated if the bearer of the bearer share certificate
shall produce such certificate to a notary public or a bank manager or a
director or officer of the Company (herein referred to as an "authorised
person") and if the authorised person shall endorse the document bearing
such signature with a statement:
(a) identifying the bearer share certificate produced to him by number
and date and specifying the number of shares and the class of shares
(if appropriate) comprised therein;
(b) confirming that the signature of the bearer share certificate was
subscribed in his presence and that if the bearer is representing a
body corporate he has so acknowledged and has produced satisfactory
evidence of authority thereof as provided in Regulation 12; and
(c) specifying the capacity in which he is qualified as an authorised
person and, if a notary public, affixing his seal thereto or, if a
bank manager, attaching an identifying stamp of the bank of which is
is a manager.
10. Notwithstanding any other provisions of these Articles, at any time, the
bearer of a bearer share certificate may deliver the certificate for such
shares into the custody of the Company at its registered office, whereupon
the Company shall issue a receipt therefor under the Seal signed by a
director or officer identifying by name and address the person delivering
such certificate and specifying the date and number of the bearer share
certificate so deposited and the number of shares comprised therein. Any
such receipt may be used by the person named therein for the purpose of
exercising the rights vested in the shares represented by the bearer share
certificate so deposited including the right to appoint a proxy. Any
bearer share certificate so deposited shall be returned to the person
named in the receipt upon request by the person mentioned in the receipt
or to his personal representative if such person be dead and thereupon the
receipt issued therefor shall be of no further effect whatsoever and shall
be returned to the Company for cancellation or, if it has been lost or
mislaid such indemnity as may be required by resolution of directors shall
be given to the Company.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
5
11. The bearer of a bearer share certificate shall for all purposes be deemed
to be the owner of the shares comprised in such certificate and in no
circumstances shall the Company or the Chairman of any meeting of members
or the Company's registrars or any director or officer of the Company or
any authorised person be obliged to inquire into the circumstances whereby
a bearer share certificate came into the hands of the bearer thereof, or
to question the validity or authenticity of any action taken by the bearer
of a bearer share certificate whose signature has been authenticated as
provided herein.
12. If the bearer of a bearer share certificate shall be a corporation, then
all the rights exercisable by virtue of such shareholding may be exercised
by an individual duly authorised to represent the corporation but unless
such individual shall acknowledge that he is representing a corporation
and shall produce upon request satisfactory evidence that he is duly
authorised to represent the corporation, the individual shall for all
purposes hereof be regarded as the holder of the shares in any bearer
share certificate held by him.
13. The directors may provide for payment of dividends to the holders of
bearer shares by coupons or talons and in such event the coupons or talons
shall be in such form and payable at such time and in such place or places
as the directors shall resolve. The Company shall be entitled to recognise
the absolute right of the bearer of any coupon or talon issued as
aforesaid to payment of the dividend to which it relates and delivery of
the coupon or talon to the Company or its agents shall constitute in all
respects a good discharge of the Company in respect of such dividend.
14. If any bearer share certificate, coupon or talon be worn out or defaced,
the directors may, upon the surrender thereof for cancellation, issue a
new one in its stead, and if any bearer share certificate, coupon or talon
be lost or destroyed, the directors may upon the loss or destruction being
established to their satisfaction, and upon such indemnity being given to
the Company as it shall by resolution of directors determine, issue a new
bearer share certificate in its stead, and in either case on payment of
such sum as the Company may from time to time by resolution of directors
require. In case of loss or destruction the person to whom such new bearer
share certificate, coupon or talon is issued shall also bear and pay to
the Company all expenses incidental to the investigation by the Company of
the evidence of such loss or destruction and to such indemnity.
SHARES, AUTHORISED CAPITAL AND CAPITAL
15. Subject to the provisions of these Articles and any resolution of members
the unissued shares of the Company shall be at the disposal of the
directors who may without prejudice and without limiting or affecting any
rights previously conferred on the holders of any existing shares or class
or series of shares, offer, allot, grant options over or otherwise dispose
of shares to such persons, at such times and upon such terms and
conditions as the Company may by resolution of directors determine.
16. Shares in the Company shall be issued for money, services rendered,
personal property, an estate in real property, a promissory note or other
binding obligation to contribute money or property or any combination of
the foregoing as shall be determined by a resolution of directors.
However, shares for which payment is not made pursuant to a promissory
note or other written binding obligation for payment of a debt may upon
resolution of directors, be forfeited and canceled. Prior to such
forfeiture, the Company must give written notice to the member who
defaults in making payment pursuant to a promissory note or other written
binding obligation to pay a debt. Such notice shall name a further date
not earlier than the expiration of 14 days from the date of service of the
notice on or before which the payment required by the notice is to be made
and shall contain a statement that in the event of non-payment at or
before the time named in the notice the shares, or any of them, in respect
of
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
6
which payment is not made will be liable to be forfeited. Where a notice
has been issued and the requirements of the notice have been complied
with, the directors may, at any time before tender of payment, by
resolution of directors forfeit and cancel the shares to which the notice
relates. The Company is under no obligation to refund any moneys to the
member whose shares have been canceled under this situation and that
member shall be discharged from any further obligation to the Company.
17. Shares in the Company may be issued for such amount of consideration as
the directors may from time to time by resolution of directors determine,
except that in the case of shares with par value, the amount shall not be
less than the par value, and in the absence of fraud the decision of the
directors as to the value of the consideration received by the Company in
respect of the issue is conclusive unless a question of law is involved.
The consideration in respect of the shares constitutes capital to the
extend of the par value and the excess constitutes surplus.
18. A share issued by the Company upon conversion of, or in exchange for,
another share or debt obligation or other security in the Company, shall
be treated for all purposes as having been issued for money equal to the
consideration received or deemed to have been received by the Company in
respect of the other share, debt obligation or security.
19. Treasury shares may be disposed of by the Company on such terms and
conditions (not otherwise inconsistent with these Articles) as the Company
may by resolution of directors determine.
20. The Company may issue fractions of a share and a fractional share shall
have the same corresponding fractional liabilities, limitations,
preferences, privileges, qualifications, restrictions, rights and other
attributes of a whole share of the same class or series of shares.
21. Upon the issue by the Company of a share without par value, the
consideration in respect of the share constitutes capital to the extent
designated by the directors and the excess constitutes surplus, except
that the directors must designate as capital an amount of the
consideration that is at least equal to the amount that the share is
entitled to as a preference, if any, in the assets of the Company upon
liquidation of the Company.
22. The Company may purchase, redeem or otherwise acquire and hold its own
shares but no purchase, redemption or other acquisition which shall
constitute a reduction in capital shall be made otherwise than in
compliance with Regulations 36 and 37.
23. Shares that the Company purchases, redeems or otherwise acquires pursuant
to Regulation 22 may be canceled or held as treasury shares unless the
shares are purchased, redeemed or otherwise acquired out of capital and
would otherwise infringe upon the requirements of Regulations 36 and 37,
or to the extent that such shares are in excess of 80 percent of the
issued shares of the Company, in which case they shall be canceled but
they shall be available for reissue. Upon the cancellation of a share, the
amount included as capital of the Company with respect to that share shall
be deducted from the capital of the Company.
24. Where shares in the Company are held by the Company as treasury shares or
are held by another company of which the Company holds, directly or
indirectly, shares having more than 50 percent of the votes in the
election of directors of the other company, such shares of the company are
not entitled to vote or to have dividends paid thereon and shall not be
treated as outstanding for any purpose except for purposes of determining
the capital of the Company.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
7
25. Notice of a trust, expressed, implied or constructive, may be entered in
the share register.
TRANSFER OF SHARES
26. Subject to any limitations in the Memorandum, registered shares in the
Company may be transferred by a written instrument of transfer signed by
the transferor and containing the name and address of the transferee, but
in the absence of such written instrument of transfer the directors may
accept such evidence of a transfer of shares as they consider appropriate.
27. The Company shall not be required to treat a transferee of a registered
share in the Company as a member until the transferee's name has been
entered in the share register.
28. Subject to any limitations in the the Memorandum, the Company must on the
application of the transferor or transferee of a registered share in the
Company enter in the share register the name of the transferee of the
share save that the registration of transfers may be suspended and the
share register closed at such times and for such periods as the Company
may from time to time by resolution of directors determine provided always
that such registration shall not be suspended and the share register
closed for more than 60 days in any period of 12 months.
TRANSMISSION OF SHARES
29. The executor or administration of a deceased member, the guardian of an
incompetent member or the trustee of a bankrupt member shall be the only
person recognized by the Company as having any title to his share but they
shall not be entitled to exercise any rights as a member of the Company
until they have proceeded as set forth in the next two regulations.
30. Any person becoming entitled by operation of law or otherwise to a share
or shares in consequence of the death, incompetence or bankruptcy of any
member may be registered as a member upon such evidence being produced as
may reasonably be required by the directors. An application by any such
person to be registered as a member shall for all purposes be deemed to be
a transfer of shares of the deceased, incompetent or bankrupt member and
the directors shall treat it as such.
31. Any person who has become entitled to a share or shares in the consequence
of the death, incompetence or bankruptcy of any member may, instead of
being registered himself, request in writing that some person be named by
him be registered as the transferee of such share or shares and such
request shall likewise be treated as if it were a transfer.
32. What amounts to incompetence on the part of a person is a matter to be
determined by the court having regard to all the relevant evidence and the
circumstances of the case.
REDUCTION OR INCREASE IN AUTHORISED CAPITAL OR CAPITAL
33. The Company may by a resolution of members or by resolution of directors
amend the Memorandum to increase or reduce its authorised capital and in
connection therewith the Company may in respect of any unissued shares
increase or reduce the number of such shares, increase or reduce the par
value of any such shares or effect any combination of the foregoing.
34. The Company may amend the Memorandum to
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
8
(a) divide the shares, including issued shares, of a class or series into
a large number of shares of the same class or series; or
(b) combine the shares, including issued shares, of a class or series
into a smaller number of shares of the same class or series;
provided, however, that where shares are divided or combined under (a) or
(b) of this Regulation, the aggregate par value of the new shares must be
equal to the aggregate par value of the original shares.
35. The capital of the Company may by a resolution of members or by resolution
of directors be increased by transferring an amount of the surplus of the
Company to capital, and, subject to the provisions of Regulations 36 and
37, the capital of the Company may be reduced by transferring an amount of
the capital of the Company to surplus.
36. No reduction of capital shall be effected that reduces the capital of the
Company to an amount that immediately after the reduction is less than the
aggregate par value of all outstanding shares with par value and all
shares with par value held by the Company as treasury shares and the
aggregate of the amounts designated as capital of all outstanding shares
without par value and all shares without par value held by the Company as
treasury shares that are entitled to a preference, if any, in assets of
the Company upon liquidation of the Company.
37. No reduction of capital shall be effected unless the directors determine
that immediately after the reduction the Company will be able to satisfy
its liabilities as they become due in the ordinary course of its business
and that the realizable assets of the Company will not be less than its
total liabilities, other than deferred taxes, as shown in the books of the
Company and its remaining capital, and, in the absence of fraud, the
decision of the directors as to the realizable value of the assets of the
Company is conclusive, unless a question of law is involved.
38. Where the Company reduces its capital the Company may
(a) return to its members any amount received by the Company upon the
issue of any of its shares;
(b) purchase, redeem or otherwise acquire its shares out of capital; or
(c) cancel any capital that is lost or not represented by assets having a
realizable value.
MEETINGS AND CONSENTS OF MEMBERS
39. The directors of the Company may convene meetings of the members of the
Company at such times and in such manner and place within or outside the
British Virgin Islands as the directors consider necessary or desirable.
40. Upon the written request of members holding 10 percent or more of the
outstanding voting shares in the Company the directors shall convene a
meeting of members.
41. The directors shall give not less than 7 days notice of meetings of
members to those persons whose names on the date the notice is given
appear as members in the share register of the Company.
42. A meeting of members held in contravention of the requirement in
Regulation 41 is valid
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
9
(a) if members holding not less than 90 percent of the total number of
shares entitled to vote on all matters to be considered at the
meeting, or 90 percent of the votes of each class or series of shares
where members are entitled to vote thereon as a class or series
together with not less than a 90 percent majority of the remaining
votes, have agreed to shorter notice of the meeting; or
(b) if all members holding shares entitled to vote on all or any
matters to be considered at the meeting have waived notice of
the meeting and for this purpose presence at the meeting shall
be deemed to constitute waiver.
43. The inadvertent failure of the directors to give notice of a meeting to a
member, or the fact that a member has not received notice, does not
invalidate the meeting.
44. A member may be represented at a meeting of members by a proxy who may
speak and vote on behalf of the member.
45. The instrument appointing a proxy shall be produced at the place appointed
for the meeting before the time for holding the meeting at which the
person named in such instrument proposes to vote.
46. An instrument appointing a proxy shall be in substantially the following
form or such other form as the Chairman of the meeting shall accept as
properly evidencing the wishes of the member appointing the proxy.
(Name of Company)
I/We being a member of the
above Company with shares HEREBY APPOINT
of or failing him
of to be my/our proxy to vote for me/us at the
meeting of
members to be held on the day of
and at any adjournment thereof.
(Any restrictions on voting to be inserted here).
Signed this day of
- - --------------------------------------
Member
47. The following shall apply in respect of joint ownership of shares:
(a) if two or more persons hold shares jointly each of them may be
present in person or by proxy at a meeting of members and may speak
as a member;
(b) if only one of the joint owners is present in person or by proxy
he may vote on behalf of all joint owners; and
(c) if two or more of the joint owners are present in person or
by proxy they must vote as one.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
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10
48. A member shall be deemed to be present at a meeting of members if he
participates by telephone or other electronic means and all members
participating in the meeting are able to hear each other.
49. A meeting of members is duly constituted if, at the commencement of the
meeting, there are present in person or by proxy not less than 50 percent
of the votes of the shares of class or series of shares entitled to vote
on resolutions of members considered at the meeting. If a quorum be
present, notwithstanding the fact that such quorum may be represented by
only one person, then such person may resolve any matter and a certificate
signed by such person accompanied by a copy of the proxy form where such
person be a proxy, shall constitute a valid resolution of members.
50. If within two hours from the time appointed for the meeting a quorum is
not present, the meeting, if convened upon the requisition of members,
shall be dissolved; in any other case it shall stand adjourned to the next
business day at the same time and place or to such other time and place as
the directors may determine, and if at the adjourned meeting there are
present within one hour from the time appointed for the meeting in person
or by proxy not less than one third of the votes of the shares of each
class or series of shares entitled to vote on the resolution to be
considered by the meeting, those present shall constitute a quorum but
otherwise the meeting shall be dissolved.
51. At every meeting of members, the Chairman of the Board of Directors shall
preside as chairman of the meeting. If there is no Chairman of the Board
of Directors or if the Chairman of the Board of Directors is not present
at the meeting, the members present shall choose some one of their number
to be the chairman. If the members are unable to choose a chairman for any
reason, then the person representing the greatest number of voting shares
present in person or by prescribed form of proxy at the meeting shall
preside as chairman failing which the oldest individual member or
representative of a member present shall take the chair.
52. The chairman may, with the consent of the meeting, adjourn any meeting
from time to time, and from place to place, but no business shall be
transacted at any adjourned meeting other than the business left
unfinished at the meeting from which the adjournment took place.
53. At the meeting of the members the chairman shall be responsible for
deciding in such manner as he shall consider appropriate whether any
resolution has been carried or not and the result of his decision shall be
announced to the meeting and recorded in the minutes thereof. If the
chairman shall have any doubt as to the outcome of any resolution put to
the vote, he shall cause a poll to be taken of all votes cast upon such
resolution, but if the chairman shall fail to take a poll then any member
present in person or by proxy who disputes the announcement by the
chairman of the result of any vote may immediately following such
announcement demand that a poll be taken and the chairman shall thereupon
cause a poll to be taken. If a poll is taken at any meeting, the results
thereof shall be duly recorded in the minutes of that meeting by the
chairman.
54. Any person other than an individual shall be regarded as one member and
subject to Regulation 55 the right of any individual to speak for or
represent such member shall be determined by the law of the jurisdiction
where, and by the documents by which, the person is constituted or derives
its existence. In case of doubt, the directors may in good faith, seek
legal advice from any qualified person and unless and until a court of
competent jurisdiction shall otherwise rule, the directors may rely and
act upon such advice without any liability to any member.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
11
55. Any person other than an individual which is a member of the Company may
by resolution of its directors or other governing body authorise such
person as it thinks fit to act as its representative at any meeting of the
Company or of any class of members of the Company, and the person so
authorised shall be entitled to exercise the same powers on behalf of the
person which he represents as that person could exercise if it were an
individual member of the Company.
56. The chairman of any meeting at which a vote is cast by proxy or on behalf
of any person other than an individual may call for a notarially certified
copy of such proxy or authority which shall be produced within 7 days of
being so requested or the votes cast by such proxy or on behalf of such
person shall be disregarded.
57. Directors of the Company may attend and speak at any meeting of members of
the Company and at any separate meeting of the holders of any class or
series of shares in the Company
DIRECTORS
58. The first director or directors of the Company shall be elected by the
subscriber(s) to the Memorandum and these Articles; and, save as provided
in Regulation 63 hereof, thereafter, the directors shall be elected by the
members for such term as the members determine.
59. The minimum number of directors shall be one and the maximum number shall
be 10.
60. Each director shall hold office for the term, if any, fixed by resolution
of members or until his earlier death, resignation or removal.
61. A director may be removed from office, with or without cause, only by a
resolution of members.
62. A director may resign his office by giving written notice of his
resignation to the Company and the resignation shall have effect from the
date the notice is received by the Company or from such later date as may
be specified in the notice.
63. A vacancy in the Board of Directors may be filled by a resolution of
members or by a resolution of a majority of the remaining directors. In
addition, the directors, by resolution, may appoint new directors, resign
and specify that their resignations will become effective following the
appointment of their replacements.
64. With prior or subsequent approval by a resolution of members, the
directors may, by a resolution of directors, fix the emoluments of
directors with respect to services to be rendered in any capacity to the
Company.
65. A director shall not require a share qualification, and may be an
individual or a company.
POWER OF DIRECTORS
66. The business and affairs of the Company shall be managed by the directors
who may pay all expenses incurred preliminary to and in connection with
the formation and registration of the Company and may exercise all such
powers of the Company as are not by the Ordinance or by the Memorandum or
these Articles required to be exercised by the members of the Company,
subject to any delegation of such powers as may be authorised by these
Articles and to such requirements as may be prescribed by a resolution of
members; but no requirement made by a resolution of members shall prevail
if it be
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
12
inconsistent with these Articles nor shall such requirements invalidate
any prior act of the directors which would have been valid if such
requirement had not been made.
67. The directors may, by a resolution of directors, appoint any person,
including a person who is a director, to be an officer or agent of the
Company.
68. Every officer or agent of the Company has such powers and authority of the
directors, including the power and authority to affix the Seal, as are set
forth in these Articles or in the resolution of directors appointing the
officer or agent, except that no officer or agent has any power or
authority with respect to fixing the emoluments of directors.
69. Any director which is a body corporate may appoint any person its duly
authorised representative for the purpose of representing it at meetings
of the Board of Directors or with respect to unanimous written consents or
with respect to any other actions of directors in accordance with these
Articles.
70. The continuing directors may act notwithstanding any vacancy in their
body, save that if their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum for a meeting of
directors, the continuing directors or director may act only for the
purpose of appointing directors to fill any vacancy that has arisen or
summoning a meeting of members.
71. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for moneys paid to the Company
shall be signed, drawn, accepted, endorsed or otherwise executed, as the
case may be, in such manner as shall from time to time be determined by
resolution of directors.
PROCEEDINGS OF DIRECTORS
72. The directors of the Company or any committee thereof may meet at such
times and in such manner and places within or outside the British Virgin
Islands as the directors may determine to be necessary or desirable.
73. A director shall be deemed to be present at a meeting of directors if he
participates by telephone or other electronic means and all directors
participating in the meeting are able to hear each other.
74. A director shall be given not less than 3 days notice of meetings of
directors, but a meeting of directors held without 3 days notice having
been given to all directors shall be valid if all the directors entitled
to vote at the meeting who do not attend waive notice of the meeting; and
for this purpose the presence of a director at the meeting shall be deemed
to constitute waiver on his part. The inadvertent failure to give notice
of a meeting to a director, or the fact that a director has not received
the notice, does not invalidate the meeting.
75. A director may be written instrument appoint an alternate who need not be
a director and an alternate is entitled to attend meetings in the absence
of the director who appointed him and to vote or consent in place of the
director.
76. A meeting of directors is duly constituted for all purposes if at the
commencement of the meeting there are present in person or by alternate
not less than one half of the total number of directors then in office,
unless there are only 2 directors in which case the quorum shall be 2.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
13
77. If the Company shall have only one director the provisions herein
contained for meetings of the directors shall not apply but such sole
director shall have full power to represent and act for the Company in all
matters as are not by the Ordinance or the Memorandum or these Articles
required to be exercised by the members of the Company and in lieu of
minutes of a meeting such sole director shall record in writing and sign a
note or memorandum of all matters requiring a resolution of directors.
Such a note of memorandum shall constitute sufficient evidence of such
resolution for all purposes.
78. At every meeting of the directors the Chairman of the Board of Directors
shall preside as chairman of the meeting. If there is no Chairman of the
Board of Directors or if the Chairman of the Board of Directors is not
present at the meeting the Vice Chairman of the Board of Directors shall
preside. If there is no Vice Chairman of the Board of Directors or if the
Vice Chairman of the Board of Directors is not present at the meeting the
directors present shall choose some one of their number to be chairman of
the meeting.
79. The directors shall cause the following corporate records to be kept:
(a) minutes of all meetings of directors, members, committees of
directors, committees of officers and committees of members;
(b) copies of all resolutions consented to by directors, members,
committees of directors, committees of officers and committees
of members; and
(c) such other accounts and records as the directors by
resolution of directors consider necessary or desirable in
order to reflect the financial position of the Company.
80. The books, records and minutes shall be kept at the registered office of
the Company or at such other place as the directors determine.
81. The directors may, by a resolution of directors, designate one or more
committees, each consisting of one or more directors.
82. Each committee of directors has such powers and authorities of the
directors, subject to prior consent of the shareholders, including the
powers and authority to affix the seal. No committee has any power or
authority to either amend the Memorandum or these Articles or to act in
respect to matters requiring a resolution of directors under Regulation
63, 64 and 67.
83. The meetings and proceedings of each committee of directors consisting of
2 or more directors shall be governed mutatis mutandis by the provisions
of these Articles regulating the proceedings of directors so far as the
same are not superseded by any provisions in the resolution establishing
the committee.
OFFICERS
84. The Company may by resolution of directors appoint officers of the Company
at such times as shall be considered necessary or expedient. Such
officers, who need not be directors or members of the Company, may consist
of the Chairman of the Board of Directors, a Vice Chairman of the Board of
Directors, a President and one or more Vice Presidents, Secretaries and
Treasurers and such other officers as may from time to time be deemed
desirable. Any number of offices may be held by the same person.
85. The officers shall perform such duties as shall be prescribed at the time
of their appointment subject to any modification in such duties as may be
prescribed thereafter by resolution of
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
14
directors or resolution of members, but in the absence of any specific
allocation of duties it shall be the responsibility of the Chairman of the
Board of Directors to preside at meetings of directors and members, the
Vice Chairman to act in the absence of the Chairman, the President to
manage the day to day affairs of the Company, the Vice Presidents to act
in order of seniority in the absence of the President but otherwise to
perform such duties as may be delegated to them by the President, the
Secretaries to maintain the share register, minute books and records
(other than financial records) of the Company and to ensure compliance
with all procedural requirements imposed on the Company by applicable law,
and the Treasurer to be responsible for the financial affairs of the
Company.
86. The emoluments of all officers shall be fixed by resolution of directors.
87. The officers of the Company shall hold office until their successors are
duly elected and qualified, but any officer elected or appointed by the
directors may be removed at any time, with or without cause, by resolution
of directors. Any vacancy occurring in any office of the Company may be
filled by resolution of directors.
CONFLICT OF INTERESTS
88. No agreement or transaction between the Company and one or more of its
directors or any person in which any director has a financial interest or
to whom any director is related, including as a director of that other
person, is void or voidable for this reason only or by reason only that
the director is present at the meeting of directors or at the meeting of
the committee of directors that approves the agreement or transaction or
that the vote or consent of the director is counted for that purpose if
the material facts of the interest of each director in the agreement or
transaction and his interest in or relationship to any other party to the
agreement or transaction are disclosed in good faith or are known by the
other directors. Such agreement or transaction is valid even if at the
time the agreement or transaction was authorized, approved or ratified by
resolution of directors or by resolution of members the agreement or
transaction was unfairly prejudicial to one or more members of the company
or the creditors of the company except that no person who voted in favor
of the resolution authorizing, approving or ratifying the agreement or
transaction shall be capable subsequently of impugning or objecting to the
agreement or transaction.
89. A director who has an interest in any particular business to be considered
at a meeting of directors or members may be counted for purposes of
determining whether the meeting is duly constituted.
INDEMNIFICATION
90. Subject to Regulation 91 the Company shall indemnify against all expenses,
including legal fees, and against all judgements, fines and amounts paid
in settlement and reasonably incurred in connection with legal,
administrative or investigative proceedings any person who
(a) is or was a party or is threatened to be made a party to any
threatened, pending or completed proceedings, whether civil,
criminal, administrative or investigative, by reason of the fact that
the person is or was a director, an officer or a liquidator of the
Company; or
(b) is or was, at the request of the Company, serving as a director,
officer or liquidator of or in any capacity is or was acting
for, another company or a partnership, joint venture, trust or
other enterprise.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
15
91. Regulation 90 only applies to a person referred to in that Regulation if
the person acted honestly and in good faith with a view to the best
interests of the Company and, in the case of criminal proceedings, the
person had no reasonable cause to believe that his conduct was unlawful.
92. The decision of the directors as to whether the person acted honestly and
in good faith and with a view to the best interests of the Company and as
to whether the person had no reasonable cause to believe that his conduct
was unlawful, is, in the absence of fraud, sufficient for the purpose of
these Articles, unless a question of law is involved.
93. The termination of any proceedings by any judgment, order, settlement,
conviction or the entering of a nolle prosequi does not, by itself, create
a presumption that the person did not act honestly and in good faith and
with a view to the best interests of the Company or that the person had
reasonable cause to believe that his conduct was unlawful.
94. If a person referred to in Regulation 90 has been successful in defence of
any proceedings referred to in that Regulation the person is entitled to
be indemnified against all expenses, including legal fees, and against all
judgments, fines and amounts paid in settlement and reasonably incurred by
the person in connection with the proceedings.
95. The Company may purchase and maintain insurance in relation to any person
who is or was a director, an officer or a liquidator of the Company, or
who at the request of the Company is or was serving as a director, an
officer or a liquidator of, or in any other capacity is or was acting for,
another company or a partnership, joint venture, trust or another
enterprise, against any liability asserted against the person and incurred
by the person in that capacity, whether or not the Company has or would
have had the power to indemnify the person against the liability under
Regulation 90.
PERSONAL LIABILITY
96. No member, director, officer, agent or liquidator of the Company is liable
for any debt, obligation or default of the Company in the execution of the
duties of his office or otherwise in relation thereto except in so far as
he may be liable for his own conduct or acts. If, however, at any time
there is no member of the Company, any person doing business in the name
or on behalf of the Company is personally liable for the payment of all
debts of the Company contracted during that time and the person may be
sued therefor without joinder in the proceedings of any other person.
SEAL
97. The directors shall provide for the safe custody of the Seal. The Seal
when affixed to any written instrument shall be witnessed by a director or
any other person so authorised from time to time by resolution of
directors. The directors may provide for a facsimile of the Seal and of
the signature of any director or authorised person which may be reproduced
by printing or other means on any instrument and it shall have the same
force and validity as if the Seal had been affixed to such instrument and
the same had been signed and hereinbefore described.
AUTHENTICATION OF DOCUMENTS
98. Subject to the provisions of the Ordinance and these Articles the company
is bound by any document signed on its behalf in accordance with the
resolution of directors or the resolution of members, as the case may be,
authorizing the execution of such document or in accordance with any
general or special powers of attorney granted by the company, and
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
16
need not be under its common seal. If any authentication or attestation is
required, the signature of the person(s) executing the document may be
certified by the Registered Agent of the Company, any notary public, any
official department or consulate of any country, any major bank or other
financial institution, or as otherwise requested.
DIVIDENDS
99. The Company may by a resolution of directors declare and pay dividends in
money, shares, or other property but dividends shall only be declared and
paid out of surplus. In the event that dividends are paid in specie the
directors shall have the responsibility for establishing and recording in
the resolution of directors authorising the dividends a fair and proper
value for the assets to be distributed. The directors may from time to
time pay to the members such interim dividends as appear to the directors
to be justified by the profits of the Company. The directors may, before
declaring any dividend, set aside out of the profits of the Company such
sum as they think proper as a reserve fund, and may invest the sum so set
apart as a reserve fund upon such securities as they may select.
100. No dividend shall be declared and paid unless the directors determine that
immediately after the payment of the dividend the Company will be able to
satisfy its liabilities as they become due in the ordinary course of its
business and the realizable value of the assets of the Company will not be
less than the sum of its total liabilities, other than deferred taxes, as
shown in its books of account, and its capital. In the absence of fraud,
the decision of the directors as to the realizable value of the assets of
the Company is conclusive, unless a question of law is involved.
101. Notice of any dividend that may have been declared shall be given to each
member in the manner hereinafter mentioned and all dividends unclaimed for
3 years after having been declared may be forfeited by resolution of
directors for the benefit of the Company.
102. No dividend shall bear interest as against the Company and no dividend
shall be paid on shares described in Regulation 24.
103. A share issued as a dividend by the Company shall be treated for all
purposes as having been issued for money equal to the surplus that is
transferred to capital upon the issue of the share.
104. In the case of a dividend of authorised but unissued shares with par
value, an amount equal to the aggregate par value of such shares shall be
transferred from surplus to capital at the time of the distribution.
105. In the case of a dividend of authorised but unissued shares without par
value, the amount designated by the directors shall be transferred from
surplus to capital at the time of the distribution, except that the
directors must designate as capital an amount that is at least equal to
the amount that such shares are entitled to as a preference, if any, in
the assets of the Company upon liquidation of the Company.
106. A division of the issued and outstanding shares of a class or series of
shares into a larger number of shares of the same class or series having a
proportionately smaller par value does not constitute a dividend of
shares.
ACCOUNTS
107. The Company shall keep such accounts and records as the directors consider
necessary or desirable in order to reflect the financial position of the
Company.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
17
108. The members may, but are not bound to, require the directors to prepare
profit and loss accounts and balance sheet and, unless so required, the
directors shall not be bound to prepare such profit and loss accounts and
balance sheet.
109. A copy of such profit and loss account and balance sheet, if prepared,
shall be served on every member in the manner and with similar notice to
that prescribed herein for calling a meeting of members or upon such
shorter notice as the members may agree to accept.
110. The Company may by a resolution of directors include in the computation of
surplus for any purpose the unrealized appreciation of the assets of the
Company, and, in the absence of fraud, the decision of the directors as to
the value of the assets is conclusive, unless a question of law is
involved.
AUDIT
111. The Company may by resolution of members call for the accounts to be
examined by auditors.
112. The first auditors may be appointed by resolution of directors; subsequent
auditors may be appointed by resolution of members.
113. The auditors may be members of the Company but no director or other
officer shall be eligible to be an auditor of the Company during his
continuance in office.
114. The remuneration of the auditors of the Company
(a) in the case of auditors appointed by the directors, may be fixed by
resolution of directors;
(b) subject to the foregoing, shall be fixed by resolution of
members or in such manner as the Company may by resolution of
members determine.
115. The auditors shall examine each profit and loss account and balance sheet,
if required, to be served on every member of the Company or laid before a
meeting of the members of the Company and shall state in a written report
whether or not
(a) in the opinion the profit and loss account and balance sheet give a
true and fair view respectively of the profit and loss for the period
covered by the accounts, and of the state of affairs of the Company
at the end of that period;
(b) all the information and explanations required by the auditors
have been obtained.
116. The report of the auditors shall be annexed to the accounts and shall be
read at the meeting of members at which the accounts are laid before the
Company or shall be served on the members.
117. Every auditor of the Company shall have the right of access at all times
to the books of account and vouchers of the Company, and shall be entitled
to require from the directors and officers of the Company such information
and explanations as he thinks necessary for the performance of his duties.
118. The auditors of the Company shall be entitled to receive notice of and
attend any meetings of members of the Company at which the Company's
profit and loss account and balance sheet are to presented.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
18
NOTICES
119. Any notice, information or written statement to be given by the Company to
members must be served in the case of members holding registered shares by
mail addressed to each member at the address shown in the share register
and in the case of members holding shares issued to bearer, in the manner
provided in the Memorandum.
120. Any summons, notice, order, document, process, information or written
statement to be served on the Company may be served by leaving it, or by
sending it by registered mail addressed to the Company, at its Registered
Office, or by leaving it with, or by sending it by registered mail to, the
Registered Agent of the Company.
121. Service of any summons, notice, order, document, process, information or
written statement to be served on the Company may be proved by showing
that the summons, notice, order, document, process, information or written
statement was mailed in such time as to admit to its being delivered in
the normal course of delivery within the period prescribed for service and
was correctly addressed and the postage was prepaid.
PENSION AND SUPERANNUATION FUNDS
122. The directors may establish and maintain or procure the establishment and
maintenance of any non-contributory or contributory pension or
superannuation funds for the benefit of, and give or procure the giving of
donations, gratuities, pensions, allowances or emoluments to any persons
who are or were at any time in the employment or service of the Company or
any company which is a subsidiary of the Company or is allied to or
associated with the Company or with any such subsidiary, or who are or
were at any time directors or officers of the Company or of any such other
company as aforesaid or who hold or held any salaried employment or office
in the Company or such other company, or any persons in whose welfare the
Company or any such other company as aforesaid is or has been at any time
interested, and to the wives, widows, families and dependents of any such
person, and may make payments for or towards the insurance of any such
persons as aforesaid, and may do any of the matters aforesaid either alone
or in conjunction with any such other company as aforesaid. Subject always
to the proposals being approved by resolution of members, a director
holding any such employment, or office shall be entitled to participate in
and retain for his own benefit any such donation, gratuity, pension,
allowance or emolument.
ARBITRATION
123. Whenever any difference arises between the Company on the one hand and any
of the members or their executors, administrators or assigns on the other
hand, touching the true intent and construction of the incidence or
consequences of these Articles or of the Ordinance, touching anything done
or executed, omitted or suffered in pursuance of the Ordinance or touching
any breach or alleged breach or otherwise relating to the premises or to
these Articles, or to any Act or Ordinance affecting the Company or to any
of the affairs of the Company such difference shall, unless the parties
agree to refer the same to a single arbitrator, be referred to 2
arbitrators one to be chosen by each of the parties to the difference and
the arbitrators shall before entering on the reference appoint an umpire.
124. If either party to the reference makes default in appointing an arbitrator
either originally or by way of substitution (in the event that an
appointed arbitrator shall die, be incapable of acting or refuse to act)
for 10 days after the other party has given him notice to appoint the
same, such other party may appoint an arbitrator to act in the place of
the arbitrator of the defaulting party.
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
<PAGE>
19
VOLUNTARILY WINDING UP AND DISSOLUTION
125. The Company may voluntarily commence to wind up and dissolve by a
resolution of members or a resolution of directors but if the Company has
never issued shares it may voluntarily commence to wind up and dissolve by
a resolution of directors.
CONTINUATION
126. The Company may by resolution of members or by a resolution passed
unanimously by all directors of the Company continue as a company
incorporated under the laws of a jurisdiction outside the British Virgin
Islands in the manner provided under those laws.
We, Arias Fabrega & Fabrega Trust Co. BVI Limited of Wickhams Cay, Road
Town, Tortola, British Virgin Islands for the purpose of incorporating an
International Business Company under the laws of the British Virgin Islands
hereby subscribe our name to these Articles of Association the 27th day of
March, 1998 in the presence of:
Subscriber
/s/ Illegible
Arias Fabrega & Fabrega Trust Co. BVI Limited
Witness
Nadia Harrigan
/s/ NADIA HARRIGAN
Wickhams Cay
Road Town, Tortola
[REGISTRAR OF INTERNATIONAL BUSINESS COMPANIES
GOVERNMENT OF THE BRITISH VIRGIN ISLANDS SEAL]
EXHIBIT 4.1
EXECUTION COPY
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of October 28, 1999
by and among
Amethyst Financial Company Limited
Pride International, Inc.
Maritima Petroleo e Engenharia Ltda.
and
Donaldson, Lufkin & Jenrette Securities Corporation
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of October 28, 1999, by and among Amethyst Financial Company Limited, a
limited liability company incorporated in the British Virgin Islands (the
"COMPANY"), Pride International, Inc. ("PRIDE"), Maritima Petroleo e Engenharia
Ltda. ("MARITIMA", and together with Pride, the "GUARANTORS"), and Donaldson,
Lufkin & Jenrette Securities Corporation (the "INITIAL PURCHASER"), who has
agreed to purchase the Company's 11 3/4% Senior Secured Notes due 2001 (the
"INITIAL NOTES") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated October
28, 1999 (the "PURCHASE AGREEMENT"), by and among the Company, the Guarantors
and the Initial Purchaser. In order to induce the Initial Purchaser to purchase
the Initial Notes, the Company has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchaser set forth in Section 9 of
the Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them the Indenture, dated November 1, 1999,
between the Company and Wilmington Trust Company, as Trustee, relating to the
Initial Notes and the Exchange Notes (the "INDENTURE") or the Purchase
Agreement, as the case may be.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 of the Act.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
CERTIFICATED SECURITIES: Definitive Notes, as defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Exchange
Notes to be issued in the Exchange Offer,
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(b) the maintenance of such Exchange Offer Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period not less than
the period required pursuant to Section 3(b) hereof and (c) the delivery by the
Company to the Registrar under the Indenture of Exchange Notes in the same
aggregate principal amount as the aggregate principal amount of Initial Notes
tendered by Holders thereof pursuant to the Exchange Offer.
CONSUMMATION DEADLINE: As defined in Section 3(b) hereof.
EFFECTIVENESS DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE NOTES: The Company's 11 3/4% Senior Secured Exchange Notes due
2001 and the related Pride Guarantee to be issued pursuant to the Indenture: (i)
in the Exchange Offer or (ii) as contemplated by Section 4 hereof.
EXCHANGE OFFER: The exchange and issuance by the Company and Pride of a
principal amount of Exchange Notes and related Pride Guarantee (each of which
shall be registered pursuant to the Exchange Offer Registration Statement) equal
to the outstanding principal amount of Initial Notes that are tendered by such
Holders in connection with such exchange and issuance.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchaser proposes
to sell the Initial Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act and pursuant to Regulation S under
the Act.
FILING DEADLINE: As defined in Sections 3(a) and 4(a) hereof.
HOLDERS: As defined in Section 2 hereof.
PROSPECTUS: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECOMMENCEMENT DATE: As defined in Section 6(d) hereof.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
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REGISTRATION STATEMENT: Any registration statement of the Company and
Pride relating to (a) an offering of Exchange Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) that is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
REGULATION S: Regulation S promulgated under the Act.
RULE 144: Rule 144 promulgated under the Act.
SHELF REGISTRATION STATEMENT: As defined in Section 6(b) hereof.
SUSPENSION NOTICE: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 as in effect on the date of the
Indenture.
TRANSFER RESTRICTED SECURITIES: Each Initial Note, until the earliest to
occur of (a) the date on which such Initial Note is exchanged in the Exchange
Offer for an Exchange Note which is entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements of
the Act, (b) the date on which such Initial Note has been disposed of in
accordance with a Shelf Registration Statement (and the purchasers thereof have
been issued Exchange Notes), or (c) the date on which such Initial Note is
distributed to the public pursuant to Rule 144 under the Act (and purchasers
thereof have been issued Exchange Notes) and each Exchange Note until the date
on which such Exchange Note is disposed of by a Broker-Dealer pursuant to the
"Plan of Distribution" contemplated by the Exchange Offer Registration Statement
(including the delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause the Exchange Offer
Registration Statement to be filed with the Commission as soon as practicable
after the Closing Date, but in no event later than 60 days after
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the Closing Date (such 60th day being the "FILING DEADLINE"), (ii) use their
best efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest possible time, but in no event later than 150 days
after the Closing Date (such 150 days being the "EFFECTIVENESS DEADLINE"), (iii)
in connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause it
to become effective, (B) file, if applicable, a posteffective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all necessary filings, if any, in connection with the registration and
qualification of the Exchange Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, and
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting (i) registration of the Exchange Notes to be offered
in exchange for the Initial Notes that are Transfer Restricted Securities and
(ii) resales of Exchange Notes by Broker-Dealers that tendered into the Exchange
Offer Initial Notes that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Initial Notes acquired directly from the Company or any of its Affiliates) as
contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their best efforts to cause
the Exchange Offer Registration Statement to be effective continuously, and
shall keep the Exchange Offer open for a period of not less than the minimum
period required under applicable federal and state securities laws to Consummate
the Exchange Offer; PROVIDED, HOWEVER, that in no event shall such period be
less than 30 days. The Company and the Guarantors shall cause the Exchange Offer
to comply with all applicable federal and state securities laws. No securities
other than the Exchange Notes and the related Pride Guarantee shall be included
in the Exchange Offer Registration Statement. The Company and the Guarantors
shall use their best efforts to cause the Exchange Offer to be Consummated on
the earliest practicable date after the Exchange Offer Registration Statement
has become effective, but in no event later than 30 business days thereafter
(such 30th day being the "CONSUMMATION DEADLINE").
(c) The Company and the Guarantors shall include a "Plan of Distribution"
section in the Prospectus contained in the Exchange Offer Registration Statement
and indicate therein that any Broker-Dealer who holds Transfer Restricted
Securities that were acquired for the account of such Broker-Dealer as a result
of market-making activities or other trading activities (other than Initial
Notes acquired directly from the Company or any Affiliate of the Company), may
exchange such Transfer Restricted Securities pursuant to the Exchange Offer.
Such "Plan of Distribution" section shall also contain all other information
with respect to such sales by such Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Transfer Restricted Securities held by any such Broker-Dealer, except to the
extent required by the Commission as a result of a change in policy, rules or
regulations after the date of this Agreement. See the Shearman & Sterling
no-action letter (available July 2, 1993).
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Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Exchange
Notes received by such Broker-Dealer in the Exchange Offer, the Company and the
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement. To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Exchange Notes by Broker-Dealers, the Company and the Guarantors agree to use
their best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Sections 6(a) and (c) hereof and in conformity with
the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of
one year from the Consummation Deadline or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration Statement
have been sold pursuant thereto. The Company shall provide sufficient copies of
the latest version of such Prospectus to such Broker-Dealers, promptly upon
request, and in no event later than one day after such request, at any time
during such period.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Exchange Offer is not permitted by
applicable law (after the Company and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below), (ii) for any reason the Exchange
Offer is not consummated within 180 days of the date of this Agreement, (iii)
the Initial Purchaser so requests in writing to the Company with respect to
Initial Notes not eligible to be exchanged for Exchange Notes in the Exchange
Offer or (iv) any Holder of Transfer Restricted Securities shall notify the
Company within 20 Business Days following the Consummation Deadline that (A)
such Holder was prohibited by law or Commission policy from participating in the
Exchange Offer or (B) such Holder may not resell the Exchange Notes acquired by
it in the Exchange Offer to the public without delivering a prospectus and the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (C) such Holder is a
Broker-Dealer and holds Initial Notes acquired directly from the Company or any
of its Affiliates, then the Company shall, at their cost:
(x) cause to be filed, on or prior to 30 days after the earliest of (i)
the date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above, (ii) the 180th day
after the date of this Agreement if for any reason the Exchange Offer is not
then consummated and (iii) the date on which the Company receives the notice
specified in clause (a)(iii) or (iv) above (such earliest date, the "FILING
DEADLINE"), a shelf registration statement pursuant to Rule 415 under the Act
(which may be an amendment to the Exchange Offer Registration Statement (the
"SHELF REGISTRATION STATEMENT")), relating to all Transfer Restricted
Securities, and
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<PAGE>
(y) shall use their best efforts to cause such Shelf Registration
Statement to become effective on or prior to 60 days after the Filing Deadline
for the Shelf Registration Statement (such 60th day the "EFFECTIVENESS
DEADLINE").
If, after the Company and the Guarantors have filed an Exchange Offer
Registration Statement that satisfies the requirements of Section 3(a) above,
the Company and the Guarantors are required to file and make effective a Shelf
Registration Statement solely because the Exchange Offer is not permitted under
applicable federal law (i.e., clause (a)(i) above), then the filing of the
Exchange Offer Registration Statement shall be deemed to satisfy the
requirements of clause (x) above; PROVIDED that, in such event, the Company and
the Guarantors shall remain obligated to meet the Effectiveness Deadline set
forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and
the Guarantors shall use their best efforts to keep any Shelf Registration
Statement required by this Section 4(a) continuously effective, supplemented,
amended and current as required by and subject to the provisions of Sections
6(b) and (c) hereof and in conformity with the requirements of this Agreement,
the Act and the policies, rules and regulations of the Commission as announced
from time to time, for a period of at least two years (as extended pursuant to
Section 6(d)) following the Closing Date, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Shelf
Registration Statement have been sold pursuant thereto.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated on or prior to the Consummation Deadline or (iv) any
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<PAGE>
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded within 2 days by a post-effective
amendment to such Registration Statement that cures such failure and that is
itself declared effective within 5 days of filing such post-effective amendment
to such Registration Statement (each such event referred to in clauses (i)
through (iv), a "REGISTRATION DEFAULT"), then the Company hereby agrees to pay
to each Holder of Transfer Restricted Securities affected thereby liquidated
damages in an amount equal to $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities held by such Holder for each week or portion
thereof that the Registration Default continues for the first 90-day period
immediately following the occurrence of such Registration Default. The amount of
the liquidated damages shall increase by an additional $.05 per week per $1,000
in principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.50 per week per $1,000 in principal
amount of Transfer Restricted Securities; PROVIDED that the Company shall in no
event be required to pay liquidated damages for more than one Registration
Default at any given time. Notwithstanding anything to the contrary set forth
herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Company to pay liquidated damages with respect to securities shall survive until
such time as such obligations with respect to such securities shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the Exchange
Offer, the Company and the Guarantors shall (x) comply with all applicable
provisions of Section 6(c) below, (y) use their best efforts to effect such
exchange and to permit the resale of Exchange Notes by Broker-Dealers that
tendered in the Exchange Offer Initial Notes that such Broker-Dealer acquired
for its own account as a result of its market making activities or other trading
activities (other than Initial Notes acquired directly from the Company or any
of its Affiliates) being sold in accordance with the intended method or methods
of distribution thereof, and (z) comply with all of the following
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provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange Offer,
that in the reasonable opinion of counsel to the Company or the Guarantors
raises a substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Guarantors hereby agree to seek a
no-action letter or other favorable decision from the Commission allowing the
Company and the Guarantors to Consummate an Exchange Offer for such Transfer
Restricted Securities. The Company and the Guarantors hereby agree to pursue the
issuance of such a decision to the Commission staff level. In connection with
the foregoing, the Company and the Guarantors hereby agree to take all such
other actions as may be requested by the Commission or otherwise required in
connection with the issuance of such decision, including without limitation (A)
participating in telephonic conferences with the Commission, (B) delivering to
the Commission staff an analysis prepared by counsel to the Company setting
forth the legal bases, if any, upon which such counsel has concluded that such
an Exchange Offer should be permitted and (C) diligently pursuing a resolution
(which need not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation, any
Holder who is a Broker Dealer) shall furnish, upon the request of the Company or
the Guarantors, prior to the Consummation of the Exchange Offer, a written
representation to the Company or the Guarantors (which may be contained in the
letter of transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an Affiliate of the Company or the Guarantors,
(B) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a distribution
of the Exchange Notes to be issued in the Exchange Offer and (C) it is acquiring
the Exchange Notes in its ordinary course of business. As a condition to its
participation in the Exchange Offer each Holder using the Exchange Offer to
participate in a distribution of the Exchange Notes shall acknowledge and agree
that, if the resales are of Exchange Notes obtained by such Holder in exchange
for Initial Notes acquired directly from the Company or an Affiliate thereof, it
(1) could not, under Commission policy as in effect on the date of this
Agreement, rely on the position of the Commission enunciated in MORGAN STANLEY
AND CO., INC. (available June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION
(available May 13, 1988), as interpreted in the Commission's letter to SHEARMAN
& STERLING dated July 2, 1993, and similar no-action letters (including, if
applicable, any no-action letter obtained pursuant to clause (i) above), and (2)
must comply with the registration and prospectus delivery requirements of the
Act in connection with a secondary resale transaction and that such a secondary
resale transaction must be covered by an effective registration statement
containing the selling security holder information required by Item 507 or 508,
as applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the Commission (A)
stating that the Company and the Guarantors are registering the Exchange Offer
in reliance on the position of the Commission
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enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988),
MORGAN STANLEY AND CO., INC. (available June 5, 1991) as interpreted in the
Commission's letter to SHEARMAN & STERLING dated July 2, 1993, and, if
applicable, any no-action letter obtained pursuant to clause (i) above, (B)
including a representation that the Company has not entered into any arrangement
or understanding with any Person to distribute the Exchange Notes to be received
in the Exchange Offer and that, to the best of the Company's and the Guarantors'
information and belief, each Holder participating in the Exchange Offer is
acquiring the Exchange Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the distribution
of the Exchange Notes received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as set forth in any
no-action letter obtained pursuant to clause (i) above, if applicable.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall:
(i) comply with all the provisions of Section 6(c) below and use
their best efforts to effect such registration to permit the sale of the
Transfer Restricted Securities being sold in accordance with the intended method
or methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
and the Guarantors will prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the Act,
which form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(ii) issue, upon the request of any Holder or purchaser of Initial
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Exchange Notes having an aggregate principal amount equal to the
aggregate principal amount of Initial Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company and the Guarantors shall register Exchange Notes on the Shelf
Registration Statement for this purpose and issue the Exchange Notes to the
purchaser(s) of securities subject to the Shelf Registration Statement in the
names as such purchaser(s) shall designate.
(c) GENERAL PROVISIONS. In connection with any Registration Statement and
any related Prospectus required by this Agreement, the Company and the
Guarantors shall:
(i) use their best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for the
period specified in Section 3 or 4 of this Agreement, as applicable. Upon the
occurrence of any event that would cause any such Registration Statement or the
Prospectus contained therein (A) to contain an untrue statement of material fact
or omit to state any material fact necessary to make the statements therein not
misleading or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the Company
and the Guarantors shall file promptly an appropriate amendment to such
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Registration Statement curing such defect, and, if Commission review is
required, use their best efforts to cause such amendment to be declared
effective as soon as practicable.
(ii) prepare and file with the Commission such amendments and
posteffective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully
with Rules 424, 430A and 462, as applicable, under the Act in a timely manner;
and comply with the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement to the
Prospectus;
(iii) advise each Holder promptly and, if requested by such Holder,
confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment thereto, when
the same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to the
Prospectus or for additional information relating thereto, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted Securities
for offering or sale in any jurisdiction, or the initiation of any proceeding
for any of the preceding purposes, and (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement thereto or
any document incorporated by reference therein untrue, or that requires the
making of any additions to or changes in the Registration Statement in order to
make the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Company shall use their
best efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(iv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement
or post-effective amendment to the Registration Statement or related Prospectus
or any document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
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(v) furnish to each Holder in connection with such exchange or sale, if
any, before filing with the Commission, copies of any Registration Statement or
any Prospectus included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including all documents incorporated by
reference after the initial filing of such Registration Statement), which
documents will be subject to the review and comment of such Holders in
connection with such sale, if any, for a period of at least five Business Days,
and the Company will not file any such Registration Statement or Prospectus or
any amendment or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which such Holders
shall reasonably object within five Business Days after the receipt thereof. A
Holder shall be deemed to have reasonably objected to such filing if such
Registration Statement, amendment, Prospectus or supplement, as applicable, as
proposed to be filed, contains an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading
or fails to comply with the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus, provide
copies of such document to each Holder in connection with such exchange or sale,
if any, make the Company's and the Guarantors' representatives available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as such
Holders may reasonably request;
(vii) make available, at reasonable times, for inspection by each
Holder and any attorney or accountant retained by such Holders, all financial
and other records, pertinent corporate documents of the Company and the
Guarantors and cause the Company's and the Guarantors' officers, directors and
employees to supply all information reasonably requested by any such Holder,
attorney or accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and prior to
its effectiveness;
(viii) if requested by any Holders in connection with such exchange
or sale, promptly include in any Registration Statement or Prospectus, pursuant
to a supplement or post-effective amendment if necessary, such information as
such Holders may reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the Transfer
Restricted Securities; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the Company
is notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(ix) furnish to each Holder in connection with such exchange or
sale, without charge, at least one copy of the Registration Statement, as first
filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(x) deliver to each Holder without charge, as many copies of the
Prospectus
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(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons reasonably may request; the Company and the Guarantors hereby
consent to the use (in accordance with law) of the Prospectus and any amendment
or supplement thereto by each selling Holder in connection with the offering and
the sale of the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(xi) upon the request of any Holder, enter into such agreements (including
underwriting agreements) and make such representations and warranties and take
all such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant to any
applicable Registration Statement contemplated by this Agreement as may be
reasonably requested by any Holder in connection with any sale or resale
pursuant to any applicable Registration Statement. In such connection, the
Company shall:
(A) upon request of any Holder, furnish (or in the case of
paragraphs (2) and (3), use its best efforts to cause to be furnished) to each
Holder, upon Consummation of the Exchange Offer or upon the effectiveness of the
Shelf Registration Statement, as the case may be:
(1) a certificate, dated such date, signed on behalf of the
Company and each Guarantor by (x) the President or any Vice President and (y) a
principal financial or accounting officer of the Company and such Guarantor,
confirming, as of the date thereof, the matters set forth in Sections 6(y), 9(a)
and 9(b) of the Purchase Agreement and such other similar matters as such
Holders may reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange Offer
or the date of effectiveness of the Shelf Registration Statement, as the case
may be, of counsel for the Company and the Guarantors covering matters similar
to those set forth in paragraph (e) of Section 9 of the Purchase Agreement and
such other matter as such Holder may reasonably request, and in any event
including a statement to the effect that such counsel has participated in
conferences with officers and other representatives of the Company and the
Guarantors, representatives of the independent public accountants for the
Company and the Guarantors and have considered the matters required to be stated
therein and the statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of such
statements; and that such counsel advises that, on the basis of the foregoing
(relying as to materiality to the extent such counsel deems appropriate upon the
statements of officers and other representatives of the Company and the
Guarantors and without independent check or verification), no facts came to such
counsel's attention that caused such counsel to believe that the applicable
Registration Statement, at the time such Registration Statement or any
posteffective amendment thereto became effective and, in the case of the
Exchange Offer Registration Statement, as of the date of Consummation of the
Exchange Offer, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the opinion dated the
date of Consummation of the Exchange Offer, as of the date of Consummation,
contained an untrue
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<PAGE>
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes no responsibility for, and
has not independently verified, the accuracy, completeness or fairness of the
financial statements, notes and schedules and other financial data included in
any Registration Statement contemplated by this Agreement or the related
Prospectus; and
(3) a customary comfort letter, dated the date of Consummation of
the Exchange Offer, or as of the date of effectiveness of the Shelf Registration
Statement, as the case may be, from the Company's and Pride's independent
accountants, in the customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection with underwritten
offerings, and affirming the matters set forth in the comfort letters delivered
pursuant to Section 9(h) of the Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance with the
matters covered in clause (A) above and with any customary conditions contained
in any agreement entered into by the Company and the Guarantors pursuant to this
clause (xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in connection
with the registration and qualification of the Transfer Restricted Securities
under the securities or Blue Sky laws of such jurisdictions as the selling
Holders may request and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the applicable Registration Statement;
PROVIDED, HOWEVER, that the Company shall not be required to register or qualify
as a foreign corporation where it is not now so qualified or to take any action
that would subject it to the service of process in suits or to taxation, other
than as to matters and transactions relating to the Registration Statement, in
any jurisdiction where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities to be sold
and not bearing any restrictive legends; and to register such Transfer
Restricted Securities in such denominations and such names as the selling
Holders may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xiv) use their best efforts to cause the disposition of the
Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof to consummate the
disposition of such Transfer Restricted Securities, subject to the proviso
contained in clause (xii) above;
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(xv) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture with
printed certificates for the Transfer Restricted Securities which are in a form
eligible for deposit with the Depository Trust Company;
(xvi) otherwise use their best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to its
security holders with regard to any applicable Registration Statement, as soon
as practicable, a consolidated earnings statement meeting the requirements of
Rule 158 (which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is defined
in paragraph (c) of Rule 158 under the Act);
(xvii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the TIA; and
execute and use its best efforts to cause the Trustee to execute, all documents
that may be required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner; and
(xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or Section
15(d) of the Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"SUSPENSION NOTICE"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "RECOMMENCEMENT
DATE"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the date of delivery of the Recommencement Date.
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<PAGE>
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors' performance
of or compliance with this Agreement will be borne by the Company and the
Guarantors, regardless of whether a Registration Statement becomes effective,
including without limitation: (i) all registration and filing fees and expenses;
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all expenses of printing (including printing
certificates for the Exchange Notes to be issued in the Exchange Offer and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company and the Holders of
Transfer Restricted Securities; (v) all application and filing fees in
connection with listing the Exchange Notes on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company and the Guarantors (including the expenses of any special audit and
comfort letters required by or incident to such performance).
The Company and the Guarantors will, in any event, bear its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
severally will reimburse the Initial Purchaser and the Holders of Transfer
Restricted Securities who are tendering Initial Notes in the Exchange Offer
and/or selling or reselling Initial Notes or Exchange Notes pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Cravath, Swaine &
Moore, unless another firm shall be chosen by the Holders of a majority in
principal amount of the Transfer Restricted Securities for whose benefit such
Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors agree severally to indemnify and hold
harmless each Holder, its directors, officers and each Person, if any, who
controls such Holder (within the meaning of Section 15 of the Act or Section 20
of the Exchange Act), from and against any and all losses, claims, damages,
liabilities, judgments, (including without limitation, any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action that could give rise to any such losses, claims, damages,
liabilities or judgments) caused by any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement thereto)
provided by the Company to any Holder or any prospective purchaser of Exchange
Notes or registered Initial Notes,
16
<PAGE>
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by an untrue statement or omission or alleged untrue
statement or omission that is based upon information relating to any of the
Holders furnished in writing to the Company by any of the Holders.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and the Guarantors, and
their respective directors and officers, and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company or the Guarantors to the same extent as the foregoing indemnity from
the Company and the Guarantors set forth in Section 8(a) above, but only with
reference to information relating to such Holder furnished in writing to the
Company by such Holder expressly for use in any Registration Statement. In no
event shall any Holder, its directors, officers or any Person who controls such
Holder be liable or responsible for any amount in excess of the amount by which
the total amount received by such Holder with respect to its sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities and (ii) the
amount of any damages that such Holder, its directors, officers or any Person
who controls such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PERSON") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but may employ separate
counsel and participate in the defense thereof, but the fees and expenses of
such counsel, except as provided below, shall be at the expense of the Holder).
Any indemnified party shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and
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<PAGE>
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all indemnified parties and all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by a
majority of the Holders, in the case of the parties indemnified pursuant to
Section 8(a), and by the Company and Guarantors, in the case of parties
indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and
hold harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by clause
8(d)(i) is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Company and the Guarantors, on the one hand,
and of the Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
fault of the Company and the Guarantors, on the one hand, and of the Holder, on
the other hand, shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or such Guarantor, on the one hand, or by the Holder, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, the Guarantors and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
18
<PAGE>
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such indemnified party in
connection with investigating or defending any matter, including any action that
could have given rise to such losses, claims, damages, liabilities or judgments.
Notwithstanding the provisions of this Section 8, no Holder, its directors, its
officers or any Person, if any, who controls such Holder shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Transfer Restricted Securities held by each Holder hereunder
and not joint.
SECTION 9. RULE 144A AND RULE 144
The Company agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make
available, upon request of any Holder, to such Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of the
Exchange Act, to make all filings required thereby in a timely manner in order
to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) REMEDIES. The Company and the Guarantors acknowledge and agree that
any failure by the Company or the Guarantors to comply with its obligations
under Sections 3 and 4 hereof may result in material irreparable injury to the
Initial Purchaser or the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, the Initial Purchaser or any Holder may
obtain such relief as may be required to specifically enforce the Company's and
the Guarantors' obligations under Sections 3 and 4 hereof. The Company and the
Guarantors further agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
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<PAGE>
(b) NO INCONSISTENT AGREEMENTS. Neither the Company nor the Guarantors
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof. The
Company has not previously entered into any agreement granting any registration
rights with respect to its securities to any Person. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's or the Guarantors' securities
under any agreement in effect on the date hereof.
(c) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) THIRD PARTY BENEFICIARY. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchaser, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect its rights or the rights
of Holders hereunder.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company, to Amethyst Financial Company Limited, c/o
Arias Fabrega and Fabrega Trust Co. BVI Limited, 325 Waterfront Drive,
Omar Hodge Building, 2nd Floor, Wickham's Cay Road, Tortola, British
Virgin Islands;
(iii) if to Pride, to Pride International, Inc., 5847 San Felipe,
Suite 3300, Houston, TX 77057, (713) 789-1400;
20
<PAGE>
(iv) if to Maritima, to Maritima Petroleo e Engenharia Ltda.,
Avenido Almirante Borraso, 52 Grupo 3400, 20031-000 Centro Rio de Janeiro,
Brazil; and
(v) if to the Initial Purchaser, Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, New York, New York 10172,
Attention: Syndicate Department,
or in any case to such other address as the person to be notified may have
requested in writing.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; PROVIDED, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining
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provisions contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
22
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
AMETHYST FINANCIAL COMPANY LIMITED
By /s/ EARL W. MCNIEL
Name: Earl W. McNiel
Title: Treasurer
PRIDE INTERNATIONAL, INC.
By /s/ EARL W. MCNIEL
Name: Earl W. McNiel
Title: Treasurer
MARITIMA PETROLEO E ENGENHARIA LTDA.
By /s/ GERMAN EFROMOVICH
Name: German Efromovich
Title: President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ C. MITCHELL COX
Name: C. Mitchell Cox
Title: Senior Vice President
23
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EXHIBIT A
NOTICE OF FILING OF
A/B EXCHANGE OFFER REGISTRATION STATEMENT
To: Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Louise Guarneri (Compliance Department)
Fax: (212) 892-7272
From: Amethyst Financial Company Limited
11 3/4% Senior Secured Notes due 2001
Date: ___, 199_
For your information only (NO ACTION REQUIRED):
Today, ______, 199_, we filed [an A/B Exchange Registration Statement/a
Shelf Registration Statement] with the Securities and Exchange Commission. We
currently expect this registration statement to be declared effective within __
business days of the date hereof.
24
EXHIBIT 4.2
EXECUTION COPY
AMETHYST FINANCIAL
COMPANY LIMITED
$53,000,000
11 3/4% Senior Secured Notes Due 2001
Guaranteed in an amount up to
$30,000,000 by PrideInternational, Inc.
and
Backed by a $23,000,000 Letter of Credit
Issued by Republic National Bank of New York
Purchase Agreement
October 28, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE>
$53,000,000
11 3/4% SENIOR SECURED NOTES DUE 2001
of AMETHYST FINANCIAL COMPANY LIMITED
Guaranteed in an amount up to
$30,000,000 by Pride International, Inc.
and
Backed by a $23,000,000 Letter of Credit
Issued by Republic National Bank of New York
PURCHASE AGREEMENT
October 28, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Dear Sirs:
Amethyst Financial Company Limited, a limited liability company
incorporated in the British Virgin Islands (the "COMPANY"), proposes to issue
and sell to Donaldson, Lufkin & Jenrette Securities Corporation (the "INITIAL
PURCHASER") an aggregate of $53,000,000 in principal amount of its 11 3/4%
Senior Secured Notes due 2001 (the "INITIAL NOTES"), subject to the terms and
conditions set forth herein. The Initial Notes are to be issued pursuant to the
provisions of an indenture (the "INDENTURE"), to be dated as of the Closing Date
(as defined below), among the Company, the Guarantors (as defined below) and
Wilmington Trust Company, as trustee (the "TRUSTEE"). The Initial Notes and the
Exchange Notes (as defined below) issuable in exchange therefor are collectively
referred to herein as the "NOTES." The Notes will be guaranteed in an amount up
to $30,000,000 (the "PRIDE GUARANTEE") by one of the indirect owners of the
Company, Pride International, Inc. ("PRIDE"), and will be backed by a
$23,000,000 irrevocable standby letter of credit (the "LETTER OF CREDIT") issued
by Republic National Bank of New York and arranged by another of the Company's
indirect owners, Maritima Petroleo e Engenharia Ltda. ("MARITIMA", and together
with Pride, the "GUARANTORS"). Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Indenture.
1. OFFERING MEMORANDUM. The Initial Notes will be offered and sold
to the Initial Purchaser pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"ACT"). The Company and the Guarantors have prepared preliminary offering
memoranda, dated October 21 , 1999 and October 26, 1999 (such preliminary
offering memoranda, including the information with respect to Pride incorporated
therein, the "PRELIMINARY
<PAGE>
OFFERING MEMORANDUM") and a final offering memorandum, dated October 28, 1999
(such final offering memorandum, including the information with respect to Pride
incorporated therein, the "OFFERING MEMORANDUM"), relating to the Initial Notes,
the Pride Guarantee and the Letter of Credit.
Upon original issuance thereof, and until such time as the same is
no longer required pursuant to the Indenture, the Initial Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER:
(1) REPRESENTS THAT (I) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE ACT)(A "QIB"), (II) IT HAS ACQUIRED
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE ACT OR (III) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER
THE ACT (AN "IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (I) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (II) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (III) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE ACT, (IV) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE ACT, (V)
TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE ACT, (VI) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (VII) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR
AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.
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AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS NOTE IN VIOLATION OF THE FOREGOING."
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Company, an aggregate principal amount of $53,000,000 of
Initial Notes at a purchase price equal to 99.5% of the principal amount thereof
less a gross spread of 3.0%, for a net purchase price of 96.0% of the principal
amount thereof (the "PURCHASE PRICE").
3. TERMS OF OFFERING. The Initial Purchaser has advised the Company
that the Initial Purchaser will make offers (the "EXEMPT RESALES") of the
Initial Notes purchased hereunder on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to (i) persons whom the Initial
Purchaser reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBS"), and (ii) persons permitted to purchase the
Initial Notes in offshore transactions in reliance upon Regulation S under the
Act (each, a "REGULATION S PURCHASER") (such persons specified in clauses (i)
and (ii) being referred to herein as the "ELIGIBLE PURCHASERS"). The Initial
Purchaser will offer the Initial Notes to Eligible Purchasers initially at a
price equal to 99.5% of the principal amount thereof. Such price may be changed
at any time without notice.
Holders (including subsequent transferees) of the Notes will have
the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in substantially
the form of Exhibit A hereto, for so long as such Initial Notes constitute
"TRANSFER RESTRICTED SECURITIES" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company and the
Guarantor will agree to file with the Securities and Exchange Commission (the
"COMMISSION") under the circumstances set forth therein, (i) a registration
statement under the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating
to the Company's 11 3/4% Senior Secured Exchange Notes dUE 2001 (the "EXCHANGE
NOTES"), to be offered in exchange for the Initial Notes (such offer to exchange
being referred to as the "EXCHANGE OFFER"), the Pride Guarantee and the Letter
of Credit and (ii) a shelf registration statement pursuant to Rule 415 under the
Act (the "SHELF REGISTRATION STATEMENT" and, together with the Exchange Offer
Registration Statement, the "REGISTRATION STATEMENTS") relating to the resale by
certain holders of the Initial Notes and to use its best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer. This Agreement, the Indenture, the Notes, the Security
Agreement, the Pride Guarantee, the Letter of Credit, the Transfer Certificates
executed pursuant to Sections 15.3 and 15.4 of the Mitsubishi Loan Agreements,
the Deed of Consent and Undertaking of Mitsubishi relating to the collateral
assignment by the Company in favor of the Trustee of a 53% undivided interest in
the Tranche A facilities of the Mitsubishi Loan Agreements and the related
collateral, and the Registration Rights Agreement are hereinafter sometimes
referred to collectively as the "OPERATIVE DOCUMENTS."
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4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the
Initial Notes shall be made at the offices of Cravath, Swaine & Moore, 825
Eighth Avenue, New York, NY 10019, or such other location as may be mutually
acceptable. Such delivery and payment shall be made at 9:00 a.m. New York City
time, on November 1, 1999 or at such other time on the same date or such other
date as shall be agreed upon by the Initial Purchaser and the Company in
writing. The time and date of such delivery and the payment for the Initial
Notes are herein called the "CLOSING DATE."
(b) One or more of the Initial Notes in definitive global
form, registered in the name of Cede & Co., as nominee of the Depository Trust
Company ("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Notes (collectively, the "GLOBAL NOTE"), shall
be delivered by the Company to the Initial Purchaser (or as the Initial
Purchaser directs) in each case with any transfer taxes thereon duly paid by the
Company against payment by the Initial Purchaser of the Purchase Price thereof
by wire transfer in same day funds to the order of the Company. The Global Note
shall be made available to the Initial Purchaser for inspection not later than
9:30 a.m., New York City time, on the business day immediately preceding the
Closing Date.
5. AGREEMENTS OF THE COMPANY AND THE GUARANTOR. Each of the Company
and the Guarantors hereby agrees with the Initial Purchaser as follows:
(a) To advise the Initial Purchaser promptly and, if requested
by the Initial Purchaser, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the qualification
or exemption from qualification of any Initial Notes for offering or sale in any
jurisdiction designated by the Initial Purchaser pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (ii) of
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or that requires any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein not misleading. The Company and the
Guarantor shall use their best efforts to prevent the issuance of any stop order
or order suspending the qualification or exemption of any Notes under any state
securities or Blue Sky laws and, if at any time any state securities commission
or other federal or state regulatory authority shall issue an order suspending
the qualification or exemption of any Notes under any state securities or Blue
Sky laws, the Company and the Guarantor shall use their best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchaser and those persons
identified by the Initial Purchaser to the Company as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as the Initial Purchaser may reasonably request for the
time period specified in Section 5(c). Subject to the Initial Purchaser's
compliance with its representations and warranties and agreements set forth in
Section 7 hereof, the Company consents to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchaser in connection with
Exempt Resales.
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<PAGE>
(c) During such period as in the opinion of counsel for the
Initial Purchaser an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchaser and in connection with
market-making activities of the Initial Purchaser for so long as any Initial
Notes are outstanding, (i) not to make any amendment or supplement to the
Offering Memorandum of which the Initial Purchaser shall not previously have
been advised or to which the Initial Purchaser shall reasonably object after
being so advised and (ii) to prepare promptly upon the Initial Purchaser's
reasonable request, any amendment or supplement to the Offering Memorandum which
may be necessary or advisable in connection with such Exempt Resales or such
market-making activities.
(d) If, during the period referred to in Section 5(c) above,
any event shall occur or condition shall exist as a result of which, in the
opinion of counsel to the Initial Purchaser, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein, in
the light of the circumstances when such Offering Memorandum is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchaser, it is necessary to amend or supplement the Offering
Memorandum to comply with any applicable law, forthwith to prepare an
appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchaser and such other persons as the Initial Purchaser may designate such
number of copies thereof as the Initial Purchaser may reasonably request.
(e) Prior to the sale of all Initial Notes pursuant to Exempt
Resales as contemplated hereby, to cooperate with the Initial Purchaser and
counsel to the Initial Purchaser in connection with the registration or
qualification of the Initial Notes for offer and sale to the Initial Purchaser
and pursuant to Exempt Resales under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchaser may request and to continue such
registration or qualification in effect so long as required for Exempt Resales
and to file such consents to service of process or other documents as may be
necessary in order to effect such registration or qualification; PROVIDED,
HOWEVER, that neither the Company nor the Guarantors shall be required in
connection therewith to qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would subject it to
general consent to service of process or taxation other than as to matters and
transactions relating to the Preliminary Offering Memorandum, the Offering
Memorandum or Exempt Resales, in any jurisdiction in which it is not now so
subject.
(f) So long as the Notes are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for
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<PAGE>
such period, and for the period from the beginning of such year to the close of
such quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(g) As soon as practicable, Pride will make generally
available to its security holders and to the Initial Purchaser an earnings
statement or statements of Pride and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(h) So long as the Notes are outstanding, to furnish to the
Initial Purchaser as soon as available copies of all reports or other
communications furnished by the Company or any of the Guarantors to its security
holders or furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company or any of the
Guarantors is listed and such other publicly available information concerning
the Company and/or its subsidiaries as the Initial Purchaser may reasonably
request.
(i) So long as any of the Initial Notes remain outstanding and
during any period in which the Company and the Guarantors are not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), to make available to any holder of Initial Notes in connection
with any sale thereof and any prospective purchaser of such Initial Notes from
such holder, the information ("RULE 144A INFORMATION") required by Rule
144A(d)(4) under the Act.
(j) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the obligations of the Company
and the Guarantors under this Agreement, including: (i) the fees, disbursements
and expenses of counsel to the Company and the Guarantors and accountants of the
Company and the Guarantors in connection with the sale and delivery of the
Initial Notes to the Initial Purchaser and pursuant to Exempt Resales, and all
other fees and expenses in connection with the preparation, printing, filing and
distribution of the Preliminary Offering Memorandum, the Offering Memorandum and
all amendments and supplements to any of the foregoing (including financial
statements), including the mailing and delivering of copies thereof to the
Initial Purchaser and persons designated by it in the quantities specified
herein, (ii) all costs and expenses related to the transfer and delivery of the
Initial Notes to the Initial Purchaser and pursuant to Exempt Resales, including
any transfer or other taxes payable thereon, (iii) all costs of printing or
producing this Agreement, the other Operative Documents and any other agreements
or documents in connection with the offering, purchase, sale or delivery of the
Initial Notes, (iv) all expenses in connection with the registration or
qualification of the Initial Notes and the Pride Guarantee for offer and sale
under the securities or Blue Sky laws of the several states and all costs of
printing or producing any preliminary and supplemental Blue Sky memoranda in
connection therewith (including the filing fees and fees and disbursements of
counsel for the Initial Purchaser in connection with such registration or
qualification and memoranda relating thereto), (v) the cost of printing
certificates representing the Initial Notes and the Pride Guarantee, (vi) all
expenses and listing fees in connection with the application for quotation of
the Initial Notes in the National Association of Securities Dealers, Inc.
("NASD") Automated Quotation System - PORTAL ("PORTAL"), (vii) the fees and
expenses of the Trustee and the Trustee's counsel in connection with the
Indenture, the Notes, the Pride Guarantee and the Letter of Credit, (viii) the
costs and charges of any transfer agent, registrar and/or depositary (including
DTC), (ix) any fees charged by rating agencies for the rating of the Notes, (x)
all costs and expenses of the Exchange Offer and any Registration Statement,
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<PAGE>
as set forth in the Registration Rights Agreement, and (xi) and all other costs
and expenses incident to the performance of the obligations of the Company and
the Guarantors hereunder for which provision is not otherwise made in this
Section.
(k) To use its best efforts to effect the inclusion of the
Initial Notes in PORTAL and to maintain the listing of the Initial Notes on
PORTAL for so long as the Initial Notes are outstanding.
(l) To obtain the approval of DTC for "book-entry" transfer of
the Notes, and to comply with all of its agreements set forth in the
representation letters of the Company and the Guarantors to DTC relating to the
approval of the Notes by DTC for "book-entry" transfer.
(m) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell, contract to
sell or otherwise transfer or dispose of any debt securities of the Company or
Pride or any warrants, rights or options to purchase or otherwise acquire debt
securities of the Company or Pride substantially similar to the Notes and the
Pride Guarantee (other than (i) the Notes and the Pride Guarantee and (ii)
commercial paper issued in the ordinary course of business), without the prior
written consent of the Initial Purchaser.
(m) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Initial Notes to the Initial Purchaser
or pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Initial Notes under the Act.
(n) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Notes and the related Pride Guarantee.
(o) To cause the Exchange Offer to be made in the appropriate
form to permit Exchange Notes and guarantees thereof by the Guarantors
registered pursuant to the Act to be offered in exchange for the Initial Notes,
the Pride Guarantee and the Letter of Credit and to comply with all applicable
federal and state securities laws in connection with the Exchange Offer.
(p) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(q) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy all conditions precedent to the delivery of
the Initial Notes, the Pride Guarantee and the Letter of Credit.
5A. AGREEMENT OF THE COMPANY. The Company agrees that in the event
the Company determines to pursue any Transaction (as hereinafter defined) during
the two year period commencing on the date of this Agreement, Donaldson, Lufkin
& Jenrette Securities Corporation ("DLJ") shall have the right to act as the
Company's sole placement agent, sole initial purchaser or sole managing
underwriter, as the case may be, with respect to each such Transaction. For
purposes of this covenant, the term "Transaction" shall include each of the
following: any sale of securities of the Company effected pursuant to a private
sale or an underwritten public offering. If the Company determines to pursue any
such Transaction, DLJ and the Company will enter into an agreement
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appropriate to the circumstances, containing provisions for, among other things,
compensation, indemnification, contribution, and representations and warranties,
which are usual and customary for similar agreements entered into by DLJ and
other investment banks of international standing acting in similar transactions.
DLJ shall have no obligation to act as placement agent, initial purchaser,
underwriter, or dealer manager to the Company or to place or purchase any
securities of the Company, except to the extent that such obligations arise out
of a placement agent agreement, purchase agreement, underwriting agreement, as
the case may be, with respect to a particular Transaction executed and delivered
by both DLJ and the Company.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
GUARANTORS. As of the date hereof, each of the Company and the Guarantors
represents and warrants to, and agrees with, the Initial Purchaser that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum do not, and any supplement or amendment to them will not, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall not apply
to statements in or omissions from the Preliminary Offering Memorandum or the
Offering Memorandum (or any supplement or amendment thereto) based upon
information relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use therein. No stop order
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(b) Each of the Company and its subsidiaries and Pride and its
subsidiaries has been duly incorporated, is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation and has the
corporate power and authority to carry on its business as described in the
Preliminary Offering Memorandum and the Offering Memorandum and to own, lease
and operate its properties, and each is duly qualified and is in good standing
as a foreign corporation authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on (i) the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole,
(ii) the business, prospects, financial condition or results of operations of
Pride and its subsidiaries, taken as a whole, or (iii) the Notes or any of the
other Operative Documents (a "MATERIAL ADVERSE EFFECT").
(c) All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid, nonassessable
and not subject to any preemptive or similar rights.
(d) The entities listed on Schedule A hereto are the only
subsidiaries, direct or indirect, of the Company. All of the outstanding shares
of capital stock of each of the Company's subsidiaries have been duly authorized
and validly issued and are fully paid and nonassessable, and are owned by the
Company, directly or indirectly through one or more subsidiaries, free and clear
of any security interest, claim, lien, encumbrance or adverse interest of any
nature (each, a "LIEN"), except for
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the pledge of the shares of the Company's subsidiaries pledged in connection
with the Mitsubishi Loan Documents.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors.
(f) The Indenture has been duly authorized by the Company and
each of the Guarantors and, on the Closing Date, will have been validly executed
and delivered by the Company and each of the Guarantors. When the Indenture has
been duly executed and delivered by the Company and each of the Guarantors, the
Indenture will be a valid and binding agreement of the Company and each
Guarantor, enforceable against the Company and each Guarantor in accordance with
its terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the
Indenture will conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the "TIA" or "TRUST INDENTURE ACT"), and the
rules and regulations of the Commission applicable to an indenture which is
qualified thereunder.
(g) The Initial Notes have been duly authorized and, on the
Closing Date, will have been validly executed and delivered by the Company. When
the Initial Notes have been issued, executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Initial Purchaser in accordance with the terms of this Agreement, the Initial
Notes will be entitled to the benefits of the Indenture and will be valid and
binding obligations of the Company, enforceable in accordance with their terms
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the Initial
Notes will conform as to legal matters to the description thereof contained in
the Offering Memorandum.
(h) On the Closing Date, the Exchange Notes will have been
duly authorized by the Company. When the Exchange Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Exchange Notes will be entitled to the benefits of the Indenture
and will be the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
(i) The Pride Guarantee to be endorsed on the Initial Notes by
Pride has been duly authorized by Pride and, on the Closing Date, will have been
duly executed and delivered by Pride. When the Initial Notes have been issued,
executed and authenticated in accordance with the Indenture and delivered to and
paid for by the Initial Purchaser in accordance with the terms of this
Agreement, the pride Guarantee endorsed thereon will be entitled to the benefits
of the Indenture and will be the valid and binding obligation of Pride,
enforceable against Pride in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date, the Pride Guarantee to be
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<PAGE>
endorsed on the Initial Notes will conform as to legal matters to the
description thereof contained in the Offering Memorandum.
(j) The Pride Guarantee to be endorsed on the Exchange Notes
by Pride has been duly authorized by Pride and, when issued, will have been duly
executed and delivered by Pride. When the Exchange Notes have been issued,
executed and authenticated in accordance with the terms of the Exchange Offer
and the Indenture, the Pride Guarantee endorsed thereon will be entitled to the
benefits of the Indenture and will be the valid and binding obligation of Pride,
enforceable against Pride in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. When the Exchange Notes are issued, authenticated and
delivered, the Pride Guarantee to be endorsed on the Exchange Notes will conform
as to legal matters to the description thereof in the Offering Memorandum.
(k) The Registration Rights Agreement has been duly authorized
by the Company and each of the Guarantors and, on the Closing Date, will have
been duly executed and delivered by the Company and each of the Guarantors. When
the Registration Rights Agreement has been duly executed and delivered, the
Registration Rights Agreement will be a valid and binding agreement of the
Company and each of the Guarantors, enforceable against the Company and each
Guarantor in accordance with its terms except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability. On the Closing Date, the Registration Rights Agreement will
conform as to legal matters to the description thereof in the Offering
Memorandum.
(l) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or in default in the performance
of any obligation, agreement, covenant or condition contained in any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to the Company and its subsidiaries, taken as a whole, to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective property is bound.
(m) The execution, delivery and performance of this Agreement
and the other Operative Documents by the Company and each of the Guarantors,
compliance by the Company and each of the Guarantors with all provisions hereof
and thereof and the consummation of the transactions contemplated hereby and
thereby will not (i) require any consent, approval, authorization or other order
of, or qualification with, any court or governmental body or agency (except such
as may be required under the securities or Blue Sky laws of the various states),
(ii) conflict with or constitute a breach of any of the terms or provisions of,
or a default under, the charter or by-laws of the Company, either Guarantor or
any of their respective subsidiaries, any of the Mitsubishi Documents, any of
the MARAD Documents or any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to (x) the Company and its
subsidiaries, taken as a whole, to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or their
respective property is bound, or (y) either Guarantor and its subsidiaries,
taken as a whole, to which such Guarantor or any of its subsidiaries is a party
or by which either Guarantor or any of its subsidiaries or their respective
property is bound, (iii) violate or conflict with any applicable law or any
rule, regulation,
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judgment, order or decree of any court or any governmental body or agency having
jurisdiction over the Company, either Guarantor, any of their respective
subsidiaries or their respective property, (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien under, any agreement
or instrument to which the Company, either Guarantor or any of their respective
subsidiaries is a party or by which the Company, either Guarantor or any of
their respective subsidiaries or their respective property is bound, or (v)
result in the termination, suspension or revocation of any Authorization (as
defined below) of the Company, either Guarantor or any of their respective
subsidiaries or result in any other impairment of the rights of the holder of
any such Authorization.
(n) There are no legal or governmental proceedings pending or
threatened to which the Company, any Guarantor or any of their respective
subsidiaries is or could be a party or to which any of their respective property
is or could be subject, which might result, singly or in the aggregate, in a
Material Adverse Effect.
(o) Neither the Company, any Guarantor nor any of their
respective subsidiaries has violated any foreign, federal, state or local law or
regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), any provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or any provisions of the
Foreign Corrupt Practices Act or the rules and regulations promulgated
thereunder (THE "FCPA"), except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect. None of the Company, any
Guarantor, any of their respective affiliates or subsidiaries, or any director,
officer, agent, employee, representative or other person acting on their behalf,
directly or indirectly, has taken any action in connection with the award or
retention of any of the Petrobras charters (as described in the Offering
Memorandum) which violated any provision of the FCPA or would have violated the
FCPA if such actions had been taken by persons or entities who were subject to
the FCPA.
(p) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for cleanup, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect.
(q) Each of the Company, the Guarantors and their respective
subsidiaries has such permits, licenses, consents, exemptions, franchises,
authorizations and other approvals (each, an "AUTHORIZATION") of, and has made
all filings with and notices to, all governmental or regulatory authorities and
self-regulatory organizations and all courts and other tribunals, including
without limitation, under any applicable Environmental Laws, as are necessary to
own, lease, license and operate its respective properties and to conduct its
business, except where the failure to have any such Authorization or to make any
such filing or notice would not, singly or in the aggregate, have a Material
Adverse Effect. Each such Authorization is valid and in full force and effect
and each of the Company and its subsidiaries is in compliance with all the terms
and conditions thereof and with the rules and regulations of the authorities and
governing bodies having jurisdiction with respect thereto; and no event has
occurred (including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time or
both, would allow, revocation, suspension or
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termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization; and such Authorizations contain no restrictions that
are burdensome to the Company or any of its subsidiaries, except where such
failure to be valid and in full force and effect or to be in compliance, the
occurrence of any such event or the presence of any such restriction would not,
singly or in the aggregate, have a Material Adverse Effect.
(r) The accountants, PricewaterhouseCoopers LLP, that have
certified the financial statements and supporting schedules included in the
Preliminary Offering Memorandum and the Offering Memorandum are independent
public accountants with respect to the Company and the Guarantors, as required
by the Act and the Exchange Act. The historical financial statements, together
with related schedules and notes, set forth in the Preliminary Offering
Memorandum and the Offering Memorandum comply as to form in all material
respects with the requirements applicable to registration statements on Form S-1
under the Act.
(s) The historical financial statements, together with related
schedules and notes forming part of the Offering Memorandum (and any amendment
or supplement thereto, including the supplemental consolidating balance sheet),
present fairly the consolidated financial position, results of operations and
changes in financial position of the Company and its subsidiaries on the basis
stated in the Offering Memorandum at the respective dates or for the respective
periods to which they apply; such statements and related schedules and notes
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set forth
in the Offering Memorandum (and any amendment or supplement thereto) are, in all
material respects, accurately presented and prepared on a basis consistent with
such financial statements and the books and records of the Company.
(t) The consolidated financial statements, together with
related schedules and notes, of Pride incorporated by reference in the Offering
Memorandum (and any amendment or supplement thereto), present fairly in all
material respects the consolidated financial position, results of operations and
cash flows of Pride and its subsidiaries on the basis stated in the Offering
Memorandum at the respective dates or for the respective periods to which they
apply; such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as disclosed therein; and the other
financial and statistical information and data incorporated by reference in the
Offering Memorandum (and any amendment or supplement thereto) are in all
material respects accurately presented and prepared on a basis consistent with
such financial statements and the books and records of Pride and its
subsidiaries.
(u) The Company is not and, after giving effect to the
offering and sale of the Initial Notes and the application of the net proceeds
thereof as described in the Offering Memorandum, will not be, an "investment
company," as such term is defined in the Investment Company Act of 1940, as
amended.
(v) There are no contracts, agreements or understandings
between the Company or any Guarantor and any person granting such person the
right to require the Company to file a registration statement under the Act with
respect to any securities of the Company or to require the Company or such
Guarantor to include such securities with the Notes and the Pride Guarantee
registered pursuant to any Registration Statement.
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(w) Neither the Company nor any of its subsidiaries nor any
agent thereof acting on the behalf of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of the
Initial Notes to violate Regulation G (12 C.F.R. Part 207), Regulation T (12
C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R.
Part 224) of the Board of Governors of the Federal Reserve System.
(x) No "nationally recognized statistical rating organization"
as such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company or any Guarantor that it is considering
imposing) any condition (financial or otherwise) on the Company's or any
Guarantor's retaining any rating assigned to the Company or any Guarantor, any
securities of the Company or any Guarantor or (ii) has indicated to the Company
or any Guarantor that it is considering (a) the downgrading, suspension, or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of the Company, any Guarantor or any securities of
the Company or any Guarantor.
(y) Since the respective dates as of which information is
given in the Offering Memorandum other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there has not occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Company and its subsidiaries, taken as a whole, or Pride and
its subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of the Company or any of its subsidiaries
or Pride or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries, nor Pride nor any of its subsidiaries, has incurred any material
liability or obligation, direct or contingent.
(z) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains all the information specified in,
and meeting the requirements of, Rule 144A(d)(4) under the Act.
(aa) When the Initial Notes and the Pride Guarantee are issued
and delivered pursuant to this Agreement, neither the Initial Notes nor the
Pride Guarantee will be of the same class (within the meaning of Rule 144A under
the Act) as any security of the Company or Pride that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated inter-dealer quotation system.
(bb) No form of general solicitation or general advertising
(as defined in Regulation D under the Act) was used by the Company, the
Guarantors or any of their respective representatives (other than the Initial
Purchaser, as to whom the Company and the Guarantors make no representation) in
connection with the offer and sale of the Initial Notes contemplated hereby,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising. No securities of the same
class as the Initial Notes have been issued and sold by the Company within the
six-month period immediately prior to the date hereof.
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(cc) Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the TIA.
(dd) None of the Company, the Guarantors nor any of their
respective affiliates or any person acting on its or their behalf (other than
the Initial Purchaser, as to whom the Company and the Guarantors make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the Act ("REGULATION S") with respect
to the Initial Notes or the Pride Guarantee.
(ee) The Initial Notes offered and sold in reliance on
Regulation S have been and will be offered and sold only in offshore
transactions.
(ff) The sale of the Initial Notes pursuant to Regulation S is
not part of a plan or scheme to evade the registration provisions of the Act.
(gg) No registration under the Act of the Initial Notes or the
Pride Guarantee is required for the sale of the Initial Notes and the Pride
Guarantee to the Initial Purchaser as contemplated hereby or for the Exempt
Resales assuming the accuracy of the Initial Purchaser's representations and
warranties and agreements set forth in Section 7 hereof.
(hh) Each certificate signed by any officer of the Company or
any Guarantor and delivered to the Initial Purchaser or counsel for the Initial
Purchaser shall be deemed to be a representation and warranty by the Company or
such Guarantor to the Initial Purchaser as to the matters covered thereby.
(ii) Each of the Security Agreements has been duly authorized
by the Company and each of the Guarantors (to the extent they are a party
thereto) and, on the Closing Date, will have been duly executed and delivered by
the Company and each of the Guarantors (to the extent they are a party thereto).
When each Security Agreement has been duly executed and delivered, each such
Security Agreement will be a valid and binding agreement of the Company and each
of the Guarantors (to the extent they are a party thereto), enforceable against
the Company and each Guarantor (to the extent they are a party thereto) in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability. On the
Closing Date, each of the Security Agreements will conform as to legal matters
to the description thereof in the Offering Memorandum.
(jj) The Letter of Credit has been duly authorized by the
Letter of Credit Provider and, on the Closing Date, will have been duly executed
and delivered by the Letter of Credit Provider. When the Letter of Credit has
been duly executed and delivered, the Letter of Credit will be a valid and
binding agreement of the Letter of Credit Provider, enforceable against the
Letter of Credit Provider in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date, the Letter of Credit will conform as
to legal matters to the description thereof in the Offering Memorandum.
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(kk) On the Closing Date, upon due execution of the Security
Agreements, the Collateral Agent will have a valid first priority perfected
security interest in the Collateral, free and clear of all liens, except those
liens created by or pursuant to the Security Agreements.
(ll) The Company and its subsidiaries and each of the
Guarantors have good and marketable title in fee simple to all real property and
good and marketable title to all personal property owned by them which is
material to the business of the Company and its subsidiaries or such Guarantor,
as the case may be, in each case free and clear of all Liens and defects, except
such as are described in the Offering Memorandum, Exchange Act filings or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and its
subsidiaries or such Guarantor; and any real property and buildings held under
lease by the Company and its subsidiaries or such Guarantor are held by them
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries, in each case except
as described in the Offering Memorandum or Exchange Act filings.
(mm) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, all patents, patent rights, licenses, inventions,
copyrights, knowhow (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names ("INTELLECTUAL PROPERTY") currently
employed by them in connection with the business now operated by them except
where the failure to own or possess or otherwise be able to acquire such
intellectual property would not, singly or in the aggregate, have a Material
Adverse Effect; and neither the Company nor any of its subsidiaries has received
any notice of infringement of or conflict with asserted rights of others with
respect to any of such intellectual property which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
(nn) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; and neither the Company nor any of its subsidiaries (i) has
received notice from any insurer or agent of such insurer that substantial
capital improvements or other material expenditures will have to be made in
order to continue such insurance or (ii) has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers at a cost that would
not have a Material Adverse Effect.
(oo) Except as disclosed in the Offering Memorandum, no
relationship, direct or indirect, exists between or among the Company or any of
its subsidiaries on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of its subsidiaries on the other
hand, which would be required by the Act to be described in the Offering
Memorandum if the Offering Memorandum were a prospectus included in a
registration statement on Form S-1 filed with the Commission.
(pp) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
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necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(qq) All material tax returns required to be filed by the
Company and each of its subsidiaries in any jurisdiction have been filed, other
than those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment received by
the Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
(rr) The indebtedness represented by the Initial Notes is
being incurred for proper purposes and in good faith and each of the Company and
the Guarantors will be on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Initial Notes) solvent, and
will have on the Closing Date (after giving effect to the application of the
proceeds from the issuance of the Initial Notes) sufficient capital for carrying
on their respective business and will be on the Closing Date (after giving
effect to the application of the proceeds from the issuance of the Initial
Notes) able to pay their respective debts as they mature.
(ss) No action has been taken and no law, statute, rule or
regulation or order has been enacted, adopted or issued by any governmental
agency or body which prevents the execution, delivery and performance of any of
the Operative Documents, the issuance of the Initial Notes or the Pride
Guarantee, or suspends the sale of the Initial Notes or the Pride Guarantee in
any jurisdiction referred to in Section 5(e); and no injunction, restraining
order or other order or relief of any nature by a federal or state court or
other tribunal of competent jurisdiction has been issued with respect to the
Company or any of its subsidiaries or Pride which would prevent or suspend the
issuance or sale of the Initial Notes or the Pride Guarantee in any jurisdiction
referred to in Section 5(e).
(tt) Each of the Mitsubishi Documents and the MARAD Documents
is and, as of the Closing Date, will be a legal, valid and binding obligation of
each of the parties thereto, and there does not exist and, as of the Closing
Date, there will not exist any default (or event which with the giving of notice
or lapse of time would constitute a default) under any of the Mitsubishi
Documents.
The Company acknowledges that the Initial Purchaser and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and the Guarantors and counsel to the
Initial Purchaser will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. INITIAL PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Initial
Purchaser represents and warrants to, and agrees with, the Company and the
Guarantors:
(a) The Initial Purchaser is either a QIB or an Accredited
Institution, in either case, with such knowledge and experience in financial and
business matters as is necessary in order to evaluate the merits and risks of an
investment in the Initial Notes.
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(b) The Initial Purchaser (A) is not acquiring the Initial
Notes with a view to any distribution thereof or with any present intention of
offering or selling any of the Initial Notes in a transaction that would violate
the Act or the securities laws of any state of the United States or any other
applicable jurisdiction and (B) will be reoffering and reselling the Initial
Notes only to (x) QIBs in reliance on the exemption from the registration
requirements of the Act provided by Rule 144A and (y) in offshore transactions
in reliance upon Regulation S under the Act.
(c) The Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Initial Notes
pursuant hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(d) The Initial Purchaser agrees that, in connection with
Exempt Resales, such Initial Purchaser will solicit offers to buy the Initial
Notes only from, and will offer to sell the Initial Notes only to, Eligible
Purchasers. The Initial Purchaser further agrees that it will offer to sell the
Initial Notes only to, and will solicit offers to buy the Initial Notes only
from (A) Eligible Purchasers that the Initial Purchaser reasonably believes are
QIBs, and (B) Regulation S Purchasers, in each case, that agree that (x) the
Initial Notes purchased by them may be resold, pledged or otherwise transferred
within the time period referred to under Rule 144(k) (taking into account the
provisions of Rule 144(d) under the Act, if applicable) under the Act, as in
effect on the date of the transfer of such Initial Notes, only (I) to the
Company or any of its subsidiaries, (II) to a person whom the seller reasonably
believes is a QIB purchasing for its own account or for the account of a QIB in
a transaction meeting the requirements of Rule 144A under the Act, (III) in an
offshore transaction (as defined in Rule 902 under the Act) meeting the
requirements of Rule 904 of the Act, (IV) in a transaction meeting the
requirements of Rule 144 under the Act, (V) to an Accredited Institution that,
prior to such transfer, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer of such
Initial Note and, if such transfer is in respect of an aggregate principal
amount of Initial Notes less than $250,000, an opinion of counsel acceptable to
the Company that such transfer is in compliance with the Act, (VI) in accordance
with another exemption from the registration requirements of the Act (and based
upon an opinion of counsel acceptable to the Company) or (VII) pursuant to an
effective registration statement and, in each case, in accordance with the
applicable securities laws of any state of the United States or any other
applicable jurisdiction and (y) they will deliver to each person to whom such
Initial Notes or an interest therein is transferred a notice substantially to
the effect of the foregoing.
(e) The Initial Purchaser and its affiliates or any person
acting on its or their behalf have not engaged or will not engage in any
directed selling efforts within the meaning of Regulation S with respect to the
Initial Notes or the Pride Guarantee.
(f) The Initial Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions.
(g) The sale of the Initial Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not part of a
plan or scheme to evade the registration provisions of the Act.
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Such Initial Purchaser acknowledges that the Company and the
Guarantors and, for purposes of the opinions to be delivered to the Initial
Purchaser pursuant to Section 9 hereof, counsel to the Company and the
Guarantors and counsel to the Initial Purchaser will rely upon the accuracy and
truth of the foregoing representations and the Initial Purchaser hereby consents
to such reliance.
8. INDEMNIFICATION
(a) The Company and each Guarantor agree, jointly and
severally, to indemnify and hold harmless the Initial Purchaser, its directors,
its officers and each person, if any, who controls such Initial Purchaser within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Offering Memorandum (or any amendment or
supplement thereto), the Preliminary Offering Memorandum or any Rule 144A
Information provided by the Company or any Guarantor to any holder or
prospective purchaser of Initial Notes pursuant to Section 5(h) or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Initial Purchaser furnished in
writing to the Company by such Initial Purchaser; provided, however, that the
foregoing indemnity agreement with respect to any Preliminary Offering
Memorandum shall not inure to the benefit of the Initial Purchaser if it failed
to deliver a Final Offering Memorandum, as then amended or supplemented, (so
long as the Final Offering Memorandum and any amendment or supplement thereto
was provided by the Company to the Initial Purchaser in the requisite quantity
and on a timely basis to permit proper delivery on or prior to the Closing Date)
to the person asserting any losses, claims, damages, liabilities or judgements
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such material
misstatement or omission or alleged material misstatement or omission was cured
in the Final Offering Memorandum, as so amended or supplemented.
(b) The Initial Purchaser agrees to indemnify and hold
harmless the Company and the Guarantors, and their respective directors and
officers and each person, if any, who controls (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) the Company or the Guarantors, to
the same extent as the foregoing indemnity from the Company and the Guarantors
to the Initial Purchaser but only with reference to information relating to the
Initial Purchaser furnished in writing to the Company by the Initial Purchaser
expressly for use in the Preliminary Offering Memorandum or the Offering
Memorandum.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of
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which indemnity may be sought pursuant to both Sections 8(a) and 8(b), the
Initial Purchaser shall not be required to assume the defense of such action
pursuant to this Section 8(c), but may employ separate counsel and participate
in the defense thereof, but the fees and expenses of such counsel, except as
provided below, shall be at the expense of the Initial Purchaser). Any
indemnified party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the indemnified party unless (i) the
employment of such counsel shall have been specifically authorized in writing by
the indemnifying party, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Donaldson, Lufkin
& Jenrette Securities Corporation, in the case of the parties indemnified
pursuant to Section 8(a), and by the Company, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the fees and expenses of counsel (in any case where such fees
and expenses are at the expense of the indemnifying party) and, prior to the
date of such settlement, the indemnifying party shall have failed to comply with
such reimbursement request. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or compromise
of, or consent to the entry of judgment with respect to, any pending or
threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and the Initial Purchaser on the
other hand from the offering of the Initial Notes or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company and the
Guarantors, on the one hand, and the Initial Purchaser, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other
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relevant equitable considerations. The relative benefits received by the Company
and the Guarantors, on the one hand and the Initial Purchaser, on the other
hand, shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Initial Notes (after underwriting discounts and
commissions, but before deducting expenses) received by the Company, and the
total discounts and commissions received by the Initial Purchaser bear to the
total price to investors of the Initial Notes, in each case as set forth in the
table on the cover page of the Offering Memorandum. The relative fault of the
Company and the Guarantors, on the one hand, and the Initial Purchaser, on the
other hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Guarantors, on the one hand, or the Initial Purchaser, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Guarantors, and the Initial Purchaser
agree that it would not be just and equitable if contribution pursuant to this
Section 8(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 the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
judgments referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
incurred by such indemnified party in connection with investigating or defending
any matter, including any action, that could have given rise to such losses,
claims, damages, liabilities or judgments. Notwithstanding the provisions of
this Section 8, the Initial Purchaser shall not be required to contribute any
amount in excess of the amount by which the total discounts and commissions
received by such Initial Purchasers exceeds the amount of any damages which the
Initial Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The obligations of
the Initial Purchaser to purchase the Initial Notes under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and
the Guarantors contained in this Agreement shall be true and correct on the
Closing Date with the same force and effect as if made on and as of the Closing
Date.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a possible
change that does not indicate the direction of the possible change in, any
rating of the Company or any Guarantor or any securities of the Company or any
Guarantor (including, without
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limitation, the placing of any of the foregoing ratings on credit watch with
negative or developing implications or under review with an uncertain direction)
by any "nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall not have
occurred any change, nor shall any notice have been given of any potential or
intended change, in the outlook for any rating of the Company or any Guarantor
or any securities of the Company or any Guarantor by any such rating
organization and (iii) no such rating organization shall have given notice that
it has assigned (or is considering assigning) a lower rating to the Notes than
that on which the Notes were marketed.
(c) Since the respective dates as of which information is
given in the Offering Memorandum other than as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto subsequent to the
date of this Agreement), (i) there shall not have occurred any change or any
development involving a prospective change in the condition, financial or
otherwise, or the earnings, business, management or operations of the Company
and its subsidiaries, taken as a whole, or Pride and its subsidiaries, taken as
a whole, (ii) there shall not have been any change or any development involving
a prospective change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries or Pride or any of its subsidiaries and (iii)
neither the Company nor any of its subsidiaries, nor Pride nor any of its
subsidiaries, shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(c)(i),
9(c)(ii) or 9(c)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Initial Notes on the terms and in
the manner contemplated in the Offering Memorandum.
(d) You shall have received on the Closing Date a certificate
dated the Closing Date, signed by the President and the Chief Financial Officer
of the Company and each of the Guarantors, confirming the matters set forth in
Sections 6(y), 9(a) and 9(b) and stating that each of the Company and the
Guarantors has complied with all the agreements and satisfied all of the
conditions herein contained and required to be complied with or satisfied on or
prior to the Closing Date.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the Closing
Date, of counsel for the Company, portions of which may be given by Baker &
Botts, L.L.P., outside counsel for the Company, portions of which may be given
by Dancia Penn & Co., the Company's British Virgin Island's counsel, and
portions of which may be given by other special counsel for the Company
(provided that Baker & Botts, L.L.P. will provide the opinion specified in
clause (xix) below) , to the effect that:
(i) each of the Company and its subsidiaries has been
duly incorporated, is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as described in the Offering Memorandum and
to own, lease and operate its properties;
(ii) each of the Company and its subsidiaries is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect;
(iii) all the outstanding shares of capital stock of the
Company have
21
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been duly authorized and validly issued and are fully paid, nonassessable and
not subject to any preemptive or similar rights;
(iv) all of the outstanding shares of capital stock of
each of the Company's subsidiaries have been duly authorized and validly issued
and are fully paid and nonassessable, and are owned by the Company, free and
clear of any Lien other than Liens created under the Mitsubishi Documents;
(v) the Initial Notes have been duly authorized and,
when executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchaser in accordance
with the terms of this Agreement, will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company, enforceable
in accordance with their terms except as (x) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability;
(vi) the Indenture has been duly authorized, executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms except as
(x) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (y) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability;
(vii) this Agreement has been duly authorized, executed
and delivered by the Company;
(viii) the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (y) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability;
(ix) the Exchange Notes have been duly authorized;
(x) the statements under the captions "Business -
Construction and Permanent Financing", "Business - The Petrobras Contracts",
"Business - The Shipyards", "Description of Notes", "Description of the Security
for the Notes", "Plan of Distribution" and "Certain Tax Considerations" in the
Offering Memorandum, insofar as such statements constitute a summary of the
legal matters, documents or proceedings referred to therein, fairly present in
all material respects such legal matters, documents and proceedings;
(xi) neither the Company nor any of its subsidiaries is
in violation of its respective charter or bylaws and, to the best of such
counsel's knowledge after due inquiry, neither the Company nor any of its
subsidiaries is in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company
22
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or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound;
(xii) the execution, delivery and performance of this
Agreement and the other Operative Documents by the Company and each of the
Guarantors, the compliance by the Company and each of the Guarantors with all
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of the Company or any of its subsidiaries, any of the Mitsubishi
Documents, any of the MARAD Documents or any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to the Company
and its subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound, (iii) violate or conflict with any
applicable law or any rule, regulation, judgment, order or decree of any court
or any governmental body or agency having jurisdiction over the Company, any of
its subsidiaries or their respective property, (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien under, any agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or their respective property is
bound, or (v) result in the termination, suspension or revocation of any
Authorization (as defined below) of the Company or any of its subsidiaries or
result in any other impairment of the rights of the holder of any such
Authorization;
(xiii) after due inquiry, such counsel does not know of
any legal or governmental proceedings pending or threatened to which the Company
or any of the Company's subsidiaries is or could be a party or to which any of
their respective property is or could be subject, which might result, singly or
in the aggregate, in a Material Adverse Effect;
(xiv) the Company is not and, after giving effect to the
offering and sale of the Initial Notes and the application of the net proceeds
thereof as described in the Offering Memorandum, will not be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended;
(xv) to the best of such counsel's knowledge after due
inquiry, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company or to require the Company to include such securities with the Notes
registered pursuant to any Registration Statement;
(xvi) the Indenture complies as to form in all material
respects with the requirements of the TIA, and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder. It is not
necessary in connection with the offer, sale and delivery of the Initial Notes
to the Initial Purchaser in the manner contemplated by this Agreement or in
connection with the Exempt Resales to qualify the Indenture under the TIA.
(xvii) no registration under the Act of the Initial
Notes is required for
23
<PAGE>
the sale of the Initial Notes to the Initial Purchaser as contemplated by this
Agreement or for the Exempt Resales assuming that (i) the Initial Purchaser is a
QIB, or a Regulation S Purchaser, (ii) the accuracy of, and compliance with, the
Initial Purchaser's representations and agreements contained in Section 7 of
this Agreement, and (iii) the accuracy of the representations of the Company and
the Guarantors set forth in Sections 6(dd), (ee) and (ff) of this Agreement;
(xiii) such counsel has no reason to believe that, as of
the date of the Offering Memorandum or as of the Closing Date, the Offering
Memorandum, as amended or supplemented, if applicable (except for the financial
statements and other financial data included therein, as to which such counsel
need not express any belief) contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(xix) each of the Security Agreements has been duly
authorized, executed and delivered by the Company and each is a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability;
(xx) the Collateral Agent has a valid first priority
perfected security interest in the Collateral, free and clear of all liens,
except those liens created by or pursuant to the Security Agreements;
(xxi) the Company and its subsidiaries own or possess,
or can acquire on reasonable terms, all patents, patent rights, licenses,
inventions, copyrights, knowhow (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names ("INTELLECTUAL PROPERTY")
currently employed by them in connection with the business now operated by them
except where the failure to own or possess or otherwise be able to acquire such
intellectual property would not, singly or in the aggregate, have a Material
Adverse Effect; and neither the Company nor any of its subsidiaries has received
any notice of infringement of or conflict with asserted rights of others with
respect to any of such intellectual property which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect;
(xxii) to the best of such counsel's knowledge, after
due inquiry, no action has been taken and no law, statute, rule or regulation or
order has been enacted, adopted or issued by any governmental agency or body
which prevents the execution, delivery and performance of any of the Operative
Documents or the issuance of the Initial Notes, or suspends the sale of the
Initial Notes in any jurisdiction referred to in Section 5(e); and no
injunction, restraining order or other order or relief of any nature by a
federal or state court or other tribunal of competent jurisdiction has been
issued with respect to the Company or any of its subsidiaries which would
prevent or suspend the issuance or sale of the Initial Notes in any jurisdiction
referred to in Section 5(e).
The opinions described in Section 9(e) above shall be rendered to
you at the request of the Company and shall so state therein. In giving such
opinion with respect to the matters covered by
24
<PAGE>
Section 9(e)(xviii), such counsel may state that their opinion and belief are
based upon their participation in the preparation of the Offering Memorandum and
any amendments or supplements thereto and review and discussion of the contents
thereof, but are without independent check or verification except as specified.
(f) You shall have received on the Closing Date opinions
(satisfactory to you and counsel for the Initial Purchaser), dated the Closing
Date, of counsel for Pride, portions of which may be given by Baker & Botts,
L.L.P., outside counsel for Pride, portions of which may be given by Robert W.
Randall, Vice President and General Counsel for Pride, and portions of which may
be given by other special counsel for the Company, to the effect that:
(i) each of Pride and Pride Offshore, Inc. and Pride
International Holdings, Inc. (the "U.S. SUBSIDIARIES") has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as described in the Offering Memorandum and
to own, lease and operate its properties;
(ii) each of Pride and the U.S. Subsidiaries is duly
qualified and is in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect;
(iii) all of the outstanding shares of capital stock of
each of Pride's subsidiaries have been duly authorized and validly issued and
are fully paid and nonassessable, and are owned by Pride, free and clear of any
Lien;
(iv) the Pride Guarantee has been duly authorized and,
when the Initial Notes are executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, the Pride Guarantee
endorsed thereon will be entitled to the benefits of the Indenture and will be
valid and binding obligations of Pride, enforceable in accordance with their
terms except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (y) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability;
(v) the Indenture has been duly authorized, executed and
delivered by Pride and is a valid and binding agreement of Pride, enforceable
against Pride in accordance with its terms except as (x) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (y) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of general
applicability;
(vi) this Agreement has been duly authorized, executed
and delivered by Pride;
(vii) the Registration Rights Agreement has been duly
authorized, executed and delivered by Pride and is a valid and binding agreement
of Pride, enforceable against Pride
25
<PAGE>
in accordance with its terms, except as (x) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability;
(viii) neither Pride nor any of the U.S. Subsidiaries is
in violation of its respective charter or bylaws and, to the best of such
counsel's knowledge after due inquiry, neither Pride nor any of the U.S.
Subsidiaries is in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to Pride and the U.S.
Subsidiaries, taken as a whole, to which Pride or any of the U.S. Subsidiaries
is a party or by which Pride or any of the U.S. Subsidiaries or their respective
property is bound;
(ix) the execution, delivery and performance of this
Agreement and the other Operative Documents by the Company and each of the
Guarantors, the compliance by the Company and each of the Guarantors with all
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of Pride or any of the U.S. Subsidiaries, any of the Mitsubishi
Documents, any of the MARAD Documents or any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to Pride and
the U.S. Subsidiaries, taken as a whole, to which Pride or any of the U.S.
Subsidiaries is a party or by which Pride or any of the U.S. Subsidiaries or
their respective property is bound, (iii) violate or conflict with any
applicable law or any rule, regulation, judgment, order or decree of any court
or any governmental body or agency having jurisdiction over Pride, any of the
U.S. Subsidiaries or their respective property, (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien under, any agreement
or instrument to which Pride or any of the U.S. Subsidiaries is a party or by
which Pride or any of the U.S. Subsidiaries or their respective property is
bound, or (v) result in the termination, suspension or revocation of any
Authorization (as defined below) of Pride or any of the U.S. Subsidiaries or
result in any other impairment of the rights of the holder of any such
Authorization;
(x) such counsel does not know of any legal or
governmental proceedings pending or threatened to which Pride or any of its
subsidiaries is or could be a party or to which any of their respective property
is or could be subject, which might result, singly or in the aggregate, in a
Material Adverse Effect;
(xi) Pride is not and, after giving effect to the
offering and sale of the Initial Notes, the Pride Guarantee and the application
of the net proceeds thereof as described in the Offering Memorandum, will not
be, an "investment company" as such term is defined in the Investment Company
Act of 1940, as amended;
(xii) to the best of such counsel's knowledge after due
inquiry, there are no contracts, agreements or understandings between Pride and
any person granting such person the right to require Pride to file a
registration statement under the Act with respect to any securities of Pride or
to require Pride to include such securities with the Pride Guarantee registered
pursuant to any Registration Statement;
26
<PAGE>
(xiii) each of the Security Agreements to which Pride is
party has been duly authorized, executed and delivered by Pride and each is a
valid and binding agreement of Pride, enforceable against Pride in accordance
with its terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability;
(xiv) no action has been taken and no law, statute, rule
or regulation or order has been enacted, adopted or issued by any governmental
agency or body which prevents the execution, delivery and performance of the
Pride Guarantee, or suspends the sale of the Pride Guarantee in any jurisdiction
referred to in Section 5(e); and no injunction, restraining order or other order
or relief of any nature by a federal or state court or other tribunal of
competent jurisdiction has been issued with respect to Pride which would prevent
or suspend the issuance or sale of the Pride Guarantee in any jurisdiction
referred to in Section 5(e).
The opinions described in Section 9(f) above shall be rendered to
you at the request of Pride and shall so state therein.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the Closing
Date, of Pedro Calmon Advogados Associados, counsel for Maritima, to the effect
that:
(i) the Indenture has been duly authorized, executed and
delivered by Maritima and is a valid and binding agreement of Maritima,
enforceable against Maritima in accordance with its terms except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability;
(ii) this Agreement has been duly authorized, executed
and delivered by Maritima;
(iii) the Registration Rights Agreement has been duly
authorized, executed and delivered by Maritima and is a valid and binding
agreement of Maritima, enforceable against Maritima in accordance with its
terms, except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (y) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability;
(iv) the execution, delivery and performance of this
Agreement and the other Operative Documents by the Company and each of the
Guarantors, the compliance by the Company and each of the Guarantors with all
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (i) require any consent, approval,
authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the charter or
by-laws of Maritima or any of its subsidiaries, any of the Mitsubishi Documents,
any of the MARAD Documents or any indenture,
27
<PAGE>
loan agreement, mortgage, lease or other agreement or instrument that is
material to Maritima and its subsidiaries, taken as a whole, to which Maritima
or any of its subsidiaries is a party or by which Maritima or any of its
subsidiaries or their respective property is bound, (iii) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree of
any court or any governmental body or agency having jurisdiction over Maritima,
any of its subsidiaries or their respective property, (iv) result in the
imposition or creation of (or the obligation to create or impose) a Lien under,
any agreement or instrument to which Maritima or any of its subsidiaries is a
party or by which Maritima or any of its subsidiaries or their respective
property is bound, or (v) result in the termination, suspension or revocation of
any Authorization (as defined below) of Maritima or any of its subsidiaries or
result in any other impairment of the rights of the holder of any such
Authorization;
(v) each of the Security Agreements to which Maritima is
party has been duly authorized, executed and delivered by Maritima and each is a
valid and binding agreement of Maritima, enforceable against Maritima in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
The opinions described in Section 9(g) above shall be rendered to
you at the request of Maritima and shall so state therein.
(h) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the Closing
Date, of counsel for the Letter of Credit Provider, to the effect that the
Letter of Credit has been duly authorized, executed and delivered by the Letter
of Credit Provider and is a valid and binding agreement of the Letter of Credit
Provider, enforceable against the Letter of Credit Provider in accordance with
its terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(i) You shall have received on the Closing Date opinions
(satisfactory in form and substance to you and counsel for the Initial
Purchasers), dated the Closing Date, of United Kingdom, British Virgin Islands,
Bahamian and Brazilian counsel for the Company.
(j) The Initial Purchaser shall have received on the Closing
Date an opinion, dated the Closing Date, of Cravath, Swaine & Moore, counsel for
the Initial Purchaser, in form and substance reasonably satisfactory to the
Initial Purchaser.
(k) The Initial Purchaser shall have received, at the time
this Agreement is executed and at the Closing Date, letters dated the date
hereof or the Closing Date, as the case may be, in form and substance
satisfactory to the Initial Purchaser from PricewaterhouseCoopers LLP,
independent public accountants, containing the information and statements of the
type ordinarily included in accountants' "comfort letters" to the Initial
Purchaser with respect to the financial statements and certain financial
information contained in the Offering Memorandum.
(l) The Initial Notes shall have been approved by the NASD for
trading and
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duly listed in PORTAL.
(m) The Initial Purchaser shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Company, the Guarantors and the Trustee.
(n) The Company and the Guarantors shall have executed the
Registration Rights Agreement and the Initial Purchaser shall have received an
original copy thereof, duly executed by the Company and the Guarantors.
(o) Each of the parties to each of the Security Agreements
shall have executed such Security Agreements and the Initial Purchaser shall
have received an original copy thereof, duly executed by the parties thereto.
(p) Each of the parties to the Letter of Credit shall have
executed the Letter of Credit and the Initial Purchaser shall have received an
original copy thereof, duly executed by such parties.
(q) Each of the parties to the Transfer Certificates executed
pursuant to Sections 15.3 and 15.4 of the Mitsubishi Loan Agreements shall have
executed such Transfer Certificates and the Initial Purchaser shall have
received an original copy thereof, duly executed by such parties; and the
Company shall have acquired all of the rights and assumed all of the liabilities
of Petro Dia Four SA in respect of the Tranche A facilities under each of the
Mitsubishi Loan Agreements.
(r) Neither the Company nor the Guarantors shall have failed
at or prior to the Closing Date to perform or comply with any of the agreements
herein contained and required to be performed or complied with by the Company or
the Guarantors, as the case may be, at or prior to the Closing Date.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchaser by written notice to the Company if any of
the following has occurred: (i) any outbreak or escalation of hostilities or
other national or international calamity or crisis or change in economic
conditions or in the financial markets of the United States or elsewhere that,
in the Initial Purchaser's judgment, is material and adverse and, in the Initial
Purchaser's judgment, makes it impracticable to market the Initial Notes on the
terms and in the manner contemplated in the Offering Memorandum, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock Exchange, the Chicago Board
of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
or the Nasdaq National Market or limitation on prices for securities or other
instruments on any such exchange or the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company or any Guarantor on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial
29
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condition or results of operations of the Company and its subsidiaries, taken as
a whole, (v) the declaration of a banking moratorium by either federal or New
York State authorities or (vi) the taking of any action by any federal, state or
local government or agency in respect of its monetary or fiscal affairs which in
your opinion has a material adverse effect on the financial markets in the
United States.
11. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company, to Amethyst
Financial Company Limited, c/o Arias Fabrega and Fabrega Trust Co. BVI Limited,
325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's Cay Road,
Tortola, British Virgin Islands, (ii) if to Pride, to Pride International, Inc.,
5847 San Felipe, Suite 3300, Houston, TX 77057, (713) 789-1400; (iii) if to
Maritima, to Maritima Petroleo e Engenharia Ltda., Avenido Almirante Borraso, 52
Grupo 3400, 20031-000 Centro Rio de Janeiro, Brazil and (iv) if to the Initial
Purchaser, Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue,
New York, New York 10172, Attention: Syndicate Department, or in any case to
such other address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Company, the Guarantors
and the Initial Purchaser set forth in or made pursuant to this Agreement shall
remain operative and in full force and effect, and will survive delivery of and
payment for the Initial Notes, regardless of (i) any investigation, or statement
as to the results thereof, made by or on behalf of the Initial Purchaser, the
officers or directors of the Initial Purchaser, any person controlling the
Initial Purchaser, the Company, any Guarantor, the officers or directors of the
Company or any Guarantor, or any person controlling the Company or any
Guarantor, (ii) acceptance of the Initial Notes and payment for them hereunder
and (iii) termination of this Agreement.
If for any reason the Initial Notes are not delivered by or on
behalf of the Company as provided herein (other than as a result of any
termination of this Agreement pursuant to Section 10), the Company and each
Guarantor, jointly and severally, agree to reimburse the Initial Purchaser for
all out-of-pocket expenses (including the fees and disbursements of counsel)
incurred by them. Notwithstanding any termination of this Agreement, the Company
shall be liable for all expenses which it has agreed to pay pursuant to Section
5(j) hereof. The Company and each Guarantor also agree, jointly and severally,
to reimburse the Initial Purchaser and its officers, directors and each person,
if any, who controls such Initial Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act for any and all fees and expenses
(including without limitation the fees and expenses of counsel) incurred by them
in connection with enforcing their rights under this Agreement (including
without limitation its rights under Section 8).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Guarantors,
the Initial Purchaser, the Initial Purchaser's directors and officers, any
controlling persons referred to herein, the directors of the Company and the
Guarantors and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include a purchaser of any of the Initial Notes from the Initial Purchaser
merely because of such purchase.
This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
30
<PAGE>
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
31
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Guarantors and the Initial Purchaser.
Very truly yours,
AMETHYST FINANCIAL COMPANY LIMITED
By: /s/ EARL W. MCNIEL
Name: Earl W. McNiel
Title: Treasurer
PRIDE INTERNATIONAL, INC.
By: /s/ EARL W. MCNIEL
Name: Earl W. McNiel
Title: Vice President
MARITIMA PETROLEO E ENGENHARIA LTDA.
By: /s/ GERMAN EFROMOVICH
Name: German Efromovich
Title: President
DONALDSON, LUFKIN & JENRETTE SECURITIES
CORPORATION
By: /s/ C. MITCHELL COX
Name: C. Mitchell Cox
Title: Senior Vice President
32
<PAGE>
SCHEDULE A
SUBSIDIARIES
1. Petrodrill Four Limited
2. Petrodrill Five Limited
3. Petrodrill Six Limited
4. Petrodrill Seven Limited
S-2
EXHIBIT 4.3
EXECUTION COPY
================================================================================
INDENTURE
AMETHYST FINANCIAL COMPANY LIMITED
as Issuer
$53,000,000
11 3/4% Senior Secured Notes due 2001
------------------------
WILMINGTON TRUST COMPANY
as Trustee
PRIDE INTERNATIONAL, INC.
as Guarantor
MARITIMA PETROLEO e ENGENHARIA LTDA.,
as procurer of a Letter of Credit
Dated as of November 1, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
PAGE
-----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.......................... 1
SECTION 1.02. Other Definitions.................... 32
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act...................... 33
SECTION 1.04. Rules of Construction................ 33
ARTICLE II
THE SECURED NOTES
SECTION 2.01. Form and Dating...................... 34
SECTION 2.02. Execution and Authentication......... 38
SECTION 2.03. Registrar and Paying Agent........... 39
SECTION 2.04. Paying Agent to Hold Money in
Trust.............................. 40
SECTION 2.05. Holder Lists......................... 40
SECTION 2.06. Transfer and Exchange................ 40
SECTION 2.07. Replacement of Secured Noted......... 53
SECTION 2.08. Outstanding Secured Notes............ 54
SECTION 2.09. Treasury Secured Notes............... 54
SECTION 2.10. Temporary Secured Notes.............. 55
SECTION 2.11. Cancellation......................... 55
SECTION 2.12. Payment of Interest; Interest Rights
Preserved.......................... 55
SECTION 2.13. Computation of Interest.............. 57
SECTION 2.14. CUSIP Number......................... 57
ARTICLE III
REDEMPTION AND PREPAYMENT
SECTION 3.01. Notices to Trustee................... 57
SECTION 3.02. Selection of Secured Notes to be
Redeemed........................... 57
SECTION 3.03. Notice of Redemption................. 58
SECTION 3.04. Effect of Notice of Redemption....... 59
SECTION 3.05. Deposit of Redemption Price.......... 59
SECTION 3.06. Secured Notes Redeemed in Part....... 60
SECTION 3.07. Optional Redemptions................. 60
SECTION 3.08. Redemption Upon Loss of a Mortgaged
Rig................................ 63
SECTION 3.09. Redemption Upon Sale of a Mortgaged
Rig................................ 63
<PAGE>
Contents p. 2
PAGE
ARTICLE IV
COVENANTS
SECTION 4.01. Payment of Secured Notes............. 64
SECTION 4.02. Maintenance of Office or Agency...... 65
SECTION 4.03. Corporate Existence.................. 65
SECTION 4.04. Maintenance of Properties and
Insurance.......................... 66
SECTION 4.05. Compliance With Laws................. 66
SECTION 4.06. Taxes and Other Claims............... 66
SECTION 4.07. Stay, Extension and Usury Laws....... 67
SECTION 4.08. Change of Control.................... 67
SECTION 4.09. Limitations on Indebtedness.......... 72
SECTION 4.10. Limitation on Liens.................. 74
SECTION 4.11. Limitation on Restricted Payments.... 74
SECTION 4.12. Limitation on Sale/Leaseback
Transactions....................... 77
SECTION 4.13. SEC Reports.......................... 77
SECTION 4.14. Limitation on Restrictions on
Distributions from Restricted
Subsidiaries....................... 78
SECTION 4.15. Limitation on Asset Sales............ 79
SECTION 4.16. Limitation on Asset Swaps............ 81
SECTION 4.17. Limitation on Affiliate
Transactions....................... 81
SECTION 4.18. Limitation on the Sale or Issuance of
Capital Stock of Restricted
Subsidiaries....................... 82
SECTION 4.19. Future Subsidiary Guarantors......... 83
SECTION 4.20. Impairment of Liens.................. 83
SECTION 4.21. Limitation on Issuer Activities...... 83
SECTION 4.22. Insurance............................ 84
SECTION 4.23. Amendments to Security Documents..... 84
SECTION 4.24. Use of Proceeds...................... 84
SECTION 4.25. Separate Corporate Entities.......... 84
SECTION 4.26. Compliance Certificate; Notice of
Default or Event of Default........ 85
SECTION 4.27. Prohibition on Issuer Becoming an
Investment Company................. 86
SECTION 4.28. Additional Amounts................... 86
ARTICLE V
CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER
SECTION 5.01. Limitations on Mergers and
Consolidations..................... 89
<PAGE>
Contents p. 3
PAGE
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.................... 91
SECTION 6.02. Acceleration......................... 94
SECTION 6.03. Other Remedies....................... 95
SECTION 6.04. Waiver of Past Defaults.............. 96
SECTION 6.05. Control By Majority.................. 96
SECTION 6.06. Limitation on Suits.................. 97
SECTION 6.07. Rights of Holders of Secured Notes to
Receive Payment.................... 97
SECTION 6.08. Collection Suit by Trustee........... 98
SECTION 6.09. Trustee May File Proofs of Claim..... 98
SECTION 6.10. Priorities........................... 100
SECTION 6.11. Undertaking For Costs................ 100
SECTION 6.12. Restoration of Rights and Remedies... 101
SECTION 6.13. Rights and Remedies Cumulative....... 101
SECTION 6.14. Delay or Omission Not Waiver......... 101
ARTICLE VII
TRUSTEE
SECTION 7.01. Duties of Trustee.................... 101
SECTION 7.02. Rights of Trustee.................... 103
SECTION 7.03. Individual Rights of Trustee......... 105
SECTION 7.04. Trustee's Disclaimer................. 105
SECTION 7.05. Notice of Defaults................... 105
SECTION 7.06. Reports by Trustee to Holders of the
Secured Notes...................... 106
SECTION 7.07. Compensation and Indemnity........... 106
SECTION 7.08. Replacement of Trustee............... 107
SECTION 7.09. Successor Trustee by Merger, etc. ... 109
SECTION 7.10. Eligibility; Disqualification........ 110
SECTION 7.11. Preferential Collection of Claims
Against the Issuer................. 110
SECTION 7.12. Other Offices........................ 110
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.01. Satisfaction and Discharge........... 111
SECTION 8.02. Application of Trust Money........... 112
SECTION 8.03. Repayment of the Issuer.............. 112
SECTION 8.04. Reinstatement........................ 113
<PAGE>
Contents p. 4
PAGE
ARTICLE IX
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 9.01. Option To Effect Defeasance or
Covenant Defeasance................ 113
SECTION 9.02. Defeasance and Discharge............. 113
SECTION 9.03. Covenant Defeasance.................. 114
SECTION 9.04. Conditions to Defeasance or Covenant
Defeasance......................... 115
SECTION 9.05. Deposited Money and U.S. Government
Obligations To Be Held in Trust;
Other Miscellaneous Provisions..... 117
SECTION 9.06. Repayment to the Issuer.............. 118
SECTION 9.07. Reinstatement........................ 119
ARTICLE X
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 10.01. Without Consent of Holders of Secured
Notes.............................. 119
SECTION 10.02. With Consent of Holders of Secured
Notes.............................. 120
SECTION 10.03. Effect of Supplemental Indentures.... 123
SECTION 10.04. Compliance with Trust Indenture
Act................................ 123
SECTION 10.05. Revocation and Effect of Consents.... 124
SECTION 10.06. Notation on or Exchange of Secured
Notes.............................. 124
SECTION 10.07. Trustee To Sign Supplemental
Indentures......................... 124
SECTION 10.08. Payment for Consent.................. 126
ARTICLE XI
COLLATERAL AND SECURITY; GUARANTEES; LETTER OF CREDIT
SECTION 11.01. Security Agreements.................. 126
SECTION 11.02. Recording and Opinions............... 127
SECTION 11.03. Further Assurances and Security...... 128
SECTION 11.04. Possession and Use of Collateral..... 129
SECTION 11.05. Certificates of the Issuer........... 129
SECTION 11.06. Authorization of Actions To Be Taken
by the Trustee Under the Security
Agreements......................... 129
<PAGE>
Contents p. 5
PAGE
SECTION 11.07. Authorization of Receipt of Funds by
the Trustee Under the Security
Agreements......................... 130
SECTION 11.08. Guarantees; Letter of Credit......... 130
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls......... 130
SECTION 12.02. Notices.............................. 130
SECTION 12.03. Communication By Holders of Secured
Notes With Other Holders of Secured
Notes.............................. 132
SECTION 12.04. Certificate and Opinion as to
Conditions Precedent............... 132
SECTION 12.05. Statements Required in a Certificate
or Opinion......................... 134
SECTION 12.06. Acts of Holders...................... 134
SECTION 12.07. Rules by Trustee and Agents.......... 136
SECTION 12.08. No Personal Liability of Directors,
Officers, Employees and
Stockholders....................... 136
SECTION 12.09. Governing Law........................ 136
SECTION 12.10. Agent for Service; Submission to
Jurisdiction; Waiver of
Immunities......................... 136
SECTION 12.11. No Adverse Interpretation of Other
Agreements......................... 138
SECTION 12.12. Successors........................... 138
SECTION 12.13. Severability......................... 138
SECTION 12.14. Counterpart Originals................ 138
SECTION 12.15. Table of Contents, Headings, etc. ... 138
SECTION 12.16. Judgment Currency.................... 138
ARTICLE XIII
PRIDE GUARANTEE
SECTION 13.01. Pride Guarantee...................... 139
SECTION 13.02. Limitation on Liability.............. 142
SECTION 13.03. Successors and Assigns............... 142
SECTION 13.04. No Waiver............................ 143
SECTION 13.05. Modification......................... 143
SECTION 13.06. Execution of Supplemental Indenture
for Future Subsidiary Guarantors... 144
SECTION 13.07. Nonimpairment........................ 144
SECTION 13.08. Pride Covenants...................... 145
<PAGE>
Contents p. 6
EXHIBITS
Exhibit A..................... Form of Secured Note
Exhibit B-1................... Form of Certificate for Exchange or
Registration of Transfer from U.S.
Global Note to Regulation S Global
Note
Exhibit B-2................... Form of Certificate for Exchange or
Registration of Transfer from
Regulation S Global Note to U.S.
Global Note
Exhibit B-3................... Form of Certificate for Exchange or
Registration of Transfer of
Definitive Notes
Exhibit B-4................... Form of Certificate for Exchange or
Registration of Transfer from U.S.
Global Note or Regulation S
Permanent Global Note to Definitive
Note
Exhibit C..................... Form of Certificate From Acquiring
Institutional Accredited Investor
Exhibit D..................... Form of Subsidiary Guarantee
Exhibit E..................... Form of Letter of Credit
Schedule A.................... MARAD Documents
Schedule B.................... Mitsubishi Loan Agreements
Schedule C.................... Mitsubishi Loan Collateral Agreements
<PAGE>
INDENTURE, dated as of November 1, 1999, among AMETHYST
FINANCIAL COMPANY LIMITED, a British Virgin Islands limited
liability company (the "Issuer"), PRIDE INTERNATIONAL, INC., a
Louisiana corporation ("Pride"), MARITIMA PETROLEO e
ENGENHARIA LTDA., a Brazilian company ("Maritima"), and
WILMINGTON TRUST COMPANY, as trustee (the "Trustee").
RECITALS
The Issuer has duly authorized the creation and issuance of its 11
3/4% Senior Secured Notes due 2001 (the "Initial Secured Notes") of the tenor
and amount hereinafter set forth; and to provide therefor and for, if and when
issued as further evidence of the Issuer's indebtedness and in substitution for
the Initial Secured Notes pursuant to this Indenture and the Registration Rights
Agreement (as defined herein), the Issuer's 11 3/4% Senior Secured Notes due
2001 (the "Exchange Secured Notes", and together with the Initial Secured Notes,
the "Secured Notes"), the Issuer has duly authorized the execution and delivery
of this Indenture.
All things necessary to make the Secured Notes, when executed by the
Issuer and authenticated and delivered by the Trustee hereunder and duly issued
by the Issuer, the valid obligations of the Issuer, and to make this Indenture a
valid instrument of the Issuer, Pride and Maritima, in accordance with their
respective terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that, for and in
consideration of the premises and the purchase of the Initial Secured Notes by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
<PAGE>
2
proportionate benefit of all Holders of the Secured Notes,
as follows:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture,
except as otherwise expressly provided or unless the context otherwise requires:
<PAGE>
3
"ACQUIRED INDEBTEDNESS" means, with respect to any
specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, whether or not such Indebtedness is incurred in connection with,
or in contemplation of, such other Person merging with or into, or
becoming a Subsidiary of such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired
by such specified Person.
"ADDITIONAL ASSETS" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Capital Stock by the Issuer or another Restricted Subsidiary or (iii)
Capital Stock constituting a minority interest in any Person that at such time
is a Restricted Subsidiary; PROVIDED, HOWEVER, that any such Restricted
Subsidiary described in clause (ii) or (iii) above is primarily engaged in a
Related Business. Proceeds of insurance arising from damage for an asset shall
be deemed to have been invested in Additional Assets to the extent of the cost
of such repairs made to such asset.
"ADJUSTED NET ASSETS" of a Subsidiary Guarantor at any date means
the amount by which the fair value of the assets and property of such Subsidiary
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under its Subsidiary Guarantee, of such Subsidiary Guarantor at such
date.
"AFFILIATE" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of Voting Stock, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Affiliate" shall also mean any beneficial owner of Capital Stock representing
5% or more of the total voting power of the Voting Stock (on a fully diluted
basis) of such a Person or of rights or warrants to purchase such Capital Stock
(whether or not
<PAGE>
4
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence of this definition.
"AGENT" means any Registrar, Paying Agent or
coregistrar.
"APPLICABLE PROCEDURES" means, with respect to any transfer or
exchange of beneficial interests in a Global Note, the rules and procedures of
the Depository and the Trustee that apply to such transfer and exchange.
"ASSET SALE" means any direct or indirect sale, capital lease,
transfer or other disposition (or series of related sales, capital leases,
transfers or dispositions) by the Issuer or any Restricted Subsidiary, including
any disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "disposition") in one
transaction or a series of related transactions, of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Issuer
or a Restricted Subsidiary), (ii) any drill ship or drilling rig or all or
substantially all the assets of any division or line of business of the Issuer
or any Restricted Subsidiary or (iii) any other assets of the Issuer or any
Restricted Subsidiary outside of the ordinary course of business of the Issuer
or such Restricted Subsidiary (other than, in the case of (i), (ii) and (iii)
above, (u) a disposition by a Restricted Subsidiary to the Issuer or by the
Issuer or a Restricted Subsidiary to a Wholly Owned Restricted Subsidiary, (v)
for purposes of the covenant described under Section 4.15 hereof only, a
disposition that constitutes a Restricted Payment permitted by the covenant
described under Section 4.11 hereof, (w) Asset Swaps permitted under Section
4.16 hereof, (x) dispositions of Incidental Assets, (y) dispositions of
Temporary Cash Investments and (z) a disposition of assets with a fair market
value of less than $100,000).
"ASSET SWAP" means a substantially concurrent purchase and sale, or
exchange, of assets constituting Additional Assets described in clause (i) of
the definition thereof between the Issuer or any Restricted Subsidiary and
another Person or group of Persons; PROVIDED, HOWEVER, that the cash and other
assets to be received by the Issuer or such Restricted Subsidiary which do not
constitute Additional Assets do not constitute more than 25% of the total
consideration to be received by the Issuer or such Restricted Subsidiary in such
Asset Swap.
<PAGE>
5
"ATTRIBUTABLE INDEBTEDNESS," when used with respect to any
Sale/Leaseback Transaction, means, as at the time of determination, the present
value (discounted at the rate set forth or implicit in the terms of the lease
included in such transaction) of the total obligations of the lessee for rental
payments (other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for property rights)
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended).
"AVERAGE LIFE" means, as of the date of determination, with respect
to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i)
the sum of the products of numbers of years from the date of determination to
the dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"BOARD OF DIRECTORS" means the Board of Directors of a Person or any
committee thereof duly authorized to act on behalf of such Board.
"BOARD RESOLUTION" means a copy of a resolution certified by a
Secretary or Assistant Secretary of a Person to have been duly adopted by the
Board of Directors thereof and to be in full force and effect on the date of
such certification and delivered to the Trustee.
"BUSINESS DAY" means each day which is not a Legal
Holiday.
"CAPITALIZED LEASE OBLIGATION" of any Person means any obligation of
such Person to pay rent or other amounts under a lease of property, real or
person, that is required to be capitalized for financial reporting purposes in
accordance with generally accepted accounting principles and the amount of such
obligation shall be the capitalized amount thereof determined in accordance with
GAAP.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, rights to purchase, warrants or options (whether or not
currently exercisable), participations or other equivalents of or interests in
(however designated) the equity (which includes, but is not limited to, common
stock, preferred stock and partnership and joint venture interests) of such
Person (excluding any
<PAGE>
6
debt securities that are convertible into, or exchangeable for, such equity).
"CEDEL" means Cedel Bank, societe anonyme (or any successor
securities clearing agency).
"CERTIFICATED SECURED NOTES" means Secured Notes that are
substantially in the form of the Secured Note attached hereto as Exhibit A that
do not include the information or text called for by footnotes 1 and 4 thereto.
"CODE" means the Internal Revenue Code of 1986, as
amended.
"COLLATERAL" shall include, in each case as pledged and assigned to
the Collateral Agent, the Trustee or the Issuer, as applicable, pursuant to the
Security Agreements, (1) an undivided 53% participation interest in the Issuer
Loans, all of the Issuer's right, title and interest in and to (a) the
Mitsubishi Documents, (b) the security for the Issuer Loans provided for in the
Mitsubishi Loan Collateral Agreements, (c) all cash held by the Collateral Agent
and the Trustee pursuant to the Indenture or the Security Agreements and the
Reserve Account and all Reserve Account Property held pursuant to the Reserve
Account Agreement (including any cash collateral deposited therein by the
Issuer); and (2) all proceeds of any of the foregoing, including from any
policies and contracts of insurance taken out from time to time in respect each
of the Mortgaged Rigs.
"COLLATERAL AGENT" means Wilmington Trust Company, as collateral
agent under the Issuer Security Agreement until a successor replaces it in
accordance with the applicable provisions of the Issuer Security Agreement and
thereafter means the successor serving thereunder.
"COMMON STOCK" means Capital Stock other than
Preferred Stock.
"CONSOLIDATED EBITDA COVERAGE RATIO" as of any date of determination
means the ratio of (a) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (b) Consolidated Interest Expense for such four
fiscal quarters; PROVIDED, HOWEVER, that:
(a) if the Issuer or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding
or if the transaction
<PAGE>
7
giving rise to the need to calculate the Consolidated EBITDA Coverage
Ratio is an issuance of Indebtedness, or both, EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving effect
on a pro forma basis to such Indebtedness as if such Indebtedness had been
issued on the first day of such period and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with
the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period;
(b) if since the beginning of such period the Issuer or any
Restricted Subsidiary shall have made any asset disposition, the EBITDA
for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of
such asset disposition for such period, or increased by an amount equal to
the EBITDA (if negative), directly attributable thereto for such period,
and Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable to
any Indebtedness of the Issuer or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect to the Issuer
and its continuing Subsidiaries in connection with such asset dispositions
for such period (or, if the Capital Stock of any Restricted Subsidiary is
sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the
extent the Issuer and its continuing Subsidiaries are no longer liable for
such Indebtedness after such sale);
(c) if since the beginning of such period the Issuer or any
Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially
all of an operating unit of a business (which shall include the
acquisition or construction of a vessel or drilling rig, provided the
Issuer has paid 75% or more of the cost thereof and such vessel or
drilling rig is reasonably expected to be delivered within 90 days),
EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including the issuance
of any Indebtedness) as if such Investment or
<PAGE>
8
acquisition occurred on the first day of such period; and
(d) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into the
Issuer or any Restricted Subsidiary since the beginning of such period)
shall have made any asset disposition or any Investment that would have
required an adjustment pursuant to clause (2) or (3) above if made by the
Issuer or a Restricted Subsidiary during such period, EBITDA and
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such asset disposition or Investment
occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto, and the amount of Consolidated Interest Expense associated with any
Indebtedness issued in connection therewith, the pro forma calculations shall be
determined in good faith by a responsible financial or accounting officer of the
Issuer. If any Indebtedness bears a floating rate of interest and is being given
pro forma effect, the interest of such Indebtedness shall be calculated as if
the rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate Protection Agreement
applicable to such Indebtedness if such Interest Rate Protection Agreement has a
remaining term in excess of 12 months).
For purposes of this definition, in the case of the acquisition
since the beginning of such period of a drilling rig or drill ship (or of a
Restricted Subsidiary owning same) by the Issuer or by a Restricted Subsidiary
pursuant to a binding purchase agreement or the delivery during of such period
of a drilling rig or drill ship to the Issuer or a Restricted Subsidiary
pursuant to a binding construction contract, which drilling rig or drill ship
has been subject for at least one full fiscal quarter to a binding drilling
contract constituting a Qualifying Contract, then, for purposes of making the
pro forma calculations provided for in the first sentence of the preceding
paragraph, the financial or accounting officer of the Issuer shall give pro
forma effect to the earnings (losses) of such drilling rig or drill ship as if
such drilling rig or drill ship were acquired on the first day of such period,
by basing such earnings (losses) on the annualized (x) historical revenues
actually earned from such Qualifying Contract and (y) actual expenses related
thereto,
<PAGE>
9
in each case for each quarter during such period in which the Qualifying
Contract is in effect.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the total
interest expense of the Issuer and its consolidated Restricted Subsidiaries,
plus, to the extent not included in such interest expense:
(i) interest expense attributable to Capitalized
Lease Obligations;
(ii) amortization of debt discount and debt
issuance cost;
(iii) capitalized interest;
(iv) non-cash interest payments;
(v) commissions, discounts and other fees and
charges owed with respect to letters of credit and
bankers' acceptance financing;
(vi) net costs under Interest Rate Protection
Agreements (including amortization of fees);
(vii) dividends in respect of any Redeemable Stock
held by Persons other than the Issuer or a Restricted
Subsidiary;
(viii) interest expense attributable to deferred
payment obligations; and
(ix) interest expense on Indebtedness of another Person to the
extent that such Indebtedness is guaranteed by the Issuer or a Restricted
Subsidiary.
"CONSOLIDATED NET INCOME" means, for any period, the net income of
the Issuer and its consolidated subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income:
(a) any net income of any Person if such Person is not a Restricted
Subsidiary, except that (1) the Issuer's equity in the net income of any
such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Issuer or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or
other distribution to a Restricted Subsidiary, to the limitations
contained in clause (c) below) and
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10
(2) the Issuer's equity in a net loss of any such Person for such period
shall be included in determining such Consolidated Net Income;
(b) any net income of any Person acquired by the Issuer or a
Restricted Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition;
(c) any net income of any Restricted Subsidiary to the extent such
Restricted Subsidiary is subject to restrictions, directly or indirectly,
on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Issuer, except that
(1) the net income of a Restricted Subsidiary shall be included to the
extent such net income could be paid to the Issuer or a Restricted
Subsidiary by loans, advances, intercompany transfers, principal
repayments or otherwise; (2) the Issuer's equity in the net income of any
such Restricted Subsidiary for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Restricted Subsidiary during such period to the Issuer
or another Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to another
Restricted Subsidiary, to the limitation contained in this clause) and (3)
the Issuer's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining such Consolidated Net Income;
(d) any gain (but not loss) realized upon the sale or other
disposition of any property, plant or equipment of the Issuer or its
consolidated subsidiaries (including pursuant to any sale-and- leaseback
arrangement) which is not sold or otherwise disposed of in the ordinary
course of business and any gain (but not loss) realized upon the sale or
other disposition of any Capital Stock of any Person;
(e) extraordinary, unusual or nonrecurring
charges; and
(f) the cumulative effect of a change in
accounting principles.
"CONSOLIDATED NET WORTH" of a Person means the consolidated
stockholders' equity of such Person and its Subsidiaries, as determined in
accordance with GAAP.
<PAGE>
11
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of
the Trustee specified in Section 12.02 hereof or such other address as to which
the Trustee may give notice to the Issuer.
"DEFAULT" means any act, event or condition which is, or after
notice or passage of time or both would be, an Event of Default.
"DEPOSITARY" means, with respect to the Secured Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Secured Notes, until a successor
shall have been appointed and become such Depositary pursuant to the applicable
provision of this Indenture, and thereafter, "Depositary" shall mean or include
such successor.
"EBITDA" for any period means the Consolidated Net Income for such
period, plus the following (but without duplication) to the extent deducted in
calculating such Consolidated Net Income for such period: (a) income tax
expense, (b) Consolidated Interest Expense, (c) depreciation
expense and (d) amortization expense.
"EUROCLEAR" means the Euroclear System (or any
successor securities clearing agency).
"EVENT OF LOSS" is defined to mean any of the following events: (a)
the actual loss of a Mortgaged Rig (b) the agreed, arranged or constructive
total loss of a Mortgaged Rig, (c) requisition for title or other compulsory
acquisition of title of a Mortgaged Rig by any governmental or other competent
authority, agency or instrumentality otherwise than by requisition for hire, or
(d) capture, seizure, arrest, detention or confiscation of a Mortgaged
Rig by any government or Person acting or purporting to act on behalf of any
government unless such Mortgaged Rig is released and restored to the Mortgaged
Rig Owner from such capture, arrest or detention within six months after the
occurrence thereof or such other period as may be specified in the insurance
policies taken out or entered into in respect of the Mortgaged Rig.
"EVENT OF LOSS PROCEEDS" means all compensation, damages and other
payments (including insurance proceeds) received by any Mortgaged Rig Owner, the
Issuer, any Restricted Subsidiary, the security agent under the Mitsubishi Loan
Collateral Documents, the Collateral Agent or the Trustee, jointly or severally,
from any Person,
<PAGE>
12
including any governmental authority, with respect to or in connection with an
Event of Loss.
"EXCHANGE ACT" means the Securities Exchange Act
of 1934, as amended.
"EXCHANGE GLOBAL NOTE" means one or more Global Notes that do not
and are not required to bear the Private Placement Legend.
"EXCHANGE OFFER" means the offer that may be made by the Issuer
pursuant to the Registration Rights Agreement to exchange Exchange Secured Notes
for Initial Secured Notes.
"EXCHANGE OFFER REGISTRATION STATEMENT" has the
meaning set forth in the Registration Rights Agreement.
"EXCHANGE SECURED NOTES" has the meaning set forth in the Recitals
to this Indenture and more particularly means any Secured Notes authenticated
and delivered under this Indenture pursuant to the Exchange Offer.
"EXCHANGEABLE STOCK" means any Capital Stock which is exchangeable
or convertible into another security (other than Capital Stock of the Issuer
which is neither Exchangeable Stock nor Redeemable Stock).
"GAAP" means generally accepted accounting principles in the United
States set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect from time to time.
"GLOBAL NOTE" means, individually and collectively, the Regulation S
Temporary Global Note, the Regulation S Permanent Note, the U.S. Global Note and
the Exchange Global Note.
"GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such other Person (whether arising
by virtue of partnership arrangements, or by agreements to keep well,
<PAGE>
13
to purchase assets, goods, securities or services, to take or pay or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); PROVIDED, HOWEVER, that the term "guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "guarantee" used as a verb has a corresponding meaning. The
term "guarantor" shall mean any Person guaranteeing any obligation.
"GUARANTEES" means, collectively, the Pride Guarantee and any
Subsidiary Guarantee.
"GUARANTOR" means, collectively, Pride and any Subsidiary Guarantor.
"HEDGING OBLIGATIONS" of any Person means the net obligation (not
the notional amount) of such Person pursuant to any interest rate swap
agreement, foreign currency exchange agreement, interest rate collar agreement,
option or futures contract or other similar agreement or arrangement relating to
interest rates or foreign exchange rates.
"HOLDER" or "NOTEHOLDER" means the Person in whose name a Secured
Note is registered on the Registrar's books.
"INCIDENTAL ASSET" is defined to mean any equipment, outfit,
furniture, furnishings, appliances, spare or replacement parts or stores owned
by the Issuer or a Restricted Subsidiary that have become obsolete or unfit for
use or no longer useful, necessary or profitable in the conduct of the business
of the Issuer or such Restricted Subsidiary, as the case may be. In no event
shall the term "Incidental Asset" include a drilling rig or a drill ship or a
Mortgaged Rig.
"INCUR" means issue, assume, guarantee, incur or otherwise become
liable for, PROVIDED, HOWEVER, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning.
<PAGE>
14
"INDEBTEDNESS" of any Person at any date means, without duplication:
(a) all indebtedness of such Person for borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof);
(b) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments;
(c) all obligations of such Person in respect of letters of credit
or other similar instruments (or reimbursement obligations with respect
thereto), other than standby letters of credit and performance bonds
issued by such Person in the ordinary course of business, to the extent
not drawn or, to the extent drawn, if such drawing is reimbursed not later
than the third Business Day following demand for reimbursement;
(d) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, except trade payables and accrued
expenses incurred in the ordinary course of business;
(e) all Capitalized Lease Obligations of such
Person;
(f) all Indebtedness of others secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person,
to the extent of the fair market value of all the assets of such Person
subject to such Lien;
(g) all Indebtedness of others guaranteed by such
Person to the extent of such guarantee;
(h) Redeemable Stock; and
(i) all Hedging Obligations of such Person.
For purposes of clause (h) of the preceding sentence, Redeemable Stock shall be
valued at the maximum fixed redemption, repayment or repurchase price, which
shall be calculated in accordance with the terms of such Redeemable Stock as if
such Redeemable Stock were repurchased on any date on which Indebtedness shall
be required to be determined pursuant to this Indenture; PROVIDED, HOWEVER, that
if such Redeemable Stock is not then permitted to be redeemed, repaid or
repurchased, the redemption, repayment or repurchase price shall be the book
value of such
<PAGE>
15
Redeemable Stock. The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability of any guarantees at such date;
PROVIDED that for purposes of calculating the amount of any non-interest bearing
or other discount security, such Indebtedness shall be deemed to be the
principal amount thereof that would be shown on the balance sheet of the issuer
thereof dated such date prepared in accordance with GAAP but that such security
shall be deemed to have been Incurred only on the date of the original issuance
thereof. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"INDENTURE" means this Indenture, as amended or supplemented from
time to time by one or more indentures supplemental hereto entered into pursuant
to the applicable provisions hereof, including for all purposes of this
Indenture and any supplemental indenture the provisions of the Trust Indenture
Act that are deemed to be a part of and govern this Indenture and any
supplemental indenture.
"INDIRECT PARTICIPANT" means a Person who holds an
interest through a Participant.
"INITIAL PURCHASER" means Donaldson, Lufkin &
Jenrette Securities Corporation.
"INITIAL SECURED NOTES" has the meaning set forth in the Recitals to
this Indenture and more particularly means any of the Secured Notes
authenticated and delivered under this Indenture other than Exchange Secured
Notes.
"INSTITUTIONAL ACCREDITED INVESTOR" means an entity which is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"INTEREST RATE PROTECTION AGREEMENT" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Issuer or any Restricted Subsidiary against
fluctuations in interest rates.
"INVESTMENT" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of guarantee or
<PAGE>
16
similar arrangement) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person. For purposes of
the definition of "Unrestricted Subsidiary", the definition of "Restricted
Payment" and Section 4.11, (i) "Investment" shall include the portion
(proportionate to the Issuer's equity interest in such Subsidiary) of the fair
market value of the net assets of any Subsidiary of the Issuer at the time that
such Subsidiary is designated an Unrestricted Subsidiary; PROVIDED, HOWEVER,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the
Issuer shall be deemed to continue to have a permanent "Investment" in such
Subsidiary at the time of such redesignation equal to (x) the amount of such
Investment immediately prior to such redesignation less (y) the portion
(proportionate to the Issuer's equity interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time of such
redesignation; and (ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at its fair market value at the time of such
transfer, in each case as determined in good faith by the Issuer's Board of
Directors.
"INVESTMENT GRADE RATING" means BBB- or above, in the case of S&P
(or its equivalent under any successor rating categories of S&P), Baa3 or above,
in the case of Moody's (or its equivalent under any successor rating categories
of Moody's), and the equivalent in respect of the ratings categories of any
Rating Agencies substituted for S&P or Moody's.
"ISSUE DATE" means the date on which the Secured Notes are
originally issued.
"ISSUER" means the Person named as such in the preamble of this
Indenture unless and until a successor replaces it pursuant to the applicable
provisions hereof and thereafter means such successor.
"ISSUER LOAN" means loans made under the Mitsubishi Loan Documents
purchased by the Issuer.
"ISSUER ORDER" means a written order or request signed in the name
of an Officer of the Issuer and delivered to the Trustee.
"ISSUER SECURITY AGREEMENT" means the Senior Secured Note Security
and Pledge Agreement of even date
<PAGE>
17
herewith among the Issuer, the Trustee and the Collateral Agent.
"LEGAL HOLIDAY" means a Saturday, a Sunday or other day on which
commercial banks in The City of New York, Brazil, the Bahamas or the British
Virgin Islands or in the city of the corporate trust office of the Trustee are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday, payment may be made on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
"LETTER OF CREDIT" means the standby irrevocable letter of credit
issued by the Letter of Credit Provider to the Trustee in substantially the form
of Exhibit E.
"LETTER OF CREDIT PROVIDER" means Republic National Bank of New
York, together with its successors.
"LIEN" means any mortgage, pledge, hypothecation, charge,
assignment, deposit arrangement, encumbrance, security interest, lien (statutory
or other), or preference, priority or other security or similar agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any agreement to give or grant a Lien or any lease, condition sale
or other title retention agreement having substantially the same economic effect
as any of the foregoing). For the purposes of this Indenture, the Issuer or any
of its Subsidiaries shall be deemed to own subject to a Lien any asset which the
Issuer or such Subsidiary has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, Capitalized Lease
Obligation or other title retention agreement relating to such asset.
"MARAD DOCUMENTS" means the documents listed on Schedule A hereto,
as the same may be amended or modified or refinanced from time to time.
"MARITIMA" means Maritima Petroleo e Engenharia Ltda.
"MITSUBISHI DOCUMENTS" means, collectively, the
Mitsubishi Loan Agreements and the Mitsubishi Loan
Collateral Documents.
"MITSUBISHI LOAN AGREEMENTS" means the documents listed on Schedule
B hereto, as the same may be amended or modified from time to time.
<PAGE>
18
"MITSUBISHI LOAN COLLATERAL DOCUMENTS" means the documents listed on
Schedule C hereto, as the same may be amended or modified from time to time.
"MATURITY" means the date on which the principal of a Secured Note
becomes due and payable as provided therein or in this Indenture, whether at the
Stated Maturity or the Change of Control Payment Date or by declaration of
acceleration, call for redemption or otherwise.
"MOODY'S" means Moody's Investors Service, Inc., or if Moody's
Investors Services, Inc. shall cease rating the specified debt securities and
such ratings business with respect thereto shall have been transferred to a
successor Person, such successor Person.
"MORTGAGED RIG" means any Rig subject to the Lien of the Security
Documents.
"MORTGAGED RIG OWNER" means any owner of a Mortgaged Rig. The
"Mortgaged Rig Owners" as of the date of this Indenture are Petrodrill Six
Limited and Petrodrill Seven Limited.
"NET AVAILABLE CASH" from an Asset Sale means cash payments or
Temporary Cash Equivalents received therefrom (including any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise and proceeds from the sale or other
disposition of any securities received as consideration, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to such properties or assets or received in any other noncash form), in each
case net of (i) all legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all federal, state, provincial, foreign
and local taxes required to be accrued as a liability under GAAP, as a
consequence of such Asset Sale, (ii) all payments made on any Indebtedness which
is secured by any assets subject to such Asset Sale, in accordance with the
terms of any Lien upon or other security agreement of any kind with respect to
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Sale, or by applicable law, be repaid out of the proceeds
from such Asset Sale, (iii) all distributions and other payments required to be
made to minority interest holders in Subsidiaries or joint ventures as a result
of such Asset Sale and (iv) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the
<PAGE>
19
property or other assets disposed in such Asset Sale and retained by the Issuer
or any Restricted Subsidiary after such Asset Sale.
"NET CASH PROCEEDS" means, with respect to any issuance or sale of
Capital Stock, the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"NON-CONVERTIBLE CAPITAL STOCK" means, with respect to any Person,
any non-convertible Capital Stock of such Person and any Capital Stock of such
Person convertible solely into non-convertible common stock of such person;
PROVIDED, HOWEVER, that Non-Convertible Capital Stock shall not include any
Redeemable Stock or Exchangeable Stock.
"OBLIGATIONS" means, with respect to any Indebtedness, any
obligation thereunder, including, without limitation, principal, premium and
interest (including post petition interest thereon and, with respect to the
Secured Notes, Special Interest and Additional Amounts), penalties, fees, costs,
expenses, indemnifications, reimbursements, damages and other liabilities.
"OBLIGORS" means the Issuer, Pride and the Subsidiary Guarantors, if
any, collectively; "Obligor" means the Issuer, Pride or any Subsidiary
Guarantor.
"OFFERING MEMORANDUM" means the Offering Memorandum, dated October
28, 1999, relating to the Issuer's offering and placement of the Initial Secured
Notes.
"OFFERING" means the Offering of the Initial Secured Notes by the
Issuer.
"OFFICER" means, with respect to any Person, the Chairman of the
Board, a Vice Chairman of the Board, the Chief Executive Officer, the President,
the Chief Financial Officer, the Chief Accounting Officer, the Treasurer, any
Assistant Treasurer, the Controller, the Secretary, an Assistant Secretary or
any Vice President of such person.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman
of the Board, a Vice Chairman of the Board, the President, the Chief Executive
Officer or a Vice President, and by the Chief Financial Officer, the Chief
Accounting Officer, the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Issuer or a
<PAGE>
20
Subsidiary and delivered to the Trustee, which shall comply with this Indenture.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee that meets the requirements of Sections
12.04 and 12.05 hereof. The counsel may be an employee of or counsel to the
Issuer, any Subsidiary, Pride, Maritima or the Trustee.
"PARI PASSU INDEBTEDNESS" means any Indebtedness of the Issuer,
whether outstanding on the date on which the Secured Notes are originally issued
or thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall be subordinated in right of payment to the Secured Notes.
"PARTICIPANT" means, with respect to DTC, Euroclear or Cedel, a
Person who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"PERMITTED HOLDER" means any Shareholder or any
Affiliate of a Shareholder.
"PERMITTED INVESTMENTS" means:
(a) certificates of deposit, bankers acceptances, time deposits,
Eurocurrency deposits and similar types of Investments routinely offered
by commercial banks with final maturities of one year or less issued by
commercial banks having capital and surplus in excess of $100,000,000;
(b) commercial paper issued by any corporation, if such commercial
paper has credit ratings of at least "A-1" by S&P and at least "P-1" by
Moody's;
(c) U.S. Government Obligations with a maturity of three years or
less;
(d) repurchase obligations of instruments of the type described in
clause (c);
(e) shares of money market mutual or similar funds having assets in
excess of $100,000,000;
(f) payroll advances in the ordinary course of business;
<PAGE>
21
(g) other advances and loans to officers and employees of the Issuer
or any Restricted Subsidiary, so long as the aggregate principal amount of
such advances and loans does not exceed $1,000,000 at any one time
outstanding;
(h) Investments in any Person in the form of a capital contribution
of the Issuer's Common Stock;
(i) Investments made by the Issuer in its Restricted Subsidiaries
(or any Person that will be a Restricted Subsidiary as a result of such
Investment) or by a Restricted Subsidiary in the Issuer or in one or more
Restricted Subsidiaries (or any Person that will be a Restricted
Subsidiary as a result of such Investment);
(j) Investments in stock, obligations or securities received in
settlement of debts owing to the Issuer or any Restricted Subsidiary as a
result of bankruptcy or insolvency proceedings or upon the foreclosure,
perfection or enforcement of any Lien in favor of the Issuer or any
Restricted Subsidiary, in each case as to debt owing to the Issuer or any
Restricted Subsidiary that arose in the ordinary course of business of the
Issuer or any such Restricted Subsidiary;
(k) Investments made in exchange for Indebtedness
permitted by clause (b)(iv) of Section 4.09;
(l) Investments in a Person other than a Restricted Subsidiary for
the purpose of financing the construction or upgrade of new drilling rigs,
drillships or similar vessels and related equipment, in an aggregate
amount not to exceed at any time outstanding $100,000,000; PROVIDED,
HOWEVER, that at the time of such Investment, the Issuer or such Person
has entered into a Qualifying Contract with respect thereto; and
(m) Investment represented by that portion of the proceeds from
Asset Sales that is not required to be cash or Temporary Cash Equivalents
by the covenant in Section 4.15 hereof.
"PERMITTED LIENS" means, with respect to any Person, (a) pledges or
deposits by such Person under worker's compensation laws, unemployment insurance
laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of
<PAGE>
22
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or United
States government bonds to secure surety or appeal bonds to which such Person is
a party, or deposits as security for contested taxes or import duties or for the
payment of rent, in each case Incurred in the ordinary course of business; (b)
Liens imposed by law, such as maritime, carriers', warehousemen's and mechanics'
Liens, in each case for sums not yet due or being contested in good faith by
appropriate proceedings or other Liens arising out of judgments or awards
against such Person with respect to which such Person shall then be proceeding
with an appeal or other proceedings for review; (c) Liens for property taxes not
yet subject to penalties for non-payment or which are being contested in good
faith and by appropriate proceedings; (d) Liens in favor of issuers of surety
bonds or letters of credit issued pursuant to the request of and for the account
of such Person in the ordinary course of its business; PROVIDED, HOWEVER, that
such letters of credit do not constitute Indebtedness; (e) minor survey
exceptions, minor encumbrances, easements or reservations of, or rights of
others for, licenses, rights-of-way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other restrictions as
to the use of real property or Liens incidental to the conduct of the business
of such Person or to the ownership of its properties which were not Incurred in
connection with Indebtedness and which do not in the aggregate materially
adversely affect the value of said properties or materially impair their use in
the operation of the business of such Person; (f) Liens securing Indebtedness
Incurred to finance the construction, equipping, mobilization, transportation,
installation, purchase or lease of, or repairs, upgrades, improvements or
additions to, property of such Person; PROVIDED, HOWEVER, that the Lien may not
extend to any property owned by such Person or any of its Subsidiaries at the
time the Lien is Incurred other than the property so constructed, equipped,
mobilized, transported, installed, purchased, leased, repaired, upgraded,
improved or added to, and the Indebtedness (other than any interest thereon)
secured by the Lien may not be Incurred more than 180 days after the later of
the purchase, acquisition, completion of construction, equipping, mobilization,
transportation, installation, repair, improvement, addition or commencement of
full operation of the property subject to the Lien; (g) Liens existing on the
Issue Date; (h) Liens on property or shares of Capital Stock of another Person
at the time such other Person becomes a Subsidiary of such Person; PROVIDED,
HOWEVER, that such Liens are not created, incurred or assumed in connection
with, or in contemplation of, such
<PAGE>
23
other Person becoming such a Subsidiary; PROVIDED FURTHER, HOWEVER, that such
Lien may not extend to any other property owned by such Person or any of its
Subsidiaries; (i) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means of a
merger or consolidation with or into such Person or a Subsidiary of such Person;
PROVIDED, HOWEVER, that such Liens are not created, incurred or assumed in
connection with, or in contemplation of, such acquisition; PROVIDED FURTHER,
HOWEVER, that the Liens may not extend to any other property owned by such
Person or any of its Subsidiaries; (j) Liens securing Indebtedness or other
obligations of a Subsidiary of such Person owing to such Person or a wholly
owned Subsidiary of such Person; (k) Liens securing Hedging Obligations so long
as such Hedging Obligations relate to Indebtedness that is, and is permitted to
be under this Indenture, secured by a Lien on the same property securing such
Hedging Obligations; (l) any charter or Qualifying Contract; (m) judgment Liens
not giving rise to an Event of Default; (n) rights of off-set of banks and other
Persons; (o) deposits made to obtain insurance; (p) Liens or equitable
encumbrances deemed to exist by reason of a negative pledge or other
arrangements to refrain from permitting Liens or fraudulent transfer law; (q)
Liens to secure any Refinancing (or successive Refinancings) as a whole, or in
part, of any Indebtedness secured by any Lien referred to in the foregoing
clauses (f), (g), (h) and (i); PROVIDED, HOWEVER, that (x) such new Lien shall
be limited to all or part of the same property that secured the original Lien
(plus improvements to or on such property); and (y) the Indebtedness secured by
such Lien at such time is not increased to any amount greater than the sum of
(A) the outstanding principal amount or, if greater, committed amount of the
Indebtedness described under clauses (f), (g), (h) and (i) at the time the
original Lien became a Permitted Lien and (B) an amount necessary to pay any
fees and expenses, including premiums, related to such refinancing, refunding,
extension, renewal or replacement; and (r) Liens created under the MARAD
Documents or the Mitsubishi Documents. Notwithstanding the foregoing, "Permitted
Liens" will not include any Lien described in clauses (f), (h) or (i) above to
the extent such Lien applies to any Additional Assets acquired directly or
indirectly from Net Available Cash pursuant to Section 4.15. For purposes of
this definition, the term "Indebtedness" shall be deemed to include interest on
such Indebtedness.
"PERSON" means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association, joint stock
company, trust,
<PAGE>
24
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"PREFERRED STOCK", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"PRIDE" means Pride International, Inc. and its
successors.
"PRIDE GUARANTEE" means the guarantee of the Secured Notes by Pride
pursuant to the provisions described in Article XIII hereof.
"PUBLIC EQUITY OFFERING" means an underwritten primary public
offering of common stock of the Issuer or a Shareholder pursuant to an effective
registration statement under the Securities Act or pursuant to applicable laws
of any jurisdiction outside the United States, in the case of a Shareholder,
only to the extent the net cash proceeds therefrom are contributed as equity
capital to the Issuer.
"QUALIFIED INSTITUTIONAL BUYER" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"QUALIFIED SUBSTITUTE OWNER" means, as of the date of acquisition of
beneficial ownership, directly or indirectly, of at least 26.4% of the total
voting power of the Voting Stock of the Issuer, a corporation (x) whose
long-term senior unsecured debt has an investment grade rating by either Moody's
or S&P and (y) which derived at least 50% of its revenue during the most recent
12-month period for which financial statements are publicly available from
offshore drilling operations.
"QUALIFYING CONTRACT" with respect to a drilling rig, drillship or
similar vessel means the charter or any other contract for the use thereof (i)
between the Issuer or a Restricted Subsidiary and a counterparty that, as
certified in an Officers' Certificate delivered to the Trustee in connection
therewith, is, or has a performance guarantee from a third party that is, (a) a
company that is either generally recognized as a major oil company, (b) an oil
company, a gas producer or an oil and gas service company, in each case at the
time such contract is executed having a Total Equity Market Capitalization of at
least
<PAGE>
25
$1.0 billion if such entity is a public company, or if such entity is not a
public company, having a consolidated net worth of $500.0 million or (c) a
company that has an investment grade rating of its long-term debt from Moody's
or S&P, (ii) having a minimum term of three years and (iii) containing a minimum
day rate for such rig, drillship or similar vessel.
"RATING AGENCIES" means (a) S&P and Moody's or (b) if S&P or Moody's
or both of them are not making ratings of the Secured Notes publicly available,
a nationally recognized United States rating agency or agencies, as the case may
be, selected by the Issuer, which will be substituted for S&P or Moody's or
both, as the case may be.
"RECORD DATE" means, for the interest payment on any Interest
Payment Date, the date specified in Section 2.12 hereof.
"REDEEMABLE STOCK" means, with respect to any Secured Notes, any
Capital Stock that, by its terms (or by the terms of any security into which it
is convertible, or for which it is exchangeable, in each case at the option of
the holder thereof), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the date on which such Secured Notes mature. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Redeemable Stock solely
because the holders thereof have the right to require the Issuer to repurchase
such Capital Stock upon the occurrence of a change of control or an asset sale
shall not constitute Redeemable Stock if the terms of such Capital Stock provide
that the Issuer may not repurchase or redeem any such Capital Stock pursuant to
such provisions unless such repurchase or redemption complies with the covenants
described in Sections 4.08, 4.11 and 4.15.
"REDEMPTION DATE" means, when used with respect to any Secured Note
or part thereof to be redeemed hereunder, the date fixed for redemption of such
Secured Notes pursuant to the terms of the Secured Notes and this Indenture.
"REDEMPTION PRICE" means, when used with respect to any Secured Note
or part thereof to be redeemed hereunder, the price fixed for redemption of such
Secured Note pursuant to the terms of the Secured Notes and this Indenture, plus
accrued and unpaid interest, if any, and Additional Amounts, if any, and Special
Interest, if any, thereon, to the Redemption Date.
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26
"REFINANCE" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and between the Issuer and
the Initial Purchaser, as such agreement may be amended, modified or
supplemented from time to time.
"REGULATION S" means Regulation S under the Securities Act
(including any successor regulation thereto), as it may be amended from time to
time.
"REGULATION S GLOBAL NOTE" means a Regulation S Temporary Global
Note or Regulation S Permanent Global Note, as appropriate.
"REGULATION S PERMANENT GLOBAL NOTE" means, collectively, one or
more permanent global senior notes that contain the paragraph referred to in
footnote 1, the phrase referred to in footnote 4 and the additional schedule
referred to in footnote 5 to the form of the Secured Note attached hereto as
Exhibit A, and that are deposited with the Secured Note Custodian and registered
in the name of the Depositary or its nominee, representing the Initial Secured
Notes sold in reliance on Regulation S.
"REGULATION S TEMPORARY GLOBAL NOTE" means a single temporary global
senior note that contains the paragraphs referred to in footnote 1, the phrase
referred to in footnote 4 and the additional schedule referred to in footnote 4
to the form of the Senior Secured Note attached hereto as Exhibit A, in the form
of the Secured Note attached hereto as Exhibit A that is deposited with the
Secured Note Custodian and registered in the name of the Depositary or its
nominee, representing the Initial Secured Notes sold in reliance on Regulation
S.
"RELATED BUSINESS" means any business related, ancillary or
complementary to the businesses of the Issuer and the Restricted Subsidiaries on
the Issue Date.
"RESERVE ACCOUNT" means the reserve account established pursuant to
the Reserve Account Agreement.
"RESERVE ACCOUNT AGREEMENT" means the Seniorc Secured Note Reserve
Account Agreement of even date herewith
<PAGE>
27
among the Issuer, the Trustee and Wilmington Trust Company as reserve account
agent.
"RESERVE ACCOUNT PROPERTY" means the funds and Investments
contained in the Reserve Account.
"RESPONSIBLE OFFICER", when used with respect to the Trustee, means
any officer of the Trustee with responsibility for the administration of this
Indenture and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"RESTRICTED COLLATERAL" means (1) any Rig made subject to the Lien
of the Security Agreements, (2) the Capital Stock of each Restricted Subsidiary
owning a Mortgaged Rig, (3) each Qualifying Contract subject to the Lien of the
Security Agreements and (4) the Reserve Account and the cash and Investments
credited thereto.
"RESTRICTED SUBSIDIARY" means any Subsidiary other than an
Unrestricted Subsidiary.
"RULE 144A" means Rule 144A under the Securities Act (including any
successor regulation thereto), as it may be amended from time to time.
"S&P" is defined to mean Standard & Poors Ratings Group, a division
of McGraw-Hill Companies, Inc. and its successors.
"SALE/LEASEBACK TRANSACTION" means any arrangement with any Person
providing for the leasing by the Issuer or any of its Restricted Subsidiaries,
for a period of more than three years, of any real or tangible personal
property, which property has been or is to be sold or transferred by the Issuer
or such Restricted Subsidiary to such Person in contemplation of such leasing.
"SEC" or "COMMISSION" means the Securities and
Exchange Commission.
"SECURED NOTE CUSTODIAN" means the Trustee, as custodian for the
Depositary with respect to the Secured Notes in global form, or any successor
entity thereto.
"SECURED NOTES" has the meaning set forth in the Recitals of this
Indenture and more particularly means any of the Secured Notes authenticated and
delivered under this Indenture.
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28
"SECURITIES ACT" means the U.S. Securities Act of
1933, as amended.
"SECURITY AGREEMENTS" means the Reserve Account Agreement, the
Issuer Security Agreement, the Mitsubishi Collateral Documents and any other
document that secures the
Secured Notes or an Issuer Loan.
"SENIOR INDEBTEDNESS" of any Person means (i) Indebtedness of such
Person, whether outstanding on the Issue Date or thereafter Incurred, and (ii)
accrued and unpaid interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Issuer to
the extent post filing interest is allowed in such proceeding) in respect of (A)
indebtedness for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
person is responsible or liable unless, in the case of (i) and (ii), in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are subordinate in right of
payment to the Secured Notes, the Issuer Loans or the Subsidiary Guarantees, as
applicable; PROVIDED, HOWEVER, that Senior Indebtedness shall not include (1)
any obligation of such Person to any Subsidiary of such Person, (2) any
liability for federal, state, local, foreign or other taxes owed or owing by
such Person, (3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities), (4) any Indebtedness of such Person
(and any accrued and unpaid interest in respect thereof) which is subordinate or
junior in any respect to any other Indebtedness or other obligation of such
Person or (5) that portion of any Indebtedness which at the time of Incurrence
is Incurred in violation of this Indenture.
"SHAREHOLDER" means any of the Shareholders.
"SHAREHOLDERS" means Drillpetro Inc., a company organized under the
laws of the Bahamas, Techdrill Inc., a company organized under the laws of the
Bahamas (each of the foregoing an Affiliate of Maritima), Westville Management
Corporation Inc., a company organized under the laws of the British Virgin
Islands (an indirect wholly owned subsidiary of Pride) and First Reserve
Corporation, individually or collectively as the context requires.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary Guarantor and any
other Restricted Subsidiary that would be a Significant Subsidiary of the Issuer
within the meaning of
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29
Rule 1-02 under Regulation S-X promulgated by the SEC. For purposes of Section
6.01(g) and Section 6.01(h) hereof only, the term "Significant Subsidiary" shall
also include any group of Restricted Subsidiaries that, taken as a whole as of
the latest audited consolidated financial statements for the Issuer and its
Subsidiaries, would constitute a Significant Subsidiary.
"SPECIAL INTEREST" means all "special interest" owing pursuant to
the Registration Rights Agreement.
"SPECIAL RECORD DATE" means a date fixed by the Trustee pursuant to
Section 2.12 hereof for the payment of Defaulted Interest.
"STATED MATURITY" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"SUBORDINATED OBLIGATION" means any Indebtedness of the Issuer or a
Subsidiary Guarantor, as the case may be (whether outstanding on the Issue Date
or thereafter Incurred) which is subordinate or junior in right of payment to
the Secured Notes, the Issuer Loans or any Subsidiary Guarantee, as applicable,
whether pursuant to a written agreement to that effect or by operation of law.
"SUBSIDIARY" means, with respect to any Person:
(1) any corporation of which more than 50% of the total voting power
of all classes of the capital stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors is
owned by such Person directly or through one or more other Subsidiaries of
such Person, and
(2) any entity other than a corporation of which at least a majority
of the capital stock or other equity interest (however designated)
entitled (without regard to the occurrence of any contingency) to vote in
the election of the governing body, partners, managers or others that will
control the management of such entity is owned by such Person directly or
through one or more other Subsidiaries of such Person.
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30
"SUBSIDIARY GUARANTOR" means each Subsidiary of the Issuer, whether
now owned or hereafter formed, which shall execute and deliver a Subsidiary
Guarantee.
"SUBSIDIARY GUARANTEE" means a guarantee in the form of Exhibit D
hereto of the Issuer's obligations with respect to the Secured Notes issued by a
Subsidiary of the Issuer.
"TANGIBLE PROPERTY" means all land, buildings, machinery and
equipment and leasehold interests and improvements which would be reflected on a
balance sheet of the Issuer prepared in accordance with GAAP, excluding (a) all
rights, contracts and other intangible assets of any nature whatsoever and (b)
all inventories and other current assets.
"TEMPORARY CASH INVESTMENTS" means Investments described in clauses
(a), (b), (c) and (d) of the definition of Permitted Investments.
"TOTAL EQUITY MARKET CAPITALIZATION" of any Person means, as of any
day of determination, the sum of (i) the product of (A) the aggregate number of
outstanding primary shares of common stock of such Person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such Person) multiplied by (B) the
average closing price of such common stock over the 20 consecutive Business Days
immediately preceding such day, plus (ii) the liquidation value of any
outstanding shares of preferred stock of such Person on such day.
"TRANSFER RESTRICTED NOTES" means Secured Notes that bear or are
required to bear the Private Placement Legend.
"TRUST INDENTURE ACT" or "TIA" means the U.S. Trust Indenture Act of
1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of this Indenture,
PROVIDED that if the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" or "TIA" means, if so required by such amendment, the
Trust Indenture Act of 1939, as so amended.
"TRUSTEE" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
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31
"UNRESTRICTED SUBSIDIARY" means:
(a) any Subsidiary of the Issuer that at the time of determination
will be designated an Unrestricted Subsidiary by the Board of Directors of
the Issuer as provided below; and
(b) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Issuer may designate any Subsidiary of
the Issuer as an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries (x) owns any Capital Stock or Indebtedness of, or holds any Lien on
any property of, the Issuer or any other Subsidiary of the Issuer that is not a
Subsidiary of the Subsidiary to be so designated or (y) owns any of the
Collateral; PROVIDED, HOWEVER, that either (A) the Subsidiary to be so
designated has total assets greater than $10,000 or less or (B) if such
Subsidiary has assets greater than $10,000, such designation would be permitted
under Section 4.11.
Any such designation by the Board of Directors of the Issuer shall
be evidenced to the Trustee by filing a resolution of the Board of Directors
with the Trustee giving effect to such designation. The Board of Directors of
the Issuer may designate any Unrestricted Subsidiary as a Restricted Subsidiary
if, immediately after giving effect to such designation, (A) no Default or Event
of Default shall have occurred and be continuing and (B) the Issuer could incur
$1.00 of additional Indebtedness under Section 4.09(a) hereof.
"U.S. GLOBAL NOTE" means, collectively, one or more permanent Global
Notes that contain the paragraphs referred to in footnote 1 or footnote 3, in
the phrase referred to in footnote 4 and the additional schedule referred to in
footnote 5 to the form of the Secured Note attached hereto as Exhibit A, and
that are deposited with the Secured Note Custodian and registered in the name of
the Depositary or its nominee, representing Secured Notes sold in reliance on
Rule 144A or in reliance on another exemption from the registration requirements
of the Securities Act.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
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32
"U.S. PERSON" means (i) any individual resident in the United
States, (ii) any partnership or corporation organized or incorporated under the
laws of the United States, (iii) any estate of which an executor or
administrator is a U.S. person (other than an estate governed by foreign law and
of which at least one executor or administrator is a non U.S. Person who has
sole or shared investment discretion with respects to its assets), (iv) any
trust of which any trustee is a U.S. Person (other than a trust of which at
least one trustee is an non-U.S. Person who has sole or shared investment
discretion with respect to its assets and no beneficiary of the trust (and no
settler, if the trust is revocable) is a U.S. Person), (v) any agency or branch
of a foreign entity located in the United States, (vi) any nondiscretionary or
similar account (other than an estate or trust) held by a dealer or other
fiduciary for the benefit or account of a U.S. Person, (vii) any discretionary
or similar account (other than an estate or trust) held by a dealer or other
fiduciary organized, incorporated or (if an individual) resident in the United
States (other than such an account held for the benefit or account of a non U.S.
Person), (viii) any partnership or corporation organized or incorporated under
the laws of a foreign jurisdiction and formed by a U.S. Person principally for
the purpose of investing in securities not registered under the Securities Act
(unless it is organized or incorporated and owned, by "accredited investors"
within the meaning of Rule 501(a) under the Securities Act who are not natural
persons, estates or trusts); PROVIDED, HOWEVER, that the term "U.S. Person"
shall not include (A) a branch or agency of a U.S. Person that is located and
operating outside the United States for valid business purposes as a locally
regulated branch or agency engaged in the banking or insurance business, (B) any
employee benefit plan established and administered in accordance with the law,
customary practices and documentation of a foreign country and (C) the
international organizations set forth in Section 902(k)(vi) of Regulation S and
any other similar international organizations, and their agencies, affiliates
and pension plans.
"VOTING STOCK OF A PERSON" means all classes of Capital Stock or
other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" means a Restricted Subsidiary
all the Capital Stock of which (other
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33
than directors' qualifying shares) is owned by the Issuer or one or more Wholly
Owned Restricted Subsidiaries.
SECTION 1.02. OTHER DEFINITIONS.
DEFINED
TERM IN SECTION
- - ---- ----------
"Act".................................................... 12.06(a)
"Additional Amounts"..................................... 4.28(a)
"Affiliate Transaction".................................. 4.17(a)
"Change of Control"...................................... 4.08(a)
"Change of Control Offer"................................ 4.08(a)
"Change of Control Purchase Price"....................... 4.08(a)
"Change of Control Offer Period"......................... 4.08(b)
"Change of Control Payment Date"......................... 4.08(b)
"Covenant Defeasance".................................... 9.03
"DTC".................................................... 2.03
"Defaulted Interest"..................................... 2.12
"Defeasance"............................................. 9.02
"Event of Default"....................................... 6.01
"40-day restricted period"............................... 2.01(c)
"Guaranteed Indebtedness"................................ 4.19
"Interest Payment Date".................................. 2.12
"Make Whole Premium"..................................... 3.07
"Mortgaged Rig Asset".................................... 4.15(a)
"Paying Agent"........................................... 2.03
"Pride Indenture"........................................ 13.03(b)
"Private Placement Legend"............................... 2.06(f)(i)
"Process Agent".......................................... 12.10
"Registrar".............................................. 2.03
"Restricted Payment"..................................... 4.11(a)
"Secured Notes".......................................... 2.01(b)
"Securities Register".................................... 2.03
"Successor".............................................. 5.01(a)
"Tax Jurisdiction"....................................... 4.28(a)
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34
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the Trust Indenture Act, the
provision is incorporated by reference in and made a part of this Indenture.
The following Trust Indenture Act terms used in this Indenture have
the following meanings:
"indenture securities" means the Secured Notes;
"indenture security holder" means a Holder of a Secured Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Secured Notes means the Issuer or any other Obligor
on the Secured Notes.
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by the Trust Indenture Act reference to another statute
or defined by Commission rule under the Trust Indenture Act have the meanings so
assigned to them therein.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(1) the words "herein," "hereof" and "hereunder", and other words of
similar import, refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(2) a term has the meaning assigned to it;
(3) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(4) "or" is not exclusive;
(5) words in the singular include the plural, and in the plural
include the singular;
(6) provisions apply to successive events and transactions;
(7) references to sections of or rules under the Securities Act
shall be deemed to include substitute,
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35
replacement of successor sections or rules adopted by the Commission from
time to time;
(8) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with generally accepted accounting principles;
(9) when used with respect to the Secured Notes, the term "principal
amount" shall mean the principal amount thereof at Maturity;
(10) unless otherwise expressly provided herein, the principal
amount of any preferred stock shall be greater of (i) the maximum
liquidation value of such preferred stock or (ii) the maximum mandatory
redemption or mandatory repurchase price with respect to such preferred
stock; and
(11) all references to amounts of money or $ mean U.S. Dollars.
ARTICLE II
THE SECURED NOTES
SECTION 2.01. FORM AND DATING. (a) GENERAL. The Secured Notes,
together with the Trustee's certificate of authentication and Pride's notation
of the Pride Guarantee, shall be substantially in the form set forth in Exhibit
A hereto. The Secured Notes may have notations, legends or endorsements required
by law, stock exchange rule or usage. Each Secured Note shall be dated the date
of its authentication. The Secured Notes shall be issued only in fully
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. The Initial Secured Notes and the Exchange Secured Notes will
be the same except that the Private Placement Legend and paragraph 21 will be
omitted from the Exchange Secured Notes.
The terms and provisions contained in the Secured Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Issuer, Pride, Maritima and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
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36
(b) AUTHORIZED PRINCIPAL AMOUNT; TERMS. The aggregate principal
amount of Secured Notes which may be authenticated and delivered under this
Indenture is $53,000,000 issuable in a single series. All Secured Notes under
this Indenture shall in all respects be equally and ratably entitled to the
benefits hereof without preference, priority or distinction on account of the
actual time of the authentication and delivery of such Secured Notes.
There is created a series of Secured Notes with the following terms:
The title of the Secured Notes will be 11 3/4% Senior Secured Notes
due 2001 (the "Secured Notes"). The Secured Notes will be limited to (A)
Initial Secured Notes in an aggregate principal amount not to exceed
$53,000,000 (B) Exchange Secured Notes for issue only in the Exchange
Offer pursuant to the Exchange Offer Registration Statement for a like
principal amount of Initial Secured Notes exchanged in such Exchange
Offer, in each case upon the receipt of an Issuer Order directing the
Trustee to authenticate such Secured Notes and certifying that all
conditions precedent to the issuance of the relevant Secured Notes
contained herein have been complied with. The aggregate principal amount
of Secured Notes outstanding at any time may not exceed $53,000,000,
except as provided in Section 2.07 hereof. The Secured Notes will mature
on November 1, 2001.
(c) INITIAL SECURED NOTES. Initial Secured Notes, with the notation
of the Pride Guarantee endorsed thereon, shall be issued in the form of one or
more permanent Global Notes in definitive fully registered form without interest
coupons. Secured Notes offered and sold to QIBs in reliance on Rule 144A, shall
be issued initially in the form of the U.S. Global Note, which shall be
deposited on behalf of the purchasers of the Secured Notes represented thereby
with the Secured Note Custodian, and registered in the name of the Depositary or
a nominee of the Depositary, duly executed by the Issuer and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the U.S.
Global Note may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary or its nominee as hereinafter
provided. Initial Secured Notes offered and sold in reliance on Regulation S
shall be issued initially in the form of the Regulation S Temporary Global Note,
which shall be deposited on behalf of the purchasers of the Secured Notes
represented thereby with the Secured Note Custodian, and registered in the name
of the Depositary or the nominee of the Depositary
<PAGE>
37
for the accounts of designated agents holding on behalf of Euroclear or Cedel,
duly executed by the Issuer and authenticated by the Trustee as hereinafter
provided. The "40--day restricted period" (as defined in Regulation S) shall be
terminated upon the receipt by the Trustee of a written certificate from the
Depositary, together with copies of certificates from Euroclear and Cedel
certifying that they have received certification of non-United States beneficial
ownership of 100% of the aggregate principal amount of the Regulation S
Temporary Global Note (except to the extent of any beneficial owners thereof who
acquired an interest therein pursuant to another exemption from registration
under the Securities Act and who will take delivery of a beneficial ownership
interest in a 144A Global Note, all as contemplated by Section 2.06(a)(ii)
hereof). Following the termination of the 40--day restricted period, beneficial
interests in the Regulation S Temporary Global Note shall be exchanged for
beneficial interests in Regulation S Permanent Global Note pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Note, the Trustee shall cancel the Regulation S Temporary
Global Note. The aggregate principal amount of the Regulation S Temporary Global
Note and the Regulation S Permanent Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depository or its nominee, as the case may be, in connection with transfers of
interest as hereinafter provided.
Each Global Note shall represent such of the outstanding Secured
Notes as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Secured Notes from time to time
endorsed on Schedule A thereto and that the aggregate amount of outstanding
Secured Notes represented thereby may from time to time be reduced or increased,
as appropriate, to reflect exchanges, redemptions and transfers of interests.
Any endorsement of Schedule A of a Global Note to reflect the amount of any
increase or decrease in the amount of outstanding Secured Notes represented
thereby shall be made by the Trustee or the Secured Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
The provisions of the "Operating Procedures of the Euroclear
Clearance System" and "Terms and Conditions Governing Use of Euroclear" and the
"Management Regulations" and "Instructions to Participants" of Cedel shall be
applicable to interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Note that are
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held by Participants through Euroclear or Cedel. The Trustee shall have no
obligation to notify Holders of any such procedures or to monitor or enforce
compliance with the same.
Except as set forth in Section 2.06 hereof, the Global Notes may be
transferred, in whole and not in part, only to another nominee of the Depositary
or to a successor of the Depositary or its nominee.
(d) BOOK-ENTRY PROVISIONS. This Section 2.01(d) shall apply only to
Global Notes deposited with or on behalf of the Depositary.
The Issuer shall execute and the Trustee shall, in accordance with
this Section 2.01(d), authenticate and deliver the Global Secured Notes that (i)
shall be registered in the name of the Depositary or the nominee of the
Depositary and (ii) shall be delivered by the Trustee to the Depositary or
pursuant to the Depositary's instructions or held by the Secured Note Custodian.
Participants shall have no rights either under this Indenture with
respect to any Global Note held on their behalf by the Depositary or by the
Secured Note Custodian as custodian for the Depositary or under such Global
Note, and the Depositary may be treated by the Issuer, the Trustee and any agent
of the Issuer or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Participants, the
operation of customary practices of such Depositary governing the exercise of
the rights of an owner of a beneficial interest in any Global Note.
(e) CERTIFICATED SECURED NOTES. Secured Notes issued in certificated
form shall be substantially in the form of Exhibit A attached hereto (but
without including the text referred to in footnotes 1 and 4 thereto) and shall
be printed, typewritten, lithographed or engraved or produced by any combination
of these methods or may be produced by any other method permitted by the rules
of any securities exchange on which the Secured Notes may be listed, as
evidenced by the execution of such Secured Notes.
(f) PROVISIONS APPLICABLE TO FORMS OF SECURED NOTES. The Secured
Notes may also have such additional provisions, omissions, variations or
substitutions as are
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39
not inconsistent with the provisions of this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with this Indenture,
any applicable law or with any rules made pursuant thereto or with the rules of
any securities exchange or governmental agency or as may be determined
consistently herewith by the Officers of the Issuer executing such Secured
Notes, as conclusively evidenced by their execution of such Secured Notes. All
Secured Notes will be otherwise substantially identical except as provided
herein.
Subject to the provisions of this Article II, a Holder of a Global
Note may grant proxies and otherwise authorize any Person to take any action
that a Holder is entitled to take under this Indenture or the Secured Notes.
SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers shall sign
the Secured Notes for the Issuer by manual or facsimile signature; and one
officer of Pride shall sign the notation of the Pride Guarantee endorsed thereon
for Pride by manual or facsimile signature. All references herein to execution
of Secured Notes shall include references to Pride signing the notation of the
Pride Guarantee endorsed thereon.
If an Officer whose signature is on a Secured Note no longer holds
that office at the time a Secured Note is authenticated, the Secured Note shall
nevertheless be valid.
A Secured Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Secured Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Secured Notes shall be
substantially as set forth in Exhibit A hereto.
The Trustee shall authenticate (i) Initial Secured Notes for
original issue in an aggregate principal amount not to exceed $53,000,000 and
(ii) Exchange Secured Notes for issue only in the Exchange Offer pursuant to the
Exchange Offer Registration Statement for a like principal amount of Initial
Secured Notes exchanged in such Exchange Offer, in each case upon the receipt of
an Issuer Order directing the Trustee to authenticate such Secured Notes and an
Officers' Certificate certifying that all conditions precedent to the issuance
of the relevant Secured Notes contained herein have been complied with.
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40
The aggregate principal amount of Secured Notes outstanding at any
time may not exceed $53,000,000, except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Issuer to authenticate Secured Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Secured Notes whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Issuer or an Affiliate of the Issuer.
SECTION 2.03. REGISTRAR AND PAYING AGENT. The Issuer shall maintain
(i) an office or agency where Secured Notes may be presented for registration of
transfer or for exchange ("Registrar"), (ii) an office or agency where Secured
Notes may be presented for payment ("Paying Agent"), and (iii) and an office or
agency where notices or demands to or upon the Issuer and any Guarantor in
respect of the Secured Notes and this Indenture may be served. The Registrar
shall keep a register of the Secured Notes and of their transfer and exchange
(the "Securities Register"). The Issuer may appoint one or more co-registrars
and one or more additional paying agents except as otherwise provided in this
Indenture. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Issuer may change any Paying
Agent or Registrar without notice to any Holder. The Issuer shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Issuer fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Issuer or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Issuer initially appoints The Depository Trust Issuer ("DTC") to
act as Depositary with respect to the Global Secured Notes.
The Issuer initially appoints the Trustee (at the Corporate Trust
Office of the Trustee) to act as the Registrar and Paying Agent and to act as
Secured Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Issuer shall
require each Paying Agent other than the Trustee to agree in writing that the
Paying Agent will hold in trust for the benefit of Holders or the Trustee all
money held by the Paying Agent for the payment of
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41
principal of, premium, if any, on, interest on, and Special Interest, if any,
and Additional Amounts, if any, on, the Secured Notes, and shall notify the
Trustee of any default by the Issuer in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to pay all money held
by it to the Trustee. The Issuer at any time may require a Paying Agent to pay
all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Issuer, a Guarantor, or a Subsidiary or
Affiliate of any thereof) shall have no further liability for the money. If the
Issuer, a Guarantor or a Subsidiary or Affiliate of any thereof acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to the Issuer, the Trustee shall serve as
Paying Agent for the Secured Notes.
SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of all Holders and shall otherwise comply with TIA Section
312(a). If the Trustee is not the Registrar, the Issuer shall furnish to the
Trustee at least seven Business Days before each Interest Payment Date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Secured Notes, and the Issuer shall otherwise comply with TIA
Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF
GLOBAL SECURED NOTES. The transfer and exchange of beneficial interests in
Global Secured Notes shall be effected through the Depositary, in accordance
with this Indenture and the Applicable Procedures, which shall include
restrictions on transfer comparable to those set forth herein to the extent
required by the Securities Act. Beneficial interests in a Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the same Global Note in accordance with the transfer restrictions
set forth in subsection (e) of this Section 2.06 and in the legend in subsection
(f) of this Section 2.06. Transfers of beneficial interests in the Global Notes
to Persons required to take delivery thereof in the form of an interest in
another Global Note shall be permitted as follows:
(i) U.S. GLOBAL NOTE TO REGULATION S GLOBAL NOTE. Prior to the
expiration of the 40-day restricted period, an owner of a beneficial
interest in the U.S.
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42
Global Note deposited with the Depositary (or the Secured Note Custodian)
will not be permitted to transfer its interest to a Person who wishes to
take delivery thereof in the form of an interest in the Regulation S
Global Note. If, at any time after the expiration of the 40-day restricted
period, an owner of a beneficial interest in the U.S. Global Note
deposited with the Depositary (or the Secured Note Custodian) wishes to
transfer its beneficial interest in the U.S. Global Note to a Person who
is required or permitted to take delivery thereof in the form of an
interest in the Regulation S Global Note, such owner shall, subject to the
Applicable Procedures, exchange or cause the exchange of such interest for
an equivalent beneficial interest in the Regulation S Global Note as
provided in this Section 2.06(a)(i). Upon receipt by the Trustee of (1)
instructions given in accordance with the Applicable Procedures from a
Participant directing the Trustee to credit or cause to be credited a
beneficial interest in the Regulation S Global Note in an amount equal to
the beneficial interest in the U.S. Global Note to be exchanged, (2) a
written order given in accordance with the Applicable Procedures
containing information regarding the Participant account of the Depositary
and the Euroclear or Cedel account to be credited with such increase, and
(3) a certificate in the form of Exhibit B-1 hereto given by the owner of
such beneficial interest stating that the transfer of such interest has
been made in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with Rule 903 or Rule 904
of Regulation S, then the Trustee, as Registrar, shall instruct the
Depositary to reduce or cause to be reduced the aggregate principal amount
at Maturity of the U.S. Global Note and to increase or cause to be
increased the aggregate principal amount at Maturity of the Regulation S
Global Note by the principal amount at Maturity of the beneficial interest
in the U.S. Global Note to be exchanged or transferred, to credit or cause
to be credited to the account of the Person specified in such
instructions, a beneficial interest in the Regulation S Global Note equal
to the reduction in the aggregate principal amount at Maturity of the U.S.
Global Note, and to debit, or cause to be debited, from the account of the
Person making such exchange or transfer the beneficial interest in the
U.S. Global Note that is being exchanged or transferred.
(ii) REGULATION S GLOBAL NOTE TO U.S. GLOBAL NOTE. Prior to the
expiration of the 40-day restricted
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43
period, an owner of a beneficial interest in the Regulation S Global Note
deposited with the Depositary (or the Secured Note Custodian) will not be
permitted to transfer its interest to a Person who wishes to take delivery
thereof in the form of an interest in the U.S. Global Note. If, at any
time, after the expiration of the 40-day restricted period, an owner of a
beneficial interest in the Regulation S Global Note deposited with the
Depositary or with the Secured Note Custodian wishes to transfer its
beneficial interest in the Regulation S Global Note to a Person who is
required or permitted to take delivery thereof in the form of an interest
in the U.S. Global Note, such owner shall, subject to the Applicable
Procedures, exchange or cause the exchange of such interest for an
equivalent beneficial interest in the U.S. Global Note as provided in this
Section 2.06(a)(ii). Upon receipt by the Trustee of (1) instructions from
Euroclear or Cedel, if applicable, and the Depositary, directing the
Trustee, as Registrar, to credit or cause to be credited a beneficial
interest in the U.S. Global Note equal to the beneficial interest in the
Regulation S Global Note to be exchanged, such instructions to contain
information regarding the Participant account with the Depositary to be
credited with such increase, (2) a written order given in accordance with
the Applicable Procedures containing information regarding the Participant
account of the Depositary and (3) a certificate in the form of Exhibit B-2
attached hereto given by the owner of such beneficial interest stating (A)
if the transfer is pursuant to Rule 144A, that the Person transferring
such interest in the Regulation S Global Note reasonably believes that the
Person acquiring such interest in the U.S. Global Note is a QIB and is
obtaining such beneficial interest in a transaction meeting the
requirements of Rule 144A and any applicable blue sky or securities laws
of any state of the United States, (B) that the transfer complies with the
requirements of Rule 144 under the Securities Act, (C) if the transfer is
to an Institutional Accredited Investor that such transfer is in
compliance with the Securities Act and that a certificate in the form of
Exhibit C attached hereto is attached thereto, together with, if the
Issuer should so request or if the transfer is in respect of an aggregate
principal amount of Secured Notes less than $250,000, an Opinion of
Counsel in form reasonably acceptable to the Issuer and to the Registrar
that such transfer is in compliance with the Securities Act or (D) if the
transfer is pursuant to any other exemption from the registration
requirements of the Securities Act, that
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the transfer of such interest has been made in compliance with the
transfer restrictions applicable to the Global Notes and pursuant to and
in accordance with the requirements of the exemption claimed, such
statement to be supported by an Opinion of Counsel from the transferee or
the transferor in form reasonably acceptable to the Issuer and to the
Registrar and, in each case, in accordance with any applicable securities
laws of any state of the United States or any other applicable
jurisdiction, then the Trustee, as Registrar, shall instruct the
Depositary to reduce or cause to be reduced the aggregate principal amount
at Maturity of the Regulation S Global Note and to increase or cause to be
increased the aggregate principal amount at Maturity of the U.S. Global
Note by the principal amount at Maturity of the beneficial interest in the
Regulation S Global Note to be exchanged or transferred, and the Trustee,
as Registrar, shall instruct the Depositary, concurrently with such
redemption, to credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the U.S. Global
Note equal to the reduction in the aggregate principal amount at Maturity
of the Regulation S Global Note and to debit or cause to be debited from
the account of the Person making such transfer the beneficial interest in
the Regulation S Global Note that is being exchanged or transferred.
(iii) U.S. GLOBAL NOTES TO INSTITUTIONAL ACCREDITED INVESTOR. If, at
any time, an owner of a beneficial interest in the U.S. Global Note
deposited with the Depositary (or the Secured Note Custodian) wishes to
transfer its beneficial interest in such U.S. Global Note to a Person who
is an Institutional Accredited Investor, such owner shall, subject to the
Applicable Procedures and the other provisions of this Section 2.06,
exchange or cause the exchange of such interest for an equivalent
beneficial interest in a U.S. Global Note as provided in this Section
2.06(a) (iii). Upon receipt by the Trustee of (1) instructions given in
accordance with the Applicable Procedures from a Participant directing the
Trustee to credit or cause to be credited a beneficial interest in a U.S.
Global Note in an amount equal to the beneficial interest in the U.S.
Global Note to be exchanged, (2) a written order given in accordance with
the Applicable Procedures containing information regarding the Participant
account of the Depositary to be credited with such increase, and (3) a
certificate in the form of Exhibit C hereto given by the proposed
transferee,
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45
and, if the Issuer should so request, an Opinion of Counsel provided by
the transferor or the transferee (a copy of which the Transferor attaches
to such certificate), in form reasonably acceptable to the Issuer and to
the Registrar, to the effect that such transfer is in compliance with the
Securities Act, then the Trustee, as Registrar, shall instruct the
Depositary to credit or cause to be credited to the account of the Person
specified in such instructions, a beneficial interest in the U.S. Global
Note equal to the aggregate principal amount being transferred, and to
debit, or cause to be debited, from the account of the Person making such
exchange or transfer the beneficial interest in the U.S. Global Note that
is being exchanged or transferred.
(b) TRANSFER AND EXCHANGE OF CERTIFICATED SECURED NOTES. When
Certificated Secured Notes are presented by a Holder to the Registrar with a
request to register the transfer of the Certificated Secured Notes or to
exchange such Certificated Secured Notes for an equal principal amount of
Certificated Secured Notes of other authorized denominations, the Registrar
shall register the transfer or make the exchange as requested only if the
Certificated Secured Notes are presented or surrendered for registration of
transfer or exchange, are endorsed and contain a signature guarantee or are
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney and contains a
signature guarantee, duly authorized in writing and the Registrar received the
following documentation (all of which may be submitted by facsimile):
In the case of Certificated Secured Notes that are Transfer
Restricted Secured Notes, such request shall be accompanied by the
following additional information and documents, as applicable:
(i) if such Transfer Restricted Note is being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, or such Transfer Restricted Note is being
transferred to the Issuer, a certification to that effect from such
Holder (in substantially the form of Exhibit B-3 hereto); or
(ii) if such Transfer Restricted Note is being transferred to
a QIB in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with Rule
144 under the Securities Act or in an
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46
offshore transaction pursuant to and in compliance with Rule 904
under the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that effect
from such Holder (in substantially the form of Exhibit B-3 hereto);
or
(iii) if such Transfer Restricted Note is being transferred in
reliance on any other exemption from the registration requirements
of the Securities Act, a certification to that effect from such
Holder (in substantially the form of Exhibit B-3 hereto) and an
Opinion of Counsel from such Holder or the transferee in form
reasonably acceptable to the Issuer and to the Registrar to the
effect that such transfer is in compliance with the Securities Act.
(c) TRANSFER OF A BENEFICIAL INTERESTS IN GLOBAL NOTES FOR
CERTIFICATED SECURED NOTES. (i) The Global Notes that are Transfer Restricted
Notes or the Exchange Global Notes, as the case may be, shall be exchanged by
the Issuer for one or more Certificated Secured Notes representing Initial
Secured Notes or Exchange Secured Notes, as the case may be, if (x) the
Depositary (A) has notified the Issuer that it is unwilling or unable to
continue as, or ceases to be, a "Clearing Agency" registered under Section 17A
of the Exchange Act and (B) a successor to the Depositary registered as a
"Clearing Agency" under Section 17A of the Exchange Act is not able to be
appointed by the Issuer within 90 calendar days or (y) the Depositary is at any
time unwilling or unable to continue as Depositary and a successor to the
Depositary is not able to be appointed by the Issuer within 90 calendar days or
(C) the Issuer, at its option, delivers a notice in the form of an Officers'
Certificate that it elects to cause the issuance of Certificated Secured Notes.
If an Event of Default occurs and is continuing, the Issuer shall, at the
request of the Holder thereof, exchange all or part of a Global Note that is a
Transfer Restricted Note or an Exchange Global Note, as the case may be, for one
or more Certificated Secured Notes representing Initial Secured Notes or
Exchange Secured Notes, as the case may be; PROVIDED that the principal amount
of each of such Certificated Secured Notes, and such Global Note, after such
exchange, shall be $1,000 or an integral multiple thereof. Whenever a Global
Note is exchanged as a whole for one or more Certificated Secured Notes, it
shall be surrendered by the Holder thereof to the
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Trustee for cancelation. Whenever a Global Note is exchanged in part for one or
more Certificated Secured Notes, it shall be surrendered by the Holder thereof
to the Trustee and the Trustee shall make the appropriate notations to Schedule
A thereof pursuant to Section 2.01 hereof. All Certificated Secured Notes or
Exchange Secured Notes, as the case may be, issued in exchange for a Global Note
or any portion thereof shall be registered in such names, and delivered, as the
Depositary shall instruct the Trustee. Any Certificated Secured Notes issued
pursuant to this Section 2.06(c)(i) shall include the Private Placement Legend,
except as otherwise provided for by this Section 2.06. Interests in a Global
Note may not be exchanged for Certificated Secured Notes other than as provided
in this Section 2.06. If a beneficial interest in a Transfer Restricted Note is
being transferred, the following additional documents and information must be
submitted (including by facsimile):
(A) if such beneficial interest is being transferred to the Person
designated by the Depositary as being the beneficial owner, a
certification to that effect from such Person (in substantially the form
of Exhibit B-4 hereto);
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act or pursuant to an
exemption from registration in accordance with Rule 144 under the
Securities Act or in an offshore transaction pursuant to and in compliance
with Rule 904 under the Securities Act or pursuant to an effective
registration statement under the Securities Act, a certification to that
effect from the transferor (in substantially the form of Exhibit B-4
hereto);
(C) if such beneficial interest is being transferred in reliance on
any other exemption from the registration requirements of the Securities
Act, a certification to that effect from the transferor (in substantially
the form of Exhibit B-4 hereto) and an Opinion of Counsel from the
transferee or the transferor in form reasonably acceptable to the Issuer
and to the Registrar to the effect that such transfer is in compliance
with the Securities Act, in which case the Trustee or the Secured Note
Custodian, at the direction of the Trustee, shall, in accordance with the
standing instructions and procedures existing between the Depositary and
the Secured Note Custodian, cause the aggregate principal amount of the
U.S. Global Note or Regulation S Permanent Global Note, as applicable, to
be reduced accordingly and, following such reduction, the Issuer shall
execute and, the Trustee shall authenticate and deliver to the transferee
a
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Certificated Secured Note in the appropriate principal amount.
(ii) Certificated Secured Notes issued in exchange for a
beneficial interest in the U.S. Global Note or Regulation S
Permanent Global Note, as applicable, pursuant to this Section
2.06(c) shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its
Participants or Indirect Participants or otherwise, shall instruct
the Trustee. The Trustee shall deliver such Certificated Secured
Notes to the Persons in whose names such Secured Notes are so
registered. Following any such issuance of Certificated Secured
Notes, the Trustee, as Registrar, shall instruct the Depositary to
reduce or cause to be reduced the aggregate principal amount at
maturity of the applicable Global Note to reflect the transfer.
(d) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsections (e) and (f) of this Section 2.06), a Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. Any Holder of a
beneficial interest in a Global Note shall, by acceptance of such Global Note,
agree that transfers of beneficial interests in such Global Note may be effected
only through a book-entry system maintained by the Holder of such Global Note
(or its agent), and that ownership of a beneficial interest in the Secured Notes
represented thereby shall be required to be reflected in book-entry form.
Interests of beneficial owners in a Global Note may be transferred in accordance
with the rules and procedures of the Depositary (or its successors).
(e) CONTINUOUS RESTRICTIONS ON TRANSFER AND EXCHANGE OF SECURED
NOTES. Notwithstanding any other provision of this Indenture, the Secured Notes
may not at any time, including after consummation of the Exchange Offer, be
transferred to, or held by Persons other than QIBs or Institutional Accredited
Investors. Any Holder or beneficial owner of a Secured Note shall, by acceptance
of such Secured Note, agree that such Holder or owner will deliver to each
Person to whom a Secured Note or an interest therein is transferred a notice
provided for in the legend
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specified in subsection (f) of this Section 2.06. No Secured Note may be
transferred by the Trustee or the Registrar in violation of the foregoing.
(f) LEGENDS. (i) Except as permitted by the following paragraphs
(iii), (iv) and (v), each Secured Note certificate evidencing Global Notes and
Certificated Secured Notes (and all Secured Notes issued in exchange therefor or
substitution thereof) shall bear a legend (the "Private Placement Legend") in
substantially the following form:
THIS SECURED NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. ACCORDINGLY, THIS SECURED NOTE MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE
NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) UNDER REGULATION D UNDER THE
SECURITIES ACT (AN "IAI"));
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
NOTE EXCEPT (I) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (II) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (III) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE ACT, (IV) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE ACT, (V)
TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE ACT, (VI) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (VII) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT
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AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION; AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE
IN VIOLATION OF THE FOREGOING.
(ii) After the registration of the Exchange Secured Notes under the
Securities Act, the Secured Exchange Notes when issued, will bear a legend to
the following effect unless otherwise agreed by the Issuer and the holder
thereof.
THE HOLDER:
(A) REPRESENTS THAT (1) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB")
OR (2) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES
ACT (AN "IAI");
(B) AGREES THAT IT WILL NOT RESELL, OR OTHERWISE TRANSFER THIS
NOTE EXCEPT TO (1) A QIB OR (2) AN IAI;
(C) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND;
(D) THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE
TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING. THE INDENTURE ALSO CONTAINS A PROVISION REQUIRING THE
ISSUER TO EXERCISE REASONABLE CARE TO ENSURE THAT THE SECURED NOTES
ARE RESOLD OR OTHERWISE TRANSFERRED ONLY TO PURCHASERS MEETING THE
REQUIREMENTS SPECIFIED IN CLAUSE (B) ABOVE.
(iii) Upon any sale or transfer of a Transfer Restricted Note
(including any Transfer Restricted Note represented by a Global Note) pursuant
to Rule 144 under the
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51
Securities Act or pursuant to a effective registration statement under the
Securities Act:
(a) in the case of any Transfer Restricted Note that is a
Certificated Secured Note, the Registrar shall permit the Holder thereof
to exchange such Transfer Restricted Note for a Certificated Secured Note
that does not bear the legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted Note upon receipt
of a certification from the transferring Holder substantially in the form
of Exhibit B-4 hereto; and
(b) in the case of any Transfer Restricted Note represented by a
Global Note, such Transfer Restricted Note shall not be required to bear
the legend set forth in (i) above, but shall continue to be subject to the
provisions of Section 2.06(a) and (b) hereof; PROVIDED, HOWEVER, that with
respect to any request for an exchange of a Transfer Restricted Note that
is represented by a Global Note for a Certificated Secured Note that does
not bear the legend set forth in (i) above, which request is made in
reliance upon Rule 144, the Holder thereof shall certify in writing to the
Registrar that such request is being made pursuant to Rule 144 (such
certification to be substantially in the form of Exhibit B-4 hereto).
(iv) Upon any sale or transfer of a Transfer Restricted Note
(including any Transfer Restricted Note represented by a Global Note) in
reliance on any exemption from the registration requirements of the Securities
Act (other than exemptions pursuant to Rule 144A or Rule 144 under the
Securities Act) in which the Holder or the transferee provides an Opinion of
Counsel to the Issuer and the Registrar in form and substance reasonably
acceptable to the Issuer and the Registrar (which Opinion of Counsel shall also
state that the transfer restrictions contained in the legend are no longer
applicable):
(a) in the case of any Transfer Restricted Note that is a
Certificated Secured Note, the Registrar shall permit the Holder thereof
to exchange such Transfer Restricted Note for a Certificated Secured Note
that does not bear the legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted Note; and
(b) in the case of any Transfer Restricted Note represented by a
Global Note, such Transfer Restricted Note shall not be required to bear
the legend set forth
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52
in (i) above, but shall continue to be subject to the provisions of
Section 2.06(a) and (b) hereof.
(v) By its acceptance of any Initial Secured Note represented by a
certificate bearing the Private Placement Legend, each Holder of, and beneficial
owner of an interest in, such Initial Secured Note acknowledges the restrictions
on transfer of such Initial Secured Note set forth in the Private Placement
Legend and the legend specified in paragraph (ii) above and under the heading
"Notice to Investors" in the Offering Memorandum and agrees that it will
transfer such Initial Secured Note only in accordance with the Private Placement
Legend and the restrictions set forth under the heading "Notice to Investors" in
the Offering Memorandum.
(vi) Notwithstanding the foregoing, upon the occurrence of the
Exchange Offer in accordance with the Registration Rights Agreement, the Issuer
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate (A) one or more Global Notes
in aggregate principal amount equal to the principal amount of the restricted
beneficial interests validly tendered and not properly withdrawn by Persons that
certify in the letter of transmittal delivered in the Exchange Offer that they
are not (x) broker-dealers, (y) persons participating in the distribution of the
Exchange Secured Notes or (z) persons who are affiliates (as defined in Rule 144
under the Securities Act) of the Issuer and accepted for exchange in the
Exchange Offer and (B) Certificated Secured Notes that do not bear the Private
Placement Legend but continue to bear the legend specified in clause (ii) of
this Section 2.06(f) in an aggregate principal amount equal to the principal
amount of the Certificated Secured Notes that are Transfer Restricted Notes
accepted for exchange in the Exchange Offer. Concurrently with the issuance of
such Secured Notes, the Trustee shall cause the aggregate principal amount of
the applicable Global Notes to be reduced accordingly and the Issuer shall
execute and the Trustee shall authenticate and deliver to the Persons designated
by the Holders of Certificated Secured Notes so accepted Certificated Secured
Notes in the appropriate principal amount.
(g) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as
all beneficial interests in Global Notes have been exchanged for Certificated
Secured Notes, redeemed, repurchased or cancelled, all Global Notes shall be
returned to or retained and cancelled by the Trustee in accordance with Section
2.11 hereof. At any time prior to such cancellation, if any beneficial interest
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53
in a Global Note is exchanged for Certificated Secured Notes, redeemed,
repurchased or cancelled, the principal amount of Secured Notes represented by
such Global Note shall be reduced accordingly and an endorsement shall be made
on such Global Note, by the Trustee or the Secured Note Custodian, at the
direction of the Trustee, to reflect such reduction.
(h) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES. (i) To
permit registrations of transfers and exchanges, the Issuer shall execute and
the Trustee shall authenticate Global Notes and Certificated Secured Notes at
the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Issuer may require payment of a
sum sufficient to cover any stamp or transfer tax or similar governmental charge
payable in connection therewith (other than any such stamp or transfer taxes or
similar governmental charge payable upon exchange or transfer pursuant to
Sections 2.10, 3.06, 4.08, and 10.06 hereto).
(iii) All Global Notes and Certificated Secured Notes issued upon
any registration of transfer or exchange of Global Notes or Certificated Secured
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes or
Certificated Secured Notes surrendered upon such registration of transfer or
exchange.
(iv) The Registrar shall not be required: (A) to issue, to register
the transfer of or to exchange Secured Notes during a period beginning at the
opening of 15 Business Days before the day of any selection of Secured Notes for
redemption under Article III hereof and ending at the close of business on the
day of selection, (B) to register the transfer of or to exchange any Secured
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Secured Note being redeemed in part, or (C) to register the
transfer of or to exchange a Secured Note between a Record Date and the next
succeeding Interest Payment Date.
(v) Prior to due presentment for the registration of a transfer of
any Secured Note, the Trustee, any Agent and the Issuer may deem and treat the
Person in whose name any Secured Note is registered as the absolute owner of
such Secured Note for the purpose of receiving payment of principal of and
interest on such Secured Notes and for all other purposes, and neither the
Trustee, any Agent nor the Issuer shall be affected by notice to the contrary.
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54
(vi) The Trustee shall authenticate Global Notes and Certificated
Secured Notes in accordance with the provisions of Section 2.02 hereof.
Notwithstanding anything herein to the contrary, as to any
certifications or certificates delivered to the Trustee or Registrar pursuant to
this Section 2.06, the Trustee's or the Registrar's duties shall be limited to
confirming that any such certifications and certificates delivered to it are in
the form of Exhibits B-1 through B-4 and C attached hereto. The Trustee or
Registrar shall not be responsible for confirming the truth or accuracy of
representations made in any such certifications or certificates.
SECTION 2.07. REPLACEMENT OF SECURED NOTES. If any mutilated Secured
Note is surrendered to the Trustee or the Issuer and the Trustee and the Issuer
receive evidence to their satisfaction of the destruction, loss or theft of any
Secured Note, the Issuer shall issue, and the Trustee, upon the receipt of an
Issuer Order, shall authenticate, a replacement Secured Note if the Trustee's
requirements are met. If required by the Trustee or the Issuer, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Issuer to protect the Issuer, each Guarantor, the Trustee, any
Agent and any authenticating agent from any loss that any of them may suffer if
a Secured Note is replaced. The Issuer may charge for its expenses in replacing
a Secured Note.
Every replacement Secured Note is an additional obligation of the
Issuer and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Secured Notes duly issued hereunder. The
provisions of this Section 2.07 are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the replacement of
mutilated, destroyed, lost or stolen Secured Notes.
SECTION 2.08. OUTSTANDING SECURED NOTES. The Secured Notes
outstanding at any time are all the Secured Notes authenticated by the Trustee
except for those cancelled by it, those delivered to it for cancellation, those
reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.09 hereof, a Secured Note does
not cease to be outstanding because the Issuer or an Affiliate of the Issuer
holds the Secured Note.
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55
If a Secured Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Secured Note is held by a bona fide purchaser.
If the principal amount of any Secured Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest (including Special
Interest and Additional Amounts, if any), on it ceases to accrue.
If the Paying Agent (other than the Issuer, a Guarantor, or a
Subsidiary or an Affiliate of any thereof), holds, on a Redemption Date or at
Maturity, money sufficient to pay Secured Notes payable on that date, then on
and after that date such Secured Notes shall be deemed to be no longer
outstanding and shall cease to accrue interest (including Special Interest and
Additional Amounts, if any).
SECTION 2.09. TREASURY SECURED NOTES. In determining whether the
Holders of the required principal amount of Secured Notes have concurred in any
direction, waiver or consent, Secured Notes owned by the Issuer, a Subsidiary, a
Guarantor, or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Issuer, a Subsidiary or any
Guarantor, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Secured Notes that a Responsible Officer
knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY SECURED NOTES. Until definitive Secured
Notes are ready for delivery, the Issuer may prepare and the Trustee shall
authenticate temporary Secured Notes upon a Issuer Order. Temporary Secured
Notes shall be substantially in the form of definitive Secured Notes but may
have variations that the Issuer considers appropriate for temporary Secured
Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable
delay, the Issuer shall prepare and the Trustee shall authenticate definitive
Secured Notes in exchange for temporary Secured Notes.
Holders of temporary Secured Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION. The Issuer at any time may deliver
Secured Notes to the Trustee for cancellation. The Registrar and Paying Agent
shall forward to the Trustee any Secured Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee
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56
and no one else shall cancel all Secured Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall upon the
written request of the Issuer, return such cancelled Secured Notes to the
Issuer. The Issuer may not issue new Secured Notes to replace Secured Notes that
it has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest (including Additional Amounts, if any, and Special Interest, if any),
on any Secured Note which is payable, and is punctually paid or duly provided
for, on any June 30 or December 30 or on November 1, 2001 (each an "Interest
Payment Date"), commencing on December 30, 1999, shall be paid to the Person in
whose name such Secured Note is registered at the close of business on the
Record Date for such interest payment, which shall be the June 15 or December 15
or, in the case of the November 1, 2001 Interest Payment Date, October 15, 2001
(in each case, whether or not a Business Day) immediately preceding such
Interest Payment Date.
Any interest on any Secured Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the
registered Holder on the relevant Record Date, and, except as hereinafter
provided, such Defaulted Interest and any interest payable on such Defaulted
Interest may be paid by the Issuer, at its election, as provided in clause (a)
or (b) below:
(a) The Issuer may elect to make payment of any Defaulted Interest,
and any interest payable on such Defaulted Interest, to the Persons in
whose names the Secured Notes are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Issuer shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on the Secured Notes and the date of the proposed payment, and at the same
time the Issuer shall deposit with the Trustee an amount of money equal to
the aggregate amount proposed to be paid in respect of such Defaulted
Interest (including Additional Amounts, if any, and Special Interest, if
any), or shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as provided in this clause (a). Thereupon the
Trustee shall fix a Special Record Date for the payment
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of such Defaulted Interest which shall be not more than 15 calendar days
and not less than 10 calendar days prior to the date of the proposed
payment and not less than 10 calendar days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall promptly
notify the Issuer of such Special Record Date and, in the name and at the
expense of the Issuer, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be sent, first
class mail, postage prepaid, to each Holder at such Holder's address as it
appears in the Securities Register, not less than 10 calendar days prior
to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been mailed
as aforesaid, such Defaulted Interest shall be paid to the Persons in
whose names the Secured Notes are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to the
following clause (b).
(b) The Issuer may make payment of any Defaulted Interest (including
Additional Amounts, if any, and Special Interest, if any), and any
interest payable on such Defaulted Interest, on the Secured Notes in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Secured Notes may be listed, and upon
such notice as may be required by such exchange, if, after notice given by
the Issuer to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.12, each
Secured Note delivered under this Indenture upon registration of transfer of, or
in exchange for, or in lieu of, or in substitution for, any other Secured Note,
shall carry the rights to interest (Additional Amounts, if any, and Special
Interest, if any), accrued and unpaid, and to accrue, which were carried by such
other Secured Note.
SECTION 2.13. COMPUTATION OF INTEREST. Interest on the Secured
Notes shall be computed on the basis of a 360-day year comprised of twelve
30-day months.
SECTION 2.14. CUSIP NUMBER. The Issuer in issuing the Secured Notes
may use a "CUSIP" number, and if it does so, the Trustee shall use the CUSIP
number in notices of redemption or exchange as a convenience to Holders;
PROVIDED that any such notice may state that no
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58
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Secured Notes and that reliance may be placed
only on the other identification numbers printed on the Secured Notes. The
Issuer shall promptly notify the Trustee of any change in the CUSIP number.
ARTICLE III
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE. If the Issuer elects to redeem
Secured Notes pursuant to the optional redemption provisions of Section 3.07
hereof and of the Secured Notes, it shall furnish to the Trustee, at least 45
days (unless a shorter period is acceptable to the Trustee) but not more than 60
days before a Redemption Date, an Officers' Certificate setting forth (i) the
clause of this Indenture pursuant to which the redemption shall occur, (ii) the
Redemption Date, (iii) the principal amount of Secured Notes to be redeemed and
(iv) the Redemption Price.
SECTION 3.02. SELECTION OF SECURED NOTES TO BE REDEEMED. In the
case of any partial redemption provided for in Section 3.07 hereof, selection of
the Secured Notes for redemption will be made by the Trustee on a pro rata
basis, by lot or by such other method as the Trustee in its sole discretion
shall deem to be fair and appropriate, although no Secured Note of $1,000 in
then outstanding principal amount or less shall be redeemed in part. If any
Secured Note is to be redeemed in part only, the notice of redemption relating
to such Secured Note shall state the portion of the principal amount thereof to
be redeemed. A new Secured Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Secured Note. Partial Redemptions provided for in
Section 3.08 and Section 3.09 hereof will be applied to all Secured Notes on a
pro rata basis, although no Secured Note of $1,000 in then outstanding principal
amount shall be redeemed in part.
The Trustee shall promptly notify the Issuer in writing of the
Secured Notes selected for redemption and, in the case of any Secured Note
selected for partial redemption, the portion of the principal amount thereof to
be redeemed. Secured Notes and portions of Secured Notes selected shall be in
amounts of $1,000 or integral multiples of $1,000, except that if all of the
Secured Notes of a Holder are to be redeemed, the entire outstanding amount of
Secured Notes held by such Holder, even if not an integral
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multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Secured Notes called for
redemption also apply to portions of Secured Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more
than 60 days before a Redemption Date, the Issuer shall mail or cause to be
mailed, by first class mail, a notice of redemption to each Holder whose Secured
Notes are to be redeemed at its registered address as it appears in the
Securities Register.
The notice shall identify the Secured Notes to be redeemed including
CUSIP number and shall state:
(a) the Redemption Date;
(b) the Redemption Price and the method of calculating such
Redemption Price pursuant to this Indenture;
(c) if any Secured Note is being redeemed in part, the portion of
the principal amount of such Secured Note to be redeemed and that, after
the Redemption Date upon surrender of such Secured Note, a new Secured
Note or Secured Notes in principal amount equal to the unredeemed portion
shall be issued upon cancellation of the original Secured Note;
(d) the name and address of the Paying Agent;
(e) that Secured Notes called for redemption (other than a Global
Note) must be surrendered to the Paying Agent to collect the Redemption
Price;
(f) that, unless the Issuer defaults in making such redemption
payment, interest (including Additional Amounts, if any, and Special
Interest, if any), on Secured Notes (or portions thereof) called for
redemption cease to accrue on and after the Redemption Date;
(g) the paragraph of the Secured Notes or Section of this Indenture
pursuant to which the Secured Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Secured Notes.
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At the Issuer's request, the Trustee shall give the notice of
redemption in the Issuer's name and at its expense; PROVIDED, HOWEVER, that the
Issuer shall have delivered to the Trustee, at least 45 days prior to the
Redemption Date (unless a shorter time is acceptable to the Trustee), an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of
redemption is mailed in accordance with Section 3.03 hereof, Secured Notes
called for redemption become irrevocably due and payable on the Redemption Date
at the Redemption Price including interest, including Special Interest, if any,
and Additional Amounts, if any, accrued and unpaid on the Redemption Date. Upon
surrender to the Paying Agent, such Secured Notes shall be paid at the
Redemption Price stated in such notice. Failure to give notice or any defect in
the notice to any Holder shall not affect the validity of the notice to any
other Holder. A notice of redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. On or prior to the
Redemption Date, the Issuer shall deposit with the Trustee or with the Paying
Agent immediately available funds sufficient to pay the Redemption Price of and
accrued and unpaid interest, if any, on (and Special Interest, if any, and
Additional Amounts, if any), on all Secured Notes to be redeemed on that date.
The Trustee or the Paying Agent shall promptly return to the Issuer any money
deposited with the Trustee or the Paying Agent by the Issuer in excess of the
amounts necessary to pay the Redemption Price of, and accrued interest
(including Special Interest, if any, and Additional Amounts, if any), on all
Secured Notes to be redeemed.
If the Issuer complies with the provisions of the preceding
paragraph, on and after the Redemption Date, interest (including Special
Interest, if any, and Additional Amounts, if any), shall cease to accrue on the
Secured Notes or the portions of Secured Notes called for redemption. If a
Secured Note is redeemed on or after a Record Date but on or prior to the
related Interest Payment Date, then any accrued and unpaid interest (including
Special Interest, if any, and Additional Amounts, if any), shall be paid to the
Person in whose name such Secured Note was registered at the close of business
on such Record Date. If any Secured Note called for redemption shall not be so
paid upon surrender for redemption because of the failure of the Issuer to
comply with the preceding paragraph, interest (including Special Interest, if
any, and Additional Amounts, if any),
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shall be paid on the unpaid principal, from the Redemption Date until such
principal is paid, and to the extent lawful on any interest not paid on such
unpaid principal, in each case at the rate provided in the Secured Notes and in
Section 4.01 hereof.
SECTION 3.06. SECURED NOTES REDEEMED IN PART. Upon surrender of a
Secured Note that is redeemed in part, the Issuer shall issue and, upon the
Issuer's written request, the Trustee shall authenticate for the Holder at the
expense of the Issuer a new Secured Note equal in principal amount to the
unredeemed portion of the Secured Note surrendered. The records of the Registrar
and the Depositary shall reflect any partial redemption of any Global Note.
SECTION 3.07. OPTIONAL REDEMPTIONS. (a) The Secured Notes will be
redeemable, at the Issuer's option, in whole or from time to time in part upon
not less than 30 and not more than 60 days' prior notice mailed by first class
mail to each Holder's registered address appearing in the Securities Register on
any date prior to Maturity at a price equal to 100% of the principal amount
thereof plus accrued and unpaid interest (including Special Interest, if any,
and Additional Amounts, if any), to the Redemption Date (subject to the right of
Holders of record on the relevant Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date), plus the
Make-Whole Premium. In no event will the Redemption Price ever be less than
100% of the principal amount of the Secured Notes to be redeemed plus accrued
and unpaid interest (including Special Interest, if any, and Additional Amounts,
if any), to the Redemption Date.
The amount of the Make-Whole Premium with respect to any Secured
Notes (or portion thereof) to be redeemed will be equal to the excess, if any,
of:
(i) the sum of the present values, calculated as
of the Redemption Date, of:
(1) each interest payment that, but for such redemption, would
have been payable on the Secured Notes (or portion thereof) being
redeemed on each Interest Payment Date occurring after the
Redemption Date (excluding any accrued and unpaid interest for the
period prior to the Redemption Date); and
(2) the principal amount that, but for such redemption, would
have been payable at the final
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62
maturity of the Secured Notes (or portion thereof) being redeemed,
over
(ii) the principal amount of the Secured Notes (or portion thereof)
being redeemed.
The present values of interest and principal payments referred to in
clause (i) above will be determined in accordance with generally accepted
principles of financial analysis. Such present values will be calculated by
discounting the amount of each payment of interest or principal from the date
that each such payment would have been payable, but for the redemption, to the
Redemption Date at a discount rate equal to the Treasury Rate (as defined below)
plus 50 basis points.
The Make-Whole Premium will be calculated by the Independent
Investment Banker.
For purposes of this Section 3.07 and Section 3.09, the following
definitions apply:
"TREASURY RATE" is defined to mean, with respect to any Redemption
Date, the rate per annum equal to the semiannual equivalent yield to maturity of
the Comparable Treasury Issue, assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Redemption Date.
"COMPARABLE TREASURY ISSUE" is defined to mean the United States
Treasury security selected by an Independent Investment Banker as having a
maturity comparable to the weighted average maturity of the remaining term of
the Secured Notes outstanding that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to such weighted average
maturity of such Secured Notes. "Independent Investment Banker" means the
Reference Treasury Dealer appointed by the Trustee after consultation with the
Issuer.
"COMPARABLE TREASURY PRICE" is defined to mean, with respect to any
Redemption Date, the average of the Reference Treasury Dealer Quotations for
such Redemption Date. The "Reference Treasury Dealer Quotations" means, with
respect to the Reference Treasury Dealer and any Redemption Date, the average,
as determined by the Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by the
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Reference Treasury Dealer at 5:00 p.m. (New York City time) on the third
business day preceding such Redemption Date.
"REFERENCE TREASURY DEALER" is defined to mean each of Donaldson,
Lufkin & Jenrette Securities Corporation and its successors; PROVIDED, HOWEVER,
that if Donaldson, Lufkin & Jenrette Securities Corporation shall cease to be a
primary U.S. government securities dealer in New York City (a "Primary Treasury
Dealer"), the Issuer shall substitute therefor another Primary Treasury Dealer.
(b) The Secured Notes may be redeemed, at the option of the Issuer,
at any time as a whole but not in part, on not less than 30 nor more than 60
days' prior notice mailed by first class mail to each Holder's registered
address appearing in the Securities Register, at a price equal to 100% of the
principal amount thereof plus accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any), to the Redemption Date
(subject to the right of Holders of record on the relevant Record Date to
receive interest due on an Interest Payment Date that is on or prior to the
Redemption Date), in the event the Issuer has become or would become obligated
to pay (and the Issuer cannot avoid such obligation by taking reasonable
measures available to it), on the next date on which any amount would be payable
with respect to the Secured Notes, any Additional Amounts as a result of a
change in or an amendment to the laws (including nay regulations promulgated
thereunder) of a Tax Jurisdiction, or any change in or amendment to any official
position regarding the application or interpretation of such laws or
regulations, which change or amendment is announced or becomes effective on or
after the Issue Date; PROVIDED, HOWEVER, that such redemption shall be
conditioned upon the Issuer being actually obligated to pay such Additional
Amounts on the relevant payment date.
Prior to giving of the notice of redemption described in the
preceding paragraph, the Issuer shall deliver to the Trustee an Officers'
Certificate (together with a copy of an Opinion of Counsel from counsel that is
independent from the Issuer to the effect that the Issuer will be or will become
obligated to pay Additional Amounts), stating that the Issuer is entitled to
effect such redemption in accordance with this Indenture and setting forth in
reasonable detail a statement of the facts relating thereto.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
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SECTION 3.08. REDEMPTION UPON LOSS OF A MORTGAGED RIG. If an Event
of Loss occurs at any time with respect to a Mortgaged Rig, the Issuer shall
redeem 50% of the Secured Notes (or 100% of the Secured Notes in the case of an
Event of Loss with respect to both Mortgaged Rigs or it Secured Notes have
previously been redeemed pursuant to this Section 3.08 or Section 3.09) on the
earlier to occur of (A) 30 days after the receipt of any Event of Loss Proceeds
by the Issuer from the applicable Mortgaged Rig Owner and (B) 180 days after the
date on which such Event of Loss occurred, at a Redemption Price equal to 100%
of their principal amount, plus accrued and unpaid interest (including
Additional Amounts, if any, and Special Interest, if any), to the Redemption
Date (subject to the right of Holders of record on the relevant Record Date to
receive interest due on an Interest Payment Date that is on or prior to the
Redemption Date).
SECTION 3.09. REDEMPTION UPON SALE OF A MORTGAGED RIG. If a
Mortgaged Rig or the Capital Stock of a Restricted Subsidiary then owning a
Mortgaged Rig is sold in compliance with the terms of this Indenture, the Issuer
shall redeem 50% of the Secured Notes (or 100% of the Secured Notes in the case
of a sale of both Mortgaged Rigs or the Capital Stock of both Restricted
Subsidiaries then owning Mortgaged Rigs or if Secured Notes have previously
been redeemed pursuant to this Section 3.08 or Section 3.09) on the earlier to
occur of (A) 30 days after the receipt by the Issuer of Net Available Cash from
such sale and (B) 60 days after the date of such sale at a Redemption Price
equal to 100% of their principal amount, plus accrued and unpaid interest
(including Additional Amounts, if any, and Special Interest, if any), to the
Redemption Date (subject to the right of Holders of record on the relevant
Record Date to receive interest due on an Interest Payment Date that is on or
prior to the Redemption Date), plus the Make-Whole Premium. In no event will the
Redemption Price ever be less than 100% of the principal amount of the Secured
Notes to be redeemed plus accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any), to the Redemption Date.
ARTICLE IV
COVENANTS
SECTION 4.01. PAYMENT OF SECURED NOTES. The Issuer shall pay or
cause to be paid the principal of, premium, if any, and interest (including
Special Interest, if any, and Additional Amounts, if any), on the Secured
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Notes on the dates and in the manner provided in the Secured Notes and in this
Indenture. Principal, premium, if any, and interest (including Special Interest,
if any, and Additional Amounts, if any), shall be considered paid on the date
due if the Trustee or the Paying Agent, if other than the Issuer, a Guarantor or
a Subsidiary or Affiliate of any thereof, holds as of noon, New York time, on
the due date money deposited by the Issuer in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest (including Special Interest, if any, and Additional Amount, if any),
then due. The Issuer shall pay all Special Interest, if any, in the same manner
on the dates and in the amounts set forth in the Registration Rights Agreement.
The Issuer will promptly notify the Trustee of a Registration Default (as
defined in the Registration Rights Agreement) under the Registration Rights
Agreement and any cure thereof.
The Issuer shall pay interest (including post-petition interest in
any proceeding under any applicable Federal, state or foreign bankruptcy law) on
Defaulted Interest and Special Interest, if any, and Additional Interest, if any
(without regard to any applicable grace period), at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Issuer shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
(which may be an office of the Trustee or an affiliate of the Trustee, Registrar
or co-registrar) where Secured Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon the Issuer in
respect of the Secured Notes and this Indenture may be served. The Issuer shall
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Issuer shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Issuer may also from time to time designate one or more other
offices or agencies where the Secured Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
PROVIDED, HOWEVER, that no such designation or rescission shall in any manner
relieve the Issuer of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Issuer shall
give prompt written notice to the Trustee of
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any such designation or rescission and of any change in the location of any such
other office or agency.
The Issuer hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Issuer in accordance with Section
2.03 hereof.
SECTION 4.03. CORPORATE EXISTENCE. Subject to the provisions of
Article V hereof, the Issuer shall do or cause to be done all things necessary
to preserve and keep in full force and effect (i) its company existence, and the
company, corporate, partnership or other existence of each of the Restricted
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of each of the Issuer or any such
Restricted Subsidiary of the Issuer and (ii) the rights (charter and statutory),
licenses and franchises of each of the Issuer and the Restricted Subsidiaries of
the Issuer; PROVIDED, HOWEVER, that the Issuer shall not be required to preserve
any such right, license or franchise, or the company, corporate, partnership or
other existence of any of the Restricted Subsidiaries, if the Board of Directors
of the Issuer or the Restricted Subsidiary so concerned, or of an officer (or
other agent employed by the Issuer or of the Subsidiary so concerned) of the
Issuer or a Restricted Subsidiary having managerial responsibility for any such
properties or assets, shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Issuer and the Restricted
Subsidiaries taken as a whole and that the loss thereof is not adverse in any
material respect to the Holders of the Secured Notes.
SECTION 4.04. MAINTENANCE OF PROPERTIES AND INSURANCE. (a) The
Issuer shall cause all material properties and assets owned by or leased by it
or any of the Restricted Subsidiaries useful and necessary to the conduct of its
business or the business of any of its Restricted Subsidiaries to be maintained
and kept in good condition, repair and working order (reasonable wear and tear
excepted) and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in its judgment may
be necessary, so that the business carried on in connection therewith may be
properly conducted at all times; PROVIDED, HOWEVER, that nothing in this Section
4.04 shall prevent the Issuer or any of the Restricted Subsidiaries from
discontinuing the use, operation or maintenance of any of such properties and
assets, or disposing of any of them, if such discontinuance or disposal is, in
the judgment of the Board of Directors of the Issuer or the Restricted
Subsidiary so concerned, or of an officer (or other agent employed by the Issuer
or of the
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Subsidiary so concerned) of the Issuer or a Restricted Subsidiary having
managerial responsibility for any such properties or assets, desirable in the
conduct of the business of the Issuer or such Restricted Subsidiary of the
Issuer, and if such discontinuance or disposal is not adverse in any material
respect to the Holders.
(b) To the extent available at commercially reasonable rates, the
Issuer shall maintain, and shall cause the Restricted Subsidiaries, to the
extent such Restricted Subsidiaries maintain operations, to maintain, insurance
with responsible carriers against such risks and in such amounts, and with such
deductibles, retentions, self-insured amounts and coinsurance provisions, as are
customarily carried by similar businesses of similar size.
SECTION 4.05. COMPLIANCE WITH LAWS. The Issuer shall comply, and
shall cause each of the Subsidiaries of the Issuer to comply, with all
applicable statutes, rules, regulations, orders and restrictions in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as would not in the aggregate have a
material adverse effect on the financial condition or results of operations of
the Issuer and the Restricted Subsidiaries taken as a whole.
SECTION 4.06. TAXES AND OTHER CLAIMS. The Issuer shall pay, and
shall cause each of the Restricted Subsidiaries to pay, prior to delinquency,
(a) all material taxes, assessments, and governmental charges levied or imposed
upon the Issuer or any of the Restricted Subsidiaries or upon the income,
profits or property or assets of the Issuer or any of the Restricted
Subsidiaries and (b) all lawful claims for labor, materials and supplies, which,
if unpaid, might by law become a Lien upon the property or assets of the Issuer
or any of the Restricted Subsidiaries, except such as are contested in good
faith and by appropriate proceedings or where the failure to effect such payment
is not adverse in any material respect to the Holders of the Secured Notes and
for which adequate reserves in accordance with GAAP or other appropriate
provisions have been made.
SECTION 4.07. STAY, EXTENSION AND USURY LAWS. The Issuer and each of
the Guarantors covenant (to the extent that they may lawfully do so) that they
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Issuer and each of
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the Guarantors (to the extent that they may lawfully do so) hereby expressly
waive all benefit or advantage of any such law, and covenant that they shall
not, by resort to any such law, hinder, delay or impede the execution of any
power herein granted to the Trustee, but shall suffer and permit the execution
of every such power as though no such law has been enacted.
SECTION 4.08. CHANGE OF CONTROL. (a) Upon the occurrence of any of
the following events (each a "Change of Control"), the Issuer shall make an
offer to repurchase all outstanding Secured Notes (the "Change of Control
Offer") at a purchase price (the "Change of Control Purchase Price") in cash
equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid
interest thereon, if any, (including Additional Amounts, if any, and Special
Interest, if any), to the date of purchase (subject to the right of Holders of
record on the relevant Record Date to receive interest (including Special
Interest, if any, and Additional Amounts, if any), due on the relevant Interest
Payment Date):
(i) any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable),
other than a Shareholder (or any Affiliate thereof) is or becomes
the "beneficial owner" (as defined in Section 13(d) of the Exchange Act,
except that a person will be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 26.4% of the total voting power of the Voting
Stock of the Issuer; PROVIDED, HOWEVER, for purposes of this clause (i)
there shall not be a Change of Control with respect to Pride's "beneficial
ownership" of the Voting Stock of the Issuer unless (A) any "person" or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d)
of the Exchange Act, whether or not applicable), is or becomes the
"beneficial owner" (as defined in Section 13(d) of the Exchange Act,
except that a person will be deemed to have "beneficial ownership" of all
shares that any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock
of Pride, and (B) within 25 days after the closing of any such transaction
either Moody's or S&P lowers the credit ratings for any outstanding debt
of Pride or, in the
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event Pride has no outstanding rated debt, the ratings of Pride;
(ii) individuals who on the Issue Date constituted the board of
directors of the Issuer (together with any new directors whose election by
such board of directors or whose nomination for election by the
shareholders of the Issuer was approved by a vote of 66 2/3% of the
directors of the Issuer, then still in office who were either directors on
the Issue Date or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the board of
directors of the Issuer then in office;
(iii) the adoption of a plan relating to the liquidation or
dissolution of the Issuer;
(iv) the merger or consolidation of any Shareholder or the Issuer
with or into another Person (other than in the case of a Shareholder, a
Person controlled by a Permitted Holder) or the merger of another Person
(other than in the case of a Shareholder, a Person controlled by a
Permitted Holder) with or into any Shareholder or the Issuer, as the case
may be, or the sale of all or substantially all the assets of any
Shareholder or the Issuer to another Person (other than in the case of a
Shareholder, a Person controlled by a Permitted Holder), and, in the case
of any such merger or consolidation, the securities of such Shareholder or
the Issuer, as the case may be, that are outstanding immediately prior to
such transaction and which represent 100% of the aggregate voting power of
the Voting Stock of such Shareholder or the Issuer, as the case may be,
are changed into or exchanged for cash, securities or property, unless
pursuant to such transaction such securities are changed into or exchanged
for, in addition to any other consideration, securities of the surviving
corporation that represent immediately after such transaction, at least a
majority of the aggregate voting power of the Voting Stock of the
surviving corporation; or
(v) prior to any Public Equity Offering of the Issuer, (x) Pride or
a Qualified Substitute Owner ceases for any reason for more than 10 days
to be the beneficial owner, directly or indirectly, of at least 26.4% of
the total voting power of the Voting Stock of
the Issuer.
(b) The Change of Control Offer will remain open for a period of at
least 30 days following its commencement
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but no longer than 60 days, except to the extent that a longer period is
required by applicable law (the "Change of Control Offer Period"). On the first
Business Day after the termination of the Change of Control Offer Period (the
"Change of Control Payment Date"), the Issuer will purchase all Secured Notes
validly tendered and not properly withdrawn pursuant to the Change of Control
Offer. Payment for any Secured Notes so purchased will be made in the same
manner as interest payments are made on the Secured Notes. If the Change of
Control Payment Date is on or after a Record Date and on or before the related
Interest Payment Date, any accrued and unpaid interest including Special
Interest, if any and Additional Amounts, if any (to the extent involving
interest that is due and payable on such Interest Payment Date), shall be paid
to the Person in whose name a Secured Note is registered at the close of
business on such Record Date, and no additional interest (including Additional
Amounts, if any, or Special Interest, if any) (to the extent involving interest
that is due and payable on such Interest Payment Date), shall be payable to
Holders who validly tender Secured Notes pursuant to the Change of Control
Offer.
(c) Within 30 days following any Change of Control, the Issuer or
the Trustee (at the expense of the Issuer) shall mail by first class mail, a
notice to each Holder, with a copy of such notice to the Trustee. The notice,
which shall govern the terms of the Change of Control Offer, shall state:
(i) that a Change of Control has occurred and a Change of Control
Offer is being made as provided for herein that each Holder has the right
to require the Issuer to purchase such Holder's Secured Notes at the
Change of Control Purchase Price, and that, although Holders are not
required to tender their Secured Notes, all Secured Notes that are validly
tendered shall be accepted for payment;
(ii) the circumstances and relevant facts regarding such Change of
Control (including information with respect to pro forma historical
income, cash flow and capitalization after giving effect to such Change of
Control);
(iii) the Change of Control Purchase Price and the Change of Control
Payment Date, which will be no earlier than 30 days and no later than 60
days after the date such notice is mailed;
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(iv) that any Secured Note accepted for payment pursuant to the
Change of Control Offer (and duly paid for on the Change of Control
Payment Date) shall cease to accrue interest (including Special Interest
and Additional Amounts, if applicable), after the Change of Control
Payment Date;
(v) that any Secured Notes (or portions thereof) not validly
tendered shall continue to accrue interest, including Special Interest and
Additional Amounts, if applicable;
(vi) that any Holder electing to have a Secured Note purchased
pursuant to any Change of Control Offer shall be required to surrender the
Secured Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Secured Note completed, or transfer by book-entry
transfer, to the Issuer, a depositary, if appointed by the Issuer, or a
Paying Agent at the address specified in the notice at least one Business
Day before the Change of Control Purchase Date;
(vii) that Holders shall be entitled to withdraw their election if
the Issuer, the depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Change of Control Offer
Period, a telegram, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Secured Note the Holder
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Secured Note purchased; and
(viii) the instructions and any other information necessary to
enable Holders to tender their Secured Notes (or portions thereof) and
have such Secured Notes (or portions thereof) purchased pursuant to the
Change of Control Offer.
(d) On or before the Change of Control Payment Date, the Issuer
shall, to the extent lawful, (1) accept for payment all Secured Notes or
portions thereof validly tendered and not properly withdrawn pursuant to the
Change of Control Offer, (2) deposit by noon, New York City time, on such date
with the Paying Agent an amount equal to the Change of Control Purchase Price in
respect of all Secured Notes or portions thereof so validly tendered and not
properly withdrawn and (3) deliver or cause to be delivered to the Trustee the
Secured Notes so accepted together with an Officers' Certificate stating the
aggregate principal
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amount of Secured Notes or portions thereof being purchased by the Issuer. The
Paying Agent shall promptly (but in any case not later than five days after the
Change of Control Payment Date) mail to each Holder of Secured Notes so validly
tendered and not properly withdrawn the Change of Control Purchase Price for
such Secured Notes.
(e) Upon surrender and cancellation of a Certificated Secured Note
that is purchased in part pursuant to the Change of Control Offer, the Issuer
shall promptly issue and the Trustee shall authenticate and mail (or cause to be
transferred by book entry) to the surrendering Holder of such Certificated
Secured Note, a new Certificated Secured Note equal in principal amount to the
unpurchased portion of such surrendered Certificated Secured Note; PROVIDED that
each such new Certificated Secured Note shall be in a principal amount of $1,000
or an integral multiple thereof. Upon surrender of a Global Note that is
purchased in part pursuant to a Change of Control Offer, the Paying Agent shall
forward such Global Note to the Trustee who shall make a notation on Schedule A
thereof to reduce the principal amount of such Global Note to an amount equal to
the unpurchased portion of such Global Note, as provided in Section 2.06 hereof.
The Issuer shall publicly announce the results of the Change of Control Offer on
the Change of Control Payment Date. For purposes of this Section 4.08, the
Trustee shall act as the Paying Agent.
(f) The Issuer shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of the Secured Notes as a result of a Change of Control. To the
extent that the provisions of any securities laws or regulations conflict with
the other provisions of this Section 4.08, the Issuer shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the other provisions of this Section 4.08.
SECTION 4.09. LIMITATIONS ON INDEBTEDNESS. (a) The Issuer will not,
and will not permit any Restricted Subsidiary to, Incur, directly or indirectly,
any Indebtedness; PROVIDED, HOWEVER, that the Issuer may Incur Indebtedness if
the Consolidated EBITDA Coverage Ratio at the date of such Incurrence and after
giving effect thereto exceeds 2.25 to 1.0.
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(b) Notwithstanding paragraph (a), the following Indebtedness may be
Incurred:
(i) Indebtedness of the Issuer or a Restricted Subsidiary owed to
and held by a Restricted Subsidiary or Indebtedness of a Restricted
Subsidiary owed to and held by the Issuer; PROVIDED, HOWEVER, that (a) any
subsequent issuance or transfer of any Capital Stock that results in such
Restricted Subsidiary to whom Indebtedness is owed ceasing to be a
Restricted Subsidiary or any transfer of such Indebtedness (other than to
the Issuer or another Restricted Subsidiary) shall be deemed, in each
case, to constitute the Incurrence of such Indebtedness and (b) if the
Issuer is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all obligations with
respect to the Secured Notes;
(ii) the Initial Secured Notes and the Exchange Secured Notes;
(iii) the Subsidiary Guarantees, if any, the Issuer Loans and
Indebtedness incurred in exchange for, or the proceeds of which are used
to Refinance any Indebtedness permitted by this clause (iii); PROVIDED,
HOWEVER, that (A) the principal amount of the Indebtedness so Incurred
shall not exceed the principal amount of the Indebtedness so Refinanced
(plus the amount of reasonable fees and expenses incurred in connection
therewith, including any premium or defeasance costs) and (B) the
Indebtedness so Incurred (1) shall not mature prior to the Stated Maturity
of the Indebtedness so Refinanced and (2) shall have an Average Life equal
to or greater than the remaining Average Life of the Indebtedness so
Refinanced;
(iv) Indebtedness of the Issuer or any Restricted Subsidiary (other
than Indebtedness described in clause (i), (ii) or (iii) above) (x)
outstanding on the Issue Date and (y) Indebtedness Incurred in exchange
for, or the proceeds of which are used to Refinance, any Indebtedness
permitted by this clause (iv) or permitted by clause (a) above; PROVIDED,
HOWEVER, that (A) the principal amount of the Indebtedness so Incurred
shall not exceed the principal amount of the Indebtedness Refinanced (plus
the amount of reasonable fees and expenses incurred in connection
therewith, including any premium or defeasance costs); and (B) the
Indebtedness so Incurred (1) shall not mature prior to the Stated Maturity
of the Indebtedness so Refinanced
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and (2) shall have an Average Life equal to or greater than the remaining
Average Life of the Indebtedness so Refinanced;
(v) Obligations of the Issuer or a Restricted Subsidiary under
performance or surety bonds relating to building contracts for the
construction, repair or improvement of drilling rigs, drillships or
similar vessels or contracts for the installation of related equipment;
(vi) Hedging Obligations;
(vii) Indebtedness of Restricted Subsidiaries or the Issuer under
the Mitsubishi Loan Agreements and the MARAD Documents; and
(viii) Indebtedness of the Issuer or any Restricted Subsidiary in an
aggregate principal amount which, together with all other Indebtedness of
the Issuer then outstanding (other than Indebtedness permitted by clauses
(i) through (vii) of this paragraph (b) or paragraph (a)) does not exceed
$20,000,000.
(c) Notwithstanding paragraphs (a) and (b), neither the Issuer nor
any Restricted Subsidiary shall issue any Indebtedness if the proceeds thereof
are used, directly or indirectly, to repay, prepay, redeem, defease, retire,
refund or refinance any Subordinated Obligations unless such Indebtedness shall
be subordinated to the Secured Notes or the Issuer Loans, as applicable, to at
least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with the foregoing
covenant, (i) in the event that an item of Indebtedness meets the criteria of
more than one of the types of Indebtedness described above, the Issuer, in its
sole discretion, will classify such item of Indebtedness and only be required to
include the amount and type of such Indebtedness in one of the above clauses and
(ii) an item of Indebtedness may be divided and classified in more than one of
the types of Indebtedness described above.
SECTION 4.10. LIMITATION ON LIENS. The Issuer shall not, and shall
not permit any Restricted Subsidiary to, directly or indirectly, Incur or permit
to exist any Lien of any nature whatsoever on any of its properties (including
Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or
thereafter acquired unless, in the case of property or assets not consisting of
Collateral, contemporaneously therewith effective provision
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is made to secure the Secured Notes equally and ratably with (or prior to) the
obligations so secured for so long as such obligations are so secured; in each
case other than Permitted Liens.
SECTION 4.11. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Issuer will not, and will not permit any Restricted
Subsidiary, directly or indirectly, to:
(i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Issuer) or to the direct or indirect
holders of its Capital Stock, except:
(A) dividends or distributions payable solely in its
Non-Convertible Capital Stock or in options, warrants or other
rights to purchase its Non-Convertible Capital Stock;
(B) dividends or distributions payable to the Issuer or a
Restricted Subsidiary; and
(C) pro rata dividends or distributions on the Capital Stock
of a Restricted Subsidiary held by minority stockholders;
(ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Issuer or of any direct or indirect parent of the
Issuer, or any Restricted Subsidiary (except Capital Stock held by the
Issuer or a Restricted Subsidiary);
(iii) purchase, repurchase, redeem, defease or otherwise acquire or
retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment, any Subordinated Obligation (other than
the purchase, repurchase or other acquisition of Subordinated Obligations
purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year
of the date of acquisition); or
(iv) make any Investment other than a Permitted Investment (any such
dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Investment being herein referred to as a
"Restricted Payment"),
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if at the time the Issuer or such Restricted Subsidiary makes such Restricted
Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom); or
(2) the Issuer would not be permitted to Incur an additional $1 of
Indebtedness pursuant to Section 4.09(a) after giving pro forma effect to
such Restricted Payment; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from the beginning of the
fiscal quarter during which the Secured Notes were originally issued
to the end of the most recent fiscal quarter ending at least 45 days
prior to the date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such
deficit);
(B) 100% of the aggregate net proceeds (including the fair
market value of noncash proceeds, which shall be determined in good
faith by the Board of Directors of the Issuer) received by the
Issuer from the issue or sale of its Capital Stock (other than
Redeemable Stock or Exchangeable Stock) subsequent to the Issue Date
(other than an issuance or sale to a Restricted Subsidiary or an
employee stock ownership plan or similar trust);
(C) the amount by which Indebtedness of the Issuer is reduced
on the Issuer's balance sheet upon the conversion or exchange (other
than by a Restricted Subsidiary) subsequent to the Incurrence of any
Indebtedness of the Issuer convertible or exchangeable for Capital
Stock (other than Redeemable Stock or Exchangeable Stock) of the
Issuer (less the amount of any cash, or other property, distributed
by the Issuer upon such conversion or exchange); and
(D) to the extent not otherwise included in Consolidated Net
Income, the net reduction in Investments in Unrestricted
Subsidiaries resulting from dividends, repayments of loans or
advances,
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or other transfers of assets, in each case to the Issuer or any
Restricted Subsidiary after the Issue Date from any Unrestricted
Subsidiary or from the redesignation of an Unrestricted Subsidiary
as a Restricted Subsidiary (valued in each case as provided in the
definition of Investment), not to exceed in the case of any
Restricted Subsidiary the total amount of Investments (other than
Permitted Investments) in such Restricted Subsidiary made by the
Issuer and its Restricted Subsidiaries in such Unrestricted
Subsidiary after the Issue Date.
(b) The provisions of Section (a) shall not prohibit:
(i) any purchase or redemption of Capital Stock or Subordinated
Obligations of the Issuer made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Capital Stock of the Issuer (other
than Redeemable Stock or Exchangeable Stock and other Capital Stock issued
or sold to a Restricted Subsidiary or an employee stock ownership plan);
PROVIDED, HOWEVER, that (A) such purchase or redemption shall be excluded
in the calculation of the amount of Restricted Payments and (B) the Net
Cash Proceeds from such sale shall be excluded from clauses (3)(B) and
(3)(C) of Section (a);
(ii) any purchase or redemption of Subordinated Obligations of the
Issuer made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Indebtedness of the Issuer which is permitted to be
issued pursuant to Section 4.09 hereof; PROVIDED, HOWEVER, that such
purchase or redemption shall be excluded in the calculation of the amount
of Restricted Payments;
(iii) dividends paid within 60 days after the date of declaration if
at such date of declaration such dividend would have complied with this
provision; PROVIDED, HOWEVER, that at the time of payment of such
dividend, no other Default shall have occurred and be continuing (or would
result therefrom); PROVIDED FURTHER, HOWEVER, that such dividend shall be
included in the calculation of the amount of Restricted Payments (unless
already included in determining the amount of Restricted Payments
previously made upon the declaration of such dividend).
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SECTION 4.12. LIMITATION ON SALE/LEASEBACK TRANSACTIONS. The Issuer
will not, and will not permit any Restricted Subsidiary to, enter into any
Sale/Leaseback Transaction with any Person (other than the Issuer or a
Restricted Subsidiary) unless:
(a) the Issuer or such Restricted Subsidiary would be entitled to
incur Indebtedness, in a principal amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction, secured by a
Lien on the property subject to such Sale/Leaseback Transaction pursuant
to Section 4.10 above without equally and ratably securing the Secured
Notes pursuant to such Section;
(b) the net proceeds received by the Issuer or any Restricted
Subsidiary in connection with such Sale/Leaseback Transaction are at least
equal to the fair value (as determined by the Board of Directors) of such
property; and
(c) the Issuer applies the proceeds of such transaction in
compliance with Section 4.15. Notwithstanding the foregoing, the Issuer
shall not and shall not permit any Restricted Subsidiary to enter into or
otherwise became liable with respect to any Sale/Leaseback Transaction
involving any Restricted Collateral.
SECTION 4.13. SEC REPORTS. Notwithstanding that the Issuer may not
be required to remain subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Issuer shall file with the SEC and provide
the Trustee and Noteholders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act.
In addition, whether or not required by the rules and regulations of
the Commission, the Issuer will file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such filing). In addition, the Issuer shall furnish to the Noteholders
and to prospective investors, upon the requests of such Noteholders, any
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act so long as the Secured Notes are not freely transferable under
the Securities Act.
SECTION 4.14. LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM
RESTRICTED SUBSIDIARIES. The Issuer shall not, and shall not permit any
Restricted Subsidiary
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to, create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions, in cash or
otherwise, on its Capital Stock to the Issuer or any Restricted Subsidiary or
pay any Indebtedness owed to the Issuer or any Restricted Subsidiary, (b) make
any loans or advances to the Issuer or any Restricted Subsidiary or (c) transfer
any of its property or assets to the Issuer or any Restricted Subsidiary,
except:
(i) any encumbrance or restriction pursuant to an agreement in
effect or entered into on the Issue Date;
(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Acquired Indebtedness
or Preferred Stock Incurred by such Restricted Subsidiary on or prior to
the date on which such Restricted Subsidiary became a Restricted
Subsidiary or was acquired by the Issuer (other than Indebtedness or
Preferred Stock Incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was acquired by
the Issuer or otherwise Incurred in anticipation of such acquisition) and
outstanding on such date;
(iii) any encumbrance or restriction relating to any assets acquired
after the Issue Date, so long as such encumbrance or restriction relates
only to the assets so acquired and is not or was not created in
anticipation of such acquisition;
(iv) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Indebtedness or Preferred Stock Incurred
pursuant to an agreement referred to in clause (i), (ii) or (iii) of this
Section or this clause (iv) or contained in any amendment to an agreement
referred to in clause (i), (ii) or (iii) of this Section or this clause
(iv); PROVIDED, HOWEVER, that the encumbrances and restrictions with
respect to such Restricted Subsidiary contained in any such refinancing
agreement or amendment are in the aggregate no less favorable to the
Holders of Secured Notes than the encumbrances and restrictions with
respect to such Restricted Subsidiary contained in such predecessor
agreements;
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(v) any such encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests or in
license agreements to the extent such provisions restrict the assignment
of such agreement and any rights granted or property leased thereunder;
(vi) in the case of clause (iii) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a Restricted
Subsidiary to the extent such restrictions restrict the transfer of the
property subject to such security agreements or mortgages; and
(vii) any temporary encumbrance or restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered into for
the sale or disposition of all or substantially all the Capital Stock or
assets of such Restricted Subsidiary pending the closing of such sale or
disposition.
Nothing contained in this covenant shall prevent the Issuer or any
Restricted Subsidiary from entering into any agreement permitting the incurrence
of Liens otherwise permitted by Section 4.10 hereof.
SECTION 4.15. LIMITATION ON ASSET SALES. (a) The Issuer shall not,
and shall not permit any Restricted Subsidiary to, sell, assign, convey,
transfer or otherwise dispose of a Mortgaged Rig or any other portion of the
Collateral (other than an Incidental Asset or Temporary Cash Investments in the
Reserve Account and other than a transfer of a Mortgaged Rig to a Wholly Owned
Restricted Subsidiary that becomes a Subsidiary Guarantor); PROVIDED, HOWEVER,
that the Issuer or a Restricted Subsidiary may sell a Mortgaged Rig or the
Issuer may sell all the Capital Stock of a Restricted Subsidiary owning a
Mortgaged Rig (any such asset proposed to be sold is referred to herein as a
"Mortgaged Rig Asset") if such sale of a Mortgaged Rig Asset shall be made in
compliance with each of the following conditions:
(i) no Default shall have occurred and be
continuing;
(ii) the sale shall be effected in a commercially
reasonable manner as determined by the Board of
Directors and evidenced by a Board Resolution;
(iii) the entire consideration for such sale shall be at least equal
to the fair market value of the
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Mortgaged Rig Asset (as determined in good faith by the Issuer's Board of
Directors);
(iv) at least 85% of the consideration received
shall be in the form of cash or Temporary Cash
Equivalents; and
(v) the Issuer shall have complied with the other provisions of this
Indenture applicable to such sale, including Section 3.09.
(b) The Issuer shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any Asset Sales (other than Asset Sales permitted by
Section 4.15(a) and foreclosures, deeds-in-lieu of foreclosure or similar
transactions) unless (i) the Issuer or the applicable Restricted Subsidiary, as
the case may be, receives consideration at the time of such Asset Sale at least
equal to the fair market value of the assets sold or otherwise disposed of (as
determined in good faith by the Issuer's Board of Directors), and (ii) at least
85% of the consideration received by the Issuer or the Restricted Subsidiary, as
the case may be, from such Asset Sale at the time of such disposition shall be
in the form of cash or Temporary Cash Equivalents. If the Issuer or a Restricted
Subsidiary engages in an Asset Sale in compliance with the previous sentence or
a foreclosure, deed-in-lieu of foreclosure or similar transaction, then the
Issuer shall or shall cause a Restricted Subsidiary to apply an amount equal to
such excess Net Available Cash within 360 days of the Asset Sale either (i) to
repay Senior Indebtedness of the Issuer or of a Restricted Subsidiary (other
than in each case Indebtedness owed to an Affiliate of the Issuer), (ii)
to invest in Additional Assets or (iii) pay (no later than the end of such
360-day period) such excess Net Available Cash (to the extent not applied
pursuant to clauses (i) or (ii) above) directly to the Trustee for deposit in
the Reserve Account. Pending application of Net Available Cash pursuant to this
Section, such Net Available Cash shall be invested in Permitted Investments or
to temporarily reduce Indebtedness.
SECTION 4.16. LIMITATION ON ASSET SWAPS. The Issuer will not, and
will not permit any Restricted Subsidiary to, engage in any Asset Swap, unless:
(i) at the time of entering into the agreement with respect thereto
and immediately after giving effect to the proposed Asset Swap, no Default
shall have occurred and be continuing;
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(ii) the aggregate fair market values of the Additional Assets and
other consideration to be received by the Issuer or the applicable
Restricted Subsidiary is, at the time the Asset Swap is agreed to,
substantially equal to the aggregate fair market of the property being
disposed of by the Issuer or the applicable Restricted Subsidiary (to be
determined in good faith by the Board of Directors of the Issuer and to be
evidenced by a resolution of such Board set forth in an Officers'
Certificate delivered to the Trustee); and
(iii) the cash payments, if any, received by the Issuer or such
Restricted Subsidiary in connection with such Asset Swap are treated as
Net Available Cash received from an Asset Sale.
SECTION 4.17. LIMITATION ON AFFILIATE TRANSACTIONS. (a) The Issuer
shall not, and shall not permit any Restricted Subsidiary to, enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property, employee compensation arrangements or the rendering of any
service) with any Affiliate of the Issuer (an "Affiliate Transaction") unless
the terms thereof (i) are no less favorable to the Issuer or such Restricted
Subsidiary than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate, (ii) if such
Affiliate Transaction involves an amount in excess of $500,000, (A) are set
forth in writing and (B) have been approved by a majority of the members of the
Board of Directors of the Issuer having no personal stake in such Affiliate
Transaction and (iii) if such Affiliate Transaction involves an amount in excess
of $10,000,000, have been determined by an investment banking firm of national
reputation or, in the case of the sale or transfer of assets subject to
valuation, an appropriate independent qualified appraiser of national
reputation, given the size and nature of the transaction, to be fair, from a
financial standpoint, to the Issuer and its Restricted Subsidiaries.
(b) The provisions of the foregoing paragraph (a) shall not prohibit
(i) any Restricted Payment permitted to be paid pursuant to the covenant
described under Section 4.11 hereof, (ii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements of the Issuer, stock options, stock
ownership and other employee benefit plans approved by the Board of Directors of
the Issuer, (iii) the grant of stock options or similar rights to employees,
officers and directors of the
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Issuer pursuant to plans approved by its Board of Directors, (v) the payment of
reasonable fees to directors of the Issuer and its Restricted Subsidiaries who
are not employees of the Issuer or its Restricted Subsidiaries and any Affiliate
Transaction between the Issuer and a Wholly Owned Restricted Subsidiary or
between Wholly Owned Restricted Subsidiaries, and (vi) transactions pursuant to
agreements in effect on the Issue Date and disclosed in the Offering Memorandum.
(c) The Issuer shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, Incur or permit to exist any Indebtedness
of the Issuer or any Restricted Subsidiary owed to a Shareholder unless (i) such
Indebtedness is subordinated to the Secured Notes, in the case of the Issuer, or
the Issuer Loans, in the case of a Restricted Subsidiary, and (ii) all payments
of principal, premium, if any, and interest in respect of the Secured Notes or
the Issuer Loans, as applicable, is required to be paid before any amounts shall
be payable in respect of such Indebtedness and, prior to such time, the holder
of such Indebtedness shall not have any claim against the Issuer or such
Restricted Subsidiary in respect of such Indebtedness; PROVIDED, HOWEVER, that
payments and prepayments thereof may be made if permitted under Section 4.11.
SECTION 4.18. LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES. The Issuer shall not sell or otherwise dispose of any
Capital Stock of a Restricted Subsidiary, and shall not permit any such
Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise
dispose of any of its Capital Stock except (i) to the Issuer or a Wholly Owned
Restricted Subsidiary, (ii) if, immediately after giving effect to such
issuance, sale or other disposition, neither the Issuer nor any of its
Subsidiaries own any Capital Stock of such Restricted Subsidiary, (iii)
directors' qualifying shares or (iv) other than with respect to shares of
Capital Stock of a Restricted Subsidiary which owns a Mortgaged Rig, if,
immediately after giving effect to such issuance, sale or other disposition,
such Restricted Subsidiary would no longer constitute a Restricted Subsidiary
and any Investment in such Person remaining after giving effect thereto would
have been permitted to be made under the covenant described under Section 4.11
if made on the date of such issuance, sale or other disposition.
SECTION 4.19. FUTURE SUBSIDIARY GUARANTORS. The Issuer may not
permit any Restricted Subsidiary, directly or indirectly, to guarantee any
Indebtedness of the Issuer or any other Obligor ("Guaranteed Indebtedness")
unless
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(i) such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for a Subsidiary Guarantee of
payment of the Secured Notes by such Restricted Subsidiary and (ii) such
Restricted Subsidiary waives and will not in any manner whatsoever claim or take
the benefit or advantage of, any rights of reimbursement, indemnity or
subrogation or any other rights against the Issuer or any other Restricted
Subsidiary as a result of any payment by such Restricted Subsidiary under its
Subsidiary Guarantee.
SECTION 4.20. IMPAIRMENT OF LIENS. The Issuer shall not, and the
Issuer shall not permit any Restricted Subsidiary to, take or omit to take, any
action which action or omission might or would have the result of materially
impairing the Liens with respect to the Collateral for the benefit of the
Trustee and the Holders of the Secured Notes or the Liens granted by the
Mortgaged Rig Owners pursuant to the Mitsubishi Loan Collateral Documents, and
except as permitted by this Indenture and the Security Agreements, the Issuer
shall not, and shall not permit any Restricted Subsidiary to, grant to any
Person other than the Trustee, for the benefit of the Trustee and the Holders of
the Secured Notes, any interest whatsoever in any of the Collateral.
SECTION 4.21. LIMITATION ON ISSUER ACTIVITIES. The Issuer will not
engage in any business activity or undertake any activity, except any activity
(i) relating to the offering, sale or issuance of the Secured Notes or the use
of the proceeds of such sale of Secured Notes to acquire the Issuer Loans, or
(ii) undertaken with the purpose of, and directly related to, exercising its
rights under, and fulfilling the obligations of the Issuer or the Restricted
Subsidiaries under, the Secured Notes, this Indenture, the Issuer Loans, the
Mitsubishi Documents and Security Agreements.
SECTION 4.22. INSURANCE. The Issuer shall, or shall cause the
Mortgaged Rig Owner owning a Mortgaged Rig to, carry and maintain with respect
to each Mortgaged Rig owned by it insurance payable in United States Dollars in
amounts, against risks and in a form which is substantially equivalent to the
coverage carried by other responsible and experienced companies engaged in the
operation of drilling rigs similar to the Mortgaged Rigs and with insurance
companies, underwriters, funds, mutual insurance associations or clubs of
recognized standing. Total property insurance for the Mortgaged Rigs shall be in
an aggregate amount not less than the sum of the aggregate outstanding principal
amount, subject to customary
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deductibles, retentions or self-insurance, of the Secured Notes and the
aggregate principal amount of all other Indebtedness secured by a Lien on the
Collateral.
SECTION 4.23. AMENDMENTS TO SECURITY DOCUMENTS. The Issuer shall
not, and the Issuer shall not permit any of its Restricted Subsidiaries to,
amend, modify or supplement, or permit or consent to any amendment, modification
or supplement of, the Security Agreements in any way that would be adverse to
the Holders of the Notes.
SECTION 4.24. USE OF PROCEEDS. The Issuer shall use the net
proceeds of the offering of the Secured Notes to acquire the Issuer Loans.
SECTION 4.25. SEPARATE CORPORATE ENTITIES. The Issuer shall, and
shall cause each of its Subsidiaries to, and each Shareholder shall, conduct its
business in its own name so as to avoid the appearance of conducting its
business on behalf of any other Person or that the assets of the Issuer or any
such Subsidiaries or any Shareholder (the "Applicable Entities") are available
to pay the creditors of any of the other applicable Entities. Without limiting
the generality of the foregoing,
(1) each Applicable Entity shall maintain corporate records and
books of account separate from those of the other Applicable Entities;
(2) each Applicable Entity shall comply with its constitutive
documents, including by obtaining proper authorization from its board of
directors of all corporate action requiring such authorization and
holding meetings of its board of directors as required
by its constitutive documents;
(3) operating expenses and liabilities of each Applicable Entity
shall not be paid from the funds of the other Applicable Entities except
to the extent such funds have been contributed as equity or constitute
loans and, in each case, documented appropriately;
(4) each Applicable Entity shall maintain an arm's-length
relationship with the other Applicable Entities and shall not hold itself
out as being liable for the debts of the other Applicable Entities; and
(5) each Applicable Entity shall keep its assets and its liabilities
wholly separate from the other applicable Entities except that operating
assets may be
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pooled in the ordinary course of the Applicable Entity's drilling
business.
The foregoing, however, shall not be violated by reason of this Indenture, the
Guarantees or the Security Agreements or any permitted Indebtedness or permitted
Lien under the Indenture.
The Issuer shall cause each Unrestricted Subsidiary to provide in
any Indebtedness Incurred by such Unrestricted Subsidiary that the holder of
such Indebtedness will not have any recourse to the Issuer or any of its
Restricted Subsidiaries with respect to such Indebtedness.
SECTION 4.26. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT OR EVENT OF
DEFAULT. (a) The Issuer and each Subsidiary Guarantor shall deliver to the
Trustee, within 90 days after the end of each fiscal year, an Officers'
Certificate (which shall be signed by Officers satisfying the requirements of
Section 314 of the Trust Indenture Act) stating that a review of the activities
of the Issuer and the Restricted Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Issuer has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Issuer
has kept, observed, performed and fulfilled in all material respects each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge
and what action the Issuer is taking or proposes to take with respect thereto)
and that to the best of his or her knowledge no event has occurred and remains
in existence by reason of which payments on account of the principal of,
interest, if any (including Special Interest, if any, and Additional Amounts, if
any), on the Secured Notes is prohibited or if such event has occurred, a
description of the event and what action the Issuer is taking or proposes to
take with respect thereto.
(b) The year-end financial statements delivered pursuant to Section
4.13 hereof shall be accompanied by a written statement of the independent
public accountants of the Issuer (who shall be a firm of established national
reputation) that in making the examination necessary for certification of such
financial statements, nothing has come to their attention that would lead them
to believe that the
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Issuer has violated any provisions of Article 4 or Article 5 hereof (except
that, such written statement need not address the Issuer's compliance with the
provisions of Sections 4.2, 4.5, 4.7, 4.8, 4.17 or 4.27 hereof) or, if any such
violation has occurred, specifying the nature and period of existence thereof,
it being understood that such accountants shall not be liable directly or
indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) The Issuer shall, so long as any of the Secured Notes are
outstanding, deliver to the Trustee, forthwith upon, but in any event within
five Business Days after any Officer's becoming aware of any Default or Event of
Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Issuer is taking or proposes to take with respect thereto.
(d) For purposes of this Section 4.26, compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.
SECTION 4.27. PROHIBITION ON ISSUER BECOMING AN INVESTMENT COMPANY.
The Issuer shall not become an "Investment Company" as defined in the Investment
Company Act of 1940, as amended.
SECTION 4.28. ADDITIONAL AMOUNTS. (a) Except to the extent required
by any applicable law, regulation or governmental policy, any and all payments
of, or in respect of, any Secured Note shall be made free and clear of and
without deduction for or on account of any and all present or future taxes,
levies, imposts, deduction, charges or withholdings and all liabilities with
respect thereto imposed by the British Virgin Islands, Brazil, the United
States of America or any other jurisdiction with which the Issuer, Pride or any
Subsidiary Guarantor has some connection (including any jurisdiction from or
through which payments under the Secured Notes, the Pride Guarantee or the
Subsidiary Guarantees (if any) are made or in which the Mortgaged Rigs are
located) or any political subdivision of or any taxing authority in any such
jurisdiction (collectively, "Taxes" and any such jurisdiction or political
subdivision or taxing authority, a "Tax Jurisdiction"). If the Issuer, Pride or
any Subsidiary Guarantor shall be required by law to withhold or deduct any
Taxes from or in respect of any sum payable under the Secured Notes, the Pride
Guarantee or a Subsidiary Guarantee, the sum payable by the Issuer under the
Secured Notes shall be increased by the amount ("Additional Amounts") necessary
so that after making all required withholdings and deductions, the Holder or
beneficial owner
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of a Secured Note shall receive an amount equal to the sum that it would have
received had not such withholdings and deductions been made; PROVIDED that any
such sum shall not be paid to a Holder (an "Excluded Holder") (i) in respect of
any Taxes resulting from the beneficial owner of such Secured Note carrying on
business or being deemed to carry on business in or through a permanent
establishment or fixed base in the relevant taxing jurisdiction or having any
other connection with the relevant taxing jurisdiction or any political
subdivision thereof or any taxing authority therein other than the mere holding
or owning of such Secured Note, being a beneficiary of the Pride Guarantee or
any applicable Subsidiary Guarantee, the receipt of any income or payments in
respect of such Secured Note, the Pride Guarantee or any applicable Subsidiary
Guarantee or the enforcement of such Secured Note, the Pride Guarantee or any
applicable Subsidiary Guarantee, (ii) in respect of any Taxes that would not
have been imposed but for the presentation (where presentation is required) of
such Secured Note for payment more than 180 days after the date such payment
became due and payable or was duly provided for, whichever occurs later, or
(iii) in respect of United States federal income Taxes, if such Holder fails to
provide to the Issuer, within 30 days of a request by the Issuer, a complete and
valid IRS Form W-8 or other form establishing an exemption from United States
withholding Taxes. The Issuer, Pride or the Subsidiary Guarantors, as
applicable, will also (i) make such withholding or deduction and (ii) remit the
full amount deducted or withheld to the relevant authority in accordance with
applicable law, and, in any such case, the Issuer will furnish to each Holder on
whose behalf an amount was so remitted, within 30 calendar days after the date
the payment of any Taxes is due pursuant to applicable law, certified copies of
tax receipts evidencing such payment by the Issuer, Pride or the Subsidiary
Guarantors, as applicable. The Issuer will, upon written request of each Holder
(other than an Excluded Holder), reimburse each such Holder for the amount of
(i) any Taxes so levied or imposed and paid by such Holder as a result of
payments made under or with respect to any Secured Notes, and (ii) any Taxes so
levied or imposed with respect to any reimbursement under the foregoing clause
(i) so that the net amount received by such Holder (net of payments made under
or with respect to such Secured Notes, the Pride Guarantee or the applicable
Subsidiary Guarantees) after such reimbursement will not be less than the net
amount the Holder would have received if Taxes on such reimbursement had not
been imposed.
(b) At least 30 calendar days prior to each date on which any
payment under or with respect to the Secured
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Notes is due and payable, if the Issuer will be obligated to pay Additional
Amounts with respect to such payment, the Issuer will deliver to the Trustee an
Officers' Certificate stating the fact that such Additional Amounts will be
payable and the amounts so payable and will set forth such other information
necessary to enable the Trustee to pay such Additional Amounts to Holders on the
payment date.
(c) If any Holder or beneficial owner of any Secured Note receives a
refund of Taxes after the Issuer, Pride or any Subsidiary Guarantor, as
applicable, has paid any Additional Amounts, such Holder or beneficial owner
shall reimburse the Issuer, Pride or any Subsidiary Guarantor, as applicable,
for any amount of such refund.
(d) The Issuer will pay any present or future stamp, issue,
registration, documentary or other similar taxes and duties, including interest
and penalties, in respect of the creation, issue and offering of the Secured
Notes payable in the United States, the British Virgin Islands, Brazil or any
political subdivision thereof or taxing authority of or in the foregoing. The
Issuer will also pay and indemnify the Trustee and the Holders of the Secured
Notes from and against all court fees and taxes or other taxes and duties,
including interest and penalties, paid by any of them in any jurisdiction in
connection with any action permitted to be taken by the Holders or the Trustee
to create Liens on the Collateral or to enforce the Obligations of Issuer, Pride
or the Subsidiary Guarantors under the Secured Notes, this Indenture, the Pride
Guarantee, the Subsidiary Guarantees, the Issuer Loans or the Security
Agreements.
(e) Whenever there is mentioned, in any context, the payment of
principal, premium or interest in respect of any Secured Note or the net
proceeds received on the sale or exchange of any Secured Note, such mention
shall be deemed to include the payment of Additional Amounts or Special Interest
provided for in this Indenture to the extent that, in such context, Additional
Amounts or Special Interest are, were or would be payable in respect thereof
pursuant to this Indenture.
ARTICLE V
CONSOLIDATION, MERGER, CONVEYANCE, LEASE OR TRANSFER
SECTION 5.01. LIMITATIONS ON MERGERS AND CONSOLIDATIONS. (a) Neither
the Issuer nor any Subsidiary Guarantor (other than any Subsidiary Guarantor
that shall
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have been released from its Subsidiary Guarantee pursuant to the provisions of
this Indenture) will consolidate with or merge into any Person, continue in
another jurisdiction, or sell, lease, convey, transfer or otherwise dispose of
all or substantially all of its assets to any Person, unless:
(i) the Person formed by or surviving such consolidation or merger
(if other than the Issuer or such Subsidiary Guarantor, as the case may
be), or to which such sale, lease, conveyance, transfer or other
disposition shall be made (collectively, the "Successor"), is a
corporation organized and existing under the laws of the Bahamas, the
British Virgin Islands or Panama (such jurisdiction of organization, the
"Relevant Jurisdiction"), and the Successor assumes by supplemental
indenture in a form satisfactory to the Trustee all of the applicable
Obligations of the Issuer or such Subsidiary Guarantor, as the case may
be, under this Indenture, the Security Agreements, the Subsidiary
Guarantees and the Secured Notes;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have
occurred and be continuing;
(iii) in the case of the Issuer, immediately after giving effect to
such transactions, the resulting, surviving or transferee Person would be
able to incur at least $1 of Indebtedness pursuant to Section 4.09(a)
hereof;
(iv) immediately after giving effect to such transaction, the
Successor shall have a Consolidated Net Worth in an amount that is not
less than the Consolidated Net Worth of the Issuer or Subsidiary Guarantor
as the case may be, immediately prior to such transaction;
(v) the Issuer shall have delivered, or caused to be delivered to
the Trustee, in form and substance reasonably satisfactory to the Trustee,
an Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, continuance, sale, assignment, conveyance or
transfer and the supplemental indenture in respect thereto comply with the
provisions of this Indenture and that all conditions precedent in this
Indenture relating to such transactions have been complied with;
(vi) the Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that the Holders
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will not recognize income, gain or loss for U.S. Federal income tax
purposes as a result of such transaction and will be subject to U.S.
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such transaction had not occurred;
and
(vii) the Issuer shall have delivered to the Trustee an Opinion of
Counsel in the Relevant Jurisdiction to the effect that(A) any payment of
interest, principal or premiums (if any) on the Secured Notes by the
Issuer to a Holder or by a Subsidiary Guarantor on its Subsidiary
Guarantee, as applicable, will, after the consolidation, merger,
conveyance, transfer or lease of assets be exempt from withholding tax in
the Relevant Jurisdiction and (B) no other taxes on income (including
taxable capital gains) will be payable under the law of the Relevant
Jurisdiction by a Holder who is or who is deemed to be a nonresident of
the Relevant Jurisdiction in respect of the acquisition, ownership or
disposition of the Secured Notes, including the receipt of interest,
principal or premiums thereon.
(b) Upon any transaction or series of transactions that are of the
type described in, and are effected in accordance with, this Section 5.01, the
Successor shall succeed to, and be substituted for, and may exercise every right
and power of, the Issuer or Subsidiary Guarantor, as applicable, under this
Indenture and the Secured Notes with the same effect as if such Successor had
been named as the Issuer or Subsidiary Guarantor, as applicable, in this
Indenture; and when a Successor duly assumes all of the Obligations and
covenants of the Issuer or a Subsidiary Guarantor pursuant to this Indenture and
the Secured Notes, except in the case of a conveyance, transfer or lease, the
predecessor Person shall be relieved of all such Obligations.
(c) For all purposes of this Indenture and the Secured Notes,
Subsidiaries of any Successor will, upon such transaction or series of
transactions, become Restricted Subsidiaries or Unrestricted Subsidiaries as
provided pursuant to this Indenture and all Indebtedness, and all Liens on the
property or assets, of the Successor and its Restricted Subsidiaries immediately
prior to such transaction or series of transactions shall be deemed to have been
incurred upon such transaction or series of transactions.
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ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. Each of the following is an
"Event of Default" hereunder:
(a) default in the payment of interest (including Special Interest,
if any, and Additional Amounts, if any), on the Secured Notes or an Issuer
Loan when due, continued for 30 days;
(b) (i) default in the payment of principal of, or premium, if any,
on, any Secured Note or Issuer Loan when due at its Stated Maturity, upon
redemption, required repurchase, declaration of acceleration or otherwise;
or
(ii) the failure to redeem or purchase Secured Notes or the Issuer
Loans when required pursuant to this Indenture or the Mitsubishi Loan
Agreements;
(c) the failure by the Issuer to comply with its obligations under
Sections 3.08, 3.09, 4.08, 4.15 or 5.01;
(d) the failure by the Issuer and the Subsidiary Guarantors to
comply with its other agreements contained in this Indenture or in the
Security Agreements and such failure or event of default continues for 60
days after notice; PROVIDED, HOWEVER, that a default under this clause (d)
will not constitute an Event of Default until the Trustee provides written
notice to the Issuer, or the Holders of 25% in aggregate principal amount
of the outstanding Secured Notes provide a written notice to the Issuer
and the Trustee, of the default, and the Issuer does not cure such default
within 60 days after receipt of such notice;
(e) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness by the Issuer or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Issuer or any of its Restricted
Subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of this Indenture, which default (i) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in such
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Indebtedness on the date of such default unless being contested in good
faith by appropriate proceedings (a "Payment Default"), (ii) results in
the acceleration of such Indebtedness prior to its express maturity and,
in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $10,000,000 or more or (iii) occurs under a Mitsubishi Loan
Agreement or Mitsubishi Loan Collateral Agreement, is not a Payment
Default and is not cured or waived within 120 days; PROVIDED, HOWEVER,
that a default under this clause (e) will not constitute an Event of
Default until the Trustee provides a written notice to the Issuer, or the
Holders of 25% in aggregate principal amount of the outstanding Secured
Notes provide a written notice to the Issuer and the Trustee, of the
default;
(f) failure by the Issuer or any of its Restricted Subsidiaries to
pay final judgments aggregating in excess of $10,000,000, which judgments
are not paid, discharged or stayed for a period of 30 days;
(g) the entry by a court having jurisdiction in the premises of (i)
a decree or order for relief in respect of the Issuer, Pride or any
Significant Subsidiary in an involuntary case or proceeding under United
States bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state, or foreign bankruptcy, insolvency, or other
similar law or (ii) a decree or order adjudging the Issuer, Pride or any
Significant Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Issuer, Pride or any Significant
Subsidiary under United States bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal, state or foreign bankruptcy,
insolvency, or similar law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
the Issuer, Pride or any Significant Subsidiary or of any substantial part
of the property or assets of the Issuer, Pride or any Significant
Subsidiary, or ordering the winding up or liquidation of the affairs of
the Issuer, Pride or any Significant Subsidiary, and the continuance of
any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days;
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(h) (i) the commencement by the Issuer, Pride or any Significant
Subsidiary of a voluntary case or proceeding under United States
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal, state or foreign bankruptcy, insolvency or other similar law or
of any other case or proceeding to be adjudicated a bankrupt or insolvent;
or (ii) the consent by the Issuer, Pride or any Significant Subsidiary to
the entry of a decree or order for relief in respect of the Issuer, Pride
or any Significant Subsidiary in an involuntary case or proceeding under
United States bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal, state, or foreign bankruptcy, insolvency or
other similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against the Issuer, Pride or any Significant
Subsidiary; or (iii) the filing by the Issuer, Pride or any Significant
Subsidiary of a petition or answer or consent seeking reorganization or
relief under U.S. bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal, state or foreign bankruptcy, insolvency or other
similar law; or (iv) the consent by the Issuer, Pride or any Significant
Subsidiary to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Issuer, Pride or any Significant
Subsidiary or of any substantial part of the Property or assets of the
Issuer, Pride or any Significant Subsidiary, or the making by the Issuer,
Pride or any Significant Subsidiary of an assignment for the benefit of
creditors; or (v) the admission by the Issuer, Pride or any Significant
Subsidiary in writing of its inability to pay its debts generally as they
become due; or (vi) the taking of corporate action by the Issuer, Pride or
any Significant Subsidiary in furtherance of any such action; or
(i) the Pride Guarantee or any Subsidiary Guarantee ceases to be in
full force and effect (other than in accordance with the terms of this
Indenture and such Subsidiary Guarantee) or Pride or a Subsidiary
Guarantor denies or disaffirms its obligations under the Pride Guarantee
or its Subsidiary Guarantee, as applicable; or
(j) the Letter of Credit ceases to be in full force and effect or
the Letter of Credit Provider denies or disaffirms its obligations under
the Letter of Credit; or
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(k) the Liens under the Security Agreements shall, at any time,
cease to be in full force and effect for any reason (other than by
operation of the provisions of this Indenture and the Security Agreements)
other than the satisfaction in full of all obligations under this
Indenture and discharge of this Indenture, or any Lien created thereunder
shall be declared invalid or unenforceable or the Issuer or any Mortgaged
Rig Owner shall assert, in any pleading in any court of competent
jurisdiction, that any such Lien is invalid or unenforceable.
SECTION 6.02. ACCELERATION. If any Event of Default (other than an
Event of Default specified in clause (g) or (h) of Section 6.01) occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% of the outstanding aggregate principal amount at Stated Maturity of the
Secured Notes, may declare the principal amount at Stated Maturity of, premium,
if any, and any accrued and unpaid interest (including Additional Amounts, if
any, and Special Interest, if any), on all such Secured Notes then outstanding
to be immediately due and payable by a notice in writing to the Issuer (and to
the Trustee if given by Holders of such Secured Notes), and upon any such
declaration all amounts payable in respect of the Secured Notes will become and
be immediately due and payable. If any Event of Default specified in clause (g)
or (h) of Section 6.01 occurs, the principal amount at Stated Maturity of,
premium, if any, and any accrued and unpaid interest (including Additional
Amounts, if any, and Special Interest, if any), on, the Secured Notes then
outstanding shall become immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder of such Secured Notes.
After any such acceleration, but before a judgment or decree based
on acceleration, Holders of a majority in principal amount at Stated Maturity of
the outstanding Secured Notes by notice to the Issuer and the Trustee may
rescind an acceleration and its consequences if:
(a) the Issuer, Pride or any Subsidiary Guarantor
has paid or deposited with the Trustee a sum sufficient
to pay
(i) all money paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursement and advances of
the Trustee, its agents and counsel, and any other amounts due to
the Trustee under Section 7.07;
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(ii) all overdue installments of interest (including
Additional Amounts, if any, and Special Interest, if any), on, and
any other amounts due in respect of, all Secured Notes;
(iii) the principal of (and premium, if any, on) any Secured
Notes that have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed
therefor in the Secured Notes and this Indenture; and
(iv) to the extent that payment of such interest is lawful,
interest upon Defaulted Interest at the rate or rates prescribed
therefor in the Secured Notes and this Indenture;
(b) all Events of Default, other than the nonpayment of principal of
Secured Notes which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 6.04;
(c) the annulment of such acceleration would not conflict with any
judgment or decree of a court of competent jurisdiction; and
(d) the Issuer has delivered an Officers' Certificate to the Trustee
to the effect of clauses (b) and (c) of this sentence.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of, premium, on, if any, any interest (including Special Interest,
if any, and Additional Amounts, if any), on, and any other amounts owing and
unpaid on, the Secured Notes or to enforce the performance of any provision of
the Secured Notes, the Security Agreements, the Guarantees or this Indenture or
may draw under the Letter of Credit.
The Trustee may maintain a proceeding even if it does not possess
any of the Secured Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
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SECTION 6.04. WAIVER OF PAST DEFAULTS. Subject to Section 6.07
hereof, Holders of not less than a majority in aggregate principal amount of the
then outstanding Secured Notes by notice to the Trustee may on behalf of the
Holders of all of the Secured Notes waive an existing Default or Event of
Default and its consequences hereunder, except (i) an existing Default or Event
of Default in the payment of the principal of, premium, if any, on, or interest
(including Additional Interest and Special Interest, if any), on, the Secured
Notes (including in connection with an offer to purchase) or (ii) an existing
Default or Event of Default in respect of a provision that under Section 10.02
cannot be amended without the consent of each Holder affected thereby. Upon any
such waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this Indenture
and the Security Agreements; but no such waiver shall extend to any subsequent
or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in
aggregate principal amount of the Secured Notes then outstanding may direct the
time, method and place of conducting any proceeding for exercising any remedy
available to the Trustee or exercising any trust or power conferred on it.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or the Security Agreements or, subject to Section 7.01 hereof,
that the Trustee determines may be unduly prejudicial to the rights of other
Holders of Secured Notes or that may involve the Trustee in personal liability;
PROVIDED that the Trustee may take any other action deemed by the Trustee that
is not inconsistent with such direction. Prior to taking any action hereunder,
the Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by taking or not taking such
action.
SECTION 6.06. LIMITATION ON SUITS. No Holder of any Secured Note
shall have the right to institute any proceeding, judicial or otherwise, with
respect to this Indenture, the Pride Guarantee, the Subsidiary Guarantees, the
Letter of Credit, the Secured Notes or the Security Agreements, or for the
appointment of a receiver or a trustee, or for any other remedy, unless:
(a) the Holder of a Secured Note has given to the Trustee written
notice of a continuing Event of Default;
(b) a Holder or Holders of at least 25% in principal amount of the
then outstanding Secured Notes
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make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Secured Note or Holders of Secured Notes offer
and, if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the Secured Notes then outstanding do not give the Trustee a
direction inconsistent with the request;
in any event, it being understood and intended that no one or more Holders of
Secured Notes shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture or the Security Agreements to
affect, disturb or prejudice the rights of any Holders of Secured Notes, or to
obtain or to seek to obtain priority or preference over any other of such
Holders or to enforce any right under this Indenture or the Security Agreements,
except in the manner herein provided and for the equal and ratable benefit of
all Holders of Secured Notes.
A Holder of a Secured Note may not use this Indenture or any
Security Agreement to prejudice the rights of another Holder of a Secured Note
or to obtain a preference or priority over another Holder of a Secured
Note.
SECTION 6.07. RIGHTS OF HOLDERS OF SECURED NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of, premium, if any, on, and interest (including
Additional Amounts, if any, and Special Interest, if any), on, the Secured Notes
held by such Holder, on or after the respective due dates expressed in the
Secured Note or this Indenture (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
such Holder; except that no Holder shall have the right to institute any such
suit, if and to the extent that the institution or prosecution thereof or the
entry of judgment therein would under applicable law result in the surrender,
impairment,
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waiver, or loss of the Liens of the Security Agreements upon any property or
assets subject to the Liens.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default
specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is
authorized to recover judgment in its own name and as trustee of an express
trust against the Issuer for the whole amount of principal of, premium, if any,
on, interest (including Special Interest, if any, and Additional Amounts, if
any), remaining unpaid on, the Secured Notes and interest on overdue principal
and, to the extent lawful, interest and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due to the Trustee under Section
7.07.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee shall be
entitled and empowered, without regard to whether the Trustee or any Holder
shall have made any demand or performed any other act pursuant to the provisions
of this Article and without regard to whether the principal of the Secured Notes
shall then be due and payable as therein expressed or by declaration or
otherwise, by intervention in any proceedings relative to the Issuer, Pride, any
Subsidiary Guarantor, the Letter of Credit Provider or any Obligor upon the
Secured Notes, or to the creditors or property or assets of the Issuer, Pride,
any Subsidiary Guarantor, the Letter of Credit Provider or any other Obligor or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be entitled and empowered in such
instances:
(a) to file and prove a claim or claims for the whole amount of
principal (and premium, if any), interest (including Additional Amounts,
if any, and Special Interest, if any), and any other amounts owing and
unpaid in respect of the Secured Notes, and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including all amounts owing to the Trustee and each
predecessor Trustee pursuant to Section 7.07 hereof) and of the Holders
allowed in any judicial proceedings relative to the Issuer, Pride, any
Subsidiary Guarantor, the Letter of Credit Provider or other Obligor upon
the Secured Notes, or to the creditors or property of the Issuer, Pride,
any Subsidiary
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Guarantor, the Letter of Credit Provider or any such other Obligor;
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of the Secured Notes in any election of a trustee or
a standby trustee in arrangement, reorganization, liquidation or other
bankruptcy or insolvency proceedings or Person performing similar
functions in comparable proceedings; and
(c) to collect and receive any moneys or other property or assets
payable or deliverable on any such claims, and to distribute all amounts
received with respect to the claims of the Holders and of the Trustee on
their behalf; and any trustee, receiver, or liquidator, custodian or other
similar official is hereby authorized by each of the Holders to make
payments to the Trustee, and, in the event that the Trustee shall consent
to the making of payments directly to the Holders, to pay to the Trustee
such amounts as shall be sufficient to cover all amounts owing to the
Trustee and each predecessor Trustee pursuant to Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Secured Notes or the rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
person.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
Holders of the Secured Notes, and it shall not be necessary to make any Holders
of the Secured Notes parties to any such proceedings.
SECTION 6.10. PRIORITIES. If the Trustee collects any money or
property pursuant to this Article (including funds received from collateral
agents and escrow agents pursuant to the Security Agreements), it shall pay out
the money or property in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including
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payment of all compensation, expense and liabilities incurred, and all
advances made, by the Trustee and the costs and expenses of collection;
Second: to Holders of Secured Notes for amounts due and unpaid on
the Secured Notes for principal, premium, if any, and interest (including
Special Interest, if any, and Additional Amounts, if any), ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Secured Notes for principal (premium, if any), and
interest (including Special Interest, if any, and Additional Amounts, if
any), respectively; and
Third: to the Issuer, Pride or the Subsidiary Guarantors or to such
other party as a court of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment
to Holders of Secured Notes pursuant to this Section 6.10. At least 15 days
before such record date, the Issuer shall mail to each Holder and the Trustee a
notice that states the record date, the payment date and amount to be paid. The
Trustee may mail such notice in the name and at the expense of the Issuer.
SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement
of any right or remedy under this Indenture and the Security Agreements or in
any suit against the Trustee for any action taken or omitted by it as a Trustee,
a court in its discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder of a Secured Note
pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
aggregate principal amount of the then outstanding Secured Notes.
SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or
any Holder of Secured Notes has instituted any proceeding to enforce any right
or remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case the Issuer, the Trustee and the Holders
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions
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hereunder, and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding has been instituted.
SECTION 6.13. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided in Section 2.07 hereof, no right or remedy conferred herein, or in the
Security Agreements, upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 6.14. DELAY OR OMISSION NOT WAIVER. No delay or omission of
the Trustee or of any Holder of any Secured Note to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article VI, by the Security Agreements, or
by law to the Trustee or to the Holders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the Holders, as the
case may be.
ARTICLE VII
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill
in their exercise, as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of
Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and the
Security Agreements to which it was a party and no others, and no implied
covenants or obligations shall
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be read into this Indenture or such Security Agreements, as the case
maybe, against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture or the
Security Agreements to which it is a party. However, the Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture or such Security Agreements,
as the case may be.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture or the Security Agreements to which the Trustee is a party that
in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of
this Section.
(e) No provision of this Indenture or the Security Agreements shall
require the Trustee to expend or risk its own funds or incur any liability. The
Trustee shall be under no obligation to exercise any of its rights and powers
under this Indenture or the Security Agreements at the request of any Holders,
unless such Holders shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer. Money
held in trust by the
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Trustee need not be segregated from other funds except to the extent required by
law.
(g) Every provision of this Indenture or the Security Agreements
relating to the conduct or affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this Section and to the
provisions of the Trust Indenture Act.
SECTION 7.02. RIGHTS OF TRUSTEE. (a) Subject to the provisions of
Section 7.01(a) hereof, the Trustee may rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the oral or written advice of such counsel or any Opinion of Counsel
with respect to legal matters relating to this Indenture, the Security
Agreements, the Secured Notes, the Letter of Credit and any Guarantee shall be
full and complete authorization and protection from liability in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any attorney or agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture; PROVIDED, HOWEVER, that the
Trustee's conduct does not constitute willful misconduct or negligence.
(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
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(f) Except with respect to Section 4.02 hereof, the Trustee shall
have no duty to inquire as to the performance of the Issuer's covenants in
Article IV hereof. In addition, the Trustee shall not be deemed to have
knowledge of any Default or Event of Default except (i) any Event of Default
occurring pursuant to Sections 6.01(a) (except that the Trustee shall not be
deemed to have knowledge of a default in the payment of Special Interest or
Additional Amounts) or 6.01(b), or (ii) any Default or Event of Default of which
a Responsible Officer of the Trustee shall have received written notification
from the Issuer, any Guarantor or any Holder; PROVIDED that the Trustee shall
comply with the "automatic stay" provisions contained in U.S. bankruptcy laws,
if applicable. As used herein, the term "knowledge" means the actual fact or
statement of knowing, without any duty to make any investigation with regard
thereto.
(g) Prior to the occurrence of an Event of Default hereunder and
after the curing and waiving of all Events of Default, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document unless requested in writing to do so by
the Holders of not less than a majority in aggregate principal amount of the
Secured Notes then outstanding; PROVIDED that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Indenture, the Trustee may require reasonable indemnity against such
expenses or liabilities as a condition to proceeding; the reasonable expenses of
every such examination shall be paid by the Issuer or, if advanced by the
Trustee, shall be repaid by the Issuer upon demand. The Trustee shall not be
bound to ascertain or inquire as to the performance or observance of any
covenants, conditions, or agreements on the part of the Issuer, except as
otherwise set forth herein, but the Trustee may, in its discretion, make such
further inquiry or investigation into such facts or matters as it may see fit
and if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuer personally or by agent or attorney.
(h) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
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(i) The permissive rights of the Trustee to do things enumerated in
this Indenture shall not be construed as a duty.
SECTION 7.03 INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Secured
Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer with
the same rights it would have if it were not Trustee. However, in the event that
the Trustee acquires any conflicting interest (as defined in the Trust Indenture
Act) it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue as Trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04 TRUSTEE'S DISCLAIMER. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Security Agreements, the Pride Guarantee, the Letter of
Credit, any Subsidiary Guarantee or the Secured Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Secured Notes or any
money paid to the Issuer or upon the Issuer's direction under any provision of
this Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Secured
Notes or any other document in connection with the sale of the Secured Notes,
any Security Agreement or pursuant to this Indenture or the Security Agreements,
other than its certificate of authentication.
SECTION 7.05 NOTICE OF DEFAULTS. If a Default or Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to Holders of Secured Notes a notice of the Default or Event of Default
within 90 days after it occurs. Except in the case of a Default or Event of
Default in payment of principal of, premium, if any, or interest on any Secured
Note (including payments pursuant to the mandatory repurchase provisions of such
Secured Notes, if any), the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Secured Notes.
SECTION 7.06 REPORTS BY TRUSTEE TO HOLDERS OF THE SECURED NOTES.
Within 60 days after each May 15 beginning with the May 15 following the date of
this Indenture, and for so long as Secured Notes remain
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outstanding, the Trustee shall mail to the Holders of the Secured Notes a brief
report dated as of such reporting date that complies with TIA Section 313(a)
(but if no event described in TIA Section 313(a) has occurred within the twelve
months preceding the reporting date, no report need be transmitted). The Trustee
also shall comply with TIA Section 313(b). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Secured Notes shall be mailed to the Issuer and filed with the Commission and
each stock exchange on which the Secured Notes are listed in accordance with TIA
Section 313(d). The Issuer shall promptly notify the Trustee whenever the
Secured Notes become listed on any stock exchange and of any delisting thereof.
SECTION 7.07 COMPENSATION AND INDEMNITY. The Issuer shall pay to the
Trustee promptly from time to time such compensation for its acceptance of this
Indenture and services hereunder as agreed to by the parties from time to time.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuer shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it, including the costs of collection, in addition to the compensation
for its services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Issuer shall indemnify the Trustee against any and all losses,
liabilities or expenses (including reasonable attorneys' fees) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture, including the costs and expenses of enforcing this
Indenture against the Issuer (including this Section 7.07) and defending itself
against any claim (whether asserted by the Issuer or any Holder or any other
Person) or liability in connection with the exercise or performance of any of
its powers or duties hereunder, except to the extent any such loss, liability or
expense may be attributable to its negligence or bad faith. The Trustee shall
notify the Issuer promptly of any claim for which it may seek indemnity. Failure
by the Trustee to so notify the Issuer shall not relieve the Issuer of its
respective obligations hereunder. The Issuer shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Issuer shall pay the reasonable fees and expenses of such counsel. The
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Issuer need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
The obligations of the Issuer under this Section 7.07 shall survive
the resignation or removal of the Trustee and the satisfaction and discharge of
this Indenture.
To secure the Issuer's payment obligations in this Section, the
Trustee shall have a Lien prior to the Secured Notes on all money or property
held or collected by the Trustee, except that held in trust to pay principal of,
and premium, if any, interest (including Additional Amounts, if any, and Special
Interest, if any), on particular Secured Notes. Such Lien shall be a Lien
permitted by this Indenture and shall survive the satisfaction and discharge of
this Indenture.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Sections 6.01(g) or 6.01(h) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any applicable bankruptcy laws.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
SECTION 7.08 REPLACEMENT OF TRUSTEE. A resignation or removal of the
Trustee and appointment of a successor Trustee shall become effective only upon
the successor Trustee's acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Issuer. The Holders of Secured
Notes of a majority in principal amount of the then outstanding Secured Notes
may remove the Trustee by so notifying the Trustee and the Issuer in writing. If
at any time:
(a) the Trustee shall fail to comply with Section 310(b) of the
Trust Indenture Act after written request thereof by the Issuer or by any
Holder who has been a bona fide Holder of a Secured Note for at least six
months, unless the Trustee's duty to resign is stayed in accordance with
the provisions of TIA Section 310(b); or
(b) the Trustee shall cease to be eligible under Section 7.10 hereof
and shall fail to resign after
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written request therefor by the Issuer or by any Holder; or
(c) the Trustee shall become incapable of acting or a decree or
order for relief by a court having jurisdiction in the premises shall have
been entered in respect of the Trustee in an involuntary case under the
United States bankruptcy laws, as now or hereinafter constituted, or a
decree or order by a court having jurisdiction in the premises shall have
been entered for the appointment of a receiver, custodian, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Trustee
or of its property and assets or affairs, or any public officer shall take
charge or control of the Trustee or of its property and assets or affairs
for the purpose of rehabilitation, conservation, winding-up or
liquidation; or
(d) the Trustee shall commence a voluntary case under the United
States bankruptcy laws, as now or hereafter constituted, or shall consent
to the appointment of or taking possession by a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Trustee or of its property and assets or affairs, or shall make an
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action; or
(e) the Trustee becomes incapable of acting, then, in any such case,
(i) the Issuer by a Board Resolution may remove the Trustee with respect
to the Secured Notes, or (ii) subject to Section 6.11 hereof, any Holder
who has been a bona fide Holder of a Secured Note for at least six months
may, on behalf of such Holder and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee for the Secured Notes.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuer shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Secured Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Issuer.
If a successor Trustee does not take office within 60 days after the
retiring Trustee notifies the Issuer of
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its resignation or is removed, the retiring Trustee, the Issuer, or the Holders
of Secured Notes of at least 10% in principal amount of the then outstanding
Secured Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Secured
Note who has been a Holder of a Secured Note for at least six months, fails to
comply with Section 7.10, such Holder of a Secured Note may petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Secured Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
that all sums owing to the Trustee hereunder have been paid and subject to the
Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Issuer's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09 SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee
consolidates, merges or converts into, or transfers all or substantially all of
its corporate trust business to, another corporation, the successor entity
without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Secured Notes shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Secured Notes so
authenticated; and in case at that time any of the Secured Notes shall not have
been authenticated, any successor to the Trustee may authenticate such Secured
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Secured Notes or in this Indenture
provided that the certificate of the Trustee shall have.
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SECTION 7.10 ELIGIBILITY; DISQUALIFICATION. There shall at all times
be a Trustee hereunder that is a corporation organized and doing business under
the laws of the United States of America or of any state thereof that is
authorized under such laws to exercise corporate trustee power, that is subject
to supervision or examination by federal or state authorities and that has a
combined capital and surplus of at least $75,000,000 as set forth in its most
recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee shall comply
with TIA Section 310(b), subject to the penultimate paragraph thereof; PROVIDED,
HOWEVER, that there shall be excluded from the operation of TIA Section
310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE ISSUER.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
SECTION 7.12. OTHER OFFICES. The Trustee is
hereby authorized to act as Collateral Agent or Reserve
Account Agent.
ARTICLE VIII
SATISFACTION AND DISCHARGE
SECTION 8.01SATISFACTION AND DISCHARGE. This Indenture and the
Guarantees shall upon the request of the Issuer cease to be of further effect
(except as to surviving rights of registration of transfer, substitution or
exchange of Secured Notes herein expressly provided for, the Issuer's
obligations under Sections 7.07 and 8.04 hereof, the Issuer's rights of optional
redemption under Article III hereof, and the Issuer's, the Trustee's and the
Paying Agent's obligations under Section 8.03 hereof) and the Trustee, at the
expense of the Issuer, shall execute proper
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instruments acknowledging satisfaction and discharge of this Indenture when:
(a) either
(i) all outstanding Secured Notes have been delivered to the
Trustee for cancellation; or
(ii) all such Secured Notes not theretofore delivered to the
Trustee for cancellation have become due and payable, will become
due and payable within one year or are to be called for redemption
within one year under irrevocable arrangements satisfactory to the
Trustee for the giving of notice of redemption by the Trustee in the
name and at the expense of the Issuer, and the Issuer has
irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire debt
on the Secured Notes not theretofore delivered to the Trustee for
cancellation, for principal of (premium, if any, on) and interest
(including Additional Amounts and Special Interest, if any), to the
date of Maturity or date of redemption;
(b) the Issuer has paid or caused to be paid all sums then due and
payable by the Issuer under this Indenture; and
(c) the Issuer has delivered an Officers' Certificate and an Opinion
of Counsel relating to compliance with the conditions set forth in this
Indenture.
Notwithstanding the satisfaction and discharge of this Indenture,
the Issuer's obligations in Sections 2.02, 2.04, 2.06, 2.07, 2.11, 2.13, 4.24,
7.07, 7.08, 8.02, 8.03, and 8.04, and the Trustee's and Paying Agent's
obligations in Section 8.03 shall survive until the Secured Notes are no longer
outstanding. Thereafter, only the Issuer's obligations in Sections 7.07, 8.03
and 8.04 and the Trustee's and Paying Agent's obligations in Section 8.03 shall
survive.
In order to have money available on a payment date to pay principal
(and premium, if any, on) or interest (including Additional Amounts, if any, and
Special Interest, if any), on the Secured Notes, the U.S. Government Obligations
referred to in Section 8.02 shall be payable as to principal (and premium, if
any) or interest (including Additional Amounts, if any, and Special Interest, if
any), at least one Business Day before such payment date in such
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amounts as will provide the necessary money. U.S. Government Obligations shall
not be callable at the Issuer's option.
SECTION 8.02. APPLICATION OF TRUST MONEY. All money deposited with
the Trustee pursuant to Section 8.01 shall be held in trust and, at the written
direction of the Issuer, be invested prior to maturity in noncallable U.S.
Government Obligations, and applied by the Trustee in accordance with the
provisions of the Secured Notes and this Indenture, to the payment, either
directly or through any Paying Agent as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium, if any) and interest
(including Additional Amounts, if any, and Special Interest, if any), for the
payment of which money has been deposited with the Trustee; but such money need
not be segregated from other funds except to the extent required by law.
SECTION 8.03. REPAYMENT OF THE ISSUER. The Trustee and the Paying
Agent shall promptly pay to the Issuer upon written request any excess money or
securities held by them at any time, such excess to be determined on the related
Opinion of Counsel received under Section 8.01(c).
The Trustee and the Paying Agent shall pay to the Issuer upon
written request any money held by them for the payment of principal or interest
that remains unclaimed for two years after the date upon which such payment
shall have become due; PROVIDED that the Issuer shall have either caused notice
of such payment to be mailed to each Holder of the Secured Notes entitled
thereto no less than 30 days prior to such repayment or within such period shall
have published such notice in a financial newspaper of widespread circulation
published in The City of New York, including, without limitation, The Wall
Street Journal (national edition). After payment to the Issuer, Holders entitled
to the money must look to the Issuer for payment as general creditors unless an
applicable abandoned property law designates another Person, and all liability
of the Trustee and such Paying Agent with respect to such money shall cease.
SECTION 8.04. REINSTATEMENT. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
Section 8.02 by reason of any legal proceeding or by reason of any order or
judgment of any court of governmental authority enjoining, restraining or
otherwise prohibiting such application, the Issuer's, Prime's, Maritima's and
Subsidiary Guarantor's obligations under this Indenture, the Secured Notes, the
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Security Agreements, the Prime Guarantee and the Subsidiary Guarantees shall be
revived and reinstated as though no deposit has occurred pursuant to Section
8.01 until such time as the Trustee or Paying Agent is permitted to apply all
such money or U.S. Government Obligations in accordance with Section 8.02;
PROVIDED, HOWEVER, that if the Issuer, Pride or a Subsidiary Guarantor has made
any payment of interest (including Special Interest, if any, and Additional
Amounts, if any), on or principal of any Secured Notes because of the
reinstatement of their Obligations, the Issuer, Pride or such Subsidiary
Guarantor shall be subrogated to the rights of the Holders of such Secured Notes
to receive such payment from the money or U.S. Government Obligations held by
the Trustee or Paying Agent.
ARTICLE IX
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 9.01 OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE. The
Issuer may, at the option of its Board of Directors evidenced by a Board
Resolution, at any time, elect to have either Section 9.02 or 9.03 hereof be
applied to all outstanding Secured Notes upon compliance with the conditions set
forth below in this Article IX.
SECTION 9.02. DEFEASANCE AND DISCHARGE. Upon the Issuer's exercise
under Section 9.01 hereof of the option applicable to this Section 9.02, the
Issuer, Pride and the Subsidiary Guarantors, if any, shall, subject to the
satisfaction of the conditions set forth in Section 9.04 hereof, be deemed to
have been discharged from their respective Obligations with respect to all
outstanding Secured Notes, this Indenture, the Pride Guarantee and the
Subsidiary Guarantees, if any, on the date the conditions set forth below are
satisfied (hereinafter, "Defeasance"). For this purpose, Defeasance means that
the Issuer shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Secured Notes and the Issuer, Pride and the
Subsidiary Guarantors shall be deemed to have satisfied all of their obligations
under such Secured Notes, this Indenture, the Security Agreements and the
Subsidiary Guarantees (and the Trustee, at the expense of the Issuer, shall
execute proper instruments acknowledging the same), subject to the following
which shall survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders of such Secured Notes to receive, solely
from the trust fund described in Section 9.04 hereof and as more fully set
forth in
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Section 9.04, payments in respect of the principal and of and any premium
and interest (including Special Interest, if any, and Additional Amounts,
if any), on such Secured Notes when payments are due (but not a Redemption
upon an Event of Loss or the Change of Control Purchase Price);
(b) the Issuer's obligations with respect to such Secured Notes
under Sections 2.06, 2.07, 2.10, and 4.02 hereof;
(c) the rights, powers, trusts, duties and immunities of the Trustee
under this Indenture;
(d) Article III hereof other than Section 3.08 and Section 3.09; and
(e) this Article IX.
Subject to compliance with this Article IX the Issuer may exercise
its option under this Section 9.02 notwithstanding the prior exercise of its
option under Section 9.03 hereof.
SECTION 9.03 COVENANT DEFEASANCE. Upon the Issuer's exercise under
Section 9.01 hereof of the option applicable to this Section 9.03, (i) the
Issuer shall, subject to the satisfaction of the conditions set forth in Section
9.04 hereof, be released from its obligations under the covenants contained in
Sections 3.08, 3.09, 4.04, 4.06, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15,
4.16, 4.17, 4.18, 4.19, 4.20, 4.21, 4.22, 4.23, 4.24 and Sections 5.01(a)(iii)
and 5.01(a)(iv) hereof and any covenant added to this Indenture subsequent to
the Issue Date pursuant to Section 10.01 hereof with respect to the outstanding
Secured Notes and (ii) the occurrence of any event specified in Section 6.01(c)
or 6.01(d) hereof, with respect to any of Sections 4.04, 4.06, 4.08, 4.09, 4.10,
4.11, 4.12, 4.12, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21, 4.22, 4.23,
4.24 and Sections 5.01(a)(iii) and 5.01(a)(iv) hereof and any covenant added to
this Indenture subsequent to the Issue Date pursuant to Section 10.01 hereof,
shall be deemed not to be or result in an Event of Default, in each case with
respect to such Secured Notes as provided in this Section 9.03 on and after the
date on which the conditions set forth in Section 9.04 hereof are satisfied, and
the Secured Notes shall thereafter be deemed not "outstanding" for the purposes
of any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes
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hereunder (it being understood that such Secured Notes shall not be deemed
outstanding for accounting purposes). For this purpose, "Covenant Defeasance"
means that, with respect to the outstanding Secured Notes, the Issuer, Pride and
the Subsidiary Guarantors may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such covenant (to
the extent so specified in the case of Section 6.01(c) or 6.01(d) hereof),
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture, the Security
Agreements, the Pride Guarantee, the Subsidiary Guarantees and the Secured Notes
shall be unaffected thereby.
SECTION 9.04. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE. The
following shall be the conditions to the application of either Section 9.02 or
9.03 hereof to the outstanding Secured Notes:
In order to exercise either Defeasance or Covenant Defeasance:
(a) the Issuer shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to the benefits of the Holders of such Secured Notes, (i)
money in an amount, or (ii) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one Business Day
before the due date of any payment, money in an amount, or (iii) a
combination thereof, in each case sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee, to pay and
discharge the principal of (premium, if any, on) and any installment of
interest (including Additional Amounts, if any, and Special Interest, if
any), on the Secured Notes at the Maturity thereof or Redemption Date
therefor in accordance with the terms of this Indenture and the Secured
Notes;
(b) in the case of an election under Section 9.02 hereof, the Issuer
shall have delivered to the Trustee an Opinion of Counsel confirming that
(A) the Issuer
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has received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date of this Indenture, there has been a
change in the applicable United States Federal income tax law, in either
case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the outstanding Secured Notes will not
recognize income, gain or loss for United States Federal income tax
purposes as a result of such Defeasance and will be subject to United
States federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Defeasance had not
occurred;
(c) in the case of an election under Section 9.03 hereof, the Issuer
shall have delivered to the Trustee an Opinion of Counsel confirming that
the Holders of the outstanding Secured Notes will not recognize income,
gain or loss for United States Federal income tax purposes as a result of
such Covenant Defeasance and will be subject to U.S. federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Secured Notes pursuant
to this Article IX concurrently with such incurrence) or insofar as
Section 6.01(g) or 6.01(h) hereof is concerned, shall have occurred at any
time on or prior to the 91st day after the date of such deposit and be
continuing on such 91st day (it being understood that this condition shall
not be deemed satisfied until after such 91st day);
(e) such Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Issuer or
any of the Issuer's Subsidiaries is a party or by which the Issuer, the
Issuer or any of the Issuer's Subsidiaries is bound;
(f) such Defeasance or Covenant Defeasance shall not cause the
Trustee to have a conflicting interest within the meaning of the Trust
Indenture Act (assuming for the purpose of this clause (f) that all
Secured Notes are in default within the meaning of such Act);
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(g) such Defeasance or Covenant Defeasance shall not result in the
trust arising from such deposit constituting an investment Issuer within
the meaning of the Investment Issuer Act of 1940, as amended, unless such
trust shall be registered under such Act or exempt from registration
thereunder;
(h) the Issuer shall have delivered to the Trustee an Opinion of
Counsel to the effect that on the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(i) the Issuer shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuer with the
intent of preferring the Holders over any other creditors of the Issuer or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Issuer; and
(j) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Defeasance or the Covenant
Defeasance have been complied with.
SECTION 9.05. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 9.06 hereof,
all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee, collectively for
purposes of this Section 9.05, the "Trustee") pursuant to Section 9.04 hereof in
respect of the outstanding Secured Notes shall be held in trust and applied by
the Trustee, in accordance with the provisions of such Secured Notes and this
Indenture, to the payment, either directly or through any such Paying Agent as
the Trustee may determine, to the Holders of such Secured Notes of all sums due
and to become due thereon in respect of principal, premium, if any, and interest
(including Additional Amounts, if any, and Special Interest, if any), but such
money need not be segregated from other funds except to the extent required by
law.
The Issuer shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or U.S. Government
Obligations deposited pursuant to Section 9.04 hereof or the principal and
interest received in respect thereof.
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Anything in this Article IX to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuer from time to time upon the request of
the Issuer any money or U.S. Government Obligations held by it as provided in
Section 9.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
9.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Defeasance or Covenant Defeasance.
SECTION 9.06. REPAYMENT TO THE ISSUER. Any money deposited with the
Trustee or any Paying Agent, or then held by the Issuer, in trust for the
payment of the principal of, premium, if any, or interest (including Additional
Amounts, if any, and Special Interest, if any), on, any Secured Note and
remaining unclaimed for two years after such principal, and premium, if any, or
interest on, (including Additional Amounts, if any, and Special Interest, if
any), has become due and payable shall be paid to the Issuer on its request or
(if then held by the Issuer) shall be discharged from such trust; and the Holder
of such Secured Note shall thereafter, as a creditor, look only to the Issuer
for payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Issuer as trustee thereof,
shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Issuer cause to be published once, in The New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Issuer.
SECTION 9.07. REINSTATEMENT. If the Trustee or Paying Agent is
unable to apply any United States dollars or U.S. Government Obligations in
accordance with Section 9.02 or 9.03 hereof, as the case may be, by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Issuer's
Obligations under this Indenture and the Secured Notes and the Guarantors'
obligations under their respective Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to Section 9.02 or 9.03 hereof until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 9.02 or 9.03 hereof, as the case may be; PROVIDED,
HOWEVER, that, if the Issuer makes
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any payment of principal of, premium, if any, interest, (including Additional
Amounts, if any, and Special Interest, if any), on any Secured Note following
the reinstatement of its Obligations, the Issuer shall be subrogated to the
rights of the Holders of such Secured Notes to receive such payment from the
money held by the Trustee or Paying Agent.
ARTICLE X
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 10.01. WITHOUT CONSENT OF HOLDERS OF SECURED NOTES.
Notwithstanding Section 10.02 of this Indenture, the Issuer and the Trustee may
amend or supplement this Indenture or the Secured Notes without the consent of
any Holder of a Secured Note:
(a) to evidence the succession of another Person to the Issuer and
the assumption by such successor of the covenants and Obligations of the
Issuer under this Indenture and contained in the Secured Notes or the
Security Agreements;
(b) to add to the covenants of the Issuer, for the benefit of
Holders, or to surrender any right or power conferred upon the Issuer by
this Indenture or the Security Agreements;
(c) to add any additional Events of Default;
(d) to provide for uncertificated Secured Notes in addition to or in
place of Certificated Secured Notes (provided that the uncertificated
Secured Notes are issued in registered form for purposes of Section 163(f)
of the Code, or in a manner such that the uncertificated Secured Notes are
described in Section 163(f)(2)(B) of the Code);
(e) to evidence and provide for the acceptance of
appointment under this Indenture by the successor
Trustee;
(f) to add additional security for the Secured Notes or to secure or
add additional security for the Pride Guarantee or the Subsidiary
Guarantees;
(g) to cure any ambiguity, to correct or supplement any provision in
this Indenture or the Security Agreements which may be inconsistent with
any other provision herein or therein or to add any other
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provisions with respect to matters or questions arising under this
Indenture or the Security Agreements, provided that such actions will not
adversely affect the interests of Holders in any material respect;
(h) to add or release any Subsidiary Guarantor pursuant to the terms
of this Indenture; or
(i) to comply with the requirements of the SEC to effect or maintain
the qualification of this Indenture under the Trust Indenture Act.
Upon the request of the Issuer accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, and
upon receipt by the Trustee of the documents described in Section 10.07 hereof,
the Trustee shall join with the Issuer in the execution of any amended or
supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 10.02. WITH CONSENT OF HOLDERS OF SECURED NOTES. Except as
provided below in this Section 10.02, the Issuer and the Trustee may amend or
supplement this Indenture and the Secured Notes may be amended or supplemented
with the consent of the Holders of at least a majority in aggregate principal
amount at Stated Maturity of the Secured Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Secured Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium, if any, or, interest (including Special
Interest, if any, and Additional Amounts, if any), on, the Secured Notes, except
a payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture, the Security Agreements or the
Secured Notes may be waived with the consent of the Holders of a majority in
aggregate principal amount at Stated Maturity of the then outstanding Secured
Notes (including consents obtained in connection with a tender offer or exchange
offer for the Secured Notes).
Upon the request of the Issuer accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
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consent of the Holders of Secured Notes as aforesaid, and upon receipt by the
Trustee of the documents described in Section 10.07 hereof, the Trustee shall
join with the Issuer in the execution of such amended or supplemental Indenture
unless such amended or supplemental Indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion, but shall not be obligated to, enter into such
amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Secured
Notes under this Section 10.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Issuer shall mail to the Holders of Secured Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Issuer to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Secured Notes then
outstanding may waive compliance in a particular instance by the Issuer with any
provision of this Indenture or the Secured Notes. However, without the consent
of each Holder affected, an amendment or waiver may not (with respect to any
Secured Notes held by a non-consenting Holder):
(a) reduce the amount of Secured Notes whose Holders must consent to
an amendment;
(b) reduce the rate of or extend the time for payment of interest
(including Additional Amounts, if any, and Special Interest, if any), on
any Secured Note or any Issuer Loan;
(c) reduce the principal of or extend the Stated Maturity of any
Secured Note or any Issuer Loan;
(d) modify the obligations of Issuer to make mandatory redemptions
or otherwise reduce the premium payable upon the redemption of any Secured
Note or change the time at which any Secured Note may be or is required to
be redeemed as described under Article III;
(e) modify the obligations of Pride to make payments under the Pride
Guarantee or modify the
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obligations of the Letter of Credit Provider under the Letter of Credit;
(f) make any Secured Note payable in money other than that stated in
the Secured Note;
(g) impair the right of any Holder of the Secured Notes to receive
payment of principal of and interest (including Additional Amounts, if
any, and Special Interest, if any), on such Holder's Secured Notes on or
after the due dates therefor or to institute suit for the enforcement of
any payment on or with respect to such Holder's Secured Notes;
(h) make any change in the amendment provisions which require each
Holder's consent or in the waiver provisions;
(i) (x) make any change in the Pride Guarantee, the Subsidiary
Guarantees, if any, the Letter of Credit or any Security Agreement or
Mitsubishi Loan Agreement (in the case of the Mitsubishi Documents, if the
Issuer has the right to consent to any such change) that would materially
adversely affect the Noteholders or (y) terminate the Lien of this
Indenture or any Security Agreement (other than in accordance with the
terms hereof or thereof) on any property at any time subject thereto or
deprive the Holders of the security afforded by the Lien of this Indenture
or the Security Agreements or the Issuer of the Liens securing the Issuer
Loans;
(j) modify the Obligations of the Issuer to make offers to purchase
Secured Notes upon a Change of Control;
(k) subordinate in right of payment the Secured Notes, the Pride
Guarantee or the Subsidiary Guarantees to any other Indebtedness;
(l) amend, supplement or otherwise modify the provisions of this
Indenture relating to the Pride Guarantee, any Subsidiary Guarantee or the
Letter of Credit; or
(m) make any change in Sections 6.04 or 6.07 or modify any of the
provisions of this Section 10.02 (except to increase any percentage set
forth therein or herein).
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Upon the request of the Issuer accompanied by a Board Resolution of
the Issuer authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Secured Notes as aforesaid, and upon
receipt by the Trustee of the documents described in Section 7.02 hereof, the
Trustee shall join with the Issuer in the execution of such amended or
supplemental Indenture unless such amended or supplemental Indenture affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise, in
which case the Trustee may in its discretion, but shall not be obligated to,
enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Secured
Notes under this Section 10.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
SECTION 10.03. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution
of any supplemental indenture under this Article X, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Secured Notes
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby. After a supplemental indenture becomes effective, the Issuer shall mail
to Holders a notice briefly describing such amendment. The failure to give such
notice to all Holders, or any defect therein, shall not impair or affect the
validity of an amendment under this Section.
SECTION 10.04. COMPLIANCE WITH TRUST INDENTURE ACT. Every
amendment or supplement to this Indenture or the Secured Notes shall be set
forth in an amended or supplemental Indenture that complies with the Trust
Indenture Act as then in effect.
SECTION 10.05. REVOCATION AND EFFECT OF CONSENTS. (a) Until an
amendment, supplement or waiver becomes effective, a consent to it by a Holder
of a Secured Note is a continuing consent by the Holder of a Secured Note and
every subsequent Holder of a Secured Note or portion of a Secured Note that
evidences the same debt as the consenting Holder's Secured Note, even if
notation of the consent is not made on any Secured Note. However, any such
Holder of a Secured Note or subsequent Holder of a Secured Note may revoke the
consent as to its Secured Note if the Trustee receives written notice of
revocation before the date the
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waiver, supplement or amendment becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds every
Holder.
(b) The Issuer may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding subsection, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 10.06. NOTATION ON OR EXCHANGE OF SECURED NOTES. The Trustee
may place an appropriate notation about an amendment, supplement or waiver on
any Secured Note thereafter authenticated. The Issuer in exchange for all
Secured Notes may issue and the Trustee shall authenticate new Secured Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Secured Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 10.07. TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES. The Trustee
shall sign any supplemental Indenture authorized pursuant to this Article X if
the amendment or supplement does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. Neither the Issuer nor any Subsidiary
Guarantor may sign a supplemental Indenture until the Board of Directors of such
Person approves it. In executing any supplemental indenture, the Trustee shall
be entitled to receive indemnity reasonably satisfactory to it and to receive
and (subject to Section 7.01) shall be fully protected in relying upon, in
addition to the documents required by Section 12.04, an Officers' Certificate
and an Opinion of Counsel stating that:
(a) such supplemental indenture is authorized or permitted by this
Indenture and that all conditions precedent to the execution, delivery and
performance of such supplemental indenture have been satisfied;
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(b) the Issuer and the Subsidiary Guarantors, if any, have all
necessary corporate power and authority to execute and deliver the
supplemental indenture and that the execution, delivery and performance of
such supplemental indenture has been duly authorized by all necessary
corporate action of the Issuer and the Subsidiary Guarantors, if any;
(c) the execution, delivery and performance of the supplemental
indenture do not conflict with, or result in the breach of or constitute a
default under any of the terms, conditions or provisions of (i) this
Indenture, (ii) the charter documents and By-laws of the Issuer or any
Subsidiary Guarantor, or (iii) any material agreement or instrument to
which the Issuer or any Subsidiary Guarantor is subject and of which such
counsel is aware;
(d) to the knowledge of legal counsel writing such Opinion of
Counsel, the execution, delivery and performance of the supplemental
indenture do not conflict with, or result in the breach of any of the
terms, conditions or provisions of (i) any law or regulation applicable to
the Issuer or any Subsidiary Guarantor, or (ii) any material order, writ,
injunction or decree of any court or governmental instrumentality
applicable to the Issuer or any Subsidiary Guarantor;
(e) such supplemental indenture has been duly and validly executed
and delivered by the Issuer and the Subsidiary Guarantors, if any, and
this Indenture together with such supplemental indenture constitutes a
legal, valid and binding obligations of the Issuer and the Subsidiary
Guarantors, if any, enforceable against the Issuer and the Subsidiary
Guarantors, if any, as applicable, in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar
laws affecting the enforcement of creditors' rights generally and general
equitable principles (whether considered in a proceeding at law or in
equity) and commercial reasonableness; and
(f) this Indenture together with such amendment or supplement
complies with the Trust Indenture Act.
SECTION 10.08. PAYMENT FOR CONSENT. Neither the Issuer, Pride, nor
any Affiliate of the Issuer or Pride shall, directly or indirectly, pay or cause
to be paid any consideration, whether by way of interest, fee or otherwise,
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to any Holder for or as an inducement to any consent, waiver or amendment of any
of the terms or provisions of this Indenture, the Secured Notes or the Security
Agreements unless such consideration is offered to be paid to all Holders that
so consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
ARTICLE XI
COLLATERAL AND SECURITY; GUARANTEES;
LETTER OF CREDIT
SECTION 11.01. SECURITY AGREEMENTS. The due and punctual payment of
the principal of, premium, if any, interest (including Additional Amounts, if
any, and Special Interest, if any) on, and any other amounts due in respect of,
the Secured Notes when and as the same shall be due and payable, whether on an
Interest Payment Date, at Stated Maturity, by acceleration, call for redemption,
upon a Change of Control Offer, purchase or otherwise, and interest on the
overdue principal of and interest (including Additional Amounts, if any, and
Special Interest, if any) (to the extent permitted by law), on the Secured Notes
and performance of all other obligations of the Issuer to the Holders of the
Secured Notes or the Trustee under this Indenture, the Secured Notes and the
Security Agreements, according to the terms hereunder or thereunder, shall be
secured as provided in the Security Agreements, (i) by a pledge to the
Collateral Agent in favor of the Trustee for its benefit and the Holders of
Secured Notes, of an undivided 53% interest in the Issuer Loans and all the
Issuer's right, title and interest in and to the Mitsubishi Documents and the
security for the Issuer Loans provided for in the Mitsubishi Loan Collateral
Agreements; and (ii) by a pledge to the Reserve Account Agent in favor of the
Trustee for its benefit and the benefit of the Holders of Secured
Notes, of interest in the Reserve Account and the Reserve Account Property and
any other cash of the Issuer that is required by the terms of this Indenture or
any Security Agreement to be deposited with the Trustee or the Reserve Account
Agent.
Each Holder, by its acceptance of a Secured Note, consents and
agrees to the terms of the Security Agreements (including, without limitation,
the provisions providing for foreclosure and release of Collateral) as the same
may be in effect or may be amended from time to time in accordance with the
terms thereof and hereof and authorizes and directs the Trustee to enter into
each of the Security Agreements to
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which it is expressed to be a party and to perform its respective obligations
and exercise its respective rights thereunder in accordance therewith. The
Issuer will do or cause to be done all such acts and things as may be necessary
or proper, or as may be required by the provisions of the Security Agreements,
to assure and confirm to the Collateral Agent, the Reserve Account Agent and the
Trustee the Liens in the Collateral contemplated hereby and by the Security
Agreements, as from time to time constituted, so as to render the same available
to the fullest extent permitted by law for the security and benefit of this
Indenture and of the Secured Notes, as applicable, according to the intent and
purposes herein and therein expressed. The Issuer shall to the fullest extent
permitted by law take, upon request of the Trustee, any and all actions
reasonably required to cause the Security Agreements to create and maintain, as
security for the Obligations of the Issuer under this Indenture, the Secured
Notes and the Security Agreements to be valid and enforceable, perfected (except
as expressly provided herein and therein), Liens in and on all the Collateral in
favor of the Trustee, the Reserve Account Agent or a Collateral Agent, as
applicable, for the benefit of the Trustee and for the equal and ratable benefit
of the Holders of the Secured Notes.
SECTION 11.02. RECORDING AND OPINIONS. (a) The Issuer represents
that it has caused or will promptly cause to be executed and delivered, filed
and recorded and covenants that it will promptly cause to be executed and
delivered and filed and recorded, all instruments and documents, and represents
that it has done and will do or will cause to be done all such acts and other
things, at the Issuer's expense as are necessary to subject the applicable
Collateral to valid Liens and to perfect those Liens, all to the fullest extent
permitted by law. The Issuer shall, as promptly as practicable, cause to be
executed and delivered, filed and recorded all instruments and do all acts and
other things as may be required by law to perfect, maintain and
protect the Liens under the applicable Security Agreements (except as otherwise
expressly provided herein and therein), all to the fullest extent permitted by
law.
(b) The Issuer shall furnish to the Trustee promptly after the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments or otherwise necessary to make effective the
Liens intended to be created by the Security Agreements and reciting the details
of such action, or (ii) stating that, in the opinion of such
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counsel, no such action is necessary to make such Lien effective. Such opinion
of counsel shall cover the necessity for recordings, registrations and filings
required in all relevant jurisdictions.
(c) The Issuer shall furnish to the Trustee within three months
after each anniversary of the Issue Date, an Opinion of Counsel, dated as of
such date, stating either that (i) in the opinion of such counsel, all action
has been taken with respect to the recording, registering, filing, rerecording,
reregistering and refiling of all supplemental indentures, financing statements,
continuation statements or other instruments of further assurance or otherwise
as is necessary to maintain the effectiveness of the Liens intended to be
created by the Security Agreements and reciting the details of such action or
(ii) in the opinion of such counsel, no such action is necessary to maintain the
effectiveness of such Liens. Such opinion of counsel shall cover the necessity
of recordings, registrations, filing, rerecordings, reregistrations and
refilings in all relevant jurisdictions.
(d) The Issuer shall otherwise comply with the provisions of Section
314(b) and, as applicable Sections 314(c), (d) and (e) of the Trust Indenture
Act.
SECTION 11.03. FURTHER ASSURANCES AND SECURITY. The Issuer will
execute, acknowledge and deliver to the Trustee, at the Issuer's expense, at any
time and from time to time such further assignments, transfers, assurances or
other instruments as may be reasonably required to effectuate the terms of this
Indenture and the Security Agreements, and will at any time and from time to
time do or cause to be done all such acts and things as may be necessary or
proper, or as may be reasonably required by the Trustee, to assure and confirm
to the Trustee the Liens in the Collateral contemplated hereby and by the
Security Agreements, all to the fullest extent permitted by law. The
Trustee shall have no duty to determine whether any filing or recording is
necessary hereunder or under any Collateral Document.
SECTION 11.04. POSSESSION AND USE OF COLLATERAL. To the extent set
forth in the Security Agreements, all funds deposited in the Reserve Account
constitute Collateral and will, at the direction of the Issuer except during the
continuance of a Default or an Event of Default and at the direction of the
Trustee during the continuance of a Default or an Event of Default, be invested
in Temporary Cash Equivalents (such cash and Temporary Cash Equivalents,
together with interest, dividends and distributions thereof,
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the "Reserve Account Property"), in the manner provided for in the Reserve
Account Agreement. No funds shall be released from the Reserve Account except as
provided herein and in the Reserve Account Agreement. The Reserve Account
Account and the Reserve Property shall be pledged to, and be under the sole
dominion and control of the Trustee acting for its benefit and the benefit of
the Holders of Secured Notes.
SECTION 11.05. CERTIFICATES OF THE ISSUER. Except as otherwise
provided in the Reserve Account Agreement, the Issuer will furnish to the
Trustee prior to each proposed release of Collateral pursuant to the Security
Agreements all documents required by Section 314(d) of the Trust Indenture Act.
The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof,
accept as conclusive evidence of compliance with the foregoing provisions the
appropriate statements contained in such instruments. Any certificate or opinion
required by Section 314(d) of the Trust Indenture Act may be made by an Officer
of the Issuer, except in cases where Section 314(d) of the Trust Indenture Act
requires that such certificate or opinion be made by an independent engineer,
appraiser or other expert within the meaning of Section 314(d) of the Trust
Indenture Act.
SECTION 11.06. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE
UNDER THE SECURITY AGREEMENTS. The Trustee may, in its sole discretion and
without the consent of the Holders, on behalf of the Holders, take all actions
it deems necessary or appropriate in order to (a) enforce any of the terms of
the Security Agreements and (b) collect and receive any and all amounts payable
in respect of the obligations of the Issuer hereunder. The Trustee shall have
the power to institute and to maintain such suits and proceedings as it may
reasonably deem expedient to prevent any impairment of the Collateral by any
acts that may be unlawful or in violation of the Security Agreements, or this
Indenture, and such suits and proceedings as the Trustee may deem expedient to
preserve or protect its interests and the interests of the Holders in the
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
government enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Holders or of the Trustee).
SECTION 11.07. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE
UNDER THE SECURITY AGREEMENTS. The Trustee
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is authorized to receive any funds for the benefit of the Holders distributed
under the Security Agreements, and to make further distributions of such funds
to the Holders according to the provisions of this Indenture and the Security
Agreements.
SECTION 11.08. GUARANTEES; LETTER OF CREDIT. The Trustee shall make
demands under the Pride Guarantee and the Subsidiary Guarantees, if any, and
make drawings under the Letter of Credit, in such order as the Trustee shall, in
its sole discretion, determine, in respect of any amounts due on the Secured
Notes or under this Indenture that have not been remitted to the Trustee by or
on behalf of the Issuer.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS. If any provision of
this Indenture limits, qualifies or conflicts with the duties imposed by, or
with another provision included in this Indenture by operation of Sections 310
to 318, inclusive, of the Trust Indenture Act, such imposed duties or
incorporated provision shall control. If any provision of this Indenture
modifies or excludes any provision of the Trust Indenture Act that can be so
modified or excluded, the latter provision shall be deemed to apply to this
Indenture as so modified or excluded, as the case may be.
SECTION 12.02. NOTICES. Any notice or communication by the Issuer,
Pride, Maritima, any Subsidiary Guarantor or the Trustee to the others is duly
given if in writing and delivered in person or mailed by first class mail
(registered or certified, return receipt requested), telecopier or overnight air
courier guaranteeing next-day delivery, to the others' address:
If to the Issuer or any Subsidiary Guarantor:
Amethyst Financial Company Limited
c/o Arias Fabrega and
Fabrega Trust Co. BVI Limited
325 Waterfront Drive,
Omar Hodge Building, 2nd Floor
Wickham's Lay Road,
Tortola, British Virgin Islands
Attention:
Telephone No.:
Telecopier No.:
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If to Pride:
Pride Internationa, Inc.
5847 San Felipe, Suite 3300
Houston, TX 77057
Attention:
Telephone No.: (713) 789-1400
Telecopier No.:
If to Maritima:
Maritima Petroleo e Engenharia Ltda.
Avenido Almirante Borraso
52 Grupo 3400
20031-000 Centro Rio de Janeiro, Brazil
Attention:
Telephone No.:
Telecopier No.:
If to the Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone No.: (302) 651-8856
Telecopier No.: (302) 651-8882
The Issuer, Pride, Maritima, any Subsidiary Guarantor or the
Trustee, by notice to the others may designate additional or different addresses
for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the
Securities Register kept by the Registrar and shall be given if so sent within
the time prescribed. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the Trust
Indenture Act. Failure to mail a notice or communication to
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a Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it; a notice or communication, however, shall not be effective unless,
in the case of the Issuer, Pride, Maritima, any Subsidiary Guarantor or the
Trustee, actually received.
If the Issuer mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give notice by mail to
Holders, then such notification as shall be made with the approval of the
Trustee shall constitute a sufficient notification for every purpose hereunder.
SECTION 12.03. COMMUNICATION BY HOLDERS OF SECURED NOTES WITH OTHER
HOLDERS OF SECURED NOTES. Holders may communicate pursuant to TIA Section 312(b)
with other Holders with respect to their rights under this Indenture or the
Secured Notes. The Issuer, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuer or a Guarantor to the Trustee to
take any action under this Indenture, the Letter of Credit, the Guarantees or
the Security Agreements, the Issuer or such Guarantor, as the case may be, upon
request, shall furnish to the Trustee, to the extent required by this Indenture
or the Trust Indenture Act:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.05 hereof) stating that, in the opinion of such counsel,
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all such conditions precedent and covenants have been satisfied.
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more such Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Officer of the Issuer or any
Subsidiary Guarantor may be based, insofar as it relates to legal matters, upon
a certificate or opinion of, or representations by, counsel, unless such Officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, and may state that it is so based, insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an Officer or Officers of the Issuer, or such Subsidiary Guarantor stating
that the information with respect to such factual matters is in the possession
of the Issuer or such Subsidiary Guarantor, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 12.05. STATEMENTS REQUIRED IN A CERTIFICATE OR OPINION. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(a) a statement that the Persons making such certificate or opinion
have read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the
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statements or opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Persons, they have made
such examination or investigation as is necessary to enable them to
express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Persons, such condition or covenant has been satisfied.
SECTION 12.06. ACTS OF HOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by a specified percentage of Holders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such specified percentage of Holders in person or by agents duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are received
by the Trustee and, where it is hereby expressly required, by the Issuer. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Sections 7.01 and 7.02) conclusive in favor of the
Trustee, the Issuer and the Guarantor, if made in the manner provided in this
Section. Any electronic or other transmission pursuant to the Applicable
Procedures will be considered an instrument executed by the Holder of the Global
Notes held by the Depository for purposes of this Section 12.06.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems
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sufficient, including the execution of such instrument or writing without more.
(c) The ownership, principal amount and serial numbers of Secured
Notes held by any Person, and the date of holding the same, shall be proved by
the Securities Register.
(d) If the Issuer shall solicit from the Holders of Secured Notes
any request, demand, authorization, direction, notice, consent, waiver or other
Act, the Issuer may, at its option, by or pursuant to Board Resolution, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Issuer shall have no obligation to do so. Such record date shall be the
record date specified in or pursuant to such Board Resolution, which shall be a
date not earlier than the date 30 days prior to the first solicitation is
completed. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of record at the close of business on
such record date shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of outstanding Secured Notes have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that purpose the
outstanding Secured Notes shall be computed as of such record date; PROVIDED
that no such authorization, agreement or consent by the Holders on such record
date shall be deemed effective unless it shall become pursuant to the provisions
of this Indenture not later than eleven months after the record date.
(e) Except to the extent otherwise expressly provided in this
Indenture, any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Secured Note in connection with this
Indenture, the Security Agreements, the Letter of Credit or the Guarantees shall
bind every future Holder of the same Secured Note and the Holder of every
Secured Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Secured Note.
(f) Without limiting the foregoing, a Holder entitled hereunder to
give or take any action with regard to any particular Secured Note may do so
with regard to all or
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any part of the principal amount of such Secured Note or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any different part of such principal amount.
SECTION 12.07. RULES BY TRUSTEE AND AGENTS. The Trustee may make
reasonable rules for action by or at a meeting of Holders. The Registrar or
Paying Agent may make reasonable rules and set reasonable requirements for its
functions; provided that no such rule shall conflict with the terms of this
Indenture or the Trust Indenture Act.
SECTION 12.08. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS. No director, officer, employee, incorporator or
stockholder of the Issuer, Pride, Maritima or any Subsidiary Guarantor, as such,
shall have any liability for any obligations of the Issuer, Pride, Maritima or
any Subsidiary Guarantor under the Secured Notes, this Indenture, the Pride
Guarantee, the Subsidiary Guarantees or for any claim based on, in respect of,
or by reason of, such Obligations or their creation. Each Holder by accepting a
Secured Note waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the Secured Notes.
SECTION 12.09. GOVERNING LAW. THE INTERNAL LAWS OF THE STATE OF NEW
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE SECURED NOTES,
WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
SECTION 12.10. AGENT FOR SERVICE; SUBMISSION TO JURISDICTION; WAIVER
OF IMMUNITIES. By the execution and delivery of this Indenture or any amendment
or supplement hereto, each of the Issuer, Pride, each Subsidiary Guarantor and
Maritima (i) acknowledges that it has, by separate written instrument,
designated and appointed CT Corporation System (the "Process Agent") currently
located at 1633 Broadway, New York, New York 10019, as its authorized
agent upon which process may be served in any suit, action or proceeding with
respect to, arising out of, or relating to, this Indenture, the Pride Guarantee,
the Subsidiary Guarantees or the Secured Notes or brought under United States
Federal or state securities laws, may be instituted in any United States Federal
or state court located in The City of New York, New York, and acknowledges that
the Process Agent has accepted such designation, (ii) irrevocably submits to the
jurisdiction of any such court in any such suit, action or proceeding and
irrevocably waives, to the fullest extent that it may effectively and lawfully
do so, any obligation to the laying of venue of any such suit, action or
proceeding and the defense of an
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inconvenient forum to the maintenance of any such suit action or proceeding in
such court, and (iii) agrees, to the extent permitted by law, that service of
process upon the Process Agent shall be deemed in every respect effective
service of process upon the Issuer, Pride, such Subsidiary Guarantor or Maritima
in any such suit, action or proceeding. The Issuer, Pride, each Subsidiary
Guarantor and Maritima further agree to take any and all action, including the
execution and filing of any and all such documents and instruments as may be
necessary to continue such designation and appointment of the Process Agent in
full force and effect so long as this Indenture shall be in full force and
effect; PROVIDED that the Issuer, Pride, each Subsidiary Guarantor and Maritima
may and shall (to the extent the Process Agent ceases to be able to be served on
the basis contemplated herein), by written notice to the Trustee, designate such
additional or alternative agents for service of process under this Section 12.10
that (i) maintains an office located in the Borough of Manhattan, The City of
New York in the State of New York, (ii) are either (a) counsel for the Issuer,
Pride, a Subsidiary Guarantor or Maritima or (b) a corporate service company
which acts as agent for service of process for other persons in the ordinary
course of its business and for other persons in the ordinary course of its
business and (iii) agrees to act as agent for service of process in accordance
with this Section 12.10. Such notice shall identify the name of such agent for
process and the address of such agent for process in the Borough of Manhattan,
The City of New York, State of New York. Upon the request of any Holder of a
Secured Note, the Trustee shall deliver such information to such Holder.
Notwithstanding the foregoing, there shall, at all times, be at least one agent
for service of process for the Issuer, Pride, each Subsidiary Guarantor and
Maritima appointed and acting in accordance with this Section 12.10.
To the extent that the Issuer, Pride, any Subsidiary Guarantor or
Maritima has or hereafter may acquire any immunity from jurisdiction of any
court or from any legal process (whether through service of notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to itself or its property, each of the Issuer, Pride, such Subsidiary
Guarantor and Maritima hereby irrevocably waives such immunity in respect of its
Obligations under this Indenture, the Pride Guarantee, the Subsidiary Guarantees
and the Secured Notes, to the extent permitted by law.
SECTION 12.11. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Indenture may not be used to interpret any other indenture, loan or debt
agreement of the Issuer or the
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Issuer's Subsidiaries or of any other Person. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 12.12. SUCCESSORS. All agreements of the Issuer, Pride,
Maritima and the Subsidiary Guarantors in this Indenture, the Secured Notes and
the Pride Guarantee and the Subsidiary Guarantees shall bind their respective
successors. All agreements of the Trustee in this Indenture shall bind its
successors.
SECTION 12.13. SEVERABILITY. In case any provision in this Indenture
or in the Secured Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 12.14. COUNTERPART ORIGINALS. The parties may sign any
number of copies of this Indenture and by the parties thereto in separate
counterparts. Each of which when signed shall be deemed to be an original, but
all of them together represent the same agreement.
SECTION 12.15. TABLE OF CONTENTS, HEADINGS, ETC. The Table of
Contents, Cross-Reference Table and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or restrict
any of the terms or provisions hereof.
SECTION 12.16. JUDGMENT CURRENCY. The Issuer and the Guarantors
agree, to the fullest extent that they may effectively do so under applicable
law, that (a) if for the purpose of obtaining judgment in any court it is
necessary to convert the sum due in respect of the principal of, or premium, if
any, or interest (including Additional Amounts, if any, and Special Interest, if
any), on the Secured Notes (the "Required Currency") into a currency in which a
judgment will be rendered (the "Judgment Currency"), the rate of exchange used
shall be the rate at which in accordance with normal banking procedures the
Trustee could purchase in The City of New York the Required Currency with the
Judgment Currency on the day on which final unappealable judgment is entered,
unless such day is not a New York Banking Day, then, to the extent permitted by
applicable law, the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Trustee could purchase in The City
of New York the Required Currency with the Judgment Currency on the New York
Banking Day preceding the day on which final unappealable judgment is entered
and (b) their obligations under this Indenture to make payments
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in the Required Currency (i) shall not be discharged or satisfied by any tender,
or any recovery pursuant to any judgment (whether or not entered in accordance
with subsection (a)), in any currency other than the Required Currency, except
to the extent that such tender or recovery shall result in the actual receipt,
by the payee, of the full amount of the Required Currency expressed to be
payable in respect of such payments, (ii) shall be enforceable as an alternative
or additional cause of action for the purpose of recovering in the Required
Currency the amount, if any, by which such actual receipt shall fall short of
the full amount of the Required Currency so expressed to be payable and (iii)
shall not be affected by judgment being obtained for any other sum due under
this Indenture. For purposes of the foregoing, "New York Banking Day" means any
day except a Saturday, Sunday or a legal holiday in The City of New York or a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to close.
ARTICLE XIII
PRIDE GUARANTEE
SECTION 13.01. PRIDE GUARANTEE. (a) Pride hereby irrevocably and
unconditionally guarantees, as a primary obligor and not merely as a surety, to
each Holder and to the Trustee and its successors and assigns (i) the full and
punctual payment when due, whether at Stated Maturity, by acceleration, by
redemption or otherwise, of all obligations of the Issuer under this Indenture
(including obligations to the Trustee), the Secured Notes and the Security
Agreements, whether for payment of principal of, and premium, if any, and
interest (including Additional Amounts, if any, and Special Interest, if any)
on, the Secured Notes and all other monetary obligations of the Issuer under
this Indenture, the Secured Notes and the Security Agreements and (ii) the full
and punctual performance within applicable grace periods of all other
obligations of the Issuer whether for fees, expenses, indemnification or
otherwise under this Indenture, the Secured Notes and the Security Agreements
(all the foregoing being hereinafter collectively called the "Guaranteed
Obligations"). Pride further agrees that the Guaranteed Obligations may be
extended or renewed, in whole or in part, without notice or further assent from
Pride, and that Pride shall remain bound under this Article XIII notwithstanding
any extension or renewal of any Guaranteed Obligation.
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(b) To the extent permitted by applicable law, Pride waives
presentation to, demand of payment from and protest to the Issuer of any of the
Guaranteed Obligations and also waives notice of protest for nonpayment. Pride
waives notice of any default under the Secured Notes, the Security Agreements or
the Guaranteed Obligations. To the extent permitted by applicable law, the
obligations of Pride hereunder shall not be affected by (i) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Issuer or any other Person under this Indenture, the Secured
Notes, the Security Agreements or any other agreement or otherwise; (ii) any
extension or renewal of any thereof; (iii) any rescission, waiver, amendment or
modification of any of the terms or provisions of this Indenture, the Secured
Notes, the Security Agreements or any other agreement; (iv) the release of any
security held by any Holder or the Trustee for the Guaranteed Obligations or any
of them; (v) the failure of any Holder or Trustee to exercise any right or
remedy against any other guarantor of the Guaranteed Obligations; or (vi) any
change in the ownership of Pride.
(c) Pride hereby waives any right to which it may be entitled to
have its obligations hereunder divided among Pride and any Subsidiary
Guarantors, such that Pride's obligations would be less than the full amount
claimed. Pride hereby waives any right to which it may be entitled to have the
assets of the Issuer first be used and depleted as payment of the Issuer's or
Pride's obligations hereunder prior to any amounts being claimed from or paid by
Pride hereunder. Pride hereby waives any right to which it may be entitled to
require that the Company be sued prior to an action being initiated against
Pride.
(d) To the extent permitted by applicable law, Pride further agrees
that its Guarantee herein constitutes a guarantee of payment, performance and
compliance when due (and not a guarantee of collection) and waives any right to
require that any resort be had by any Holder or the Trustee to any security held
for payment of the Guaranteed Obligations.
(e) The Guarantee of Pride shall rank pari passu with principal of
and premium, if any, and interest on all unsecured Senior Indebtedness of Pride.
(f) Except as expressly set forth in Section 9.02, to the extent
permitted by applicable law, the obligations of Pride hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender,
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alteration or compromise, and shall not be subject to any defense of setoff,
counterclaim, recoupment or termination whatsoever or by reason of the
invalidity, illegality or unenforceability of the Guaranteed Obligations or
otherwise. Without limiting the generality of the foregoing, to the extent
permitted by applicable law, the obligations of Pride herein shall not be
discharged or impaired or otherwise affected by the failure of any Holder or the
Trustee to assert any claim or demand or to enforce any remedy under this
Indenture, the Secured Notes, the Security Agreements or any other agreement, by
any waiver or modification of any thereof, by any default, failure or delay,
wilful or otherwise, in the performance of the obligations, or by any other act
or thing or omission or delay to do any other act or thing which may or might in
any manner or to any extent vary the risk of Pride or would otherwise operate as
a discharge of Pride as a matter of law or equity.
(g) Subject to Section 9.02, Pride agrees that its Guarantee shall
remain in full force and effect until payment in full of the lesser of the Pride
Limit and all the Guaranteed Obligations. Pride further agrees that its
Guarantee herein shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of principal of or interest
(including Additional Amounts, if any, and Special Amounts, if any), on, or any
other amount in respect of, any Guaranteed Obligation is rescinded or must
otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Issuer or otherwise.
(h) In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against
Pride by virtue hereof, upon the failure of the Company to pay the principal of
or interest (including Additional Amounts, if any, and Special Amounts, if any),
on any Guaranteed Obligation when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, or to perform or comply
with any other Guaranteed Obligation, Pride hereby promises to and shall, upon
receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in
cash, to the Holders or the Trustee an amount equal to the lesser of (x) the sum
of (i) the unpaid principal amount of such Guaranteed Obligations, (ii) accrued
and unpaid interest on such Guaranteed Obligations (but only to the extent not
prohibited by law) and (iii) all other monetary obligations of the Issuer to the
Holders and the Trustee and (y) the Pride Limit.
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(i) Pride agrees that it shall not be entitled to exercise any right
of subrogation in relation to the Holders in respect of any Guaranteed
Obligations guaranteed hereby until payment in full of all Guaranteed
Obligations. After all the Guaranteed Obligations have been paid in full, the
Trustee agrees to execute any documents and to take any actions reasonably
requested by Pride to enforce such subrogation. Pride further agrees that, as
between it, on the one hand, and the Holders and the Trustee, on the other hand,
(i) the maturity of the Guaranteed Obligations guaranteed hereby may be
accelerated as provided in Article VI for the purposes of any Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Guaranteed Obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of such Guaranteed
Obligations as provided in Article VI, such Guaranteed Obligations (whether or
not due and payable) shall forthwith become due and payable by Pride for the
purposes of this Section 13.01.
(j) Pride also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Trustee or
any Holder in enforcing any rights under this Section 13.01.
(k) Upon request of the Trustee, Pride shall execute and deliver
such further instruments and do such further acts as may be reasonably necessary
or proper to carry out more effectively the purpose of this Indenture.
SECTION 13.02. LIMITATION ON LIABILITY. Any term or provision of
this Indenture to the contrary notwithstanding, the maximum aggregate amount of
the Guaranteed Obligations guaranteed hereunder by Pride shall not exceed
$30,000,000.00 (the "Pride Limit").
SECTION 13.03. SUCCESSORS AND ASSIGNS. (a) This Article XIII shall
be binding upon Pride and its successors and assigns and shall inure to the
benefit of the successors and assigns of the Trustee and the Holders and, in the
event of any transfer or assignment of rights by any Holder or the Trustee, the
rights and privileges conferred upon that party in this Indenture, in the
Secured Notes and in the Security Agreements shall automatically extend to and
be vested in such transferee or assignee, all subject to the terms and
conditions of this Indenture.
(b) Pride will not, in any transaction or series of transactions,
consolidate with or merge into any other Person (other than a merger of a
Subsidiary of Pride into Pride in which Pride is the continuing Person), or
sell,
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convey, assign, transfer, lease or otherwise dispose of all or
substantially all of the property and assets of Pride and its Subsidiaries,
taken as a whole, to any Person, unless
(i) either (x) Pride shall be the continuing Person or (y) the
Person (if other than Pride) formed by such consolidation or into which
Pride is merged, or the Person which acquires, by sale, assignment,
conveyance, transfer, lease or other disposition, all or substantially all
of the property and assets of Pride and its Subsidiaries, taken as a whole
(such corporation or Person, the "Surviving Entity"), shall expressly
assume, by a supplemental Indenture, the due and punctual payment and
performance of Pride's covenants and obligations under this Indenture,
including the Pride Guarantee; and
(ii) the Surviving Entity shall be a permitted successor to Pride
under the Indenture dated as of May 1, 1997, as amended and supplemented
by the Second Supplemental Indenture thereto dated as of May 26, 1999,
between Pride and The Chase Manhattan Bank, as
trustee (the "Pride Indenture").
SECTION 13.04. NO WAIVER. Neither a failure nor a delay on the part
of either the Trustee or the Holders in exercising any right, power or privilege
under this Article XIII shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article XIII at
law, in equity, by statute or otherwise.
SECTION 13.05. MODIFICATION. No modification, amendment or waiver
of any provision of this Article XIII, nor the consent to any departure by Pride
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Trustee, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice to
or demand on Pride in any case shall entitle Pride to any other or further
notice or demand in the same, similar or other circumstances.
SECTION 13.06. EXECUTION OF SUPPLEMENTAL INDENTURE FOR FUTURE
SUBSIDIARY GUARANTORS. Each Subsidiary which is required to become a Subsidiary
Guarantor pursuant to Section 4.19 shall promptly execute and deliver to the
<PAGE>
145
Trustee a supplemental indenture in the form of Exhibit D hereto pursuant to
which such Subsidiary shall become a Subsidiary Guarantor under this Indenture
and shall guarantee the Guaranteed Obligations (as defined in such form of
supplemental indenture). Concurrently with the execution and delivery of such
supplemental indenture, the Issuer shall deliver to the Trustee an Opinion of
Counsel and an Officers' Certificate to the effect that such supplemental
indenture has been duly authorized, executed and delivered by such Subsidiary
and that, subject to the application of bankruptcy, insolvency, moratorium,
fraudulent conveyance or transfer and other similar laws relating to creditors'
rights generally and to the principles of equity, whether considered in a
proceeding at law or in equity, the Subsidiary Guarantee of such Subsidiary
Guarantor is a legal, valid and binding obligation of such Subsidiary Guarantor,
enforceable against such Subsidiary Guarantor in accordance with its terms and
or to such other matters as the Trustee may reasonably request.
SECTION 13.07. NONIMPAIRMENT. The failure to endorse a Guarantee
on any Secured Note shall not affect or impair the validity thereof.
SECTION 13.08. PRIDE COVENANTS. Pride agrees, for the benefit of
the Holders of the Secured Notes, to comply with all its covenants in the Pride
Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
AMETHYST FINANCIAL COMPANY
LIMITED
by /s/ EARL W. MCNIEL
Name: Earl W. McNiel
Title: Treasurer
WILMINGTON TRUST COMPANY
by /s/ CARYN M. O'MARA
Name: Caryn M. O'Mara
Title: Authorized Signer
<PAGE>
146
Each of the following entities as Guarantor:
PRIDE INTERNATIONAL, INC.
by /s/ EARL W. MCNIEL
Name: Earl W. McNiel
Title: Vice President
Each of the following entities as
procurer of a Letter of Credit:
MARITIMA PETROLEO e ENGENHARIA LTDA.
by /s/ GERMAN EFROMOVICH
Name: German Efromovich
Title: President
<PAGE>
Exhibit A
(Face of Note)
[THIS GLOBAL NOTE IS A GLOBAL NOTE WITHIN THE
MEANING OF THE INDENTURE REFERRED TO ON THE REVERSE THEREOF.
UNLESS THIS SECURED NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO AMETHYST FINANCIAL COMPANY LIMITED (THE "ISSUER") OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURED NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
SECTION 2.06 OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
THIS GLOBAL NOTE IS EXCHANGEABLE FOR A SECURED NOTE IN DEFINITIVE,
FULLY REGISTERED FORM, WITHOUT INTEREST COUPONS, IF (A) DTC NOTIFIES THE ISSUER
THAT IT IS UNWILLING OR UNABLE TO CONTINUE AS DEPOSITORY FOR THIS GLOBAL NOTE OR
IF AT ANY TIME DTC CEASES TO BE A "CLEARING AGENCY" REGISTERED UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND A SUCCESSOR DEPOSITORY IS NOT
APPOINTED BY THE ISSUER WITHIN 90 DAYS OF SUCH NOTICE, (B) THE ISSUER EXECUTES
AND DELIVERS TO THE TRUSTEE A NOTICE THAT THIS GLOBAL NOTE SHALL BE SO
TRANSFERABLE, REGISTRABLE, AND EXCHANGEABLE, AND SUCH TRANSFER SHALL BE SO
REGISTRABLE, OR (C) AN EVENT OF DEFAULT (AS HEREINAFTER DEFINED) HAS OCCURRED
AND IS CONTINUING WITH RESPECT TO THE SECURED NOTES.]1
[THIS SECURED NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS. ACCORDINGLY, THIS SECURED NOTE MAY NOT BE OFFERED,
- - --------
(1) These paragraphs should be included if the Secured Notes are issued in
global form.
<PAGE>
2
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) UNDER REGULATION D UNDER THE SECURITIES ACT (AN "IAI")),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (I) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (II) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (III) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE ACT, (IV) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE ACT, (V) TO AN IAI THAT, PRIOR TO
SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE
FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS
IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000,
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE ACT, (VI) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY) OR (VII) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR
AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE
TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.]2
- - --------
(2) These paragraphs (the Private Placement Legend) should be replaced upon
the exchange of Initial Secured Notes for Exchange Secured Notes in the Exchange
Offer or upon the registration of Initial Secured Notes pursuant to the
Registration Rights Agreement by the paragraphs referred to in Footnote 3.
<PAGE>
3
[THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI") OR (C) IT
IS A PERSON INVOLVED IN THE ORGANIZATION OR OPERATION OF THE ISSUER OR AN
AFFILIATE (AS DEFINED IN RULE 405 UNDER THE SECURITIES ACT) OF THE ISSUER,
(2) AGREES THAT IT WILL NOT RESELL, OR OTHERWISE TRANSFER THIS NOTE
EXCEPT TO (A) A QIB, (B) AN IAI, OR (C) A PERSON INVOLVED IN THE
ORGANIZATION OR OPERATION OF THE ISSUER OR AN AFFILIATE (AS DEFINED IN
RULE 405 UNDER THE SECURITIES ACT) OF THE ISSUER, AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR
AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE
TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING. THE
INDENTURE ALSO CONTAINS A PROVISION REQUIRING THE ISSUER TO EXERCISE REASONABLE
CARE TO ENSURE THAT THE SECURED NOTES ARE RESOLD OR OTHERWISE TRANSFERRED ONLY
TO PURCHASERS MEETING THE REQUIREMENTS SPECIFIED IN CLAUSE (2) ABOVE.](3)
- - --------
(3) This should be included on all Exchange Secured Notes or upon
registration of Initial Secured Notes pursuant to the Registration Rights
Agreement.
<PAGE>
11 3/4% Secured Notes due 2001
AMETHYST FINANCIAL COMPANY LIMITED
No.
CUSIP No.
$_____________________
AMETHYST FINANCIAL COMPANY LIMITED promises to pay to
_______________________ or registered assigns, the principal sum of
___________________ United States Dollars, [or such greater or lesser amount as
may from time to time be endorsed on Schedule A hereto]4 on November 1, 2001.
Interest Payment Dates: June 30, December 30 and
November 1, 2001
Record Dates: June 15 and December 15 or, with respect to the
November 1, 2001 Interest Payment Date, October 15, 2001
Reference is hereby made to the further provisions of this Secured
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authorization hereon has been duly
executed by the Trustee referred to on the reverse hereof by manual signature,
this Secured Note shall not be
- - --------
(4) This is included on Global Notes only.
<PAGE>
2
entitled to any benefit of this Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed as of the date written below.
AMETHYST FINANCIAL COMPANY
LIMITED
by
_________________________
Name:
Title:
by
_________________________
Name:
Title:
Date:___________________
Certificate of Authentication:
This is one of the Secured Notes
referred to in the within-mentioned
Indenture:
WILMINGTON TRUST COMPANY,
as Trustee,
by
___________________________________
Authorized Signatory
<PAGE>
(Reverse of Note)
11 3/4% Secured Note due 2001
Capitalized terms used herein shall have the meanings assigned to
them in this Indenture referred to below unless otherwise indicated.
SECTION 1. INTEREST. Amethyst Financial Company Limited, a British
Virgin Islands limited liability company (such company, and its successors and
assigns under the Indenture hereinafter referred to, being called the "Issuer"),
promises to pay interest on the principal amount of this Secured Note at 11 3/4%
per annum until Maturity and shall pay Additional Amounts (as defined), if any,
and Special Interest, if any, payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Issuer will pay interest, if any, and
Additional Amounts, if any, and Special Interest, if any, semi-annually in
arrears on June 30 and December 30 of each year and on November 1, 2001 (each,
an "Interest Payment Date"), or if any such day is not a Business Day, on the
next succeeding Business Day. Interest on the Secured Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the Issue Date; provided that if there is no existing Default in the
payment of interest, and if this Secured Note is authenticated between a Record
Date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from the next June 30 or December 30, as the case
may be. The Issuer shall pay interest (including post-petition interest in any
proceeding under any applicable Federal, State or foreign bankruptcy law) on
overdue installments of interest ("Defaulted Interest"), Additional Amounts, if
any, and Special Interest, if any (without regard to any applicable grace
periods), from time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
SECTION 2. METHOD OF PAYMENT. The Issuer will pay interest on the
Secured Notes (except Defaulted Interest), Additional Amounts, if any, and
Special Interest, if any, to the Persons who are registered Holders of Secured
Notes at the close of business on June 15 or December 15 or, with respect to the
November 1, 2001, Interest Payment Date, October 15, 2001 immediately preceding
the Interest Payment Date (each, a "Record Date"), even if such Secured Notes
are cancelled after such Record Date and on or before such Interest Payment
Date, except as provided in Section 2.12 of the Indenture with respect to
Defaulted Interest. The
<PAGE>
2
Secured Notes will be payable as to principal, premium, interest, Additional
Amounts and Special Interest at the office or agency of the Issuer maintained
for such purpose within the City and State of New York, or, at the option of the
Issuer, payment of interest and Additional Amounts and Special Interest may be
made by check mailed to the Holders at their addresses set forth in the register
of Holders, provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium, if
any, and Additional Amounts, if any, and Special Interest, if any, on, all
Global Notes and all other Secured Notes the Holders of which shall have
provided wire transfer instructions to the Issuer and the Paying Agent prior to
the applicable Record Date for such payment. Such payment shall be in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
SECTION 3. ADDITIONAL AMOUNTS. Except to the extent required by any
applicable law, regulation or governmental policy, any and all payments of, or
in respect of, any Secured Note shall be made free and clear of and without
deduction for or on account of any and all present or future taxes, levies,
imposts, deduction, charges or withholdings and all liabilities with respect
thereto imposed by the British Virgin Islands, Brazil, the United States of
America or any other jurisdiction with which the Issuer, Pride or any Subsidiary
Guarantor has some connection (including any jurisdiction from or through which
payments under the Secured Notes, the Pride Guarantee or the Subsidiary
Guarantees (if any) are made or in which the Mortgaged Rigs are located) or any
political subdivision of or any taxing authority in any such jurisdiction
(collectively, "Taxes" and any such jurisdiction or political subdivision or
taxing authority, a "Tax Jurisdiction"). If the Issuer, Pride or any Subsidiary
Guarantor shall be required by law to withhold any Taxes from or in respect of
any sum payable under the Secured Notes, the Pride Guarantee or a Subsidiary
Guarantee, the sum payable by the Issuer under the Secured Notes shall be
increased by the amount ("Additional Amounts") necessary so that after making
all required withholdings and deductions, the Holder or beneficial owner of a
Secured Note shall receive an amount equal to the sum that it would have
received had not such withholdings and deductions been made; PROVIDED that any
such sum shall not be paid to a Holder (an "Excluded Holder") (i) in respect of
any Taxes resulting from the beneficial owner of such Secured Note carrying on
business or being deemed to carry on business in or through a permanent
establishment or fixed base in the relevant taxing jurisdiction or having any
other connection with the
<PAGE>
3
relevant taxing jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such Secured Note,
being a beneficiary of the Pride Guarantee or any applicable Subsidiary
Guarantee, the receipt of any income or payments in respect of such Secured
Note, the Pride Guarantee or any applicable Subsidiary Guarantee or the
enforcement of such Secured Note, the Pride Guarantee or any applicable
Subsidiary Guarantee, (ii) in respect of any Taxes that would not have been
imposed but for the presentation (where presentation is required) of such
Secured Note for payment more than 180 days after the date such payment became
due and payable or was duly provided for, whichever occurs later, or (iii) in
respect of United States federal income Taxes, if such Holder fails to provide
to the Issuer, within 30 days of a request by the Issuer, complete and valid IRS
Form W-8 or other form establishing an exemption from United States withholding
Taxes. The Issuer, Pride or the Subsidiary Guarantors, as applicable, will also
(i) make such withholding or deduction and (ii) remit the full amount deducted
or withheld to the relevant authority in accordance with applicable law, and, in
any such case, the Issuer will furnish to each Holder on whose behalf an amount
was so remitted, within 30 calendar days after the date the payment of any
Taxes, is due pursuant to applicable law, certified copies of tax receipts
evidencing such payment by the Issuer, Pride or the Subsidiary Guarantors, as
applicable. The Issuer will, upon written request of each Holder (other than an
Excluded Holder), reimburse each such holder for the amount of (i) any Taxes so
levied or imposed and paid by such holder as a result of payments under or with
respect to any Secured Notes, and (ii) any Taxes so levied or imposed with
respect to any reimbursement under the foregoing clause (i) so that the net
amount received by such Holder (net of payments made under or with respect to
such Secured Notes, the Pride Guarantee or the applicable Subsidiary Guarantees
after such reimbursement will not be less than the net amount the Holder would
have received if Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment
under or with respect to the Secured Notes is due and payable, if the Issuer
will be obligated to pay Additional Amounts with respect to such payment, the
Issuer will deliver to the Trustee an Officers' Certificate stating the fact
that such Additional Amounts will be payable and the amounts so payable and will
set forth such other information necessary to enable the Trustee to pay such
Additional Amounts to Holders on the payment date.
<PAGE>
4
If any Holder or beneficial owner of any Secured Note receives a
refund of Taxes after the Issuer, Pride or any Subsidiary Guarantor, as
applicable, has paid any Additional Amounts, such Holder or beneficial owner
shall reimburse the Issuer, Pride or any Subsidiary Guarantor, as applicable,
for any amount of such refund.
In addition, the Issuer will pay any present or future stamp, issue,
registration, documentary or other similar taxes and duties, including interest
and penalties, in respect of the creation, issue and offering of the Secured
Notes payable in the United States, the British Virgin Islands, Brazil or any
political subdivision thereof or taxing authority of or in the foregoing. The
Issuer will also pay and indemnify the Trustee and the Holders of the Secured
Notes from and against all court fees and taxes or other taxes and duties,
including interest and penalties, paid by any of them in any jurisdiction in
connection with any action permitted to be taken by the Holders or the Trustee
to create Liens on the Collateral or to enforce the Obligations of the Issuer,
Pride or the Subsidiary Guarantors under the Secured Notes, the Indenture, the
Pride Guarantee, the Subsidiary Guarantees, the Issuer Loans or the Security
Agreements.
Whenever there is mentioned, in any context, the payment of
principal, premium or interest in respect of any Secured Note or the net
proceeds received on the sale or exchange of any Secured Note, such mention
shall be deemed to include the payment of Additional Amounts or Special Interest
provided for in the Indenture to the extent that, in such context, Additional
Amounts are, were or would be payable in respect thereof pursuant to the
Indenture.
SECTION 4. PAYING AGENT AND REGISTRAR. Initially, the Trustee under
this Indenture will act as Paying Agent and Registrar. The Issuer may change any
Paying Agent or Registrar without notice to any Holder. In certain situations,
the Issuer or any of its Subsidiaries may act in any such capacity.
SECTION 5. INDENTURE. The Issuer issued the Secured Notes under an
Indenture dated as of November 1, 1999 ("Indenture") between the Issuer, Pride
International, Inc. ("Pride") acting as guarantor, Maritima Petroleo e
Engenharia Ltda. ("Maritima") as procurer of the Letter of Credit and Wilmington
Trust Company as trustee (the "Trustee," which term includes any successor
trustee under the Indenture). The terms of the Secured Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
U.S. Trust Indenture Act of
<PAGE>
5
1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb) as in effect on the date of
the Indenture. The Secured Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. The
Secured Notes are secured obligations of the Issuer issuable in a single series,
consisting of 11 3/4% Senior Secured Notes due 2001 (the "Secured Notes")
limited to $53,000,000 aggregate principal amount (subject to Section 2.07 of
the Indenture). This Secured Note is one of the Secured Notes referred to in the
Indenture.
SECTION 6. OPTIONAL REDEMPTIONS. (a) Under the terms of the
Indenture, the Secured Notes will be redeemable, at the Issuer's option at any
time in whole or from time to time in part upon not less than 30 and not more
than 60 days' prior notice mailed by first class mail to the Holders of the
Secured Notes, on any date prior to Maturity at a price equal to 100% of the
principal amount thereof plus accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any), to the Redemption Date plus
the Make-Whole Premium.
(b) Under the terms of the Indenture, the Secured Notes may be
redeemed, at the option of the Issuer, at any time as a whole but not in part,
on not less than 30 nor more than 60 days' prior notice mailed by first class
mail to the Holders of the Secured Notes, at a price equal to 100% of the
principal amount thereof plus accrued and unpaid interest (including Special
Interest, if any, and Additional Amounts, if any), to the Redemption Date, in
the event the Issuer has become or would become obligated to pay (and the Issuer
cannot avoid such obligation by taking reasonable measures available to it), on
the next date on which any amount would be payable with respect to the Secured
Notes, any Additional Amounts as a result of a change in or an amendment to the
laws (including any regulations promulgated thereunder) of a Tax Jurisdiction,
or any change in or amendment to any official position regarding the application
or interpretation of such laws or regulations, which change or amendment is
announced or becomes effective on or after the Issue Date; PROVIDED, HOWEVER,
that such redemption shall be conditioned upon the Issuer being actually
obligated to pay such Additional Amounts on the relevant payment date.
Prior to the giving of the notice of redemption described in the preceding
paragraph, the Issuer shall deliver to the Trustee an Officers' Certificate
(together with a copy of an Opinion of Counsel from counsel that is independent
from the Issuer to the effect that the Issuer will be or will become obligated
to pay Additional Amounts),
<PAGE>
6
stating that the Issuer is entitled to effect such redemption in accordance with
the Indenture and setting forth in reasonable detail a statement of the facts
relating thereto.
(c) Notices of redemption will be mailed by first class mail at
least 30 days but not more than 60 days before the Redemption Date to each
Holder whose Secured Notes are to be redeemed at its registered address. Secured
Notes in denominations larger than $1,000 may be redeemed in part but only in
integral multiples of $1,000, unless all of the Secured Notes held by a Holder
are to be redeemed. Unless the Issuer defaults in making such redemption
payment, on and after the Redemption Date interest (including Special Interest,
if any and Additional Amounts, if any), ceases to accrue on Secured Notes or
portions thereof called for redemption.
SECTION 7. REDEMPTION UPON LOSS OF A RIG. If an Event of Loss occurs
at any time with respect to a Mortgaged Rig, the Issuer shall redeem 50% of the
Secured Notes (or 100% of the Secured Notes in the case of an Event of Loss with
respect to both Mortgaged Rigs or if Secured Notes were previously redeemed
pursuant to this section 7 or Section 8) on the earlier to occur of (A) 30 days
after the receipt of the related Event of Loss Proceeds by the Issuer from the
applicable Mortgaged Rig Owner and (B) 180 days after the date on which such
Event of Loss occurred, at a Redemption Price equal to 100% of their principal
amount, plus accrued and unpaid interest (including Additional Amounts, if any,
and Special Interest, if any), to the Redemption Date, all as provided in the
Indenture.
SECTION 8. REDEMPTION UPON SALE OF A MORTGAGED RIG. If a Mortgaged
Rig or the Capital Stock of a Restricted Subsidiary then owning a Mortgaged Rig
is sold in compliance with the terms of the Indenture, the Issuer shall redeem
50% of the Secured Notes (or 100% of the Secured Notes in the case of a sale of
both Mortgaged Rigs or the Capital Stock of both Restricted Subsidiaries then
owning Mortgaged Rigs or if Secured Notes have previously been redeemed pursuant
to this Section 8 or Section 7) on the earlier to occur of (A) 30 days after the
receipt by the Issuer of Net Available Cash from such sale and (B) 60 days after
the date of such sale at a Redemption Price equal to 100% of their principal
amount, plus accrued and unpaid interest (including Additional Amounts, if any,
and Special Interest, if any), to the Redemption Date plus the Make- Whole
Premium.
<PAGE>
7
SECTION 9. REPURCHASE AT OPTION OF HOLDER. Upon the occurrence of a
Change of Control, each Holder will have the right to require the Issuer to
repurchase such Holder's Secured Notes in whole or in part (the "Change of
Control Offer") at a purchase price (the "Change of Control Purchase Price") in
cash equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest thereon, if any (including Additional Interest, if any, and
Special Amounts, if any), to the Change of Control Payment Date on the terms
described in the Indenture.
Within 30 days following any Change of Control, the Issuer shall
send, or cause to be sent, by first class mail, postage prepaid, a notice
regarding the Change of Control Offer to each Holder of Secured Notes. The
Holder of this Secured Note may elect to have this Secured Note or a portion
hereof in an authorized denomination purchased by completing the form entitled
"Option of Holder to Require Purchase" appearing below and tendering this
Secured Note pursuant to the Change of Control Offer. Unless the Issuer defaults
in the payment of the Change of Control Payment with respect thereto, all
Secured Notes or portions thereof accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest (including Additional Amounts, if
any, and Special Interest, if any), from and after the Change of Control
Purchase Date.
SECTION 10. DENOMINATIONS; TRANSFER AND EXCHANGE. The Secured Notes
are in registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Secured Notes may be registered and Secured
Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents (including, in certain cases, opinions of
counsel) and the Issuer may require a Holder to pay any taxes and fees required
by law or permitted by the Indenture. The Issuer need not exchange or register
the transfer of any Secured Note or portion of a Secured Note selected for
redemption, except for the unredeemed portion of any Secured Note being redeemed
in part. Also, it need not exchange or register the transfer of any Secured
Notes for a period of 15 days before a selection of Secured Notes to be redeemed
or during the period between a Record Date and the corresponding Interest
Payment Date.
SECTION 11. PERSONS DEEMED OWNERS. The registered Holder of a
Secured Note may be treated as its owner for all purposes.
<PAGE>
8
SECTION 12. AMENDMENT, SUPPLEMENT AND WAIVER. With the consent of
the Holders of not less than a majority in aggregate principal amount of the
outstanding Secured Notes (including consents obtained in connection with a
tender offer or exchange offer for the Secured Notes), the Issuer and the
Trustee may enter into one or more indentures supplemental to the Indenture for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of modifying in any manner the rights
of the Holders; PROVIDED that no such supplemental indenture may, among other
things, without the consent of the Holder of each outstanding Secured Noted
affected thereby, (i) reduce the amount Secured Notes whose Holders must consent
to an amendment, (ii) reduce the rate of or extend the time for payment of
interest (including Additional Interest, if any, and Special Interest, if any),
on any Secured Note or any Issuer Loan, (iii) reduce the principal of or extend
the Stated Maturity of any Secured Note or any Issuer Loan, (iv) modify the
obligations of Issuer to make mandatory redemptions or otherwise reduce the
premium payable upon the redemption of any Secured Note or change the time at
which any Secured Note may be or is required to be redeemed as described under
the covenants described in paragraphs 7, 8 and 9 above, (v) modify the
obligations of Pride to make payments under the Pride Guarantee or the
obligations of the Letter of Credit Provider under the Letter of Credit, (vi)
make any Secured Note payable in money other than that stated in the Secured
Note, (vii) impair the right of any Holder of the Secured Notes to receive
payment of principal of and interest (including Additional Interest, if any, and
Special Interest, if any), on such Holder's Secured Notes on or after the due
dates therefor or to institute suit for the enforcement of any payment on or
with respect to such Holder's Secured Notes, (viii) make any change in the
amendment provisions which require each Holder's consent or in the waiver
provisions, (ix) make any change in the Pride Guarantee, the Subsidiary
Guarantees, if any, the Letter of Credit or any Security Agreement or Mitsubishi
Loan Agreement (in the case of the Mitsubishi Documents, if the Issuer has the
right to consent to any such change) that would materially adversely affect the
Noteholders or terminate the Lien of the Indenture or any Security Agreement on
any property at any time subject thereto or deprive the Holders of the security
afforded by the Lien of the Indenture or the Security Agreements or the Issuer
of the Liens securing the Issuer Loans.
SECTION 13. DEFAULTS AND REMEDIES. Events of Default include in
summary form: (i) default for 30 days in the payment when due of interest
(including Special
<PAGE>
9
Interest, if any, or Additional Amounts, if any), on the Secured Notes or an
Issuer Loan; (ii) default in payment when due of the principal of, or premium,
if any, on any Secured Note or Issuer Loan; (iii) failure by the Issuer to
comply with Sections 3.08, 3.09, 4.08, 4.15 or 5.01 of the Indenture; (iv)
failure by the Issuer and the Subsidiary Guarantors for 60 days after notice to
comply with any of its other agreements in the Indenture or the Security
Agreements, or the occurrence of an event of default under a Mitsubishi Loan
Collateral Document that continues for 60 days after notice; (v) Indebtedness of
the Issuer or any Subsidiary is not paid when due within the applicable grace
period, if any, or is accelerated by the holders thereof and, in either case,
the aggregate principal amount of such unpaid or accelerated Indebtedness
exceeds $10,000,000 or a default occurs under a Mitsubishi Document, such
default is not a payment default and such default is not cured or waived within
120 days; (vi) failure by the Issuer or any of its Restricted Subsidiaries to
pay final judgments aggregating in excess of $10,000,000, which judgments are
not paid, discharged or stayed for a period of 30 days; (viii) certain events of
bankruptcy or insolvency with respect to the Issuer, Pride or any Significant
Subsidiary; (ix) the Pride Guarantee or any Subsidiary Guarantee shall for any
reason cease to be, or be asserted by Pride or any Subsidiary Guarantor, as
applicable, not to be, in full force and effect (except pursuant to the release
of any Subsidiary Guarantee in accordance with the Indenture); (x) the Letter of
Credit for any reason cease to be, or be asserted by the Letter of Credit
Provider not to be, in full force and effect; and (xi) the Liens under the
Security Agreements shall, at any time, cease to be in full force and effect for
any reason (other than by operation of the provisions of the Indenture and the
Security Agreements) other than the satisfaction in full of all obligations
under the Indenture and discharge of the Indenture, or any Lien created
thereunder shall be declared invalid or unenforceable or the Issuer or any
Mortgaged Rig Owner shall assert, in any pleading in any court of competent
jurisdiction, that any such Lien is invalid or unenforceable.
Holders of the Secured Notes may not enforce the Indenture or the
Secured Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Secured Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of the Secured Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal, premium, if any, or interest) if it
<PAGE>
10
determines that withholding notice is not opposed to the interests of the
Holders. Subject to certain limitations, the Holders of a majority in aggregate
principal amount of the Secured Notes then outstanding by notice to the Trustee
may on behalf of the Holders of all of the Secured Notes then outstanding waive
any existing Default or Event of Default and its consequences under the
Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, premium, if any, on, or interest (including
Special Interest, if any, and Additional Amounts, if any), on, the Secured
Notes. The Issuer is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Issuer is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
SECTION 14. DEFEASANCE PRIOR TO MATURITY OR REDEMPTION. The Issuer,
at its election, shall (a) be deemed to have paid and discharged its debt on the
Secured Notes and the Indenture and on Security Agreements, the Pride Guarantee
and the Subsidiary Guarantees shall cease to be of further effect as to all
outstanding Secured Notes (except as to (i) rights of registration of transfer,
substitution and exchange of Secured Notes, (ii) the Issuer's right of optional
redemption, (iii) rights of Holders to receive payments of principal of,
premium, if any, and interest (including Special Interest, if any, and
Additional Amounts, if any), on the Secured Notes (but not the Change of Control
Purchase Price) and any rights of the Holders with respect to such amounts, (iv)
the rights, obligations and immunities of the Trustee under the Indenture, and
(v) certain other specified provisions in the Indenture) or (b) cease to be
under any obligation to comply with certain restrictive covenants that are
described in the Indenture, after the irrevocable deposit by the Issuer with the
Trustee, in trust for the benefit of the Holders, at any time prior to the
stated Maturity of the Secured Notes, of (i) money in an amount, (ii) U.S.
Government Obligations which through the payment of interest and principal will
provide, not later than one Business Day before the due date of payment in
respect of such Secured Notes, money in an amount, or (iii) a combination
thereof sufficient to pay and discharge the principal of, premium, if any on,
and interest (including Additional Amounts, if any, and Special Interest, if
any), on, such Secured Notes then outstanding on the dates on which any such
payments are due in accordance with the terms of the Indenture and of such
Secured Notes.
SECTION 15. SECURITY AGREEMENTS. As provided in the Indenture and
the Security Agreements and subject to
<PAGE>
11
certain limitations set forth therein, the Obligations of the Issuer under the
Indenture, the Secured Notes and the Security Agreements are secured by the
Collateral as provided in the Security Agreements. Each Holder, by accepting a
Secured Note, agrees to be bound to all terms and provisions of the Security
Agreements, as the same may be amended from time to time. The Liens created
under the Security Agreements shall be released upon the terms and subject to
the conditions set forth in the Indenture and the Security Agreements.
SECTION 16. TRUSTEE DEALINGS WITH THE ISSUER. Subject to certain
limitations imposed by the Trust Indenture Act, the Trustee, in its individual
or any other capacity, may make loans to, accept deposits from, and perform
services for the Issuer or its Affiliates, and may otherwise deal with the
Issuer or its Affiliates, as if it were not the Trustee.
SECTION 17. NO RECOURSE AGAINST OTHERS. A director, officer,
employee, incorporator or stockholder of the Issuer, Pride, Maritima or any
Subsidiary Guarantor, as such, shall not have any liability for any obligations
of the Issuer, Pride, Maritima or any Subsidiary Guarantors under the Secured
Notes, the Indenture, the Pride Guarantee, the Subsidiary Guarantees or for any
claim based on, in respect of, or by reason of, such Obligations or their
creation. Each Holder by accepting a Secured Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Secured Notes.
SECTION 18. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SECURED NOTE, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PRINCIPLES THEREOF.
SECTION 19. AUTHENTICATION. This Secured Note shall not be valid
until authenticated by the manual signature of the Trustee or an authenticating
agent.
SECTION 20. ABBREVIATIONS. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/MA (=
Uniform Gifts to Minors Act).
SECTION 21. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED
SECURED NOTES. In addition to the rights provided to Holders of Secured Notes
under the
<PAGE>
12
Indenture, Holders of Transferred Restricted Secured Notes (as defined in the
Registration Rights Agreement) shall have all the rights set forth in the
Registration Rights Agreement dated as of the date of the Indenture, between the
Issuer and the parties named on the signature pages thereof (the "Registration
Rights Agreement").
SECTION 22. CUSIP NUMBERS. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Issuer has
caused CUSIP numbers to be printed on the Secured Notes and the Trustee may use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Secured Notes or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed thereon.
The Issuer will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Amethyst Financial Company Limited
Amethyst Financial Company Limited
c/o Arias Fabrega and
Fabrega Trust Co. BVI Limited
325 Waterfront Drive,
Omar Hodge Building, 2nd Floor
Wickham's Lay Road,
Tortola, British Virgin Islands
Telephone No.: [ ]
Telecopier No.: [ ]
<PAGE>
GUARANTEE
Subject to the limitations set forth in the Indenture, Pride has
irrevocably and unconditionally guaranteed (i) the full and punctual payment
when due, whether at Stated Maturity, by acceleration, by redemption or
otherwise, of all obligations of the Issuer under the Indenture (including
obligations to the Trustee), the Secured Notes and the Security Agreements,
whether for payment of principal of, premium, if any, on, or interest (including
Additional Amounts, if any, and Special Interest, if any), on the Secured Notes
and all other monetary obligations of the Issuer under the Indenture, the
Secured Notes and the Security Agreements and (ii) the full and punctual
performance within applicable grace periods of all other obligations of the
Issuer whether for fees, expenses, indemnification or otherwise under the
Indenture, the Secured Notes and the Security Agreements (all the foregoing
being hereinafter collectively called the "Guaranteed Obligations"). Capitalized
terms used herein shall have the same meanings assigned to them in this
Indenture unless otherwise indicated.
Payment on each Secured Note is guaranteed by Pride pursuant to
Article XIII of the Indenture and reference is made to such Indenture for the
precise terms of the Pride Guarantee.
The Guaranteed Obligations guaranteed by Pride under the Pride
Guarantee are limited to $30,000,000.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
2
PRIDE INTERNATIONAL, INC.
By
_________________________
Name:
Title:
<PAGE>
ASSIGNMENT FORM
To assign this Secured Note, fill in the form below: (I) or (we) assign and
transfer this Secured Note to
________________________________________________________________________________
(Insert assignee's Social Security or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Secured Note on the books of the Issuer or the agent appointed
by the Issuer to maintain such books. The agent appointed hereby may substitute
another to act for him.
________________________________________________________________________________
Date:_________________________
Your signature:_________________________________
(Sign exactly as your name appears on the face of this Secured Note)
Signature Guarantee:
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Secured Note purchased by the
Issuer pursuant to Section 4.08 of the Indenture, check the box below:
[ ] Section 4.8
If you want to elect to have only part of the Secured Note purchased
by the Issuer pursuant to Section 4.08 of the Indenture, state the amount you
elect to have purchased (must be an integral multiple of $1,000):
$_________
Your Signature:_________________________________
(Sign exactly as your name
appears on the Secured Note)
Signature Guarantee: Social Security or Tax
Identification No.:
<PAGE>
SCHEDULE A
CHANGES IN PRINCIPAL AMOUNT OF SECURED NOTE5
The following changes in the principal amount of this Global Note
have been recorded:
AMOUNT OF AMOUNT OF PRINCIPAL AMOUNT
DECREASE INCREASE OF THIS GLOBAL SIGNATURE
IN PRINCIPAL IN PRINCIPAL NOTE FOLLOWING OF AUTHORIZED
DATE OF AMOUNT OF THIS AMOUNT OF THIS SUCH DECREASE OFFICER OF
TRANSACTION GLOBAL NOTE GLOBAL NOTE (OR INCREASE) TRUSTEE
- - ----------- -------------- -------------- ---------------- -------------
- - --------
5 This should only be included if the Secured Note is issued in global form.
<PAGE>
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION
OF TRANSFER FROM U.S. GLOBAL NOTE TO
REGULATION S GLOBAL NOTE
(PURSUANT TO SECTION 2.06(A)(I) OF THE INDENTURE)
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: 11 3/4% Senior Secured Notes due 2001 of AmethyST
Financial Company Limited
Reference is hereby made to this Indenture, dated as of November 1,
1999 (the "Indenture"), between Amethyst Financial Company Limited (the
"Issuer"), Pride International, Inc., Maritima Petroleo e Engenharia Ltda. and
Wilmington Trust Company, as trustee (the "Trustee"). Capitalized terms used but
not defined herein shall have the meanings given them in the Indenture.
This letter relates to U.S.$_________ principal amount of Secured
Notes which are evidenced by one or more U.S. Global Notes and held with the
Depositary in the name of ___________ (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest in the Secured Notes to a
Person who will take delivery thereof in the form of an equal principal amount
of Secured Notes evidenced by one or more Regulation S Global Secured Notes,
which amount, immediately after such transfer, is to be held with the Depositary
through Euroclear or Cedel or both.
In connection with such request and in respect of such Secured
Notes, the Transferor hereby certifies that such transfer has been effected in
compliance with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with Rule 903 or Rule 904 under the United States
Securities Act of 1933, as amended (the "Securities Act"), and accordingly the
Transferor hereby further certifies that:
(1) The offer of the Secured Notes was not made to a person in the
United States and, if the 40-day restricted period has not yet expired and
the Transferor is a dealer (as defined in Section 2(12) of the Securities
Act), or a person receiving a selling concession, fee or other
remuneration in respect of the Secured Notes being sold (collectively,
"Dealers"),
<PAGE>
2
(i) neither the Transferor or any Person acting on its behalf knows that
the transferee is a U.S. Person and (ii) if the Transferor or any person
acting on its behalf knows that the transferee is a Dealer, the Transferor
or Person acting on its behalf has sent a confirmation or other notice to
the transferee stating that the Secured Notes may be offered or sold
during the 40-day restricted period only in accordance with the provisions
of Regulation S, pursuant to registration under the Securities Act or
pursuant to an available exemption from the registration requirements of
the Securities Act;
(2) either:
(a) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any Person
acting on its behalf reasonably believed and believes that the
transferee was outside the United States; or
(b) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither
the Transferor nor any Person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of
the requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade the
registration provisions of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest
being transferred as described above is to be held with the Depositary
through Euroclear or Cedel or both.
Upon giving effect to this request to exchange a beneficial interest
in a U.S. Global Note for a beneficial interest in a Regulation S Global Note,
the resulting beneficial interest shall be subject to the restrictions on
transfer applicable to Regulation S Global Notes pursuant to the Indenture and
the Securities Act and, if such transfer occurs prior to the end of the 40-day
restricted period associated with the initial offering of Secured Notes, the
additional restrictions applicable to transfers of interest in the Regulation S
Temporary Global Note.
<PAGE>
3
This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuer and Donaldson, Lufkin & Jenrette
Securities Corporation (the "Initial Purchaser"), the Initial Purchaser of such
Secured Notes being transferred. We acknowledge that you, the Issuer and the
Initial Purchaser will rely upon our confirmations, acknowledgments and
agreements set forth herein, and we agree to notify you promptly in writing if
any of our representations or warranties herein ceases to be accurate and
complete. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By:________________________________________
Name:______________________________________
Title:_____________________________________
Dated:________________________
cc: Amethyst Financial Company Limited
Initial Purchaser
<PAGE>
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION
OF TRANSFER FROM REGULATION S GLOBAL NOTE TO
U.S. GLOBAL NOTE
(PURSUANT TO SECTION 2.06(A)(II) OF THE INDENTURE)
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: 11 3/4% Senior Secured Notes due 2001 of Amethyst
Financial Company Limited
Reference is hereby made to this Indenture dated as of November 1,
1999 (the "Indenture"), between Amethyst Financial Company Limited (the
"Issuer"), Pride International,Inc. and Maritima Petroleo e Engenharia Ltda. and
Wilmington Trust Company, as trustee (the "Trustee"). Capitalized terms used but
not defined herein shall have the meanings given them in the Indenture.
This letter relates to $__________ principal amount of Secured Notes
which are evidenced by one or more Regulation S Global Secured Notes and held
with the Depositary through Euroclear or Cedel in the name of _____________ (the
"Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Secured Notes to a Person who will take delivery thereof in the
form of an equal principal amount of Secured Notes evidenced by one or more U.S.
Global Notes, to be held with the Depositary.
In connection with such request and in respect of such Secured
Notes, the Transferor hereby certifies that:
[CHECK ONE]
[ ] such transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the
"Securities Act") and, accordingly, the Transferor hereby further
certifies that the Secured Notes are being transferred to a Person that
the Transferor reasonably believes is purchasing the Secured Notes for its
own account, or for one or more accounts with respect to which such Person
exercises sole investment discretion, and such Person and each such
account is a "qualified
<PAGE>
2
institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A;
OR
[ ] such transfer is being effected pursuant to and in accordance with Rule
144 under the Securities Act;
[ ] the surrendered Secured Notes are being transferred to Institutional
Accredited Investor pursuant to an exemption under the Securities Act
other than Rule 144A, Rule 144 or Rule 904 and the Transferor further
certifies that the Transfer complies with the transfer restrictions
applicable to beneficial interests in Global Notes and Certificated
Secured Notes bearing the Private Placement Legend and the requirements of
the exemption claimed, which certification is supported by a certificate
attached hereto executed by the Transferee in the form of Exhibit C to the
Indenture, and, if the Issuer should so request, an Opinion of Counsel
provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), in form reasonably
acceptable to the Issuer and to the Registrar, to the effect that such
transfer is in compliance with the Securities Act to the effect that such
Transfer is in compliance with the Securities Act;
[ ] such transfer is being effected in an offshore transaction pursuant to and
in accordance with Rule 904 under the Securities Act;
OR
[ ] such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
OR
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than those
contemplated above, and the Transferor hereby further certifies that the
Secured Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the Transferor or
<PAGE>
3
the Transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Issuer and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and such Secured Notes are being transferred in compliance with any applicable
blue sky or securities laws of any state of the United States or any other
applicable jurisdiction.
Upon giving effect to this request to exchange a beneficial interest
in Regulation S Global Notes for a beneficial interest in U.S. Global Notes, the
resulting beneficial interest shall be subject to the restrictions on transfer
applicable to U.S. Global Notes pursuant to the Indenture and the Securities
Act.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuer and Donaldson, Lufkin & Jenrette
Securities Corporation (the "Initial Purchaser"), the Initial Purchaser of such
Secured Notes being transferred. We acknowledge that you, the Issuer and the
Initial Purchaser will rely upon our confirmations, acknowledgments and
agreements set forth herein, and we agree to notify you promptly in writing if
any of our representations or warranties herein ceases to be accurate and
complete. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By:________________________________________
Name:______________________________________
Title:_____________________________________
Dated:________________________
cc: Amethyst Financial Company Limited
Initial Purchaser
<PAGE>
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION
OF TRANSFER OF CERTIFICATED NOTES
(PURSUANT TO SECTION 2.06(B) OF THE INDENTURE)
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: 11 3/4% Senior Secured Notes due 2001 of Amethyst
Financial Company Limited
Reference is hereby made to this Indenture dated as of November 1,
1999 (the "Indenture"), between Amethyst Financial Company Limited (the
"Issuer"), Pride International, Inc. and Maritima Petroleo e Engenharia Ltda.
and Wilmington Trust Company, as trustee (the "Trustee"). Capitalized terms used
but not defined herein shall have the meanings given them in the Indenture.
This relates to $_______ principal amount of Secured Notes which are
evidenced by one or more Certificated Secured Notes in the name of ____________
(the "Transferor"). The Transferor has requested an exchange or transfer of such
Certificated Secured Note(s) in the form of an equal principal amount of Secured
Notes evidenced by one or more Certificated Secured Notes, to be delivered to
the Transferor or, in the case of a transfer of such Secured Notes, to such
Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Secured Notes
surrendered to the Trustee herewith for exchange (the "Surrendered Secured
Notes"), the Holder of such Surrendered Secured Notes hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Secured Notes are being acquired for the Transferor's own
account, without transfer;
OR
[ ] the Surrendered Secured Notes are being transferred to the Issuer;
<PAGE>
2
OR
[ ] the Surrendered Secured Notes are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of 1933,
as amended (the "Securities Act"), and, accordingly, the Transferor hereby
further certifies that the Surrendered Secured Notes are being transferred
to a Person that the Transferor reasonably believes is purchasing the
Surrendered Secured Notes for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A;
OR
[ ] the Surrendered Secured Notes are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
OR
[ ] the Surrendered Secured Notes are being transferred in an offshore
transaction pursuant to and in accordance with Rule 904 under the
Securities Act;
OR
[ ] the Surrendered Secured Notes are being transferred to an Institutional
Accredited Investor pursuant to an exemption under the Securities Act
other than Rule 144A, Rule 144 or Rule 904 and the Transferor further
certifies that the transfer complies with the transfer restrictions
applicable to beneficial interests in Global Notes and Certificated
Secured Notes bearing the Private Placement Legend and the requirements of
the exemption claimed, which certification is supported by a certificate
attached hereto executed by the Transferee in the form of Exhibit C to the
Indenture, and, if the Issuer should so request, an Opinion of Counsel
provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), in form reasonably
acceptable to the Issuer and to the Registrar, to the effect that such
transfer is in compliance with the Securities Act;
<PAGE>
3
OR
[ ] the Surrendered Secured Notes are being transferred pursuant to an
effective registration statement under the Securities Act;
OR
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than those
contemplated above, and the Transferor hereby further certifies that the
Secured Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification) in form
reasonably acceptable to the Issuer and to the Registrar, to the effect
that such transfer is in compliance with the Securities Act;
and the Surrendered Secured Notes are being transferred in compliance with any
applicable blue sky or securities laws of any state of the United States or any
other applicable jurisdiction.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuer and Donaldson, Lufkin & Jenrette
Securities Corporation the "Initial Purchaser"), the Initial Purchaser of such
Secured Notes being transferred. We acknowledge that you, the Issuer and the
Initial Purchaser will rely upon our confirmations, acknowledgments and
agreements set forth herein, and we agree to notify you promptly in writing if
any of our representations or warranties herein ceases to be accurate and
complete. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By:________________________________________
Name:______________________________________
Title:_____________________________________
Dated:________________________
cc: Amethyst Financial Company Limited
Initial Purchaser
<PAGE>
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR
REGISTRATION OF TRANSFER FROM U.S. GLOBAL
NOTE OR REGULATION S PERMANENT GLOBAL NOTE
TO DEFINITIVE NOTE
(PURSUANT TO SECTION 2.06(C) OF THE INDENTURE)
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: 11 3/4% Senior Secured Notes due 2001 of Amethyst
Financial Company Limited
Reference is hereby made to this Indenture dated as of November 1,
1999 (the "Indenture"), between Amethyst Financial Company Limited (the
"Issuer"), Pride International, Inc. and Maritima Petroleo e Engenharia Ltda.
and Wilmington Trust Company, as trustee (the "Trustee"). Capitalized terms used
but not defined herein shall have the meanings given them in the Indenture.
This letter relates to $___________ principal amount of Secured
Notes which are evidenced by a beneficial interest in one or more U.S. Global
Secured Notes or Regulation S Permanent Global Notes in the name of
_____________ (the "Transferor"). The Transferor has requested an exchange or
transfer of such beneficial interest in the form of an equal principal amount of
Secured Notes evidenced by one or more Certificated Secured Notes, to be
delivered to the Transferor or, in the case of a transfer of such Secured Notes,
to such Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Secured Notes
surrendered to the Trustee herewith for exchange (the "Surrendered Secured
Notes"), the Holder of such surrendered Secured Notes hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Secured Notes are being transferred to
the beneficial owner of such Secured Notes;
OR
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2
[ ] the Surrendered Secured Notes are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of 1933,
as amended (the "Securities Act"), and, accordingly, the Transferor hereby
further certifies that the Surrendered Secured Notes are being transferred
to a Person that the Transferor reasonably believes is purchasing the
Surrendered Secured Notes for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion,
and such Person and each such account is a "qualified institutional buyer"
within the meaning of Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A;
OR
[ ] the Surrendered Secured Notes are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
OR
[ ] such transfer is being effected in an offshore transaction pursuant to and
in accordance with Rule 904 under the Securities Act;
OR
[ ] the Surrendered Secured Notes are being transferred to Institutional
Accredited Investor pursuant to an exemption under the Securities Act
other than Rule 144A, Rule 144 or Rule 904 and the Transferor further
certifies that the transfer complies with the transfer restrictions
applicable to beneficial interests in Global Notes and Certificated
Secured Notes bearing the Private Placement Legend and the requirements of
the exemption claimed, which certification is supported by a certificate
attached hereto executed by the Transferee in the form of Exhibit C to
this Indenture, and, if the Issuer should so request, an Opinion of
Counsel provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), in form reasonably
acceptable to the Issuer and to the Registrar, to the effect that such
transfer is in compliance with the Securities Act;
OR
[ ] the Surrendered Secured Notes are being transferred pursuant to an
effective registration statement under the Securities Act;
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OR
[ ] the Surrendered Secured Notes are being transferred pursuant to an
exemption from the registration requirements of the Securities Act other
than those contemplated above, and the Transferor hereby further certifies
that the Secured Notes are being transferred in compliance with the
transfer restrictions applicable to the Global Secured Notes and in
accordance with the requirements of the exemption claimed, which
certification is supported by an Opinion of Counsel, provided by the
Transferor or the Transferee (a copy of which the Transferor has attached
to this certification) in form reasonably acceptable to the Issuer and to
the Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and the Surrendered Secured Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuer and Donaldson, Lufkin & Jenrette
Securities Corporation (the "Initial Purchaser"), the Initial Purchaser of such
Secured Notes being transferred. We acknowledge that you, the Issuer and the
Initial Purchaser will rely upon our confirmations, acknowledgments and
agreements set forth herein, and we agree to notify you promptly in writing if
any of our representations or warranties herein ceases to be accurate and
complete. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By:________________________________________
Name:______________________________________
Title:_____________________________________
Dated:________________________
cc: Amethyst Financial Company Limited
Initial Purchaser
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Reference is hereby made to this Indenture, dated as of November 1,
1999 (the "Indenture"), between Amethyst Financial Company Limited, as issuer,
Pride International, Inc. and Maritima Petroleo e Engenharia Ltda. and
Wilmington Trust Company, as trustee. Capitalized terms used but not defined
herein shall have the meanings given them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [ ] Beneficial interests, or
(b) [ ] Certificated Secured Notes,
we confirm that:
(i) we are an entity which is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act of
1933, as amended (the "Securities Act"), or an entity in which all of the
equity owners are accredited investors within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act (an "Institutional
Accredited Investor");
(ii) any purchase of Secured Notes by us will be for our own account
or for the account of one or more other Institutional Accredited
Investors;
(iii) in the event that we purchase any Secured Notes, we will
acquire Secured Notes having a minimum purchase price of at least $250,000
for our own account and for each separate account for which we are acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing Secured Notes;
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(v) we are not acquiring Secured Notes with a view to any
distribution thereof in a transaction that would violate the Securities
Act or the securities laws of any State of the United States or any other
applicable jurisdiction; provided that the disposition of our property and
the property of any accounts for which we are acting as fiduciary shall
remain at all times within our control; and
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such questions
of representatives of the Issuer and receive answers thereto, as we deem
necessary in connection with our decision to purchase Secured Notes.
We understand that the Secured Notes are being offered in a
transaction not involving any public offering within the meaning of the
Securities Act and that the Secured Notes have not been registered under the
Securities Act, and we agree, on our own behalf and on behalf of each account
for which we acquire any Secured Notes, that (A) such Secured Notes may be
offered, resold, pledged or otherwise transferred only (i) to a Person whom we
reasonably believe to be a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in a transaction meeting the requirements of Rule
144A, in a transaction meeting the requirements of Rule 144 under the Securities
Act, outside of the United States in a transaction meeting the requirements of
Rule 903 or 904 under the Securities Act or in accordance with another exemption
from the registration requirements of the Securities Act (and based upon an
opinion of counsel if the Issuer so requests), (ii) to the Issuer or (iii)
pursuant to an effective registration statement under the Securities Act, and,
in each case, in accordance with any applicable securities laws of any State of
the United States or any other applicable jurisdiction and (B) that we will, and
each subsequent Holder is required to, notify any subsequent purchaser from it
of the resale restrictions set forth in (A) above. We understand that the
registrar and transfer agent will not be required to accept for registration of
transfer any Secured Notes, except upon presentation of evidence satisfactory to
the Issuer that the foregoing restrictions on transfer have been complied with.
We further understand that the Secured Notes purchased by us will bear a legend
reflecting the substance of this paragraph.
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This certificate and the statements contained herein are made for
your benefit and the benefit of the Issuer and Donaldson, Lufkin & Jenrette
Securities Corporation (the "Initial Purchaser"), the Initial Purchaser of such
Secured Notes being transferred. We acknowledge that you, the Issuer and the
Initial Purchaser will rely upon our confirmations, acknowledgments and
agreements set forth herein, and we agree to notify you promptly in writing if
any of our representations or warranties herein ceases to be accurate and
complete. Terms used in this certificate and not otherwise defined in the
Indenture have the meanings set forth in Regulation S under the Securities Act.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF.
____________________________________
(Name of Purchaser)
By:_________________________________
Name:_______________________________
Title:______________________________
Address:____________________________
<PAGE>
EXHIBHT D
FORM OF SUBSIDIARY GUARANTEE
[To be provided]
<PAGE>
EXHIBIT E
FORM OF LETTER OF CREDIT
IRREVOCABLE LETTER OF CREDIT NO. [ ]
[Date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Dear Sirs:
We, Republic National Bank of New York (the "L/C Issuer"), hereby
establish in your favor our Irrevocable Letter of Credit No. [ ] whereby we
irrevocably authorize you, as trustee under the Indenture dated as of November
1, 1999 (as the same may be amended or supplemented, the "Indenture"), between
Amethyst Financial Company Limited (the "Issuer"), Pride International,Inc.,
Maritima Petroleo e Engenharia Ltda.and you, as Trustee (the "Trustee"), to draw
hereunder from time to time, from and after the date hereof to and including
3:00 p.m., New York time, on April 30, 2002 (the "L/C Expiration Date") (or such
other time as this Letter of Credit shall earlier terminate by its terms), a
maximum aggregate amount up to but not exceeding the lesser of (a) the Available
L/C Amount on the date of any drawing, and (b) $23,000,000 (the "Stated L/C
Amount"), available against the following documents presented at Republic
National Bank of New York, 452 Fifth Avenue, 5th Floor, New York, New York
10018, Attention: Letter of Credit Department:
1. A drawing certificate in the form of Annex A attached hereto, which
certificate shall be on your letterhead, have all blanks
appropriately filled in and shall be signed by a purported officer
of beneficiary with an accompanying signature authentication signed
by another purported officer of beneficiary.
2. This original Letter of Credit instrument and all amendments hereto,
if any, which original Letter of Credit instrument and amendments
will be returned to he beneficiary after we endorse the back with
the amount of the drawing.
<PAGE>
2
If demand for payment is made on a Business Day in strict conformity
with the terms and conditions hereof and is received by us prior to 11:00 a.m.,
New York time, then payment shall be made to you prior to 12:00 noon, New York
time, on the next succeeding Business Day. If any such demand for payment is
received by us at or after 11:00 a.m., New York time, such demand shall be
deemed to have been received prior to 11:00 a.m. on the next Business Day.
Drawings made under and in compliance with the terms of this Letter
of Credit will be duly honored upon presentation of original documentation at
Republic National Bank of New York, 452 Fifth Avenue, 5th Floor, New York, New
York 10018, Attention: Letter of Credit Department. Partial drawings under this
Letter of Credit shall be permitted. Payment under this Letter of Credit will be
made by the L/C Issuer from its own funds by wire transfer of immediately
available funds in United States dollars to the account specified in the related
drawing certificate. Upon payment pursuant to the terms hereof of the amount
specified in a drawing certificate presented hereunder, we shall be fully
discharged of our obligation under this Letter of Credit with respect to, and to
the extent of the amount, of such drawing certificate.
For purposes of this Letter of Credit:
"AVAILABLE L/C AMOUNT" shall mean, as of any date of determination,
the amount available to be drawn under the Letter of Credit from time to time,
which on any date of determination shall be equal to the Stated L/C Amount minus
the amount of all drawings under the Letter of Credit made prior to such date of
determination, PROVIDED that, with respect to the initial Payment Date, the
Available L/C Amount shall be the Stated L/C Amount.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions in New York, New York, London, Tokyo and Rio
de Janiero are authorized or obligated by law or executive order to be
closed.
This Letter of Credit is not transferable except to a successor
trustee under the Indenture. Such transfer shall be effective upon receipt by us
of the original transfer form effecting such transfer signed by the transferor
and by the transferee in the form of Annex B hereto (which shall be conclusive
evidence of such transfer), and, in such case, the transferee instead of the
transferor shall, without the necessity of further action, be entitled to all
the benefits of and rights under this
<PAGE>
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Letter of Credit in the transferor's place; PROVIDED, FURTHER, that this
original Letter of Credit instrument and all amendments hereto, if any, shall
have been presented to us for an appropriate endorsement of transfer (which
original Letter of Credit instrument and amendments will be returned to the
beneficiary after such endorsement of transfer).
To the extent not inconsistent with the express terms hereof, this
Letter of Credit shall be governed by, and construed in accordance with, the
terms of the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce, Publication No. 500, except for
Article 41 and the first sentence of Article 48(g) thereof, and to the extent
not governed thereby, shall be governed by and construed in accordance with the
laws of the State of New York, including without limitation, Article 5 of the
New York Uniform Commercial Code.
This Letter of Credit sets forth in full our undertaking, and,
except as specifically set forth herein such undertaking shall not in any way be
modified, amended, amplified or limited by reference to any other document,
instrument or agreement whatsoever.
Our obligations under this Letter of Credit are primary, absolute
and unconditional (except as expressly provided herein), and neither the failure
of you or any successor trustee under the Indenture to perform any covenant or
obligations, nor the commencement of any bankruptcy, insolvency or other
proceedings by or against you or any successor trustee under the Indenture shall
in any way affect or limit our unconditional obligations under this Letter of
Credit.
We agree to honor and pay in immediately available funds the amount
of any drawing certificate if presented as required by and otherwise in
compliance with all of the terms of this Letter of Credit. Upon the earlier of
(i) the receipt by us of written notice, in the form of Annex C hereto, stating
that the Secured Notes have been paid in full (which notice shall be conclusive
evidence thereof), signed by you or a successor trustee under the Indenture, as
appropriate, and (ii) the L/C Expiration Date, this Letter of Credit shall
automatically terminate.
Very truly yours,
<PAGE>
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REPUBLIC NATIONAL BANK OF NEW YORK
By:
_________________________
Name:
Title:
By:
_________________________
Name:
Title:
<PAGE>
ANNEX A TO
REPUBLIC NATIONAL BANK OF NEW YORK
IRREVOCABLE LETTER OF CREDIT NO. _____________
[Letterhead of Trustee]
Republic National Bank
of New York
452 Fifth Avenue, 5th Floor
New York, New York 10018
Attention: Letter of Credit Department
RE: Republic National Bank of New York
Irrevocable Letter of Credit No. _____________
DRAWING CERTIFICATE
Ladies and Gentlemen:
[ ] (the "Trustee") hereby certifies to Republic National Bank of New York
(the "L/C Issuer") with reference to Irrevocable Letter of Credit No. _________
(the "Letter of Credit"; capitalized terms contained herein and not otherwise
defined herein are used herein as defined in or pursuant to the Letter of
Credit) that:
1. The Trustee is the trustee or a successor trustee under the
Indenture.
2. The Trustee is making a demand for payment under the Letter of
Credit in the amount of U.S.$______________, which represents
amounts due on the Issuer's 11 3/4% Senior Secured Notes due 2001 or
under the Indenture that have not been remitted to the Trustee by or
on behalf of the Issuer.
3. The amount demanded is to be paid in immediately available funds on
__________, to the following account:
U.S.$______________ to Account No._____________ at
____________________.
4. The Available L/C Amount prior to the drawing requested pursuant to
this drawing certificate is U.S. $____________. The Available L/C
Amount after the drawing requested pursuant to this drawing
certificate will be U.S.$______________. The amount hereby demanded
does not exceed the Available L/C Amount. The Available L/C Amount
has been computed in strict conformity with the terms and conditions
of the Letter of Credit.
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IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the ________ day of
____________, _____.
[ ], as
Trustee
By:
_________________________
Name:
Title:
SIGNATURE AUTHENTICATION
By:
_________________________
Name:
Title:
<PAGE>
ANNEX B TO
REPUBLIC NATIONAL BANK OF NEW YORK
IRREVOCABLE LETTER OF CREDIT NO. ____________
[Letterhead of Trustee]
[Date]
Republic National Bank
of New York
452 Fifth Avenue, 5th Floor
New York, New York 10018
Attention: Letter of Credit Department
RE: Republic National Bank of New York
Irrevocable Letter of Credit No. ____________________
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
_____________________________
(Name of Transferee)
_____________________________
(Address)
as successor trustee under the Indenture (as defined in the above-referenced
Letter of Credit) all rights of the undersigned beneficiary to draw under the
above Letter of Credit.
By this transfer, all rights of the undersigned beneficiary in such
Letter of Credit are transferred to the undersigned transferee and the
undersigned transferee shall have the sole rights as beneficiary thereof
including sole rights relating to any amendments, whether increases or
extensions or other amendments and whether now existing or hereafter made. All
amendments are to be advised directly to the undersigned transferee without
necessity of any consent of or notice to the undersigned beneficiary.
The original Letter of Credit (and any amendments thereto) is
returned herewith, and we ask you to endorse the
<PAGE>
2
transfer on the reverse thereof, and forward it directly to the undersigned
transferee with your customary notice of transfer.
Very truly yours,
SIGNATURE AUTHENTICATION [Name of Transferor]
By: By:
______________________ _________________________
Name: (Authorized Officer)
Title:
SIGNATURE AUTHENTICATION [Name of Transferee]
By: By:
______________________ _________________________
Name: (Authorized Officer)
Title:
<PAGE>
ANNEX C TO
REPUBLIC NATIONAL BANK OF NEW YORK
IRREVOCABLE LETTER OF CREDIT NO. ____________
[Letterhead of Trustee]
[Date]
Republic National Bank
of New York
452 Fifth Avenue, 5th Floor
New York, New York 10018
Attention: Letter of Credit Department
RE: Republic National Bank of New York
Irrevocable Letter of Credit No. ____________________
Ladies and Gentlemen:
The undersigned, a duly authorized officer of [ ] (the "Trustee"),
hereby certifies to Republic National Bank of New York (the "L/C Issuer") with
reference to Irrevocable Letter of Credit No. __________ (the "Letter of
Credit"; capitalized terms contained herein and not otherwise defined herein are
used herein as defined in or pursuant to the Letter of Credit) that:
1. The Trustee is the Trustee or a successor trustee under the
Indenture.
<PAGE>
2
2. The Secured Notes have been paid in full. The Letter of Credit,
which accompanies this Certificate, is hereby surrendered for
cancelation.
Please acknowledge receipt of this Certificate and confirm that the
Letter of Credit has been canceled by signing in the space provided below.
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate this _______ day of __________,
- - -----.
[ ], as
Trustee
By:
_________________________
Name:
Title:
SIGNATURE AUTHENTICATION
By:
_________________________
Name:
Title:
Acknowledged and confirmed:
REPUBLIC NATIONAL BANK OF NEW YORK
By:
_________________________
Name:
Title:
<PAGE>
SCHEDULE A
MARAD DOCUMENTS
(unless otherwise expressly specified,
all documents are dated as of April 9, 1999)
1. Commitment to Guarantee Obligation by the United
States of America accepted by Petrodrill Four Limited
("Petrodrill Four") (as shipowner).
2. Commitment to Guarantee Obligation by the United
States of America accepted by Petrodrill Five Limited
("Petrodrill Five") (as shipowner).
3. Credit Agreements among each of Petrodrill Four and Petrodrill Five (as
shipowner), and Govco Incorporated (as primary lender), Citibank, N.A. (as
alternate lender), Citibank International PLC (as Facility Agent) and Citicorp
North America, Inc. (as Administrative Agent for the primary lender and the
commercial paper holders of the primary lender) (the "Credit Agreements").
4. Trust Indentures relating to the United States Government Guaranteed
Ship Financing Obligations, between each of Petrodrill Four and Petrodrill Five
(as shipowner), and FMB Trust Company, National Association (as indenture
trustee).
5. United States Government Guaranteed Export Ship Financing Obligation,
Amethyst 5 Series (the "Petrodrill Five Obligations"), consisting of
US$150,183,000 aggregate principal amount of Floating Rate Note issued by
Petrodrill Five; as well as relevant Guarantee of the United States of America
and the Indenture Trustee's Authentication Certificate.
6. United States Government Guaranteed Export Ship Financing Obligation,
Amethyst 4 Series (the "Petrodrill Four Obligations"), consisting of
US$149,625,000 aggregate principal amount of Floating Rate Note issued by
Petrodrill Four; as well as relevant Guarantee of the United States of America
and the Indenture Trustee's Authentication Certificate.
7. Authorization Agreement between the United States of America and FMB
Trust Company, National Association ("FMB Trust Company") (as indenture trustee
under the Trust Indenture dated as of April 9, 1999, between it and Petrodrill
Four) (Contract No. MA-13504).
8. Authorization Agreement between the United States of America and FMB
Trust Company (as indenture trustee under
<PAGE>
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the Trust Indenture dated as of April 9, 1999, between it
and Petrodrill Five) (Contract No. MA-13510).
9. Forms of Secretary Supplemental Indentures to each of the Trust
Indenture between each of Petrodrill Four and Petrodrill Five, and FMB Trust
Company (Exhibit to Trust Indenture).
10. Security Agreements between each of Petrodril Four ("Petrodrill Four
Security Agreement") and Petrodrill Five ("Petrodrill Five Security Agreement"
and together with the Petrodrill Four Security Agreement, the "Security
Agreements"), and The United States of America (Contracts Nos. MA-13505 and
13511, respectively).
11. Promissory Notes issued by each of Petrodrill Four and Petrodrill Five
to the benefit of The United States of America, each in the aggregate amount of
US$149,625,000 and US$150,183,000, respectively (the "Promissory Notes").
12. Forms of mortgage in account current form between each of Petrodrill
Four and Petrodrill Five (as mortgagor), and The United States of America (as
mortgagee), relating to the mortgage of sixty-four sixty fourth (64/64th)
shares, of which each mortgagor is the owner in the Amethyst 4 and Amethyst 5,
respectively (the "Mortgages").
13. Form of Deed of Covenants between each of Petrodrill Four and
Petrodrill Five, and The United States of America, supplementing the Security
Agreements and the Mortgages.
14. Title XI Reserve Fund and Financial Agreements between each of
Petrodrill Four and Petrodrill Five, and The United States of America (Contracts
Nos. MA-13507 and MA- 13513, respectively).
15. Consents of Shipyard made by TDI-Halter, Limited Partnership
("TDI-Halter"), to each of Petrodrill Four and Petrodrill Five, and The United
States of America, relating to the assignment of, and granting of a security
interest in, the the the construction contracts and the rigs t.b.n. Amethyst 4
and Amethyst 5 in favour of The United States of America pursuant to the
Security Agreements.
16. Consents of Shipyard made by TDI-Halter to each of Petrodrill Four and
Petrodrill Five, and The United States of America, relating to the assignment
of, and granting of a security interest in, the the Parent Guarantee dated as of
April 15, 1998 in favour of The United States of America
pursuant to the Security Agreements.
<PAGE>
3
17. Contracts for the construction and sale of Dynamic
Positioned Semi-Submersible Drilling Vessels (Hulls Nos.
1828 and 1829) dated as of April 9, 1998, between TDI-Halter
and Petrodrill Construction Inc. (the "Construction
Contracts").
18. Novation Agreements dated as of December 9, 1998, between TDI-Halter,
Petrodrill Offshore Inc. (formerly Pedrodrill Construction, Inc.), and each of
Petrodrill Four and Petrodrill Five.
19. Amendments No. 1 to the Semi-Submersible Drilling Vessel Construction
Contract between TDI-Halter and each of Petrodrill Four and Petrodrill Five.
20. Depository Agreements among each of Petrodrill Four and Petrodrill
Five (as shipowner), and Citibank, N.A. (as depository) and The United States of
America (Contracts Nos. MA-13508 and MA-13514, respectively).
21. Uniform Commercial Code-Financing Statement-Forms UCC-1 between each
of Petrodrill Four and Petrodrill Five, and The United States of America,
providing a description of the collateral given to The United States of America.
22. Letter-agreement dated as of April 1, 1999, between Citicorp North
America, Inc. and Petrodrill Four and Petrodrill Five, providing for the payment
of non-refundable fees to Citicorp North America, Inc. in connection with the
Credit Agreements.
23. Assignment Agreement between Maritima Petroleo e Engenharia Ltda.
("Maritima") (as assignor) and The United States of America (as assignee),
relating to the assignment by Maritima of its rights pursuant to the services
rendering contracts entered into with Petrobras in connection with the rigs
t.b.n. Amethyst 4 and Amethyst 5.
24. Consent of Petroleo Brasileiro S.A. ("Petrobras") to Maritima and The
United States of America, relating to the assignment of, and granting of a
security interest in, the services rendering contract entered into with
Petrobras in connection with the rig t.b.n. Amethyst 4 by Maritima in favour of
The United States of America pursuant to the security agreement entered into
between Maritima and The United States of America (the "Maritima Security
Agreement").
25. Consents of Petrobras to each Petrodrill Four and Petrodrill Five and
The United States of America, relating
<PAGE>
4
to the assignment of, and granting of a security interest in, the charter
agreement entered into with Petrobras in connection with the rig t.b.n. Amethyst
4 by Petrodrill Four in favour of The United States of America pursuant to the
Petrodrill Four Security Agreement.
26. Consents of Bigem Holdings N.V.to each Petrodrill Four and Petrodrill
Five and The United States of America, relating to the assignment of, and
granting of a security interest in, the licensing agreement entered into with
Bigem Holdings N.V. in connection with the rig t.b.n. Amethyst 4 by Petrodrill
Four in favour of The United States of America pursuant to the Petrodrill Four
Security Agreement.
27. Consents of Formaritima Ltd. to each Petrodrill Four and Petrodrill
Five and The United States of America, relating to the assignment of, and
granting of a security interest in, the management agreement entered into with
Formaritima Ltd. in connection with the rig t.b.n. Amethyst 4 by Petrodrill Four
in favour of The United States of America pursuant to the Petrodrill Four
Security Agreement.
28. Consents of Workships Contractors B.V. to each Petrodrill Four and
Petrodrill Five and The United States of America, relating to the assignment of,
and granting of a security interest in, the marine and nautical services
agreement entered into with Workships Contractors B.V. in connection with the
rig t.b.n. Amethyst 4 by Petrodrill Four in favour of The United States of
America pursuant to the Petrodrill Four Security Agreement.
29. Consents of Petrodrill Engineering N.V. to each Petrodrill Four and
Petrodrill Five and The United States of America, relating to the assignment of,
and granting of a security interest in, the construction management agreement
entered into with Petrodrill Engineering N.V. in connection with the rig t.b.n.
Amethyst 4 by Petrodrill Four in favour of The United States of America pursuant
to the Petrodrill Four Security Agreement.
30. Performance Bonds dated as of April 13, 1998, between TDI-Halter (as
principal) and Fireman's Fund Insurance Company (as surety), regarding the issue
of performance bonds in the amount of US$84.0 million each to Petrodrill
Construction, Inc. (as obligee) in connection with each of the Construction
Contracts.
31. Labor and Material Payment Bonds dated as of April 13, 1998, between
TDI-Halter (as principal) and Fireman's Fund Insurance Company (as surety),
regarding the issue of labor and material payment bonds in the amount of US$84.0
<PAGE>
5
million each to Petrodrill Construction, Inc. (as obligee) in connection with
each of the Construction Contracts.
32. Dual Obligee Riders among each of Petrodrill Four and Petrodrill Five,
TDI-Halter and Fireman's Fund Insurance Company, adding The United States of
America as a co-obligee and as sole loss payee to the joing and several bond
executed between TDI-Halter and Fireman's Fund Insurance Company.
33. Guaranty Agreements in Favor of The United States, made by each of
Petrodrill Four and Petrodrill Five to The United States of America, providing
for a cross-guarantee by each of Petrodrill Four and Petrodrill Five in
connection with the obligations assumed under the Promissory Notes.
34. Guaranty Agreement in Favor of The United States, made by Pride
International, Inc. ("Pride") (as guarantor) to The United States of America,
providing for a guarantee in connection with the payment by both Petrodrill Four
and Petrodrill Five of late arrival penalties that might be imposed by Petrobras
and ad valorem taxes up to a maximum aggregate amount of US$20.5 million (the
"Pride Guaranty Agreement").
35. Payment Undertaking in Favor of The United States, made by Maritima
(as guarantor) to The United States of America, providing for a guarantee in
connection with the payment by both Petrodrill Four and Petrodrill Five of late
arrival penalties that might be imposed by Petrobras and ad valorem taxes up to
a maximum aggregate amount of US$20.5 million (the "Maritima Payment
Undertaking").
36. Interguarantor Agreement between Maritima and Pride, providing for the
manner of payment of any amount due under the Pride Guaranty Agreement and the
Maritima Payment Undertaking.
37. Any and all exhibits, attachments, annexes and/or schedules to the
foregoing MARAD Documents, as well as any and all other agreements, amendments,
assignments, deeds and instruments re-stating, supplementing, amending,
providing a collateral to, or otherwise pertaining or relating to the above
MARAD Documents, together with their relevant exhibits, attachments, annexes
and/or schedules.
<PAGE>
SCHEDULE B
MITSUBISHI LOAN AGREEMENTS
1. Loan Agreement dated as of December 19, 1998, among Lenders (Petro Dia
Three S.A. ("MC1") and Petro Dia Four S.A. ("MC2) as initial lenders),
Petrodrill Six Limited ("Petrodrill Six") (as borrower) and Mitsubishi
Corporation (UK) (as Facility Agent and Security Agent), providing for a secured
loan facility not exceeding US$160.0 million in connection with the acquisition
of a semi-submersible drilling rig t.b.n. "Amethyst 6" (the "Amethyst 6
Mitsubishi Credit Facility").
2. Loan Agreement dated as of December 19, 1998, among Lenders (MC1 and
MC2 as initial lenders), Petrodrill Seven Limited ("Petrodrill Seven") (as
borrower) and Mitsubishi Corporation (UK) (as Facility Agent and Security
Agent), providing for a secured loan facility not exceeding US$180.0 million in
connection with the acquisition of a semi-submersible drilling rig t.b.n.
"Amethyst 7" (the "Amethyst 7 Mitsubishi Credit Facility" and together with the
Amethyst 6 Mitsubishi Credit Facility, the "Mitsubishi Credit Facilities").
3. Any and all exhibits, attachments, annexes and/or schedules to the
foregoing documents, as well as any and all other agreements, amendments,
assignments, deeds and instruments, other than those referred to in items 1
through 22 of Schedule C hereto, re-stating, supplementing, amending, providing
a collateral to, or otherwise pertaining or relating to the Mitsubishi Credit
Facilities, together with their relevant exhibits, attachments, annexes and/or
schedules.
<PAGE>
SCHEDULE C
MITSUBISHI LOAN COLLATERAL DOCUMENTS
1. Fee Agreement dated as of December 19, 1998, among MC1 and MC2 (as
initial creditors), and Petrodrill Six and Petrodrill Seven (as borrowers), and
Pride International, Inc. ("Pride") and Maritima Petroleo e Engenharia Ltda.
("Maritima") (as sponsors).
2. Deeds of Guarantee and Undertaking dated as of December 19, 1998, each
relating to the Amethyst 6 Credit Facility and the Amethyst 7 Credit Facility,
among each of Petrodrill Six and Petrodrill Seven (as borrower), and Pride and
Maritima (as Sponsors), the Lenders (MC1 and MC2 as initial lenders) and
Mitsubishi (as Facility Agent and Security Agent).
3. Subordinated Loan Facility Agreements dated as of December 19, 1998,
among each of Petrodrill Six and Petrodrill Seven (as borrower), and Pride and
Maritima (as sponsors), the Lenders (MC1 and MC2 as initial lenders) and
Mitsubishi (as Facility Agent and Security Agent).
4. Floor Guarantee dated as of December 19, 1998, relating to the
Mitsubishi Credit Facilities, among Pride and Maritima (as sponsors) and MC1 and
MC2 (as beneficiaries).
5. Share Charges dated as of December 19, 1998, over each of the
Petrodrill Six and Petrodrill Seven shares, between Amethyst Financial Company
Limited (the "Company") (as shareholder) and Mitsubishi (as Security Agent).
6. Additional Funding and Guarantee Agreement dated as of December 19,
1998, among MC1 and MC2, Pride and Maritima (as sponsors) and Petrodrill Six and
Petrodrill Seven, as amended and restated as at July 1, 1999, incorporating
amendments made by Deeds of Release dated as of April 15, 1999, May 14, 1999,
June 15, 1999 and July 1, 1999.
7. Assignments of Charterparty, Earnings and Requisition Compensation
dated as of December 19, 1998, between each of Petrodrill Six and Petrodrill
Seven (as assignor), and Mitsubishi (as Security Agent), relating to each of the
semi-submersible drilling units having Daewoo Heavy Industries Ltd.'s Hull Nos.
3016 and 3015 t.b.n. "Amethyst 6" and "Amethyst 7", respectively.
8. Assignments of Deed of Guarantee and Undertaking and Subordinated Loan
Facility Agreement dated as of December 19, 1998, relating to each of the Credit
<PAGE>
2
Facilities, between each of Petrodrill Six and Petrodrill Seven (as assignor),
and Mitsubishi (as Security Agent).
9. Assignments of Rig Construction Contract and Refund Guarantee dated as
of December 19, 1998, between each of Petrodrill Six and Petrodrill Seven (as
assignor), and Mitsubishi (as Security Agent), in respect of each of the
semi-submersible drilling units having Hulls Nos. 3016 and 3015 at Daewoo Heavy
Industries, Ltd., respectively.
10. Bridging Loan Agreement dated as of December 19, 1998, between MC1 (as
funder) and MC2 (as participant), providing for the funding of the participant's
participation in the Credit Facilities.
11. Debentures dated as of December 19, 1998, between each of Petrodrill
Six and Petrodrill Seven (as borrower), and Mitsubishi (as Security Agent).
12. Deed of Covenants dated as of December 19, 1998, between each of
Petrodrill Six and Petrodrill Seven (as owner), and Mitsubishi (as Security
Agent), relating to the First Priority Statutory Mortgage over each of the semi-
submersible drilling units "Amethyst 6" and "Amethyst 7" (formerly Hulls Nos.
3016 and 3015 at Daewoo Heavy Industries, Ltd., respectively).
13. Insurances Assignments dated as of December 19, 1998, between each of
Petrodrill Six and Petrodrill Seven (as assignor), and Mitsubishi (as Security
Agent), relating to each of the semi-submersible drilling units having Daewoo
Heavy Industries Ltd.'s Hull Nos. 3016 and 3015 t.b.n. "Amethyst 6" and
"Amethyst 7", respectively.
14. Inter-Company Cross Guarantee dated as of December 19, 1998, among
Petrodrill Six, Petrodrill Seven and the Company (as guarantors), and Mitsubishi
(as Security Agent).
15. Loan Agreement dated as of December 19, 1998, between Petrodrill Six
(as borrower) and Petrodrill Seven (as lender), providing for a facility of
US$10.0 million repayable on demand.
16. Inter-Company Loan Agreement Assignment dated as of December 19, 1998,
between Petrodrill Seven (as assignor) and Mitsubishi (as Security Agent),
relating to the semi- submersible drilling unit having Daewoo Heavy Industries
Ltd.'s Hull No. 3015 t.b.n. "Amethyst 7".
17. Management Account Charges dated as of December 19, 1998, between
each of Petrodrill Six and Petrodrill
<PAGE>
3
Seven (as chargor), and Mitsubishi (as Security Agent), relating to each of the
semi-submersible drilling units having Daewoo Heavy Industries Ltd.'s Hull Nos.
3016 and 3015 t.b.n. "Amethyst 6" and "Amethyst 7", respectively.
18. Omnibus Contract Assignments dated as of December 19, 1998, between
each of Petrodrill Six and Petrodrill Seven (as assignor), and Mitsubishi (as
Security Agent), relating to each of the semi-submersible drilling units having
Daewoo Heavy Industries Ltd.'s Hull Nos. 3016 and 3015 t.b.n. "Amethyst 6" and
"Amethyst 7", respectively.
19. Performance Guarantee dated as of December 19, 1998, between
Mitsubishi (as guarantor) and Petrodrill Six and Petrodrill Seven (as
beneficiaries), relating to two semi-submersible drilling plataforms.
20. Reserve Account Charges dated as of December 19, 1998, between each of
Petrodrill Six and Petrodrill Seven (as chargor), and Mitsubishi (as Security
Agent), relating to each of the semi-submersible drilling units having Daewoo
Heavy Industries Ltd.'s Hull Nos. 3016 and 3015 t.b.n. "Amethyst 6" and
"Amethyst 7", respectively.
21. Security Trust Deed dated as of December 19, 1998, among Petrodrill
Six and Petrodrill Seven (as borrowers), Pride, Maritima and the Company (as the
other security parties), the Lenders (MC1 and MC2 as initial lenders) and
Mitsubishi (as Facility Agent and Security Agent).
22. Services Rendering Contract Assignments dated as of December 19, 1998,
between Maritima and each of Petrodrill Six and Petrodrill Seven (as assignors),
and Mitsubishi (as Security Agent), relating to each of the semi-submersible
drilling units having Daewoo Heavy Industries Ltd.'s Hull Nos. 3016 and 3015
t.b.n. "Amethyst 6" and "Amethyst 7", respectively.
23. Any and all exhibits, attachments, annexes and/or schedules to the
foregoing documents, as well as any and all other agreements, amendments,
assignments, deeds and instruments other than those referred to in items 1 and 2
of Schedule B hereto, re-stating, supplementing, amending, providing a
collateral to, or otherwise pertaining or relating to the Mitsubishi Credit
Facilities, together with their relevant exhibits, attachments, annexes and/or
schedules.
<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
- - --------------- -----------------
310(a)(1) ................................................... 7.10
(a)(2) ................................................... 7.10
(a)(3) ................................................... N.A.
(a)(4) ................................................... N.A.
(a)(5) ................................................... 7.10
(b) ................................................... 7.03; 7.08; 7.10
(c) ................................................... N.A.
311(a) ................................................... 7.11
(b) ................................................... 7.11
(c) ................................................... N.A.
312(a) ................................................... 2.05
(b) ................................................... 12.03
(c) ................................................... 12.03
313(a) ................................................... 7.06
(b)(1) ................................................... 7.06
(b)(2) ................................................... 7.06
(c) ................................................... 7.06; 12.02
(d) ................................................... 7.06
314(a) ................................................... 4.13;4.26;12.02
(b) ................................................... 11.02
(c)(1) ................................................... 12.04; 12.05
(c)(2) ................................................... 7.02;12.04;12.05
(c)(3) ................................................... N.A.
(d) ................................................... 11.02
(e) ................................................... 11.02
(f) ................................................... N.A.
315(a) ................................................... 7.01
(b) ................................................... 7.05; 12.04
(c) ................................................... 7.01
(d) ................................................... 7.01
(e) ................................................... 6.11
316(a)(last ...................................................
sentence) ................................................... 2.09
(a)(1)(A).................................................. 6.05
(a)(1)(B).................................................. 6.04
(a)(2) .................................................. N.A.
(b) .................................................. 6.07
(c) .................................................. 2.12
317(a)(1) .................................................. 6.08
(a)(2) .................................................. 6.09
(b) .................................................. 2.04
318(a) .................................................. 12.01
(b) .................................................. N.A.
(c) .................................................. 12.01
- - -----------------
N.A. means not applicable.
* This Cross-Reference Table is not part of this Indenture.
EXHIBIT 4.5
EXECUTION COPY
SENIOR SECURED NOTE SECURITY AND PLEDGE AGREEMENT
THIS SENIOR SECURED NOTE SECURITY AND PLEDGE AGREEMENT (the
"Agreement") is made and entered into as of November 1, 1999, by AMETHYST
FINANCIAL COMPANY LIMITED, a British Virgin Islands limited liability company
(the "Issuer"), in favor of WILMINGTON TRUST COMPANY, a banking corporation duly
organized and existing under the laws of the State of Delaware, as trustee (in
such capacity, the "Trustee") under the Indenture (as hereinafter defined), for
the holders of the Secured Notes (as hereinafter defined), and WILMINGTON TRUST
COMPANY, a banking corporation duly organized and existing under the laws of the
State of Delaware, as collateral agent (in such capacity, the "Collateral
Agent").
W I T N E S S E T H:
WHEREAS, the Issuer, as issuer, the Trustee, Pride International,
Inc., as guarantor ("Pride"), and Maritima Petroleo e Engenharia Ltda. have
entered into an indenture dated as of November 1, 1999 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which the Issuer is issuing $53,000,000 in aggregate
principal amount of its 11 3/4% Senior Secured Notes due 2001 (the "Secured
Notes");
WHEREAS, the Issuer will use the proceeds of the Secured Notes to
purchase participation interests (each an "ISSUER LOAN") in the Mitsubishi Loan
Agreements. The Issuer Loans will be used by Petrodrill Six Limited and
Petrodrill Seven Limited to finance all or a portion of certain costs of
acquiring, constructing, altering, improving or repairing drilling rigs and
drillships or improvements to be used in connection therewith; and
WHEREAS, to secure its obligations under the Indenture and the
Secured Notes and the Security Agreements (as defined in the Indenture) to which
it is a party (the "Obligations"), the Issuer has agreed (i) to grant to the
Collateral Agent for the benefit of the Trustee and the equal and ratable
benefit of the Holders of the Secured Notes, Liens and security interests in and
to the Issuer Loans, the Mitsubishi Loan Agreements, the Mitsubishi Loan
Collateral Documents and the other Collateral (as defined herein) and (ii) to
execute and deliver this Agreement in order to secure the payment and
performance by the Issuer of the
<PAGE>
2
Obligations.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and in order to induce
the Holders of the Secured Notes to purchase the Secured Notes, the Issuer
hereby agrees with the Collateral Agent and with the Trustee for its benefit and
the equal and ratable benefit of the Holders of the Secured Notes as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Indenture. In
addition to any other defined terms used herein, the following term shall
constitute a defined term for the purposes of this Agreement:
"Permitted Liens" means Liens existing on the date on which the
Secured Notes are originally issued or provided for under the terms of
agreements existing on such date and listed on Schedule B attached hereto.
SECTION 2. CREATION OF SECURITY INTEREST. The Issuer hereby grants to the
Collateral Agent for the benefit of the Trustee, and for the equal and ratable
benefit of the Holders of the Secured Notes, Liens and a continuing security
interest in and to the collateral described in Section 3 hereof (the
"Collateral") in order to secure the payment and performance of all Obligations.
SECTION 3. COLLATERAL. The Collateral is:
(i) an undivided 53% interest in the Issuer Loans and all of the
Issuer's right, title and interest in and to the Mitsubishi Documents listed on
SCHEDULE A attached hereto (as such may be amended, modified or supplemented
from time to time), together with an undivided 53% interest in and to the
Issuer's right, title and interest in and to all agreements, documents, notes,
collateral documents and instruments relating to such Mitsubishi Documents, and
the security for the Issuer Loans provided for in the Mitsubishi Loan Collateral
Documents;
(ii) all of the Issuer's right, title and interest in and to all
replacements, additions, accessions, substitutions, repairs, proceeds and
products relating to or from all items described in this Section 3, whether now
owned or hereafter at any time acquired by the Issuer and wherever located, and
all
<PAGE>
3
documents, ledger sheets, files, books and records of the Issuer relating
thereto. Proceeds hereunder include (x) whatever is now or hereafter received by
the Issuer upon the sale, exchange, collection or other disposition of any item
of Collateral; (y) any property of the type or types described in clauses (i) or
(ii) now or hereafter acquired by the Issuer with any proceeds of Collateral
hereunder; and (z) any payments under any insurance or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Collateral.
SECTION 4. DELIVERY OF COLLATERAL. All certificates or instruments
representing or evidencing the Collateral shall be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto and shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to
the Collateral Agent, and shall be accompanied by any required transfer tax
stamps. Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the right, at any time in its discretion and
without notice to the Issuer, but subject to its compliance with the
requirements of applicable law, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of the Collateral. In
addition, upon the occurrence and during the continuance of an Event of Default,
but subject to its compliance with the requirements of applicable law, the
Collateral Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing any Collateral for certificates or
instruments of smaller or larger denominations.
SECTION 5. REPRESENTATIONS AND WARRANTIES. The Issuer hereby represents
and warrants to the Collateral Agent and Trustee that:
(a) LEGAL POWER. The execution, delivery and performance by the
Issuer of this Agreement are within the Issuer's legal powers, have been duly
authorized by all necessary corporate action, require no action by or in respect
of, or filing with (except for any filings provided for hereunder), any
governmental authority, require no consent of any other Person and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the constitutive documents of the Issuer or of any agreement
(after giving effect to the use of proceeds of the issuance of the Secured
Notes),
<PAGE>
4
judgment, injunction, order, decree or other instrument binding upon the Issuer
or result in the creation or imposition of any Lien on any asset of the Issuer
(other than the Liens created by this Agreement and the Reserve Account
Agreement).
(b) TITLE TO COLLATERAL. The Issuer is the legal, record and
beneficial owner of the Issuer Loans existing on the Issue Date, free and clear
of any Lien or claims of any Person except for the Liens listed on SCHEDULE B
attached hereto and the Liens created by this Agreement and the Reserve Account
Agreement.
(c) ENFORCEABILITY. This Agreement has been duly executed and
delivered by the Issuer and constitutes a legal, valid and binding obligation of
the Issuer, enforceable against the Issuer in accordance with its terms, except
as such enforceability may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or general principles of equity and
commercial reasonableness.
(d) PERFECTION; PRIORITY. Upon the execution and delivery of this
Agreement, and the filing of the UCC-1 financing statements and other documents
relating to the Collateral listed on SCHEDULE C attached hereto, to the extent
such security interests are created under United States federal or applicable
state laws or the law of the British Virgin Islands or England, the security
interests in the Collateral created pursuant to this Agreement are valid and
perfected first priority security interests, securing the payment of the
Obligations for the benefit of the Trustee and the Holders of the Secured Notes,
and enforceable as such against all creditors of the Issuer and any Persons
purporting to purchase any of the Collateral from the Issuer other than as
permitted by the Indenture; as of the date hereof (and after giving effect to
the use of proceeds of the issuance of the Secured Notes), there are no other
security interests in or Liens on the Collateral or any portion thereof, and no
financing statement, pledge, notice of Lien, assignment or collateral
assignment, mortgage or deed of trust covering the Collateral or any portion
thereof ("Lien Notice") exists or is on file in any public office, except with
respect to Liens listed on SCHEDULE B attached hereto and, the Liens created by
this Agreement and the Reserve Account Agreement.
(e) OFFICES. The Issuer's chief executive office is located at the
address listed as such in SCHEDULE D attached
<PAGE>
5
hereto ("Chief Executive Office"), and the Issuer has no place of business other
than that set forth in such Schedule D, except as permitted hereafter by Section
6(c) hereof.
(f) BUSINESS NAMES. The Issuer has not conducted its businesses
under any corporate, partnership or fictitious name during the five (5) years
preceding the date hereof other than Petrodrill Offshore.
(g) NO CONSENTS. No consent of any other Person and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either (i) for the
granting of the Liens by the Issuer on the Collateral pursuant to this Agreement
or for the execution, delivery or performance of this Agreement by the Issuer
(except for filings listed on Schedule C attached hereto, the filings or other
actions necessary to maintain the perfection of the Liens on the Issuer Loans
and perfect Liens on after-acquired Collateral or the proceeds of the
Collateral) or (ii) for the exercise by the Collateral Agent of the remedies in
respect of the Collateral pursuant to this Agreement, except, in each case, as
may be required under the Mitsubishi Documents or in connection with any such
disposition by laws affecting the offering and sale of the Issuer Loans
constituting Collateral or the collateral securing such Issuer Loans.
(h) ACCURATE INFORMATION. As of the date hereof, all information set
forth herein relating to the Collateral is accurate and complete in all material
respects.
SECTION 6. COVENANTS.
(a) LIEN NOTICES. The Issuer will defend its interest in the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein, and the Issuer will not permit any Lien
Notices with respect to the Collateral or any portion thereof to exist or be on
file in any public office for more than 10 days after the Issuer shall have
notice thereof, except with respect to Permitted Liens. The Issuer will advise
the Collateral Agent and the Trustee promptly, in reasonable detail, at the
addresses as specified in Section 16(a) of this Agreement, of any Lien (other
than Permitted Liens) on, or claim asserted against, any of the Collateral.
(b) LOCATION OF COLLATERAL. The Issuer will keep all of the
Collateral now held or subsequently acquired by it at the
<PAGE>
6
location specified on SCHEDULE D hereto, or at locations hereafter established
in compliance with Section 6(c) hereof (except for Collateral held by the
Collateral Agent, the Trustee or the Reserve Account Agent), unless the Issuer
shall have given the Collateral Agent and the Trustee prior written notice
thereof and shall have in advance executed and caused to be filed or delivered
to the Collateral Agent and the Trustee any financing statements or other
documents required by the Collateral Agent or the Trustee in order to perfect,
protect and preserve the Liens and security interest created hereby, all in form
and substance satisfactory to the Collateral Agent and the Trustee.
(c) LOCATION OF OFFICES; CORPORATION NAME; LEGAL STRUCTURE. The
Issuer will not change the location of its Chief Executive Office or establish
any place of business other than that set forth on Schedule D attached hereto,
or voluntarily or involuntarily change its name, identity or legal structure,
including without limitation any continuance, amalgamation, merger,
consolidation or sale of substantially all of its assets, unless the Issuer
shall have given the Collateral Agent and the Trustee at least 30 days prior
written notice thereof and shall have in advance executed and caused to be filed
and or delivered to the Collateral Agent and the Trustee any financing
statements or other documents required by the Collateral Agent and the Trustee
in order to perfect, protect and preserve the Liens and security interest
created hereby, all in form and substance reasonably satisfactory to the
Collateral Agent and the Trustee.
(d) ADDITIONAL COLLATERAL; FURTHER ASSURANCES. The Issuer agrees
that immediately upon becoming the beneficial owner of any additional
Collateral, it will pledge and deliver to the Collateral Agent for the benefit
of the Trustee and the equal and ratable benefit of the Holders of the Secured
Notes, the certificates, instruments and documents, if any, representing such
Collateral (as well as duly executed instruments of transfer or assignment in
blank), and grant to the Collateral Agent for the benefit of the Trustee and the
equal and ratable benefit of the Holders of the Secured Notes pursuant to
appropriate and necessary Security Agreements, a continuing first priority
security interest in and Lien on such other Collateral, all in form and
substance reasonably satisfactory to the Trustee. The Issuer shall also promptly
(and in any event within five Business Days after receipt thereof), subject to
its compliance with the requirements of applicable law, deliver to the
Collateral Agent any other documents of title, promissory notes, certificates or
instruments representing Collateral which it holds. The Issuer
<PAGE>
7
further agrees that it will promptly (and in any event within five Business Days
after such acquisition) deliver to the Collateral Agent and the Trustee an
amendment, duly executed by the Issuer, in substantially the form of SCHEDULE E
hereto (an "Additional Collateral Amendment"), with respect to the additional
Collateral that is to be pledged pursuant to this Agreement. The Issuer hereby
authorizes the Collateral Agent and the Trustee to attach each Additional
Collateral Amendment to this Agreement and agrees that any notes, instruments or
other forms of Investment or other property or assets listed on any Additional
Collateral Amendment delivered to the Collateral Agent or the Trustee and all
proceeds thereof shall for all purposes hereunder be considered Collateral. The
Issuer will promptly (i) execute and deliver, cause to be executed and filed, or
use its best efforts to give any notices, in all appropriate jurisdictions
(including foreign jurisdictions) or procure any financing statements, including
continuation statements, assignments, pledges or other documents, (ii) mark any
chattel paper constituting Collateral and deliver any certificates, chattel
paper or instruments constituting Collateral to the Collateral Agent or the
Trustee, (iii) execute and deliver or cause to be executed and delivered all
assignments, instruments and other documents, and (iv) take any other actions,
in each such case as necessary or, in the reasonable opinion of the Collateral
Agent or the Trustee, desirable to perfect or continue the perfection and the
priority of the Collateral Agent's security interest and Liens in the
Collateral, to protect the Collateral against the rights, claims, or interests
of third Persons other than holders of Permitted Liens or to effect the purposes
of this Agreement. The Issuer also hereby authorizes the Collateral Agent to
file any financing or continuation statements with respect to the Collateral
necessary or, in its reasonable opinion desirable, to perfect or continue the
perfection or priority of the Collateral Agent's Lien hereunder without the
signature of the Issuer to the extent permitted by applicable law.
(e) DISPOSITION OF COLLATERAL. The Issuer will not sell, transfer,
assign, pledge, collaterally assign, exchange or otherwise dispose of, or grant
any option or warrant with respect to, any of the Collateral except as permitted
by the Indenture or the Reserve Account Agreement. If the proceeds of any sale
of any Collateral are notes, instruments, documents of title, standby letters of
credit or chattel paper, such proceeds shall be promptly delivered to the
Collateral Agent to be held as Collateral hereunder. If the Collateral, or any
part thereof, is
<PAGE>
8
sold, transferred, assigned, exchanged, or otherwise disposed of in violation of
these provisions, the security interest and Liens of the Collateral Agent shall
continue in such Collateral or part thereof notwithstanding such sale, transfer,
assignment, exchange or other disposition, and the Issuer will hold the proceeds
thereof in an separate account for its benefit and the Holders of the Secured
Notes and the benefit of the Trustee and the Holders of the Secured Notes and
transfer such proceeds to the Collateral Agent in kind to be held as Collateral
hereunder.
(f) RESTRICTIVE AGREEMENTS. The Issuer agrees that, except for the
Mitsubishi Documents and any other existing agreements set forth on SCHEDULE F
attached hereto, it will not (i) enter into any agreement or understanding that
purports to or may restrict or inhibit the Collateral Agent's or the Trustee's
rights or remedies hereunder, including, without limitation, the Collateral
Agent's or the Trustee's right to sell or otherwise dispose of the Collateral or
amend or modify in any manner materially adverse to the Trustee the Mitsubishi
Documents or (ii) fail to pay or discharge any tax, assessment or levy of any
nature not later than five days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment with regard to the Collateral.
(g) RIGHTS OF COLLATERAL AGENT AND TRUSTEE. Upon the occurrence and
during the continuance of an Event of Default, the Collateral Agent and the
Trustee shall have the right at any time to make any payments and do any other
acts as the Collateral Agent or the Trustee may deem necessary to protect the
Liens and security interest of the Collateral Agent in the Collateral,
including, without limitation, the rights to pay, purchase, contest or
compromise any Lien which, in the judgment of the Collateral Agent or the
Trustee, appears to be prior to or superior to the Liens and security interest
granted hereunder, and challenge any action or proceeding purporting to affect
its Liens and security interest in the Collateral. The Issuer hereby agrees to
reimburse the Collateral Agent and the Trustee for all payments made and
expenses incurred under this Agreement, including reasonable fees, expenses and
disbursements of attorneys acting for the Collateral Agent or the Trustee,
including any of the foregoing payments under or acts taken to perfect or
protect its Liens and security interest in the Collateral, which amounts shall
be secured under this Agreement, and agrees that it shall be bound by any
payment made or act taken by the Collateral Agent or the Trustee hereunder.
Neither the Collateral Agent nor the Trustee shall have any obligation to
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9
make any of the foregoing payments or perform any of the foregoing acts.
(h) RECORDS. The Issuer will keep and maintain, at its own cost and
expense, satisfactory and complete records of the Collateral.
(i) ACCESS. Both the Collateral Agent and the Trustee shall at all
times have full and free access during normal business hours, on reasonable
notice to the Issuer, except during the continuation of a Default or Event of
Default when no such notice shall be required, to all the books, correspondence
and records of the Issuer relating to the Collateral, and the Collateral Agent
and its representatives and the Trustee and its representatives, may examine the
same, take extracts therefrom and make photocopies thereof, and the Issuer
agrees to render to each of the Collateral Agent and the Trustee, at the
Issuer's cost and expense, such clerical and other assistance, at all times and
in such manner as may be requested with regard thereto. The Collateral Agent and
its representatives and the Trustee and its representatives shall at all times
also have the right on reasonable notice to the Issuer, except during the
continuation of a Default or an Event of Default when no such notice shall be
required, to enter, during normal business hours, into and upon any premises
where any of the Collateral is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein. The Issuer
shall have the right to have a representative present during any examination or
inspection contemplated by this Section, unless an Event of Default has occurred
and it continuing.
(j) TAXES. The Issuer shall pay all taxes, assessments and
government charges and all claims as and to the extent required by Section 4.06
of the Indenture; provided that the Issuer shall in any event pay such taxes,
assessments or levies not later than five days prior to the date of any proposed
sale under any judgment, writ or warrant of attachment with regard to any
Collateral of the Issuer entered or filed against the Issuer as a result of the
failure to make such payment.
(k) ISSUER LOANS. The Issuer covenants with the Collateral Agent and
the Trustee, except as permitted by this Agreement, not to do or permit to be
done anything to impair the security of the Mitsubishi Documents; not to execute
any other assignment of its interest in the Issuer Loans or the Mitsubishi
Documents except as may be otherwise agreed to in writing by the
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10
Collateral Agent and the Trustee and except as provided herein, provided that
the Issuer may assign its interests in any portion thereof not constituting
Collateral if such assignment is permitted by the Indenture and is made subject
to the rights of the Trustee and the Collateral Agent under the Indenture,
hereunder and under the Reserve Account Agreement, including, without
limitation, the rights set forth in Section 7; except as permitted by the
Indenture, not to alter, modify or change the terms of the Issuer Loans or the
Mitsubishi Documents without the prior written consent of the Trustee, or,
except as permitted by the Indenture, cancel or terminate any of the Issuer
Loans or any of the security for such Issuer Loans or accept a surrender thereof
so as to effect directly or indirectly, proximately or remotely, a cancelation
or termination or diminution of the obligations of the parties thereunder; and
to execute and deliver, at the request of Collateral Agent or the Trustee, all
such further assurances, acknowledgments, and certificates for the purposes
hereof as Collateral Agent or the Trustee shall from time to time reasonably
require.
SECTION 7. VOTING RIGHTS; ISSUER LOAN PAYMENTS; ETC.
(a) At all times, whether or not Event of Default shall have
occurred and be continuing, only the Collateral Agent on behalf of the Trustee
or the Trustee directly shall be entitled to exercise any and all voting and
other consensual rights of the Issuer pertaining to the Issuer Loans and
Mitsubishi Documents. The Issuer hereby appoints and constitutes the Collateral
Agent and the Trustee, whether acting separately or jointly, as the Issuer's
attorneys-in-fact to exercise any and all such voting and other consensual
rights of the Issuer. This power of attorney is coupled with an interest in the
Trustee and the Collateral Agent as agent on behalf of the Trustee and is
irrevocable by the Issuer. The Issuer shall execute and deliver (or cause to be
executed and delivered) to the Collateral Agent or the Trustee all such proxies,
additional powers or attorney and other instruments as the Collateral Agent or
the Trustee may reasonably request for the purpose of enabling the Collateral
Agent or the Trustee to exercise or cause the exercise of the voting and other
rights that it is entitled to exercise pursuant to this Section 7(a).
(b) All payments made from time to time on, or with respect to the
Issuer Loans or other Collateral Loans received by the Issuer and all other
amount received by the Issuer with respect to the Collateral, whether interest,
principal,
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11
dividends, distributions or otherwise, shall be delivered to the Trustee for
deposit in the Reserve Account. The foregoing notwithstanding, the Issuer shall
make provision such that all payments made under the Mitsubishi Documents in
respect of the Issuer Loans shall be paid directly into the Reserve Account.
(c) All interest and principal payments, all distributions and all
other payments that are received by the Issuer contrary to the provisions of
this Section 7 shall be received in trust for the Collateral Agent for the
benefit of the Trustee and the equal and ratable benefit of the Holders of the
Secured Notes, shall be segregated from the other property or funds of the
Issuer and be forthwith delivered to the Collateral Agent or the Trustee as
Collateral in the same form as so received (with any necessary endorsements or
other instruments of transfer or assignment in blank), and all such payments
shall be deposited in the Reserve Account.
(d) So long as no Event of Default shall have occurred and be
continuing, neither the Collateral Agent nor the Trustee shall be under any
obligation to collect, attempt to collect, protect or enforce the Collateral,
which the Issuer agrees and undertakes to do at the Issuer's expense; provided
that the Collateral Agent and the Trustee shall cooperate with the Issuer and
take all such action as the Issuer may reasonably request to permit the Issuer
to collect, protect or enforce the Collateral. All expenses (including, without
limitation, reasonable attorneys' fees and legal expenses) actually incurred or
paid by the Collateral Agent or the Trustee in connection with or incident to
any such collection or attempt to collect, protect or enforce the Collateral
shall be borne by the Issuer or reimbursed by the Issuer to the Collateral Agent
and the Trustee upon demand.
SECTION 8. POWER OF ATTORNEY. In addition to all of the powers granted to
the Trustee pursuant to Article VI of the Indenture, the Issuer hereby appoints
and constitutes the Collateral Agent and the Trustee, whether acting separately
or jointly, as the Issuer's attorneys-in-fact to exercise all of the following
powers upon and at any time after the occurrence and during the continuance of
an Event of Default: (i) collection of proceeds of any Collateral; (ii)
conveyance of any item of Collateral to any purchaser thereof; (iii) giving of
any notices or recording of the security interest and the Liens under Section
6(d) hereof; (iv) making of any payments or taking any acts under Section 9
hereof and (v) paying or discharging taxes or Liens
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12
levied or placed upon the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by the Collateral Agent
in its sole discretion, and such payments made by the Collateral Agent to become
the Obligations of the Issuer to the Collateral Agent, due and payable
immediately upon demand. The Collateral Agent's authority hereunder shall
include, without limitation, the authority to endorse and negotiate any checks
or instruments representing proceeds of Collateral in the name of the Issuer, to
execute and give receipt for any certificate of ownership or any document
constituting Collateral, to transfer title to any item of Collateral, to sign
the Issuer's name on all financing statements (to the extent permitted by
applicable law) or any other Security Agreements or other documents deemed
necessary or appropriate by the Collateral Agent to preserve, protect or perfect
the Liens in the Collateral and to file the same, to prepare, file and sign the
Issuer's name on any notice of Lien, and to prepare, file and sign the Issuer's
name on a proof of claim in bankruptcy or similar document against any person
obligated upon any Collateral to, the Issuer, and to take any other actions
arising from or incident to the powers granted to the Collateral Agent in this
Agreement. This power of attorney is coupled with an interest in the Trustee and
the Collateral Agent as agent on behalf of the Trustee and is irrevocable by the
Issuer.
SECTION 9. COLLATERAL AGENT OR TRUSTEE MAY PERFORM. If the Issuer fails to
perform any covenant or agreement contained herein, the Collateral Agent or the
Trustee may, but shall not be obligated to, itself perform, or cause performance
of, such covenant or agreement, and the expenses of the Collateral Agent or the
Trustee incurred in connection therewith shall be payable by the Issuer under
Section 16(o) hereof.
SECTION 10. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to the Collateral Agent or the Trustee hereunder are being
granted in order to preserve and protect the Collateral Agent's Liens and
security interest in and to the Collateral granted hereby and shall not be
interpreted to, and shall not, impose any duties on the Collateral Agent or the
Trustee in connection therewith. Each of the Collateral Agent and the Trustee
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Collateral Agent or the Trustee
accords its own property, it being understood that neither the Collateral Agent
nor the Trustee shall have any responsibility for
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13
(i) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent or the Trustee has or is deemed to have knowledge of such
matters, (ii) taking any necessary steps to preserve rights against any parties
with respect to any Collateral, or (iii) inquiring into or verifying that the
Issuer has complied or will comply with its duty to furnish additional items of
Collateral to the Collateral Agent or the Trustee pursuant to Section 6(d)
hereof unless reasonably requested by the Issuer to do so at any time before an
Event of Default occurs and is continuing. Absent knowledge to the contrary, the
Collateral Agent and the Trustee may assume that the items of Collateral
actually delivered to it are all items required to be so delivered and may
assume that no other such items need be so delivered.
SECTION 11. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Issuer represents
to the Collateral Agent and the Trustee and the Holders of the Secured Notes
that the Issuer has made its own arrangements for keeping informed of changes or
potential changes affecting the Collateral (including, but not limited to,
payments of principal, premiums or interest, reorganization, restructuring or
other exchanges, tender offers and voting rights), and the Issuer agrees that
the Collateral Agent and the Trustee and the Holders of the Secured Notes shall
have no responsibility or liability for informing the Issuer of any such changes
or partial changes or for taking any action or omitting to take any action with
respect thereof. Except as not prohibited by the Indenture, the Issuer covenants
that it will not, without the prior written consent of the Trustee, vote to
enable, or take any other action to permit, anyone to sell or otherwise dispose
of, or grant any option with respect to, any of the Collateral or create or
permit to exist any Lien upon or with respect to any of the Collateral, except
for Permitted Liens and the Liens granted under this Agreement and the Reserve
Account Agreement. The Issuer will defend the right, title and interest of the
Collateral Agent and the Trustee and the Holders of the Secured Notes in and to
the Collateral against the claims and demands of all Persons, subject, HOWEVER,
to the rights of holders of Permitted Liens.
SECTION 12. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Collateral Agent may, subject to the provisions of the Indenture,
this Agreement, and the Collateral Agent's and the Trustee's compliance with any
requirements of law
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14
(including, without limitation, the applicable Uniform Commercial Code or laws
of foreign jurisdictions) applicable to the action to be taken, without notice
to or demand upon the Issuer except as required by the Indenture, the Reserve
Account Agreement, this Agreement or applicable law, do any one or more of the
following:
(i) exercise any or all of the rights and remedies provided
for by the applicable Uniform Commercial Code or laws of foreign
jurisdictions specifically including, without limitation, the right to
recover the fees and expenses incurred by the Collateral Agent or the
Trustee in the enforcement of this Agreement or in connection with the
redemption of the Collateral, including reasonable fees, expenses and
disbursements of attorneys;
(ii) at its option, transfer or register, and the Issuer shall
register or cause to be registered upon request therefor by the Collateral
Agent or the Trustee, the Collateral or any part thereof on the books of
the Persons in whom any Investments constituting Collateral are made, into
the name of the Trustee's nominee(s);
(iii) personally, or by agents or attorneys, immediately
retake possession of the Collateral, or any part thereof, from the Issuer
or any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon the
Issuer's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of the Issuer;
(iv) sell, assign or otherwise liquidate, or direct the Issuer
to sell, assign or otherwise liquidated, any or all of the Collateral or
any part thereof, and take possession of the proceeds of any such sale or
liquidation;
(v) require the Issuer to assemble the Collateral or any part
thereof and make it available at one or more places as the Collateral
Agent or the Trustee may designate and to deliver possession of the
Collateral or any part thereof to the Collateral Agent or the Trustee;
(vi) use, in connection with any assembly, use or disposition
of the Collateral, any intellectual property,
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15
intangibles or other technical knowledge or process used or utilized from
time to time by the Company;
(vii) sell or cause the same to be sold at any broker's board
or at public or private sale, in one or more sales or lots, at such price
or prices as the Collateral Agent may deem best, for cash or on credit or
for future delivery, without assumption of any credit; and the purchaser
of any or all Collateral so sold shall thereafter hold the same
absolutely, free from any claim, encumbrance or right of any kind
whatsoever;
(viii) enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to estop or prevent the
Collateral Agent from pursuing any other or further remedy which it may
have, and any repossession or retaking or sale of the Collateral pursuant
to the terms hereof shall not operate to release the Issuer until full and
final payment of any deficiency has been made in cash;
(ix) in connection with any public or private sale under the
applicable Uniform Commercial Code or other applicable legislation, the
Collateral Agent shall give the Issuer at least ten Business Days' prior
written notice of the time and place of any public sale of its Collateral
or of the time after which any private sale or other intended disposition
thereof may be made, which shall be deemed to be reasonable notice of such
sale or other disposition. Such notice may be given to the Issuer in
accordance with the provisions of Section 17(a) hereof;
(x) proceed by an action or actions at law or in equity to
recover the Obligations or to foreclose this Agreement and sell the
Collateral, or any portion thereof, pursuant to a judgment or decree of a
court or courts of competent jurisdiction;
(xi) exercise any other rights and remedies provided by
applicable law and the other Security Agreements; and
(xii) if the Collateral Agent recovers possession of all or
any part of the Collateral pursuant to a writ of possession or other
judicial process, whether prejudgment or otherwise, the Collateral Agent
may thereafter retain, sell
<PAGE>
16
or otherwise dispose of such Collateral in accordance with this Agreement
or the applicable Uniform Commercial Code or other applicable legislation,
and following such retention, sale or other disposition, the Collateral
Agent may voluntarily dismiss without prejudice the judicial action in
which such writ of possession or other judicial process was issued. The
Issuer hereby consents to the voluntary dismissal by the Collateral Agent
of such judicial action, and the Issuer further consents to the
exoneration of any bond that the Collateral Agent files in such action.
(b) In view of the fact that federal, state and foreign securities
laws may impose certain restrictions on the method by which a sale of the
Collateral may be effected after an Event of Default, the Issuer agrees that
upon the occurrence and during the continuance of an Event of Default, the
Collateral Agent may cause, from time to time, the sale of all or any part of
the Collateral by means of a private placement, restricting the prospective
purchasers to those who will represent and agree that they are purchasing for
investment only and not for distribution. In so doing, the Collateral Agent may
solicit, or may cause an investment manager to solicit, offers to buy the
Collateral, or any part of it, for cash, from a limited number of investors who
might be interested in purchasing the Collateral. The Issuer acknowledges and
agrees that any such private sale may result in prices and terms less favorable
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Collateral Agent shall be under no
obligation to delay a sale of any of the Collateral for the period of time
necessary to permit the Issuer to cause an issuer or obligor to register such
securities for public sale under the Securities Act, or under applicable state
or foreign securities laws, even if the Issuer could cause the such issuer or
obligor, as the case may be, to do so.
(c) The Issuer further agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Collateral pursuant to this Section 12 valid and
binding and in compliance with any and all other applicable requirements of
applicable law, PROVIDED, THAT the Issuer shall have no obligation to register
the Collateral for sale or other distribution under the securities laws of any
jurisdiction. The Issuer further agrees that a breach of any of the covenants
contained in this Section 12 will cause irreparable injury to the
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17
Trustee and the Holders of the Secured Notes, that the Trustee and the Holders
of the Secured Notes have no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section 12
shall be specifically enforceable against the Issuer, and the Issuer hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred and is continuing.
(d) Any cash held by the Collateral Agent as Collateral and all cash
proceeds received by the Trustee in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral shall be applied by the
Collateral Agent:
FIRST, to the payment of the costs and expenses of such sale,
including, without limitation, expenses of the Collateral Agent and its
agents including the reasonable fees and expenses of its counsel, and all
expenses, liabilities and advances made or incurred by the Collateral
Agent in connection therewith or pursuant to Section 17(o) hereof;
NEXT, to the Trustee, for the payment in full of all amounts due
under Section 7.07 of the Indenture;
NEXT, to the Trustee, for distribution to the Holders of the Secured
Notes for the payment in full of the remaining Obligations; and
FINALLY, after payment in full of all of the Obligations, to the
Issuer, or its successors or assigns, or to whomsoever may be lawfully
entitled to receive the same as a court of competent jurisdiction may
direct.
(e) If any sale or other disposition of Collateral by the Collateral
Agent or any other action of the Collateral Agent or the Trustee hereunder
results in reduction of the Obligations, to the extent permitted by applicable
law, such action will not release the Issuer from its liability for any unpaid
Obligations, including costs, charges and expenses incurred in the liquidation
of Collateral, together with interest thereon, and the same shall be immediately
due and payable to the Collateral Agent, the Trustee and the Holders of the
Secured Notes as provided for in the Indenture.
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(f) The Collateral Agent may enforce its rights hereunder without
prior judicial process or judicial hearing, and to the extent permitted by law
the Issuer expressly waives any and all legal rights which might otherwise
require the Collateral Agent to enforce its right by judicial process.
SECTION 13. IRREVOCABLE AUTHORIZATION AND INSTRUCTIONS TO THE APPLICABLE
OBLIGOR. The Issuer hereby authorizes and instructs the applicable obligor or
issuer to comply with any instructions received by such obligor or issuer, as
the case may be, from the Collateral Agent or the Trustee that (i) states than
an Event of Default has occurred and is continuing and (ii) is otherwise in
accordance with the terms of this Agreement and applicable law, without any
other or further instructions from the Issuer, and the Issuer agrees that the
applicable issuers and obligors shall be fully protected in so complying.
SECTION 14. RESERVE ACCOUNT. All money received by the Issuer and required
to be deposited in the Reserve Account shall be promptly and without commingling
remitted to the Reserve Account Agent for deposit therein.
SECTION 15. WAIVERS.
(a) Except as may be required under the provisions of the Indenture
and to the fullest extent permitted under applicable law, neither the Collateral
Agent nor the Trustee shall be under any duty whatsoever to make or give any
presentment, notice of dishonor, protest, demand for performance, notice of
non-performance, notice of intent to accelerate, notice of acceleration, or
other notice or demand in connection with any Collateral or the Obligations, or
to take any steps reasonably necessary to preserve any rights against any
Obligor or other Person. The Issuer waives to the fullest extent permitted under
applicable law any right of marshaling in respect of any and all Collateral, and
waives to the fullest extent permitted under applicable law any right to require
the Collateral Agent or the Trustee to proceed against any Obligor or other
Person, exhaust any Collateral or enforce any other remedy which the Collateral
Agent or the Trustee now has or may hereafter have against any Obligor or other
Person.
(b) The Issuer waives to the fullest extent permitted under
applicable law (i) any and all notices of acceptance, creation, modification,
rearrangement, renewal or extension for any period of any instrument executed by
any Obligor in
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19
connection with the Obligations and (ii) any defense of any Obligor by reason of
disability, lack of authorization, cessation of the liability of any Obligor or
for any other reason. The Issuer authorizes the Collateral Agent to the fullest
extent permitted under applicable law, without notice or demand and without any
reservation of rights against the Issuer and without affecting the Issuer's
liability hereunder or on the Obligations, from time to time to (w) take and
hold other property, other than the Collateral, as security for the Obligations,
and exchange, enforce, waive and release any or all of the Collateral, (x) after
the occurrence and during the continuance of an Event of Default and the
acceleration of the Secured Notes, apply the Collateral in the manner permitted
by this Agreement or the Indenture and (y) renew, extend for any period,
accelerate, amend or modify, supplement, enforce, compromise, settle, waive or
release the obligations of any obligor on, or any instrument or agreement of
such other Person with respect to the Issuer Loans and any or all of any other
Collateral.
SECTION 16. MISCELLANEOUS PROVISIONS.
(a) NOTICES. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to the Issuer at its address as set forth in Section
12.02 of the Indenture, to the Trustee at its address as set forth in Section
12.02 of the Indenture, and to the Collateral Agent at Wilmington Trust Company
c/o the Trustee at such address.
(b) SALES OF COLLATERAL. No sales of Collateral may be made in
contravention of the terms of the Indenture and the Mitsubishi Documents and the
cash proceeds of the sale of any Collateral shall be promptly and without
commingling remitted to the Collateral Agent or the Trustee for deposit in the
Reserve Account.
(c) NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Agreement
may not be used to interpret another pledge, security or debt agreement of the
Issuer or any Affiliate or Subsidiary of the Issuer. No such pledge, security or
debt agreement may be used to interpret this Agreement.
(d) SEVERABILITY. The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid, illegal or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall
<PAGE>
20
affect in that jurisdiction only such clause or provision, or part thereof, and
shall not in any manner affect such clause or provision in any other
jurisdiction or any other clause or provision of this Agreement in any
jurisdiction.
(e) HEADINGS. The headings in this Agreement have been inserted for
convenience of reference only, are not to be considered a part hereof and shall
in no way modify or restrict any of the terms or provisions hereof.
(f) COUNTERPART ORIGINALS. This Agreement may be signed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall together constitute one and the same agreement.
(g) BENEFITS OF SECURITY AGREEMENT. Nothing in this Agreement,
express or implied, shall give to any Person, other than the parties hereto and
their successors hereunder and the Holders of the Secured Notes, any benefit or
any legal or equitable right, remedy or claim under this Agreement.
(h) AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or waiver of any
provision of this Agreement and any consent to any departure by the Issuer from
any provision of this Agreement shall be effective only if made or given in
compliance with all of the terms and provisions of the Indenture, and neither
the Collateral Agent nor the Trustee nor any Holder of any Secured Note shall be
deemed, by any act, delay, indulgence, omission or otherwise, to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof, except as
set forth in such amendment or waiver. Failure of the Collateral Agent or the
Trustee to exercise, or delay in exercising, any right, power or privilege
hereunder shall not operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Collateral Agent, the Trustee or any Holder of a Secured Note of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy that the Collateral Agent, the Trustee or any such
Holder would otherwise have on any future occasion. The right and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
(i) INTERPRETATION OF SECURITY AGREEMENT. All terms
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21
not defined herein or in the Indenture shall have the meaning set forth in the
Uniform Commercial Code of the State of New York, except where the context
otherwise requires. To the extent a term or provision of this Agreement
conflicts with the Indenture, the Indenture shall control with respect to the
subject matter of such term or provision. Acceptance of or acquiescence in a
course of performance rendered under this Agreement shall not be relevant in
determining the meaning of this Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
(j) CONTINUING SECURITY INTEREST; TRANSFER OF COLLATERAL. This
Agreement shall create a continuing Lien and security interest in the Collateral
and shall (i) unless otherwise provided in the Indenture or this Agreement
remain in full force and effect until payment in full of (A) the Secured Notes
under the terms of the Indenture and (B) all Obligations then due and owing
under the Indenture and the Security Agreements; PROVIDED, HOWEVER, that after
receipt from the Issuer by the Collateral Agent of a request for a release of
any Collateral permitted under the Indenture upon the sale, transfer,
assignment, exchange or other disposition of such Collateral not prohibited by
the Indenture and upon receipt by the Collateral Agent of all proceeds of such
sale, transfer, assignment, exchange or other disposition required to be
remitted to the Collateral Agent or the Trustee or the Collateral constituting
the proceeds of such sale, transfer, assignment, exchange or other disposition
being made subject to a Lien and security interest in favor of the Collateral
Agent for the benefit of the Trustee and the equal and ratable benefit of the
Holders of the Secured Notes, which Lien has the same priority as had the Lien
on the Collateral being sold, assigned or otherwise disposed of, such Collateral
shall be released from the Lien and security interest created hereunder and no
longer constitute Collateral. Upon the payment in full of (A) the Secured Notes
under the terms of the Indenture and (B) all Obligations then due and owing
under the Indenture and the Security Agreements, the Issuer shall be entitled to
the return (and release of any Lien), upon its request and at its expense, of
such of the Collateral pledged by it as shall not have been sold or otherwise
applied pursuant to the terms hereof. This Agreement shall be binding upon the
Issuer, its successors and assigns, and inure, together with the rights and
remedies of the Trustee hereunder, to the benefit of the Collateral Agent, the
Trustee, the Holders of the Secured Notes and their respective successors,
transferees and assigns.
<PAGE>
22
(k) REINSTATEMENT. This Agreement shall continue to be effective or
be reinstated, as the case may be, if at any time any amount received by the
Collateral Agent, the Trustee or any Holder of a Secured Note in respect of the
Obligations is rescinded or must otherwise be restored or returned by the
Collateral Agent, the Trustee or any Holder of a Security Note upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization or the Issuer
or upon the appointment of any receiver, intervenor, conservator, trustee or
similar official for the Issuer or upon the appointment of any receiver,
intervenor, conservator, trustee or similar official for the Issuer or any
substantial part of its assets, or otherwise, all as though such payments had
not been made.
(l) SURVIVAL OF PROVISIONS. All representations, warranties and
covenants of the Issuer contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the full and final
payment and performance by the Issuer of the Obligations.
(m) AUTHORITY OF COLLATERAL AGENT AND TRUSTEE. Both the Collateral
Agent and Trustee shall have and be entitled to exercise all powers hereunder
that are specifically granted to the Collateral Agent and the Trustee by the
terms hereof, together with such powers as are reasonably incident thereto. The
Collateral Agent and the Trustee may perform any of their respective duties
hereunder or in connection with the Collateral by or through agents or employees
and shall be entitled to retain counsel and to act in reliance upon the advice
of counsel concerning all such matters. None of the Collateral Agent, any
director, officer, any attorney or agent of the Collateral Agent, the Trustee,
any director, officer, employee, attorney or agent of the Trustee or the Holders
of the Secured Notes shall be liable to the Issuer for any action taken or
omitted to be taken by it or them hereunder, except for its or their own gross
negligence or willful misconduct or a breach of a relevant agreement, nor shall
the Collateral Agent or the Trustee be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto. The Collateral Agent and its directors, officers, employees,
attorneys and agents, and the Trustee and its directors, officers, employees,
attorneys and agents shall be entitled to rely on any communication, instrument
or document reasonably in good faith believed by it or them to be genuine and
correct and to have been signed or sent by the proper person or persons. Neither
the Collateral Agent nor the Trustee shall be required
<PAGE>
23
to, and shall not, expend or risk any of its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder.
The Issuer acknowledges that the rights and responsibilities of the
Trustee under this Agreement with respect to any action taken by the Collateral
Agent and the Trustee or the exercise or non-exercise by the Collateral Agent or
the Trustee of any option, right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Agreement shall, as
among the Collateral Agent, the Trustee and the Holders of the Secured Notes, be
governed by the Indenture and by such other applicable agreements with respect
thereto as may exist from time to time among them, but, as among the Collateral
Agent, the Trustee and the Issuer, the Collateral Agent and the Trustee shall be
conclusively presumed to be acting as agent for the Holders of the Secured Notes
with full and valid authority so to act or refrain from acting, and the Issuer
shall not be obligated or entitled to make any inquiry respecting such
authority.
In any case in which the Collateral Agent shall be required or
permitted to make any determination as to the extent to which the security
interest or Liens under this Agreement secures any obligations, the Collateral
Agent is authorized, without any direction from, or requirement for consent of
or authorization by, the Trustee, to institute proceedings in a court of
competent jurisdiction for the obtaining of any authoritative determination of
such matter. If the Collateral Agent institutes any such proceeding, it shall
give prompt written notice thereof to the Trustee and shall afford each of them
the opportunity to participate in such proceeding.
(n) RELEASE; TERMINATION OF SECURITY AGREEMENT.
(i) Subject to the provisions of Section 16(k) hereof, this
Agreement shall terminate upon payment in full of (A) the Secured Notes under
the terms of the Indenture and (B) all Obligations then due and owing under the
Indenture and the Security Agreements, except that the provisions of Section
16(o) hereof shall survive.
(ii) The Issuer agrees that it will not sell or dispose of any
of the Collateral in violation of the Indenture; PROVIDED, HOWEVER, that if the
Issuer shall sell or otherwise dispose of any of the Collateral in accordance
with the terms of
<PAGE>
24
the Indenture and shall certify such compliance to the Collateral Agent and the
Trustee, the Collateral Agent shall, and the Trustee shall cause, at the request
of the Issuer, release or cause to be released the Collateral subject to such
sale or disposition free and clear of the Liens and security interest under this
Agreement.
(iii) Upon any termination of this Agreement or release of any
Collateral as permitted by the Indenture, the Collateral Agent and the Trustee
will, at the expense of the Issuer, execute and deliver to the Issuer such
documents and take such other actions as the Issuer shall reasonably request to
evidence the termination of this Agreement or the release of such Collateral, as
the case may be. Any such action taken by the Collateral Agent or the Trustee
shall be without warranty by or recourse to the Collateral Agent or the Trustee,
except as to the absence of any prior assignments by the Collateral Agent or the
Trustee of its interests in the Collateral, and shall be at the expense of the
Issuer. The Collateral Agent and the Trustee may conclusively rely on any
certificate delivered to it by the Issuer stating that the execution of such
documents and release of the Collateral is in accordance with and permitted by
the terms of this Agreement and the Indenture.
(o) PAYMENT OF FEES AND EXPENSES AND INDEMNITY. The Issuer will upon
demand pay to the Collateral Agent and the Trustee, without duplication, the
amount of any and all fees and expenses, including, without duplication, the
reasonable fees and disbursements of its counsel, that the Collateral Agent and
the Trustee may incur in connection with (i) administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent and the Trustee
hereunder or (iv) the failure by the Issuer to perform or observe any of the
provisions hereof. The Issuer shall be liable for and shall reimburse and
indemnify both the Trustee and the Collateral Agent and hold both the Trustee
and the Collateral Agent harmless from and against any and all claims, losses,
liabilities, costs, damages or expenses (including reasonable attorneys' fees
and expenses) (collectively, "Losses") arising from or in connection with or
related to this Agreement or being the Trustee or the Collateral Agent
hereunder; PROVIDED, HOWEVER, that nothing contained herein shall require the
Trustee or the Collateral Agent to be indemnified for Losses caused by their
respective gross negligence or willful misconduct or in connection with any
<PAGE>
25
breach by the Collateral Agent or the Trustee of the Indenture or any document
executed in connection therewith.
(p) FINAL EXPRESSION. This Agreement, together with the Indenture,
the Security Agreements and any other agreement executed in connection herewith
or therewith, is intended by the parties as a final expression of this Agreement
and is intended as a complete and exclusive statement of the terms and
conditions hereof.
(q) ISSUER REMAIN LIABLE. Anything herein to the contrary
notwithstanding (a) the Issuer shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
or the Trustee of any of the rights hereunder shall not release the Issuer from
any of its duties or obligations under the contracts and agreements included in
the Collateral and (c) the Collateral Agent and the Trustee shall not have any
obligation or liability under any contracts and agreements included in the
Collateral by reason of this Agreement, nor shall the Collateral Agent or the
Trustee be obligated to perform any of the obligations or duties of the Issuer
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
(r) RIGHTS OF HOLDERS. No Holder of a Secured Note shall have any
independent rights hereunder other than those rights granted to individual
Holders pursuant to Section 6.07 of the Indenture, provided that nothing in this
subsection (s) shall limit any rights granted to the Trustee under the Secured
Notes, the Indenture or the Security Agreements.
(s) NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS. No past, present or future director, officer, employee,
incorporator or stockholder of the Issuer, any Subsidiary of the Issuer or any
guarantor of the Notes, as such, shall have any liability for any obligations of
the Issuer under this Agreement or for any claim based on, in respect of, or by
reason of, such obligations or their creation.
(t) GOVERNING LAW; WAIVER OF JURY TRIAL; WAIVER
OF DAMAGES.
(i) THIS AGREEMENT SHALL BE GOVERNED BY AND
<PAGE>
26
INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY DISPUTE
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THE ISSUER, THE COLLATERAL AGENT, THE
TRUSTEE AND THE HOLDERS OF THE SECURED NOTES IN CONNECTION WITH THIS
AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE RESOLVED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE
CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
(ii) THE ISSUER AGREES THAT WILMINGTON TRUST COMPANY (OR ITS
SUCCESSOR AS COLLATERAL AGENT) SHALL, IN ITS CAPACITY AS COLLATERAL AGENT
OR IN THE NAME AND ON BEHALF OF THE TRUSTEE AND ANY HOLDERS OF SECURED
NOTES, AND THE TRUSTEE SHALL, IN ITS CAPACITY AS TRUSTEE OR IN THE NAME
AND ON BEHALF OF ANY HOLDERS OF SECURED NOTES, HAVE THE RIGHT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE ISSUER OR ITS
PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH TO
ENABLE THE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER ENTERED IN FAVOR OF THE COLLATERAL AGENT OR THE
TRUSTEE. THE ISSUER AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIMS,
SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE COLLATERAL AGENT
OR THE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF THE COLLATERAL AGENT OR THE TRUSTEE. TO THE
EXTENT PERMITTED BY LAW, THE ISSUER WAIVES ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT IN WHICH THE TRUSTEE HAS COMMENCED A
PROCEEDING DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS.
(iii) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE ISSUER,
THE COLLATERAL AGENT AND THE TRUSTEE EACH WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
(iv) THE ISSUER AGREES THAT NONE OF THE COLLATERAL AGENT, THE
TRUSTEE, AND ANY HOLDER OF A SECURED NOTE SHALL HAVE ANY LIABILITY TO THE
ISSUER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) FOR LOSSES
SUFFERED BY THE ISSUER IN
<PAGE>
27
CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THE
TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED BY THIS
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT
OF A COURT THAT IS BINDING ON THE COLLATERAL AGENT, THE TRUSTEE OR SUCH
NOTEHOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS
OR OMISSIONS ON THE PART OF THE COLLATERAL AGENT, THE TRUSTEE OR SUCH
HOLDER OF A SECURED NOTE, AS THE CASE MAY BE, CONSTITUTING NEGLIGENCE OR
WILLFUL MISCONDUCT OR A BREACH OF ANY RELEVANT AGREEMENT.
(v) THE ISSUER WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY THE TRUSTEE OR ANY HOLDER OF A SECURED NOTE
OF ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS
THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON
THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS. THE ISSUER WAIVES
THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE COLLATERAL AGENT, THE
TRUSTEE OR ANY HOLDER OF A SECURED NOTE IN CONNECTION WITH ANY JUDICIAL
PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY
UPON COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS, TO ENFORCE ANY
JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE COLLATERAL AGENT,
THE TRUSTEE OR ANY HOLDER OF A SECURED NOTE OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION THIS AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT AMONG THE
ISSUER ON THE ONE HAND AND THE COLLATERAL AGENT, THE TRUSTEE AND/OR THE
HOLDERS OF THE SECURED NOTES ON THE OTHER HAND.
(u) APPOINTMENT OF COLLATERAL AGENT. The Trustee hereby appoints the
Collateral Agent, and the Collateral Agent accepts appointment, as collateral
agent under the terms of this Agreement. The Collateral Agent may resign at any
time by giving written notice thereof to the Trustee and may be removed at any
time with or without cause by the Trustee, with the consent of the Issuer (not
to be unreasonably withheld)unless an Event of Default has occurred and is
continuing. Prior to the effectiveness of any such resignation or removal, the
Trustee shall have the right to appoint a successor Collateral Agent (with the
consent of the Issuer (not to be unreasonably withheld) unless an Event of
Default has occurred and is continuing) which shall be a commercial bank or
trust company organized or chartered under the laws of the United States of
America or any
<PAGE>
28
state thereof having combined capital and surplus of at least $50,000,000. If no
successor Collateral Agent shall have been so appointed by the Trustee and shall
have accepted such appointment within 30 days after the retiring Collateral
Agent's giving of notice of resignation or the Trustee's removal of the retiring
Collateral Agent, then the retiring Collateral Agent shall, prior to the
effectiveness of its resignation or removal, on behalf of the Trustee and the
Holders of the Secured Notes, appoint a successor Collateral Agent, which shall
be a commercial bank or trust company organized under the laws of the United
States of America or any State thereof having a combined capital and surplus of
at least $50,000,000. Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall be discharged from its duties and obligations under this Agreement other
than for existing claims for wilful misconduct, gross negligence or breaches of
the relevant agreements. After any retiring Collateral Agent's resignation or
removal hereunder as Collateral Agent, the provisions of this Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Collateral Agent under this Agreement. Any corporation into which the
Collateral Agent may be merged, or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Collateral
Agent shall be a party, shall be Collateral Agent under this Agreement without
the execution or filing of any paper or any further act on the part of the
parties hereto.
(v) AGENT FOR SERVICE: SUBMISSION TO JURISDICTION: WAIVER OF
IMMUNITIES. By the execution and delivery of this Agreement, the Issuer (i)
acknowledges that it has, by separate written instrument, irrevocably designated
and appointed CT Corporation System, 1633 Broadway, New York, New York 10019 (or
any successor), as its authorized agent upon which process may be served in any
suit or proceeding arising out of or relating to this Agreement that may be
instituted in any federal or state court in the State of New York, or brought
under federal or state securities laws, and acknowledges that CT Corporation
System has accepted such designation, (ii) submits to the jurisdiction of any
such court in any such suit or proceeding, and (iii) agrees that service of
process upon CT Corporation System (or any successor) and written notice of said
service to the Issuer shall be deemed in every respect effective service of
process upon the
<PAGE>
29
Issuer in any such suit or proceeding. The Issuer further agrees to take any and
all action, including the execution and filing of any and all such documents and
instrument, as may be necessary to continue such destination and appointment of
CT Corporation System (or any successor) in full force and effect so long as the
Secured Notes shall be outstanding.
To the extent that the Issuer has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, the
Issuer hereby irrevocably waives such immunity in respect of its obligations
under this Agreement, to the extent permitted by law.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
30
IN WITNESS WHEREOF, the Issuer has caused this Agreement to be duly
executed and delivered as of the day and year first above written.
AMETHYST FINANCIAL COMPANY LIMITED
By: /s/ EARL W. MCNIEL
Name: Earl W. McNiel
Title: Treasurer
By its acceptance hereof, as of the day and year first above written, the
Collateral Agent and the Trustee agree to be bound by the provisions hereof.
WILMINGTON TRUST COMPANY, as
Collateral Agent and Trustee
By: /s/ CARYN M. O'MARA
Name: Caryn M. O'Mara
Title: Authorized Signer
<PAGE>
SCHEDULE A to
Secured Note
Security and
Pledge Agreement
(Section 3(i))
MITSUBISHI DOCUMENTS
1. Loan Agreement dated as of December 19, 1998, among Lenders (Petro Dia
Three S.A. ("MC1") and Petro Dia Four S.A. ("MC2) as initial lenders),
Petrodrill Six Limited ("Petrodrill Six") (as borrower) and Mitsubishi
Corporation (UK) (as Facility Agent and Security Agent), providing for a secured
loan facility not exceeding US$160.0 million in connection with the acquisition
of a semi-submersible drilling rig t.b.n. "Amethyst 6" (the "Amethyst 6
Mitsubishi Credit Facility").
2. Loan Agreement dated as of December 19, 1998, among Lenders (MC1 and
MC2 as initial lenders), Petrodrill Seven Limited ("Petrodrill Seven") (as
borrower) and Mitsubishi Corporation (UK) (as Facility Agent and Security
Agent), providing for a secured loan facility not exceeding US$180.0 million in
connection with the acquisition of a semi-submersible drilling rig t.b.n.
"Amethyst 7" (the "Amethyst 7 Mitsubishi Credit Facility" and together with the
Amethyst 6 Mitsubishi Credit Facility, the "Mitsubishi Credit Facilities").
3. Fee Agreement dated as of December 19, 1998, among MC1 and MC2 (as
initial creditors), and Petrodrill Six and Petrodrill Seven (as borrowers), and
Pride International, Inc. ("Pride") and Maritima Petroleo e Engenharia Ltda.
("Maritima") (as sponsors).
4. Deeds of Guarantee and Undertaking dated as of December 19, 1998, each
relating to the Amethyst 6 Credit Facility and the Amethyst 7 Credit Facility,
among each of Petrodrill Six and Petrodrill Seven (as borrower), and Pride and
Maritima (as Sponsors), the Lenders (MC1 and MC2 as initial lenders) and
Mitsubishi (as Facility Agent and Security Agent).
5. Subordinated Loan Facility Agreements dated as of December 19, 1998,
among each of Petrodrill Six and Petrodrill Seven (as borrower), and Pride and
Maritima (as sponsors), the Lenders (MC1 and MC2 as initial lenders) and
Mitsubishi (as Facility Agent and Security Agent).
<PAGE>
2
6. Floor Guarantee dated as of December 19, 1998, relating to the
Mitsubishi Credit Facilities, among Pride and Maritima (as sponsors) and MC1 and
MC2 (as beneficiaries).
7. Share Charges dated as of December 19, 1998, over each of the
Petrodrill Six and Petrodrill Seven shares, between Amethyst Financial Company
Limited (the "Company") (as shareholder) and Mitsubishi (as Security Agent).
8. Additional Funding and Guarantee Agreement dated as of December 19,
1998, among MC1 and MC2, Pride and Maritima (as sponsors) and Petrodrill Six and
Petrodrill Seven, as amended and restated as at July 1, 1999, incorporating
amendments made by Deeds of Release dated as of April 15, 1999, May 14, 1999,
June 15, 1999 and July 1, 1999.
9. Assignments of Charterparty, Earnings and Requisition Compensation
dated as of December 19, 1998, between each of Petrodrill Six and Petrodrill
Seven (as assignor), and Mitsubishi (as Security Agent), relating to each of the
semi-submersible drilling units having Daewoo Heavy Industries Ltd.'s Hull Nos.
3016 and 3015 t.b.n. "Amethyst 6" and "Amethyst 7", respectively.
10. Assignments of Deed of Guarantee and Undertaking and Subordinated Loan
Facility Agreement dated as of December 19, 1998, relating to each of the Credit
Facilities, between each of Petrodrill Six and Petrodrill Seven (as assignor),
and Mitsubishi (as Security Agent).
11. Assignments of Rig Construction Contract and Refund Guarantee dated as
of December 19, 1998, between each of Petrodrill Six and Petrodrill Seven (as
assignor), and Mitsubishi (as Security Agent), in respect of each of the
semi-submersible drilling units having Hulls Nos. 3016 and 3015 at Daewoo Heavy
Industries, Ltd., respectively.
12. Bridging Loan Agreement dated as of December 19, 1998, between MC1 (as
funder) and MC2 (as participant), providing for the funding of the participant's
participation in the Credit Facilities.
13. Debentures dated as of December 19, 1998, between each of Petrodrill
Six and Petrodrill Seven (as borrower), and Mitsubishi (as Security Agent).
14. Deed of Covenants dated as of December 19, 1998,
<PAGE>
3
between each of Petrodrill Six and Petrodrill Seven (as owner), and Mitsubishi
(as Security Agent), relating to the First Priority Statutory Mortgage over each
of the semi- submersible drilling units "Amethyst 6" and "Amethyst 7" (formerly
Hulls Nos. 3016 and 3015 at Daewoo Heavy Industries, Ltd., respectively).
15. Insurances Assignments dated as of December 19, 1998, between each of
Petrodrill Six and Petrodrill Seven (as assignor), and Mitsubishi (as Security
Agent), relating to each of the semi-submersible drilling units having Daewoo
Heavy Industries Ltd.'s Hull Nos. 3016 and 3015 t.b.n. "Amethyst 6" and
"Amethyst 7", respectively.
16. Inter-Company Cross Guarantee dated as of December 19, 1998, among
Petrodrill Six, Petrodrill Seven and the Company (as guarantors), and Mitsubishi
(as Security Agent).
17. Loan Agreement dated as of December 19, 1998, between Petrodrill Six
(as borrower) and Petrodrill Seven (as lender), providing for a facility of
US$10.0 million repayable on demand.
18. Inter-Company Loan Agreement Assignment dated as of December 19, 1998,
between Petrodrill Seven (as assignor) and Mitsubishi (as Security Agent),
relating to the semi-submersible drilling unit having Daewoo Heavy Industries
Ltd.'s Hull No. 3015 t.b.n. "Amethyst 7".
19. Management Account Charges dated as of December 19, 1998, between each
of Petrodrill Six and Petrodrill Seven (as chargor), and Mitsubishi (as Security
Agent), relating to each of the semi-submersible drilling units having Daewoo
Heavy Industries Ltd.'s Hull Nos. 3016 and 3015 t.b.n. "Amethyst 6" and
"Amethyst 7", respectively.
20. Omnibus Contract Assignments dated as of December 19, 1998, between
each of Petrodrill Six and Petrodrill Seven (as assignor), and Mitsubishi (as
Security Agent), relating to each of the semi-submersible drilling units having
Daewoo Heavy Industries Ltd.'s Hull Nos. 3016 and 3015 t.b.n. "Amethyst 6" and
"Amethyst 7", respectively.
21. Performance Guarantee dated as of December 19, 1998, between
Mitsubishi (as guarantor) and Petrodrill Six and Petrodrill Seven (as
beneficiaries), relating to two semi-submersible drilling plataforms.
<PAGE>
4
22. Reserve Account Charges dated as of December 19, 1998, between each of
Petrodrill Six and Petrodrill Seven (as chargor), and Mitsubishi (as Security
Agent), relating to each of the semi-submersible drilling units having Daewoo
Heavy Industries Ltd.'s Hull Nos. 3016 and 3015 t.b.n. "Amethyst 6" and
"Amethyst 7", respectively.
23. Security Trust Deed dated as of December 19, 1998, among Petrodrill
Six and Petrodrill Seven (as borrowers), Pride, Maritima and the Company (as the
other security parties), the Lenders (MC1 and MC2 as initial lenders) and
Mitsubishi (as Facility Agent and Security Agent).
24. Services Rendering Contract Assignments dated as of December 19, 1998,
between Maritima and each of Petrodrill Six and Petrodrill Seven (as assignors),
and Mitsubishi (as Security Agent), relating to each of the semi-submersible
drilling units having Daewoo Heavy Industries Ltd.'s Hull Nos. 3016 and 3015
t.b.n. "Amethyst 6" and "Amethyst 7", respectively.
25. Any and all exhibits, attachments, annexes and/or schedules to the
foregoing documents, as well as any and all other agreements, amendments,
assignments, deeds and instruments other than those referred to in Schedule 1
hereto, re-stating, supplementing, amending, providing a collateral to, or
otherwise pertaining or relating to the Mitsubishi Credit Facilities, together
with their relevant exhibits, attachments, annexes and/or schedules.
<PAGE>
1
SCHEDULE B to
Secured Note
Security and
Pledge Agreement
(Section 5(b))
LIENS ON COLLATERAL
None
<PAGE>
1
SCHEDULE C to
Secured Note
Security and
Pledge Agreement
(Section 5(d))
FILINGS
Secretary of State of New York UCC-1 Financing Statements
Secretary of State of Texas UCC-1 Financing Statements
Register of Encumbrance (British Virgin Islands)
<PAGE>
1
SCHEDULE D to
Secured Note
Security and
Pledge Agreement
(Section 5(e) and
Section 6(b)
CHIEF EXECUTIVE OFFICE AND LOCATION OF COLLATERAL
Amethyst Financial Company Limited
c/o Arias Fabrega and
Fabrega Trust Co. BVI Limited
325 Waterfront Drive,
Omar Hodge Building, 2nd Floor
Wickham's Lay Road,
Tortola, British Virgin Islands
<PAGE>
1
SCHEDULE E to
Secured Note
Security and
Pledge Agreement
(Section 6(d))
FORM OF ADDITIONAL COLLATERAL AMENDMENT
This Additional Collateral Amendment, dated _____________, is delivered
pursuant to Section 6(d) of the Security Agreement referred to below. The
undersigned hereby pledges to the Collateral Agent for the benefit of the
Trustee and the equal and ratable benefit of the Holders of the Secured Notes,
and grants to the Collateral Agent for the benefit to the Trustee and the equal
and ratable benefit of the Holders of the Secured Notes, continuing Liens and
security interest in all of its rights, title and interest in the Collateral
listed below.
The undersigned hereby agrees that this Additional Collateral Amendment
may be attached to the Secured Note Security and Pledge Agreement, dated as of
November 1, 1999, between the undersigned and Wilmington Trust Company, as
Collateral Agent and as Trustee (the "Security Agreement"); capitalized terms
used herein and not otherwise defined herein shall have the meanings given to
such terms in the Security Agreement; and the Collateral listed on this
Additional Collateral Amendment shall be deemed to be part of the Collateral,
and shall become part of the Collateral and shall secure all Obligations.
AMETHYST FINANCIAL COMPANY LIMITED
By:
____
Name:_____________________________
Title:____________________________
<PAGE>
Description of
Investment
or other
Collateral EVIDENCED BY OBLIGOR DATE
<PAGE>
SCHEDULE F to
Secured Note
Security and
Pledge Agreement
(Section 6(f))
RESTRICTIVE AGREEMENTS
Mitsubishi Documents
EXHIBIT 4.6
EXECUTION COPY
This RESERVE ACCOUNT AGREEMENT (the "Agreement"), dated as
of November 1, 1999, among WILMINGTON TRUST COMPANY, as reserve
account agent (in such capacity, the "Reserve Account Agent"),
WILMINGTON TRUST COMPANY, as trustee (in such capacity, the
"Trustee") under the Indenture (as defined herein), AMETHYST
FINANCIAL COMPANY LIMITED, a British Virgin Islands limited
liability company (the "Issuer").
RECITALS
A. Pursuant to the Indenture, dated as of November 1, 1999 (as
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Indenture"), among the Issuer, the Trustee, Pride International, Inc.
and Maritima Petroleo e Engenharia Ltda., the Issuer is issuing $53,000,000
aggregate principal amount at Stated Maturity of its 11 3/4% Senior Secured
Notes due 2002 (the "Notes").
B. As security for its obligations, among other things, under the
Notes and the Indenture, the Issuer is required to enter into a Senior Secured
Note Security and Pledge Agreement of even date herewith (the "Security and
Pledge Agreement") with Wilmington Trust Company, as Collateral Agent (the
"Collateral Agent"), and the Trustee, in which the Issuer is granting Liens on
an undivided 53% interest in the Issuer Loans and the Issuer's right, title and
interest in and to the Mitsubishi Documents and the security for the Issuer
Loans provided for in the Mitsubishi Loan Collateral Documents (the "Secured
Note Collateral").
C. Under the terms of the Indenture and the Security and Pledge
Agreement, the Issuer is required to pay (or cause to be paid) all amounts of
principal, interest and other obligations owed to the Issuer in respect of the
Issuer Loans and the Mitsubishi Documents, whether proceeds of the Secured Note
Collateral or otherwise, consisting of cash or cash equivalents to the Trustee
or the Reserve Account Agent for deposit in the Reserve Account (as defined
below).
D. The parties have entered into this Agreement in order to set
forth the conditions upon which, and the manner in which, funds will be
disbursed from the Reserve Account and released from the security interest and
Liens created hereby.
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS. Terms used herein and not defined herein shall
have the meanings as defined in the Indenture. In addition to any other defined
terms used herein, the following terms shall constitute defined terms for
purposes of this Agreement and shall have the meanings set forth below:
"AVAILABLE FUNDS" means (A) the sum of (i) all amounts deposited in
the Reserve Account from time to time and (ii) interest earned or dividends paid
on the funds in the Reserve Account (including holdings of Temporary Cash
Investments), less (B) the sum of (i) aggregate disbursements previously made or
then required to be made pursuant to Section 3(a)(i) or Section 3(a)(ii) of this
Agreement and (ii) the aggregate disbursements previously made pursuant to
Section 3(a)(iii), 3(a)(iv) or 6(b)(iii) of this Agreement.
"COLLATERAL" shall have the meaning given in Section 6(a) hereof.
"DISBURSEMENT REQUEST" means a notice sent by the Issuer requesting
a disbursement of funds from the Reserve Account, in substantially the form of
Exhibit A hereto or Exhibit B hereto, as applicable. Each Disbursement Request
shall be signed by the Chairman of the Board, a Vice Chairman of the Board, the
Chief Executive Officer, the Chief Operating Officer, the Chief Financial
Officer or any Vice President of the Issuer.
"ISSUE DATE" means November 1, 1999.
"RESERVE ACCOUNT" shall have the meaning given in Section 2(b).
"RESERVE ACCOUNT AGENT" shall have the meaning set forth in the
preamble to this Agreement.
"TRUSTEE" shall include any successor Trustee appointed pursuant to
the Indenture.
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2. RESERVE ACCOUNT; RESERVE ACCOUNT AGENT. (a) APPOINTMENT OF
RESERVE ACCOUNT AGENT. The Issuer and the Trustee hereby appoint the Reserve
Account Agent, and the Reserve Account Agent hereby accepts appointment, as
reserve account agent, under the terms and conditions of this Agreement.
(b) ESTABLISHMENT OF THE RESERVE ACCOUNT. Concurrent with the
execution and delivery hereof, the Reserve Account Agent shall establish and
maintain in the name of the Issuer at Bankers Trust Company, a special,
segregated and irrevocable reserve account designated "Senior Secured Note
Reserve Account pledged by Amethyst Financial Company Limited to Wilmington
Trust Company, as Trustee" (the "Reserve Account"). All funds accepted by the
Reserve Account Agent pursuant to this Agreement shall be held in the Reserve
Account until disbursed in accordance with the terms hereof. The Reserve
Account, the funds held therein and any Temporary Cash Investments held by the
Reserve Account Agent in which such funds are invested shall be beneficially
owned by the Issuer and pledged to and under the sole dominion and control of
the Trustee, acting for its benefit and the equal and ratable benefit of the
Holders of the Notes.
(c) The Issuer shall provide notice to the Reserve Account Agent and
the Trustee of the source of any moneys deposited to the Reserve Account by
reference to the applicable provisions of the Indenture and the Mitsubishi
Documents and by reference to whether any such moneys represent payments of
principal of or interest on the Issuer Loans or other amounts and shall keep an
ongoing record of the amounts so deposited and disbursed in accordance with this
Agreement. It shall be the Issuer's responsibility to satisfy the Trustee as to
the accounting for the Reserve Account, with a view to ensuring that the amounts
required to be calculated for any disbursement are ascertainable.
(d) RESERVE ACCOUNT AGENT COMPENSATION. The Issuer shall pay to the
Reserve Account Agent such compensation for services to be performed by it under
this Agreement as the Issuer and the Reserve Agent may agree in writing from
time to time. The Reserve Agent shall be paid any compensation owed to it
directly by the Issuer and shall not disburse from the Reserve Account any such
amounts.
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The Issuer shall reimburse the Reserve Account Agent upon request
for all reasonable expenses, disbursements and advances incurred or made by the
Reserve Account Agent in implementing any of the provisions of this Agreement,
including reasonable compensation and expenses and disbursements of its counsel.
The Reserve Agent shall be paid any such expenses owed to it directly by the
Issuer and shall not disburse from the Reserve Account any such amounts. The
provisions of this Section 2(d) shall survive termination of this Agreement.
(e) INVESTMENT OF FUNDS IN THE RESERVE ACCOUNT. Pending release
thereof in accordance with this Agreement and the Indenture, funds deposited in
the Reserve Account shall be invested and reinvested only upon the following
terms and conditions:
(i) ACCEPTABLE INVESTMENTS. All funds deposited or held in the
Reserve Account at any time shall be invested, at the direction of the
Issuer except during the continuance of a Default or an Event of Default,
and then only at the direction of the Trustee, by the Reserve Account
Agent in Temporary Cash Investments in accordance with the Issuer's or the
Trustee's written instructions, as applicable, from time to time to the
Reserve Account Agent; PROVIDED, HOWEVER, that any such written
instruction shall specify the particular Investment to be made, shall
contain the certification referred to in Section 2(e)(ii), if required,
and shall be executed by an officer of the Issuer. All Temporary Cash
Investments shall be assigned to and held in the possession of, or, in the
case of Temporary Cash Investments maintained in book-entry form with the
Federal Reserve Bank, transferred to a book entry account in the name of,
the Reserve Account Agent, as pledgee, with such guarantees as are
customary, except that Temporary Cash Investments maintained in book-entry
form with the Federal Reserve Bank shall be transferred to a book entry
account in the name of the Reserve Account Agent at the Federal Reserve
Bank that includes only Temporary Cash Investments held by the Reserve
Account Agent for its customers and segregated by separate recordation in
the books and records of the Reserve Account Agent.
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(ii) SECURITY INTEREST IN AND LIEN ON INVESTMENTS. No investment of
funds in the Reserve Account shall be made unless the Issuer has certified
to the Reserve Account Agent and the Trustee that, upon such investment,
the Trustee will have a first priority perfected Lien and security
interest for the benefit of the Trustee and the equal and ratable benefit
of the Holders of the Secured Notes in the applicable Investment. A
certificate as to a class of investments need not be issued with respect
to individual investments in securities in that class if the certificate
applicable to the class remains accurate with respect to such individual
investments, which continued accuracy the Reserve Account Agent may
conclusively assume. Promptly after the Issue Date, and within three
months after the anniversary of the Issue Date, until the payment in full
of the Notes in accordance with the terms thereof and of the Indenture,
and all other Obligations then due and owing under the Notes, the
Indenture, this Agreement and the other Security Agreements, the Issuer
shall provide to the Trustee and the Reserve Account Agent, an Opinion of
Counsel, dated each such date as applicable, which opinion shall meet the
requirements of Section 314(b) of the Trust Indenture Act of 1939, as
amended (the "TIA").
(iii) INTEREST AND DIVIDENDS. All interest earned and dividends paid
on funds invested in Temporary Cash Investments shall be deposited in the
Reserve Account as additional Collateral beneficially owned by the Issuer
and pledged to the Trustee, acting for its benefit and the equal and
ratable benefit of the Holders of the Notes, and shall be reinvested in
accordance with the terms hereof.
(iv) LIMITATION ON RESERVE ACCOUNT AGENT'S RESPONSIBILITIES. The
Reserve Account Agent's sole responsibilities under this Section 2 shall
be (A) to retain, or cause its agent in the State of New York to retain,
possession of certificated Temporary Cash Investments (except, however,
that the Reserve Account Agent may surrender possession of any such
Temporary Cash Investments to the issuer thereof for the purpose of
effecting assignment, crediting interest, or reinvesting such security or
reducing such security to cash) and to be
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the registered or designated owner of Temporary Cash Investments which are
not certificated, (B) to follow the Issuer's or the Trustee's written
instructions, as applicable, given in accordance with Section 2(e)(i), (C)
to invest and reinvest funds pursuant to this Section 2(e) and (D) to use
reasonable efforts to reduce to cash such Temporary Cash Investments as
may be required to fund any disbursement or payment in accordance with
Section 3. In connection with clause (i) above, the Reserve Account Agent
will maintain, or cause its agent in the State of New York to maintain,
continuous possession in the State of New York of certificated Temporary
Cash Investments and cash included in the Collateral and will cause
uncertificated Temporary Cash Investments to be registered in the
book-entry system of, and transferred to an account of the Reserve Account
Agent or a subagent of the Reserve Account Agent at, the Federal Reserve
Bank of New York. Except as set forth below, the Reserve Account Agent
shall not be required to reduce to cash any Temporary Cash Investments to
fund any disbursement or payment in accordance with Section 3 in the
absence of written instructions signed by an officer of the Issuer
specifying the particular investment to liquidate, unless a Default or
Event of Default has occurred and is continuing, in which case such
written instructions shall be signed by a Responsible Officer of the
Trustee. If no such written instructions are received, the Reserve Account
Agent shall liquidate those Temporary Cash Investments having the lowest
interest rate per annum, regardless of maturity, or if none such exist,
those having the nearest maturity. The Reserve Account Agent shall have no
duty to determine whether or not to file or record any document or
instrument in connection with this Agreement, but will follow the
instructions of the Trustee.
(f) SUBSTITUTION OF RESERVE ACCOUNT AGENT. The Reserve Account Agent
may resign by giving not less than 30 days' prior written notice to the Issuer
and the Trustee. Such resignation shall take effect upon the later to occur of
(i) delivery of all funds and Temporary Cash Investments maintained by the
Reserve Account Agent hereunder and copies of all books, records and other
documents in the Reserve Account Agent's possession relating to such funds or
Temporary Cash
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Investments or this Agreement to a successor Reserve Account Agent mutually
approved by the Issuer and the Trustee (which approvals shall not be
unreasonably withheld or delayed) and (ii) the Issuer, the Trustee and such
successor Reserve Account Agent entering into this Agreement or any written
successor agreement no less favorable to the interests of the Holders of the
Notes and the Trustee than this Agreement; and the Reserve Account Agent shall
thereupon be discharged of all obligations under this Agreement other than for
existing claims for wilful misconduct, gross negligence or breaches of this
Agreement and shall have no further duties, obligations or responsibilities in
connection herewith, except as set forth in Section 4. If a successor Reserve
Account Agent has not been appointed or has not accepted such appointment within
30 days after notice of resignation is given to the Issuer, the Reserve Account
Agent may apply to a court of competent jurisdiction for the appointment of a
successor Reserve Account Agent.
3. DISBURSEMENTS. (a) DISBURSEMENT REQUEST; DISBURSEMENTS. (i) Not
later than three Business Days after any deposit to the Reserve Account in
respect of a payment of principal on any Issuer Loan, the Issuer shall submit to
the Reserve Account Agent, with a copy to the Trustee, a completed Disbursement
Request substantially in the form of Exhibit A hereto requesting payment to the
Issuer of funds from the Reserve Account in an amount equal to 47% of the amount
of such principal payment.
(ii) Not later than three Business Days after the amount on deposit
in the Reserve Account representing interest payments on the Issuer Loans first
exceeds the amount payable on the Notes in respect of interest (including
Additional Amounts, if any, and Special Interest, if any) on the Notes on the
next succeeding Interest Payment Date, the Issuer shall submit to the Reserve
Account Agent, with a copy to the Trustee, a completed Disbursement Request
substantially in the form of Exhibit A hereto requesting payment to the Issuer
of funds from the Reserve Account in an amount equal to such excess.
(iii) At least two Business Days prior to any date on which a
disbursement from the Reserve Account is required for a payment on the Notes,
including an Interest Payment Date, a
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Redemption Date or a Change of Control Payment Date, the Issuer shall submit to
the Reserve Account Agent a completed Disbursement Request substantially in the
form of Exhibit B hereto requesting payment to the Trustee of Available Funds on
deposit in the Reserve Account in an amount equal to the aggregate amount of
principal, premium, if any, and interest (including Special Interest, if any,
and Additional Amounts, if any), owed on the Notes under the Indenture on such
Interest Payment Date, Redemption Date or Change of Control Payment Date, as the
case may be, unless the Issuer has disbursed and the Trustee has received funds
from the Issuer in such amount on or before such Interest Payment Date,
Redemption Date or Change of Control Payment Date.
(iv) If an Event of Default under the Indenture has occurred and is
continuing, the Trustee shall be entitled unilaterally to initiate withdrawals
by executing a Disbursement Request which will be substantially similar to the
form of Exhibit A or Exhibit B, as applicable, but which need only to be
executed by the Trustee.
(b) CONDITIONS PRECEDENT TO DISBURSEMENT. Subject to Section 4 and
any mandatory provisions of applicable law, the Reserve Account Agent shall make
the payments to be made pursuant to a completed Disbursement Request if (i) the
Issuer shall have submitted, in accordance with the provisions of Section 3(a)
herein such Disbursement Request to the Reserve Account Agent substantially in
the form of Exhibit A or Exhibit B, as applicable, with blanks appropriately
filled in and (ii) the Reserve Account Agent shall not have received any notice
from the Trustee that as a result of an Event of Default the Indebtedness
represented by the Notes has been accelerated and has become due and payable (in
which event the Reserve Account Agent shall apply all Available Funds as
required by Section 6(b)(iii)).
(c) CERTIFICATIONS FOR DISTRIBUTIONS. Provided that no Event of
Default has occurred and is continuing, the Issuer shall initiate all requests
for withdrawal of funds from the Reserve Account by executing a Disbursement
Request and submitting such request to the Trustee. The Trustee shall not,
except following an Event of Default, be entitled unilaterally to initiate
withdrawals.
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(d) DEPOSITS IRREVOCABLE. Any deposits made into the Reserve Account
hereunder shall be irrevocable and the amount of such deposits and any
instrument or security held in the Reserve Account hereunder and all interest
thereon shall be held in trust by the Reserve Account Agent and applied solely
as provided herein.
4. LIMITATION OF THE RESERVE ACCOUNT AGENT'S LIABILITY:
RESPONSIBILITIES OF THE RESERVE ACCOUNT AGENT. The Reserve Account Agent's
responsibility and liability under this Agreement shall be limited as follows:
(i) the Reserve Account Agent does not represent, warrant or guaranty to the
Holders of the Notes from time to time the performance of the Issuer; (ii) the
Reserve Account Agent shall have no responsibility to the Issuer or the Holders
of the Notes or the Trustee from time to time as a consequence of performance or
nonperformance by the Reserve Account Agent hereunder, except for any gross
negligence or wilful misconduct of the Reserve Account Agent or its breach of
this Agreement; (iii) the Issuer shall remain solely responsible for all aspects
of the Issuer's business and conduct; and (iv) the Reserve Account Agent is not
obligated to supervise, inspect or inform the Issuer or any third party of any
matter referred to above.
No implied covenants or obligations shall be inferred from this
Agreement against the Reserve Account Agent, nor shall the Reserve Account Agent
be bound by the provisions of any agreement beyond the specific terms hereof.
Specifically and without limiting the foregoing, the Reserve Account Agent shall
in no event have any liability in connection with its investment, reinvestment
or liquidation, in good faith and in accordance with the terms hereof, of any
funds or Temporary Cash Investments held by it hereunder, including without
limitation any liability for any delay not resulting from gross negligence or
willful misconduct in such investment, reinvestment or liquidation, or for any
loss of principal or income incident to any such delay.
The Reserve Account Agent shall be entitled to rely upon any
judicial order or judgment, upon any written opinion of counsel or upon any
certification, instruction, notice, or other writing delivered to it by the
Issuer or the Trustee in compliance with the provisions of this Agreement
without being
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required to determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of service thereof. The Reserve Account
Agent may act in reliance upon any instrument comporting with the provisions of
this Agreement or signature believed by it to be genuine and may assume that any
Person purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
The Reserve Account Agent may act pursuant to the oral or written
advice of counsel chosen by it with respect to any matter relating to this
Agreement and shall not be liable for any action taken or omitted in accordance
with such advice.
The Reserve Account Agent shall not be called upon to advise any
party as to selling or retaining, or taking or refraining from taking any action
with respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this Agreement
with respect to any funds or property deposited hereunder, the Reserve Account
Agent shall be entitled to refuse to comply with any and all claims, demands or
instructions with respect to such funds or property, and the Reserve Account
Agent shall not be or become liable for its failure or refusal to comply with
conflicting claims, demands or instructions. The Reserve Account Agent shall be
entitled to refuse to act until either any conflicting or adverse claims or
demands shall have been finally determined by a court of competent jurisdiction
or settled by agreement between the conflicting claimants as evidenced in a
writing, satisfactory to the Reserve Account Agent, or the Reserve Account Agent
shall have received security or an indemnity satisfactory to the Reserve Account
Agent sufficient to save the Reserve Account Agent harmless from and against any
and all loss, liability or expense which the Reserve Account Agent may incur by
reason of its acting. In connection with the matters described in this
paragraph, the Reserve Account Agent may in addition elect in its sole option to
commence an interpleader action or seek other judicial relief or orders as the
Reserve Account Agent may deem necessary.
No provision of this Agreement shall require the
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Reserve Account Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder.
5. INDEMNITY. The Issuer shall indemnify, hold harmless and defend
the Reserve Account Agent and its directors, officers, agents, employees and
controlling persons, from and against any and all claims, actions, obligations,
liabilities and expenses, including defense costs, investigative fees and costs,
legal fees, and claims for damages, arising from the Reserve Account Agent's
performance under this Agreement, except to the extent that such liability,
expense or claim is directly attributable to the gross negligence or willful
misconduct of any of the foregoing Persons or such Persons' breach of this
Agreement. The provisions of this Section shall survive any termination,
satisfaction or discharge of this Agreement as well as the resignation or
removal of the Reserve Account Agent. The provisions of this paragraph 5 shall
survive the termination of this Agreement.
6. GRANT OF LIENS AND SECURITY INTEREST: INSTRUCTIONS TO RESERVE
ACCOUNT AGENT. (a) The Issuer hereby irrevocably grants a first priority,
subject to the Security and Pledge Agreement, security interest in and Lien on,
and pledges, assigns and sets over to the Trustee, for its benefit and the equal
and ratable benefit of the Holders of the Notes, all of the Issuer's right,
title and interest in the Reserve Account, and all property now or hereafter
placed or deposited in, or delivered to the Reserve Account Agent for placement
or deposit in, the Reserve Account, including, without limitation, all funds
held therein, all Temporary Cash Investments held by (or otherwise maintained in
the name of) the Reserve Account Agent pursuant to Section 2, and all proceeds
thereof as well as all rights of the Issuer under this Agreement (collectively,
the "Collateral"), in order to secure all obligations and indebtedness of the
Issuer under the Notes and any other obligation, now or hereafter arising, of
every kind and nature, owed by the Issuer under the Indenture or the Security
Agreements to the Holders of the Notes or to the Trustee or the Collateral
Agent. The Reserve Account Agent hereby acknowledges the Trustee's security
interest and Lien as set forth above. The Issuer shall take all actions
necessary on its part to insure the continuance of a first
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priority security interest in and Lien on the Collateral in favor of the Trustee
in order to secure all such obligations and indebtedness.
(b) The Issuer and the Trustee hereby irrevocably instruct the
Reserve Account Agent to, and the Reserve Account Agent shall, (i) (A) at all
times maintain sole dominion and control over funds and Temporary Cash
Investments in the Reserve Account, acting for the benefit of the Trustee and
the Holders of the Notes to the extent specifically required herein, (B)
maintain, or cause its agent within the State of New York to maintain,
possession of all certificated Temporary Cash Investments purchased hereunder
that are physically possessed by the Reserve Account Agent in order for the
Trustee to enjoy a continuous perfected first priority security interest therein
under the law of the State of New York (the Issuer hereby agreeing that in the
event any certificated Temporary Cash Investments are in the possession of the
Issuer or a third party, the Issuer shall use its best efforts to deliver all
such certificates to the Reserve Account Agent), (C) take all steps specified by
the Issuer pursuant to paragraph (a) above to cause the Trustee to enjoy a
continuous perfected first priority security interest and Liens under the New
York Uniform Commercial Code and any applicable law of the State of New York in
all Temporary Cash Investments purchased hereunder that are not certificated and
(D) maintain the Collateral free and clear of all Liens, security interests,
safekeeping or other charges, demands and claims against the Reserve Account
Agent of any nature now or hereafter existing in favor of anyone other than the
Trustee; (ii) promptly notify the Trustee if the Reserve Account Agent receives
written notice that any Person other than the Trustee has or claims to have a
Lien on or security interest in any portion of the Collateral and (iii) upon
receipt of written notice from one of the Trustee of the acceleration of the
maturity of the Notes, and direction from the Trustee to disburse all Available
Funds to the Trustee, as promptly as practicable disburse all Available Funds
held in the Reserve Account to the Trustee and transfer title to all Temporary
Cash Investments held by the Reserve Account Agent hereunder and constituting
Available Funds to the Trustee in the amounts set forth in such notice. The
Reserve Account Agent shall not have any right to receive compensation from the
Trustee and is without any authority to
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obligate the Trustee or to compromise or pledge its security interest and Lien
hereunder. Accordingly, the Reserve Account Agent is hereby directed to
cooperate with the Trustee in the exercise of its rights in the Collateral
provided for herein. In addition to the foregoing, the Reserve Account Agent
shall take all steps specified by the Issuer pursuant to paragraph (a) above to
cause the Trustee to enjoy a continuous perfected first priority security
interest in and Liens on the Collateral under any other applicable law.
(c) Any money and Temporary Cash Investments collected by the
Trustee pursuant to Section 6(b)(iii) shall be applied as provided in Section
6.02 of the Indenture.
(d) Upon demand, the Issuer will execute and deliver to the Trustee
such instruments and documents as the Trustee may reasonably deem necessary or
advisable to confirm or perfect under any applicable law the rights of the
Trustee under this Agreement and the Trustee's interest in the Collateral. The
Trustee shall be entitled to take all necessary action to preserve and protect
the security interest created hereby as a Lien and encumbrance upon the
Collateral.
(e) The Issuer hereby appoints the Trustee as its attorney-in-fact
with full power of substitution, exercisable upon the occurrence and during the
continuance of a Default or Event of Default, to do any act which the Issuer is
obligated hereto to do, and the Trustee may, but shall not be obligated to,
exercise such rights as the Issuer might exercise with respect to the Collateral
and take any action in the Issuer's name to protect the Trustee's Lien and
security interest hereunder. In addition to the rights provided under Section
6(b)(iii) hereof, upon an Event of Default and for so long as such Event of
Default continues, the Trustee may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party under the New York Uniform
Commercial Code or other applicable law, and the Trustee may also upon obtaining
possession of the Collateral as set forth herein, without notice to the Issuer
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange, broker's board or at
any of the Trustee's
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office or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Trustee may deem commercially reasonable. The Issuer
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale.
The Issuer agrees that, to the extent notice of sale shall be required by law,
at least ten Business Days' notice to the Issuer of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Trustee shall not be obligated to make
any sale regardless of notice of sale having been given. The Trustee may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
7. TERMINATION. This Agreement shall terminate automatically ten
days following disbursement of all funds remaining in the Reserve Account
(including Temporary Cash Investments) and the payment in full of the Notes and
all other Obligations then due and owing under the Indenture and the Security
Agreements, unless sooner terminated by agreement of the parties hereto (in
accordance with the terms hereof, not in violation of the Indenture; the Trustee
may not earlier terminate this Agreement unless it has received the consent of
100% of the Holders of all of the Notes outstanding); PROVIDED, HOWEVER, that
the obligations of the Issuer under Section 2(d) and Section 5 (and any existing
claims thereunder) shall survive termination of this Agreement or the
resignation of the Reserve Account Agent; PROVIDED, FURTHER, HOWEVER, that until
such tenth day, the Issuer will cause this Agreement (or any permitted successor
agreement) to remain in effect and will cause there to be a Reserve Account
Agent (including any permitted successor thereto) acting hereunder (or under any
such permitted successor agreement).
8. MISCELLANEOUS. (a) WAIVER. Any party hereto may specifically
waive any breach of this Agreement by any other party, but no such waiver shall
be deemed to have been given unless such waiver is in writing, signed by the
waiving party and specifically designating the breach waived, nor shall any such
waiver constitute a continuing waiver of similar or other breaches.
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(b) INVALIDITY. If for any reason whatsoever any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
(c) ASSIGNMENT. This Agreement is personal to the parties hereto,
and the rights and duties of any party hereunder shall not be assignable except
with the prior written consent of the other parties. Notwithstanding the
foregoing, this Agreement shall inure to and be binding upon the parties and
their successors and permitted assigns. Nothing herein shall restrict the
Reserve Account Agent from performing its duties through a subagent.
(d) BENEFIT. The parties hereto and their successors and permitted
assigns, but no others, shall be bound hereby and entitled to the benefits
hereof; PROVIDED, HOWEVER, that the Holders of the Notes and their permitted
assigns shall be entitled to the benefits hereof and to enforce this Agreement.
(e) TIME. Time is of the essence with respect to
each provision of this Agreement.
(f) ENTIRE AGREEMENT; AMENDMENTS. This Agreement, the Indenture and
the other Security Agreements contain the entire agreement among the parties
with respect to the subject matter hereof and supersede any and all prior
agreements, understandings and commitments, whether oral or written. This
Agreement may be amended only in accordance with Article X of the Indenture and
further by a writing signed by a duly authorized representative of each party
hereto.
(g) NOTICES. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and shall be delivered to the Issuer at its address as set forth in
Section 12.02 of the Indenture, to the Trustee at its address as set forth in
Section 12.02 of the Indenture, and to the Reserve Account Agent
<PAGE>
16
at Wilmington Trust Company c/o the Trustee at such address.
(h) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) CAPTIONS. Captions in this Agreement are for convenience only
and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
(j) CHOICE OF LAW: WAIVER OF JURY TRIAL. The existence, validity,
construction, operation and effect of any and all terms and provisions of this
Agreement shall be determined in accordance with and governed by the laws of the
State of New York, without regard to principles of conflicts of law. The parties
to this Agreement hereby agree that jurisdiction over such parties and over the
subject matter of any action or proceeding arising under this Agreement may be
exercised by a competent Court of the State of New York, or by a United States
sitting in The City of New York. The Issuer hereby submits to the personal
jurisdiction of such courts, hereby waives personal service of process upon it
and hereby waives, to the extent permitted by applicable law, the right to a
trial by jury in any action or proceeding with the Reserve Account Agent. The
Issuer waives any objection that it may have to the location of the court in
which the Reserve Account Agent has commenced a proceeding described in this
paragraph including, without limitation, any objection to the laying of venue or
based on the grounds of forum non conveniens.
(k) AUTHORITY OF THE ISSUER; VALID AND BINDING AGREEMENT. The Issuer
hereby represents and warrants that this Agreement has been duly authorized,
executed and delivered on its behalf and constitutes the legal, valid and
binding obligation of the Issuer, subject as to enforceability to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally or general principles of
equity and commercial reasonableness. The execution, delivery and performance of
this Agreement by the Issuer does not violate any applicable law or regulation
to which the Issuer is subject and does not require the consent of any
<PAGE>
17
governmental or other regulatory body to which the Issuer is subject, except for
such consents and approvals as have been obtained and are in full force and
effect.
(l) AUTHORITY OF THE RESERVE ACCOUNT AGENT AND THE TRUSTEE VALID AND
BINDING AGREEMENT. Each of the Reserve Account Agent and the Trustee hereby
represents and warrants that this Agreement has been duly authorized, executed
and delivered on its behalf and constitutes its legal, valid and binding
obligation, subject as to enforceability to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally or general principles of equity and
commercial reasonableness. The execution, delivery and performance of this
Agreement by the Reserve Account Agent and the Trustee does not violate any
applicable law or regulation to which the Reserve Account Agent or the Trustee
is subject and does not require the consent of any governmental or other
regulatory body to which the Reserve Account Agent or the Trustee is subject,
except for such consents and approvals as have been obtained and are in full
force and effect.
(m) AGENT FOR SERVICE: SUBMISSION TO JURISDICTION: WAIVER OF
IMMUNITIES. By the execution and delivery of this Agreement, the Issuer (i)
acknowledges that it has, by separate written instrument, irrevocably designated
and appointed CT Corporation System, 1633 Broadway, New York, New York 10019 (or
any successor), as its authorized agent upon which process may be served in any
suit or proceeding arising out of or relating to this Agreement that may be
instituted in any federal or state court in the State of New York, or brought
under federal or state securities laws, and acknowledges that CT Corporation
System has accepted such designation, (ii) submits to the jurisdiction of any
such court in any such suit or proceeding, and (iii) agrees that service of
process upon CT Corporation System (or any successor) and written notice of said
service to the Issuer shall be deemed in every respect effective service of
process upon the Issuer in any such suit or proceeding. The Issuer further
agrees to take any and all action, including the execution and filing of any and
all such documents and instrument, as may be necessary to continue such
destination and appointment of CT Corporation System (or any successor) in full
force and effect so long as any
<PAGE>
18
of the Secured Notes shall be outstanding.
To the extent that the Issuer has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property, it
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement, to the extent permitted by law.
[Signature Page Follows]
<PAGE>
19
IN WITNESS WHEREOF, the parties have executed and delivered this
Reserve Account Agreement as of the day first above written.
RESERVE ACCOUNT AGENT:
WILMINGTON TRUST COMPANY,
as Reserve Account Agent
by /s/ CARYN M. O'MARA
Name: Caryn M. O'Mara
Title: Authorized Signer
TRUSTEE:
WILMINGTON TRUST COMPANY,
as Trustee
by /s/ CARYN M. O'MARA
Name: Caryn M. O'Mara
Title: Authorized Signer
ISSUER:
AMETHYST FINANCIAL COMPANY
LIMITED
by /s/ EARL W. MCNIEL
Name: Earl W. McNiel
Title: Treasurer
<PAGE>
EXHIBIT A
Form of Disbursement Request
[Letterhead of the Issuer]
[Date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: Disbursement Request No.
[indicate whether revised]
Ladies and Gentlemen:
We refer to the Reserve Account Agreement (the "Reserve Account
Agreement"), dated as of November 1, 1999, among you (the "Reserve Account
Agent"), Wilmington Trust Company, as Trustee, and Amethyst Financial Company
Limited, a British Virgin Islands limited liability company (the "Issuer").
Capitalized terms used herein shall have the meaning given in the Reserve
Account Agreement. This letter constitutes a Disbursement Request under Section
[3(a)(i)] [3(a)(ii)] of the Reserve Account Agreement.
The undersigned Officer of the Issuer hereby notifies you that
the Issuer has requested, and has satisfied the conditions contained in Section
11.05 of the Indenture for, the release of $[ ], from the Reserve Account which
was deposited therein as a result of [specify source of deposit, i.e., payment
of principal or interest made on Issuer Loans] of $[ ].
In connection with the requested disbursement, the undersigned
Officer of the Issuer hereby certifies to you that:
The Notes have [not], as a result of an Event of Default (as
defined in the Indenture), been accelerated and become due and payable.
<PAGE>
2
[add wire instructions].
The Reserve Account Agent is entitled to rely on the foregoing in
disbursing funds relating to this Disbursement Request.
AMETHYST FINANCIAL COMPANY
LIMITED
by _______________________________
Name:
Title:
<PAGE>
EXHIBIT B
Form of Disbursement Request
[Letterhead of the Issuer]
[Date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Re: Disbursement Request No.
[indicate whether revised]
Ladies and Gentlemen:
We refer to the Reserve Account Agreement (the "Reserve Account
Agreement"), dated as of November 1, 1999, among you (the "Reserve Account
Agent"), Trustee, and Amethyst Financial Company Limited, a British Virgin
Islands limited liability company (the "Issuer"). Capitalized terms used herein
shall have the meaning given in the Reserve Account Agreement. This letter
constitutes a Disbursement Request under Section [3(a)(iii)] [3(a)(iv)] of the
Reserve Account Agreement.
The undersigned Officer of the Issuer hereby notifies you that
the Issuer has requested, and has satisfied the conditions contained in Section
11.05 of the Indenture for, the release of $[ ], from the Reserve Account which
was deposited therein as a result of [specify source of deposit, i.e., payment
of principal or interest made on Issuer Loans] of $[ ] to be applied as follows:
[ ].
In connection with the requested disbursement, the undersigned
Officer of the Issuer hereby certifies to you that:
<PAGE>
2
The Notes have [not], as a result of an Event of Default (as
defined in the Indenture), been accelerated and become due and payable.
[add wire instructions].
The Reserve Account Agent is entitled to rely on the foregoing in
disbursing funds relating to this Disbursement Request.
AMETHYST FINANCIAL COMPANY
LIMITED
by _______________________________
Name:
Title:
EXHIBIT 4.7
Date: 1 November 1999
(1) PETRO DIA THREE S.A.
(2) PETRO DIA FOUR S.A.
(3) MITSUBISHI CORPORATION (UK) PLC (AS FACILITY AGENT)
(4) MITSUBISHI CORPORATION (UK) PLC (AS SECURITY AGENT)
(5) PETRODRILL SIX LIMITED
(6) PETRODRILL SEVEN LIMITED
(7) PRIDE INTERNATIONAL, INC.
(8) MARITIMA PETROLEO E ENGENHARIA LTDA.
(9) AMETHYST FINANCIAL COMPANY LIMITED
(10) WILMINGTON TRUST COMPANY (AS TRUSTEE)
(11) WILMINGTON TRUST COMPANY (AS COLLATERAL AGENT)
DEED OF CONSENT
Field Fisher Waterhouse 35 Vine Street London EC3N 2AA
<PAGE>
THIS DEED OF CONSENT is dated 1 November 1999 and is made BETWEEN:
(1) PETRO DIA THREE S.A., a company incorporated under the laws of Panama
whose registered office is at 53rd Street, Urbanizacion Obarrio, Torre
Swiss Bank, 16th Floor, Panama City, Republic of Panama ("MC1"); and
(2) PETRO DIA FOUR S.A., a company incorporated under the laws of Panama whose
registered office is at 53rd Street, Urbanizacion Obarrio, Torre Swiss
Bank, 16th Floor, Panama City, Republic of Panama ("MC2"); and
(3) MITSUBISHI CORPORATION (UK) PLC, a company incorporated in England and
Wales (Reg No. 2214224) whose registered office is at Bow Bells House,
Bread Street, London EC4M 9BQ, in its capacity as Facility Agent for the
Lenders ("FACILITY AGENT"); and
(4) MITSUBISHI CORPORATION (UK) PLC, a company incorporated in England and
Wales (Reg No. 2214224) whose registered office is at Bow Bells House,
Bread Street, London EC4M 9BQ, in its capacity as Security Agent for the
Secured Parties ("SECURITY AGENT"); and
(5) PETRODRILL SIX LIMITED, a company incorporated under the laws of the
British Virgin Islands whose registered office is at Arias Fabrega and
Fabrega Trust Co. BVI Limited, 325 Waterfront Drive, Omar Hodge Building,
2nd Floor, Wickham's Cay, Road Town, Tortola, British Virgin Islands
("PETRODRILL SIX"); and
(6) PETRODRILL SEVEN LIMITED, a company incorporated under the laws of the
British Virgin Islands whose registered office is at Arias Fabrega and
Fabrega Trust Co. BVI Limited, 325 Waterfront Drive, Omar Hodge Building,
2nd Floor, Wickham's Cay, Road Town, Tortola, British Virgin Islands
("PETRODRILL SEVEN"); and
(7) PRIDE INTERNATIONAL, INC., a company incorporated under the laws of the
State of Louisiana, USA, of 5847 San Felipe, Suite 3300, Houston, Texas
77057, USA ("PRIDE"); and
(8) MARITIMA PETROLEO E ENGENHARIA LTDA., a company incorporated under the
laws of Brazil, of Avenida Almte. Barroso, 52 Gr 3400, Rio de Janeiro,
Brazil ("MARITIMA"); and
(9) AMETHYST FINANCIAL COMPANY LIMITED, a company incorporated under the laws
of the British Virgin Islands whose registered office is at Arias Fabrega
and Fabrega Trust Co. BVI Limited, 325 Waterfront Drive, Omar Hodge
Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, British Virgin
Islands ("AMETHYST"); and
<PAGE>
(10) WILMINGTON TRUST COMPANY, a company incorporated under the laws of
Delaware whose principal place of business is at Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001, in its capacity as
trustee for the holders of the Notes (as defined below) (together with its
successors and assigns, the "TRUSTEE"); and
(11) WILMINGTON TRUST COMPANY, a company incorporated under the laws of
Delaware whose principal place of business is at Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001, in its capacity as
collateral agent for the Trustee and the holders of the Notes (together
with its successors and assigns, the "COLLATERAL Agent"); and
SUPPLEMENTAL to (1) two loan agreements (providing for secured loan facilities
not exceeding US$160,000,000 and US$180,000,000, respectively, in connection
with the construction, equipping and mobilization by Petrodrill Six and
Petrodrill Seven of the semi-submersible drilling rigs t.b.n. "Amethyst 6" and
"Amethyst 7"), each dated 19 December 1999 and made between (in the case of the
US$160,000,000 loan facility) (a) MC1 and MC2, (b) Petrodrill Six, (c) the
Facility Agent and (d) the Security Agent and (in the case of the US$180,000,000
loan facility) (w) MC1 and MC2, (x) Petrodrill Seven, (y) the Facility Agent and
(z) the Security Agent (such two loan agreements being hereinafter sometimes
together called the "LOAN AGREEMENTS") and (2) all other documentation referred
to in the Loan Agreements.
WHEREAS:
A. The Additional Funding and Guarantee Agreement included certain provisions
to the following effect:
(1) Each Sponsor gave an undertaking to MC1 and MC2 that, on or prior to
the Bridging Loan Repayment Date, it would, in its Several
Proportion, make Sponsors' Funds available to the Borrowers in the
aggregate principal amount of US$100,000,000 (comprising
US$47,000,000 to be made available to Petrodrill Six and
US$53,000,000 to be made available to Petrodrill Seven).
(2) Each Sponsor severally guaranteed to MC1 the due and punctual
payment by MC2 of such Sponsor's Several Proportion of the Bridging
Loans (in all respects in accordance with the Bridging Loan
Agreement) and the payment of all interest in respect thereof
(including interest capitalized in accordance with the terms
thereof).
(3) MC2 gave each of the Sponsors an option (exercisable on the terms
and in the manner, and subject to the conditions, specified in the
Additional Funding and Guarantee Agreement) to require MC2 to
transfer to each Sponsor such Sponsor's
<PAGE>
Several Proportion of the whole (but, save as provided in the
Additional Funding and Guarantee Agreement, not part only) of the
MC2 Participations.
(4) MC2 gave an undertaking to the Sponsors that any amounts received
and retained by MC2 from the Sponsors in respect of the exercise of
such options would be applied pro tanto in or towards repayment to
MC1 of the Bridging Loans.
B. Instead of arranging for a transfer to the Sponsors of the whole of the
MC2 Participations (as envisaged by Clause 3 of the Additional Funding and
Guarantee Agreement), the Sponsors have made arrangements for the whole of
the MC2 Participations to be transferred to Amethyst with effect from 1
November 1999 in consideration of the payment by Amethyst to MC2 of the
Transfer Price.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Unless the context otherwise requires or unless otherwise defined in this
Deed, words and expressions defined in the Loan Agreements shall have the
same meanings when used in this Deed. All of the parties hereto confirm
that they have, or have been supplied with, copies of the Loan Agreements.
1.2 Additionally, in this Deed, unless the context otherwise requires:
"EXISTING SECURITY AGREEMENT" means the Senior Secured Note Security and
Pledge Agreement dated as of 1 November 1999 by Amethyst in favor of the
Trustee and the Collateral Agent (attached hereto as Exhibit A).
"MC2 PARTICIPATIONS" shall have the same meaning as is given to this
expression in the Additional Funding and Guarantee Agreement (as amended
and restated as at 1 July 1999) made between MC1, MC2, Pride, Maritima,
Petrodrill Six and Petrodrill Seven.
"MITSUBISHI DOCUMENTS' means the documents listed on Schedule A to the
Existing Security Agreement, as the same may be amended, modified or
supplemented from time to time.
"NOTES" means the Senior Secured Notes due 2001 issued by Amethyst
pursuant to the Indenture dated as of 1 November 1999 among Amethyst, the
Trustee, Pride and Maritima.
"SECURITY DOCUMENTS" means the collateral documents and other agreements
entered into from time to time in connection with the Notes (including,
without limitation, the Existing Security Agreement) or the other
obligations of Amethyst incurred from time to time to fund, carry, refund
or refinance its interest in the MC2 Participations that are
<PAGE>
secured by liens and security interests on the MC2 Participations, their
proceeds or the rights of Amethyst under the Mitsubishi Documents.
2. OPERATIVE PROVISIONS
2.1 This Deed shall take effect on the receipt (on an unconditional basis) by
MC1 of US$100,000,000 in cleared funds in its account No. 310-053-463 with
Bank of Tokyo-Mitsubishi Trust Company, 360 Madison Avenue, New York, NY
10017 (the "EFFECTIVE DATE").
2.2 Each of MC1, MC2, the Facility Agent and the Security Agent confirms that:
(1) it consents to (A) the pledge by Amethyst in favor of the Trustee
and the Collateral Agent, pursuant to the Existing Security
Agreement, of (i) an undivided 53% interest in the MC2
Participations and all of Amethyst's right, title and interest in
and to the Mitsubishi Documents, together with an undivided 53%
interest in and to all of Amethyst's right, title and interest in
and to all agreements, documents, notes, collateral documents and
instruments relating to the Mitsubishi Documents and the security
for the MC2 Participations, and (ii) all of Amethyst's right, title
and interest in and to all replacements, additions, accessions,
substitutions, repairs, proceeds and products relating to or from
all items described in Clause 2.2(1)(A)(i), whether now owned or
hereafter at any time acquired by Amethyst and wherever located, and
all documents, ledger sheets, files, books and records of Amethyst
relating thereto (proceeds hereunder include (a) whatever is now or
hereafter received by Amethyst upon the sale, exchange, collection,
or other disposition of any item of the collateral described in this
Clause 2.2(1)(A), (b) any property of the type described in this
Clause 2.2(1)(A) now or hereafter acquired by Amethyst with any
proceeds of such collateral hereunder and (c) any payments under any
insurance or any indemnity, warranty or guaranty, payable by reason
of loss or damage to or otherwise with respect to any of the
collateral described in this Clause 2.2(1)(A)) and (B) the pledge by
Amethyst of all or any portion of the MC2 Participations, their
proceeds or the rights of Amethyst under the Mitsubishi Documents
pursuant to any other Security Document;
(2) notwithstanding Clause 15.3 of the Loan Agreements, the Trustee, the
Collateral Agent or any other beneficiary under a Security Document
may, after the occurrence (and notification in writing to MC1, MC2,
the Facility Agent and the Security Agent by the Trustee, the
Collateral Agent or other beneficiary) of an Event of Default under
a Security Document (a "SECURITY DOCUMENT EVENT OF DEFAULT")
transfer (in accordance with, and subject to, the provisions of
Clause 15.4 of the relevant Loan Agreement, except to the extent
modified by this Deed to, among other things, eliminate the strict
requirement that the transferee be a Qualifying Lender, so that
references in such Clause 15.4 to Clause 15.3 of the relevant Loan
Agreement or to Qualifying Lender shall be read as so modified)
<PAGE>
(in the case of the Trustee or Collateral Agent) all or any part of
53% of the MC2 Participations and the other collateral described in
Section 2.2(1)(A) and (in the case of any other beneficiary) all or
any part of the collateral pledged in accordance with Section
2.2(1)(B) (in either case, the "MITSUBISHI LOAN RIGHTS") to any
person that is a Qualifying Lender or to any other financial
institution incorporated in or controlled by persons residing in or
with a principal place of business in any country which is a member
of OECD managing or owning a minimum of $100 million in assets
according to its most recent quarterly balance sheet prepared under
generally accepted accounting principles applicable to such
institution (each, a "PERMITTED LENDER"), and each of MC1, MC2, the
Facility Agent and the Security Agent hereby agrees that, in the
event that the Trustee, the Collateral Agent or any other
beneficiary exercises its remedies under the Security Documents to
acquire or dispose of all or any part of the collateral described in
Clause 2.2(1) of this Deed to a Permitted Lender, the Facility Agent
(on its own behalf and on behalf of the other parties to the
relevant Loan Agreement), the Security Agent and MC1 shall
counter-sign appropriate Transfer Certificates for such transfer;
(3) it will enter into a deed of consent containing terms substantially
the same as this Deed in connection with any refinancing of the
Notes, any debt extended by a Permitted Lender or any other
obligation incurred by Amethyst from time to time to fund, carry,
refund or refinance its interest in the MC2 Participations, their
proceeds or the rights of Amethyst under the Mitsubishi Documents,
in each case, secured by the Security Documents;
(4) it hereby acknowledges, understands and agrees that each of the
Trustee, the Collateral Agent and any other beneficiary under the
Security Documents shall not have any obligation or duty to MC1,
MC2, the Facility Agent or the Security Agent under the Mitsubishi
Documents, the Security Documents or the other documents and
instruments related to the collateral described in Clause 2.2(1) of
this Deed and shall not be required to pay or perform any obligation
thereunder; and
(5) it hereby acknowledges, understands and agrees that all amounts held
for the benefit of, or paid directly to, the Trustee, any other
beneficiary under the Security Documents or Amethyst in accordance
with the Mitsubishi Documents, the other documents and instruments
related to the collateral described in Clause 2.2(1) of this Deed,
this Deed or the Security Documents (whether subsequently paid by
the Trustee to the holders of the Notes, held by the Trustee in
escrow or released to Amethyst) shall be held and paid free and
clear of all claims (including set-off) of MC1, MC2, the Facility
Agent or the Security Agent, whether under the Cross-Guarantee or
otherwise; and
(6) pursuant to Section 7(a) of the Existing Security Agreement, at all
times, whether or not a Security Document Event of Default shall
have occurred and be
<PAGE>
continuing, only the Collateral Agent on behalf of the Trustee or
the Trustee directly shall be entitled to exercise any and all
voting and other consensual rights of Amethyst pertaining to the MC2
Participations and the Mitsubishi Documents.
2.3 PAYMENT OF THE MC2 PARTICIPATIONS
Amethyst hereby notifies MC1, MC2, the Facility Agent and the Security
Agent that:
(1) subject to Clause 2.3(2), until the Trustee shall have otherwise
notified MC1, MC2, the Facility Agent and the Security Agent in
writing that all Notes have been paid in full and that all liens and
security interests encumbering the MC2 Participations have been
released (in which case, payments will be made in the manner
directed by Amethyst), all interest, principal and other amounts
payable to Amethyst or its successors and assigns in respect of the
MC2 Participations shall be paid to the Trustee as such amounts
become due at its account number 49870-0 at Bankers Trust Company,
New York, New York, ABA number 0210-0002-1, or such other location
as the Trustee may notify them in writing; or
(2) if the Trustee shall have notified MC1, MC2, the Facility Agent and
the Security Agent that a Security Document Event of Default has
occurred and is continuing, 53% of all interest, principal and other
amounts payable to Amethyst or its successors and assigns in respect
of the MC2 Participations shall be paid to such other location in an
OECD country as the Trustee may notify them in writing and 47% of
such amounts shall be paid to such other location as Amethyst may
notify them in writing.
2.4 AGREEMENT TO PAYMENT PROCEDURE
The Facility Agent and the Security Agent agree to make payments in the
manner described in Clause 2.3 of this Deed.
2.5 BENEFIT OF FLOOR GUARANTEE
For the avoidance of doubt, each of the Sponsors and Amethyst hereby
confirms and agrees that Amethyst shall not, by virtue of the transfer to
Amethyst of the MC2 Participations or otherwise, have or acquire any right
or interest in the Floor Guarantee, the entire benefit of which is and
will remain vested in MC1 for its own account absolutely.
2.6 NOTICE AND ACKNOWLEDGMENT
Amethyst hereby notifies Petrodrill Six and Petrodrill Seven, and each of
Petrodrill Six and Petrodrill Seven hereby acknowledge receipt of notice,
of the granting by Amethyst in favor of the Trustee and the Collateral
Agent, pursuant to the Existing Security Agreement, of the security
interest in and to the collateral described in Clause 2.2(1).
<PAGE>
2.7 NO BREACH OR EVENT OF DEFAULT
For the avoidance of doubt, each of MC1, MC2, the Facility Agent and the
Security Agent acknowledges, confirms and agrees that:
(1) notwithstanding Clause 11.1(vi) of the Loan Agreements, the
releases, discharges, waivers, modifications and amendments to the
Security Documents (as defined in the Loan Agreements) effected by
this Deed, the Deed of Release dated as of the date hereof among
MC1, MC2, Petrodrill Six, Petrodrill Seven, Pride, Maritima and
Amethyst, the Transfer Certificates dated as of the date hereof
relating to the transfer to Amethyst of the MC2 Participations and
all deeds and agreements executed prior to the date hereof with the
purpose of effecting releases, discharges, waivers, modifications
and amendments to the Additional Funding and Guarantee Agreement are
not, do not result in and will not result in a breach or Event of
Default under the Loan Agreements; and
(2) notwithstanding Clause 15.2 of the Loan Agreements, the collateral
assignment of the Deeds of Guarantee and Undertaking and
Subordinated Loan Facilities in favor of the Lenders in accordance
with the terms of the Mitsubishi Documents is not, does not result
in and will not result in a breach or Event of Default under the
Loan Agreements.
3. REPRESENTATIONS AND WARRANTIES
Each of the parties hereto (other than the Trustee and the Collateral Agent)
represents and warrants (severally as to itself) to each of the other parties
hereto as follows:
3.1 It is a company with limited liability duly organized and validly existing
under the laws specified on page 1 or (as the case may be) page 2 of this
Deed, possessing the capacity to sue or be sued in its own name, and it
has the power to own its assets and carry on its business as it is now
being conducted.
3.2 It has the power to enter into and perform this Deed and the transactions
contemplated hereby and has taken all necessary action to authorize the
entry into and performance of this Deed and the transactions contemplated
hereby in accordance with the terms hereof.
3.3 This Deed constitutes its legal, valid and binding obligations enforceable
in accordance with its terms and is in proper form for the enforcement in
all the courts of the country (and, where applicable, State) of its
incorporation or (as the case may be) establishment or (as the case may
be) registration.
3.4 The entry into, and performance of, this Deed and the transactions
contemplated hereby do not conflict with:
<PAGE>
(1) any law or official requirement;
(2) its constitutional documents; or
(3) any agreement or document to which it is a party or which is binding
upon it or any of its assets,
and will not result in the creation or imposition of (or enforcement
of) any encumbrance on any of its assets.
4. NOTICES, ETC.
4.1 Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, may be made by facsimile transmission or by telex
or by letter.
4.2 Any communication or document to be made or delivered by one person to any
other pursuant to this Deed shall (unless the one has by not less than
three (3) days' written notice to the other specified another address) be
made or delivered to that other person at the respective addresses and
facsimile numbers set out below.
(1) MC1:
Petro Dia Three S.A.
c/o Mitsubishi Corporation
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship &
Industrial Project Department
Fax No.: +81 3 3210 4446
(2) MC2:
Petro Dia Four S.A.
c/o Mitsubishi Corporation
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship &
Industrial Project Department
Fax No.: +81 3 3210 4446
<PAGE>
(3) The Facility Agent:
Mitsubishi Corporation (UK) PLC
Bow Bells House
Bread Street
London EC4M 9BQ
Attention: General Manager, Machinery
Department
Fax No.: +44 171 822 0184
(4) The Security Agent:
Mitsubishi Corporation (UK) PLC
Bow Bells House
Bread Street
London EC4M 9BQ
Attention: General Manager, Machinery
Department
Fax No.: +44 171 822 0184
(5) Petrodrill Six:
Petrodrill Six Limited
c/o Petrodrill Engineering N.V.
K.P. van der Mandelelaan 38
3062 MB Rotterdam (Brainpark)
The Netherlands
Attention: Steve Assiter
Fax No.: +31 10 272 2727
(6) Petrodrill Seven:
Petrodrill Seven Limited
c/o Petrodrill Engineering N.V.
K.P. van der Mandelelaan 38
3062 MB Rotterdam (Brainpark)
The Netherlands
Attention: Steve Assiter
Fax No.: +31 10 272 2727
<PAGE>
(7) Pride:
Pride International, Inc.
5847 San Felipe
Suite 3300
Houston, Texas 77057
USA
Attention: Robert Randall
Fax No.: +1 713 914 9796
(8) Maritima:
Maritima Petroleo e Engenharia Ltda.
Avenida Almirante Barroso 52
Grupo 3400
Rio de Janeiro
Brazil
Attention: German Efromovich
Fax No.: +55 21 220 6566
(9) Amethyst:
Amethyst Financial Company Limited
c/o Petrodrill Engineering N.V.
K.P. van der Mandelelaan 38
3062 MB Rotterdam (Brainpark)
The Netherlands
Attention: Steve Assiter
Fax No.: +31 10 272 2727
(10) The Trustee
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Fax No.: (302) 651-8882
(11) The Collateral Agent
<PAGE>
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Fax No.: (302) 651-8882
4.3 Any notice given hereunder shall be deemed to have been received:
(1) If sent by facsimile transmission or by telex, at the opening of
business one (1) Banking Day after the day it was transmitted;
(2) In the case of a written notice lodged by hand, at the time of
actual delivery; and
(3) If posted, on the fifth Banking Day following the day on which it
was properly dispatched by first class mail postage prepaid.
5. GOVERNING LAW AND JURISDICTION
5.1 This Agreement shall be governed by and construed in accordance with
English law.
5.2 Each of the parties hereto irrevocably agrees that the English courts are
to have jurisdiction to settle any disputes which may arise out of or in
connection with this Agreement and that accordingly any suit, action or
proceedings ("PROCEEDINGS") arising out of or in connection with this
Agreement may be brought in such courts.
5.3 Each of the parties hereto hereby irrevocably waives any objection which
it may have now or hereafter to the laying of the venue of any Proceedings
in any such court as is referred to in Clause 5.2 and any claim that any
such Proceedings have been brought in an inconvenient forum, and further
irrevocably agrees that a judgment in any Proceedings brought in the
English courts shall be conclusive and binding upon the Borrower and may
be enforced in the courts of any other jurisdiction.
5.4 Nothing contained in this Clause shall limit the right of any of the
parties hereto to take proceedings in any other court of competent
jurisdiction, nor shall the taking of Proceedings in any one or more
jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
5.5 (1) MC1 and MC2 each irrevocably and unconditionally appoints and
empowers Mitsubishi Corporation (UK) PLC of Bow Bells House,
Bread Street, London EC4M 9BQ to receive for it and on its
behalf, service of process issued out of the English courts in
any Proceedings arising out of or in connection with this
Agreement.
<PAGE>
(2) Petrodrill Six and Petrodrill Seven each irrevocably and
unconditionally appoints and empowers Hackwood Secretaries Limited
of One Silk Street, London EC2Y 8HQ to receive for it and on its
behalf, service of process issued out of the English courts in any
Proceedings arising out of or in connection with this Agreement.
(3) Pride, Maritima and Amethyst each irrevocably and unconditionally
appoints and empowers Hackwood Secretaries Limited of One Silk
Street, London EC2Y 8HQ to receive for it and on its behalf, service
of process issued out of the English courts in any Proceedings
arising out of or in connection with this Agreement.
(4) Each of the parties hereto (other than the Trustee, the Collateral
Agent, the Facility Agent and the Security Agent) irrevocably and
unconditionally:
(a) agrees to maintain in England a duly appointed process agent
notified to the other parties to this Agreement for the
purposes of paragraphs (1), (2) and (3) above;
(b) agrees that failure by any such process agent to give notice
of such process to it shall not impair the validity of such
service or of any judgment based thereon;
(c) consents to the service of process out of any of the said
courts in any such Proceedings by the airmailing of copies,
postage prepaid, to it at its address for the time being
applying for the purposes of Clause 4; and
(d) agrees that nothing herein shall affect the right to serve
process in any other manner permitted by law.
6. COUNTERPARTS
This Deed may be executed in any number of counterparts and by the
different parties hereto on different counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
7. WAIVER; REMEDIES CUMULATIVE
No failure to exercise, and no delay in exercising on the part of any
party hereto, any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right,
power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided are cumulative and not exclusive of any rights or remedies
provided by law.
<PAGE>
8. LANGUAGE
Each document referred to herein or to be delivered hereunder (including
financial statements) and each other communication shall be in the English
language.
<PAGE>
IN WITNESS whereof the parties hereto have caused this Deed to be duly executed
and delivered as a deed the day and year first above written.
EXECUTION
EXECUTED and DELIVERED ) /s/ Y. MIYAMOTO
as a DEED by PETRO DIA )
THREE S.A. acting by its duly )
authorized signatory/attorney-in-fact )
in the presence of: ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Y. MIYAMOTO
as a DEED by PETRO DIA )
FOUR S.A. acting by its duly )
authorized signatory/attorney-in-fact )
in the presence of : ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Y. MIYAMOTO
as a DEED by MITSUBISHI )
CORPORATION (UK) PLC (in its )
capacity as Facility Agent) acting )
by its duly authorized signatory/ )
attorney-in-fact in the presence of: ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Y. MIYAMOTO
as a DEED by MITSUBISHI )
CORPORATION (UK) PLC (in its )
capacity as Security Agent) acting )
by its duly authorized signatory/ )
attorney-in-fact in the presence of: ) /s/ Illegible
<PAGE>
EXECUTED and DELIVERED ) /s/ EARL W. MCNIEL
as a DEED by PETRODRILL )
SIX LIMITED acting by its duly )
authorized signatory/attorney-in-fact )
in the presence of: ) /s/ ROBERT W. RANDALL
EXECUTED and DELIVERED ) /s/ EARL W. MCNIEL
as a DEED by PETRODRILL )
SEVEN LIMITED acting by its duly )
authorized signatory/attorney-in-fact )
in the presence of: ) /s/ ROBERT W. RANDALL
EXECUTED and DELIVERED ) /s/ EARL W. MCNIEL
as a DEED by PRIDE )
INTERNATIONAL INC. acting by )
its duly authorized signatory/ )
attorney-in-fact in the presence of: ) /s/ ROBERT W. RANDALL
EXECUTED and DELIVERED ) /s/ GERMAN EFROMOVICH
as a DEED by MARITIMA )
PETROLEO E ENGENHARIA )
LTDA. acting by its duly authorized )
signatory/attorney-in-fact in the )
presence of: ) /s/ Illegible
<PAGE>
EXECUTED and DELIVERED ) /s/ EARL W. MCNIEL
as a DEED by AMETHYST )
FINANCIAL COMPANY )
LIMITED acting by its duly )
authorized signatory/attorney-in-fact )
in the presence of: ) /s/ ROBERT W. RANDALL
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by WILMINGTON )
TRUST COMPANY (in its )
capacity as Trustee) acting by )
its duly authorized )
signatory/attorney-in-fact in the )
presence of: ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by WILMINGTON )
TRUST COMPANY (in its )
capacity as Collateral Agent) )
acting by its duly authorized )
signatory/attorney-in-fact in the )
presence of: ) /s/ Illegible
EXHIBIT 4.8
DATED DECEMBER 1998
THE LENDERS HEREIN REFERRED TO
as Lenders
-and-
PETRODRILL SEVEN LIMITED
as Borrower
- and -
MITSUBISHI CORPORATION (UK) PLC
as Facility Agent
- and -
MITSUBISHI CORPORATION (UK) PLC
as Security Agent
-------------------------------------------------
LOAN AGREEMENT
providing for a secured loan facility
not exceeding US$180,000,000
in connection with the acquisition
of a semi-submersible drilling rig
t.b.n. "AMETHYST 7"
-------------------------------------------------
F I E L D - F I S H E R - W A T E R H O U S E
4 1 V I N E S T R E E T L O N D O N E C 3 N 2 A A
<PAGE>
CONTENTS
CLAUSE/HEADING PAGE
- - -------------- ----
1. DEFINITIONS AND INTERPRETATION 2
2. THE FACILITY 17
3. CONDITIONS PRECEDENT 19
4. DISBURSEMENT OF ADVANCES 24
5. INTEREST 26
6. REPAYMENT AND PREPAYMENT 27
7. SECURITY 29
8. REPRESENTATIONS 31
9. PAYMENTS: TAXATION 35
10. EVENTS OF DEFAULT 37
11. COVENANTS 41
12. SECURITY ACCOUNTS 46
13. PROVISIONS RELATING TO SECURITY 48
14. CHANGE IN CIRCUMSTANCES 48
15. TRANSFERS 51
16. FEES AND EXPENSES 52
17. CURRENCY INDEMNITY 53
18. GENERAL INDEMNITIES 54
19. THE AGENTS 55
20. SET-OFF/PRO-RATA SHARING 61
21. NOTICES, ETC. 63
22. COUNTERPARTS 64
23. AGENTS'AND LENDERS'CERTIFICATES 65
24. WAIVER; REMEDIES CUMULATIVE 66
25. LANGUAGE 65
26. SEVERABILITY 65
27. GOVERNING LAW AND JURISDICTION 65
SIGNATORIES 67
SCHEDULES
1 THE LENDERS AND THEIR COMMITMENTS 68
2 THE FORM OF REPAYMENT SCHEDULE 69
3 PART 1: SERVICES CONTRACTS 70
PART 2: OTHER SERVICES CONTRACTS 70
4 DRAWING REQUEST 71
5 DETAILS OF THE HOLDER OF SHARES IN THE BORROWER
AND THE SISTER COMPANY 72
6 FORM OF TRANSFER CERTIFICATE 73
7 PART 1 - THE PROJECT DOCUMENTS 76
PART 2 - THE SECURITY DOCUMENTS 77
8 INSURANCES 79
<PAGE>
THIS AGREEMENT is made this day of December 1998
BETWEEN
(1) THE LENDERS, the respective names and offices of which are set out in
Schedule 1, as Lenders;
(2) PETRODRILL SEVEN LIMITED, a company incorporated under the laws of the
British Virgin Islands having its registered office at 325 Waterfront
Drive, Omar Hodge Building, 2nd Floor, Wickhams Cay, Road Town, Tortola,
British Virgin Islands, as Borrower;
(3) MITSUBISHI CORPORATION (UK) PLC, a company incorporated in England and
Wales (Reg No. 2214224) whose registered office is at Bow Bells House,
Bread Street, London EC4M 9BQ, in its capacity as facility agent for
the Lenders; and
(4) MITSUBISHI CORPORATION (UK) PLC, a company incorporated in England and
Wales (Reg No. 2214224) whose registered office is Bow Bells House, Bread
Street, London EC4M 9BQ, in its capacity as security agent and trustee for
the Secured Parties.
WHEREAS:
(A) This Agreement sets out the terms and conditions upon and subject
to which loan facilities will be made available to the Borrower in an
aggregate principal amount (including interest capitalised in accordance
with the terms hereof) not exceeding US$180,000,000 for the purpose of
financing the acquisition of a semi-submersible drilling rig to be
constructed by the Builder, comprising a Tranche A Facility of a principal
amount (including interest capitalised as aforesaid) not exceeding
US$53,000,000, a Tranche B Facility in a principal amount (including
interest capitalised as aforesaid) not exceeding US$74,000,000 and a
Tranche C Facility in a principal amount (including interest capitalised
as aforesaid) not exceeding US$53,000,000.
(B) Subject to and upon the terms and conditions contained in this Agreement
and the Sister Company Loan Agreement respectively MC1 has agreed to make
available to the Borrower and the Sister Company loan facilities in the
aggregate principal amount (including interest capitalised as aforesaid)
not exceeding US$127,000,000 and of US$113,000,000 respectively.
(C) Maritima and Pride have severally and unconditionally agreed with and
undertaken to MC1 and MC2 that subject to and in accordance with the terms
of the Additional Funding and Guarantee Agreement (referred to in Recital
(D)), they will provide or arrange the provision of funding to the
Borrower in each case on or before 29 October 1999 and in each case on the
terms and conditions of the facilities to be made available under this
Agreement and the Sister Company Loan Agreement in the amount (including
interest capitalised as aforesaid as at such date) of US$53,000,000 and to
the Sister Company in the amount of US$47,000,000 (including interest
capitalised in accordance with the terms of the Sister Company Loan
Agreement as at such date).
- 1 -
<PAGE>
(D) Accordingly it has been agreed that subject to the terms and conditions
contained in this Agreement MC1 will provide a bridging loan to MC2 (an
affiliate company of MC1) in an amount (including interest capitalised as
hereinafter provided to 29 October 1999) not exceeding US$53,000,000 on
terms that it will be repaid to MC1 on or before 29 October 1999 and to
give effect to this and to the agreement and undertaking referred to in
Recital (C) Pride and Maritima have (INTER ALIA) entered into an
Additional Funding and Guarantee Agreement with MC1 and MC2 whereby Pride
and Maritima severally guarantee the repayment of the Bridging Loans and
MC2 has granted to them an option severally to purchase (subject to and in
accordance with the Additional Funding and Guarantee Agreement) from MC2
its Tranche A Commitment and its participation in the Tranche A Advances.
(E) It has therefore also been agreed that the Tranche C Facility will only
be made available to the Borrower by MC1 conditionally to the extent of
the repayment to MC1 of the Bridging Loan and the assumption by Pride and
Maritima or another Qualifying Lender of the Tranche A Commitments of MC2
and the assumption by Pride and Maritima or such party of MC2's
participation in the Tranche A Advances and the payment by Pride and
Maritima to MC2 of the amount thereof all in accordance with the
Additional Funding and Guarantee Agreement.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS
In this Agreement the following words and expressions shall, except where
the context otherwise requires, have the following meanings:
"ADDITIONAL FUNDERS" means Elliott Associates LP and Westgate
International LP;
"ADDITIONAL FUNDING AND GUARANTEE AGREEMENT" means the agreement to be
executed in the approved form by MC1, MC2, the Borrower, the Guarantors
and the Additional Funders whereby the Guarantors will severally guarantee
the performance by MC2 of its obligations under the Bridging Loan
Agreement and the Additional Funders guarantee the performance by Maritima
of its obligations thereunder (in each case without any right of recourse
to MC2);
"ADVANCE" means an advance made or to be made or deemed to be by the
Lenders under the Facilities or (as the context may require) the principal
amount thereof for the time being outstanding and when designated an "A"
ADVANCE, a "B" ADVANCE or a "C" ADVANCE means an Advance made or to be
made in respect of the Tranche "A" Facility, the Tranche "B" Facility or
the Tranche "C" Facility respectively and, additionally, when designated a
"PRE-DELIVERY ADVANCE" means an Advance made or to be made prior to the
Yard Delivery Date, when designated the "YARD DELIVERY ADVANCE" means the
Advance made or to be made on the Yard Delivery Date upon delivery of the
Rig by the Builder to the Borrower and when designated a "POST YARD
DELIVERY ADVANCE" means an Advance made or to be made after the Yard
Delivery Date but prior to the Charterparty Commencement Date;
- 2 -
<PAGE>
"AGENTS" means the Facility Agent and the Security Agent, and
"AGENT" means either of them, as the context requires;
"ASSIGNMENT OF DEED OF GUARANTEE AND UNDERTAKING AND SUBORDINATED LOAN
FACILITY AGREEMENT" means the assignment in the approved form to be
executed pursuant to Clause 7.1(xv);
"AVAILABLE FACILITY AMOUNT" means on any date in respect of any Facility
the Facility Amount of such Facility as reduced by the amount of Advances
made or deemed to have been made hereunder in respect of such Facility and
as further reduced by the amount of interest which has accrued on the
Advances drawn or deemed to have been drawn under such Facility since the
Interest Capitalisation Date last preceding such date;
"AVAILABILITY PERIOD" means the period commencing on the date of this
Agreement and ending on the earlier of 30 April 2001 and the Charterparty
Commencement Date;
"BALLOON" means the instalment of the Loan repayable by the
Borrower on the Final Repayment Date pursuant to Clause 6.3;
"BANKING DAY" means a day (not being a Saturday or Sunday) on which banks
and foreign exchange markets are open for business in London, New York,
Tokyo and Rio de Janeiro and, in respect of the period expiring on (and
including) the Yard Delivery Date, Seoul;
"BORROWER" means Petrodrill Seven Limited, a company organised and
existing under the laws of the British Virgin Islands (Company No. 273701)
whose registered office is at 325 Waterfront Drive, Omar Hodge Building,
2nd Floor, Wickhams Cay, Road Town, Tortola, British Virgin Islands;
"BRIDGING LOANS" has the meaning assigned to such term in the Bridging
Loan Agreement;
"BRIDGING LOAN AGREEMENT" means the agreement in the approved form dated
the same date as this Agreement between MC1 and MC2 pursuant to which MC1
has agreed to advance to MC2 the amounts of Advances made by MC2 under the
Tranche A Facility and the amounts of certain advances made by MC2
pursuant to the Sister Company Loan Agreement;
"BRIDGING LOAN REPAYMENT DATE" means the earlier of:
(i) 29 October 1999; and
(ii) the date on which (the Tranche A Facility having been fully
drawn and the Tranche A Facility having been fully drawn under and
as defined in the Sister Company Loan Agreement) further Drawings
are not available for Drawing under the Tranche B Facility (and
further drawings under the Tranche B Facility are not available as
defined in and in accordance with the Sister Company Loan Agreement)
by reason of the application of Clause 3.6(viii) of the Loan
Agreement (or Sister Company Loan Agreement) (because the making of
such Drawings would cause the Prospective Final Grossed-up Advances
Amount of the Tranche B Facility to exceed US$74,000,000 or (as the
case may be) the
- 3 -
<PAGE>
Prospective Final Grossed-up Amount of the Tranche B Facility as
defined in and under the Sister Company Loan Agreement to exceed
US$66,000,000);
"BUILDER" means Daewoo Corporation a company organised and existing under
the laws of Korea and Daewoo Heavy Industries Ltd., a company organised
and existing under the laws of Korea whose registered offices are at 541
5-GA, Namdaemuro, Jung-Gu, Seoul, Korea, being jointly and severally the
builder under the Rig Construction Contract;
"CHARTERPARTY" means the time charterparty agreement in respect of the Rig
(Contract No. 101.2.155.97-9) dated on or around 12 January 1998 and
executed by and between Maritima (as owner) and Petrobras (as charterer)
in the approved form, all rights and obligations of Maritima having since
been assigned by Maritima to the Borrower with Petrobras' approval by an
assignment document made between Petrobras, Maritima and the Borrower
dated 10 July 1998;
"CHARTERPARTY ASSIGNMENT" means a deed of assignment to be executed by the
Borrower in favour of the Security Agent for itself and as trustee for the
Secured Parties in accordance with Clause 7.1(iv);
"CHARTERPARTY COMMENCEMENT DATE" means the date on which the Rig (having
arrived at the Port or in sheltered waters in Macae -RJ) is accepted by
Petrobras for the commencement of operations, all in accordance with the
Charterparty;
"CHARTERPARTY HIRE" means all payments by way of charterhire and any other
monies from time to time payable under the Charterparty;
"COMMITMENT" in relation to a Lender means the aggregate of its Tranche A
Commitment, its Tranche B Commitment and its Tranche C Commitment;
"TRANCHE A COMMITMENT" in relation to a Lender means, subject as
hereinafter provided, the amount (if any) set opposite its name in the
column headed "TRANCHE A COMMITMENT" of Schedule 1 (or, as the case may
be, the amount specified as the portion of the Tranche A Facility
transferred in the Transfer Certificate pursuant to which such Lender
became a party hereto), "TRANCHE B COMMITMENT" in relation to a Lender
means, subject as hereinafter provided, the amount (if any) set opposite
its name in the column headed "TRANCHE B COMMITMENT" of Schedule 1 (or, as
the case may be, the amount specified as the portion of the Tranche B
Facility transferred in the Transfer Certificate pursuant to which such
Lender became a party hereto) and "TRANCHE C COMMITMENT" in relation to a
Lender means, subject as hereinafter provided, the amount (if any) set
opposite its name in the column headed "TRANCHE C COMMITMENT" in Schedule
1 (or, as the case may be, the amount specified as the portion of the
Tranche C Facility transferred in the Transfer Certificate pursuant to
which such Lender became a party hereto) and, in any such case, as reduced
from time to time in accordance with the provisions hereof; and "TRANCHE A
COMMITMENTS", "TRANCHE B COMMITMENTS" and "TRANCHE C COMMITMENTS" shall be
construed accordingly;
"CONSTRUCTION AND MOBILISATION COSTS" means the costs, charges and
expenses paid or to be paid by the Borrower in respect of spare parts,
operating manuals and procedures, training, construction management team
costs, commissioning of all equipment, construction insurance and
mobilisation costs during transit to Brazil;
"CONTRACT PRICE" has the meaning given to it in the Rig Construction
Contract;
- 4 -
<PAGE>
"CONTRACTUAL DELIVERY DATE" has the meaning given to it in the Rig
Construction Contract;
"CORRESPONDING SISTER COMPANY COMMITMENTS", "CORRESPONDING SISTER COMPANY
OUTSTANDINGS", "CORRESPONDING SISTER COMPANY FACILITIES" and
"CORRESPONDING SISTER COMPANY ADVANCES" means, in relation to any
Commitments, Outstandings, Facilities or Advances, the commitments,
outstandings, facilities or, as the case may be, advances under the Sister
Company Loan Agreement having the same designation as such Commitments,
Outstandings, Facilities or Advances under this Agreement;
"CROSS GUARANTEE" means the guarantee to be executed by the Borrower, the
Sister Company and the Shareholder in favour of the Security Agent for
itself and as trustee for the Secured Parties in accordance with Clause
7.1(xii);
"DAILY RATE" means after the Charterparty Commencement Date (in respect of
the first Year) US$26,753 per day during which the Rig is operating (and
during any day during which the Rig is not operating US$9,300) comprising
a fixed proportion of US$11,753 (or US$5,000 if non-operational for more
than 5 consecutive working days) (the "FIXED PROPORTION") and a variable
proportion of US$15,000 (or US$9,300 if non-operational for more than 5
consecutive working days) (the "VARIABLE PROPORTION") and in respect of
each subsequent Year an amount equal to the aggregate of (i) the Fixed
Proportion (unchanged) and (ii) the Variable Proportion escalated on the
first anniversary of the Charterparty Commencement Date and each
successive anniversary of the Charterparty Commencement Date thereafter at
the rate of 3% per annum);
"DEED OF COVENANTS" means the deed of covenants to be executed by the
Borrower in favour of the Security Agent for itself and as trustee for the
Secured Parties (in conjunction with the Mortgage) in accordance with
Clause 7.1(iii);
"DEED OF GUARANTEE AND UNDERTAKING" means the deed of guarantee
and undertaking to be executed in accordance with Clause 7.2;
"DELAYED DELIVERY DEDUCTIBLE" means any amount which is deductible by
insurers before amounts become payable or which is deducted from amounts
which are payable under the terms of the delayed delivery insurance
effected pursuant to Clause 11.3 in the event of a claim being made in
respect of such insurance;
"DRAWDOWN DATE", in relation to an Advance, means the date on
which such Advance is made or deemed to be made hereunder;
"DRAWING REQUEST" means the request for drawing an Advance
pursuant to any of the Facilities issued by the Borrower pursuant
to this Agreement;
"EARNINGS" means the aggregate of (i) the Charterparty Hire, (ii) all
other moneys whatsoever due or to become due to the Borrower at any time
during the Security Period arising out of the use or operation of the Rig
and/or out of the provision of related services (including, but not
limited to) all hire and other moneys receivable in respect of the Rig
(whether receivable directly by the Borrower or by any agent on its
behalf), all compensation payable to the Borrower in the event of
requisition of the Rig for hire, all remuneration for salvage and towage
services and all demurrage and detention moneys
- 5 -
<PAGE>
and (iii) damages for breach (or payments for variation or termination) of
the Charterparty or any other charterparty or contract entered into by the
Borrower for the employment of the Rig;
"ENVIRONMENTAL APPROVALS" means all approvals, licences, permits,
exemptions and authorisations required under applicable Environmental
Laws;
"ENVIRONMENTAL CLAIM" means (1) any claim by, or directive from, any
applicable governmental, judicial or other regulatory authority alleging
breach of, or non-compliance with, any Environmental Laws or Environmental
Approvals or otherwise howsoever relating to or arising out of an
Environmental Incident or (2) any claim by any other third party howsoever
relating to or arising out of an Environmental Incident (and, in each such
case, "CLAIM" shall mean a claim for damages, clean-up costs, compliance,
remedial action or otherwise);
"ENVIRONMENTAL INCIDENT" means (1) any release (or threatened release) of
Environmentally Sensitive Material from the Rig, (2) any incident in which
Environmentally Sensitive Material is released (or threatens to be
released) from any vessel other than the Rig and which involves collision
between the Rig and such other vessel or some other incident of navigation
or operation, in either case where the Rig or the Borrower are actually or
allegedly at fault or otherwise liable (in whole or in part) or (3) any
incident in which Environmentally Sensitive Material is released (or is
threatened to be released) from a vessel other than the Rig and where a
vessel is actually or potentially liable to be arrested as a result and/or
where the Borrower is actually or allegedly at fault or otherwise liable;
"ENVIRONMENTAL LAWS" means all laws, regulations, conventions and
agreements whatsoever relating to pollution or protection of the
environment (including, without limitation, the United States Oil
Pollution Act of 1990 and any comparable laws of the individual States of
the United States of America); and
"ENVIRONMENTALLY SENSITIVE MATERIAL" means oil, oil products, gas or any
other substance which is polluting, toxic or hazardous or any substance
the release of which into the environment is regulated, prohibited or
penalised by or pursuant to any Environmental Law;
"EVENT OF DEFAULT" means any of the events specified in Clause 10.1;
"FACILITIES" means the Tranche A Facility, the Tranche B Facility and the
Tranche C Facility and "FACILITY" means any of them;
"FACILITY AGENT" means Mitsubishi Corporation (UK) PLC, in its capacity as
facility agent for the Lenders and includes any successor facility agent
appointed hereunder;
"FACILITY AMOUNT" means in relation to any Facility the amount of such
Facility specified in Clause 2;
"FINAL REPAYMENT DATE" means the last of the dates specified in the
Repayment Schedule;
"FINANCING DOCUMENTS" means this Agreement and the Security Documents;
- 6 -
<PAGE>
"FLOOR GUARANTEE" means the guarantee to be executed by the Guarantors in
accordance with Clause 7.2(i);
"GUARANTEES" means the Floor Guarantee, and the Deed of Guarantee and
Undertaking, and "GUARANTEE" means any of them;
"GUARANTORS" means each of Maritima and Pride, and "GUARANTOR" means
either of them;
"INITIAL LENDERS" means MC1 and MC2;
"INSURANCES" means all policies and contracts of insurance (which
expression includes all entries of the Rig in a protection and indemnity
or war risks association) which are from time to time taken out or entered
into in respect of the Rig and the Charterparty Hire or otherwise
howsoever in connection with the Rig, including (but not limited to) any
policies of insurance effected pursuant to the Financing Documents
including (without limitation) (i) all insurances taken out by the Builder
in respect of the Rig and the Listed Items and the Purchaser's Supplies
(as defined in the Rig Construction Contract), and (ii) the Temporary
Confirmation of Insurance and (iii) (subject to such insurances being
available in the international insurance market) such other insurances as
the Facility Agent may from time to time at its discretion require;
"INSURANCES ASSIGNMENT" means a deed of assignment to the Insurances
executed or to be executed by the Borrower in favour of the Lender in
accordance with Clause 7.1(vi);
"INTER-COMPANY LOAN" means the loan made or to be made pursuant
to the Inter-company Loan Agreement;
"INTER-COMPANY LOAN AGREEMENT" means the agreement in the approved form
between the Borrower and the Sister Company for the loan by the Borrower
to the Sister Company of US$10,000,000;
"INTER-COMPANY LOAN ASSIGNMENT" means the assignment of the Inter-company
Loan to be executed pursuant to Clause 7.1(ii);
"INTEREST CAPITALISATION DATES" means (i)the date falling six months after
the date of this Agreement; (ii) each date falling at six monthly
intervals between such date and (in the case of Tranche B Advances and
Tranche C Advances) the Charterparty Commencement Date; and (iii) (in the
case of Tranche A Advances) the Notional Interim A Facility Date and the
Charterparty Commencement Date;
"LENDERS" means the Initial Lenders and any person who becomes a Lender
from time to time pursuant to Clause 15 (Transfers) but excluding any
person who ceases to be a Lender pursuant to that Clause;
"LENDING OFFICE" means in relation to a Lender, the branch office of such
Lender through which such Lender is for the time being acting for the
purposes of this Agreement;
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<PAGE>
"LISTED ITEMS" means the equipment defined as the "LISTED ITEMS" in the
Rig Construction Contract;
"LISTED ITEMS PRICE" means the price payable by the Borrower to the
Builder in respect of the Listed Items;
"LOAN" means the aggregate principal amount advanced by the Lenders
hereunder under any of the Facilities or (as the context requires) the
amount thereof for the time being outstanding hereunder and shall include
interest which has accrued and been capitalised in accordance with Clause
5.2;
"MC1" means Petro Dia Three S.A. a company incorporated under the laws of
Panama whose registered office is at 53rd Street, Urbanizacion Obarrio,
Torre Swiss Bank, 16th Floor, Panama City, Republic of Panama;
"MC2" means Petro Dia Four S.A. a company incorporated under the laws of
Panama whose registered office is at 53rd Street, Urbanizacion Obarrio,
Torre Swiss Bank, 16th Floor, Panama City, Republic of Panama;
"MAJORITY LENDERS" means those Lenders the aggregate of whose Outstandings
comprise at least 66 2/3% of the Loan or, if an Advance has not then been
made, Lenders the aggregate of whose Commitments represent at least 66
2/3% of the Total Commitments;
"MANAGEMENT ACCOUNT" means an account to be opened by and in the name of
the Borrower with the Management Account Bank and designated as the
Facility Agent may specify, and shall include any sub-account forming part
of such account and also any such other account or accounts as may, with
the agreement from time to time of the Security Agent, be opened and/or
designated as the Management Account by the Borrower;
"MANAGEMENT ACCOUNT BANK" means The Bank of Tokyo-Mitsubishi Limited,
London Branch or such other bank as the Facility Agent may nominate for
the purpose of holding and operating the Management Account;
"MANAGEMENT ACCOUNT CHARGE" means the charge over the Management Account
to be executed by the Borrower in favour of the Security Agent for itself
and as trustee for the Secured Parties in accordance with Clause 7.1(vii);
"MARITIMA" means Maritima Petroleo e Engenharia Ltda, (formerly Maritima
Navegacao e Engenharia Ltda), a company incorporated under the laws of
Brazil whose registered office is at Avenida Almte, Barroso, 52 Gr. 3400,
2031-000 Rio de Janeiro, Brazil;
"MONTHLY OUTGOINGS" means (in relation to each and every month) the day to
day administration and operational costs and expenses incurred or to be
incurred by the Borrower in the operation of the Rig for that month
exclusive of any such as arise under the provisions of this Agreement,
being an amount equal to the aggregate of the Daily Rate applicable for
the month in question multiplied by the number of days in that month;
"MORTGAGE DEBENTURE" means a first priority mortgage debenture to be
executed by the Borrower pursuant to Clause 7.1(x) in favour of the
Security Agent for itself and as trustee for the Secured Parties;
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<PAGE>
"NOTIONAL FINAL FACILITY DATE" means 31 December 2000;
"NOTIONAL INTERIM A FACILITY DATE" means, in relation to the Tranche A
Facility, 29 October 1999;
"OFF-HIRE DEDUCTIBLE" means any amount which is deductible by insurers
before amounts become payable and which is deducted from amounts which are
payable under the terms of the off-hire insurance effected pursuant to
Clause 11.3 in the event of a claim being made in respect of such
insurance;
"OMNIBUS CONTRACT ASSIGNMENT" means the assignment to be executed
in accordance with Clause 7.1(ix);
"ORIGINAL SCHEDULED CHARTERPARTY COMMENCEMENT DATE" means 17 September
2000;
"ORIGINAL SCHEDULED YARD DELIVERY DATE" means 30 June 2000;
"OTHER SERVICES CONTRACTS" means the contracts specified in Schedule 3
Part 2;
"OUTSTANDINGS" means, in relation to a Lender at any time, the aggregate
principal amount of its participation in all (if any) Advances outstanding
at that time;
"OUTSTANDING INDEBTEDNESS" means the Loan and all interest thereon and all
other sums of money from time to time owing to the Lenders under this
Agreement and/or the Security Documents or any of them;
"PETROBRAS" means Petroleo Brasileiro S.A. - Petrobras;
"POST-DELIVERY OPEX" means costs incurred by the Borrower in the operation
of the Rig during the period between the Yard Delivery Date and the
Charterparty Commencement Date;
"POTENTIAL EVENT OF DEFAULT" means any event or circumstance which, with
the giving of notice, lapse of time or both or the satisfaction of any
other applicable condition or the making of any applicable determination,
may become an Event of Default;
"PRE-DELIVERY OPEX" means costs incurred by the Borrower in respect of
crews wages and travelling expenses during the period between the Original
Scheduled Yard Delivery Date and the Yard Delivery Date;
"PRIDE" means Pride International Inc., a company incorporated under the
laws of the State of Louisiana, USA of 5847 San Felipe, Suite 330,
Houston, Texas 77057 USA;
"PROJECT DOCUMENTS" means the documents specified in Schedule 7
Part 1;
"PROJECT PARTIES" means the parties to the Project Documents (including
the Security Parties);
"PROSPECTIVE FINAL GROSSED-UP ADVANCES AMOUNT" means on any date in
respect of any Facility the amount of the Advances which (on the basis of
the Advances which have been made or deemed to have been made under such
Facility on or prior to such date and
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<PAGE>
the Advances which after such date will be deemed to be made pursuant to
Clause 4.4 for the purposes of capitalising interest on such Advances)
will be outstanding under such Facility on the Notional Final Facility
Date on the assumption that no other Advances are made (save only for
Advances deemed to be made in accordance with Clause 4.4 for the purposes
of capitalising interest) and no payments of interest or repayments of any
Advance are made between such date and the Notional Final Facility Date;
"PROSPECTIVE INTERIM GROSSED-UP A ADVANCES AMOUNT" means on any date in
respect of the Tranche A Facility the amount of the A Advances which (on
the basis of the A Advances made or deemed to have been made under the
Tranche A Facility on or prior to such date and the A Advances which after
such date will be deemed to be made pursuant to Clause 4.4 for the
purposes of capitalising interest on such A Advances) will be outstanding
under the A Facility on the Notional Interim A Facility Date on the
assumption that no other A Advances (save any for A Advances deemed to be
made in accordance with Clause 4.4 for the purposes of capitalising
interest) are made and no payments of interest or repayments of any
Advance are made between such date and the Notional Interim A Facility
Date;
"PROVISIONAL CONTRACT PRICE" has the meaning ascribed thereto in the Rig
Construction Contract;
"PURCHASER'S SUPPLIES" has the meaning ascribed to such term in the Rig
Construction Contract;
"PURCHASER'S SUPPLIES CONTRACTS" means the contracts entered into or
novated from time to time by the Borrower for the purchase of Purchaser's
Supplies;
"PURCHASER'S SUPPLIES PRICE" means the aggregate amount payable by the
Borrower to the suppliers of Purchaser's Supplies under the Purchaser's
Supplies Contracts;
"QUALIFYING LENDER" means Elliott Associates LP, Westgate International LP
and/or any person who in accordance with Clause 15.3 becomes a Lender
under this Agreement and complies with the requirements of that Clause and
being (in the case only of a Transferee to whom a Lender is proposing to
transfer or novate any of its Tranche A Commitments), either (i) a bank or
other financial institution which is a first class international bank
incorporated in any country which is a member of OECD or (ii) a person
approved by MC1 such approval not to be unreasonably withheld or delayed;
"REFUND GUARANTEE" means the guarantee issued to Petrodrill Construction
Inc and novated to the Borrower by The Export-Import Bank of Korea (or
such other international bank acceptable to the Lenders) in respect of
certain instalments of the Contract Price paid by the Borrower to the
Builder pursuant to the Rig Construction Contract;
"REPAYMENT DATE" means any of the eighty-four (84) repayment dates
specified in the Repayment Schedule;
"REPAYMENT INSTALMENT" means each instalment for repayment of the Loan and
payment of interest thereon, in each case as provided for in Clauses 6.2
and 6.3;
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<PAGE>
"REPAYMENT SCHEDULE" means the schedule substantially in the form set out
in Schedule 2 to be prepared by the Facility Agent in accordance with
Clause 6.3;
"REQUISITION COMPENSATION" means all moneys or other compensation payable
during the Security Period by reason of requisition for title or other
compulsory acquisition of the Rig otherwise than by requisition for hire;
"RESERVE ACCOUNT" means an account to be opened by and in the name of the
Borrower with the Reserve Account Bank and designated as the Facility
Agent may specify, and includes any sub-account forming part of such
account and also any such other account or accounts as may, with the
agreement from time to time of the Facility Agent, be opened and/or
designated as the Reserve Account by the Borrower;
"RESERVE ACCOUNT BANK" means The Bank of Tokyo-Mitsubishi Limited, London
Branch or such other bank as the Facility Agent may nominate for the
purpose of holding and operating the Reserve Account;
"RESERVE ACCOUNT CHARGE" means the charge over the Reserve Account to be
executed by the Borrower in favour of the Security Agent for itself and as
trustee for the Secured Parties in accordance with Clause 7.1(viii);
"RIG" means the semi submersible drilling platform to be built, or (as the
case may be) being built or (as the case may be) built and delivered to
the Borrower pursuant to the Rig Construction Contract including the
Materials, the Listed Items and the Purchaser's Supplies (all as defined
in the Rig Construction Contract);
"RIG CONSTRUCTION CONTRACT" means the agreement dated 9 April 1998 and
executed between the Builder and Petrodrill Construction Inc and novated
to the Borrower in the approved form for the construction and delivery of
a semi-submersible drilling platform having Builder's Hull No 3015 (as the
same may hereafter be amended and supplemented from time to time with the
prior approval of the Lender);
"RIG CONSTRUCTION CONTRACT AND REFUND GUARANTEE ASSIGNMENT" means the
assignment executed or to be executed in accordance with Clause 7.1(i);
"RIG MORTGAGE" means a first priority mortgage on the Rig to be executed
by the Borrower pursuant to Clause 7.1(iii) (together with the Deed of
Covenants supplemental thereto);
"SECURED OBLIGATIONS" means all monies, obligations and liabilities of any
nature whatsoever which are now or at any time hereafter may be or become
due or owing by the Borrower or any of the other Security Parties to
either of the Agents or any of the Lenders under or pursuant to any of the
Financing Documents (including damages for breaches thereof) and any other
liabilities, whether actual or contingent, now existing or hereafter
incurred by the Borrower or any of the other Security Parties to either of
the Agents or any of the Lenders under or pursuant to any of the Financing
Documents or under or pursuant to any of the Sister Company Financing
Documents (whether in either case due, owing or incurred by the Borrower
or such other Security Parties alone or jointly with any other person(s)
and in whatever name, firm or style and whether as principal or surety);
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<PAGE>
"SECURED PARTIES" means the Lenders and the Agents and also the Lenders
and the Agents (as defined in the Sister Company Loan Agreement);
"SECURITY AGENT" means Mitsubishi Corporation (UK) PLC in its capacity as
security agent and trustee for the Lenders under the Security Trust Deed
and includes any successor security agent and trustee appointed under the
terms hereof and thereof;
"SECURITY DOCUMENTS" means the agreements, mortgages, deeds and other
documents specified in Schedule 7 Part 2 and any other documents
(including, as the context may require, this Agreement) that may now or
hereafter be executed as security for the Loan or any part thereof but
excluding (for the avoidance of doubt) the Floor Guarantee;
"SECURITY PARTIES" means the Borrower, the Guarantors, the Shareholder,
the Sister Company, and during the period prior to the unconditional and
irrevocable performance by each of the Additional Funders of their
obligations under the Additional Funding and Guarantee Agreement and
unless and until the Additional Funders are no longer under any actual or
contingent obligation under the Additional Funding and Guarantee Agreement
the Additional Funders or any of them, and "SECURITY PARTY" means any of
them;
"SECURITY PERIOD" means the period commencing on the date hereof and
terminating on the date upon which all moneys payable or to become payable
to the Agents and/or the Lenders at any time and from time to time
pursuant to the terms hereof and pursuant to the Security Documents and
all moneys payable or to become payable to the Agents and/or the Lenders
at any time and from time to time pursuant to the Sister Company Financing
Documents shall have been paid in full and neither the Agents nor any of
the Lenders are under any actual or contingent obligation to the Borrower
or the Sister Company under the Financing Documents or the Sister Company
Financing Documents;
"SECURITY TRUST DEED" means the security trust deed entered into or to be
entered into relating to the security granted in favour of the Security
Agent by the Borrower;
"SERVICES CONTRACTS" means the contracts specified in Schedule 3
Part 1 between the Borrower and the Services Providers;
"SERVICES PROVIDERS" means the persons specified in the Service Contracts
for the provision of services to the Borrower and the Rig in the course of
its operation;
"SERVICES RENDERING CONTRACT" means the contract (Contract No.
101.0.156.97-1) which is supplemental to the Charterparty and which
provides for services related thereto in relation to the Rig, as executed
on or around 12 January 1998 by and between Maritima and Petrobras in the
approved form, with the Borrower since being joined as an intervenient
party with Petrobras' approval by a document executed by and between
Petrobras, Maritima and the Borrower and dated 21 August 1998;
"SERVICES RENDERING CONTRACT ASSIGNMENT" means the assignment to be
executed in accordance with Clause 7.1(v);
"SERVICES RENDERING CONTRACT PAYMENTS" means payments made or to be made
by Petrobras to the Borrower pursuant to the Services Rendering Contract;
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<PAGE>
"SHARE CHARGE" means the charge over the whole of the issued share capital
of the Borrower to be executed by the Shareholder in favour of the
Security Agent for itself and as trustee for the Secured Parties in
accordance with Clause 7.1(x);
"SHAREHOLDER" means Amethyst Financial Company Limited, a company
incorporated in the British Virgin Islands as the shareholder in
the Borrower;
"SISTER COMPANY" means Petrodrill Six Limited a company incorporated
under the laws of the British Virgin Islands under Company No. 273686;
"SISTER COMPANY FINANCING DOCUMENTS" means all or any of the agreements
and documents to be executed by or in favour of the Agents and/or the
Lenders for the provision of finance in connection with the acquisition
and operation by the Sister Company of the Sister Rig, and shall include
all agreements, encumbrances, guarantees and other documents and
instruments entered into pursuant to or as contemplated by such agreements
whether by the Sister Company or any third party but excluding (for the
avoidance of doubt) the Floor Guarantee;
"SISTER COMPANY LOAN AGREEMENT" means the loan agreement of the same date
as this Agreement between the same parties as the parties to this
Agreement for the provision by the Lenders of certain loan facilities to
the Sister Company relating to the acquisition of the Sister Rig by the
Sister Company;
"SISTER RIG" means the semi-submersible drilling rig (Builder's Hull No.
3016) to be built or (as the case may be) being built or (as the case may
be) built and delivered to the Sister Company pursuant to the contract
between Petrodrill Construction Inc. and the Builder and novated to the
Sister Company, to be owned and operated by the Sister Company including
the Materials, Listed Items and the Purchaser's Supplies (all as defined
in such contract);
"SUB-CONTRACTORS' GUARANTEES" means the guarantees or warranties of the
Builder's sub-contractors, as referred to in Clause 17.13 of the Rig
Construction Contract;
"SUBORDINATED LOAN FACILITY AGREEMENT" means the agreement dated the same
date as this agreement to be executed in accordance with Clause 7.1(xiv);
"SURPLUS EARNINGS" means, at any relevant time, such amount of the
Earnings (i) which remains standing to the credit of the Management
Account at such time and (ii) which is available for transfer to the
Reserve Account pursuant to Clause 12.2 at such time;
"TEMPORARY CONFIRMATION OF INSURANCE" means the temporary confirmation of
insurance (and described as Temporary Confirmation of Insurance) issued by
McGriff, Seibels, bartama & Colvin Inc (as brokers) on 15 December 1998
with Assigned No.
MS-S711A-Daewoo;
"TOTAL PROJECT COSTS" means the aggregate of the Contract Price, the
Listed Items Price, the Pre-delivery Opex, the Construction and
Mobilisation Costs, Post-delivery Opex and all other costs and expenditure
of any nature which it is necessary for the Borrower to incur in order to
perform its obligations under the Rig Construction Contract and to
acquire, transport and mobilise the Rig and to have the Rig (having first
arrived at the
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<PAGE>
port or in sheltered waters in Macae - RJ) accepted by Petrobras, all in
accordance with the Charterparty;
"TOTAL TRANCHE A COMMITMENTS" means at any time the aggregate of all the
Tranche A Commitments of all the Lenders at such time;
"TOTAL TRANCHE B COMMITMENTS" means at any time the aggregate of all the
Tranche B Commitments of all the Lenders at such time;
"TOTAL TRANCHE C COMMITMENTS" means at any time the aggregate of all the
Tranche C Commitments of all the Lenders at such time;
"TOTAL COMMITMENTS" means at any time the aggregate of all the Commitments
of all the Lenders at such time;
"TOTAL FACILITIES AMOUNT" means the lesser of (i) US$180,000,000 and (ii)
the aggregate of 100% of the Contract Price, the Purchaser's Supplies
Price, the Construction and Mobilisation Costs, Pre-delivery Opex,
Post-delivery Opex and interest capitalised in accordance with Clause 4.4;
"TOTAL LOSS" means:-
(i) the actual total loss of the Rig;
(ii) the agreed, arranged or constructive total loss of the Rig;
(iii) requisition for title or other compulsory acquisition of title of
the Rig by any governmental or other competent authority, agency or
instrumentality otherwise than by requisition for hire;
(iv) capture seizure arrest detention or confiscation of the Rig by any
government or person acting or purporting to act on behalf of any
government unless the Rig be released and restored to the Borrower
from such capture seizure arrest or detention within 6 months after
the occurrence thereof or such other period as may be specified in
the Rig's Insurances;
"TOTAL OUTSTANDINGS" means at any time the Outstandings of all the Lenders
at such time;
"TRANCHE A FACILITY" means the loan facility referred to in Clause 2.1(a),
the terms and conditions of which are set out in this Agreement;
"TRANCHE B FACILITY" means the loan facility referred to in Clause 2.1(b),
the terms and conditions of which are set out in this Agreement;
"TRANCHE C AVAILABILITY COMMENCEMENT DATE" means the date on which the
conditions specified in Clause 3.5 (in addition to any other conditions
precedent to the availability of the Tranche C Facility) have been
satisfied and on which any part of the Tranche C Facility becomes
available for drawing;
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<PAGE>
"TRANCHE C FACILITY" means the loan facility referred to in Clause 2.1(c),
the terms and conditions of which are set out in this Agreement;
"TRANSFER CERTIFICATE" means an instrument executed pursuant to and in
accordance with Clause 15.4;
"TRANCHES" means the tranches into which the Loan is deemed to be divided
in accordance with and for the purposes of certain provisions of this
Agreement;
"TRANSFEREE" means a Qualifying Lender to whom a Lender transfers all or
part of such Lender's rights, benefits and obligations under this
Agreement, the other Security Documents and the Sister Company Financing
Documents subject to and in accordance with Clause 15 and the provisions
of the Sister Company Loan Agreement;
"US DOLLARS" or "US$" or "$" means the lawful currency from time to time
of the United States of America;
"YARD DELIVERY DATE" means the date on which the Rig is delivered by the
Builder to, and accepted by, the Borrower in accordance with the Rig
Construction Contract; and
"YEAR" means each successive period of 365 days throughout the Security
Period, the first such period to commence on the Charterparty Commencement
Date.
1.2 CONSTRUCTION OF PARTICULAR EXPRESSIONS
Any reference in this Agreement to:-
"APPROVED FORM" means, in relation to any document, the document in
question being in such form and having such content as shall have been
approved by the Facility Agent;
"CALENDAR MONTH" means a period commencing on the first day of the month
and ending on the last day of that month (for example, the period 1
January to 31 January shall be a calendar month);
"CERTIFIED COPY" means, in relation to any document certified by a
company, a copy of such document bearing the endorsement "Certified a
true, complete and accurate copy of the original" and signed and dated by
a duly authorised officer of the company in question;
"CLAIM" has the meaning given to this expression in the
definition of "Environmental Claim" in Clause 1.1;
"ENCUMBRANCE" means a mortgage, charge, pledge, lien or other encumbrance
securing any obligation of any person or any other type of contractual or
preferential arrangement (including, without limitation, title transfer
and retention of title and set off arrangements) having a similar legal or
economic effect, but excluding any encumbrances arising by operation of
law or in the ordinary course of business which are discharged in the
ordinary course of business unless being contested in good faith and by
appropriate proceedings;
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<PAGE>
"EXCESS RISKS" means the proportion (if any) of claims for general
average, salvage and salvage charges not recoverable under the hull and
machinery policies in respect of the Rig in consequence of her insured
value being less than the value at which the Rig is assessed for the
purpose of such claims;
"GOVERNMENTAL AUTHORITY" includes any political sub-division of such
governmental authority;
"HOLDING COMPANY" has the meaning given to this term in Section 736 of the
Companies Act 1985 (or any statutory modification or re-enactment
thereof);
"INDEBTEDNESS" means, in relation to any person, any obligation of any
kind (whether present or future, actual or contingent, whether incurred as
principal or surety and whether in respect of interest, principal or
otherwise) for the payment or prepayment of money;
"MONTH" means a period beginning in one calendar month and ending in the
next calendar month on the day numerically corresponding to the day of the
calendar month on which it started provided that (i) if the period started
on the last Banking Day in a calendar month or if the next calendar month
contains no such numerically corresponding day, it shall end on the last
Banking Day in the next calendar month and (ii) if such numerically
corresponding day is not a Banking Day, the period shall end on the next
following Banking Day but if there is no such Banking Day it shall end on
the preceding Banking Day, and the terms "MONTHS" and "MONTHLY" shall be
construed accordingly;
"PERSON" means any person, firm or company (and shall include that
person's assignees);
"PROTECTION AND INDEMNITY RISKS" (in relation to the Insurances for the
Rig) means the usual risks covered by an English protection and indemnity
association including the proportion not recoverable in case of collision
under the ordinary running down clause;
"SAME DAY FUNDS" means freely transferable funds in the currency due
hereunder settled for same day value in such manner and through such
clearing system (if any) as the Lender shall notify to the Borrower as
being customary for the settlement in such currency of international
transactions of the type contemplated by this Agreement;
"SUBORDINATED INDEBTEDNESS" means any indebtedness of any of the Security
Parties which cannot lawfully be repaid prior to such time as all amounts
due and/or to become due to the Lender under or in connection with the
Financing Documents have been repaid/paid in full;
"SUBSIDIARY" means in relation to any company any entity over fifty per
cent (50%) of whose capital is owned, directly or indirectly, by such
company or which is otherwise effectively controlled directly or
indirectly by such company and "control" for this purpose means control by
virtue of the direct or indirect ownership of the majority of the voting
share capital or the right to appoint management or direct policies by
virtue of ownership of share capital, contract or otherwise;
"TAXES" means any present or future taxes, levies, duties, charges, fees,
deductions or withholdings of any nature now or hereafter imposed, levied,
collected, withheld or
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<PAGE>
assessed by any country or any political sub-division or taxing authority
thereof and "TAX" and "TAXATION" shall be construed accordingly;
a TIME OF DAY shall (unless otherwise specified) be construed as a
reference to London time; and
"WAR RISKS" (in relation to the Insurances for the Rig) includes the risk
of mines and all risks excluded from the standard form of English marine
policy by Clause 23 of the Lloyd's Institute Time Clauses (Hull) 1/10/83).
1.3 CONSTRUCTION OF CERTAIN REFERENCES
In this Agreement, unless the context otherwise requires:
(1) References to this Agreement include the Recitals, Appendices and
Schedules to this Agreement and references to Clauses, Appendices
and Schedules are to be construed as references to the Clauses of,
and Appendices and Schedules to, this Agreement as amended from time
to time;
(2) References to (or to any specified provisions of) any Financing
Document or any other document shall be construed as references to
such Financing Document, that provision or that document as amended
or novated or supplemented (as the case may be) from time to time;
and
(3) References to the singular shall include the plural and vice versa;
1.4 HEADINGS
Clause headings are inserted for convenience of reference only and shall
be ignored in the interpretation of this Agreement.
2. THE FACILITY
2.1 AMOUNT AND CURRENCY
The Lenders upon and subject to the terms of this Agreement and in
reliance on the representations and warranties by the Borrower herein
contained hereby agrees to make available to the Borrower the following
facilities:
(a) the Tranche A Facility, being a facility in an amount (and including
all interest on A Advances capitalised in accordance with this
Agreement to the Notional Interim A Facility Date) not exceeding
US$53,000,000;
(b) the Tranche B Facility, being a facility in an amount (including all
interest on B Advances capitalised in accordance with this
Agreement) not exceeding US$74,000,000; and
(c) the Tranche C Facility, being a facility in an amount (including all
interest on C Advances capitalised in accordance with this
Agreement) not exceeding US$53,000,000.
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<PAGE>
2.2 PURPOSE
The Facilities are made available for, and shall be applied by the
Borrower exclusively to:
(i) the payment by the Borrower to the Builder of amounts falling due to
the Builder in respect of the Contract Price in accordance with the
Rig Construction Contract or in reimbursement to the Borrower of the
instalments of the Contract Price paid by the Borrower prior to the
Drawdown Date of the Advance in question;
(ii) as to an amount not exceeding US$10,000,000, in making the
Inter-company Loan to the Sister Company;
(iii) if the Yard Delivery Date is postponed beyond the Original Scheduled
Yard Delivery Date, towards Pre-delivery Opex not exceeding
US$20,000 per day;
(iv) as to an amount not exceeding US$11,800,000, towards Construction
and Mobilisation Costs;
(v) Post-delivery Opex;
(vi) in the case of Advances deemed to have been made under Clause 4.4,
in capitalising interest in accordance with such Clause; and
(vii) the payment of interest accrued on Tranche A Advances during the
period from the Bridging Loan Repayment Date to the Charterparty
Commencement Date.
2.3 OBLIGATIONS OF THE LENDERS
Each Lender will participate through its Lending Office:
(i) in each Tranche A Advance in the proportion borne by its Tranche A
Commitment to the Total Tranche A Commitments on the Drawdown Date
of such Tranche A Advance;
(ii) in each Tranche B Advance in the proportion borne by its Tranche B
Commitment to the Total Tranche B Commitments on the Drawdown Date
of such Tranche B Advance; and
(iii) in each Tranche C Advance in the proportion borne by its Tranche C
Commitment to the Total Tranche C Commitments on the Drawdown Date
of such Tranche C Advance.
The obligations of each Lender hereunder are several and the failure of
any Lender to carry out its obligations hereunder shall not relieve any
other Lender, the Agents or the Borrower from any of its or their
respective obligations to the parties hereto other than to such Lender
which has so failed, and neither shall either of the Agents nor any Lender
be responsible for the obligations of any Lender or (as the case may be)
any other Lender hereunder.
2.4 INTERESTS OF LENDERS
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Notwithstanding any other term of this Agreement, the interests of the
Lenders are several and the aggregate of the amounts outstanding at any
time hereunder from the Borrower to any Lender or to the Facility Agent or
the Security Agent for its own account is a separate and independent debt.
Save as otherwise expressly provided herein or in any other Security
Document each of the Agents and every Lender shall each have the right to
protect and enforce its rights arising under this Agreement and it shall
not be necessary for any Lender or (as the case may be) either of the
Agents to be joined as an additional party in any proceedings for this
purpose but this is without prejudice to Clause 10.4.
2.5 UNCONDITIONAL OBLIGATIONS
The Borrower enters into this Agreement as principal, and the obligations
of the Borrower to make payment hereunder and to observe and perform all
of its other obligations under this Agreement are absolute, unconditional
and irrevocable obligations of the Borrower and are not and shall not be
deemed to be in any way conditional or dependent upon the performance of
the Rig Construction Contract by the Builder or the performance by
Petrobras of its obligations under the Charterparty and/or the Services
Rendering Contract, the continued hiring of the Rig under the
Charterparty, the availability of funds in the Management Account and/or
the Reserve Account or the performance by any other party other than the
Lenders of its obligations to the Borrower or the successful delivery or
operation of the Rig or any other matter or event of any nature whatsoever
save as expressly provided in this Agreement.
3. CONDITIONS PRECEDENT
3.1 INITIAL CONDITIONS
None of the Facilities shall be available for drawing until the
satisfaction, in a manner in all respects satisfactory to the Facility
Agent, of the following conditions and until delivery to the Facility
Agent of the following documents, all in form and substance satisfactory
to the Facility Agent:
(i) a certified copy of each of the Project Documents, certified in each
case by the parties thereto;
(ii) a certificate signed by the Borrower certifying that each Project
Document to which it is a party is in full force and effect and that
all conditions precedent to the parties' respective obligations
thereunder have been satisfied (or identifying those conditions
which have not yet been satisfied) and that all necessary
authorisations of governmental and other authorities to which the
parties to such documents are subject have been obtained to such
documents and the performance by the parties thereto of their
respective obligations thereunder other than registration with the
Brazilian Central Bank;
(iii) the Security Documents other than the Mortgage and the Deed of
Covenants duly executed by the parties thereto;
(iv) the documents specified in Clause 7.1 (except those specified in
Clause 7.1(iii));
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(v) certified copies of the Articles of Incorporation and By-Laws of
each of the Security Parties and the certificate of good standing
and certificate of incumbency of each of the Security Parties;
(vi) a duly certified copy of the resolutions of the Board of Directors,
or such other documents evidencing the completion of corporate
authorisation procedures (to the satisfaction of the Facility Agent)
of each of the Security Parties authorising the execution, delivery
and performance of each of the Financing Documents to which it is a
party and, as the case may be, including the incurring of debt
obligations hereunder and thereunder, upon the terms hereof and
thereof and authorising the person(s) who signed, or will sign, this
Agreement, the Security Documents and all other agreements and
documents executed or to be executed pursuant hereto and thereto on
behalf of the relevant Security Party to do so, and any power of
attorney executed in connection therewith;
(vii) specimen signature(s) of the person(s) authorised to execute this
Agreement, the Security Documents and all other documents to be
provided hereunder or thereunder on behalf of the Security Parties;
(viii)a duly certified copy of the shareholder's consent to and approval
for the actions taken at the Board of Directors' meeting of the
Borrower and the Sister Company to give guarantees in respect of,
and to charge their assets as security for, each other's liabilities
to the Secured Parties under the Financing Documents and the Sister
Company Financing Documents;
(ix) certified copies of all governmental approvals, authorisations,
consents, registrations and confirmations, if any, with respect to
this Agreement and the Security Documents shall have been received
by the Facility Agent other than registration with the Brazilian
Central Bank;
(x) a written confirmation from each of the agents for service of
process appointed by the Borrower pursuant to this Agreement and the
Security Documents irrevocably accepting such appointment shall have
been received by the Lender;
(xi) a legal opinion from the English legal advisers to the Agents and
the Initial Lenders in a form acceptable to the Facility Agent;
(xii) a legal opinion from Higgs & Johnson, Bahamian counsel to the Agents
and the Initial Lenders, in a form acceptable to the Facility Agent;
(xiii)a legal opinion from Tozzini Freise Teixeira e Silva, Brazilian
counsel to the Agents and the Initial Lenders, in a form acceptable
to the Facility Agent;
(xiv) a legal opinion from Dancia Penn & Co, British Virgin Islands
counsel to the Agents and the Initial Lenders, in a form acceptable
to the Facility Agent;
(xv) a legal opinion from Kim & Chang, Korean counsel to the Agents and
the Initial Lenders, in a form acceptable to the Facility Agent;
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(xvi) legal opinions from Baker & Botts LLP and from [name of Louisiana
Counsel], US counsel to the Agents and the Initial Lenders, in a
form acceptable to the Facility Agent;
(xvii) a legal opinion from Zevan & Associates, Netherlands Antilles
Counsel to the Agents and the Initial Lenders, in a form acceptable
to the Facility Agent;
(xviii) a legal opinion from Nauta Dutilh, Netherlands Counsel to the
Agents and the Initial Lenders, in a form acceptable to the
Facility Agent;
(xix) a legal opinion from Kleinberg Kaplan Wolff and Cohen, New York
Counsel to the Agents and the Initial Lenders, in a form acceptable
to the Facility Agent;
(xx) a legal opinion from Maples and Calder, Cayman Islands, Counsel to
the Agents and the Initial Lenders, in a form acceptable to the
Facility Agent;
(xxi) the Bridging Loan Agreement having been duly executed in the
approved form and having become unconditional in accordance with
its terms;
(xxii) the Additional Funding and Guarantee Agreement in the approved form
having been duly executed by the parties thereto and having become
unconditional in accordance with its terms;
(xxiii) a letter from Petrobras in the approved form regarding the
delivery and acceptance of the Rig under the Charterparty;
(xxiv) the completion of all filings, registration or recordings of all of
the Security Documents required by the laws of any applicable
jurisdiction; and
(xxv) evidence satisfactory to the Facility Agent that the Rig
Construction Contract, the Charterparty and the Services Rendering
Contract are in full force and effect.
3.2 PRE-DELIVERY ADVANCES
The making of each Pre-delivery Advance and of each Post Yard Delivery
Advance shall be subject to the delivery to the Facility Agent (if the
Lender so requests) of such evidence as the Facility Agent may reasonably
require that the instalment of the Contract Price to which such Advance is
to be applied has been paid or (as the case may be) become due and payable
under the Rig Construction Contract or (in the case of an Advance
requested in respect of Pre-delivery Opex or Construction and Mobilisation
Costs) that the relevant expenditure has been paid or (as the case may be)
become due and payable within the requirements of Clause 2.2(iii) or (as
the case may be) 2.2(iv).
3.3 YARD DELIVERY ADVANCE AND POST YARD DELIVERY ADVANCES
The making of the Yard Delivery Advance and of each Post Yard Delivery
Advance shall be conditional upon and (in the case of the Yard Delivery
Advance) be made simultaneously with:
(i) the Rig having been duly delivered by the Builder to and accepted by
the Borrower in accordance with the Rig Construction Contract, and
the protocol of
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delivery and acceptance and other delivery documents required by the
Rig Construction Contract having been duly executed and delivered in
accordance with the terms thereof;
(ii) the Rig having been duly registered in the Registry of Bahamian
Ships and the Borrower having been registered as the owner of
64/64th shares in the Rig (free of all encumbrances other than the
Rig Mortgage and the Mortgage Debenture), and a provisional
certificate of registration having been issued by such Registry;
(iii) the Rig Mortgage, together with the Deed of Covenants collateral
thereto, having been duly executed by the Borrower, received by the
Security Agent and registered in the Registry of Bahamian Ships;
(iv) the Rig having been insured and entered in the P & I Club (including
the Mortgagee's Interest Insurance with Additional Perils
(Pollution) Insurance) in accordance with the provisions of the
Mortgage and the Deed of Covenants and all requirements therein and
in this Agreement and the other Financing Documents in respect of
insurance having been complied with;
(v) the Insurances Assignment having been duly executed by the
parties thereto and consented to, or notified to and acknowledged
by, the relevant parties, and copies of all Insurances taken out
pursuant to the Mortgage, the Deed of Covenants and this Agreement
and the other Financing Documents and an entry certificate in the P
& I Club and the original of the letter of undertaking to be issued
by the P & I Club having been received by the Security Agent, each
in form and substance satisfactory to the Facility Agent;
(vi) certified copies of all Korean and Bahamian governmental approvals,
authorisations, consents, registrations and confirmations with
respect to the delivery and export of the Rig to the Borrower
pursuant to the Rig Construction Contract and with respect to
registration (whether provisional or permanent) of title to the Rig
in the name of the Borrower under the Bahamian flag having been
received by the Facility Agent;
(vii) a certified copy of the Classification Certificate stating that the
Rig has been built according to the class requirements (without
recommendations) having been received by the Facility Agent; and
(viii)all such other agreements, documents certificates or opinions as
the Facility Agent may reasonably request having been received by
the Facility Agent.
3.4 TRANCHE B ADVANCES
Prior to the Tranche C Availability Commencement Date no Tranche B Advance
may be drawn under the Tranche B Facility unless and until the Tranche A
Facility (including Advances deemed to have been made in accordance with
Clause 4.4) has been drawn to the fullest extent possible without
breaching the condition imposed by Clause 3.6(ix).
3.5 TRANCHE C ADVANCES
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The Tranche C Facility shall be made available to the extent that and in
the amount that the Bridging Loan has been repaid by MC2 pursuant to the
Bridging Loan Agreement and Tranche C Advances from time to time may be
drawn PRO TANTO in an aggregate amount not exceeding the amount so repaid.
3.6 ALL ADVANCES
The obligations of the Lenders to make any Advance under any of the
Facilities shall be subject to the further conditions that as at the
Drawdown Date of each such Advance:
(i) no Event of Default or Potential Event of Default shall have
occurred and be continuing;
(ii) each of the Project Documents shall then continue to be in full
force and effect and no event of default (howsoever described) and
no event or circumstance which with the giving of notice or lapse of
time may become such an event has occurred under any Project
Document;
(iii) the proceeds of the Advance shall, on the Drawdown Date of the
Advance, be due from the Borrower to the Builder under the Rig
Construction Contract or, as the case may be, the Borrower has
provided the Facility Agent with such evidence as the Facility Agent
may require that such proceeds will be applied for the purposes
specified in Clause 2.2;
(iv) the Lender shall have been provided with such further documentation
or information in support of the Drawing Request in respect of such
Advance as the Facility Agent may reasonably determine to be
necessary;
(v) the representations and warranties made or deemed made in Clause 8
shall be true in all material respects on and as of the Drawdown
Date of such Advance with the same effect as though such
representations and warranties had been made on and as of such
Drawdown Date;
(vi) the making of such Advance not causing the amount outstanding in
respect of the Facility under which it is drawn to exceed the
Available Facility Amount of such Facility on the Drawdown Date of
such Advance;
(vii) the making of such Advance not causing the Loan to exceed the Total
Facilities Amount;
(viii)the making of such Advance under any Facility not causing the
Prospective Final Grossed-up Advances Amount of such Facility to
exceed the Facility Amount of such Facility; and
(ix) in the case of a Tranche A Advance, the making of such Advance not
causing the Prospective Interim Grossed-up A Advances Amount of the
Tranche A Facility to exceed US$53,000,000.
3.7 NO WAIVER OF CONDITIONS
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The conditions specified in Clause 3 are for the exclusive benefit of the
Agents and Lenders and if the Facility Agent in its discretion allows the
Borrower to draw any Advance under any Facility notwithstanding that some
or all of the conditions specified in Clause 3 have not been satisfied the
Agents and the Lenders shall not thereby be deemed to have waived any such
condition, and the Borrower covenants with the Agents and the Lenders to
satisfy such conditions upon request from the Lenders forthwith or within
such time limit as the Facility Agent may agree.
4. DISBURSEMENT OF ADVANCES
4.1 GENERAL
Subject to the terms of this Agreement (including, but not limited to, the
conditions set forth in Clause 3):
(i) subject to sub-paragraph (ii) of this Clause 4.1, Advances
under the Tranche A Facility, the Tranche B Facility and the Tranche
C Facility may be drawn by the Borrower in a maximum principal
amount up to but not exceeding the Available Facility Amount of the
relevant Facility on the Drawdown Date of the relevant Advance when
requested by the Borrower from time to time during the Availability
Period; and
(ii) with effect from the Tranche C Availability Commencement Date
Advances shall be made under each of the Facilities in the
proportions PRO RATA which the Available Facility Amount of each
such Facility bears to the Total Available Facility Amounts of all
the Facilities on the Drawdown Date of such Advances.
4.2 PROCEDURE
When the Borrower wishes to draw any Advance under any of the Facilities,
it shall deliver to the Facility Agent a Drawing Request substantially in
the form of Schedule 4 appropriately completed, to be received by the
Lender not later than 11:00am (London time), seven (7) Banking Days prior
to the date of drawing of the Advance, specifying in respect of the
proposed Drawing:
(a) the date of the Drawing (which must be a Banking Day during
the Availability Period);
(b) the principal amount of the Advance in US Dollars; and
(c) the Facility under which the Drawing is requested.
The Borrower may deliver a Drawing Request setting out a schedule of
requested Pre-delivery Advances subject to the satisfaction of the
conditions specified in this Agreement on the Drawdown Date of such
Advances and, in particular, Clause 3.2. Subject to the terms of this
Agreement, such Drawing Request shall be irrevocable and the Borrower
shall be bound to borrow in accordance with such Drawing Request. The
Facility Agent shall promptly notify each Lender of such Drawing Request.
The Borrower may not deliver a Drawing Request hereunder until after
satisfaction of the other conditions precedent (including those applicable
to the relevant Facility) set out in Clause 3.
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4.3 TRANSFER OF FUNDS
Subject as otherwise provided herein each Lender shall on the relevant
Drawdown Date make available to the Facility Agent in US Dollars in the
manner and to the account provided for in Clause 9.2 the amount of its
participation in the relevant Advance in the proportion which its
Commitment in respect of the Facility under which such Advance is drawn
bears to the Total Commitments in respect of such Facility. The Borrower
irrevocably and unconditionally instructs and authorises the Facility
Agent to make each Advance upon and subject to the terms hereof:
(i) in the case of an Advance made or to be made for the purpose
specified in Clause 2.2(i) by paying the proceeds thereof (or such
proportion thereof as is not in reimbursement of amounts already
paid by the Borrower) by disbursement to the Builder;
(ii) in the case of an Advance made or to be made for the purpose
specified in Clause 2.2(ii) by disbursement to the Sister Company in
accordance with the Inter-Company Loan Agreement;
(iii) in the case of an Advance made or to be made for the purposes
specified in Clause 2.2(iii), 2.2(iv), 2.2(v), 2.2(vi) or 2.2(vii)
by disbursement to the Borrower of amounts paid or payable by the
Borrower in respect of the matters specified in such sub-clauses
and upon such disbursement of any amount the Lenders shall be deemed in
proportion to the respective amounts made available by them to the
Facility Agent to have made to the Borrower an Advance in US Dollars in
the amount of the amount so disbursed which shall satisfy PRO TANTO the
obligations of such Lenders to lend such amount to the Borrower hereunder
and shall reduce accordingly the amount of the Commitments and of such
Facility available for drawing.
4.4 CAPITALISATION OF INTEREST
Subject as provided in Clause 5.2(ii) on each Interest Capitalisation Date
the Borrower shall be deemed to have served a Drawing Request requesting
an Advance (an "INTEREST CAPITALISATION ADVANCE") in respect of each
Advance outstanding on such Interest Capitalisation Date in the amount of
interest to be capitalised on such outstanding Advance on such Interest
Capitalisation Date in accordance with Clause 5.2. Each Interest
Capitalisation Advance shall be deemed to have been requested from those
Lenders who have participated in the Advances (or to whom participations
in such Advances have been transferred in accordance with the Transfer
Certificates pursuant to which they become Lenders hereunder) to which it
relates (and shall be deemed to be drawn under the Facility or Facilities
under which such Advances were drawn) and (subject to Clause 4.5) such
Lenders shall be deemed to have made to the Borrower an Interest
Capitalisation Advance in US Dollars in the amount of such interest which
shall (i) increase the amount of the Loan by such amount; (ii) satisfy PRO
TANTO the obligations of such Lenders PRO RATA in proportion to their
respective participations in such Advance to lend such amount to the
Borrower hereunder; and (iii) reduce accordingly the amount of their
Commitments and of such Facility available for drawing. The Facility Agent
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shall calculate, and notify the relevant Lenders and the Borrower of the
amount of each Interest Capitalisation Advance and of such Lenders'
respective participations therein.
4.5 FACILITY LIMIT
Interest on the Advances will not be capitalised if this would cause the
amount of the Loan to exceed the Total Facilities Amount. Accordingly, if
on any Interest Capitalisation Date as a result of the application of
Clause 4.4 and of Clause 5.2 the aggregate amount of all Advances exceeds
(or, if an Interest Capitalisation Advance were made or deemed to be made
pursuant to Clause 4.4 the aggregate of all Advances would exceed) the
Total Facilities Amount the Borrower shall pay to the Facility Agent for
the account of the Lenders by way of a payment of interest the amount of
interest which would otherwise have been capitalised by means of such
Interest Capitalisation Advance.
4.6 CANCELLATION
Any portion of the Total Commitments in respect of any Facility not
advanced hereunder on or prior to the last day of the Availability Period
shall be reduced automatically to nil immediately thereafter and shall not
thereafter be available for drawing.
4.7 FAILURE TO DRAW
If for any reason (other than a default by a Lender or a Lender's bank)
the Advance is not made hereunder after a Drawing Request therefor has
been given pursuant to Clause 4.2, the Borrower will pay to the Facility
Agent for the account of the relevant Lenders such amount as the Facility
Agent may certify in reasonable detail (such certification to be
conclusive in the absence of manifest error) as necessary to compensate it
for any resulting loss or expense on account of funds acquired, contracted
for or utilised in order to fund the Advance.
5. INTEREST
5.1 RATE
Interest shall accrue on the Loan from the respective Drawdown Dates of
each Advance comprising the Loan until actual repayment (i) in respect of
the period prior to the Yard Delivery Date at the rate of 12.5% per annum
and (ii) thereafter, at the rate of 11% per annum.
5.2 CAPITALISATION AND PAYMENT OF INTEREST
(i) Subject to paragraph (i) below interest accruing prior to the
Charterparty Commencement Date shall be capitalised in accordance
with this Clause and the other provisions of this Agreement. On each
Interest Capitalisation Date interest which has accrued on the Loan
shall be capitalised and added to the amount of the Loan in
accordance with Clause 4.4 so that the principal amount of the Loan
shall thereafter be deemed for all purposes (including, but not
limited to, the calculation of interest) to comprise and to include
the principal amount advanced hereunder and the amount of such
capitalised interest deemed to have been advanced.
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(ii) Interest accruing on all Tranche A Advances during the period from
the Bridging Loan Repayment Date until the Charterparty Commencement
Date shall not be capitalised but shall be paid in arrears on each
Interest Capitalisation Date.
5.3 DEFAULT RATE
Without affecting any other remedy of the Lenders or the Agents hereunder,
the Borrower will pay interest on the Loan or any part thereof or interest
thereon or other sum due under this Agreement or any of the Security
Documents which is not paid on the due date for payment thereof for each
day during the period of such default at such annual rate as is
conclusively certified by the Facility Agent to the Borrower to be equal
to the aggregate of (1) two per cent (2%) per annum and (2) the higher of
(a) the rate quoted by the Facility Agent as the arithmetic mean quoted by
the Lenders (or, in the absence of such quotation from any Lender
determined by the Facility Agent) (weighted by reference to the
participations of the Lenders in the overdue payment in question) as being
the rates at which each such Lender was (or would have been), at or about
11.00am (London time) on the date of acquisition of the relevant deposits,
able in accordance with its usual practices to fund in US Dollars from its
principal bankers on an overnight or call basis or for such period or
periods as such Lender may determine and in amounts equivalent to, or
comparable with, the amount of the Loan or relevant part thereof or
interest thereon or other sum due in respect thereof as aforesaid in
respect of which default has been made and (b) 11%. Interest payable by
the Borrower as aforesaid shall be payable on demand by the Facility Agent
and shall be compounded at such intervals as the Facility Agent may
determine.
5.4 DAY COUNT FRACTION
All interest is respect of Advances and the Loan shall accrue from day to
day (after as well as before judgment) on the basis of a year of 360 days
and for the actual number of days elapsed.
6. REPAYMENT AND PREPAYMENT
6.1 CONSOLIDATION OF ADVANCES
In addition and without prejudice to any other provision of this
Agreement, with effect from the Charterparty Commencement Date all
Advances drawn under the Facilities and then comprising the Loan shall be
consolidated and treated as a single amount for all purposes of this
Agreement.
6.2 REPAYMENT INSTALMENTS
The Borrower shall repay an amount equal to 85% of the Loan outstanding on
the Charterparty Commencement Date after the capitalisation of interest on
such date in accordance with Clause 5.2 together with the interest
accruing on the Loan during the period of such repayments by means of
eighty-four (84) equal payments, one such payment being payable on each
Repayment Date in the amount of the Repayment Instalment (comprising a
proportion of the principal of the Loan repayable on each such date and
the interest element payable on each such date) specified in respect of
such Repayment Date in the Repayment Schedule delivered by the Facility
Agent pursuant to Clause 6.4. The Repayment Dates shall be the fifth day
of the second month next
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following the month during which the Charterparty Commencement Date occurs
and the 83 dates falling at consecutive monthly intervals thereafter.
6.3 BALLOON PAYMENT
The remaining 15% of the Loan outstanding on the Charterparty Commencement
Date as aforesaid shall be repaid by a single payment on the Final
Repayment Date.
6.4 REPAYMENT SCHEDULE
The Facility Agent shall prepare, within fourteen (14) Banking Days after
the Charterparty Commencement Date, a repayment schedule in the form of
the Repayment Schedule set out in Schedule 2 setting forth the specific
Repayment Dates and the specific amounts of each Repayment Instalment,
comprising a proportion of the principal of the Loan repayable on each
such date and the interest element payable on each such date, which shall
form an integral part hereof upon notification thereof to the Borrower.
6.5 REBORROWING
No amount repaid may be reborrowed by the Borrower.
6.6 PREPAYMENT
The Borrower may upon giving the Facility Agent not less than 90 days'
prior written notice prepay the whole or part of the Loan subject to and
in accordance with Clauses 6.8 and 18. Save as expressly permitted or
required under the terms of this Agreement the Borrower may not prepay any
part of the Loan.
6.7 TOTAL LOSS OF THE RIG
In the event that the Rig becomes a Total Loss at any time, the whole of
the insurance proceeds or other compensation payable in respect of such
Total Loss will be paid to the Security Agent (as assignee(s) and chargee
thereof under the Rig Construction Contract and Refund Guarantee
Assignment, the Rig Mortgage and associated Deed of Covenants, the
Mortgage Debenture and the Insurances Assignment). In the event that any
of the said insurance proceeds or other compensation are received in any
currency other than US Dollars, the Facility Agent on behalf of the
Lenders will be entitled (and is hereby authorised) at the cost of the
Borrower to convert the same into US Dollars at the Facility Agent's
principal banker's spot rate of exchange applicable at the relevant time.
The whole amount of such insurance proceeds or other compensation
(converted into US Dollars, if appropriate) will be applied by the
Facility Agent in or towards prepayment of the Loan subject to and in
accordance with Clauses 6.8 and 18 and any excess shall be paid to the
Borrower. If the amount thereof is less than the Outstanding Indebtedness
the Borrower shall on demand pay to the Facility Agent for the account of
the Lenders the amount of such shortfall.
6.8 CONDITIONS APPLICABLE
Prepayment of the Loan made under Clauses 6.6 or 6.7 will be made together
with accrued interest to the date of prepayment together with all other
amounts which may be payable under this Agreement and the other Security
Documents. On any such
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prepayment the Borrower will additionally pay such further amount as will
indemnify the Agents and the Lenders against all funding or other fees,
costs, charges, losses, demands and expenses sustained or incurred as a
consequence of such prepayment, including (but not limited to) any such
sustained or incurred in liquidating deposits taken to fund the amount so
prepaid or sustained or incurred in connection with the cancellation,
reduction or re-arrangement of any interest rate swap, hedge transaction
or other funding or financing agreement or arrangement which the Agents
and/or any of the Lenders may have arranged or entered into for the
purpose of funding the amount so prepaid (and the Borrower hereby
acknowledges that the Agents and the Lenders may effect such arrangements
as the Agents and/or any of the Lenders may in their discretion consider
appropriate), and the certificate of the relevant Agent or Lender as to
the amount of such fees, costs, charges, losses, demands, expenses and
shall in the absence of manifest error be final and conclusive and binding
on the Borrower.
6.9 APPLICATION OF PREPAYMENTS
Any prepayment made pursuant to Clauses 6.5, 6.6, 14.3 or any other
provision of this Agreement shall (subject always to any appropriation by
the Facility Agent under Clause 9.5) be applied in reduction of the
Repayment Instalments (including the Balloon) PRO RATA.
7. SECURITY
7.1 LOAN SECURITY DOCUMENTS
By way of continuing security for the due and punctual performance by the
Borrower of all of its obligations under the Financing Documents, the
Borrower shall execute and deliver (or procure the execution and delivery)
to the Security Agent of the following (all at the times and in all other
respects in accordance with the terms of this Agreement and the Security
Documents):
(i) an assignment, in the approved form of the benefit of and the
Borrower's right and interest in the Rig Construction Contract, the
Refund Guarantee, and the Sub-contractors' Guarantees, together with
the notices to the Builder and to the issuer(s) of the Refund
Guarantee and the acknowledgements and consents specified in such
assignment duly executed by the parties thereto;
(ii) an assignment, in the approved form of the Inter-company Loan
together with the notices to the Sister Company and the
acknowledgements and consents specified in such assignment duly
executed by the parties thereto;
(iii) a first preferred mortgage over the Rig and Deed of Covenants
collateral thereto, each being in the approved form;
(iv) an assignment, in the approved form of the benefit of and the title
and interest of the Borrower in the Charterparty, Earnings and
Requisition Compensation, together with the notices to Petrobras and
the acknowledgements and consents specified in such assignment duly
executed by the parties thereto;
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(v) an assignment, in the approved form of the Services Rendering
Contract, together with the notices to Petrobras and the
acknowledgements and consents specified in such assignment duly
executed by the parties thereto;
(vi) an assignment, in the approved form of the Insurances together with
the notices, acknowledgement, consents and letters of undertaking in
relation to the Insurances and other related documents as may be
specified in such assignment and/or as may otherwise be required by
this Agreement or any of the other Security Documents;
(vii) a charge in the approved form over the Management Account, together
with the notices to the Management Account Bank and the
acknowledgements and consents and undertakings specified in such
agreement duly executed by the parties thereto;
(viii)a charge in the approved form over the Reserve Account, together
with the notices to the Reserve Account Bank and the
acknowledgements and consents and undertakings specified in such
agreement duly executed by the parties thereto;
(ix) an assignment, in the approved form, of all of the Services
Contracts, together with the notices to the Services Providers and
the acknowledgements and consents specified in such assignments duly
executed by the parties thereto;
(x) a mortgage debenture in the approved form creating fixed and
floating charges over the business, undertaking and assets of the
Borrower;
(xi) a charge, in the approved form creating a charge over the
Shareholder's shares in the Borrower;
(xii) a guarantee, in the approved form by the Borrower, the Sister
Company and the Shareholder guaranteeing and securing the
obligations of each of the Borrower and the Sister Company to the
Agents and the Lenders in accordance with its terms;
(xiii)a deed of guarantee and undertaking, in the approved form, between
the Borrower, the Guarantors, the Lenders, the Facility Agent and
the Security Agent;
(xiv) a subordinated loan facility agreement, in the approved form,
between the Borrower, the Guarantors, the Facility Agent and the
Security Agent;
(xv) an assignment of deed of guarantee and undertaking and subordinated
loan facility agreement, in the approved form, between the Borrower
and the Security Agent; and
(xvi) the Sister Company Financing Documents duly executed by all the
parties thereto.
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7.2 GUARANTEES AND UNDERTAKINGS
By way of continuing security for the due and punctual performance by the
Borrower of its obligations under the Financing Documents and/or any other
agreements to which the relevant Guarantee relates, the Borrower will
procure the execution by the Guarantors and the delivery to the Security
Agent and, in the case of sub-clause 7.2(i) the Initial Lenders of the
following guarantees and undertakings:
(i) A guarantee, in the approved form whereby the Guarantors guarantee
in their several proportions to the Initial Lenders in accordance
with the terms therein contained the repayment of the Loan and the
Sister Company Loan by the Borrower and the Sister Company
respectively in accordance with this Agreement and the Sister
Company Loan Agreement up to an amount not exceeding US$108,000,000;
(ii) a deed of guarantee and undertaking, in the approved form whereby
the Guarantors severally or jointly and severally (in accordance
with its terms) give certain guarantees and undertakings.
7.3 SISTER RIG COLLATERAL
The security created by the Borrower under or pursuant to the Financing
Documents shall also constitute security to the Lender for the obligations
of the Sister Company under the Sister Company Financing Documents, and
the security created by the Sister Company under the Sister Company
Financing Documents shall also constitute security for the Borrower's
obligations under the Financing Documents, all in accordance with their
respective terms.
7.4 SECURITY AGENT AS TRUSTEE
The Secured Obligations shall be secured by the interests and rights
granted in favour of the Security Agent as trustee for the Agents and the
Lenders under the Security Documents and such interests and rights shall
be held by the Security Agent upon trust for the benefit of the Secured
Parties without any preference or priority amongst them as security for
the Secured Obligations in accordance with the Security Trust Deed.
8. REPRESENTATIONS
8.1 REPRESENTATIONS
The Borrower hereby represents and warrants to the Facility Agent
and each of the Lenders, that:-
(i) each of the Borrower and the Sister Company is duly formed and is
validly existing under the laws of the British Virgin Islands, has
full power to carry on its business as it is now being conducted and
has complied with all statutory and other requirements relative to
such business;
(ii) the Borrower and each of the other Security Parties and the
Project Parties has full power to execute, deliver and
perform its obligations under each of the Financing
Documents and the Project Documents to which it is or is to
be a party
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and (in the case of the Borrower) to borrow hereunder and to repay
and service such borrowings in the manner herein provided; all
necessary corporate, shareholder and other action has been taken by
the Borrower and all other Security Parties and the Project Parties
to approve and authorise the execution, delivery and performance of
each of the Financing Documents and the Project Documents to which
it is or is to be a party;
(iii) save for registration of the Charterparty with the Brazilian Central
Bank all necessary governmental or other official consents,
authorisations and licences for the Borrower and all other Security
Parties and the Project Parties to execute, deliver and perform
their obligations under each of the Financing Documents and the
Project Documents to which it is or is to be a party have been
obtained and, as of the date of this Agreement, no further such
consents, authorisations or licences are necessary for the
performance by the Borrower and the other Security Parties and the
Project Parties of their respective obligations under each of the
Financing Documents and the Project Documents to which it is or is
to be a party;
(iv) the Financing Documents and the Project Documents constitute, or
will upon due execution as provided herein and therein constitute,
the legal, valid and binding obligations of the Borrower and the
other Security Parties and the Project Parties as are or are to be
parties thereto enforceable in accordance with their respective
terms subject to equitable principles and creditors' rights
generally;
(v) the execution and delivery of, and the performance of the provisions
of, the Financing Documents by each of the Borrower and the other
Security Parties and of the Project Documents by the other Project
Parties do not, and will not during the Security Period, contravene
(a) any applicable law or regulation existing at the date hereof or
(b) any contractual restriction binding on any of the Borrower and
the other Security Parties or any of the Project Parties or (c) any
of the constitutional documents of any of the Borrower or the other
Security Parties or any of the Project Parties;
(vi) no action, suit or proceeding is pending or threatened against any
of the Borrower and/or the other Security Parties before any court,
board of arbitration or administrative agency which could or might
result in any material adverse change in the business or condition
(financial or otherwise) of any of the Borrower and/or the other
Security Parties;
(vii) none of the Borrower or the other Security Parties is in default
under any agreement by which it is bound, nor is it in default in
respect of any financial commitment or obligation (including
obligations under guarantees) which could or might result in any
material adverse change in the business or condition (financial or
otherwise) of any of the Borrower and/or the other Security Parties;
(viii)the financial and other information relative to the Borrower and
the other Security Parties and the Project Parties and the Project
Documents furnished to the Agents and/or any of the Lenders in
connection with the negotiation of this Agreement is, to the best
knowledge and belief of the Borrower, true, accurate and complete
and neither contains any mis-statement of fact nor omits any
material fact or any fact necessary to make any such information not
misleading. There has been no
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material adverse change in the position of such person(s) from that
set forth in the relevant aforesaid information;
(ix) details of the holders of shares in the Shareholders, the Borrower,
the Guarantors and the Sister Company and their respective
shareholdings are as set out in Schedule 5 and will so remain
throughout the Security Period;
(x) the Borrower has no Subsidiaries as at the date hereof;
(xi) no Event of Default, nor any Potential Event of Default has occurred
and is continuing;
(xii) the Rig will upon the Drawdown Date of the Yard Delivery Advance
be:-
(a) in the absolute and (save for the Rig Mortgage thereon and the
other Security Documents) unencumbered ownership of the
Borrower;
(b) registered in the name of the Borrower under the flag
of the Commonwealth of the Bahamas and at the Port of
Nassau;
(c) properly classed with Lloyds Register of Shipping with the
following notation: "Unrestricted Service O.U. + 100A1, + LMC,
UMS, DP(AA), PC, DRILL, OIWS with the descriptive notation
semi-submersible, self-propelled drilling vessel"; and
(d) insured in accordance with the relevant provisions of the Deed
of Covenants and this Agreement;
(xiii)all applicable Environmental Laws and Environmental Approvals
relating to the Rig and its operation and management and the
business of the Borrower (as now conducted and as reasonably
anticipated to be conducted in the future) have been complied with
except to the extent that such failure to so comply would not
reasonably be expected to have a material adverse effect;
(xiv) no Environmental Claim has been made or threatened against the
Borrower or otherwise in connection with the Rig which would be
expected to have a material adverse effect;
(xv) no Environmental Incident has occurred which would be expected to
have a material adverse effect;
(xvi) the choice by the Security Parties and the Project Parties of a
particular governing law to govern this Agreement and any other
Financing Document and the Project Document containing such
provisions and the submission by such parties to the jurisdiction of
the courts of a particular country in this Agreement and any other
Financing Document and the Project Documents containing such
provisions are valid and binding;
(xvii)the execution and performance by Security Parties and the Project
Parties of this Agreement the other Financing Documents and the
Project Documents are private commercial acts and neither the
Borrower nor any other Security Party or any
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Project Party is entitled to claim any immunity in relation to
itself or its assets under any law or in any jurisdiction in
connection with any legal proceedings, set-off or counterclaim
relating to this Agreement or any other Financing Document or any
Project Document, or in connection with the enforcement of any
judgment, award, ruling or order arising from such proceedings;
(xviii) no Taxes are imposed by withholding or otherwise on any payment to
be made by the Borrower or the other Security Parties under this
Agreement or any of the other Financing Documents or are imposed on
or by virtue of the execution or delivery by the Borrower or the
other Security Parties of this Agreement or any of the other
Financing Documents or any document or instrument to be executed or
delivered under this Agreement or any of the other Financing
Documents;
(xix) it is not necessary to ensure the legality, validity, enforceability
or admissibility in evidence of this Agreement or any other
Financing Documents that it or any other instrument be filed,
recorded, registered or enrolled in any court, public office or
elsewhere in Brazil or that any stamp, registration or similar tax
be paid in Brazil on or in relation to this Agreement or any other
Financing Documents, which are in proper form for their respective
enforcement in the courts of Brazil and the other jurisdictions to
which the same are expressed to be subject other than the recording
of the relevant Financing Documents and the payment of recording
fees;
(xx) save as disclosed in writing to the Facility Agent by a letter dated
of even date with this Agreement, the Borrower is not party to any
agreements, arrangements or contracts (written or oral) other than
the Project Agreements, the Security Documents and the Inter Company
Loan Agreement;
(xxi) the legal opinions furnished pursuant to Clause 3.1(xii) to (xx) are
true and correct in all respects;
(xxii)save for different charter rates set out in a letter delivered by
the Borrower to the Facility Agent and having even date with this
Agreement, the Charterparty and the Services Rendering Contracts are
in identical terms to the charterparties and services rendering
contracts executed between Maritima and Petrobras in respect of the
Related Rigs; and
(xxiii) Maritima is the same legal entity as the company previously called
Maritima Navegacao Engenharia Ltda.
8.2 LENDERS' AND AGENTS' RELIANCE
The Borrower acknowledges that it has made the representations and
warranties referred to in Clause 8.1 with the intention of persuading the
Agents and the Lenders to enter into this Agreement and that the Agents
and the Lenders have entered into this Agreement on the basis of, and in
full reliance on, each of such representations and warranties. The
Borrower warrants to the Agents and the Lenders that each of such
representations and warranties is true and correct in all material
respects as of the date of this Agreement and that none of them omits any
matter the omission of which makes any of such representations and
warranties misleading.
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8.3 KNOWLEDGE OF LENDERS OR AGENTS
The rights and remedies of the Agents and the Lenders in relation to any
misrepresentations or breach of warranty on the part of the Borrower shall
not be prejudiced by any investigation by or on behalf of the Agents
and/or the Lenders into the affairs of the Borrower, by the execution or
the performance of this Agreement or by any other act or thing which may
be done by or on behalf of the Agents and/or the Lenders in connection
with this Agreement and which might, apart from this Clause, prejudice
such rights or remedies.
8.4 REPETITION
The representations set out in Clause 8.1 and the warranty in Clause 8.2
shall survive the execution of this Agreement and the making of the
Advances hereunder and shall be deemed to be repeated at the time of the
giving of each Drawing Request, on the date for the borrowing of each
Advance and on each Repayment Date with reference to the facts and
circumstances then subsisting, as if made at each such time.
9. PAYMENTS: TAXATION
9.1 CURRENCY OF ACCOUNT
The US Dollar is the currency of account and the currency of payment for
each and every sum due from the Borrower hereunder, PROVIDED HOWEVER THAT
any amount falling due under Clause 18 (Indemnities) or 16 (Fees and
Expenses) shall be payable in the currency in which the corresponding
loss, expense, deficiency, duty, tax or other payment has been incurred or
suffered.
9.2 ACCOUNTS AND PROCEDURE FOR PAYMENT
All payments to be made by the Borrower to the Agents for the account of
the Lenders or to Lenders hereunder shall be made on and for value on the
due date:-
(a) if in US Dollars in freely transferable same day funds to the
account of the Facility Agent with the Management Account Bank, ,
account number to be notified by the Facility Agent or at such other
bank as the Facility Agent may designate; and
(b) if in any other currency, in same day funds to such account of the
Facility Agent with such bank as the Facility Agent may from time to
time designate.
9.3 WITHHOLDING; GROSS-UP
All payments to be made by or for the account of the Borrower hereunder or
under any other Security Document shall be made without set-off or
counterclaim and free and clear of and without deduction for or on account
of any present or future Taxes of any nature whatsoever imposed by or in
any country ("APPLICABLE TAX") unless (i) the Borrower is compelled by law
to make payment to or for the account of either Agent or any Lender
subject to such Applicable Tax, or (ii) the Security Agent or the Facility
Agent is compelled by law to make payment for or for the account of any
Lender subject to such Applicable Tax in any such case the Borrower shall
promptly pay such Applicable Tax
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and the amount of the relevant payment by the Borrower hereunder or (as
the case may be) under the relevant other Security Document shall be
increased to the extent necessary to ensure that the relevant Agent or (as
the case may be) the relevant Lender actually receives an amount, free and
clear of and after deduction for all such Applicable Tax, equal to the
full amount which would have been received if no such withholding or
deduction had been made. The Borrower shall pay and indemnify and keep
indemnified the Agents and each of the Lenders against all such Applicable
Tax. The Borrower shall promptly deliver to the Facility Agent copies of
official Tax receipts evidencing payment of any such Applicable Tax
imposed as aforesaid. The obligations of the Borrower under this Clause
9.3 shall survive the repayment of the Loan and the payment of all other
sums payable hereunder and under the other Security Documents.
9.4 BANKING DAY CONVENTION
Whenever any payment hereunder would otherwise become due on a day which
is not a Banking Day, the due date thereof shall instead be the next
succeeding Banking Day unless such Banking Day falls in the next calendar
month in which case payment shall be made on the immediately preceding
Banking Day.
9.5 APPROPRIATION
Notwithstanding any other provision of this Agreement and/or of the
Security Documents (express or implied), at any time after the occurrence
and during the continuance of an Event of Default the Facility Agent shall
have an absolute and unfettered right to appropriate any payments received
from the Borrower and/or from any other Security Party and any monies
received in respect of all or any of the other Security Documents to such
of the Borrower's obligations hereunder and/or under the Security
Documents and/or under the Sister Rig Financing Documents (whether to the
Loan or any part thereof, or the Sister Company Loan or any part thereof
interest or any other sums payable hereunder or thereunder) as the
Facility Agent may determine, to the exclusion of any right on the part of
the Borrower to make any appropriation in respect of such payment(s)
and/or monies.
9.6 CONTROL ACCOUNT
The Facility Agent will maintain a control account showing the Loan and
other sums owing by the Borrower under this Agreement and the other
Financing Documents and all payments in respect thereof made by the
Borrower from time to time. The control account shall in the absence of
manifest error be conclusive as to the amount from time to time owing by
the Borrower under this Agreement and the other Financing Documents.
9.7 REIMBURSEMENT OF FACILITY AGENT
(i) Unless the Facility Agent shall have been notified by a Lender not
later than one Banking Day prior to the Drawdown Date of any Advance
that such Lender will not make available its portion of such Advance
the Facility Agent may assume that such Lender has made its portion
available to the Facility Agent. If the Facility Agent makes an
amount available to the Borrower which has not (but should have)
been made available to the Facility Agent by a Lender, the Facility
Agent shall be entitled to recover the relevant amount from such
Lender on demand, or failing this, the Borrower shall on request
made by the Facility Agent
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to the Borrower refund such amount, together with interest thereon
at the rate determined by the Facility Agent to be equal to the cost
to the Facility Agent of funding such amount for the period until
receipt by the Facility Agent thereof.
(ii) If the Facility Agent makes an amount available to a Lender which
has not (but should have) been made available to the Facility Agent
by the Borrower, such Lender shall on request refund such amount to
the Facility Agent together with interest thereon at the rate
determined by the Facility Agent to be equal to the cost to the
Facility Agent of making available such amount for the period from
the date on which such amount was so made available until receipt by
the Facility Agent thereof.
10. EVENTS OF DEFAULT
10.1 EVENTS
Each of the following events (whether or not arising as a result of events
or circumstances beyond the Borrower's control) shall constitute an Event
of Default, if:-
(i) any principal of or interest on the Loan or any other amount
becoming payable under this Agreement and/or the Security Documents
is not paid on the due date for payment thereof or (in the case only
of sums expressed to be payable upon demand) within a period of five
(5) Banking Days after demand is made therefor; or
(ii) the Borrower shall make default under, or in the due and punctual
observance and performance of, Clause 11.1(xi) and shall fail to
remedy the same within one (1) Banking Day after written notice from
the Facility Agent to the Borrower requiring such default to be
remedied; or
(iii) the Borrower or any other Security Party makes default under, or in
the due and punctual observance and performance of, any other
provision of this Agreement and/or the Security Documents and/or any
of the Project Documents which default (in the reasonable opinion of
the Facility Agent) is not capable of remedy and/or imperils the
security created by the Security Documents and/or any of the Project
Documents or any of them, or any such default arises which (in the
reasonable opinion of the Facility Agent) is capable of remedy and
does not imperil the security created by the Security Documents
and/or any of the Project Documents or any of them and is not
remedied within thirty (30) days after written notice from the
Facility Agent to the Borrower requiring remedial action; or
(iv) any indebtedness of any Security Party (being indebtedness in excess
of US$500,000 (or the equivalent in any other currency) is not paid
on its due date or within any period of grace specified in the
contract evidencing the original terms of such indebtedness or
becomes due or capable of being declared due prior to its stated
date of payment; or
(v) any party to a Project Document (other than the Borrower or another
Security Party) defaults in the due performance or observance of any
of its covenants, undertakings or obligations under such Project
Document which default could be
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material in the context of the transactions contemplated by the
Financing Documents and (if such default is capable of remedy) the
same is not remedied to the satisfaction of the Facility Agent
within the period (if any) allowed for remedy thereof under the
Project Documents or a period of thirty (30) days after the Facility
Agent gives notice to the Borrower requiring the same to be
remedied; or
(vi) any representation or warranty made pursuant to Clause 8.1 or any
other provision of this Agreement or made pursuant to any provision
of any of the Security Documents proves to have been materially
incorrect or becomes materially incorrect in any respect as of the
date on which such representation or warranty is made or repeated
(or deemed to be repeated); or
(vii) any governmental licence, authorisation, consent or approval at any
time necessary to enable the Borrower and/or any of the Security
Parties and/or any of the Project Parties to comply with its or
their respective obligations hereunder or under the Security
Documents or under the Project Documents or any of them or to enable
the operation of the Rig is revoked or withheld or modified or is
otherwise not granted or fails to remain in full force and effect or
(but without prejudice to the generality of the foregoing) the
Charterparty and other related documents which require registration
are not registered with the Central Bank of Brazil in accordance
with Clause 11.1(f) within the period of four weeks after the
Charterparty Commencement Date; or
(viii)the Borrower and/or any other Security Party or any Project Party
other than a Security Party becomes insolvent or bankrupt or
suspends payment of its debts generally as they fall due, or any
steps are taken by any person or by any government authority for the
winding up, liquidation or dissolution of the Borrower and/or any
other Security Party or any Project Party other than a Security
Party or for the making of an administration order (including,
without limitation, the presentation of a petition for an
administration order) or for the re-arrangement, re-organisation or
reconstruction of the Borrower and/or any other Security Party or
any Project Party other than a Security Party, or if an encumbrancer
takes possession of or if a receiver or trustee is appointed of, or
if any distress or execution is levied against, any of the assets of
the Borrower and/or any other Security Party or any Project Party
other than a Security Party, or if any process or proceeding similar
to any of the foregoing shall be instituted under the laws of any
relevant jurisdiction; or
(ix) the Borrower and/or any other Security Party suspends or threatens
to suspend its operations or (without the prior written consent of
the Facility Agent) disposes or threatens to dispose of all or
substantially all of its business, property or assets, or if all or
substantially all of the same is seized or appropriated; or
(x) any change occurs in the shareholders and the respective
shareholdings in the Borrower or the Sister Company from those
specified in Schedule 5; or
(xi) save as may be permitted under this Agreement or any of the Security
Documents any Charterparty Hire and/or any other Earnings are paid
otherwise than to the Management Account; or
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(xii) the Rig becomes a Total Loss and the Facility Agent does not, within
a period of one hundred and eighty (180) days following the
occurrence of such Total Loss, receive for the account of the
Lenders the insurance proceeds or other compensation relating to
such Total Loss in an amount not less than the amount for which the
Rig shall have been required to be insured at the time of such Total
Loss pursuant to the Mortgage and Deed of Covenants and the other
Financing Documents; or
(xiii)this Agreement or any of the Security Documents or any of the
Project Documents ceases at any time to be the legal, valid and
binding obligation of the Borrower or, as the case may be, any other
Security Party or, as the case may be, Project Party being a party
thereto, or if it becomes impossible or unlawful for any of the
material obligations of the Borrower and/or any other Security Party
and/or any Project Party to be performed or for any of the rights
given to the Agents or the Lenders hereunder and/or under any of the
Security Documents to be exercised or the Borrower or any other
Security Party or any Project Party disaffirms or repudiates any
such obligations; or
(xiv) the Rig is not delivered to and accepted by the Borrower in all
material respects in accordance with the provisions of the Rig
Construction Contract prior to the date falling 365 days after the
Original Scheduled Yard Delivery Date; or
(xv) the Rig has not arrived at the Port or in sheltered waters in
Macae-RJ) and accepted by Petrobras for the commencement of
operations in all respects in accordance with the Charterparty prior
to the date falling 365 days after the Original Scheduled
Charterparty Commencement Date; or
(xvi) the Rig Construction Contract is terminated or any event or
circumstance arises thereunder which entitles either party
thereunder to terminate the same pursuant to Clauses 18 or 19
thereof or otherwise pursuant to the terms thereof or either party
repudiates its obligations thereunder or commits any other breach
which would entitle the other party to treat its obligations
thereunder as terminated; or
(xvii)the Refund Guarantee is terminated or the issuer thereof repudiates
its obligations thereunder; or
(xviii) the Charterparty is terminated or any event or circumstance arises
thereunder which entitles either party thereto to terminate the same
or either party repudiates its obligations thereunder or commits any
other breach which would entitle the other party to treat its
obligations thereunder as terminated; or
(xix) the Services Rendering Contract is terminated or any event or
circumstance arises thereunder which entitles either party thereto
to terminate the same or either party repudiates its obligations
thereunder or commits any other breach which would entitle the other
party to treat its obligations thereunder as terminated; or
(xx) there is any breach or non observance on the part of Pride and/or
Maritima of their respective obligations under the Additional
Funding and Guarantee Agreement; or
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(xxi) the Bridging Loan is not repaid to MC1 on the Bridging Loan
Repayment Date (otherwise than by reason of a default by MC2 in the
performance of its obligations under the Additional Funding and
Guarantee Agreement to remit to MC1 amounts received from the
Transferees to whom MC2 transfers its participation in the Tranche A
Facility in accordance with the Additional Funding and Guarantee
Agreement; or
(xxii)it is not possible to maintain the Insurances throughout the
Security Period for any reason (including, without limitation, by
reason of any relevant Insurances not being available in the
international insurance market); or
(xxiii) any of the events or circumstances specified in the foregoing
paragraphs (i) to (xx) (MUTATIS MUTANDIS) occur under the Sister
Company Financing Documents.
10.2 RIGHTS ON EVENT OF DEFAULT
At any time after the occurrence of an Event of Default and while the same
is continuing (and in addition and without prejudice to any other rights
of the Agents or the Lenders):
(i) the Facility Agent may and shall if so directed by the Majority
Lenders by notice in writing to the Borrower declare that the Loan
and all other amounts outstanding from the Borrower under this
Agreement and/or the Security Documents are immediately due and
payable and such declaration shall be effective from the date of
such occurrence or such other later date as the Facility Agent may
specify in the said notice, and (at the same time as or at any time
subsequent to the service of such notice and the same shall be
immediately due and payable and the Lenders' obligation to make
available or to continue to make available the Facilities, or any
part thereof, to the Borrower shall immediately cease); and/or
(ii) either of the Agents or any of the Lenders may terminate or
otherwise rearrange (at the discretion of such Agents or Lenders)
any interest rate or currency swap, hedging or other currency or
interest rate management agreement or arrangements which the Agents
or any of the Lenders may have taken out or entered into in relation
to the Loan or any part thereof.
10.3 SURVIVAL OF RIGHTS
The termination of this Agreement for any cause whatsoever shall not
affect the right of the Agents and the Lenders to recover from the
Borrower any amounts due to the Agents and the Lenders on or before the
termination or in consequence thereof or the right of the Agents and the
Lenders to recover any damages for breach of this Agreement and/or the
Security Documents or any of them.
10.4 NO INDEPENDENT ACTION
No Lender may, except with the prior consent of the Majority Lenders (and,
where a Lender may, it may only do so through the Security Agent):
(a) enforce any encumbrance created or evidenced by any Security
Document or require the Security Agent to enforce any such
encumbrance;
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(b) sue for or institute any creditor's process (including a Mareva
injunction, garnishment, execution or levy, whether before or after
judgment) in respect of any obligation (whether or not for the
payment of money) owing to it under or in respect of any Financing
Document;
(c) take any step (including petition, application, notice of meeting or
proposal to creditors) for the winding-up, or administration of, or
any insolvency proceeding in relation to, the Borrower, or for a
voluntary arrangement or scheme or arrangement in relation to the
Borrower; or
(d) apply for any order for an injunction or specified performance in
respect of the Borrower in relation to any of the Financing
Documents.
Provided that for the avoidance of doubt that nothing herein contained
shall restrict the rights of the Beneficiaries under (and as defined in)
the Floor Guarantee to enforce or refrain from enforcing their rights
thereunder at such times and in such manner as they may think fit.
11. COVENANTS
11.1 GENERAL COVENANTS
The Borrower hereby covenants and undertakes with the Agents and each of
the Lenders that throughout the Security Period:-
(i) it will obtain and promptly renew (or require the other Project
Parties where applicable to obtain and promptly renew) from time to
time and comply with the terms of all consents which may be required
under any applicable law in connection with or for the execution,
delivery or due performance by the Security Parties and the Project
Parties of this Agreement, the Security Documents or the Project
Documents or for the validity or enforceability of this Agreement or
the Security Documents or the Project Documents (or procure such
obtaining, renewal or compliance);
(ii) it will pay or cause to be paid all of its obligations, ents, rates,
taxes, assessments, impositions, calls and outgoings whatsoever
(whether governmental, municipal or otherwise) imposed upon or
payable in respect of its property or assets as and when the same
shall become payable save for any of the same which are being
contested in good faith and by appropriate proceedings and which
could not reasonably be expected to have a material adverse effect
on the business or operation of the Borrower;
(iii) it will deliver to the Facility Agent in sufficient copies for each
of the Lenders:
(a) as soon as the same are available (and in any event within one
hundred and twenty (120) days) after the end of each of its
financial years ending after the date hereof, its accounts for
such financial year (including the profit and loss account for
the financial year ended on the last day of such financial
year and the balance sheet as of the end of such financial
year) having ensured that such accounts were prepared on such
basis as is
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reasonably acceptable to the Facility Agent and were prepared
in accordance with accounting principles and practices
generally accepted in the United States of America ("GAAP")
and consistently applied and give (in conjunction with the
notes thereto) a fair presentation in accordance with GAAP of
(i) the financial condition of the Borrower as at the date as
of which they were prepared, and (ii) the results of the
operations of the Borrower for the period to which they relate
and were audited by auditors acceptable to the Facility Agent
and were certified by its duly authorised officer as giving
(in conjunction with the notes thereto) a true and fair view
of its financial condition as at the end of such financial
year and of the results of its operations during such
financial year;
(b) simultaneously with the delivery of each of its accounts in
accordance with sub-clause (iii)(a), a certificate signed by a
duly authorised director or officer of the Borrower confirming
that as of the date of such certificate (which must be dated
not more than ten (10) days prior to the date on which it is
delivered to the Facility Agent) no Event of Default or
Potential Event of Default has occurred at any time after the
date of the last such certificate delivered pursuant to this
sub-clause (iii)(b) (or the date of this Agreement, in the
case of the initial such certificate);
(c) as soon as reasonably practicable following receipt from the
Builder, a certified true copy of each progress report given
by the Builder pursuant to the Rig Construction Contract and
each notice of anticipated delivery date given by the Builder
pursuant to the Rig Construction Contract and a certified true
copy of each other notice or report given to it by the Builder
pursuant to or in connection with the Rig Construction
Contract which could reasonably be considered to be material
in the context of the transactions contemplated by the
Security Documents and the Project Documents;
(d) simultaneously with delivery to Petrobras of each progress
report given by the Borrower to Petrobras pursuant to the
Charterparty and each other notice or report so delivered by
the Borrower pursuant to the Charterparty which could
reasonably be considered to be material in the context of the
transactions contemplated by the Security Documents and the
Project Documents, a certified true copy of such notice or
report;
(e) from time to time promptly upon request by the Lender, such
other information as the Security Agent may reasonably require
in the context of this Agreement and any of the Security
Documents and the Project Documents; and
(f) evidence satisfactory to the Security Agent that it has
registered the Charterparty and any other documents requiring
registration with the Central Bank of Brazil within 4 weeks of
the Charterparty Commencement Date,
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(iv) promptly upon becoming aware of the same, it will notify the
Security Agent of:
(a) any dispute between the Borrower and (A) the Builder in
relation to the Rig Construction Contract, (B) Petrobras in
relation to the Charterparty or any of the other Project
Documents which, in any case, could reasonably be considered
to be material in the context of the transactions contemplated
by this Agreement and any of the other Security Documents or
could reasonably be expected to have a material adverse effect
on the Borrower;
(b) any breach by any party to any Security Document or any
Project Document of any party's obligations thereunder which
could reasonably be considered to be material in the context
of the transactions contemplated by this Agreement and any
other Security Document or could reasonably be expected to
have a material adverse effect on the Borrower and provide the
Security Agent with details of the nature and extent of such
breach and the steps which it intends to take in respect
thereof;
(c) any event which could materially adversely affect the
completion and delivery of the Rig under the Rig Construction
Contract Date; and
(d) the occurrence of any Event of Default or any Potential Event
of Default;
(v) it will immediately upon delivery of the Rig by the Builder register
itself as the owner of 64/64th shares in the Rig at the Registry of
Bahamian Ships free from any encumbrance (save only for the Mortgage
and the Mortgage Debenture) and will deliver to the Facility Agent a
certified copy of the certificate of registration of the Rig
immediately it is issued;
(vi) it will perform all of its obligations under each of the Security
Documents and the Project Documents to which it is a party in
accordance with the respective terms thereof and not terminate or
amend, or offer to terminate or amend, any of the Security Documents
or Project Documents to which it is a party or waive any of its
rights thereunder which, in the case of any amendment or waiver,
could be material in the context of this Agreement and the Security
Documents or Project Documents and the transactions contemplated
hereby or thereby and without prejudice to the generality of the
foregoing it will use all reasonable endeavours to procure that all
payments are made by Petrobras pursuant to the Project Documents
without any withholding, set-off, counterclaim or other deduction of
any kind;
(vii) it will permit representatives of the Facility Agent (or any
accountants, engineers or other experts or specialists designated by
the Facility Agent) to visit or inspect, or procure that any such
representatives are able to visit or inspect, the Rig during its
construction and after the Yard Delivery Date and the Borrower's
books of account, at such times and as often as may be reasonably
required by the Facility Agent subject to the Facility Agent first
giving reasonable prior written notice and in exercising such rights
the Facility Agent's representative will comply with the reasonable
instructions of the Borrower's crew;
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(viii)it will at its own cost and expense promptly execute, acknowledge,
deliver, file and register all such additional documents,
instruments, agreements, certificates, consents and assurances and
do all such other acts and things as may be legally required for the
Borrower to do and as may be necessary or as the Facility Agent may
reasonably request from time to time in order to effectuate the
purposes of this Agreement or any of the Security Documents or the
Project Documents or to perfect the security interest intended to be
constituted by any of the Security Documents or to enable the Agents
and the Lenders to obtain the full benefits of this Agreement or any
of the Security Documents or the Project Documents and to exercise
and enforce the rights and remedies under this Agreement or any of
the Security Documents or the Project Documents;
(ix) it will not, without the prior written consent of the Facility
Agent:-
(a) (save and except as envisaged in this Agreement) create,
assume or permit to exist any encumbrance upon any of its
property or other assets, real or personal, tangible or
intangible, whether now owned or hereafter acquired, other
than any lien on the Rig arising as a result of any necessary
salvage or arising in the ordinary course of operation of the
Rig; or
(b) engage in any business or activity except the ownership of the
Rig, its chartering to Petrobras in accordance with the
Charterparty and its operation and activities incidental
thereto or pursuant to any subsequent charter or drilling
service contract; or
(c) save and except as envisaged by this Agreement make
any loans to any person(s), make any investments of any kind
(including but not limited to (i) the acquisition of any
shares in or debentures of any company and/or (ii) the
purchase, or acquisition on finance lease, hire purchase or
similar terms, of any fixed asset(s) premises/office equipment
for the Borrower's own use, including charters out), or
authorise or enter into any capital commitments otherwise than
in the ordinary course of business; or
(d) (save and except as envisaged in this Agreement or agreed by
the Facility Agent in writing) borrow any money or permit any
such borrowing to continue, or enter into any agreement for
payment on deferred terms (otherwise than on customary
suppliers' credit terms) or any equipment lease or contract
hire agreement (other than in respect of necessary machinery
and/or equipment for the Rig or otherwise in the ordinary
course of business); or
(e) (save and except as envisaged in this Agreement) assume,
guarantee or endorse or otherwise become or remain liable in
connection with any obligation of any person (otherwise than
in the ordinary course of operating of the Rig); or
(f) at any time during the Security Period purchase or
otherwise acquire for value any shares of its capital stock,
and will not in any financial year during the Security Period
declare or pay any dividend on any of such shares or make any
distribution to the holder(s) of any such shares except
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as provided in Clause 12.4 and it will not issue any new
shares of its capital stock.
(x) it will maintain the Management Account and the Reserve Account (and
any other account(s) opened by the Borrower for the purposes of this
Agreement;
(xi) in the event that, and whenever, the Facility Agent shall issue any
certificate for the purposes of Clause 9.2 of the Deed of Guarantee
and Undertaking and shall supply a certified copy thereof to the
Borrower, the Borrower will, unless the Guarantors shall have made
the relevant payment by way of subscription for equity share capital
in the Borrower pursuant to Clause 9.1 of the Deed of Guarantee and
Undertaking within seven (7) Banking Days immediately following the
day on which it is supplied by the Facility Agent with a certified
copy of such certificate, deliver to the Sponsors (and will not
purport to revoke) a duly completed request for a drawing under the
Subordinated Loan Facility Agreement in an amount equal to the
amount specified in said certificate, and will simultaneously
deliver a certified copy of such certificate to the Facility Agent;
(xii) it will ensure that Formaritima Ltd and Petrodrill Engineering N.V.
will not (without the prior written consent of the Facility Agent,
such consent not to be unreasonably withheld or delayed) cancel,
vary or amend any of the Other Services Contracts and that
Formaritima Ltd and Petrodrill Engineering N.V. will (unless the
Facility Agent otherwise agrees) take all appropriate steps to
enforce performance by all parties (other than Formaritima Ltd and
Petrodrill Engineering N.V.) of their respective obligations under
the Other Services Contracts; and
(xiii)it will do or cause to be done all things necessary to preserve in
full force its corporate existence, rights, franchises or
authorities necessary for the conduct of its business.
11.2 COST OVERRUNS
Without prejudice to any other provision of this Agreement or any other
Security Documents, the Borrower will perform its obligations under the
Rig Construction Contract and any Purchaser's Supplies Contract.
11.3 INSURANCES
The Borrower will take out and effect and maintain throughout the Security
Period the Insurances meeting the requirements specified in Schedule 8
with such insurers as are acceptable to the Facility Agent. The terms and
conditions of such insurances shall be subject to the prior approval of
the Facility Agent (such approval not to be unreasonably withheld or
delayed) and duplicates of all cover notes, policies and certificates of
entry shall be provided to the Security Agent for its approval and
retention. The Borrower will renew all such insurances at least fourteen
(14) days before the relevant policies or contracts or certificates of
entry expire and the Borrower will punctually pay all premiums, calls,
contributions or other sums payable in respect of such insurances.
11.4 INSURANCE PROCEEDS AND DEDUCTIBLES
The Borrower shall:
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(i) procure that the insurance proceeds, received or to be received by
the Borrower shall be paid to the Facility Agent in accordance with
the Insurances Assignment and are paid into the Management Account;
(ii) pay to the Facility Agent and remit to the Management Account an
amount equal to the deductions made for deductibles or excess
applied by insurers in respect of any claim, such payments to be
funded by the Borrower (without recourse to the Lenders).
11.5 LIQUIDATED DAMAGES; REFUNDS
The Borrower shall procure that all amounts payable by the Builder under
the Rig Construction Contract and the Export-Import Bank of Korea under
the Refund Guarantee received or to be received by the Borrower are paid
to the Security Agent and credited to the Management Account.
12. SECURITY ACCOUNTS
12.1 REMITTANCE OF EARNINGS
The Borrower shall, throughout the Security Period, procure and ensure
that all monies payable under the Charterparty and any other Earnings are
paid to the Management Account unless and until such time as the Lender
shall, following the occurrence of an Event of Default and whilst the same
is continuing, require that the Charterparty Hire and any other Earnings
of the Rig and all the Services Rendering Contract Payments are paid to
the Facility Agent or as it may direct (whereafter the Borrower shall
procure and ensure that the Charterparty Hire and any other Earnings and
all the Services Rendering Contract Payments are paid in accordance with
the directions of the Facility Agent).
12.2 USE OF MANAGEMENT ACCOUNT
Subject to the provisions of Clause 12.1 and unless and until an Event of
Default shall have occurred and be continuing (whereupon the provisions of
Clause 12.4 shall be and become applicable) and subject in all respects to
the provisions of Clause 9.5, monies from time to time credited to, or
standing to the credit of, the Management Account shall be applied in
accordance with the following provisions:-
(i) Subject to no Event of Default or Potential Event of Default having
occurred, and be continuing the Facility Agent and the Borrower
shall on the 5th day of each month (commencing on the 5th of the
month following the month during when the first payment of
Charterparty Hire is paid to the Management Account) release to the
Borrower an amount not exceeding the Monthly Outgoings incurred by
the Borrower during the preceding month.
(ii) All other monies from time to time standing to the credit of the
Management Account shall be applied by the Facility Agent in or
towards payment of the Repayment Instalments and otherwise in or
towards amounts of principal of, and interest accrued on, the Loan
from time to time payable by the Borrower hereunder and other
amounts from time to time falling due and payable hereunder and/or
under any of the Security Documents (and such application by the
Facility
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Agent, which the Facility Agent is hereby irrevocably authorised
by the Borrower to do, shall constitute PRO tanto satisfaction of
the corresponding obligations of the Borrower hereunder).
(iii) Subject to the payments made in accordance with sub-clauses (i) or
(ii) Surplus Earnings shall be transferred to the Reserve Account on
the 5th day of each month.
12.3 USE OF RESERVE ACCOUNT
All monies transferred to the Reserve Account in accordance with Clause
12.2(iii) shall during the Security Period remain credited to the Reserve
Account unless withdrawn pursuant to Clause 12.4 in accordance with and
subject to the Reserve Account Charge. If at the time the amount for the
time being credited to the Management Account is insufficient to discharge
the Monthly Outgoings and/or payments to the Agents and the Lenders in
accordance with Clause 12.2(i) and/or 12.2 (ii), then subject to no Event
of Default and no Potential Event of Default having occurred, the Facility
Agent shall apply any amounts credited to the Reserve Account in or
towards the Monthly Outgoings and/or payments to the Agents and the
Lenders and the provisions of Clause 12.2(i) and (ii) shall (MUTATIS
MUTANDIS) apply.
12.4 WITHDRAWAL
Subject to there being credited to the Reserve Account and the Sister
Company Reserve Account immediately following such withdrawal an amount
equal to the aggregate of the next six (6) Repayment Instalments and the
next six (6) Repayment Instalments under and as defined in the Sister
Company Loan Agreement the Borrower may from time to time withdraw monies
from the Reserve Account.
12.5 FOLLOWING EVENT OF DEFAULT
Without prejudice to the provisions of the Management Account Charge and
the Reserve Account Charge, upon the occurrence of an Event of Default and
whilst the same is continuing the Facility Agent shall forthwith be and
become entitled then or at any time thereafter to apply all moneys
standing to the credit of, or from time to time credited to, the
Management Account and the Reserve Account in or towards payment of
amounts due to the Agents and the Lenders under this Agreement and/or the
other Security Documents.
12.6 INTEREST
Amounts for the time being standing to the credit of the Management
Account and the Reserve Account shall bear interest at the rates from time
to time paid by the Management Account Bank or (as the case may be) the
Reserve Account Bank to its customers for US Dollar deposits of like
amounts for like periods (but having regard to payments which are
scheduled to fall due to be made from time to time from such accounts),
such interest to accrue from day to day, to be calculated on the actual
number of days elapsed and on the basis of a three hundred and sixty (360)
day year and to be credited to the relevant account at such intervals as
the Facility Agent and the Borrower shall agree.
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13. PROVISIONS RELATING TO SECURITY
13.1 CONTINUING SECURITY
It is declared and agreed that:
(i) the security created or to be created by or pursuant to this
Agreement and the other Security Documents shall be held by the
Security Agent as a continuing security for the payment and
discharge of the Secured Obligations;
(ii) the security so created shall not be satisfied by any intermediate
payment or satisfaction of any part of the amount hereby and thereby
secured;
(iii) the security so created shall be in addition to and shall not in any
way be prejudiced or affected by any collateral or other security
now or hereafter held by the Agents or any of the Lenders for all or
any part of the moneys hereby and thereby secured;
(iv) every power and remedy given to the Agents or any of the Lenders
hereunder or under any of the Security Documents shall be in
addition to, and not a limitation of, any and every other power or
remedy vested in the Lender hereunder or thereunder; and
(v) all the powers so vested in the Agents or any of the Lenders may be
exercised from time to time and as often as the Lender may deem
expedient.
13.2 CLAIMS AGAINST SECURITY PARTIES
Notwithstanding any other provision of this Agreement and/or of the
Security Documents (express or implied), the Agents and the Lenders shall
have an absolute and unfettered right to make, enforce or seek to enforce
any claim against the Borrower and/or against any other Security Party
and/or against any security or other asset(s) or document(s), agreement(s)
or arrangement(s) simultaneously and/or in such order or sequence as any
of the Agents or the Lenders may in their sole and absolute discretion see
fit.
14. CHANGE IN CIRCUMSTANCES
14.1 ILLEGALITY
In the event that by reason of change subsequent to the date hereof in any
applicable law, regulation or regulatory requirement or in the
interpretation thereof it shall appear to any Lender that it has become
unlawful for such Lender to maintain or give effect to its obligations as
contemplated by this Agreement, such Lender shall inform the Facility
Agent who shall thereupon give notice to the Borrower to that effect,
whereafter the liability of such Lender to make or to maintain Commitments
and its participation in the Loan shall cease, and if any of the
Facilities in which such Lender is participating has already been drawn
down the Borrower shall prepay such Lender's participation in the Loan to
such Lender either immediately or, on the latest date permitted by such
law, regulation or regulatory requirement, in accordance with and subject
to the provisions of Clause 18. In any such event, but without prejudice
to the aforesaid obligations of the Borrower to prepay such Lender's
participation in the Loan, the Borrower and the Lender
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so affected and the Facility Agent shall negotiate in good faith for a
period of 30 days next succeeding the giving of such notice with a view to
agreeing terms for making such Lender's participation in the Loan
available from another jurisdiction, or for establishing a mutually
acceptable basis for funding from alternative sources, or for
restructuring the Facilities on a basis which is not unlawful.
14.2 INCREASED COSTS
(i) If by reason of the introduction of, or any change in, any
applicable law, treaty, regulation or regulatory requirement or any
change in the interpretation or application of any of the foregoing
by any judicial, governmental or other competent body or authority
or if by reason of compliance by any Lender or either of the Agents
with any applicable directive, request or requirement (whether or
not having the force of law) of any central bank or governmental,
fiscal or other authority (including, but not limited to, a
directive, request or requirement relating to any Lender's
allocation of capital for the purpose of its business) any Secured
Party incurs an increased cost (as defined in paragraph (ii)), the
Borrower shall promptly on demand made by the Facility Agent on
behalf of such Secured Party pay to the Facility Agent for the
account of such Secured Party the amount of such increased cost:-
(ii) In this Agreement "INCREASED COST" means:
(a) any Taxation to which any Secured Party is subjected with
respect to the Loan or any part thereof (other than corporate
Taxation on such Secured Party's overall net income); or
(b) an additional cost incurred by a Secured Party as a result of
it having entered into, or performing, maintaining or funding
its obligations under, this Agreement or any other Financing
Documents; or
(c) that portion of any additional cost incurred by a Secured
Party in making, funding or maintaining all or any advances or
commitments comprised in a class of advances or commitments
formed by or including its participations in the Loans made
available or to be made available under this Agreement, as is
attributable to it making, funding or maintaining those
participations; or
(d) a reduction in any amount payable to a Secured Party or in the
effective return to a Secured Party under this Agreement or on
its capital which is attributable to the funding of this
Agreement or its commitment to make funds available hereunder;
or
(e) the amount of any payment made by a Secured Party, or the
amount of any interest or other return foregone by a Secured
Party, calculated by reference to any amount received or
receivable by that Secured Party from any other party under
this Agreement.
(iii) Any demand made by the Facility Agent under sub-paragraph (i) above
shall contain reasonable details of the increased cost and the
event(s) giving rise to it,
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but no Secured Party need disclose any information which is
confidential or disclosure of which would be contrary to its
recognised banking policies.
(iv) The obligation under paragraph (i) to pay increased costs does not
apply to any increased cost:
(a) compensated for by the operation of Clause 9.2; or
(b) attributable to any change in the rate of tax on the
overall net income of a Secured Party (or the overall net
income of a division or branch of a Secured Party) imposed in
the jurisdiction in which its principal office for the time
being is situate or in which it is resident for tax purposes
or is carrying on business and by virtue thereof is subject to
such tax in that jurisdiction; or
(c) attributable to any law or regulation relating to any of the
matters set out in the report of the Basle Committee on
Banking Regulations and Supervisory Practices dated July 1988
and entitled "INTERNATIONAL CONVERGENCE OF CAPITAL MEASUREMENT
AND CAPITAL STANDARDS" as the same are in force and applied
and interpreted at the date of this Agreement.
(iv) In the case of a demand made by or on behalf of a Lender, the
Borrower shall be at liberty at any time after the receipt of such
notice, so long as the circumstances giving rise to such increased
cost continue, on giving not less than five Banking Days'
irrevocable notice to the Facility Agent and such Lender, to prepay
all (but not part only) of such Lender's participation in the Loan
in accordance with and subject to the provisions of Clause 14.3.
(v) In any such event, but without prejudice to the obligations of the
Borrower as aforesaid, the Borrower and the Lender will negotiate in
good faith with a view to mitigating the effects on the Borrower.
14.3 PREPAYMENT
Where any Lender's participation in the Loan is to be prepaid by the
Borrower pursuant to any of the provisions of this Clause 14, the Borrower
shall simultaneously with such prepayment pay to the Facility Agent for
the account of such Lender all accrued interest on any sum prepaid to the
date of prepayment and all other sums payable by the Borrower to or for
the account of such Lender pursuant to this Agreement and/or the Security
Documents together with such amounts as may be certified by such Lender to
be necessary to satisfy the indemnity obligations of the Borrower as
provided for in Clause 18.
14.4 FACILITY AGENT'S AND LENDER'S DETERMINATION
The certificate or determination of the Facility Agent or (as the case may
be) any Lender, as to any of the matters referred to in this Clause 14
shall, save for any manifest error, be conclusive and binding on the
Borrower.
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15. TRANSFERS
15.1 AGREEMENT BINDING ON SUCCESSORS
This Agreement and the other Financing Documents shall benefit and bind
the parties, any transferee or assignee in respect of which an assignment
or novation becomes effective in accordance with Clause 15.3(iii), and
their respective successors as if they were named as parties and had
executed this Agreement. Any reference in any Financing Document to any
party shall be construed accordingly.
15.2 BORROWER'S ASSIGNMENT
The Borrower may not assign or transfer all or any part of its rights or
obligations under any Financing Document.
15.3 TRANSFER
A Lender (an "EXISTING LENDER") may at any time assign, transfer or novate
any of its rights and/or obligations under this Agreement (and the other
Financing Documents to the extent possible as a matter of law) only if:-
(i) such assignment, transfer or novation is to a Qualifying
Lender (a "NEW LENDER");
(ii) such Existing Lender simultaneously assigns, transfers or
novates to such New Lender the proportion of its Corresponding
Sister Company Commitments and of its Corresponding Sister Company
Outstandings so that such New Lender becomes a Lender (as defined in
and in accordance with the Sister Company Loan Agreement) which is
the same as the proportion of its Commitments and Outstandings which
it is assigning, transferring or novating hereunder;
(iii) either such assignment, transfer or novation is effected pursuant to
Clause 15.4 or such New Lender executes an undertaking in form and
substance satisfactory to the Facility Agent that it is bound by the
terms of the Financing Documents.
15.4 NOVATION
Subject to Clause 15.3 any Existing Lender may at any time novate all or
part of its Commitments and/or transfer all or part of its Outstandings
and its rights and benefits under the Financing Documents by delivering to
the Facility Agent a duly completed and executed Transfer Certificate
substantially in the form of Schedule 6. On receipt of such a Transfer
Certificate, the Facility Agent shall countersign it for and on behalf of
itself and the other parties to this Agreement and with effect from the
date specified in the Transfer Certificate to the extent that they are
expressed to be the subject of transfer and/or novation in the Transfer
Certificate:-
(i) the Existing Lender and the other Parties (the "EXISTING PARTIES")
will be released from their obligations to each other (the
"DISCHARGED OBLIGATIONS");
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(ii) the New Lender and the existing Parties will assume obligations
towards each other which differ from the discharged obligations only
insofar as they are owed to or assumed by the New Lender instead of
the Existing Lender;
(iii) the rights of the Existing Lender against the existing Parties and
vice versa (the "DISCHARGED RIGHTS") will be cancelled; and
(iv) the New Lender and the existing Parties will acquire rights against
each other which differ from the discharged rights only insofar as
they are exercisable by or against the New Lender instead of the
Existing Lender,
15.5 NEW LENDERS
Each New Lender shall, by its execution of a Transfer Certificate, accept
that none of the other parties hereto is in any way responsible for:
(a) the accuracy and/or completeness of any information supplied to the
New Lender in connection herewith;
(b) the financial condition, creditworthiness, condition, affairs,
status and nature of the Borrower or any of the Guarantors or any
other Security Party or the observance by the Borrower, any of the
Guarantors or any other Security Party of any of their respective
obligations under the Financing Documents or any document relating
thereto; or
(c) the legality, validity, effectiveness, adequacy or enforceability of
this Agreement or any document relating hereto and, save as
otherwise expressly provided herein, none of such parties shall, or
shall be deemed to be, the agent or trustee of such New Lender in
connection herewith.
15.6 LENDING OFFICES
The initial Lending Office(s) of each Lender has/have been notified by
that Lender to the Facility Agent. Any Lender may at any time change any
of its Lending Office(s) in relation to all or a specified part of any of
its Commitments and/or Outstandings by notifying the Facility Agent and
the Borrower of the fax number, telex number and address of its new
Lending Office(s).
15.6 DISCLOSURE OF INFORMATION
The Lender may disclose information regarding the Borrower or the
Guarantors and the transactions entered into pursuant to this Agreement to
any actual or potential, assignee or sub-participant, subject to such
recipients of information agreeing to keep it confidential.
16. FEES AND EXPENSES
16.1 FEES AND DISBURSEMENTS
The Borrower will pay to each of the Agents on demand, all costs, charges
and expenses (including all out-of-pocket expenses and legal fees and VAT
thereon) incurred by each
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of the Agents in connection with the preservation of its rights under and
enforcement or attempted enforcement of this Agreement and the Security
Documents or otherwise in connection with the Loan or any part thereof.
16.2 TAXES AND DUTIES
The Borrower will pay to the Facility Agent and the Lenders on demand, all
stamp, registration and other duties (including any such duties payable by
the Lender) imposed by any relevant jurisdiction (or any taxing authority
therein or thereof) on this Agreement and/or any of the Security Documents
or otherwise in connection with the Loan or any part thereof.
17. CURRENCY INDEMNITY
17.1 CURRENCY INDEMNITY
(i) If, for any reason, any payment due from the Borrower under or in
connection with any Security Document is made or is satisfied in a
currency (the "OTHER CURRENCY") other than the currency in which the
relevant payment under this Agreement is due (the "CONTRACTUAL
CURRENCY"), then to the extent that the payment (when converted into
the Contractual Currency at the rate of exchange on the date of
payment or, in the case of the liquidation or insolvency of the
Borrower, at the rate of exchange on the latest date permitted by
applicable law for the determination of liabilities in such
liquidation or insolvency) actually received by the party entitled
thereto falls short of the amount expressed to be due under the
terms of this Agreement or, as the case may be, such other Security
Document, the Borrower shall, as a separate and independent
obligation, indemnify the party entitled thereto and hold such party
harmless against the amount of such shortfall.
(ii) If on any occasion the Contractual Currency so purchased exceeds the
amount payable hereunder in the Contractual Currency to the party
entitled thereto then, subject to the Borrower having no further
obligation, actual or contingent, to such party under this
Agreement, such party shall refund to the Borrower the excess amount
of the Contractual Currency so purchased.
(iii) For the purpose of this Clause "RATE OF EXCHANGE" means the rate at
which the party entitled thereto is able on the relevant date to
purchase the Contractual Currency with the Other Currency and shall
take into account any premium and other costs of exchange.
17.2 INDEPENDENT OBLIGATIONS
The indemnities in Clause 17.1 shall constitute separate and independent
obligations of the Borrower from the other respective obligations under
this Agreement, shall give rise to a separate and independent cause of
action against the Borrower and shall apply irrespective of any indulgence
granted by the Lenders or by the Agents from time to time.
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18. GENERAL INDEMNITIES
18.1 UNSCHEDULED REPAYMENTS
Without prejudice to the provisions of Clause 16.2, the Borrower shall
indemnify each Agent and each Lender against all funding and other fees,
costs, charges, losses, demand and expenses incurred or sustained as a
consequence of the Lender receiving (including any receipt in respect of a
repayment or prepayment made with the consent or at the request of or as
required by the Agents or any Lender including, but not limited to, any
prepayment under Clauses 6.5, 6.6 or 14.3) or recovering all or any part
of the Loan or any other amount due hereunder on a day other than at the
times and otherwise in accordance with the Repayment Schedule.
18.2 EVENT OF DEFAULT
The Borrower undertakes to indemnify each of the Agents and the Lenders
against any and all liabilities losses costs, demands, charges,
liabilities and expenses (including, without limitation, legal fees) which
the Agents or such Lender may incur or sustain as a consequence of any
default by the Borrower in the performance of the obligations expressed to
be assumed by it in this Agreement and/or the Security Documents.
18.3 FINANCING COSTS
The liability of the Borrower under Clauses 18.1 and 18.2 shall include
but not be limited to all funding or other fees, costs, charges, losses,
demands and expenses sustained or incurred by either of the Agents or each
of the Lenders including (but not limited to) any sustained or incurred in
liquidating deposits taken to fund the amount so prepaid or sustained or
incurred in connection with the cancellation, reduction or re-arrangement
of any interest rate swap, hedge transaction or other funding or financing
agreement or arrangement which the Agents or such Lender may have arranged
or entered into for the purpose of funding the amount so prepaid (and the
Borrower hereby acknowledges that either of the Agents or each of the
Lenders may in its discretion enter into any such agreements or
arrangements as it considers appropriate).
18.4 OPERATION OF RIG
The Borrower shall indemnify each of the Agents and each of the Lenders
upon demand against all costs, expenses, claims, liabilities and losses of
any nature whatsoever sustained or incurred as a result of or in
connection with any the ownership or operation of the Rig and/or claims by
any third party or any Environmental Claim being made against the Lender
or otherwise howsoever arising out of any Environmental Incident. If the
Lender shall become aware of any claim for the purposes of this Clause
18.4 it shall give notice thereof to the Borrower as soon as reasonably
practicable (but not as a condition precedent to the liability of the
Borrower under this Clause 18.4) and shall (if the Borrower shall
indemnify and secure each of the Agents and each of the Lenders to such
Agents or (as the case may be) such Lender's reasonable satisfaction
against any liability costs damages and expenses which may reasonably be
incurred thereby and/or in relation thereto) take such action as the
Borrower may reasonably and promptly by notice request to avoid, resist or
compromise the claim, provided that:
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(1) If either Agent or (as the case may be) the Lender receives
instructions to appeal against or otherwise resist any claim, it may
thereafter give notice to the Borrower to provide such Agent or (as
the case may be) such Lender with a written opinion of legal
advisers (to be approved by the Agent or (as the case may be) such
Lender, such approval not to be unreasonably withheld) to the effect
that there are reasonable and proper grounds for appealing against
or resisting such claim, and if no such opinion is received by such
Agent or (as the case may be) such Lender within 21 days after the
service of such notice such Agent or (as the case may be) such
Lender shall thereupon be released from any obligations which it
would otherwise have under this Clause and (notwithstanding any
other provision hereof) shall be entitled to immediate
indemnification by the Borrower in respect of such claim, and if
such an opinion is so received but there is a change in the basis on
which it is given then such Agent or (as the case may be) such
Lender may give further notice under this Clause.
(2) Neither Agent nor any Lender shall be required to appeal against or
otherwise resist or to compromise any claim if in the reasonable
opinion of such Agent or Lender doing so could have adverse long
term or consequential implications for such Agent or Lender.
(3) All communications pertaining to any claim with the person authority
or body whatsoever making the claim as are made by the Borrower (if
any) shall first be approved by the Agent or (as the case may be)
such Lender (such approval not to be unreasonably withheld).
18.5 AGENT'S OR LENDER'S CERTIFICATE
A certificate of either Agent or a Lender of the amount of any such loss
or expense as is mentioned in Clauses 18.1, 18.2 and 18.3 and specifying
the basis upon which such loss, expense or amount is computed shall, in
the absence of manifest error, be final and conclusive and binding on the
parties hereto.
19. THE AGENTS
19.1 APPOINTMENT
Each Lender irrevocably appoints the Facility Agent to act as its agent
for the purpose of this Agreement and irrevocably authorises it to take
such action and exercise such rights, powers and discretions as are
specifically delegated to it by this Agreement or the other Security
Documents and such other action, rights, powers and discretions as are
reasonably incidental thereto. However, the Facility Agent may not begin
any legal action or proceeding in the name of a Lender without its
consent. The relationship between the Facility Agent and the Lenders is of
agent and principal only. The Facility Agent shall not be a trustee for
any Lender, nor an agent or trustee for the Borrower or either Guarantor,
under or in relation to any Security Document.
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19.2 DUTIES OF FACILITY AGENT
The Facility Agent shall:-
(i) promptly send to each Lender details of each communication
received by it from the Borrower and/or either of the Guarantors
under this Agreement (except that details of any communication
relating to a particular Lender shall be sent to that Lender only),
details of any Transfer Certificate executed by any other Lender and
provide such other information relating to the Facility as any
Lender may reasonably request;
(ii) promptly send to each Lender a copy of any document or information
received by it under Clause 4 (Availability and Drawing);
(iii) subject to the other provisions of this Clause 19, act in accordance
with any instructions from the Majority Lenders or, if so instructed
by the Majority Lenders, refrain from exercising a right, power or
discretion vested in it under this Agreement; and
(iv) have only those duties, obligations and responsibilities of a solely
mechanical and administrative nature, expressly specified in this
Agreement.
19.3 PERFORMANCE OF DUTIES
The Facility Agent:-
(i) may perform any of its duties, obligations and responsibilities
under the Security Documents by or through its personnel or any
sub-contractor or agents;
(ii) may refrain from exercising any right, power or discretion vested
in it under the Security Documents until it has received
instructions from the Majority Lenders or (provided that
instructions have been requested) as to whether (and, if it is to
be, the way in which) it is to be exercised and shall in all cases
be fully protected when acting, or (if so instructed) refraining
from acting, in accordance with instructions from the Majority
Lenders;
(iii) may treat (a) the Lender which makes available any share of the Loan
as the person entitled to repayment of that share unless all or part
of it has been assigned or transferred (and the Facility Agent has
received notice of that assignment or transfer) in accordance with
Clause 15; and (b) the office(s) notified by a Lender to the
Facility Agent for this purpose before the signing of this Agreement
(or, as the case may be, in the relevant Transfer Certificate or
notice of assignment) as its Lending Office(s) unless the Facility
Agent has received from that Lender a notice of change of Lending
Office in accordance with Clause 15. The Facility Agent may act on
any such assignment and/or notice until it is superseded by a
further assignment and/or notice;
(iv) shall not be required to do anything which would or might in its
reasonable opinion be contrary to any law or directive or otherwise
render it liable to any person which is not a party to the Security
Documents and may do anything which is in its reasonable opinion
necessary to comply with any law or directive;
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(v) shall not be required to make any enquiry as to default by the
Borrower or either of the Guarantors (unless specifically so
instructed by the Majority Lenders) in the performance or observance
of any of the provisions of the Security Documents or as to the
existence of any Event of Default or Potential Event of Default
unless that Facility Agent acquires actual knowledge to the contrary
or has been notified in writing thereof by a Lender; and
(vi) may refrain from taking any step (or further step) to protect
or enforce the rights of any person under the Security Documents
until it has been indemnified (or received confirmation that it will
be so indemnified) and/or secured to its satisfaction against any
and all actions, charges, costs, losses, expenses or liabilities
(including legal, accountants' and other professional fees) which
would or might be brought, made or preferred against or suffered,
sustained or incurred by it as a result.
19.4 AGENTS' DISCRETIONS
The Facility Agent may:-
(i) assume that any representation made by the Borrower or either of the
Guarantors in connection with the Security Documents is true;
(ii) assume that no Event of Default has occurred and that the Borrower
is not in breach of or default under the Security Documents;
(iii) assume that any right, power, authority or discretion vested in this
Agreement upon the Majority Lenders or any other person has not been
exercised;
(iv) rely on any communication, certificate, legal opinion or other
document reasonably believed by it to be genuine;
(v) rely as to any matter of fact which might reasonably be expected to
be within the knowledge of any person, on a written statement by
that person and on any communication or document believed by it to
be genuine;
(vi) obtain and pay for the advice or services of any lawyers,
accountants, surveyors or other experts in relation to the
negotiation, preparation, execution and enforcement of the Security
Documents as may to it seem necessary or desirable and rely on any
such advice;
(vii) retain for its own benefit and without liability to account any fee
or other sum receivable by it in connection with its agency and
subject always to Clause 20 (Set Off/Pro-Rata Sharing) for its
account; and
(viii)accept deposits from, lend money to, provide any advisory or other
services or engage in any kind of banking or other business with,
any party to any Security Document or related company of any party
(and, in each case, may do so without liability to account to any
Lender).
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19.5 LIMITATION OF RESPONSIBILITIES
Neither the Facility Agent nor any of its personnel,
sub-contractors or agents shall be:-
(i) responsible for the adequacy, accuracy, completeness or
reasonableness of any representation, warranty, statement,
projection, assumption or information provided by the Borrower or
either of the Guarantors to any Lender, or contained in any Security
Document or any notice or other document delivered under or in
connection with any Security Document;
(ii) responsible for the execution, delivery, validity, legality,
adequacy, enforceability or admissibility in evidence of any
Security Document or any such notice or other document or for the
satisfaction or failure by the Borrower to satisfy any condition
precedent to the utilisation of the Facility; or
(iii) responsible for the collectability of amounts payable under any
Security Documents;
(iv) responsible for the accuracy of any statements (whether written or
oral) made in or in connection with any Security Documents; or
(v) liable for anything done or not done by it or any of them under or
in connection with any Security Document save in the case of its or
their own negligence or wilful misconduct (but so that this Clause
19.5(v) shall not be construed to impose any liability in respect of
any matter for which liability is under any other provision of this
Clause excluded).
19.6 THE FACILITY AGENT AS LENDER
The Facility Agent shall with respect to its own participation in the
Facilities (if any) have the same rights and powers under the Financing
Documents as any other Lender and may exercise them as though it were not
also acting as agent for the Lenders. The Facility Agent and its
associates and affiliates may, without liability to disclose or account,
engage in any kind of financial, trust or commercial business with, or
acquire or dispose of any kind of security of, the Borrower, any
Guarantor, any other Security Party, any of their respective associates or
affiliates and none of the Facility Agent, nor any of its associates or
affiliates shall have any obligation to disclose or account for any
dealings with the Borrower, any Guarantor, any other Security Party, any
of their respective associates or affiliates prior to the date of this
Agreement. The agency department of the Facility Agent will be treated as
a separate entity from any other department of the Facility Agent and any
information received by the Facility Agent in any other capacity may be
treated as confidential by them.
19.7 NO RELIANCE ON THE FACILITY AGENT
Without affecting the responsibility of the Borrower for information
supplied by it or on its behalf in connection with any Security Document,
each Lender confirms that it has itself been, and will at all times
continue to be, solely responsible for making its own independent
investigation and appraisal of the business, financial condition,
prospects, creditworthiness, status and affairs of the Borrower, the
Guarantors or any other person
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and has not relied, and will not at any time rely, on the Facility Agent
or any other Lender:-
(i) to provide it with any information relating to the business,
financial condition, prospects, creditworthiness, status or affairs
of the Borrower, the Guarantors or any other person, whether coming
into its possession before or after the drawing of the Facility
(except as stated in Clause 19.2 or as provided otherwise in this
Agreement); or
(ii) to check or enquire into the adequacy, accuracy, completeness or
reasonableness of any representation, warranty, valuation,
statement, projection, assumption or information at any time
provided by or on behalf of the Borrower, the Guarantors or any
other person under or in connection with any Security Document
(whether or not that information has been or is at any time
circulated to it by the Facility Agent); or
(iii) to assess or keep under review the business, financial condition,
prospects, creditworthiness, status or affairs of the Borrower, the
Guarantors or any other person.
19.8 LENDERS' INDEMNITY
To the extent that the Borrower or either of the Guarantors do not do so
on demand or are not obliged to do so, each Lender shall on demand
indemnify the Facility Agent in the proportion borne by its Outstandings
to all the Outstandings at the relevant time (or, if there are then no
Outstandings, in the proportion borne by its Commitments to the Total
Commitments) against any cost, expense or liability mentioned in Clause 16
(Fees and Expenses) or sustained or incurred by the Facility Agent in
complying with any instructions from the Majority Lenders or otherwise
sustained or incurred by it (in its capacity as an Agent) in connection
with its duties, obligations and responsibilities under the Security
Documents except routine administrative costs and expenses of the Facility
Agent or to the extent that they are sustained or incurred as a result of
the gross negligence or wilful misconduct of the Facility Agent or any of
its personnel or agents.
19.9 CHANGE OF AGENTS
Notwithstanding the irrevocable appointments in Clause 19.1, the Facility
Agent may resign at any time if it gives at least 30 days' notice in
writing to the Borrower and the Lenders and the Facility Agent may at any
time be removed by the Majority Lenders giving not less than 30 days'
notice to the Facility Agent. However, no resignation or removal shall be
effective until the successor has been appointed and accepted its
appointment in accordance with this Clause 19.9. The Majority Lenders may
appoint a successor to the resigning or removed Facility Agent but, if the
successor has not been so appointed and accepted its appointment within 15
days after the date of the notice of resignation or, as the case may be,
removal, the resigning Facility Agent and the Majority Lenders may appoint
a successor Facility Agent. Any appointment of a successor must be in
writing, signed by the person(s) appointing that successor and delivered
to that successor. Any acceptance of such appointment must be in writing,
signed by the person appointed and delivered to the person(s) appointing
that successor. The other parties to this Agreement shall be promptly
informed of the acceptance by a successor Facility Agent. Upon the
successor accepting its appointment, the resigning or, as the case may
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be, the removed facility Agent shall be automatically discharged from any
further obligation under the Security Documents and its successor and each
of the other parties to the Security Documents shall have the same rights
and obligations among themselves as they would have had if the successor
had been the original Facility Agent party to this Agreement and the other
Security Documents. The resigning or, as the case may be, the removed
Facility Agent shall provide its successor with (or with copies of) such
records as its successor requires to carry out its duties under the
Security Documents.
19.10 SIGNING OF TRANSFER CERTIFICATES
The Borrower, the Security Agent and each Lender (except for the Existing
Lender and the New Lender seeking the relevant assignment and/or novation)
irrevocably authorises the Facility Agent to sign each Transfer
Certificate on their behalf.
19.11 ACCEPTANCE OF TITLE
The Facility Agent may accept without investigation, requisition or
objection such title as any person may have to the undertakings, property
and assets which are subject to the Security Documents and shall not be
bound or concerned to examine or enquire into nor be liable to any other
Secured Party or any other person for any defect or failure in the title
of any person whether such defect or failure was known to the Facility
Agent or might have been discovered upon examination or enquiry and
whether capable of remedy or not nor for any failure on the part of the
Facility Agent to give notice to any third party of the Security Documents
to which it is party or otherwise perfect or register the security thereby
created.
19.12 THE BORROWER AND THE FACILITY AGENT
The Borrower shall be entitled to rely on any direction, instruction,
certificate, document or other communication made by the Facility Agent
and shall not be required to enquire whether it is made with the authority
of the Lenders, and performance of any obligation arising under this
Agreement or the Security Documents in reliance on any such shall be
deemed to be proper performance of the obligation in question.
19.13 AGENT OF THE LENDERS
Save as expressly provided in the Security Documents, the Facility Agent
is appointed hereunder and thereunder solely as the agent of the Lenders,
and the foregoing provisions of this Clause 19 (The Agents) apply solely
to the Facility Agent in their capacity as agent for the Lenders.
19.14 AGENT'S KNOWLEDGE
Information obtained by the Facility Agent in any capacity other than in
its capacity as Facility Agent and or through any department other than
the department having specific responsibility for the administration of
the Loan and the Security Documents shall not be imputed to the Facility
Agent.
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19.15 AMENDMENTS
The Facility Agent may (except where any other authority is required for
the same by the express provisions of the Financing Documents) grant
waivers or consents or vary the terms of the Financing Documents only if
the same has been authorised by the Majority Lenders. Any such waiver,
consent or variation so authorised and effected by the Facility Agent
shall be binding on all the Lenders and the Facility Agent shall be under
no liability whatsoever in respect of any such wavier, consent or
variation. This Clause 19.15 shall not authorise, except with the prior
consent of all the Lenders:
(a) any change in the manner in which interest is calculated or paid
under this Agreement in respect of the Loan;
(b) any extension of the date for, or alteration in the amount or
currency of, any payment of principal, interest, fee, commission or
any other amount payable under the Financing Documents in respect of
the Loan;
(c) any increase in any Lender's Commitment in respect of the
Facilities;
(d) any extension of a date on which a payment of principal must be paid
in respect of the Loan; or
(e) any variation of the definition of Majority Lenders, and this Clause
19.15 shall not authorise, except with the prior consent of all the
Lenders;
(g) any variation of:
(i) Clause 14.1 (ILLEGALITY), 20.2 (PRO RATA SHARING); or
(ii) this Clause 19.17,
(h) any extension of the Availability Period; or
(i) any amendment of any provision of the Financing Documents which
contemplates the need for the consent or approval of each Lender.
19.16 THE SECURITY AGENT
The Lenders will appoint the Security Agent to act as security agent in
accordance with the Security Trust Deed.
20. SET-OFF/PRO-RATA SHARING
20.1 SET OFF
The Borrower authorises the Facility Agent and each of the Lenders to
apply (without prior notice) any credit balance (whether or not then due)
to which the Borrower is at any time beneficially entitled on any account
at, any sum held to its order by and/or any liability or obligation
(whether or not matured) of, any office of the Facility Agent or such
Lender in or towards satisfaction of any sum then due and payable by it to
the Facility Agent or such Lender under the Security Documents and unpaid
and, for that
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purpose, to convert one currency into another (provided that nothing in
this Clause 20.1 shall be effective to create a charge, and provided
further that any credit balance, sum and/or liability or obligation as
aforesaid shall be held by the Facility Agent or, as the case may be, such
Lender pursuant to or in connection with the Security Documents). No party
shall be obliged to exercise any of its rights under this Clause 20.1,
which shall be without prejudice and in addition to any right of set-off,
combination of accounts, lien or other right (including the benefit of the
Security Documents) to which it is at any time otherwise entitled (whether
by operation of law, contract or otherwise). Each Lender shall notify the
Facility Agent and the Borrower forthwith upon the exercise or purported
exercise of any right of set-off giving full details in relation thereto
and the Facility Agent shall inform the other Lenders forthwith.
20.2 PRO-RATA SHARING
If at any time the proportion received or recovered (whether by direct
payment, by exercise of any right of set-off, combination of accounts or
lien, or otherwise) by any Lender in respect of the total sum which has
become due to it from the Borrower or either of the Guarantors under the
Security Documents before that time exceeds the proportion received or
recovered by the Lender(s) receiving or recovering the smallest proportion
(if any), then:-
(i) such Lender shall promptly notify the Facility Agent and within 2
Banking Days after receiving a request from the Facility Agent, that
Lender shall pay to the Facility Agent an amount equal to the excess
and the Facility Agent shall notify the Borrower or the relevant
Guarantor, as the case may be, of the receipt of such amount;
(ii) the Facility Agent shall promptly distribute that payment as if it
were made by the Borrower or the relevant Guarantor, as the case may
be; and
(iii) as between the Borrower and the Lenders, that excess amount shall be
treated as having been paid to the Lenders to which (and in the
proportions in which) it is distributed under (ii) above, rather
than as having been paid to that Lender.
Within 2 Banking Days after any Lender receives or recovers any such sum
otherwise than by payment through the Facility Agent, that Lender shall
notify the Facility Agent of the amount and currency so received or
recovered, how it was received or recovered and whether it represents
principal, interest or other sums. If all or part of any amount so
received or recovered by that Lender (the "RELEVANT LENDER") required
thereafter to be repaid to the Borrower or another obligor, as the case
may be, has to be refunded by it (with or without interest), each Lender
to whom any part of that amount has been distributed shall repay to the
Facility Agent for the account of the Relevant Lender (within 2 Banking
Days after receiving a request from the Facility Agent on behalf of the
Relevant Lender) its proportionate share of the amount to be repaid to the
Borrower or, as the case may be, other obligor and of any interest
required to be paid by the Relevant Lender on that amount in respect of
all or any part of the period from the date of the relevant distribution
to the date of that payment to the Relevant Lender.
Any amount received or recovered by a Lender under a novation, assignment,
sub-participation or the like shall be ignored for the purpose of this
Clause 20.2. Furthermore, a Lender shall not be obliged to share any
amount which it has (i) alone
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received on its own account under Clause 14 (Changes in Circumstances) or
(ii) received or recovered as a result of taking legal proceedings with
any other Lender which had an opportunity to participate in those legal
proceedings but did not do so and did not take separate legal proceedings.
The provisions of this Clause 20.2 shall not, and shall not be construed
so as to, constitute a charge by a Lender over all or any part of a sum
received or recovered by it in the circumstances mentioned in Clause 20.2.
20.3 FLOOR GUARANTEE
For the avoidance of doubt, nothing contained in this Clause 20 shall in
any way restrict the Initial Lenders or other Beneficiaries under (and as
defined in) the Floor Guarantee from recovering and retaining for their
own exclusive benefit amounts received or recovered by them under or in
respect of the Floor Guarantee.
21. NOTICES, ETC.
21.1 METHOD OF SENDING
Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, may be made by facsimile transmission or by telex
or by letter.
21.2 ADDRESSES FOR NOTICES
Any communication or document to be made or delivered by one person to
another pursuant to this Agreement shall (unless the one has by not less
than three (3) days' written notice to the other specified another
address) be made or delivered to that other person at the respective
addresses set out below.
(1) The Borrower (Petrodrill Seven Limited):-
PETRODRILL ENGINEERING NV
K.P. van der Mandalelaan 38
3062 MB Rotterdam (Brainpark)
The Netherlands
Attention: Steve Assiter
Facsimile:
Telex:
(2) The Initial Lenders:-
PETRO DIA THREE S.A.
c/o MITSUBISHI CORPORATION
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship & Industrial Project Department
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PETRO DIA FOUR S.A.
c/o MITSUBISHI CORPORATION
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship & Industrial Project Department
Facsimile:
Telex:
(3) The Facility Agent:-
MITSUBISHI CORPORATION (UK) PLC
Bow Bells House
Bread Street
London
EC4M 9BQ
Attention: General Manager, Machinery Department
Facsimile: 0171 822 0184
Telex:
(4) The Security Agent:-
MITSUBISHI CORPORATION (UK) PLC
Bow Bells House
Bread Street
London
EC4M 9BQ
Attention: General Manager, Machinery Department
Facsimile: 0171 822 0184
Telex:
21.3 DEEMED RECEIPT
Any notice given hereunder shall be deemed to have been received:
(i) If sent by facsimile transmission or by telex, at the opening of
business one (1) Banking Day after the day it was transmitted;
(ii) In the case of a written notice lodged by hand, at the time of
actual delivery; and
(iii) If posted, on the fifth Banking Day following the day on which it
was properly despatched by first class mail postage prepaid.
22. COUNTERPARTS
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This Agreement may be executed in any number of counterparts and by the
different parties hereto on different counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
23. AGENTS' AND LENDERS' CERTIFICATES
A certificate of either of the Agents or of any Lender (i) stating the
amount of any sum due to such Agent or Lender hereunder (and specifying
the provision hereof under which such sum became due and reasonable
details of the manner of calculation thereof), and/or (ii) stating the
determination by either Agent or any Lender as to any matter to be
determined by such Agent or Lender hereunder (including but not limited to
rate of interest and currency exchange), shall be conclusive as to the
subject matter thereof in the absence of manifest error.
24. WAIVER; REMEDIES CUMULATIVE
No failure to exercise and no delay in exercising on the part of the
Lender any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof, or the exercise
of any other right, power or privilege. The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies
provided by law.
25. LANGUAGE
Each document referred to herein or to be delivered hereunder and under
the Security Documents (including financial statements) and each other
communication shall be in the English language. In the event of any
conflict between the version in English and any version in any other
language of any document (including this Agreement) the version in English
shall prevail.
26. SEVERABILITY
Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
27. GOVERNING LAW AND JURISDICTION
27.1 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law.
27.2 SUBMISSION TO JURISDICTION
For the benefit of the Agents and the Lenders, the Borrower irrevocably
agrees that the English courts are to have jurisdiction to settle any
disputes which may arise out of or in connection with this Agreement and
the other Financing Documents and that accordingly any suit, action or
proceedings ("PROCEEDINGS") arising out of or in connection with this
Agreement and the other Financing Documents may be brought in such courts.
- 65 -
<PAGE>
27.3 WAIVER OF OBJECTION
The Borrower irrevocably waives any objection which it may have now or
hereafter to the laying of the venue of any Proceedings in any such court
as is referred to in Clause 27.2 and any claim that any such Proceedings
have been brought in an inconvenient forum and further irrevocably agrees
that a judgment in any Proceedings brought in the English courts shall be
conclusive and binding upon the Borrower and may be enforced in the courts
of any other jurisdiction.
27.4 OTHER JURISDICTIONS
Nothing contained in this Clause 27 shall limit the right of the Agents or
any Lender to take proceedings against the Borrower in any other court of
competent jurisdiction, nor shall the taking of Proceedings in any one or
more jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
27.5 SERVICE OF PROCESS
The Borrower irrevocably and unconditionally:
(a) designates, and appoints and empowers Hackwood Secretaries Limited
of One Silk Street, London EC2Y 8HQ to receive for it and on its
behalf, service of process issued out of the English courts to
receive for it and on its behalf service of process issued out of
the Japanese courts in any Proceedings arising out of or in
connection with this Agreement;
(b) agrees to maintain in England a duly appointed process agent
notified to the Facility Agent, for the purposes of paragraph (a)
above;
(c) agrees that failure by any such process agent to give notice of such
process to it shall not impair the validity of such service or of
any judgment based thereon;
(d) consents to the service of process out of any of the said courts in
any such Proceedings by the airmailing of copies, postage prepaid,
to it at its address for the time being applying for the purposes of
Clause 19; and
(e) agrees that nothing herein shall affect the right to serve process
in any other manner permitted by law.
IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed by their authorised officers or other representatives the day and year
first above written
- 66 -
<PAGE>
SIGNATORIES
EXECUTED on behalf of ) /s/ Illegible
PETRODRILL SEVEN LIMITED )
by its duly authorised signatory/ )
attorney-in-fact: ) /s/ Illegible
EXECUTED on behalf of PETRO ) /s/ H. MIYAMOTO
DIA THREE S.A. by its duly )
authorised signatory/attorney-in-fact: ) /s/ Illegible
EXECUTED on behalf of PETRO ) /s/ H. MIYAMOTO
DIA FOUR S.A. by its duly )
authorised signatory/attorney-in-fact: ) /s/ Illegible
EXECUTED on behalf of ) /s/ Illegible
MITSUBISHI CORPORATION )
(UK) PLC (in its capacity as Facility )
Agent) a by its duly authorised )
signatory/attorney-in-fact: ) /s/ Illegible
EXECUTED on behalf of ) /s/ Illegible
MITSUBISHI CORPORATION )
(UK) PLC (in its capacity as Security )
Agent) by its duly authorised )
signatory/attorney-in-fact: ) /s/ Illegible
- 67 -
<PAGE>
SCHEDULE 1
THE LENDERS AND THEIR COMMITMENTS
TRANCHE A FACILITY
NAME OF LENDER AMOUNT OF TRANCHE A COMMITMENT US$
(INCLUDING INTEREST TO BE CAPITALISED
PRIOR TO THE NOTIONAL INTERIM A FACILITY
DATE)
Petro Dia Four SA 53,000,000
TRANCHE B FACILITY
NAME OF LENDER AMOUNT OF TRANCHE B COMMITMENT US$
(INCLUDING INTEREST TO BE CAPITALISED
PRIOR TO THE NOTIONAL INTERIM A FACILITY
DATE)
Petro Dia Three SA 74,000,000
TRANCHE C FACILITY
NAME OF LENDER AMOUNT OF TRANCHE C COMMITMENT US$
(INCLUDING INTEREST TO BE CAPITALISED
PRIOR TO THE NOTIONAL INTERIM A FACILITY
DATE)
Petro Dia Three SA 53,000,000
- 68 -
<PAGE>
SCHEDULE 2
THE FORM OF REPAYMENT SCHEDULE
REPAYMENT DATE AMOUNT OF REPAYMENT INSTALMENT
- 69 -
<PAGE>
SCHEDULE 3
PART 1: SERVICES CONTRACTS
1. Management Agreement between the Borrower and Formaritima Ltd relating to
the Rig and dated as of 5 November 1998.
2. Licensing Agreement between Bigem Holdings NV and the Borrower relating to
the design of the Rig and dated as of 5 November 1998.
3. Construction Management Agreement between the Borrower and Petrodrill
Engineering BV relating to the Rig and dated as of 5 November 1998.
PART 2: OTHER SERVICES CONTRACTS
1. Technical Services Agreement between Formaritima Ltd and Pride-Foramer
S.A. relating to the Rig and dated as of 5 November 1998.
2. Marine and Nautical Services Agreement between Formaritima Ltd and
Workships Contractors B.V. relating to the Rig and dated as of 5 November
1998.
3. Supply Agreement between Petrodrill Engineering N.V. and Maritima relating
to the Rig and dated as of 5 November 1998.
4. Local Services Agreement between Formaritima Ltd and Maritima relating to
the Rig and dated as of 5 November 1998.
5. Supply Agreement between Petrodrill Engineering N.V. and Pride-Foramer
S.A. relating to the Rig and dated as of 5 November 1998.
6. Supply Agreement between Petrodrill Engineering N.V. and Workships
Contractors B.V.
- 70 -
<PAGE>
SCHEDULE 4
DRAWING REQUEST
FROM: Petrodrill Seven Limited [DATE]
TO: Mitsubishi Corporation (UK) PLC
as Facility Agent
Dear Sirs
LOAN AGREEMENT
We refer to the Loan Agreement dated [ ] December 1998 (the "LOAN AGREEMENT")
and made between the Lenders (as defined therein) (1) ourselves (as Borrower),
Mitsubishi Corporation (UK) PLC (as Facility Agent) and Mitsubishi Corporation
(UK) PLC (as Security Agent). Terms defined in the Loan Agreement shall have the
same meaning when used herein.
We hereby give you irrevocable Notice:
(a) that we wish to make a Drawing on [INSERT DATE OF PROPOSED drawing] (being
a Banking Day during the Availability Period)*;
(b) that the Advance will be in the principal amount of US$[ ]; and
(c) that the Facility under which the Drawing is requested is the:
[Tranche A Facility] [Tranche B Facility] [Tranche C Facility],
upon the terms and subject to the conditions of the Loan Agreement.
We confirm that the representations and warranties set out in Clause 8 of the
Loan Agreement are true and that, no event which is or, with the giving of
notice or the passage of time or both, would become an Event of Default has
occurred and is continuing.
Please pay the proceeds of the Advance to the credit of the Management Account.
Yours faithfully
_________________________________
Authorised signatory for and on behalf of
PETRODRILL SEVEN LIMITED
_________________________________
* or attached schedule of requested Pre-delivery Advances.
- 71 -
<PAGE>
SCHEDULE 5
DETAILS OF THE HOLDER OF SHARES IN THE BORROWER
AND THE SISTER COMPANY
Amethyst Financial Company Limited is the registered holder and beneficial owner
of the entire issued share capital in the Borrower.
- 72 -
<PAGE>
SCHEDULE 6
FORM OF TRANSFER CERTIFICATE
To: [Insert name of Facility Agent]
[Insert address of Facility Agent]
Attention: [ ]
PETRODRILL SEVEN LIMITED
US$180,000,000 LOAN AGREEMENT DATED [ ] 1998
1. This Transfer Certificate relates to the above loan agreement (the "LOAN
AGREEMENT", which term shall include any amendments or supplements
thereto), and the other Security Documents referred to therein. Terms
defined in the Loan Agreement have the same meaning in this Transfer
Certificate.
In this Transfer Certificate :
"EXISTING LENDER" means [ ]; and
"TRANSFEREE" means [ ].
2. The Existing Lender (i) confirms that the details in the Schedule to this
Transfer Certificate under the heading "RIGHTS TO BE ASSIGNED AND/OR
OBLIGATIONS TO BE NOVATED" accurately summarises the Outstandings which
are to be assigned and/or Commitments which are to be novated by this
Transfer Certificate and (ii) requests the Transferee to accept and
procure the transfer to the Transferee of the portion specified in the
Schedule hereto of, as the case may be, such Outstandings and/or its
Commitment by counter-signing and delivering this Transfer Certificate to
the Facility Agent at its address for the service of notices specified in
the Loan Agreement.
3. The Transferee hereby requests the Facility Agent to accept this Transfer
Certificate as being delivered to the Facility Agent pursuant to and for
the purposes of Clause 15 (Transfers) of the Loan Agreement so as to take
effect in accordance with the terms thereof on the Transfer Date or on
such later date as may be determined in accordance with the terms thereof.
4. The Transferee:
(a) confirms that it has received a copy of the Loan Agreement together
with such other documents and information as it has requested in
connection with this transaction;
(b) confirms that it has not relied and will not rely on the Existing
Lender to check or enquire on its behalf into the legality,
validity, effectiveness, adequacy or completeness of any such
documents or information;
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<PAGE>
(c) confirms and agrees that it has not relied and will not rely on any
of the Existing Lender, the Agents, or the other Lenders to assess
or keep under review on its behalf the financial condition,
creditworthiness, condition, affairs, status or nature of the
Borrower or any other party to the Security Documents, and has not
relied and will not rely on any of the Existing Lender, the Agent or
the other Lenders to ensure that the Borrower or any other party to
the Security Documents are not in breach of or default under any of
the same; and
(d) if not already a Lender, appoints the Agents to act as its agents as
provided in the Loan Agreement and the Security Trustee Deed and
agrees to be bound by the Loan Agreement (including, but not limited
to, Clause 15 (Transfer)).
5. The Transferee undertakes with the Existing Lender and each of the other
parties to the Loan Agreement that it will perform, in accordance with
their terms, all those obligations which, by the terms of the Loan
Agreement, will be assumed by it upon delivery of the executed copy of
this Transfer Certificate to the Facility Agent.
6. On execution of this Transfer Certificate by the Facility Agent on their
behalf, the Borrower, the Lenders and the Agents accept the Transferee as
a party to the Loan Agreement in substitution for the Existing Lender with
respect to all those rights and obligations which, by the terms of the
Loan Agreement and other Security Documents, will be transferred to or
assumed by the Transferee after delivery of the executed copy of this
Transfer Certificate to the Facility Agent.
7. None of the Existing Lender, the other Lenders or the Agents:
(a) makes any representation or warranty or assumes any responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of any of the Loan Agreement and the Security
Documents or the Project Documents, or with respect to whether the
Borrower, the Guarantors or any other party to the Security
Documents or the Project Documents has complied with its obligations
thereunder (under Clause 3 (Conditions Precedent) of the Loan
Agreement); or
(b) assumes any responsibility for the financial condition of the
Borrower, the Guarantors or any other party to any Security Document
or Project Document or any other document or for the performance and
observance by the Borrower, the Guarantors or any other party to the
Security Documents or Project Documents or any other document of its
or their obligations and any and all conditions and warranties,
whether express or implied by law or otherwise, are hereby excluded.
8. The Existing Lender hereby gives notice that nothing herein or in the
Loan Agreement (or any document relating thereto) shall oblige the
Existing Lender to (i) accept a re-transfer from the Transferee of the
whole or any part of its rights, benefits and/or obligations under the
Loan Agreement transferred pursuant hereto or (ii) support any losses
directly or indirectly sustained or incurred by the Transferee for any
reason whatsoever including, without limitation, the non-performance by
the Borrower, the Guarantors or any other party to the Security Documents
(or any document relating thereto) of its obligations under any such
document. The Transferee hereby acknowledges the absence of any such
obligation as is referred to in (i) or (ii) above.
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<PAGE>
9. This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with English
law.
10. The Transferee warrants and represents to the Facility Agent and each of
the Lenders that it is a Qualifying Lender as defined in Clause 1.1 of the
Loan Agreement.
THE SCHEDULE
1. Existing Lender:
2. Transferee:
3. Transfer Date:
4. Commitment:
Lender's Commitment Facility (Tranche A, Portion Transferred
(US$) B or C) (US$)
5. Outstandings:
Amount of Lender's Facility (Tranche A, Drawdown Date Portion
Participation (US$) B or C) Transferred
6. Transferee's Lending Office details:
Address:
Telephone Number:
Telex No:
Fax No:
7. Rights to be Assigned and/or Obligations to be Novated.
___________________________ ___________________________
[Existing Lender] [Transferee]
__________________________________
Facility Agent for itself and on behalf of
the Security Trustee and the Borrower
- 75 -
<PAGE>
SCHEDULE 7
PART 1 - THE PROJECT DOCUMENTS
1. (a) Shipbuilding Contract dated 9 April 1998 the "SHIPBUILDING
CONTRACT" between Daewoo Corporation and Daewoo Heavy Industries
Ltd. (collectively, the "BUILDER") and Petrodrill Offshore Inc.
(formerly called Petrodrill Construction Inc.) (the "OWNER") for the
purchase of a Dynamic Positioned Semi-Submersible Drilling Vessel
having the Hull No. 3015.
(b) Side Letter No. 1 dated as of 9 April 1998 between the Owner and the
Builder, whereby the Owner has agreed to certain amendments to the
Shipbuilding Contract as set forth therein.
(c) Side Letter No. 2, dated as of 9 April 1998 between the Owner and
the Builder, whereby the Owner has agreed to consider certain
proposals of the Builder as set forth therein.
(d) Main Contract Amendment Agreement dated 8 October 1998.
(e) Novation Agreement in respect of the Shipbuilding Contract dated 4
December 1998 between the Builder, the Owner and the Borrower.
(f) Letter of Confirmation as to continued validity of the Rig
Construction Contract.
2. (a) Refund Guarantee (the "REFUND GUARANTEE") issued by The
Export-Import Bank of Korea (the "REFUND GUARANTOR").
(b) Novation Agreement in respect of the Refund Guarantee dated 4
December 1998.
(c) Consent in respect of (f) above.
3. Chartering Contract (Contract No. [101.2.159.97-1] between Maritima
Navigacao e Engenharia Ltda (whose successor is Maritima) and Petrobras.
4. Services Rendering Contract (Contract no. [101.2.156.97-0] between
Maritima Navigacao e Engenharia Ltda (whose successor is Maritima) and
Petrobras.
5. Letter of Agreement dated 15 January 1998, relative to the aforesaid
Chartering Contract and Services Rendering Contract, between Maritima and
Petrobras.
6. A further Letter of Agreement dated 15 January 1998, relative to the
aforesaid Chartering Contract and Services Rendering
Contract, between Maritima and Petrobras.
7. Rider No. 01 for the assignment of rights and obligations arising from the
aforesaid Chartering Contract, dated 10 July 1998 and made between
Petrobras, Maritima and Petrodrill Seven Limited.
8. Rider No. 1 to the aforesaid Services Rendering Contract, dated 21 August
1998 and made between Maritima, Petrobras and Petrodrill Seven Limited.
- 76 -
<PAGE>
9. Letter dated 28 May 1998 from Petrobras to Maritima reference
E&P/SUEX-SSE-048-98.
10. Amethyst Seven Technical Services Agreement between Formaritima Ltd. and
Pride-Foramer S.A.;
11. Amethyst Seven Marine and Nautical Services Agreement between Formaritima
Ltd. and Workships Contractors BV;
12. Amethyst Seven Management Agreement between Petrodrill Seven Limited and
Formaritima Ltd.;
13. Amethyst Seven Supply Agreement between Petrodrill Engineering N.V. and
Maritima Petroleo e Engenharia Ltda;
14. Amethyst Seven Local Services Agreement between Formaritima Ltd. and
Maritima Petroleo e Engenharia Ltda;
15. Licensing Agreement between Bigem Holdings N.V. and Petrodrill Seven
Limited;
16. Amethyst Seven Supply Agreement between Petrodrill Engineering N.V. and
Pride-Foramer S.A;
17. Amethyst Seven Supply Agreement between Petrodrill Engineering N.V. and
Workships Contractors B.V.;
18. Amethyst Seven Construction Management Agreement between Petrodrill Seven
Limited and Petrodrill Engineering N.V.; and
19. Amethyst Financial Company Ltd's Shareholders' Agreement between
Drillpetro Inc., Techdrill Inc., and Westville Management Corporation.
20. Local Services Agreement between Maritima and Formaritima Ltd.
21. Technical Services Agreement between Pride-Foramer SA and Formaritima Ltd.
22. Supply Agreement between Pride-Foramer SA and Petrodrill Engineering Ltd.
23. Supply Agreement between Maritima and Petrodrill Engineering Ltd.
24. Supply Agreement between Workships Contractors BV and Petrodrill
Engineering Ltd.
PART 2 - THE SECURITY DOCUMENTS
1. Rig Construction Contract and Refund Guarantees Assignment
2. Rig Mortgage
3. Deed of Covenants
4. Charterparty Assignment
5. Services Rendering Contract Assignment
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<PAGE>
6. Insurances Assignment
7. Management Account Charge
8. Reserve Account Charge
9. Services Contracts Assignment
10. Share Charge
11. Cross Guarantee
12. Deed of Guarantee and Undertaking
13. Assignment of Deed of Guarantee and Undertaking and Subordinated
Loan Facility Agreement
14. Mortgage Debenture
15. Security Trust Deed
16. The Additional Funding and Guarantee Agreement referred to in Clause 7.5
17. Inter-company Loan Assignment
18. The subordinated loan facility agreement referred to in Clause 7.1(xiii)
- 78 -
<PAGE>
SCHEDULE 8
INSURANCES
The Insurances to be effected and maintained throughout the Security Period
shall be effected and maintained (with the Security Agent, the Facility Agent
and each of the Lenders being named as a principal assured) with insurers
acceptable to the Facility Agent providing insurance cover against such risks as
are insured by the Temporary Confirmation of Insurance and on terms and
conditions no less favourable than are provided for by the Temporary
Confirmation of Insurance and (subject to such insurance being available in the
international insurance markets) otherwise as the Facility Agent may from time
to time at its discretion require.
- 79 -
EXHIBIT 4.9
DATED 19 DECEMBER 1998
THE LENDERS HEREIN REFERRED TO
as Lenders
-and-
PETRODRILL SIX LIMITED
as Borrower
- and -
MITSUBISHI CORPORATION (UK) PLC
as Facility Agent
- and -
MITSUBISHI CORPORATION (UK) PLC
as Security Agent
-------------------------------------------------
LOAN AGREEMENT
providing for a secured loan facility
not exceeding US$160,000,000
in connection with the acquisition
of a semi-submersible drilling rig
t.b.n. "AMETHYST 6"
-------------------------------------------------
FIELD - FISHER - WATERHOUSE
41 VINE STREET LONDON EC3N 2AA
<PAGE>
CONTENTS
CLAUSE/HEADING PAGE
- - -------------- ----
1. DEFINITIONS AND INTERPRETATION 2
2. THE FACILITY 18
3. CONDITIONS PRECEDENT 20
4. DISBURSEMENT OF ADVANCES 24
5. INTEREST 27
6. REPAYMENT AND PREPAYMENT 28
7. SECURITY 30
8. REPRESENTATIONS 32
9. PAYMENTS: TAXATION 36
10. EVENTS OF DEFAULT 38
11. COVENANTS 42
12. SECURITY ACCOUNTS 47
13. PROVISIONS RELATING TO SECURITY 49
14. CHANGE IN CIRCUMSTANCES 49
15. TRANSFERS 52
16. FEES AND EXPENSES 54
17. CURRENCY INDEMNITY 54
18. GENERAL INDEMNITIES 55
19. THE AGENTS 56
20. SET-OFF/PRO-RATA SHARING 63
21. NOTICES, ETC. 64
22. COUNTERPARTS 66
23. AGENTS'AND LENDERS'CERTIFICATES 66
24. WAIVER; REMEDIES CUMULATIVE 66
25. LANGUAGE 67
26. SEVERABILITY 67
27. GOVERNING LAW AND JURISDICTION 67
SIGNATORIES 69
SCHEDULES
1 THE LENDERS AND THEIR COMMITMENTS 70
2 THE FORM OF REPAYMENT SCHEDULE 71
3 PART 1: SERVICES CONTRACTS 72
PART 2: OTHER SERVICES CONTRACTS 72
4 DRAWING REQUEST 73
5 DETAILS OF THE HOLDER OF SHARES IN THE BORROWER
AND THE SISTER COMPANY 74
6 FORM OF TRANSFER CERTIFICATE 75
7 PART 1 - THE PROJECT DOCUMENTS 78
PART 2 - THE SECURITY DOCUMENTS 79
8 INSURANCES 81
<PAGE>
THIS AGREEMENT is made this 19th day of December 1998
BETWEEN
(1) THE LENDERS, the respective names and offices of which are set out in the
First Schedule, as Lenders;
(2) PETRODRILL SIX LIMITED, a company incorporated under the laws of the
British Virgin Islands having its registered office at 325 Waterfront
Drive, Omar Hodge Building, 2nd Floor, Wickhams Cay, Road Town, Tortola,
British Virgin Islands, as Borrower;
(3) MITSUBISHI CORPORATION (UK) PLC, a company incorporated in England and
Wales (Reg No. 2214224) whose registered office is at Bow Bells House,
Bread Street, London EC4M 9BQ, in its capacity
as facility agent for the Lenders; and
(4) MITSUBISHI CORPORATION (UK) PLC, a company incorporated in England and
Wales (Reg No. 2214224) whose registered office is Bow Bells House, Bread
Street, London EC4M 9BQ, in its capacity as security agent and trustee for
the Secured Parties.
WHEREAS:
(A) This Agreement sets out the terms and conditions upon and subject to
which loan facilities will be made available to the Borrower in an
aggregate principal amount (including interest capitalised in accordance
with the terms hereof) not exceeding US$160,000,000 for the purpose of
financing the acquisition of a semi-submersible drilling rig to be
constructed by the Builder, comprising a Tranche A Facility of a principal
amount (including interest capitalised as aforesaid) not exceeding
US$47,000,000, a Tranche B Facility in a principal amount (including
interest capitalised as aforesaid) not exceeding US$66,000,000 and a
Tranche C Facility in a principal amount (including interest capitalised
as aforesaid) not exceeding US$47,000,000.
(B) Subject to and upon the terms and conditions contained in this Agreement
and the Sister Company Loan Agreement respectively MC1 has agreed to make
available to the Borrower and the Sister Company loan facilities in the
aggregate principal amount (including interest capitalised as aforesaid)
not exceeding US$113,000,000 and of US$127,000,000 respectively.
(C) Maritima and Pride have severally and unconditionally agreed with
and undertaken to MC1 and MC2 that subject to and in accordance with the
terms of the Additional Funding and Guarantee Agreement (referred to in
Recital (D)), they will provide or arrange the provision of funding to the
Borrower in each case on or before 29 October 1999 and in each case on the
terms and conditions of the facilities to be made available under this
Agreement and the Sister Company Loan Agreement in the amount (including
interest capitalised as aforesaid as at such date) of US$47,000,000 and to
the Sister Company in the amount of US$53,000,000 (including interest
capitalised in accordance with the terms of the Sister Company Loan
Agreement as at such date).
- 1 -
<PAGE>
(D) Accordingly it has been agreed that subject to the terms and
conditions contained in this Agreement MC1 will provide a bridging loan to
MC2 (an affiliate company of MC1) in an amount (including interest
capitalised as hereinafter provided to 29 October 1999) not exceeding
US$47,000,000 on terms that it will be repaid to MC1 on or before 29
October 1999 and to give effect to this and to the agreement and
undertaking referred to in Recital (C) Pride and Maritima have (INTER
ALIA) entered into an Additional Funding and Guarantee Agreement with MC1
and MC2 whereby Pride and Maritima severally guarantee the repayment of
the Bridging Loans and MC2 has granted to them an option severally to
purchase (subject to and in accordance with the Additional Funding and
Guarantee Agreement) from MC2 its Tranche A Commitment and its
participation in the Tranche A Advances.
(E) It has therefore also been agreed that the Tranche C Facility
will only be made available to the Borrower by MC1 conditionally to the
extent of the repayment to MC1 of the Bridging Loan and the assumption by
Pride and Maritima or another Qualifying Lender of the Tranche A
Commitments of MC2 and the assumption by Pride and Maritima or such party
of MC2's participation in the Tranche A Advances and the payment by Pride
and Maritima to MC2 of the amount thereof all in accordance with the
Additional Funding and Guarantee Agreement.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS
In this Agreement the following words and expressions shall, except where
the context otherwise requires, have the following meanings:
"ADDITIONAL FUNDERS" means Elliott Associates LP and Westgate
International LP;
"ADDITIONAL FUNDING AND GUARANTEE AGREEMENT" means the agreement to be
executed in the approved form by MC1, MC2, the Borrower, the Guarantors
and the Additional Funders whereby the Guarantors will severally guarantee
the performance by MC2 of its obligations under the Bridging Loan
Agreement and the Additional Funders guarantee the performance by Maritima
of its obligations thereunder (in each case without any right of recourse
to MC2);
"ADVANCE" means an advance made or to be made or deemed to be by the
Lenders under the Facilities or (as the context may require) the principal
amount thereof for the time being outstanding and when designated an "A"
ADVANCE, a "B" ADVANCE or a "C" ADVANCE means an Advance made or to be
made in respect of the Tranche "A" Facility, the Tranche "B" Facility or
the Tranche "C" Facility respectively and, additionally, when designated a
"PRE-DELIVERY ADVANCE" means an Advance made or to be made prior to the
Yard Delivery Date, when designated the "YARD DELIVERY ADVANCE" means the
Advance made or to be made on the Yard Delivery Date upon delivery of the
Rig by the Builder to the Borrower and when designated a "POST YARD
DELIVERY ADVANCE" means an Advance made or to be made after the Yard
Delivery Date but prior to the Charterparty Commencement Date;
- 2 -
<PAGE>
"AGENTS" means the Facility Agent and the Security Agent, and
"AGENT" means either of them, as the context requires;
"ASSIGNMENT OF DEED OF GUARANTEE AND UNDERTAKING AND SUBORDINATED LOAN
FACILITY AGREEMENT" means the assignment in the approved form to be
executed pursuant to Clause 7.1(xiv);
"AVAILABLE FACILITY AMOUNT" means on any date in respect of any Facility
the Facility Amount of such Facility as reduced by the amount of Advances
made or deemed to have been made hereunder in respect of such Facility and
as further reduced by the amount of interest which has accrued on the
Advances drawn or deemed to have been drawn under such Facility since the
Interest Capitalisation Date last preceding such date;
"AVAILABILITY PERIOD" means the period commencing on the date of this
Agreement and ending on the earlier of 30 April 2001 and the Charterparty
Commencement Date;
"BALLOON" means the instalment of the Loan repayable by the
Borrower on the Final Repayment Date pursuant to Clause 6.3;
"BANKING DAY" means a day (not being a Saturday or Sunday) on which banks
and foreign exchange markets are open for business in London, New York,
Tokyo and Rio de Janeiro and, in respect of the period expiring on (and
including) the Yard Delivery Date, Seoul;
"BORROWER" means Petrodrill Six Limited, a company organised and
existing under the laws of the British Virgin Islands (Company No. 273701)
whose registered office is at 325 Waterfront Drive, Omar Hodge Building,
2nd Floor, Wickhams Cay, Road Town, Tortola, British Virgin Islands;
"BRIDGING LOANS" has the meaning assigned to such term in the Bridging
Loan Agreement and "BRIDGING LOAN" means the Bridging Loan made for the
purpose of funding Tranche A Advances under the
Tranche A Facility;
"BRIDGING LOAN AGREEMENT" means the agreement in the approved form dated
the same date as this Agreement between MC1 and MC2 pursuant to which MC1
has agreed to advance to MC2 the amounts of Advances made by MC2 under the
Tranche A Facility and the amounts of certain advances made by MC2
pursuant to the Sister Company Loan Agreement;
"BRIDGING LOAN REPAYMENT DATE" means the earlier of:
(i) 29 October 1999; and
(ii) the date on which (the Tranche A Facility having been fully
drawn and the Tranche A Facility having been fully drawn under and
as defined in the Sister Company Loan Agreement) further Drawings
are not available for Drawing under the Tranche B Facility (and
further drawings under the Tranche B Facility are not available as
defined in and in accordance with the Sister Company Loan Agreement)
by reason of the application of Clause 3.6(viii) of the Loan
Agreement (or Sister Company Loan Agreement) (because the making of
such Drawings would cause the Prospective Final Grossed-up Advances
Amount of the
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Tranche B Facility to exceed US$66,000,000 or (as the case may be)
the Prospective Final Grossed-up Amount of the Tranche B Facility as
defined in and under the Sister Company Loan Agreement to exceed
US$74,000,000);
"BUILDER" means Daewoo Corporation a company organised and existing under
the laws of Korea and Daewoo Heavy Industries Ltd., a company organised
and existing under the laws of Korea whose registered offices are at 541
5-GA, Namdaemuro, Jung-Gu, Seoul, Korea, being jointly and severally the
builder under the Rig Construction Contract;
"CHARTERPARTY" means the time charterparty agreement in respect of the Rig
(Contract No. 101.2.159.97-1) dated on or around 12 January 1998 and
executed by and between Maritima (as owner) and Petrobras (as charterer)
in the approved form, all rights and obligations of Maritima having since
been assigned by Maritima to the Borrower with Petrobras' approval by an
assignment document made between Petrobras, Maritima and the Borrower
dated 10 July 1998;
"CHARTERPARTY ASSIGNMENT" means a deed of assignment to be executed by the
Borrower in favour of the Security Agent for itself and as trustee for the
Secured Parties in accordance with Clause 7.1(iii);
"CHARTERPARTY COMMENCEMENT DATE" means the date on which the Rig (having
arrived at the Port or in sheltered waters in Macae -RJ) is accepted by
Petrobras for the commencement of operations, all in accordance with the
Charterparty;
"CHARTERPARTY HIRE" means all payments by way of charterhire and
any other monies from time to time payable under the Charterparty;
"COMMITMENT" in relation to a Lender means the aggregate of its Tranche A
Commitment, its Tranche B Commitment and its Tranche C Commitment;
"TRANCHE A COMMITMENT" in relation to a Lender means, subject as
hereinafter provided, the amount (if any) set opposite its name in the
column headed "TRANCHE A COMMITMENT" of Schedule 1 (or, as the case may
be, the amount specified as the portion of the Tranche A Facility
transferred in the Transfer Certificate pursuant to which such Lender
became a party hereto), "TRANCHE B COMMITMENT" in relation to a Lender
means, subject as hereinafter provided, the amount (if any) set opposite
its name in the column headed "TRANCHE B COMMITMENT" of Schedule 1 (or, as
the case may be, the amount specified as the portion of the Tranche B
Facility transferred in the Transfer Certificate pursuant to which such
Lender became a party hereto) and "TRANCHE C COMMITMENT" in relation to a
Lender means, subject as hereinafter provided, the amount (if any) set
opposite its name in the column headed "TRANCHE C COMMITMENT" in Schedule
1 (or, as the case may be, the amount specified as the portion of the
Tranche C Facility transferred in the Transfer Certificate pursuant to
which such Lender became a party hereto) and, in any such case, as reduced
from time to time in accordance with the provisions hereof; and "TRANCHE A
COMMITMENTS", "TRANCHE B COMMITMENTS" and "TRANCHE C COMMITMENTS" shall be
construed accordingly;
"CONSTRUCTION AND MOBILISATION COSTS" means the costs, charges and
expenses paid or to be paid by the Borrower in respect of spare parts,
operating manuals and procedures, training, construction management team
costs, commissioning of all equipment, construction insurance and
mobilisation costs during transit to Brazil;
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<PAGE>
"CONTRACT PRICE" has the meaning given to it in the Rig
Construction Contract;
"CONTRACTUAL DELIVERY DATE" has the meaning given to it in the
Rig Construction Contract;
"CORRESPONDING SISTER COMPANY COMMITMENTS", "CORRESPONDING SISTER COMPANY
OUTSTANDINGS", "CORRESPONDING SISTER COMPANY FACILITIES" and
"CORRESPONDING SISTER COMPANY ADVANCES" means, in relation to any
Commitments, Outstandings, Facilities or Advances, the commitments,
outstandings, facilities or, as the case may be, advances under the Sister
Company Loan Agreement having the same designation as such Commitments,
Outstandings, Facilities or Advances under this Agreement;
"CROSS GUARANTEE" means the guarantee to be executed by the Borrower, the
Sister Company and the Shareholder in favour of the Security Agent for
itself and as trustee for the Secured Parties in accordance with Clause
7.1(xi);
"DAILY RATE" means after the Charterparty Commencement Date (in respect of
the first Year) US$27,805 per day during which the Rig is operating (and
during any day during which the Rig is not operating US$14,300) comprising
a fixed proportion of US$12,805 (or US$5,000 if non-operational for more
than 5 consecutive working days) (the "FIXED PROPORTION") and a variable
proportion of US$15,000 (or US$9,300 if non-operational for more than 5
consecutive working days) (the "VARIABLE PROPORTION") and in respect of
each subsequent Year an amount equal to the aggregate of (i) the Fixed
Proportion (unchanged) and (ii) the Variable Proportion escalated on the
first anniversary of the Charterparty Commencement Date and each
successive anniversary of the Charterparty Commencement Date thereafter at
the rate of 3% per annum);
"DEED OF COVENANTS" means the deed of covenants to be executed by the
Borrower in favour of the Security Agent for itself and as trustee for the
Secured Parties (in conjunction with the Mortgage) in accordance with
Clause 7.1;
"DEED OF GUARANTEE AND UNDERTAKING" means the deed of guarantee
and undertaking to be executed in accordance with Clause 7.2(ii);
"DELAYED DELIVERY DEDUCTIBLE" means any amount which is deductible by
insurers before amounts become payable or which is deducted from amounts
which are payable under the terms of the delayed delivery insurance
effected pursuant to Clause 11.3 in the event of a claim being made in
respect of such insurance;
"DRAWDOWN DATE", in relation to an Advance, means the date on
which such Advance is made or deemed to be made hereunder;
"DRAWING REQUEST" means the request for drawing an Advance
pursuant to any of the Facilities issued by the Borrower pursuant
to this Agreement;
"EARNINGS" means the aggregate of (i) the Charterparty Hire, (ii) all
other moneys whatsoever due or to become due to the Borrower at any time
during the Security Period arising out of the use or operation of the Rig
and/or out of the provision of related services (including, but not
limited to) all hire and other moneys receivable in respect of the Rig
(whether receivable directly by the Borrower or by any agent on its
behalf), all compensation payable to the Borrower in the event of
requisition of the Rig for hire, all
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<PAGE>
remuneration for salvage and towage services and all demurrage and
detention moneys and (iii) damages for breach (or payments for variation
or termination) of the Charterparty or any other charterparty or contract
entered into by the Borrower for the employment of the Rig;
"ENVIRONMENTAL APPROVALS" means all approvals, licences, permits,
exemptions and authorisations required under applicable
Environmental Laws;
"ENVIRONMENTAL CLAIM" means (1) any claim by, or directive from, any
applicable governmental, judicial or other regulatory authority alleging
breach of, or non-compliance with, any Environmental Laws or Environmental
Approvals or otherwise howsoever relating to or arising out of an
Environmental Incident or (2) any claim by any other third party howsoever
relating to or arising out of an Environmental Incident (and, in each such
case, "CLAIM" shall mean a claim for damages, clean-up costs, compliance,
remedial action or otherwise);
"ENVIRONMENTAL INCIDENT" means (1) any release (or threatened release) of
Environmentally Sensitive Material from the Rig, (2) any incident in which
Environmentally Sensitive Material is released (or threatens to be
released) from any vessel other than the Rig and which involves collision
between the Rig and such other vessel or some other incident of navigation
or operation, in either case where the Rig or the Borrower are actually or
allegedly at fault or otherwise liable (in whole or in part) or (3) any
incident in which Environmentally Sensitive Material is released (or is
threatened to be released) from a vessel other than the Rig and where a
vessel is actually or potentially liable to be arrested as a result and/or
where the Borrower is actually or allegedly at fault or otherwise liable;
"ENVIRONMENTAL LAWS" means all laws, regulations, conventions and
agreements whatsoever relating to pollution or protection of the
environment (including, without limitation, the United States Oil
Pollution Act of 1990 and any comparable laws of the individual States of
the United States of America); and
"ENVIRONMENTALLY SENSITIVE MATERIAL" means oil, oil products, gas or any
other substance which is polluting, toxic or hazardous or any substance
the release of which into the environment is regulated, prohibited or
penalised by or pursuant to any Environmental Law;
"EVENT OF DEFAULT" means any of the events specified in Clause
10.1;
"FACILITIES" means the Tranche A Facility, the Tranche B Facility and the
Tranche C Facility and "FACILITY" means any of them;
"FACILITY AGENT" means Mitsubishi Corporation (UK) PLC, in its capacity as
facility agent for the Lenders and includes any successor facility agent
appointed hereunder;
"FACILITY AMOUNT" means in relation to any Facility the amount of
such Facility specified in Clause 2;
"FINAL REPAYMENT DATE" means the last of the dates specified in
the Repayment Schedule;
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<PAGE>
"FINANCING DOCUMENTS" means this Agreement and the Security
Documents;
"FLOOR GUARANTEE" means the guarantee to be executed by the
Guarantors in accordance with Clause 7.2(i);
"GUARANTEES" means the Floor Guarantee, and the Deed of Guarantee
and Undertaking, and "GUARANTEE" means any of them;
"GUARANTORS" means each of Maritima and Pride, and "GUARANTOR"
means either of them;
"INITIAL LENDERS" means MC1 and MC2;
"INSURANCES" means all policies and contracts of insurance (which
expression includes all entries of the Rig in a protection and indemnity
or war risks association) which are from time to time taken out or entered
into in respect of the Rig and the Charterparty Hire or otherwise
howsoever in connection with the Rig, including (but not limited to) any
policies of insurance effected pursuant to the Financing Documents
including (without limitation) (i) all insurances taken out by the Builder
in respect of the Rig and the Listed Items and the Purchaser's Supplies
(as defined in the Rig Construction Contract), and (ii) the Temporary
Confirmation of Insurance and (iii) (subject to such insurances being
available in the international insurance market) such other insurances as
the Facility Agent may from time to time at its discretion require;
"INSURANCES ASSIGNMENT" means a deed of assignment to the Insurances
executed or to be executed by the Borrower in favour of the Lender in
accordance with Clause 7.1(v);
"INTER-COMPANY LOAN" means the loan made or to be made pursuant
to the Inter-company Loan Agreement;
"INTER-COMPANY LOAN AGREEMENT" means the agreement in the approved form
between the Borrower and the Sister Company for the loan by the Sister
Company to the Borrower of US$10,000,000;
"INTEREST CAPITALISATION DATES" means (i)the date falling six months after
the date of this Agreement; (ii) each date falling at six monthly
intervals between such date and (in the case of Tranche B Advances and
Tranche C Advances) the Charterparty Commencement Date; and (iii) (in the
case of Tranche A Advances) the Notional Interim A Facility Date and the
Charterparty Commencement Date;
"LENDERS" means the Initial Lenders and any person who becomes a Lender
from time to time pursuant to Clause 15 (Transfers) but excluding any
person who ceases to be a Lender pursuant to that Clause;
"LENDING OFFICE" means in relation to a Lender, the branch office of such
Lender through which such Lender is for the time being acting for the
purposes of this Agreement;
"LISTED ITEMS" means the equipment defined as the "LISTED ITEMS"
in the Rig Construction Contract;
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<PAGE>
"LISTED ITEMS PRICE" means the price payable by the Borrower to
the Builder in respect of the Listed Items;
"LOAN" means the aggregate principal amount advanced by the Lenders
hereunder under any of the Facilities or (as the context requires) the
amount thereof for the time being outstanding hereunder and shall include
interest which has accrued and been capitalised in accordance with Clause
5.2;
"MC1" means Petro Dia Three S.A. a company incorporated under the laws of
Panama whose registered office is at 53rd Street, Urbanizacion Obarrio,
Torre Swiss Bank, 16th Floor, Panama City, Republic of Panama;
"MC2" means Petro Dia Four S.A. a company incorporated under the laws of
Panama whose registered office is at 53rd Street, Urbanizacion Obarrio,
Torre Swiss Bank, 16th Floor, Panama City, Republic of Panama;
"MAJORITY LENDERS" means those Lenders the aggregate of whose Outstandings
comprise at least 66 2/3% of the Loan or, if an Advance has not then been
made, Lenders the aggregate of whose Commitments represent at least 66
2/3% of the Total Commitments;
"MANAGEMENT ACCOUNT" means an account to be opened by and in the name of
the Borrower with the Management Account Bank and designated as the
Facility Agent may specify, and shall include any sub-account forming part
of such account and also any such other account or accounts as may, with
the agreement from time to time of the Security Agent, be opened and/or
designated as the Management Account by the Borrower;
"MANAGEMENT ACCOUNT BANK" means The Bank of Tokyo-Mitsubishi Limited,
London Branch or such other bank as the Facility Agent may nominate for
the purpose of holding and operating the Management Account;
"MANAGEMENT ACCOUNT CHARGE" means the charge over the Management Account
to be executed by the Borrower in favour of the Security Agent for itself
and as trustee for the Secured Parties in accordance with Clause 7.1(vi);
"MARITIMA" means Maritima Petroleo e Engenharia Ltda, (formerly Maritima
Navegacao e Engenharia Ltda), a company incorporated under the laws of
Brazil whose registered office is at Avenida Almte, Barroso, 52 Gr. 3400,
2031-000 Rio de Janeiro, Brazil;
"MONTHLY OUTGOINGS" means (in relation to each and every month) the day to
day administration and operational costs and expenses incurred or to be
incurred by the Borrower in the operation of the Rig for that month
exclusive of any such as arise under the provisions of this Agreement,
being an amount equal to the aggregate of the Daily Rate applicable for
the month in question multiplied by the number of days in that month;
"MORTGAGE DEBENTURE" means a first priority mortgage debenture to be
executed by the Borrower pursuant to Clause 7.1(ix) in favour of the
Security Agent for itself and as trustee for the Secured Parties;
"NOTIONAL FINAL FACILITY DATE" means 31 December 2000;
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<PAGE>
"NOTIONAL INTERIM A FACILITY DATE" means, in relation to the
Tranche A Facility, 29 October 1999;
"OFF-HIRE DEDUCTIBLE" means any amount which is deductible by insurers
before amounts become payable and which is deducted from amounts which are
payable under the terms of the off-hire insurance effected pursuant to
Clause 11.3 in the event of a claim being made in respect of such
insurance;
"OMNIBUS CONTRACT ASSIGNMENT" means the assignment to be executed
in accordance with Clause 7.1(viii);
"ORIGINAL SCHEDULED CHARTERPARTY COMMENCEMENT DATE" means 18
October 2000;
"ORIGINAL SCHEDULED YARD DELIVERY DATE" means 31 July 2000;
"OTHER SERVICES CONTRACTS" means the contracts specified in
Schedule 3 Part 2;
"OUTSTANDINGS" means, in relation to a Lender at any time, the aggregate
principal amount of its participation in all (if any) Advances outstanding
at that time;
"OUTSTANDING INDEBTEDNESS" means the Loan and all interest thereon and all
other sums of money from time to time owing to the Lenders under this
Agreement and/or the Security Documents or any of them;
"PETROBRAS" means Petroleo Brasileiro S.A. - Petrobras;
"POST-DELIVERY OPEX" means costs incurred by the Borrower in the operation
of the Rig during the period between the Yard Delivery Date and the
Charterparty Commencement Date;
"POTENTIAL EVENT OF DEFAULT" means any event or circumstance which, with
the giving of notice, lapse of time or both or the satisfaction of any
other applicable condition or the making of any applicable determination,
may become an Event of Default;
"PRE-DELIVERY OPEX" means costs incurred by the Borrower in respect of
crews wages and travelling expenses during the period between the Original
Scheduled Yard Delivery Date and the Yard Delivery Date;
"PRIDE" means Pride International Inc., a company incorporated under the
laws of the State of Louisiana, USA of 5847 San Felipe, Suite 330,
Houston, Texas 77057 USA;
"PROJECT DOCUMENTS" means the documents specified in Schedule 7
Part 1;
"PROJECT PARTIES" means the parties to the Project Documents
(including the Security Parties);
"PROSPECTIVE FINAL GROSSED-UP ADVANCES AMOUNT" means on any date in
respect of any Facility the amount of the Advances which (on the basis of
the Advances which have been made or deemed to have been made under such
Facility on or prior to such date and the Advances which after such date
will be deemed to be made pursuant to Clause 4.4 for the purposes of
capitalising interest on such Advances) will be outstanding under such
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<PAGE>
Facility on the Notional Final Facility Date on the assumption that no
other Advances are made (save only for Advances deemed to be made in
accordance with Clause 4.4 for the purposes of capitalising interest) and
no payments of interest or repayments of any Advance are made between such
date and the Notional Final Facility Date;
"PROSPECTIVE INTERIM GROSSED-UP A ADVANCES AMOUNT" means on any date in
respect of the Tranche A Facility the amount of the A Advances which (on
the basis of the A Advances made or deemed to have been made under the
Tranche A Facility on or prior to such date and the A Advances which after
such date will be deemed to be made pursuant to Clause 4.4 for the
purposes of capitalising interest on such A Advances) will be outstanding
under the A Facility on the Notional Interim A Facility Date on the
assumption that no other A Advances (save any for A Advances deemed to be
made in accordance with Clause 4.4 for the purposes of capitalising
interest) are made and no payments of interest or repayments of any
Advance are made between such date and the Notional Interim A Facility
Date;
"PROVISIONAL CONTRACT PRICE" has the meaning ascribed thereto in
the Rig Construction Contract;
"PURCHASER'S SUPPLIES" has the meaning ascribed to such term in
the Rig Construction Contract;
"PURCHASER'S SUPPLIES CONTRACTS" means the contracts entered into or
novated from time to time by the Borrower for the purchase of Purchaser's
Supplies;
"PURCHASER'S SUPPLIES PRICE" means the aggregate amount payable by the
Borrower to the suppliers of Purchaser's Supplies under the Purchaser's
Supplies Contracts;
"QUALIFYING LENDER" means Elliott Associates LP, Westgate International LP
and/or any person who in accordance with Clause 15.3 becomes a Lender
under this Agreement and complies with the requirements of that Clause and
being (in the case only of a Transferee to whom a Lender is proposing to
transfer or novate any of its Tranche A Commitments), either (i) a bank or
other financial institution which is a first class international bank
incorporated in any country which is a member of OECD or (ii) a person
approved by MC1 such approval not to be unreasonably withheld or delayed;
"REFUND GUARANTEE" means the guarantee issued to Petrodrill Construction
Inc and novated to the Borrower by The Export-Import Bank of Korea (or
such other international bank acceptable to the Lenders) in respect of
certain instalments of the Contract Price paid by the Borrower to the
Builder pursuant to the Rig Construction Contract;
"REPAYMENT DATE" means any of the eighty-four (84) repayment
dates specified in the Repayment Schedule;
"REPAYMENT INSTALMENT" means each instalment for repayment of the Loan and
payment of interest thereon, in each case as provided for in Clauses 6.2
and 6.3;
"REPAYMENT SCHEDULE" means the schedule substantially in the form set out
in Schedule 2 to be prepared by the Facility Agent in accordance with
Clause 6.3;
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<PAGE>
"REQUISITION COMPENSATION" means all moneys or other compensation payable
during the Security Period by reason of requisition for title or other
compulsory acquisition of the Rig otherwise than by requisition for hire;
"RESERVE ACCOUNT" means an account to be opened by and in the name of the
Borrower with the Reserve Account Bank and designated as the Facility
Agent may specify, and includes any sub-account forming part of such
account and also any such other account or accounts as may, with the
agreement from time to time of the Facility Agent, be opened and/or
designated as the Reserve Account by the Borrower;
"RESERVE ACCOUNT BANK" means The Bank of Tokyo-Mitsubishi Limited, London
Branch or such other bank as the Facility Agent may nominate for the
purpose of holding and operating the Reserve Account;
"RESERVE ACCOUNT CHARGE" means the charge over the Reserve Account to be
executed by the Borrower in favour of the Security Agent for itself and as
trustee for the Secured Parties in accordance with Clause 7.1(vii);
"RIG" means the semi submersible drilling platform to be built, or (as the
case may be) being built or (as the case may be) built and delivered to
the Borrower pursuant to the Rig Construction Contract including the
Materials, the Listed Items and the Purchaser's Supplies (all as defined
in the Rig Construction Contract);
"RIG CONSTRUCTION CONTRACT" means the agreement dated 9 April 1998 and
executed between the Builder and Petrodrill Construction Inc and novated
to the Borrower in the approved form for the construction and delivery of
a semi-submersible drilling platform having Builder's Hull No 3016 (as the
same may hereafter be amended and supplemented from time to time with the
prior approval of the Lender);
"RIG CONSTRUCTION CONTRACT AND REFUND GUARANTEE ASSIGNMENT" means the
assignment executed or to be executed in accordance with Clause 7.1(i);
"RIG MORTGAGE" means a first priority mortgage on the Rig to be executed
by the Borrower pursuant to Clause 7.1(ii) (together with the Deed of
Covenants supplemental thereto);
"SECURED OBLIGATIONS" means all monies, obligations and liabilities of any
nature whatsoever which are now or at any time hereafter may be or become
due or owing by the Borrower or any of the other Security Parties to
either of the Agents or any of the Lenders under or pursuant to any of the
Financing Documents (including damages for breaches thereof) and any other
liabilities, whether actual or contingent, now existing or hereafter
incurred by the Borrower or any of the other Security Parties to either of
the Agents or any of the Lenders under or pursuant to any of the Financing
Documents or under or pursuant to any of the Sister Company Financing
Documents (whether in either case due, owing or incurred by the Borrower
or such other Security Parties alone or jointly with any other person(s)
and in whatever name, firm or style and whether as principal or surety);
"SECURED PARTIES" means the Lenders and the Agents and also the
Lenders and the Agents (as defined in the Sister Company Loan
Agreement);
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<PAGE>
"SECURITY AGENT" means Mitsubishi Corporation (UK) PLC in its capacity as
security agent and trustee for the Lenders under the Security Trust Deed
and includes any successor security agent and trustee appointed under the
terms hereof and thereof;
"SECURITY DOCUMENTS" means the agreements, mortgages, deeds and other
documents specified in Schedule 7 Part 2 and any other documents
(including, as the context may require, this Agreement) that may now or
hereafter be executed as security for the Loan or any part thereof but
excluding (for the avoidance of doubt) the Floor Guarantee;
"SECURITY PARTIES" means the Borrower, the Guarantors, the Shareholder,
the Sister Company, and during the period prior to the unconditional and
irrevocable performance by each of the Additional Funders of their
obligations under the Additional Funding and Guarantee Agreement and
unless and until the Additional Funders are no longer under any actual or
contingent obligation under the Additional Funding and Guarantee Agreement
the Additional Funders or any of them, and "SECURITY PARTY" means any of
them;
"SECURITY PERIOD" means the period commencing on the date hereof and
terminating on the date upon which all moneys payable or to become payable
to the Agents and/or the Lenders at any time and from time to time
pursuant to the terms hereof and pursuant to the Security Documents and
all moneys payable or to become payable to the Agents and/or the Lenders
at any time and from time to time pursuant to the Sister Company Financing
Documents shall have been paid in full and neither the Agents nor any of
the Lenders are under any actual or contingent obligation to the Borrower
or the Sister Company under the Financing Documents or the Sister Company
Financing Documents;
"SECURITY TRUST DEED" means the security trust deed entered into or to be
entered into relating to the security granted in favour of the Security
Agent by the Borrower;
"SERVICES CONTRACTS" means the contracts specified in Schedule 3
Part 1 between the Borrower and the Services Providers;
"SERVICES PROVIDERS" means the persons specified in the Service
Contracts for the provision of services to the Borrower and the
Rig in the course of its operation;
"SERVICES RENDERING CONTRACT" means the contract (Contract No.
101.0.160.97-1) which is supplemental to the Charterparty and which
provides for services related thereto in relation to the Rig, as executed
on or around 12 January 1998 by and between Maritima and Petrobras in the
approved form, with the Borrower since being joined as an intervenient
party with Petrobras' approval by a document executed by and between
Petrobras, Maritima and the Borrower and dated 21 August 1998;
"SERVICES RENDERING CONTRACT ASSIGNMENT" means the assignment to
be executed in accordance with Clause 7.1(iv);
"SERVICES RENDERING CONTRACT PAYMENTS" means payments made or to be made
by Petrobras to the Borrower pursuant to the Services Rendering Contract;
"SHARE CHARGE" means the charge over the whole of the issued share capital
of the Borrower to be executed by the Shareholder in favour of the
Security Agent for itself and as trustee for the Secured Parties in
accordance with Clause 7.1(ix);
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<PAGE>
"SHAREHOLDER" means Amethyst Financial Company Limited, a company
incorporated in the British Virgin Islands as the shareholder in
the Borrower;
"SISTER COMPANY" means Petrodrill Seven Limited a company
incorporated under the laws of the British Virgin Islands;
"SISTER COMPANY FINANCING DOCUMENTS" means all or any of the agreements
and documents to be executed by or in favour of the Agents and/or the
Lenders for the provision of finance in connection with the acquisition
and operation by the Sister Company of the Sister Rig, and shall include
all agreements, encumbrances, guarantees and other documents and
instruments entered into pursuant to or as contemplated by such agreements
whether by the Sister Company or any third party but excluding (for the
avoidance of doubt) the Floor Guarantee;
"SISTER COMPANY LOAN AGREEMENT" means the loan agreement of the same date
as this Agreement between the same parties as the parties to this
Agreement for the provision by the Lenders of certain loan facilities to
the Sister Company relating to the acquisition of the Sister Rig by the
Sister Company;
"SISTER RIG" means the semi-submersible drilling rig (Builder's Hull No.
3015) to be built or (as the case may be) being built or (as the case may
be) built and delivered to the Sister Company pursuant to the contract
between Petrodrill Construction Inc. and the Builder and novated to the
Sister Company, to be owned and operated by the Sister Company including
the Materials, Listed Items and the Purchaser's Supplies (all as defined
in such contract);
"SUB-CONTRACTORS' GUARANTEES" means the guarantees or warranties
of the Builder's sub-contractors, as referred to in Clause 17.13
of the Rig Construction Contract;
"SUBORDINATED LOAN FACILITY AGREEMENT" means the agreement dated the same
date as this agreement to be executed in accordance with Clause 7.1(xii);
"SURPLUS EARNINGS" means, at any relevant time, such amount of the
Earnings (i) which remains standing to the credit of the Management
Account at such time and (ii) which is available for transfer to the
Reserve Account pursuant to Clause 12.2 at such time;
"TEMPORARY CONFIRMATION OF INSURANCE" means the temporary confirmation of
insurance (and described as Temporary Confirmation of Insurance) issued by
McGriff, Seibels, bartama & Colvin Inc (as brokers) on 15 December 1998
with Assigned No. MS-S711A-Daewoo;
"TOTAL PROJECT COSTS" means the aggregate of the Contract Price, the
Listed Items Price, the Pre-delivery Opex, the Construction and
Mobilisation Costs, Post-delivery Opex and all other costs and expenditure
of any nature which it is necessary for the Borrower to incur in order to
perform its obligations under the Rig Construction Contract and to
acquire, transport and mobilise the Rig and to have the Rig (having first
arrived at the port or in sheltered waters in Macae - RJ) accepted by
Petrobras, all in accordance with the Charterparty;
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<PAGE>
"TOTAL TRANCHE A COMMITMENTS" means at any time the aggregate of
all the Tranche A Commitments of all the Lenders at such time;
"TOTAL TRANCHE B COMMITMENTS" means at any time the aggregate of
all the Tranche B Commitments of all the Lenders at such time;
"TOTAL TRANCHE C COMMITMENTS" means at any time the aggregate of
all the Tranche C Commitments of all the Lenders at such time;
"TOTAL COMMITMENTS" means at any time the aggregate of all the
Commitments of all the Lenders at such time;
"TOTAL FACILITIES AMOUNT" means the lesser of (i) US$160,000,000 and (ii)
the aggregate of 100% of the Contract Price, the Purchaser's Supplies
Price, the Construction and Mobilisation Costs, Pre-delivery Opex,
Post-delivery Opex and interest
capitalised in accordance with Clause 4.4;
"TOTAL LOSS" means:-
(i) the actual total loss of the Rig;
(ii) the agreed, arranged or constructive total loss of the Rig;
(iii) requisition for title or other compulsory acquisition of title of
the Rig by any governmental or other competent authority, agency or
instrumentality otherwise than by requisition for hire;
(iv) capture seizure arrest detention or confiscation of the Rig by any
government or person acting or purporting to act on behalf of any
government unless the Rig be released and restored to the Borrower
from such capture seizure arrest or detention within 6 months after
the occurrence thereof or such other period as may be specified in
the Rig's Insurances;
"TOTAL OUTSTANDINGS" means at any time the Outstandings of all
the Lenders at such time;
"TRANCHE A FACILITY" means the loan facility referred to in Clause 2.1(a),
the terms and conditions of which are set out in this Agreement;
"TRANCHE B FACILITY" means the loan facility referred to in Clause 2.1(b),
the terms and conditions of which are set out in this Agreement;
"TRANCHE C AVAILABILITY COMMENCEMENT DATE" means the date on which the
conditions specified in Clause 3.5 (in addition to any other conditions
precedent to the availability of the Tranche C Facility) have been
satisfied and on which any part of the Tranche C Facility becomes
available for drawing;
"TRANCHE C FACILITY" means the loan facility referred to in Clause 2.1(c),
the terms and conditions of which are set out in this Agreement;
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"TRANSFER CERTIFICATE" means an instrument executed pursuant to
and in accordance with Clause 15.4;
"TRANCHES" means the tranches into which the Loan is deemed to be divided
in accordance with and for the purposes of certain provisions of this
Agreement;
"TRANSFEREE" means a Qualifying Lender to whom a Lender transfers all or
part of such Lender's rights, benefits and obligations under this
Agreement, the other Security Documents and the Sister Company Financing
Documents subject to and in accordance with Clause 15 and the provisions
of the Sister Company Loan Agreement;
"US DOLLARS" or "US$" or "$" means the lawful currency from time
to time of the United States of America;
"YARD DELIVERY DATE" means the date on which the Rig is delivered by the
Builder to, and accepted by, the Borrower in accordance with the Rig
Construction Contract; and
"YEAR" means each successive period of 365 days throughout the Security
Period, the first such period to commence on the Charterparty Commencement
Date.
1.2 CONSTRUCTION OF PARTICULAR EXPRESSIONS
Any reference in this Agreement to:-
"APPROVED FORM" means, in relation to any document, the document in
question being in such form and having such content as shall have been
approved by the Facility Agent;
"CALENDAR MONTH" means a period commencing on the first day of the month
and ending on the last day of that month (for example, the period 1
January to 31 January shall be a calendar month);
"CERTIFIED COPY" means, in relation to any document certified by a
company, a copy of such document bearing the endorsement "Certified a
true, complete and accurate copy of the original" and signed and dated by
a duly authorised officer of the company in question;
"CLAIM" has the meaning given to this expression in the
definition of "Environmental Claim" in Clause 1.1;
"ENCUMBRANCE" means a mortgage, charge, pledge, lien or other encumbrance
securing any obligation of any person or any other type of contractual or
preferential arrangement (including, without limitation, title transfer
and retention of title and set off arrangements) having a similar legal or
economic effect, but excluding any encumbrances arising by operation of
law or in the ordinary course of business which are discharged in the
ordinary course of business unless being contested in good faith and by
appropriate proceedings;
"EXCESS RISKS" means the proportion (if any) of claims for general
average, salvage and salvage charges not recoverable under the hull and
machinery policies in respect of the Rig in consequence of her insured
value being less than the value at which the Rig is assessed for the
purpose of such claims;
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<PAGE>
"GOVERNMENTAL AUTHORITY" includes any political sub-division of
such governmental authority;
"HOLDING COMPANY" has the meaning given to this term in Section 736 of the
Companies Act 1985 (or any statutory modification or re-enactment
thereof);
"INDEBTEDNESS" means, in relation to any person, any obligation of any
kind (whether present or future, actual or contingent, whether incurred as
principal or surety and whether in respect of interest, principal or
otherwise) for the payment or prepayment of money;
"MONTH" means a period beginning in one calendar month and ending in the
next calendar month on the day numerically corresponding to the day of the
calendar month on which it started provided that (i) if the period started
on the last Banking Day in a calendar month or if the next calendar month
contains no such numerically corresponding day, it shall end on the last
Banking Day in the next calendar month and (ii) if such numerically
corresponding day is not a Banking Day, the period shall end on the next
following Banking Day but if there is no such Banking Day it shall end on
the preceding Banking Day, and the terms "MONTHS" and "MONTHLY" shall be
construed accordingly;
"PERSON" means any person, firm or company (and shall include
that person's assignees);
"PROTECTION AND INDEMNITY RISKS" (in relation to the Insurances for the
Rig) means the usual risks covered by an English protection and indemnity
association including the proportion not recoverable in case of collision
under the ordinary running down clause;
"SAME DAY FUNDS" means freely transferable funds in the currency due
hereunder settled for same day value in such manner and through such
clearing system (if any) as the Lender shall notify to the Borrower as
being customary for the settlement in such currency of international
transactions of the type contemplated by this Agreement;
"SUBORDINATED INDEBTEDNESS" means any indebtedness of any of the Security
Parties which cannot lawfully be repaid prior to such time as all amounts
due and/or to become due to the Lender under or in connection with the
Financing Documents have been repaid/paid in full;
"SUBSIDIARY" means in relation to any company any entity over fifty per
cent (50%) of whose capital is owned, directly or indirectly, by such
company or which is otherwise effectively controlled directly or
indirectly by such company and "control" for this purpose means control by
virtue of the direct or indirect ownership of the majority of the voting
share capital or the right to appoint management or direct policies by
virtue of ownership of share capital, contract or otherwise;
"TAXES" means any present or future taxes, levies, duties, charges, fees,
deductions or withholdings of any nature now or hereafter imposed, levied,
collected, withheld or assessed by any country or any political
sub-division or taxing authority thereof and "TAX" and "TAXATION" shall be
construed accordingly;
a TIME OF DAY shall (unless otherwise specified) be construed as
a reference to London time; and
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"WAR RISKS" (in relation to the Insurances for the Rig) includes the risk
of mines and all risks excluded from the standard form of English marine
policy by Clause 23 of the Lloyd's Institute Time Clauses (Hull) 1/10/83).
1.3 CONSTRUCTION OF CERTAIN REFERENCES
In this Agreement, unless the context otherwise requires:
(1) References to this Agreement include the Recitals, Appendices and
Schedules to this Agreement and references to Clauses, Appendices
and Schedules are to be construed as references to the Clauses of,
and Appendices and Schedules to, this Agreement as amended from time
to time;
(2) References to (or to any specified provisions of) any Financing
Document or any other document shall be construed as references to
such Financing Document, that provision or that document as amended
or novated or supplemented (as the case may be) from time to time;
and
(3) References to the singular shall include the plural and vice versa;
1.4 HEADINGS
Clause headings are inserted for convenience of reference only and shall
be ignored in the interpretation of this Agreement.
2. THE FACILITY
2.1 AMOUNT AND CURRENCY
The Lenders upon and subject to the terms of this Agreement and in
reliance on the representations and warranties by the Borrower herein
contained hereby agrees to make available to the Borrower the following
facilities:
(a) the Tranche A Facility, being a facility in an amount (and including
all interest on A Advances capitalised in accordance with this
Agreement to the Notional Interim A Facility Date) not exceeding
US$47,000,000;
(b) the Tranche B Facility, being a facility in an amount (including all
interest on B Advances capitalised in accordance with this
Agreement) not exceeding US$66,000,000; and
(c) the Tranche C Facility, being a facility in an amount (including all
interest on C Advances capitalised in accordance with this
Agreement) not exceeding US$47,000,000.
2.2 PURPOSE
The Facilities are made available for, and shall be applied by the
Borrower exclusively to:
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(i) the payment by the Borrower to the Builder of amounts falling due to
the Builder in respect of the Contract Price in accordance with the
Rig Construction Contract or in reimbursement to the Borrower of the
instalments of the Contract Price paid by the Borrower prior to the
Drawdown Date of the Advance in question;
(ii) if the Yard Delivery Date is postponed beyond the Original Scheduled
Yard Delivery Date, towards Pre-delivery Opex not exceeding
US$20,000 per day;
(iii) as to an amount not exceeding US$11,800,000, towards Construction
and Mobilisation Costs;
(iv) Post-delivery Opex;
(v) in the case of Advances deemed to have been made under Clause 4.4,
in capitalising interest in accordance with such Clause; and
(vi) the payment of interest accrued on Tranche A Advances during the
period from the Bridging Loan Repayment Date to the Charterparty
Commencement Date.
2.3 OBLIGATIONS OF THE LENDERS
Each Lender will participate through its Lending Office:
(i) in each Tranche A Advance in the proportion borne by its Tranche A
Commitment to the Total Tranche A Commitments on the Drawdown Date
of such Tranche A Advance;
(ii) in each Tranche B Advance in the proportion borne by its Tranche B
Commitment to the Total Tranche B Commitments on the Drawdown Date
of such Tranche B Advance; and
(iii) in each Tranche C Advance in the proportion borne by its Tranche C
Commitment to the Total Tranche C Commitments on the Drawdown Date
of such Tranche C Advance.
The obligations of each Lender hereunder are several and the failure of
any Lender to carry out its obligations hereunder shall not relieve any
other Lender, the Agents or the Borrower from any of its or their
respective obligations to the parties hereto other than to such Lender
which has so failed, and neither shall either of the Agents nor any Lender
be responsible for the obligations of any Lender or (as the case may be)
any other Lender hereunder.
2.4 INTERESTS OF LENDERS
Notwithstanding any other term of this Agreement, the interests of the
Lenders are several and the aggregate of the amounts outstanding at any
time hereunder from the Borrower to any Lender or to the Facility Agent or
the Security Agent for its own account is a separate and independent debt.
Save as otherwise expressly provided herein or in any other Security
Document each of the Agents and every Lender shall each have the right to
protect and enforce its rights arising under this Agreement and it shall
not be necessary
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for any Lender or (as the case may be) either of the Agents to be joined
as an additional party in any proceedings for this purpose but this is
without prejudice to Clause 10.4.
2.5 UNCONDITIONAL OBLIGATIONS
The Borrower enters into this Agreement as principal, and the obligations
of the Borrower to make payment hereunder and to observe and perform all
of its other obligations under this Agreement are absolute, unconditional
and irrevocable obligations of the Borrower and are not and shall not be
deemed to be in any way conditional or dependent upon the performance of
the Rig Construction Contract by the Builder or the performance by
Petrobras of its obligations under the Charterparty and/or the Services
Rendering Contract, the continued hiring of the Rig under the
Charterparty, the availability of funds in the Management Account and/or
the Reserve Account or the performance by any other party other than the
Lenders of its obligations to the Borrower or the successful delivery or
operation of the Rig or any other matter or event of any nature whatsoever
save as expressly provided in this Agreement.
3. CONDITIONS PRECEDENT
3.1 INITIAL CONDITIONS
None of the Facilities shall be available for drawing until the
satisfaction, in a manner in all respects satisfactory to the Facility
Agent, of the following conditions and until delivery to the Facility
Agent of the following documents, all in form and substance satisfactory
to the Facility Agent:
(i) a certified copy of each of the Project Documents, certified in each
case by the parties thereto;
(ii) a certificate signed by the Borrower certifying that each
Project Document to which it is a party is in full force and effect
and that all conditions precedent to the parties' respective
obligations thereunder have been satisfied (or identifying those
conditions which have not yet been satisfied) and that all necessary
authorisations of governmental and other authorities to which the
parties to such documents are subject have been obtained to such
documents and the performance by the parties thereto of their
respective obligations thereunder other than registration with the
Brazilian Central Bank;
(iii) the Security Documents other than the Mortgage and the Deed of
Covenants duly executed by the parties thereto;
(iv) the documents specified in Clause 7.1 (except those specified in
Clause 7.1(ii));
(v) certified copies of the Articles of Incorporation and By-Laws of
each of the Security Parties and the certificate of good standing
and certificate of incumbency of each of the Security Parties;
(vi) a duly certified copy of the resolutions of the Board of
Directors, or such other documents evidencing the completion of
corporate authorisation procedures (to the satisfaction of the
Facility Agent) of each of the Security Parties authorising the
execution, delivery and performance of each of the Financing
Documents to
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<PAGE>
which it is a party and, as the case may be, including the incurring
of debt obligations hereunder and thereunder, upon the terms hereof
and thereof and authorising the person(s) who signed, or will sign,
this Agreement, the Security Documents and all other agreements and
documents executed or to be executed pursuant hereto and thereto on
behalf of the relevant Security Party to do so, and any power of
attorney executed in connection therewith;
(vii) specimen signature(s) of the person(s) authorised to execute this
Agreement, the Security Documents and all other documents to be
provided hereunder or thereunder on behalf of the Security Parties;
(viii)a duly certified copy of the shareholder's consent to and approval
for the actions taken at the Board of Directors' meeting of the
Borrower and the Sister Company to give guarantees in respect of,
and to charge their assets as security for, each other's liabilities
to the Secured Parties under the Financing Documents and the Sister
Company Financing Documents;
(ix) certified copies of all governmental approvals, authorisations,
consents, registrations and confirmations, if any, with respect to
this Agreement and the Security Documents shall have been received
by the Facility Agent other than registration with the Brazilian
Central Bank;
(x) a written confirmation from each of the agents for service of
process appointed by the Borrower pursuant to this Agreement and the
Security Documents irrevocably accepting such appointment shall have
been received by the Lender;
(xi) a legal opinion from the English legal advisers to the Agents and
the Initial Lenders in a form acceptable to the Facility Agent;
(xii) a legal opinion from Higgs & Johnson, Bahamian counsel to the Agents
and the Initial Lenders, in a form acceptable to the Facility Agent;
(xiii)a legal opinion from Tozzini Freise Teixeira e Silva, Brazilian
counsel to the Agents and the Initial Lenders, in a form acceptable
to the Facility Agent;
(xiv) a legal opinion from Dancia Penn & Co, British Virgin Islands
counsel to the Agents and the Initial Lenders, in a form acceptable
to the Facility Agent;
(xv) a legal opinion from Kim & Chang, Korean counsel to the Agents and
the Initial Lenders, in a form acceptable to the Facility Agent;
(xvi) legal opinions from Baker & Botts LLP and from [name of Louisiana
Counsel], US counsel to the Agents and the Initial Lenders, in a
form acceptable to the Facility Agent;
(xvii)a legal opinion from Zevan & Associates, Netherlands Antilles
Counsel to the Agents and the Initial Lenders, in a form acceptable
to the Facility Agent;
(xviii)a legal opinion from Nauta Dutilh, Netherlands Counsel to the
Agents and the Initial Lenders, in a form acceptable to the Facility
Agent;
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<PAGE>
(xix) a legal opinion from Kleinberg Kaplan Wolff and Cohen, New York
Counsel to the Agents and the Initial Lenders, in a form acceptable
to the Facility Agent;
(xx) a legal opinion from Maples and Calder, Cayman Islands, Counsel to
the Agents and the Initial Lenders, in a form acceptable to the
Facility Agent;
(xxi) the Sister Company Financing Documents having been duly executed and
having become unconditional in accordance with their terms;
(xxii)the Bridging Loan Agreement having been duly executed in the
approved form and having become unconditional in accordance with its
terms;
(xxiii)the Additional Funding and Guarantee Agreement in the approved
form having been duly executed by the parties thereto and having
become unconditional in accordance with its terms;
(xxiv)a letter from Petrobras in the approved form
regarding the delivery and acceptance of the Rig under the
Charterparty;
(xxv) the completion of all filings, registration or recordings of all of
the Security Documents required by the laws of any applicable
jurisdiction; and
(xxvi)evidence satisfactory to the Facility Agent that the Rig
Construction Contract, the Charterparty and the Services Rendering
Contract are in full force and effect.
3.2 PRE-DELIVERY ADVANCES
The making of each Pre-delivery Advance and of each Post Yard Delivery
Advance shall be subject to the delivery to the Facility Agent (if the
Lender so requests) of such evidence as the Facility Agent may reasonably
require that the instalment of the Contract Price to which such Advance is
to be applied has been paid or (as the case may be) become due and payable
under the Rig Construction Contract or (in the case of an Advance
requested in respect of Pre-delivery Opex or Construction and Mobilisation
Costs) that the relevant expenditure has been paid or (as the case may be)
become due and payable within the requirements of Clause 2.2(ii) or (as
the case may be) 2.2(iii).
3.3 YARD DELIVERY ADVANCE AND POST YARD DELIVERY ADVANCES
The making of the Yard Delivery Advance and of each Post Yard Delivery
Advance shall be conditional upon and (in the case of the Yard Delivery
Advance) be made simultaneously with:
(i) the Rig having been duly delivered by the Builder to and accepted by
the Borrower in accordance with the Rig Construction Contract, and
the protocol of delivery and acceptance and other delivery documents
required by the Rig Construction Contract having been duly executed
and delivered in accordance with the terms thereof;
(ii) the Rig having been duly registered in the Registry of Bahamian
Ships and the Borrower having been registered as the owner of
64/64th shares in the Rig (free
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<PAGE>
of all encumbrances other than the Rig Mortgage and the Mortgage
Debenture), and a provisional certificate of registration having
been issued by such Registry;
(iii) the Rig Mortgage, together with the Deed of Covenants collateral
thereto, having been duly executed by the Borrower, received by the
Security Agent and registered in the Registry of Bahamian Ships;
(iv) the Rig having been insured and entered in the P & I Club (including
the Mortgagee's Interest Insurance with Additional Perils
(Pollution) Insurance) in accordance with the provisions of the
Mortgage and the Deed of Covenants and all requirements therein and
in this Agreement and the other Financing Documents in respect of
insurance having been complied with;
(v) the Insurances Assignment having been duly executed by the
parties thereto and consented to, or notified to and acknowledged
by, the relevant parties, and copies of all Insurances taken out
pursuant to the Mortgage, the Deed of Covenants and this Agreement
and the other Financing Documents and an entry certificate in the P
& I Club and the original of the letter of undertaking to be issued
by the P & I Club having been received by the Security Agent, each
in form and substance satisfactory to the Facility Agent;
(vi) certified copies of all Korean and Bahamian governmental
approvals, authorisations, consents, registrations and confirmations
with respect to the delivery and export of the Rig to the Borrower
pursuant to the Rig Construction Contract and with respect to
registration (whether provisional or permanent) of title to the Rig
in the name of the Borrower under the Bahamian flag having been
received by the Facility Agent;
(vii) a certified copy of the Classification Certificate stating that the
Rig has been built according to the class requirements (without
recommendations) having been received by the Facility Agent; and
(viii)all such other agreements, documents certificates or opinions as
the Facility Agent may reasonably request having been received by
the Facility Agent.
3.4 TRANCHE B ADVANCES
Prior to the Tranche C Availability Commencement Date no Tranche B Advance
may be drawn under the Tranche B Facility unless and until the Tranche A
Facility (including Advances deemed to have been made in accordance with
Clause 4.4) has been drawn to the fullest extent possible without
breaching the condition imposed by Clause 3.6(ix).
3.5 TRANCHE C ADVANCES
The Tranche C Facility shall be made available to the extent that and in
the amount that the Bridging Loan has been repaid by MC2 pursuant to the
Bridging Loan Agreement and Tranche C Advances from time to time may be
drawn PRO TANTO in an aggregate amount not exceeding the amount so repaid.
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<PAGE>
3.6 ALL ADVANCES
The obligations of the Lenders to make any Advance under any of the
Facilities shall be subject to the further conditions that as at the
Drawdown Date of each such Advance:
(i) no Event of Default or Potential Event of Default shall
have occurred and be continuing;
(ii) each of the Project Documents shall then continue to be in full
force and effect and no event of default (howsoever described) and
no event or circumstance which with the giving of notice or lapse of
time may become such an event has occurred under any Project
Document;
(iii) the proceeds of the Advance shall, on the Drawdown Date of the
Advance, be due from the Borrower to the Builder under the Rig
Construction Contract or, as the case may be, the Borrower has
provided the Facility Agent with such evidence as the Facility Agent
may require that such proceeds will be applied for the purposes
specified in Clause 2.2;
(iv) the Lender shall have been provided with such further documentation
or information in support of the Drawing Request in respect of such
Advance as the Facility Agent may reasonably determine to be
necessary;
(v) the representations and warranties made or deemed made in Clause 8
shall be true in all material respects on and as of the Drawdown
Date of such Advance with the same effect as though such
representations and warranties had been made on and as of such
Drawdown Date;
(vi) the making of such Advance not causing the amount outstanding in
respect of the Facility under which it is drawn to exceed the
Available Facility Amount of such Facility on the Drawdown Date of
such Advance;
(vii) the making of such Advance not causing the Loan to exceed the Total
Facilities Amount;
(viii)the making of such Advance under any Facility not causing the
Prospective Final Grossed-up Advances Amount of such Facility to
exceed the Facility Amount of such Facility; and
(ix) in the case of a Tranche A Advance, the making of such Advance not
causing the Prospective Interim Grossed-up A Advances Amount of the
Tranche A Facility to exceed US$47,000,000.
3.7 NO WAIVER OF CONDITIONS
The conditions specified in Clause 3 are for the exclusive benefit of the
Agents and Lenders and if the Facility Agent in its discretion allows the
Borrower to draw any Advance under any Facility notwithstanding that some
or all of the conditions specified in Clause 3 have not been satisfied the
Agents and the Lenders shall not thereby be deemed to have waived any such
condition, and the Borrower covenants with the Agents
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<PAGE>
and the Lenders to satisfy such conditions upon request from the Lenders
forthwith or within such time limit as the Facility Agent may agree.
4. DISBURSEMENT OF ADVANCES
4.1 GENERAL
Subject to the terms of this Agreement (including, but not limited to, the
conditions set forth in Clause 3):
(i) subject to sub-paragraph (ii) of this Clause 4.1, Advances
under the Tranche A Facility, the Tranche B Facility and the Tranche
C Facility may be drawn by the Borrower in a maximum principal
amount up to but not exceeding the Available Facility Amount of the
relevant Facility on the Drawdown Date of the relevant Advance when
requested by the Borrower from time to time during the Availability
Period; and
(ii) with effect from the Tranche C Availability Commencement Date
Advances shall be made under each of the Facilities in the
proportions PRO RATA which the Available Facility Amount of each
such Facility bears to the Total Available Facility Amounts of all
the Facilities on the Drawdown Date of such Advances.
4.2 PROCEDURE
When the Borrower wishes to draw any Advance under any of the Facilities,
it shall deliver to the Facility Agent a Drawing Request substantially in
the form of Schedule 4 appropriately completed, to be received by the
Lender not later than 11:00am (London time), seven (7) Banking Days prior
to the date of drawing of the Advance, specifying in respect of the
proposed Drawing:
(a) the date of the Drawing (which must be a Banking Day during
the Availability Period);
(b) the principal amount of the Advance in US Dollars; and
(c) the Facility under which the Drawing is requested.
The Borrower may deliver a Drawing Request setting out a schedule of
requested Pre-delivery Advances subject to the satisfaction of the
conditions specified in this Agreement on the Drawdown Date of such
Advances and, in particular, Clause 3.2. Subject to the terms of this
Agreement, such Drawing Request shall be irrevocable and the Borrower
shall be bound to borrow in accordance with such Drawing Request. The
Facility Agent shall promptly notify each Lender of such Drawing Request.
The Borrower may not deliver a Drawing Request hereunder until after
satisfaction of the other conditions precedent (including those applicable
to the relevant Facility) set out in Clause 3.
4.3 TRANSFER OF FUNDS
Subject as otherwise provided herein each Lender shall on the relevant
Drawdown Date make available to the Facility Agent in US Dollars in the
manner and to the account
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provided for in Clause 9.2 the amount of its participation in the relevant
Advance in the proportion which its Commitment in respect of the Facility
under which such Advance is drawn bears to the Total Commitments in
respect of such Facility. The Borrower irrevocably and unconditionally
instructs and authorises the Facility Agent to make each Advance upon and
subject to the terms hereof:
(i) in the case of an Advance made or to be made for the purpose
specified in Clause 2.2(i) by paying the proceeds thereof (or such
proportion thereof as is not in reimbursement of amounts already
paid by the Borrower) by disbursement to the Builder;
(ii) in the case of an Advance made or to be made for the purposes
specified in Clause 2.2(ii), 2.2(iii), 2.2(iv), 2.2(v) or 2.2(vi) by
disbursement to the Borrower of amounts paid or payable by the
Borrower in respect of the matters specified in such sub-clauses
and upon such disbursement of any amount the Lenders shall be deemed in
proportion to the respective amounts made available by them to the
Facility Agent to have made to the Borrower an Advance in US Dollars in
the amount of the amount so disbursed which shall satisfy PRO TANTO the
obligations of such Lenders to lend such amount to the Borrower hereunder
and shall reduce accordingly the amount of the Commitments and of such
Facility available for drawing.
4.4 CAPITALISATION OF INTEREST
Subject as provided in Clause 5.2(ii) on each Interest Capitalisation Date
the Borrower shall be deemed to have served a Drawing Request requesting
an Advance (an "INTEREST CAPITALISATION ADVANCE") in respect of each
Advance outstanding on such Interest Capitalisation Date in the amount of
interest to be capitalised on such outstanding Advance on such Interest
Capitalisation Date in accordance with Clause 5.2. Each Interest
Capitalisation Advance shall be deemed to have been requested from those
Lenders who have participated in the Advances (or to whom participations
in such Advances have been transferred in accordance with the Transfer
Certificates pursuant to which they become Lenders hereunder) to which it
relates (and shall be deemed to be drawn under the Facility or Facilities
under which such Advances were drawn) and (subject to Clause 4.5) such
Lenders shall be deemed to have made to the Borrower an Interest
Capitalisation Advance in US Dollars in the amount of such interest which
shall (i) increase the amount of the Loan by such amount; (ii) satisfy PRO
TANTO the obligations of such Lenders PRO RATA in proportion to their
respective participations in such Advance to lend such amount to the
Borrower hereunder; and (iii) reduce accordingly the amount of their
Commitments and of such Facility available for drawing. The Facility Agent
shall calculate, and notify the relevant Lenders and the Borrower of the
amount of each Interest Capitalisation Advance and of such Lenders'
respective participations therein.
4.5 FACILITY LIMIT
Interest on the Advances will not be capitalised if this would cause the
amount of the Loan to exceed the Total Facilities Amount. Accordingly, if
on any Interest Capitalisation Date as a result of the application of
Clause 4.4 and of Clause 5.2 the aggregate amount of all Advances exceeds
(or, if an Interest Capitalisation Advance were made or deemed to be made
pursuant to Clause 4.4 the aggregate of all Advances would
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exceed) the Total Facilities Amount the Borrower shall pay to the Facility
Agent for the account of the Lenders by way of a payment of interest the
amount of interest which would otherwise have been capitalised by means of
such Interest Capitalisation Advance.
4.6 CANCELLATION
Any portion of the Total Commitments in respect of any Facility not
advanced hereunder on or prior to the last day of the Availability Period
shall be reduced automatically to nil immediately thereafter and shall not
thereafter be available for drawing.
4.7 FAILURE TO DRAW
If for any reason (other than a default by a Lender or a Lender's bank)
the Advance is not made hereunder after a Drawing Request therefor has
been given pursuant to Clause 4.2, the Borrower will pay to the Facility
Agent for the account of the relevant Lenders such amount as the Facility
Agent may certify in reasonable detail (such certification to be
conclusive in the absence of manifest error) as necessary to compensate it
for any resulting loss or expense on account of funds acquired, contracted
for or utilised in order to fund the Advance.
5. INTEREST
5.1 RATE
Interest shall accrue on the Loan from the respective Drawdown Dates of
each Advance comprising the Loan until actual repayment (i) in respect of
the period prior to the Yard Delivery Date at the rate of 12.5% per annum
and (ii) thereafter, at the rate of 11% per annum.
5.2 CAPITALISATION AND PAYMENT OF INTEREST
(i) Subject to paragraph (i) below interest accruing prior to
the Charterparty Commencement Date shall be capitalised in
accordance with this Clause and the other provisions of this
Agreement. On each Interest Capitalisation Date interest which has
accrued on the Loan shall be capitalised and added to the amount of
the Loan in accordance with Clause 4.4 so that the principal amount
of the Loan shall thereafter be deemed for all purposes (including,
but not limited to, the calculation of interest) to comprise and to
include the principal amount advanced hereunder and the amount of
such capitalised interest deemed to have been advanced.
(ii) Interest accruing on all Tranche A Advances during the period from
the Bridging Loan Repayment Date until the Charterparty Commencement
Date shall not be capitalised but shall be paid in arrears on each
Interest Capitalisation Date.
5.3 DEFAULT RATE
Without affecting any other remedy of the Lenders or the Agents hereunder,
the Borrower will pay interest on the Loan or any part thereof or interest
thereon or other sum due under this Agreement or any of the Security
Documents which is not paid on the due date for payment thereof for each
day during the period of such default at such annual rate as
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is conclusively certified by the Facility Agent to the Borrower to be
equal to the aggregate of (1) two per cent (2%) per annum and (2) the
higher of (a) the rate quoted by the Facility Agent as the arithmetic mean
quoted by the Lenders (or, in the absence of such quotation from any
Lender determined by the Facility Agent) (weighted by reference to the
participations of the Lenders in the overdue payment in question) as being
the rates at which each such Lender was (or would have been), at or about
11.00am (London time) on the date of acquisition of the relevant deposits,
able in accordance with its usual practices to fund in US Dollars from its
principal bankers on an overnight or call basis or for such period or
periods as such Lender may determine and in amounts equivalent to, or
comparable with, the amount of the Loan or relevant part thereof or
interest thereon or other sum due in respect thereof as aforesaid in
respect of which default has been made and (b) 11%. Interest payable by
the Borrower as aforesaid shall be payable on demand by the Facility Agent
and shall be compounded at such intervals as the Facility Agent may
determine.
5.4 DAY COUNT FRACTION
All interest is respect of Advances and the Loan shall accrue from day to
day (after as well as before judgment) on the basis of a year of 360 days
and for the actual number of days elapsed.
6. REPAYMENT AND PREPAYMENT
6.1 CONSOLIDATION OF ADVANCES
In addition and without prejudice to any other provision of this
Agreement, with effect from the Charterparty Commencement Date all
Advances drawn under the Facilities and then comprising the Loan shall be
consolidated and treated as a single amount for all purposes of this
Agreement.
6.2 REPAYMENT INSTALMENTS
The Borrower shall repay an amount equal to 85% of the Loan outstanding on
the Charterparty Commencement Date after the capitalisation of interest on
such date in accordance with Clause 5.2 together with the interest
accruing on the Loan during the period of such repayments by means of
eighty-four (84) equal payments, one such payment being payable on each
Repayment Date in the amount of the Repayment Instalment (comprising a
proportion of the principal of the Loan repayable on each such date and
the interest element payable on each such date) specified in respect of
such Repayment Date in the Repayment Schedule delivered by the Facility
Agent pursuant to Clause 6.4. The Repayment Dates shall be the fifth day
of the second month next following the month during which the Charterparty
Commencement Date occurs and the 83 dates falling at consecutive monthly
intervals thereafter.
6.3 BALLOON PAYMENT
The remaining 15% of the Loan outstanding on the Charterparty Commencement
Date as aforesaid shall be repaid by a single payment on the Final
Repayment Date.
6.4 REPAYMENT SCHEDULE
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The Facility Agent shall prepare, within fourteen (14) Banking Days after
the Charterparty Commencement Date, a repayment schedule in the form of
the Repayment Schedule set out in Schedule 2 setting forth the specific
Repayment Dates and the specific amounts of each Repayment Instalment,
comprising a proportion of the principal of the Loan repayable on each
such date and the interest element payable on each such date, which shall
form an integral part hereof upon notification thereof to the Borrower.
6.5 REBORROWING
No amount repaid may be reborrowed by the Borrower.
6.6 PREPAYMENT
The Borrower may upon giving the Facility Agent not less than 90 days'
prior written notice prepay the whole or part of the Loan subject to and
in accordance with Clauses 6.8 and 18. Save as expressly permitted or
required under the terms of this Agreement the Borrower may not prepay any
part of the Loan.
6.7 TOTAL LOSS OF THE RIG
In the event that the Rig becomes a Total Loss at any time, the whole of
the insurance proceeds or other compensation payable in respect of such
Total Loss will be paid to the Security Agent (as assignee(s) and chargee
thereof under the Rig Construction Contract and Refund Guarantee
Assignment, the Rig Mortgage and associated Deed of Covenants, the
Mortgage Debenture and the Insurances Assignment). In the event that any
of the said insurance proceeds or other compensation are received in any
currency other than US Dollars, the Facility Agent on behalf of the
Lenders will be entitled (and is hereby authorised) at the cost of the
Borrower to convert the same into US Dollars at the Facility Agent's
principal banker's spot rate of exchange applicable at the relevant time.
The whole amount of such insurance proceeds or other compensation
(converted into US Dollars, if appropriate) will be applied by the
Facility Agent in or towards prepayment of the Loan subject to and in
accordance with Clauses 6.8 and 18 and any excess shall be paid to the
Borrower. If the amount thereof is less than the Outstanding Indebtedness
the Borrower shall on demand pay to the Facility Agent for the account of
the Lenders the amount of such shortfall.
6.8 CONDITIONS APPLICABLE
Prepayment of the Loan made under Clauses 6.6 or 6.7 will be made together
with accrued interest to the date of prepayment together with all other
amounts which may be payable under this Agreement and the other Security
Documents. On any such prepayment the Borrower will additionally pay such
further amount as will indemnify the Agents and the Lenders against all
funding or other fees, costs, charges, losses, demands and expenses
sustained or incurred as a consequence of such prepayment, including (but
not limited to) any such sustained or incurred in liquidating deposits
taken to fund the amount so prepaid or sustained or incurred in connection
with the cancellation, reduction or re-arrangement of any interest rate
swap, hedge transaction or other funding or financing agreement or
arrangement which the Agents and/or any of the Lenders may have arranged
or entered into for the purpose of funding the amount so prepaid (and the
Borrower hereby acknowledges that the Agents and the Lenders may effect
such arrangements as the Agents and/or any of the Lenders may in their
discretion consider
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appropriate), and the certificate of the relevant Agent or Lender as to
the amount of such fees, costs, charges, losses, demands, expenses and
shall in the absence of manifest error be final and conclusive and binding
on the Borrower.
6.9 APPLICATION OF PREPAYMENTS
Any prepayment made pursuant to Clauses 6.5, 6.6, 14.3 or any other
provision of this Agreement shall (subject always to any appropriation by
the Facility Agent under Clause 9.5) be applied in reduction of the
Repayment Instalments (including the Balloon) PRO RATA.
7. SECURITY
7.1 LOAN SECURITY DOCUMENTS
By way of continuing security for the due and punctual performance by the
Borrower of all of its obligations under the Financing Documents, the
Borrower shall execute and deliver (or procure the execution and delivery)
to the Security Agent of the following (all at the times and in all other
respects in accordance with the terms of this Agreement and the Security
Documents):
(i) an assignment, in the approved form of the benefit of and the
Borrower's right and interest in the Rig Construction Contract, the
Refund Guarantee, and the Sub-contractors' Guarantees, together with
the notices to the Builder and to the issuer(s) of the Refund
Guarantee and the acknowledgements and consents specified in such
assignment duly executed by the parties thereto;
(ii) a first preferred mortgage over the Rig and Deed of Covenants
collateral thereto, each being in the approved form;
(iii) an assignment, in the approved form of the benefit of and the title
and interest of the Borrower in the Charterparty, Earnings and
Requisition Compensation, together with the notices to Petrobras and
the acknowledgements and consents specified in such assignment duly
executed by the parties thereto;
(iv) an assignment, in the approved form of the Services Rendering
Contract, together with the notices to Petrobras and the
acknowledgements and consents specified in such assignment duly
executed by the parties thereto;
(v) an assignment, in the approved form of the Insurances together with
the notices, acknowledgement, consents and letters of undertaking in
relation to the Insurances and other related documents as may be
specified in such assignment and/or as may otherwise be required by
this Agreement or any of the other Security Documents;
(vi) a charge in the approved form over the Management Account, together
with the notices to the Management Account Bank and the
acknowledgements and consents and undertakings specified in such
agreement duly executed by the parties thereto;
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(vii) a charge in the approved form over the Reserve Account, together
with the notices to the Reserve Account Bank and the
acknowledgements and consents and undertakings specified in such
agreement duly executed by the parties thereto;
(viii)an assignment, in the approved form, of all of the Services
Contracts, together with the notices to the Services Providers and
the acknowledgements and consents specified in such assignments duly
executed by the parties thereto;
(ix) a mortgage debenture in the approved form creating fixed and
floating charges over the business, undertaking and assets of the
Borrower;
(x) a charge, in the approved form creating a charge over the
Shareholder's shares in the Borrower;
(xi) a guarantee, in the approved form by the Borrower, the Sister
Company and the Shareholder guaranteeing and securing the
obligations of each of the Borrower and the Sister Company to the
Agents and the Lenders in accordance with its terms;
(xii) a deed of guarantee and undertaking, in the approved form, between
the Borrower, the Guarantors, the Lenders, the Facility Agent and
the Security Agent;
(xiii)a subordinated loan facility agreement, in the approved form,
between the Borrower, the Guarantors, the Facility Agent and the
Security Agent;
(xiv) an assignment of deed of guarantee and undertaking and subordinated
loan facility agreement, in the approved form, between the Borrower
and the Security Agent; and
(xv) the Sister Company Financing Documents duly executed by all the
parties thereto.
7.2 GUARANTEE AND UNDERTAKING
By way of continuing security for the due and punctual performance by the
Borrower of its obligations under the Financing Documents and/or any other
agreements to which the relevant Guarantee relates, the Borrower will
procure the execution by the Guarantors and the delivery to the Security
Agent and in the case of sub-clause 7.2(i) the Initial Lenders of the
following guarantees and undertakings:
(i) a guarantee in the approved form whereby the Guarantors guarantee in
their several proportions to the Initial Lenders in accordance with
the terms therein contained the repayment of the Loan and the Sister
Company Loan by the Borrower and the Sister Company respectively in
accordance with this Agreement and the Sister Company Loan Agreement
up to an amount not exceeding US$108,000,000;
(ii) a deed of guarantee and undertaking, in the approved form whereby
the Guarantors severally or jointly and severally (in accordance
with its terms) give certain guarantees and undertakings.
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7.3 SISTER RIG COLLATERAL
The security created by the Borrower under or pursuant to the Financing
Documents shall also constitute security to the Lender for the obligations
of the Sister Company under the Sister Company Financing Documents, and
the security created by the Sister Company under the Sister Company
Financing Documents shall also constitute security for the Borrower's
obligations under the Financing Documents, all in accordance with their
respective terms.
7.4 SECURITY AGENT AS TRUSTEE
The Secured Obligations shall be secured by the interests and rights
granted in favour of the Security Agent as trustee for the Agents and the
Lenders under the Security Documents and such interests and rights shall
be held by the Security Agent upon trust for the benefit of the Secured
Parties without any preference or priority amongst them as security for
the Secured Obligations in accordance with the Security Trust Deed.
8. REPRESENTATIONS
8.1 REPRESENTATIONS
The Borrower hereby represents and warrants to the Facility Agent
and each of the Lenders, that:-
(i) each of the Borrower and the Sister Company is duly formed and is
validly existing under the laws of the British Virgin Islands, has
full power to carry on its business as it is now being conducted and
has complied with all statutory and other requirements relative to
such business;
(ii) the Borrower and each of the other Security Parties and the
Project Parties has full power to execute, deliver and perform its
obligations under each of the Financing Documents and the Project
Documents to which it is or is to be a party and (in the case of the
Borrower) to borrow hereunder and to repay and service such
borrowings in the manner herein provided; all necessary corporate,
shareholder and other action has been taken by the Borrower and all
other Security Parties and the Project Parties to approve and
authorise the execution, delivery and performance of each of the
Financing Documents and the Project Documents to which it is or is
to be a party;
(iii) save for registration of the Charterparty with the Brazilian Central
Bank all necessary governmental or other official consents,
authorisations and licences for the Borrower and all other Security
Parties and the Project Parties to execute, deliver and perform
their obligations under each of the Financing Documents and the
Project Documents to which it is or is to be a party have been
obtained and, as of the date of this Agreement, no further such
consents, authorisations or licences are necessary for the
performance by the Borrower and the other Security Parties and the
Project Parties of their respective obligations under each of the
Financing Documents and the Project Documents to which it is or is
to be a party;
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(iv) the Financing Documents and the Project Documents
constitute, or will upon due execution as provided herein and
therein constitute, the legal, valid and binding obligations of the
Borrower and the other Security Parties and the Project Parties as
are or are to be parties thereto enforceable in accordance with
their respective terms subject to equitable principles and
creditors' rights generally;
(v) the execution and delivery of, and the performance of the
provisions of, the Financing Documents by each of the Borrower and
the other Security Parties and of the Project Documents by the other
Project Parties do not, and will not during the Security Period,
contravene (a) any applicable law or regulation existing at the date
hereof or (b) any contractual restriction binding on any of the
Borrower and the other Security Parties or any of the Project
Parties or (c) any of the constitutional documents of any of the
Borrower or the other Security Parties or any of the Project
Parties;
(vi) no action, suit or proceeding is pending or threatened against any
of the Borrower and/or the other Security Parties before any court,
board of arbitration or administrative agency which could or might
result in any material adverse change in the business or condition
(financial or otherwise) of any of the Borrower and/or the other
Security Parties;
(vii) none of the Borrower or the other Security Parties is in default
under any agreement by which it is bound, nor is it in default in
respect of any financial commitment or obligation (including
obligations under guarantees) which could or might result in any
material adverse change in the business or condition (financial or
otherwise) of any of the Borrower and/or the other Security Parties;
(viii)the financial and other information relative to the Borrower and
the other Security Parties and the Project Parties and the Project
Documents furnished to the Agents and/or any of the Lenders in
connection with the negotiation of this Agreement is, to the best
knowledge and belief of the Borrower, true, accurate and complete
and neither contains any mis-statement of fact nor omits any
material fact or any fact necessary to make any such information not
misleading. There has been no material adverse change in the
position of such person(s) from that set forth in the relevant
aforesaid information;
(ix) details of the holders of shares in the Shareholders, the Borrower,
the Guarantors and the Sister Company and their respective
shareholdings are as set out in Schedule 5 and will so remain
throughout the Security Period;
(x) the Borrower has no Subsidiaries as at the date hereof;
(xi) no Event of Default, nor any Potential Event of Default has occurred
and is continuing;
(xii) the Rig will upon the Drawdown Date of the Yard Delivery Advance
be:-
(a) in the absolute and (save for the Rig Mortgage thereon and the
other Security Documents) unencumbered ownership of the
Borrower;
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(b) registered in the name of the Borrower under the flag of the
Commonwealth of the Bahamas and at the Port of Nassau;
(c) properly classed with Lloyds Register of Shipping with the
following notation: "Unrestricted Service O.U. + 100A1, + LMC,
UMS, DP(AA), PC, DRILL, OIWS with the descriptive notation
semi-submersible, self-propelled drilling vessel"; and
(d) insured in accordance with the relevant provisions of the Deed
of Covenants and this Agreement;
(xiii)all applicable Environmental Laws and Environmental Approvals
relating to the Rig and its operation and management and the
business of the Borrower (as now conducted and as reasonably
anticipated to be conducted in the future) have been complied with
except to the extent that such failure to so comply would not
reasonably be expected to have a material adverse effect;
(xiv) no Environmental Claim has been made or threatened against the
Borrower or otherwise in connection with the Rig which would be
expected to have a material adverse effect;
(xv) no Environmental Incident has occurred which would be expected to
have a material adverse effect;
(xvi) the choice by the Security Parties and the Project Parties of a
particular governing law to govern this Agreement and any other
Financing Document and the Project Document containing such
provisions and the submission by such parties to the jurisdiction of
the courts of a particular country in this Agreement and any other
Financing Document and the Project Documents containing such
provisions are valid and binding;
(xvii)the execution and performance by Security Parties and the Project
Parties of this Agreement the other Financing Documents and the
Project Documents are private commercial acts and neither the
Borrower nor any other Security Party or any Project Party is
entitled to claim any immunity in relation to itself or its assets
under any law or in any jurisdiction in connection with any legal
proceedings, set-off or counterclaim relating to this Agreement or
any other Financing Document or any Project Document, or in
connection with the enforcement of any judgment, award, ruling or
order arising from such proceedings;
(xviii)no Taxes are imposed by withholding or otherwise on any payment to
be made by the Borrower or the other Security Parties under this
Agreement or any of the other Financing Documents or are imposed on
or by virtue of the execution or delivery by the Borrower or the
other Security Parties of this Agreement or any of the other
Financing Documents or any document or instrument to be executed or
delivered under this Agreement or any of the other Financing
Documents;
(xix) it is not necessary to ensure the legality, validity, enforceability
or admissibility in evidence of this Agreement or any other
Financing Documents that it or any other instrument be filed,
recorded, registered or enrolled in any court, public office or
elsewhere in Brazil or that any stamp, registration or similar tax
be paid in Brazil
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on or in relation to this Agreement or any other Financing
Documents, which are in proper form for their respective enforcement
in the courts of Brazil and the other jurisdictions to which the
same are expressed to be subject other than the recording of the
relevant Financing Documents and the payment of recording fees;
(xx) save as disclosed in writing to the Facility Agent by a letter dated
of even date with this Agreement, the Borrower is not party to any
agreements, arrangements or contracts (written or oral) other than
the Project Agreements, the Security Documents and the Inter Company
Loan Agreement;
(xxi) the legal opinions furnished pursuant to Clause 3.1(xii) to (xx) are
true and correct in all respects;
(xxii)save for different charter rates set out in a letter delivered by
the Borrower to the Facility Agent and having even date with this
Agreement, the Charterparty and the Services Rendering Contracts are
in identical terms to the charterparties and services rendering
contracts executed between Maritima and Petrobras in respect of the
Related Rigs; and
(xxiii)Maritima is the same legal entity as the company previously called
Maritima Navegacao Engenharia Ltda.
8.2 LENDERS' AND AGENTS' RELIANCE
The Borrower acknowledges that it has made the representations and
warranties referred to in Clause 8.1 with the intention of persuading the
Agents and the Lenders to enter into this Agreement and that the Agents
and the Lenders have entered into this Agreement on the basis of, and in
full reliance on, each of such representations and warranties. The
Borrower warrants to the Agents and the Lenders that each of such
representations and warranties is true and correct in all material
respects as of the date of this Agreement and that none of them omits any
matter the omission of which makes any of such representations and
warranties misleading.
8.3 KNOWLEDGE OF LENDERS OR AGENTS
The rights and remedies of the Agents and the Lenders in relation to any
misrepresentations or breach of warranty on the part of the Borrower shall
not be prejudiced by any investigation by or on behalf of the Agents
and/or the Lenders into the affairs of the Borrower, by the execution or
the performance of this Agreement or by any other act or thing which may
be done by or on behalf of the Agents and/or the Lenders in connection
with this Agreement and which might, apart from this Clause, prejudice
such rights or remedies.
8.4 REPETITION
The representations set out in Clause 8.1 and the warranty in Clause 8.2
shall survive the execution of this Agreement and the making of the
Advances hereunder and shall be deemed to be repeated at the time of the
giving of each Drawing Request, on the date for the borrowing of each
Advance and on each Repayment Date with reference to the facts and
circumstances then subsisting, as if made at each such time.
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9. PAYMENTS: TAXATION
9.1 CURRENCY OF ACCOUNT
The US Dollar is the currency of account and the currency of payment for
each and every sum due from the Borrower hereunder, PROVIDED HOWEVER THAT
any amount falling due under Clause 18 (Indemnities) or 16 (Fees and
Expenses) shall be payable in the currency in which the corresponding
loss, expense, deficiency, duty, tax or other payment has been incurred or
suffered.
9.2 ACCOUNTS AND PROCEDURE FOR PAYMENT
All payments to be made by the Borrower to the Agents for the account of
the Lenders or to Lenders hereunder shall be made on and for value on the
due date:-
(a) if in US Dollars in freely transferable same day funds to the
account of the Facility Agent with the Management Account Bank, ,
account number to be notified by the Facility Agent or at such other
bank as the Facility Agent may designate; and
(b) if in any other currency, in same day funds to such account of the
Facility Agent with such bank as the Facility Agent may from time to
time designate.
9.3 WITHHOLDING; GROSS-UP
All payments to be made by or for the account of the Borrower hereunder or
under any other Security Document shall be made without set-off or
counterclaim and free and clear of and without deduction for or on account
of any present or future Taxes of any nature whatsoever imposed by or in
any country ("APPLICABLE TAX") unless (i) the Borrower is compelled by law
to make payment to or for the account of either Agent or any Lender
subject to such Applicable Tax, or (ii) the Security Agent or the Facility
Agent is compelled by law to make payment for or for the account of any
Lender subject to such Applicable Tax in any such case the Borrower shall
promptly pay such Applicable Tax and the amount of the relevant payment by
the Borrower hereunder or (as the case may be) under the relevant other
Security Document shall be increased to the extent necessary to ensure
that the relevant Agent or (as the case may be) the relevant Lender
actually receives an amount, free and clear of and after deduction for all
such Applicable Tax, equal to the full amount which would have been
received if no such withholding or deduction had been made. The Borrower
shall pay and indemnify and keep indemnified the Agents and each of the
Lenders against all such Applicable Tax. The Borrower shall promptly
deliver to the Facility Agent copies of official Tax receipts evidencing
payment of any such Applicable Tax imposed as aforesaid. The obligations
of the Borrower under this Clause 9.3 shall survive the repayment of the
Loan and the payment of all other sums payable hereunder and under the
other Security Documents.
9.4 BANKING DAY CONVENTION
Whenever any payment hereunder would otherwise become due on a day which
is not a Banking Day, the due date thereof shall instead be the next
succeeding Banking Day
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unless such Banking Day falls in the next calendar month in which case
payment shall be made on the immediately preceding Banking Day.
9.5 APPROPRIATION
Notwithstanding any other provision of this Agreement and/or of the
Security Documents (express or implied), at any time after the occurrence
and during the continuance of an Event of Default the Facility Agent shall
have an absolute and unfettered right to appropriate any payments received
from the Borrower and/or from any other Security Party and any monies
received in respect of all or any of the other Security Documents to such
of the Borrower's obligations hereunder and/or under the Security
Documents and/or under the Sister Rig Financing Documents (whether to the
Loan or any part thereof, or the Sister Company Loan or any part thereof
interest or any other sums payable hereunder or thereunder) as the
Facility Agent may determine, to the exclusion of any right on the part of
the Borrower to make any appropriation in respect of such payment(s)
and/or monies.
9.6 CONTROL ACCOUNT
The Facility Agent will maintain a control account showing the Loan and
other sums owing by the Borrower under this Agreement and the other
Financing Documents and all payments in respect thereof made by the
Borrower from time to time. The control account shall in the absence of
manifest error be conclusive as to the amount from time to time owing by
the Borrower under this Agreement and the other Financing Documents.
9.7 REIMBURSEMENT OF FACILITY AGENT
(i) Unless the Facility Agent shall have been notified by a
Lender not later than one Banking Day prior to the Drawdown Date of
any Advance that such Lender will not make available its portion of
such Advance the Facility Agent may assume that such Lender has made
its portion available to the Facility Agent. If the Facility Agent
makes an amount available to the Borrower which has not (but should
have) been made available to the Facility Agent by a Lender, the
Facility Agent shall be entitled to recover the relevant amount from
such Lender on demand, or failing this, the Borrower shall on
request made by the Facility Agent to the Borrower refund such
amount, together with interest thereon at the rate determined by the
Facility Agent to be equal to the cost to the Facility Agent of
funding such amount for the period until receipt by the Facility
Agent thereof.
(ii) If the Facility Agent makes an amount available to a Lender
which has not (but should have) been made available to the Facility
Agent by the Borrower, such Lender shall on request refund such
amount to the Facility Agent together with interest thereon at the
rate determined by the Facility Agent to be equal to the cost to the
Facility Agent of making available such amount for the period from
the date on which such amount was so made available until receipt by
the Facility Agent thereof.
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10. EVENTS OF DEFAULT
10.1 EVENTS
Each of the following events (whether or not arising as a result of events
or circumstances beyond the Borrower's control) shall constitute an Event
of Default, if:-
(i) any principal of or interest on the Loan or any other amount
becoming payable under this Agreement and/or the Security Documents
is not paid on the due date for payment thereof or (in the case only
of sums expressed to be payable upon demand) within a period of five
(5) Banking Days after demand is made therefor; or
(ii) the Borrower shall make default under, or in the due and punctual
observance and performance of, Clause 11.1(xi) and shall fail to
remedy the same within one (1) Banking Day after written notice from
the Facility Agent to the Borrower requiring such default to be
remedied; or
(iii) the Borrower or any other Security Party makes default under, or in
the due and punctual observance and performance of, any other
provision of this Agreement and/or the Security Documents and/or any
of the Project Documents which default (in the reasonable opinion of
the Facility Agent) is not capable of remedy and/or imperils the
security created by the Security Documents and/or any of the Project
Documents or any of them, or any such default arises which (in the
reasonable opinion of the Facility Agent) is capable of remedy and
does not imperil the security created by the Security Documents
and/or any of the Project Documents or any of them and is not
remedied within thirty (30) days after written notice from the
Facility Agent to the Borrower requiring remedial action; or
(iv) any indebtedness of any Security Party (being indebtedness in excess
of US$500,000 (or the equivalent in any other currency) is not paid
on its due date or within any period of grace specified in the
contract evidencing the original terms of such indebtedness or
becomes due or capable of being declared due prior to its stated
date of payment; or
(v) any party to a Project Document (other than the Borrower or
another Security Party) defaults in the due performance or
observance of any of its covenants, undertakings or obligations
under such Project Document which default could be material in the
context of the transactions contemplated by the Financing Documents
and (if such default is capable of remedy) the same is not remedied
to the satisfaction of the Facility Agent within the period (if any)
allowed for remedy thereof under the Project Documents or a period
of thirty (30) days after the Facility Agent gives notice to the
Borrower requiring the same to be remedied; or
(vi) any representation or warranty made pursuant to Clause 8.1 or any
other provision of this Agreement or made pursuant to any provision
of any of the Security Documents proves to have been materially
incorrect or becomes materially incorrect in any respect as of the
date on which such representation or warranty is made or repeated
(or deemed to be repeated); or
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(vii) any governmental licence, authorisation, consent or approval at any
time necessary to enable the Borrower and/or any of the Security
Parties and/or any of the Project Parties to comply with its or
their respective obligations hereunder or under the Security
Documents or under the Project Documents or any of them or to enable
the operation of the Rig is revoked or withheld or modified or is
otherwise not granted or fails to remain in full force and effect
[or (but without prejudice to the generality of the foregoing) the
Charterparty and other related documents which require registration
are not registered with the Central Bank of Brazil in accordance
with Clause 11.1(f) within the period of four weeks after the
Charterparty Commencement Date; or
(viii)the Borrower and/or any other Security Party or any Project Party
other than a Security Party becomes insolvent or bankrupt or
suspends payment of its debts generally as they fall due, or any
steps are taken by any person or by any government authority for the
winding up, liquidation or dissolution of the Borrower and/or any
other Security Party or any Project Party other than a Security
Party or for the making of an administration order (including,
without limitation, the presentation of a petition for an
administration order) or for the re-arrangement, re-organisation or
reconstruction of the Borrower and/or any other Security Party or
any Project Party other than a Security Party, or if an encumbrancer
takes possession of or if a receiver or trustee is appointed of, or
if any distress or execution is levied against, any of the assets of
the Borrower and/or any other Security Party or any Project Party
other than a Security Party, or if any process or proceeding similar
to any of the foregoing shall be instituted under the laws of any
relevant jurisdiction; or
(ix) the Borrower and/or any other Security Party suspends or threatens
to suspend its operations or (without the prior written consent of
the Facility Agent) disposes or threatens to dispose of all or
substantially all of its business, property or assets, or if all or
substantially all of the same is seized or appropriated; or
(x) any change occurs in the shareholders and the respective
shareholdings in the Borrower or the Sister Company from those
specified in Schedule 5; or
(xi) save as may be permitted under this Agreement or any of the Security
Documents any Charterparty Hire and/or any other Earnings are paid
otherwise than to the Management Account; or
(xii) the Rig becomes a Total Loss and the Facility Agent does not, within
a period of one hundred and eighty (180) days following the
occurrence of such Total Loss, receive for the account of the
Lenders the insurance proceeds or other compensation relating to
such Total Loss in an amount not less than the amount for which the
Rig shall have been required to be insured at the time of such Total
Loss pursuant to the Mortgage and Deed of Covenants and the other
Financing Documents; or
(xiii)this Agreement or any of the Security Documents or any of the
Project Documents ceases at any time to be the legal, valid and
binding obligation of the Borrower or, as the case may be, any other
Security Party or, as the case may be, Project Party being a party
thereto, or if it becomes impossible or unlawful for
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any of the material obligations of the Borrower and/or any other
Security Party and/or any Project Party to be performed or for any
of the rights given to the Agents or the Lenders hereunder and/or
under any of the Security Documents to be exercised or the Borrower
or any other Security Party or any Project Party disaffirms or
repudiates any such obligations; or
(xiv) the Rig is not delivered to and accepted by the Borrower in all
material respects in accordance with the provisions of the Rig
Construction Contract prior to the date falling 365 days after the
Original Scheduled Yard Delivery Date; or
(xv) the Rig has not arrived at the Port or in sheltered waters in
Macae-RJ) and accepted by Petrobras for the commencement of
operations in all respects in accordance with the Charterparty prior
to the date falling 365 days after the Original Scheduled
Charterparty Commencement Date; or
(xvi) the Rig Construction Contract is terminated or any event or
circumstance arises thereunder which entitles either party
thereunder to terminate the same pursuant to Clauses 18 or 19
thereof or otherwise pursuant to the terms thereof or either party
repudiates its obligations thereunder or commits any other breach
which would entitle the other party to treat its obligations
thereunder as terminated; or
(xvii)the Refund Guarantee is terminated or the issuer thereof repudiates
its obligations thereunder; or
(xviii) the Charterparty is terminated or any event or circumstance arises
thereunder which entitles either party thereto to terminate the same
or either party repudiates its obligations thereunder or commits any
other breach which would entitle the other party to treat its
obligations thereunder as terminated; or
(xix) the Services Rendering Contract is terminated or any event or
circumstance arises thereunder which entitles either party thereto
to terminate the same or either party repudiates its obligations
thereunder or commits any other breach which would entitle the other
party to treat its obligations thereunder as terminated; or
(xx) there is any breach or non observance on the part of Pride and/or
Maritima of their respective obligations under the Additional
Funding and Guarantee Agreement; or
(xxi) the Bridging Loan is not repaid to MC1 on the Bridging Loan
Repayment Date (otherwise than by reason of a default by MC2 in the
performance of its obligations under the Additional Funding and
Guarantee Agreement to remit to MC1 amounts received from the
Transferees to whom MC2 transfers its participation in the Tranche A
Facility in accordance with the Additional Funding and Guarantee
Agreement; or
(xxii)it is not possible to maintain the Insurances throughout the
Security Period for any reason (including, without limitation, by
reason of any relevant Insurances not being available in the
international insurance market); or
(xxiii) any of the events or circumstances specified in the foregoing
paragraphs (i) to (xx) (MUTATIS MUTANDIS) occur under the Sister
Company Financing Documents.
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10.2 RIGHTS ON EVENT OF DEFAULT
At any time after the occurrence of an Event of Default and while the same
is continuing (and in addition and without prejudice to any other rights
of the Agents or the Lenders):
(i) the Facility Agent may and shall if so directed by the
Majority Lenders by notice in writing to the Borrower declare that
the Loan and all other amounts outstanding from the Borrower under
this Agreement and/or the Security Documents are immediately due and
payable and such declaration shall be effective from the date of
such occurrence or such other later date as the Facility Agent may
specify in the said notice, and (at the same time as or at any time
subsequent to the service of such notice and the same shall be
immediately due and payable and the Lenders' obligation to make
available or to continue to make available the Facilities, or any
part thereof, to the Borrower shall immediately cease); and/or
(ii) either of the Agents or any of the Lenders may terminate or
otherwise rearrange (at the discretion of such Agents or Lenders)
any interest rate or currency swap, hedging or other currency or
interest rate management agreement or arrangements which the Agents
or any of the Lenders may have taken out or entered into in relation
to the Loan or any part thereof.
10.3 SURVIVAL OF RIGHTS
The termination of this Agreement for any cause whatsoever shall not
affect the right of the Agents and the Lenders to recover from the
Borrower any amounts due to the Agents and the Lenders on or before the
termination or in consequence thereof or the right of the Agents and the
Lenders to recover any damages for breach of this Agreement and/or the
Security Documents or any of them.
10.4 NO INDEPENDENT ACTION
No Lender may, except with the prior consent of the Majority Lenders (and,
where a Lender may, it may only do so through the Security Agent):
(a) enforce any encumbrance created or evidenced by any Security
Document or require the Security Agent to enforce any such
encumbrance;
(b) sue for or institute any creditor's process (including a Mareva
injunction, garnishment, execution or levy, whether before or after
judgment) in respect of any obligation (whether or not for the
payment of money) owing to it under or in respect of any Financing
Document;
(c) take any step (including petition, application, notice of meeting or
proposal to creditors) for the winding-up, or administration of, or
any insolvency proceeding in relation to, the Borrower, or for a
voluntary arrangement or scheme or arrangement in relation to the
Borrower; or
(d) apply for any order for an injunction or specified performance in
respect of the Borrower in relation to any of the Financing
Documents.
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Provided that for the avoidance of doubt nothing herein contained shall
restrict the rights of the Beneficiaries under (and as defined in) the
Floor Guarantee to enforce (or refrain from enforcing) their rights
thereunder at such times and in such manner as they may think fit.
11. COVENANTS
11.1 GENERAL COVENANTS
The Borrower hereby covenants and undertakes with the Agents and each of
the Lenders that throughout the Security Period:-
(i) it will obtain and promptly renew (or require the other
Project Parties where applicable to obtain and promptly renew) from
time to time and comply with the terms of all consents which may be
required under any applicable law in connection with or for the
execution, delivery or due performance by the Security Parties and
the Project Parties of this Agreement, the Security Documents or the
Project Documents or for the validity or enforceability of this
Agreement or the Security Documents or the Project Documents (or
procure such obtaining, renewal or compliance);
(ii) it will pay or cause to be paid all of its obligations,
rents, rates, taxes, assessments, impositions, calls and outgoings
whatsoever (whether governmental, municipal or otherwise) imposed
upon or payable in respect of its property or assets as and when the
same shall become payable save for any of the same which are being
contested in good faith and by appropriate proceedings and which
could not reasonably be expected to have a material adverse effect
on the business or operation of the Borrower;
(iii) it will deliver to the Facility Agent in sufficient copies for each
of the Lenders:
(a) as soon as the same are available (and in any event
within one hundred and twenty (120) days) after the end of each of
its financial years ending after the date hereof, its accounts for
such financial year (including the profit and loss account for the
financial year ended on the last day of such financial year and the
balance sheet as of the end of such financial year) having ensured
that such accounts were prepared on such basis as is reasonably
acceptable to the Facility Agent and were prepared in accordance
with accounting principles and practices generally accepted in the
United States of America ("GAAP") and consistently applied and give
(in conjunction with the notes thereto) a fair presentation in
accordance with GAAP of (i) the financial condition of the Borrower
as at the date as of which they were prepared, and (ii) the results
of the operations of the Borrower for the period to which they
relate and were audited by auditors acceptable to the Facility Agent
and were certified by its duly authorised officer as giving (in
conjunction with the notes thereto) a true and fair view of its
financial condition as at the end of such financial year and of the
results of its operations during such financial year;
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(b) simultaneously with the delivery of each of its
accounts in accordance with sub-clause (iii)(a), a certificate
signed by a duly authorised director or officer of the
Borrower confirming that as of the date of such certificate
(which must be dated not more than ten (10) days prior to the
date on which it is delivered to the Facility Agent) no Event
of Default or Potential Event of Default has occurred at any
time after the date of the last such certificate delivered
pursuant to this sub-clause (iii)(b) (or the date of this
Agreement, in the case of the initial such certificate);
(c) as soon as reasonably practicable following receipt
from the Builder, a certified true copy of each progress
report given by the Builder pursuant to the Rig Construction
Contract and each notice of anticipated delivery date given by
the Builder pursuant to the Rig Construction Contract and a
certified true copy of each other notice or report given to it
by the Builder pursuant to or in connection with the Rig
Construction Contract which could reasonably be considered to
be material in the context of the transactions contemplated by
the Security Documents and the Project Documents;
(d) simultaneously with delivery to Petrobras of each
progress report given by the Borrower to Petrobras pursuant to
the Charterparty and each other notice or report so delivered
by the Borrower pursuant to the Charterparty which could
reasonably be considered to be material in the context of the
transactions contemplated by the Security Documents and the
Project Documents, a certified true copy of such notice or
report;
(e) from time to time promptly upon request by the Lender, such
other information as the Security Agent may reasonably require
in the context of this Agreement and any of the Security
Documents and the Project Documents; and
(f) evidence satisfactory to the Security Agent that it has
registered the Charterparty and any other documents requiring
registration with the Central Bank of Brazil within 4 weeks of
the Charterparty Commencement Date,
(iv) promptly upon becoming aware of the same, it will notify the
Security Agent of:
(a) any dispute between the Borrower and (A) the Builder
in relation to the Rig Construction Contract, (B) Petrobras in
relation to the Charterparty or any of the other Project
Documents which, in any case, could reasonably be considered
to be material in the context of the transactions contemplated
by this Agreement and any of the other Security Documents or
could reasonably be expected to have a material adverse effect
on the Borrower;
(b) any breach by any party to any Security Document or
any Project Document of any party's obligations thereunder
which could reasonably be considered to be material in the
context of the transactions contemplated by this Agreement and
any other Security Document or could reasonably be expected to
have a material adverse effect on the
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Borrower and provide the Security Agent with details of the
nature and extent of such breach and the steps which it
intends to take in respect thereof;
(c) any event which could materially adversely affect the
completion and delivery of the Rig under the Rig Construction
Contract Date; and
(d) the occurrence of any Event of Default or any Potential Event
of Default;
(v) it will immediately upon delivery of the Rig by the Builder register
itself as the owner of 64/64th shares in the Rig at the Registry of
Bahamian Ships free from any encumbrance (save only for the Mortgage
and the Mortgage Debenture) and will deliver to the Facility Agent a
certified copy of the certificate of registration of the Rig
immediately it is issued;
(vi) it will perform all of its obligations under each of the
Security Documents and the Project Documents to which it is a party
in accordance with the respective terms thereof and not terminate or
amend, or offer to terminate or amend, any of the Security Documents
or Project Documents to which it is a party or waive any of its
rights thereunder which, in the case of any amendment or waiver,
could be material in the context of this Agreement and the Security
Documents or Project Documents and the transactions contemplated
hereby or thereby and without prejudice to the generality of the
foregoing it will use all reasonable endeavours to procure that all
payments are made by Petrobras pursuant to the Project Documents
without any withholding, set-off, counterclaim or other deduction of
any kind;
(vii) it will permit representatives of the Facility Agent (or any
accountants, engineers or other experts or specialists designated by
the Facility Agent) to visit or inspect, or procure that any such
representatives are able to visit or inspect, the Rig during its
construction and after the Yard Delivery Date and the Borrower's
books of account, at such times and as often as may be reasonably
required by the Facility Agent subject to the Facility Agent first
giving reasonable prior written notice and in exercising such rights
the Facility Agent's representative will comply with the reasonable
instructions of the Borrower's crew;
(viii)it will at its own cost and expense promptly execute, acknowledge,
deliver, file and register all such additional documents,
instruments, agreements, certificates, consents and assurances and
do all such other acts and things as may be legally required for the
Borrower to do and as may be necessary or as the Facility Agent may
reasonably request from time to time in order to effectuate the
purposes of this Agreement or any of the Security Documents or the
Project Documents or to perfect the security interest intended to be
constituted by any of the Security Documents or to enable the Agents
and the Lenders to obtain the full benefits of this Agreement or any
of the Security Documents or the Project Documents and to exercise
and enforce the rights and remedies under this Agreement or any of
the Security Documents or the Project Documents;
(ix) it will not, without the prior written consent of the Facility
Agent:-
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(a) (save and except as envisaged in this Agreement) create,
assume or permit to exist any encumbrance upon any of its
property or other assets, real or personal, tangible or
intangible, whether now owned or hereafter acquired, other
than any lien on the Rig arising as a result of any necessary
salvage or arising in the ordinary course of operation of the
Rig; or
(b) engage in any business or activity except the ownership of the
Rig, its chartering to Petrobras in accordance with the
Charterparty and its operation and activities incidental
thereto or pursuant to any subsequent charter or drilling
service contract; or
(c) save and except as envisaged by this Agreement make
any loans to any person(s), make any investments of any kind
(including but not limited to (i) the acquisition of any
shares in or debentures of any company and/or (ii) the
purchase, or acquisition on finance lease, hire purchase or
similar terms, of any fixed asset(s) premises/office equipment
for the Borrower's own use, including charters out), or
authorise or enter into any capital commitments otherwise than
in the ordinary course of business; or
(d) (save and except as envisaged in this Agreement or
agreed by the Facility Agent in writing) borrow any money or
permit any such borrowing to continue, or enter into any
agreement for payment on deferred terms (otherwise than on
customary suppliers' credit terms) or any equipment lease or
contract hire agreement (other than in respect of necessary
machinery and/or equipment for the Rig or otherwise in the
ordinary course of business); or
(e) (save and except as envisaged in this Agreement) assume,
guarantee or endorse or otherwise become or remain liable in
connection with any obligation of any person (otherwise than
in the ordinary course of operating of the Rig); or
(f) at any time during the Security Period purchase or
otherwise acquire for value any shares of its capital stock,
and will not in any financial year during the Security Period
declare or pay any dividend on any of such shares or make any
distribution to the holder(s) of any such shares except as
provided in Clause 12.4 and it will not issue any new shares
of its capital stock.
(x) it will maintain the Management Account and the Reserve Account (and
any other account(s) opened by the Borrower for the purposes of this
Agreement;
(xi) in the event that, and whenever, the Facility Agent shall
issue any certificate for the purposes of Clause 9.2 of the Deed of
Guarantee and Undertaking and shall supply a certified copy thereof
to the Borrower, the Borrower will, unless the Guarantors shall have
made the relevant payment by way of subscription for equity share
capital in the Borrower pursuant to Clause 9.1 of the Deed of
Guarantee and Undertaking within seven (7) Banking Days immediately
following the day on which it is supplied by the Facility Agent with
a certified copy of such certificate, deliver to the Sponsors (and
will not purport to revoke) a
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duly completed request for a drawing under the Subordinated Loan
Facility Agreement in an amount equal to the amount specified in
said certificate, and will simultaneously deliver a certified copy
of such certificate to the Facility Agent;
(xii) it will ensure that Formaritima Ltd and Petrodrill Engineering N.V.
will not (without the prior written consent of the Facility Agent,
such consent not to be unreasonably withheld or delayed) cancel,
vary or amend any of the Other Services Contracts and that
Formaritima Ltd and Petrodrill Engineering N.V. will (unless the
Facility Agent otherwise agrees) take all appropriate steps to
enforce performance by all parties (other than Formaritima Ltd and
Petrodrill Engineering N.V.) of their respective obligations under
the Other Services Contracts; and
(xiii)it will do or cause to be done all things necessary to preserve in
full force its corporate existence, rights, franchises or
authorities necessary for the conduct of its business.
11.2 COST OVERRUNS
Without prejudice to any other provision of this Agreement or any other
Security Documents, the Borrower will perform its obligations under the
Rig Construction Contract and any Purchaser's Supplies Contract.
11.3 INSURANCES
The Borrower will take out and effect and maintain throughout the Security
Period the Insurances meeting the requirements specified in Schedule 8
with such insurers as are acceptable to the Facility Agent. The terms and
conditions of such insurances shall be subject to the prior approval of
the Facility Agent (such approval not to be unreasonably withheld or
delayed) and duplicates of all cover notes, policies and certificates of
entry shall be provided to the Security Agent for its approval and
retention. The Borrower will renew all such insurances at least fourteen
(14) days before the relevant policies or contracts or certificates of
entry expire and the Borrower will punctually pay all premiums, calls,
contributions or other sums payable in respect of such insurances.
11.4 INSURANCE PROCEEDS AND DEDUCTIBLES
The Borrower shall:
(i) procure that the insurance proceeds, received or to be received by
the Borrower shall be paid to the Facility Agent in accordance with
the Insurances Assignment and are paid into the Management Account;
(ii) pay to the Facility Agent and remit to the Management Account an
amount equal to the deductions made for deductibles or excess
applied by insurers in respect of any claim, such payments to be
funded by the Borrower (without recourse to the Lenders).
11.5 LIQUIDATED DAMAGES; REFUNDS
The Borrower shall procure that all amounts payable by the Builder under
the Rig Construction Contract and the Export-Import Bank of Korea under
the Refund Guarantee
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received or to be received by the Borrower are paid to the Security Agent
and credited to the Management Account.
12. SECURITY ACCOUNTS
12.1 REMITTANCE OF EARNINGS
The Borrower shall, throughout the Security Period, procure and ensure
that all monies payable under the Charterparty and any other Earnings are
paid to the Management Account unless and until such time as the Lender
shall, following the occurrence of an Event of Default and whilst the same
is continuing, require that the Charterparty Hire and any other Earnings
of the Rig and all the Services Rendering Contract Payments are paid to
the Facility Agent or as it may direct (whereafter the Borrower shall
procure and ensure that the Charterparty Hire and any other Earnings and
all the Services Rendering Contract Payments are paid in accordance with
the directions of the Facility Agent).
12.2 USE OF MANAGEMENT ACCOUNT
Subject to the provisions of Clause 12.1 and unless and until an Event of
Default shall have occurred and be continuing (whereupon the provisions of
Clause 12.4 shall be and become applicable) and subject in all respects to
the provisions of Clause 9.5, monies from time to time credited to, or
standing to the credit of, the Management Account shall be applied in
accordance with the following provisions:-
(i) Subject to no Event of Default or Potential Event of Default
having occurred, and be continuing the Facility Agent and the
Borrower shall on the 5th day of each month (commencing on the 5th
of the month following the month during when the first payment of
Charterparty Hire is paid to the Management Account) release to the
Borrower an amount not exceeding the Monthly Outgoings incurred by
the Borrower during the preceding month.
(ii) All other monies from time to time standing to the credit
of the Management Account shall be applied by the Facility Agent in
or towards payment of the Repayment Instalments and otherwise in or
towards amounts of principal of, and interest accrued on, the Loan
from time to time payable by the Borrower hereunder and other
amounts from time to time falling due and payable hereunder and/or
under any of the Security Documents (and such application by the
Facility Agent, which the Facility Agent is hereby irrevocably
authorised by the Borrower to do, shall constitute PRO tanto
satisfaction of the corresponding obligations of the Borrower
hereunder).
(iii) Subject to the payments made in accordance with sub-clauses (i) or
(ii) Surplus Earnings shall be transferred to the Reserve Account on
the 5th day of each month.
12.3 USE OF RESERVE ACCOUNT
All monies transferred to the Reserve Account in accordance with Clause
12.2(iii) shall during the Security Period remain credited to the Reserve
Account unless withdrawn pursuant to Clause 12.4 in accordance with and
subject to the Reserve Account Charge. If at the time the amount for the
time being credited to the Management Account is
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insufficient to discharge the Monthly Outgoings and/or payments to the
Agents and the Lenders in accordance with Clause 12.2(i) and/or 12.2 (ii),
then subject to no Event of Default and no Potential Event of Default
having occurred, the Facility Agent shall apply any amounts credited to
the Reserve Account in or towards the Monthly Outgoings and/or payments to
the Agents and the Lenders and the provisions of Clause 12.2(i) and (ii)
shall (MUTATIS MUTANDIS) apply.
12.4 WITHDRAWAL
Subject to there being credited to the Reserve Account and the Sister
Company Reserve Account immediately following such withdrawal an amount
equal to the aggregate of the next six (6) Repayment Instalments and the
next six (6) Repayment Instalments under and as defined in the Sister
Company Loan Agreement the Borrower may from time to time withdraw monies
from the Reserve Account.
12.5 FOLLOWING EVENT OF DEFAULT
Without prejudice to the provisions of the Management Account Charge and
the Reserve Account Charge, upon the occurrence of an Event of Default and
whilst the same is continuing the Facility Agent shall forthwith be and
become entitled then or at any time thereafter to apply all moneys
standing to the credit of, or from time to time credited to, the
Management Account and the Reserve Account in or towards payment of
amounts due to the Agents and the Lenders under this Agreement and/or the
other Security Documents.
12.6 INTEREST
Amounts for the time being standing to the credit of the Management
Account and the Reserve Account shall bear interest at the rates from time
to time paid by the Management Account Bank or (as the case may be) the
Reserve Account Bank to its customers for US Dollar deposits of like
amounts for like periods (but having regard to payments which are
scheduled to fall due to be made from time to time from such accounts),
such interest to accrue from day to day, to be calculated on the actual
number of days elapsed and on the basis of a three hundred and sixty (360)
day year and to be credited to the relevant account at such intervals as
the Facility Agent and the Borrower shall agree.
13. PROVISIONS RELATING TO SECURITY
13.1 CONTINUING SECURITY
It is declared and agreed that:
(i) the security created or to be created by or pursuant to this
Agreement and the other Security Documents shall be held by the
Security Agent as a continuing security for the payment and
discharge of the Secured Obligations;
(ii) the security so created shall not be satisfied by any intermediate
payment or satisfaction of any part of the amount hereby and thereby
secured;
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(iii) the security so created shall be in addition to and shall not in any
way be prejudiced or affected by any collateral or other security
now or hereafter held by the Agents or any of the Lenders for all or
any part of the moneys hereby and thereby secured;
(iv) every power and remedy given to the Agents or any of the Lenders
hereunder or under any of the Security Documents shall be in
addition to, and not a limitation of, any and every other power or
remedy vested in the Lender hereunder or thereunder; and
(v) all the powers so vested in the Agents or any of the Lenders may be
exercised from time to time and as often as the Lender may deem
expedient.
13.2 CLAIMS AGAINST SECURITY PARTIES
Notwithstanding any other provision of this Agreement and/or of the
Security Documents (express or implied), the Agents and the Lenders shall
have an absolute and unfettered right to make, enforce or seek to enforce
any claim against the Borrower and/or against any other Security Party
and/or against any security or other asset(s) or document(s), agreement(s)
or arrangement(s) simultaneously and/or in such order or sequence as any
of the Agents or the Lenders may in their sole and absolute discretion see
fit.
14. CHANGE IN CIRCUMSTANCES
14.1 ILLEGALITY
In the event that by reason of change subsequent to the date hereof in any
applicable law, regulation or regulatory requirement or in the
interpretation thereof it shall appear to any Lender that it has become
unlawful for such Lender to maintain or give effect to its obligations as
contemplated by this Agreement, such Lender shall inform the Facility
Agent who shall thereupon give notice to the Borrower to that effect,
whereafter the liability of such Lender to make or to maintain Commitments
and its participation in the Loan shall cease, and if any of the
Facilities in which such Lender is participating has already been drawn
down the Borrower shall prepay such Lender's participation in the Loan to
such Lender either immediately or, on the latest date permitted by such
law, regulation or regulatory requirement, in accordance with and subject
to the provisions of Clause 18. In any such event, but without prejudice
to the aforesaid obligations of the Borrower to prepay such Lender's
participation in the Loan, the Borrower and the Lender so affected and the
Facility Agent shall negotiate in good faith for a period of 30 days next
succeeding the giving of such notice with a view to agreeing terms for
making such Lender's participation in the Loan available from another
jurisdiction, or for establishing a mutually acceptable basis for funding
from alternative sources, or for restructuring the Facilities on a basis
which is not unlawful.
14.2 INCREASED COSTS
(i) If by reason of the introduction of, or any change in, any
applicable law, treaty, regulation or regulatory requirement or any
change in the interpretation or application of any of the foregoing
by any judicial, governmental or other competent body or authority
or if by reason of compliance by any Lender or either of the Agents
with any applicable directive, request or requirement
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(whether or not having the force of law) of any central bank or
governmental, fiscal or other authority (including, but not limited
to, a directive, request or requirement relating to any Lender's
allocation of capital for the purpose of its business) any Secured
Party incurs an increased cost (as defined in paragraph (ii)), the
Borrower shall promptly on demand made by the Facility Agent on
behalf of such Secured Party pay to the Facility Agent for the
account of such Secured Party the amount of such increased cost:-
(ii) In this Agreement "INCREASED COST" means:
(a) any Taxation to which any Secured Party is subjected with
respect to the Loan or any part thereof (other than corporate
Taxation on such Secured Party's overall net income); or
(b) an additional cost incurred by a Secured Party as a result of
it having entered into, or performing, maintaining or funding
its obligations under, this Agreement or any other Financing
Documents; or
(c) that portion of any additional cost incurred by a
Secured Party in making, funding or maintaining all or any
advances or commitments comprised in a class of advances or
commitments formed by or including its participations in the
Loans made available or to be made available under this
Agreement, as is attributable to it making, funding or
maintaining those participations; or
(d) a reduction in any amount payable to a Secured Party or in the
effective return to a Secured Party under this Agreement or on
its capital which is attributable to the funding of this
Agreement or its commitment to make funds available hereunder;
or
(e) the amount of any payment made by a Secured Party, or the
amount of any interest or other return foregone by a Secured
Party, calculated by reference to any amount received or
receivable by that Secured Party from any other party under
this Agreement.
(iii) Any demand made by the Facility Agent under sub-paragraph (i) above
shall contain reasonable details of the increased cost and the
event(s) giving rise to it, but no Secured Party need disclose any
information which is confidential or disclosure of which would be
contrary to its recognised banking policies.
(iv) The obligation under paragraph (i) to pay increased costs does not
apply to any increased cost:
(a) compensated for by the operation of Clause 9.2; or
(b) attributable to any change in the rate of tax on the
overall net income of a Secured Party (or the overall net
income of a division or branch of a Secured Party) imposed in
the jurisdiction in which its principal office for the time
being is situate or in which it is resident for tax purposes
or is carrying on business and by virtue thereof is subject to
such tax in that jurisdiction; or
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(c) attributable to any law or regulation relating to any of the
matters set out in the report of the Basle Committee on
Banking Regulations and Supervisory Practices dated July 1988
and entitled "INTERNATIONAL CONVERGENCE OF CAPITAL MEASUREMENT
AND CAPITAL STANDARDS" as the same are in force and applied
and interpreted at the date of this Agreement.
(iv) In the case of a demand made by or on behalf of a Lender,
the Borrower shall be at liberty at any time after the receipt of
such notice, so long as the circumstances giving rise to such
increased cost continue, on giving not less than five Banking Days'
irrevocable notice to the Facility Agent and such Lender, to prepay
all (but not part only) of such Lender's participation in the Loan
in accordance with and subject to the provisions of Clause 14.3.
(v) In any such event, but without prejudice to the obligations of the
Borrower as aforesaid, the Borrower and the Lender will negotiate in
good faith with a view to mitigating the effects on the Borrower.
14.3 PREPAYMENT
Where any Lender's participation in the Loan is to be prepaid by the
Borrower pursuant to any of the provisions of this Clause 14, the Borrower
shall simultaneously with such prepayment pay to the Facility Agent for
the account of such Lender all accrued interest on any sum prepaid to the
date of prepayment and all other sums payable by the Borrower to or for
the account of such Lender pursuant to this Agreement and/or the Security
Documents together with such amounts as may be certified by such Lender to
be necessary to satisfy the indemnity obligations of the Borrower as
provided for in Clause 18.
14.4 FACILITY AGENT'S AND LENDER'S DETERMINATION
The certificate or determination of the Facility Agent or (as the case may
be) any Lender, as to any of the matters referred to in this Clause 14
shall, save for any manifest error, be conclusive and binding on the
Borrower.
15. TRANSFERS
15.1 AGREEMENT BINDING ON SUCCESSORS
This Agreement and the other Financing Documents shall benefit and bind
the parties, any transferee or assignee in respect of which an assignment
or novation becomes effective in accordance with Clause 15.3(iii), and
their respective successors as if they were named as parties and had
executed this Agreement. Any reference in any Financing Document to any
party shall be construed accordingly.
15.2 BORROWER'S ASSIGNMENT
The Borrower may not assign or transfer all or any part of its rights or
obligations under any Financing Document.
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15.3 TRANSFER
A Lender (an "EXISTING LENDER") may at any time assign, transfer or novate
any of its rights and/or obligations under this Agreement (and the other
Financing Documents to the extent possible as a matter of law) only if:-
(i) such assignment, transfer or novation is to a Qualifying
Lender (a "NEW LENDER");
(ii) such Existing Lender simultaneously assigns, transfers or novates
to such New Lender the proportion of its Corresponding Sister
Company Commitments and of its Corresponding Sister Company
Outstandings so that such New Lender becomes a Lender (as defined in
and in accordance with the Sister Company Loan Agreement) which is
the same as the proportion of its Commitments and Outstandings which
it is assigning, transferring or novating hereunder; and
(iii) either such assignment, transfer or novation is effected pursuant to
Clause 15.4 or such New Lender executes an undertaking in form and
substance satisfactory to the Facility Agent that it is bound by the
terms of the Financing Documents.
15.4 NOVATION
Subject to Clause 15.3 any Existing Lender may at any time novate all or
part of its Commitments and/or transfer all or part of its Outstandings
and its rights and benefits under the Financing Documents by delivering to
the Facility Agent a duly completed and executed Transfer Certificate
substantially in the form of Schedule 6. On receipt of such a Transfer
Certificate, the Facility Agent shall countersign it for and on behalf of
itself and the other parties to this Agreement and with effect from the
date specified in the Transfer Certificate to the extent that they are
expressed to be the subject of transfer and/or novation in the Transfer
Certificate:-
(i) the Existing Lender and the other Parties (the "EXISTING PARTIES")
will be released from their obligations to each other (the
"DISCHARGED OBLIGATIONS");
(ii) the New Lender and the existing Parties will assume obligations
towards each other which differ from the discharged obligations only
insofar as they are owed to or assumed by the New Lender instead of
the Existing Lender;
(iii) the rights of the Existing Lender against the existing Parties and
vice versa (the "DISCHARGED RIGHTS") will be cancelled; and
(iv) the New Lender and the existing Parties will acquire rights against
each other which differ from the discharged rights only insofar as
they are exercisable by or against the New Lender instead of the
Existing Lender,
15.5 NEW LENDERS
Each New Lender shall, by its execution of a Transfer Certificate, accept
that none of the other parties hereto is in any way responsible for:
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(a) the accuracy and/or completeness of any information
supplied to the New Lender in connection herewith;
(b) the financial condition, creditworthiness, condition, affairs,
status and nature of the Borrower or any of the Guarantors or any
other Security Party or the observance by the Borrower, any of the
Guarantors or any other Security Party of any of their respective
obligations under the Financing Documents or any document relating
thereto; or
(c) the legality, validity, effectiveness, adequacy or enforceability of
this Agreement or any document relating hereto and, save as
otherwise expressly provided herein, none of such parties shall, or
shall be deemed to be, the agent or trustee of such New Lender in
connection herewith.
15.6 LENDING OFFICES
The initial Lending Office(s) of each Lender has/have been notified by
that Lender to the Facility Agent. Any Lender may at any time change any
of its Lending Office(s) in relation to all or a specified part of any of
its Commitments and/or Outstandings by notifying the Facility Agent and
the Borrower of the fax number, telex number and address of its new
Lending Office(s).
15.6 DISCLOSURE OF INFORMATION
The Lender may disclose information regarding the Borrower or the
Guarantors and the transactions entered into pursuant to this Agreement to
any actual or potential, assignee or sub-participant, subject to such
recipients of information agreeing to keep it confidential.
16. FEES AND EXPENSES
16.1 FEES AND DISBURSEMENTS
The Borrower will pay to each of the Agents on demand, all costs, charges
and expenses (including all out-of-pocket expenses and legal fees and VAT
thereon) incurred by each of the Agents in connection with the
preservation of its rights under and enforcement or attempted enforcement
of this Agreement and the Security Documents or otherwise in connection
with the Loan or any part thereof.
16.2 TAXES AND DUTIES
The Borrower will pay to the Facility Agent and the Lenders on demand, all
stamp, registration and other duties (including any such duties payable by
the Lender) imposed by any relevant jurisdiction (or any taxing authority
therein or thereof) on this Agreement and/or any of the Security Documents
or otherwise in connection with the Loan or any part thereof.
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17. CURRENCY INDEMNITY
17.1 CURRENCY INDEMNITY
(i) If, for any reason, any payment due from the Borrower under
or in connection with any Security Document is made or is satisfied
in a currency (the "OTHER CURRENCY") other than the currency in
which the relevant payment under this Agreement is due (the
"CONTRACTUAL CURRENCY"), then to the extent that the payment (when
converted into the Contractual Currency at the rate of exchange on
the date of payment or, in the case of the liquidation or insolvency
of the Borrower, at the rate of exchange on the latest date
permitted by applicable law for the determination of liabilities in
such liquidation or insolvency) actually received by the party
entitled thereto falls short of the amount expressed to be due under
the terms of this Agreement or, as the case may be, such other
Security Document, the Borrower shall, as a separate and independent
obligation, indemnify the party entitled thereto and hold such party
harmless against the amount of such shortfall.
(ii) If on any occasion the Contractual Currency so purchased exceeds the
amount payable hereunder in the Contractual Currency to the party
entitled thereto then, subject to the Borrower having no further
obligation, actual or contingent, to such party under this
Agreement, such party shall refund to the Borrower the excess amount
of the Contractual Currency so purchased.
(iii) For the purpose of this Clause "RATE OF EXCHANGE" means the rate at
which the party entitled thereto is able on the relevant date to
purchase the Contractual Currency with the Other Currency and shall
take into account any premium and other costs of exchange.
17.2 INDEPENDENT OBLIGATIONS
The indemnities in Clause 17.1 shall constitute separate and independent
obligations of the Borrower from the other respective obligations under
this Agreement, shall give rise to a separate and independent cause of
action against the Borrower and shall apply irrespective of any indulgence
granted by the Lenders or by the Agents from time to time.
18. GENERAL INDEMNITIES
18.1 UNSCHEDULED REPAYMENTS
Without prejudice to the provisions of Clause 16.2, the Borrower shall
indemnify each Agent and each Lender against all funding and other fees,
costs, charges, losses, demand and expenses incurred or sustained as a
consequence of the Lender receiving (including any receipt in respect of a
repayment or prepayment made with the consent or at the request of or as
required by the Agents or any Lender including, but not limited to, any
prepayment under Clauses 6.5, 6.6 or 14.3) or recovering all or any part
of the Loan or any other amount due hereunder on a day other than at the
times and otherwise in accordance with the Repayment Schedule.
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18.2 EVENT OF DEFAULT
The Borrower undertakes to indemnify each of the Agents and the Lenders
against any and all liabilities losses costs, demands, charges,
liabilities and expenses (including, without limitation, legal fees) which
the Agents or such Lender may incur or sustain as a consequence of any
default by the Borrower in the performance of the obligations expressed to
be assumed by it in this Agreement and/or the Security Documents.
18.3 FINANCING COSTS
The liability of the Borrower under Clauses 18.1 and 18.2 shall include
but not be limited to all funding or other fees, costs, charges, losses,
demands and expenses sustained or incurred by either of the Agents or each
of the Lenders including (but not limited to) any sustained or incurred in
liquidating deposits taken to fund the amount so prepaid or sustained or
incurred in connection with the cancellation, reduction or re-arrangement
of any interest rate swap, hedge transaction or other funding or financing
agreement or arrangement which the Agents or such Lender may have arranged
or entered into for the purpose of funding the amount so prepaid (and the
Borrower hereby acknowledges that either of the Agents or each of the
Lenders may in its discretion enter into any such agreements or
arrangements as it considers appropriate).
18.4 OPERATION OF RIG
The Borrower shall indemnify each of the Agents and each of the Lenders
upon demand against all costs, expenses, claims, liabilities and losses of
any nature whatsoever sustained or incurred as a result of or in
connection with any the ownership or operation of the Rig and/or claims by
any third party or any Environmental Claim being made against the Lender
or otherwise howsoever arising out of any Environmental Incident. If the
Lender shall become aware of any claim for the purposes of this Clause
18.4 it shall give notice thereof to the Borrower as soon as reasonably
practicable (but not as a condition precedent to the liability of the
Borrower under this Clause 18.4) and shall (if the Borrower shall
indemnify and secure each of the Agents and each of the Lenders to such
Agents or (as the case may be) such Lender's reasonable satisfaction
against any liability costs damages and expenses which may reasonably be
incurred thereby and/or in relation thereto) take such action as the
Borrower may reasonably and promptly by notice request to avoid, resist or
compromise the claim, provided that:
(1) If either Agent or (as the case may be) the Lender receives
instructions to appeal against or otherwise resist any claim, it may
thereafter give notice to the Borrower to provide such Agent or (as
the case may be) such Lender with a written opinion of legal
advisers (to be approved by the Agent or (as the case may be) such
Lender, such approval not to be unreasonably withheld) to the effect
that there are reasonable and proper grounds for appealing against
or resisting such claim, and if no such opinion is received by such
Agent or (as the case may be) such Lender within 21 days after the
service of such notice such Agent or (as the case may be) such
Lender shall thereupon be released from any obligations which it
would otherwise have under this Clause and (notwithstanding any
other provision hereof) shall be entitled to immediate
indemnification by the Borrower in respect of such claim, and if
such an opinion is so received but there is a change in the basis on
which it is given then such Agent or (as the case may be) such
Lender may give further notice under this Clause.
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(2) Neither Agent nor any Lender shall be required to appeal against or
otherwise resist or to compromise any claim if in the reasonable
opinion of such Agent or Lender doing so could have adverse long
term or consequential implications for such Agent or Lender.
(3) All communications pertaining to any claim with the person authority
or body whatsoever making the claim as are made by the Borrower (if
any) shall first be approved by the Agent or (as the case may be)
such Lender (such approval not to be unreasonably withheld).
18.5 AGENT'S OR LENDER'S CERTIFICATE
A certificate of either Agent or a Lender of the amount of any such loss
or expense as is mentioned in Clauses 18.1, 18.2 and 18.3 and specifying
the basis upon which such loss, expense or amount is computed shall, in
the absence of manifest error, be final and conclusive and binding on the
parties hereto.
19. THE AGENTS
19.1 APPOINTMENT
Each Lender irrevocably appoints the Facility Agent to act as its agent
for the purpose of this Agreement and irrevocably authorises it to take
such action and exercise such rights, powers and discretions as are
specifically delegated to it by this Agreement or the other Security
Documents and such other action, rights, powers and discretions as are
reasonably incidental thereto. However, the Facility Agent may not begin
any legal action or proceeding in the name of a Lender without its
consent. The relationship between the Facility Agent and the Lenders is of
agent and principal only. The Facility Agent shall not be a trustee for
any Lender, nor an agent or trustee for the Borrower or either Guarantor,
under or in relation to any Security Document.
19.2 DUTIES OF FACILITY AGENT
The Facility Agent shall:-
(i) promptly send to each Lender details of each communication
received by it from the Borrower and/or either of the Guarantors
under this Agreement (except that details of any communication
relating to a particular Lender shall be sent to that Lender only),
details of any Transfer Certificate executed by any other Lender and
provide such other information relating to the Facility as any
Lender may reasonably request;
(ii) promptly send to each Lender a copy of any document or information
received by it under Clause 4 (Availability and Drawing);
(iii) subject to the other provisions of this Clause 19, act in accordance
with any instructions from the Majority Lenders or, if so instructed
by the Majority Lenders, refrain from exercising a right, power or
discretion vested in it under this Agreement; and
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(iv) have only those duties, obligations and responsibilities of a solely
mechanical and administrative nature, expressly specified in this
Agreement.
19.3 PERFORMANCE OF DUTIES
The Facility Agent:-
(i) may perform any of its duties, obligations and responsibilities
under the Security Documents by or through its personnel or any
sub-contractor or agents;
(ii) may refrain from exercising any right, power or discretion
vested in it under the Security Documents until it has received
instructions from the Majority Lenders or (provided that
instructions have been requested) as to whether (and, if it is to
be, the way in which) it is to be exercised and shall in all cases
be fully protected when acting, or (if so instructed) refraining
from acting, in accordance with instructions from the Majority
Lenders;
(iii) may treat (a) the Lender which makes available any share of the Loan
as the person entitled to repayment of that share unless all or part
of it has been assigned or transferred (and the Facility Agent has
received notice of that assignment or transfer) in accordance with
Clause 15; and (b) the office(s) notified by a Lender to the
Facility Agent for this purpose before the signing of this Agreement
(or, as the case may be, in the relevant Transfer Certificate or
notice of assignment) as its Lending Office(s) unless the Facility
Agent has received from that Lender a notice of change of Lending
Office in accordance with Clause 15. The Facility Agent may act on
any such assignment and/or notice until it is superseded by a
further assignment and/or notice;
(iv) shall not be required to do anything which would or might in its
reasonable opinion be contrary to any law or directive or otherwise
render it liable to any person which is not a party to the Security
Documents and may do anything which is in its reasonable opinion
necessary to comply with any law or directive;
(v) shall not be required to make any enquiry as to default by
the Borrower or either of the Guarantors (unless specifically so
instructed by the Majority Lenders) in the performance or observance
of any of the provisions of the Security Documents or as to the
existence of any Event of Default or Potential Event of Default
unless that Facility Agent acquires actual knowledge to the contrary
or has been notified in writing thereof by a Lender; and
(vi) may refrain from taking any step (or further step) to
protect or enforce the rights of any person under the Security
Documents until it has been indemnified (or received confirmation
that it will be so indemnified) and/or secured to its satisfaction
against any and all actions, charges, costs, losses, expenses or
liabilities (including legal, accountants' and other professional
fees) which would or might be brought, made or preferred against or
suffered, sustained or incurred by it as a result.
19.4 AGENTS' DISCRETIONS
The Facility Agent may:-
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(i) assume that any representation made by the Borrower or either of the
Guarantors in connection with the Security Documents is true;
(ii) assume that no Event of Default has occurred and that the Borrower
is not in breach of or default under the Security Documents;
(iii) assume that any right, power, authority or discretion vested in this
Agreement upon the Majority Lenders or any other person has not been
exercised;
(iv) rely on any communication, certificate, legal opinion or other
document reasonably believed by it to be genuine;
(v) rely as to any matter of fact which might reasonably be expected to
be within the knowledge of any person, on a written statement by
that person and on any communication or document believed by it to
be genuine;
(vi) obtain and pay for the advice or services of any lawyers,
accountants, surveyors or other experts in relation to the
negotiation, preparation, execution and enforcement of the Security
Documents as may to it seem necessary or desirable and rely on any
such advice;
(vii) retain for its own benefit and without liability to account any fee
or other sum receivable by it in connection with its agency and
subject always to Clause 20 (Set Off/Pro-Rata Sharing) for its
account; and
(viii)accept deposits from, lend money to, provide any advisory or other
services or engage in any kind of banking or other business with,
any party to any Security Document or related company of any party
(and, in each case, may do so without liability to account to any
Lender).
19.5 LIMITATION OF RESPONSIBILITIES
Neither the Facility Agent nor any of its personnel,
sub-contractors or agents shall be:-
(i) responsible for the adequacy, accuracy, completeness or
reasonableness of any representation, warranty, statement,
projection, assumption or information provided by the Borrower or
either of the Guarantors to any Lender, or contained in any Security
Document or any notice or other document delivered under or in
connection with any Security Document;
(ii) responsible for the execution, delivery, validity, legality,
adequacy, enforceability or admissibility in evidence of any
Security Document or any such notice or other document or for the
satisfaction or failure by the Borrower to satisfy any condition
precedent to the utilisation of the Facility; or
(iii) responsible for the collectability of amounts payable under any
Security Documents;
(iv) responsible for the accuracy of any statements (whether written or
oral) made in or in connection with any Security Documents; or
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(v) liable for anything done or not done by it or any of them under or
in connection with any Security Document save in the case of its or
their own negligence or wilful misconduct (but so that this Clause
19.5(v) shall not be construed to impose any liability in respect of
any matter for which liability is under any other provision of this
Clause excluded).
19.6 THE FACILITY AGENT AS LENDER
The Facility Agent shall with respect to its own participation in the
Facilities (if any) have the same rights and powers under the Financing
Documents as any other Lender and may exercise them as though it were not
also acting as agent for the Lenders. The Facility Agent and its
associates and affiliates may, without liability to disclose or account,
engage in any kind of financial, trust or commercial business with, or
acquire or dispose of any kind of security of, the Borrower, any
Guarantor, any other Security Party, any of their respective associates or
affiliates and none of the Facility Agent, nor any of its associates or
affiliates shall have any obligation to disclose or account for any
dealings with the Borrower, any Guarantor, any other Security Party, any
of their respective associates or affiliates prior to the date of this
Agreement. The agency department of the Facility Agent will be treated as
a separate entity from any other department of the Facility Agent and any
information received by the Facility Agent in any other capacity may be
treated as confidential by them.
19.7 NO RELIANCE ON THE FACILITY AGENT
Without affecting the responsibility of the Borrower for information
supplied by it or on its behalf in connection with any Security Document,
each Lender confirms that it has itself been, and will at all times
continue to be, solely responsible for making its own independent
investigation and appraisal of the business, financial condition,
prospects, creditworthiness, status and affairs of the Borrower, the
Guarantors or any other person and has not relied, and will not at any
time rely, on the Facility Agent or any other Lender:-
(i) to provide it with any information relating to the business,
financial condition, prospects, creditworthiness, status or affairs
of the Borrower, the Guarantors or any other person, whether coming
into its possession before or after the drawing of the Facility
(except as stated in Clause 19.2 or as provided otherwise in this
Agreement); or
(ii) to check or enquire into the adequacy, accuracy, completeness or
reasonableness of any representation, warranty, valuation,
statement, projection, assumption or information at any time
provided by or on behalf of the Borrower, the Guarantors or any
other person under or in connection with any Security Document
(whether or not that information has been or is at any time
circulated to it by the Facility Agent); or
(iii) to assess or keep under review the business, financial condition,
prospects, creditworthiness, status or affairs of the Borrower, the
Guarantors or any other person.
19.8 LENDERS' INDEMNITY
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To the extent that the Borrower or either of the Guarantors do not do so
on demand or are not obliged to do so, each Lender shall on demand
indemnify the Facility Agent in the proportion borne by its Outstandings
to all the Outstandings at the relevant time (or, if there are then no
Outstandings, in the proportion borne by its Commitments to the Total
Commitments) against any cost, expense or liability mentioned in Clause 16
(Fees and Expenses) or sustained or incurred by the Facility Agent in
complying with any instructions from the Majority Lenders or otherwise
sustained or incurred by it (in its capacity as an Agent) in connection
with its duties, obligations and responsibilities under the Security
Documents except routine administrative costs and expenses of the Facility
Agent or to the extent that they are sustained or incurred as a result of
the gross negligence or wilful misconduct of the Facility Agent or any of
its personnel or agents.
19.9 CHANGE OF AGENTS
Notwithstanding the irrevocable appointments in Clause 19.1, the Facility
Agent may resign at any time if it gives at least 30 days' notice in
writing to the Borrower and the Lenders and the Facility Agent may at any
time be removed by the Majority Lenders giving not less than 30 days'
notice to the Facility Agent. However, no resignation or removal shall be
effective until the successor has been appointed and accepted its
appointment in accordance with this Clause 19.9. The Majority Lenders may
appoint a successor to the resigning or removed Facility Agent but, if the
successor has not been so appointed and accepted its appointment within 15
days after the date of the notice of resignation or, as the case may be,
removal, the resigning Facility Agent and the Majority Lenders may appoint
a successor Facility Agent. Any appointment of a successor must be in
writing, signed by the person(s) appointing that successor and delivered
to that successor. Any acceptance of such appointment must be in writing,
signed by the person appointed and delivered to the person(s) appointing
that successor. The other parties to this Agreement shall be promptly
informed of the acceptance by a successor Facility Agent. Upon the
successor accepting its appointment, the resigning or, as the case may be,
the removed facility Agent shall be automatically discharged from any
further obligation under the Security Documents and its successor and each
of the other parties to the Security Documents shall have the same rights
and obligations among themselves as they would have had if the successor
had been the original Facility Agent party to this Agreement and the other
Security Documents. The resigning or, as the case may be, the removed
Facility Agent shall provide its successor with (or with copies of) such
records as its successor requires to carry out its duties under the
Security Documents.
19.10 SIGNING OF TRANSFER CERTIFICATES
The Borrower, the Security Agent and each Lender (except for the Existing
Lender and the New Lender seeking the relevant assignment and/or novation)
irrevocably authorises the Facility Agent to sign each Transfer
Certificate on their behalf.
19.11 ACCEPTANCE OF TITLE
The Facility Agent may accept without investigation, requisition or
objection such title as any person may have to the undertakings, property
and assets which are subject to the Security Documents and shall not be
bound or concerned to examine or enquire into nor be liable to any other
Secured Party or any other person for any defect or failure in the title
of any person whether such defect or failure was known to the Facility
Agent or
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might have been discovered upon examination or enquiry and whether capable
of remedy or not nor for any failure on the part of the Facility Agent to
give notice to any third party of the Security Documents to which it is
party or otherwise perfect or register the security thereby created.
19.12 THE BORROWER AND THE FACILITY AGENT
The Borrower shall be entitled to rely on any direction, instruction,
certificate, document or other communication made by the Facility Agent
and shall not be required to enquire whether it is made with the authority
of the Lenders, and performance of any obligation arising under this
Agreement or the Security Documents in reliance on any such shall be
deemed to be proper performance of the obligation in question.
19.13 AGENT OF THE LENDERS
Save as expressly provided in the Security Documents, the Facility Agent
is appointed hereunder and thereunder solely as the agent of the Lenders,
and the foregoing provisions of this Clause 19 (The Agents) apply solely
to the Facility Agent in their capacity as agent for the Lenders.
19.14 AGENT'S KNOWLEDGE
Information obtained by the Facility Agent in any capacity other than in
its capacity as Facility Agent and or through any department other than
the department having specific responsibility for the administration of
the Loan and the Security Documents shall not be imputed to the Facility
Agent.
19.15 AMENDMENTS
The Facility Agent may (except where any other authority is required for
the same by the express provisions of the Financing Documents) grant
waivers or consents or vary the terms of the Financing Documents only if
the same has been authorised by the Majority Lenders. Any such waiver,
consent or variation so authorised and effected by the Facility Agent
shall be binding on all the Lenders and the Facility Agent shall be under
no liability whatsoever in respect of any such wavier, consent or
variation. This Clause 19.15 shall not authorise, except with the prior
consent of all the Lenders:
(a) any change in the manner in which interest is calculated or paid
under this Agreement in respect of the Loan;
(b) any extension of the date for, or alteration in the amount or
currency of, any payment of principal, interest, fee, commission or
any other amount payable under the Financing Documents in respect of
the Loan;
(c) any increase in any Lender's Commitment in respect of the
Facilities;
(d) any extension of a date on which a payment of principal must be paid
in respect of the Loan; or
(e) any variation of the definition of Majority Lenders, and this Clause
19.15 shall not authorise, except with the prior consent of all the
Lenders;
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(g) any variation of:
(i) Clause 14.1 (ILLEGALITY), 20.2 (PRO RATA SHARING); or
(ii) this Clause 19.17,
(h) any extension of the Availability Period; or
(i) any amendment of any provision of the Financing Documents which
contemplates the need for the consent or approval of each Lender.
19.16 THE SECURITY AGENT
The Lenders will appoint the Security Agent to act as security agent in
accordance with the Security Trust Deed.
20. SET-OFF/PRO-RATA SHARING
20.1 SET OFF
The Borrower authorises the Facility Agent and each of the Lenders to
apply (without prior notice) any credit balance (whether or not then due)
to which the Borrower is at any time beneficially entitled on any account
at, any sum held to its order by and/or any liability or obligation
(whether or not matured) of, any office of the Facility Agent or such
Lender in or towards satisfaction of any sum then due and payable by it to
the Facility Agent or such Lender under the Security Documents and unpaid
and, for that purpose, to convert one currency into another (provided that
nothing in this Clause 20.1 shall be effective to create a charge, and
provided further that any credit balance, sum and/or liability or
obligation as aforesaid shall be held by the Facility Agent or, as the
case may be, such Lender pursuant to or in connection with the Security
Documents). No party shall be obliged to exercise any of its rights under
this Clause 20.1, which shall be without prejudice and in addition to any
right of set-off, combination of accounts, lien or other right (including
the benefit of the Security Documents) to which it is at any time
otherwise entitled (whether by operation of law, contract or otherwise).
Each Lender shall notify the Facility Agent and the Borrower forthwith
upon the exercise or purported exercise of any right of set-off giving
full details in relation thereto and the Facility Agent shall inform the
other Lenders forthwith.
20.2 PRO-RATA SHARING
If at any time the proportion received or recovered (whether by direct
payment, by exercise of any right of set-off, combination of accounts or
lien, or otherwise) by any Lender in respect of the total sum which has
become due to it from the Borrower or either of the Guarantors under the
Security Documents before that time exceeds the proportion received or
recovered by the Lender(s) receiving or recovering the smallest proportion
(if any), then:-
(i) such Lender shall promptly notify the Facility Agent and within 2
Banking Days after receiving a request from the Facility Agent, that
Lender shall pay to the Facility Agent an amount equal to the excess
and the Facility Agent shall notify
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the Borrower or the relevant Guarantor, as the case may be, of the
receipt of such amount;
(ii) the Facility Agent shall promptly distribute that payment as if it
were made by the Borrower or the relevant Guarantor, as the case may
be; and
(iii) as between the Borrower and the Lenders, that excess amount shall be
treated as having been paid to the Lenders to which (and in the
proportions in which) it is distributed under (ii) above, rather
than as having been paid to that Lender.
Within 2 Banking Days after any Lender receives or recovers any such sum
otherwise than by payment through the Facility Agent, that Lender shall
notify the Facility Agent of the amount and currency so received or
recovered, how it was received or recovered and whether it represents
principal, interest or other sums. If all or part of any amount so
received or recovered by that Lender (the "RELEVANT LENDER") required
thereafter to be repaid to the Borrower or another obligor, as the case
may be, has to be refunded by it (with or without interest), each Lender
to whom any part of that amount has been distributed shall repay to the
Facility Agent for the account of the Relevant Lender (within 2 Banking
Days after receiving a request from the Facility Agent on behalf of the
Relevant Lender) its proportionate share of the amount to be repaid to the
Borrower or, as the case may be, other obligor and of any interest
required to be paid by the Relevant Lender on that amount in respect of
all or any part of the period from the date of the relevant distribution
to the date of that payment to the Relevant Lender.
Any amount received or recovered by a Lender under a novation, assignment,
sub-participation or the like shall be ignored for the purpose of this
Clause 20.2. Furthermore, a Lender shall not be obliged to share any
amount which it has (i) alone received on its own account under Clause 14
(Changes in Circumstances) or (ii) received or recovered as a result of
taking legal proceedings with any other Lender which had an opportunity to
participate in those legal proceedings but did not do so and did not take
separate legal proceedings.
The provisions of this Clause 20.2 shall not, and shall not be construed
so as to, constitute a charge by a Lender over all or any part of a sum
received or recovered by it in the circumstances mentioned in Clause 20.2.
20.3 FLOOR GUARANTEE
For the avoidance of doubt nothing contained in this Clause 20 shall in
any way restrict the Initial Lenders or other Beneficiaries under (and as
defined in) the Floor Guarantee from recovering and retaining for their
own exclusive benefit all amounts received or recovered by them under or
in respect of the Floor Guarantee.
21. NOTICES, ETC.
21.1 METHOD OF SENDING
Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, may be made by facsimile transmission or by telex
or by letter.
21.2 ADDRESSES FOR NOTICES
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Any communication or document to be made or delivered by one person to
another pursuant to this Agreement shall (unless the one has by not less
than three (3) days' written notice to the other specified another
address) be made or delivered to that other person at the respective
addresses set out below.
(1) The Borrower (Petrodrill Six Limited):-
PETRODRILL ENGINEERING NV
K.P. van der Mandalelaan 38
3062 MB Rotterdam (Brainpark)
The Netherlands
Attention: Steve Assiter
Facsimile:
Telex:
(2) The Initial Lenders:-
PETRO DIA THREE S.A.
c/o MITSUBISHI CORPORATION
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship & Industrial Project Department
PETRO DIA FOUR S.A.
c/o MITSUBISHI CORPORATION
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship & Industrial Project Department
Facsimile:
Telex:
(3) The Facility Agent:-
MITSUBISHI CORPORATION (UK) PLC
Bow Bells House
Bread Street
London
EC4M 9BQ
Attention: General Manager, Machinery Department
Facsimile: 0171 822 0184
Telex:
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<PAGE>
(4) The Security Agent:-
MITSUBISHI CORPORATION (UK) PLC
Bow Bells House
Bread Street
London
EC4M 9BQ
Attention: General Manager, Machinery Department
Facsimile: 0171 822 0184
Telex:
21.3 DEEMED RECEIPT
Any notice given hereunder shall be deemed to have been received:
(i) If sent by facsimile transmission or by telex, at the opening of
business one (1) Banking Day after the day it was transmitted;
(ii) In the case of a written notice lodged by hand, at the time of
actual delivery; and
(iii) If posted, on the fifth Banking Day following the day on which it
was properly despatched by first class mail postage prepaid.
22. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the
different parties hereto on different counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
23. AGENTS' AND LENDERS' CERTIFICATES
A certificate of either of the Agents or of any Lender (i) stating the
amount of any sum due to such Agent or Lender hereunder (and specifying
the provision hereof under which such sum became due and reasonable
details of the manner of calculation thereof), and/or (ii) stating the
determination by either Agent or any Lender as to any matter to be
determined by such Agent or Lender hereunder (including but not limited to
rate of interest and currency exchange), shall be conclusive as to the
subject matter thereof in the absence of manifest error.
24. WAIVER; REMEDIES CUMULATIVE
No failure to exercise and no delay in exercising on the part of the
Lender any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof, or the exercise
of any other right, power or privilege. The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies
provided by law.
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<PAGE>
25. LANGUAGE
Each document referred to herein or to be delivered hereunder and under
the Security Documents (including financial statements) and each other
communication shall be in the English language. In the event of any
conflict between the version in English and any version in any other
language of any document (including this Agreement) the version in English
shall prevail.
26. SEVERABILITY
Any provision in this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
27. GOVERNING LAW AND JURISDICTION
27.1 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law.
27.2 SUBMISSION TO JURISDICTION
For the benefit of the Agents and the Lenders, the Borrower irrevocably
agrees that the English courts are to have jurisdiction to settle any
disputes which may arise out of or in connection with this Agreement and
the other Financing Documents and that accordingly any suit, action or
proceedings ("Proceedings") arising out of or in connection with this
Agreement and the other Financing Documents may be brought in such courts.
27.3 WAIVER OF OBJECTION
The Borrower irrevocably waives any objection which it may have now or
hereafter to the laying of the venue of any Proceedings in any such court
as is referred to in Clause 27.2 and any claim that any such Proceedings
have been brought in an inconvenient forum and further irrevocably agrees
that a judgment in any Proceedings brought in the English courts shall be
conclusive and binding upon the Borrower and may be enforced in the courts
of any other jurisdiction.
27.4 OTHER JURISDICTIONS
Nothing contained in this Clause 27 shall limit the right of the Agents or
any Lender to take proceedings against the Borrower in any other court of
competent jurisdiction, nor shall the taking of Proceedings in any one or
more jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
27.5 SERVICE OF PROCESS
The Borrower irrevocably and unconditionally:
(a) designates, and appoints and empowers Hackwood Secretaries Limited
of One Silk Street, London EC2Y 8HQ to receive for it and on its
behalf, service of
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<PAGE>
process issued out of the English courts to receive for it and on
its behalf service of process issued out of the Japanese courts in
any Proceedings arising out of or in connection with this Agreement;
(b) agrees to maintain in England a duly appointed process agent
notified to the Facility Agent, for the purposes of paragraph (a)
above;
(c) agrees that failure by any such process agent to give notice of such
process to it shall not impair the validity of such service or of
any judgment based thereon;
(d) consents to the service of process out of any of the said courts in
any such Proceedings by the airmailing of copies, postage prepaid,
to it at its address for the time being applying for the purposes of
Clause 19; and
(e) agrees that nothing herein shall affect the right to serve process
in any other manner permitted by law.
IN WITNESS whereof the parties hereto have caused this Agreement to be duly
executed by their authorised officers or other representatives the day and year
first above written
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<PAGE>
SIGNATORIES
EXECUTED on behalf of ) /s/ Illegible
PETRODRILL SIX LIMITED )
by its duly authorised signatory/ )
attorney-in-fact: ) /s/ Illegible
EXECUTED on behalf of PETRO ) /s/ H. MIYAMOTO
DIA THREE S.A. by its duly )
authorised signatory/attorney-in-fact: ) /s/ Illegible
EXECUTED on behalf of PETRO ) /s/ H. MIYAMOTO
DIA FOUR S.A. by its duly )
authorised signatory/attorney-in-fact: ) /s/ Illegible
EXECUTED on behalf of ) /s/ Illegible
MITSUBISHI CORPORATION )
(UK) PLC (in its capacity as Facility )
Agent) by its duly authorised )
signatory/attorney-in-fact: ) /s/ Illegible
EXECUTED on behalf of ) /s/ Illegible
MITSUBISHI CORPORATION )
(UK) PLC (in its capacity as Security )
Agent) by its duly authorised )
signatory/attorney-in-fact: ) /s/ Illegible
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<PAGE>
SCHEDULE 1
THE LENDERS AND THEIR COMMITMENTS
TRANCHE A FACILITY
NAME OF LENDER AMOUNT OF TRANCHE A COMMITMENT US$
(INCLUDING INTEREST TO BE CAPITALISED
PRIOR TO THE NOTIONAL INTERIM A FACILITY
DATE)
Petro Dia Four SA 47,000,000
TRANCHE B FACILITY
NAME OF LENDER AMOUNT OF TRANCHE B COMMITMENT US$
(INCLUDING INTEREST TO BE CAPITALISED
PRIOR TO THE NOTIONAL FINAL FACILITY
DATE)
Petro Dia Three SA 66,000,000
TRANCHE C FACILITY
NAME OF LENDER AMOUNT OF TRANCHE C COMMITMENT US$
(INCLUDING INTEREST TO BE CAPITALISED
PRIOR TO THE NOTIONAL FINAL FACILITY
DATE)
Petro Dia Three SA 47,000,000
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<PAGE>
SCHEDULE 2
THE FORM OF REPAYMENT SCHEDULE
REPAYMENT DATE AMOUNT OF REPAYMENT INSTALMENT
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<PAGE>
SCHEDULE 3
PART 1: SERVICES CONTRACTS
1. Management Agreement between the Borrower and Formaritima Ltd relating to
the Rig and dated as of 5 November 1998.
2. Licensing Agreement between Bigem Holdings NV and the Borrower relating to
the design of the Rig and dated as of 5 November 1998.
3. Construction Management Agreement between the Borrower and Petrodrill
Engineering BV relating to the Rig and dated as of 5 November 1998.
PART 2: OTHER SERVICES CONTRACTS
1. Technical Services Agreement between Formaritima Ltd and Pride-Foramer
S.A. relating to the Rig and dated as of 5 November 1998.
2. Marine and Nautical Services Agreement between Formaritima Ltd and
Workships Contractors B.V. relating to the Rig and dated as of 5
November 1998.
3. Supply Agreement between Petrodrill Engineering N.V. and Maritima relating
to the Rig and dated as of 5 November 1998.
4. Local Services Agreement between Formaritima Ltd and Maritima relating to
the Rig and dated as of 5 November 1998.
5. Supply Agreement between Petrodrill Engineering N.V. and Pride-Foramer
S.A. relating to the Rig and dated as of 5 November 1998.
6. Supply Agreement between Petrodrill Engineering N.V. and Workships
Contractors B.V.
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SCHEDULE 4
DRAWING REQUEST
FROM: Petrodrill Six Limited [DATE]
TO: Mitsubishi Corporation (UK) PLC
as Facility Agent
Dear Sirs
LOAN AGREEMENT
We refer to the Loan Agreement dated [ o ] December 1998 (the "LOAN AGREEMENT")
and made between the Lenders (as defined therein) (1) ourselves (as Borrower),
Mitsubishi Corporation (UK) PLC (as Facility Agent) and Mitsubishi Corporation
(UK) PLC (as Security Agent). Terms defined in the Loan Agreement shall have the
same meaning when used herein.
We hereby give you irrevocable Notice:
(a) that we wish to make a Drawing on [INSERT DATE OF PROPOSED drawing] (being
a Banking Day during the Availability Period)*;
(b) that the Advance will be in the principal amount of US$[ o ]; and
(c) that the Facility under which the Drawing is requested is the:
[Tranche A Facility] [Tranche B Facility] [Tranche C Facility],
upon the terms and subject to the conditions of the Loan Agreement.
We confirm that the representations and warranties set out in Clause 8 of the
Loan Agreement are true and that, no event which is or, with the giving of
notice or the passage of time or both, would become an Event of Default has
occurred and is continuing.
Please pay the proceeds of the Advance to the credit of the Management Account.
Yours faithfully
_________________________________
Authorised signatory for and on behalf of
PETRODRILL SIX LIMITED
_________________________________
* or attach schedule of requested Pre-delivery Advances.
<PAGE>
SCHEDULE 5
DETAILS OF THE HOLDER OF SHARES IN THE BORROWER
AND THE SISTER COMPANY
Amethyst Financial Company Limited is the registered holder and beneficial owner
of the entire issued share capital in the Borrower.
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SCHEDULE 6
FORM OF TRANSFER CERTIFICATE
To: [Insert name of Facility Agent]
[Insert address of Facility Agent]
Attention: [ ]
PETRODRILL SIX LIMITED
US$160,000,000 LOAN AGREEMENT DATED [ o ] 1998
1. This Transfer Certificate relates to the above loan agreement (the "LOAN
AGREEMENT", which term shall include any amendments or supplements
thereto), and the other Security Documents referred to therein. Terms
defined in the Loan Agreement have the same meaning in this Transfer
Certificate.
In this Transfer Certificate :
"EXISTING LENDER" means [ o ]; and
"TRANSFEREE" means [ o ].
2. The Existing Lender (i) confirms that the details in the Schedule
to this Transfer Certificate under the heading "RIGHTS TO BE ASSIGNED
AND/OR OBLIGATIONS TO BE NOVATED" accurately summarises the Outstandings
which are to be assigned and/or Commitments which are to be novated by
this Transfer Certificate and (ii) requests the Transferee to accept and
procure the transfer to the Transferee of the portion specified in the
Schedule hereto of, as the case may be, such Outstandings and/or its
Commitment by counter-signing and delivering this Transfer Certificate to
the Facility Agent at its address for the service of notices specified in
the Loan Agreement.
3. The Transferee hereby requests the Facility Agent to accept this Transfer
Certificate as being delivered to the Facility Agent pursuant to and for
the purposes of Clause 15 (Transfers) of the Loan Agreement so as to take
effect in accordance with the terms thereof on the Transfer Date or on
such later date as may be determined in accordance with the terms thereof.
4. The Transferee:
(a) confirms that it has received a copy of the Loan Agreement together
with such other documents and information as it has requested in
connection with this transaction;
(b) confirms that it has not relied and will not rely on the Existing
Lender to check or enquire on its behalf into the legality,
validity, effectiveness, adequacy or completeness of any such
documents or information;
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<PAGE>
(c) confirms and agrees that it has not relied and will not
rely on any of the Existing Lender, the Agents, or the other Lenders
to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature of
the Borrower or any other party to the Security Documents, and has
not relied and will not rely on any of the Existing Lender, the
Agent or the other Lenders to ensure that the Borrower or any other
party to the Security Documents are not in breach of or default
under any of the same; and
(d) if not already a Lender, appoints the Agents to act as its agents as
provided in the Loan Agreement and the Security Trustee Deed and
agrees to be bound by the Loan Agreement (including, but not limited
to, Clause 15 (Transfer)).
5. The Transferee undertakes with the Existing Lender and each of the other
parties to the Loan Agreement that it will perform, in accordance with
their terms, all those obligations which, by the terms of the Loan
Agreement, will be assumed by it upon delivery of the executed copy of
this Transfer Certificate to the Facility Agent.
6. On execution of this Transfer Certificate by the Facility Agent
on their behalf, the Borrower, the Lenders and the Agents accept the
Transferee as a party to the Loan Agreement in substitution for the
Existing Lender with respect to all those rights and obligations which, by
the terms of the Loan Agreement and other Security Documents, will be
transferred to or assumed by the Transferee after delivery of the executed
copy of this Transfer Certificate to the Facility Agent.
7. None of the Existing Lender, the other Lenders or the Agents:
(a) makes any representation or warranty or assumes any
responsibility with respect to the legality, validity,
effectiveness, adequacy or enforceability of any of the Loan
Agreement and the Security Documents or the Project Documents, or
with respect to whether the Borrower, the Guarantors or any other
party to the Security Documents or the Project Documents has
complied with its obligations thereunder (under Clause 3 (Conditions
Precedent) of the Loan Agreement); or
(b) assumes any responsibility for the financial condition of
the Borrower, the Guarantors or any other party to any Security
Document or Project Document or any other document or for the
performance and observance by the Borrower, the Guarantors or any
other party to the Security Documents or Project Documents or any
other document of its or their obligations and any and all
conditions and warranties, whether express or implied by law or
otherwise, are hereby excluded.
8. The Existing Lender hereby gives notice that nothing herein or in
the Loan Agreement (or any document relating thereto) shall oblige the
Existing Lender to (i) accept a re-transfer from the Transferee of the
whole or any part of its rights, benefits and/or obligations under the
Loan Agreement transferred pursuant hereto or (ii) support any losses
directly or indirectly sustained or incurred by the Transferee for any
reason whatsoever including, without limitation, the non-performance by
the Borrower, the Guarantors or any other party to the Security Documents
(or any document relating thereto) of its obligations under any such
document. The Transferee hereby acknowledges the absence of any such
obligation as is referred to in (i) or (ii) above.
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<PAGE>
9. This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with English
law.
10. The Transferee warrants and represents to the Facility Agent and each of
the Lenders that it is a Qualifying Lender as defined in Clause 1.1 of the
Loan Agreement.
THE SCHEDULE
1. Existing Lender:
2. Transferee:
3. Transfer Date:
4. Commitment:
Lender's Commitment Facility (Tranche A, Portion Transferred
(US$) B or C) (US$)
5. Outstandings:
Amount of Lender's Facility (Tranche A, Drawdown Date Portion
Participation (US$) B or C) Transferred
6. Transferee's Lending Office details:
Address:
Telephone Number:
Telex No:
Fax No:
7. Rights to be Assigned and/or Obligations to be Novated.
___________________________ ___________________________
[Existing Lender] [Transferee]
__________________________________
Facility Agent for itself and on behalf of
the Security Trustee and the Borrower
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SCHEDULE 7
PART 1 - THE PROJECT DOCUMENTS
1. (a) Shipbuilding Contract dated 9 April 1998 the "SHIPBUILDING
CONTRACT" between Daewoo Corporation and Daewoo Heavy Industries
Ltd. (collectively, the "BUILDER") and Petrodrill Offshore Inc.
(formerly called Petrodrill Construction Inc.) (the "OWNER") for the
purchase of a Dynamic Positioned Semi-Submersible Drilling Vessel
having the Hull No. 3016.
(b) Side Letter No. 1 dated as of 9 April 1998 between the Owner and the
Builder, whereby the Owner has agreed to certain amendments to the
Shipbuilding Contract as set forth therein.
(c) Side Letter No. 2, dated as of 9 April 1998 between the Owner and
the Builder, whereby the Owner has agreed to consider certain
proposals of the Builder as set forth therein.
(d) Main Contract Amendment Agreement dated 8 October 1998.
(e) Novation Agreement in respect of the Shipbuilding Contract dated 4
December 1998 between the Builder, the Owner and the Borrower.
(f) Letter of Confirmation as to continued validity of the Rig
Construction Contract.
2. (a) Refund Guarantee (the "REFUND GUARANTEE") issued by The
Export-Import Bank of Korea (the "REFUND GUARANTOR").
(b) in respect of the Refund Guarantee dated 4
December 1998.
(c) Consent in respect of (f) above.
3. Chartering Contract (Contract No. [101.2.159.97-1] between Maritima
Navigacao e Engenharia Ltda (whose successor is Maritima) and Petrobras.
4. Services Rendering Contract (Contract no. [101.2.160.97-0] between
Maritima Navigacao e Engenharia Ltda (whose successor is Maritima) and
Petrobras.
5. Letter of Agreement dated 15 January 1998, relative to the aforesaid
Chartering Contract and Services Rendering Contract, between Maritima and
Petrobras.
6. A further Letter of Agreement dated 15 January 1998, relative to the
aforesaid Chartering Contract and Services Rendering
Contract, between Maritima and Petrobras.
7. Rider No. 01 for the assignment of rights and obligations arising from the
aforesaid Chartering Contract, dated 10 July 1998 and made between
Petrobras, Maritima and Petrodrill Six Limited.
8. Rider No. 1 to the aforesaid Services Rendering Contract, dated
21 August 1998 and made between Maritima, Petrobras and Petrodrill Six
Limited.
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<PAGE>
9. Letter dated 28 May 1998 from Petrobras to Maritima reference
E&P/SUEX-SSE-048-98.
10. Amethyst 6 Technical Services Agreement between Formaritima Ltd.
and Pride-Foramer S.A.;
11. Amethyst 6 Marine and Nautical Services Agreement between Formaritima Ltd.
and Workships Contractors BV;
12. Amethyst 6 Management Agreement between Petrodrill Six Limited
and Formaritima Ltd.;
13. Amethyst 6 Supply Agreement between Petrodrill Engineering N.V.
and Maritima Petroleo e Engenharia Ltda;
14. Amethyst 6 Local Services Agreement between Formaritima Ltd. and
Maritima Petroleo e Engenharia Ltda;
15. Licensing Agreement between Bigem Holdings N.V. and Petrodrill
Six Limited;
16. Amethyst 6 Supply Agreement between Petrodrill Engineering N.V. and
Pride-Foramer S.A;
17. Amethyst 6 Supply Agreement between Petrodrill Engineering N.V. and
Workships Contractors B.V.;
18. Amethyst 6 Construction Management Agreement between Petrodrill
Six Limited and Petrodrill Engineering N.V.; and
19. Amethyst Financial Company Ltd's Shareholders' Agreement between
Drillpetro Inc., Techdrill Inc., and Westville Management Corporation.
20. Local Services Agreement between Maritima and Formaritima Ltd.
21. Technical Services Agreement between Pride-Foramer SA and Formaritima Ltd.
22. Supply Agreement between Pride-Foramer SA and Petrodrill Engineering Ltd.
23. Supply Agreement between Maritima and Petrodrill Engineering Ltd.
24. Supply Agreement between Workships Contractors BV and Petrodrill
Engineering Ltd.
PART 2 - THE SECURITY DOCUMENTS
1. Rig Construction Contract and Refund Guarantee Assignment
2. Rig Mortgage
3. Deed of Covenants
4. Charterparty Assignment
5. Services Rendering Contract Assignment
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<PAGE>
6. Insurances Assignment
7. Management Account Charge
8. Reserve Account Charge
9. Services Contracts Assignment
10. Share Charge
11. Cross Guarantee
12. Deed of Guarantee and Undertaking
13. Assignment of Deed of Guarantee and Undertaking and Subordinated
Loan Facility Agreement
14. Mortgage Debenture
15. Security Trust Deed
16. The Additional Funding and Guarantee Agreement referred to in
Clause 7.5
17. The subordinated loan facility agreement referred to in Clause 7.1(xii).
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<PAGE>
SCHEDULE 8
INSURANCES
The Insurances to be effected and maintained throughout the Security Period
shall be effected and maintained (with the Security Agent, the Facility Agent
and each of the Lenders being named as a principal assured) with insurers
acceptable to the Facility Agent providing insurance cover against such risks as
are insured by the Temporary Confirmation of Insurance and on terms and
conditions no less favourable than are provided for by the Temporary
Confirmation of Insurance and (subject to such insurance being available in the
international insurance markets) otherwise as the Facility Agent may from time
to time at its discretion require.
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EXHIBIT 4.10
DATED 19 DECEMBER 1998
PETRODRILL SEVEN LIMITED
as Borrower
- and -
PRIDE INTERNATIONAL INC. and
MARITIMA PETROLEO E ENGENHARIA LTDA
as Sponsors
- and -
THE LENDERS herein referred to
as Lenders
- and -
MITSUBISHI CORPORATION (UK) PLC
as Facility Agent
- and -
MITSUBISHI CORPORATION (UK) PLC
as Security Agent
-------------------------------------------------
DEED OF GUARANTEE AND UNDERTAKING
relating to the Loan Agreement
in respect of Amethyst 7
-------------------------------------------------
F I E L D - F I S H E R - W A T E R H O U S E
4 1 V I N E S T R E E T L O N D O N E C 3 N 2 A A
<PAGE>
CONTENTS
CLAUSE/HEADING PAGE
1. DEFINITIONS AND INTERPRETATION 2
2. REFUND UNDERTAKING 3
3. COST OVERRUNS UNDERTAKING 4
4. INSURANCE DEDUCTIBLES UNDERTAKING 4
5. OPEX SHORTFALL UNDERTAKING 5
6. CHARTERPARTY AND SERVICES RENDERING CONTRACT
PERFORMANCE UNDERTAKING 5
7. MANAGEMENT AGREEMENT PERFORMANCE UNDERTAKING 6
8. MAINTENANCE OF INSURANCES UNDERTAKING 7
9. PAYMENTS TO THE BORROWER 8
10. PAYMENTS TO/LOANS BY LENDERS 9
11. PRESERVATION OF OBLIGATIONS 11
12. PAYMENTS 14
13. TAXATION 15
14. REPRESENTATIONS AND WARRANTIES 15
15. UNDERTAKINGS 16
16. CURRENCY INDEMNITY 18
17. DELEGATION, ASSIGNMENT 19
18. NOTICES, ETC. 19
19. GOVERNING LAW AND JURISDICTION 21
20. COUNTERPARTS 23
21. WAIVER; REMEDIES CUMULATIVE 24
22. LANGUAGE 24
23. SEVERABILITY 24
<PAGE>
THIS DEED is made on December 1998 BETWEEN:-
(1) PETRODRILL SEVEN LIMITED of Arias Fabrega and Fabrega Trust Co., BVI
Limited, 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's
Cay, Road Town, Tortola, British Virgin Islands (the "BORROWER");
(2) PRIDE INTERNATIONAL INC,. a company incorporated under the laws of the
State of Louisiana, USA, of 5847 San Felipe, Suite 3300, Houston, Texas
TX77057 ("PRIDE") and MARITIMA PETROLEO E ENGENHARIA LTDA., a company
incorporated under the laws of Brazil, of Avenida Almirante Barroso 52,
Group 3400, Rio de Janeiro ("MARITIMA") (together, the "SPONSORS" and,
individually, a "SPONSOR");
(3) THE LENDERS, the respective names and offices of which are set out in
Clause 1.2, as Initial Lenders (the "INITIAL LENDERS");
(4) MITSUBISHI CORPORATION (UK) PLC, a company incorporated in England and
Wales (Reg No. 2214224), whose registered office is at Bow Bells House,
Bread Street, London EC4M 9BQ, in its capacity as facility agent for the
Lenders (the "FACILITY Agent"); and
(5) MITSUBISHI CORPORATION (UK) PLC, a company incorporated in England and
Wales (Reg No. 2214224), whose registered office is at Bow Bells House,
Bread Street, London EC4M 9BQ, as security trustee and agent for the
Secured Parties.
WHEREAS:
(A) By a loan agreement (as amended or supplemented from time to time, the
"LOAN AGREEMENT") of even date herewith and made between the Initial
Lenders (1), the Borrower (2), the Facility Agent (3) and the Security
Agent (4), the Initial Lenders have agreed, upon and subject to the terms
and conditions of the Loan Agreement, to make available to the Borrower
loan facilities not exceeding US$180,000,000 for the purposes therein
specified.
(B) By a further loan agreement (the "SISTER COMPANY LOAN AGREEMENT") of even
date herewith and made between the Initial Lenders (1), the Sister Company
(2), the Facility Agent (3) and the Security Agent (4), the Initial
Lenders have agreed to make available to the Sister Company (on
substantially identical terms to the Loan Agreement) loan facilities not
exceeding US$160,000,000 for the purposes therein specified.
(C) The execution and delivery of this Deed of Guarantee and Undertaking is
one of the conditions precedent to the Initial Lenders' making their
Commitments available under the Loan Agreement and under the Sister
Company Loan Agreement.
(D) The Sponsors have agreed to execute and deliver this Deed of Guarantee and
Undertaking in consideration of the Initial Lenders, at the Sponsors'
request, making or continuing loans or advances to, or otherwise giving
credit or granting accommodation or time to, the Borrower pursuant to the
Loan Agreement and/or the Sister Company Loan Agreement.
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<PAGE>
IT IS AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 TERMS DEFINED IN THE LOAN AGREEMENT
Unless the context otherwise requires or unless otherwise defined in this
Deed of Guarantee and Undertaking, words and expressions defined in the
Loan Agreement shall have the same meanings when used in this Deed of
Guarantee and Undertaking.
1.2 OTHER DEFINED TERMS
In this Deed of Guarantee and Undertaking, unless the context otherwise
requires:
"EQUITY SHARE CAPITAL" means, in relation to any company, its issued share
capital excluding any part of that capital which (neither as regards
dividends nor as respects capital) carries any right to participate beyond
a specified amount in a distribution.
"INITIAL LENDERS" means Petro Dia Three SA and Petro Dia Four SA, each
being a company incorporated in the Republic of Panama whose principal
place of business is at 53rd Street, Urbanizacion Obarrio, Torre Swiss
Bank, 16th Floor, Panama City, Republic of
Panama;
"LENDERS" means the Initial Lenders and any person who becomes a Lender
from time to time pursuant to Clause 15 (TRANSFERS) of the Loan Agreement,
but excluding any person who ceases to be a Lender pursuant to that
Clause;
"SISTER COMPANY GUARANTEE AND UNDERTAKING" means the deed of guarantee and
undertaking (in substantially the same terms as this Deed of Guarantee and
Undertaking) executed pursuant to the Sister Company Loan Agreement and
dated the same date as this Deed of Guarantee and Undertaking;
"TAXES" means any present or future taxes, levies, duties, charges, fees,
deductions or withholdings of any nature now or hereafter imposed, levied,
collected, withheld or assessed by any country or any political
sub-division or taxing authority thereof.
1.3 INTERPRETATION
This Deed of Guarantee and Undertaking shall be interpreted consistently
with the Loan Agreement, and accordingly the provisions of Clauses 1.2 to
1.4 (inclusive) of the Loan Agreement shall apply hereto and (MUTATIS
MUTANDIS) shall be deemed to be incorporated into this Deed of Guarantee
and Undertaking as if set out in full in this Deed of Guarantee and
Undertaking.
1.4 SECURITY AGENT
The Security Agent enters into this Deed of Guarantee and Undertaking as
security trustee and agent for the Secured Parties in accordance with the
Security Trust Deed and all rights and powers conferred on or vested in
the Security Agent under this Deed of Guarantee and Undertaking shall be
conferred on and vested in the Security Agent in such capacity, and the
term "SECURITY AGENT" shall be construed accordingly.
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<PAGE>
2. REFUND UNDERTAKING
2.1 DEFINITIONS
In this Clause 2:
"BUILDER'S RISK INSURANCE" means such part of the insurances effected by
the Temporary Confirmation of Insurances which relates to the Rig during
the period up to the time of delivery to the Borrower in accordance with
the Rig Construction Contract;
"CONSTRUCTION CONTRACT REPAYMENTS" means the aggregate amount of all
payments/repayments and payments in respect of interest payable (in each
case whether or not paid) by the Builder pursuant to the Rig Construction
Contract and/or by the Export-Import Bank of Korea pursuant to the Refund
Guarantee and/or by any insurers pursuant to the Builder's Risk Insurance
(in each case to the Security Agent as assignee of the benefit of the Rig
Construction Contract, the Refund Guarantee and the Borrower's interest in
the Builder's Risk Insurance) (i) following any termination or rescission
of the Rig Construction Contract (however arising) or (ii) upon any refund
of all or any of the instalments of the Contract Price of the Rig and/or
any interest otherwise becoming payable or (iii) following a Total Loss
prior to the delivery of the Rig by the Builder; and
"TEMPORARY CONFIRMATION OF INSURANCE" means the temporary confirmation of
insurance (and described as Temporary Confirmation of Insurance) issued by
McGriff, Seibels, Bartama & Colvin Inc (as brokers) on 15 December 1998
with Assigned No. MS-S711A - Daewoo.
2.2 UNDERTAKING
The Sponsors hereby jointly and severally and irrevocably and
unconditionally undertake to the Borrower and as a separate and
independent obligation to the Security Agent in each case as primary
obligors that:-
(i) in the event of any termination or rescission of the Rig
Construction Contract (however arising), or
(ii) upon any refund of all of the instalments of the Contract Price
becoming payable (whether or not paid), or
(iii) following a Total Loss prior to the delivery of the Rig by the
Builder,
they shall, within 7 Banking Days of first written demand from the
Facility Agent, pay to the Borrower in accordance with Clause 9 the amount
which is determined by the Facility Agent as being the excess (if any) of
the Outstanding Indebtedness over the Construction Contract Repayments.
-3-
<PAGE>
3. COST OVERRUNS UNDERTAKING
3.1 DEFINITIONS
In this Clause 3:
"FUNDED AMOUNT" means at any relevant time the aggregate of (i) One
Hundred and Eighty Million United States Dollars (US$180,000,000) and (ii)
all amounts paid to, and received by, the Borrower by the Sponsors in
accordance with Clause 3.2; and
"SEVERAL PROPORTIONS" has the same meaning as is given to this
expression in Clause 6.1.
3.2 UNDERTAKING
If on any date and from time to time the Facility Agent shall determine
that the amount of the Total Project Costs incurred as at such date
exceeds the Funded Amount at that time, then, without prejudice to or in
any way limiting or affecting their other obligations under this Deed of
Guarantee and Undertaking, the Sponsors hereby severally and
unconditionally and irrevocably agree and undertake with the Borrower and
as a separate and independent obligation with the Security Agent that they
will, within 7 Banking Days of first written demand from the Facility
Agent made from time to time, pay in their Several Proportions to the
Borrower in accordance with Clause 9 a sum which is then determined by the
Facility Agent as being equal to the amount of such excess.
3.3 LIMITATION
The aggregate total liability of the Sponsors under Clause 3 of this Deed
of Guarantee and Undertaking shall not exceed US$20,000,000 less the
aggregate of all amounts which the Sponsors have, at the date of any
payment under Clause 3 of this Deed of Guarantee and Undertaking, paid
pursuant to Clause 3 of the Sister Company Guarantee and Undertaking.
4. INSURANCE DEDUCTIBLES UNDERTAKING
4.1 DEFINITIONS
In this Clause 4:
"DELAY IN DELIVERY INSURANCE" means the insurances referred to in
paragraph (A) (DELAY IN DELIVERY) of Section III (BUSINESS INTERRUPTION)
of the Conditions to the Temporary Confirmation of Insurance;
"INSURANCE DEDUCTIBLE" means any excess or deductible applied in respect
of any claim arising under the Delay in Delivery Insurance and/or the Loss
of Hire Insurance; and
"LOSS OF HIRE INSURANCE" means the insurances referred to in paragraph (B)
(LOSS OF HIRE) of Section III (BUSINESS Interruption) of the Conditions to
the Temporary Confirmation of Insurance; and
"TEMPORARY CONFIRMATION OF INSURANCE" has the same meaning as is given to
this expression in Clause 2.1.
-4-
<PAGE>
4.2 PAYMENT UNDERTAKING
The Sponsors hereby jointly and severally and unconditionally and
irrevocably undertake to the Borrower and as a separate and independent
obligation to the Security Agent that in the event that any incident shall
occur in relation to the Rig which gives rise to a right to claim under
the Delay in Delivery Insurance or the Loss of Hire Insurance they will,
within 7 Banking Days of first written demand from the Facility Agent, pay
to the Borrower in accordance with Clause 9 such amount as is determined
by the Facility Agent to be equal to the amount of any Insurance
Deductible applicable in respect of each such claim.
5. OPEX SHORTFALL UNDERTAKING
5.1 DEFINITIONS
In this Clause 5:
"MANAGEMENT AGREEMENT" has the same meaning as is given to this
expression in Clause 7.1;
"MONTHLY OPEX AMOUNT" means all Opex actually incurred in
relation to any calendar month during the Security Period; and
"OPEX" means the costs of operating the Rig including the costs
listed in Clause 4.5.3 of the Management Agreement;
5.2 PAYMENT UNDERTAKING
The Sponsors hereby jointly and severally and unconditionally and
irrevocably undertake to the Borrower and as a separate and independent
obligation to the Security Agent that in the event that in any calendar
month the Monthly Opex Amount exceeds the Monthly Outgoings for that
calendar month they will, within 7 Banking Days of first written demand
from the Facility Agent, pay to the Borrower in accordance with Clause 9
such amount as is determined by the Facility Agent to be equal to the
amount of such excess for that calendar month.
6. CHARTERPARTY AND SERVICES RENDERING CONTRACT PERFORMANCE
UNDERTAKING
6.1 DEFINITIONS
In this Clause 6:
"SEVERAL PROPORTIONS" means (in relation to Pride) 30% and (in
relation to Maritima) 70%.
-5-
<PAGE>
6.2 UNDERTAKING
If at any time any default is made by the Borrower in the due and punctual
performance or observance of any of the obligations on its part to be
performed under or in connection with the Charterparty and/or the Services
Rendering Contract in all respects in accordance with their respective
terms, or if any of such obligations are otherwise not performed or
observed by the time or in the manner provided therein, the Sponsors
hereby irrevocably and unconditionally undertake to the Borrower and as a
separate and independent obligation to the Security Agent:-
(i) jointly and severally that they will promptly take all steps (not
involving the payment of money) that may be necessary to ensure that
the obligations of which the Borrower is in default are performed in
accordance with the Charterparty or (as the case may be) the
Services Rendering Contract, and
(ii) severally that they will, within 7 Banking Days of first written
demand from the Facility Agent, pay in their Several Proportions to
the Borrower in accordance with Clause 9 such amount as is
determined by the Facility Agent to be necessary so as to enable the
Borrower to perform (or to fund the performance of)such obligations,
PROVIDED THAT (a) this undertaking shall not, and shall not be construed
so as to, impose on the Sponsors a liability greater than that which the
Borrower has or would have to Petrobras under the Charterparty or (as the
case may be) the Services Rendering Contract and (b) in the event of any
default , or failure on the part of the Sponsors (or either of them) to
honour, the undertaking contained in paragraph (i) above neither of the
Sponsors shall have any liability to make any payment(s) to the Borrower
and/or to the Security Agent in respect of any lost payments of
Charterparty Hire or of the Services Rendering Contract Payments that may
(but for such default or failure) have become payable to the Borrower or
the Security Agent (as assignee of the Borrower's rights).
7. MANAGEMENT AGREEMENT PERFORMANCE UNDERTAKING
7.1 DEFINITIONS
In this Clause 7:
"MANAGEMENT AGREEMENT" means the management agreement relating to the Rig
dated as of 5 November 1998 by and made between the Borrower and the
Manager, a copy of which has been supplied to each of the parties hereto
by the Borrower prior to the date hereof;; and
"MANAGER" means Formaritima Limited as manager under the
Management Agreement.
7.2 UNDERTAKING
The Sponsors hereby jointly and severally and irrevocably and
unconditionally undertake to the Borrower and as a separate and
independent obligation to the Security Agent to procure that the Manager
duly and punctually performs and observes all the obligations on its part
to be performed under or in connection with the Management Agreement in
all respects in accordance with its terms.
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<PAGE>
Without prejudice to the generality of foregoing, if at any time any
default is made by the Manager in the performance or observance of any
such obligations, or if any of such obligations are otherwise not
performed or observed by the time or in the manner provided therein, the
Sponsors hereby jointly and severally and irrevocably unconditionally
undertake to the Borrower and as a separate and independent obligation to
the Security Agent that:-
(i) they will promptly take all steps that may be necessary to ensure
that the obligations of which the Manager is in default are
performed in accordance with the Management Agreement (including,
without limitation, the payment of any defaulted amounts);
(ii) that they will, within 7 Banking Days of first written demand from
the Facility Agent, pay to the Borrower in accordance with Clause 9
any sum which is determined by the Facility Agent to be payable by
the Manager to the Borrower as a direct consequence of such default.
provided that in the event of any breach of, or failure on the part of the
Sponsors (or either of them) to honour, the undertakings contained in
paragraphs (i) and (ii) above neither of the Sponsors shall have any
liability to make any payment(s) to the Borrower and/or to the Security
Agent in respect of any lost payments of Charterparty Hire and/or of the
Services Rendering Contract Payments that may (but for such default or
failure) have become payable to the Borrower
8. MAINTENANCE OF INSURANCES UNDERTAKING
8.1 DEFINITIONS
In this Clause 8:
"TEMPORARY CONFIRMATION OF INSURANCE" has the same meaning as is given to
this expression in Clause 2.1.
8.2 UNDERTAKING
The Sponsors hereby jointly and severally and unconditionally and
irrevocably undertake to the Secured Parties that they will throughout the
Security Period:-
(i) procure that insurances are effected and maintained (with
the Security Agent, the Facility Agent and each of the
Lenders being named as a principal assured) with insurers
acceptable to the Facility Agent providing insurance cover
against such risks as are insured by the Temporary
Confirmation of Insurance and on terms and conditions no
less favourable than are provided for by the Temporary
Confirmation of Insurance and (subject to such insurance
being available in the international insurance markets)
otherwise as the Facility Agent may from time to time at
its discretion require; and
-7-
<PAGE>
(ii) procure that the Borrower complies with all its obligations in
respect of Insurances as contained in the Loan Agreement and the
Deed of Covenants.
8.3 REMEDY FOR BREACH OF UNDERTAKING
In the event that the Sponsors shall at any time and for any reason fail
to comply in all material respects with their undertaking contained in
this Clause 8.2, then the Lenders (or any of them) may at their option
(but shall not be obliged to) themselves effect and thereafter maintain
insurances to the extent necessary to restore the insurances to the level
at which they are required to be maintained. All costs incurred by the
relevant Lenders in effecting and/or maintaining any such insurances
(including, but not limited to, all premiums, calls, contributions or
other sums payable in respect of such insurances) shall be repayable by
the Sponsors (who shall be jointly and severally liable in respect
thereof) on first demand by the Facility Agent together with interest
thereon (which will also be payable upon first demand by the Facility
Agent and which shall be compounded at such intervals as the Facility
Agent may determine) at such annual rate as is conclusively certified by
the Facility Agent to the Sponsors as being equal to the aggregate of (1)
two and one half per centum (2.5%) per annum and (2) the higher of (a) the
cost to the relevant Lenders of funding such costs by borrowing on arms
length terms plus any other expenses or losses which such Lenders may have
incurred in respect thereof and (b) 13%.
The remedy specified above shall be the sole remedy of the Security Agent
for breach by the Sponsors of their undertaking contained in this Clause
8.
9. PAYMENTS TO THE BORROWER
9.1 SUBORDINATED LOANS
Simultaneously with the execution of this Deed of Guarantee and
Undertaking the Borrower, the Sponsors, the Facility Agent and the
Security Agent are executing a Subordinated Loan Facility Agreement in the
approved form (the "SUBORDINATED LOAN FACILITY AGREEMENT"). As between the
Borrower and the Sponsors, any payment to be made by the Sponsors to the
Borrower under any of Clauses 2, 3, 4, 5, 6 and/or 7 shall be made within
7 Banking Days of the Facility Agent's first written demand therefor by
remittance to the Management Account and shall be made by way of
subordinated loan to the Borrower under the Subordinated Loan Facility
Agreement, PROVIDED ALWAYS that the Sponsors shall not be required to make
any amount available to the Borrower by way of subordinated loan under the
Subordinated Loan Facility Agreement if within 7 Banking Days after the
Facility Agent's first written demand therefor the Sponsors shall have
made the amount thereof available to the Borrower (and the Borrower shall
have received such amount) in cleared funds by way of subscription for
equity share capital in the Borrower.
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<PAGE>
9.2 FACILITY AGENT'S CERTIFICATES
A certificate in writing signed on behalf of the Facility Agent which:
(i) makes a determination of any amount(s) for the purposes of Clause 2
(REFUND UNDERTAKING), Clause 3 (COST OVERRUNS UNDERTAKING), Clause 4
(INSURANCE DEDUCTIBLES UNDERTAKING), Clause 5 (OPEX SHORTFALL
UNDERTAKING), Clause 6 (CHARTERPARTY AND SERVICES RENDERING CONTRACT
PERFORMANCE UNDERTAKING) and/or Clause 7 (MANAGEMENT AGREEMENT
PERFORMANCE UNDERTAKING), and
(ii) specifies the provision(s) of this Deed of Guarantee and Undertaking
pursuant to which such amount(s) is/are payable, and
(iii) gives reasonable details of the manner of calculation thereof
shall (in the absence of manifest error) be conclusive as to the
subject matter thereof.
9.3 EQUITABLE REMEDIES
It is acknowledged that, without prejudice to any other rights or remedies
that the Borrower and/or the Security Agent might have, damages alone will
not be an adequate remedy for any breach by the Sponsors of any of their
obligations to make any payment(s) to the Borrower under any of Clauses 2,
3, 4, 5, 6 and/or 7 and under the provisions of Clause 9 and that
accordingly the Borrower and/or the Security Agent may be entitled without
proof of special damage to the remedies of injunction, specific
performance or other equitable relief for any threatened or actual breach
of the provisions of this Agreement by the Sponsors.
10. PAYMENTS TO/LOANS BY LENDERS
10.1 PAYMENTS BY SPONSORS TO LENDERS
Without prejudice to any of the other provisions of this Deed of Guarantee
and Undertaking, in the event that for any reason (including, without
limitation, any inability or unwillingness on the part of the Borrower to
request or make any drawings under the Subordinated Loan Facility
Agreement) any amount(s) payable by the Sponsors to the Borrower under any
of Clauses 2, 3, 4, 5, 6 and/or 7 has/have not been paid to, and received
by, the Borrower in cleared funds within 7 Banking Days of the Facility
Agent's first written demand therefor, then the Sponsors will be obliged
forthwith upon the Security Agent's first written demand to make payment
of such unpaid amount(s) to the Security Agent for the account of the
Lenders.
10.2 LOANS BY LENDERS TO BORROWER
Without prejudice to the provisions of Clause 10.1 or to any other rights
of the Security Agent under this Deed of Guarantee and Undertaking, in the
circumstances stipulated in Clause 10.1 and pending the Sponsors complying
with their obligations under Clause 9.1 and/or Clause 10.1 the Lenders (or
any of them) may at their option (but shall not be obliged to) themselves
provide funds to the Borrower by way of loan in an amount or amounts equal
to the amount(s) payable (but not paid) by the Sponsors as aforesaid. Any
such loans shall (as between the Borrower and the relevant Lenders) bear
no interest, but the Sponsors shall be liable to compensate the relevant
Lenders by making payment to them of such amount (calculated on a per
annum basis) as is equal to interest on the amounts of such loans at such
annual rate as is conclusively certified by the Facility
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<PAGE>
Agent to the Sponsors as being equal to the aggregate of (1) two and one
half per cent (2.5%) per annum and (2) the higher of (a) the cost to the
relevant Lenders of funding such loan(s) plus any other costs, expenses or
losses which such Lenders may have incurred in respect thereof and (b)
13%. Such amounts shall be payable upon first demand and if not paid shall
bear interest as aforesaid. Any amount(s) so provided by any Lenders by
way of loan to the Borrower shall be repayable by the Borrower on first
demand by the Security Agent (or as the relevant Lenders may otherwise
specify at the time such funds are provided), but in all other respects
shall be deemed to have been advanced by the relevant Lenders pursuant to
the Loan Agreement, shall rank PARI PASSU with all Advances made or to be
made thereunder and shall be secured by the Security Documents
accordingly.
10.3 APPLICATION OF PAYMENTS BY SPONSORS
In the event that the Sponsors make any payment(s) to the Security Agent
for the account of the Lenders pursuant to their obligations under Clause
10.1, then forthwith upon receipt by the Security Agent of such payment(s)
in cleared funds:
(i) if the amount(s) of such payment(s) received is/are less
than, or equal to, the aggregate amount(s) of all (if any)
loans made to the Borrower pursuant to Clause 10.2 and not
previously waived and released by the Lenders (or, as the
case may be, by any relevant Lenders), the Security Agent
will pay the amounts to the relevant Lenders for their own
account absolutely pro rata in accordance with their loans
advanced to the Borrower pursuant to Clause 10.2 and such
Lenders will waive and release PRO TANTO the obligations of
the Borrower in respect of such loans, and the Sponsors
shall be deemed to have complied PRO TANTO with their
obligation to make payment of such amount(s) to the
Borrower by way of subordinated loan under the Subordinated
Loan Facility Agreement (so that the amount(s) in question
shall be treated as though they were subordinated loans
made available to the Borrower by, and repayable by the
Borrower to, the Sponsors in accordance with the provisions
of the Subordinated Loan Facility Agreement);
(ii) if and to the extent that the amount(s) of such payments
received exceed(s) the aggregate amount(s) of all (if any)
loans made to the Borrower pursuant to Clause 10.2 and not
previously waived and released by the Lenders (or, as the
case may be, by any relevant Lenders), the portion thereof
which equals the aggregate amount(s) of all (if any) loans
made to the Borrower pursuant to Clause 10.2 and not
previously waived and released by the Lender (or, as the
case may be, by any relevant Lenders) will be applied in
accordance with sub-clause (i) above, and the excess shall
be applied as follows:-
(a) in case an Event of Default or Potential Event of
Default shall have occurred and shall be continuing,
the Security Agent may (at its option) EITHER pay
such monies to the Borrower by remittance to the
Management Account (in which event the provisions of
sub-paragraph (b) below will apply) OR retain such
monies and apply the same in or towards payment of
the Secured Obligations in such order of application
as the Security Agent shall decide;
- - -10-
<PAGE>
(b) in any other case, the Security Agent shall pay such
monies to the Borrower by remittance to the
Management Account and the amounts so paid to the
Borrower shall be treated as though they were
subordinated loans made available to the Borrower by,
and repayable by the Borrower to, the Sponsors in
accordance with the provisions of the Subordinated
Loan Facility Agreement.
10.4 APPLICATION OF PAYMENTS
The Borrower hereby irrevocably agrees that any sum received by the
Security Agent from the Sponsors pursuant to any of the provisions of this
Deed of Guarantee and Undertaking may (to the extent not applied in making
good any defaults of the Sponsors in respect of their obligations to the
Borrower under this Deed of Guarantee and Undertaking) be applied by the
Security Agent in meeting payments due or to become due from the Borrower
under the Financing Documents in such order of application as the Security
Agent shall decide.
11. PRESERVATION OF OBLIGATIONS
11.1 DURATION OF OBLIGATIONS
The Sponsors agree that their respective obligations under this Deed of
Guarantee and Undertaking shall remain in full force and effect throughout
the Security Period and notwithstanding the enforcement by the Security
Agent of any of its rights under the Security Documents (including,
without limitation, the appointment of a Receiver) or the taking of
possession of any of the assets which stand security for the Secured
Obligations or any part of such assets.
11.2 CONTINUING SECURITY ETC.
Each of the Sponsors declares and agrees that:
(i) this Deed of Guarantee and Undertaking shall be held by the
Security Agent as a continuing security and shall not be
satisfied by any intermediate payment or satisfaction of
any part of the moneys and liabilities hereby agreed to be
paid or performed and shall remain in full force and
effect until the moneys and liabilities hereby agreed to be
paid or performed have been unconditionally and irrevocably
paid and discharged in full to the satisfaction of the
Security Agent;
(ii) it has not received any security from the Borrower or from any other
persons for the giving of this Deed of Guarantee and Undertaking and
it will not take any such security without the prior written consent
of the Security Agent, and the Sponsors will hold any security taken
in breach of this provision in trust for the Security Agent;
(iii) the Security Agent shall not be bound to enforce any guarantee or
security or proceed or take any other steps against the Borrower or
any other person before enforcing this Deed of Guarantee and
Undertaking; and
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(iv) this Deed of Guarantee and Undertaking shall be in addition to, and
not in substitution for, any other rights which the Secured Parties
may now or hereafter have under or by virtue of any guarantee,
security, encumbrance or agreement or any lien or by operation of
law or under any collateral or other security now or hereafter held
by the Security Agent or to which the Security Agent may be
entitled.
11.3 AVOIDANCE OF SECURITIES
Any settlement or discharge under this Deed of Guarantee and Undertaking
between the Security Agent and the Sponsors shall be conditional upon no
security or payment to the Security Agent by the Borrower, the Sponsors or
any other person being avoided or set aside or ordered to be refunded or
reduced by virtue of any provision or enactment relating to bankruptcy,
insolvency or liquidation for the time being in force, and if such
condition is not satisfied, the Security Agent shall be entitled to
recover from the Sponsors on demand the value of such security or the
amount of any such payment as if such settlement or discharge had not
occurred.
11.4 PRESERVATION OF RIGHTS
The obligations of the Sponsors under this Deed of Guarantee and
Undertaking shall not be affected by any act, omission, matter or thing
which, but for this provision, might operate to release or otherwise
exonerate either of the Sponsors from its or their obligations under this
Deed of Guarantee and Undertaking in whole or in part, including (without
limitation, and whether or not known to or discoverable by the Sponsors,
the Borrower, any Secured Party or any other person):
(i) any time or waiver granted to or composition with the Borrower, the
other Sponsor or any other person;
(ii) the taking, variation, compromise, discharge, composition,
arrangement, renewal or release of or refusal or neglect to perfect
or enforce any rights, remedies or securities against the Borrower,
the other Sponsor or any other person;
(iii) any legal limitation, disability, incapacity or other circumstances
relating to the Borrower, the other Sponsor or any other person;
(iv) any amendment or supplement to this Deed of Guarantee and
Undertaking, any of the Financing Documents or any other document or
security;
(v) the dissolution, liquidation, amalgamation, reconstruction or
reorganisation of the Borrower, the other Sponsor or any other
person;
(vi) the unenforceability or invalidity of any obligations of the
Borrower, the other Sponsor or any other person under this Deed of
Guarantee and Undertaking or any of the other Financing Documents or
any other document or security;
(vii) the failure of any of the Secured Parties to take any other
guarantee or security (whether contemporaneous with this Deed of
Guarantee and Undertaking) or otherwise; or
(viii) any other act, event or omission which but for the provision would
or might operate to impair, discharge or otherwise affect the
obligations of the Sponsors (or either of them) under this Deed of
Guarantee and Undertaking.
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11.5 NON-COMPETITION
Until all the Secured Obligations and the Sister Company Obligations and
the moneys and liabilities hereby agreed to be paid or performed have been
unconditionally and irrevocably paid and discharged in full to the
satisfaction of the Security Agent, the Sponsors shall not by virtue of
any payment made or performance under this Deed of Guarantee and
Undertaking on account of such moneys and liabilities or by virtue of any
relationship between, or transaction involving, the Sponsors and the
Borrower:
(i) exercise any rights of subrogation or otherwise in relation to any
rights, security or moneys held or received or receivable by any
Secured Party or any other person;
(ii) exercise any right of contribution from the other Sponsor or any
co-surety or any other person liable in respect of such moneys and
liabilities under any other guarantee, security or agreement;
(iii) exercise any right of set-off or counterclaim against the Borrower
or the other Sponsor or any such co-surety or any other person;
(iv) receive, claim or have the benefit of any payment, distribution,
security or indemnity from the Borrower or the other Sponsor or any
such co-surety or any other person; or
(v) unless so directed by the Security Agent (when the Sponsors will
prove in accordance with such directions), claim as a creditor of
the Borrower or the other Sponsor or any such co-surety in
competition with the Security Agent.
The Sponsors shall hold in trust for the Security Agent and forthwith pay
or transfer (as appropriate) to the Security Agent any such payment
(including an amount equal to any such set-off), distribution or benefit
of such security, indemnity or claim received by it.
11.6 SUSPENSE ACCOUNTS
Until all moneys and liabilities hereby agreed to be paid or performed
have been unconditionally and irrevocably paid in full to the satisfaction
of the Security Agent, the Security Agent may at any time keep in a
separate account (without liability to pay interest thereon) for as long
as it may think fit any moneys received, recovered or realised under this
Deed of Guarantee and Undertaking or under any other guarantee, security
or agreement relating in whole or in part to the moneys and liabilities
hereby agreed to be paid and performed without being under any
intermediate obligation to apply the same or any part thereof in or
towards the discharge of such amount.
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12. PAYMENTS
12.1 CURRENCY OF FUNDS
All payments to be made by the Sponsors under this Deed of Guarantee and
Undertaking shall be made:
(i) for value on the due date at such time and in such funds as the
Security Agent may specify to the Sponsors as being customary at the
time for the settlement of transaction in US Dollars in the place
for payment; and
(ii) to such account at such office or bank as the Security Agent may
notify to the Sponsors for this purpose.
12.2 NO SET-OFF OR COUNTERCLAIMS
All amounts due from the Sponsors to the Security Agent under this Deed of
Guarantee and Undertaking shall be paid without any form of set-off,
counterclaim or condition whatsoever. Any amount due from the Sponsors
under this Deed of Guarantee and Undertaking shall not be reduced by any
set-off, counterclaim or other claim which the Sponsors may have against
the Borrower whether under this Deed of Guarantee and Undertaking, any
Project Document, any of the Financing Documents or otherwise.
12.3 UNCONDITIONAL OBLIGATION
Nothing in this Deed of Guarantee and Undertaking, nor any matter, fact,
act, omission, circumstance or thing whatsoever, including without
limitation:
(i) the termination (for any cause) of the Charterparty or of the
Services Rendering Contract or of any other contract or arrangement
for the use or operation of the Rig,
(ii) any change in circumstances or political, economic or financial
conditions,
(iii) the insolvency, dissolution, death, disability or incapacity of any
person whatsoever,
(iv) the breach by any person of any agreement or understanding, or
(v) any of the matters specified in Clause 11.4,
shall operate in any way to affect or minimise, or release the Sponsors
from any of the Sponsors' obligations under, this Deed of Guarantee and
Undertaking, all of which obligations shall subsist in full
notwithstanding any such matter, fact, omission, circumstance or thing.
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13. TAXATION
13.1 WITHHOLDING; GROSS-UP
All payments to be made by or for the account of the Sponsors (or either
of them) hereunder shall be made without set-off or counterclaim and free
and clear of and without deduction for or on account of any present or
future Taxes of any nature whatsoever imposed by or in any country
("APPLICABLE TAX") unless the Sponsors (or either of them) are/is
compelled by law to make payment to, or for the account of, the Borrower
and/or the Security Agent subject to such Applicable Tax. In any such case
the Sponsors (or, as the case may be, the relevant Sponsor) shall promptly
pay such Applicable Tax, and the amount of the relevant payment by the
Sponsors (or, as the case may be, the relevant Sponsor) hereunder shall be
increased to the extent necessary to ensure that the Borrower and/or the
Security Agent actually receives an amount, free and clear of and after
deduction for all such Applicable Tax, equal to the full amount which
would have been received if no such withholding or deduction had been
made. The Sponsors (or, as the case may be, the relevant Sponsor) shall
pay and indemnify and keep indemnified the Borrower and/or the Security
Agent against all such Applicable Tax. The Sponsors (or, as the case may
be, the relevant Sponsor) shall promptly deliver to the Facility Agent
copies of official receipts for Taxes evidencing payment of any such
Applicable Tax imposed as aforesaid. The obligations of the Sponsors (or,
as the case may be, the relevant Sponsor) under this Clause 13 shall
survive the Security Period.
14. REPRESENTATIONS AND WARRANTIES
14.1 REPRESENTATIONS
Each of the Sponsors represents and warrants severally as to itself to
each of the Secured Parties on the date of this Deed of Guarantee and
Undertaking as follows:-
(i) It is a limited liability company duly organised and validly
existing under the laws specified on page 1 of this Deed of
Guarantee and Undertaking, possessing perpetual corporate existence
and the capacity to sue or be sued in its own name, and each of it
and its Subsidiaries has the power to own its assets and carry on
its business as it is now being conducted.
(ii) It has the power to enter into and perform this Deed of
Guarantee and Undertaking and each of the other Financing
Documents and the Project Documents to which it is a party
and the transactions contemplated hereby and thereby and
has taken all necessary action to authorise the entry into
and performance of this Deed of Guarantee and Undertaking
and each of the other Financing Documents and the Project
Documents to which it is a party and the transactions
contemplated hereby and thereby in accordance with the
terms thereof.
(iii) This Deed and each of the other Financing Documents and the Project
Documents to which it is a party constitute its legal, valid and
binding obligations enforceable in accordance with their respective
terms and are in proper form for the enforcement in all the courts
of the country of incorporation subject in each case to the
qualifications and other matters contained or referred to in the
legal opinions obtained by the Lenders in respect of the relevant
jurisdictions.
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(iv) The entry into and performance of this Deed of Guarantee and
Undertaking and each of the other Financing Documents and Project
Documents to which it is a party and the transactions contemplated
hereby and thereby do not conflict with:
(a) any law or official requirement;
(b) its constitutional documents; or
(c) any agreement or document to which it or any of its
Subsidiaries (if any) is a party or which is binding upon it
or any of its Subsidiaries or any of their respective assets,
and will not result in the creation or imposition of (or
enforcement of) any encumbrance on any of its assets or the
assets of any of its Subsidiaries (if any).
14.2 REPETITION
The representations and warranties set out in this Clause 14 shall survive
the execution of this Deed of Guarantee and Undertaking and the making of
each Advance under the Loan Agreement and shall be deemed to be repeated
on the date of the giving of each Drawing Request, on each Drawdown Date
on each Repayment Date, so long as any amount is or may be outstanding
under the Loan Agreement or any Commitment is in force with reference to
the facts and circumstances then subsisting, as if made at each such time.
15. UNDERTAKINGS
15.1 DURATION
The undertakings in this Clause 15 shall remain in force from and after
the date hereof and throughout the Security Period.
15.2 Accounts
Each of the Sponsors will furnish, or procure that there is furnished, to
the Security Agent, in sufficient copies for each of the Lenders:
(i) as soon as practicable:
(a) (and in any event within 120 days after the close of each
financial year) its audited accounts;
(b) (if prepared) the consolidated (audited, if prepared) accounts
of those of its Subsidiaries (if any) for that year;
(ii) as soon as practicable (and in any event within 45 days after the
end of each financial quarter of each of its financial years):
(a) its unaudited balance sheet as at the end of such
quarter; and
(b) its unaudited statement of income and cash-flow statement for
that quarter;
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15.3 Further general information
Each of the Sponsors shall furnish to the Security Agent promptly such
further information in its possession or control or in the possession and
control of any of its Subsidiaries (if any) regarding its financial
condition and operations and that of its Subsidiaries, as the Security
Agent may reasonably request.
15.4 LITIGATION
Each of the Sponsors shall furnish to the Security Agent details of any
litigation, arbitration or administrative proceedings against it or
concerning the Rig or the Project Documents which are current or, to its
knowledge, threatened or pending, as soon as the same are instituted or so
threatened if the same might have a material adverse effect on the
financial condition of either of the Sponsors or might have a material
effect on either of the Sponsor's respective obligations under the Project
Documents.
15.5 NOTIFICATION OF DEFAULTS
Each of Sponsors shall notify the Security Agent of any Event of Default
or any Potential Event of Default promptly upon becoming aware of its
occurrence.
15.6 CONSENTS
Each of the Sponsors will obtain and promptly renew from time to time, and
will promptly furnish certified copies to the Security Agent of, all
consents as may be required under any applicable law to enable it to
perform its obligations under this Deed of Guarantee and Undertaking and
the other Financing Documents and the Project Documents to which either of
the Sponsors is a party or which are required for the validity or
enforceability thereof, and the Sponsors shall comply with the terms of
the same.
15.7 CONTINUED OWNERSHIP
The Sponsors shall procure that Amethyst Financial Company Limited remains
throughout the Security Period the registered holder and beneficial owner
of the entire issued share capital in the Borrower.
15.8 DISSOLUTION OF THE BORROWER
The Sponsors jointly and severally and unconditionally and irrevocably
undertake and agree with the Security Agent that throughout the Security
Period:
(i) they will not institute and will procure that Amethyst Financial
Company Ltd does not institute any steps for the winding up or
dissolution of the Borrower (or any equivalent process in the
country of incorporation of the Borrower);
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(ii) they will ensure that all votes attaching to any equity share
capital which is legally or beneficially owned by themselves and/or
by either of them and/or by Amethyst Financial Company Ltd or which
is otherwise directly or indirectly under their or its control will
be used to vote against any proposal or resolution for the
winding-up or dissolution of the Borrower.
15.9 ALTERNATIVE CHARTERER
The Sponsors jointly and severally and unconditionally and irrevocably
undertake to the Borrower and as a separate and independent obligation to
the Security Agent that in the event of any termination of the
Charterparty (however arising) during the Security Period the Sponsors
will use their respective best endeavours to procure a new charter for the
Rig with an independent third party approved by the Facility Agent on
arm's length terms no less favourable than the Charterparty and will
procure that the benefit of such new charter and the Borrower's right,
title and interest therein will be assigned to the Security Agent as agent
and trustee for the Lenders by way of security for the Secured
Obligations.
16. CURRENCY INDEMNITY
16.1 CURRENCY INDEMNITY
(i) If, for any reason, any payment due from the Sponsors (or
either of them) under or in connection with this Deed of
Guarantee and Undertaking is made or is satisfied in a
currency (the "OTHER CURRENCY") other than the currency in
which the relevant payment under this Deed of Guarantee and
Undertaking is due (the "CONTRACTUAL CURRENCY"), then to
the extent that the payment (when converted into the
Contractual Currency at the rate of exchange on the date of
payment or, in the case of the liquidation or insolvency of
the Sponsors (or either of them), at the rate of exchange
on the latest date permitted by applicable law for the
determination of liabilities in such liquidation or
insolvency) actually received by the party entitled thereto
falls short of the amount expressed to be due under the
terms of this Deed of Guarantee and Undertaking, the
Sponsors, or (as the case may be) the relevant Sponsor,
shall, as a separate and independent obligation, indemnify
the party entitled thereto and hold such party harmless
against the amount of such shortfall.
(ii) If on any occasion the Contractual Currency so purchased
exceeds the amount payable hereunder in the Contractual
Currency to the party entitled thereto then, subject to the
Sponsors, or (as the case may be) the relevant Sponsor,
having no further obligation, actual or contingent, to such
party under this Agreement, such party shall refund to the
Sponsors, or (as the case may be) the relevant Sponsor, the
excess amount of the Contractual Currency so purchased.
(iii) For the purpose of this Clause "RATE OF EXCHANGE" means the rate at
which the party entitled thereto is able on the relevant date to
purchase the Contractual Currency with the Other Currency and shall
take into account any premium and other costs of exchange.
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16.2 INDEPENDENT OBLIGATIONS
The indemnities in Clause 16.1 shall constitute separate and independent
obligations of the Sponsors from their other respective obligations under
this Deed of Guarantee and Undertaking, shall give rise to a separate and
independent cause of action against the Sponsors or (as the case may be)
the relevant Sponsor and shall apply irrespective of any indulgence
granted by the Secured Parties from time to time.
17. DELEGATION, ASSIGNMENT
17.1 DELEGATION
The Security Agent shall be entitled at any time and as often as may be
expedient to delegate all or any of the powers and discretions vested in
it by the Financing Documents or any of them (including the power vested
in it by virtue of this Clause 17.1) in such manner upon such terms and to
such persons as the Security Agent in its absolute discretion may think
fit.
17.2 ASSIGNMENT
The provisions of Clause 15 of the Loan Agreement shall apply hereto and
(MUTATIS MUTANDIS) be deemed incorporated herein and, accordingly any
Lender may novate and/or assign its rights in respect of this Deed to any
person to whom its Commitments and/or Outstandings are novated or assigned
in accordance with such Clause, and this Deed shall remain in full force
and effect after, and shall continue to secure the Secured Obligations
after and resulting from, any novation or assignment in accordance with
such Clause 15.
17.3 BENEFIT OF THIS DEED
This Deed shall extend to, and enure to the benefit of the Security Agent
and its duly appointed successors and assigns
18. NOTICES, ETC.
18.1 METHOD OF SENDING
Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, may be made by facsimile transmission or by telex
or by letter.
18.2 ADDRESSES FOR NOTICES
Any communication or document to be made or delivered by one person to
another pursuant to this Deed of Guarantee and Undertaking shall (unless
the one has by not less than three (3) days' written notice to the other
specified another address) be made or delivered to that other person at
the respective addresses and facsimile numbers set out below.
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(1) The Borrower:-
PETRODRILL SEVEN LIMITED
c/o Petrodrill Engineering NV
K.P. van der Mandalelaan 38
3062 MB Rotterdam (Brainpark)
The Netherlands
Attention: Steve Assister
Fax No: 00 31 10 272 2727
(2) The Sponsors
PRIDE INTERNATIONAL INC.
5847 San Felipe
Suite 3300
Houston
Texas, TX77 057
USA
Attention: Robert Randall
Fax No: 001 713 914 9796
MARITIMA PETROLEO E ENGENHARIA LTDA
Avenida Almirante Barroso 52
Group 3400
Rio de Janeiro
Brazil
Attention: German Efromovich
Fax No: 00 55 21 220 6566
(3) The Lenders:-
PETRO DIA THREE S.A.
c/o MITSUBISHI CORPORATION
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship & Industrial Project Department
Fax No: 00 81 3 3210 4446
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PETRO DIA FOUR S.A.
c/o MITSUBISHI CORPORATION
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship & Industrial Project Department
Fax No: 00 81 3 3210 4446
(4) The Facility Agent:-
MITSUBISHI CORPORATION (UK) PLC
Bow Bells House
Bread Street
London EC4M 9BQ
Attention: General Manager, Machinery Department
Fax No: 071 822 0184
(5) The Security Agent:-
MITSUBISHI CORPORATION (UK) PLC
Bow Bells House
Bread Street
London EC4M 9BQ
Attention: General Manager, Machinery Department
Fax No: 071 822 0184
18.3 DEEMED RECEIPT
Any notice given hereunder shall be deemed to have been received:
(i) If sent by facsimile transmission or by telex, at the opening of
business one (1) Banking Day after the day it was transmitted;
(ii) In the case of a written notice lodged by hand, at the time of
actual delivery; and
(iii) If posted, on the fifth Banking Day following the day on which it
was properly despatched by first class mail postage prepaid.
19. GOVERNING LAW AND JURISDICTION
19.1 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law.
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19.2 SUBMISSION TO JURISDICTION
Each of the parties hereto irrevocably agrees that the English courts are
to have jurisdiction to settle any disputes which may arise out of or in
connection with this Agreement and/or the other Financing Documents and
that accordingly any suit, action or proceedings ("PROCEEDINGS") arising
out of or in connection with this Agreement and/or the other Financing
Documents may be brought in such courts.
19.3 WAIVER OF OBJECTION
Each of the parties hereto hereby irrevocably waives any objection which
it may have now or hereafter to the laying of the venue of any Proceedings
in any such court as is referred to in Clause 19.2 and any claim that any
such Proceedings have been brought in an inconvenient forum, and further
irrevocably agrees that a judgment in any Proceedings brought in the
English courts shall be conclusive and binding upon the Borrower and may
be enforced in the courts of any other jurisdiction.
19.4 OTHER JURISDICTIONS
Nothing contained in this Clause 19 shall limit the right of any of the
parties hereto to take proceedings in any other court of competent
jurisdiction, nor shall the taking of Proceedings in any one or more
jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
19.5 SERVICE OF PROCESS
(1) The Borrower irrevocably and unconditionally:
(a) designates, and appoints and empowers Hackwood Secretaries
Limited of One Silk Street, London EC2Y 8HQ to receive for it
and on its behalf, service of process issued out of the
English courts in any Proceedings arising out of or in
connection with this Agreement;
(b) agrees to maintain in England a duly appointed process agent
notified to the other parties to this Agreement, for the
purposes of paragraph (a) above;
(c) agrees that failure by any such process agent to give notice
of such process to it shall not impair the validity of such
service or of any judgment based thereon;
(d) consents to the service of process out of any of the said
courts in any such Proceedings by the airmailing of copies,
postage prepaid, to it at its address for the time being
applying for the purposes of Clause 18; and
(e) agrees that nothing herein shall affect the right to serve
process in any other manner permitted by law.
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(2) The Sponsors irrevocably and unconditionally:
(a) designate, and appoint and empower Hackwood Secretaries
Limited of One Silk Street, London EC2Y 8HQ to receive for
them and on their behalf, service of process issued out of the
English courts in any Proceedings arising out of or in
connection with this Agreement;
(b) agree to maintain in England a duly appointed process agent
notified to the other parties to this Agreement, for the
purposes of paragraph (a) above;
(c) agree that failure by any such process agent to give notice of
such process to them shall not impair the validity of such
service or of any judgment based thereon;
(d) consent to the service of process out of any of the said
courts in any such Proceedings by the airmailing of copies,
postage prepaid, to them at the address for the time being
applying for the purposes of Clause 18; and
(e) agree that nothing herein shall affect the right to serve
process in any other manner permitted by law.
(3) The Lenders irrevocably and unconditionally:
(a) designate, and appoint and empower Mitsubishi Corporation (UK)
PLC of Bow Bells House, Bread Street, London EC4M 9BQ to
receive for them and on their behalf, service of process
issued out of the English courts in any Proceedings arising
out of or in connection with this Agreement;
(b) agree to maintain in England a duly appointed process agent
notified to the other parties to this Agreement, for the
purposes of paragraph (a) above;
(c) agree that failure by any such process agent to give notice of
such process to them shall not impair the validity of such
service or of any judgment based thereon;
(d) consent to the service of process out of any of the said
courts in any such Proceedings by the airmailing of copies,
postage prepaid, to them at the address for the time being
applying for the purposes of Clause 18; and
(e) agree that nothing herein shall affect the right to serve
process in any other manner permitted by law.
20. COUNTERPARTS
This Deed of Guarantee and Undertaking may be executed in any number of
counterparts and by the different parties hereto on different counterparts
and all of such counterparts taken together shall be deemed to constitute
one and the same instrument.
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21. WAIVER; REMEDIES CUMULATIVE
No failure to exercise and no delay in exercising on the part of the
Borrower and/or any of the Secured Parties any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege preclude any other or
further exercise thereof, or the exercise of any other right, power or
privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
22. LANGUAGE
Each document referred to herein or to be delivered hereunder (including
financial statements) and each other communication shall be in the English
language.
23. SEVERABILITY
Any provision in this Deed of Guarantee and Undertaking which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
IN WITNESS whereof the parties have caused this Deed of Guarantee and
Undertaking to be executed and delivered as a deed the day and year first above
written.
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by PETRODRILL )
SEVEN LIMITED acting by )
its duly authorised signatory )
/attorney-in-fact in the presence of:- ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by PRIDE )
INTERNATIONAL INC acting by )
its duly authorised signatory/ )
attorney-in-fact in the presence of: ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by MARITIMA )
PETROLEO E ENGENHARIA )
LTDA acting by its duly authorised )
signatory/attorney-in-fact in the )
presence of: ) /s/ Illegible
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<PAGE>
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by PETRO DIA THREE )
S.A. acting by its duly authorised )
signatory/attorney-in-fact in )
the presence of: ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by PETRO DIA FOUR )
S.A. acting by its duly authorised )
signatory/attorney-in-fact in )
the presence of: ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by MITSUBISHI )
CORPORATION (UK) PLC (in its )
capacity as Facility Agent) acting by )
its duly authorised signatory/ )
attorney-in-fact in the presence of: ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by MITSUBISHI )
CORPORATION (UK) PLC (in its )
capacity as Security Agent) acting by )
its duly authorised signatory/ )
attorney-in-fact in the presence of: ) /s/ Illegible
-25-
DATED 19 DECEMBER 1998
PETRODRILL SIX LIMITED
as Borrower
- and -
PRIDE INTERNATIONAL INC. and
MARITIMA PETROLEO E ENGENHARIA LTDA
as Sponsors
- and -
THE LENDERS herein referred to
as Lenders
- and -
MITSUBISHI CORPORATION (UK) PLC
as Facility Agent
- and -
MITSUBISHI CORPORATION (UK) PLC
as Security Agent
-------------------------------------------------
DEED OF GUARANTEE AND UNDERTAKING
relating to the Loan Agreement
in respect of Amethyst 6
-------------------------------------------------
F I E L D - F I S H E R - W A T E R H O U S E
4 1 V I N E S T R E E T L O N D O N E C 3 N 2 A A
<PAGE>
CONTENTS
CLAUSE/HEADING PAGE
1. DEFINITIONS AND INTERPRETATION 2
2. REFUND UNDERTAKING 3
3. COST OVERRUNS UNDERTAKING 4
4. INSURANCE DEDUCTIBLES UNDERTAKING 4
5. OPEX SHORTFALL UNDERTAKING 5
6. CHARTERPARTY AND SERVICES RENDERING CONTRACT
PERFORMANCE UNDERTAKING 5
7. MANAGEMENT AGREEMENT PERFORMANCE UNDERTAKING 6
8. MAINTENANCE OF INSURANCES UNDERTAKING 7
9. PAYMENTS TO THE BORROWER 8
10. PAYMENTS TO/LOANS BY LENDERS 9
11. PRESERVATION OF OBLIGATIONS 11
12. PAYMENTS 14
13. TAXATION 15
14. REPRESENTATIONS AND WARRANTIES 15
15. UNDERTAKINGS 16
16. CURRENCY INDEMNITY 18
17. DELEGATION, ASSIGNMENT 19
18. NOTICES, ETC. 19
19. GOVERNING LAW AND JURISDICTION 21
20. COUNTERPARTS 23
21. WAIVER; REMEDIES CUMULATIVE 24
22. LANGUAGE 24
23. SEVERABILITY 24
<PAGE>
THIS DEED is made on 19 December 1998 BETWEEN:-
(1) PETRODRILL SIX LIMITED of Arias Fabrega and Fabrega Trust Co., BVI
Limited, 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's
Cay, Road Town, Tortola, British Virgin Islands (the "BORROWER");
(2) PRIDE INTERNATIONAL INC,. a company incorporated under the laws of the
State of Louisiana, USA, of 5847 San Felipe, Suite 3300, Houston, Texas
TX77057 ("PRIDE") and MARITIMA PETROLEO E ENGENHARIA LTDA., a company
incorporated under the laws of Brazil, of Avenida Almirante Barroso 52,
Group 3400, Rio de Janeiro ("MARITIMA") (together, the "SPONSORS" and,
individually, a "SPONSOR");
(3) THE LENDERS, the respective names and offices of which are set out in
Clause 1.2, as Initial Lenders (the "INITIAL LENDERS");
(4) MITSUBISHI CORPORATION (UK) PLC, a company incorporated in England and
Wales (Reg No. 2214224), whose registered office is at Bow Bells House,
Bread Street, London EC4M 9BQ, in its capacity as facility agent for the
Lenders (the "FACILITY Agent"); and
(5) MITSUBISHI CORPORATION (UK) PLC, a company incorporated in England and
Wales (Reg No. 2214224), whose registered office is at Bow Bells House,
Bread Street, London EC4M 9BQ, as security trustee and agent for the
Secured Parties.
WHEREAS:
(A) By a loan agreement (as amended or supplemented from time to time, the
"LOAN AGREEMENT") of even date herewith and made between the Initial
Lenders (1), the Borrower (2), the Facility Agent (3) and the Security
Agent (4), the Initial Lenders have agreed, upon and subject to the terms
and conditions of the Loan Agreement, to make available to the Borrower
loan facilities not exceeding US$160,000,000 for the purposes therein
specified.
(B) By a further loan agreement (the "SISTER COMPANY LOAN AGREEMENT") of even
date herewith and made between the Initial Lenders (1), the Sister Company
(2), the Facility Agent (3) and the Security Agent (4), the Initial
Lenders have agreed to make available to the Sister Company (on
substantially identical terms to the Loan Agreement) loan facilities not
exceeding US$180,000,000 for the purposes therein specified.
(C) The execution and delivery of this Deed of Guarantee and Undertaking is
one of the conditions precedent to the Initial Lenders' making their
Commitments available under the Loan Agreement and under the Sister
Company Loan Agreement.
(D) The Sponsors have agreed to execute and deliver this Deed of Guarantee and
Undertaking in consideration of the Initial Lenders, at the Sponsors'
request, making or continuing loans or advances to, or otherwise giving
credit or granting accommodation or time to, the Borrower pursuant to the
Loan Agreement and/or the Sister Company Loan Agreement.
IT IS AGREED as follows:-
- 1 -
<PAGE>
1. DEFINITIONS AND INTERPRETATION
1.1 TERMS DEFINED IN THE LOAN AGREEMENT
Unless the context otherwise requires or unless otherwise defined in this
Deed of Guarantee and Undertaking, words and expressions defined in the
Loan Agreement shall have the same meanings when used in this Deed of
Guarantee and Undertaking.
1.2 OTHER DEFINED TERMS
In this Deed of Guarantee and Undertaking, unless the context otherwise
requires:
"EQUITY SHARE CAPITAL" means, in relation to any company, its issued share
capital excluding any part of that capital which (neither as regards
dividends nor as respects capital) carries any right to participate beyond
a specified amount in a distribution.
"INITIAL LENDERS" means Petro Dia Three SA and Petro Dia Four SA, each
being a company incorporated in the Republic of Panama whose principal
place of business is at 53rd Street, Urbanizacion Obarrio, Torre Swiss
Bank, 16th Floor, Panama City, Republic of Panama;
"LENDERS" means the Initial Lenders and any person who becomes a Lender
from time to time pursuant to Clause 15 (TRANSFERS) of the Loan Agreement,
but excluding any person who ceases to be a Lender pursuant to that
Clause;
"SISTER COMPANY GUARANTEE AND UNDERTAKING" means the deed of guarantee and
undertaking (in substantially the same terms as this Deed of Guarantee and
Undertaking) executed pursuant to the Sister Company Loan Agreement and
dated the same date as this Deed of Guarantee and Undertaking;
"TAXES" means any present or future taxes, levies, duties, charges, fees,
deductions or withholdings of any nature now or hereafter imposed, levied,
collected, withheld or assessed by any country or any political
sub-division or taxing authority thereof.
1.3 INTERPRETATION
This Deed of Guarantee and Undertaking shall be interpreted consistently
with the Loan Agreement, and accordingly the provisions of Clauses 1.2 to
1.4 (inclusive) of the Loan Agreement shall apply hereto and (MUTATIS
MUTANDIS) shall be deemed to be incorporated into this Deed of Guarantee
and Undertaking as if set out in full in this Deed of Guarantee and
Undertaking.
1.4 SECURITY AGENT
The Security Agent enters into this Deed of Guarantee and Undertaking as
security trustee and agent for the Secured Parties in accordance with the
Security Trust Deed and all rights and powers conferred on or vested in
the Security Agent under this Deed of Guarantee and Undertaking shall be
conferred on and vested in the Security Agent in such capacity, and the
term "SECURITY AGENT" shall be construed accordingly.
- 2 -
<PAGE>
2. REFUND UNDERTAKING
2.1 DEFINITIONS
In this Clause 2:
"BUILDER'S RISK INSURANCE" means such part of the insurances effected by
the Temporary Confirmation of Insurances which relates to the Rig during
the period up to the time of delivery to the Borrower in accordance with
the Rig Construction Contract;
"CONSTRUCTION CONTRACT REPAYMENTS" means the aggregate amount of all
payments/repayments and payments in respect of interest payable (in each
case whether or not paid) by the Builder pursuant to the Rig Construction
Contract and/or by the Export-Import Bank of Korea pursuant to the Refund
Guarantee and/or by any insurers pursuant to the Builder's Risk Insurance
(in each case to the Security Agent as assignee of the benefit of the Rig
Construction Contract, the Refund Guarantee and the Borrower's interest in
the Builder's Risk Insurance) (i) following any termination or rescission
of the Rig Construction Contract (however arising) or (ii) upon any refund
of all or any of the instalments of the Contract Price of the Rig and/or
any interest otherwise becoming payable or (iii) following a Total Loss
prior to the delivery of the Rig by the Builder; and
"TEMPORARY CONFIRMATION OF INSURANCE" means the temporary confirmation of
insurance (and described as Temporary Confirmation of Insurance) issued by
McGriff, Seibels, Bartama & Colvin Inc (as brokers) on 15 December 1998
with Assigned No. MS-S711A - Daewoo.
2.2 UNDERTAKING
The Sponsors hereby jointly and severally and irrevocably and
unconditionally undertake to the Borrower and as a separate and
independent obligation to the Security Agent in each case as primary
obligors that:-
(i) in the event of any termination or rescission of the Rig
Construction Contract (however arising), or
(ii) upon any refund of all of the instalments of the Contract Price
becoming payable (whether or not paid), or
(iii) following a Total Loss prior to the delivery of the Rig by the
Builder,
they shall, within 7 Banking Days of first written demand from the
Facility Agent, pay to the Borrower in accordance with Clause 9 the amount
which is determined by the Facility Agent as being the excess (if any) of
the Outstanding Indebtedness over the Construction Contract Repayments.
- 3 -
<PAGE>
3. COST OVERRUNS UNDERTAKING
3.1 DEFINITIONS
In this Clause 3:
"FUNDED AMOUNT" means at any relevant time the aggregate of (i) One
Hundred and Sixty Million United States Dollars (US$160,000,000) and (ii)
all amounts paid to, and received by, the Borrower by the Sponsors in
accordance with Clause 3.2; and
"SEVERAL PROPORTIONS" has the same meaning as is given to this
expression in Clause 6.1.
3.2 UNDERTAKING
If on any date and from time to time the Facility Agent shall determine
that the amount of the Total Project Costs incurred as at such date
exceeds the Funded Amount at that time, then, without prejudice to or in
any way limiting or affecting their other obligations under this Deed of
Guarantee and Undertaking, the Sponsors hereby severally and
unconditionally and irrevocably agree and undertake with the Borrower and
as a separate and independent obligation with the Security Agent that they
will, within 7 Banking Days of first written demand from the Facility
Agent made from time to time, pay in their Several Proportions to the
Borrower in accordance with Clause 9 a sum which is then determined by the
Facility Agent as being equal to the amount of such excess.
3.3 LIMITATION
The aggregate total liability of the Sponsors under Clause 3 of this Deed
of Guarantee and Undertaking shall not exceed US$20,000,000 less the
aggregate of all amounts which the Sponsors have, at the date of any
payment under Clause 3 of this Deed of Guarantee and Undertaking, paid
pursuant to Clause 3 of the Sister Company Guarantee and Undertaking.
4. INSURANCE DEDUCTIBLES UNDERTAKING
4.1 DEFINITIONS
In this Clause 4:
"DELAY IN DELIVERY INSURANCE" means the insurances referred to in
paragraph (A) (DELAY IN DELIVERY) of Section III (BUSINESS INTERRUPTION)
of the Conditions to the Temporary Confirmation of Insurance;
"INSURANCE DEDUCTIBLE" means any excess or deductible applied in respect
of any claim arising under the Delay in Delivery Insurance and/or the Loss
of Hire Insurance; and
"LOSS OF HIRE INSURANCE" means the insurances referred to in paragraph (B)
(LOSS OF HIRE) of Section III (BUSINESS Interruption) of the Conditions to
the Temporary Confirmation of Insurance; and
- 4 -
<PAGE>
"TEMPORARY CONFIRMATION OF INSURANCE" has the same meaning as is given to
this expression in Clause 2.1.
4.2 PAYMENT UNDERTAKING
The Sponsors hereby jointly and severally and unconditionally and
irrevocably undertake to the Borrower and as a separate and independent
obligation to the Security Agent that in the event that any incident shall
occur in relation to the Rig which gives rise to a right to claim under
the Delay in Delivery Insurance or the Loss of Hire Insurance they will,
within 7 Banking Days of first written demand from the Facility Agent, pay
to the Borrower in accordance with Clause 9 such amount as is determined
by the Facility Agent to be equal to the amount of any Insurance
Deductible applicable in respect of each such claim.
5. OPEX SHORTFALL UNDERTAKING
5.1 DEFINITIONS
In this Clause 5:
"MANAGEMENT AGREEMENT" has the same meaning as is given to this
expression in Clause 7.1;
"MONTHLY OPEX AMOUNT" means all Opex actually incurred in
relation to any calendar month during the Security Period; and
"OPEX" means the costs of operating the Rig including the costs
listed in Clause 4.5.3 of the Management Agreement;
5.2 PAYMENT UNDERTAKING
The Sponsors hereby jointly and severally and unconditionally and
irrevocably undertake to the Borrower and as a separate and independent
obligation to the Security Agent that in the event that in any calendar
month the Monthly Opex Amount exceeds the Monthly Outgoings for that
calendar month they will, within 7 Banking Days of first written demand
from the Facility Agent, pay to the Borrower in accordance with Clause 9
such amount as is determined by the Facility Agent to be equal to the
amount of such excess for that calendar month.
6. CHARTERPARTY AND SERVICES RENDERING CONTRACT PERFORMANCE UNDERTAKING
6.1 DEFINITIONS
In this Clause 6:
"SEVERAL PROPORTIONS" means (in relation to Pride) 30% and (in
relation to Maritima) 70%.
- 5 -
<PAGE>
6.2 UNDERTAKING
If at any time any default is made by the Borrower in the due and punctual
performance or observance of any of the obligations on its part to be
performed under or in connection with the Charterparty and/or the Services
Rendering Contract in all respects in accordance with their respective
terms, or if any of such obligations are otherwise not performed or
observed by the time or in the manner provided therein, the Sponsors
hereby irrevocably and unconditionally undertake to the Borrower and as a
separate and independent obligation to the Security Agent:-
(i) jointly and severally that they will promptly take all steps (not
involving the payment of money) that may be necessary to ensure that
the obligations of which the Borrower is in default are performed in
accordance with the Charterparty or (as the case may be) the
Services Rendering Contract, and
(ii) severally that they will, within 7 Banking Days of first written
demand from the Facility Agent, pay in their Several Proportions to
the Borrower in accordance with Clause 9 such amount as is
determined by the Facility Agent to be necessary so as to enable the
Borrower to perform (or to fund the performance of)such obligations,
PROVIDED THAT (a) this undertaking shall not, and shall not be construed
so as to, impose on the Sponsors a liability greater than that which the
Borrower has or would have to Petrobras under the Charterparty or (as the
case may be) the Services Rendering Contract and (b) in the event of any
default , or failure on the part of the Sponsors (or either of them) to
honour, the undertaking contained in paragraph (i) above neither of the
Sponsors shall have any liability to make any payment(s) to the Borrower
and/or to the Security Agent in respect of any lost payments of
Charterparty Hire or of the Services Rendering Contract Payments that may
(but for such default or failure) have become payable to the Borrower or
the Security Agent (as assignee of the Borrower's rights).
7. MANAGEMENT AGREEMENT PERFORMANCE UNDERTAKING
7.1 DEFINITIONS
In this Clause 7:
"MANAGEMENT AGREEMENT" means the management agreement relating to the Rig
dated as of 5 November 1998 by and made between the Borrower and the
Manager, a copy of which has been supplied to each of the parties hereto
by the Borrower prior to the date hereof;; and
"MANAGER" means Formaritima Limited as manager under the
Management Agreement.
7.2 UNDERTAKING
The Sponsors hereby jointly and severally and irrevocably and
unconditionally undertake to the Borrower and as a separate and
independent obligation to the Security Agent to procure that the Manager
duly and punctually performs and observes all the obligations on its part
to be performed under or in connection with the Management Agreement in
all respects in accordance with its terms.
- 6 -
<PAGE>
Without prejudice to the generality of foregoing, if at any time any
default is made by the Manager in the performance or observance of any
such obligations, or if any of such obligations are otherwise not
performed or observed by the time or in the manner provided therein, the
Sponsors hereby jointly and severally and irrevocably unconditionally
undertake to the Borrower and as a separate and independent obligation to
the Security Agent that:-
(i) they will promptly take all steps that may be necessary to ensure
that the obligations of which the Manager is in default are
performed in accordance with the Management Agreement (including,
without limitation, the payment of any defaulted amounts);
(ii) that they will, within 7 Banking Days of first written demand from
the Facility Agent, pay to the Borrower in accordance with Clause 9
any sum which is determined by the Facility Agent to be payable by
the Manager to the Borrower as a direct consequence of such default.
provided that in the event of any breach of, or failure on the part of the
Sponsors (or either of them) to honour, the undertakings contained in
paragraphs (i) and (ii) above neither of the Sponsors shall have any
liability to make any payment(s) to the Borrower and/or to the Security
Agent in respect of any lost payments of Charterparty Hire and/or of the
Services Rendering Contract Payments that may (but for such default or
failure) have become payable to the Borrower
8. MAINTENANCE OF INSURANCES UNDERTAKING
8.1 DEFINITIONS
In this Clause 8:
"TEMPORARY CONFIRMATION OF INSURANCE" has the same meaning as is given to
this expression in Clause 2.1.
8.2 UNDERTAKING
The Sponsors hereby jointly and severally and unconditionally and
irrevocably undertake to the Secured Parties that they will throughout the
Security Period:-
(i) procure that insurances are effected and maintained (with the
Security Agent, the Facility Agent and each of the Lenders being
named as a principal assured) with insurers acceptable to the
Facility Agent providing insurance cover against such risks as are
insured by the Temporary Confirmation of Insurance and on terms and
conditions no less favourable than are provided for by the Temporary
Confirmation of Insurance and (subject to such insurance being
available in the international insurance markets) otherwise as the
Facility Agent may from time to time at its discretion require; and
- 7 -
<PAGE>
(ii) procure that the Borrower complies with all its obligations in
respect of Insurances as contained in the Loan Agreement and the
Deed of Covenants.
8.3 REMEDY FOR BREACH OF UNDERTAKING
In the event that the Sponsors shall at any time and for any reason fail
to comply in all material respects with their undertaking contained in
this Clause 8.2, then the Lenders (or any of them) may at their option
(but shall not be obliged to) themselves effect and thereafter maintain
insurances to the extent necessary to restore the insurances to the level
at which they are required to be maintained. All costs incurred by the
relevant Lenders in effecting and/or maintaining any such insurances
(including, but not limited to, all premiums, calls, contributions or
other sums payable in respect of such insurances) shall be repayable by
the Sponsors (who shall be jointly and severally liable in respect
thereof) on first demand by the Facility Agent together with interest
thereon (which will also be payable upon first demand by the Facility
Agent and which shall be compounded at such intervals as the Facility
Agent may determine) at such annual rate as is conclusively certified by
the Facility Agent to the Sponsors as being equal to the aggregate of (1)
two and one half per centum (2.5%) per annum and (2) the higher of (a) the
cost to the relevant Lenders of funding such costs by borrowing on arms
length terms plus any other expenses or losses which such Lenders may have
incurred in respect thereof and (b) 13%.
The remedy specified above shall be the sole remedy of the Security Agent
for breach by the Sponsors of their undertaking contained in this Clause
8.
9. PAYMENTS TO THE BORROWER
9.1 SUBORDINATED LOANS
Simultaneously with the execution of this Deed of Guarantee and
Undertaking the Borrower, the Sponsors, the Facility Agent and the
Security Agent are executing a Subordinated Loan Facility Agreement in the
approved form (the "SUBORDINATED LOAN FACILITY AGREEMENT"). As between the
Borrower and the Sponsors, any payment to be made by the Sponsors to the
Borrower under any of Clauses 2, 3, 4, 5, 6 and/or 7 shall be made within
7 Banking Days of the Facility Agent's first written demand therefor by
remittance to the Management Account and shall be made by way of
subordinated loan to the Borrower under the Subordinated Loan Facility
Agreement, PROVIDED ALWAYS that the Sponsors shall not be required to make
any amount available to the Borrower by way of subordinated loan under the
Subordinated Loan Facility Agreement if within 7 Banking Days after the
Facility Agent's first written demand therefor the Sponsors shall have
made the amount thereof available to the Borrower (and the Borrower shall
have received such amount) in cleared funds by way of subscription for
equity share capital in the Borrower.
9.2 FACILITY AGENT'S CERTIFICATES
A certificate in writing signed on behalf of the Facility Agent which:
- 8 -
<PAGE>
(i) makes a determination of any amount(s) for the purposes of Clause 2
(REFUND UNDERTAKING), Clause 3 (COST OVERRUNS UNDERTAKING), Clause 4
(INSURANCE DEDUCTIBLES UNDERTAKING), Clause 5 (OPEX SHORTFALL
UNDERTAKING), Clause 6 (CHARTERPARTY AND SERVICES RENDERING CONTRACT
PERFORMANCE UNDERTAKING) and/or Clause 7 (MANAGEMENT AGREEMENT
PERFORMANCE UNDERTAKING), and
(ii) specifies the provision(s) of this Deed of Guarantee and Undertaking
pursuant to which such amount(s) is/are payable, and
(iii) gives reasonable details of the manner of calculation thereof
shall (in the absence of manifest error) be conclusive as to the
subject matter thereof.
9.3 EQUITABLE REMEDIES
It is acknowledged that, without prejudice to any other rights or remedies
that the Borrower and/or the Security Agent might have, damages alone will
not be an adequate remedy for any breach by the Sponsors of any of their
obligations to make any payment(s) to the Borrower under any of Clauses 2,
3, 4, 5, 6 and/or 7 and under the provisions of Clause 9 and that
accordingly the Borrower and/or the Security Agent may be entitled without
proof of special damage to the remedies of injunction, specific
performance or other equitable relief for any threatened or actual breach
of the provisions of this Agreement by the Sponsors.
10. PAYMENTS TO/LOANS BY LENDERS
10.1 PAYMENTS BY SPONSORS TO LENDERS
Without prejudice to any of the other provisions of this Deed of Guarantee
and Undertaking, in the event that for any reason (including, without
limitation, any inability or unwillingness on the part of the Borrower to
request or make any drawings under the Subordinated Loan Facility
Agreement) any amount(s) payable by the Sponsors to the Borrower under any
of Clauses 2, 3, 4, 5, 6 and/or 7 has/have not been paid to, and received
by, the Borrower in cleared funds within 7 Banking Days of the Facility
Agent's first written demand therefor, then the Sponsors will be obliged
forthwith upon the Security Agent's first written demand to make payment
of such unpaid amount(s) to the Security Agent for the account of the
Lenders.
10.2 LOANS BY LENDERS TO BORROWER
Without prejudice to the provisions of Clause 10.1 or to any other rights
of the Security Agent under this Deed of Guarantee and Undertaking, in the
circumstances stipulated in Clause 10.1 and pending the Sponsors complying
with their obligations under Clause 9.1 and/or Clause 10.1 the Lenders (or
any of them) may at their option (but shall not be obliged to) themselves
provide funds to the Borrower by way of loan in an amount or amounts equal
to the amount(s) payable (but not paid) by the Sponsors as aforesaid. Any
such loans shall (as between the Borrower and the relevant Lenders) bear
no interest, but the Sponsors shall be liable to compensate the relevant
Lenders by making payment to them of such amount (calculated on a per
annum basis) as is equal to interest on the amounts of such loans at such
annual rate as is conclusively certified by the Facility
- 9 -
<PAGE>
Agent to the Sponsors as being equal to the aggregate of (1) two and one
half per cent (2.5%) per annum and (2) the higher of (a) the cost to the
relevant Lenders of funding such loan(s) plus any other costs, expenses or
losses which such Lenders may have incurred in respect thereof and (b)
13%. Such amounts shall be payable upon first demand and if not paid shall
bear interest as aforesaid. Any amount(s) so provided by any Lenders by
way of loan to the Borrower shall be repayable by the Borrower on first
demand by the Security Agent (or as the relevant Lenders may otherwise
specify at the time such funds are provided), but in all other respects
shall be deemed to have been advanced by the relevant Lenders pursuant to
the Loan Agreement, shall rank PARI PASSU with all Advances made or to be
made thereunder and shall be secured by the Security Documents
accordingly.
10.3 APPLICATION OF PAYMENTS BY SPONSORS
In the event that the Sponsors make any payment(s) to the Security Agent
for the account of the Lenders pursuant to their obligations under Clause
10.1, then forthwith upon receipt by the Security Agent of such payment(s)
in cleared funds:
(i) if the amount(s) of such payment(s) received is/are less
than, or equal to, the aggregate amount(s) of all (if any) loans
made to the Borrower pursuant to Clause 10.2 and not previously
waived and released by the Lenders (or, as the case may be, by any
relevant Lenders), the Security Agent will pay the amounts to the
relevant Lenders for their own account absolutely pro rata in
accordance with their loans advanced to the Borrower pursuant to
Clause 10.2 and such Lenders will waive and release PRO TANTO the
obligations of the Borrower in respect of such loans, and the
Sponsors shall be deemed to have complied PRO TANTO with their
obligation to make payment of such amount(s) to the Borrower by way
of subordinated loan under the Subordinated Loan Facility Agreement
(so that the amount(s) in question shall be treated as though they
were subordinated loans made available to the Borrower by, and
repayable by the Borrower to, the Sponsors in accordance with the
provisions of the Subordinated Loan Facility Agreement);
(ii) if and to the extent that the amount(s) of such payments received
exceed(s) the aggregate amount(s) of all (if any) loans made to the
Borrower pursuant to Clause 10.2 and not previously waived and
released by the Lenders (or, as the case may be, by any relevant
Lenders), the portion thereof which equals the aggregate amount(s)
of all (if any) loans made to the Borrower pursuant to Clause 10.2
and not previously waived and released by the Lender (or, as the
case may be, by any relevant Lenders) will be applied in accordance
with sub-clause (i) above, and the excess shall be applied as
follows:-
(a) in case an Event of Default or Potential Event of Default
shall have occurred and shall be continuing, the Security
Agent may (at its option) EITHER pay such monies to the
Borrower by remittance to the Management Account (in which
event the provisions of sub-paragraph (b) below will apply) OR
retain such monies and apply the same in or towards payment of
the Secured Obligations in such order of application as the
Security Agent shall decide;
- 10 -
<PAGE>
(b) in any other case, the Security Agent shall pay such monies to
the Borrower by remittance to the Management Account and the
amounts so paid to the Borrower shall be treated as though
they were subordinated loans made available to the Borrower
by, and repayable by the Borrower to, the Sponsors in
accordance with the provisions of the Subordinated Loan
Facility Agreement.
10.4 APPLICATION OF PAYMENTS
The Borrower hereby irrevocably agrees that any sum received by the
Security Agent from the Sponsors pursuant to any of the provisions of this
Deed of Guarantee and Undertaking may (to the extent not applied in making
good any defaults of the Sponsors in respect of their obligations to the
Borrower under this Deed of Guarantee and Undertaking) be applied by the
Security Agent in meeting payments due or to become due from the Borrower
under the Financing Documents in such order of application as the Security
Agent shall decide.
11. PRESERVATION OF OBLIGATIONS
11.1 DURATION OF OBLIGATIONS
The Sponsors agree that their respective obligations under this Deed of
Guarantee and Undertaking shall remain in full force and effect throughout
the Security Period and notwithstanding the enforcement by the Security
Agent of any of its rights under the Security Documents (including,
without limitation, the appointment of a Receiver) or the taking of
possession of any of the assets which stand security for the Secured
Obligations or any part of such assets.
11.2 CONTINUING SECURITY ETC.
Each of the Sponsors declares and agrees that:
(i) this Deed of Guarantee and Undertaking shall be held by the Security
Agent as a continuing security and shall not be satisfied by any
intermediate payment or satisfaction of any part of the moneys and
liabilities hereby agreed to be paid or performed and shall remain
in full force and effect until the moneys and liabilities hereby
agreed to be paid or performed have been unconditionally and
irrevocably paid and discharged in full to the satisfaction of the
Security Agent;
(ii) it has not received any security from the Borrower or from any other
persons for the giving of this Deed of Guarantee and Undertaking and
it will not take any such security without the prior written consent
of the Security Agent, and the Sponsors will hold any security taken
in breach of this provision in trust for the Security Agent;
(iii) the Security Agent shall not be bound to enforce any guarantee or
security or proceed or take any other steps against the Borrower or
any other person before enforcing this Deed of Guarantee and
Undertaking; and
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(iv) this Deed of Guarantee and Undertaking shall be in addition to, and
not in substitution for, any other rights which the Secured Parties
may now or hereafter have under or by virtue of any guarantee,
security, encumbrance or agreement or any lien or by operation of
law or under any collateral or other security now or hereafter held
by the Security Agent or to which the Security Agent may be
entitled.
11.3 AVOIDANCE OF SECURITIES
Any settlement or discharge under this Deed of Guarantee and Undertaking
between the Security Agent and the Sponsors shall be conditional upon no
security or payment to the Security Agent by the Borrower, the Sponsors or
any other person being avoided or set aside or ordered to be refunded or
reduced by virtue of any provision or enactment relating to bankruptcy,
insolvency or liquidation for the time being in force, and if such
condition is not satisfied, the Security Agent shall be entitled to
recover from the Sponsors on demand the value of such security or the
amount of any such payment as if such settlement or discharge had not
occurred.
11.4 PRESERVATION OF RIGHTS
The obligations of the Sponsors under this Deed of Guarantee and
Undertaking shall not be affected by any act, omission, matter or thing
which, but for this provision, might operate to release or otherwise
exonerate either of the Sponsors from its or their obligations under this
Deed of Guarantee and Undertaking in whole or in part, including (without
limitation, and whether or not known to or discoverable by the Sponsors,
the Borrower, any Secured Party or any other person):
(i) any time or waiver granted to or composition with the Borrower, the
other Sponsor or any other person;
(ii) the taking, variation, compromise, discharge, composition,
arrangement, renewal or release of or refusal or neglect to perfect
or enforce any rights, remedies or securities against the Borrower,
the other Sponsor or any other person;
(iii) any legal limitation, disability, incapacity or other circumstances
relating to the Borrower, the other Sponsor or any other person;
(iv) any amendment or supplement to this Deed of Guarantee and
Undertaking, any of the Financing Documents or any other document or
security;
(v) the dissolution, liquidation, amalgamation, reconstruction or
reorganisation of the Borrower, the other Sponsor or any other
person;
(vi) the unenforceability or invalidity of any obligations of the
Borrower, the other Sponsor or any other person under this Deed of
Guarantee and Undertaking or any of the other Financing Documents or
any other document or security;
(vii) the failure of any of the Secured Parties to take any other
guarantee or security (whether contemporaneous with this Deed of
Guarantee and Undertaking) or otherwise; or
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(viii) any other act, event or omission which but for the provision would
or might operate to impair, discharge or otherwise affect the
obligations of the Sponsors (or either of them) under this Deed of
Guarantee and Undertaking.
11.5 NON-COMPETITION
Until all the Secured Obligations and the Sister Company Obligations and
the moneys and liabilities hereby agreed to be paid or performed have been
unconditionally and irrevocably paid and discharged in full to the
satisfaction of the Security Agent, the Sponsors shall not by virtue of
any payment made or performance under this Deed of Guarantee and
Undertaking on account of such moneys and liabilities or by virtue of any
relationship between, or transaction involving, the Sponsors and the
Borrower:
(i) exercise any rights of subrogation or otherwise in relation to any
rights, security or moneys held or received or receivable by any
Secured Party or any other person;
(ii) exercise any right of contribution from the other Sponsor or any
co-surety or any other person liable in respect of such moneys and
liabilities under any other guarantee, security or agreement;
(iii) exercise any right of set-off or counterclaim against the Borrower
or the other Sponsor or any such co-surety or any other person;
(iv) receive, claim or have the benefit of any payment, distribution,
security or indemnity from the Borrower or the other Sponsor or any
such co-surety or any other person; or
(v) unless so directed by the Security Agent (when the Sponsors will
prove in accordance with such directions), claim as a creditor of
the Borrower or the other Sponsor or any such co-surety in
competition with the Security Agent.
The Sponsors shall hold in trust for the Security Agent and forthwith pay
or transfer (as appropriate) to the Security Agent any such payment
(including an amount equal to any such set-off), distribution or benefit
of such security, indemnity or claim received by it.
11.6 SUSPENSE ACCOUNTS
Until all moneys and liabilities hereby agreed to be paid or performed
have been unconditionally and irrevocably paid in full to the satisfaction
of the Security Agent, the Security Agent may at any time keep in a
separate account (without liability to pay interest thereon) for as long
as it may think fit any moneys received, recovered or realised under this
Deed of Guarantee and Undertaking or under any other guarantee, security
or agreement relating in whole or in part to the moneys and liabilities
hereby agreed to be paid and performed without being under any
intermediate obligation to apply the same or any part thereof in or
towards the discharge of such amount.
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12. PAYMENTS
12.1 CURRENCY OF FUNDS
All payments to be made by the Sponsors under this Deed of Guarantee and
Undertaking shall be made:
(i) for value on the due date at such time and in such funds as the
Security Agent may specify to the Sponsors as being customary at the
time for the settlement of transaction in US Dollars in the place
for payment; and
(ii) to such account at such office or bank as the Security Agent may
notify to the Sponsors for this purpose.
12.2 NO SET-OFF OR COUNTERCLAIMS
All amounts due from the Sponsors to the Security Agent under this Deed of
Guarantee and Undertaking shall be paid without any form of set-off,
counterclaim or condition whatsoever. Any amount due from the Sponsors
under this Deed of Guarantee and Undertaking shall not be reduced by any
set-off, counterclaim or other claim which the Sponsors may have against
the Borrower whether under this Deed of Guarantee and Undertaking, any
Project Document, any of the Financing Documents or otherwise.
12.3 UNCONDITIONAL OBLIGATION
Nothing in this Deed of Guarantee and Undertaking, nor any matter, fact,
act, omission, circumstance or thing whatsoever, including without
limitation:
(i) the termination (for any cause) of the Charterparty or of the
Services Rendering Contract or of any other contract or arrangement
for the use or operation of the Rig,
(ii) any change in circumstances or political, economic or financial
conditions,
(iii) the insolvency, dissolution, death, disability or incapacity of any
person whatsoever,
(iv) the breach by any person of any agreement or understanding, or
(v) any of the matters specified in Clause 11.4,
shall operate in any way to affect or minimise, or release the Sponsors
from any of the Sponsors' obligations under, this Deed of Guarantee and
Undertaking, all of which obligations shall subsist in full
notwithstanding any such matter, fact, omission, circumstance or thing.
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13. TAXATION
13.1 WITHHOLDING; GROSS-UP
All payments to be made by or for the account of the Sponsors (or either
of them) hereunder shall be made without set-off or counterclaim and free
and clear of and without deduction for or on account of any present or
future Taxes of any nature whatsoever imposed by or in any country
("APPLICABLE TAX") unless the Sponsors (or either of them) are/is
compelled by law to make payment to, or for the account of, the Borrower
and/or the Security Agent subject to such Applicable Tax. In any such case
the Sponsors (or, as the case may be, the relevant Sponsor) shall promptly
pay such Applicable Tax, and the amount of the relevant payment by the
Sponsors (or, as the case may be, the relevant Sponsor) hereunder shall be
increased to the extent necessary to ensure that the Borrower and/or the
Security Agent actually receives an amount, free and clear of and after
deduction for all such Applicable Tax, equal to the full amount which
would have been received if no such withholding or deduction had been
made. The Sponsors (or, as the case may be, the relevant Sponsor) shall
pay and indemnify and keep indemnified the Borrower and/or the Security
Agent against all such Applicable Tax. The Sponsors (or, as the case may
be, the relevant Sponsor) shall promptly deliver to the Facility Agent
copies of official receipts for Taxes evidencing payment of any such
Applicable Tax imposed as aforesaid. The obligations of the Sponsors (or,
as the case may be, the relevant Sponsor) under this Clause 13 shall
survive the Security Period.
14. REPRESENTATIONS AND WARRANTIES
14.1 REPRESENTATIONS
Each of the Sponsors represents and warrants severally as to itself to
each of the Secured Parties on the date of this Deed of Guarantee and
Undertaking as follows:-
(i) It is a limited liability company duly organised and validly
existing under the laws specified on page 1 of this Deed of
Guarantee and Undertaking, possessing perpetual corporate existence
and the capacity to sue or be sued in its own name, and each of it
and its Subsidiaries has the power to own its assets and carry on
its business as it is now being conducted.
(ii) It has the power to enter into and perform this Deed of Guarantee
and Undertaking and each of the other Financing Documents and the
Project Documents to which it is a party and the transactions
contemplated hereby and thereby and has taken all necessary action
to authorise the entry into and performance of this Deed of
Guarantee and Undertaking and each of the other Financing Documents
and the Project Documents to which it is a party and the
transactions contemplated hereby and thereby in accordance with the
terms thereof.
(iii) This Deed and each of the other Financing Documents and the Project
Documents to which it is a party constitute its legal, valid and
binding obligations enforceable in accordance with their respective
terms and are in proper form for the enforcement in all the courts
of the country of incorporation subject in each case
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<PAGE>
to the qualifications and other matters contained or referred to in
the legal opinions obtained by the Lenders in respect of the
relevant jurisdictions.
(iv) The entry into and performance of this Deed of Guarantee and
Undertaking and each of the other Financing Documents and Project
Documents to which it is a party and the transactions contemplated
hereby and thereby do not conflict with:
(a) any law or official requirement;
(b) its constitutional documents; or
(c) any agreement or document to which it or any of its
Subsidiaries (if any) is a party or which is binding upon it
or any of its Subsidiaries or any of their respective assets,
and will not result in the creation or imposition of (or
enforcement of) any encumbrance on any of its assets or the
assets of any of its Subsidiaries (if any).
14.2 REPETITION
The representations and warranties set out in this Clause 14 shall survive
the execution of this Deed of Guarantee and Undertaking and the making of
each Advance under the Loan Agreement and shall be deemed to be repeated
on the date of the giving of each Drawing Request, on each Drawdown Date
on each Repayment Date, so long as any amount is or may be outstanding
under the Loan Agreement or any Commitment is in force with reference to
the facts and circumstances then subsisting, as if made at each such time.
15. UNDERTAKINGS
15.1 DURATION
The undertakings in this Clause 15 shall remain in force from and after
the date hereof and throughout the Security Period.
15.2 Accounts
Each of the Sponsors will furnish, or procure that there is furnished, to
the Security Agent, in sufficient copies for each of the Lenders:
(i) as soon as practicable:
(a) (and in any event within 120 days after the close of each
financial year) its audited accounts;
(b) (if prepared) the consolidated (audited, if prepared) accounts
of those of its Subsidiaries (if any) for that year;
(ii) as soon as practicable (and in any event within 45 days after the
end of each financial quarter of each of its financial years):
(a) its unaudited balance sheet as at the end of such quarter; and
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(b) its unaudited statement of income and cash-flow statement for
that quarter;
15.3 Further general information
Each of the Sponsors shall furnish to the Security Agent promptly such
further information in its possession or control or in the possession and
control of any of its Subsidiaries (if any) regarding its financial
condition and operations and that of its Subsidiaries, as the Security
Agent may reasonably request.
15.4 LITIGATION
Each of the Sponsors shall furnish to the Security Agent details of any
litigation, arbitration or administrative proceedings against it or
concerning the Rig or the Project Documents which are current or, to its
knowledge, threatened or pending, as soon as the same are instituted or so
threatened if the same might have a material adverse effect on the
financial condition of either of the Sponsors or might have a material
effect on either of the Sponsor's respective obligations under the Project
Documents.
15.5 NOTIFICATION OF DEFAULTS
Each of Sponsors shall notify the Security Agent of any Event of Default
or any Potential Event of Default promptly upon becoming aware of its
occurrence.
15.6 CONSENTS
Each of the Sponsors will obtain and promptly renew from time to time, and
will promptly furnish certified copies to the Security Agent of, all
consents as may be required under any applicable law to enable it to
perform its obligations under this Deed of Guarantee and Undertaking and
the other Financing Documents and the Project Documents to which either of
the Sponsors is a party or which are required for the validity or
enforceability thereof, and the Sponsors shall comply with the terms of
the same.
15.7 CONTINUED OWNERSHIP
The Sponsors shall procure that Amethyst Financial Company Limited remains
throughout the Security Period the registered holder and beneficial owner
of the entire issued share capital in the Borrower.
15.8 DISSOLUTION OF THE BORROWER
The Sponsors jointly and severally and unconditionally and irrevocably
undertake and agree with the Security Agent that throughout the Security
Period:
(i) they will not institute and will procure that Amethyst Financial
Company Ltd does not institute any steps for the winding up or
dissolution of the Borrower (or any equivalent process in the
country of incorporation of the Borrower);
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<PAGE>
(ii) they will ensure that all votes attaching to any equity share
capital which is legally or beneficially owned by themselves and/or
by either of them and/or by Amethyst Financial Company Ltd or which
is otherwise directly or indirectly under their or its control will
be used to vote against any proposal or resolution for the
winding-up or dissolution of the Borrower.
15.9 ALTERNATIVE CHARTERER
The Sponsors jointly and severally and unconditionally and irrevocably
undertake to the Borrower and as a separate and independent obligation to
the Security Agent that in the event of any termination of the
Charterparty (however arising) during the Security Period the Sponsors
will use their respective best endeavours to procure a new charter for the
Rig with an independent third party approved by the Facility Agent on
arm's length terms no less favourable than the Charterparty and will
procure that the benefit of such new charter and the Borrower's right,
title and interest therein will be assigned to the Security Agent as agent
and trustee for the Lenders by way of security for the Secured
Obligations.
16. CURRENCY INDEMNITY
16.1 CURRENCY INDEMNITY
(i) If, for any reason, any payment due from the Sponsors (or either of
them) under or in connection with this Deed of Guarantee and
Undertaking is made or is satisfied in a currency (the "OTHER
CURRENCY") other than the currency in which the relevant payment
under this Deed of Guarantee and Undertaking is due (the
"CONTRACTUAL CURRENCY"), then to the extent that the payment (when
converted into the Contractual Currency at the rate of exchange on
the date of payment or, in the case of the liquidation or insolvency
of the Sponsors (or either of them), at the rate of exchange on the
latest date permitted by applicable law for the determination of
liabilities in such liquidation or insolvency) actually received by
the party entitled thereto falls short of the amount expressed to be
due under the terms of this Deed of Guarantee and Undertaking, the
Sponsors, or (as the case may be) the relevant Sponsor, shall, as a
separate and independent obligation, indemnify the party entitled
thereto and hold such party harmless against the amount of such
shortfall.
(ii) If on any occasion the Contractual Currency so purchased exceeds the
amount payable hereunder in the Contractual Currency to the party
entitled thereto then, subject to the Sponsors, or (as the case may
be) the relevant Sponsor, having no further obligation, actual or
contingent, to such party under this Agreement, such party shall
refund to the Sponsors, or (as the case may be) the relevant
Sponsor, the excess amount of the Contractual Currency so purchased.
(iii) For the purpose of this Clause "RATE OF EXCHANGE" means the rate at
which the party entitled thereto is able on the relevant date to
purchase the Contractual Currency with the Other Currency and shall
take into account any premium and other costs of exchange.
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16.2 INDEPENDENT OBLIGATIONS
The indemnities in Clause 16.1 shall constitute separate and independent
obligations of the Sponsors from their other respective obligations under
this Deed of Guarantee and Undertaking, shall give rise to a separate and
independent cause of action against the Sponsors or (as the case may be)
the relevant Sponsor and shall apply irrespective of any indulgence
granted by the Secured Parties from time to time.
17. DELEGATION, ASSIGNMENT
17.1 DELEGATION
The Security Agent shall be entitled at any time and as often as may be
expedient to delegate all or any of the powers and discretions vested in
it by the Financing Documents or any of them (including the power vested
in it by virtue of this Clause 17.1) in such manner upon such terms and to
such persons as the Security Agent in its absolute discretion may think
fit.
17.2 ASSIGNMENT
The provisions of Clause 15 of the Loan Agreement shall apply hereto and
(MUTATIS MUTANDIS) be deemed incorporated herein and, accordingly any
Lender may novate and/or assign its rights in respect of this Deed to any
person to whom its Commitments and/or Outstandings are novated or assigned
in accordance with such Clause, and this Deed shall remain in full force
and effect after, and shall continue to secure the Secured Obligations
after and resulting from, any novation or assignment in accordance with
such Clause 15.
17.3 BENEFIT OF THIS DEED
This Deed shall extend to, and enure to the benefit of the Security Agent
and its duly appointed successors and assigns
18. NOTICES, ETC.
18.1 METHOD OF SENDING
Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, may be made by facsimile transmission or by telex
or by letter.
18.2 ADDRESSES FOR NOTICES
Any communication or document to be made or delivered by one person to
another pursuant to this Deed of Guarantee and Undertaking shall (unless
the one has by not less than three (3) days' written notice to the other
specified another address) be made or delivered to that other person at
the respective addresses and facsimile numbers set out below.
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<PAGE>
(1) The Borrower:-
PETRODRILL SIX LIMITED
c/o Petrodrill Engineering NV
K.P. van der Mandalelaan 38
3062 MB Rotterdam (Brainpark)
The Netherlands
Attention: Steve Assister
Fax No: 00 31 10 272 2727
(2) The Sponsors
PRIDE INTERNATIONAL INC.
5847 San Felipe
Suite 3300
Houston
Texas, TX77 057
USA
Attention: Robert Randall
Fax No: 001 713 914 9796
MARITIMA PETROLEO E ENGENHARIA LTDA
Avenida Almirante Barroso 52
Group 3400
Rio de Janeiro
Brazil
Attention: German Efromovich
Fax No: 00 55 21 220 6566
(3) The Lenders:-
PETRO DIA THREE S.A.
c/o MITSUBISHI CORPORATION
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship & Industrial Project Department
Fax No: 00 81 3 3210 4446
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<PAGE>
PETRO DIA FOUR S.A.
c/o MITSUBISHI CORPORATION
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship & Industrial Project Department
Fax No: 00 81 3 3210 4446
(4) The Facility Agent:-
MITSUBISHI CORPORATION (UK) PLC
Bow Bells House
Bread Street
London EC4M 9BQ
Attention: General Manager, Machinery Department
Fax No: 071 822 0184
(5) The Security Agent:-
MITSUBISHI CORPORATION (UK) PLC
Bow Bells House
Bread Street
London EC4M 9BQ
Attention: General Manager, Machinery Department
Fax No: 071 822 0184
18.3 DEEMED RECEIPT
Any notice given hereunder shall be deemed to have been received:
(i) If sent by facsimile transmission or by telex, at the opening of
business one (1) Banking Day after the day it was transmitted;
(ii) In the case of a written notice lodged by hand, at the time of
actual delivery; and
(iii) If posted, on the fifth Banking Day following the day on which it
was properly despatched by first class mail postage prepaid.
19. GOVERNING LAW AND JURISDICTION
19.1 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law.
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19.2 SUBMISSION TO JURISDICTION
Each of the parties hereto irrevocably agrees that the English courts are
to have jurisdiction to settle any disputes which may arise out of or in
connection with this Agreement and/or the other Financing Documents and
that accordingly any suit, action or proceedings ("PROCEEDINGS") arising
out of or in connection with this Agreement and/or the other Financing
Documents may be brought in such courts.
19.3 WAIVER OF OBJECTION
Each of the parties hereto hereby irrevocably waives any objection which
it may have now or hereafter to the laying of the venue of any Proceedings
in any such court as is referred to in Clause 19.2 and any claim that any
such Proceedings have been brought in an inconvenient forum, and further
irrevocably agrees that a judgment in any Proceedings brought in the
English courts shall be conclusive and binding upon the Borrower and may
be enforced in the courts of any other jurisdiction.
19.4 OTHER JURISDICTIONS
Nothing contained in this Clause 19 shall limit the right of any of the
parties hereto to take proceedings in any other court of competent
jurisdiction, nor shall the taking of Proceedings in any one or more
jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
19.5 SERVICE OF PROCESS
(1) The Borrower irrevocably and unconditionally:
(a) designates, and appoints and empowers Hackwood Secretaries
Limited of One Silk Street, London EC2Y 8HQ to receive for it
and on its behalf, service of process issued out of the
English courts in any Proceedings arising out of or in
connection with this Agreement;
(b) agrees to maintain in England a duly appointed process agent
notified to the other parties to this Agreement, for the
purposes of paragraph (a) above;
(c) agrees that failure by any such process agent to give notice
of such process to it shall not impair the validity of such
service or of any judgment based thereon;
(d) consents to the service of process out of any of the said
courts in any such Proceedings by the airmailing of copies,
postage prepaid, to it at its address for the time being
applying for the purposes of Clause 18; and
(e) agrees that nothing herein shall affect the right to serve
process in any other manner permitted by law.
(2) The Sponsors irrevocably and unconditionally:
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<PAGE>
(a) designate, and appoint and empower Hackwood Secretaries
Limited of One Silk Street, London EC2Y 8HQ to receive for
them and on their behalf, service of process issued out of the
English courts in any Proceedings arising out of or in
connection with this Agreement;
(b) agree to maintain in England a duly appointed process agent
notified to the other parties to this Agreement, for the
purposes of paragraph (a) above;
(c) agree that failure by any such process agent to give notice of
such process to them shall not impair the validity of such
service or of any judgment based thereon;
(d) consent to the service of process out of any of the said
courts in any such Proceedings by the airmailing of copies,
postage prepaid, to them at the address for the time being
applying for the purposes of Clause 18; and
(e) agree that nothing herein shall affect the right to serve
process in any other manner permitted by law.
(3) The Lenders irrevocably and unconditionally:
(a) designate, and appoint and empower Mitsubishi Corporation (UK)
PLC of Bow Bells House, Bread Street, London EC4M 9BQ to
receive for them and on their behalf, service of process
issued out of the English courts in any Proceedings arising
out of or in connection with this Agreement;
(b) agree to maintain in England a duly appointed process agent
notified to the other parties to this Agreement, for the
purposes of paragraph (a) above;
(c) agree that failure by any such process agent to give notice of
such process to them shall not impair the validity of such
service or of any judgment based thereon;
(d) consent to the service of process out of any of the said
courts in any such Proceedings by the airmailing of copies,
postage prepaid, to them at the address for the time being
applying for the purposes of Clause 18; and
(e) agree that nothing herein shall affect the right to serve
process in any other manner permitted by law.
20. COUNTERPARTS
This Deed of Guarantee and Undertaking may be executed in any number of
counterparts and by the different parties hereto on different counterparts
and all of such counterparts taken together shall be deemed to constitute
one and the same instrument.
21. WAIVER; REMEDIES CUMULATIVE
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<PAGE>
No failure to exercise and no delay in exercising on the part of the
Borrower and/or any of the Secured Parties any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege preclude any other or
further exercise thereof, or the exercise of any other right, power or
privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
22. LANGUAGE
Each document referred to herein or to be delivered hereunder (including
financial statements) and each other communication shall be in the English
language.
23. SEVERABILITY
Any provision in this Deed of Guarantee and Undertaking which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
IN WITNESS whereof the parties have caused this Deed of Guarantee and
Undertaking to be executed and delivered as a deed the day and year first above
written.
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by PETRODRILL )
SIX LIMITED acting by )
its duly authorised signatory)
/attorney-in-fact in the presence of:- ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by PRIDE )
INTERNATIONAL INC acting by )
its duly authorised signatory/ )
attorney-in-fact in the presence of: ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by MARITIMA )
PETROLEO E ENGENHARIA )
LTDA acting by its duly authorised )
signatory/attorney-in-fact in the )
presence of: ) /s/ Illegible
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<PAGE>
EXECUTED and DELIVERED )/s/ H. MIYAMOTO
as a DEED by PETRO DIA THREE )
S.A. acting by its duly authorised )
signatory/attorney-in-fact in )
the presence of: ) /s/ Illegible
EXECUTED and DELIVERED )/s/ H. MIYAMOTO
as a DEED by PETRO DIA FOUR )
S.A. acting by its duly authorised )
signatory/attorney-in-fact in )
the presence of: ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by MITSUBISHI )
CORPORATION (UK) PLC (in its )
capacity as Facility Agent) acting by )
its duly authorised signatory/ )
attorney-in-fact in the presence of: ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by MITSUBISHI )
CORPORATION (UK) PLC (in its )
capacity as Security Agent) acting by )
its duly authorised signatory/ )
attorney-in-fact in the presence of: ) /s/ Illegible
EXHIBIT 4.12
DATED 19 December 1998
PRIDE INTERNATIONAL INC. and
MARITIMA PETROLEO E ENGENHARIA LTDA
as Sponsors
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PETRO DIA THREE SA AND PETRO DIA FOUR SA
as Beneficiaries
-------------------------------------------------
FLOOR GUARANTEE
relating to the Loan Agreements
in respect of "Amethyst 6" and "Amethyst 7"
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F I E L D - F I S H E R - W A T E R H O U S E
4 1 V I N E S T R E E T L O N D O N E C 3 N 2 A A
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INDEX
CLAUSE/HEADING PAGE
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1. DEFINITIONS AND INTERPRETATION 2
2. FLOOR GUARANTEE AND UNDERTAKING 4
3. PRESERVATION OF OBLIGATIONS 5
4. PAYMENTS 8
5. TAXATION 8
6. REPRESENTATIONS AND WARRANTIES 9
7. CURRENCY INDEMNITY 10
8. DELEGATION, ASSIGNMENT 10
9. NOTICES, ETC. 11
10. COUNTERPARTS 12
11. WAIVER; REMEDIES CUMULATIVE 12
12. LANGUAGE 12
13. SEVERABILITY 12
14. GOVERNING LAW AND JURISDICTION 12
<PAGE>
THIS DEED is made on 19 December 1998 BETWEEN:-
(1) PRIDE INTERNATIONAL INC,. a company incorporated under the laws of the
State of Louisiana, USA, of 5847 San Felipe, Suite 3300, Houston, Texas
77057, USA ("PRIDE") and MARITIMA PETROLEO E ENGENHARIA LTDA., a company
incorporated under the laws of Brazil, of Avenida Almirante Barroso 52,
Gr. 3400, 2031-000 Rio de Janeiro, Brazil ("MARITIMA") (together, the
"SPONSORS" and, individually, a "SPONSOR"); and
(2) PETRO DIA THREE SA a company duly organised and existing under the laws of
the Republic of Panama whose registered office is at 53rd Street
Urbanizacion Obarrio Torre Swiss Bank, 16th Floor, Panama City, Republic
of Panama and PETRO DIA FOUR SA a company duly organised and existing
under the laws of the Republic of Panama whose registered office is at
53rd Street Urbanizacion Obarrio Torre Swiss Bank, 16th Floor, Panama
City, Republic of Panama (together the "Beneficiaries" and individually a
"BENEFICIARY").
WHEREAS:
(A) By a loan agreement (as amended or supplemented from time to time, the
"LOAN AGREEMENT") of even date herewith and made between the Beneficiaries
(1), the Borrower (2), the Facility Agent (3) and the Security Agent (4),
the Beneficiaries have agreed, upon and subject to the terms and
conditions of the Loan Agreement, to make available to the Borrower loan
facilities not exceeding US$160,000,000 for the purposes therein
specified.
(B) By a further loan agreement (the "SISTER COMPANY LOAN AGREEMENT") dated
the same date as the Loan Agreement and made between the Beneficiaries
(1), the Sister Company (2), the Facility Agent (3) and the Security Agent
(4), the Beneficiaries have agreed to make available to the Sister Company
upon and subject to the terms and conditions of the Sister Company Loan
Agreement loan facilities not exceeding US$180,000,000 for the purposes
therein specified.
(C) The Sponsors have agreed to execute and deliver this Deed to the
Beneficiaries as two of the Lenders in consideration of the Beneficiaries,
at the Sponsors' request, entering into the Loan Agreement and the Sister
Company Loan Agreement and making or continuing loans or advances to, or
otherwise giving credit or granting accommodation or granting time to, the
Borrowers as defined in and pursuant to the Loan Agreement and/or the
Sister Company Loan Agreement.
(D) It is the parties' intention that this Deed shall be held by the
Beneficiaries as security for the Guaranteed Obligations in addition to
and separately from any other security therefor held by the Security
Agent for the benefit of the Secured Parties, it being recognised that
the obligations of the Borrower and of the Sister Company under the
Loan Agreement and the Sister Company Loan Agreement respectively
constitute separate and independent debts thereunder in favour of the
Beneficiaries as Lenders.
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IT IS AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Deed the following words and expressions shall, except where the
context otherwise requires, have the following meanings:
"ADVANCE" means any Advance as defined in the Loan Agreement or in the
Sister Company Loan Agreement;
"AGENTS" means the Facility Agent and the Security Agent and "AGENT"
means either or any of them as the context requires;
"BANKING DAY" shall bear the meaning ascribed to it in the Loan
Agreements;
"BENEFICIARIES" means each of the Beneficiaries specified on page one of
this Deed and their respective successors in title and transferees to the
extent only that such Beneficiary expressly transfers or assigns the
benefit of this Deed to such successor in title and transferee in
accordance with Clause 8 (to the intent that no Lender other than the
Beneficiaries shall be entitled to the benefit of this Deed other than as
a successor in title and transferee of either Beneficiary as aforesaid);
"BORROWER" means Petrodrill Six Limited, a company incorporated under the
laws of the British Virgin Islands, of Arias Fabrega and Fabrega Trust Co;
BVI Limited, 325 Waterfront Drive, Omar Hodge Building, 2nd Floor,
Wickham's Cay, Road Town, Tortola, British Virgin Islands;
"COMMITMENT" means any Commitment as defined in and for the purpose of
the Loan Agreement or the Sister Company Loan Agreement;
"DRAWDOWN NOTICE" means any Drawdown Notice as defined in the Loan
Agreement and in the Sister Company Loan Agreement;
"FACILITY AGENT" means Mitsubishi Corporation (UK) PLC in its capacity as
facility agent for the Lenders under each of the Loan Agreement and the
Sister Company Loan Agreement and includes any successor facility agent or
agents appointed under the Loan Agreement and the Sister Company Loan
Agreement or either of them;
"FINANCING DOCUMENTS" means the Loan Agreement and the Sister Company Loan
Agreement and the Security Documents and "FINANCING DOCUMENT" means any of
them;
"GUARANTEED OBLIGATIONS" is defined in Clause 2.1;
"LENDERS" means each of the Lenders specified in Schedule 1 of the Loan
Agreement and/or of the Sister Company Loan Agreement and their respective
successors in title and transferees under the Loan Agreement and/or of the
Sister Company Loan Agreement;
"OUTSTANDINGS" means any Outstandings as defined in the Loan Agreement
or in the Sister Company Loan Agreement;
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"PROJECT DOCUMENTS" means the documents listed in Schedule 7 Part 1 of the
Loan Agreement and in Schedule 7 part 1 of the Sister Company Loan
Agreement;
"RECEIVER" means a receiver and/or manager (and, as the context so admits,
shall include an administrative receiver) or any similar person or officer
appointed by the Security Agent pursuant to any Security Document;
"REPAYMENT DATE" means any Repayment Date as defined in and for the
purpose of each of the Loan Agreement and the Sister Company Loan
Agreement;
"SECURITY DOCUMENTS" means [this Deed and] the agreements, mortgages,
deeds and other documents specified in Schedule 7 Part 2 of the Loan
Agreement and/or the Sister Company Loan Agreement and any other documents
(including, as the context may require the Loan Agreement and the Sister
Company Loan Agreement) that may now or hereafter be included in the term
"Security Documents" as that term is defined in either of the Loan
Agreements or the Sister Company Loan Agreement;
"SECURITY AGENT" means Mitsubishi Corporation (UK) PLC in its capacity as
security trustee and agent under the Security Trust Deed and includes any
successor security trustee and agent appointed under the terms thereof;
"SECURITY PERIOD" means whichever of the later to expire of the Security
Period under the Loan Agreement or under the Sister Company Loan Agreement
(as the term "SECURITY PERIOD" is respectively defined therein);
"SECURITY TRUST DEED" has the meaning ascribed to it in the Loan
Agreement and the Sister Company Loan Agreement;
"SEVERAL PROPORTIONS" means:
(i) in relation to Pride, 30%; and
(ii) in relation to Maritima, 70%;
"SISTER COMPANY" means Petrodrill Seven Limited, a company incorporated
under the laws of the British Virgin Islands, of Arias Fabrega and Fabrega
Trust Co; BVI Limited, 325 Waterfront Drive, Omar Hodge Building, 2nd
Floor, Wickham's Cay, Road Town, Tortola, British Virgin Islands; and
"TAXES" means any Taxes as defined in the Loan Agreement or in the Sister
Company Loan Agreement.
1.2 INTERPRETATION
This Deed shall be interpreted consistently with the Loan Agreement, and
accordingly the provisions of Clauses 1.2 to 1.4 (inclusive) of the Loan
Agreement shall apply hereto and (MUTATIS MUTANDIS) shall be deemed to be
incorporated into this Deed as if set out in full in this Deed.
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<PAGE>
2. FLOOR GUARANTEE AND UNDERTAKING
2.1 GUARANTEE
Each Sponsor hereby severally irrevocably and unconditionally guarantees
to each of the Beneficiaries the due and punctual payment and discharge by
each of the Borrower and the Sister Company of such Sponsor's Several
Proportion of all monies, obligations and liabilities of any nature
whatsoever which are now or at any time hereafter may be or become due or
owing by the Borrower and/or the Sister Company to each such Beneficiary
under or pursuant to the Loan Agreement or the Sister Company Loan
Agreement (including, but not limited to, any damages for any breaches
thereof) and such Sponsor's Several Proportion of any other liabilities,
whether actual or contingent, now existing or hereafter incurred by the
Borrower and/or the Sister Company to each such of the Beneficiaries under
or pursuant to [the Loan Agreement or the Sister Company Loan
Agreement](whether, in any such case, due, owing or incurred by the
Borrower and/or the Sister Company alone or jointly with any other
person(s) and in whatever name, firm or style and whether as principal or
surety) (all such obligations and liabilities being referred to herein as
the "GUARANTEED OBLIGATIONS") and undertakes that if the Borrower or the
Sister Company (as the case may be) fails for any reason punctually to
perform such of the Guaranteed Obligations or any of them as it is liable
to perform, each Sponsor severally shall cause such Sponsor's Several
Proportion of each and every such payment to be made within five (5)
Banking Days of receipt by such Sponsor of a written demand from the
Beneficiaries (or either of them) as if such Sponsor instead of the
Borrower or the Sister Company (as the case may be) were expressed in the
[the Loan Agreement or the Sister Company Loan Agreement respectively] to
be the primary obligor with respect to such Sponsor's Several Proportion
of the relevant Guaranteed Obligation.
2.2 INDEMNITY
Each Sponsor hereby severally irrevocably and unconditionally undertakes
with each of the Beneficiaries that if any sum expressed to be payable by
such Sponsor under Clause 2.1 is not for any reason recoverable from that
Sponsor under this Deed on the basis of a guarantee (including, without
limitation, any sum not recoverable under this Deed due to any invalidity,
unenforceability or avoidance of any of the Financing Documents)
suchSponsor shall as a primary obligor indemnify the Beneficiaries in
respect thereof and shall pay such sum to such Beneficiaries on first
demand.
2.3 LIMITATION
The aggregate amount recoverable from each of the Sponsors under Clause 2
of this Deed (whether as sureties or by way of indemnity) shall not
exceed:
(i) in the case of Pride US$32,400,000; and
(ii) in the case of Maritima US$75,600,000.
2.4 COMMENCEMENT
The obligation of the Guarantors under this Deed in respect of Guaranteed
Obligations shall commence on the Charterparty Commencement Date and
neither of the Guarantors shall have any obligation until such date but so
that with effect from such date the
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Guarantors shall be liable in respect of all Guaranteed Obligations
whenever the same may have arisen (and whether the same arose prior to or
after such date).
3. PRESERVATION OF OBLIGATIONS
3.1 DURATION OF OBLIGATIONS
The Sponsors agree that their respective obligations under this Deed shall
remain in full force and effect throughout the Security Period and
notwithstanding the enforcement by the Security Agent of any of its rights
under the Security Documents (including but without limitation, the
appointment of a Receiver) or by either of the Beneficiaries or the taking
of possession of any of the Secured Assets or any part thereof.
3.2 CONTINUING GUARANTEE ETC.
Each of the Sponsors declares and agrees that:
(i) this Deed shall be held by and shall be available to the Beneficiaries
as a continuing guarantee and shall not be satisfied by any
intermediate payment or satisfaction of any part of the moneys
and liabilities hereby agreed to be paid or performed and shall
remain in full force and effect until the Guaranteed Obligations
and any other moneys and liabilities hereby agreed to be paid or
performed have been unconditionally and irrevocably paid and
discharged in full to the satisfaction of the Beneficiaries;
(ii) it has not received any security from the Borrower or the Sister
Company or from any other persons for the giving of this Deed and it
will not take any such security without the prior written consent of
the Beneficiaries, and the Sponsors will hold any security taken in
breach of this provision in trust for the Beneficiaries;
(iii) neither of the Beneficiaries shall be bound to enforce any guarantee
or security or proceed or take any other steps against the Borrower
and/or the Sister Company or any other person before enforcing this
Deed;
(iv) this Deed shall be in addition to, and not in substitution for, any
other rights which the Beneficiaries may now or hereafter have under
or by virtue of any guarantee, security, encumbrance or agreement or
any lien or by operation of law or under any collateral or other
security now or hereafter held by the Beneficiaries or the Security
Agent or to which the Security Agent or either of the Beneficiaries
may be entitled; and
(v) without prejudice to sub-clause (i) this Deed shall be held by
and shall be available to the Beneficiaries as security for
the ultimate balance owing to the Beneficiaries in respect of
the Guaranteed Obligations and shall not be discharged or affected
by any intermediate reduction in (or extinguishment of) all or
any of the Guaranteed Obligations resulting from a transfer or
assignment by a Beneficiary of all or any of such Beneficiary's
rights under the Loan Agreement or the Sister Company Loan
Agreement pursuant to Clause 8.
3.3 AVOIDANCE OF SECURITIES
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Any settlement or discharge under this Deed between either Beneficiary and
the Sponsors shall be conditional upon no security or payment to the
Beneficiaries (or either of them) by the Borrower and/or the Sister
Company, the Sponsors or any other person being avoided or set-aside or
ordered to be refunded or reduced by virtue of any provision or enactment
relating to bankruptcy, insolvency or liquidation for the time being in
force, and if such condition is not satisfied, the Beneficiaries (or
either of them) shall be entitled to recover from the Sponsors on demand
the value of such security or the amount of any such payment as if such
settlement or discharge had not occurred.
3.4 PRESERVATION OF RIGHTS
The obligations of the Sponsors under this Deed shall not be affected by
any act, omission, matter or thing which, but for this provision, might
operate to release or otherwise exonerate either of the Sponsors from its
obligations hereunder in whole or in part, including (without limitation,
and whether or not known to or discoverable by the Sponsors, the Borrower,
the Sister Company, either Beneficiary or any other person):
(i) any time or waiver granted to or composition with the Borrower, the
Sister Company or the other Sponsor or any other person;
(ii) the taking, variation, compromise, discharge, composition,
arrangement, renewal or release of or refusal or neglect to perfect
or enforce any rights, remedies or securities against the Borrower,
the Sister Company or the other Sponsor or any other person;
(iii) any legal limitation, disability, incapacity or other circumstances
relating to the Borrower, the Sister Company or the other Sponsor or
any other person;
(iv) any amendment or supplement to this Deed or any of the Financing
Documents or any other document or security;
(v) the dissolution, liquidation, amalgamation, reconstruction or
reorganisation of the Borrower, the Sister Company or the other
Sponsor or any other person;
(vi) the unenforceability or invalidity of any obligations of the
Borrower, the Sister Company or the other Sponsor or any other
person under this Deed or any of the other Financing Documents or
any other document or security;
(vii) the failure of either of the Beneficiaries or any other person to
take any other guarantee or security (whether contemporaneous with
this Deed) or otherwise; or
(viii) any other act, event or omission which but for the provision would
or might operate to impair, discharge or otherwise affect the
obligations of the Sponsors or either of them hereunder.
3.5 NON-COMPETITION
Until all the Guaranteed Obligations and the other moneys and liabilities
hereby agreed to be paid or performed have been unconditionally and
irrevocably paid and discharged in full to the satisfaction of the
Beneficiaries, the Sponsors shall not by virtue of any payment made or
performance hereunder on account of such moneys and liabilities or by
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virtue of any relationship between, or transaction involving, the
Sponsors, the Borrower, the Sister Company or any other person:
(i) exercise any rights of subrogation or otherwise in relation to any
rights, security or moneys held or received or receivable by any
Secured Party or any other person;
(ii) exercise any right of contribution from the other Sponsor or any
co-surety or any other person liable in respect of such moneys and
liabilities under any other guarantee, security or agreement;
(iii) exercise any right of set-off or counterclaim against the Borrower,
the Sister Company or the other Sponsor or any such co-surety or any
other person;
(iv) receive, claim or have the benefit of any payment, distribution,
security or indemnity from the Borrower, the Sister Company or the
other Sponsor or any such co-surety or any other person; or
(v) unless so directed by the Beneficiaries (when the Sponsors will
prove in accordance with such directions), claim as a creditor of
the Borrower, the Sister Company or the other Sponsor or any such
co-surety in competition with the Beneficiaries (or either of them).
The Sponsors shall hold in trust for the Beneficiaries and forthwith pay
or transfer (as appropriate) to the Beneficiaries any such payment
(including an amount equal to any such set-off), distribution or benefit
of such security, indemnity or claim received by it.
3.6 SUSPENSE ACCOUNTS
Until the Guaranteed Obligations and all other liabilities hereby agreed
to be paid or performed have been unconditionally and irrevocably paid in
full to the satisfaction of the Beneficiaries, either Beneficiary may at
any time keep in a separate account (without liability to pay interest
thereon) for as long as it may think fit any moneys received, recovered or
realised under this Deed or under any other guarantee, security or
agreement relating in whole or in part to the moneys and liabilities
hereby agreed to be paid and performed without being under any
intermediate obligation to apply the same or any part thereof in or
towards the discharge of such amount.
3.7 INTEREST
The Sponsors shall pay interest at the relevant rate applicable under the
relevant Financing Document (as well after as before judgement) on any
amount for the time being due from the Sponsors to either Beneficiary
under this Deed from the date of a valid demand for payment hereunder
until actual payment in full.
3.8 OPENING OF NEW ACCOUNTS
If for any reason this Deed ceases to be a continuing security, either
Beneficiary may either continue any then existing account or open one or
more fresh accounts for the Borrower or the Sister Company, but in either
case the obligations of the Guarantors shall
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remain unaffected by, and be computed without regard to, any payment into
and out of any such account.
4. PAYMENTS
4.1 CURRENCY OF FUNDS
All payments to be made by the Sponsors under this Deed shall be made:
(i) for value on the due date at such time and in such funds as the
Beneficiaries entitled to such payment may specify to the Sponsors
as being customary at the time for the settlement of transaction in
US Dollars in the place for payment; and
(ii) to such account at such office or bank as the Beneficiary entitled
to such payment may notify to the Sponsors for this purpose.
4.2 NO SET-OFF OR COUNTERCLAIMS
All amounts due from the Sponsors to the Beneficiaries (or either of them)
under this Deed shall be paid without any form of set-off, counterclaim or
condition whatsoever. Any amount due from the Sponsors under this Deed
shall not be reduced by any set-off, counterclaim or other claim which the
Sponsors may have against the Borrower or the Sister Company whether under
this Deed, any Project Document or otherwise.
4.3 UNCONDITIONAL OBLIGATION
Nothing in this Deed, nor any matter, fact, act, omission, circumstance or
thing whatsoever, including without limitation:
(i) the failure or frustration of the project the subject of the
Project Documents;
(ii) any change in circumstances or political, economic or financial
conditions;
(iii) the insolvency, dissolution, death, disability or incapacity of any
person whatsoever; or
(iv) the breach by any person of any agreement or understanding,
shall operate in any way to affect or minimise, or release the Sponsors
from any of the Sponsors' obligations under, this Deed, all of which
obligations shall subsist in full notwithstanding any such matter, fact,
omission, circumstance or thing.
5. TAXATION
All payments to be made by the Sponsors (or either of them) hereunder
shall be made without set-off or counterclaim and free and clear of and
without deduction for or on account of any present or future Taxes of any
nature whatsoever imposed by or in any country ("APPLICABLE TAX") unless
the Sponsors (or either of them) are compelled by law to make payment to
or for the account of the Beneficiaries (or either of them) subject to
such Applicable Tax, in which case it shall promptly pay such Applicable
Tax and the amount of the relevant payment hereunder shall be increased to
the extent necessary to
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ensure that the recipient Beneficiary actually receives an amount, free
and clear of and after deduction for all such Applicable Tax, equal to the
full amount which would have been received if no such withholding or
deduction had been made. Each of the Sponsors shall severally pay and
indemnify and keep indemnified each of the Beneficiaries against all such
Applicable Tax. The Sponsors shall promptly deliver to each of the
Beneficiaries copies of official Tax receipts evidencing payment of any
such Applicable Tax imposed as aforesaid. The obligations of the Sponsors
under this Clause 5 shall survive the repayment of the Guaranteed
Obligations and Sister Company Obligations and the payment of all other
sums payable hereunder and under the other Security Documents.
6. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS
Each of the Sponsors represents and warrants severally as to itself to
each of the Beneficiaries on the date of this Deed as follows:-
(i) It is a limited liability company duly organised and validly
existing under the laws specified on page 1 of this Deed, possessing
perpetual corporate existence and the capacity to sue or be sued in
its own name and each of it and its Subsidiaries has the power to
own its assets and carry on its business as it is now being
conducted.
(ii) It has the power to enter into and perform this Deed and each of
the other Financing Documents and the Project Documents to which
it is a party and the transactions contemplated thereby and has
taken all necessary action to authorise the entry into and
performance of this Deed and each of the other Financing
Documents and the Project Documents to which it is a party and
the transactions contemplated thereby in accordance with the
terms thereof.
(iii) This Deed and each of the other Financing Documents and the Project
Documents to which it is a party constitute its legal, valid and
binding obligations enforceable in accordance with their respective
terms and are in proper form for the enforcement in all the courts
of the country of incorporation.
(iv) The entry into and performance of this Deed and each of the other
Financing Documents and Project Documents to which it is a party and
the transactions contemplated thereby do not conflict with:
(a) any law or official requirement;
(b) its constitutional documents; or
(c) any agreement or document to which it or any of its
Subsidiaries is a party or which is binding upon it or any of
its Subsidiaries or any of their respective assets, and will
not result in the creation or imposition of (or enforcement
of) any encumbrance on any of its assets or the assets of any
of its Subsidiaries.
6.2 REPETITION
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The representations and warranties set out in this Clause 6 shall survive
the execution of this Deed and the making of each Advance and shall be
deemed to be repeated on the date of the giving of each Drawdown Notice,
on each Drawdown Date on each Repayment Date, so long as any of the
Guaranteed Obligations is or may be outstanding or any Commitment is in
force with reference to the facts and circumstance then subsisting, as if
make at each such time.
7. CURRENCY INDEMNITY
7.1 INDEMNITY
(i) If, for any reason, any payment due from the Sponsors (or either
of them) under or in connection with this Deed is made or is
satisfied in a currency (the "OTHER CURRENCY") other than the
currency in which the relevant payment under this Deed is due
(the "CONTRACTUAL CURRENCY"), then to the extent that the payment
(when converted into the Contractual Currency at the rate of
exchange on the date of payment or, in the case of the
liquidation or insolvency of the Sponsors (or either of them), at
the rate of exchange on the latest date permitted by applicable
law for the determination of liabilities in such liquidation or
insolvency) actually received by the party entitled thereto falls
short of the amount expressed to be due under the terms of this
Deed, the Sponsors, or (as the case may be) the relevant Sponsor,
shall, as a separate and independent several obligation,
indemnify the party entitled thereto and hold such party harmless
against the amount of such shortfall.
(ii) If on any occasion the Contractual Currency so purchased exceeds
the amount payable hereunder in the Contractual Currency to the
party entitled thereto then, subject to the Sponsors, or (as the
case may be) the relevant Sponsor, having no further obligation,
actual or contingent, to such party under this Deed, such party
shall refund to the Sponsors, or (as the case may be) the
relevant Sponsor, the excess amount of the Contractual Currency
so purchased.
(iii) For the purpose of this Clause "RATE OF EXCHANGE" means the rate at
which the party entitled thereto is able on the relevant date to
purchase the Contractual Currency with the Other Currency and shall
take into account any premium and other costs of exchange.
7.2 INDEPENDENT OBLIGATIONS
The indemnities in Clause 7.1 shall constitute separate and independent
obligations of the Sponsors from their other respective obligations under
this Deed, shall give rise to a separate and independent cause of action
against the Sponsors or (as the case may be) the relevant Sponsor
severally and shall apply irrespective of any indulgence granted by the
Beneficiaries (or either of them) from time to time.
8. ASSIGNMENT
If either of the Beneficiaries transfers the benefit of any of its rights
under the Loan Agreement or the Sister Company Loan Agreement to any
transferee (a "TRANSFEREE") (including any transfer effected pursuant to
and in accordance with Clause 15.4 of the Loan Agreement or the Sister
Company Loan Agreement) such Beneficiary shall be
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entitled to elect whether to transfer and assign the benefit of its rights
under this Deed by the service of notice by such Beneficiary upon the
Sponsors. If such Beneficiary does not serve such a notice such
Beneficiary shall retain the full benefit of this Deed for the obligations
of the Guarantors in respect of the Guaranteed Obligations and for the
avoidance of any doubt it is expressly confirmed and agreed by the
Guarantors and each of them that the benefit of this Deed shall apply in
respect of the Guaranteed Obligations including (for the avoidance of
doubt) any Guaranteed Obligations existing at the date of or incurred
after the date of such transfer.
9. NOTICES, ETC.
9.1 METHOD OF SENDING
Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, may be made by facsimile transmission or by telex
or by letter.
9.2 ADDRESSES FOR NOTICES
Any communication or document to be made or delivered by one person to
another pursuant to this Deed shall (unless the one has by not less than
three (3) days' written notice to the other specified another address) be
made or delivered to that other person at the respective addresses set out
below.
(1) The Beneficiaries: Petro Dia Three S.A.
c/o Mitsubishi Corporation
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship & Industrial Project Department
Facsimile:
(2) The Sponsors Petro Dia Four S.A.
c/o Mitsubishi Corporation
6-3 Marunouchi 2-chome
Chiyoda-ku
Tokyo
Japan
Attention: General Manager, Ship & Industrial Project Department
Facsimile:
9.3 DEEMED RECEIPT
Any notice given hereunder shall be deemed to have been received:
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(i) If sent by facsimile transmission or by telex, at the opening of
business one (1) Banking Day after the day it was transmitted;
(ii) In the case of a written notice lodged by hand, at the time of
actual delivery; and
(iii) If posted, on the fifth Banking Day following the day on which it
was properly despatched by first class mail postage prepaid.
10. COUNTERPARTS
This Deed may be executed in any number of counterparts and by the
different parties hereto on different counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
11. WAIVER; REMEDIES CUMULATIVE
No failure to exercise and no delay in exercising on the part of the
Beneficiary (or either of them) any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other or further
exercise thereof, or the exercise of any other right, power or privilege.
The rights and remedies herein provided are cumulative and not exclusive
of any rights or remedies provided by law.
12. LANGUAGE
Each document referred to herein or to be delivered hereunder (including
financial statements) and each other communication shall be in the English
language.
13. SEVERABILITY
Any provision in this Deed which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
14. GOVERNING LAW AND JURISDICTION
14.1 GOVERNING LAW
This Deed shall be governed by and construed in accordance with English
law.
14.2 SUBMISSION TO JURISDICTION
Each of the parties hereto irrevocably agrees that the English courts are
to have jurisdiction to settle any disputes which may arise out of or in
connection with this Deed and/or the Financing Documents and that
accordingly any suit, action or proceedings ("PROCEEDINGS") arising out of
or in connection with this Deed and/or the other Financing Documents may
be brought in such courts.
14.3 WAIVER OF OBJECTION
- 12 -
<PAGE>
Each of the Sponsors irrevocably waives any objection which it may have
now or hereafter to the laying of the venue of any Proceedings in any such
court as is referred to in Clause 14.2 and any claim that any such
Proceedings have been brought in an inconvenient forum, and further
irrevocably agrees that a judgment in any Proceedings brought in the
English courts shall be conclusive and binding upon each of the Sponsors
and may be enforced in the courts of any other jurisdiction.
14.4 OTHER JURISDICTIONS
Nothing contained in this Clause 14 shall limit the right of any of the
parties hereto to take proceedings in any other court of competent
jurisdiction, nor shall the taking of Proceedings in any one or more
jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
14.5 SERVICE OF PROCESS
The Sponsors irrevocably and unconditionally:
(a) designate, and appoint and empower Hackwood Secretaries Limited of
One Silk Street, London EC2Y 8HQ to receive for them and on their
behalf, service of process issued out of the English courts in any
Proceedings arising out of or in connection with this Agreement;
(b) agree to maintain in England a duly appointed process agent notified
to the other parties to this Agreement, for the purposes of
paragraph (a) above;
(c) agree that failure by any such process agent to give notice of such
process to them shall not impair the validity of such service or of
any judgment based thereon;
(d) consent to the service of process out of any of the said courts in
any such Proceedings by the airmailing of copies, postage prepaid,
to them at the address for the time being applying for the purposes
of Clause 8; and
(e) agree that nothing herein shall affect the right to serve process in
any other manner permitted by law.
IN WITNESS whereof the parties have caused this Deed to be executed and
delivered as a Deed.
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by PRIDE )
INTERNATIONAL INC acting by )
its duly authorised signatory/ )
attorney-in-fact in the presence of:- ) /s/ Illegible
EXECUTED and DELIVERED )
as a DEED by MARITIMA )
- 13 -
<PAGE>
PETROLEO E ENGENHARIA ) /s/ Illegible
LTDA acting by its duly authorised )
signatory/attorney-in-fact in the )
presence of:- ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by PETRO DIA THREE )
SA acting by its duly authorised )
signatory/attorney-in-fact )
in the presence of:- ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by PETRO DIA FOUR )
SA acting by its duly authorised )
signatory/attorney-in-fact )
in the presence of:- ) /s/ Illegible
- 14 -
EXHIBIT 4.13
DATED 19 DECEMBER 1998
PETRODRILL SIX LIMITED AND OTHERS
as Guarantors
- and -
MITSUBISHI CORPORATION (UK) PLC
as Security Agent
-----------------------------------------
INTER-COMPANY CROSS GUARANTEE
-----------------------------------------
F I E L D - F I S H E R - W A T E R H O U S E
4 1 V I N E S T R E E T L O N D O N E C 3 N 2 A A
<PAGE>
CONTENTS
NUMBER/CLAUSE PAGE
============= ====
1. DEFINITIONS AND INTERPRETATION 1
2. JOINT AND SEVERAL GUARANTEE 4
3. CONTINUING SECURITY 4
4. INTEREST 4
5. REPRESENTATIONS AND WARRANTIES 5
6. OPENING OF NEW ACCOUNT 5
7. DEALINGS WITH THE PRINCIPALS AND OTHERS 5
8. DISCHARGE AND RELEASES AVOIDED 6
9. RIGHT TO MAKE DEMAND 7
10. CERTIFICATE 7
11. EFFECT OF PRINCIPAL'S INSOLVENCY 7
12. EFFECT OF OTHER GUARANTEES ETC. 8
13. RESORTING TO OTHER MEANS OF PAYMENT 8
14. NO PROOF IN COMPETITION WITH SECURITY AGENT 8
15. CHANGE IN CONSTITUTION OF PRINCIPALS OR GUARANTOR 9
16. NO SECURITY RECEIVED BY GUARANTORS 9
17. MONEY NOT RECOVERABLE ON FOOTING OF GUARANTEE 9
18. CHANGE IN SECURITY AGENT'S CONSTITUTION OR
AMALGAMATION ETC. 9
19. PAYMENTS BY GUARANTORS 10
20. CURRENCY INDEMNITY 10
21. NO WAIVER OF RIGHTS UNDER GUARANTEE 10
22. SECURITY AGENT 11
23. DEMANDS 11
24. ASSIGNMENT 12
25. GOVERNING LAW AND JURISDICTION 12
26. WAIVER; REMEDIES CUMULATIVE 13
27. SEVERABILITY 14
28. PROPERTY IN THE DEED TO BELONG TO THE SECURITY AGENT 14
THE SCHEDULE 15
SIGNATORIES 15
<PAGE>
THIS DEED OF GUARANTEE is made the 19 day of December 1998
BETWEEN
(1) THE SEVERAL COMPANIES whose names and registered offices are specified in
the Schedule below (together called the "COMPANIES" which expression shall
include each or any one or more of them severally); and
(2) MITSUBISHI CORPORATION (UK) PLC, a company incorporated in England and
Wales (Reg No. 2214224), whose registered office is at Bow Bells House,
Bread Street, London EC4M 9BQ in its capacity as security trustee and
agent for the Secured Parties
WHEREAS:
(A) By loan agreement dated the same date as this Deed, and made between
Petrodrill Six, the Lenders, the Facility Agent and the Security Agent,
the Lenders have made available to Petrodrill Six upon the terms and
subject to the conditions thereof, loan facilities in a maximum aggregate
principal amount of US$160,000,000.
(B) By a loan agreement dated the same date as this Deed, and made between
Petrodrill Seven, the Lenders, the Facility Agent and the Security Agent,
the Lenders have made available to Petrodrill Seven, upon the terms and
subject to the conditions whereof, loan facilities in a maximum aggregate
principal amount of US$180,000,000.
(C) It is a condition of the Facilities being available for drawing that
certain conditions (as set out in each of the Loan Agreements) have first
been satisfied and that certain documents (as set out in the Loan
Agreements) have first been delivered.
(D) One of such conditions is a condition that the Security Documents
(including, but not limited to, this Deed), duly executed by the parties
thereto and being in form and substance satisfactory to the Security
Agent, shall have been delivered to the Security Agent.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS
In this Deed the following words and expressions shall, except where the
context otherwise requires, have the following meanings:
"AGENTS" means the Facility Agent and the Security Agent and "AGENT" means
either or any of them as the context requires;
"AMETHYST" means Amethyst Financial Company Limited (one of the
Companies);
"BANKING DAY" shall bear the meaning ascribed to it in the Loan
Agreements;
"COMMITMENT" means any Commitment as defined in and for the purpose of
each of the Loan Agreements;
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"FACILITIES" means each of the Facilities as defined in the Petrodrill Six
Loan Agreement or in the Petrodrill Seven Loan Agreement;
"FACILITY AGENT" means Mitsubishi Corporation (UK) PLC in its capacity as
facility agent for the Lenders under each Loan Agreement and includes any
successor facility agent or agents appointed under the Loan Agreements or
either of them;
"FINANCING DOCUMENTS" means the Loan Agreements and the Security Documents
and "FINANCING DOCUMENT" means any of them;
"GUARANTEED OBLIGATIONS" is defined in Clause 2;
"GUARANTOR" means each of the Companies in so far only as it covenants by
this Deed to pay and discharge monies, obligations or liabilities due
owing or incurred by a Company other than itself to the Agents or the
Lenders;
"LENDERS" means each of the Lenders specified in Schedule 1 of the
Petrodrill Six Loan Agreement and in Schedule 1 of the Petrodrill Seven
Loan Agreement and includes their respective successors in title and
transferees under the relevant Loan Agreement;
"LOAN AGREEMENTS" means the Petrodrill Six Loan Agreement and the
Petrodrill Seven Loan Agreement and "LOAN AGREEMENT" means either or both
of them as the context requires;
"OUTSTANDINGS" means any Outstandings as defined in and for the purpose of
each of the Loan Agreements;
"PETRODRILL SIX" means Petrodrill Six Limited, a company incorporated
under the laws of the British Virgin Islands, of Arias Fabrega and Fabrega
Trust Co., BVI Limited, 325 Waterfront Drive, Omar Hodge Building, 2nd
Floor, Wickham's Cay, Road Town, Tortola, British Virgin Islands;
"PETRODRILL SIX LOAN AGREEMENT" means the loan agreement referred to in
Recital (A);
"PETRODRILL SEVEN" means Petrodrill Seven Limited, a company incorporated
under the laws of the British Virgin Islands, of Arias Fabrega and Fabrega
Trust Co., BVI Limited, 325 Waterfront Drive, Omar Hodge Building, 2nd
Floor, Wickham's Cay, Road Town, Tortola, British Virgin Islands;
"PETRODRILL SEVEN LOAN AGREEMENT" means the loan agreement referred to in
Recital (B);
"PRINCIPALS" means the Companies in so far only as any monies, obligations
and liabilities may at any time be due or owing or payable from or by them
under or pursuant to any of the Financing Documents (whether due, owing or
incurred by the relevant person alone or jointly with any other person(s)
and in whatever name form or style and whether as principal or surety)
otherwise than as Guarantors under this Deed;
"SECURED PARTIES" means the Agents and the Lenders;
2
<PAGE>
"SECURITY AGENT" means Mitsubishi Corporation (UK) PLC, in its capacity as
security trustee and (where applicable hereunder or thereunder) agent for
the Secured Parties under the Security Trust Deed and the other Financing
Documents and includes any successor security trustee and agent appointed
under the terms hereof and thereof;
"SECURITY DOCUMENTS" means the agreements, mortgages, deeds and other
documents specified in Schedule 7 Part 2 of the Petrodrill Six Loan
Agreement and in Schedule 7 Part 2 of the Petrodrill Seven Loan Agreement
and any other documents (including, as the context may require the Loan
Agreements) that may now or hereafter be included in the term "SECURITY
DOCUMENTS" as that term is defined in and for the purpose of each of the
Loan Agreements;
"SECURITY TRUST DEED" shall have the meaning ascribed thereto in each of
the Loan Agreements;
"SHARE CHARGES" means the two deeds of even date herewith, each between
Amethyst and the Security Agent by which Amethyst charged to the Security
Agent the Shares in Petrodrill Six and Petrodrill Seven, respectively; and
"SHARES" means all of the shares in each of Petrodrill Six and Petrodrill
Seven held by Amethyst at the date hereof and such other shares in
Petrodrill Six and Petrodrill Seven of which Amethyst or may at any time
become (whether alone or jointly with any other person) the legal and/or
beneficial owner, and all dividends, interest, payments and other
distributions payable in relation to any of the shares and all stocks,
shares, rights, money or property accruing or offered by way of
redemption, bonus, preference, option, exchange, purchase, substitution or
otherwise to or in respect of any of the shares, all allotments, offers,
rights and benefits whatsoever accruing, offered or arising in respect of
any of the shares and all or any other rights attaching to or exercisable
by virtue of the ownership of any of the shares and all proceeds of any
disposal of any of the shares or of any enforcement of the Share Charges
and any other sum received or receivable in respect of any of the Shares.
1.2 CLAUSE HEADINGS
Clause headings and the table of contents are inserted for convenience of
reference only and will be ignored in the interpretation of this Deed.
1.3 CONSTRUCTION OF CERTAIN REFERENCES
In this Deed, unless the context otherwise requires:
(a) references to Recitals, Clauses and Schedules are to be construed as
references to Clauses and Recitals of and Schedules to, this Deed;
(b) references to this Deed (or to any other document) are to this Deed
(or, as the case may be, to that other document) as from time to
time amended, varied or supplemented;
(c) references to any Act of Parliament or any Section of, Schedule to
or other provision of an Act of Parliament shall be construed, at
any particular time, as including reference to any modification,
extension or re-enactment thereof then in force and instruments,
orders and regulations then in force and made under or deriving
validity from the relevant Act;
3
<PAGE>
(d) words importing the plural will include the singular and vice versa;
(e) references to persons include companies; and
(f) expressions listed in Clause 1.2 of the Loan Agreements shall, where
used in this Deed, unless the context otherwise requires, be
construed in accordance with Clause 1.2 of the Loan Agreements.
2. JOINT AND SEVERAL GUARANTEE
Each of the Companies unconditionally and irrevocably guarantees to and
undertakes with the Security Agent (as trustee for the Secured Parties)
both severally and also jointly with each of the other Companies that it
will pay and discharge to the Security Agent on demand all monies,
obligations and liabilities of any nature which are now or at any time
hereafter may be or become due or owing by any other Company to any of the
Agents or any of the Lenders under or pursuant to any of the Financing
Documents (including damages for breach thereof) and any other
liabilities, whether actual or contingent, now existing or hereafter
incurred by any other Company to any of the Agents or any of the Lenders
under or pursuant to any of the Financing Documents (whether in any such
case due, owing or incurred by the relevant person alone or jointly with
any other person(s) and in whatever name, form or style and whether as
principal or surety) (except in any such case any monies, obligations and
liabilities, due, owing or incurred by such other Company as Guarantor for
the Company concerned) (all such monies, obligations and liabilities being
referred to herein as the "GUARANTEED OBLIGATIONS") and each Company
undertakes jointly and severally that if any other Company fails for any
reason punctually to perform such of the Guaranteed Obligations or any of
them as it is liable to perform, each Company shall cause every such
payment to be made within five (5) Banking Days of receipt by such Company
of a written demand from the Security Agent as if such Company were itself
expressed in the relevant Financing Document to be the primary obligor
with regard to the relevant Guaranteed Obligations Provided however that
the amounts payable by Amethyst (but without affecting the liabilities of
the other Companies under this Deed) shall be limited to the aggregate of
amounts generated by the Shares including all realisations received by the
Security Agent or by any delegate thereof or receiver, receiver and
manager or administrative receiver or similar person by virtue of any
enforcement of the Share Charges.
3. CONTINUING SECURITY
This Deed shall be a continuing security for all the Guaranteed
Obligations and shall not be discharged by any intermediate discharge or
payment of or on account of any of the Guaranteed Obligations or any of
them or any settlement of accounts between the Security Agent and the
Principals, any other guarantor or any other person. No demand made by or
on behalf of the Security Agent hereunder shall prejudice or restrict the
rights of the Security Agent to make further or other demands.
4. INTEREST
The Guarantors shall pay interest at the relevant rate applicable under
the relevant Financing Document (as well after as before judgment) on any
amount for the time being
4
<PAGE>
due from the Guarantors to the Security Agent under this Deed from the
date of a valid demand for payment hereunder until actual payment in full.
5. REPRESENTATIONS AND WARRANTIES
Each of the Companies represents and warrants severally as to itself to
as follows:-
(i) It is a limited liability company duly organised and validly
existing under the law of the country where its registered office is
situate as specified against its name in the Schedule, possessing
perpetual corporate existence and the capacity to sue or be sued in
its own name and has the power to own its assets and carry on its
business as it is now being conducted.
(ii) It has the power to enter into and perform this and the transactions
contemplated hereby and has taken all necessary action to authorise
the entry into and performance of this Deed and the transactions
contemplated hereby in accordance with the terms hereof.
(iii) This Deed constitutes its legal, valid and binding obligations
enforceable in accordance with its terms and is in proper form for
the enforcement in all the courts of the country of incorporation.
(iv) The entry into and performance of this Deed and the transactions
contemplated hereby do not conflict with:
(a) any law or official requirement;
(b) its constitutional documents; or
(c) any agreement or document to which it is a party or which is
binding upon it or any of its assets, and will not result in
the creation or imposition of (or enforcement of) any
encumbrance on any of its assets.
6. OPENING OF NEW ACCOUNT
If for any reason this Deed ceases to be a continuing security, the
Secured Parties may either continue any then existing account or open one
or more fresh accounts for the Principals, but in either case the
obligations of the Guarantors under this Deed shall remain unaffected by,
and be computed without regard to, any payment into or out of any such
account.
7. DEALINGS WITH THE PRINCIPALS AND OTHERS
The obligations of the Guarantors under this Deed and the liabilities of
any other person under the Financing Documents and all security rights and
interests of whatsoever nature created thereby or pursuant thereto
(including, without limitation, those created by or pursuant to each of
the Security Documents) shall not be impaired, discharged or otherwise
affected by any act, omission, matter or thing which, but for this
provision, might operate to release or otherwise exonerate any of the
Guarantors from its obligations hereunder in whole or in part or to
release, discharge, impair or adversely affect any such security rights
and interests, including (without limitation, and whether or not known to
or discoverable by the Guarantors, the Security Agent or any other
person):
5
<PAGE>
(i) any time or waiver granted to or composition with the Principals or
any other person;
(ii) the taking, variation, compromise, discharge, composition,
arrangement, renewal or release of or refusal or neglect to perfect
or enforce any rights, remedies or securities against the Principals
or any other person;
(iii) any legal limitation, disability, incapacity or other circumstances
relating to the Principals or any other person;
(iv) any amendment or supplement to this Deed or any of the other
Financing Documents or any other document or security;
(v) the dissolution, liquidation, amalgamation, reconstruction or
reorganisation of Principals or any other person;
(vi) the unenforceability or invalidity of any obligations of the
Principals or any other person under this Deed or any of the other
Financing Documents or any other document or security;
(vii) the failure of the Security Agent or any other person to take any
other guarantee or security (whether contemporaneous with this Deed)
or otherwise; or
(viii) any other act, event or omission which but for the provision would
or might operate to impair, discharge or otherwise affect the
obligations of the Guarantors hereunder.
8. DISCHARGE AND RELEASES AVOIDED
8.1 No assurance, security or payment which may be avoided or adjusted under
the law, including under any enactment, relating to individual or
corporate insolvency and no release, settlement or discharge given or made
by either of the Agents and/or the Lenders on the faith of any such
assurance, security or payment shall prejudice or affect the right of the
Security Agent to recover all liabilities due and owing under this Deed
from the Guarantors (including any monies which it or the Facility Agent
or the Lenders may be compelled to refund under the provisions of the
Insolvency Act 1986 and any costs payable by it or them or otherwise
incurred in connection therewith) or to enforce the security created by or
pursuant to this Deed to the full extent of the liabilities due and owing
under this Deed.
8.2 In the event of any claim being made or proceedings being taken against
the Security Agent the effect of which, if successful, would be the
avoidance or reduction of any such security or payment and whether or not
any Guarantor shall have been made a party thereto, the Security Agent
shall have absolute discretion to concede or settle the same on such terms
as it may think fit whereupon the preceding sub-Clause shall have effect
as if such concession or settlement had been ordered by the court (without
the possibility of appeal) and the relevant Guarantor shall in addition
pay the Security Agent all costs and expenses (on a full indemnity basis)
arising out of or in connection with any such claim or proceedings.
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<PAGE>
8.3 If the Security Agent has reasonable grounds for believing that any
assurance, security or payment received by it from the Principals (or any
of them) or the Guarantors or any other person in respect of the
Guaranteed Obligations may be avoided or adjusted under any law relating
to bankruptcy, insolvency or winding-up then the Security Agent shall be
at liberty to retain the security created by or pursuant to this Deed for
the relevant period (as defined below) after the payment and discharge in
full of all amounts due and owing notwithstanding any release, settlement
discharge or arrangement given or made by the Security Agent on, or as a
consequence of, such payment or termination or liability provided that, if
at any time within the relevant period after such payment or discharge, a
petition shall be presented to a competent court for an order for the
winding-up or the making of an administration order in respect of the
Principals (or any of them) or the Principals (or any of them) shall
commence to be wound-up or to go into administration, or if any analogous
proceedings are taken in respect of the Guarantors or such other person,
the Security Agent shall be at liberty to continue to retain such security
(including the documents aforesaid) for and during such further period as
the Security Agent may determine in which event such security shall be
deemed to have continued to have been held as security for the payment and
discharge to the Security Agent of all amounts due and owing under this
Deed. In this Clause the "RELEVANT PERIOD" means a period of one month
plus any statutory period during which any assurance, security or payment
such as is referred to above may be avoided or invalidated (or such longer
period as the Security Agent shall consider comparable in the light of the
provisions of any applicable law of any jurisdiction).
9. RIGHT TO MAKE DEMAND
If the right to make a demand for payment of any sum from the Principals
has arisen the Security Agent may make a demand under this Deed (i) before
making any demand on the Principals (or any of them) or any other surety
or enforcing any other guarantee or security for the Guaranteed
Obligations and (ii) for the payment of the ultimate balance after
resorting to other means of payment or for the balance due at any time
notwithstanding that the Security Agent has not resorted to other means of
payment.
10. CERTIFICATE
The Security Agent's certificate of the amount of the Guaranteed
Obligations outstanding at any time shall, in the absence of manifest
error, be PRIMA FACIE evidence for all purposes of this Deed as against
the Guarantor.
11. EFFECT OF PRINCIPALS' INSOLVENCY
The bankruptcy, liquidation or insolvency of any of the Principals shall
not affect or determine the liability of the Guarantors under this Deed.
All dividends, compositions and money received by the Security Agent from
any of the Companies or from any other company, person or estate capable
of being applied by the Security Agent in reduction of the indebtedness of
any of the Principals shall be regarded for all purposes as payments in
gross and the Security Agent shall be entitled to prove in the bankruptcy,
liquidation or insolvency of any of the Principals in respect of the whole
of such Principal's indebtedness to the Security Agent and/or the Lenders
and without any right on the part of any of the Guarantors to be
subrogated to the Security Agent in respect of any such proof to the
intent that each of the guarantees contained in this Deed shall apply to
and secure the whole of any ultimate balance which shall remain due to the
Security Agent.
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12. EFFECT OF OTHER GUARANTEES ETC.
This Deed and the rights of the Security Agent under it shall be in
addition to and shall not be in any way prejudiced or affected by any one
or more other securities or guarantees for any of the Principals which the
Security Agent may now or subsequently hold whether from any of the
Guarantors or from any other person.
13. RESORTING TO OTHER MEANS OF PAYMENT
The Security Agent shall be at liberty but not bound to resort for its own
benefit to any other means of payment at any time and in any order it
thinks fit without in consequence diminishing the liability of the
Guarantors and the Security Agent may enforce any of the guarantees
contained in this Deed either for the payment of the ultimate balance or
balances after resorting to other means of payment (including any of such
other guarantees) or for the balance or balances due at any time
notwithstanding that any such other means of payment have not been
resorted to and in each case without entitling the Guarantors to any
benefit from such other means of payment so long as any money remains due
or owing or payable (whether actually or contingently) from or by the
Principals to the Security Agent.
14. NO PROOF IN COMPETITION WITH SECURITY AGENT
Each of the guarantees contained in this Deed shall take effect as a
guarantee of the whole and every part of the Guaranteed Obligations and
accordingly none of the Guarantors shall be entitled as against the
Security Agent to any right of proof in the bankruptcy, liquidation or
insolvency of the Principals or any other surety or other right of a
surety (including any right of contribution from any other surety)
discharging, in whole or in part, its liability for the Guaranteed
Obligations or to share in any security held or money received by the
Security Agent on account of the Guaranteed Obligations or any other
surety or to have or exercise any rights as surety (including any such
right of contribution as stated above) in competition with the Security
Agent unless and until the whole of the Guaranteed Obligations shall have
first been completely discharged and satisfied. Furthermore, until such
money shall have been discharged and satisfied in full none of the
Guarantors shall, if any money shall have become payable or shall have
been paid by any of the Guarantors under any of the guarantees contained
in this Deed, take any step to enforce repayment or to exercise any other
rights, claims or remedies of any kind which may accrue howsoever to any
such Guarantor in respect either of the amount so payable or so paid
(including any such right of contribution as stated above) or of any other
money for the time being due to any such Guarantor from the Principal
concerned or any other surety PROVIDED that in the event of the
bankruptcy, liquidation or insolvency of any of the Principals or any
other surety each of the Guarantors shall, if so directed by the Security
Agent but not otherwise, prove for the whole or any part of the money due
to that Guarantor from such Principal or any other surety as stated above
on terms that the benefit of such proof and of all money to be received by
the Guarantor in respect of it shall be held in trust for the Security
Agent and applied in discharging the obligations of the Guarantor to the
Security Agent under this Deed. For the purposes of enabling the Security
Agent to sue any of the Principals or any other surety or to prove in the
bankruptcy, liquidation or insolvency of any of the Principals or any
other surety for the whole of such money as stated above, or to preserve
intact the liability of any other party, the Security Agent may at any
time place and keep, for such time as it may think prudent, any money
received, or realised on account of the obligations of such Principal or
under any other guarantee or security to the credit, either of such
Guarantor, or such
8
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other person or transaction (if any) as the Security Agent may think fit,
without any intermediate obligation on the part of the Security Agent to
apply the same or any part of it in or towards the discharge of the
Guaranteed Obligations, or any intermediate right on the part of such
Guarantor to sue such Principal or any other surety or to prove in the
bankruptcy, liquidation or insolvency of such Principal or any other
surety in competition with or so as to diminish any dividend or other
advantage that would or might come to the Security Agent, or to treat the
liability of such Principal or any other surety as diminished.
15. CHANGE IN CONSTITUTION OF PRINCIPALS OR GUARANTOR
Each of the guarantees contained in this Deed shall remain in full force
and effect notwithstanding any change in the constitution of any of the
Principals or any of the Guarantors.
16. NO SECURITY RECEIVED BY GUARANTORS
It is declared by each of the Guarantors that no security has been
received by it from any of the Principals or any other surety for the
giving of the guarantee on its part contained in this Deed and each of the
Guarantors agrees that it will not, so long as such guarantee remains in
force, take any security in respect of its liability under this Deed
without first obtaining the written consent of the Security Agent.
17. MONEY NOT RECOVERABLE ON FOOTING OF GUARANTEE
As a separate and independent stipulation each of the Guarantors agrees,
both severally and also jointly with every other Guarantor, that any of
the Guaranteed Obligations which may not be recoverable on the footing of
a guarantee, whether by reason of any legal limitation, disability or
incapacity on or of any of the Principals or any other fact or
circumstance, and whether known to the Security Agent or any of the
Guarantors or not, shall nevertheless be recoverable from the Guarantors
as though the same had been incurred by the Guarantors and the Guarantors
were jointly and severally liable as sole or principal debtors in respect
of such Guaranteed Obligations and shall be paid by the Guarantors on
demand Provided however that the amounts payable by Amethyst under this
Clause 17 (but without affecting the liabilities of the other Companies
under this clause 17) shall be limited to the aggregate of amounts
generated by the Shares including all realisations received by the
Security Agent or by any delegate thereof or receiver, receiver and
manager or administrative receiver or similar person by virtue of any
enforcement of the Share Charges.
18. CHANGE IN SECURITY AGENT'S CONSTITUTION OR AMALGAMATION ETC.
This Deed shall continue to bind the Guarantors notwithstanding any
amalgamation or merger that may be effected by the Security Agent with any
other company or companies and notwithstanding any reconstruction by the
Security Agent involving the formation of and transfer of the whole or any
part of its undertaking and assets to a new company and notwithstanding
the sale or transfer of the whole or any part of the undertaking and
assets of the Security Agent to another company, whether the company or
companies with which the Security Agent may amalgamate or merge or the
company to which the Security Agent may transfer the whole or any part of
its undertaking and assets either on
9
<PAGE>
a reconstruction or sale or transfer as stated above shall or shall not
differ from the Security Agent in their or its objects, character or
constitution, it being the intent of each of the Guarantors that the
guarantee on its part contained in this Deed shall remain valid and
effectual in all respects in favour of, against and with reference to, and
that the benefit of the guarantees and all rights conferred upon the
Security Agent by this Deed may be assigned to and enforced by, any such
company or companies and proceeded on in the same manner to all intents
and purposes as if such company or companies had been named in this deed
instead of and/or in addition to the Security Agent.
19. PAYMENTS BY GUARANTORS
Each payment to be made by any of the Guarantors under this Deed shall be
made to the Security Agent, in the appropriate currency in accordance with
the terms and provisions of the relevant Financing Documents, to the
credit of the Security Agent's account with whichever bank or banks
located in the country of such currency, as shall be designated by the
Security Agent regardless of any law, regulation or decree, now or after
this date in effect, which affects or might in any manner affect any of
such terms and provisions or the rights of the Security Agent as against
such Principal. All such payments shall be made in full without set-off or
counterclaim and free and clear of and without deduction of or withholding
for or on account of any tax of any nature now or subsequently imposed by
any country or any subdivision or taxing authority of or in such country
or any federation or organisation of which such country is a member. If
any such payment shall be subject to any such tax or if any of the
Guarantors shall be required to make any such deduction or withholding,
such Guarantor shall pay such tax, shall ensure that such payment,
deduction or withholding will not exceed the minimum legal liability for
it and shall simultaneously pay to the Security Agent such additional
amount as may be necessary to enable the Security Agent to receive, after
all such payments, deductions and withholdings, a net amount equal to the
full amount payable under this Deed. If any of the Guarantors shall make
any such payment, deduction or withholding such Guarantor shall within 30
days forward to the Security Agent an official receipt or other official
documentation evidencing such payment or the payment of such deduction or
withholding. As used in this Clause the term "TAX" includes all levies,
imposts, duties, charges, fees, deductions, withholdings, turnover tax,
transaction tax, stamp tax and any restrictions or conditions result in a
charge.
20. CURRENCY INDEMNITY
It is further agreed by each of the Guarantors, both severally and also
jointly with every other Guarantor, that if any judgment or order is given
or made for the payment of any amount due under this Deed and is expressed
in a currency other than that in which such amount is payable by the
Guarantors under this Deed the Guarantors will indemnify the Security
Agent against any loss incurred as a result of any variation having
occurred in rates of exchange between the date as at which such amount is
converted into such other currency for the purposes of such judgment or
order. This indemnity shall constitute a separate and independent
obligation of the Guarantors and shall apply irrespective of any
indulgence granted to any of the Guarantors from time to time and shall
continue in full force and effect notwithstanding any such judgment or
order as stated above.
21. NO WAIVER OF RIGHTS UNDER GUARANTEE
Each of the Guarantors declares that no delay or omission on the part of
the Security Agent in exercising any right, power, privilege or remedy in
respect of any of the
10
<PAGE>
guarantees contained in this Deed shall impair such right, power,
privilege or remedy or be construed as a waiver of it nor shall any single
or partial exercise of any such right, power, privilege or remedy preclude
any further exercise of it or the exercise of any other right, power,
privilege or remedy. The rights, powers, privilege and remedies provided
in this Deed are cumulative and not exclusive of any rights, powers,
privileges or remedies provided by law.
22. SECURITY AGENT
The benefit of this Deed (including any sums received by the Security
Agent pursuant to this Deed) shall be held by the Security Agent upon
trust for the benefit of the Secured Parties as security for the
Guaranteed Obligations in such shares and ranking in such order as shall
be from time to time applicable pursuant to any agreement between the
Secured Parties all in accordance with the Security Trust Deed; references
in this Deed to the Security Agent shall be construed accordingly.
23. DEMANDS
23.1 METHOD OF SENDING
Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, may be made by facsimile transmission or by telex
or by letter.
23.2 ADDRESSES FOR NOTICES
Any communication or document to be made or delivered by one person to
another pursuant to this Deed shall (unless the one has by not less than
three (3) days' written notice to the other specified another address) be
made or delivered to that other person at the respective addresses set out
below.
(1) The Security Agent:-
Bow Bells House
Broad Street
London EC4M 9BQ
Attention: General Manager, Machinery Department;
Facsimile: 0171-822 0184
(2) Petrodrill Six:-
Arias Fabrega and Fabrega Trust Co., BVI Limited
325 Waterfront Drive
Omar Hodge Building
2nd Floor, Wickham's Cay
Road Town
Tortola
British Virgin Islands
(3) Petrodrill Seven:-
Arias Fabrega and Fabrega Trust Co., BVI Limited
325 Waterfront Drive
11
<PAGE>
Omar Hodge Building
2nd Floor, Wickham's Cay
Road Town
Tortola
British Virgin Islands
(4) Amethyst Financial Company Ltd:-
Arias Fabrega and Fabrega Trust Co., BVI Limited
325 Waterfront Drive
Omar Hodge Building
2nd Floor, Wickham's Cay
Road Town
Tortola
British Virgin Islands
23.3 DEEMED RECEIPT
Any notice given hereunder shall be deemed to have been received:
(i) If sent by facsimile transmission , at the opening of business one
(1) Banking Day after the day it was transmitted;
(ii) In the case of a written notice lodged by hand, at the time of
actual delivery; and
(iii) If posted, on the fifth Banking Day following the day on which it
was properly despatched by first class mail postage prepaid.
24. ASSIGNMENT
The provisions of Clause 15 of each of the Loan Agreements shall apply
hereto and (MUTATIS MUTANDIS) be deemed incorporated herein and,
accordingly, any Lender may novate and/or assign this Deed to any person
to whom its Commitments and/or Outstandings are novated or assigned in
accordance with such Clause and this Deed shall remain in full force and
effect after, and shall continue to secure the Guaranteed Obligations
after and resulting from, any novation or assignment in accordance with
either such Clause 15.
25. GOVERNING LAW AND JURISDICTION
25.1 GOVERNING LAW
This Deed shall be governed by and construed in accordance with English
law.
12
<PAGE>
25.2 SUBMISSION TO JURISDICTION
For the benefit of the Security Agent, each of the Guarantors irrevocably
agrees that the English courts are to have jurisdiction to settle any
disputes which may arise out of or in connection with this Deed and that
accordingly any suit, action or proceedings ("PROCEEDINGS") arising out of
or in connection with this Deed may be brought in such courts.
25.3 WAIVER OF OBJECTION
Each of the Guarantors irrevocably waives any objection which it may have
now or hereafter to the laying of the venue of any Proceedings in any such
court as is referred to in Clause 25.2 and any claim that any such
Proceedings have been brought in an inconvenient forum and further
irrevocably agrees that a judgment in any Proceedings brought in the
English courts shall be conclusive and binding upon such Guarantor and may
be enforced in the courts of any other jurisdiction.
25.4 OTHER JURISDICTIONS
Nothing contained in this Clause 25 shall limit the right of the Security
Agent to take proceedings against any Guarantor in any other court of
competent jurisdiction, nor shall the taking of Proceedings in any one or
more jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
25.5 SERVICE OF PROCESS
Each Company irrevocably and unconditionally:
(a) designates, and appoints and empowers Hackwood Secretaries Limited
of One Silk Street, London EC2Y 8HQ to receive for it and on its
behalf, service of process issued out of the English courts in any
Proceedings arising out of or in connection with this Deed;
(b) agrees to maintain in England a duly appointed process agent
notified to the Security Agent, for the purposes of paragraph (a)
above;
(c) agrees that failure by any such process agent to give notice of such
process to it shall not impair the validity of such service or of
any judgment based thereon;
(d) consents to the service of process out of any of the said courts in
any such Proceedings by the airmailing of copies, postage prepaid,
to it at its address set out in the Schedule; and
(e) agrees that nothing herein shall affect the right to serve process
in any other manner permitted by law.
26. WAIVER; REMEDIES CUMULATIVE
No failure to exercise and no delay in exercising on the part of the
Security Agent any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right,
power or privilege preclude any other or further exercise
13
<PAGE>
thereof, or the exercise of any other right, power or privilege. The
rights and remedies herein provided are cumulative and not exclusive of
any rights or remedies provided by law.
27. SEVERABILITY
Any provision in this Deed which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
28. PROPERTY IN THE DEED TO BELONG TO THE SECURITY AGENT
The paper on which this Deed is written shall remain at all times the
property of the Security Agent.
IN WITNESS WHEREOF this Deed has been executed the day and year first before
written
14
<PAGE>
THE SCHEDULE
NAME OF COMPANY REGISTERED OFFICE OF EACH COMPANY
Petrodrill Six Limited Arias Fabrega and Fabrega
Co., BVI Limited
325 Waterfront Drive
Omar Hodge Building
2nd Floor, Wickham's Cay
Road Town
Tortola
British Virgin Islands
Petrodrill Seven Limited Arias Fabrega and Fabrega
Co., BVI Limited
325 Waterfront Drive
Omar Hodge Building
2nd Floor, Wickham's Cay
Road Town
Tortola
British Virgin Islands
Amethyst Financial Arias Fabrega and Fabrega
Company Ltd. Co., BVI Limited
325 Waterfront Drive
Omar Hodge Building
2nd Floor, Wickham's Cay
Road Town
Tortola
British Virgin Islands
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by PETRODRILL )
SIX LIMITED by its duly )
authorised signatory/attorney-in- )
fact in the presence of:- ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by PETRODRILL )
SEVEN LIMITED by its duly )
authorised signatory/attorney-in- )
fact in the presence of:- ) /s/ Illegible
EXECUTED and DELIVERED )
15
<PAGE>
as a DEED by AMETHYST ) /s/ Illegible
FINANCIAL COMPANY LTD. )
by its duly authorised signatory/ )
attorney-in-fact in the presence )
of:- ) /s/ Illegible
EXECUTED and DELIVERED ) /s/ Illegible
as a DEED by MITSUBISHI )
CORPORATION (UK) PLC )
by its duly authorised signatory/ )
attorney-in-fact in the presence )
of:- ) /s/ Illegible
16
EXHIBIT 4.14
TRANSFER CERTIFICATE
To: Mitsubishi Corporation (UK) PLC
Bow Bells House
Bread Street
London
EC4M 9BQ
Attention: General Manager, Machinery Department
PETRODRILL SEVEN LIMITED
US$180,000,000 LOAN AGREEMENT DATED
DECEMBER 19, 1998
1. This Transfer Certificate relates to the above loan agreement (the "LOAN
AGREEMENT," which term shall include any amendments or supplements
thereto), and the other Security Documents referred to therein. Terms
defined in the Loan Agreement have the same meaning in this Transfer
Certificate.
In this Transfer Certificate:
"EXISTING LENDER" means Petro Dia Four S.A., a company incorporated under
the laws of Panama, whose registered office is at 53rd Street,
Urbanizacion Obarrio, Torre Swiss Bank, 16th Floor, Panama City, Republic
of Panama.
"MC1" means Petro Dia Three S.A., a company incorporated under the laws of
Panama, whose registered office is at 53rd Street, Urbanizacion Obarrio,
Torre Swiss Bank, 16th Floor, Panama City, Republic of Panama.
"TRANSFEREE" means Amethyst Financial Company Limited, a company
incorporated under the laws of the British Virgin Islands, whose
registered office is at c/o Arias Fabrega and Fabrega Trust Co. BVI
Limited, 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's
Cay, Road Town, Tortola, British Virgin Islands.
2. The Existing Lender (i) confirms that the details in the Schedule to this
Transfer Certificate under the heading "RIGHTS TO BE ASSIGNED AND/OR
OBLIGATIONS TO BE NOVATED" accurately summarizes the Outstandings which
are to be assigned and/or Commitments which are to be novated by this
Transfer Certificate and (ii) requests the Transferee to accept and
procure the transfer to the Transferee of the portion specified in the
Schedule hereto of, as the case may be, such Outstandings and/or its
Commitment by counter-signing and delivering this Transfer Certificate to
the Facility Agent at its address for the service of notices specified in
the Loan Agreement.
-1-
<PAGE>
3. The Transferee hereby requests the Facility Agent to accept this Transfer
Certificate as being delivered to the Facility Agent pursuant to and for
the purposes of Clause 15 (Transfers) of the Loan Agreement so as to take
effect in accordance with the terms thereof on the Transfer Date or on
such later date as may be determined in accordance with the terms thereof.
4. The Transferee:
(a) confirms that it has received a copy of the Loan Agreement together
with such other documents and information as it has requested in
connection with this transaction;
(b) confirms that it has not relied and will not rely on the Existing
Lender to check or enquire on its behalf into the legality,
validity, effectiveness, adequacy or completeness of any such
documents or information;
(c) confirms and agrees that it has not relied and will not rely on any
of the Existing Lender, the Agents, or the other Lenders to assess
or keep under review on its behalf the financial condition,
creditworthiness, condition, affair, status or nature of the
Borrower or any other party to the Security Documents, and has not
relied and will not rely on any of the Existing Lender, the Agents
or the other Lenders to ensure that the Borrower or any other party
to the Security Documents are not in breach of or default under any
of the same;
(d) if not already a Lender, appoints the Agents to act as its agents as
provided in the Loan Agreement and the Security Trustee Deed and
agrees to be bound by the Loan Agreement (including, but not limited
to, Clause 15 (Transfer)); and
(e) confirms that it shall not, by virtue of the transfer effected by
this Transfer Certificate or otherwise, have or acquire any right or
interest in the Floor Guarantee, the entire benefit of which is and
will remain vested in MC1 for its own account absolutely.
5. The Transferee undertakes with the Existing Lender and each of the other
parties to the Loan Agreement that it will perform, in accordance with
their terms, all those obligations which, by the terms of the Loan
Agreement, will be assumed by it upon delivery of the executed copy of
this Transfer Certificate to the Facility Agent.
6. On execution of this Transfer Certificate by the Facility Agent on their
behalf and by their execution of this Transfer Certificate, each of the
Borrower, the Lenders and the Agents accept the Transferee as a party to
the Loan Agreement in substitution for the Existing Lender with respect to
all those rights and obligations which, by the terms of the Loan Agreement
and other Security Documents, will be transferred to or assumed by the
Transferee after delivery of the executed copy of this Transfer
Certificate to the Facility Agent. For the avoidance of doubt, MC1 accepts
and approves the Transferee as a Qualifying Lender to be a party to the
Loan Agreement in substitution for the Existing Lender with respect to all
those rights and obligations which, by the terms of the Loan Agreement and
other Security Documents, will be transferred to or assumed by the
Transferee after delivery of the executed copy of this Transfer
Certificate to the Facility Agent.
-2-
<PAGE>
7. None of the Existing Lender, the other Lenders or the Agents:
(a) makes any representation or warranty or assumes any responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of any of the Loan Agreement and the Security
Documents or the Project Documents, or with respect to whether the
Borrower, the Guarantors or any other party to the Security
Documents or the Project Documents has complied with its obligations
thereunder (including, without limitation, under Clause 3
(Conditions Precedent) of the Loan Agreement); or
(b) assumes any responsibility for the financial condition of the
Borrower, the Guarantors or any other party to any Security Document
or Project Document or any other document or for the performance and
observance by the Borrower, the Guarantors or any other party to the
Security Documents or Project Documents or any other document of its
or their obligations and any and all conditions and warranties,
whether express or implied by law or otherwise, are hereby excluded.
8. The Existing Lender hereby gives notice that nothing herein or in the Loan
Agreement (or any document relating thereto) shall oblige the Existing
Lender to (i) accept a re-transfer from the Transferee of the whole or any
part of its rights, benefits and/or obligations under the Loan Agreement
transferred pursuant hereto or (ii) support any losses directly or
indirectly sustained or incurred by the Transferee for any reason
whatsoever, including, without limitation, the non-performance by the
Borrower, the Guarantors or any other party to the Security Documents (or
any document relating thereto) of its obligations under any such document.
The Transferee hereby acknowledges the absence of any such obligation as
is referred to in (i) or (ii) above.
9. This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with English
law.
10. The Transferee warrants and represents to the Facility Agent and each of
the Lenders that, by operation of this Transfer Certificate, and, in
particular, MC1's approval given under paragraph 6 hereof, it is a
Qualifying Lender as defined in Clause 1.1 of the Loan Agreement.
11. Notwithstanding Clause 15.3 of the Loan Agreement, each of the Facility
Agent, the Security Agent, the Borrower and the Lenders hereby agrees that
the Transferee may transfer (in accordance with, and subject to, the
provisions of Clause 15.4 of the Loan Agreement, except to the extent
modified by this Deed to, among other things, eliminate the strict
requirement that the transferee be a Qualifying Lender, so that references
in such Clause 15.4 to Clause 15.3 of the Loan Agreement or to Qualifying
Lender shall be read as so modified) all or any part of the Outstandings,
Commitments and other rights and obligations transferred to the Transferee
pursuant to this Transfer Certificate (collectively, the "TRANCHE A
PARTICIPATIONS") to any person that is a Qualifying Lender or to any other
financial institution incorporated in or controlled by persons residing in
or with a principal place of business in any country which is a member of
OECD managing or owning a minimum of $100 million in assets according to
its most recent quarterly balance sheet prepared under
-3-
<PAGE>
generally accepted accounting principles applicable to such institution
(each, a "PERMITTED LENDER"), and each of the Facility Agent, on behalf of
the Borrower, the Lenders and the Agents, and MC1 and MC2 hereby agrees
that, in the event that the Transferee exercises the right set forth in
this Section 11 to transfer all or any part of the Tranche A
Participations to a Permitted Lender, the Facility Agent (on its own
behalf and on behalf of the other parties to the relevant Loan Agreement)
and MC1 shall counter-sign appropriate Transfer Certificates for such
transfer.
-4-
<PAGE>
THE SCHEDULE
1. Existing Lender: Petro Dia Four S.A.
2. Transferee: Amethyst Financial Company Limited
3. Transfer Date: November 1, 1999
4. Rights to be Assigned and/or Obligations to be Novated
Commitment:
LENDER'S COMMITMENT FACILITY PORTION TRANSFERRED
US$53,000,000 Tranche A US$53,000,000
Outstandings:
AMOUNT OF LENDER'S FACILITY DRAWDOWN PORTION
PARTICIPATION DATE TRANSFERRED
US$47,744,376.99 Tranche A 12/24/98 US$47,744,376.99
US$3,017,179.38 Tranche A 6/24/99 US$3,017,179.38
US$2,238,443.63 Tranche A 10/29/99 US$2,238,443.63
----------------- --------- -------- -----------------
US$53,000,000.00 Tranche A US$53,000,000.00
5. Transferee's Lending Office details:
Address: Amethyst Financial Company Limited
c/o Petrodrill Engineering N.V.
K.P. van der Mandalelaan 38
3062 MB Rotterdam (Brainpark)
The Netherlands
Attn: Steve Assiter
Tel. No.: +(31) 10 272 2722
Fax No.: +(31) 10 272 2727
-5-
<PAGE>
/s/ YOICHIRO MIYAMOTO /s/ EARL W. MCNIEL
- - --------------------- ------------------
Petro Dia Four S.A. Amethyst Financial Company Limited
Name: Yoichiro Miyamoto Name: Earl W. McNiel
Title: Director Title: Treasurer
/s/ YOICHIRO MIYAMOTO /s/ YOICHIRO MIYAMOTO
- - --------------------- ---------------------
Facility Agent for itself and on behalf of Petro Dia Three S.A.
the Borrower, the Lenders and the Agents Name: Yoichiro Miyamoto
Name: Yoichiro Miyamoto Title: Director
Title: Attorney-in-Fact
<PAGE>
/s/ EARL W. MCNIEL /s/ YOICHIRO MIYAMOTO
- - ------------------ ---------------------
Petrodrill Seven Limited Security Agent
Name: Earl W. McNiel Name: Yoichiro Miyamoto
Title: Treasurer Title: Attorney-in-Fact
EXHIBIT 4.15
TRANSFER CERTIFICATE
To: Mitsubishi Corporation (UK) PLC
Bow Bells House
Bread Street
London
EC4M 9BQ
Attention: General Manager, Machinery Department
PETRODRILL SIX LIMITED
US$160,000,000 LOAN AGREEMENT DATED DECEMBER 19, 1998
1. This Transfer Certificate relates to the above loan agreement (the "LOAN
AGREEMENT," which term shall include any amendments or supplements
thereto), and the other Security Documents referred to therein. Terms
defined in the Loan Agreement have the same meaning in this Transfer
Certificate.
In this Transfer Certificate:
"EXISTING LENDER" means Petro Dia Four S.A., a company incorporated under
the laws of Panama, whose registered office is at 53rd Street,
Urbanizacion Obarrio, Torre Swiss Bank, 16th Floor, Panama City, Republic
of Panama.
"MC1" means Petro Dia Three S.A., a company incorporated under the laws of
Panama, whose registered office is at 53rd Street, Urbanizacion Obarrio,
Torre Swiss Bank, 16th Floor, Panama City, Republic of Panama.
"TRANSFEREE" means Amethyst Financial Company Limited, a company
incorporated under the laws of the British Virgin Islands, whose
registered office is at c/o Arias Fabrega and Fabrega Trust Co. BVI
Limited, 325 Waterfront Drive, Omar Hodge Building, 2nd Floor, Wickham's
Cay, Road Town, Tortola, British Virgin Islands.
2. The Existing Lender (i) confirms that the details in the Schedule to
this Transfer Certificate under the heading "RIGHTS TO BE ASSIGNED
AND/OR OBLIGATIONS TO BE NOVATED" accurately summarizes the
Outstandings which are to be assigned and/or Commitments which are to
be novated by this Transfer Certificate and (ii) requests the
Transferee to accept and procure the transfer to the Transferee of the
portion specified in the Schedule hereto of, as the case may be, such
Outstandings and/or its Commitment by counter-signing and delivering
this Transfer Certificate to the Facility Agent at its address for the
service of notices specified in the Loan Agreement.
<PAGE>
3. The Transferee hereby requests the Facility Agent to accept this Transfer
Certificate as being delivered to the Facility Agent pursuant to and for
the purposes of Clause 15 (Transfers) of the Loan Agreement so as to take
effect in accordance with the terms thereof on the Transfer Date or on
such later date as may be determined in accordance with the terms thereof.
4. The Transferee:
(a) confirms that it has received a copy of the Loan Agreement together
with such other documents and information as it has requested in
connection with this transaction;
(b) confirms that it has not relied and will not rely on the Existing
Lender to check or enquire on its behalf into the legality,
validity, effectiveness, adequacy or completeness of any such
documents or information;
(c) confirms and agrees that it has not relied and will not rely on any
of the Existing Lender, the Agents, or the other Lenders to assess
or keep under review on its behalf the financial condition,
creditworthiness, condition, affair, status or nature of the
Borrower or any other party to the Security Documents, and has not
relied and will not rely on any of the Existing Lender, the Agents
or the other Lenders to ensure that the Borrower or any other party
to the Security Documents are not in breach of or default under any
of the same;
(d) if not already a Lender, appoints the Agents to act as its agents as
provided in the Loan Agreement and the Security Trust Deed and
agrees to be bound by the Loan Agreement (including, but not limited
to, Clause 15 (Transfer)); and
(e) confirms that it shall not, by virtue of the transfer effected by
this Transfer Certificate or otherwise, have or acquire any right or
interest in the Floor Guarantee, the entire benefit of which is and
will remain vested in MC1 for its own account absolutely.
5. The Transferee undertakes with the Existing Lender and each of the other
parties to the Loan Agreement that it will perform, in accordance with
their terms, all those obligations which, by the terms of the Loan
Agreement, will be assumed by it upon delivery of the executed copy of
this Transfer Certificate to the Facility Agent.
6. On execution of this Transfer Certificate by the Facility Agent on their
behalf and by their execution of this Transfer Certificate, each of the
Borrower, the Lenders and the Agents accept the Transferee as a party to
the Loan Agreement in substitution for the Existing Lender with respect to
all those rights and obligations which, by the terms of the Loan Agreement
and other Security Documents, will be transferred to or assumed by the
Transferee after delivery of the executed copy of this Transfer
Certificate to the Facility Agent. For the avoidance of doubt, MC1 accepts
and approves the Transferee as a Qualifying Lender to be a party to the
Loan Agreement in substitution for the Existing Lender with respect to all
those rights and obligations which, by the terms of the Loan Agreement and
other Security Documents, will be transferred to or assumed by the
Transferee after delivery of the executed copy of this Transfer
Certificate to the Facility Agent.
<PAGE>
7. None of the Existing Lender, the other Lenders or the Agents:
(a) makes any representation or warranty or assumes any responsibility
with respect to the legality, validity, effectiveness, adequacy or
enforceability of any of the Loan Agreement and the Security
Documents or the Project Documents, or with respect to whether the
Borrower, the Guarantors or any other party to the Security
Documents or the Project Documents has complied with its obligations
thereunder (including, without limitation, under Clause 3
(Conditions Precedent) of the Loan Agreement); or
(b) assumes any responsibility for the financial condition of the
Borrower, the Guarantors or any other party to any Security Document
or Project Document or any other document or for the performance and
observance by the Borrower, the Guarantors or any other party to the
Security Documents or Project Documents or any other document of its
or their obligations and any and all conditions and warranties,
whether express or implied by law or otherwise, are hereby excluded.
8. The Existing Lender hereby gives notice that nothing herein or in the Loan
Agreement (or any document relating thereto) shall oblige the Existing
Lender to (i) accept a re-transfer from the Transferee of the whole or any
part of its rights, benefits and/or obligations under the Loan Agreement
transferred pursuant hereto or (ii) support any losses directly or
indirectly sustained or incurred by the Transferee for any reason
whatsoever, including, without limitation, the non-performance by the
Borrower, the Guarantors or any other party to the Security Documents (or
any document relating thereto) of its obligations under any such document.
The Transferee hereby acknowledges the absence of any such obligation as
is referred to in (i) or (ii) above.
9. This Transfer Certificate and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with English
law.
10. The Transferee warrants and represents to the Facility Agent and each of
the Lenders that, by operation of this Transfer Certificate, and, in
particular, MC1's approval given under paragraph 6 hereof, it is a
Qualifying Lender as defined in Clause 1.1 of the Loan Agreement.
11. Notwithstanding Clause 15.3 of the Loan Agreement, each of the Facility
Agent, the Security Agent, the Borrower and the Lenders hereby agrees that
the Transferee may transfer (in accordance with, and subject to, the
provisions of Clause 15.4 of the Loan Agreement, except to the extent
modified by this Deed to, among other things, eliminate the strict
requirement that the transferee be a Qualifying Lender, so that references
in such Clause 15.4 to Clause 15.3 of the Loan Agreement or to Qualifying
Lender shall be read as so modified) all or any part of the Outstandings,
Commitments and other rights and obligations transferred to the Transferee
pursuant to this Transfer Certificate (collectively, the "TRANCHE A
PARTICIPATIONS") to any person that is a Qualifying Lender or to any other
financial institution incorporated in or controlled by persons residing in
or with a principal place of business in any country which is a member of
OECD managing or owning a minimum of $100 million in assets according to
its most recent quarterly balance sheet prepared under generally accepted
accounting principles applicable to such institution (each, a "PERMITTED
<PAGE>
LENDER"), and each of the Facility Agent, on behalf of the Borrower, the
Lenders and the Agents, and MC1 and MC2 hereby agrees that, in the event
that the Transferee exercises the right set forth in this Section 11 to
transfer all or any part of the Tranche A Participations to a Permitted
Lender, the Facility Agent (on its own behalf and on behalf of the other
parties to the relevant Loan Agreement) and MC1 shall counter-sign
appropriate Transfer Certificates for such transfer.
<PAGE>
THE SCHEDULE
1. Existing Lender: Petro Dia Four S.A.
2. Transferee: Amethyst Financial Company Limited
3. Transfer Date: November 1, 1999
4. Rights to be Assigned and/or Obligations to be Novated
Commitment:
LENDER'S COMMITMENT FACILITY PORTION TRANSFERRED
US$47,000,000 Tranche A US$47,000,000
Outstandings:
AMOUNT OF LENDER'S FACILITY DRAWDOWN PORTION
PARTICIPATION FACILITY DATE TRANSFERRED
US$35,487,649.00 Tranche A 12/24/98 US$35,487,649.00
US$ 2,478,227.00 Tranche A 1/27/99 US$ 2,478,227.00
US$ 2,445,291.00 Tranche A 2/26/99 US$ 2,445,291.00
US$ 796,372.00 Tranche A 3/26/99 US$ 796,372.00
US$ 1,282,973.38 Tranche A 4/19/99 US$ 1,282,973.38
US$ 2,524,452.70 Tranche A 6/24/99 US$ 2,524,452.70
US$ 1,985,034.92 Tranche A 10/29/99 US$ 1,985,034.92
__________________ ____________________ _________________
US$ 47,000,000.00 Tranche A US$47,000,000.00
5. Transferee's Lending Office details:
Address: Amethyst Financial Company Limited
c/o Petrodrill Engineering N.V.
K.P. van der Mandalelaan 38
3062 MB Rotterdam (Brainpark)
The Netherlands
Attn: Steve Assiter
Tel. No.: +(31) 10 272 2722
Fax No.: +(31) 10 272 2727
<PAGE>
/s/ YOICHIRO MIYAMOTO /s/ EARL W. MCNIEL
- - --------------------- ------------------
Petro Dia Four S.A. Amethyst Financial Company Limited
Name: Yoichiro Miyamoto Name: Earl W. McNiel
Title: Director Title: Treasurer
/s/ YOICHIRO MIYAMOTO /s/ YOICHIRO MIYAMOTO
- - --------------------- ---------------------
Facility Agent for itself and on behalf of Petro Dia Three S.A.
the Borrower, the Lenders and the Agents Name: Yoichiro Miyamoto
Name: Yoichiro Miyamoto Title: Director
Title: Attorney-in-Fact
<PAGE>
/s/ EARL W. MCNIEL /s/ YOICHIRO MIYAMOTO
- - ------------------ ---------------------
Petrodrill Six Limited Security Agent
Name: Earl W. McNiel Name: Yoichiro Miyamoto
Title: Treasurer Title: Attorney-in-Fact
EXHIBIT 4.16
Document 1
Contract No. MA-13509
COMMITMENT TO GUARANTEE OBLIGATION
by
THE UNITED STATES OF AMERICA
Accepted by
PETRODRILL FIVE LIMITED
Shipowner
(Under Title XI, Merchant Marine Act, 1936,
as amended, and in effect on the
date of this Guarantee Commitment)
-------------------------------------------
<PAGE>
TABLE OF CONTENTS
DOC
NO. DOCUMENT
- - --- --------------------------------------
1. Commitment to Guarantee Obligations
Schedule One -- Form of Opinion of
2 Counsel
Appendix I -- Form of Credit
3 Agreement
Appendix II -- Form of Trust
4 Indenture
Schedule A -- Schedule of
5 Definitions to the Trust Indenture
Exhibit 1 -- General Provisions
Incorporated into the Trust
6 Indenture by Reference
Exhibit 2 -- Form of Floating Rate
7 Note
Exhibit 3 -- Form of Fixed Rate
8 Note
Exhibit 4 -- Form of Authorization
9 Agreement
Exhibit 5 -- Form of Secretary's
10 Supplemental Indenture
Appendix III -- Form of Security
11 Agreement
Exhibit 1 -- General Provisions
Incorporated into the Security
12 Agreement by Reference
Schedule X -- Schedule of
13 Definitions
Exhibit 2 -- Form of Secretary's
14 Note
Exhibit 3 -- Form of First
15 Preferred Ship Mortgage
Exhibit 4 -- Form of Title XI
Reserve Fund and Financial
16 Agreement
Exhibit 5 -- Form of Consent of
17 Shipyard
18 Exhibit 6 -- Construction Contract
Exhibit 7 -- Form of Depository
19 Agreement
<PAGE>
COMMITMENT TO GUARANTEE OBLIGATIONS
BY
THE UNITED STATES OF AMERICA
accepted by
PETRODRILL FIVE LIMITED
Shipowner
THIS COMMITMENT TO GUARANTEE OBLIGATIONS, dated as of April 9, 1999 (the
"Guarantee Commitment"), is made and entered into by the UNITED STATES OF
AMERICA (the "United States"), represented by the SECRETARY OF TRANSPORTATION,
acting by and through the MARITIME ADMINISTRATOR (the "Secretary"), and accepted
on said date by PETRODRILL FIVE LIMITED, a British Virgin Islands international
business company (the "Shipowner").
RECITALS
A. The Shipowner will be the sole owner of the dynamic positioned
semi-submersible drilling vessel to be named AMETHYST 5 ("the Vessel"), built
pursuant to the Construction Contract with TDI-Halter, Limited Partnership (the
"Shipyard").
B. To aid in financing the construction of the Vessel, the Shipowner will
borrow an aggregate principal amount equal to 87 1/2% of the Actual Cost of the
Vessel, as of the Closing Date. To accomplish such financing, the Shipowner has
accepted this Guarantee Commitment subject to the terms and conditions set forth
herein.
C. The Shipowner has entered into the Credit Agreement providing for the
sale and delivery of obligations in the aggregate principal amount of
$150,183,000 to be designated "United States Government Guaranteed Export Ship
Financing Obligations, AMETHYST 5 Series" (the "Obligations") having the
maturity date and interest rate set forth in the Credit Agreement, the Indenture
and the Obligations.
D. As security for the Guarantees and the Secretary's Note, the Shipowner
will execute and deliver the Security Agreement, Contract No. MA-13511, and the
following agreements shall be executed and delivered: the Indenture, the
Authorization Agreement, Contract No. MA-13510, the Secretary's Note, the
Mortgage, Contract No. MA-13512, the Financial Agreement, Contract MA-13513, and
the Depository Agreement, Contract No. MA-13514.
W I T N E S S E T H:
That under the provisions of Title XI of the Merchant Marine Act, 1936, as
amended and in consideration of (i) the covenants of the Shipowner contained
herein and (ii) other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Secretary hereby commits
itself as herein provided.
ARTICLE I
FINDINGS AND DETERMINATIONS OF SECRETARY
Pursuant to Section 1103(g)(i) of Title XI, the Secretary has determined
that the issuance of this Guarantee Commitment will not result in the denial of
an economically sound application to issue a commitment to guarantee obligations
for a Vessel documented under the laws of the United States.
Pursuant to Section 1104A(b)(1) of Title XI, the Secretary has approved the
Shipowner as responsible and possessing the ability, experience, financial
resources and other qualifications necessary to the adequate operation and
maintenance of the Vessel.
<PAGE>
Pursuant to Section 1104A(b)(2) of Title XI, the Secretary has determined
that the aggregate of the Actual Cost of the Vessel is $171,638,175. Prior to
the Closing Date, the Secretary, in its discretion, may redetermine the actual
Cost of the Vessel.
On the Closing Date, the aggregate principal amount of the Obligations will
not exceed 87 1/2% of the Actual Cost of the Vessel.
Pursuant to Sections 1104A(b)(3), 1104A(b)(4) and 1104A(b)(5) of Title XI,
the Secretary has determined that: (1) the maturity date of the Obligations is
satisfactory, (2) payments of principal required by the Obligations are
satisfactory, and (3) the interest rate to be borne by the Obligations to be
issued on the Closing Date is reasonable.
Pursuant to Section 1104A(d) of Title XI, the Secretary has found that the
Shipowner's proposed use of the Vessel will be economically sound.
Pursuant to Section 1104A(d)(A) of Title XI, the Secretary has determined
that the construction, reconstruction or reconditioning of the Vessel will aid
in the transition of United States shipyards to commercial activities or will
preserve shipbuilding assets that would be essential in time of war or national
emergency.
The Secretary has further determined that the Secretary of Defense has
received notice of the Secretary's receipt of application and that the Secretary
of Defense has not disapproved the loan guarantee pursuant to the authority,
under Section 1104A(j)(1) of Title XI, to assess whether the potential use of
the Vessel may cause harm to the United States national security interests.
The Secretary has determined that the countries in which the Shipowner has
its chief executive offices or has located a substantial portion of its assets
present an acceptable financial and legal risk to the Secretary's Security.
ARTICLE II
COMMITMENT TO GUARANTEE OBLIGATIONS
The United States, represented by the Secretary, HEREBY COMMITS ITSELF TO
GUARANTEE the payment of the unpaid interest on, and the unpaid balance of the
principal of, the Obligations, including interest accruing between the date of
default under the Obligations and the payment in full of the Guarantees, and, to
effect this Guarantee Commitment, hereby commits itself to execute and deliver
the Authorization Agreement, Security Agreement, Financial Agreement, and
Depository Agreement on the Closing Date pursuant to the terms of the Guarantee
Commitment.
ARTICLE III
THE OBLIGATIONS
The Obligations shall be as provided in the Indenture and in the form of
the Obligations annexed as Exhibits 2 and 3 to the Indenture. The Obligations
shall be subject to all of the terms and conditions set forth in the Indenture.
ARTICLE IV
CONDITIONS TO EXECUTION AND DELIVERY OF THE GUARANTEE
The obligation of the Secretary to execute and deliver the Guarantee on the
Closing Date shall be subject to the following conditions unless waived in
writing by the Secretary:
(a) the Closing Date shall occur on or prior to September 11, 1999.
(b) the Shipowner and the Shipyard shall have executed and delivered to the
Secretary a copy of the Construction Contract, as amended, and the Shipyard
shall have executed the Consent of Shipyard.
(c) the Shipowner shall have executed and delivered the following
documents in the form attached hereto: the Security Agreement, Financial
Agreement, Trust Indenture, Secretary's Note, Obligations, Credit Agreement, and
Depository Agreement;
- 2 -
<PAGE>
(d) the Indenture Trustee shall have executed, in the form attached hereto,
the Authorization Agreement and Trust Indenture; the Depository shall have
executed the Depository Agreement; and the Lender shall have executed the Credit
Agreement;
(e) the following documents shall have been delivered to the Secretary: (i)
one executed counterpart and one copy of the Credit Agreement; (ii) two executed
counterparts of the Trust Indenture, (iii) two specimen copies of the
Obligations; (iv) two executed originals of the legal opinion issued under
section (j) of this Article; (v) two copies of the legal opinion delivered to
the Lender pursuant to the Credit Agreement, and (vi) two originals of all other
documents delivered by the Shipowner, Indenture Trustee or the Depository in
connection with this Closing.
(f) the Shipowner shall have executed an Officer's Certificate representing
and warranting the truth of the following statements as of the Closing Date:
(i) each of the representations and warranties set out at Section
2.01 of the Security Agreement; and
(ii) the Shipowner is not in violation of any Federal laws having a
substantial adverse effect on the interests of the United States of America
and that the consummation of the Commitment would not violate non-Title XI
Federal law.
(g) the Secretary shall have received the Guarantee Fee payable under
Section 1104A(e) of Title XI and the Investigation Fee, due under Section
1104A(f) of Title XI.
(h) the Shipowner shall have complied in all material respects with its
agreements under this Guarantee Commitment;
(i) there shall not have occurred any event which constitutes (or after any
period of time or any notice, or both, would constitute) a "Default" under the
Security Agreement;
(j) there shall have been delivered to the Secretary by the Shipowner
opinions of counsel admitted to the appropriate jurisdictions of the United
States and British Virgin Islands, the Commonwealth of the Bahamas, and the
Federative Republic of Brazil acceptable to the Secretary, in the form annexed
hereto as Schedule One which shall include, among other things, an opinion to
the effect that: (i) by the terms of the Security Agreement, the Shipowner has
granted to the Secretary a fully perfected, first priority security interest in
each of the assets which constitutes the Security; and (ii) all filings,
recordings, notice and other actions required to perfect the Secretary's
interest in the Security and to render such security interest valid and
enforceable under applicable law have been duly effected:
(k) Petrodrill Four Limited shall have executed and delivered to the
Secretary its guarantee of the Title XI debt of the Shipowner.
(l) Each of Pride International, Inc. and Maritima Petroleo E Engenharia
Ltda. shall have executed and delivered to the Secretary its guarantee of final
charges that may be assessed against the Vessel due to late arrival penalties
and/or ad valorem taxes in an amount not to exceed $20,500,000.
(m) the Secretary shall have received a letter agreement from the Shipowner
to provide the Secretary within a reasonable time after the Closing Date, with
eight (8) conformed copies of the Guarantee Commitment and each of the
Appendices and Exhibits thereto executed on or prior to such date;
(n) on the Closing Date, the qualifying requirements set forth in Section
10 of the Financial Agreement shall have been complied with and certified to as
required therein; and
(o) at least fifteen (15) Business Days prior to the Closing Date, there
shall have been delivered to the Secretary, pro forma balance sheets for the
Shipowner as of the Closing Date, certified by an officer of the Shipowner
showing, among other things, all non-Title XI debt of the Shipowner;
(p) on the Closing Date, the Shipowner shall certify that all non-Title XI
loans to the Shipowner relating to the Vessel has been discharged or
subordinated satisfactorily to the Secretary, and
(q) at least ten (10) days prior to the Closing Date, the Shipowner shall
have provided the Secretary with satisfactory evidence of insurance as required
by the Security Agreement.
- 3 -
<PAGE>
(r) on the Closing Date, the Secretary shall be a beneficiary under the
Shipyard's performance and labor and material payments bonds, which bonds shall
be in form and substance satisfactory to the Secretary.
(s) on the Closing Date, the Shipowner and Amethyst Financial Company
Limited shall issue a declaration regarding lobbying activities pursuant to the
provisions of 31 U.S.C. 1352.
ARTICLE V
VARIATION OF GUARANTEE COMMITMENT
No variation from the terms and conditions hereof shall be permitted except
pursuant to an amendment executed by the Secretary and the Shipowner.
ARTICLE VI
TERMINATION OR ASSIGNMENT OF GUARANTEE COMMITMENT
This Guarantee Commitment may be terminated and the parties hereto shall
have no further rights or obligations hereunder, upon written notice by the
Secretary of the termination of the obligations of the United States pursuant to
the Shipowner's failure to satisfy one or more conditions set forth in Article V
hereof or upon the Secretary's determination, at or before the Closing Date,
that (i) the Shipowner is in violation of Federal law and such violation would
have a substantial, adverse affect on the interests of the United States of
America or (ii) the consummation of the Commitment would violate non-Title XI
Federal law. The Shipowner's warranties and representations shall survive the
termination of this Agreement and the Secretary's issuance of the Guarantees.
This Guarantee Commitment may not be assigned by the Shipowner without the prior
written approval of the Secretary and any attempt to do so shall be null and
void AB INITIO.
ARTICLE VII
GOVERNING LAW; JURISDICTION AND CONSENT TO SUIT
This Guarantee Commitment hereby adopts and incorporates by reference as if
fully set forth herein the provisions relating to Jurisdiction and Consent to
Suit of the Special Provisions of the Security Agreement.
ARTICLE VIII
MISCELLANEOUS
(a) The table of contents and the titles of the Articles are inserted as a
matter of convenient reference and shall not be construed as a part of this
Guarantee Commitment. This Guarantee Commitment may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
(b) For all purposes of this Guarantee Commitment, unless otherwise
expressly provided or unless the context shall otherwise require, capitalized
terms used herein shall have the meaning given in Schedule X to the Security
Agreement.
- 4 -
<PAGE>
IN WITNESS WHEREOF, this Commitment to Guarantee Obligations has been
executed by the United States and accepted by the Shipowner, all as of the day
and year first above written.
UNITED STATES OF AMERICA,
SECRETARY OF TRANSPORTATION
(SEAL) MARITIME ADMINISTRATION
Attest: BY: /s/Joel C. Richard
Secretary
Maritime Administration
/s/Larry Main
Assistant Secretary
ACCEPTED BY:
PETRODRILL FIVE LIMITED
as Shipowner
BY: /s/Earl W. McNiel
Treasurer
Attest:
BY: /s/ Robert W. Randall
Secretary
- 5 -
EXHIBIT 4.17
Document 1
Contract No. MA-13503
COMMITMENT TO GUARANTEE OBLIGATION
by
THE UNITED STATES OF AMERICA
Accepted by
PETRODRILL FOUR LIMITED
Shipowner
(Under Title XI, Merchant Marine Act, 1936,
as amended, and in effect on the
date of this Guarantee Commitment)
-------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
DOC.
NO. DOCUMENT
- - ------ ---------------------------------------------------------------------------------------------
<S> <C>
1 Commitment to Guarantee Obligations
2 Schedule One -- Form of Opinion of Counsel
3 Appendix I -- Form of Credit Agreement
4 Appendix II -- Form of Trust Indenture
5 Schedule A -- Schedule of Definitions to the Trust Indenture
6 Exhibit 1 -- General Provisions Incorporated into the Trust Indenture by Reference
7 Exhibit 2 -- Form of Floating Rate Note
8 Exhibit 3 -- Form of Fixed Rate Note
9 Exhibit 4 -- Form of Authorization Agreement
10 Exhibit 5 -- Form of Secretary's Supplemental Indenture
11 Appendix III -- Form of Security Agreement
12 Exhibit 1 -- General Provisions Incorporated into the Security Agreement by Reference
13 Schedule X -- Schedule of Definitions
14 Exhibit 2 -- Form of Secretary's Note
15 Exhibit 3 -- Form of First Preferred Ship Mortgage
16 Exhibit 4 -- Form of Title XI Reserve Fund and Financial Agreement
17 Exhibit 5 -- Form of Consent of Shipyard
18 Exhibit 6 -- Construction Contract
19 Exhibit 7 -- Form of Depository Agreement
</TABLE>
<PAGE>
COMMITMENT TO GUARANTEE OBLIGATIONS
BY
THE UNITED STATES OF AMERICA
accepted by
PETRODRILL FOUR LIMITED
Shipowner
THIS COMMITMENT TO GUARANTEE OBLIGATIONS, dated as of April 9, 1999 (the
"Guarantee Commitment"), is made and entered into by the UNITED STATES OF
AMERICA (the "United States"), represented by the SECRETARY OF TRANSPORTATION,
acting by and through the MARITIME ADMINISTRATOR (the "Secretary"), and accepted
on said date by PETRODRILL FOUR LIMITED, a British Virgin Islands international
business company (the "Shipowner").
RECITALS:
A. The Shipowner will be the sole owner of the dynamic positioned
semi-submersible drilling vessel to be named AMETHYST 4 ("the Vessel"), built
pursuant to the Construction Contract with TDI-Halter, Limited Partnership (the
"Shipyard").
B. To aid in financing the construction of the Vessel, the Shipowner will
borrow an aggregate principal amount equal to 87- 1/2% of the Actual Cost of the
Vessel, as of the Closing Date. To accomplish such financing, the Shipowner has
accepted this Guarantee Commitment subject to the terms and conditions set forth
herein.
C. The Shipowner has entered into the Credit Agreement providing for the
sale and delivery of obligations in the aggregate principal amount of
$149,625,000 to be designated "United States Government Guaranteed Export Ship
Financing Obligations, AMETHYST 4 Series" (the "Obligations") having the
maturity date and interest rate set forth in the Credit Agreement, the Indenture
and the Obligations.
D. As security for the Guarantees and the Secretary's Note, the Shipowner
will execute and deliver the Security Agreement, Contract No. MA-13505, and the
following agreements shall be executed and delivered: the Indenture, the
Authorization Agreement, Contract No. MA-13504, the Secretary's Note, the
Mortgage, Contract No. MA-13506, the Financial Agreement, Contract MA-13507, and
the Depository Agreement, Contract No. MA-13508.
W I T N E S S E T H:
That under the provisions of Title XI of the Merchant Marine Act, 1936, as
amended and in consideration of (i) the covenants of the Shipowner contained
herein and (ii) other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Secretary hereby commits
itself as herein provided.
ARTICLE I
FINDINGS AND DETERMINATIONS OF SECRETARY
Pursuant to Section 1103(g)(i) of Title XI, the Secretary has determined
that the issuance of this Guarantee Commitment will not result in the denial of
an economically sound application to issue a commitment to guarantee obligations
for a Vessel documented under the laws of the United States.
Pursuant to Section 1104A(b)(1) of Title XI, the Secretary has approved the
Shipowner as responsible and possessing the ability, experience, financial
resources and other qualifications necessary to the adequate operation and
maintenance of the Vessel.
<PAGE>
Pursuant to Section 1104A(b)(2) of Title XI, the Secretary has determined
that the aggregate of the Actual Cost of the Vessel is $171,000,063. Prior to
the Closing Date, the Secretary, in its discretion, may redetermine the Actual
Cost of the Vessel.
On the Closing Date, the aggregate principal amount of the Obligations will
not exceed 87- 1/2% of the Actual Cost of the Vessel.
Pursuant to Sections 1104A(b)(3), 1104A(b)(4) and 1104A(b)(5) of Title XI,
the Secretary has determined that: (1) the maturity date of the Obligations is
satisfactory, (2) payments of principal required by the Obligations are
satisfactory, and (3) the interest rate to be borne by the Obligations to be
issued on the Closing Date is reasonable.
Pursuant to Section 1104A(d) of Title XI, the Secretary has found that the
Shipowner's proposed use of the Vessel will be economically sound.
Pursuant to Section 1104A(d)(A) of Title XI, the Secretary has determined
that the construction, reconstruction or reconditioning of the Vessel will aid
in the transition of United States shipyards to commercial activities or will
preserve shipbuilding assets that would be essential in time of war or national
emergency.
The Secretary has further determined that the Secretary of Defense has
received notice of the Secretary's receipt of application and that the Secretary
of Defense has not disapproved the loan guarantee pursuant to the authority,
under Section 1104A(j)(1) of Title XI, to assess whether the potential use of
the Vessel may cause harm to the United States national security interests.
The Secretary has determined that the countries in which the Shipowner has
its chief executive offices or has located a substantial portion of its assets
present an acceptable financial and legal risk to the Secretary's Security.
ARTICLE II
COMMITMENT TO GUARANTEE OBLIGATIONS
The United States, represented by the Secretary, HEREBY COMMITS ITSELF TO
GUARANTEE the payment of the unpaid interest on, and the unpaid balance of the
principal of, the Obligations, including interest accruing between the date of
default under the Obligations and the payment in full of the Guarantees, and, to
effect this Guarantee Commitment, hereby commits itself to execute and deliver
the Authorization Agreement, Security Agreement, Financial Agreement, and
Depository Agreement on the Closing Date pursuant to the terms of the Guarantee
Commitment.
ARTICLE III
THE OBLIGATIONS
The Obligations shall be as provided in the Indenture and in the form of
the Obligations annexed as Exhibits 2 and 3 to the Indenture. The Obligations
shall be subject to all of the terms and conditions set forth in the Indenture.
ARTICLE IV
CONDITIONS TO EXECUTION AND DELIVERY OF THE GUARANTEE
The obligation of the Secretary to execute and deliver the Guarantee on the
Closing Date shall be subject to the following conditions unless waived in
writing by the Secretary:
(a) the Closing Date shall occur on or prior to September 11, 1999.
(b) the Shipowner and the Shipyard shall have executed and delivered to the
Secretary a copy of the Construction Contract, as amended, and the Shipyard
shall have executed the Consent of Shipyard.
(c) the Shipowner shall have executed and delivered the following
documents in the form attached hereto: the Security Agreement, Financial
Agreement, Trust Indenture, Secretary's Note, Obligations, Credit Agreement, and
Depository Agreement;
- 2 -
<PAGE>
(d) the Indenture Trustee shall have executed, in the form attached hereto,
the Authorization Agreement and Trust Indenture; the Depository shall have
executed the Depository Agreement; and the Lender shall have executed the Credit
Agreement;
(e) The following documents shall have been delivered to the Secretary: (i)
one executed counterpart and one copy of the Credit Agreement; (ii) two executed
counterparts of the Trust Indenture, (iii) two specimen copies of the
Obligations; (iv) two executed originals of the legal opinion issued under
section (j) of this Article; (v) two copies of the legal opinion delivered to
the Lender pursuant to the Credit Agreement; and (iv) two originals of all other
documents delivered by the Shipowner, Indenture Trustee or the Depository in
connection with this Closing.
(f) the Shipowner shall have executed an Officer's Certificate representing
and warranting the truth of the following statements as of the Closing Date:
(i) each of the representations and warranties set out at Section
2.01 of the Security Agreement; and
(ii) the Shipowner is not in violation of any Federal laws having a
substantial adverse effect on the interests of the United States of America
and that the consummation of the Commitment would not violate non-Title XI
Federal law.
(g) the Secretary shall have received the Guarantee Fee payable under
Section 1104A(e) of Title XI and the Investigation Fee, due under Section
1104A(f) of Title XI.
(h) the Shipowner shall have complied in all material respects with its
agreements under this Guarantee Commitment;
(i) there shall not have occurred any event which constitutes (or after any
period of time or any notice, or both, would constitute) a "Default" under the
Security Agreement;
(j) there shall have been delivered to the Secretary by the Shipowner
opinions of counsel admitted to the appropriate jurisdictions of the United
States and British Virgin Islands, the Commonwealth of the Bahamas, and the
Federative Republic of Brazil acceptable to the Secretary, in the form annex
hereto as Schedule One which shall include, among other things, an opinion to
the effect that: (i) by the terms of the Security Agreement, the Shipowner has
granted to the Secretary a fully perfected, first priority security interest in
each of the assets which constitutes the Security; and (ii) all filings,
recordings, notice and other actions required to perfect the Secretary's
interest in the Security and to render such security interests valid and
enforceable under applicable law have been duly effected;
(k) Petrodrill Five Limited shall have executed and delivered to the
Secretary its guarantee of the Title XI debt of the Shipowner.
(l) Each of Pride International, Inc. and Maritima Petroleo E Engenharia
Ltda. shall have executed and delivered to the Secretary its guarantee of final
charges that may be assessed against the Vessel due to late arrival penalties
and/or ad valorem taxes in an amount not to exceed $20,500,000.
(m) the Secretary shall have received a letter agreement from the Shipowner
to provide the Secretary within a reasonable time after the Closing Date, with
eight (8) conformed copies of the Guarantee Commitment and each of the
Appendices and Exhibits thereto executed on or prior to such date;
(n) on the Closing Date, the qualifying requirements set forth in Section
10 of the Financial Agreement shall have been complied with and certified to as
required therein; and
(o) at least fifteen (15) Business Days prior to the Closing Date, there
shall have been delivered to the Secretary, pro forma balance sheets for the
Shipowner as of the Closing Date, certified by an officer of the Shipowner
showing, among other things, all non-Title XI debt of the Shipowner;
(p) on the Closing Date, the Shipowner shall certify that all non-Title XI
loans to the Shipowner relating to the Vessel has been discharged or
subordinated satisfactorily to the Secretary, and
(q) at least ten (10) days prior to the Closing Date, the Shipowner shall
have provided the Secretary with satisfactory evidence of insurance as required
by the Security Agreement.
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(r) on the Closing Date, the Secretary shall be a beneficiary under the
Shipyard's performance and labor and material payments bonds, which bonds shall
be in form and substance satisfactory to the Secretary.
(s) on the Closing Date, the Shipowner and Amethyst Financial Company
Limited shall issue a declaration regarding lobbying activities pursuant to the
provisions of 31 U.S.C. 1352.
ARTICLE V
VARIATION OF GUARANTEE COMMITMENT
No variation from the terms and conditions hereof shall be permitted except
pursuant to an amendment executed by the Secretary and the Shipowner.
ARTICLE VI
TERMINATION OR ASSIGNMENT OF GUARANTEE COMMITMENT
This Guarantee Commitment may be terminated and the parties hereto shall
have no further rights or obligations hereunder, upon written notice by the
Secretary of the termination of the obligations of the United States pursuant to
the Shipowner's failure to satisfy one or more conditions set forth in Article V
hereof or upon the Secretary's determination, at or before the Closing Date,
that (i) the Shipowner is in violation of Federal law and such violation would
have a substantial, adverse affect on the interests of the United States of
America or (ii) the consummation of the Commitment would violate non-Title XI
Federal law. The Shipowner's warranties and representations shall survive the
termination of this Agreement and the Secretary's issuance of the Guarantees.
This Guarantee Commitment may not be assigned by the Shipowner without the prior
written approval of the Secretary and any attempt to do so shall be null and
void AB INITIO.
ARTICLE VII
GOVERNING LAW; JURISDICTION AND CONSENT TO SUIT
This Guarantee Commitment hereby adopts and incorporates by reference as if
fully set forth herein the provisions relating to Jurisdiction and Consent to
Suit of the Special Provisions of the Security Agreement.
ARTICLE VIII
MISCELLANEOUS
(a) The table of contents and the titles of the Articles are inserted as a
matter of convenient reference and shall not be construed as a part of this
Guarantee Commitment. This Guarantee Commitment may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
(b) For all purposes of this Guarantee Commitment, unless otherwise
expressly provided or unless the context shall otherwise require, capitalized
terms used herein shall have the meaning given in Schedule X to the Security
Agreement.
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<PAGE>
IN WITNESS WHEREOF, this Commitment to Guarantee Obligations has been
executed by the United States and accepted by the Shipowner, all as of the day
and year first above written.
UNITED STATES OF AMERICA,
SECRETARY OF TRANSPORTATION
(SEAL) MARITIME ADMINISTRATION
Attest: BY: /s/Joel C. Richard
Secretary
Maritime Administration
/s/Larry Main
Assistant Secretary
ACCEPTED BY:
PETRODRILL FOUR LIMITED
as Shipowner
BY: /s/Earl W. McNiel
Treasurer
Attest:
BY: /s/ Robert W. Randall
Secretary
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EXHIBIT 4.18
CREDIT AGREEMENT
dated as of April 9, 1999
among
PETRODRILL FIVE LIMITED
as Shipowner
GOVCO INCORPORATED
as Primary Lender
CITIBANK, N.A.
as Alternate Lender
CITIBANK INTERNATIONAL PLC,
as Facility Agent
and
CITICORP NORTH AMERICA, INC.
as Administrative Agent for the Primary Lender and
the commercial paper holders of the Primary Lender.
<PAGE>
TABLE OF CONTENTS
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.................2
1.01 Defined Terms.................................................2
1.02 Principles of Construction....................................2
SECTION 2. THE CREDIT FACILITY........................................2
2.01 Amount........................................................2
2.02 Availability..................................................2
2.03 Disbursements and Minimum Amount of Utilizations..............3
2.04 Relationship of Floating Rate Note and Fixed Rate Note........3
SECTION 3. DISBURSEMENT REQUIREMENTS..................................3
3.01 Disbursement Procedures.......................................3
SECTION 4. TERMS OF THE CREDIT........................................4
4.01 Principal Repayment...........................................4
4.02 Interest Payment..............................................4
4.03 Prepayment....................................................5
4.04 Recapture.....................................................6
4.05 Evidence of Debt..............................................7
4.06 Limit of United States Guarantee..............................7
SECTION 5. CONDITIONS PRECEDENT........................................8
5.01 Conditions Precedent to Lenders' Obligations Under this
Agreement...................................................8
5.02 Conditions Precedent to Each Disbursement.....................9
5.02 Conditions Precedent to Each Disbursement.....................9
SECTION 6. FEES AND EXPENSES...........................................9
6.01 Fees..........................................................9
6.02 Taxes.........................................................9
6.03 Expenses.....................................................10
6.04 Additional or Increased Costs................................11
SECTION 7. PAYMENTS..................................................12
7.01 Method of Payment............................................12
7.02 Application of Payments......................................13
SECTION 8. REPRESENTATIONS AND WARRANTIES BY THE SHIPOWNER...........14
8.01 Representations and Warranties of the Shipowner..............14
8.02 Agreements of the Shipowner..................................16
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SECTION 9. CANCELLATION, SUSPENSION AND EVENTS OF DEFAULT............17
9.01 Cancellation.................................................17
9.02 Events of Default............................................18
SECTION 10. GOVERNING LAW AND JURISDICTION...........................19
10.01 Governing Law................................................19
10.02 Submission to Jurisdiction...................................19
10.03 Waiver of Security Requirements..............................19
10.04 No Limitation................................................19
SECTION 11. MISCELLANEOUS............................................19
11.01 Computations.................................................19
11.02 Notices......................................................20
11.03 Disposition of Indebtedness..................................22
11.04 Disclaimer...................................................22
11.05 No Waiver; Remedies Cumulative...............................22
11.06 Currency.....................................................23
11.07 Severability.................................................23
11.08 Amendment or Waiver..........................................23
11.09 Indemnification..............................................23
11.10 Benefit of Agreement.........................................24
11.11 Waiver of Jury Trial.........................................24
11.12 Execution in Counterparts....................................24
11.13 Shipowner Documents..........................................24
11.14 Entire Agreement.............................................25
11.15 No Proceedings...............................................25
SECTION 12. ARRANGEMENTS AMONG THE AGENTS AND THE LENDERS...........25
12.01 Appointment..................................................25
12.02 Rights of Facility Agent.....................................25
12.03 Duties.......................................................26
12.04 Limitation on Obligations of Facility Agent..................26
12.05 Indemnification by Lenders...................................27
12.06 Limitation on Responsibility.................................27
12.07 No Claims on Employees of Facility Agent.....................27
12.08 Banking Business.............................................28
12.09 Resignation or Termination of Facility Agent.................28
12.10 Successor to Facility Agent..................................28
12.11 Discharge of Obligations.....................................28
12.12 Responsibilities of Lenders..................................28
12.13 Agency Division..............................................29
12.14 Administrative Agent.........................................29
12.15 Facility Agent Only Agent for the Lenders....................29
ii
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EXHIBITS
Exhibit 1 Schedule of Definitions
ANNEXES
Annex A Form of Disbursement Requests
iii
<PAGE>
THIS CREDIT AGREEMENT, dated as of April 9, 1999 is made by and among PETRODRILL
FIVE LIMITED, a British Virgin Islands international business company (the
"Shipowner"), GOVCO INCORPORATED, a Delaware corporation (the "Primary Lender"),
CITIBANK, N.A., a national banking association (the "Alternate Lender"),
CITIBANK INTERNATIONAL PLC, a bank organized and existing under the laws of
England, as facility agent for both the Primary Lender and the Alternative
Lender (and their respective successors and assigns) with respect to the
Floating Rate Note, and its permitted successors and assigns (in such capacity,
the "Facility Agent"), and CITICORP NORTH AMERICA, INC., a Delaware corporation,
as administrative agent for the Primary Lender and the commercial paper holders
of the Primary Lender (and their respective successors and assigns)(in such
capacity, together with its permitted successors and assigns, the
"Administrative Agent," and together with the Facility Agent, the "Agents"). As
used herein, the term "Lender" shall mean either the Primary Lender or the
Alternate Lender, as the case may be, depending on which of the two parties made
or will make the relevant disbursement of funds under this Agreement; provided,
however, that if the Primary Lender assigns its rights under this Agreement to
the Alternate Lender, the term "Lender," as used herein, shall mean only the
Alternate Lender.
BACKGROUND
WHEREAS:
(A) by this Agreement, the Lenders have established a credit facility (the
"Credit Facility") in the amount of $150,183,000, pursuant to which the Primary
Lender may, in its discretion, subject to the terms and conditions hereof,
extend financing to the Shipowner (i) for the manufacture, construction,
fabrication, financing and purchase by the Shipowner of the Vessel; (ii) for the
payment of the related Construction Period Interest; and (iii) for the payment
of the Guarantee Fees; and if the Primary Lender chooses at any time not to
extend, or continue to extend, any such financing, then the Alternate Lender
shall extend the undisbursed portion of such financing;
(B) the establishment of the Credit Facility is in reliance upon the
commitment of the United States to guarantee the payment of the unpaid interest
on, and the unpaid balance of the principal of, the Floating Rate Note,
including interest accruing between the date of an Indenture Default under the
Floating Rate Note and the payment in full of the Guarantee;
(C) a condition to the Lenders' extension of the Credit Facility under
this Agreement is the Facility Agent's timely receipt of Certificates
Authorizing Disbursement and issuance of the Guarantee of the Floating Rate
Note;
(D) the Facility Agent will serve as facility agent for the benefit, and
on behalf, of each of the Lenders in connection with the Credit Facility, this
Agreement and the other related documents and the Administrative Agent will
<PAGE>
act as an administrative agent for the Primary Lender and the Primary Lender's
commercial paper holders; and
(E) the Credit Facility may be utilized by the Shipowner in accordance
with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
1.01 DEFINED TERMS. For the purposes of this Agreement, unless otherwise
defined herein, defined terms shall have the meanings specified in Exhibit 1
hereto.
1.02 PRINCIPLES OF CONSTRUCTION.
(a) The meanings set forth for defined terms in this Agreement shall be
equally applicable to both the singular and plural forms of the terms defined.
(b) Unless otherwise specified, all references in this Agreement to
Annexes or Exhibits are to Annexes or Exhibits in or to this Agreement.
(c) The headings of the Sections in this Agreement are included for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.
SECTION 2. THE CREDIT FACILITY
2.01 AMOUNT. The Lenders hereby establish the Credit Facility, upon the
terms and conditions set forth in this Agreement, in favor of the Shipowner in
the maximum amount of $150,183,000 (the "Credit Facility Amount"), to enable the
Shipowner to finance: (i) the manufacture, construction, fabrication, financing
and purchase of the Vessel; (ii) Construction Period Interest; and (iii) the
Guarantee Fees. The Primary Lender intends (but is not obligated) to fund the
Credit Facility through the issuance and sale of Commercial Paper to investors
which is exempt from the registration requirements of the United States
Securities Act of 1933, as amended. The Primary Lender may, at its option, elect
at any time not to fund the Credit Facility or the undisbursed portion thereof,
in which case the Alternate Lender will, subject to the terms and conditions
provided herein, be obligated to fund under the Credit Facility the amount (the
"Available Amount") which is equal to the excess, if any, of the Credit Facility
Amount over the outstanding principal amount evidenced by the Floating Rate
Note, plus the aggregate outstanding principal amount evidenced by Fixed Rate
Notes ("Outstanding Principal").
2.02 AVAILABILITY. Disbursements under the Credit Facility may be made
once a calendar month and up to and including the Final Disbursement Date.
"Final Disbursement Date" shall mean either February 15, 2001 or, if
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<PAGE>
earlier, the date on which the Available Amount under the Credit Facility is
canceled in accordance with Section 9.01 or reduced to zero.
2.03 DISBURSEMENTS AND MINIMUM AMOUNT OF UTILIZATIONS. Upon satisfaction
of Sections 3.01, 5.01 and 5.02, disbursements shall be made by advances from
the Primary Lender or the Alternate Lender to the Shipowner ("Disbursements") in
accordance with Section 3.01. Notwithstanding anything in this Agreement to the
contrary, the Shipowner may not request a Disbursement under the Credit Facility
for an amount (a) less than the smaller of (i) $1,000,000 or (ii) the Available
Amount or (b) more than the Available Amount.
2.04 RELATIONSHIP OF FLOATING RATE NOTE AND FIXED RATE NOTE. Disbursements
from the Credit Facility shall become the indebtedness of the Shipowner to the
Lenders under the Floating Rate Note. The Shipowner shall convert indebtedness
under the Floating Rate Note to indebtedness under one or more Fixed Rate Notes
no later than the earlier of (i) two years from the Delivery Date, or (ii)
September 15, 2002. At its option, and from time to time, the Shipowner may
convert any portion, or all, of the indebtedness of the Floating Rate Note to a
Fixed Rate Note or series of Fixed Rate Notes at any time during or after the
construction of the Vessel, so long as the conversion of the Floating Rate Note
to the Fixed Rate Note does not occur later than the earlier of (i) two years
after the Delivery Date or (ii) September 15, 2002, and, except for the final
conversion, each conversion is in a minimum amount of $50,000,000; and the
Shipowner shall have paid any amount payable under Section 4.04(a)(iv) or any
other provision hereof in connection therewith.
SECTION 3. DISBURSEMENT REQUIREMENTS
3.01 DISBURSEMENT PROCEDURES. Upon receipt by the Facility Agent of each
Certificate Authorizing Disbursement at least five (5) Business Days prior to
the proposed disbursement date, the Primary Lender may, and if the Primary
Lender elects not to, the Alternate Lender shall, disburse funds in accordance
with the terms of such Certificate Authorizing Disbursement to the Shipowner, or
the Shipowner's designee, subject to the terms of this Agreement and such
Certificate Authorizing Disbursement; provided that, if the Certificate
Authorizing Disbursement and the request for disbursement referred to therein do
not specify a disbursement date, then the disbursement date shall be the fifth
Business Day (or such earlier or later Business Day as is requested by the
Shipowner and is acceptable to the disbursing Lender) following the Facility
Agent's receipt of such Certificate Authorizing Disbursement. Promptly following
each Disbursement, the Facility Agent shall transmit to the Indenture Trustee a
copy of the Certificate Authorizing Disbursement, a confirmation that the
Disbursement was made, and a copy of Exhibit A to the Floating Rate Note,
updated to reflect such Disbursement and other intervening, related events.
3
<PAGE>
SECTION 4. TERMS OF THE CREDIT
4.01 PRINCIPAL REPAYMENT. The Shipowner shall repay all Outstanding
Principal in twenty-four (24) approximately equal, successive semi-annual
installments, with each such installment to be payable on a Payment Date;
provided that, on the last Payment Date, the Shipowner shall repay in full the
remaining Outstanding Principal.
4.02 INTEREST PAYMENT.
(a) On each Interest Payment Date, the Shipowner shall pay to the
Indenture Trustee, on behalf of the Person(s) entitled thereto, interest on the
Outstanding Principal, calculated at an interest rate per annum equal to the
Applicable Interest Rate therefor, as determined for each successive Interest
Period. The Indenture Trustee shall calculate the Applicable Interest Rate based
on information provided (i) by the Administrative Agent to the Facility Agent if
the Primary Lender is the Lender, or (ii) by the Facility Agent if the Alternate
Lender is the Lender. From time to time, the Administrative Agent or Facility
Agent will confirm CP Rate, LIBOR, Base Rate, and Applicable Interest Rate to
the Indenture Trustee. In the event that the Primary Lender assigns the
financing of all or any portion of the amount outstanding under the Credit
Facility (whether or not evidenced by a Note) to the Alternate Lender or other
party, the interest rate on such amount shall be determined by the Facility
Agent (and the Facility Agent shall notify the Indenture Trustee thereof)
pursuant to clause (i) of the definition of Applicable Interest Rate for the
period prior to the effective date of such assignment and pursuant to clause
(ii) of such definition for all periods after such date.
(b) The Shipowner shall pay to the Facility Agent, on behalf of the
Person(s) entitled to any Unpaid Amount, on demand, interest on such Unpaid
Amount (to the extent permitted by applicable law) for each Post Maturity Period
at an interest rate per annum equal to the sum (the "Post Maturity Interest
Rate") of (1) three percent (3%), plus (2) the Post Maturity Applicable Interest
Rate. With respect to any Unpaid Amounts, the "Post Maturity Applicable Interest
Rate" shall mean either (i) LIBOR on the Quotation Date therefor plus three
tenths of one percent (0.30%) per annum, or (ii) for any such Post Maturity
Period LIBOR cannot be determined the rate per annum reasonably determined by
the Person to whom such Unpaid Amount is owed before the last day of such Post
Maturity Period to be that which expresses as a percentage rate per annum the
cost which such Person would incur in funding such Unpaid Amount from whatever
source it reasonably deems appropriate for such Post Maturity Period plus three
tenths of one percent (0.30%) per annum, or (iii) if any such Unpaid Amount is
an Accelerated Repayment, then during the first Post Maturity Period the rate
which would have been applicable to such Unpaid Amount had it not so fallen due.
In the absence of an Indenture Default, any interest which shall have accrued
under this Section 4.02(b) in respect of an Unpaid Amount shall be due and
payable and shall be paid by the Shipowner on demand on such dates as the Person
to whom such Unpaid Amount is owed may specify by written notice to the
Shipowner, or if there is
4
<PAGE>
an Indenture Default, any interest which shall have accrued under this Section
4.02(b) in respect of an Unpaid Amount shall be due and payable immediately and
shall be paid by the Shipowner without demand and any payment by, or on behalf
of, the Shipowner hereunder shall be governed by Section 7.02 and the provisions
of the last paragraph of Section 9.02.
As used herein, "Unpaid Amount" means all or any part of principal,
accrued interest, fees or other amounts owing to the Lenders under this
Agreement or the Floating Rate Note which is not paid in full when and as due
and payable, whether at Stated Maturity, by acceleration or otherwise, or any
sum due and payable by the Shipowner to the Lenders under any judgment of any
court or arbitral tribunal in connection with this Agreement which is not paid
on the date of such judgment; PROVIDED, HOWEVER, that it is agreed that Unpaid
Amount shall not include any part of the principal and interest on the Floating
Rate Note, except that Unpaid Amount shall include all such amounts thereof as
are not paid by the Shipowner as and when they are due but are paid by the
Shipowner prior to payment thereof by the Secretary. "LIBOR" shall mean, in
relation to any Post Maturity Period (other than the first Post Maturity Period
contemplated by clause (iii) of Section 4.02(b)), the rate of interest per annum
(rounded upward, if necessary, to the nearest 1/16 of 1%) last quoted by the
principal London office of CITIBANK, N.A., prior to the close of business at
such London office on the Quotation Date for the offering to leading banks in
the London interbank market of U.S. Dollar deposits on an overnight basis and in
an amount comparable to the Unpaid Amount to which LIBOR is to apply.
"Accelerated Repayment" shall mean any part of the principal of the Floating
Rate Note which became due and payable on a day other than its Payment Date.
"Post Maturity Period" shall mean with respect to the period from the date an
Unpaid Amount was due until such amount shall have been paid in full, each
successive period, the first of which shall start on the date such Unpaid Amount
was due (or the date of any such judgment or arbitral award, if earlier) and
each other of which shall start on the last day of the preceding such period,
and the duration of each of which shall be one day, or if LIBOR applies, then
from and including the Quotation Date for such Post Maturity Period to but
excluding the next Quotation Date or such other duration selected by the Person
to whom such Unpaid Amount is due; PROVIDED, HOWEVER, that in the case of any
Accelerated Repayment, the first such Post Maturity Period applicable thereto
shall be of a duration equal to the unexpired portion of its then applicable
Interest Period. "Quotation Date" in relation to any Post Maturity Period means
the day on which quotations would ordinarily be given by CITIBANK, N.A. in the
London interbank market for dollar deposits for delivery on the first day of
that period; PROVIDED, HOWEVER, that if, for any such Post Maturity Period,
quotations would ordinarily be given on more than one date, the Quotation Date
for that period shall be the last of those dates.
4.03 PREPAYMENT. (a) The Shipowner may from time to time prepay on any
Interest Payment Date all or any part of the Outstanding Principal evidenced by
the Floating Rate Note, provided that: (i) any partial prepayment shall be in a
minimum principal amount of $10,000,000, unless otherwise required by the
Indenture; (ii) the Shipowner shall have given the Facility Agent
5
<PAGE>
and the Indenture Trustee prior written notice of such prepayment (which shall
be not less than 40 nor more than 60 days); (iii) the Shipowner shall have paid
in full all amounts due under this Agreement as of the date of such prepayment,
including, without limitation, interest which has accrued to the date of
prepayment on the amount prepaid and all other amounts payable hereunder
relating to such prepayment; (iv) any amount prepaid hereunder (other than the
Outstanding Principal amount thereof prepaid through the issuance of Fixed Rate
Notes, the Outstanding Principal amount of which is subtracted from the Credit
Facility pursuant to the last sentence of Section 2.01) shall not be considered
part of the Available Amount; and (v) subject to Section 4.03(c), if the Lender
is the Primary Lender, the Shipowner shall pay to the Facility Agent, for the
benefit of the Primary Lender an amount equal to (x) the amount of yield that
the Primary Lender is required to pay to holders of its Commercial Paper during
the Liquidation Period (as defined below) on an amount of Commercial Paper
having an aggregate issue price equal to the amount of the Shipowner's
prepayment less (y) the amount of the estimated investment earnings, as
determined by the Facility Agent, on the prepayment amount during the
Liquidation Period. The "Liquidation Period" means the period from the date on
which a prepayment is made to the earliest date on which the Primary Lender's
total amount of Commercial Paper related to the funding of the Disbursements can
be reduced (without prepayment thereof) by an amount equal to the amount of the
Shipowner's prepayment. Prepayments shall be applied to the installments of
principal of the Credit Facility in the inverse order of their maturity, and, in
cases where more than one Note is Outstanding, PRO RATA to each Note.
(b) Upon delivery to the Shipowner and the Secretary of the instrument
satisfying and discharging the Indenture contemplated by Section 12.01 of the
Exhibit 1 to the Indenture, all of the Shipowner's indebtedness, liabilities and
obligations under this Agreement and the Fee Letter shall become immediately due
and payable without demand upon, or notice to, the Shipowner.
(c) Notwithstanding any other provision to the contrary herein, the
Shipowner or the Secretary (after the Secretary's assumption of the Floating
Rate Note pursuant to Section 6.09 of Exhibit 1 to the Indenture) may from time
to time prepay all or any part of the principal amount of the Floating Rate Note
without any prepayment penalty or premium in accordance with Article III of
Exhibit 1 to the Indenture.
(d) Notwithstanding any other provision to the contrary herein, the
Shipowner shall have the right to prepay any portion of the Floating Rate Note
and convert that Obligation to a Fixed Rate Note so long as it first obtains the
Secretary's consent to the interest rate applicable to the Fixed Rate Note and,
except for the final disbursement, such conversion equals or exceeds $50,000,000
principal; and the Shipowner shall have paid any amount payable under Section
4.04(a)(iv) or any other provision hereof in connection therewith.
4.04 RECAPTURE. (a) Upon the written request of the Facility Agent, the
Shipowner shall pay to the applicable Lender, such amounts as shall be
sufficient (in the reasonable judgment of such Lender) to compensate such
<PAGE>
Lender for any loss, expense or liability (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or redeployment
of deposits from third parties or in connection with obtaining funds to make or
maintain any Disbursement) which such Lender reasonably determines is
attributable to:
(i) any failure to make scheduled payments on a Payment Date or any
payment due in connection with any Redemption; or
(ii) any failure by the Shipowner to borrow any advance for which a
Certificate Authorizing Disbursement has been issued; or
(iii) any revocation of a notice of prepayment given pursuant to Section
4.03(a); or
(iv) subject to the provisions of Section 4.03(c), any prepayment of the
Floating Rate Note (including, without limitation, due to the issuance of any
fixed rate notes) other than on an Interest Payment Date after giving five
Business Days prior written notice to such Lender.
(b) Without prejudice to any other provision hereof (and at the
Shipowner's expense), such Lender shall use such reasonable efforts as it shall
determine in its sole discretion to minimize any loss, expense or liability to
the extent possible.
4.05 EVIDENCE OF DEBT. The Shipowner agrees that to evidence further its
obligation to repay all amounts disbursed under the Credit Facility, with
interest accrued thereon, it shall issue and deliver to the Facility Agent, in
accordance with the written instructions of the Facility Agent, the Floating
Rate Note. The Floating Rate Note shall (i) be in the form of Exhibit 2 to the
Indenture; (ii) bear the Secretary's Guarantee, and (iii) be valid and
enforceable as to its principal amount at any time only to the extent of the
aggregate amounts then disbursed and outstanding thereunder, and, as to
interest, only to the extent of the interest accrued thereon at the rate
guaranteed by the Secretary, with any interest in excess thereof being evidenced
by this Agreement.
4.06 LIMIT OF UNITED STATES GUARANTEE. None of the interest, fees, and
expenses arising under Sections 4.03, 4.04 and 6 and none of the Indemnified
Amounts, commissions, Taxes, Other Taxes, Post Maturity Interest Rate, interest
in excess of 9% (or such higher rate as may be agreed from time to time by the
Secretary) (the "Cap Rate") under the Floating Rate Note, the costs of obtaining
any interest rate protection, or any other charges, costs, expenses, or
indebtedness owed by the Shipowner under this Agreement to any Person is
guaranteed by the United States. The Guarantee of the United States extends only
to the principal and interest owed under the Obligations and only to the extent
specified therein.
7
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SECTION 5. CONDITIONS PRECEDENT
5.01 CONDITIONS PRECEDENT TO LENDERS' OBLIGATIONS UNDER THIS AGREEMENT.
The obligations of the Lenders under this Agreement shall be subject to the
delivery to the Facility Agent of the documents indicated below on or before the
Closing Date:
(a) THIS AGREEMENT, THE FLOATING RATE NOTE AND THE FEE LETTER. This
Agreement and the Fee Letter, each fully executed by the parties thereto
in form and substance satisfactory to the Lenders, which shall be in full
force and effect and the Floating Rate Note shall have been fully executed
by the Shipowner, endorsed by, or on behalf of, the United States, and
delivered to the Facility Agent, and all amounts then payable under the
Fee Letter shall have been paid to the Person entitled thereto.
(b) EXISTENCE. Evidence in form and substance satisfactory to the
Lenders, that the Shipowner is duly organized, validly existing and in
good standing under the laws of the British Virgin Islands, with full
power, authority and legal right to own its property and to carry on its
business as now conducted.
(c) AUTHORITY. Evidence in form and substance satisfactory to the
Lenders, of the authority of the Shipowner to execute, deliver, perform
and observe the terms and conditions of this Agreement, the Floating Rate
Note, the Fee Letter, and the Indenture and evidence of authority
(including specimen signatures) for each Person who, on behalf of the
Shipowner, signed this Agreement, the Floating Rate Note, the Fee Letter,
and the Indenture, or will otherwise act as representatives of the
Shipowner in the operation of the Credit Facility.
(d) GOVERNMENTAL AND OTHER AUTHORIZATIONS. Copies, certified as true
copies by a duly authorized officer of the Shipowner, of each consent,
license, authorization or approval of, and exemption by, any Governmental
Authority and any governmental authorities within the United States or
elsewhere, which are necessary or advisable (i) for the execution,
delivery, performance and observance by the Shipowner of this Agreement,
the Floating Rate Note, the Fee Letter, and the Indenture; and (ii) for
the validity, binding effect and enforceability of this Agreement, the
Floating Rate Note, the Fee Letter, and the Indenture, or if none is
necessary, a written certification from the Shipowner that none is
necessary.
(e) LEGAL OPINIONS. (1) Opinion of legal counsel for the Shipowner
concerning this Agreement, the Floating Rate Note, the Fee Letter, and the
Indenture; (2) Opinion of the Chief Counsel of the Maritime Administration
dated the Closing Date, signed by or on behalf of such Chief Counsel,
addressed to the Lenders and the Agents to the effect that the Guarantees
and the Authorization Agreement have been or will be duly authorized,
executed and delivered by the United States of America, and constitute
legal, valid, and binding obligations of the United States of America
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enforceable in accordance with their respective terms; and (3) Opinion of
Mayer, Brown & Platt addressed to the Lenders, the Agents, and the
Indenture Trustee concerning this Agreement, the Fee Letter, the Indenture
and the Floating Rate Note.
(f) GUARANTEE COMMITMENT. A copy of the fully executed Guarantee
Commitment, which shall be in full force and effect until completion of
the Closing.
(g) AUTHORIZATION AGREEMENT. The fully executed Authorization
Agreement, which shall be in full force and effect.
(h) INDENTURE. The fully executed Indenture, which shall be in full
force and effect.
5.02 CONDITIONS PRECEDENT TO EACH DISBURSEMENT. The agreement of the
Primary Lender to fund any Disbursement under this Agreement and any obligations
of the Alternate Lender to fund any Disbursements under this Agreement shall be
subject only to the Facility Agent's receipt of a Certificate Authorizing
Disbursement, upon which each such Lender may conclusively rely.
SECTION 6. FEES AND EXPENSES
6.01 FEES. The Shipowner shall pay or cause to be paid to the Person
entitled thereto such fees and other amounts as are set forth in that certain
Fee Letter (as amended, restated or otherwise modified from time to time with
the prior written consent of the Secretary, the "Fee Letter") dated as of April
1, 1999 between the Shipowner and the Agents, in each case when and as due.
6.02 TAXES.
(a) The Shipowner agrees to pay all amounts owing by it under this
Agreement or the Floating Rate Note free and clear of and without deduction for
any and all present and future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, EXCLUDING in the case of
each Lender, taxes imposed on its income, and franchise taxes imposed on it in
lieu of income taxes, by either (i) the jurisdiction under the laws of which
such Lender is organized or any political subdivision thereof, or (ii) the
jurisdiction of such Lender's applicable lending office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter referred to as
"Taxes"). In addition, the Shipowner agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Floating Rate
Note or from the execution, delivery, or registration of, or otherwise with
respect to, this Agreement or the Floating Rate Note (hereinafter referred to as
"Other Taxes").
(b) The Shipowner further agrees:
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(i) that, if the Shipowner is prevented by operation of law from paying
any such Taxes or Other Taxes, or if any such Taxes or Other Taxes are required
to be deducted or withheld, then the fees or expenses required to be paid under
this Agreement shall, on an after-tax basis, be increased by the amount
necessary to yield to the Lenders fees or expenses in the amounts provided for
in this Agreement after the provision for the payment of all such Taxes and
Other Taxes;
(ii) that the Shipowner shall, at the request of any Lender or any Agent,
execute and deliver to such Lender or Agent, as the case may be, such further
instruments as may be necessary or desirable to effect the payment of the
increased amounts as provided for in subsection (i) above; PROVIDED, HOWEVER,
that the Shipowner may not amend the Floating Rate Note without the prior
written consent of the Secretary;
(iii) that the Shipowner shall hold the Lenders harmless from and against
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 6.02) and any and all liabilities (including, without limitation,
penalties, interest and expenses) arising from, or with respect to, any Taxes or
Other Taxes (whether or not properly or legally asserted) and whether paid, or
payable, by the Shipowner, the Lenders, or any other Person;
(iv) that, at the request of any Lender or any Agent, the Shipowner shall
provide such Lender or Agent within the later of thirty (30) calendar days after
such request or thirty (30) calendar days after the payment of such Taxes or
Other Taxes, a copy evidencing the payment of any Taxes or Other Taxes by the
Shipowner; and
(v) that each payment under this Section 6.02 shall be made within thirty
(30) days from the date the applicable Lender makes written demand therefor.
Each demand for payment by such Lender under Section 6.02(b)(v) for amounts paid
or incurred by the Lenders or itself shall be accompanied by a certificate (with
accompanying documentation supporting the demand) showing in reasonable detail
the basis for the calculation of the amounts demanded, which certificate, in the
absence of manifest error, shall be conclusive and binding for all purposes.
Notwithstanding anything to the contrary contained herein, the agreements
in this Section 6.02 shall survive the termination of this Agreement and the
payment of the Floating Rate Note and all other amounts due hereunder.
6.03 EXPENSES. The Shipowner agrees, whether or not the transactions
hereby contemplated shall be consummated, to pay, or reimburse the Agents and
the Lenders, respectively, promptly upon demand for the payment of all
reasonable and duly documented costs and expenses arising in connection with the
preparation, printing, execution, delivery, registration, implementation,
modification of or waiver or consent under this Agreement, the Floating Rate
Note or the Indenture, including, without limitation, the
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reasonable and duly documented out-of-pocket expenses of the Agents and the
Lenders (incurred in respect of telecommunications, mail or courier service,
travel and the like), and the fees and expenses of counsel for the Agents and
the Lenders. The Shipowner shall also pay all of the costs and expenses
(including, without limitation, the fees and expenses of counsel) incurred by or
charged to the Agents or the Lenders in connection with the amendment or
enforcement of this Agreement, the Floating Rate Note or the Indenture or the
protection or preservation of any right or claim of the Agents or the Lenders
arising out of this Agreement, the Floating Rate Note or the Indenture.
6.04 ADDITIONAL OR INCREASED COSTS.
(a) If, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation, or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining the
Disbursements or the Credit Facility, then the Shipowner shall from time to
time, upon demand by such Lender, pay to such Lender additional amounts
sufficient to compensate such Lender for such increased cost.
(b) If any Lender determines that compliance with any law or regulation or
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required to be maintained by such Lender or any corporation controlling
such Lender and that the amount of such capital is increased by or based upon
the existence of such Lender's commitment to lend hereunder and other
commitments of this type, then, upon demand by such Lender, the Shipowner shall
immediately pay to the Facility Agent (for the benefit of such Lender), from
time to time as specified by the Facility Agent (on behalf of such Lender),
additional amounts sufficient to compensate such Lender or such corporation in
the light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of its
commitment to lend hereunder.
(c) Each Lender shall take such reasonable steps as it shall determine to
minimize amounts demanded under this Section 6.04; PROVIDED that no Lender shall
be obligated to take any actions under this SECTION 6.04 if such Lender has
determined, that such actions would cause it to incur any material costs or
expenses or would otherwise be disadvantageous to it in any material respect. In
the event that a Lender transfers the booking office of the Credit Facility or
the Floating Rate Note to minimize amounts demanded under this Section 6.04, any
costs and expenses incurred in such transfer shall be paid by the Shipowner on
demand by such Lender.
(d) Each demand for payment by the Facility Agent (on behalf of any
Lender) under this Section 6.04 shall be accompanied by a certificate showing in
reasonable detail the basis for the calculation of the amounts demanded, which
certificate, in the absence of manifest error, shall be conclusive and binding
for all purposes.
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(e) Each Lender shall notify the Shipowner of any event occurring after
the date of this Agreement which entitles such Lender to compensation pursuant
to this Section 6.04, as promptly as practicable, and in any event within ninety
(90) days after it has knowledge of such event and has determined that a request
for compensation hereunder shall be made. The Shipowner shall not be obligated
to reimburse any Lender for any loss or cost incurred more than ninety (90) days
prior to delivery of notice to the Shipowner by the Lender requesting
compensation under this Section 6.04. Notwithstanding anything to the contrary
contained herein, the agreements in this SECTION 6.04 shall survive the
termination of this Agreement and the payment of the Floating Rate Note and all
other amounts due hereunder.
SECTION 7. PAYMENTS
7.01 METHOD OF PAYMENT.
(a) (i) All payments to be made by the Shipowner under this Agreement and
the Floating Rate Note shall be made without set-off or counterclaim in Dollars
in immediately available and freely transferable funds no later than 11:00 A.M.
(New York City time) on the date on which due. Except as provided in Section
7.01(a)(ii), all payments to be made by the Shipowner or the Agents hereunder
shall be made if to (A) the Primary Lender (for the account of Govco
Incorporated, its successors and assigns), (B) the Alternate Lender (for the
account of Citibank, N.A., its successors and assigns), (C) the Facility Agent
(for the account of Citibank International plc, its successors and assigns), (D)
the Administrative Agent (for the account of Citicorp North America, Inc., its
successors and assigns), or (E) any other Lender (for the account of such
Lender, its successors and assigns), in each case to the Facility Agent (for the
account of Citibank International plc, its successors and assigns) at Citibank,
N.A., 399 Park Avenue, New York, New York 10043, DDA. Account No. 10963054,
Attn: Loans Agency. Upon receipt thereof by the Facility Agent, the Facility
Agent shall forthwith forward such funds to the party entitled thereto pursuant
to the written instructions provided by such party to the Facility Agent in
accordance with Section 11.02.
(ii) The Shipowner shall pay the principal and the guaranteed amount
of the Applicable Interest Rate on the Floating Rate Note to the Indenture
Trustee and all other amounts due under this Agreement directly to the Person
entitled thereto, in each case, by wire transfer in same day and immediately
available and freely transferable funds. Wire transfer instructions shall be
provided to the Shipowner. Until further notice, wire instructions for the
Indenture Trustee are as follows: The First National Bank of Maryland, ABA
#052-000-113, Credit Trust Receipts, A/C #090-02-764, Re: Petrodrill.
(b) Except as otherwise provided herein, whenever any payment would
otherwise fall due on a day which is not a Business Day, the due date for
payment shall be the immediately succeeding Business Day, and interest and fees
shall be computed in accordance with Section 11.01.
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(c) Whenever a sum is required to be paid to the Facility Agent under this
Agreement for the account of another Person, the Facility Agent shall not be
obligated to make such sum available to such other Person unless and until the
Facility Agent shall have established to its satisfaction that is has actually
received payment of such sum. Notwithstanding the foregoing, unless it has
received actual notice to the contrary, the Facility Agent may (but shall not be
obligated to) assume on the date of any Disbursement or any other payment
required to be made by any Lender hereunder that such Lender has made available
to the Facility Agent such Disbursement or other payment and the Facility Agent
may (but shall not be required to) make available to the Shipowner on such date
a corresponding amount in reliance upon such assumption. Additionally, the
Facility Agent may (but shall not be obligated to) assume on the date of any
payment required to be made by the Shipowner hereunder that the Shipowner has
made available to the Facility Agent such payment and the Facility Agent may
(but shall not be required to) make available to the Lenders on such date a
corresponding amount in reliance upon such assumption. If and to the extent that
either (i) the Lender shall not in fact have made such Disbursement or other
payment available to the Facility Agent and the Facility Agent has made
available a corresponding amount to the Shipowner in reliance on the
above-described assumptions or (ii) the Shipowner has not in fact made such
payment and the Facility Agent has made available a corresponding amount to the
Lender in reliance on the above-described assumptions, then, in either such
case, such Lender agrees to repay to the Facility Agent forthwith on demand such
corresponding amount together with an amount sufficient to indemnify the
Facility Agent against any cost or loss it may have suffered or incurred by
reason of its having paid out such sum prior to receipt thereof.
7.02 APPLICATION OF PAYMENTS. In the absence of an Indenture Default, the
Lenders shall each apply payments received by them under this Agreement and the
Floating Rate Note (whether at Stated Maturity, by reason of acceleration,
prepayment or otherwise), in the following order of priority: (i) interest due
pursuant to Section 4.02(a); (ii) installments of principal due; (iii) interest
due pursuant to Section 4.02(b) other than the amount described in clause (i)
above; (iv) all amounts due under the Fee Letter; and (v) all other amounts due
under this Agreement and not otherwise provided for in this Section 7.02. Upon
the occurrence of an Indenture Default, the Lenders shall each hold any payments
they receive after an Indenture Default from, or on behalf of, the Shipowner
under this Agreement, the Fee Letter and any related agreement (excluding the
Floating Rate Note) and shall promptly deliver such payments to the Secretary if
the Secretary has been required to honor a Guarantee as a result of said
Indenture Default. All such amounts received during an Indenture Default and
delivered to the Secretary in accordance with the preceding sentence shall be
applied first to pay, satisfy and discharge all amounts owed by the Shipowner to
the Secretary under the Secretary's Note and the Mortgage and then to pay,
satisfy and discharge any and all amounts owed to the Lenders or the Agents.
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SECTION 8. REPRESENTATIONS AND WARRANTIES BY THE SHIPOWNER
8.01 REPRESENTATIONS AND WARRANTIES OF THE SHIPOWNER. The Shipowner
represents and warrants to the Agents and the Lenders that, as of the Closing
Date:
(a) EXISTENCE AND AUTHORITY. The Shipowner is duly organized, validly
existing under the laws of its jurisdiction of formation, is in good standing
under the laws of its jurisdiction of formation, has been duly qualified to do
business in, and is in good standing as a foreign corporation in each
jurisdiction in which the conduct of its business or the ownership of its
properties requires it to be so qualified, and has full power, authority and
legal right to own its properties and conduct its business as it is presently
now conducted.
The Shipowner has full power, authority and legal right (i) to execute and
deliver this Agreement, the Floating Rate Note and the Indenture, (ii) to
perform and observe the terms and provisions of each of said documents to be
performed or observed by it, (iii) to consummate the transactions contemplated
thereby and (iv) to own its properties (including, without limitation, the
Vessel owned or to be owned by it) and conduct its business as presently
conducted.
(b) GOVERNMENT AND OTHER AUTHORIZATIONS. All consents, licenses,
authorizations and approvals of, and exemptions by, any Governmental Authority
and any governmental authorities within the United States or elsewhere and any
other Persons that are necessary or advisable: (i) for the execution, delivery,
performance and observance by the Shipowner of this Agreement, the Floating Rate
Note, and the Indenture; and (ii) for the validity, binding effect and
enforceability of this Agreement, the Floating Rate Note, and the Indenture have
been obtained and are in full force and effect.
(c) RESTRICTIONS. The execution, delivery and performance or observance by
the Shipowner of the terms of, and consummation by the Shipowner of the
transactions contemplated by, this Agreement, the Floating Rate Note, and the
Indenture do not and will not conflict with or result in a breach or violation
of: (i) the charter, by-laws or organizational documents of the Shipowner; (ii)
any federal or state law of the United States or any other ordinance, decree,
constitutional provision, regulation or other requirement of any Governmental
Authority (including, without limitation, any restriction on interest that may
be paid by the Shipowner); or (iii) any order, writ, injunction, judgment or
decree of any court or other tribunal. Further, the execution, delivery and
performance or observance by the Shipowner of the terms of, and consummation by
the Shipowner of the transactions contemplated by, this Agreement, the Floating
Rate Note, and the Indenture does not and will not conflict with or result in a
breach of any agreement or instrument to which the Shipowner is a party, or by
which it or any of its revenues, properties or assets may be subject, or result
in the creation or imposition of any Lien upon any of the revenues, properties
or assets of the Shipowner pursuant to any such agreement or instrument. "Lien"
shall mean any lien, lease, mortgage, pledge,
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hypothecation, preferential arrangement relating to payments, or other
encumbrance or security interest.
(d) BINDING EFFECT. This Agreement, the Floating Rate Note, and the
Indenture which have been executed on or before the date hereof have been duly
executed and delivered by the Shipowner. Each of the Agreement, the Floating
Rate Note, and the Indenture constitutes, and each of the Agreement, the
Floating Rate Note, and the Indenture as it may hereafter be amended will
constitute, a direct, general and unconditional obligation of the Shipowner
which is legal, valid and binding upon the Shipowner and enforceable against the
Shipowner in accordance with its respective terms. All obligations evidenced by
the Floating Rate Note will be entitled to the benefits of the Guarantees and
the Authorization Agreement.
(e) CHOICE OF LAW. Under applicable conflict of laws principles, the
choice of law provisions of this Agreement, the Floating Rate Note and the
Indenture are valid, binding and not subject to revocation by the Shipowner. In
any proceedings brought for enforcement of this Agreement, the choice of the law
of the State of New York as the governing law of such documents will be
recognized and such law will be applied. In any proceeding brought for
enforcement of the Indenture or the Floating Rate Note, the choice of law of the
State of Maryland as the governing law of such documents will be recognized and
such law will be applied.
(f) LEGAL PROCEEDINGS. No legal proceedings are pending or, to the best of
the Shipowner's knowledge, threatened before any court or governmental agency
which might: (i) materially and adversely affect the Shipowner's financial
condition, business or operations; (ii) restrain or enjoin or have the effect of
restraining or enjoining the performance or observance of the terms and
conditions of any of this Agreement, the Indenture or the Floating Rate Note; or
(iii) in any other manner question the validity, binding effect or
enforceability of any of the provisions of this Agreement, the Indenture or the
Floating Rate Note.
(g) USE OF THE VESSEL. The Vessel will be used for lawful purposes.
(h) SHIPOWNER FINANCIAL STATEMENTS. The Shipowner Financial Statements
present fairly the financial condition of the Shipowner at the date of such
statements and the results of the operations of the Shipowner for such fiscal
year. The Shipowner Financial Statements have been prepared in accordance with
generally accepted accounting principles in the United States consistently
applied. Except as fully reflected in the Shipowner Financial Statements, there
are no liabilities or obligations with respect to the Shipowner of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether or
not due) for the period to which the Shipowner Financial Statements relate that,
either individually or in the aggregate, would be material to the Shipowner.
Since the date of the most recent audited Shipowner Financial Statements, there
has been no material adverse change in the financial condition, business
prospects or operations of the Shipowner.
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"Shipowner Financial Statements" shall mean the financial statements of the
Shipowner furnished to the Facility Agent prior to the date of this Agreement.
(i) NO TAXES. There is no Tax imposed on or in connection with: (i) the
execution, delivery or performance of this Agreement, the Indenture or the
Floating Rate Note; (ii) the enforcement of this Agreement, the Indenture or the
Floating Rate Note; or (iii) on any payment to be made to any Lender under this
Agreement or the Floating Rate Note.
(j) LAWS. None of this Agreement, the Indenture, the Floating Rate Note,
the transactions contemplated thereunder nor any Person party to this Agreement,
the Indenture or the Floating Rate Note is required to qualify under the Trust
Indenture Act or register or qualify under any securities law.
(k) DEFAULTS. No Event of Default has occurred and is continuing and no
event or circumstance has occurred and is continuing which with the passage of
time, the giving of notice or both would constitute an Event of Default.
8.02 AGREEMENTS OF THE SHIPOWNER. The Shipowner agrees that until all
amounts owing under this Agreement and the Floating Rate Note have been paid in
full, the Shipowner will, unless the Agents and the Lenders shall have consented
in writing:
(a) INTEREST RATE PROTECTION. At all times that (1) a Floating Rate
Note exists and (2) the Applicable Interest Rate is equal to or greater
than the Cap Rate less 0.5%, the Shipowner (at its expense) within fifteen
(15) Business Days thereafter, shall (A) enter into, and thereafter
maintain in full force and effect, an amortizing interest rate cap
agreement with a strike price providing for a cap based on the Applicable
Interest Rate not in excess of the Cap Rate per annum and otherwise
acceptable to the Lenders, with a counterparty rated "AA" or better by any
of the rating agencies that rate the Commercial Paper issued by the
Primary Lender or such other counterparty reasonably acceptable to the
Lenders, covering the Floating Rate Note and based on the expected
amortization schedule of such Note, and (B) execute such documents and
instruments as may be necessary, or in the opinion of the Facility Agent
desirable, to effect the assignment of its rights thereunder to the
Facility Agent for the benefit of the Lenders and, if any payments are
made under any Guarantee, the Secretary, in every case with such terms as
are reasonably acceptable to the Facility Agent for the protection of the
Lenders. If the Shipowner fails to satisfy the requirements of this
Section 8.02(a) within the fifteen (15) Business Days set forth above, the
Facility Agent may (in its sole discretion) and if the Facility Agent so
elects, the Shipowner hereby authorizes and directs the Facility Agent to,
satisfy the requirements of this Section 8.02(a), all at the expense of
the Shipowner, due on demand.
(b) NOTICE OF DEFAULTS. Promptly, but in no event later than ten
(10) days after the occurrence of an Indenture Default or an Event of
Default of which the Shipowner has knowledge, notify the Facility Agent
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and the Indenture Trustee of any report required by the Shipowner
Documents (or any other document entered into by the Shipowner in
connection therewith), and send a copy thereof to the Facility Agent, in
each case by facsimile or hand delivery.
(c) FINANCIAL REPORTS. Beginning with the fiscal year in which this
Agreement is executed and continuing until all amounts owing under this
Agreement and the Floating Rate Note have been paid in full, the Shipowner
shall furnish to the Facility Agent (and the Facility Agent, upon receipt
thereof, shall furnish to each Lender and the Administrative Agent) a copy
of all financial reports furnished to the Secretary pursuant to the Title
XI Reserve Fund and Financial Agreement.
(d) OTHER ACTS. From time to time, do and perform any and all acts
and execute any and all documents as may be necessary or as reasonably
requested by the Facility Agent or the Indenture Trustee in order to
effect the purposes of this Agreement and to protect the interests of the
Lenders in the Floating Rate Note and the interests of the Lenders in the
Guarantees.
(e) USE OF PROCEEDS. Use proceeds from each Disbursement solely to
finance: (i) the manufacture, construction, fabrication, financing and
purchase of the Vessel; (ii) Construction Period Interest; and (iii) the
Guarantee Fees. Use the proceeds from the issuance of any Fixed Rate Notes
to repay amounts owed under the Floating Rate Note or to finance: (i) the
manufacture, construction, fabrication, financing and purchase of the
Vessel; (ii) Construction Period Interest; and (iii) the Guarantee Fees.
(f) SUCCESSORS. Require that any successor to all or substantially
all of its business as a result of any merger or consolidation with any
other entity, dissolution or termination of legal existence, sale, lease,
transfer or other disposal of any substantial part of its properties or
any of its properties essential to the conduct of its business or
operations, as now or hereafter conducted, any change in control, any
agreement to do any of, or any combination of, the foregoing, to assume
all of the Shipowner's indebtedness, liabilities and obligations under
this Agreement, the Indenture and the Floating Rate Note.
SECTION 9. CANCELLATION, SUSPENSION AND EVENTS OF DEFAULT
9.01 CANCELLATION. The Shipowner may cancel at any time all or any part of
the Available Amount of the Credit Facility, provided that (i) thirty (30) days'
prior irrevocable written notice is given to the Agents, the Indenture Trustee,
and the Secretary and (ii) the Shipowner shall have paid to the Lenders any
commitment fees accrued and unpaid under Section 6.01 and all other amounts due
and payable under this Agreement and the Floating Rate Note as of the proposed
date of cancellation. In the absence of an Indenture Default, the Lenders may
not for any reason cancel at any time any part of the Available Amount of the
Credit Facility.
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9.02 EVENTS OF DEFAULT. Upon the occurrence of any of the following events
or conditions (each, an "Event of Default"):
(a) any failure by the Shipowner to pay when and as due any amount
owing under this Agreement, but which is not guaranteed by the Secretary;
or
(b) any failure by the Shipowner to comply with its obligations
under Section 8.02(b) or 8.02(e); or any failure by the Shipowner to
perform or comply with any of its agreements set forth in this Agreement
(exclusive of any events specified as an Event of Default in any other
subsection of this Section 9.02 and exclusive of Section 8.02(a)), which
failure, if capable of being cured, remains uncured for a period of thirty
(30) days after written notice thereof has been given to the Shipowner by
the Facility Agent; or
(c) the Shipowner shall be unable to pay its debts when and as they
fall due or shall admit in writing its inability to pay its debts as they
fall due or shall become insolvent; or the Shipowner shall apply for or
consent to the appointment of any liquidator, receiver, trustee or
administrator for all or a substantial part of its business, properties,
assets or revenues; or a liquidator, receiver, trustee or administrator
shall be appointed for the Shipowner and such appointment shall continue
undismissed, undischarged or unstayed for a period of thirty (30) days, or
the Shipowner shall institute (by petition, application, answer, consent
or otherwise) any bankruptcy, arrangement, readjustment of debt,
dissolution, liquidation or similar executory or judicial proceeding; or a
bankruptcy, arrangement, readjustment of debt, dissolution, liquidation or
similar executory or judicial proceeding shall be instituted against the
Shipowner and shall remain undismissed, undischarged or unstayed for a
period of thirty (30) days; or
(d) an Indenture Default has occurred;
then, and in any such event, and at any time thereafter, if such event is
continuing, and if there is no Indenture Default (or if there is an
Indenture Default, only after the Secretary has received all payments due
under the Secretary's Note and the Mortgage), any Agent or any Lender (by
written notice to the Shipowner), shall have the right to institute any
judicial or other proceedings under this Agreement to recover all amounts
owing under this Agreement. The Lenders agree that so long as an Indenture
Default exists, all amounts received during such period from, or on behalf
of, the Shipowner shall be applied in the manner set forth in Section
7.02. Notwithstanding an Event of Default, the Lenders may not terminate
the Available Amount of the Credit Facility without the Secretary's
consent; PROVIDED, HOWEVER, that the Shipowner's use of the Available
Amount of the Credit Facility shall remain subject to the requirements of
Sections 2.02, 3.01, and 5.02. Except as expressly provided above in this
Section 9.02, presentment, demand, protest and all other notices of any
kind are hereby expressly waived. Notwithstanding any other provision of
this Agreement, if Section 9.02(c) is applicable, the Lender may file
appropriate claims
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in connection therewith, but shall apply any funds collected as a
consequence of said filings in accordance with the provisions of Section
7.02 of this Agreement.
SECTION 10. GOVERNING LAW AND JURISDICTION
10.01 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.02 SUBMISSION TO JURISDICTION. Each of the Shipowner and the Lenders
hereby irrevocably agrees that any legal suit, action or proceeding arising out
of or relating to this Agreement, or any of the transactions contemplated
hereby, may be instituted by the other parties hereto in the Courts of the State
of New York or the Federal Courts sitting in the Borough of Manhattan, City of
New York, State of New York. Each of the Shipowner and the Lenders hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may have now or hereafter to the laying of the venue or any objection based
on forum non conveniens, or based on the grounds of jurisdiction with respect to
any such legal suit, action or proceeding and irrevocably submits generally and
unconditionally to the jurisdiction of any such court in any such suit, action
or proceeding. Each of the Shipowner and the Lenders agrees that a judgment,
after exhaustion of all available appeals, in any such action or proceeding
shall be conclusive and binding upon it and may be enforced in any other
jurisdiction by suit upon such judgment, a certified copy of which shall be
conclusive evidence of the judgment. Each of the Shipowner and the Lenders
waives personal service of any summons, complaint, or other process, which
service may be made by such or any other means permitted by New York law.
10.03 WAIVER OF SECURITY REQUIREMENTS. To the extent the Shipowner may, in
any action or proceeding arising out of or relating to this Agreement be
entitled under applicable law to require or claim that the Agents or the Lenders
post security for costs or take similar action, the Shipowner hereby irrevocably
waives and agrees not to claim the benefit of such entitlement.
10.04 NO LIMITATION. Nothing in this Section 10 shall affect the right of
the Agents or any Lender to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against the Shipowner in any
jurisdiction; PROVIDED, HOWEVER, that except as provided in Section 9.02, in the
event of an Indenture Default, the Agents and the Lenders may not proceed
against the Shipowner without the Secretary's consent unless the Secretary has
received full payment under the Secretary's Note.
SECTION 11. MISCELLANEOUS
11.01 COMPUTATIONS. Each determination of an interest rate by the
Administrative Agent or the Facility Agent, or any other Person pursuant to any
provision of this Agreement, the Fee Letter or the Floating Rate Note, in the
absence of error, shall be conclusive and binding on the Shipowner. Each
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determination of a fee or other amounts (excluding interest rates) by the
Facility Agent, any Lender, or any other Person pursuant to any provision of
this Agreement, the Fee Letter or the Floating Rate Note, in the absence of
manifest error, shall be conclusive and binding on the Shipowner. All
computations of interest and fees hereunder and under the Floating Rate Note
shall be made on the basis of a year of three hundred sixty-five (365) days and
actual days elapsed; PROVIDED, HOWEVER, that the CP Rate and LIBOR shall be
determined on the basis of a year of 360 days and actual days elapsed. The
Secretary and Indenture Trustee may request supporting documentation for the
information provided by the Facility Agent or the Administrative Agent to the
Indenture Trustee.
11.02 NOTICES. Except as otherwise specified, all notices given hereunder
shall be in writing, and shall be given by mail, facsimile, tested telex or
personal delivery and shall be deemed to be given for the purposes of this
Agreement on the day that such notice is received by the intended recipient
thereof. Unless otherwise specified in a notice delivered in accordance with
this Section 11.02, all notices shall be delivered to the parties hereto and to
the Indenture Trustee and the Secretary at their respective addresses indicated
below:
TO THE FACILITY AGENT AND THE LENDERS:
Address: Citibank International plc, as Facility Agent
P.O. Box 242
336 Strand
London, England WC2R 1HB
Attention: Karen Doran
Telephone: 01144171500 4482
Facsimile: 01144171500 4274
With a copy to:
Citibank, N.A., as the Alternate Lender
399 Park Avenue
New York, New York 10043
Attention: Structured Trade Finance
Facsimile (212) 793-2330
Telephone: (212) 559-6787
With a copy to the Administrative Agent
TO THE ADMINISTRATIVE AGENT
Address: Citicorp North America, Inc.
399 Park Avenue
New York, New York 10043
Attention: Structured Trade Finance
Facsimile (212) 793-2330
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Telephone: (212) 559-6787
TO THE SHIPOWNER
Petrodrill Five Limited
c/o Arias, Fabrega & Fabrega
P.O. Box 985
Omar Hodge Building
Wickham's Cay
Road Town, Tortola
British Virgin Islands
With a copy to:
Petrodrill Five Limited
c/o: Petrodrill Engineering N.V.
K.P. van der Mandelelaan 38
3062 MB
Rotterdam (Brainpark), The Netherlands
Netherlands
Attention: Steve Assiter
Telephone: 011.31.10.272.2722
Facsimile: 011.31.10.272.2727
Email: [email protected]
TO THE SECRETARY
Address: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
400 Seventh Street, S.W.
Washington, D.C. 20590
Attention: Office of Ship Finance
Telephone: (202) 366-5744
Facsimile: (202) 366-7901
TO THE INDENTURE TRUSTEE
Address: FMB Trust Company, National Association
Mail Code 101-591
25 South Charles Street
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Telephone: (410) 244-4238
Facsimile: (410) 244-4236
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11.03 DISPOSITION OF INDEBTEDNESS. Once the Shipowner has completely drawn
down on the Credit Facility and the Available Amount is zero, each Lender may
sell, assign, transfer, negotiate, or otherwise dispose of all or any part of
its interest in all or any part of the Shipowner's indebtedness under this
Agreement and the Floating Rate Note to any party (collectively, a "Disposition
of Indebtedness"), and any such party shall enjoy all the rights and privileges
of such Lender under this Agreement and the Floating Rate Note; PROVIDED,
HOWEVER, that each Disposition of Indebtedness to any Person other than a
domestic Affiliate of a Lender shall require the prior written consent of the
Shipowner (which consent shall not be unreasonably withheld or delayed);
PROVIDED, FURTHER, HOWEVER, that each Lender may pledge or grant participation
in all or any part of its interest in all or any part of the Shipowner's
indebtedness under this Agreement and the Floating Rate Note to any party at any
time so long as such Lender's commitment to lend the Available Amount under this
Agreement is not affected thereby. The Shipowner shall, at the request of the
Facility Agent, execute and deliver to the Facility Agent or to any party that
the Facility Agent may designate, any such further instruments as may be
necessary or desirable to give full force and effect to a Disposition of
Indebtedness by the applicable Lender.
11.04 DISCLAIMER. Neither the Agents nor the Lenders shall be responsible
in any way for the performance of the Construction Contract or any other
Shipowner Document, and no claim against the Shipbuilder or any other Person
with respect to the performance of the Construction Contract will affect the
obligations of the Shipowner under this Agreement or the Floating Rate Note.
11.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
any Agent or any Lender in exercising any right, power or privilege under this
Agreement, the Floating Rate Note or the Indenture and no course of dealing
between or among the Shipowner and any Agent or any Lender shall operate as a
waiver of the rights of the Shipowner and such Lenders against each other under
this Agreement; nor shall any single or partial exercise of any right, power or
privilege hereunder or under the Floating Rate Note or the Indenture preclude
the Shipowner, the Agents, or the Lenders from exercising against each other any
other right, power or privilege hereunder. The rights and remedies expressly
provided herein are cumulative and not exclusive of any rights or remedies which
the Agents or the Lenders would otherwise have. No notice to or demand on the
Shipowner in any case shall entitle the Shipowner to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Agent or any Lender under this Agreement to any other or further action
in any circumstances without notice or demand. Notwithstanding any other
provision to the contrary herein, no provision in this Agreement or any other
related agreement preserves any rights in favor of the parties against the
Secretary in the event that either party fails or delays to exercise any rights,
powers, or privileges under this Agreement, the Floating Rate Note or the
Indenture or engages in any particular course of dealing.
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11.06 CURRENCY. All payments of principal, interest, fees or other amounts
due hereunder and under the Floating Rate Note shall be made in Dollars,
regardless of any law, rule, regulation or statute, whether now or hereafter in
existence or in effect in any jurisdiction, which affects or purports to affect
such obligations. The obligation of the Shipowner in respect of any amount due
under this Agreement or the Floating Rate Note, notwithstanding any payment in
any other currency (whether pursuant to a judgment or otherwise), shall be
discharged only to the extent of the amount in Dollars that the Person entitled
to receive that payment may, in accordance with normal banking procedures,
purchase with the sum paid in that other currency (after any premium and costs
of exchange) on the Business Day immediately succeeding the day on which that
Person receives that payment. If the amount in Dollars that may be so purchased
for any reason falls short of the amount originally due, the Shipowner shall pay
such additional amounts, in Dollars, to compensate for the shortfall. Any
obligation of the Shipowner not discharged by that payment shall continue to be
due as a separate and independent obligation and shall accrue interest in
accordance with Section 4.02 until discharged as provided herein.
11.07 SEVERABILITY. To the extent permitted by applicable law, the
illegality or unenforceability of any provision of this Agreement shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement.
11.08 AMENDMENT OR WAIVER. This Agreement may not be changed, discharged
or terminated without the written consent of the parties hereto, and no
provision hereof may be waived without the written consent of the party to be
bound thereby. There may be no change, discharge, termination or claim of waiver
of the terms of this Agreement without the prior written consent of the
Secretary, who is entitled to enforce his rights under this Agreement as an
intended third party beneficiary to this Agreement. The parties hereto
acknowledge, however, that nothing in this Agreement creates in either the
Shipowner or the Lenders any right whatsoever against the Secretary.
11.09 INDEMNIFICATION. Without limiting any other rights that any Agent or
any Lender may have hereunder or under applicable law, the Shipowner hereby
agrees to indemnify each of the Agents and the Lenders (each, an "Indemnified
Party") from and against any and all damages, losses, claims, liabilities and
related costs and expenses, including reasonable attorneys' fees and
disbursements (all the foregoing being collectively referred to as "Indemnified
Amounts") awarded against or incurred by such Indemnified Party arising out of
or as a result of this Agreement or the Floating Rate Note excluding, however,
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of such Indemnified Party. In the event of an Indenture
Default, all amounts received by such Indemnified Party pursuant to such
indemnification after an Indenture Default shall be held and paid in the manner
required by Section 7.02.
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11.10 BENEFIT OF AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto; PROVIDED, HOWEVER, that the Shipowner may not assign any of
its rights or obligations hereunder without the prior written consent of the
Lenders, and, to the extent set forth in paragraph 11.03 hereof, the Secretary.
11.11 WAIVER OF JURY TRIAL. Each of the Shipowner and the Lenders waives
its respective rights to a trial by jury of any claim or cause of action based
upon or arising out of or related to this Agreement, any assignment or the
transactions contemplated hereby, in any action, proceeding or other litigation
of any type brought by any party against the other parties, whether with respect
to contract claims, tort claims, or otherwise. Each of the Shipowner and the
Lenders agrees that any such claim or cause of action shall be tried by a court
trial without a jury. Without limiting the foregoing, the parties further agree
that their respective right to a trial by jury is waived by operation of this
section as to any action, counterclaim or other proceeding which seeks, in whole
or in part, to challenge the validity or enforceability of this Agreement, any
assignment or any provision hereof or thereof. This waiver shall apply to any
subsequent amendments, renewals, supplements or modifications to this Agreement
or any assignment.
11.12 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.
11.13 SHIPOWNER DOCUMENTS. Notwithstanding the provisions of this
Agreement, in any conflict between this Agreement and the provisions of the
Shipowner Documents, the Shipowner Documents shall govern the agreement between
the parties hereto, but only with respect to the subject matter thereof.
Notwithstanding the previous sentence, any provision in the Indenture (or any
other agreement the Shipowner has entered into with any other Person) purporting
to release the Shipowner of any indebtedness, liability or obligation shall not
apply to any indebtedness, liability or obligation of the Shipowner hereunder
and no termination of the Indenture (or any other agreement the Shipowner has
entered into with any other Person) shall affect the continued effectiveness of
this Agreement, which shall continue in full force and effect until the Credit
Facility has been terminated and all indebtedness, liabilities and obligations
of the Shipowner have been fully discharged and satisfied, the Floating Rate
Note have been paid, satisfied and discharged in full, and there has elapsed a
year and a day from the last payment received from, or on behalf, of the
Shipowner. However, this Section 11.13 shall have no affect on the relationships
established and the agreements entered into by the parties to the Shipowner
Documents (and such other agreements the Shipowner has entered into with any
other Person), in each case to which the Lenders are not parties in their
capacities as the Lenders hereunder.
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11.14 ENTIRE AGREEMENT. This Agreement, the Fee Letter and the Floating
Rate Note contain the entire agreement among the parties hereto regarding the
Credit Facility.
11.15 NO PROCEEDINGS. Each of the Shipowner, the Alternate Lender and the
Agents hereby agrees that it will not institute against, or join any other
Person in instituting against, the Primary Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or any other
proceeding under any federal or state bankruptcy or similar law, so long as any
Commercial Paper issued by the Primary Lender shall be outstanding or there
shall not have elapsed one year plus one day since the last day on which any
such Commercial Paper shall have been outstanding.
SECTION 12. ARRANGEMENTS AMONG THE AGENTS AND THE LENDERS
12.01 APPOINTMENT. Each Lender hereby appoints the Facility Agent to act
as its agent in connection herewith and in connection with the Floating Rate
Note and the Indenture and authorizes the Facility Agent to exercise such
rights, powers and discretions as are specifically delegated to the Facility
Agent by the terms hereof and thereof, together with all such rights, powers and
discretions as are reasonably incidental thereto. Without limiting the
foregoing, all notices to be delivered to, and approvals to be given by, a
Lender under the disbursement procedures described in Section 3.01 hereof shall
be delivered to and given by the Facility Agent on behalf of such Lender.
12.02 RIGHTS OF FACILITY AGENT. The Lenders and the Facility Agent agree
that the Facility Agent may:
(i) assume that (a) any representation made by the Shipowner in connection
herewith is true; (b) no event which is or may become an Event of Default has
occurred; (c) the Shipowner is not in breach of or default under its obligations
hereunder; (d) any right, power, authority or discretion vested herein upon the
Lenders or any other person or group of persons has not been exercised; unless
it has, in its capacity as Facility Agent, notice or actual knowledge to the
contrary;
(ii) engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services may to it seem
necessary, expedient or desirable and rely upon any advice so obtained;
(iii) rely as to any matters of fact which might reasonably be expected to
be within the knowledge of the Shipowner upon a certificate signed by or on
behalf of the Shipowner;
(iv) rely upon any communication or document believed by it to be genuine;
(v) refrain from exercising any right, power or discretion vested in it as
facility agent hereunder unless and until instructed by a Lender as to
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whether or not such right, power or discretion is to be exercised and, if it is
to be exercised, as to the manner in which it should be exercised; and
(vi) refrain from acting in accordance with any instructions of any Lender
to begin any legal action or proceeding arising out of or in connection with
this Agreement until it shall have received such security as it may require
(whether by way of payment in advance or otherwise) for all costs, claims,
expenses (including legal fees) and liabilities which it will or may expend or
incur in complying with such instructions.
12.03 DUTIES. The Facility Agent shall:
(i) promptly inform each Lender of the contents of
any notice or document received by it from the
Shipowner hereunder;
(ii) promptly notify each Lender of the occurrence of any Event of
Default or any default by the Shipowner in the due performance of
or compliance with its obligations under this Agreement of which
the Facility Agent has notice from any other party hereto;
(iii) save as otherwise provided herein, act as facility agent hereunder
in accordance with any instructions given to it by any Lender,
which instructions shall be binding on all of the Lenders; and
(iv) if so instructed by any Lender, refrain from exercising any right,
power or discretion vested in it as facility agent hereunder.
12.04 LIMITATION ON OBLIGATIONS OF FACILITY AGENT. Notwithstanding
anything to the contrary expressed or implied herein, the Lenders and the
Facility Agent agree that the Facility Agent shall not:
(i) be bound to inquire as to:
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(a) whether or not any representation made by the Shipowner in
connection herewith is true;
(b) the occurrence or otherwise of any event which is or may
become an Event of Default;
(c) the performance by the Shipowner of its obligations
hereunder; or
(d) any breach of or default by the Shipowner or under its
obligations hereunder;
(ii) be bound to account to any Lender for any sum or the profit element
of any sum received by it for its own account;
(iii) be bound to disclose to any other person any information relating to
the Shipowner or any of its agencies if such disclosure would or might in its
opinion constitute a breach of any law or regulation or be otherwise actionable
at the suit of any person; or
(iv) be under any obligations other than those for which express provision
is made herein.
12.05 INDEMNIFICATION BY LENDERS. The Alternate Lender shall, from time to
time on demand by the Facility Agent, indemnify the Facility Agent, against any
and all costs, claims, expenses (including legal fees) and liabilities
(collectively, "Liabilities") together with any tax thereon which the Facility
Agent may incur, otherwise than by reason of its own gross negligence or willful
misconduct, in acting in its capacity as facility agent hereunder (including,
without limitation, any Liabilities in anyway relating to or arising out of
certifications made with respect to either (a) the due authorization, execution
or delivery of a Floating Rate Note, or (b) laws and/or regulations of any
Governmental Authority, in each case in connection with any request by the
Facility Agent to the Indenture Trustee or the Secretary for the Secretary to
endorse its guarantee on a Floating Rate Note or for the Indenture Trustee to
authenticate a Floating Rate Note).
12.06 LIMITATION ON RESPONSIBILITY. The Facility Agent accepts no
responsibility to the Lenders for the accuracy and/or completeness of any
information supplied by the Shipowner in connection herewith or for the
legality, validity, effectiveness, adequacy or enforceability of this Agreement,
and the Facility Agent shall be under no liability to the Lenders (nor to the
Shipowner, Indenture Trustee or the Secretary with respect to calculations of
the Applicable Interest Rate) as a result of taking or omitting to take any
action in relation to this Agreement, save in the case of its own negligence or
willful misconduct.
12.07 NO CLAIMS ON EMPLOYEES OF FACILITY AGENT. Each Lender agrees that it
will not assert or seek to assert against any director, officer or employee
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of the Facility Agent any claim which it might have against it in respect of the
matters referred to in Clause 12.06.
12.08 BANKING BUSINESS. The Lenders agree that the Facility Agent may
accept deposits from, lend money to and generally engage in any kind of banking
or other business with the Shipowner.
12.09 RESIGNATION OR TERMINATION OF FACILITY AGENT.
(i) The Facility Agent may (after consultation with the Shipowner and the
Lenders) resign its appointment hereunder at any time without assigning any
reason therefor by giving not less than thirty (30) days' prior written notice
to that effect to each of the other parties hereto; PROVIDED, that no such
resignation shall be effective until a successor for the Facility Agent is
appointed in accordance with the succeeding provisions of this Section 12;
(ii) The Lenders and the Shipowner may jointly seek the termination of the
appointment of the Facility Agent hereunder at any time by giving not less than
thirty (30) days prior written notice to that effect to the Facility Agent;
PROVIDED that no such termination shall be effective until a successor for the
Facility Agent is appointed in accordance with the succeeding provisions of this
Section 12; PROVIDED FURTHER that any such notice of termination must be signed
by all of the Lenders and the Shipowner; and
(iii) For the avoidance of doubt the parties hereto agree that the
provisions of this Section 12.09 shall at no time apply to or restrict the
ability of the Administrative Agent to resign its position of Administrative
Agent.
12.10 SUCCESSOR TO FACILITY AGENT. If the Facility Agent gives notice of
its resignation pursuant to Section 12.09(i) or receives notice of termination
pursuant to Section 12.09(ii), then any reputable and experienced bank or other
financial institution may be appointed as a successor to the Facility Agent by
the Lenders with the consent of the Secretary and Shipowner (which consent of
the Shipowner shall not be unreasonably withheld or delayed) during the period
of such notice but, if no such successor is so appointed, the Facility Agent may
appoint such a successor itself with the consent of the Secretary and Shipowner
(which consent of the Shipowner shall not be unreasonably withheld or delayed).
12.11 DISCHARGE OF OBLIGATIONS. If a successor to the Facility Agent is
appointed under the provisions of Section 12.10, then (i) the retiring Facility
Agent shall be discharged from any further obligation hereunder but shall remain
entitled to the benefits of the provisions of this Section 12 and (ii) its
successor and each of the other parties hereto shall have the same rights and
obligations amongst themselves as they would have had if such successor had been
a party hereto.
12.12 RESPONSIBILITIES OF LENDERS. It is understood and agreed by each
Lender that it is, and will continue to be, solely responsible for making its
own independent appraisal of and investigations into the financial condition,
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creditworthiness, condition, affairs, status and nature of the Shipowner, the
Secretary and the United States of America and, accordingly, each Lender
warrants to the Facility Agent that it has not relied and will not hereafter
rely on the Facility Agent:
(i) to check or inquire on its behalf into the adequacy, accuracy or
completeness of any information provided by the Shipowner in
connection with this Agreement or the transaction herein
contemplated (whether or not such information has been or is
hereafter circulated to such Lender by the Facility Agent); or
(ii) to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature
of the Shipowner.
12.13 AGENCY DIVISION. In acting as Facility Agent for the Lenders, the
Facility Agent's agency division shall be treated as a separate entity from any
other of its divisions or departments and, notwithstanding the foregoing
provisions of this Section 12, in the event that the Facility Agent should act
for the Shipowner in any capacity in relation to any other matter, any
information given by the Shipowner to the Facility Agent in such other capacity
may be treated as confidential by the Facility Agent.
12.14 ADMINISTRATIVE AGENT. Each party hereto (other than the
Administrative Agent) acknowledges that the Administrative Agent is a party
hereto only in its capacity as administrative agent of the Primary Lender and
the Primary Lender's commercial paper holders.
12.15 FACILITY AGENT ONLY AGENT FOR THE LENDERS. The Facility Agent is not
authorized to, nor shall it, act as the agent for the Secretary, the Indenture
Trustee, the Shipowner or any of their successors in interest or assigns in any
of the capacities provided for herein.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed and delivered as of the date first above written.
PETRODRILL FIVE LIMITED, as the GOVCO INCORPORATED, as the
Shipowner Primary Lender, by Citicorp
North America, Inc., its
By: /s/ EARL W. MCNIEL attorney-in-fact.
(Signature)
By: /s/ P. A. BOTTICELLI
Name: EARL W. MCNIEL (Signature)
(Print)
Name: P. A. BOTTICELLI
Title: TREASURER (Print)
Title: VICE PRESIDENT
(Print)
CITIBANK INTERNATIONAL PLC, CITIBANK, N.A., as the
as Facility Agent Alternate Lender
By: /s/ P. A. BOTTICELLI By: /s/ AE KYONG CHUNG
(Signature) (Signature)
Name: P. A. BOTTICELLI Name: AE KYONG CHUNG
(Print) (Print)
Title: VICE PRESIDENT Title: VICE PRESIDENT
(Print) (Print)
CITICORP NORTH AMERICA, INC.,
as the Administrative Agent
By: /s/ P. A. BOTTICELLI
(Signature)
Name: P. A. BOTTICELLI
(Print)
Title: VICE PRESIDENT
(Print)
<PAGE>
EXHIBIT 1 TO
CREDIT AGREEMENT
Schedule of Definitions to Credit Agreement
Dated as of April 9, 1999
"Accelerated Repayment" shall have the meaning set forth in Section
4.02(b) of the Credit Agreement.
"Act" means the Merchant Marine Act, 1936, as amended, and in effect on
the Closing Date.
"Administrative Agent" means CITICORP NORTH AMERICA, INC., a Delaware
corporation, as administrative agent for the Primary Lender and the commercial
paper holders of the Primary Lender (and their respective successors and
assigns), and its permitted successors and assigns.
"Affiliate" or "Affiliated" means any Person directly or indirectly
controlling, controlled by, or under common control with, another Person.
"Agent" means each of the Administrative Agent and the Facility Agent,
individually, and "Agents" means the Administrative Agent and the Facility
Agent, collectively.
"Alternate Lender" shall have the meaning set forth in the preamble to
the Credit Agreement.
"Applicable Interest Rate" shall mean
(i) with respect to any Disbursement or portion thereof that is funded by
the Primary Lender through its issuance of commercial paper notes and so long as
the Primary Lender is the holder of the indebtedness related to such funded
portion, a rate (the "CP Rate") equal to the sum of (A) the Primary Lender's
weighted average cost (defined below) related to the issuance of commercial
paper notes and other short-term borrowings or the sale of participation
interests (collectively, "Commercial Paper"), which in each case have been
allocated by the Primary Lender to the Credit Facility, which rate includes
related issuance costs incurred by the Primary Lender, plus (B) during the
<PAGE>
Construction Period, four-tenths of one percent (.40%) and thereafter,
nine-twentieths of one percent (0.45%), as calculated by the Administrative
Agent for each Interest Period and specified in a notice sent by the
Administrative Agent to the Facility Agent and by the Faculty Agent to the
Shipowner and the Indenture Trustee at least three (3) Business Days prior to
each Interest Payment Date on which the interest so calculated is payable (For
purposes of the foregoing, the Primary Lender's "weighted average cost" of
Commercial Paper shall consist of (I) the actual interest rate paid to
purchasers of Commercial Paper, (II) the costs associated with the issuance of
the Commercial Paper and (III) other borrowings the Primary Lender may incur,
including the amount to fund small or odd dollar amounts that are not easily
accommodated in the commercial paper market); and
(ii) with respect to any Disbursement funded by the Alternate Lender or to
the extent that a Disbursement held by the Primary Lender is assigned to the
Alternate Lender or to any other assignee, then, from and after the applicable
Disbursement Date or the effective date of such assignment, as the case may be,
a rate per annum equal to LIBOR plus three tenths of one percent (0.30%) per
annum; provided, however, that, if the Alternate Lender shall have determined,
prior to the commencement of any Interest Period that: (A) Dollar deposits of
sufficient amount and maturity for funding a Disbursement are not available to
such Lender in the London interbank market in the ordinary course of business;
or (B) by reason of circumstances affecting the relevant market, adequate and
fair means do not exist for ascertaining the rate of interest to be applicable
to a Disbursement; or (C) the relevant rate of interest referred to in the
definition of LIBOR which is to be used to determine the rate of interest for a
Disbursement does not cover the funding cost to the Lender of making or
maintaining the Disbursement, then the Lender shall so notify the Indenture
Trustee, who shall give notice to the Shipowner of such condition and interest
shall, effective as of the date of such notice and so long as such condition
shall exist, accrue during each applicable Interest Period at the Base Rate;
provided, further, however that if, in the Lender's reasonable judgment, it
becomes unlawful at any time for such Lender to make or maintain Disbursements
based upon LIBOR, the Lender shall so notify the Indenture Trustee, who shall
give notice to the Shipowner of such determination and, effective as of the date
of such notice and so long as such condition shall exist, interest shall
thereafter accrue during each applicable Interest Period at the Base Rate.
-2-
<PAGE>
"Authorization Agreement" means the Authorization Agreement, Contract No.
MA-13510, dated the Closing Date, between the Secretary and the Indenture
Trustee, whereby the Secretary authorizes the Guarantee of the United States of
America to be endorsed on the Floating Rate Note, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Available Amount" shall have the meaning set forth in Section 2.01 of the
Credit Agreement.
"Base Rate" means, for any Interest Period or any other period, a
fluctuating interest rate per annum as shall be in effect from time to time
which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by Citibank, N.A. in New
York, New York, from time to time, as Citibank, N.A.'s base rate; or
(b) One-half of one percent (0.50%) per annum above the latest
three-week moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of major United
States money market banks, such three-week moving average being determined
weekly on each Monday (or, if any such day is not a Business Day, on the
next succeeding Business Day) for the three-week period ending on the
previous Friday by Citibank, N.A. on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York, or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
Citibank, N.A. from three New York certificate of deposit dealers of
recognized standing selected by Citibank, N.A., in either case adjusted to
the nearest one-fourth of one percent (0.25%) or, if there is no nearest
one-fourth of one percent, to the next higher one-fourth of one percent.
"Business Day" shall mean any day on which dealings in Dollar deposits are
carried on in the London interbank market and on which commercial banks in
London and New York City are open for domestic and foreign exchange business.
"Certificate Authorizing Disbursement" shall mean, with respect to a
Disbursement, the United States Certificate Authorizing Disbursement
substantially in the form set forth in Annex A to the Credit Agreement.
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<PAGE>
"Closing Date" means April 9, 1999.
"Commercial Paper" shall have the meaning set forth in clause (a)(i)of
the definition of Applicable Interest Rate herein.
"Construction Contract" means that certain Semi-Submersible Drilling
Vessel Construction Contract (Hull No. 1829), dated April 9, 1998, by and
between the Shipowner and the Shipyard, as the same may be amended, modified or
supplemented in accordance with the applicable provisions thereof.
"Construction Period" shall mean the period from the date hereof to the
Delivery Date.
"Construction Period Interest" shall mean all interest that accrues on the
Outstanding Principal during the Construction Period.
"CP Rate" shall have the meaning set forth in clause (a)(i) of the
definition of Applicable Interest Rate herein.
"Credit Agreement" or "Agreement" shall mean the Credit Agreement, dated
as of the Closing Date, among the Shipowner; the Lenders, and the Agents,
including any Exhibit, Annex, or other attachment thereto, as the same may be
amended, modified or supplemented in accordance with the applicable provisions
thereof.
"Credit Facility" shall have the meaning set forth in Whereas Clause (A)
of the Credit Agreement.
"Credit Facility Amount" shall have the meaning set forth in Section 2.01
of the Credit Agreement.
"Delivery Date" means the date on which the Vessel is delivered to and
accepted by the Shipowner.
"Depository Agreement" means the Depository Agreement, Contract No.
MA-13514, dated the Closing Date, between the Shipowner, CITIBANK, N.A., as
Depository, and the Secretary, as the same is originally executed, or amended,
modified or supplemented in accordance with the applicable provisions thereof.
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<PAGE>
"Disbursements" shall have the meaning set forth in Section 2.03 of the
Credit Agreement.
"Disbursement Date" shall mean, in relation to any Disbursement, the
Business Day on which the Lender shall make such Disbursement.
"Disposition of Indebtedness" shall have the meaning set forth in Section
11.03 of the Credit Agreement.
"Dollars", "U.S. Dollars", "U.S.D.", "U.S. $" or "$" shall mean the
lawful currency of the United States of America.
"Event of Default" shall have the meaning set forth in Section 9.02 of the
Credit Agreement.
"Facility Agent" means CITIBANK INTERNATIONAL PLC, a bank organized and
existing under the laws of England, as facility agent for both the Primary
Lender and the Alternative Lender (and their respective successors and assigns),
and its permitted successors and assigns.
"Fee Letter" shall have the meaning set forth in Section 6.01 of the
Credit Agreement.
"Final Disbursement Date" shall have the meaning set forth in Section 2.02
of the Credit Agreement.
"Fixed Rate Note" shall mean the Note substantially identical to the form
of Exhibit 3 to the Indenture, appropriately completed.
"Floating Rate Note" shall mean the Note substantially identical to the
form of Exhibit 2 to the Indenture, appropriately completed.
"Governmental Authority" shall mean the government of any country, any
agency, department or other administrative authority or instrumentality thereof,
and any local or other governmental authority within any such country.
"Guarantee" or "Guarantees" means the guarantee of the Floating Rate Note
by the United States of America pursuant to Title XI of the Act, as provided in
the Authorization Agreement.
"Guarantee Commitment" means the Commitment to Guarantee Obligations,
Contract No. MA-13509, dated as of the Closing Date,
-5-
<PAGE>
executed by the Secretary and accepted by the Shipowner with respect to the
Guarantees, as originally executed or as modified, amended or supplemented in
accordance with the applicable provisions thereof.
"Guarantee Fees" shall mean the amounts described in the Guarantee
Commitment payable in consideration for the commitment therein described and
payable as provided in such Guarantee Commitment.
"Holder" means each holder of the Floating Rate Note.
"Indemnified Amounts" shall have the meaning set forth in Section 11.09 of
the Credit Agreement.
"Indemnified Party" shall have the meaning set forth in Section 11.09 of
the Credit Agreement.
"Indenture" means the Trust Indenture dated as of the Closing Date,
between the Shipowner and the Indenture Trustee, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Indenture Default" has the meaning specified in Article VI of Exhibit
1 to the Indenture.
"Indenture Trustee" means FMB Trust Company, National Association, a
national banking association, and any successor trustee permitted under the
Indenture.
"Interest Payment Date" means, with respect to the Floating Rate Note, the
date when any installment of interest on such Note is due and payable, which are
March 15 and September 15 of each year, beginning on September 15, 1999, and the
date of any prepayment of the Floating Rate Note.
"Interest Period" shall mean, with respect to any Disbursement, (i) the
period commencing on the Disbursement Date and extending up to, but not
including, the next Interest Payment Date; and (ii) thereafter the period
commencing on each Interest Payment Date and extending up to, but not including,
the next Interest Payment Date.
"Lender" shall have the meaning set forth in the preamble to the
Credit Agreement.
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<PAGE>
"Liabilities" shall have the meaning set forth in Section 12.05 of the
Credit Agreement.
"LIBOR" (a) in relation to any Interest Period, shall mean the rate of
interest per annum (rounded upward, if necessary, to the nearest 1/16 of 1%)
quoted by the principal London office of CITIBANK, N. A., at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for the offering to leading banks in the London interbank market of U.S.
Dollar deposits for a period and in an amount comparable to such Interest Period
and the principal amount upon which interest is to be paid during such Interest
Period; and (b) in relation to any Post Maturity Period, shall have the meaning
as set forth in Section 4.02(b) of the Credit Agreement.
"Lien" shall have the meaning set forth in Section 8.01(c) of the
Credit Agreement.
"Liquidation Period" shall have the meaning set forth in Section 4.03(a)
of the Credit Agreement.
"Maturity" when used with respect to any Obligation, means the date on
which the principal of, or interest on, such Obligation becomes due and payable
as therein provided, whether on a Payment Date, at the Stated Maturity or by
prepayment, repayment, redemption or declaration of acceleration or otherwise.
"Mortgage" means the first preferred ship mortgage on the Vessel, Contract
No. MA-13512, between the Shipowner and the Secretary, as originally executed or
as modified, amended or supplemented in accordance with the applicable
provisions thereof.
"Note" shall mean a Floating Rate Note or a Fixed Rate Note.
"Obligation" or "Obligations" shall mean the Floating Rate Note or Fixed
Rate Note(s) of the Shipowner bearing a Guarantee and authenticated and
delivered pursuant to the Indenture and the Authorization Agreement.
"Other Taxes" shall have the meaning set forth in Section 6.02(a) of the
Credit Agreement.
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<PAGE>
"Outstanding Principal" shall have the meaning set forth in Section 2.01
of the Credit Agreement.
"Payment Date" shall mean March 15 and September 15 of each year,
beginning on March 15, 2001.
"Payment Default" has the meaning specified in Section 6.01(a) of
Exhibit 1 to the Indenture.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Post Maturity Applicable Interest Rate" shall have the meaning set forth
in Section 4.02(b) of the Credit Agreement.
"Post Maturity Interest Rate" shall have the meaning set forth in Section
4.02(b) of the Credit Agreement.
"Post Maturity Period" shall have the meaning set forth in Section 4.02(b)
of the Credit Agreement.
"Primary Lender" shall have the meaning set forth in the preamble to
the Credit Agreement.
"Quotation Date" shall have the meaning set forth in Section 4.02(b) of
the Credit Agreement.
"Redemption" means with respect to the redemption of the Floating Rate
Note, the repayment or prepayment of the Floating Rate Note as applicable.
"Redemption Date" means, with respect to the Floating Rate Note, a date
fixed for the prepayment, repayment or redemption of such Note by or pursuant to
Section 4 of the Credit Agreement, Article Fourth of the Indenture, or Article
III of Exhibit 1 to the Indenture.
"Redemption Price" means, with respect to the Floating Rate Note, the
price at which the Floating Rate Note is to be prepaid, repaid, or redeemed
pursuant to Section 4 of the Credit Agreement, Article Fourth of the Indenture,
or Article III of Exhibit 1 to the Indenture.
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<PAGE>
"Secretary" means the Secretary of Transportation or any official or
official body from time to time duly authorized to perform the duties and
functions of the Secretary of Transportation under Title XI of the Act
(including the Maritime Administrator, the Acting Maritime Administrator, and to
the extent so authorized, the Deputy Maritime Administrator and other officials
of the Maritime Administration).
"Secretary's Note" means a promissory note or promissory notes issued and
delivered by the Shipowner to the Secretary described in Article Third of the
Special Provisions of the Security Agreement and shall also mean any promissory
note issued in substitution for and replacement thereof pursuant to the Security
Agreement.
"Security Agreement" shall mean that certain security agreement, Contract
No. MA-13511 dated as of the Closing Date, with respect to the Vessel, executed
by the Shipowner and the Secretary relating to the security in respect to the
Guarantees, as originally executed or as modified, amended or supplemented in
accordance with the applicable provisions thereof.
"Shipowner" means PETRODRILL FIVE LIMITED, a British Virgin Islands
international business company, and for purposes of the Indenture and the
Floating Rate Note, subject to the provisions of Sections 6.09, 8.01 and 8.02 of
Exhibit 1 to the Indenture, shall also include its successors and assigns;
provided, however, that for purposes of the Credit Agreement, the term Shipowner
shall also include the Shipowner's permitted successors and assigns under the
Credit Agreement.
"Shipowner's Documents" means the Security Agreement, the Mortgage, the
Title XI Reserve Fund and Financial Agreement, the Depository Agreement, and
the Secretary's Note.
"Shipowner Financial Statements" shall have the meaning set forth in
Section 8.01(h) of the Credit Agreement.
"Shipyard" or "Shipbuilder" means TDI-Halter, Limited Partnership.
"Stated Maturity," when used with respect to the Floating Rate Note, means
the date determinable as set forth in such Note as the final date on which the
principal of such Note is due and payable, which shall include, without
limitation, each of the Payment Dates.
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<PAGE>
"Taxes" shall have the meaning set forth in Section 6.02(a) of the
Credit Agreement.
"Title XI Reserve Fund and Financial Agreement" means that certain Title
XI Reserve Fund and Financial Agreement, Contract No. MA-13513, dated as of the
Closing Date, executed by the Shipowner and the Secretary, as amended, modified
or supplemented in accordance with the applicable provisions thereof.
"United States" means the United States of America.
"Unpaid Amount" shall have the meaning set forth in Section 4.02(b) of the
Credit Agreement.
"Vessel" means the Shipowner's dynamic positioned, semi-submersible
drilling rig to be named the AMETHYST 5, and constructed by TDI-Halter, Limited
Partnership in accordance with the Construction Contract, including all work and
material heretofore or hereafter performed upon or installed in or placed on
board such a Vessel, together with related appurtenances, additions,
improvements, and replacements.
-10-
EXHIBIT 4.19
CREDIT AGREEMENT
dated as of April 9, 1999
among
PETRODRILL FOUR LIMITED
as Shipowner
GOVCO INCORPORATED
as Primary Lender
CITIBANK, N.A.
as Alternate Lender
CITIBANK INTERNATIONAL PLC,
as Facility Agent
and
CITICORP NORTH AMERICA, INC.
as Administrative Agent for the Primary Lender and
the commercial paper holders of the Primary Lender.
<PAGE>
TABLE OF CONTENTS
-----------------
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.................2
1.01 Defined Terms.................................................2
1.02 Principles of Construction....................................2
SECTION 2. THE CREDIT FACILITY........................................2
2.01 Amount........................................................2
2.02 Availability..................................................2
2.03 Disbursements and Minimum Amount of Utilizations..............3
2.04 Relationship of Floating Rate Note and Fixed Rate Note........3
SECTION 3. DISBURSEMENT REQUIREMENTS..................................3
3.01 Disbursement Procedures.......................................3
SECTION 4. TERMS OF THE CREDIT........................................4
4.01 Principal Repayment...........................................4
4.02 Interest Payment..............................................4
4.03 Prepayment....................................................5
4.04 Recapture.....................................................6
4.05 Evidence of Debt..............................................7
4.06 Limit of United States Guarantee..............................7
SECTION 5. CONDITIONS PRECEDENT........................................8
5.01 Conditions Precedent to Lenders' Obligations Under this
Agreement...................................................8
5.02 Conditions Precedent to Each Disbursement.....................9
5.02 Conditions Precedent to Each Disbursement.....................9
SECTION 6. FEES AND EXPENSES...........................................9
6.01 Fees..........................................................9
6.02 Taxes.........................................................9
6.03 Expenses.....................................................10
6.04 Additional or Increased Costs................................11
SECTION 7. PAYMENTS..................................................12
7.01 Method of Payment............................................12
7.02 Application of Payments......................................13
SECTION 8. REPRESENTATIONS AND WARRANTIES BY THE SHIPOWNER...........14
8.01 Representations and Warranties of the Shipowner..............14
8.02 Agreements of the Shipowner..................................16
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SECTION 9. CANCELLATION, SUSPENSION AND EVENTS OF DEFAULT............17
9.01 Cancellation.................................................17
9.02 Events of Default............................................18
SECTION 10. GOVERNING LAW AND JURISDICTION...........................19
10.01 Governing Law................................................19
10.02 Submission to Jurisdiction...................................19
10.03 Waiver of Security Requirements..............................19
10.04 No Limitation................................................19
SECTION 11. MISCELLANEOUS............................................19
11.01 Computations.................................................19
11.02 Notices......................................................20
11.03 Disposition of Indebtedness..................................22
11.04 Disclaimer...................................................22
11.05 No Waiver; Remedies Cumulative...............................22
11.06 Currency.....................................................23
11.07 Severability.................................................23
11.08 Amendment or Waiver..........................................23
11.09 Indemnification..............................................23
11.10 Benefit of Agreement.........................................24
11.11 Waiver of Jury Trial.........................................24
11.12 Execution in Counterparts....................................24
11.13 Shipowner Documents..........................................24
11.14 Entire Agreement.............................................25
11.15 No Proceedings...............................................25
SECTION 12. ARRANGEMENTS AMONG THE AGENTS AND THE LENDERS...........25
12.01 Appointment..................................................25
12.02 Rights of Facility Agent.....................................25
12.03 Duties.......................................................26
12.04 Limitation on Obligations of Facility Agent..................26
12.05 Indemnification by Lenders...................................27
12.06 Limitation on Responsibility.................................27
12.07 No Claims on Employees of Facility Agent.....................27
12.08 Banking Business.............................................28
12.09 Resignation or Termination of Facility Agent.................28
12.10 Successor to Facility Agent..................................28
12.11 Discharge of Obligations.....................................28
12.12 Responsibilities of Lenders..................................28
12.13 Agency Division..............................................29
12.14 Administrative Agent.........................................29
12.15 Facility Agent Only Agent for the Lenders....................29
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EXHIBITS
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Exhibit 1 Schedule of Definitions
ANNEXES
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Annex A Form of Disbursement Requests
iii
<PAGE>
THIS CREDIT AGREEMENT, dated as of April 9, 1999 is made by and among PETRODRILL
FOUR LIMITED, a British Virgin Islands international business company (the
"Shipowner"), GOVCO INCORPORATED, a Delaware corporation (the "Primary Lender"),
CITIBANK, N.A., a national banking association (the "Alternate Lender"),
CITIBANK INTERNATIONAL PLC, a bank organized and existing under the laws of
England, as facility agent for both the Primary Lender and the Alternative
Lender (and their respective successors and assigns) with respect to the
Floating Rate Note, and its permitted successors and assigns (in such capacity,
the "Facility Agent"), and CITICORP NORTH AMERICA, INC., a Delaware corporation,
as administrative agent for the Primary Lender and the commercial paper holders
of the Primary Lender (and their respective successors and assigns)(in such
capacity, together with its permitted successors and assigns, the
"Administrative Agent," and together with the Facility Agent, the "Agents"). As
used herein, the term "Lender" shall mean either the Primary Lender or the
Alternate Lender, as the case may be, depending on which of the two parties made
or will make the relevant disbursement of funds under this Agreement; provided,
however, that if the Primary Lender assigns its rights under this Agreement to
the Alternate Lender, the term "Lender," as used herein, shall mean only the
Alternate Lender.
BACKGROUND
----------
WHEREAS:
(A) by this Agreement, the Lenders have established a credit facility (the
"Credit Facility") in the amount of $149,625,000, pursuant to which the Primary
Lender may, in its discretion, subject to the terms and conditions hereof,
extend financing to the Shipowner (i) for the manufacture, construction,
fabrication, financing and purchase by the Shipowner of the Vessel; (ii) for the
payment of the related Construction Period Interest; and (iii) for the payment
of the Guarantee Fees; and if the Primary Lender chooses at any time not to
extend, or continue to extend, any such financing, then the Alternate Lender
shall extend the undisbursed portion of such financing;
(B) the establishment of the Credit Facility is in reliance upon the
commitment of the United States to guarantee the payment of the unpaid interest
on, and the unpaid balance of the principal of, the Floating Rate Note,
including interest accruing between the date of an Indenture Default under the
Floating Rate Note and the payment in full of the Guarantee;
(C) a condition to the Lenders' extension of the Credit Facility under
this Agreement is the Facility Agent's timely receipt of Certificates
Authorizing Disbursement and issuance of the Guarantee of the Floating Rate
Note;
(D) the Facility Agent will serve as facility agent for the benefit, and
on behalf, of each of the Lenders in connection with the Credit Facility, this
Agreement and the other related documents and the Administrative Agent will
<PAGE>
act as an administrative agent for the Primary Lender and the Primary Lender's
commercial paper holders; and
(E) the Credit Facility may be utilized by the Shipowner in accordance
with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION
1.01 DEFINED TERMS. For the purposes of this Agreement, unless otherwise
defined herein, defined terms shall have the meanings specified in Exhibit 1
hereto.
1.02 PRINCIPLES OF CONSTRUCTION.
(a) The meanings set forth for defined terms in this Agreement shall be
equally applicable to both the singular and plural forms of the terms defined.
(b) Unless otherwise specified, all references in this Agreement to
Annexes or Exhibits are to Annexes or Exhibits in or to this Agreement.
(c) The headings of the Sections in this Agreement are included for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.
SECTION 2. THE CREDIT FACILITY
2.01 AMOUNT. The Lenders hereby establish the Credit Facility, upon the
terms and conditions set forth in this Agreement, in favor of the Shipowner in
the maximum amount of $149,625,000 (the "Credit Facility Amount"), to enable the
Shipowner to finance: (i) the manufacture, construction, fabrication, financing
and purchase of the Vessel; (ii) Construction Period Interest; and (iii) the
Guarantee Fees. The Primary Lender intends (but is not obligated) to fund the
Credit Facility through the issuance and sale of Commercial Paper to investors
which is exempt from the registration requirements of the United States
Securities Act of 1933, as amended. The Primary Lender may, at its option, elect
at any time not to fund the Credit Facility or the undisbursed portion thereof,
in which case the Alternate Lender will, subject to the terms and conditions
provided herein, be obligated to fund under the Credit Facility the amount (the
"Available Amount") which is equal to the excess, if any, of the Credit Facility
Amount over the outstanding principal amount evidenced by the Floating Rate
Note, plus the aggregate outstanding principal amount evidenced by Fixed Rate
Notes ("Outstanding Principal").
2.02 AVAILABILITY. Disbursements under the Credit Facility may be made
once a calendar month and up to and including the Final Disbursement Date.
"Final Disbursement Date" shall mean either December 15, 2000 or, if
2
<PAGE>
earlier, the date on which the Available Amount under the Credit Facility is
canceled in accordance with Section 9.01 or reduced to zero.
2.03 DISBURSEMENTS AND MINIMUM AMOUNT OF UTILIZATIONS. Upon satisfaction
of Sections 3.01, 5.01 and 5.02, disbursements shall be made by advances from
the Primary Lender or the Alternate Lender to the Shipowner ("Disbursements") in
accordance with Section 3.01. Notwithstanding anything in this Agreement to the
contrary, the Shipowner may not request a Disbursement under the Credit Facility
for an amount (a) less than the smaller of (i) $1,000,000 or (ii) the Available
Amount or (b) more than the Available Amount.
2.04 RELATIONSHIP OF FLOATING RATE NOTE AND FIXED RATE NOTE. Disbursements
from the Credit Facility shall become the indebtedness of the Shipowner to the
Lenders under the Floating Rate Note. The Shipowner shall convert indebtedness
under the Floating Rate Note to indebtedness under one or more Fixed Rate Notes
no later than the earlier of (i) two years from the Delivery Date, or (ii)
August 15, 2002. At its option, and from time to time, the Shipowner may convert
any portion, or all, of the indebtedness of the Floating Rate Note to a Fixed
Rate Note or series of Fixed Rate Notes at any time during or after the
construction of the Vessel, so long as the conversion of the Floating Rate Note
to the Fixed Rate Note does not occur later than the earlier of (i) two years
after the Delivery Date or (ii) August 15, 2002, and, except for the final
conversion, each conversion is in a minimum amount of $50,000,000; and the
Shipowner shall have paid any amount payable under Section 4.04(a)(iv) or any
other provision hereof in connection therewith.
SECTION 3. DISBURSEMENT REQUIREMENTS
3.01 DISBURSEMENT PROCEDURES. Upon receipt by the Facility Agent of each
Certificate Authorizing Disbursement at least five (5) Business Days prior to
the proposed disbursement date, the Primary Lender may, and if the Primary
Lender elects not to, the Alternate Lender shall, disburse funds in accordance
with the terms of such Certificate Authorizing Disbursement to the Shipowner, or
the Shipowner's designee, subject to the terms of this Agreement and such
Certificate Authorizing Disbursement; provided that, if the Certificate
Authorizing Disbursement and the request for disbursement referred to therein do
not specify a disbursement date, then the disbursement date shall be the fifth
Business Day (or such earlier or later Business Day as is requested by the
Shipowner and is acceptable to the disbursing Lender) following the Facility
Agent's receipt of such Certificate Authorizing Disbursement. Promptly following
each Disbursement, the Facility Agent shall transmit to the Indenture Trustee a
copy of the Certificate Authorizing Disbursement, a confirmation that the
Disbursement was made, and a copy of Exhibit A to the Floating Rate Note,
updated to reflect such Disbursement and other intervening, related events.
3
<PAGE>
SECTION 4. TERMS OF THE CREDIT
4.01 PRINCIPAL REPAYMENT. The Shipowner shall repay all Outstanding
Principal in twenty-four (24) approximately equal, successive semi-annual
installments, with each such installment to be payable on a Payment Date;
provided that, on the last Payment Date, the Shipowner shall repay in full the
remaining Outstanding Principal.
4.02 INTEREST PAYMENT.
(a) On each Interest Payment Date, the Shipowner shall pay to the
Indenture Trustee, on behalf of the Person(s) entitled thereto, interest on the
Outstanding Principal, calculated at an interest rate per annum equal to the
Applicable Interest Rate therefor, as determined for each successive Interest
Period. The Indenture Trustee shall calculate the Applicable Interest Rate based
on information provided (i) by the Administrative Agent to the Facility Agent if
the Primary Lender is the Lender, or (ii) by the Facility Agent if the Alternate
Lender is the Lender. From time to time, the Administrative Agent or Facility
Agent will confirm CP Rate, LIBOR, Base Rate, and Applicable Interest Rate to
the Indenture Trustee. In the event that the Primary Lender assigns the
financing of all or any portion of the amount outstanding under the Credit
Facility (whether or not evidenced by a Note) to the Alternate Lender or other
party, the interest rate on such amount shall be determined by the Facility
Agent (and the Facility Agent shall notify the Indenture Trustee thereof)
pursuant to clause (i) of the definition of Applicable Interest Rate for the
period prior to the effective date of such assignment and pursuant to clause
(ii) of such definition for all periods after such date.
(b) The Shipowner shall pay to the Facility Agent, on behalf of the
Person(s) entitled to any Unpaid Amount, on demand, interest on such Unpaid
Amount (to the extent permitted by applicable law) for each Post Maturity Period
at an interest rate per annum equal to the sum (the "Post Maturity Interest
Rate") of (1) three percent (3%), plus (2) the Post Maturity Applicable Interest
Rate. With respect to any Unpaid Amounts, the "Post Maturity Applicable Interest
Rate" shall mean either (i) LIBOR on the Quotation Date therefor plus three
tenths of one percent (0.30%) per annum, or (ii) for any such Post Maturity
Period LIBOR cannot be determined the rate per annum reasonably determined by
the Person to whom such Unpaid Amount is owed before the last day of such Post
Maturity Period to be that which expresses as a percentage rate per annum the
cost which such Person would incur in funding such Unpaid Amount from whatever
source it reasonably deems appropriate for such Post Maturity Period plus three
tenths of one percent (0.30%) per annum, or (iii) if any such Unpaid Amount is
an Accelerated Repayment, then during the first Post Maturity Period the rate
which would have been applicable to such Unpaid Amount had it not so fallen due.
In the absence of an Indenture Default, any interest which shall have accrued
under this Section 4.02(b) in respect of an Unpaid Amount shall be due and
payable and shall be paid by the Shipowner on demand on such dates as the Person
to whom such Unpaid Amount is owed may specify by written notice to the
Shipowner, or if there is
4
<PAGE>
an Indenture Default, any interest which shall have accrued under this Section
4.02(b) in respect of an Unpaid Amount shall be due and payable immediately and
shall be paid by the Shipowner without demand and any payment by, or on behalf
of, the Shipowner hereunder shall be governed by Section 7.02 and the provisions
of the last paragraph of Section 9.02.
As used herein, "Unpaid Amount" means all or any part of principal,
accrued interest, fees or other amounts owing to the Lenders under this
Agreement or the Floating Rate Note which is not paid in full when and as due
and payable, whether at Stated Maturity, by acceleration or otherwise, or any
sum due and payable by the Shipowner to the Lenders under any judgment of any
court or arbitral tribunal in connection with this Agreement which is not paid
on the date of such judgment; PROVIDED, HOWEVER, that it is agreed that Unpaid
Amount shall not include any part of the principal and interest on the Floating
Rate Note, except that Unpaid Amount shall include all such amounts thereof as
are not paid by the Shipowner as and when they are due but are paid by the
Shipowner prior to payment thereof by the Secretary. "LIBOR" shall mean, in
relation to any Post Maturity Period (other than the first Post Maturity Period
contemplated by clause (iii) of Section 4.02(b)), the rate of interest per annum
(rounded upward, if necessary, to the nearest 1/16 of 1%) last quoted by the
principal London office of CITIBANK, N.A., prior to the close of business at
such London office on the Quotation Date for the offering to leading banks in
the London interbank market of U.S. Dollar deposits on an overnight basis and in
an amount comparable to the Unpaid Amount to which LIBOR is to apply.
"Accelerated Repayment" shall mean any part of the principal of the Floating
Rate Note which became due and payable on a day other than its Payment Date.
"Post Maturity Period" shall mean with respect to the period from the date an
Unpaid Amount was due until such amount shall have been paid in full, each
successive period, the first of which shall start on the date such Unpaid Amount
was due (or the date of any such judgment or arbitral award, if earlier) and
each other of which shall start on the last day of the preceding such period,
and the duration of each of which shall be one day, or if LIBOR applies, then
from and including the Quotation Date for such Post Maturity Period to but
excluding the next Quotation Date or such other duration selected by the Person
to whom such Unpaid Amount is due; PROVIDED, HOWEVER, that in the case of any
Accelerated Repayment, the first such Post Maturity Period applicable thereto
shall be of a duration equal to the unexpired portion of its then applicable
Interest Period. "Quotation Date" in relation to any Post Maturity Period means
the day on which quotations would ordinarily be given by CITIBANK, N.A. in the
London interbank market for dollar deposits for delivery on the first day of
that period; PROVIDED, HOWEVER, that if, for any such Post Maturity Period,
quotations would ordinarily be given on more than one date, the Quotation Date
for that period shall be the last of those dates.
4.03 PREPAYMENT. (a) The Shipowner may from time to time prepay on any
Interest Payment Date all or any part of the Outstanding Principal evidenced by
the Floating Rate Note, provided that: (i) any partial prepayment shall be in a
minimum principal amount of $10,000,000, unless otherwise required by the
Indenture; (ii) the Shipowner shall have given the Facility Agent
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and the Indenture Trustee prior written notice of such prepayment (which shall
be not less than 40 nor more than 60 days); (iii) the Shipowner shall have paid
in full all amounts due under this Agreement as of the date of such prepayment,
including, without limitation, interest which has accrued to the date of
prepayment on the amount prepaid and all other amounts payable hereunder
relating to such prepayment; (iv) any amount prepaid hereunder (other than the
Outstanding Principal amount thereof prepaid through the issuance of Fixed Rate
Notes, the Outstanding Principal amount of which is subtracted from the Credit
Facility pursuant to the last sentence of Section 2.01) shall not be considered
part of the Available Amount; and (v) subject to Section 4.03(c), if the Lender
is the Primary Lender, the Shipowner shall pay to the Facility Agent, for the
benefit of the Primary Lender an amount equal to (x) the amount of yield that
the Primary Lender is required to pay to holders of its Commercial Paper during
the Liquidation Period (as defined below) on an amount of Commercial Paper
having an aggregate issue price equal to the amount of the Shipowner's
prepayment less (y) the amount of the estimated investment earnings, as
determined by the Facility Agent, on the prepayment amount during the
Liquidation Period. The "Liquidation Period" means the period from the date on
which a prepayment is made to the earliest date on which the Primary Lender's
total amount of Commercial Paper related to the funding of the Disbursements can
be reduced (without prepayment thereof) by an amount equal to the amount of the
Shipowner's prepayment. Prepayments shall be applied to the installments of
principal of the Credit Facility in the inverse order of their maturity, and, in
cases where more than one Note is Outstanding, PRO RATA to each Note.
(b) Upon delivery to the Shipowner and the Secretary of the instrument
satisfying and discharging the Indenture contemplated by Section 12.01 of the
Exhibit 1 to the Indenture, all of the Shipowner's indebtedness, liabilities and
obligations under this Agreement and the Fee Letter shall become immediately due
and payable without demand upon, or notice to, the Shipowner.
(c) Notwithstanding any other provision to the contrary herein, the
Shipowner or the Secretary (after the Secretary's assumption of the Floating
Rate Note pursuant to Section 6.09 of Exhibit 1 to the Indenture) may from time
to time prepay all or any part of the principal amount of the Floating Rate Note
without any prepayment penalty or premium in accordance with Article III of
Exhibit 1 to the Indenture.
(d) Notwithstanding any other provision to the contrary herein, the
Shipowner shall have the right to prepay any portion of the Floating Rate Note
and convert that Obligation to a Fixed Rate Note so long as it first obtains the
Secretary's consent to the interest rate applicable to the Fixed Rate Note and,
except for the final disbursement, such conversion equals or exceeds $50,000,000
principal; and the Shipowner shall have paid any amount payable under Section
4.04(a)(iv) or any other provision hereof in connection therewith.
4.04 RECAPTURE. (a) Upon the written request of the Facility Agent, the
Shipowner shall pay to the applicable Lender, such amounts as shall be
sufficient (in the reasonable judgment of such Lender) to compensate such
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Lender for any loss, expense or liability (including, without limitation, any
loss, expense or liability incurred by reason of the liquidation or redeployment
of deposits from third parties or in connection with obtaining funds to make or
maintain any Disbursement) which such Lender reasonably determines is
attributable to:
(i) any failure to make scheduled payments on a Payment Date or any
payment due in connection with any Redemption; or
(ii) any failure by the Shipowner to borrow any advance for which a
Certificate Authorizing Disbursement has been issued; or
(iii) any revocation of a notice of prepayment given pursuant to Section
4.03(a); or
(iv) subject to the provisions of Section 4.03(c), any prepayment of the
Floating Rate Note (including, without limitation, due to the issuance of any
fixed rate notes) other than on an Interest Payment Date after giving five
Business Days prior written notice to such Lender.
(b) Without prejudice to any other provision hereof (and at the
Shipowner's expense), such Lender shall use such reasonable efforts as it shall
determine in its sole discretion to minimize any loss, expense or liability to
the extent possible.
4.05 EVIDENCE OF DEBT. The Shipowner agrees that to evidence further its
obligation to repay all amounts disbursed under the Credit Facility, with
interest accrued thereon, it shall issue and deliver to the Facility Agent, in
accordance with the written instructions of the Facility Agent, the Floating
Rate Note. The Floating Rate Note shall (i) be in the form of Exhibit 2 to the
Indenture; (ii) bear the Secretary's Guarantee, and (iii) be valid and
enforceable as to its principal amount at any time only to the extent of the
aggregate amounts then disbursed and outstanding thereunder, and, as to
interest, only to the extent of the interest accrued thereon at the rate
guaranteed by the Secretary, with any interest in excess thereof being evidenced
by this Agreement.
4.06 LIMIT OF UNITED STATES GUARANTEE. None of the interest, fees, and
expenses arising under Sections 4.03, 4.04 and 6 and none of the Indemnified
Amounts, commissions, Taxes, Other Taxes, Post Maturity Interest Rate, interest
in excess of 9% (or such higher rate as may be agreed from time to time by the
Secretary) (the "Cap Rate") under the Floating Rate Note, the costs of obtaining
any interest rate protection, or any other charges, costs, expenses, or
indebtedness owed by the Shipowner under this Agreement to any Person is
guaranteed by the United States. The Guarantee of the United States extends only
to the principal and interest owed under the Obligations and only to the extent
specified therein.
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SECTION 5. CONDITIONS PRECEDENT
5.01 CONDITIONS PRECEDENT TO LENDERS' OBLIGATIONS UNDER THIS Agreement.
The obligations of the Lenders under this Agreement shall be subject to the
delivery to the Facility Agent of the documents indicated below on or before the
Closing Date:
(a) THIS AGREEMENT, THE FLOATING RATE NOTE AND THE FEE LETTER. This
Agreement and the Fee Letter, each fully executed by the parties thereto
in form and substance satisfactory to the Lenders, which shall be in full
force and effect and the Floating Rate Note shall have been fully executed
by the Shipowner, endorsed by, or on behalf of, the United States, and
delivered to the Facility Agent, and all amounts then payable under the
Fee Letter shall have been paid to the Person entitled thereto.
(b) EXISTENCE. Evidence in form and substance satisfactory to the
Lenders, that the Shipowner is duly organized, validly existing and in
good standing under the laws of the British Virgin Islands, with full
power, authority and legal right to own its property and to carry on its
business as now conducted.
(c) AUTHORITY. Evidence in form and substance satisfactory to the
Lenders, of the authority of the Shipowner to execute, deliver, perform
and observe the terms and conditions of this Agreement, the Floating Rate
Note, the Fee Letter, and the Indenture and evidence of authority
(including specimen signatures) for each Person who, on behalf of the
Shipowner, signed this Agreement, the Floating Rate Note, the Fee Letter,
and the Indenture, or will otherwise act as representatives of the
Shipowner in the operation of the Credit Facility.
(d) GOVERNMENTAL AND OTHER AUTHORIZATIONS. Copies, certified as true
copies by a duly authorized officer of the Shipowner, of each consent,
license, authorization or approval of, and exemption by, any Governmental
Authority and any governmental authorities within the United States or
elsewhere, which are necessary or advisable (i) for the execution,
delivery, performance and observance by the Shipowner of this Agreement,
the Floating Rate Note, the Fee Letter, and the Indenture; and (ii) for
the validity, binding effect and enforceability of this Agreement, the
Floating Rate Note, the Fee Letter, and the Indenture, or if none is
necessary, a written certification from the Shipowner that none is
necessary.
(e) LEGAL OPINIONS. (1) Opinion of legal counsel for the Shipowner
concerning this Agreement, the Floating Rate Note, the Fee Letter, and the
Indenture; (2) Opinion of the Chief Counsel of the Maritime Administration
dated the Closing Date, signed by or on behalf of such Chief Counsel,
addressed to the Lenders and the Agents to the effect that the Guarantees
and the Authorization Agreement have been or will be duly authorized,
executed and delivered by the United States of America, and constitute
legal, valid, and binding obligations of the United States of America
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enforceable in accordance with their respective terms; and (3) Opinion of
Mayer, Brown & Platt addressed to the Lenders, the Agents, and the
Indenture Trustee concerning this Agreement, the Fee Letter, the Indenture
and the Floating Rate Note.
(f) GUARANTEE COMMITMENT. A copy of the fully executed Guarantee
Commitment, which shall be in full force and effect until completion of
the Closing.
(g) AUTHORIZATION AGREEMENT. The fully executed Authorization
Agreement, which shall be in full force and effect.
(h) INDENTURE. The fully executed Indenture, which shall be in full
force and effect.
5.02 CONDITIONS PRECEDENT TO EACH DISBURSEMENT. The agreement of the
Primary Lender to fund any Disbursement under this Agreement and any obligations
of the Alternate Lender to fund any Disbursements under this Agreement shall be
subject only to the Facility Agent's receipt of a Certificate Authorizing
Disbursement, upon which each such Lender may conclusively rely.
SECTION 6. FEES AND EXPENSES
6.01 FEES. The Shipowner shall pay or cause to be paid to the Person
entitled thereto such fees and other amounts as are set forth in that certain
Fee Letter (as amended, restated or otherwise modified from time to time with
the prior written consent of the Secretary, the "Fee Letter") dated as of April
1, 1999 between the Shipowner and the Agents, in each case when and as due.
6.02 TAXES.
(a) The Shipowner agrees to pay all amounts owing by it under this
Agreement or the Floating Rate Note free and clear of and without deduction for
any and all present and future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, EXCLUDING in the case of
each Lender, taxes imposed on its income, and franchise taxes imposed on it in
lieu of income taxes, by either (i) the jurisdiction under the laws of which
such Lender is organized or any political subdivision thereof, or (ii) the
jurisdiction of such Lender's applicable lending office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter referred to as
"Taxes"). In addition, the Shipowner agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Floating Rate
Note or from the execution, delivery, or registration of, or otherwise with
respect to, this Agreement or the Floating Rate Note (hereinafter referred to as
"Other Taxes").
(b) The Shipowner further agrees:
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(i) that, if the Shipowner is prevented by operation of law from paying
any such Taxes or Other Taxes, or if any such Taxes or Other Taxes are required
to be deducted or withheld, then the fees or expenses required to be paid under
this Agreement shall, on an after-tax basis, be increased by the amount
necessary to yield to the Lenders fees or expenses in the amounts provided for
in this Agreement after the provision for the payment of all such Taxes and
Other Taxes;
(ii) that the Shipowner shall, at the request of any Lender or any Agent,
execute and deliver to such Lender or Agent, as the case may be, such further
instruments as may be necessary or desirable to effect the payment of the
increased amounts as provided for in subsection (i) above; PROVIDED, HOWEVER,
that the Shipowner may not amend the Floating Rate Note without the prior
written consent of the Secretary;
(iii) that the Shipowner shall hold the Lenders harmless from and against
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 6.02) and any and all liabilities (including, without limitation,
penalties, interest and expenses) arising from, or with respect to, any Taxes or
Other Taxes (whether or not properly or legally asserted) and whether paid, or
payable, by the Shipowner, the Lenders, or any other Person;
(iv) that, at the request of any Lender or any Agent, the Shipowner shall
provide such Lender or Agent within the later of thirty (30) calendar days after
such request or thirty (30) calendar days after the payment of such Taxes or
Other Taxes, a copy evidencing the payment of any Taxes or Other Taxes by the
Shipowner; and
(v) that each payment under this Section 6.02 shall be made within thirty
(30) days from the date the applicable Lender makes written demand therefor.
Each demand for payment by such Lender under Section 6.02(b)(v) for amounts paid
or incurred by the Lenders or itself shall be accompanied by a certificate (with
accompanying documentation supporting the demand) showing in reasonable detail
the basis for the calculation of the amounts demanded, which certificate, in the
absence of manifest error, shall be conclusive and binding for all purposes.
Notwithstanding anything to the contrary contained herein, the agreements
in this Section 6.02 shall survive the termination of this Agreement and the
payment of the Floating Rate Note and all other amounts due hereunder.
6.03 EXPENSES. The Shipowner agrees, whether or not the transactions
hereby contemplated shall be consummated, to pay, or reimburse the Agents and
the Lenders, respectively, promptly upon demand for the payment of all
reasonable and duly documented costs and expenses arising in connection with the
preparation, printing, execution, delivery, registration, implementation,
modification of or waiver or consent under this Agreement, the Floating Rate
Note or the Indenture, including, without limitation, the
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reasonable and duly documented out-of-pocket expenses of the Agents and the
Lenders (incurred in respect of telecommunications, mail or courier service,
travel and the like), and the fees and expenses of counsel for the Agents and
the Lenders. The Shipowner shall also pay all of the costs and expenses
(including, without limitation, the fees and expenses of counsel) incurred by or
charged to the Agents or the Lenders in connection with the amendment or
enforcement of this Agreement, the Floating Rate Note or the Indenture or the
protection or preservation of any right or claim of the Agents or the Lenders
arising out of this Agreement, the Floating Rate Note or the Indenture.
6.04 ADDITIONAL OR INCREASED COSTS.
(a) If, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation, or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender of agreeing to make or making, funding or maintaining the
Disbursements or the Credit Facility, then the Shipowner shall from time to
time, upon demand by such Lender, pay to such Lender additional amounts
sufficient to compensate such Lender for such increased cost.
(b) If any Lender determines that compliance with any law or regulation or
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required to be maintained by such Lender or any corporation controlling
such Lender and that the amount of such capital is increased by or based upon
the existence of such Lender's commitment to lend hereunder and other
commitments of this type, then, upon demand by such Lender, the Shipowner shall
immediately pay to the Facility Agent (for the benefit of such Lender), from
time to time as specified by the Facility Agent (on behalf of such Lender),
additional amounts sufficient to compensate such Lender or such corporation in
the light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of its
commitment to lend hereunder.
(c) Each Lender shall take such reasonable steps as it shall determine to
minimize amounts demanded under this Section 6.04; PROVIDED that no Lender shall
be obligated to take any actions under this SECTION 6.04 if such Lender has
determined, that such actions would cause it to incur any material costs or
expenses or would otherwise be disadvantageous to it in any material respect. In
the event that a Lender transfers the booking office of the Credit Facility or
the Floating Rate Note to minimize amounts demanded under this Section 6.04, any
costs and expenses incurred in such transfer shall be paid by the Shipowner on
demand by such Lender.
(d) Each demand for payment by the Facility Agent (on behalf of any
Lender) under this Section 6.04 shall be accompanied by a certificate showing in
reasonable detail the basis for the calculation of the amounts demanded, which
certificate, in the absence of manifest error, shall be conclusive and binding
for all purposes.
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(e) Each Lender shall notify the Shipowner of any event occurring after
the date of this Agreement which entitles such Lender to compensation pursuant
to this Section 6.04, as promptly as practicable, and in any event within ninety
(90) days after it has knowledge of such event and has determined that a request
for compensation hereunder shall be made. The Shipowner shall not be obligated
to reimburse any Lender for any loss or cost incurred more than ninety (90) days
prior to delivery of notice to the Shipowner by the Lender requesting
compensation under this Section 6.04. Notwithstanding anything to the contrary
contained herein, the agreements in this SECTION 6.04 shall survive the
termination of this Agreement and the payment of the Floating Rate Note and all
other amounts due hereunder.
SECTION 7. PAYMENTS
7.01 METHOD OF PAYMENT.
(a) (i) All payments to be made by the Shipowner under this Agreement and
the Floating Rate Note shall be made without set-off or counterclaim in Dollars
in immediately available and freely transferable funds no later than 11:00 A.M.
(New York City time) on the date on which due. Except as provided in Section
7.01(a)(ii), all payments to be made by the Shipowner or the Agents hereunder
shall be made if to (A) the Primary Lender (for the account of Govco
Incorporated, its successors and assigns), (B) the Alternate Lender (for the
account of Citibank, N.A., its successors and assigns), (C) the Facility Agent
(for the account of Citibank International plc, its successors and assigns), (D)
the Administrative Agent (for the account of Citicorp North America, Inc., its
successors and assigns), or (E) any other Lender (for the account of such
Lender, its successors and assigns), in each case to the Facility Agent (for the
account of Citibank International plc, its successors and assigns) at Citibank,
N.A., 399 Park Avenue, New York, New York 10043, DDA. Account No. 10963054,
Attn: Loans Agency. Upon receipt thereof by the Facility Agent, the Facility
Agent shall forthwith forward such funds to the party entitled thereto pursuant
to the written instructions provided by such party to the Facility Agent in
accordance with Section 11.02.
(ii) The Shipowner shall pay the principal and the guaranteed amount
of the Applicable Interest Rate on the Floating Rate Note to the Indenture
Trustee and all other amounts due under this Agreement directly to the Person
entitled thereto, in each case, by wire transfer in same day and immediately
available and freely transferable funds. Wire transfer instructions shall be
provided to the Shipowner. Until further notice, wire instructions for the
Indenture Trustee are as follows: The First National Bank of Maryland, ABA
#052-000-113, Credit Trust Receipts, A/C #090-02-764, Re: Petrodrill.
(b) Except as otherwise provided herein, whenever any payment would
otherwise fall due on a day which is not a Business Day, the due date for
payment shall be the immediately succeeding Business Day, and interest and fees
shall be computed in accordance with Section 11.01.
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(c) Whenever a sum is required to be paid to the Facility Agent under this
Agreement for the account of another Person, the Facility Agent shall not be
obligated to make such sum available to such other Person unless and until the
Facility Agent shall have established to its satisfaction that is has actually
received payment of such sum. Notwithstanding the foregoing, unless it has
received actual notice to the contrary, the Facility Agent may (but shall not be
obligated to) assume on the date of any Disbursement or any other payment
required to be made by any Lender hereunder that such Lender has made available
to the Facility Agent such Disbursement or other payment and the Facility Agent
may (but shall not be required to) make available to the Shipowner on such date
a corresponding amount in reliance upon such assumption. Additionally, the
Facility Agent may (but shall not be obligated to) assume on the date of any
payment required to be made by the Shipowner hereunder that the Shipowner has
made available to the Facility Agent such payment and the Facility Agent may
(but shall not be required to) make available to the Lenders on such date a
corresponding amount in reliance upon such assumption. If and to the extent that
either (i) the Lender shall not in fact have made such Disbursement or other
payment available to the Facility Agent and the Facility Agent has made
available a corresponding amount to the Shipowner in reliance on the
above-described assumptions or (ii) the Shipowner has not in fact made such
payment and the Facility Agent has made available a corresponding amount to the
Lender in reliance on the above-described assumptions, then, in either such
case, such Lender agrees to repay to the Facility Agent forthwith on demand such
corresponding amount together with an amount sufficient to indemnify the
Facility Agent against any cost or loss it may have suffered or incurred by
reason of its having paid out such sum prior to receipt thereof.
7.02 APPLICATION OF PAYMENTS. In the absence of an Indenture Default, the
Lenders shall each apply payments received by them under this Agreement and the
Floating Rate Note (whether at Stated Maturity, by reason of acceleration,
prepayment or otherwise), in the following order of priority: (i) interest due
pursuant to Section 4.02(a); (ii) installments of principal due; (iii) interest
due pursuant to Section 4.02(b) other than the amount described in clause (i)
above; (iv) all amounts due under the Fee Letter; and (v) all other amounts due
under this Agreement and not otherwise provided for in this Section 7.02. Upon
the occurrence of an Indenture Default, the Lenders shall each hold any payments
they receive after an Indenture Default from, or on behalf of, the Shipowner
under this Agreement, the Fee Letter and any related agreement (excluding the
Floating Rate Note) and shall promptly deliver such payments to the Secretary if
the Secretary has been required to honor a Guarantee as a result of said
Indenture Default. All such amounts received during an Indenture Default and
delivered to the Secretary in accordance with the preceding sentence shall be
applied first to pay, satisfy and discharge all amounts owed by the Shipowner to
the Secretary under the Secretary's Note and the Mortgage and then to pay,
satisfy and discharge any and all amounts owed to the Lenders or the Agents.
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SECTION 8. REPRESENTATIONS AND WARRANTIES BY THE SHIPOWNER
8.01 REPRESENTATIONS AND WARRANTIES OF THE SHIPOWNER. The Shipowner
represents and warrants to the Agents and the Lenders that, as of the Closing
Date:
(a) EXISTENCE AND AUTHORITY. The Shipowner is duly organized, validly
existing under the laws of its jurisdiction of formation, is in good standing
under the laws of its jurisdiction of formation, has been duly qualified to do
business in, and is in good standing as a foreign corporation in each
jurisdiction in which the conduct of its business or the ownership of its
properties requires it to be so qualified, and has full power, authority and
legal right to own its properties and conduct its business as it is presently
now conducted.
The Shipowner has full power, authority and legal right (i) to execute and
deliver this Agreement, the Floating Rate Note and the Indenture, (ii) to
perform and observe the terms and provisions of each of said documents to be
performed or observed by it, (iii) to consummate the transactions contemplated
thereby and (iv) to own its properties (including, without limitation, the
Vessel owned or to be owned by it) and conduct its business as presently
conducted.
(b) GOVERNMENT AND OTHER AUTHORIZATIONS. All consents, licenses,
authorizations and approvals of, and exemptions by, any Governmental Authority
and any governmental authorities within the United States or elsewhere and any
other Persons that are necessary or advisable: (i) for the execution, delivery,
performance and observance by the Shipowner of this Agreement, the Floating Rate
Note, and the Indenture; and (ii) for the validity, binding effect and
enforceability of this Agreement, the Floating Rate Note, and the Indenture have
been obtained and are in full force and effect.
(c) RESTRICTIONS. The execution, delivery and performance or observance by
the Shipowner of the terms of, and consummation by the Shipowner of the
transactions contemplated by, this Agreement, the Floating Rate Note, and the
Indenture do not and will not conflict with or result in a breach or violation
of: (i) the charter, by-laws or organizational documents of the Shipowner; (ii)
any federal or state law of the United States or any other ordinance, decree,
constitutional provision, regulation or other requirement of any Governmental
Authority (including, without limitation, any restriction on interest that may
be paid by the Shipowner); or (iii) any order, writ, injunction, judgment or
decree of any court or other tribunal. Further, the execution, delivery and
performance or observance by the Shipowner of the terms of, and consummation by
the Shipowner of the transactions contemplated by, this Agreement, the Floating
Rate Note, and the Indenture does not and will not conflict with or result in a
breach of any agreement or instrument to which the Shipowner is a party, or by
which it or any of its revenues, properties or assets may be subject, or result
in the creation or imposition of any Lien upon any of the revenues, properties
or assets of the Shipowner pursuant to any such agreement or instrument. "Lien"
shall mean any lien, lease, mortgage, pledge,
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hypothecation, preferential arrangement relating to payments, or other
encumbrance or security interest.
(d) BINDING EFFECT. This Agreement, the Floating Rate Note, and the
Indenture which have been executed on or before the date hereof have been duly
executed and delivered by the Shipowner. Each of the Agreement, the Floating
Rate Note, and the Indenture constitutes, and each of the Agreement, the
Floating Rate Note, and the Indenture as it may hereafter be amended will
constitute, a direct, general and unconditional obligation of the Shipowner
which is legal, valid and binding upon the Shipowner and enforceable against the
Shipowner in accordance with its respective terms. All obligations evidenced by
the Floating Rate Note will be entitled to the benefits of the Guarantees and
the Authorization Agreement.
(e) CHOICE OF LAW. Under applicable conflict of laws principles, the
choice of law provisions of this Agreement, the Floating Rate Note and the
Indenture are valid, binding and not subject to revocation by the Shipowner. In
any proceedings brought for enforcement of this Agreement, the choice of the law
of the State of New York as the governing law of such documents will be
recognized and such law will be applied. In any proceeding brought for
enforcement of the Indenture or the Floating Rate Note, the choice of law of the
State of Maryland as the governing law of such documents will be recognized and
such law will be applied.
(f) LEGAL PROCEEDINGS. No legal proceedings are pending or, to the best of
the Shipowner's knowledge, threatened before any court or governmental agency
which might: (i) materially and adversely affect the Shipowner's financial
condition, business or operations; (ii) restrain or enjoin or have the effect of
restraining or enjoining the performance or observance of the terms and
conditions of any of this Agreement, the Indenture or the Floating Rate Note; or
(iii) in any other manner question the validity, binding effect or
enforceability of any of the provisions of this Agreement, the Indenture or the
Floating Rate Note.
(g) USE OF THE VESSEL. The Vessel will be used for lawful purposes.
(h) SHIPOWNER FINANCIAL STATEMENTS. The Shipowner Financial Statements
present fairly the financial condition of the Shipowner at the date of such
statements and the results of the operations of the Shipowner for such fiscal
year. The Shipowner Financial Statements have been prepared in accordance with
generally accepted accounting principles in the United States consistently
applied. Except as fully reflected in the Shipowner Financial Statements, there
are no liabilities or obligations with respect to the Shipowner of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether or
not due) for the period to which the Shipowner Financial Statements relate that,
either individually or in the aggregate, would be material to the Shipowner.
Since the date of the most recent audited Shipowner Financial Statements, there
has been no material adverse change in the financial condition, business
prospects or operations of the Shipowner.
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"Shipowner Financial Statements" shall mean the financial statements of the
Shipowner furnished to the Facility Agent prior to the date of this Agreement.
(i) NO TAXES. There is no Tax imposed on or in connection with: (i) the
execution, delivery or performance of this Agreement, the Indenture or the
Floating Rate Note; (ii) the enforcement of this Agreement, the Indenture or the
Floating Rate Note; or (iii) on any payment to be made to any Lender under this
Agreement or the Floating Rate Note.
(j) LAWS. None of this Agreement, the Indenture, the Floating Rate Note,
the transactions contemplated thereunder nor any Person party to this Agreement,
the Indenture or the Floating Rate Note is required to qualify under the Trust
Indenture Act or register or qualify under any securities law.
(k) DEFAULTS. No Event of Default has occurred and is continuing and no
event or circumstance has occurred and is continuing which with the passage of
time, the giving of notice or both would constitute an Event of Default.
8.02 AGREEMENTS OF THE SHIPOWNER. The Shipowner agrees that until all
amounts owing under this Agreement and the Floating Rate Note have been paid in
full, the Shipowner will, unless the Agents and the Lenders shall have consented
in writing:
(a) INTEREST RATE PROTECTION. At all times that (1) a Floating Rate
Note exists and (2) the Applicable Interest Rate is equal to or greater
than the Cap Rate less 0.5%, the Shipowner (at its expense) within fifteen
(15) Business Days thereafter, shall (A) enter into, and thereafter
maintain in full force and effect, an amortizing interest rate cap
agreement with a strike price providing for a cap based on the Applicable
Interest Rate not in excess of the Cap Rate per annum and otherwise
acceptable to the Lenders, with a counterparty rated "AA" or better by any
of the rating agencies that rate the Commercial Paper issued by the
Primary Lender or such other counterparty reasonably acceptable to the
Lenders, covering the Floating Rate Note and based on the expected
amortization schedule of such Note, and (B) execute such documents and
instruments as may be necessary, or in the opinion of the Facility Agent
desirable, to effect the assignment of its rights thereunder to the
Facility Agent for the benefit of the Lenders and, if any payments are
made under any Guarantee, the Secretary, in every case with such terms as
are reasonably acceptable to the Facility Agent for the protection of the
Lenders. If the Shipowner fails to satisfy the requirements of this
Section 8.02(a) within the fifteen (15) Business Days set forth above, the
Facility Agent may (in its sole discretion) and if the Facility Agent so
elects, the Shipowner hereby authorizes and directs the Facility Agent to,
satisfy the requirements of this Section 8.02(a), all at the expense of
the Shipowner, due on demand.
(b) NOTICE OF DEFAULTS. Promptly, but in no event later than ten
(10) days after the occurrence of an Indenture Default or an Event of
Default of which the Shipowner has knowledge, notify the Facility Agent
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and the Indenture Trustee of any report required by the Shipowner
Documents (or any other document entered into by the Shipowner in
connection therewith), and send a copy thereof to the Facility Agent, in
each case by facsimile or hand delivery.
(c) FINANCIAL REPORTS. Beginning with the fiscal year in which this
Agreement is executed and continuing until all amounts owing under this
Agreement and the Floating Rate Note have been paid in full, the Shipowner
shall furnish to the Facility Agent (and the Facility Agent, upon receipt
thereof, shall furnish to each Lender and the Administrative Agent) a copy
of all financial reports furnished to the Secretary pursuant to the Title
XI Reserve Fund and Financial Agreement.
(d) OTHER ACTS. From time to time, do and perform any and all acts
and execute any and all documents as may be necessary or as reasonably
requested by the Facility Agent or the Indenture Trustee in order to
effect the purposes of this Agreement and to protect the interests of the
Lenders in the Floating Rate Note and the interests of the Lenders in the
Guarantees.
(e) USE OF PROCEEDS. Use proceeds from each Disbursement solely to
finance: (i) the manufacture, construction, fabrication, financing and
purchase of the Vessel; (ii) Construction Period Interest; and (iii) the
Guarantee Fees. Use the proceeds from the issuance of any Fixed Rate Notes
to repay amounts owed under the Floating Rate Note or to finance: (i) the
manufacture, construction, fabrication, financing and purchase of the
Vessel; (ii) Construction Period Interest; and (iii) the Guarantee Fees.
(f) SUCCESSORS. Require that any successor to all or substantially
all of its business as a result of any merger or consolidation with any
other entity, dissolution or termination of legal existence, sale, lease,
transfer or other disposal of any substantial part of its properties or
any of its properties essential to the conduct of its business or
operations, as now or hereafter conducted, any change in control, any
agreement to do any of, or any combination of, the foregoing, to assume
all of the Shipowner's indebtedness, liabilities and obligations under
this Agreement, the Indenture and the Floating Rate Note.
SECTION 9. CANCELLATION, SUSPENSION AND EVENTS OF DEFAULT
9.01 CANCELLATION. The Shipowner may cancel at any time all or any part of
the Available Amount of the Credit Facility, provided that (i) thirty (30) days'
prior irrevocable written notice is given to the Agents, the Indenture Trustee,
and the Secretary and (ii) the Shipowner shall have paid to the Lenders any
commitment fees accrued and unpaid under Section 6.01 and all other amounts due
and payable under this Agreement and the Floating Rate Note as of the proposed
date of cancellation. In the absence of an Indenture Default, the Lenders may
not for any reason cancel at any time any part of the Available Amount of the
Credit Facility.
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9.02 EVENTS OF DEFAULT. Upon the occurrence of any of the following events
or conditions (each, an "Event of Default"):
(a) any failure by the Shipowner to pay when and as due any amount
owing under this Agreement, but which is not guaranteed by the Secretary;
or
(b) any failure by the Shipowner to comply with its obligations
under Section 8.02(b) or 8.02(e); or any failure by the Shipowner to
perform or comply with any of its agreements set forth in this Agreement
(exclusive of any events specified as an Event of Default in any other
subsection of this Section 9.02 and exclusive of Section 8.02(a)), which
failure, if capable of being cured, remains uncured for a period of thirty
(30) days after written notice thereof has been given to the Shipowner by
the Facility Agent; or
(c) the Shipowner shall be unable to pay its debts when and as they
fall due or shall admit in writing its inability to pay its debts as they
fall due or shall become insolvent; or the Shipowner shall apply for or
consent to the appointment of any liquidator, receiver, trustee or
administrator for all or a substantial part of its business, properties,
assets or revenues; or a liquidator, receiver, trustee or administrator
shall be appointed for the Shipowner and such appointment shall continue
undismissed, undischarged or unstayed for a period of thirty (30) days, or
the Shipowner shall institute (by petition, application, answer, consent
or otherwise) any bankruptcy, arrangement, readjustment of debt,
dissolution, liquidation or similar executory or judicial proceeding; or a
bankruptcy, arrangement, readjustment of debt, dissolution, liquidation or
similar executory or judicial proceeding shall be instituted against the
Shipowner and shall remain undismissed, undischarged or unstayed for a
period of thirty (30) days; or
(d) an Indenture Default has occurred;
then, and in any such event, and at any time thereafter, if such event is
continuing, and if there is no Indenture Default (or if there is an
Indenture Default, only after the Secretary has received all payments due
under the Secretary's Note and the Mortgage), any Agent or any Lender (by
written notice to the Shipowner), shall have the right to institute any
judicial or other proceedings under this Agreement to recover all amounts
owing under this Agreement. The Lenders agree that so long as an Indenture
Default exists, all amounts received during such period from, or on behalf
of, the Shipowner shall be applied in the manner set forth in Section
7.02. Notwithstanding an Event of Default, the Lenders may not terminate
the Available Amount of the Credit Facility without the Secretary's
consent; PROVIDED, HOWEVER, that the Shipowner's use of the Available
Amount of the Credit Facility shall remain subject to the requirements of
Sections 2.02, 3.01, and 5.02. Except as expressly provided above in this
Section 9.02, presentment, demand, protest and all other notices of any
kind are hereby expressly waived. Notwithstanding any other provision of
this Agreement, if Section 9.02(c) is applicable, the Lender may file
appropriate claims in
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connection therewith, but shall apply any funds collected as a consequence
of said filings in accordance with the provisions of Section 7.02 of this
Agreement.
SECTION 10. GOVERNING LAW AND JURISDICTION
10.01 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.02 SUBMISSION TO JURISDICTION. Each of the Shipowner and the Lenders
hereby irrevocably agrees that any legal suit, action or proceeding arising out
of or relating to this Agreement, or any of the transactions contemplated
hereby, may be instituted by the other parties hereto in the Courts of the State
of New York or the Federal Courts sitting in the Borough of Manhattan, City of
New York, State of New York. Each of the Shipowner and the Lenders hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may have now or hereafter to the laying of the venue or any objection based
on forum non conveniens, or based on the grounds of jurisdiction with respect to
any such legal suit, action or proceeding and irrevocably submits generally and
unconditionally to the jurisdiction of any such court in any such suit, action
or proceeding. Each of the Shipowner and the Lenders agrees that a judgment,
after exhaustion of all available appeals, in any such action or proceeding
shall be conclusive and binding upon it and may be enforced in any other
jurisdiction by suit upon such judgment, a certified copy of which shall be
conclusive evidence of the judgment. Each of the Shipowner and the Lenders
waives personal service of any summons, complaint, or other process, which
service may be made by such or any other means permitted by New York law.
10.03 WAIVER OF SECURITY REQUIREMENTS. To the extent the Shipowner may, in
any action or proceeding arising out of or relating to this Agreement be
entitled under applicable law to require or claim that the Agents or the Lenders
post security for costs or take similar action, the Shipowner hereby irrevocably
waives and agrees not to claim the benefit of such entitlement.
10.04 NO LIMITATION. Nothing in this Section 10 shall affect the right of
the Agents or any Lender to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against the Shipowner in any
jurisdiction; PROVIDED, HOWEVER, that except as provided in Section 9.02, in the
event of an Indenture Default, the Agents and the Lenders may not proceed
against the Shipowner without the Secretary's consent unless the Secretary has
received full payment under the Secretary's Note.
SECTION 11. MISCELLANEOUS
11.01 COMPUTATIONS. Each determination of an interest rate by the
Administrative Agent or the Facility Agent, or any other Person pursuant to any
provision of this Agreement, the Fee Letter or the Floating Rate Note, in the
absence of error, shall be conclusive and binding on the Shipowner. Each
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determination of a fee or other amounts (excluding interest rates) by the
Facility Agent, any Lender, or any other Person pursuant to any provision of
this Agreement, the Fee Letter or the Floating Rate Note, in the absence of
manifest error, shall be conclusive and binding on the Shipowner. All
computations of interest and fees hereunder and under the Floating Rate Note
shall be made on the basis of a year of three hundred sixty-five (365) days and
actual days elapsed; PROVIDED, HOWEVER, that the CP Rate and LIBOR shall be
determined on the basis of a year of 360 days and actual days elapsed. The
Secretary and Indenture Trustee may request supporting documentation for the
information provided by the Facility Agent or the Administrative Agent to the
Indenture Trustee.
11.02 NOTICES. Except as otherwise specified, all notices given hereunder
shall be in writing, and shall be given by mail, facsimile, tested telex or
personal delivery and shall be deemed to be given for the purposes of this
Agreement on the day that such notice is received by the intended recipient
thereof. Unless otherwise specified in a notice delivered in accordance with
this Section 11.02, all notices shall be delivered to the parties hereto and to
the Indenture Trustee and the Secretary at their respective addresses indicated
below:
TO THE FACILITY AGENT AND THE LENDERS:
Address: Citibank International plc, as Facility Agent
P.O. Box 242
336 Strand
London, England WC2R 1HB
Attention: Karen Doran
Telephone: 01144171500 4482
Facsimile: 01144171500 4274
With a copy to:
Citibank, N.A., as the Alternate Lender
399 Park Avenue
New York, New York 10043
Attention: Structured Trade Finance
Facsimile (212) 793-2330
Telephone: (212) 559-6787
With a copy to the Administrative Agent
TO THE ADMINISTRATIVE AGENT
Address: Citicorp North America, Inc.
399 Park Avenue
New York, New York 10043
Attention: Structured Trade Finance
Facsimile (212) 793-2330
Telephone: (212) 559-6787
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TO THE SHIPOWNER
Petrodrill Four Limited
c/o Arias, Fabrega & Fabrega
P.O. Box 985
Omar Hodge Building
Wickham's Cay
Road Town, Tortola
British Virgin Islands
With a copy to:
Petrodrill Four Limited
c/o: Petrodrill Engineering N.V.
K.P. van der Mandelelaan 38
3062 MB
Rotterdam (Brainpark), The Netherlands
Netherlands
Attention: Steve Assiter
Telephone: 011.31.10.272.2722
Facsimile: 011.31.10.272.2727
Email: [email protected]
TO THE SECRETARY
Address: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
400 Seventh Street, S.W.
Washington, D.C. 20590
Attention: Office of Ship Finance
Telephone: (202) 366-5744
Facsimile: (202) 366-7901
TO THE INDENTURE TRUSTEE
Address: FMB Trust Company, National Association
Mail Code 101-591
25 South Charles Street
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Telephone: (410) 244-4238
Facsimile: (410) 244-4236
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11.03 DISPOSITION OF INDEBTEDNESS. Once the Shipowner has completely drawn
down on the Credit Facility and the Available Amount is zero, each Lender may
sell, assign, transfer, negotiate, or otherwise dispose of all or any part of
its interest in all or any part of the Shipowner's indebtedness under this
Agreement and the Floating Rate Note to any party (collectively, a "Disposition
of Indebtedness"), and any such party shall enjoy all the rights and privileges
of such Lender under this Agreement and the Floating Rate Note; PROVIDED,
HOWEVER, that each Disposition of Indebtedness to any Person other than a
domestic Affiliate of a Lender shall require the prior written consent of the
Shipowner (which consent shall not be unreasonably withheld or delayed);
PROVIDED, FURTHER, HOWEVER, that each Lender may pledge or grant participation
in all or any part of its interest in all or any part of the Shipowner's
indebtedness under this Agreement and the Floating Rate Note to any party at any
time so long as such Lender's commitment to lend the Available Amount under this
Agreement is not affected thereby. The Shipowner shall, at the request of the
Facility Agent, execute and deliver to the Facility Agent or to any party that
the Facility Agent may designate, any such further instruments as may be
necessary or desirable to give full force and effect to a Disposition of
Indebtedness by the applicable Lender.
11.04 DISCLAIMER. Neither the Agents nor the Lenders shall be responsible
in any way for the performance of the Construction Contract or any other
Shipowner Document, and no claim against the Shipbuilder or any other Person
with respect to the performance of the Construction Contract will affect the
obligations of the Shipowner under this Agreement or the Floating Rate Note.
11.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
any Agent or any Lender in exercising any right, power or privilege under this
Agreement, the Floating Rate Note or the Indenture and no course of dealing
between or among the Shipowner and any Agent or any Lender shall operate as a
waiver of the rights of the Shipowner and such Lenders against each other under
this Agreement; nor shall any single or partial exercise of any right, power or
privilege hereunder or under the Floating Rate Note or the Indenture preclude
the Shipowner, the Agents, or the Lenders from exercising against each other any
other right, power or privilege hereunder. The rights and remedies expressly
provided herein are cumulative and not exclusive of any rights or remedies which
the Agents or the Lenders would otherwise have. No notice to or demand on the
Shipowner in any case shall entitle the Shipowner to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Agent or any Lender under this Agreement to any other or further action
in any circumstances without notice or demand. Notwithstanding any other
provision to the contrary herein, no provision in this Agreement or any other
related agreement preserves any rights in favor of the parties against the
Secretary in the event that either party fails or delays to exercise any rights,
powers, or privileges under this Agreement, the Floating Rate Note or the
Indenture or engages in any particular course of dealing.
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11.06 CURRENCY. All payments of principal, interest, fees or other amounts
due hereunder and under the Floating Rate Note shall be made in Dollars,
regardless of any law, rule, regulation or statute, whether now or hereafter in
existence or in effect in any jurisdiction, which affects or purports to affect
such obligations. The obligation of the Shipowner in respect of any amount due
under this Agreement or the Floating Rate Note, notwithstanding any payment in
any other currency (whether pursuant to a judgment or otherwise), shall be
discharged only to the extent of the amount in Dollars that the Person entitled
to receive that payment may, in accordance with normal banking procedures,
purchase with the sum paid in that other currency (after any premium and costs
of exchange) on the Business Day immediately succeeding the day on which that
Person receives that payment. If the amount in Dollars that may be so purchased
for any reason falls short of the amount originally due, the Shipowner shall pay
such additional amounts, in Dollars, to compensate for the shortfall. Any
obligation of the Shipowner not discharged by that payment shall continue to be
due as a separate and independent obligation and shall accrue interest in
accordance with Section 4.02 until discharged as provided herein.
11.07 SEVERABILITY. To the extent permitted by applicable law, the
illegality or unenforceability of any provision of this Agreement shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement.
11.08 AMENDMENT OR WAIVER. This Agreement may not be changed, discharged
or terminated without the written consent of the parties hereto, and no
provision hereof may be waived without the written consent of the party to be
bound thereby. There may be no change, discharge, termination or claim of waiver
of the terms of this Agreement without the prior written consent of the
Secretary, who is entitled to enforce his rights under this Agreement as an
intended third party beneficiary to this Agreement. The parties hereto
acknowledge, however, that nothing in this Agreement creates in either the
Shipowner or the Lenders any right whatsoever against the Secretary.
11.09 INDEMNIFICATION. Without limiting any other rights that any Agent or
any Lender may have hereunder or under applicable law, the Shipowner hereby
agrees to indemnify each of the Agents and the Lenders (each, an "Indemnified
Party") from and against any and all damages, losses, claims, liabilities and
related costs and expenses, including reasonable attorneys' fees and
disbursements (all the foregoing being collectively referred to as "Indemnified
Amounts") awarded against or incurred by such Indemnified Party arising out of
or as a result of this Agreement or the Floating Rate Note excluding, however,
Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of such Indemnified Party. In the event of an Indenture
Default, all amounts received by such Indemnified Party pursuant to such
indemnification after an Indenture Default shall be held and paid in the manner
required by Section 7.02.
11.10 BENEFIT OF AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and
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assigns of the parties hereto; PROVIDED, HOWEVER, that the Shipowner may not
assign any of its rights or obligations hereunder without the prior written
consent of the Lenders, and, to the extent set forth in paragraph 11.03 hereof,
the Secretary.
11.11 WAIVER OF JURY TRIAL. Each of the Shipowner and the Lenders waives
its respective rights to a trial by jury of any claim or cause of action based
upon or arising out of or related to this Agreement, any assignment or the
transactions contemplated hereby, in any action, proceeding or other litigation
of any type brought by any party against the other parties, whether with respect
to contract claims, tort claims, or otherwise. Each of the Shipowner and the
Lenders agrees that any such claim or cause of action shall be tried by a court
trial without a jury. Without limiting the foregoing, the parties further agree
that their respective right to a trial by jury is waived by operation of this
section as to any action, counterclaim or other proceeding which seeks, in whole
or in part, to challenge the validity or enforceability of this Agreement, any
assignment or any provision hereof or thereof. This waiver shall apply to any
subsequent amendments, renewals, supplements or modifications to this Agreement
or any assignment.
11.12 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
Agreement. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.
11.13 SHIPOWNER DOCUMENTS. Notwithstanding the provisions of this
Agreement, in any conflict between this Agreement and the provisions of the
Shipowner Documents, the Shipowner Documents shall govern the agreement between
the parties hereto, but only with respect to the subject matter thereof.
Notwithstanding the previous sentence, any provision in the Indenture (or any
other agreement the Shipowner has entered into with any other Person) purporting
to release the Shipowner of any indebtedness, liability or obligation shall not
apply to any indebtedness, liability or obligation of the Shipowner hereunder
and no termination of the Indenture (or any other agreement the Shipowner has
entered into with any other Person) shall affect the continued effectiveness of
this Agreement, which shall continue in full force and effect until the Credit
Facility has been terminated and all indebtedness, liabilities and obligations
of the Shipowner have been fully discharged and satisfied, the Floating Rate
Note have been paid, satisfied and discharged in full, and there has elapsed a
year and a day from the last payment received from, or on behalf, of the
Shipowner. However, this Section 11.13 shall have no affect on the relationships
established and the agreements entered into by the parties to the Shipowner
Documents (and such other agreements the Shipowner has entered into with any
other Person), in each case to which the Lenders are not parties in their
capacities as the Lenders hereunder.
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11.14 ENTIRE AGREEMENT. This Agreement, the Fee Letter and the Floating
Rate Note contain the entire agreement among the parties hereto regarding the
Credit Facility.
11.15 NO PROCEEDINGS. Each of the Shipowner, the Alternate Lender and the
Agents hereby agrees that it will not institute against, or join any other
Person in instituting against, the Primary Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or any other
proceeding under any federal or state bankruptcy or similar law, so long as any
Commercial Paper issued by the Primary Lender shall be outstanding or there
shall not have elapsed one year plus one day since the last day on which any
such Commercial Paper shall have been outstanding.
SECTION 12. ARRANGEMENTS AMONG THE AGENTS AND THE LENDERS
12.01 APPOINTMENT. Each Lender hereby appoints the Facility Agent to act
as its agent in connection herewith and in connection with the Floating Rate
Note and the Indenture and authorizes the Facility Agent to exercise such
rights, powers and discretions as are specifically delegated to the Facility
Agent by the terms hereof and thereof, together with all such rights, powers and
discretions as are reasonably incidental thereto. Without limiting the
foregoing, all notices to be delivered to, and approvals to be given by, a
Lender under the disbursement procedures described in Section 3.01 hereof shall
be delivered to and given by the Facility Agent on behalf of such Lender.
12.02 RIGHTS OF FACILITY AGENT. The Lenders and the Facility Agent agree
that the Facility Agent may:
(i) assume that (a) any representation made by the Shipowner in connection
herewith is true; (b) no event which is or may become an Event of Default has
occurred; (c) the Shipowner is not in breach of or default under its obligations
hereunder; (d) any right, power, authority or discretion vested herein upon the
Lenders or any other person or group of persons has not been exercised; unless
it has, in its capacity as Facility Agent, notice or actual knowledge to the
contrary;
(ii) engage and pay for the advice or services of any lawyers,
accountants, surveyors or other experts whose advice or services may to it seem
necessary, expedient or desirable and rely upon any advice so obtained;
(iii) rely as to any matters of fact which might reasonably be expected to
be within the knowledge of the Shipowner upon a certificate signed by or on
behalf of the Shipowner;
(iv) rely upon any communication or document believed by it to be
genuine;
(v) refrain from exercising any right, power or discretion vested in it as
facility agent hereunder unless and until instructed by a Lender as to
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whether or not such right, power or discretion is to be exercised and, if it is
to be exercised, as to the manner in which it should be exercised; and
(vi) refrain from acting in accordance with any instructions of any Lender
to begin any legal action or proceeding arising out of or in connection with
this Agreement until it shall have received such security as it may require
(whether by way of payment in advance or otherwise) for all costs, claims,
expenses (including legal fees) and liabilities which it will or may expend or
incur in complying with such instructions.
12.03 DUTIES. The Facility Agent shall:
(i) promptly inform each Lender of the contents of any notice
or document received by it from the Shipowner hereunder;
(ii) promptly notify each Lender of the occurrence of any Event of
Default or any default by the Shipowner in the due performance of
or compliance with its obligations under this Agreement of which
the Facility Agent has notice from any other party hereto;
(iii) save as otherwise provided herein, act as facility agent hereunder
in accordance with any instructions given to it by any Lender,
which instructions shall be binding on all of the Lenders; and
(iv) if so instructed by any Lender, refrain from exercising any right,
power or discretion vested in it as facility agent hereunder.
12.04 LIMITATION ON OBLIGATIONS OF FACILITY AGENT. Notwithstanding
anything to the contrary expressed or implied herein, the Lenders and the
Facility Agent agree that the Facility Agent shall not:
(i) be bound to inquire as to:
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(a) whether or not any representation made by the Shipowner in
connection herewith is true;
(b) the occurrence or otherwise of any event which is or may
become an Event of Default;
(c) the performance by the Shipowner of its obligations hereunder;
or
(d) any breach of or default by the Shipowner or under its
obligations hereunder;
(ii) be bound to account to any Lender for any sum or the profit element
of any sum received by it for its own account;
(iii) be bound to disclose to any other person any information relating to
the Shipowner or any of its agencies if such disclosure would or might in its
opinion constitute a breach of any law or regulation or be otherwise actionable
at the suit of any person; or
(iv) be under any obligations other than those for which express provision
is made herein.
12.05 INDEMNIFICATION BY LENDERS. The Alternate Lender shall, from time to
time on demand by the Facility Agent, indemnify the Facility Agent, against any
and all costs, claims, expenses (including legal fees) and liabilities
(collectively, "Liabilities") together with any tax thereon which the Facility
Agent may incur, otherwise than by reason of its own gross negligence or willful
misconduct, in acting in its capacity as facility agent hereunder (including,
without limitation, any Liabilities in anyway relating to or arising out of
certifications made with respect to either (a) the due authorization, execution
or delivery of a Floating Rate Note, or (b) laws and/or regulations of any
Governmental Authority, in each case in connection with any request by the
Facility Agent to the Indenture Trustee or the Secretary for the Secretary to
endorse its guarantee on a Floating Rate Note or for the Indenture Trustee to
authenticate a Floating Rate Note).
12.06 LIMITATION ON RESPONSIBILITY. The Facility Agent accepts no
responsibility to the Lenders for the accuracy and/or completeness of any
information supplied by the Shipowner in connection herewith or for the
legality, validity, effectiveness, adequacy or enforceability of this Agreement,
and the Facility Agent shall be under no liability to the Lenders (nor to the
Shipowner, Indenture Trustee or the Secretary with respect to calculations of
the Applicable Interest Rate) as a result of taking or omitting to take any
action in relation to this Agreement, save in the case of its own negligence or
willful misconduct.
12.07 NO CLAIMS ON EMPLOYEES OF FACILITY AGENT. Each Lender agrees that it
will not assert or seek to assert against any director, officer or employee
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of the Facility Agent any claim which it might have against it in respect of the
matters referred to in Clause 12.06.
12.08 BANKING BUSINESS. The Lenders agree that the Facility Agent may
accept deposits from, lend money to and generally engage in any kind of banking
or other business with the Shipowner.
12.09 RESIGNATION OR TERMINATION OF FACILITY AGENT.
(i) The Facility Agent may (after consultation with the Shipowner and the
Lenders) resign its appointment hereunder at any time without assigning any
reason therefor by giving not less than thirty (30) days' prior written notice
to that effect to each of the other parties hereto; PROVIDED, that no such
resignation shall be effective until a successor for the Facility Agent is
appointed in accordance with the succeeding provisions of this Section 12;
(ii) The Lenders and the Shipowner may jointly seek the termination of the
appointment of the Facility Agent hereunder at any time by giving not less than
thirty (30) days prior written notice to that effect to the Facility Agent;
PROVIDED that no such termination shall be effective until a successor for the
Facility Agent is appointed in accordance with the succeeding provisions of this
Section 12; PROVIDED FURTHER that any such notice of termination must be signed
by all of the Lenders and the Shipowner; and
(iii) For the avoidance of doubt the parties hereto agree that the
provisions of this Section 12.09 shall at no time apply to or restrict the
ability of the Administrative Agent to resign its position of Administrative
Agent.
12.10 SUCCESSOR TO FACILITY AGENT. If the Facility Agent gives notice of
its resignation pursuant to Section 12.09(i) or receives notice of termination
pursuant to Section 12.09(ii), then any reputable and experienced bank or other
financial institution may be appointed as a successor to the Facility Agent by
the Lenders with the consent of the Secretary and Shipowner (which consent of
the Shipowner shall not be unreasonably withheld or delayed) during the period
of such notice but, if no such successor is so appointed, the Facility Agent may
appoint such a successor itself with the consent of the Secretary and Shipowner
(which consent of the Shipowner shall not be unreasonably withheld or delayed).
12.11 DISCHARGE OF OBLIGATIONS. If a successor to the Facility Agent is
appointed under the provisions of Section 12.10, then (i) the retiring Facility
Agent shall be discharged from any further obligation hereunder but shall remain
entitled to the benefits of the provisions of this Section 12 and (ii) its
successor and each of the other parties hereto shall have the same rights and
obligations amongst themselves as they would have had if such successor had been
a party hereto.
12.12 RESPONSIBILITIES OF LENDERS. It is understood and agreed by each
Lender that it is, and will continue to be, solely responsible for making its
own independent appraisal of and investigations into the financial condition,
28
<PAGE>
creditworthiness, condition, affairs, status and nature of the Shipowner, the
Secretary and the United States of America and, accordingly, each Lender
warrants to the Facility Agent that it has not relied and will not hereafter
rely on the Facility Agent:
(i) to check or inquire on its behalf into the adequacy, accuracy or
completeness of any information provided by the Shipowner in
connection with this Agreement or the transaction herein
contemplated (whether or not such information has been or is
hereafter circulated to such Lender by the Facility Agent); or
(ii) to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or nature
of the Shipowner.
12.13 AGENCY DIVISION. In acting as Facility Agent for the Lenders, the
Facility Agent's agency division shall be treated as a separate entity from any
other of its divisions or departments and, notwithstanding the foregoing
provisions of this Section 12, in the event that the Facility Agent should act
for the Shipowner in any capacity in relation to any other matter, any
information given by the Shipowner to the Facility Agent in such other capacity
may be treated as confidential by the Facility Agent.
12.14 ADMINISTRATIVE AGENT. Each party hereto (other than the
Administrative Agent) acknowledges that the Administrative Agent is a party
hereto only in its capacity as administrative agent of the Primary Lender and
the Primary Lender's commercial paper holders.
12.15 FACILITY AGENT ONLY AGENT FOR THE LENDERS. The Facility Agent is not
authorized to, nor shall it, act as the agent for the Secretary, the Indenture
Trustee, the Shipowner or any of their successors in interest or assigns in any
of the capacities provided for herein.
29
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed and delivered as of the date first above written.
PETRODRILL FOUR LIMITED, as the GOVCO INCORPORATED, as the Primary
Shipowner Lender, by Citicorp North America,
Inc., its attorney-in-fact.
By:/s/ EARL W. MCNIEL By:/s/ P. A. BOTTICELLI
(Signature) (Signature)
Name: EARL W. MCNIEL Name: P.A. BOTTICELLI
(Print) (Print)
Title: TREASURER Title: VICE PRESIDENT
(Print)
CITIBANK INTERNATIONAL PLC, CITIBANK, N.A., as the Alternate
as Facility Agent Lender
By:/s/ P. A. BOTTICELLI By:/s/ AE KYONG CHUNG
(Signature) (Signature)
Name: P. A. BOTTICELLI Name: AE KYONG CHUNG
(Print) (Print)
Title: VICE PRESIDENT Title: VICE PRESIDENT
(Print) (Print)
CITICORP NORTH AMERICA, INC., as
the Administrative Agent
By:/s/ P. A. BOTTICELLI
(Signature)
Name: P. A. BOTTICELLI
(Print)
Title: VICE PRESDIENT
(Print)
30
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EXHIBIT 1 TO
CREDIT AGREEMENT
Schedule of Definitions to Credit Agreement
Dated as of April 9, 1999
"Accelerated Repayment" shall have the meaning set forth in Section
4.02(b) of the Credit Agreement.
"Act" means the Merchant Marine Act, 1936, as amended, and in effect on
the Closing Date.
"Administrative Agent" means CITICORP NORTH AMERICA, INC., a Delaware
corporation, as administrative agent for the Primary Lender and the commercial
paper holders of the Primary Lender (and their respective successors and
assigns), and its permitted successors and assigns.
"Affiliate" or "Affiliated" means any Person directly or indirectly
controlling, controlled by, or under common control with, another Person.
"Agent" means each of the Administrative Agent and the Facility Agent,
individually, and "Agents" means the Administrative Agent and the Facility
Agent, collectively.
"Alternate Lender" shall have the meaning set forth in the preamble to
the Credit Agreement.
"Applicable Interest Rate" shall mean
(i) with respect to any Disbursement or portion thereof that is funded by
the Primary Lender through its issuance of commercial paper notes and so long as
the Primary Lender is the holder of the indebtedness related to such funded
portion, a rate (the "CP Rate") equal to the sum of (A) the Primary Lender's
weighted average cost (defined below) related to the issuance of commercial
paper notes and other short-term borrowings or the sale of participation
interests (collectively, "Commercial Paper"), which in each case have been
allocated by the Primary Lender to the Credit Facility, which rate includes
related issuance costs incurred by the Primary Lender, plus (B) during the
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Construction Period, four-tenths of one percent (.40%) and thereafter,
nine-twentieths of one percent (0.45%), as calculated by the Administrative
Agent for each Interest Period and specified in a notice sent by the
Administrative Agent to the Facility Agent and by the Faculty Agent to the
Shipowner and the Indenture Trustee at least three (3) Business Days prior to
each Interest Payment Date on which the interest so calculated is payable (For
purposes of the foregoing, the Primary Lender's "weighted average cost" of
Commercial Paper shall consist of (I) the actual interest rate paid to
purchasers of Commercial Paper, (II) the costs associated with the issuance of
the Commercial Paper and (III) other borrowings the Primary Lender may incur,
including the amount to fund small or odd dollar amounts that are not easily
accommodated in the commercial paper market); and
(ii) with respect to any Disbursement funded by the Alternate Lender or to
the extent that a Disbursement held by the Primary Lender is assigned to the
Alternate Lender or to any other assignee, then, from and after the applicable
Disbursement Date or the effective date of such assignment, as the case may be,
a rate per annum equal to LIBOR plus three tenths of one percent (0.30%) per
annum; provided, however, that, if the Alternate Lender shall have determined,
prior to the commencement of any Interest Period that: (A) Dollar deposits of
sufficient amount and maturity for funding a Disbursement are not available to
such Lender in the London interbank market in the ordinary course of business;
or (B) by reason of circumstances affecting the relevant market, adequate and
fair means do not exist for ascertaining the rate of interest to be applicable
to a Disbursement; or (C) the relevant rate of interest referred to in the
definition of LIBOR which is to be used to determine the rate of interest for a
Disbursement does not cover the funding cost to the Lender of making or
maintaining the Disbursement, then the Lender shall so notify the Indenture
Trustee, who shall give notice to the Shipowner of such condition and interest
shall, effective as of the date of such notice and so long as such condition
shall exist, accrue during each applicable Interest Period at the Base Rate;
provided, further, however that if, in the Lender's reasonable judgment, it
becomes unlawful at any time for such Lender to make or maintain Disbursements
based upon LIBOR, the Lender shall so notify the Indenture Trustee, who shall
give notice to the Shipowner of such determination and, effective as of the date
of such notice and so long as such condition shall exist, interest shall
thereafter accrue during each applicable Interest Period at the Base Rate.
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"Authorization Agreement" means the Authorization Agreement, Contract No.
MA-13504, dated the Closing Date, between the Secretary and the Indenture
Trustee, whereby the Secretary authorizes the Guarantee of the United States of
America to be endorsed on the Floating Rate Note, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Available Amount" shall have the meaning set forth in Section 2.01 of the
Credit Agreement.
"Base Rate" means, for any Interest Period or any other period, a
fluctuating interest rate per annum as shall be in effect from time to time
which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by Citibank, N.A. in New
York, New York, from time to time, as Citibank, N.A.'s base rate; or
(b) One-half of one percent (0.50%) per annum above the latest
three-week moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of major United
States money market banks, such three-week moving average being determined
weekly on each Monday (or, if any such day is not a Business Day, on the
next succeeding Business Day) for the three-week period ending on the
previous Friday by Citibank, N.A. on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York, or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
Citibank, N.A. from three New York certificate of deposit dealers of
recognized standing selected by Citibank, N.A., in either case adjusted to
the nearest one-fourth of one percent (0.25%) or, if there is no nearest
one-fourth of one percent, to the next higher one-fourth of one percent.
"Business Day" shall mean any day on which dealings in Dollar deposits are
carried on in the London interbank market and on which commercial banks in
London and New York City are open for domestic and foreign exchange business.
"Certificate Authorizing Disbursement" shall mean, with respect to a
Disbursement, the United States Certificate Authorizing Disbursement
substantially in the form set forth in Annex A to the Credit Agreement.
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"Closing Date" means April 9, 1999.
"Commercial Paper" shall have the meaning set forth in clause (a)(i)of
the definition of Applicable Interest Rate herein.
"Construction Contract" means that certain Semi-Submersible Drilling
Vessel Construction Contract (Hull No. 1828), dated April 9, 1998, by and
between the Shipowner and the Shipyard, as the same may be amended, modified or
supplemented in accordance with the applicable provisions thereof.
"Construction Period" shall mean the period from the date hereof to the
Delivery Date.
"Construction Period Interest" shall mean all interest that accrues on the
Outstanding Principal during the Construction Period.
"CP Rate" shall have the meaning set forth in clause (a)(i) of the
definition of Applicable Interest Rate herein.
"Credit Agreement" or "Agreement" shall mean the Credit Agreement, dated
as of the Closing Date, among the Shipowner; the Lenders, and the Agents,
including any Exhibit, Annex, or other attachment thereto, as the same may be
amended, modified or supplemented in accordance with the applicable provisions
thereof.
"Credit Facility" shall have the meaning set forth in Whereas Clause (A)
of the Credit Agreement.
"Credit Facility Amount" shall have the meaning set forth in Section 2.01
of the Credit Agreement.
"Delivery Date" means the date on which the Vessel is delivered to and
accepted by the Shipowner.
"Depository Agreement" means the Depository Agreement, Contract No.
MA-13508, dated the Closing Date, between the Shipowner, CITIBANK, N.A., as
Depository, and the Secretary, as the same is originally executed, or amended,
modified or supplemented in accordance with the applicable provisions thereof.
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<PAGE>
"Disbursements" shall have the meaning set forth in Section 2.03 of the
Credit Agreement.
"Disbursement Date" shall mean, in relation to any Disbursement, the
Business Day on which the Lender shall make such Disbursement.
"Disposition of Indebtedness" shall have the meaning set forth in Section
11.03 of the Credit Agreement.
"Dollars", "U.S. Dollars", "U.S.D.", "U.S. $" or "$" shall mean the
lawful currency of the United States of America.
"Event of Default" shall have the meaning set forth in Section 9.02 of the
Credit Agreement.
"Facility Agent" means CITIBANK INTERNATIONAL PLC, a bank organized and
existing under the laws of England, as facility agent for both the Primary
Lender and the Alternative Lender (and their respective successors and assigns),
and its permitted successors and assigns.
"Fee Letter" shall have the meaning set forth in Section 6.01 of the
Credit Agreement.
"Final Disbursement Date" shall have the meaning set forth in Section 2.02
of the Credit Agreement.
"Fixed Rate Note" shall mean the Note substantially identical to the form
of Exhibit 3 to the Indenture, appropriately completed.
"Floating Rate Note" shall mean the Note substantially identical to the
form of Exhibit 2 to the Indenture, appropriately completed.
"Governmental Authority" shall mean the government of any country, any
agency, department or other administrative authority or instrumentality thereof,
and any local or other governmental authority within any such country.
"Guarantee" or "Guarantees" means the guarantee of the Floating Rate Note
by the United States of America pursuant to Title XI of the Act, as provided in
the Authorization Agreement.
"Guarantee Commitment" means the Commitment to Guarantee Obligations,
Contract No. MA-13503, dated as of the Closing Date,
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<PAGE>
executed by the Secretary and accepted by the Shipowner with respect to the
Guarantees, as originally executed or as modified, amended or supplemented in
accordance with the applicable provisions thereof.
"Guarantee Fees" shall mean the amounts described in the Guarantee
Commitment payable in consideration for the commitment therein described and
payable as provided in such Guarantee Commitment.
"Holder" means each holder of the Floating Rate Note.
"Indemnified Amounts" shall have the meaning set forth in Section 11.09 of
the Credit Agreement.
"Indemnified Party" shall have the meaning set forth in Section 11.09 of
the Credit Agreement.
"Indenture" means the Trust Indenture dated as of the Closing Date,
between the Shipowner and the Indenture Trustee, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Indenture Default" has the meaning specified in Article VI of Exhibit
1 to the Indenture.
"Indenture Trustee" means FMB Trust Company, National Association, a
national banking association, and any successor trustee permitted under the
Indenture.
"Interest Payment Date" means, with respect to the Floating Rate Note, the
date when any installment of interest on such Note is due and payable, which are
February 15 and August 15 of each year, beginning on August 15, 1999, and the
date of any prepayment of the Floating Rate Note.
"Interest Period" shall mean, with respect to any Disbursement, (i) the
period commencing on the Disbursement Date and extending up to, but not
including, the next Interest Payment Date; and (ii) thereafter the period
commencing on each Interest Payment Date and extending up to, but not including,
the next Interest Payment Date.
"Lender" shall have the meaning set forth in the preamble to the
Credit Agreement.
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<PAGE>
"Liabilities" shall have the meaning set forth in Section 12.05 of the
Credit Agreement.
"LIBOR" (a) in relation to any Interest Period, shall mean the rate of
interest per annum (rounded upward, if necessary, to the nearest 1/16 of 1%)
quoted by the principal London office of CITIBANK, N. A., at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for the offering to leading banks in the London interbank market of U.S.
Dollar deposits for a period and in an amount comparable to such Interest Period
and the principal amount upon which interest is to be paid during such Interest
Period; and (b) in relation to any Post Maturity Period, shall have the meaning
as set forth in Section 4.02(b) of the Credit Agreement.
"Lien" shall have the meaning set forth in Section 8.01(c) of the
Credit Agreement.
"Liquidation Period" shall have the meaning set forth in Section 4.03(a)
of the Credit Agreement.
"Maturity" when used with respect to any Obligation, means the date on
which the principal of, or interest on, such Obligation becomes due and payable
as therein provided, whether on a Payment Date, at the Stated Maturity or by
prepayment, repayment, redemption or declaration of acceleration or otherwise.
"Mortgage" means the first preferred ship mortgage on the Vessel, Contract
No. MA-13506, between the Shipowner and the Secretary, as originally executed or
as modified, amended or supplemented in accordance with the applicable
provisions thereof.
"Note" shall mean a Floating Rate Note or a Fixed Rate Note.
"Obligation" or "Obligations" shall mean the Floating Rate Note or Fixed
Rate Note(s) of the Shipowner bearing a Guarantee and authenticated and
delivered pursuant to the Indenture and the Authorization Agreement.
"Other Taxes" shall have the meaning set forth in Section 6.02(a) of the
Credit Agreement.
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"Outstanding Principal" shall have the meaning set forth in Section 2.01
of the Credit Agreement.
"Payment Date" shall mean February 15 and August 15 of each year,
beginning on August 15, 2001.
"Payment Default" has the meaning specified in Section 6.01(a) of
Exhibit 1 to the Indenture.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Post Maturity Applicable Interest Rate" shall have the meaning set forth
in Section 4.02(b) of the Credit Agreement.
"Post Maturity Interest Rate" shall have the meaning set forth in Section
4.02(b) of the Credit Agreement.
"Post Maturity Period" shall have the meaning set forth in Section 4.02(b)
of the Credit Agreement.
"Primary Lender" shall have the meaning set forth in the preamble to
the Credit Agreement.
"Quotation Date" shall have the meaning set forth in Section 4.02(b) of
the Credit Agreement.
"Redemption" means with respect to the redemption of the Floating Rate
Note, the repayment or prepayment of the Floating Rate Note as applicable.
"Redemption Date" means, with respect to the Floating Rate Note, a date
fixed for the prepayment, repayment or redemption of such Note by or pursuant to
Section 4 of the Credit Agreement, Article Fourth of the Indenture, or Article
III of Exhibit 1 to the Indenture.
"Redemption Price" means, with respect to the Floating Rate Note, the
price at which the Floating Rate Note is to be prepaid, repaid, or redeemed
pursuant to Section 4 of the Credit Agreement, Article Fourth of the Indenture,
or Article III of Exhibit 1 to the Indenture.
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<PAGE>
"Secretary" means the Secretary of Transportation or any official or
official body from time to time duly authorized to perform the duties and
functions of the Secretary of Transportation under Title XI of the Act
(including the Maritime Administrator, the Acting Maritime Administrator, and to
the extent so authorized, the Deputy Maritime Administrator and other officials
of the Maritime Administration).
"Secretary's Note" means a promissory note or promissory notes issued and
delivered by the Shipowner to the Secretary described in Article Third of the
Special Provisions of the Security Agreement and shall also mean any promissory
note issued in substitution for and replacement thereof pursuant to the Security
Agreement.
"Security Agreement" shall mean that certain security agreement, Contract
No. MA-13505 dated as of the Closing Date, with respect to the Vessel, executed
by the Shipowner and the Secretary relating to the security in respect to the
Guarantees, as originally executed or as modified, amended or supplemented in
accordance with the applicable provisions thereof.
"Shipowner" means PETRODRILL FIVE LIMITED, a British Virgin Islands
international business company, and for purposes of the Indenture and the
Floating Rate Note, subject to the provisions of Sections 6.09, 8.01 and 8.02 of
Exhibit 1 to the Indenture, shall also include its successors and assigns;
provided, however, that for purposes of the Credit Agreement, the term Shipowner
shall also include the Shipowner's permitted successors and assigns under the
Credit Agreement.
"Shipowner's Documents" means the Security Agreement, the Mortgage, the
Title XI Reserve Fund and Financial Agreement, the Depository Agreement, and
the Secretary's Note.
"Shipowner Financial Statements" shall have the meaning set forth in
Section 8.01(h) of the Credit Agreement.
"Shipyard" or "Shipbuilder" means TDI-Halter, Limited Partnership.
"Stated Maturity," when used with respect to the Floating Rate Note, means
the date determinable as set forth in such Note as the final date on which the
principal of such Note is due and payable, which shall include, without
limitation, each of the Payment Dates.
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"Taxes" shall have the meaning set forth in Section 6.02(a) of the
Credit Agreement.
"Title XI Reserve Fund and Financial Agreement" means that certain Title
XI Reserve Fund and Financial Agreement, Contract No. MA-13507, dated as of the
Closing Date, executed by the Shipowner and the Secretary, as amended, modified
or supplemented in accordance with the applicable provisions thereof.
"United States" means the United States of America.
"Unpaid Amount" shall have the meaning set forth in Section 4.02(b) of the
Credit Agreement.
"Vessel" means the Shipowner's dynamic positioned, semi-submersible
drilling rig to be named the AMETHYST 4, and constructed by TDI-Halter, Limited
Partnership in accordance with the Construction Contract, including all work and
material heretofore or hereafter performed upon or installed in or placed on
board such a Vessel, together with related appurtenances, additions,
improvements, and replacements.
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EXHIBIT 4.20
APPENDIX III TO GUARANTEE COMMITMENT DOCUMENT 11
CONTRACT NO. MA-13511
SECURITY AGREEMENT
SPECIAL PROVISIONS
THIS SECURITY AGREEMENT, dated April 9, 1999 (the "Security Agreement"),
is between PETRODRILL FIVE LIMITED, a British Virgin Islands international
business company (the "Shipowner") and THE UNITED STATES OF AMERICA (the "United
States"), represented by the Secretary of Transportation, acting by and through
the Maritime Administrator (the "Secretary"), pursuant to Title XI of the Act.
RECITALS:
A. The Shipowner has entered the Construction Contract with TDI-Halter,
Limited Partnership, the Shipyard for the Construction of the Vessel.
B. On the date hereof, the Secretary entered into, and the Shipowner
accepted a Commitment to Guarantee Obligations, Contract No. MA-13509, whereby
the United States has committed itself to guarantee the payment in full of all
the unpaid interest on, and the unpaid principal balance of, Obligations (as
defined herein) in the aggregate principal amount equal to 87-1/2% of the Actual
Cost of the Vessel on the Closing Date, which amount is set out in Table A.
C. The Shipowner has entered into the Credit Agreement providing for the
sale and delivery, on the Closing Date, of obligations in the aggregate
principal amount of $150,183,000 to be designated "United States Government
Guaranteed Export Ship Financing Obligations, AMETHYST 5 Series" (the
"Obligations") having the maturity date and interest rate set forth in the
Credit Agreement, the Indenture and the Obligations.
D. On the date hereof, the Shipowner and FMB Trust Company, National
Association, a national banking association, as Indenture Trustee, executed and
delivered the Trust Indenture (the "Indenture") pursuant to which the Shipowner
will issue the Obligations.
E. On the date hereof, the Secretary and the Indenture Trustee executed
the Authorization Agreement, Contract No. MA-13510, which authorizes the
Indenture Trustee to endorse, execute, and authenticate the Secretary's
Guarantee on each of the Obligations.
F. As security for the due and timely payment of the Secretary's Note,
issued this day by the Shipowner, and for the Secretary's issuance of the
Guarantees, the Shipowner has executed and delivered the Security Agreement,
Contract No. MA-13511, and the Financial Agreement, Contract No. MA-13513 on
the Delivery Date will execute the Mortgage, Contract No. MA-13512, granting the
Secretary a security interest in, among other things, the Construction Contract,
the Vessel and certain other property, tangible and intangible, which the
Shipowner now has or hereafter will acquire, and all of the proceeds thereof.
<PAGE>
G. As further security to the Secretary and in consideration of the
Secretary's agreeing to issue the Guarantees, the Shipyard has executed on this
date the Consent of Shipyard to the assignment of the Construction Contract to
the Secretary.
H. In order to implement certain aspects of the transactions contemplated
by the Security Agreement and the Financial Agreement, the Secretary, the
Shipowner and CITIBANK, N.A., a national banking association (the "Depository")
have entered into the Depository Agreement, Contract No. MA-13514, on the date
hereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and in order to provide security to
the Secretary for the Secretary's Note provided for herein, the parties hereto
hereby agree as follows:
1. CONCERNING THESE SPECIAL AND GENERAL PROVISIONS. This Security Agreement
shall consist of two parts: the Special Provisions and the General Provisions
attached hereto as Exhibit 1 of the Security Agreement and incorporated herein
by reference. In the event of any conflict, or inconsistency between the Special
Provisions of this Security Agreement and Exhibit 1, said Special Provisions
shall control.
2. The following additions, deletions and amendments are hereby made to the
Security Agreement:
(a) CONCERNING THE CREDIT AGREEMENT. The term "Bond Purchase Agreement"
refers to the Credit Agreement.
(b) GRANTING CLAUSE. Section 1.03(a) of Exhibit 1 hereto is amended to
read as follows:
SECTION 1.03. GRANTING CLAUSE. (a) In order to create a present
security interest in the Secretary, the Shipowner does hereby grant, sell,
convey, assign, transfer, mortgage, pledge, set over and confirm unto the
Secretary continuing security interests in all of the right, title and
interest of the Shipowner in and to all of the following, whether now
owned or existing or hereafter arising or acquired:
(1) Hull 1829 and all material, machinery, and equipment which
are purchased for or identified for use in the construction of said hull
pursuant to the Construction Contract, as amended, while under
construction, including all additional, extra, or changed items requested
by the Shipowner and agreed upon by the Shipyard pursuant to the
Construction Contract.
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(2) The Construction Contract (insofar as it relates to the
Construction of the Vessel), together with all other contracts, whether
now in existence or hereafter entered into, relating to the Construction
of the Vessel. Said right, title and interest in and to the Construction
Contract, and the other contracts conveyed to the Secretary by this
subsection are hereinafter referred to collectively as the "Rights Under
the Construction and Related Contracts."
(3 ) The Guaranty of Halter Group Marine Inc., in connection
with the Construction Contract.
(4) The Shipowner's rights to receive all moneys which from
time to time may become due to the Shipowner with respect to the
Construction of the Vessel regardless of the legal theory by which moneys
are recovered. Said right, title and interest in and to the moneys, cash,
bonds, claims, and securities conveyed by this subsection are herein
referred to collectively as the "Moneys Due with Respect to the
Construction of the Vessel." The Secretary acknowledges and agrees that
the Moneys Due with Respect to the Construction of the Vessel will be paid
directly to the Depository for application in accordance with this
Security Agreement and the Indenture.
(5) All goods, whether equipment or inventory appertaining to
or relating to the Vessel, including owner-furnished equipment, whether or
not on board or ashore and not covered by the Mortgage.
(6) The Chartering Contract between the Shipowner and Petroleo
Brasileiro S.A. ("Petrobras") and the charter hire due thereunder, and the
Shipowner's rights to receive all moneys which from time to time may
become due to the Shipowner with respect to any other charter or charter
hire relating to the Vessel or other earnings with respect to the
operation of the Vessel.
(7) The Title XI Reserve Fund and all moneys, instruments,
negotiable documents, chattel paper, and proceeds thereof currently on
deposit or hereafter deposited in the Title XI Reserve Fund.
(8) The Construction Fund and all moneys, instruments,
negotiable documents, chattel paper and proceeds, etc.
(9) All moneys, instruments, negotiable documents, chattel
paper and proceeds thereof held by the Depository under the Depository
Agreement.
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(10) Proceeds of Policies of Insurance relating to the Vessel
and, whether or not insured, any general average claims or loss of hire
claims the Shipowner may have with respect to the Vessel.
(11) The Licensing Agreement between the Shipowner and Bigem
Holdings N.V. relating to certain design data.
(12) The Management Agreement between the Shipowner and
Formaritima Ltd. relating to the management of the operation and
maintenance of the Vessel.
(13) The Marine and Nautical Services Agreement between the
Shipowner and Workships Contractors B.V. relating to the day to day marine
and nautical operation and maintenance of the Vessel.
(14) The Construction Management Agreement between the
Shipowner and Petrodrill Engineering N.V. relating to construction
supervision, managing, accounting and budgeting, facilities and related
services in connection with the Vessel.
(15) All proceeds of the collateral described in paragraphs
(1) through (14) of this Section.
The Secretary shall have, upon execution and delivery thereof, as
further security, certain right, title and interest in and to the
following:
(16) The Mortgage, in form and substance satisfactory to the
Secretary to be executed and delivered by the Shipowner to the Secretary,
as mortgagee, on the Delivery Date, covering the Vessel.
(c) CONCERNING SECTION 2.02
For purposes of Section 2.02(b), the Secretary consents to
Chartering Contract 101.2.100.97-8 dated December 5, 1997 between
the Shipowner and Petroleo Brasileiro SA ("Petrobras").
(d) CONCERNING SECTION 2.05
(1) In connection with Section 2.05(a), declared war risk insurance
is not required prior to the Delivery Date of the Vessel.
(2) In connection with Section 2.05(b)(3) and the last paragraph of
Section 2.05(e), the maximum amount of self-insurance permitted to
the Shipowner under the last paragraph thereof shall be $100,000 per
occurrence, PROVIDED, HOWEVER, that the maximum amount of
self-insurance permitted to the Shipowner will be $150,000 per
occurrence or series of occurrences arising out of one event in
respect to a named wind storm, and $250,000 for operational risks
arising from any one occurrence.
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(3) In connection with clause (ii) of the initial paragraph of
Section 2.05(c), the Secretary shall permit payment of losses up to
the amount of $500,000 to be made directly to the Shipowner under
the circumstances specified therein.
(4) In connection with Section 2.05(l), as evidence of insurance
maintained under Section 2.05, the Shipowner may submit a fleet
cover note or comparable certificate of insurance setting forth the
terms of the policy.
(e) CONCERNING SECTION 2.08.
(1) The notice referred to in paragraph of Section 2.08 shall read
as follows:
"NOTICE OF SHIP MORTGAGE
This Vessel is owned by PETRODRILL FIVE LIMITED, a British
Virgin Islands international business company ("Shipowner"), and is
covered by a First Preferred Ship Mortgage in favor of the United
States of America, under authority of Merchant Shipping Act of The
Commonwealth of the Bahamas. Under the terms of said Mortgage
neither the Shipowner, any charterer, the master or agent of this
Vessel nor any other person has any right, power or authority to
create, incur or permit to be placed or imposed upon this Vessel any
lien whatsoever."
(2) The first sentence of Section 2.08 of Exhibit 1 hereto is
amended by inserting immediately after the words "Vessel's
documents" and immediately before the word "and", the following:
; PROVIDED THAT, if at any time, it is provided by law that a
Vessel's documents may be carried or kept at any place other
than aboard the Vessel, then the certified copy of the
Mortgage, any supplement to the Mortgage and any assignment of
the Mortgage shall be carried or kept with the Vessel's
documents,
(f) CONCERNING DISBURSEMENTS FROM THE CREDIT FACILITY. Within a
reasonable time after receipt of a Certificate Authorizing Disbursements (the
"Certificate") in the form of Annex A to the Credit Agreement together with the
submissions required by Section 5.03(a)(1),
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<PAGE>
the Secretary shall approve the Certificate provided that the Secretary has
received and is satisfied with the accuracy and completeness of the information
contained in the certificate and the information contained in the submissions
required by Section 5.03(a)(1) and provided that the Secretary concludes that
the provisions of section 5.03(a)(2) are also satisfied. Upon receipt of the
Secretary's written approval of the Certificate, the Shipowner may draw down
on the Credit Facility the amount permitted in the Certificate as approved by
the Secretary, in the manner permitted by the Credit Agreement.
(g) CONCERNING SECTION 6.01. Section 6.01 of Exhibit 1 hereto is hereby
amended by adding the following events, which shall constitute a "Security
Default":
Failure of the Shipowner to convert the Floating Rate Note to
Fixed Rate Note(s) on the earlier of (i) September 15, 2002, or (ii)
two (2) years after the Delivery Date.
Any event constituting a default under any security agreement
or mortgage as amended, relating to the vessel owned by PETRODRILL
FOUR LIMITED and financed under Title XI of the Merchant Marine Act,
1936, as amended.
Failure to maintain at its registered office a register of
mortgages, charges or other encumbrances, or failure to enter
thereon the particulars of the security interests granted by the
Security Agreement and the Financial Agreement, or failure to file a
copy of the Security Agreement or the Financial Agreement at the
Companies Registry of the British Virgin Islands.
(h) CONCERNING SECTION 9.01. Subject to Section 9.01 of the Security
Agreement, any notice, request, demand, direction, consent, waiver, approval or
other communication, when given to a party hereto, shall be addressed to:
Secretary as: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
U.S. Department of Transportation
400 Seventh Street, S.W.
Washington, D.C. 20590
Shipowner as: PETRODRILL FIVE LIMITED
c/o Arias, Fabrega & Fabrega
P.O. Box 985
Omar Hodge Building
Wickham's Cay
Road Town, Tortola
British Virgin Islands
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<PAGE>
With a copy to: PETRODRILL ENGINEERING NV
K.P. van der Mandelelaan 38
3062 MB
Rotterdam (Brainpark)
The Netherlands
Indenture Trustee as: FMB TRUST COMPANY,
NATIONAL ASSOCIATION
25 South Charles St.
16th Floor
(Mail Code 101-591)
Baltimore, MD 21201
(i) GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereto shall be construed, enforced and governed by the laws of the
United States of America, but to the extent they are inapplicable, then by the
laws of the State of New York, including without limitation, the Uniform
Commercial Code of the State of New York ("UCC"), but without regard to any
conflict of laws provisions of the State of New York; provided, however, that to
the extent required by the UCC, the laws of the British Virgin Islands shall
govern the perfection of accounts and general intangibles hereunder.
(j) JURISDICTION AND CONSENT TO SUIT. Any proceeding to enforce this
Agreement may be brought in the Federal courts of the United States of America
located in the State of New York of the United States of America. The Shipowner
and the Secretary hereby irrevocably waive any present or future objection to
such venue, and for each of itself and in respect of any of their respective
properties hereby irrevocably consents and submits unconditionally to the
non-exclusive jurisdiction of those courts. The Shipowner further irrevocably
waives any claim that any such court is not a convenient forum for any such
proceeding. The Shipowner agrees that any service of process, writ, judgment or
other notice of legal process shall be deemed and held in every respect to be
effectively served upon it in connection with proceedings in the State of New
York if delivered to Sher & Blackwell, 1850 M Street, N.W., Suite 900,
Washington, D.C. 20036, which it irrevocably designates and appoints as its
authorized agent for the service of process in the State and Federal courts in
the State of New York. Nothing herein shall affect the right of the Secretary to
serve process in any other manner permitted by applicable law. The Shipowner
further agrees that final judgment against it in any such action or proceeding
arising out of or relating to this Agreement shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States of
America by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of that fact and of the judgment.
(k) CONCERNING DISCLOSURE SHIPYARD PLANS. The Secretary shall not disclose
or release the Shipowner's or the Shipyard's plans (including designs, drawings,
construction drawings, and data) to any third party unless ordered to do so by a
state or federal court or unless the Secretary releases the plans to a
subsequent purchaser of the Vessel after Default by the Shipowner. In the event
an action is brought by a third party under the Freedom of Information Act or
under some other statute to obtain the disclosure of the Shipyard's plans, the
Secretary shall notify the Shipowner within ten (10) Business Days.
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(l) ENGAGEMENT LETTER. The Shipowner will not enter into a placement
letter or engagement letter for the fixed rate financing without the prior
written consent of the Secretary.
(m) INCONSISTENCIES. Notwithstanding any provision herein, in the event
there are any inconsistencies between the original of this document held by the
Secretary, and an original held by any other party to this transaction, the
provisions of the original held by the Secretary shall prevail.
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IN WITNESS WHEREOF, this Security Agreement has been executed by the
parties as of the day and year first written.
PETRODRILL FIVE LIMITED
SHIPOWNER
Attest: BY: /s/ EARL W. MCNIEL
-----------------------------
Treasurer
/s/ ROBERT W. RANDALL
-----------------------------
Secretary
UNITED STATES OF AMERICA
(SEAL) SECRETARY OF TRANSPORTATION
MARITIME ADMINISTRATOR
Attest:
BY: /s/ JOEL C. RICHARD
-----------------------------
Secretary
/s/ LARRY MAIN
-----------------------------
Assistant Secretary
Maritime Administration
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TABLE A
The Actual Cost of the Vessel as of the date hereof as determined by the
Secretary is $171,638,175.
The itemization of said Actual Cost is as follows:
Shipyard Contract Price $84,000,000
Owner Furnished Items 22,700,000
Design 1,669,000
Project Management Team 5,000,000
Spare Parts & Manual 3,500,000
Commissioning 2,000,000
Maritima Reimbursement 800,000
Insurance 200,000
Contingencies 11,976,000
Owner Furnished Foreign Items 24,500,000
----------
Total Construction Cost $156,345,000
Net Interest during Construction 9,432,000
Guarantee Fee 5,861,175
---------
Estimated Total Actual Cost $171,638,175
<PAGE>
EXHIBIT 1 TO SECURITY AGREEMENT DOCUMENT 12
GENERAL PROVISIONS
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; OFFICER'S CERTIFICATES; GRANTING CLAUSE
PAGE
SECTION 1.01. Definitions...............................................1
SECTION 1.02. Officer's Certificates....................................1
SECTION 1.03. Granting Clause...........................................1
ARTICLE II
SHIPOWNER'S REPRESENTATIONS AND AGREEMENTS
SECTION 2.01. Shipowner's Representations, Agreements, Organization and
Existence
(a) General Representations...............................2
(b) Taxes.................................................3
SECTION 2.02. (a) Title to and Possession of the Vessel.................3
(b) Sale, Mortgage, Transfer or Charter of the Vessel.....4
(c) Taxes and Governmental Charges........................4
(d) Liens.................................................4
(e) Requisitions by the United States.....................4
(f) Compliance with Applicable Laws.......................5
(g) Operation of the Vessel...............................5
(h) Condition and Maintenance of the Vessel...............5
(i) Material Changes in the Vessel........................6
(j) Documentation of the Vessel...........................6
SECTION 2.03. Maintenance of Construction Contract......................6
SECTION 2.04. Delivery Requirements.....................................7
SECTION 2.05. Insurance.................................................7
SECTION 2.06. Inspection of the Vessel; Examination of Shipowner's
Records..................................................13
SECTION 2.07. Requisition of Title, Termination of Construction Contract
or Total Loss of the Vessel..............................13
SECTION 2.08. Notice of Mortgage.......................................14
SECTION 2.09. Compliance with Mortgage Laws............................15
SECTION 2.10. Performance of Shipowner's Agreements by the Secretary...15
SECTION 2.11. Perfection of Security Interests; Further Assurances.....15
SECTION 2.12. Modification of Formation Agreements.....................15
SECTION 2.13. Members of Limited Liability Companies...................16
SECTION 2.14. Concerning the Performance and Payment Bonds.............16
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ARTICLE III
THE SECRETARY'S NOTE
SECTION 3.01. Secretary's Note............................................16
SECTION 3.02. Termination of the Guarantees...............................16
SECTION 3.03. Execution of Additional Secretary's Note....................17
ARTICLE IV
CONSTRUCTION FUND; MONEYS DUE WITH RESPECT TO
CONSTRUCTION OF THE VESSEL
SECTION 4.01. Construction Fund...........................................18
SECTION 4.02. Moneys Due with Respect to Construction of the Vessel.......18
ARTICLE V
ACTUAL COST; THE ESCROW FUND
SECTION 5.01. Actual Cost Determination...................................18
SECTION 5.02. Escrow Fund Deposits........................................19
SECTION 5.03. Escrow Fund Withdrawals.....................................19
SECTION 5.04. Investment and Liquidation of the Escrow Fund...............21
SECTION 5.05. Income on the Escrow Fund...................................21
SECTION 5.06. Termination Date of the Escrow Fund.........................22
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. What Constitutes "Defaults"; Continuance of Defaults........22
SECTION 6.02. Acceleration of Maturity of the Secretary's Note............23
SECTION 6.03. Waivers of Default..........................................24
SECTION 6.04. Remedies After Default......................................25
SECTION 6.05. Application of Proceeds.....................................26
SECTION 6.06. General Powers of the Secretary.............................27
ARTICLE VII
AMENDMENTS AND SUPPLEMENTS TO THE
SECURITY AGREEMENT, MORTGAGE AND INDENTURE
SECTION 7.01. Amendments and Supplements to the Security Agreement
and the Mortgage............................................28
SECTION 7.02. Amendments and Supplements to the Indenture.................28
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ARTICLE VIII
CONSOLIDATION, MERGER OR SALE
SECTION 8.01. Consolidation, Merger, or Sale..............................29
SECTION 8.02. Transfer of a General Partner's or a Joint Venturer's
Interest....................................................29
ARTICLE IX
NOTICES
SECTION 9.01. Notices and Communications..................................30
SECTION 9.02. Waivers of Notice...........................................30
SECTION 9.03. Shipowner's Name or Address Change.........................30
ARTICLE X
DISCHARGE OF SECURITY AGREEMENT AND THE MORTGAGE
SECTION 10.01. Discharge of Security Agreement and the Mortgage............30
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Successors and Assigns......................................31
SECTION 11.02. Execution in Counterparts...................................31
SECTION 11.03. Shipowner's Rights in Absence of Default....................31
SECTION 11.04. Surrender of Vessel's Documents.............................31
SECTION 11.05. Table of Contents, Titles and Headings......................31
SECTION 11.06. Payments in U.S. Currency...................................31
SECTION 11.07. Immunity....................................................32
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ARTICLE I
DEFINITIONS; OFFICER'S CERTIFICATES; GRANTING CLAUSE
SECTION 1.01. DEFINITIONS. All capitalized terms used, but not defined
herein, shall have the meaning ascribed in Schedule X.
SECTION 1.02. OFFICER'S CERTIFICATES. To satisfy a covenant or condition
provided for in this Security Agreement, the Responsible Officer of the Person
making such Officer's Certificate shall certify that the officer (a) has read
such covenant or condition; (b) has made or caused to be made such examination
or investigation as is necessary to enable the Officer to express an informed
opinion with respect to such covenant or condition; and (c) believes to the best
of the Officer's knowledge that such condition or covenant has been met. An
Officer's Certificate shall set forth the pertinent supporting information and
shall be subject to the Secretary's review of its adequacy and accuracy.
SECTION 1.03. GRANTING CLAUSE. (a) In order to create a present security
interest in the Secretary, the Shipowner does hereby grant, sell, convey,
assign, transfer, mortgage, pledge, set over and confirm unto the Secretary
continuing security interests in all of the right, title and interest of the
Shipowner in and to all of the following, whether now owned or existing or
hereafter arising or acquired:
(1) The Construction Contract (insofar as it relates to the
Construction of the Vessel under its related Construction Contract), together
with all other contracts, whether now in existence or hereafter entered into,
relating to the Construction of the Vessel. Said right, title and interest in
and to the Construction Contract, and the other contracts conveyed to the
Secretary by this subsection are hereinafter referred to collectively as the
"Rights Under the Construction and Related Contracts."
(2) The Shipowner's rights to receive all moneys which from time to
time may become due to the Shipowner with respect to the Construction of the
Vessel regardless of the legal theory by which moneys are recovered. Said right,
title and interest in and to the moneys, cash, bonds, claims, and securities
conveyed by this subsection are herein referred to collectively as the "Moneys
Due with Respect to the Construction of the Vessel." The Secretary acknowledges
and agrees that the Moneys Due with Respect to the Construction of the Vessel
will be paid directly to the Depository for application in accordance with this
Security Agreement and the Indenture.
(3) All goods, whether equipment or inventory appertaining to or
relating to each Vessel, whether or not on board or ashore and not covered by
the Mortgage, and any charter hire relating to each Vessel.
(4) The Title XI Reserve Fund and all moneys, instruments,
negotiable documents, chattel paper, and proceeds thereof currently on deposit
or hereafter deposited in the Title XI Reserve Fund.
<PAGE>
(5) The Construction Fund and all moneys, instruments, negotiable
documents, chattel paper and proceeds, etc.
(6) All moneys, instruments, negotiable documents, chattel paper and
proceeds thereof held by the Depository under the Depository Agreement.
(7) Proceeds of Policies of Insurance relating to the Vessel and,
whether or not insured, any general average claims or loss of hire claims the
Shipowner may have with respect to the Vessel.
(8) All proceeds of the collateral described in paragraphs (1)
through (7) of this Section.
The Secretary shall have, upon execution and delivery thereof, as further
security, certain right, title and interest in and to the following:
(9) The Mortgage, to be executed and delivered by the Shipowner to
the Secretary, as mortgagee, on the date hereof, covering the Vessel.
(b) The right, title and interest of the Secretary pursuant to Section
1.03(a) is herein, collectively, called the "Security." The Secretary shall hold
the Security as collateral security for all of the obligations and liabilities
of the Shipowner under the Secretary's Note and as collateral security for and
with respect to the Guarantees whether now made or hereafter entered into.
(c) Notwithstanding paragraphs (a) and (b) of this Section: (1) the
Shipowner shall remain liable to perform its obligations under the Construction
Contract and the above-mentioned other contracts; (2) the Secretary shall not,
by virtue of this Security Agreement, have any obligations under any of the
documents referred to in clause (1) or be required to make any payment owing by
the Shipowner thereunder; and (3) if there is no existing Default, the Shipowner
shall (subject to the rights of the Secretary hereunder) be entitled to exercise
all of its rights under each of the documents referred to in this Section and
shall be entitled to receive all of the benefits accruing to it thereunder as if
paragraphs (a) and (b) of this Section were not applicable.
(d) The Shipowner hereby agrees with the Secretary that the Security is to
be held by the Secretary subject to the further agreements and conditions set
forth herein.
ARTICLE II
SHIPOWNER'S REPRESENTATIONS AND AGREEMENTS
The Shipowner hereby represents and agrees, so long as this Security
Agreement shall not have been discharged, as follows:
SECTION 2.01. SHIPOWNER'S REPRESENTATIONS, AGREEMENTS, ORGANIZATION
AND EXISTENCE. (a)
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<PAGE>
GENERAL REPRESENTATIONS. The Shipowner hereby represents and warrants that the
following are true statements as of the date hereof and further warrants that
they shall remain true hereafter:
(1) The Shipowner is duly organized, validly existing and in good
standing under the laws of the jurisdiction designated in the initial paragraph
of the Special Provisions hereof and shall maintain such existence. The
Shipowner has not failed to qualify to do business in any jurisdiction in which
its business or properties require such qualification, and had and has full
legal right, power and authority to own its own properties and assets and
conduct its business as it is presently conducted;
(2) the Shipowner had and has legal power and authority to enter
into and carry out the terms of the Guarantee Commitment, the Construction
Contract, Bond Purchase Agreement, Obligations, Indenture, Security Agreement,
Secretary's Note, Mortgage, Financial Agreement, and Depository Agreement (the
"Documents");
(3) each of the Documents has been duly authorized, executed and
delivered by the Shipowner and constitutes, in accordance with its respective
terms, legal, valid and binding instruments enforceable against the Shipowner,
except to the extent limited by applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws of general application relating to or
affecting the enforcement of creditors rights as from time to time in effect;
(4) the consummation of the transactions contemplated by and
compliance by the Shipowner of all the terms and provisions of the Documents
will not violate any provisions of the formation documents of the Shipowner and
will not result in a breach of the terms and provisions of, or constitute a
default under any other agreement or undertaking by the Shipowner or by which
the Shipowner is bound or any order of any court or administrative agency
entered into in any proceedings to which the Shipowner is or has been a party;
and
(5) there is no litigation, proceeding or investigation pending or,
to the best of the Shipowner's knowledge, threatened, involving the Shipowner or
any of its property which could prevent or jeopardize the performance by the
Shipowner of its obligations under the Documents;
(b) TAXES. The Shipowner has paid or caused to be paid all taxes assessed
against it, unless the same are being contested in good faith or an authorized
extension of time has been granted.
SECTION 2.02. (a) TITLE TO AND POSSESSION OF THE VESSEL. On the date of
this Security Agreement, the Shipowner represents and warrants that it lawfully
owns the Vessel free from any liens, encumbrances, security interests, charges,
or rights IN REM (subject only to (1) the equity of the Shipyard under the
Construction Contract, if any, (2) liens on any undelivered Vessel which the
Shipyard is obligated to discharge under the Construction Contract, (3) any
security interest subordinated to the Secretary's security interest permitted
under the Special Provisions hereof, (4) the Secretary's rights hereunder and
(5) the liens permitted by paragraph (d)(3) of this Section. The
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Shipowner shall, for the Secretary's benefit, warrant and defend the title to,
and possession of, the Vessel and every part thereof against the claims and
demands of all Persons whomsoever.
(b) SALE, MORTGAGE, TRANSFER OR CHARTER OF THE VESSEL. (1) The Shipowner
shall not, without the Secretary's prior written consent, sell, mortgage, demise
charter or transfer the Vessel to any Person (or charter the Vessel to a Related
Party under any form of charter).
(2) The Shipowner hereby covenants that: (A) it will not enter into
any time charter of the Vessel in excess of six months unless the time charter
contains the following provision, "This time charter is subject to each of the
rights and remedies of the Secretary of Transportation and has been assigned to
the Secretary under a Security Agreement and Mortgage, each executed by the
Shipowner in favor of the Secretary with respect to the Vessel being chartered."
and (B) it shall, within 10 calendar days of entering into any time charter in
excess of six months, transmit a copy of the time charter to the Secretary.
(3) In no event may the Shipowner transfer the Vessel to any country
designated by the Secretary of Defense as a country whose interests are hostile
to the interests of the United States.
(c) TAXES AND GOVERNMENTAL CHARGES. The Shipowner shall pay and discharge,
or cause to be paid and discharged, on or before the same shall become
delinquent, all taxes, assessments, government charges, fines and penalties
lawfully imposed upon the Vessel, unless the same are being contested in good
faith.
(d) LIENS. (1) As a condition precedent to each payment by the Shipowner
under the Construction Contract, the Shipowner shall require an Officer's
Certificate from the Shipyard stating that once the Shipyard receives said
payment, there will be no liens or rights IN REM against the respective Vessel.
At the Delivery Date of each Vessel, the Shipowner and the Shipyard shall
provide an Officer's Certificate stating that there are no liens or rights IN
REM against the Vessel except for the Mortgage.
(2) After the Delivery Date of the Vessel, the Shipowner shall
satisfy, or cause to be satisfied, within 30 days of its knowledge thereof, any
lien or encumbrance or right IN REM which shall be filed against the Vessel
unless the same is being contested in good faith; and
(3) Neither the Shipowner, any charterer, the master of the Vessel,
nor any other Person has or shall have any right, power or authority, without
the Secretary's prior written consent, to create, incur or permit to be placed
or imposed on the Vessel any lien, encumbrance, security interest, charge, or
rights IN REM, and statutory liens incident to current operations unless such
statutory liens are subordinate to the Mortgage.
(e) REQUISITIONS BY THE UNITED STATES. Should the United States of
America, or any agency or instrumentality thereof, take or
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requisition title or use of the Vessel, or seek to take or requisition title or
use of the Vessel, the Shipowner agrees to comply promptly with said request,
taking, or requisition, without the interposition of any defense whatsoever,
saving only (i) its right to dispute at a subsequent time, the amount of
compensation to be paid by the United States or (ii) the prior taking or
requisition of title or use by another governmental body. The parties agree to
be bound by the rights, duties, procedures, and remedies specified in Section
902 of the Act (46 App. U.S.C. 1242).
(f) COMPLIANCE WITH APPLICABLE LAWS. The Shipowner shall at all times be
in compliance with all applicable laws. Each Vessel (1) shall be designed to
meet, and on the Delivery Date thereof and at all times thereafter shall be
documented in a country which is party to the International Convention for
Safety of Life at Sea, or other treaty, convention or international agreement
governing vessel inspection to which the United States is a signatory and shall
comply with all requirements of applicable laws, rules, and regulations of its
country of documentation, all applicable treaties, conventions, international
agreements to which that country is a signatory and the laws, rules and
regulations of the ports it serves; and (2) shall have on board valid
certificates showing compliance therewith. The foregoing shall not apply if: (A)
the Vessel is in Government Use; (B) there has been an actual or constructive
total loss or an agreed or compromised total loss of the Vessel; or (C) there
has been any other loss with respect to the Vessel and the Shipowner shall not
have had a reasonable time to repair the same.
(g) OPERATION OF THE VESSEL. Except when the Vessel has been in Government
Use, the Shipowner shall not (1) cause or permit the Vessel to be operated in
any manner contrary to applicable law, rule, or regulation of its country of
documentation, all applicable treaties, conventions, or international agreements
to which that country is a signatory and the laws, rules, and regulations of the
ports it serves, (2) abandon the Vessel in any port unless there has been an
actual or constructive total loss or an agreed or compromised total loss of the
Vessel.
(h) CONDITION AND MAINTENANCE OF THE VESSEL. (1) The Vessel shall be
constructed, maintained and operated so as to meet, at all times, the highest
classification, certification, rating and inspection standards for vessels of
the same age and type as may be imposed by the Classification Society. The
foregoing shall not apply (i) if the Vessel has been under Government Use, (ii)
in the event of an actual or constructive total loss or an agreed or compromised
total loss of the Vessel, or (iii) there has been any other loss with respect to
the Vessel and the Shipowner shall not have had a reasonable time to repair the
same.
(2) On the Delivery Date of the Vessel, the Shipowner shall furnish to the
Secretary an Interim Class Certificate issued for the Vessel by the
Classification Society and promptly after the Delivery Date of the Vessel,
furnish to the Secretary a Certificate of Class with respect to the Vessel
issued by the Classification Society. Subsequently, the Shipowner shall annually
(A) furnish to the Secretary a Certificate of Confirmation of Class issued by
the Classification Society showing that the above-mentioned classification and
rating have been retained for each Vessel and (B) furnish to the Secretary
copies of all Classification Society reports, including periodic and damage
surveys for the Vessel; provided that, the foregoing shall not apply if the
Vessel is in Government Use and the
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governmental body does not permit classification and rating of the Vessel.
(3) Notwithstanding Section 2.02(h)(2), if the Vessel is a barge which is
not classed, then the Shipowner shall, at all times, at its own cost and expense
maintain and preserve the Vessel, so far as may be practicable, in at least as
good order and condition, ordinary wear and tear excepted, as at the Delivery
Date of the Vessel, and shall perform or cause to be performed at least once
every five years and at any other time reasonably required by the Secretary, a
survey and inspection of the Vessel by an independent marine surveyor approved
by the Secretary; and PROVIDED THAT, no such surveys will be required within the
last three years prior to the final Stated Maturity of the Obligations. The
Shipowner shall furnish two copies of the report of such independent marine
surveyor to the Secretary within 15 days of such survey and inspection. The
Shipowner shall deliver to the Secretary annually an Officer's Certificate
stating the condition and maintenance of the Vessel; PROVIDED FURTHER, that none
of this Section shall apply when the Vessel is in Government Use.
(i) MATERIAL CHANGES IN THE VESSEL. After the Delivery Date of the Vessel,
the Shipowner shall not make, or permit to be made, any material change in the
structure, means of propulsion, type or speed of such Vessel or in its rig,
unless it shall have received the Secretary's prior written consent thereto.
(j) DOCUMENTATION OF THE VESSEL. Upon the Delivery Date and thereafter,
the Vessel shall be and shall remain documented under the laws of the country
specified in the Special Provisions.
SECTION 2.03. MAINTENANCE OF CONSTRUCTION CONTRACT. (a) The Construction
Contract shall be maintained in full force and effect insofar as it relates to
the due performance by the Shipowner and the Shipyard of all their respective
obligations thereunder and the Shipowner shall not, without the Secretary's
prior written consent, amend, modify, assign or terminate the Construction
Contract or consent to any change in the Construction Contract which releases
the Shipyard from its obligations to comply with the provisions of the
Construction Contract or any applicable laws, treaties, conventions, rules and
regulations; PROVIDED THAT, the Secretary's prior written consent shall not be
necessary, but prompt written notice to the Secretary shall be given for (1) any
mandatory or regulatory change to the Construction Contract as a result of any
requirements of any governmental agency, or (2) any non-mandatory changes that
the Shipyard and the Shipowner desire to make which do not, in the aggregate,
exceed five (5%) percent of the total Construction Contract price of the Vessel,
and which do not cause the total Construction Contract price to be increased by
an individual change by more than one (1%) percent or the delivery and
completion date of the Vessel to be extended by more than ten (10) days.
Notwithstanding the foregoing, no change shall be made in the general dimensions
and/or characteristics of the Vessel which changes the capacity of the Vessel to
perform as originally intended by the Construction Contract without the
Secretary's prior written consent. The Secretary will nonetheless retain its
authority to review work done under a change order to ascertain whether the work
should be included in Actual Cost and whether the price charged is fair and
reasonable. No withdrawals may be made from the Escrow Fund for work that is
determined not to be includable in Actual Cost.
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(b) Notwithstanding anything to the contrary contained in the Construction
Contract or herein, no changes to the payment milestones and disbursement
schedules shall be made without the Secretary's prior written consent, except to
the extent reasonably required to reflect the change orders under paragraph (a)
of this Section.
SECTION 2.04. DELIVERY REQUIREMENTS. At or prior to the Delivery
Date, the Shipowner shall have:
(a) documented the Vessel under the laws of the country specified in the
Special Provisions.
(b) executed and delivered to the Secretary the Mortgage (or, if
appropriate, a mortgage supplement) in the form of Exhibit 3 hereof;
(c) recorded the Mortgage (or, if appropriate, a mortgage supplement) in
the appropriate foreign registry, specified in the Special Provisions;
(d) delivered to the Secretary an Officer's Certificate (1) from the
Shipowner and the Shipyard certifying that the Vessel is free of any claim,
lien, charge, mortgage, or other encumbrance of any character except as
permitted under Section 2.02(d); (2) certifying that there has not occurred and
is not then continuing any event which constitutes (or after any period of time
or any notice, or both, would constitute) a default under the Security
Agreement; (3) that the marine insurance as required under Section 2.05 will be
in full force and effect at the time of Vessel delivery; (4) certifying that the
Vessel was constructed substantially in accordance with the plans and
specifications of the Construction Contract; (5) certifying that there have been
no unusual occurrences (or a full description of such occurrences, if any) which
would adversely affect the condition of the delivered Vessel.
(e) delivered to the Secretary (1) an opinion of counsel substantially in
the form of Exhibit A to the form of Mortgage; and (2) a certificate of delivery
and acceptance from the Shipowner and the Shipyard to the Secretary with respect
to the delivered Vessel;
SECTION 2.05. INSURANCE. (a) Prior to the Delivery Date of the Vessel, the
Shipowner shall, without cost to the Secretary or, with respect to war risk
builder's risk insurance mentioned below, without cost to the Shipyard, cause
the Vessel to be insured as provided in the Construction Contract and as
contemplated by the Consent of Shipyard; PROVIDED THAT, the insurance required
by this Section shall be approved by the Secretary.
(b) Upon the Delivery Date of each Vessel and at all times thereafter, the
Shipowner shall, without cost to the Secretary, keep the Vessel insured as
indicated below and with such additional insurance as may be specified by the
Secretary in an amount in U.S. dollars equal to 110% of the unpaid principal
amount of the Secretary's Note, or such greater sum, up to and including the
full commercial value of the Vessel as may be required by the Secretary. The
Shipowner shall
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provide 30 days prior written notice to the Secretary of all insurance renewals.
(1) Marine and war risk hull insurance under the latest (at the time
of issue of the policies in question) forms of American Institute of Marine
Underwriters' policies approved by the Secretary and/or policies issued by or
for the Maritime Administration (or under such other forms of policies as the
Secretary may approve in writing) insuring the Vessel against the usual risks
covered by such forms (including, at the Shipowner's option, such amounts of
increased value and other forms of "total loss only" insurance as are permitted
by said hull insurance policies); and
(2) While the Vessel is laid up, at the Shipowner's option and in
lieu of the above-mentioned marine and war risk hull insurance or marine and war
risk hull and increased value insurance, port risk insurance under the latest
(at the time of issue of the policies in question) forms of American Institute
of Marine Underwriters' policies approved by the Secretary and/or policies
issued by or for the Maritime Administration (or under such other forms of
policies as the Secretary may approve in writing) insuring the Vessel against
the usual risks covered by such forms.
(3) Notwithstanding the foregoing, the Shipowner, with the
Secretary's prior written consent, shall have the right to self-insure up to the
amount specified in the Special Provisions hereof for any loss resulting from
any one accident or occurrence (other than an actual or constructive total loss
of the Vessel).
(c) All policies of insurance under this Section shall provide, so long as
this Security Agreement has not been discharged, that payment of all losses
shall be made payable to the Secretary for distribution by him to himself, the
Shipowner and (in the case of the insurance required by paragraph (a) of this
Section) the Shipyard, except that (i) under the policies required by paragraph
(b) of this Section and (ii) as provided in paragraph (e) of this Section,
payment of all losses up to the amount specified in the Special Provisions
hereof by all insurance underwriters with respect to any one accident,
occurrence or event may be made directly to the Shipowner unless there is an
existing Default, or if the Secretary shall have assumed the Shipowner's rights
and duties under the Indenture and the Obligations and made any payments in
default under the terms of Section 6.09 of the Indenture, in which event payment
of all losses shall be made payable to the Secretary as aforesaid.
Any such insurance recoveries to which the Secretary shall be so entitled
shall be applied as follows:
(1) In the event that insurance becomes payable under said policies
on account of an accident, occurrence or event not resulting in an actual or
constructive total loss or an agreed or compromised total loss of the Vessel,
the Secretary shall (A) if there is no existing Default and if none of the
events described in Section 2.07 has occurred, in accordance with the
Shipowner's Request, pay, or consent that the underwriters pay, direct for
repairs, liabilities, salvage claims or other charges and expenses (including
sue and labor charges due or paid by the Shipowner) covered by the policies, or
(to the extent that, as stated in an Officer's Certificate delivered to the
Secretary, accompanied by written confirmation by the underwriter or a surveyor
or adjuster, the damage shall have been repaired and the cost thereof paid of
such liabilities, salvage claims, or other charges and
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expenses discharged or paid) reimburse, or consent that the underwriters
reimburse, the Shipowner therefor and (after all known damage with respect to
the particular loss shall have been repaired, except to the extent the
Shipowner, with the Secretary's written consent, deems the said repair
inadvisable, and all known costs, liabilities, salvage claims, charges and
expenses, covered by the policies, with respect to such loss shall have been
discharged or paid, as stated in an Officer's Certificate delivered to the
Secretary, accompanied by written confirmation by the underwriters or a surveyor
or adjuster) pay, or consent that the underwriters pay, any balance to the
Shipowner; or (B) if there is an existing Default, in accordance with a Request
of Shipowner, pay, or consent that the underwriters pay, direct for the
Shipowner's proportion of such repairs, liabilities, salvage claims or other
charges and expenses (including sue and labor charges due or paid by the
Shipowner) covered by the policies and hold any balance until the same may be
paid or applied under Sections 2.05(c)(1)(A), 2.05(c)(1)(C) or 2.05(c)(1)(D),
whichever is applicable; or (C) if the Guarantees shall have terminated pursuant
to Section 3.02(c) or if the Secretary shall have assumed the Shipowner's rights
and duties under the Indenture and the Obligations and made any payments in
default under the terms of Section 6.09 of the Indenture and none of the events
described in Section 2.07 has occurred, apply the insurance as provided in
Section 6.05; or (D) if the Guarantees shall have terminated pursuant to Section
3.02(b) or (d), pay the insurance to the Shipowner;
(2) In the event of an accident, occurrence or event resulting in an
actual or constructive total loss of the Vessel prior to the Delivery Date of
the Vessel, the Shipowner shall forthwith deposit with the Secretary any
insurance moneys which the Shipowner receives on account thereof under policies
of insurance required by paragraph (a) of this Section, and any such insurance
moneys shall be held by the Secretary for 10 days (or such lesser or further
time as the Shipowner and the Secretary may agree upon). Upon the expiration of
said period of time, (A) if there is no existing Default and if the Shipowner,
the Shipyard and the Secretary shall have elected not to construct the Vessel
under the Construction Contract, then said insurance moneys shall be applied, to
the extent necessary and required pursuant to Section 2.07; or (B) if there is
no existing Default and if the Shipowner, the Shipyard and the Secretary shall
not have made the election contemplated by clause A of this subsection, then
said insurance moneys (together with the Shipowner's funds to the extent, if
any, required by the Secretary for deposit on account of interest under clause
(ii) below) shall be deposited in the Escrow Fund, in such amount and to the
extent available, so that the moneys in the Escrow Fund after such deposit shall
be equal to (i) the principal amount of the Outstanding Obligations relating to
the Vessel at the time of such deposit and (ii) such interest on said deposit,
if any, as may be required by the Secretary (said moneys to be subject to
withdrawal in the same manner as moneys originally deposited in said Escrow
Fund); and the balance, if any, of such insurance moneys held by the Secretary
shall be paid to the Shipowner; and
(3) In the event of an accident, occurrence or event resulting in an
actual or constructive total loss or an agreed or compromised total loss of the
Vessel, whether prior to or after the Delivery Date of the Vessel, and the
insurance moneys have not been applied as provided in paragraph (c)(2) of this
Section, the Shipowner shall forthwith deposit with the Secretary any insurance
moneys which the Shipowner receives on account thereof under policies of
insurance required by this Section, and any such insurance moneys received by
the Secretary, whether from the
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Shipowner or otherwise, or held by the Secretary pursuant to paragraph (c)(2) of
this Section, shall (A) if there is no existing Default, be applied, to the
extent necessary, pursuant to Section 2.07; (B) if there is an existing Security
Default, be held until the same may be applied under Sections 2.05(c)(3)(A),
2.05(c)(3)(C) or 2.05(c)(3)(D), whichever is applicable; (C) if the guarantees
shall have terminated pursuant to Section 3.02(c) or if the Secretary shall have
assumed the Shipowner's rights and duties under the Indenture and the
Obligations and made any payments in default under the terms of Section 6.09 of
the Indenture, be applied as provided in Section 6.05; PROVIDED THAT,
notwithstanding the foregoing Sections 2.05(c)(3)(A), 2.05(c)(3)(B), and
2.05(c)(3)(C), the Shipowner shall not be required to so deposit with the
Secretary insurance moneys in an amount which, together with funds otherwise
available for the redemption of Obligations is in excess of that required for
the redemption of the Outstanding Obligations pursuant to Section 3.05 of the
Indenture and for the payment to the Secretary of all other sums that may be
secured by this Security Agreement and the Mortgage; or (D) if the Guarantees
shall have terminated pursuant to Section 3.02(b) or 3.02(d), be paid to the
Shipowner.
(d) In the event of an accident, occurrence or event resulting in a
constructive total loss of the Vessel, the Secretary shall have the right (with
the prior written consent of the Shipowner, unless there is an existing Default,
and at any time prior to the Delivery Date of the Vessel also with the prior
written consent of the Shipyard) to claim for a constructive total loss of the
Vessel. If (1) such claim is accepted by all underwriters under all policies
then in force as to the Vessel under which payment is due for total loss and (2)
payment in full is made in cash under such policies to the Secretary, then the
Secretary shall have the right to abandon the Vessel to the underwriters of such
policies, free from lien of this Security Agreement and the Mortgage.
(e) Commencing on the Delivery Date of the Vessel, the Shipowner shall,
without cost to the Secretary, keep the Vessel insured against marine and war
risk protection and indemnity risks and liabilities by policies of insurance
approved by the Secretary as to form and amount; PROVIDED THAT, (1) the
Shipowner shall, as soon as possible before such Delivery Date, present any such
policy to the Secretary (who shall promptly approve or disapprove the same), (2)
any approval of a policy under this subsection shall be effective until the end
of the policy period or until 60 days after the Secretary shall notify the
Shipowner of a desired change in the form and/or amount thereof, whichever shall
first occur, and (3) war protection and indemnity insurance shall be required
unless the Secretary gives written notice to the Shipowner stating that such
insurance is not required.
Such policies may provide that (1) if the Shipowner shall not have
incurred the loss, damage, or expense in question, any loss under such insurance
may be paid directly to the Person to whom any liability covered by such
policies has been incurred (whether or not a Default then exists), and (2) if
the Shipowner shall have incurred the loss, damage or expense in question, any
such loss shall be paid to the Shipowner in reimbursement if there is no
existing Default of which the underwriter has written notice from the Shipowner
or the Secretary, or, if there is such an existing Default, to the Secretary to
be held and applied as follows: (A) applied as provided in Section 6.05 in the
event the Guarantees shall have terminated pursuant to Section 3.02(c) or if the
Secretary shall have assumed the Shipowner's rights and duties under the
Indenture and the Obligations and made any payments in
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default under the terms of Section 6.09 of the Indenture, or (B) to the extent
not theretofore applied pursuant to Section 6.05, paid forthwith to the
Shipowner upon its Request in the event there is no existing Default or the
Guarantees shall have terminated pursuant to Section 3.02(b) or (d) at the date
of delivery of such Request; PROVIDED THAT, irrespective of the foregoing, with
the Secretary's prior written consent, the Shipowner shall have the right to
self-insure in an amount up to the limit specified in the Special Provisions
hereof with respect to each accident, occurrence or event, except that, with
respect to cargo or property carried, the Shipowner, with the Secretary's prior
written consent, shall have the right to self-insure in an amount up to the
limit specified in the Special Provisions hereof with respect to each cargo or
property carried.
(f) All insurance required under this Section shall be placed and kept
with the United States Government or with American and/or British (and/or other
foreign, if permitted by the Secretary in writing) insurance companies,
underwriters' association or underwriting funds approved by the Secretary. All
insurance required under this Section shall be arranged through marine insurance
brokers and/or underwriting agents as chosen by the Shipowner and approved by
the Secretary.
(g) The Secretary shall not have the right to enter into an agreement or
compromise providing for an agreed or compromised total loss of the Vessel
without prior written consent of (i) the Shipyard (prior to the Delivery Date of
the Vessel) and (ii) (unless there is an existing Default) the Shipowner. If (1)
the Shipowner shall have given prior consent thereto or (2) there is an existing
Default, the Secretary shall have the right in his discretion, and with the
prior written consent of the Shipyard prior to the Delivery Date of the Vessel,
to enter into an agreement or compromise providing for an agreed or compromised
total loss of the Vessel; PROVIDED THAT, if the aggregate amount payable to the
Shipowner and/or the Secretary under such agreement or compromise, together with
funds held by the Secretary and available for the redemption of Obligations, is
not sufficient to redeem or pay the Outstanding Obligations pursuant to Section
2.07, the Secretary shall not enter into such agreement or compromise without
the Shipowner's prior written consent.
(h) During the continuance of (1) a taking or requisition of the use of
the Vessel by any government or governmental body, or (2) a charter, with the
Secretary's prior written consent, of the use of the Vessel by the United States
Government or by any governmental body of the United States, or by any other
government or governmental body, the provisions of this Section shall be deemed
to have been complied with in all respects if such government or governmental
body shall have agreed to reimburse, in a manner approved by the Secretary in
writing, the Shipowner for loss or damage covered by the insurance required
hereunder or resulting from the risks under paragraphs (a), (b) and (e) of this
Section or if the Shipowner shall be entitled to just compensation therefor. In
addition, the provisions of this Section shall be deemed to have been complied
with in all respects during any period after (A) title to the Vessel shall have
been taken or requisitioned by any government or governmental body or (B) there
shall have been an actual or constructive total loss or an agreed or compromised
total loss of the Vessel. In the event of any taking, requisition, charter or
loss contemplated by this paragraph, the Shipowner shall promptly furnish to the
Secretary an Officer's Certificate stating that such taking, requisition,
charter or loss has occurred and, if there
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shall have been a taking, requisition or charter of the use of the Vessel, that
the government or governmental body in question has agreed to reimburse the
Shipowner, in a manner approved by the Secretary, for loss or damage resulting
from the risks under paragraphs (a), (b) and (e) of this Section or that the
Shipowner is entitled to just compensation therefor.
(i) All insurance required (A) under paragraph (a) of this Section shall
be taken out in the names of the Shipowner, the United States and the Shipyard
as assureds, and (B) under paragraphs (b) and (e) of this Section shall be taken
out in the names of the Shipowner and the United States as assureds. All
policies for such insurance so taken out shall, unless otherwise consented to by
the Secretary, provide that (1) there shall be no recourse against the United
States for the payment of premiums or commissions, (2) if such policies provide
for the payment of club calls, assessments or advances, there shall be no
recourse against the United States for the payment thereof, and (3) at least 10
days' prior written notice of any cancellation for the nonpayment of premiums,
commissions, club calls, assessments or advances shall be given to the Secretary
by the insurance underwriters.
(j) The Shipowner shall not, without the Secretary's prior written
consent, (1) do any act, nor voluntarily suffer or permit any act to be done,
whereby any insurance required by this Section shall or may be suspended,
impaired or defeated or (2) suffer or permit the Vessel to engage in any voyage
or to carry any cargo not permitted under the policies of insurance then in
effect without first covering the Vessel with insurance satisfactory in all
respects for such voyage or the carriage of such cargo; PROVIDED THAT, this
paragraph shall be subject to the requirements of any military authority of the
United States and shall not apply if and so long as the title or use of the
Vessel shall have been taken, requisitioned or chartered by any government or
governmental body as contemplated by Section 2.07.
(k) In the event that any claim or lien is asserted against the Vessel for
loss, damage or expense which is covered by insurance hereunder and it is
necessary for the Shipowner to obtain a bond or supply other security to prevent
arrest of the Vessel or to release the Vessel from arrest on account of said
claim or lien, the Secretary, on the Shipowner's Request, may, at the
Secretary's sole option, assign to any Person executing a surety or guaranty
bond or other agreement to save or release the Vessel from such arrest, all
right, title and interest of the Secretary in and to said insurance covering
such loss, damage or expense as collateral security to indemnify against
liability under said bond or other agreement.
(l) Except as the Secretary shall otherwise direct by notice in writing to
the Shipowner, the Shipowner shall deliver to the Secretary the original
policies evidencing insurance maintained under this Section; PROVIDED THAT, if
any such original policy shall have been delivered previously to the Secretary
or to a mortgagee by the Shipowner under another ship mortgage of the Shipowner,
the Shipowner shall deliver a duplicate or pro forma copy of such policy to the
Secretary. The Secretary or any agent thereof (who may also be an agent of the
issuer) shall at all times hold the policies delivered as aforesaid; PROVIDED
THAT, if one or more of said policies are held by an agent of the Secretary, the
Shipowner shall, upon the Secretary's request, deliver a duplicate or pro forma
copy thereof to the Secretary, and PROVIDED FURTHER, that if the Shipowner shall
deliver to the Secretary a
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Request (1) stating that delivery of such policy to the insurer is necessary in
connection with the collection, enforcement or settlement of any claim
thereunder (including claims for return premiums and any other amounts payable
by the insurer) and (2) setting forth the name and address of the Person to whom
such policy is to be delivered or mailed for such purpose, and if the Secretary
approves such Request, the Secretary shall, at the Shipowner's expense, deliver
or mail (by registered or certified mail, postage prepaid) such policy in
accordance with such Request, accompanied by a written direction to the
recipient to redeliver such policy directly to the Secretary or an agent thereof
when it has served the purpose for which so delivered. The Shipowner agrees
that, in case it shall at any time so cause the delivery or mailing of any
policy to any Person as aforesaid, the Shipowner will cause such policy to be
promptly redelivered to the Secretary or an agent thereof as aforesaid. The
Secretary shall have no duty to see to the redelivery of such policy, but shall
have the duty to request the redelivery thereof at intervals of 60 days
thereafter.
(m) Nothing in this Section shall limit the insurance coverage which the
Secretary may require under any contract or agreement to which the Secretary and
the Shipowner are parties.
The requirements of this Section are expressly subject to the Special
Provisions of this Security Agreement.
SECTION 2.06. INSPECTION OF THE VESSEL; EXAMINATION OF SHIPOWNER'S
RECORDS. The Shipowner will: (a) afford the Secretary, upon reasonable notice,
access to the Vessel, its cargoes and papers for the purpose of inspecting the
same; (b) maintain records of all amounts paid or obligated to be paid by or for
the account of the Shipowner for the Vessel's Construction; and (c) at
reasonable times permit the Secretary, upon request, to make reasonable,
material and pertinent examination and audit of books, records and accounts
maintained by the Shipowner, and to take information therefrom and make
transcripts or copies thereof.
SECTION 2.07. REQUISITION OF TITLE, TERMINATION OF CONSTRUCTION CONTRACT
OR TOTAL LOSS OF THE VESSEL. In the event of requisition of title to or seizure
or forfeiture of the Vessel, termination of the Construction Contract relating
to the Vessel, or the occurrence of the circumstances referred to in Section
2.05(c)(3), then all of the following shall apply:
(a) The Shipowner shall promptly give written notice thereof to the
Secretary.
(b) The Shipowner shall promptly pay all amounts it receives by reason of
such requisition, seizure, forfeiture, termination or total loss ("Loss Event")
to the Secretary.
(c) After the Secretary has received sufficient funds to retire the
Outstanding Obligations affected by the Loss Event:
(1) if there is no existing Default, (A) the Secretary and the
Shipowner shall give notice to the Indenture Trustee of a redemption of the
Outstanding Obligations pursuant to Section 3.05 of the Indenture, (B) such
amount, if any, held by the Secretary, shall be paid by the Secretary to
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the Indenture Trustee not earlier than 10 days prior to, nor later than the
opening of business on, the Redemption Date required by Section 3.05 of the
Indenture, (C) the remainder shall next be applied by the Secretary for the
payment of all other sums that may be secured hereby, and (D) the balance shall
be paid to the Shipowner including any interest earned on the proceeds which are
in excess of the amount required to redeem the Obligations;
(2) if there is an existing Default and the Guarantees shall not
have terminated pursuant to Section 3.02, such amounts shall be held until the
same may be applied or paid under paragraphs (1), (3), or (4) of this
subsection, whichever is applicable;
(3) if the Guarantees shall have terminated pursuant to Section
3.02(c) or if the Secretary shall have assumed the Shipowner's rights and duties
under the Indenture and the Obligations and made any payments in default under
the terms of Section 6.09 of the Indenture, such amounts shall be applied as
provided in Section 6.05; or
(4) if the Guarantees shall have terminated pursuant to Section
3.02(b) or 3.02(d) such amounts shall be paid by the Secretary to the Shipowner.
PROVIDED THAT, notwithstanding the foregoing, the Shipowner shall not be
required to pay the Secretary any amount which the Secretary agrees is in excess
of the amount needed for redemption of the Outstanding Obligations affected by
the Loss Event.
SECTION 2.08. NOTICE OF MORTGAGE. (a) A properly certified copy of the
Mortgage shall be carried on board the Vessel with the Vessel's documents and
shall be exhibited on demand to any Person having business with the Vessel or to
any Secretary's representative.
(b) A notice printed in plain type of such size that the paragraph of
reading matter shall cover a space not less than six inches wide by nine inches
high, and framed, shall be placed and kept prominently exhibited in the chart
room and in the master's cabin of the Vessel.
(c) The notice referred to in paragraph (b) of this Section shall read as
follows:
"NOTICE OF SHIP MORTGAGE
This Vessel is owned by (NAME OF SHIPOWNER) , a (JURISDICTION)
("Shipowner"), and is covered by a First Preferred Ship Mortgage in favor
of the United States of America, under authority of (NAME OF COUNTRY AND
LEGAL CITATION). Under the terms of said Mortgage neither the Shipowner,
any charterer, the master or agent of this Vessel nor any other person has
any right, power or authority to create, incur or permit to be placed or
imposed upon this Vessel any lien other than statutory liens incident to
current operations that are subordinate to the Mortgage."
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SECTION 2.09. COMPLIANCE WITH MORTGAGE LAWS. The Shipowner shall comply
with and satisfy all of the provisions of the pertinent mortgage laws of the
country in which the Vessel is documented in order to establish and thereafter
maintain the Mortgage thereunder as a preferred mortgage upon the Vessel.
SECTION 2.10. PERFORMANCE OF SHIPOWNER'S AGREEMENTS BY THE SECRETARY. If
the Shipowner shall fail to perform any of its agreements hereunder or under the
Mortgage, the Secretary may, in its discretion, at any time during the
continuance of an event which by itself, with the passage of time, or the giving
of notice, would constitute a Default, perform all acts and make all necessary
expenditures to remedy such failure. Notwithstanding the foregoing, the
Secretary shall not be obligated to (and shall not be liable for the failure to)
perform such acts and make such expenditures. All funds advanced and expenses
and damages incurred by the Secretary relating to such compliance shall
constitute a debt due from the Shipowner to the Secretary and shall be secured
hereunder and under the Mortgage prior to the Secretary's Note and shall be
repaid by the Shipowner upon demand, together with interest at the rate that
would have been paid by the Department of Treasury on the expended funds plus
1%.
SECTION 2.11. PERFECTION OF SECURITY INTERESTS; FURTHER ASSURANCES. The
Shipowner shall (i) furnish evidence satisfactory to the Secretary that all
financing statements under the UCC, and all filings or recordings required by
the laws of the country where the Shipowner is located, shall have been filed
against the Shipowner and the Shipyard in all offices in which it may be
necessary, or advisable in the opinion of the Secretary, to perfect its security
interest, and (ii) from time to time execute and deliver such further
instruments and take such action as may reasonably be required more effectively
to subject the Security to the lien of the Security Agreement and the Mortgage
as contemplated thereby, including but not limited to legal opinions from an
independent counsel for the Shipowner to the effect that all UCC Financing
Statements, or other filings and recordings with respect to the country where
the Shipowner is located, have been filed to perfect the Secretary's interests
in the Security as valid and enforceable first priority perfected security
agreements. With respect to Security that constitutes accounts or general
intangibles for money due or to become due, the Shipowner shall perfect the
Secretary's Security by giving written notice to the account debtor(s) of the
Secretary's security interest in such accounts and general intangibles.
SECTION 2.12. MODIFICATION OF FORMATION AGREEMENTS. (a) If the Shipowner
is organized as a general partnership, limited partnership, limited liability
company or joint venture, then for so long as there is Outstanding any
indebtedness to the United States of America pursuant to the Act, the
partnership agreement, operating agreement, limited liability agreement, joint
venture agreement (or any agreement constituting such an entity) shall not be
amended, modified or voluntarily terminated without the Secretary's prior
written consent.
(b) In the event where any action by the Shipowner, any member of the
Shipowner or the management of the Shipowner results or would result in
dissolution of the Shipowner pursuant to its limited liability company agreement
or governing law, each member of the Shipowner shall forthwith take all steps
necessary to reform and reestablish the Shipowner.
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SECTION 2.13. MEMBERS OF LIMITED LIABILITY COMPANIES. All existing and
future members of a Shipowner which is a limited liability company (each being a
"Member"), upon becoming a Member, shall forthwith enter into an agreement with
the Secretary, in form and substance satisfactory to the Secretary, whereby each
Member agrees: (1) that any amounts owed by the Shipowner to a Member with
respect to its interest (as that or the equivalent term is used in the
Shipowner's limited liability company agreement) (the "Distributions") shall be
subordinated to the Shipowner's payment of the Secretary's Note and debts under
the Security Agreement, provided that such Distributions may be paid to the
extent the Shipowner is permitted to pay dividends under the Financial
Agreement; (2) that in the event of default by the Shipowner under the Security
Agreement, the Member shall be subordinated in its rights to receive any
Distribution or to be paid any sums whatsoever by the Shipowner until the
Secretary has made a full recovery of any and all amounts owed under the
Secretary's Note and the Security Agreement.
SECTION 2.14. CONCERNING THE PERFORMANCE AND PAYMENT BONDS. During the
Construction, the Shipowner shall cause to be maintained a Performance Bond and
Payment Bond naming the Shipowner and the Secretary as co-obligees (the "Surety
Bonds") in form and substance satisfactory to the Secretary, to be obtained by
the Shipyard in the amount of the Construction Contract, issued by such surety
company or companies as shall be satisfactory to the Secretary (the "Surety").
In the event that the price for the work to be performed under the Construction
Contract is increased, then the Surety Bonds shall be increased simultaneously
in a corresponding amount. The Shipowner hereby agrees that the Secretary shall
be the sole loss payee under the Surety Bonds and the Surety shall pay such
amounts directly to the Secretary for distribution to the co-obligees as their
interests may appear. The Shipowner hereby agrees that its interest as a
co-obligee under each of the Surety Bonds is and shall be, upon the occurrence
of a Default under the Security Agreement, fully subject and subordinate to the
rights and interests of the Secretary therein. In the event of a default under
the Security Agreement, which default results in a payment under any of the
Surety Bonds, then the Surety Bonds proceeds shall be distributed by the
Secretary in accordance with the provisions of Section 6.05 hereof. The
Shipowner hereby irrevocably appoints the Secretary, the true and lawful
attorney of the Shipowner, in its name and stead, to execute all consents,
approvals, settlements and agreements on behalf of the Shipowner with respect to
any rights related to the Surety Bonds.
ARTICLE III
THE SECRETARY'S NOTE
SECTION 3.01. SECRETARY'S NOTE. On this date, the Shipowner has duly
executed and delivered and the Secretary has accepted the Secretary's Note
payable in an amount equal to the principal amount of the Obligations.
SECTION 3.02. TERMINATION OF THE GUARANTEES. Except as provided in Section
6.08 of the Indenture, the Guarantee with respect to a particular Obligation,
shall terminate only when, one or more of the following events shall occur:
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(a) Such Obligation shall have been Retired or Paid;
(b) The Obligees of all the Obligations then Outstanding shall have
elected to terminate the Guarantees, and the Secretary has been so notified by
the Indenture Trustee or all Obligees in writing; PROVIDED THAT, such
termination shall not prejudice any rights accruing hereunder prior to such
termination;
(c) Such Guarantee shall have been paid in full in cash by the Secretary;
or
(d) The Indenture Trustee and each Obligee shall have failed to demand
payment of such Guarantee as provided in the Indenture, Guarantee, or the Act.
SECTION 3.03. EXECUTION OF ADDITIONAL SECRETARY'S NOTE. (a) In the event
and when each new issue of Obligations is executed, authenticated and delivered
on a date or dates subsequent to the date hereof, as contemplated by, and
pursuant to the Indenture, the Shipowner shall, at the time of the issuance of
such Obligations, execute and deliver to the Secretary an additional Secretary's
Note or, at the Secretary's discretion, an endorsement to the Secretary's Note
in an amount equal to the principal amount of, and at the interest rate borne
by, such issue of Obligations, on the terms stated in the Secretary's Note.
(b) Each Secretary's Note or endorsement executed and delivered in
accordance with Section 3.03 shall together with the Secretary's Note be secured
by this Security Agreement and the Mortgage.
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ARTICLE IV
CONSTRUCTION FUND; MONEYS DUE WITH RESPECT TO
CONSTRUCTION OF THE VESSEL
SECTION 4.01. CONSTRUCTION FUND. (a) The Shipowner has deposited with the
Depository the amount, if any, indicated in the Depository Agreement from the
proceeds of the Obligation to be held by the Depository in a Securities Account
in accordance with the terms of the Depository Agreement. This Securities
Account together with any future deposits and the proceeds from the investment
of the amounts on deposit shall be called the "Construction Fund."
(b) The Shipowner may withdraw money from the Construction Fund under the
same procedures and conditions as the Shipowner may withdraw money from the
Escrow Fund under Section 5.03, except that the Shipowner's Request for
withdrawal will not be subject to Section 5.03(a)(2)(A) or 5.03(h). The
administration of the Construction Fund shall also be subject to the terms and
conditions of Sections 5.04 and 5.05.
SECTION 4.02. MONEYS DUE WITH RESPECT TO CONSTRUCTION OF THE VESSEL. (a)
In the event that the Shipowner shall receive any moneys from any Person in
connection with the Construction of the Vessel, the Shipowner shall give written
notice thereof to the Secretary and shall promptly pay the same over to the
Depository to be held in the Title XI Reserve Fund.
(b) Upon and after a final determination of Actual Cost in accordance with
Section 5.01, in the absence of a Default, any moneys held by the Depository
which are not to be applied for the redemption of Obligations under Section 3.04
of the Indenture shall be paid to the Shipowner.
(c) In the event there is an existing Default, the money shall be held by
the Depository in accordance with the provisions of the Depository Agreement.
(d) In the event the Secretary assumes the Shipowner's rights and duties
under Section 6.09 of the Indenture or pays the Guarantees, the Depository shall
promptly pay all moneys including all Moneys Due with Respect to Construction of
the Vessel to the Secretary, who will apply it in accordance with Section 6.05.
ARTICLE V
ACTUAL COST; THE ESCROW FUND
SECTION 5.01. ACTUAL COST DETERMINATION. (a) The Actual Cost of the
Vessel, determined as of the date of this Security Agreement, is as set forth
in Table A hereof.
(b) The Secretary agrees to: (1) make a final determination of the Actual
Cost of the Vessel, limited to amounts paid by or for the account of the
Shipowner on account of the items set forth in Table A hereof and, to the extent
approved by the Secretary, any other items or any increase
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in the amounts of such items, such determination to be made as of the time of
payment by or for the account of the Shipowner of the full amount of said Actual
Cost of the Vessel, excluding any amounts which are not to become due and
payable, and (2) promptly give written notice to the Shipowner, of the results
of said final determination; PROVIDED THAT, the Shipowner shall have requested
such determination not less than 60 days in advance and shall have furnished to
the Secretary not less than 30 days in advance of such determination along with
a Shipowner's Officer's Certificate and a statement by an independent certified
(or, with the Secretary's prior written consent, an independent) public
accountant or firm of accountants of the total amounts paid or obligated to be
paid by or for the account of the Shipowner for the Construction of the Vessel,
together with a breakdown of such totals according to the items for which paid
or obligated to be paid.
SECTION 5.02. ESCROW FUND DEPOSITS. At the time of the sale of the
Obligations, the Shipowner shall deposit with the Secretary in the Escrow Fund
all of the proceeds of that sale unless the Shipowner is entitled to withdraw
funds under Section 5.03. If the Obligations are issued before the delivery of
the Vessel, then the Shipowner shall also deposit into the Escrow Fund on the
Closing Date an amount equal to six months interest at the rate borne by the
Obligations.
SECTION 5.03. ESCROW FUND WITHDRAWALS. (a) The Secretary shall within a
reasonable time after written Request from the Shipowner, disburse from the
Escrow Fund directly to the Indenture Trustee, any Paying Agent for such
Obligations, the Shipyard, or any other Person entitled thereto, any amount
which the Shipowner is obligated to pay or to the Shipowner for any amounts it
has paid on account of the items and amounts or any other items set forth in
Table A annexed hereto or subsequently approved by the Secretary), PROVIDED
THAT, the Secretary is satisfied with the accuracy and completeness of the
information contained in the following submissions:
(1) A Responsible Officer of the Shipowner shall deliver an
Officer's Certificate, in form and substance satisfactory to the Secretary,
stating that (A) there is neither a Default under the Construction Contract nor
the Security Agreement; (B) there have been no occurrences which have or would
adversely and materially affect the condition of the Vessel, its hull or any of
its component parts; (C) the amounts of the Request is in accordance with the
Construction Contract including the approved disbursement schedule and each item
in these amounts is properly included in the Secretary's approved estimate of
Actual Cost; (D) with respect to the Request, once the Contractor is paid there
will be no liens or encumbrances on the Vessel, its hull or component parts for
which the withdrawal is being requested except for those already approved by the
Secretary; and (E) if the Vessel has already been delivered, it is in class and
is being maintained in the highest and best condition. The Shipowner shall also
attach an Officer's Certificate of the Shipyard, in form and substance
satisfactory to the Secretary, stating that there are no liens or encumbrances
as provided in clause (D) of this subsection and attaching the invoices and
receipts supporting each proposed withdrawal to the satisfaction of the
Secretary.
(2) No payment or reimbursement under this Section shall be made (A)
to any Person until the Construction Fund, if any, has been exhausted, (B) to
any Person until the total amount paid by or for the account of the Shipowner
from sources other than the proceeds of such
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Obligations equals at least 12-l/2% of the Actual Cost of the Vessel is made;
(C) to the Shipowner which would have the effect of reducing the total amounts
paid by the Shipowner pursuant to clause (B) of this subsection; or (D) to any
Person on account of items, amounts or increases representing changes and extras
or owner furnished equipment, if any, set forth in Table A annexed hereto,
unless such items, amounts and increases shall have been previously approved by
the Secretary; PROVIDED, HOWEVER, that when the amount guaranteed by the
Secretary equals 75% or less of the Actual Cost, then after the initial 12 1/2%
of Actual Cost has been paid by or on behalf of the Shipowner for the Vessel and
up to 37 1/2% of Actual Cost has been withdrawn from the Escrow Fund for the
Vessel, the Shipowner shall pay the remaining Shipowner's equity of at least 12
1/2% (as determined by the Secretary) before additional monies can be withdrawn
from the Escrow Fund relating to the Vessel.
(b) The excess, as determined by the Secretary, of any amount on deposit
in the Escrow Fund which represents interest on the principal amount deposited,
over and above the amount of interest due on the next Interest Payment Date on
the principal amount, as determined by the Secretary, remaining on deposit on
such Interest Payment Date, may, unless there is an existing Default, be
disbursed by the Secretary upon the Shipowner's Request made not more than 10
Business Days prior to such Interest Payment Date or made within at least 60
days after such Interest Payment Date.
(c) The Secretary shall not be required to make any disbursement pursuant
to this Section except out of the cash available in the Escrow Fund. If
sufficient cash is not available to make the requested disbursement, additional
cash shall be provided by the maturity or sale of securities in accordance with
instructions pursuant to Section 5.04. If any sale or payment on maturity shall
result in a loss in the principal amount of the Escrow Fund invested in
securities so sold or matured, the requested disbursement from the Escrow Fund
shall be reduced by an amount equal to such loss, and the Shipowner shall, no
later than the time for such disbursement, pay to the Indenture Trustee, any
Paying Agent, the Shipyard, or any other Person entitled thereto, the balance of
the requested disbursement from the Shipowner's funds other than the proceeds of
such Obligations.
(d) If the Secretary assumes the Shipowner's rights and duties under the
Indenture and the Obligations, and makes any payments in default under the
Indenture, or the Secretary pays the Guarantees, all amounts in the Escrow Fund
(including realized income which has not yet been paid to the Shipowner), shall
be paid to the Secretary and be credited against any amounts due or to become
due to the Secretary under the Security Agreement and the Secretary's Note. To
the extent payment of the Escrow Fund to the Secretary is not required, said
amounts or any balance thereof, shall be paid to the Shipowner.
If the Secretary shall have assumed the Shipowner's rights and duties
under the Indenture and the Obligations, and made any payments in default under
the terms of Section 6.09 of the Indenture, or the Guarantees shall become
payable by the Secretary as to the Obligations, all amounts in the Escrow Fund
at the time such Guarantees become payable (including realized income which has
not yet been paid to the Shipowner), shall be paid to the Secretary and be
credited against any amounts due or to become due to the Secretary from the
Shipowner with respect to all Obligations guaranteed
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by the Secretary to which this Security Agreement relates. To the extent payment
of the Escrow Fund to the Secretary is not required, said amounts or any balance
thereof, shall be paid to the Shipowner.
(e) At any time the Secretary shall have determined that there has been,
for any reason, a disbursement from the Escrow Fund contrary to this Section,
the Secretary shall give written notice to the Shipowner of the amount
improperly disbursed, the amount to be deposited or redeposited into the Escrow
Fund on account thereof, and the reasons for such determination. The Shipowner
shall thereafter promptly deposit or redeposit, as appropriate, such amount
(with interest, if any) required by the Secretary into the Escrow Fund.
(f) Notwithstanding any other provision of this Section, the Shipowner
shall not seek or receive reimbursement for any amount paid to the Shipyard or
any Person by the Secretary.
(g) In the event that one of the events described in Section 2.07 has
occurred with respect to the Vessel or the Secretary shall have paid the
Guarantees or shall have assumed the Shipowner's rights and duties under Section
6.09 of the Indenture, the Secretary may direct that moneys remaining on deposit
in the Escrow Fund may be withdrawn in whole or in part for one of the following
purposes: (1) application as provided in Section 3.05 of the Indenture (but in
no event shall any such disbursement for such purpose be in an amount greater
than the Outstanding Obligations); (2) payment to the Shipowner, or its order,
in the event all Outstanding Obligations are Retired or Paid, other than by
payment of the Guarantees; or (3) application as provided in Section 6.05, if
the Secretary shall have paid the Guarantees or shall have assumed the
Shipowner's rights and duties under the Indenture and the Obligations.
(h) Any amounts remaining in the Escrow Fund on the Termination Date of
the Escrow Fund which are in excess of 87 1/2% or 75% of Actual Cost, as the
case may be, shall be applied pursuant to Section 3.04 of the Indenture.
SECTION 5.04. INVESTMENT AND LIQUIDATION OF THE ESCROW FUND. The Secretary
may invest the Escrow Fund in obligations of the United States with such
maturities that the Escrow Fund will be available as required for the purposes
hereof. The Secretary shall deposit the Escrow Fund into an account with the
Treasury Department and, upon agreement with the Shipowner, shall deliver to the
Treasury Department instructions for the investment, reinvestment and
liquidation of the Escrow Fund. The Secretary shall have no liability to the
Shipowner for acting in accordance with such instructions.
SECTION 5.05. INCOME ON THE ESCROW FUND. Except as provided in Section
5.03, any income realized on the Escrow Fund shall, unless there is an existing
Default, be paid to the Shipowner upon receipt by the Secretary of such income.
For the purpose of this Section, the term "income realized on the Escrow Fund,"
shall mean with respect to the Escrow Fund (1) the excess of the cash received
from the sale of securities over their cost (less any losses from sale not
already paid pursuant to Section 5.03(c)) and (2) cash received from the payment
of principal and interest on securities.
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SECTION 5.06. TERMINATION DATE OF THE ESCROW FUND. The Escrow Fund will
terminate 90 days after the Delivery Date of the Vessel covered by this Security
Agreement (herein called the "Termination Date of the Escrow Fund"). In the
event that on such date the payment by or for the account of the Shipowner of
the full amount of the aggregate Actual Cost of the Vessel set forth in Table A
hereof has not been made or the amounts with respect to such Actual Cost are not
then due and payable, then the Shipowner and the Secretary by written agreement
shall extend the Termination Date of the Escrow Fund for such period as shall be
determined by the Shipowner and the Secretary as sufficient to allow for such
contingencies. If the Secretary shall have earlier made a final determination of
the Actual Cost of the Vessel in accordance with Section 5.01, the Termination
Date of the Escrow Fund shall be deemed to be the date of such final
determination; PROVIDED that, if as a result of such final determination, a
redemption of Obligations is required pursuant to Section 3.04 of the Indenture,
the Termination Date shall be the date specified as the Redemption Date in the
notice of redemption given pursuant to Section 3.08 of the Indenture.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. WHAT CONSTITUTES "DEFAULTS;" CONTINUANCE OF DEFAULTS.
Each of the following events shall constitute a "Default" within the meaning
of Section 6.01:
(a) A default in the payment of the whole or any part of the interest on
any of the Outstanding Obligations when the same shall become due and payable;
or default in the payment of the whole or any part of the principal of any of
the Outstanding Obligations when the same shall become due and payable, whether
by reason of Maturity, redemption, acceleration, or otherwise, or any default
referred to in Section 6.01 of the Indenture; and continuation of such default
for a period of 30 days shall constitute and is herein called a "Payment
Default." Any corresponding default with respect to the interest on, or the
principal of, the Secretary's Note is also deemed to be a Payment Default;
(b) The following shall constitute and each is herein called a "Security
Default:"
(1) Default by the Shipowner in the due and punctual observance and
performance of any provision in Sections 2.02(b) and (j), 2.03, 2.04, 2.09,
2.11, 2.12, 2.14, 8.01 and 8.02;
(2) Default by the Shipowner continued after written notice
specifying such failure by certified or registered mail to the Shipowner from
the Secretary in the due and punctual observance and performance of any
provision in Sections 2.02(a), (d), (f), (g) and (h), 2.05 (except (g) and (k)
thereof), 2.07 and 2.13.
(3) Default by the Shipowner continued for 30 days after written
notice by certified or registered mail to the Shipowner from the Secretary in
the due and punctual observance
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of any other agreement in this Security Agreement or in the Mortgage;
(4) The Shipowner shall become insolvent or bankrupt or shall cease
paying or providing for the payment of its debts generally, or the Shipowner
shall be dissolved or shall, by a court of competent jurisdiction, be adjudged a
bankrupt, or shall make a general assignment for the benefit of its creditors,
or shall lose its charter by forfeiture or otherwise; or a petition for
reorganization of the Shipowner under the applicable bankruptcy laws shall be
filed by the Shipowner, or such petition be filed by creditors and the same
shall be approved by such a court of competent jurisdiction; or a reorganization
of the Shipowner under said bankruptcy laws shall be approved by a court,
whether proposed by a creditor, a stockholder or any other Person whomsoever; or
a receiver or receivers of any kind whatsoever, whether appointed in admiralty,
bankruptcy, common law or equity proceedings, shall be appointed, by a decree of
a court of competent jurisdiction, or any other governmental body with respect
to the Vessel, or all or substantially all of the Shipowner's property, and such
decree shall have continued unstayed, on appeal or otherwise, and in effect for
a period of 60 days;
(5) Any default in the due and punctual observance and performance
of any provision in the Financial Agreement or the Construction Contract;
(6) Any representation or warranty made relating to the execution
and delivery of this Security Agreement, the Mortgage, the Guarantee Commitment
or the Financial Agreement, or in any certificate required to be furnished
pursuant thereto, shall prove to be incorrect in any material respect;
(7) Any event constituting a Default under any security agreement or
preferred mortgage, relating to any other vessel or vessels owned by the
Shipowner and financed under the Act;
(8) Any additional Security Default prescribed in the Special
Provisions hereof; and
(9) Any event constituting a default under any bareboat or time
charter or contract of affreightment of the Vessel.
At any time following the occurrence of a Security Default, the Secretary
may give the Indenture Trustee a Secretary's Notice with respect to such
Security Default, after which the Indenture Trustee and the Obligees shall have
the right to make demand for payment of the Guarantees in accordance with the
Indenture and the Authorization Agreement, unless the Secretary shall have
assumed the Shipowner's rights and duties under the Indenture and the
Obligations, and made any payments in default under Section 6.09 of the
Indenture.
SECTION 6.02. ACCELERATION OF MATURITY OF THE SECRETARY'S NOTE. The
Secretary may, by giving written notice to the Shipowner, declare the principal
of the Secretary's Note and interest
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accrued thereon to be immediately due and payable, at any time after (a) the
Secretary shall have been obligated to pay the Guarantees pursuant to the terms
of the Indenture and the Authorization Agreement, or (b) the Secretary shall
have assumed the Shipowner's rights and duties under the Indenture and the
Obligations, and made any payments in default under the terms of Section 6.09 of
the Indenture. Thereupon, the principal of and interest on the Secretary's Note
shall become immediately due and payable, together with interest at the same
rates specified in the Secretary's Note.
SECTION 6.03. WAIVERS OF DEFAULT. (a) If the Secretary shall not have
assumed the Shipowner's rights and duties under the Indenture and the
Obligations, and made any payments in default under the terms of Section 6.09 of
the Indenture, and if the Secretary determines that an event which, with the
passage of time, would become a Payment Default, has been remedied within 30
days after the occurrence of such event, upon a Request by the Shipowner, the
Secretary shall waive the consequences of such event.
(b) If the Secretary shall not have assumed the Shipowner's rights and
duties under the Indenture and the Obligations, and made any payments in default
under the terms of Section 6.09 of the Indenture, and if the Secretary shall
have determined prior to payment of the Guarantees that a Payment Default has
been remedied after the expiration of the aforesaid 30-day period, but prior to
the date of demand by the Indenture Trustee or an Obligee for payment under the
Guarantees, upon a Request by the Shipowner, the Secretary shall waive such
Default.
(c) If the Secretary shall have determined prior to the expiration of the
period required for payment of the Guarantees that a Payment Default had not
occurred or has been subsequently remedied by the Shipowner (and if the
Secretary shall not have assumed the Shipowner's rights and duties under the
Indenture and the Obligations, and made any payments in default under the terms
of Section 6.09 of the Indenture and prior to any payment of Guarantees), the
Secretary shall notify the Indenture Trustee and the Shipowner of such
determination, and, the Secretary shall waive such Default.
(d) The Secretary, in its sole discretion, may waive any Security Default
or any event which by itself, or with the passage of time or the giving of
notice, or both, would give rise to a Security Default; PROVIDED THAT, such
Default is waived prior to the Secretary giving to the Indenture Trustee the
Secretary's Notice.
(e) The Secretary shall notify the Shipowner and the Indenture Trustee in
writing of any determinations made under paragraphs (a), (b) and (c) of this
Section, and the Secretary shall waive the consequences of any such Default, and
annul any declaration under Section 6.02, and the consequences thereof.
(f) No waiver under this Section shall extend to or affect any subsequent
or other Default, nor impair any rights or remedies consequent thereon.
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(g) No waiver under this Section shall be deemed to have occurred because
the Secretary shall have assumed the Shipowner's rights and duties under the
Indenture and the Obligations, and made any payments in default under the terms
of Section 6.09 of the Indenture.
SECTION 6.04. REMEDIES AFTER DEFAULT. (a) In the event of a Default, and
before and after the payment of the Guarantees or the assumption by the
Secretary of the Shipowner's rights and duties under the Indenture and the
Obligations, and the making of any payments in default under the terms of
Section 6.09 of the Indenture, the Secretary shall have the right to take the
Vessel without legal process wherever the same may be (and the Shipowner or
other Person in possession shall forthwith surrender possession of the Vessel to
the Secretary upon demand) and hold, lay up, lease, charter, operate, or
otherwise use the Vessel for such time and upon such terms as the Secretary may
reasonably deem to be in the Secretary's best interest, accounting only for the
net profits, if any, arising from the use of the Vessel, and charging against
all receipts from the use of the Vessel, all reasonable charges and expenses
relating to the Vessel's use.
(b) Upon either (i) payment of the Guarantees or (ii) the Secretary's
assumption of the Shipowner's rights and duties under the Indenture and the
Obligations, and the making of any payments in default under Section 6.09 of the
Indenture, the Secretary shall have the right to:
(1) Exercise all the rights and remedies in foreclosure and
otherwise given to mortgagees the laws of the United States, the country of
documentation of the Vessel, or such other country in which the Vessel may be
located at the time of the foreclosure;
(2) Bring suit at law, in equity or in admiralty to recover judgment
for any and all amounts due under the Secretary's Note, this Security Agreement
and the Mortgage, collect the same out of any and all of Shipowner's property,
whether or not the same is subject to the lien of the Mortgage, and in
connection therewith, obtain a decree ordering the sale of the Vessel in
accordance with paragraph (b)(4) of this Section;
(3) Have a receiver of the Vessel appointed as a matter of right in
any suit under this Section (and any such receiver may have the rights of the
Secretary under paragraph (b)(4) of this Section;
(4) Sell the Vessel, free from any claim of the Shipowner, by a
public extrajudicial sale, held at such time and place and in such manner as the
Secretary may reasonably deem advisable, after twice publishing notice of the
time and place of such sale prior to the proposed sale in the Authorized
Newspapers to the Shipowner. Such publication and mailing is to be made at least
10 Business Days prior to the date fixed for such sale; PROVIDED THAT, such sale
may be adjourned from time to time without further publication or notice (other
than announcement at the time and place appointed for such sale or adjourned
sale). It shall not be necessary to bring the Vessel to the place appointed for
such sale or adjourned sale;
(5) Accept a conveyance of title to, and to take without legal
process (and the
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Shipowner or other Person in possession shall forthwith surrender possession to
the Secretary), the whole or any part of the Vessel and the Security wherever
the same may be, and to take possession of and to hold the same;
(6) In the Secretary's discretion, take any and all action
authorized by Sections 1105(c), 1105(e) and 1108(b) of the Act and any and all
action provided for, or authorized, or permitted by, or with respect to the
Increased Security;
(7) Receive, in the event of an actual or constructive total loss,
or an agreed or compromised total loss, or a requisition of title to or use of
the Vessel, all insurance or other payments therefor to which the Shipowner
would otherwise be entitled, such insurance moneys to be applied by the
Secretary in accordance with Section 6.05; and
(8) Pursue to final collection of all the claims arising under this
Security Agreement, and to collect such claims from, the Increased Security.
(c) The Shipowner hereby irrevocably appoints the Secretary the true and
lawful attorney of the Shipowner, in its name and stead, to make all necessary
transfers of the whole or any part of the Increased Security in connection with
a sale, use or other disposition pursuant to Section 6.04(a) or 6.04(b), and for
that purpose to execute all necessary instruments of assignment and transfer.
Nevertheless, the Shipowner shall, if so requested by the Secretary in writing,
ratify and confirm such sale by executing and delivering to any purchaser of the
whole or any part of the Increased Security, such proper bill of sale,
conveyance, instrument of transfer, or release as may be designated in such
request.
(d) No remedy shall be exclusive of any other remedy, and each and every
remedy shall be cumulative and in addition to any other remedy.
(e) No delay or omission to exercise any right or remedy shall impair any
such right or remedy or shall be deemed to be a waiver of any Default.
(f) The exercise of any right or remedy shall not constitute an election
of remedies by the Secretary.
(g) If the Secretary discontinues any proceeding, the rights and remedies
of the Secretary and of the Shipowner shall be as though no such proceeding had
been taken.
SECTION 6.05. APPLICATION OF PROCEEDS. (a) The proceeds (from sale or
otherwise) of the whole or any part of the Increased Security and use thereof by
the Secretary under any of the foregoing powers, (b) the proceeds of any
judgment collected by the Secretary for any default hereunder, (c) the proceeds
of any insurance and of any claim for damages to the whole or any part of the
Increased Security received by the Secretary while exercising any such power,
and (d) all other amounts received by the Secretary, including amounts which are
required by Sections
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2.05 and 2.07 shall be applied by the Secretary as follows:
(1) to the payment of all advances and all reasonable charges and
expenses of the Secretary pursuant to this Security Agreement;
(2) to the payment of the whole amount of the interest then due and
unpaid upon the Secretary's Note;
(3) to the payment of the whole amount of the principal then due and
unpaid upon the Secretary's Note;
(4) to the Secretary for application to any other debt of the
Shipowner due to the Secretary under any other financing insured or guaranteed
by the Secretary under to the Act;
(5) to the Indenture Trustee for its reasonable fees and expenses;
and
(6) any balance thereof remaining shall be paid to the Shipowner.
SECTION 6.06. GENERAL POWERS OF THE SECRETARY. (a) In the event the Vessel
shall be arrested or detained by a marshal or other officer of any court of law,
equity or admiralty jurisdiction in any country or nation of the world or by any
government or other authority, and shall not be released from arrest or
detention within 15 days from the date of arrest or detention, the Shipowner
hereby authorizes the Secretary, in the name of the Shipowner, to apply for and
receive possession of and to take possession of the Vessel with all the rights
and powers that the Shipowner might have, possess and exercise in any such
event. This authorization is irrevocable.
(b) The Shipowner irrevocably authorizes the Secretary or its appointee
(with full power of substitution) to appear in the name of the Shipowner in any
court of any country or nation of the world where a suit is pending against the
whole or any part of the Increased Security because of or on account of any
alleged lien or claim against the whole or any part of the Increased Security,
from which the whole or said part of the Increased Security has not been
released.
(c) The following shall constitute a debt due from the Shipowner to the
Secretary, and shall be repaid by the Shipowner upon demand: all reasonable
expenses incurred pursuant to paragraphs (a) or (b) of this Section and all
reasonable expenses incurred incident to the exercise by the Secretary of any
remedies pursuant to Section 6.04(b) or the assumption by the Secretary of the
rights and duties of the Shipowner under the Indenture and the Obligations, and
the making of any payments in default under the terms of Section 6.09 of the
Indenture (including, but not limited to, fees paid to the Indenture Trustee for
expenses incident to said assumption of the Indenture by the Secretary),
together with interest at the rate that would have been paid by the Department
of Treasury on the expended funds plus 1%. The Secretary shall not be obligated
to (nor be liable for his failure to) take any action provided for in paragraphs
(a) and (b) of this Section.
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ARTICLE VII
AMENDMENTS AND SUPPLEMENTS TO
THE SECURITY AGREEMENT, MORTGAGE AND INDENTURE
SECTION 7.01. AMENDMENTS AND SUPPLEMENTS TO THE SECURITY AGREEMENT AND THE
MORTGAGE. This Security Agreement and the Mortgage may not be amended or
supplemented orally, but may be amended or supplemented from time to time only
by an instrument in writing executed by the Shipowner and the Secretary.
SECTION 7.02. AMENDMENTS AND SUPPLEMENTS TO THE INDENTURE. Notwithstanding
any provisions in the Indenture, the Shipowner agrees that no amendments or
supplements will be made to the Indenture without the Secretary's prior written
consent, and any purported action contrary to this Section shall be null and
void AB INITIO and of no force and effect.
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ARTICLE VIII
CONSOLIDATION, MERGER OR SALE
SECTION 8.01. CONSOLIDATION, MERGER OR SALE. (a) Nothing in this Security
Agreement or the Mortgage shall prevent any lawful consolidation or merger of
the Shipowner with or into any other Person, or any sale of the Vessel to any
other Person lawfully entitled to acquire and operate the Vessel, or any sale by
the Shipowner of all or substantially all of its assets to any other Person;
PROVIDED THAT, the Secretary shall have given its prior written consent to such
succession, merger, consolidation or sale.
(b) Any Successor shall (by indenture supplemental to the Indenture, and
by instrument amending or supplementing this Security Agreement, and the
Mortgage, as may be necessary), expressly assume the payment of the principal of
(and premium, if any) and interest on the Outstanding Obligations in accordance
with the terms of the Obligations, shall execute and deliver to the Secretary,
an endorsement to the Secretary's Note in form satisfactory to the Secretary,
shall expressly assume the payment of the principal of and interest on the
Secretary's Note, and shall expressly assume the performance of the agreements
of the Shipowner in the Indenture, this Security Agreement, the Mortgage and any
related document.
(c) Upon the assumption of the documents listed in paragraph (b) of this
Section, the Secretary shall consent to the surrender of the Vessel's documents
pursuant to the laws of the Vessel's place of documentation provided that,
concurrently with such surrender, the Vessel shall be redocumented under the
laws of the Vessel's place of documentation.
(d) In the event of any sale of the Vessel, the Secretary shall determine
if there will remain adequate security for the Guarantees after discharge of the
Vessel from the Security Agreement and Mortgage, and (1) the Shipowner shall
redeem, together with any premium and/or accrued interest thereof, the
Outstanding Obligations relating to the Vessel in accordance with the provisions
of Article Third of the Indenture, or (2) the Person to which such sale shall
have been made (the "Transferee"), shall assume the documents listed in
paragraph (b) of this Section. Upon any such assumption, the Transferee shall
succeed to and be substituted for the Shipowner with the same force and effect
as if it had been named in the Indenture, the Obligations, this Security
Agreement and the Mortgage (and such other documents) to the extent the same
relate to the Outstanding Obligations and to the Vessel.
SECTION 8.02. TRANSFER OF A GENERAL PARTNER'S OR A JOINT VENTURER'S
INTEREST. If the Shipowner is organized as a partnership or a joint venture, a
general partner or a joint venturer may lawfully transfer its respective
interests under the terms of the partnership or joint venture agreement to any
Person and may be released from all of their obligations thereunder and under
this Security Agreement or the Mortgage; PROVIDED THAT, (i) the Secretary shall
have given its prior written consent to the proposed transaction and (ii) the
transferee shall assume in full all of the existing obligations which the
transferring general partner or joint venturer has under the applicable
partnership or joint
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venture agreement, this Security Agreement, the Mortgage and any related
document.
ARTICLE IX
NOTICES
SECTION 9.01. NOTICES AND COMMUNICATIONS. Except as otherwise provided in
this Security Agreement or by the Act, all notices, requests, demands,
directions, consents, waivers, approvals or other communications shall be in
writing in the English language (or accompanied by an accurate English
translation upon which the Secretary shall have the right to rely for all
purposes under this Agreement and shall be made or delivered in person or by
registered or certified mail, postage prepaid, addressed to the party at the
address of such party specified in the Special Provisions hereof, or at such
other address as such party shall advise each other party by written notice, and
shall be effective upon receipt by the addressee thereof.
SECTION 9.02. WAIVERS OF NOTICE. In any case where notice by publication,
mail or otherwise is provided for by this Security Agreement, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be deemed the equivalent of such
notice.
SECTION 9.03. SHIPOWNER'S NAME OR ADDRESS CHANGE. The Shipowner shall not
change its name or its address without first providing written notice to the
Secretary of the new name and/or the change in address.
ARTICLE X
DISCHARGE OF SECURITY AGREEMENT AND THE MORTGAGE
SECTION 10.01. DISCHARGE OF SECURITY AGREEMENT AND THE MORTGAGE. (a) If
the Obligations and the related Secretary's Note shall have been satisfied and
discharged, and if the Shipowner shall pay or cause to be paid all other sums
that may have become secured under this Security Agreement and the Mortgage,
then this Security Agreement, the Mortgage and the liens, estate and rights and
interests hereby and thereby granted, shall cease, determine, and become null
and void, and the Secretary, on the Shipowner's Request and at the Shipowner's
cost and expense, shall forthwith cause satisfaction and discharge and duly
acknowledge such satisfaction and discharge of this Security Agreement and the
Mortgage to be entered upon its and other appropriate records, and shall execute
and deliver to the Shipowner such instruments as may be necessary, and forthwith
the estate, right, title and interest of the Secretary in and to the Security,
the Increased Security, and any other securities, cash, and any other property
held by it under this Security Agreement and the Mortgage, shall thereupon
cease, determine and become null and void, and the Secretary shall transfer,
deliver and pay the same to the Shipowner.
(b) If all of the Guarantees on the Outstanding Obligations shall have
been terminated pursuant to Sections 3.02(b) or 3.02(d), the Secretary shall
assign to the Shipowner this Security Agreement, the Mortgage and the liens,
estate, rights and interests hereby and thereby granted.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. SUCCESSORS AND ASSIGNS. All the covenants, promises,
stipulations and agreements of the Secretary and Shipowner in this Security
Agreement shall bind the Secretary and Shipowner and its respective successors
and assigns. This Security Agreement is for the sole benefit of the Shipowner,
the Secretary, and their respective successors and assigns, and no other Person
shall have any right hereunder.
SECTION 11.02. EXECUTION IN COUNTERPARTS. This Security Agreement
may be executed in any number of counterparts. All such counterparts shall
be deemed to be originals and shall together constitute but one and the same
instrument.
SECTION 11.03. SHIPOWNER'S RIGHTS IN ABSENCE OF DEFAULT. Except during the
existence of a Default), the Shipowner (1) shall be permitted to retain actual
possession and use of the Vessel, and (2) shall have the right, from time to
time, in its discretion and without the consent of or release by the Secretary,
to dispose of, free from the lien hereof and of the Mortgage, any and all
engines, machinery, masts, boats, anchors, cables, chains, rigging, tackle,
apparel, furniture, capstans, outfit, tools, pumps, pumping and other equipment,
and all other appurtenances to the Vessel, and also any and all additions,
improvements and replacements in or to the Vessel or said appurtenances, after
first or simultaneously replacing the same with items of at least substantially
equal value.
SECTION 11.04. SURRENDER OF VESSEL'S DOCUMENTS. The Secretary shall
consent to the surrender of the Vessel's documents in connection with any
redocumentation of the Vessel required on account of alterations to the Vessel
which are not prohibited by this Security Agreement and by the Mortgage.
SECTION 11.05. TABLE OF CONTENTS, TITLES AND HEADINGS. The table of
contents, and titles of the Articles and the headings of the Sections are not a
part of this Security Agreement and shall not be deemed to affect the meaning or
construction of any of its provisions.
SECTION 11.06. PAYMENTS IN U.S. CURRENCY. This is an international loan
transaction in which the specification of United States currency is of the
essence, and such currency shall be the currency of account in all events. The
respective payment obligations of the Shipowner and the Secretary hereunder
shall not be discharged by an amount paid in another currency, whether pursuant
to a judgment or otherwise, to the extent that the amount so paid on prompt
conversion to such currency under normal banking procedures does not yield after
deduction of any and all fees, taxes or any other charges imposed on the payment
of such amount of United States dollars then due. In the event that any payment
by the Shipowner or the Secretary, whether pursuant to a judgment or otherwise,
upon conversion and transfer, does not result in the payment of such amount of
United States currency at the place such amount is due, each shall be entitled
to demand immediate payment of, and shall have a separate cause of action
against the other for, the additional amount necessary to
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yield the amount then due. In the event either the Shipowner or the Secretary,
upon the conversion of such judgment into currency, shall receive (as a result
of currency exchange rate fluctuations) an amount greater than that to which it
was entitled, the defaulting party shall be entitled to immediate reimbursement
of the excess amount.
SECTION 11.07. IMMUNITY. The Shipowner represents and warrants that it is
subject to civil and commercial law with respect to its obligations under this
Agreement, that the making and performance of this Agreement constitutes private
and commercial acts rather than governmental or public acts and that neither the
Shipowner nor any of its properties or revenues has any right of immunity on the
grounds of Sovereignty or otherwise from suit, court jurisdiction, attachment
prior to judgment, attachment in aid of execution of a judgment, set-off,
execution of a judgment or from any other legal process with respect to its
obligations under this Agreement. To the extent that the Shipowner may hereafter
be entitled, in any jurisdiction in which judicial proceedings may at any time
be commenced with respect to this Agreement to claim for itself or its revenues
or assets any such immunity, and to the extent that in any such jurisdiction
there may be attributed to the Shipowner such an immunity (whether or not
claimed), the Shipowner hereby irrevocably agrees not to claim and hereby
irrevocably waives such immunity. The foregoing waiver of immunity shall have
effect under the United States Sovereign Immunities Act of 1976.
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SCHEDULE X TO SECURITY AGREEMENT DOCUMENT 13
SCHEDULE OF DEFINITIONS
"Act" means the Merchant Marine Act, 1936, as amended and in effect
on the Closing Date.
"Actual Cost" means the actual cost of a Vessel, as set forth in
Table A of the Security Agreement or as subsequently redetermined by the
Secretary pursuant to the Security Agreement and the Act.
"Administrative Agent" means CITICORP NORTH AMERICA, INC., a
Delaware corporation, as administrative agent for the Primary Lender and the
commercial paper holders of the Primary Lender (and their respective successors
and assigns), and its permitted successors and assigns.
"Agent" means each of the Administrative Agent and the Facility
Agent, individually, and "Agents" means the Administrative Agent and the
Facility Agent, collectively.
"Alternate Lender" means CITIBANK, N.A., a national banking
association and its successors and assigns.
"Audited Financial Statements" mean the annual audit of the
Shipowner's accounts in accordance with generally accepted auditing standards by
independent certified public accountants or independent licensed public
accountants, certified or licensed by a regulatory authority of a state or other
political subdivision of the United States, who may be the Shipowner's regular
auditors.
"Authorization Agreement" means the Authorization Agreement,
Contract No. MA-13510, between the Secretary and the Indenture Trustee, whereby
the Secretary authorizes the Guarantee of the United States to be endorsed on
the Obligations, as the same is originally executed, or as modified, amended or
supplemented therein.
"Authorized Newspapers" means THE WALL STREET JOURNAL and THE
JOURNAL OF COMMERCE, or if either ceases to exist, then in such other newspapers
as the Secretary may designate and a newspaper printed in English, approved by
the Secretary and of general circulation in Baltimore, Maryland.
<PAGE>
"Business Day" shall mean any day on which dealings in Dollar
deposits are carried on in the London interbank market and on which commercial
banks in London and New York City are open for domestic and foreign exchange
business.
"Chapter 313" means the provisions of 46 United States Code Chapter
313, as amended.
"Classification Society" means Lloyd's Classification Society or
such other Classification Society approved in writing by the Secretary which
Classification Society shall in any event be either a member of the
International Association of Classification Societies ("IACS") that has been ISO
9000 series registered or an IACS member that meets the requirements of the
International Maritime Organization, and is qualified under a Quality Systems
Certificate Scheme and recognized by the United States Coast Guard and the
Secretary as meeting acceptable standards.
"Closing Date" or "Closing" means the date when the Security
Agreement is executed and delivered by the Shipowner.
"Commitment to Guarantee Obligations" has the same meaning as the
term Guarantee Commitment.
"Consent of Shipyard" means each, and "Consents of Shipyards" means
every, document evidencing such Shipyard's consent to the assignment of a
Construction Contract to the Secretary under the Security Agreement as
originally executed, modified, amended or supplemented.
"Construction" means construction of the Vessel, including
designing, inspecting, outfitting and equipping thereof.
"Construction Contract" means that certain Semi-Submersible Drilling
Vessel Construction Contract (Hull No. 1829), dated April 9, 1998, by and
between the Shipowner and the Shipyard, as the same may be amended, modified or
supplemented in accordance with the applicable provisions thereto.
"Construction Fund" has the meaning specified in Article IV of
the Security Agreement.
"Corporate Trust Office" means the principal corporate trust office
of the Indenture Trustee at which, at any time, its corporate trust business
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shall be principally administered, which office at the date of execution of the
Indenture is located at 25 South Charles Street, 16th Floor, Mail Code 101-591,
Baltimore, Maryland 21201.
"Credit Agreement" or "Agreement" shall mean the Credit Agreement,
dated as of the Closing Date, among the Shipowner, the Lenders, and the Agents,
including any Exhibit, Annex, or other attachment thereto, as the same may be
amended, modified or supplemented.
"Default" when used in the Security Agreement has the meaning
attributed to it in Article VI thereof.
"Delivery Date" means the date on which a Vessel is delivered to
and accepted by the Shipowner.
"Depository" shall mean the institution designated in the
Depository Agreement or any successor.
"Depository Agreement" shall mean the Depository Agreement, Contract
No. MA-13514 among the Shipowner, the Secretary and the Depository, as
originally executed or as modified or supplemented in accordance with the
applicable provisions thereof.
"Depreciated Actual Cost" means the depreciated actual cost of a
Vessel, as set forth in Table A of the Security Agreement or as subsequently
redetermined by the Secretary pursuant to the Security Agreement and the Act.
"Eligible Investment" has the meaning given by Section 5 of the
Financial Agreement.
"Escrow Fund" means the account held by the Secretary, established
under Section 1108 of the Act and administered pursuant to Article V of the
Security Agreement.
"Facility Agent" means CITIBANK INTERNATIONAL PLC, a bank organized
and existing under the laws of England, as facility agent for both the Primary
Lender and the Alternative Lender (and their respective successors and assigns),
and its permitted successors and assigns.
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"Financial Agreement" means the Title XI Reserve Fund and Financial
Agreement, Contract No. MA-13513, executed by the Shipowner and the Secretary,
as originally executed or as modified, amended or supplemented in accordance
with the applicable provisions thereof.
"Financial Asset" has the meaning given by Article 8-102(a)(9) of
the UCC.
"Government Use" means the use of a Vessel or requisition of its
title required by a governmental body of the United States of America.
"Guarantee" means each, and the "Guarantees" means every, guarantee
of an Obligation by the United States pursuant to Title XI of the Act, as
provided in the Authorization Agreement.
"Guarantee Commitment" means the Commitment to Guarantee
Obligations, Contract No. MA-13509, dated as of the Closing Date, executed by
the Secretary and accepted by the Shipowner with respect to the Guarantees, as
originally executed or as modified, amended or supplemented in accordance with
the applicable provisions thereof.
"Increased Security" means the Secretary's Note, the Security
Agreement, the Vessels, the Security, the Escrow Fund, the Title XI Reserve
Fund, the Construction Fund, and any other security agreement between the
Secretary and the Shipowner relating to any vessels financed under the Act, and
the Policies of Insurance, and the proceeds of the foregoing.
"Indenture" means the Trust Indenture dated as of the Closing Date,
between the Shipowner and the Indenture Trustee, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Indenture Default" has the meaning specified in Article VI of
the Indenture.
"Indenture Trustee" means FMB Trust Company, National Association, a
national banking association, and any successor trustee permitted under the
Indenture.
"Interest Payment Date" means with respect to any Obligation, the
date when any installment of interest on such Obligation is due and payable.
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"Lender" shall mean shall mean either the Primary Lender or the
Alternate Lender, as the case may be, depending on which of the two parties made
or will make the relevant disbursement of funds under the Credit Agreement;
provided, however, that if the Primary Lender assigns its rights under the
Credit Agreement to the Alternate Lender, the term "Lender," shall mean only the
Alternate Lender, CITIBANK, N.A., a national banking association, and its
successors and assigns.
"Long Term Debt" means, as of any date, the total notes, bonds,
debentures, equipment obligations and other evidence of indebtedness that would
be included in long term debt in accordance with generally accepted accounting
principles. There shall also be included any guarantee or other liability for
the debt of any other Person, not otherwise included on the balance sheet.
"Maturity" when used with respect to any Obligation, means the date
on which the principal of such Obligation becomes due and payable as therein
provided, whether at the Stated Maturity or by redemption, declaration of
acceleration or otherwise.
"Moneys Due with Respect to Construction of the Vessel" has the
meaning specified in Section 1.03 of the Security Agreement.
"Mortgage" means the first preferred ship mortgage on the Vessel,
Contract No. MA-13512, between the Shipowner and the Secretary, as originally
executed or as modified, amended
"Mortgagee" means the Secretary, as mortgagee under the Mortgage.
"Mortgagor" means the Shipowner, as mortgagor under the Mortgage.
"Net Worth" means, as of any date, the total of paid-in capital
stock, paid-in surplus, earned surplus and appropriated surplus, and all other
amounts that would be included in net worth in accordance with generally
accepted accounting principles, but exclusive of (1) any receivables from any
stockholder, director, Officer or employee of the Company or from any Related
Party (other than current receivables arising out of the ordinary course of
business and not outstanding for more than 60 days) and (2) any increment
resulting from the reappraisal of assets.
"Obligation" or "Obligations" shall mean the Floating Rate Note or
Fixed Rate Note(s) of the Shipowner bearing a Guarantee and authenticated and
delivered pursuant to the Indenture and the Authorization Agreement.
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"Obligation Register" has the meaning specified in Section 2.10
of the Indenture.
"Obligee" means each, and "Obligees" means every, Holder of an
Obligation.
"Offering Circular" means the offering circular relating to the
issuance and sale of each Fixed Rate Note.
"Officer's Certificate" means a certificate conforming to Section
1.02 of the Security Agreement or the Indenture as the context may require.
"Outstanding" when used with reference to the Obligations, shall
mean all Obligations theretofore issued under the Indenture, except: (1)
Obligations Retired or Paid; and (2) Obligations in lieu of which other
Obligations have been issued under the Indenture.
"Paying Agent" means any bank or trust company having the
qualifications set forth in clauses (1), (3), (4) and (5) of Section 7.02(a) of
Exhibit 1 to the Indenture, which shall be appointed by the Shipowner in
accordance with Section 4.02 of Exhibit 1 to the Indenture to pay the principal
of (and premium, if any) or interest on the Obligations on behalf of the
Shipowner.
"Payment Default" has the meaning specified in Section 6.01 of
the Security Agreement.
"Person" or "Persons" means any individual, corporation,
partnership, joint venture, association, limited liability company, joint-stock
company, trust, unincorporated organization, government, or any agency or
political subdivision thereof.
"Policies of Insurance" and "policies" means all cover notes,
binders, policies of insurance and certificates of entry in a protection and
indemnity association, club or syndicate with respect to the Vessel, (including
all endorsements and riders thereto), including but not limited to all insurance
required under Section 2.05 of the Security Agreement.
"Primary Lender" means GOVCO INCORPORATED, a Delaware corporation,
and its successors and assigns.
"Redemption Date" means a date fixed for the redemption of an
Obligation by the Indenture.
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"Related Party" means one that can exercise control or significant
influence over the management and/or operating policies of another Person, to
the extent that one of the Persons may be prevented from fully pursuing its own
separate interests. Related parties consist of all affiliates of an enterprise,
including (1) its management and their immediate families, (2) its principal
owners and their immediate families, (3) its investments accounted for by the
equity method, (4) beneficial employee trusts that are managed by the management
of the enterprise, and (5) any Person that may, or does, deal with the
enterprise and has ownership of, control over, or can significantly influence
the management or operating policies of another Person to the extent that an
arm's-length transaction may not be achieved.
"Request" means a written request to a Person for the action therein
specified, signed by a Responsible Officer of the Person making such request.
"Responsible Officer" means (1) in the case of any business
corporation, the chairman of the board of directors, the president, any
executive or senior vice president, the secretary, the treasurer, member or
partner, (2) in the case of any commercial bank, the chairman or vice-chairman
of the executive committee of the board of directors or trustees, the president,
any executive or senior vice president, the secretary, the treasurer, any trust
officer, and (3) with respect to the signing or authentication of Obligations
and Guarantees by the Indenture Trustee, any person specifically authorized by
the Indenture Trustee to sign or authenticate Obligations.
"Retired or Paid," as applied to Obligations and the indebtedness
evidenced thereby, means that such Obligations shall be deemed to have been so
retired or paid and shall no longer be entitled to any rights or benefits
provided in the Indenture if: (1) such Obligations shall have been paid in full;
(2) such Obligations shall have been canceled by the Indenture Trustee; or (3)
such Obligations shall have become due and payable at Maturity and funds
sufficient for the payment of such Obligations (including interest to the date
of Maturity, or in the case of a payment after Maturity, to the date of payment,
together with any premium thereon) and available for such payment and are held
by the Indenture Trustee or any Paying Agent with irrevocable directions, to pay
such Obligations; PROVIDED THAT, the foregoing definition is subject to Section
6.08 of the Indenture.
"Rights Under the Construction Contract and Related Contracts" shall
have the meaning specified in Section 1.03 of the Security Agreement.
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"Secretary" means the Secretary of Transportation or any officials
duly authorized to perform the functions of the Secretary of Transportation
under Title XI of the Act.
"Secretary's Note" means a promissory note or promissory notes
issued and delivered by the Shipowner to the Secretary substantially in the form
of Exhibit 2 of the Security Agreement, including any promissory note issued in
substitution for, or any endorsement or supplement thereof.
"Secretary's Notice" means a notice from the Secretary to the
Indenture Trustee that a Default, within the meaning of Section 6.01(b) of the
Security Agreement has occurred.
"Secretary of Defense" means the Secretary of Defense of the United
States of America.
"Security" has the meaning specified in Section 1.03 of the Security
Agreement.
"Securities Account" has the meaning given by Article 8-501 of the
UCC.
"Securities Intermediary" has the meaning given by Article
8-102(a)(14) of the UCC and also means the Depository.
"Security Agreement" means the security agreement, Contract No.
MA-13511, dated as of the Closing Date, consisting of the special provisions,
the general provisions and this schedule X, executed by the Shipowner as
security for the Secretary, as originally executed or as modified, amended or
supplemented.
"Security Default" has the meaning specified in Section 6.01 of
the Security Agreement.
"Shipowner" means Petrodrill Five Limited, a British Virgin Islands
international business company, and shall include its successors and assigns.
"Shipyard" or "Shipbuilder" means TDI-Halter, Limited
Partnership, a Louisiana limited partnership.
"Stated Maturity" means the date determinable as set forth in any
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Obligation as the final date on which the principal of such Obligation is due
and payable.
"Successor" means a Person formed by or surviving a consolidation or
merger with the Shipowner or to which the Vessels have been sold.
"Supplemental Indenture" shall mean any indenture supplemental to
the Indenture entered into pursuant to Article X of the Indenture.
"Title XI" means Title XI of the Act.
"Title XI Reserve Fund" has the meaning specified in the Financial
Agreement.
"Title XI Reserve Fund and Financial Agreement" means the Financial
Agreement.
"UCC" means the Uniform Commercial Code as enacted in the State of
New York.
"Vessel" means the Shipowner's Semi-Submersible Drilling Rig to be
named the AMETHYST 5 and constructed by TDI-Halter, Limited Partnership in
accordance with the Construction Contract, including all work and material
heretofore or hereafter performed upon or installed in or placed on board such
Vessel, together with related appurtenances, additions, improvements, and
replacements.
"Working Capital" shall mean the excess of current assets over
current liabilities, both determined in accordance with generally accepted
accounting principles and adjusted as follows:
(1) In determining current assets, there shall also be deducted: (A)
Any securities, obligations or evidence of indebtedness of a Related Party
or of any stockholder, director, officer or employee (or any member of his
family) of the Company or of such Related Party, except advances to agents
required for the normal current operation of the Company's vessels and
current receivables arising out of the ordinary course of business and not
outstanding for more than 60 days; and (B) An amount equal to any excess
of unterminated voyage revenue over unterminated voyage expenses;
(2) In determining current liabilities, there shall be deducted any
excess of unterminated voyage expenses over unterminated voyage revenue;
and
9
<PAGE>
(3) In determining current liabilities, there shall be added one
half of all annual charter hire and other lease obligations (having a term
of more than six months) due and payable within the succeeding fiscal
year, other than charter hire and such other lease obligations already
included and reported as a current liability on the Company's balance
sheet.
10
EXHIBIT 4.21
APPENDIX III TO GUARANTEE COMMITMENT DOCUMENT 11
CONTRACT NO. MA-13505
SECURITY AGREEMENT
SPECIAL PROVISIONS
THIS SECURITY AGREEMENT, dated April 9, 1999 (the "Security Agreement"),
is between PETRODRILL FOUR LIMITED, a British Virgin Islands international
business company (the "Shipowner") and THE UNITED STATES OF AMERICA (the "United
States"), represented by the Secretary of Transportation, acting by and through
the Maritime Administrator (the "Secretary"), pursuant to Title XI of the Act.
RECITALS:
A. The Shipowner has entered the Construction Contract with TDI-Halter,
Limited Partnership, the Shipyard for the Construction of the Vessel.
B. On the date hereof, the Secretary entered into, and the Shipowner
accepted a Commitment to Guarantee Obligations, Contract No. MA-13503, whereby
the United States has committed itself to guarantee the payment in full of all
the unpaid interest on, and the unpaid principal balance of, Obligations (as
defined herein) in the aggregate principal amount equal to 87-1/2% of the Actual
Cost of the Vessel on the Closing Date, which amount is set out in Table A.
C. The Shipowner has entered into the Credit Agreement providing for the
sale and delivery, on the Closing Date, of obligations in the aggregate
principal amount of $149,625,000 to be designated "United States Government
Guaranteed Export Ship Financing Obligations, AMETHYST 4 Series" (the
"Obligations") having the maturity date and interest rate set forth in the
Credit Agreement, the Indenture and the Obligations.
D. On the date hereof, the Shipowner and FMB Trust Company, National
Association, a national banking association, as Indenture Trustee, executed and
delivered the Trust Indenture (the "Indenture") pursuant to which the Shipowner
will issue the Obligations.
E. On the date hereof, the Secretary and the Indenture Trustee executed
the Authorization Agreement, Contract No. MA-13504, which authorizes the
Indenture Trustee to endorse, execute, and authenticate the Secretary's
Guarantee on each of the Obligations.
F. As security for the due and timely payment of the Secretary's Note,
issued this day by the Shipowner, and for the Secretary's issuance of the
Guarantees, the Shipowner has executed and delivered the Security Agreement,
Contract No. MA-13505, and the Financial Agreement, Contract No. MA-13507, on
the Delivery Date will execute the Mortgage, Contract No. MA-13506 granting
<PAGE>
the Secretary a security interest in, among other things, the Construction
Contract, the Vessel and certain other property, tangible and intangible, which
the Shipowner now has or hereafter will acquire, and all of the proceeds
thereof.
G. As further security to the Secretary and in consideration of the
Secretary's agreeing to issue the Guarantees, the Shipyard has executed on this
date the Consent of Shipyard to the assignment of the Construction Contract to
the Secretary.
H. In order to implement certain aspects of the transactions contemplated
by the Security Agreement and the Financial Agreement, the Secretary, the
Shipowner and CITIBANK, N.A., a national banking association (the "Depository")
have entered into the Depository Agreement, Contract No.
MA-13508, on the date hereof.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and in order to provide security to
the Secretary for the Secretary's Note provided for herein, the parties hereto
hereby agree as follows:
1. CONCERNING THESE SPECIAL AND GENERAL PROVISIONS. This Security Agreement
shall consist of two parts: the Special Provisions and the General Provisions
attached hereto as Exhibit 1 of the Security Agreement and incorporated herein
by reference. In the event of any conflict, or inconsistency between the Special
Provisions of this Security Agreement and Exhibit 1, said Special Provisions
shall control.
2. The following additions, deletions and amendments are hereby made to the
Security Agreement:
(a) CONCERNING THE CREDIT AGREEMENT. The term "Bond Purchase Agreement"
refers to the Credit Agreement.
(b) GRANTING CLAUSE. Section 1.03(a) of Exhibit 1 hereto is amended to
read as follows:
SECTION 1.03. GRANTING CLAUSE. (a) In order to create a present
security interest in the Secretary, the Shipowner does hereby grant, sell,
convey, assign, transfer, mortgage, pledge, set over and confirm unto the
Secretary continuing security interests in all of the right, title and
interest of the Shipowner in and to all of the following, whether now
owned or existing or hereafter arising or acquired:
(1) Hull 1828 and all material, machinery, and equipment which
are purchased for or identified for use in the construction of said hull
pursuant to the Construction Contract, as amended, while under
construction, including all additional, extra,
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<PAGE>
or changed items requested by the Shipowner and agreed upon by the
Shipyard pursuant to the Construction Contract.
(2) The Construction Contract (insofar as it relates to the
Construction of the Vessel), together with all other contracts, whether
now in existence or hereafter entered into, relating to the Construction
of the Vessel. Said right, title and interest in and to the Construction
Contract, and the other contracts conveyed to the Secretary by this
subsection are hereinafter referred to collectively as the "Rights Under
the Construction and Related Contracts."
(3 ) The Guaranty of Halter Group Marine Inc., in
connection with the Construction Contract.
(4) The Shipowner's rights to receive all moneys which from
time to time may become due to the Shipowner with respect to the
Construction of the Vessel regardless of the legal theory by which moneys
are recovered. Said right, title and interest in and to the moneys, cash,
bonds, claims, and securities conveyed by this subsection are herein
referred to collectively as the "Moneys Due with Respect to the
Construction of the Vessel." The Secretary acknowledges and agrees that
the Moneys Due with Respect to the Construction of the Vessel will be paid
directly to the Depository for application in accordance with this
Security Agreement and the Indenture.
(5) All goods, whether equipment or inventory appertaining to
or relating to the Vessel, including owner-furnished equipment, whether or
not on board or ashore and not covered by the Mortgage.
(6) The Chartering Contract between the Shipowner and Petroleo
Brasileiro S.A. ("Petrobras") and the charter hire due thereunder, and the
Shipowner's rights to receive all moneys which from time to time may
become due to the Shipowner with respect to any other charter or charter
hire relating to the Vessel or other earnings with respect to the
operation of the Vessel.
(7) The Title XI Reserve Fund and all moneys, instruments,
negotiable documents, chattel paper, and proceeds thereof currently on
deposit or hereafter deposited in the Title XI Reserve Fund.
(8) The Construction Fund and all moneys, instruments,
negotiable documents, chattel paper and proceeds, etc.
(9) All moneys, instruments, negotiable documents, chattel
paper and proceeds thereof held by the Depository under the Depository
Agreement.
- 3 -
<PAGE>
(10) Proceeds of Policies of Insurance relating to the Vessel
and, whether or not insured, any general average claims or loss of hire
claims the Shipowner may have with respect to the Vessel.
(11) The Licensing Agreement between the Shipowner and Bigem
Holdings N.V. relating to certain design data.
(12) The Management Agreement between the Shipowner and
Formaritima Ltd. relating to the management of the operation and
maintenance of the Vessel.
(13) The Marine and Nautical Services Agreement between the
Shipowner and Workships Contractors B.V. relating to the day to day marine
and nautical operation and maintenance of the Vessel.
(14) The Construction Management Agreement between the
Shipowner and Petrodrill Engineering N.V. relating to construction
supervision, managing, accounting and budgeting, facilities and related
services in connection with the Vessel.
(15) All proceeds of the collateral described in paragraphs
(1) through (14) of this Section.
The Secretary shall have, upon execution and delivery thereof, as
further security, certain right, title and interest in and to the
following:
(16) The Mortgage, in form and substance satisfactory to the
Secretary to be executed and delivered by the Shipowner to the Secretary,
as mortgagee, on the Delivery Date, covering the Vessel.
(c) CONCERNING SECTION 2.02
For purposes of Section 2.02(b), the Secretary consents to
Chartering Contract 101.2.063.97-8 dated December 5, 1997 between
the Shipowner and Petroleo Brasileiro SA ("Petrobras").
(d) CONCERNING SECTION 2.05
(1) In connection with Section 2.05(a), declared war risk insurance
is not required prior to the Delivery Date of the Vessel.
(2) In connection with Section 2.05(b)(3) and the last paragraph of
Section 2.05(e), the maximum amount of self-insurance permitted to
the Shipowner under the last paragraph thereof shall be $100,000 per
occurrence, PROVIDED, HOWEVER, that
- 4 -
<PAGE>
the maximum amount of self-insurance permitted to the Shipowner will
be $150,000 per occurrence or series of occurrences arising out of
one event in respect to a named wind storm, and $250,000 for
operational risks arising from any one occurrence.
(3) In connection with clause (ii) of the initial paragraph of
Section 2.05(c), the Secretary shall permit payment of losses up to
the amount of $500,000 to be made directly to the Shipowner under
the circumstances specified therein.
(4) In connection with Section 2.05(l), as evidence of insurance
maintained under Section 2.05, the Shipowner may submit a fleet
cover note or comparable certificate of insurance setting forth the
terms of the policy.
(e) CONCERNING SECTION 2.08.
(1) The notice referred to in paragraph of Section 2.08 shall read
as follows:
"NOTICE OF SHIP MORTGAGE
This Vessel is owned by PETRODRILL FOUR LIMITED, a British
Virgin Islands international business company ("Shipowner"), and is
covered by a First Preferred Ship Mortgage in favor of the United
States of America, under authority of Merchant Shipping Act of The
Commonwealth of the Bahamas. Under the terms of said Mortgage
neither the Shipowner, any charterer, the master or agent of this
Vessel nor any other person has any right, power or authority to
create, incur or permit to be placed or imposed upon this Vessel any
lien whatsoever."
(2) The first sentence of Section 2.08 of Exhibit 1 hereto is
amended by inserting immediately after the words "Vessel's documents" and
immediately before the word "and", the following:
; PROVIDED THAT, if at any time, it is provided by law that a
Vessel's documents may be carried or kept at any place other
than aboard the Vessel, then the certified copy of the
Mortgage, any supplement to the Mortgage and any assignment of
the Mortgage shall be carried or kept with the Vessel's
documents,
(f) CONCERNING DISBURSEMENTS FROM THE CREDIT FACILITY. Within a
reasonable time after receipt of a Certificate Authorizing Disbursements (the
"Certificate") in the form of Annex A to the Credit Agreement together with the
submissions required by Section 5.03(a)(1),
- 5 -
<PAGE>
the Secretary shall approve the Certificate provided that the Secretary has
received and is satisfied with the accuracy and completeness of the information
contained in the certificate and the information contained in the submissions
required by Section 5.03(a)(1) and provided that the Secretary concludes that
the provisions of section 5.03(a)(2) are also satisfied. Upon receipt of the
Secretary's written approval of the Certificate, the Shipowner may draw down on
the Credit Facility the amount permitted in the Certificate as approved by the
Secretary, in the manner permitted by the Credit Agreement.
(g) CONCERNING SECTION 6.01. Section 6.01 of Exhibit 1 hereto is
hereby amended by adding the following events, which shall constitute a
"Security Default":
Failure of the Shipowner to convert the Floating Rate Note
to Fixed Rate Note(s) on the earlier of (i) August 15, 2002 or
(ii) two (2) years after the Delivery Date.
Any event constituting a default under any security
agreement or mortgage as amended, relating to the vessel owned
by PETRODRILL FIVE LIMITED and financed under Title XI of the
Merchant Marine Act, 1936, as amended.
Failure to maintain at its registered office a register of
mortgages, charges or other encumbrances, or failure to enter
thereon the particulars of the security interests granted by the
Security Agreement and the Financial Agreement, or failure to
file a copy of the Security Agreement or the Financial Agreement
at the Companies Registry of the British Virgin Islands.
(h) CONCERNING SECTION 9.01. Subject to Section 9.01 of the Security
Agreement, any notice, request, demand, direction, consent, waiver, approval or
other communication, when given to a party hereto, shall be addressed to:
Secretary as: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
U.S. Department of Transportation
400 Seventh Street, S.W.
Washington, D.C. 20590
Shipowner as: PETRODRILL FOUR LIMITED
c/o Arias, Fabrega & Fabrega
P.O. Box 985
Omar Hodge Building
Wickham's Cay
Road Town, Tortola
British Virgin Islands
With a copy to: PETRODRILL ENGINEERING NV
K.P. van der Mandelelaan 38
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<PAGE>
3062 MB
Rotterdam (Brainpark)
The Netherlands
Indenture Trustee as: FMB TRUST COMPANY,
NATIONAL ASSOCIATION
25 South Charles St.
16th Floor
(Mail Code 101-591)
Baltimore, MD 21201
(i) GOVERNING LAW. This Agreement and the rights and obligations of the
parties hereto shall be construed, enforced and governed by the laws of the
United States of America, but to the extent they are inapplicable, then by the
laws of the State of New York, including without limitation, the Uniform
Commercial Code of the State of New York ("UCC"), but without regard to any
conflict of laws provisions of the State of New York; provided, however, that to
the extent required by the UCC, the laws of the British Virgin Islands shall
govern the perfection of accounts and general intangibles hereunder.
(j) JURISDICTION AND CONSENT TO SUIT. Any proceeding to enforce this
Agreement may be brought in the Federal courts of the United States of America
located in the State of New York] of the United States of America. The Shipowner
and the Secretary hereby irrevocably waive any present or future objection to
such venue, and for each of itself and in respect of any of their respective
properties hereby irrevocably consents and submits unconditionally to the
non-exclusive jurisdiction of those courts. The Shipowner further irrevocably
waives any claim that any such court is not a convenient forum for any such
proceeding. The Shipowner agrees that any service of process, writ, judgment or
other notice of legal process shall be deemed and held in every respect to be
effectively served upon it in connection with proceedings in the State of New
York if delivered to Sher & Blackwell, 1850 M Street, N.W., Suite 900,
Washington, D.C. 20036, which it irrevocably designates and appoints as its
authorized agent for the service of process in the State and Federal courts in
the State of New York. Nothing herein shall affect the right of the Secretary to
serve process in any other manner permitted by applicable law. The Shipowner
further agrees that final judgment against it in any such action or proceeding
arising out of or relating to this Agreement shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States of
America by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of that fact and of the judgment.
(k) CONCERNING DISCLOSURE SHIPYARD PLANS. The Secretary shall not disclose
or release the Shipowner's or the Shipyard's plans (including designs, drawings,
construction drawings, and data) to any third party unless ordered to do so by a
state or federal court or unless the Secretary releases the plans to a
subsequent purchaser of the Vessel after Default by the Shipowner. In the event
an action is brought by a third party under the Freedom of Information Act or
under some other statute to obtain the disclosure of the Shipyard's plans, the
Secretary shall notify the Shipowner within ten (10) Business Days.
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<PAGE>
(l) ENGAGEMENT LETTER. The Shipowner will not enter into a placement
letter or engagement letter for the fixed rate financing without the prior
written consent of the Secretary.
(m) INCONSISTENCIES. Notwithstanding any provision herein, in the event
there are any inconsistencies between the original of this document held by the
Secretary, and an original held by any other party to this transaction, the
provisions of the original held by the Secretary shall prevail.
- 8 -
<PAGE>
IN WITNESS WHEREOF, this Security Agreement has been executed by the
parties as of the day and year first written.
PETRODRILL FOUR LIMITED
SHIPOWNER
Attest: BY: /s/ EARL W. MCNIEL
-------------------
Treasurer
/s/ ROBERT W. RANDALL
- - -----------------------
Secretary
UNITED STATES OF AMERICA
(SEAL) SECRETARY OF TRANSPORTATION
MARITIME ADMINISTRATOR
Attest:
BY: /s/ JOEL C. RICHARD
-------------------
/s/ LARRY MAIN Secretary
- - -----------------------
Assistant Secretary
Maritime Administration
- 9 -
<PAGE>
TABLE A
The Actual Cost of the Vessel as of the date hereof as determined by the
Secretary is $171,000,063.
The itemization of said Actual Cost is as follows:
Shipyard Contract Price $84,000,000
Owner Furnished Items 22,700,000
Design 1,663,000
Project Management Team 5,000,000
Spare Parts & Manual 3,500,000
Commissioning 2,000,000
Maritima Reimbursement 800,000
Insurance 200,000
Contingencies 11,976,000
Owner Furnished Foreign Items 24,500,000
-------------
Total Construction Cost $156,339,000
Net Interest during Construction 8,432,000
Guarantee Fee 6,229,063
------------
Estimated Total Actual Cost $171,000,063
<PAGE>
EXHIBIT 1 TO SECURITY AGREEMENT DOCUMENT 12
GENERAL PROVISIONS
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; OFFICER'S CERTIFICATES; GRANTING CLAUSE
PAGE
SECTION 1.01. Definitions...............................................1
SECTION 1.02. Officer's Certificates....................................1
SECTION 1.03. Granting Clause...........................................1
ARTICLE II
SHIPOWNER'S REPRESENTATIONS AND AGREEMENTS
SECTION 2.01. Shipowner's Representations, Agreements, Organization and
Existence
(a) General Representations...............................2
(b) Taxes.................................................3
SECTION 2.02. (a) Title to and Possession of the Vessel.................3
(b) Sale, Mortgage, Transfer or Charter of the Vessel.....4
(c) Taxes and Governmental Charges........................4
(d) Liens.................................................4
(e) Requisitions by the United States.....................4
(f) Compliance with Applicable Laws.......................5
(g) Operation of the Vessel...............................5
(h) Condition and Maintenance of the Vessel...............5
(i) Material Changes in the Vessel........................6
(j) Documentation of the Vessel...........................6
SECTION 2.03. Maintenance of Construction Contract......................6
SECTION 2.04. Delivery Requirements.....................................7
SECTION 2.05. Insurance.................................................7
SECTION 2.06. Inspection of the Vessel; Examination of Shipowner's
Records..................................................13
SECTION 2.07. Requisition of Title, Termination of Construction Contract
or Total Loss of the Vessel..............................13
SECTION 2.08. Notice of Mortgage.......................................14
SECTION 2.09. Compliance with Mortgage Laws............................15
SECTION 2.10. Performance of Shipowner's Agreements by the Secretary...15
SECTION 2.11. Perfection of Security Interests; Further Assurances.....15
SECTION 2.12. Modification of Formation Agreements.....................15
SECTION 2.13. Members of Limited Liability Companies...................16
SECTION 2.14. Concerning the Performance and Payment Bonds.............16
i
<PAGE>
ARTICLE III
THE SECRETARY'S NOTE
SECTION 3.01. Secretary's Note............................................16
SECTION 3.02. Termination of the Guarantees...............................16
SECTION 3.03. Execution of Additional Secretary's Note....................17
ARTICLE IV
CONSTRUCTION FUND; MONEYS DUE WITH RESPECT TO
CONSTRUCTION OF THE VESSEL
SECTION 4.01. Construction Fund...........................................18
SECTION 4.02. Moneys Due with Respect to Construction of the Vessel.......18
ARTICLE V
ACTUAL COST; THE ESCROW FUND
SECTION 5.01. Actual Cost Determination...................................18
SECTION 5.02. Escrow Fund Deposits........................................19
SECTION 5.03. Escrow Fund Withdrawals.....................................19
SECTION 5.04. Investment and Liquidation of the Escrow Fund...............21
SECTION 5.05. Income on the Escrow Fund...................................21
SECTION 5.06. Termination Date of the Escrow Fund.........................22
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. What Constitutes "Defaults"; Continuance of Defaults........22
SECTION 6.02. Acceleration of Maturity of the Secretary's Note............23
SECTION 6.03. Waivers of Default..........................................24
SECTION 6.04. Remedies After Default......................................25
SECTION 6.05. Application of Proceeds.....................................26
SECTION 6.06. General Powers of the Secretary.............................27
ARTICLE VII
AMENDMENTS AND SUPPLEMENTS TO THE
SECURITY AGREEMENT, MORTGAGE AND INDENTURE
SECTION 7.01. Amendments and Supplements to the Security Agreement
and the Mortgage............................................28
SECTION 7.02. Amendments and Supplements to the Indenture.................28
ii
<PAGE>
ARTICLE VIII
CONSOLIDATION, MERGER OR SALE
SECTION 8.01. Consolidation, Merger, or Sale..............................29
SECTION 8.02. Transfer of a General Partner's or a Joint Venturer's
Interest....................................................29
ARTICLE IX
NOTICES
SECTION 9.01. Notices and Communications..................................30
SECTION 9.02. Waivers of Notice...........................................30
SECTION 9.03. Shipowner's Name or Address Change.........................30
ARTICLE X
DISCHARGE OF SECURITY AGREEMENT AND THE MORTGAGE
SECTION 10.01. Discharge of Security Agreement and the Mortgage............30
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Successors and Assigns......................................31
SECTION 11.02. Execution in Counterparts...................................31
SECTION 11.03. Shipowner's Rights in Absence of Default....................31
SECTION 11.04. Surrender of Vessel's Documents.............................31
SECTION 11.05. Table of Contents, Titles and Headings......................31
SECTION 11.06. Payments in U.S. Currency...................................31
SECTION 11.07. Immunity....................................................32
iii
<PAGE>
ARTICLE I
DEFINITIONS; OFFICER'S CERTIFICATES; GRANTING CLAUSE
SECTION 1.01. DEFINITIONS. All capitalized terms used, but not defined
herein, shall have the meaning ascribed in Schedule X.
SECTION 1.02. OFFICER'S CERTIFICATES. To satisfy a covenant or condition
provided for in this Security Agreement, the Responsible Officer of the Person
making such Officer's Certificate shall certify that the officer (a) has read
such covenant or condition; (b) has made or caused to be made such examination
or investigation as is necessary to enable the Officer to express an informed
opinion with respect to such covenant or condition; and (c) believes to the best
of the Officer's knowledge that such condition or covenant has been met. An
Officer's Certificate shall set forth the pertinent supporting information and
shall be subject to the Secretary's review of its adequacy and accuracy.
SECTION 1.03. GRANTING CLAUSE. (a) In order to create a present security
interest in the Secretary, the Shipowner does hereby grant, sell, convey,
assign, transfer, mortgage, pledge, set over and confirm unto the Secretary
continuing security interests in all of the right, title and interest of the
Shipowner in and to all of the following, whether now owned or existing or
hereafter arising or acquired:
(1) The Construction Contract (insofar as it relates to the
Construction of the Vessel under its related Construction Contract), together
with all other contracts, whether now in existence or hereafter entered into,
relating to the Construction of the Vessel. Said right, title and interest in
and to the Construction Contract, and the other contracts conveyed to the
Secretary by this subsection are hereinafter referred to collectively as the
"Rights Under the Construction and Related Contracts."
(2) The Shipowner's rights to receive all moneys which from time to
time may become due to the Shipowner with respect to the Construction of the
Vessel regardless of the legal theory by which moneys are recovered. Said right,
title and interest in and to the moneys, cash, bonds, claims, and securities
conveyed by this subsection are herein referred to collectively as the "Moneys
Due with Respect to the Construction of the Vessel." The Secretary acknowledges
and agrees that the Moneys Due with Respect to the Construction of the Vessel
will be paid directly to the Depository for application in accordance with this
Security Agreement and the Indenture.
(3) All goods, whether equipment or inventory appertaining to or
relating to each Vessel, whether or not on board or ashore and not covered by
the Mortgage, and any charter hire relating to each Vessel.
(4) The Title XI Reserve Fund and all moneys, instruments,
negotiable documents, chattel paper, and proceeds thereof currently on deposit
or hereafter deposited in the Title XI Reserve Fund.
<PAGE>
(5) The Construction Fund and all moneys, instruments, negotiable
documents, chattel paper and proceeds, etc.
(6) All moneys, instruments, negotiable documents, chattel paper and
proceeds thereof held by the Depository under the Depository Agreement.
(7) Proceeds of Policies of Insurance relating to the Vessel and,
whether or not insured, any general average claims or loss of hire claims the
Shipowner may have with respect to the Vessel.
(8) All proceeds of the collateral described in paragraphs (1)
through (7) of this Section.
The Secretary shall have, upon execution and delivery thereof, as further
security, certain right, title and interest in and to the following:
(9) The Mortgage, to be executed and delivered by the Shipowner to
the Secretary, as mortgagee, on the date hereof, covering the Vessel.
(b) The right, title and interest of the Secretary pursuant to Section
1.03(a) is herein, collectively, called the "Security." The Secretary shall hold
the Security as collateral security for all of the obligations and liabilities
of the Shipowner under the Secretary's Note and as collateral security for and
with respect to the Guarantees whether now made or hereafter entered into.
(c) Notwithstanding paragraphs (a) and (b) of this Section: (1) the
Shipowner shall remain liable to perform its obligations under the Construction
Contract and the above-mentioned other contracts; (2) the Secretary shall not,
by virtue of this Security Agreement, have any obligations under any of the
documents referred to in clause (1) or be required to make any payment owing by
the Shipowner thereunder; and (3) if there is no existing Default, the Shipowner
shall (subject to the rights of the Secretary hereunder) be entitled to exercise
all of its rights under each of the documents referred to in this Section and
shall be entitled to receive all of the benefits accruing to it thereunder as if
paragraphs (a) and (b) of this Section were not applicable.
(d) The Shipowner hereby agrees with the Secretary that the Security is to
be held by the Secretary subject to the further agreements and conditions set
forth herein.
ARTICLE II
SHIPOWNER'S REPRESENTATIONS AND AGREEMENTS
The Shipowner hereby represents and agrees, so long as this Security
Agreement shall not have been discharged, as follows:
SECTION 2.01. SHIPOWNER'S REPRESENTATIONS, AGREEMENTS, ORGANIZATION
AND EXISTENCE. (a)
2
<PAGE>
GENERAL REPRESENTATIONS. The Shipowner hereby represents and warrants that the
following are true statements as of the date hereof and further warrants that
they shall remain true hereafter:
(1) The Shipowner is duly organized, validly existing and in good
standing under the laws of the jurisdiction designated in the initial paragraph
of the Special Provisions hereof and shall maintain such existence. The
Shipowner has not failed to qualify to do business in any jurisdiction in which
its business or properties require such qualification, and had and has full
legal right, power and authority to own its own properties and assets and
conduct its business as it is presently conducted;
(2) the Shipowner had and has legal power and authority to enter
into and carry out the terms of the Guarantee Commitment, the Construction
Contract, Bond Purchase Agreement, Obligations, Indenture, Security Agreement,
Secretary's Note, Mortgage, Financial Agreement, and Depository Agreement (the
"Documents");
(3) each of the Documents has been duly authorized, executed and
delivered by the Shipowner and constitutes, in accordance with its respective
terms, legal, valid and binding instruments enforceable against the Shipowner,
except to the extent limited by applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws of general application relating to or
affecting the enforcement of creditors rights as from time to time in effect;
(4) the consummation of the transactions contemplated by and
compliance by the Shipowner of all the terms and provisions of the Documents
will not violate any provisions of the formation documents of the Shipowner and
will not result in a breach of the terms and provisions of, or constitute a
default under any other agreement or undertaking by the Shipowner or by which
the Shipowner is bound or any order of any court or administrative agency
entered into in any proceedings to which the Shipowner is or has been a party;
and
(5) there is no litigation, proceeding or investigation pending or,
to the best of the Shipowner's knowledge, threatened, involving the Shipowner or
any of its property which could prevent or jeopardize the performance by the
Shipowner of its obligations under the Documents;
(b) TAXES. The Shipowner has paid or caused to be paid all taxes assessed
against it, unless the same are being contested in good faith or an authorized
extension of time has been granted.
SECTION 2.02. (a) TITLE TO AND POSSESSION OF THE VESSEL. On the date of
this Security Agreement, the Shipowner represents and warrants that it lawfully
owns the Vessel free from any liens, encumbrances, security interests, charges,
or rights IN REM (subject only to (1) the equity of the Shipyard under the
Construction Contract, if any, (2) liens on any undelivered Vessel which the
Shipyard is obligated to discharge under the Construction Contract, (3) any
security interest subordinated to the Secretary's security interest permitted
under the Special Provisions hereof, (4) the Secretary's rights hereunder and
(5) the liens permitted by paragraph (d)(3) of this Section. The
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Shipowner shall, for the Secretary's benefit, warrant and defend the title to,
and possession of, the Vessel and every part thereof against the claims and
demands of all Persons whomsoever.
(b) SALE, MORTGAGE, TRANSFER OR CHARTER OF THE VESSEL. (1) The Shipowner
shall not, without the Secretary's prior written consent, sell, mortgage, demise
charter or transfer the Vessel to any Person (or charter the Vessel to a Related
Party under any form of charter).
(2) The Shipowner hereby covenants that: (A) it will not enter into
any time charter of the Vessel in excess of six months unless the time charter
contains the following provision, "This time charter is subject to each of the
rights and remedies of the Secretary of Transportation and has been assigned to
the Secretary under a Security Agreement and Mortgage, each executed by the
Shipowner in favor of the Secretary with respect to the Vessel being chartered."
and (B) it shall, within 10 calendar days of entering into any time charter in
excess of six months, transmit a copy of the time charter to the Secretary.
(3) In no event may the Shipowner transfer the Vessel to any country
designated by the Secretary of Defense as a country whose interests are hostile
to the interests of the United States.
(c) TAXES AND GOVERNMENTAL CHARGES. The Shipowner shall pay and discharge,
or cause to be paid and discharged, on or before the same shall become
delinquent, all taxes, assessments, government charges, fines and penalties
lawfully imposed upon the Vessel, unless the same are being contested in good
faith.
(d) LIENS. (1) As a condition precedent to each payment by the Shipowner
under the Construction Contract, the Shipowner shall require an Officer's
Certificate from the Shipyard stating that once the Shipyard receives said
payment, there will be no liens or rights IN REM against the respective Vessel.
At the Delivery Date of each Vessel, the Shipowner and the Shipyard shall
provide an Officer's Certificate stating that there are no liens or rights IN
REM against the Vessel except for the Mortgage.
(2) After the Delivery Date of the Vessel, the Shipowner shall
satisfy, or cause to be satisfied, within 30 days of its knowledge thereof, any
lien or encumbrance or right IN REM which shall be filed against the Vessel
unless the same is being contested in good faith; and
(3) Neither the Shipowner, any charterer, the master of the Vessel,
nor any other Person has or shall have any right, power or authority, without
the Secretary's prior written consent, to create, incur or permit to be placed
or imposed on the Vessel any lien, encumbrance, security interest, charge, or
rights IN REM, and statutory liens incident to current operations unless such
statutory liens are subordinate to the Mortgage.
(e) REQUISITIONS BY THE UNITED STATES. Should the United States of
America, or any agency or instrumentality thereof, take or
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requisition title or use of the Vessel, or seek to take or requisition title or
use of the Vessel, the Shipowner agrees to comply promptly with said request,
taking, or requisition, without the interposition of any defense whatsoever,
saving only (i) its right to dispute at a subsequent time, the amount of
compensation to be paid by the United States or (ii) the prior taking or
requisition of title or use by another governmental body. The parties agree to
be bound by the rights, duties, procedures, and remedies specified in Section
902 of the Act (46 App. U.S.C. 1242).
(f) COMPLIANCE WITH APPLICABLE LAWS. The Shipowner shall at all times be
in compliance with all applicable laws. Each Vessel (1) shall be designed to
meet, and on the Delivery Date thereof and at all times thereafter shall be
documented in a country which is party to the International Convention for
Safety of Life at Sea, or other treaty, convention or international agreement
governing vessel inspection to which the United States is a signatory and shall
comply with all requirements of applicable laws, rules, and regulations of its
country of documentation, all applicable treaties, conventions, international
agreements to which that country is a signatory and the laws, rules and
regulations of the ports it serves; and (2) shall have on board valid
certificates showing compliance therewith. The foregoing shall not apply if: (A)
the Vessel is in Government Use; (B) there has been an actual or constructive
total loss or an agreed or compromised total loss of the Vessel; or (C) there
has been any other loss with respect to the Vessel and the Shipowner shall not
have had a reasonable time to repair the same.
(g) OPERATION OF THE VESSEL. Except when the Vessel has been in Government
Use, the Shipowner shall not (1) cause or permit the Vessel to be operated in
any manner contrary to applicable law, rule, or regulation of its country of
documentation, all applicable treaties, conventions, or international agreements
to which that country is a signatory and the laws, rules, and regulations of the
ports it serves, (2) abandon the Vessel in any port unless there has been an
actual or constructive total loss or an agreed or compromised total loss of the
Vessel.
(h) CONDITION AND MAINTENANCE OF THE VESSEL. (1) The Vessel shall be
constructed, maintained and operated so as to meet, at all times, the highest
classification, certification, rating and inspection standards for vessels of
the same age and type as may be imposed by the Classification Society. The
foregoing shall not apply (i) if the Vessel has been under Government Use, (ii)
in the event of an actual or constructive total loss or an agreed or compromised
total loss of the Vessel, or (iii) there has been any other loss with respect to
the Vessel and the Shipowner shall not have had a reasonable time to repair the
same.
(2) On the Delivery Date of the Vessel, the Shipowner shall furnish to the
Secretary an Interim Class Certificate issued for the Vessel by the
Classification Society and promptly after the Delivery Date of the Vessel,
furnish to the Secretary a Certificate of Class with respect to the Vessel
issued by the Classification Society. Subsequently, the Shipowner shall annually
(A) furnish to the Secretary a Certificate of Confirmation of Class issued by
the Classification Society showing that the above-mentioned classification and
rating have been retained for each Vessel and (B) furnish to the Secretary
copies of all Classification Society reports, including periodic and damage
surveys for the Vessel; provided that, the foregoing shall not apply if the
Vessel is in Government Use and the
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governmental body does not permit classification and rating of the Vessel.
(3) Notwithstanding Section 2.02(h)(2), if the Vessel is a barge which is
not classed, then the Shipowner shall, at all times, at its own cost and expense
maintain and preserve the Vessel, so far as may be practicable, in at least as
good order and condition, ordinary wear and tear excepted, as at the Delivery
Date of the Vessel, and shall perform or cause to be performed at least once
every five years and at any other time reasonably required by the Secretary, a
survey and inspection of the Vessel by an independent marine surveyor approved
by the Secretary; and PROVIDED THAT, no such surveys will be required within the
last three years prior to the final Stated Maturity of the Obligations. The
Shipowner shall furnish two copies of the report of such independent marine
surveyor to the Secretary within 15 days of such survey and inspection. The
Shipowner shall deliver to the Secretary annually an Officer's Certificate
stating the condition and maintenance of the Vessel; PROVIDED FURTHER, that none
of this Section shall apply when the Vessel is in Government Use.
(i) MATERIAL CHANGES IN THE VESSEL. After the Delivery Date of the Vessel,
the Shipowner shall not make, or permit to be made, any material change in the
structure, means of propulsion, type or speed of such Vessel or in its rig,
unless it shall have received the Secretary's prior written consent thereto.
(j) DOCUMENTATION OF THE VESSEL. Upon the Delivery Date and thereafter,
the Vessel shall be and shall remain documented under the laws of the country
specified in the Special Provisions.
SECTION 2.03. MAINTENANCE OF CONSTRUCTION CONTRACT. (a) The Construction
Contract shall be maintained in full force and effect insofar as it relates to
the due performance by the Shipowner and the Shipyard of all their respective
obligations thereunder and the Shipowner shall not, without the Secretary's
prior written consent, amend, modify, assign or terminate the Construction
Contract or consent to any change in the Construction Contract which releases
the Shipyard from its obligations to comply with the provisions of the
Construction Contract or any applicable laws, treaties, conventions, rules and
regulations; PROVIDED THAT, the Secretary's prior written consent shall not be
necessary, but prompt written notice to the Secretary shall be given for (1) any
mandatory or regulatory change to the Construction Contract as a result of any
requirements of any governmental agency, or (2) any non-mandatory changes that
the Shipyard and the Shipowner desire to make which do not, in the aggregate,
exceed five (5%) percent of the total Construction Contract price of the Vessel,
and which do not cause the total Construction Contract price to be increased by
an individual change by more than one (1%) percent or the delivery and
completion date of the Vessel to be extended by more than ten (10) days.
Notwithstanding the foregoing, no change shall be made in the general dimensions
and/or characteristics of the Vessel which changes the capacity of the Vessel to
perform as originally intended by the Construction Contract without the
Secretary's prior written consent. The Secretary will nonetheless retain its
authority to review work done under a change order to ascertain whether the work
should be included in Actual Cost and whether the price charged is fair and
reasonable. No withdrawals may be made from the Escrow Fund for work that is
determined not to be includable in Actual Cost.
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(b) Notwithstanding anything to the contrary contained in the Construction
Contract or herein, no changes to the payment milestones and disbursement
schedules shall be made without the Secretary's prior written consent, except to
the extent reasonably required to reflect the change orders under paragraph (a)
of this Section.
SECTION 2.04. DELIVERY REQUIREMENTS. At or prior to the Delivery
Date, the Shipowner shall have:
(a) documented the Vessel under the laws of the country specified in the
Special Provisions.
(b) executed and delivered to the Secretary the Mortgage (or, if
appropriate, a mortgage supplement) in the form of Exhibit 3 hereof;
(c) recorded the Mortgage (or, if appropriate, a mortgage supplement) in
the appropriate foreign registry, specified in the Special Provisions;
(d) delivered to the Secretary an Officer's Certificate (1) from the
Shipowner and the Shipyard certifying that the Vessel is free of any claim,
lien, charge, mortgage, or other encumbrance of any character except as
permitted under Section 2.02(d); (2) certifying that there has not occurred and
is not then continuing any event which constitutes (or after any period of time
or any notice, or both, would constitute) a default under the Security
Agreement; (3) that the marine insurance as required under Section 2.05 will be
in full force and effect at the time of Vessel delivery; (4) certifying that the
Vessel was constructed substantially in accordance with the plans and
specifications of the Construction Contract; (5) certifying that there have been
no unusual occurrences (or a full description of such occurrences, if any) which
would adversely affect the condition of the delivered Vessel.
(e) delivered to the Secretary (1) an opinion of counsel substantially in
the form of Exhibit A to the form of Mortgage; and (2) a certificate of delivery
and acceptance from the Shipowner and the Shipyard to the Secretary with respect
to the delivered Vessel;
SECTION 2.05. INSURANCE. (a) Prior to the Delivery Date of the Vessel, the
Shipowner shall, without cost to the Secretary or, with respect to war risk
builder's risk insurance mentioned below, without cost to the Shipyard, cause
the Vessel to be insured as provided in the Construction Contract and as
contemplated by the Consent of Shipyard; PROVIDED THAT, the insurance required
by this Section shall be approved by the Secretary.
(b) Upon the Delivery Date of each Vessel and at all times thereafter, the
Shipowner shall, without cost to the Secretary, keep the Vessel insured as
indicated below and with such additional insurance as may be specified by the
Secretary in an amount in U.S. dollars equal to 110% of the unpaid principal
amount of the Secretary's Note, or such greater sum, up to and including the
full commercial value of the Vessel as may be required by the Secretary. The
Shipowner shall
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provide 30 days prior written notice to the Secretary of all insurance renewals.
(1) Marine and war risk hull insurance under the latest (at the time
of issue of the policies in question) forms of American Institute of Marine
Underwriters' policies approved by the Secretary and/or policies issued by or
for the Maritime Administration (or under such other forms of policies as the
Secretary may approve in writing) insuring the Vessel against the usual risks
covered by such forms (including, at the Shipowner's option, such amounts of
increased value and other forms of "total loss only" insurance as are permitted
by said hull insurance policies); and
(2) While the Vessel is laid up, at the Shipowner's option and in
lieu of the above-mentioned marine and war risk hull insurance or marine and war
risk hull and increased value insurance, port risk insurance under the latest
(at the time of issue of the policies in question) forms of American Institute
of Marine Underwriters' policies approved by the Secretary and/or policies
issued by or for the Maritime Administration (or under such other forms of
policies as the Secretary may approve in writing) insuring the Vessel against
the usual risks covered by such forms.
(3) Notwithstanding the foregoing, the Shipowner, with the
Secretary's prior written consent, shall have the right to self-insure up to the
amount specified in the Special Provisions hereof for any loss resulting from
any one accident or occurrence (other than an actual or constructive total loss
of the Vessel).
(c) All policies of insurance under this Section shall provide, so long as
this Security Agreement has not been discharged, that payment of all losses
shall be made payable to the Secretary for distribution by him to himself, the
Shipowner and (in the case of the insurance required by paragraph (a) of this
Section) the Shipyard, except that (i) under the policies required by paragraph
(b) of this Section and (ii) as provided in paragraph (e) of this Section,
payment of all losses up to the amount specified in the Special Provisions
hereof by all insurance underwriters with respect to any one accident,
occurrence or event may be made directly to the Shipowner unless there is an
existing Default, or if the Secretary shall have assumed the Shipowner's rights
and duties under the Indenture and the Obligations and made any payments in
default under the terms of Section 6.09 of the Indenture, in which event payment
of all losses shall be made payable to the Secretary as aforesaid.
Any such insurance recoveries to which the Secretary shall be so entitled
shall be applied as follows:
(1) In the event that insurance becomes payable under said policies
on account of an accident, occurrence or event not resulting in an actual or
constructive total loss or an agreed or compromised total loss of the Vessel,
the Secretary shall (A) if there is no existing Default and if none of the
events described in Section 2.07 has occurred, in accordance with the
Shipowner's Request, pay, or consent that the underwriters pay, direct for
repairs, liabilities, salvage claims or other charges and expenses (including
sue and labor charges due or paid by the Shipowner) covered by the policies, or
(to the extent that, as stated in an Officer's Certificate delivered to the
Secretary, accompanied by written confirmation by the underwriter or a surveyor
or adjuster, the damage shall have been repaired and the cost thereof paid of
such liabilities, salvage claims, or other charges and
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expenses discharged or paid) reimburse, or consent that the underwriters
reimburse, the Shipowner therefor and (after all known damage with respect to
the particular loss shall have been repaired, except to the extent the
Shipowner, with the Secretary's written consent, deems the said repair
inadvisable, and all known costs, liabilities, salvage claims, charges and
expenses, covered by the policies, with respect to such loss shall have been
discharged or paid, as stated in an Officer's Certificate delivered to the
Secretary, accompanied by written confirmation by the underwriters or a surveyor
or adjuster) pay, or consent that the underwriters pay, any balance to the
Shipowner; or (B) if there is an existing Default, in accordance with a Request
of Shipowner, pay, or consent that the underwriters pay, direct for the
Shipowner's proportion of such repairs, liabilities, salvage claims or other
charges and expenses (including sue and labor charges due or paid by the
Shipowner) covered by the policies and hold any balance until the same may be
paid or applied under Sections 2.05(c)(1)(A), 2.05(c)(1)(C) or 2.05(c)(1)(D),
whichever is applicable; or (C) if the Guarantees shall have terminated pursuant
to Section 3.02(c) or if the Secretary shall have assumed the Shipowner's rights
and duties under the Indenture and the Obligations and made any payments in
default under the terms of Section 6.09 of the Indenture and none of the events
described in Section 2.07 has occurred, apply the insurance as provided in
Section 6.05; or (D) if the Guarantees shall have terminated pursuant to Section
3.02(b) or (d), pay the insurance to the Shipowner;
(2) In the event of an accident, occurrence or event resulting in an
actual or constructive total loss of the Vessel prior to the Delivery Date of
the Vessel, the Shipowner shall forthwith deposit with the Secretary any
insurance moneys which the Shipowner receives on account thereof under policies
of insurance required by paragraph (a) of this Section, and any such insurance
moneys shall be held by the Secretary for 10 days (or such lesser or further
time as the Shipowner and the Secretary may agree upon). Upon the expiration of
said period of time, (A) if there is no existing Default and if the Shipowner,
the Shipyard and the Secretary shall have elected not to construct the Vessel
under the Construction Contract, then said insurance moneys shall be applied, to
the extent necessary and required pursuant to Section 2.07; or (B) if there is
no existing Default and if the Shipowner, the Shipyard and the Secretary shall
not have made the election contemplated by clause A of this subsection, then
said insurance moneys (together with the Shipowner's funds to the extent, if
any, required by the Secretary for deposit on account of interest under clause
(ii) below) shall be deposited in the Escrow Fund, in such amount and to the
extent available, so that the moneys in the Escrow Fund after such deposit shall
be equal to (i) the principal amount of the Outstanding Obligations relating to
the Vessel at the time of such deposit and (ii) such interest on said deposit,
if any, as may be required by the Secretary (said moneys to be subject to
withdrawal in the same manner as moneys originally deposited in said Escrow
Fund); and the balance, if any, of such insurance moneys held by the Secretary
shall be paid to the Shipowner; and
(3) In the event of an accident, occurrence or event resulting in an
actual or constructive total loss or an agreed or compromised total loss of the
Vessel, whether prior to or after the Delivery Date of the Vessel, and the
insurance moneys have not been applied as provided in paragraph (c)(2) of this
Section, the Shipowner shall forthwith deposit with the Secretary any insurance
moneys which the Shipowner receives on account thereof under policies of
insurance required by this Section, and any such insurance moneys received by
the Secretary, whether from the
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Shipowner or otherwise, or held by the Secretary pursuant to paragraph (c)(2) of
this Section, shall (A) if there is no existing Default, be applied, to the
extent necessary, pursuant to Section 2.07; (B) if there is an existing Security
Default, be held until the same may be applied under Sections 2.05(c)(3)(A),
2.05(c)(3)(C) or 2.05(c)(3)(D), whichever is applicable; (C) if the guarantees
shall have terminated pursuant to Section 3.02(c) or if the Secretary shall have
assumed the Shipowner's rights and duties under the Indenture and the
Obligations and made any payments in default under the terms of Section 6.09 of
the Indenture, be applied as provided in Section 6.05; PROVIDED THAT,
notwithstanding the foregoing Sections 2.05(c)(3)(A), 2.05(c)(3)(B), and
2.05(c)(3)(C), the Shipowner shall not be required to so deposit with the
Secretary insurance moneys in an amount which, together with funds otherwise
available for the redemption of Obligations is in excess of that required for
the redemption of the Outstanding Obligations pursuant to Section 3.05 of the
Indenture and for the payment to the Secretary of all other sums that may be
secured by this Security Agreement and the Mortgage; or (D) if the Guarantees
shall have terminated pursuant to Section 3.02(b) or 3.02(d), be paid to the
Shipowner.
(d) In the event of an accident, occurrence or event resulting in a
constructive total loss of the Vessel, the Secretary shall have the right (with
the prior written consent of the Shipowner, unless there is an existing Default,
and at any time prior to the Delivery Date of the Vessel also with the prior
written consent of the Shipyard) to claim for a constructive total loss of the
Vessel. If (1) such claim is accepted by all underwriters under all policies
then in force as to the Vessel under which payment is due for total loss and (2)
payment in full is made in cash under such policies to the Secretary, then the
Secretary shall have the right to abandon the Vessel to the underwriters of such
policies, free from lien of this Security Agreement and the Mortgage.
(e) Commencing on the Delivery Date of the Vessel, the Shipowner shall,
without cost to the Secretary, keep the Vessel insured against marine and war
risk protection and indemnity risks and liabilities by policies of insurance
approved by the Secretary as to form and amount; PROVIDED THAT, (1) the
Shipowner shall, as soon as possible before such Delivery Date, present any such
policy to the Secretary (who shall promptly approve or disapprove the same), (2)
any approval of a policy under this subsection shall be effective until the end
of the policy period or until 60 days after the Secretary shall notify the
Shipowner of a desired change in the form and/or amount thereof, whichever shall
first occur, and (3) war protection and indemnity insurance shall be required
unless the Secretary gives written notice to the Shipowner stating that such
insurance is not required.
Such policies may provide that (1) if the Shipowner shall not have
incurred the loss, damage, or expense in question, any loss under such insurance
may be paid directly to the Person to whom any liability covered by such
policies has been incurred (whether or not a Default then exists), and (2) if
the Shipowner shall have incurred the loss, damage or expense in question, any
such loss shall be paid to the Shipowner in reimbursement if there is no
existing Default of which the underwriter has written notice from the Shipowner
or the Secretary, or, if there is such an existing Default, to the Secretary to
be held and applied as follows: (A) applied as provided in Section 6.05 in the
event the Guarantees shall have terminated pursuant to Section 3.02(c) or if the
Secretary shall have assumed the Shipowner's rights and duties under the
Indenture and the Obligations and made any payments in
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default under the terms of Section 6.09 of the Indenture, or (B) to the extent
not theretofore applied pursuant to Section 6.05, paid forthwith to the
Shipowner upon its Request in the event there is no existing Default or the
Guarantees shall have terminated pursuant to Section 3.02(b) or (d) at the date
of delivery of such Request; PROVIDED THAT, irrespective of the foregoing, with
the Secretary's prior written consent, the Shipowner shall have the right to
self-insure in an amount up to the limit specified in the Special Provisions
hereof with respect to each accident, occurrence or event, except that, with
respect to cargo or property carried, the Shipowner, with the Secretary's prior
written consent, shall have the right to self-insure in an amount up to the
limit specified in the Special Provisions hereof with respect to each cargo or
property carried.
(f) All insurance required under this Section shall be placed and kept
with the United States Government or with American and/or British (and/or other
foreign, if permitted by the Secretary in writing) insurance companies,
underwriters' association or underwriting funds approved by the Secretary. All
insurance required under this Section shall be arranged through marine insurance
brokers and/or underwriting agents as chosen by the Shipowner and approved by
the Secretary.
(g) The Secretary shall not have the right to enter into an agreement or
compromise providing for an agreed or compromised total loss of the Vessel
without prior written consent of (i) the Shipyard (prior to the Delivery Date of
the Vessel) and (ii) (unless there is an existing Default) the Shipowner. If (1)
the Shipowner shall have given prior consent thereto or (2) there is an existing
Default, the Secretary shall have the right in his discretion, and with the
prior written consent of the Shipyard prior to the Delivery Date of the Vessel,
to enter into an agreement or compromise providing for an agreed or compromised
total loss of the Vessel; PROVIDED THAT, if the aggregate amount payable to the
Shipowner and/or the Secretary under such agreement or compromise, together with
funds held by the Secretary and available for the redemption of Obligations, is
not sufficient to redeem or pay the Outstanding Obligations pursuant to Section
2.07, the Secretary shall not enter into such agreement or compromise without
the Shipowner's prior written consent.
(h) During the continuance of (1) a taking or requisition of the use of
the Vessel by any government or governmental body, or (2) a charter, with the
Secretary's prior written consent, of the use of the Vessel by the United States
Government or by any governmental body of the United States, or by any other
government or governmental body, the provisions of this Section shall be deemed
to have been complied with in all respects if such government or governmental
body shall have agreed to reimburse, in a manner approved by the Secretary in
writing, the Shipowner for loss or damage covered by the insurance required
hereunder or resulting from the risks under paragraphs (a), (b) and (e) of this
Section or if the Shipowner shall be entitled to just compensation therefor. In
addition, the provisions of this Section shall be deemed to have been complied
with in all respects during any period after (A) title to the Vessel shall have
been taken or requisitioned by any government or governmental body or (B) there
shall have been an actual or constructive total loss or an agreed or compromised
total loss of the Vessel. In the event of any taking, requisition, charter or
loss contemplated by this paragraph, the Shipowner shall promptly furnish to the
Secretary an Officer's Certificate stating that such taking, requisition,
charter or loss has occurred and, if there
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shall have been a taking, requisition or charter of the use of the Vessel, that
the government or governmental body in question has agreed to reimburse the
Shipowner, in a manner approved by the Secretary, for loss or damage resulting
from the risks under paragraphs (a), (b) and (e) of this Section or that the
Shipowner is entitled to just compensation therefor.
(i) All insurance required (A) under paragraph (a) of this Section shall
be taken out in the names of the Shipowner, the United States and the Shipyard
as assureds, and (B) under paragraphs (b) and (e) of this Section shall be taken
out in the names of the Shipowner and the United States as assureds. All
policies for such insurance so taken out shall, unless otherwise consented to by
the Secretary, provide that (1) there shall be no recourse against the United
States for the payment of premiums or commissions, (2) if such policies provide
for the payment of club calls, assessments or advances, there shall be no
recourse against the United States for the payment thereof, and (3) at least 10
days' prior written notice of any cancellation for the nonpayment of premiums,
commissions, club calls, assessments or advances shall be given to the Secretary
by the insurance underwriters.
(j) The Shipowner shall not, without the Secretary's prior written
consent, (1) do any act, nor voluntarily suffer or permit any act to be done,
whereby any insurance required by this Section shall or may be suspended,
impaired or defeated or (2) suffer or permit the Vessel to engage in any voyage
or to carry any cargo not permitted under the policies of insurance then in
effect without first covering the Vessel with insurance satisfactory in all
respects for such voyage or the carriage of such cargo; PROVIDED THAT, this
paragraph shall be subject to the requirements of any military authority of the
United States and shall not apply if and so long as the title or use of the
Vessel shall have been taken, requisitioned or chartered by any government or
governmental body as contemplated by Section 2.07.
(k) In the event that any claim or lien is asserted against the Vessel for
loss, damage or expense which is covered by insurance hereunder and it is
necessary for the Shipowner to obtain a bond or supply other security to prevent
arrest of the Vessel or to release the Vessel from arrest on account of said
claim or lien, the Secretary, on the Shipowner's Request, may, at the
Secretary's sole option, assign to any Person executing a surety or guaranty
bond or other agreement to save or release the Vessel from such arrest, all
right, title and interest of the Secretary in and to said insurance covering
such loss, damage or expense as collateral security to indemnify against
liability under said bond or other agreement.
(l) Except as the Secretary shall otherwise direct by notice in writing to
the Shipowner, the Shipowner shall deliver to the Secretary the original
policies evidencing insurance maintained under this Section; PROVIDED THAT, if
any such original policy shall have been delivered previously to the Secretary
or to a mortgagee by the Shipowner under another ship mortgage of the Shipowner,
the Shipowner shall deliver a duplicate or pro forma copy of such policy to the
Secretary. The Secretary or any agent thereof (who may also be an agent of the
issuer) shall at all times hold the policies delivered as aforesaid; PROVIDED
THAT, if one or more of said policies are held by an agent of the Secretary, the
Shipowner shall, upon the Secretary's request, deliver a duplicate or pro forma
copy thereof to the Secretary, and PROVIDED FURTHER, that if the Shipowner shall
deliver to the Secretary a
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Request (1) stating that delivery of such policy to the insurer is necessary in
connection with the collection, enforcement or settlement of any claim
thereunder (including claims for return premiums and any other amounts payable
by the insurer) and (2) setting forth the name and address of the Person to whom
such policy is to be delivered or mailed for such purpose, and if the Secretary
approves such Request, the Secretary shall, at the Shipowner's expense, deliver
or mail (by registered or certified mail, postage prepaid) such policy in
accordance with such Request, accompanied by a written direction to the
recipient to redeliver such policy directly to the Secretary or an agent thereof
when it has served the purpose for which so delivered. The Shipowner agrees
that, in case it shall at any time so cause the delivery or mailing of any
policy to any Person as aforesaid, the Shipowner will cause such policy to be
promptly redelivered to the Secretary or an agent thereof as aforesaid. The
Secretary shall have no duty to see to the redelivery of such policy, but shall
have the duty to request the redelivery thereof at intervals of 60 days
thereafter.
(m) Nothing in this Section shall limit the insurance coverage which the
Secretary may require under any contract or agreement to which the Secretary and
the Shipowner are parties.
The requirements of this Section are expressly subject to the Special
Provisions of this Security Agreement.
SECTION 2.06. INSPECTION OF THE VESSEL; EXAMINATION OF SHIPOWNER'S
RECORDS. The Shipowner will: (a) afford the Secretary, upon reasonable notice,
access to the Vessel, its cargoes and papers for the purpose of inspecting the
same; (b) maintain records of all amounts paid or obligated to be paid by or for
the account of the Shipowner for the Vessel's Construction; and (c) at
reasonable times permit the Secretary, upon request, to make reasonable,
material and pertinent examination and audit of books, records and accounts
maintained by the Shipowner, and to take information therefrom and make
transcripts or copies thereof.
SECTION 2.07. REQUISITION OF TITLE, TERMINATION OF CONSTRUCTION CONTRACT
OR TOTAL LOSS OF THE VESSEL. In the event of requisition of title to or seizure
or forfeiture of the Vessel, termination of the Construction Contract relating
to the Vessel, or the occurrence of the circumstances referred to in Section
2.05(c)(3), then all of the following shall apply:
(a) The Shipowner shall promptly give written notice thereof to the
Secretary.
(b) The Shipowner shall promptly pay all amounts it receives by reason of
such requisition, seizure, forfeiture, termination or total loss ("Loss Event")
to the Secretary.
(c) After the Secretary has received sufficient funds to retire the
Outstanding Obligations affected by the Loss Event:
(1) if there is no existing Default, (A) the Secretary and the
Shipowner shall give notice to the Indenture Trustee of a redemption of the
Outstanding Obligations pursuant to Section 3.05 of the Indenture, (B) such
amount, if any, held by the Secretary, shall be paid by the Secretary to
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the Indenture Trustee not earlier than 10 days prior to, nor later than the
opening of business on, the Redemption Date required by Section 3.05 of the
Indenture, (C) the remainder shall next be applied by the Secretary for the
payment of all other sums that may be secured hereby, and (D) the balance shall
be paid to the Shipowner including any interest earned on the proceeds which are
in excess of the amount required to redeem the Obligations;
(2) if there is an existing Default and the Guarantees shall not
have terminated pursuant to Section 3.02, such amounts shall be held until the
same may be applied or paid under paragraphs (1), (3), or (4) of this
subsection, whichever is applicable;
(3) if the Guarantees shall have terminated pursuant to Section
3.02(c) or if the Secretary shall have assumed the Shipowner's rights and duties
under the Indenture and the Obligations and made any payments in default under
the terms of Section 6.09 of the Indenture, such amounts shall be applied as
provided in Section 6.05; or
(4) if the Guarantees shall have terminated pursuant to Section
3.02(b) or 3.02(d) such amounts shall be paid by the Secretary to the Shipowner.
PROVIDED THAT, notwithstanding the foregoing, the Shipowner shall not be
required to pay the Secretary any amount which the Secretary agrees is in excess
of the amount needed for redemption of the Outstanding Obligations affected by
the Loss Event.
SECTION 2.08. NOTICE OF MORTGAGE. (a) A properly certified copy of the
Mortgage shall be carried on board the Vessel with the Vessel's documents and
shall be exhibited on demand to any Person having business with the Vessel or to
any Secretary's representative.
(b) A notice printed in plain type of such size that the paragraph of
reading matter shall cover a space not less than six inches wide by nine inches
high, and framed, shall be placed and kept prominently exhibited in the chart
room and in the master's cabin of the Vessel.
(c) The notice referred to in paragraph (b) of this Section shall read as
follows:
"NOTICE OF SHIP MORTGAGE
This Vessel is owned by (NAME OF SHIPOWNER) , a (JURISDICTION)
("Shipowner"), and is covered by a First Preferred Ship Mortgage in favor
of the United States of America, under authority of (NAME OF COUNTRY AND
LEGAL CITATION). Under the terms of said Mortgage neither the Shipowner,
any charterer, the master or agent of this Vessel nor any other person has
any right, power or authority to create, incur or permit to be placed or
imposed upon this Vessel any lien other than statutory liens incident to
current operations that are subordinate to the Mortgage."
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SECTION 2.09. COMPLIANCE WITH MORTGAGE LAWS. The Shipowner shall comply
with and satisfy all of the provisions of the pertinent mortgage laws of the
country in which the Vessel is documented in order to establish and thereafter
maintain the Mortgage thereunder as a preferred mortgage upon the Vessel.
SECTION 2.10. PERFORMANCE OF SHIPOWNER'S AGREEMENTS BY THE SECRETARY. If
the Shipowner shall fail to perform any of its agreements hereunder or under the
Mortgage, the Secretary may, in its discretion, at any time during the
continuance of an event which by itself, with the passage of time, or the giving
of notice, would constitute a Default, perform all acts and make all necessary
expenditures to remedy such failure. Notwithstanding the foregoing, the
Secretary shall not be obligated to (and shall not be liable for the failure to)
perform such acts and make such expenditures. All funds advanced and expenses
and damages incurred by the Secretary relating to such compliance shall
constitute a debt due from the Shipowner to the Secretary and shall be secured
hereunder and under the Mortgage prior to the Secretary's Note and shall be
repaid by the Shipowner upon demand, together with interest at the rate that
would have been paid by the Department of Treasury on the expended funds plus
1%.
SECTION 2.11. PERFECTION OF SECURITY INTERESTS; FURTHER ASSURANCES. The
Shipowner shall (i) furnish evidence satisfactory to the Secretary that all
financing statements under the UCC, and all filings or recordings required by
the laws of the country where the Shipowner is located, shall have been filed
against the Shipowner and the Shipyard in all offices in which it may be
necessary, or advisable in the opinion of the Secretary, to perfect its security
interest, and (ii) from time to time execute and deliver such further
instruments and take such action as may reasonably be required more effectively
to subject the Security to the lien of the Security Agreement and the Mortgage
as contemplated thereby, including but not limited to legal opinions from an
independent counsel for the Shipowner to the effect that all UCC Financing
Statements, or other filings and recordings with respect to the country where
the Shipowner is located, have been filed to perfect the Secretary's interests
in the Security as valid and enforceable first priority perfected security
agreements. With respect to Security that constitutes accounts or general
intangibles for money due or to become due, the Shipowner shall perfect the
Secretary's Security by giving written notice to the account debtor(s) of the
Secretary's security interest in such accounts and general intangibles.
SECTION 2.12. MODIFICATION OF FORMATION AGREEMENTS. (a) If the Shipowner
is organized as a general partnership, limited partnership, limited liability
company or joint venture, then for so long as there is Outstanding any
indebtedness to the United States of America pursuant to the Act, the
partnership agreement, operating agreement, limited liability agreement, joint
venture agreement (or any agreement constituting such an entity) shall not be
amended, modified or voluntarily terminated without the Secretary's prior
written consent.
(b) In the event where any action by the Shipowner, any member of the
Shipowner or the management of the Shipowner results or would result in
dissolution of the Shipowner pursuant to its limited liability company agreement
or governing law, each member of the Shipowner shall forthwith take all steps
necessary to reform and reestablish the Shipowner.
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SECTION 2.13. MEMBERS OF LIMITED LIABILITY COMPANIES. All existing and
future members of a Shipowner which is a limited liability company (each being a
"Member"), upon becoming a Member, shall forthwith enter into an agreement with
the Secretary, in form and substance satisfactory to the Secretary, whereby each
Member agrees: (1) that any amounts owed by the Shipowner to a Member with
respect to its interest (as that or the equivalent term is used in the
Shipowner's limited liability company agreement) (the "Distributions") shall be
subordinated to the Shipowner's payment of the Secretary's Note and debts under
the Security Agreement, provided that such Distributions may be paid to the
extent the Shipowner is permitted to pay dividends under the Financial
Agreement; (2) that in the event of default by the Shipowner under the Security
Agreement, the Member shall be subordinated in its rights to receive any
Distribution or to be paid any sums whatsoever by the Shipowner until the
Secretary has made a full recovery of any and all amounts owed under the
Secretary's Note and the Security Agreement.
SECTION 2.14. CONCERNING THE PERFORMANCE AND PAYMENT BONDS. During the
Construction, the Shipowner shall cause to be maintained a Performance Bond and
Payment Bond naming the Shipowner and the Secretary as co-obligees (the "Surety
Bonds") in form and substance satisfactory to the Secretary, to be obtained by
the Shipyard in the amount of the Construction Contract, issued by such surety
company or companies as shall be satisfactory to the Secretary (the "Surety").
In the event that the price for the work to be performed under the Construction
Contract is increased, then the Surety Bonds shall be increased simultaneously
in a corresponding amount. The Shipowner hereby agrees that the Secretary shall
be the sole loss payee under the Surety Bonds and the Surety shall pay such
amounts directly to the Secretary for distribution to the co-obligees as their
interests may appear. The Shipowner hereby agrees that its interest as a
co-obligee under each of the Surety Bonds is and shall be, upon the occurrence
of a Default under the Security Agreement, fully subject and subordinate to the
rights and interests of the Secretary therein. In the event of a default under
the Security Agreement, which default results in a payment under any of the
Surety Bonds, then the Surety Bonds proceeds shall be distributed by the
Secretary in accordance with the provisions of Section 6.05 hereof. The
Shipowner hereby irrevocably appoints the Secretary, the true and lawful
attorney of the Shipowner, in its name and stead, to execute all consents,
approvals, settlements and agreements on behalf of the Shipowner with respect to
any rights related to the Surety Bonds.
ARTICLE III
THE SECRETARY'S NOTE
SECTION 3.01. SECRETARY'S NOTE. On this date, the Shipowner has duly
executed and delivered and the Secretary has accepted the Secretary's Note
payable in an amount equal to the principal amount of the Obligations.
SECTION 3.02. TERMINATION OF THE GUARANTEES. Except as provided in Section
6.08 of the Indenture, the Guarantee with respect to a particular Obligation,
shall terminate only when, one or more of the following events shall occur:
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(a) Such Obligation shall have been Retired or Paid;
(b) The Obligees of all the Obligations then Outstanding shall have
elected to terminate the Guarantees, and the Secretary has been so notified by
the Indenture Trustee or all Obligees in writing; PROVIDED THAT, such
termination shall not prejudice any rights accruing hereunder prior to such
termination;
(c) Such Guarantee shall have been paid in full in cash by the Secretary;
or
(d) The Indenture Trustee and each Obligee shall have failed to demand
payment of such Guarantee as provided in the Indenture, Guarantee, or the Act.
SECTION 3.03. EXECUTION OF ADDITIONAL SECRETARY'S NOTE. (a) In the event
and when each new issue of Obligations is executed, authenticated and delivered
on a date or dates subsequent to the date hereof, as contemplated by, and
pursuant to the Indenture, the Shipowner shall, at the time of the issuance of
such Obligations, execute and deliver to the Secretary an additional Secretary's
Note or, at the Secretary's discretion, an endorsement to the Secretary's Note
in an amount equal to the principal amount of, and at the interest rate borne
by, such issue of Obligations, on the terms stated in the Secretary's Note.
(b) Each Secretary's Note or endorsement executed and delivered in
accordance with Section 3.03 shall together with the Secretary's Note be secured
by this Security Agreement and the Mortgage.
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ARTICLE IV
CONSTRUCTION FUND; MONEYS DUE WITH RESPECT TO
CONSTRUCTION OF THE VESSEL
SECTION 4.01. CONSTRUCTION FUND. (a) The Shipowner has deposited with the
Depository the amount, if any, indicated in the Depository Agreement from the
proceeds of the Obligation to be held by the Depository in a Securities Account
in accordance with the terms of the Depository Agreement. This Securities
Account together with any future deposits and the proceeds from the investment
of the amounts on deposit shall be called the "Construction Fund."
(b) The Shipowner may withdraw money from the Construction Fund under the
same procedures and conditions as the Shipowner may withdraw money from the
Escrow Fund under Section 5.03, except that the Shipowner's Request for
withdrawal will not be subject to Section 5.03(a)(2)(A) or 5.03(h). The
administration of the Construction Fund shall also be subject to the terms and
conditions of Sections 5.04 and 5.05.
SECTION 4.02. MONEYS DUE WITH RESPECT TO CONSTRUCTION OF THE VESSEL. (a)
In the event that the Shipowner shall receive any moneys from any Person in
connection with the Construction of the Vessel, the Shipowner shall give written
notice thereof to the Secretary and shall promptly pay the same over to the
Depository to be held in the Title XI Reserve Fund.
(b) Upon and after a final determination of Actual Cost in accordance with
Section 5.01, in the absence of a Default, any moneys held by the Depository
which are not to be applied for the redemption of Obligations under Section 3.04
of the Indenture shall be paid to the Shipowner.
(c) In the event there is an existing Default, the money shall be held by
the Depository in accordance with the provisions of the Depository Agreement.
(d) In the event the Secretary assumes the Shipowner's rights and duties
under Section 6.09 of the Indenture or pays the Guarantees, the Depository shall
promptly pay all moneys including all Moneys Due with Respect to Construction of
the Vessel to the Secretary, who will apply it in accordance with Section 6.05.
ARTICLE V
ACTUAL COST; THE ESCROW FUND
SECTION 5.01. ACTUAL COST DETERMINATION. (a) The Actual Cost of the
Vessel, determined as of the date of this Security Agreement, is as set forth
in Table A hereof.
(b) The Secretary agrees to: (1) make a final determination of the Actual
Cost of the Vessel, limited to amounts paid by or for the account of the
Shipowner on account of the items set forth in Table A hereof and, to the extent
approved by the Secretary, any other items or any increase
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in the amounts of such items, such determination to be made as of the time of
payment by or for the account of the Shipowner of the full amount of said Actual
Cost of the Vessel, excluding any amounts which are not to become due and
payable, and (2) promptly give written notice to the Shipowner, of the results
of said final determination; PROVIDED THAT, the Shipowner shall have requested
such determination not less than 60 days in advance and shall have furnished to
the Secretary not less than 30 days in advance of such determination along with
a Shipowner's Officer's Certificate and a statement by an independent certified
(or, with the Secretary's prior written consent, an independent) public
accountant or firm of accountants of the total amounts paid or obligated to be
paid by or for the account of the Shipowner for the Construction of the Vessel,
together with a breakdown of such totals according to the items for which paid
or obligated to be paid.
SECTION 5.02. ESCROW FUND DEPOSITS. At the time of the sale of the
Obligations, the Shipowner shall deposit with the Secretary in the Escrow Fund
all of the proceeds of that sale unless the Shipowner is entitled to withdraw
funds under Section 5.03. If the Obligations are issued before the delivery of
the Vessel, then the Shipowner shall also deposit into the Escrow Fund on the
Closing Date an amount equal to six months interest at the rate borne by the
Obligations.
SECTION 5.03. ESCROW FUND WITHDRAWALS. (a) The Secretary shall within a
reasonable time after written Request from the Shipowner, disburse from the
Escrow Fund directly to the Indenture Trustee, any Paying Agent for such
Obligations, the Shipyard, or any other Person entitled thereto, any amount
which the Shipowner is obligated to pay or to the Shipowner for any amounts it
has paid on account of the items and amounts or any other items set forth in
Table A annexed hereto or subsequently approved by the Secretary), PROVIDED
THAT, the Secretary is satisfied with the accuracy and completeness of the
information contained in the following submissions:
(1) A Responsible Officer of the Shipowner shall deliver an
Officer's Certificate, in form and substance satisfactory to the Secretary,
stating that (A) there is neither a Default under the Construction Contract nor
the Security Agreement; (B) there have been no occurrences which have or would
adversely and materially affect the condition of the Vessel, its hull or any of
its component parts; (C) the amounts of the Request is in accordance with the
Construction Contract including the approved disbursement schedule and each item
in these amounts is properly included in the Secretary's approved estimate of
Actual Cost; (D) with respect to the Request, once the Contractor is paid there
will be no liens or encumbrances on the Vessel, its hull or component parts for
which the withdrawal is being requested except for those already approved by the
Secretary; and (E) if the Vessel has already been delivered, it is in class and
is being maintained in the highest and best condition. The Shipowner shall also
attach an Officer's Certificate of the Shipyard, in form and substance
satisfactory to the Secretary, stating that there are no liens or encumbrances
as provided in clause (D) of this subsection and attaching the invoices and
receipts supporting each proposed withdrawal to the satisfaction of the
Secretary.
(2) No payment or reimbursement under this Section shall be made (A)
to any Person until the Construction Fund, if any, has been exhausted, (B) to
any Person until the total amount paid by or for the account of the Shipowner
from sources other than the proceeds of such
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Obligations equals at least 12-l/2% of the Actual Cost of the Vessel is made;
(C) to the Shipowner which would have the effect of reducing the total amounts
paid by the Shipowner pursuant to clause (B) of this subsection; or (D) to any
Person on account of items, amounts or increases representing changes and extras
or owner furnished equipment, if any, set forth in Table A annexed hereto,
unless such items, amounts and increases shall have been previously approved by
the Secretary; PROVIDED, HOWEVER, that when the amount guaranteed by the
Secretary equals 75% or less of the Actual Cost, then after the initial 12 1/2%
of Actual Cost has been paid by or on behalf of the Shipowner for the Vessel and
up to 37 1/2% of Actual Cost has been withdrawn from the Escrow Fund for the
Vessel, the Shipowner shall pay the remaining Shipowner's equity of at least 12
1/2% (as determined by the Secretary) before additional monies can be withdrawn
from the Escrow Fund relating to the Vessel.
(b) The excess, as determined by the Secretary, of any amount on deposit
in the Escrow Fund which represents interest on the principal amount deposited,
over and above the amount of interest due on the next Interest Payment Date on
the principal amount, as determined by the Secretary, remaining on deposit on
such Interest Payment Date, may, unless there is an existing Default, be
disbursed by the Secretary upon the Shipowner's Request made not more than 10
Business Days prior to such Interest Payment Date or made within at least 60
days after such Interest Payment Date.
(c) The Secretary shall not be required to make any disbursement pursuant
to this Section except out of the cash available in the Escrow Fund. If
sufficient cash is not available to make the requested disbursement, additional
cash shall be provided by the maturity or sale of securities in accordance with
instructions pursuant to Section 5.04. If any sale or payment on maturity shall
result in a loss in the principal amount of the Escrow Fund invested in
securities so sold or matured, the requested disbursement from the Escrow Fund
shall be reduced by an amount equal to such loss, and the Shipowner shall, no
later than the time for such disbursement, pay to the Indenture Trustee, any
Paying Agent, the Shipyard, or any other Person entitled thereto, the balance of
the requested disbursement from the Shipowner's funds other than the proceeds of
such Obligations.
(d) If the Secretary assumes the Shipowner's rights and duties under the
Indenture and the Obligations, and makes any payments in default under the
Indenture, or the Secretary pays the Guarantees, all amounts in the Escrow Fund
(including realized income which has not yet been paid to the Shipowner), shall
be paid to the Secretary and be credited against any amounts due or to become
due to the Secretary under the Security Agreement and the Secretary's Note. To
the extent payment of the Escrow Fund to the Secretary is not required, said
amounts or any balance thereof, shall be paid to the Shipowner.
If the Secretary shall have assumed the Shipowner's rights and duties
under the Indenture and the Obligations, and made any payments in default under
the terms of Section 6.09 of the Indenture, or the Guarantees shall become
payable by the Secretary as to the Obligations, all amounts in the Escrow Fund
at the time such Guarantees become payable (including realized income which has
not yet been paid to the Shipowner), shall be paid to the Secretary and be
credited against any amounts due or to become due to the Secretary from the
Shipowner with respect to all Obligations guaranteed
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by the Secretary to which this Security Agreement relates. To the extent payment
of the Escrow Fund to the Secretary is not required, said amounts or any balance
thereof, shall be paid to the Shipowner.
(e) At any time the Secretary shall have determined that there has been,
for any reason, a disbursement from the Escrow Fund contrary to this Section,
the Secretary shall give written notice to the Shipowner of the amount
improperly disbursed, the amount to be deposited or redeposited into the Escrow
Fund on account thereof, and the reasons for such determination. The Shipowner
shall thereafter promptly deposit or redeposit, as appropriate, such amount
(with interest, if any) required by the Secretary into the Escrow Fund.
(f) Notwithstanding any other provision of this Section, the Shipowner
shall not seek or receive reimbursement for any amount paid to the Shipyard or
any Person by the Secretary.
(g) In the event that one of the events described in Section 2.07 has
occurred with respect to the Vessel or the Secretary shall have paid the
Guarantees or shall have assumed the Shipowner's rights and duties under Section
6.09 of the Indenture, the Secretary may direct that moneys remaining on deposit
in the Escrow Fund may be withdrawn in whole or in part for one of the following
purposes: (1) application as provided in Section 3.05 of the Indenture (but in
no event shall any such disbursement for such purpose be in an amount greater
than the Outstanding Obligations); (2) payment to the Shipowner, or its order,
in the event all Outstanding Obligations are Retired or Paid, other than by
payment of the Guarantees; or (3) application as provided in Section 6.05, if
the Secretary shall have paid the Guarantees or shall have assumed the
Shipowner's rights and duties under the Indenture and the Obligations.
(h) Any amounts remaining in the Escrow Fund on the Termination Date of
the Escrow Fund which are in excess of 87 1/2% or 75% of Actual Cost, as the
case may be, shall be applied pursuant to Section 3.04 of the Indenture.
SECTION 5.04. INVESTMENT AND LIQUIDATION OF THE ESCROW FUND. The Secretary
may invest the Escrow Fund in obligations of the United States with such
maturities that the Escrow Fund will be available as required for the purposes
hereof. The Secretary shall deposit the Escrow Fund into an account with the
Treasury Department and, upon agreement with the Shipowner, shall deliver to the
Treasury Department instructions for the investment, reinvestment and
liquidation of the Escrow Fund. The Secretary shall have no liability to the
Shipowner for acting in accordance with such instructions.
SECTION 5.05. INCOME ON THE ESCROW FUND. Except as provided in Section
5.03, any income realized on the Escrow Fund shall, unless there is an existing
Default, be paid to the Shipowner upon receipt by the Secretary of such income.
For the purpose of this Section, the term "income realized on the Escrow Fund,"
shall mean with respect to the Escrow Fund (1) the excess of the cash received
from the sale of securities over their cost (less any losses from sale not
already paid pursuant to Section 5.03(c)) and (2) cash received from the payment
of principal and interest on securities.
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SECTION 5.06. TERMINATION DATE OF THE ESCROW FUND. The Escrow Fund will
terminate 90 days after the Delivery Date of the Vessel covered by this Security
Agreement (herein called the "Termination Date of the Escrow Fund"). In the
event that on such date the payment by or for the account of the Shipowner of
the full amount of the aggregate Actual Cost of the Vessel set forth in Table A
hereof has not been made or the amounts with respect to such Actual Cost are not
then due and payable, then the Shipowner and the Secretary by written agreement
shall extend the Termination Date of the Escrow Fund for such period as shall be
determined by the Shipowner and the Secretary as sufficient to allow for such
contingencies. If the Secretary shall have earlier made a final determination of
the Actual Cost of the Vessel in accordance with Section 5.01, the Termination
Date of the Escrow Fund shall be deemed to be the date of such final
determination; PROVIDED that, if as a result of such final determination, a
redemption of Obligations is required pursuant to Section 3.04 of the Indenture,
the Termination Date shall be the date specified as the Redemption Date in the
notice of redemption given pursuant to Section 3.08 of the Indenture.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. WHAT CONSTITUTES "DEFAULTS;" CONTINUANCE OF DEFAULTS.
Each of the following events shall constitute a "Default" within the meaning
of Section 6.01:
(a) A default in the payment of the whole or any part of the interest on
any of the Outstanding Obligations when the same shall become due and payable;
or default in the payment of the whole or any part of the principal of any of
the Outstanding Obligations when the same shall become due and payable, whether
by reason of Maturity, redemption, acceleration, or otherwise, or any default
referred to in Section 6.01 of the Indenture; and continuation of such default
for a period of 30 days shall constitute and is herein called a "Payment
Default." Any corresponding default with respect to the interest on, or the
principal of, the Secretary's Note is also deemed to be a Payment Default;
(b) The following shall constitute and each is herein called a "Security
Default:"
(1) Default by the Shipowner in the due and punctual observance and
performance of any provision in Sections 2.02(b) and (j), 2.03, 2.04, 2.09,
2.11, 2.12, 2.14, 8.01 and 8.02;
(2) Default by the Shipowner continued after written notice
specifying such failure by certified or registered mail to the Shipowner from
the Secretary in the due and punctual observance and performance of any
provision in Sections 2.02(a), (d), (f), (g) and (h), 2.05 (except (g) and (k)
thereof), 2.07 and 2.13.
(3) Default by the Shipowner continued for 30 days after written
notice by certified or registered mail to the Shipowner from the Secretary in
the due and punctual observance
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of any other agreement in this Security Agreement or in the Mortgage;
(4) The Shipowner shall become insolvent or bankrupt or shall cease
paying or providing for the payment of its debts generally, or the Shipowner
shall be dissolved or shall, by a court of competent jurisdiction, be adjudged a
bankrupt, or shall make a general assignment for the benefit of its creditors,
or shall lose its charter by forfeiture or otherwise; or a petition for
reorganization of the Shipowner under the applicable bankruptcy laws shall be
filed by the Shipowner, or such petition be filed by creditors and the same
shall be approved by such a court of competent jurisdiction; or a reorganization
of the Shipowner under said bankruptcy laws shall be approved by a court,
whether proposed by a creditor, a stockholder or any other Person whomsoever; or
a receiver or receivers of any kind whatsoever, whether appointed in admiralty,
bankruptcy, common law or equity proceedings, shall be appointed, by a decree of
a court of competent jurisdiction, or any other governmental body with respect
to the Vessel, or all or substantially all of the Shipowner's property, and such
decree shall have continued unstayed, on appeal or otherwise, and in effect for
a period of 60 days;
(5) Any default in the due and punctual observance and performance
of any provision in the Financial Agreement or the Construction Contract;
(6) Any representation or warranty made relating to the execution
and delivery of this Security Agreement, the Mortgage, the Guarantee Commitment
or the Financial Agreement, or in any certificate required to be furnished
pursuant thereto, shall prove to be incorrect in any material respect;
(7) Any event constituting a Default under any security agreement or
preferred mortgage, relating to any other vessel or vessels owned by the
Shipowner and financed under the Act;
(8) Any additional Security Default prescribed in the Special
Provisions hereof; and
(9) Any event constituting a default under any bareboat or time
charter or contract of affreightment of the Vessel.
At any time following the occurrence of a Security Default, the Secretary
may give the Indenture Trustee a Secretary's Notice with respect to such
Security Default, after which the Indenture Trustee and the Obligees shall have
the right to make demand for payment of the Guarantees in accordance with the
Indenture and the Authorization Agreement, unless the Secretary shall have
assumed the Shipowner's rights and duties under the Indenture and the
Obligations, and made any payments in default under Section 6.09 of the
Indenture.
SECTION 6.02. ACCELERATION OF MATURITY OF THE SECRETARY'S NOTE. The
Secretary may, by giving written notice to the Shipowner, declare the principal
of the Secretary's Note and interest
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accrued thereon to be immediately due and payable, at any time after (a) the
Secretary shall have been obligated to pay the Guarantees pursuant to the terms
of the Indenture and the Authorization Agreement, or (b) the Secretary shall
have assumed the Shipowner's rights and duties under the Indenture and the
Obligations, and made any payments in default under the terms of Section 6.09 of
the Indenture. Thereupon, the principal of and interest on the Secretary's Note
shall become immediately due and payable, together with interest at the same
rates specified in the Secretary's Note.
SECTION 6.03. WAIVERS OF DEFAULT. (a) If the Secretary shall not have
assumed the Shipowner's rights and duties under the Indenture and the
Obligations, and made any payments in default under the terms of Section 6.09 of
the Indenture, and if the Secretary determines that an event which, with the
passage of time, would become a Payment Default, has been remedied within 30
days after the occurrence of such event, upon a Request by the Shipowner, the
Secretary shall waive the consequences of such event.
(b) If the Secretary shall not have assumed the Shipowner's rights and
duties under the Indenture and the Obligations, and made any payments in default
under the terms of Section 6.09 of the Indenture, and if the Secretary shall
have determined prior to payment of the Guarantees that a Payment Default has
been remedied after the expiration of the aforesaid 30-day period, but prior to
the date of demand by the Indenture Trustee or an Obligee for payment under the
Guarantees, upon a Request by the Shipowner, the Secretary shall waive such
Default.
(c) If the Secretary shall have determined prior to the expiration of the
period required for payment of the Guarantees that a Payment Default had not
occurred or has been subsequently remedied by the Shipowner (and if the
Secretary shall not have assumed the Shipowner's rights and duties under the
Indenture and the Obligations, and made any payments in default under the terms
of Section 6.09 of the Indenture and prior to any payment of Guarantees), the
Secretary shall notify the Indenture Trustee and the Shipowner of such
determination, and, the Secretary shall waive such Default.
(d) The Secretary, in its sole discretion, may waive any Security Default
or any event which by itself, or with the passage of time or the giving of
notice, or both, would give rise to a Security Default; PROVIDED THAT, such
Default is waived prior to the Secretary giving to the Indenture Trustee the
Secretary's Notice.
(e) The Secretary shall notify the Shipowner and the Indenture Trustee in
writing of any determinations made under paragraphs (a), (b) and (c) of this
Section, and the Secretary shall waive the consequences of any such Default, and
annul any declaration under Section 6.02, and the consequences thereof.
(f) No waiver under this Section shall extend to or affect any subsequent
or other Default, nor impair any rights or remedies consequent thereon.
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(g) No waiver under this Section shall be deemed to have occurred because
the Secretary shall have assumed the Shipowner's rights and duties under the
Indenture and the Obligations, and made any payments in default under the terms
of Section 6.09 of the Indenture.
SECTION 6.04. REMEDIES AFTER DEFAULT. (a) In the event of a Default, and
before and after the payment of the Guarantees or the assumption by the
Secretary of the Shipowner's rights and duties under the Indenture and the
Obligations, and the making of any payments in default under the terms of
Section 6.09 of the Indenture, the Secretary shall have the right to take the
Vessel without legal process wherever the same may be (and the Shipowner or
other Person in possession shall forthwith surrender possession of the Vessel to
the Secretary upon demand) and hold, lay up, lease, charter, operate, or
otherwise use the Vessel for such time and upon such terms as the Secretary may
reasonably deem to be in the Secretary's best interest, accounting only for the
net profits, if any, arising from the use of the Vessel, and charging against
all receipts from the use of the Vessel, all reasonable charges and expenses
relating to the Vessel's use.
(b) Upon either (i) payment of the Guarantees or (ii) the Secretary's
assumption of the Shipowner's rights and duties under the Indenture and the
Obligations, and the making of any payments in default under Section 6.09 of the
Indenture, the Secretary shall have the right to:
(1) Exercise all the rights and remedies in foreclosure and
otherwise given to mortgagees the laws of the United States, the country of
documentation of the Vessel, or such other country in which the Vessel may be
located at the time of the foreclosure;
(2) Bring suit at law, in equity or in admiralty to recover judgment
for any and all amounts due under the Secretary's Note, this Security Agreement
and the Mortgage, collect the same out of any and all of Shipowner's property,
whether or not the same is subject to the lien of the Mortgage, and in
connection therewith, obtain a decree ordering the sale of the Vessel in
accordance with paragraph (b)(4) of this Section;
(3) Have a receiver of the Vessel appointed as a matter of right in
any suit under this Section (and any such receiver may have the rights of the
Secretary under paragraph (b)(4) of this Section;
(4) Sell the Vessel, free from any claim of the Shipowner, by a
public extrajudicial sale, held at such time and place and in such manner as the
Secretary may reasonably deem advisable, after twice publishing notice of the
time and place of such sale prior to the proposed sale in the Authorized
Newspapers to the Shipowner. Such publication and mailing is to be made at least
10 Business Days prior to the date fixed for such sale; PROVIDED THAT, such sale
may be adjourned from time to time without further publication or notice (other
than announcement at the time and place appointed for such sale or adjourned
sale). It shall not be necessary to bring the Vessel to the place appointed for
such sale or adjourned sale;
(5) Accept a conveyance of title to, and to take without legal
process (and the
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Shipowner or other Person in possession shall forthwith surrender possession to
the Secretary), the whole or any part of the Vessel and the Security wherever
the same may be, and to take possession of and to hold the same;
(6) In the Secretary's discretion, take any and all action
authorized by Sections 1105(c), 1105(e) and 1108(b) of the Act and any and all
action provided for, or authorized, or permitted by, or with respect to the
Increased Security;
(7) Receive, in the event of an actual or constructive total loss,
or an agreed or compromised total loss, or a requisition of title to or use of
the Vessel, all insurance or other payments therefor to which the Shipowner
would otherwise be entitled, such insurance moneys to be applied by the
Secretary in accordance with Section 6.05; and
(8) Pursue to final collection of all the claims arising under this
Security Agreement, and to collect such claims from, the Increased Security.
(c) The Shipowner hereby irrevocably appoints the Secretary the true and
lawful attorney of the Shipowner, in its name and stead, to make all necessary
transfers of the whole or any part of the Increased Security in connection with
a sale, use or other disposition pursuant to Section 6.04(a) or 6.04(b), and for
that purpose to execute all necessary instruments of assignment and transfer.
Nevertheless, the Shipowner shall, if so requested by the Secretary in writing,
ratify and confirm such sale by executing and delivering to any purchaser of the
whole or any part of the Increased Security, such proper bill of sale,
conveyance, instrument of transfer, or release as may be designated in such
request.
(d) No remedy shall be exclusive of any other remedy, and each and every
remedy shall be cumulative and in addition to any other remedy.
(e) No delay or omission to exercise any right or remedy shall impair any
such right or remedy or shall be deemed to be a waiver of any Default.
(f) The exercise of any right or remedy shall not constitute an election
of remedies by the Secretary.
(g) If the Secretary discontinues any proceeding, the rights and remedies
of the Secretary and of the Shipowner shall be as though no such proceeding had
been taken.
SECTION 6.05. APPLICATION OF PROCEEDS. (a) The proceeds (from sale or
otherwise) of the whole or any part of the Increased Security and use thereof by
the Secretary under any of the foregoing powers, (b) the proceeds of any
judgment collected by the Secretary for any default hereunder, (c) the proceeds
of any insurance and of any claim for damages to the whole or any part of the
Increased Security received by the Secretary while exercising any such power,
and (d) all other amounts received by the Secretary, including amounts which are
required by Sections
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2.05 and 2.07 shall be applied by the Secretary as follows:
(1) to the payment of all advances and all reasonable charges and
expenses of the Secretary pursuant to this Security Agreement;
(2) to the payment of the whole amount of the interest then due and
unpaid upon the Secretary's Note;
(3) to the payment of the whole amount of the principal then due and
unpaid upon the Secretary's Note;
(4) to the Secretary for application to any other debt of the
Shipowner due to the Secretary under any other financing insured or guaranteed
by the Secretary under to the Act;
(5) to the Indenture Trustee for its reasonable fees and expenses;
and
(6) any balance thereof remaining shall be paid to the Shipowner.
SECTION 6.06. GENERAL POWERS OF THE SECRETARY. (a) In the event the Vessel
shall be arrested or detained by a marshal or other officer of any court of law,
equity or admiralty jurisdiction in any country or nation of the world or by any
government or other authority, and shall not be released from arrest or
detention within 15 days from the date of arrest or detention, the Shipowner
hereby authorizes the Secretary, in the name of the Shipowner, to apply for and
receive possession of and to take possession of the Vessel with all the rights
and powers that the Shipowner might have, possess and exercise in any such
event. This authorization is irrevocable.
(b) The Shipowner irrevocably authorizes the Secretary or its appointee
(with full power of substitution) to appear in the name of the Shipowner in any
court of any country or nation of the world where a suit is pending against the
whole or any part of the Increased Security because of or on account of any
alleged lien or claim against the whole or any part of the Increased Security,
from which the whole or said part of the Increased Security has not been
released.
(c) The following shall constitute a debt due from the Shipowner to the
Secretary, and shall be repaid by the Shipowner upon demand: all reasonable
expenses incurred pursuant to paragraphs (a) or (b) of this Section and all
reasonable expenses incurred incident to the exercise by the Secretary of any
remedies pursuant to Section 6.04(b) or the assumption by the Secretary of the
rights and duties of the Shipowner under the Indenture and the Obligations, and
the making of any payments in default under the terms of Section 6.09 of the
Indenture (including, but not limited to, fees paid to the Indenture Trustee for
expenses incident to said assumption of the Indenture by the Secretary),
together with interest at the rate that would have been paid by the Department
of Treasury on the expended funds plus 1%. The Secretary shall not be obligated
to (nor be liable for his failure to) take any action provided for in paragraphs
(a) and (b) of this Section.
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ARTICLE VII
AMENDMENTS AND SUPPLEMENTS TO
THE SECURITY AGREEMENT, MORTGAGE AND INDENTURE
SECTION 7.01. AMENDMENTS AND SUPPLEMENTS TO THE SECURITY AGREEMENT AND THE
MORTGAGE. This Security Agreement and the Mortgage may not be amended or
supplemented orally, but may be amended or supplemented from time to time only
by an instrument in writing executed by the Shipowner and the Secretary.
SECTION 7.02. AMENDMENTS AND SUPPLEMENTS TO THE INDENTURE. Notwithstanding
any provisions in the Indenture, the Shipowner agrees that no amendments or
supplements will be made to the Indenture without the Secretary's prior written
consent, and any purported action contrary to this Section shall be null and
void AB INITIO and of no force and effect.
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ARTICLE VIII
CONSOLIDATION, MERGER OR SALE
SECTION 8.01. CONSOLIDATION, MERGER OR SALE. (a) Nothing in this Security
Agreement or the Mortgage shall prevent any lawful consolidation or merger of
the Shipowner with or into any other Person, or any sale of the Vessel to any
other Person lawfully entitled to acquire and operate the Vessel, or any sale by
the Shipowner of all or substantially all of its assets to any other Person;
PROVIDED THAT, the Secretary shall have given its prior written consent to such
succession, merger, consolidation or sale.
(b) Any Successor shall (by indenture supplemental to the Indenture, and
by instrument amending or supplementing this Security Agreement, and the
Mortgage, as may be necessary), expressly assume the payment of the principal of
(and premium, if any) and interest on the Outstanding Obligations in accordance
with the terms of the Obligations, shall execute and deliver to the Secretary,
an endorsement to the Secretary's Note in form satisfactory to the Secretary,
shall expressly assume the payment of the principal of and interest on the
Secretary's Note, and shall expressly assume the performance of the agreements
of the Shipowner in the Indenture, this Security Agreement, the Mortgage and any
related document.
(c) Upon the assumption of the documents listed in paragraph (b) of this
Section, the Secretary shall consent to the surrender of the Vessel's documents
pursuant to the laws of the Vessel's place of documentation provided that,
concurrently with such surrender, the Vessel shall be redocumented under the
laws of the Vessel's place of documentation.
(d) In the event of any sale of the Vessel, the Secretary shall determine
if there will remain adequate security for the Guarantees after discharge of the
Vessel from the Security Agreement and Mortgage, and (1) the Shipowner shall
redeem, together with any premium and/or accrued interest thereof, the
Outstanding Obligations relating to the Vessel in accordance with the provisions
of Article Third of the Indenture, or (2) the Person to which such sale shall
have been made (the "Transferee"), shall assume the documents listed in
paragraph (b) of this Section. Upon any such assumption, the Transferee shall
succeed to and be substituted for the Shipowner with the same force and effect
as if it had been named in the Indenture, the Obligations, this Security
Agreement and the Mortgage (and such other documents) to the extent the same
relate to the Outstanding Obligations and to the Vessel.
SECTION 8.02. TRANSFER OF A GENERAL PARTNER'S OR A JOINT VENTURER'S
INTEREST. If the Shipowner is organized as a partnership or a joint venture, a
general partner or a joint venturer may lawfully transfer its respective
interests under the terms of the partnership or joint venture agreement to any
Person and may be released from all of their obligations thereunder and under
this Security Agreement or the Mortgage; PROVIDED THAT, (i) the Secretary shall
have given its prior written consent to the proposed transaction and (ii) the
transferee shall assume in full all of the existing obligations which the
transferring general partner or joint venturer has under the applicable
partnership or joint
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venture agreement, this Security Agreement, the Mortgage and any related
document.
ARTICLE IX
NOTICES
SECTION 9.01. NOTICES AND COMMUNICATIONS. Except as otherwise provided in
this Security Agreement or by the Act, all notices, requests, demands,
directions, consents, waivers, approvals or other communications shall be in
writing in the English language (or accompanied by an accurate English
translation upon which the Secretary shall have the right to rely for all
purposes under this Agreement and shall be made or delivered in person or by
registered or certified mail, postage prepaid, addressed to the party at the
address of such party specified in the Special Provisions hereof, or at such
other address as such party shall advise each other party by written notice, and
shall be effective upon receipt by the addressee thereof.
SECTION 9.02. WAIVERS OF NOTICE. In any case where notice by publication,
mail or otherwise is provided for by this Security Agreement, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be deemed the equivalent of such
notice.
SECTION 9.03. SHIPOWNER'S NAME OR ADDRESS CHANGE. The Shipowner shall not
change its name or its address without first providing written notice to the
Secretary of the new name and/or the change in address.
ARTICLE X
DISCHARGE OF SECURITY AGREEMENT AND THE MORTGAGE
SECTION 10.01. DISCHARGE OF SECURITY AGREEMENT AND THE MORTGAGE. (a) If
the Obligations and the related Secretary's Note shall have been satisfied and
discharged, and if the Shipowner shall pay or cause to be paid all other sums
that may have become secured under this Security Agreement and the Mortgage,
then this Security Agreement, the Mortgage and the liens, estate and rights and
interests hereby and thereby granted, shall cease, determine, and become null
and void, and the Secretary, on the Shipowner's Request and at the Shipowner's
cost and expense, shall forthwith cause satisfaction and discharge and duly
acknowledge such satisfaction and discharge of this Security Agreement and the
Mortgage to be entered upon its and other appropriate records, and shall execute
and deliver to the Shipowner such instruments as may be necessary, and forthwith
the estate, right, title and interest of the Secretary in and to the Security,
the Increased Security, and any other securities, cash, and any other property
held by it under this Security Agreement and the Mortgage, shall thereupon
cease, determine and become null and void, and the Secretary shall transfer,
deliver and pay the same to the Shipowner.
(b) If all of the Guarantees on the Outstanding Obligations shall have
been terminated pursuant to Sections 3.02(b) or 3.02(d), the Secretary shall
assign to the Shipowner this Security Agreement, the Mortgage and the liens,
estate, rights and interests hereby and thereby granted.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. SUCCESSORS AND ASSIGNS. All the covenants, promises,
stipulations and agreements of the Secretary and Shipowner in this Security
Agreement shall bind the Secretary and Shipowner and its respective successors
and assigns. This Security Agreement is for the sole benefit of the Shipowner,
the Secretary, and their respective successors and assigns, and no other Person
shall have any right hereunder.
SECTION 11.02. EXECUTION IN COUNTERPARTS. This Security Agreement
may be executed in any number of counterparts. All such counterparts shall
be deemed to be originals and shall together constitute but one and the same
instrument.
SECTION 11.03. SHIPOWNER'S RIGHTS IN ABSENCE OF DEFAULT. Except during the
existence of a Default), the Shipowner (1) shall be permitted to retain actual
possession and use of the Vessel, and (2) shall have the right, from time to
time, in its discretion and without the consent of or release by the Secretary,
to dispose of, free from the lien hereof and of the Mortgage, any and all
engines, machinery, masts, boats, anchors, cables, chains, rigging, tackle,
apparel, furniture, capstans, outfit, tools, pumps, pumping and other equipment,
and all other appurtenances to the Vessel, and also any and all additions,
improvements and replacements in or to the Vessel or said appurtenances, after
first or simultaneously replacing the same with items of at least substantially
equal value.
SECTION 11.04. SURRENDER OF VESSEL'S DOCUMENTS. The Secretary shall
consent to the surrender of the Vessel's documents in connection with any
redocumentation of the Vessel required on account of alterations to the Vessel
which are not prohibited by this Security Agreement and by the Mortgage.
SECTION 11.05. TABLE OF CONTENTS, TITLES AND HEADINGS. The table of
contents, and titles of the Articles and the headings of the Sections are not a
part of this Security Agreement and shall not be deemed to affect the meaning or
construction of any of its provisions.
SECTION 11.06. PAYMENTS IN U.S. CURRENCY. This is an international loan
transaction in which the specification of United States currency is of the
essence, and such currency shall be the currency of account in all events. The
respective payment obligations of the Shipowner and the Secretary hereunder
shall not be discharged by an amount paid in another currency, whether pursuant
to a judgment or otherwise, to the extent that the amount so paid on prompt
conversion to such currency under normal banking procedures does not yield after
deduction of any and all fees, taxes or any other charges imposed on the payment
of such amount of United States dollars then due. In the event that any payment
by the Shipowner or the Secretary, whether pursuant to a judgment or otherwise,
upon conversion and transfer, does not result in the payment of such amount of
United States currency at the place such amount is due, each shall be entitled
to demand immediate payment of, and shall have a separate cause of action
against the other for, the additional amount necessary to
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yield the amount then due. In the event either the Shipowner or the Secretary,
upon the conversion of such judgment into currency, shall receive (as a result
of currency exchange rate fluctuations) an amount greater than that to which it
was entitled, the defaulting party shall be entitled to immediate reimbursement
of the excess amount.
SECTION 11.07. IMMUNITY. The Shipowner represents and warrants that it is
subject to civil and commercial law with respect to its obligations under this
Agreement, that the making and performance of this Agreement constitutes private
and commercial acts rather than governmental or public acts and that neither the
Shipowner nor any of its properties or revenues has any right of immunity on the
grounds of Sovereignty or otherwise from suit, court jurisdiction, attachment
prior to judgment, attachment in aid of execution of a judgment, set-off,
execution of a judgment or from any other legal process with respect to its
obligations under this Agreement. To the extent that the Shipowner may hereafter
be entitled, in any jurisdiction in which judicial proceedings may at any time
be commenced with respect to this Agreement to claim for itself or its revenues
or assets any such immunity, and to the extent that in any such jurisdiction
there may be attributed to the Shipowner such an immunity (whether or not
claimed), the Shipowner hereby irrevocably agrees not to claim and hereby
irrevocably waives such immunity. The foregoing waiver of immunity shall have
effect under the United States Sovereign Immunities Act of 1976.
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SCHEDULE X TO SECURITY AGREEMENT DOCUMENT 13
SCHEDULE OF DEFINITIONS
"Act" means the Merchant Marine Act, 1936, as amended and in effect
on the Closing Date.
"Actual Cost" means the actual cost of a Vessel, as set forth in
Table A of the Security Agreement or as subsequently redetermined by the
Secretary pursuant to the Security Agreement and the Act.
"Administrative Agent" means CITICORP NORTH AMERICA, INC., a
Delaware corporation, as administrative agent for the Primary Lender and the
commercial paper holders of the Primary Lender (and their respective successors
and assigns), and its permitted successors and assigns.
"Agent" means each of the Administrative Agent and the Facility
Agent, individually, and "Agents" means the Administrative Agent and the
Facility Agent, collectively.
"Alternate Lender" means CITIBANK, N.A., a national banking
association and its successors and assigns.
"Audited Financial Statements" mean the annual audit of the
Shipowner's accounts in accordance with generally accepted auditing standards by
independent certified public accountants or independent licensed public
accountants, certified or licensed by a regulatory authority of a state or other
political subdivision of the United States, who may be the Shipowner's regular
auditors.
"Authorization Agreement" means the Authorization Agreement,
Contract No. MA-13504, between the Secretary and the Indenture Trustee, whereby
the Secretary authorizes the Guarantee of the United States to be endorsed on
the Obligations, as the same is originally executed, or as modified, amended or
supplemented therein.
"Authorized Newspapers" means THE WALL STREET JOURNAL and THE
JOURNAL OF COMMERCE, or if either ceases to exist, then in such other newspapers
as the Secretary may designate and a newspaper printed in English, approved by
the Secretary and of general circulation in Baltimore, Maryland.
<PAGE>
"Business Day" shall mean any day on which dealings in Dollar
deposits are carried on in the London interbank market and on which commercial
banks in London and New York City are open for domestic and foreign exchange
business.
"Chapter 313" means the provisions of 46 United States Code Chapter
313, as amended.
"Classification Society" means Lloyd's Classification Society or
such other Classification Society approved in writing by the Secretary which
Classification Society shall in any event be either a member of the
International Association of Classification Societies ("IACS") that has been ISO
9000 series registered or an IACS member that meets the requirements of the
International Maritime Organization, and is qualified under a Quality Systems
Certificate Scheme and recognized by the United States Coast Guard and the
Secretary as meeting acceptable standards.
"Closing Date" or "Closing" means the date when the Security
Agreement is executed and delivered by the Shipowner.
"Commitment to Guarantee Obligations" has the same meaning as the
term Guarantee Commitment.
"Consent of Shipyard" means each, and "Consents of Shipyards" means
every, document evidencing such Shipyard's consent to the assignment of a
Construction Contract to the Secretary under the Security Agreement as
originally executed, modified, amended or supplemented.
"Construction" means construction of the Vessel, including
designing, inspecting, outfitting and equipping thereof.
"Construction Contract" means that certain Semi-Submersible Drilling
Vessel Construction Contract (Hull No. 1828), dated April 9, 1998, by and
between the Shipowner and the Shipyard, as the same may be amended, modified or
supplemented in accordance with the applicable provisions thereto.
"Construction Fund" has the meaning specified in Article IV of
the Security Agreement.
"Corporate Trust Office" means the principal corporate trust office
of the Indenture Trustee at which, at any time, its corporate trust business
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shall be principally administered, which office at the date of execution of the
Indenture is located at 25 South Charles Street, 16th Floor, Mail Code 101-591,
Baltimore, Maryland 21201.
"Credit Agreement" or "Agreement" shall mean the Credit Agreement,
dated as of the Closing Date, among the Shipowner, the Lenders, and the Agents,
including any Exhibit, Annex, or other attachment thereto, as the same may be
amended, modified or supplemented.
"Default" when used in the Security Agreement has the meaning
attributed to it in Article VI thereof.
"Delivery Date" means the date on which a Vessel is delivered to
and accepted by the Shipowner.
"Depository" shall mean the institution designated in the
Depository Agreement or any successor.
"Depository Agreement" shall mean the Depository Agreement, Contract
No. MA-13508 among the Shipowner, the Secretary and the Depository, as
originally executed or as modified or supplemented in accordance with the
applicable provisions thereof.
"Depreciated Actual Cost" means the depreciated actual cost of a
Vessel, as set forth in Table A of the Security Agreement or as subsequently
redetermined by the Secretary pursuant to the Security Agreement and the Act.
"Eligible Investment" has the meaning given by Section 5 of the
Financial Agreement.
"Escrow Fund" means the account held by the Secretary, established
under Section 1108 of the Act and administered pursuant to Article V of the
Security Agreement.
"Facility Agent" means CITIBANK INTERNATIONAL PLC, a bank organized
and existing under the laws of England, as facility agent for both the Primary
Lender and the Alternative Lender (and their respective successors and assigns),
and its permitted successors and assigns.
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"Financial Agreement" means the Title XI Reserve Fund and Financial
Agreement, Contract No. MA-13507, executed by the Shipowner and the Secretary,
as originally executed or as modified, amended or supplemented in accordance
with the applicable provisions thereof.
"Financial Asset" has the meaning given by Article 8-102(a)(9) of
the UCC.
"Government Use" means the use of a Vessel or requisition of its
title required by a governmental body of the United States of America.
"Guarantee" means each, and the "Guarantees" means every, guarantee
of an Obligation by the United States pursuant to Title XI of the Act, as
provided in the Authorization Agreement.
"Guarantee Commitment" means the Commitment to Guarantee
Obligations, Contract No. MA-13503, dated as of the Closing Date, executed by
the Secretary and accepted by the Shipowner with respect to the Guarantees, as
originally executed or as modified, amended or supplemented in accordance with
the applicable provisions thereof.
"Increased Security" means the Secretary's Note, the Security
Agreement, the Vessels, the Security, the Escrow Fund, the Title XI Reserve
Fund, the Construction Fund, and any other security agreement between the
Secretary and the Shipowner relating to any vessels financed under the Act, and
the Policies of Insurance, and the proceeds of the foregoing.
"Indenture" means the Trust Indenture dated as of the Closing Date,
between the Shipowner and the Indenture Trustee, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Indenture Default" has the meaning specified in Article VI of
the Indenture.
"Indenture Trustee" means FMB Trust Company, National Association, a
national banking association, and any successor trustee permitted under the
Indenture.
"Interest Payment Date" means with respect to any Obligation, the
date when any installment of interest on such Obligation is due and payable.
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"Lender" shall mean shall mean either the Primary Lender or the
Alternate Lender, as the case may be, depending on which of the two parties made
or will make the relevant disbursement of funds under the Credit Agreement;
provided, however, that if the Primary Lender assigns its rights under the
Credit Agreement to the Alternate Lender, the term "Lender," shall mean only the
Alternate Lender, CITIBANK, N.A., a national banking association, and its
successors and assigns.
"Long Term Debt" means, as of any date, the total notes, bonds,
debentures, equipment obligations and other evidence of indebtedness that would
be included in long term debt in accordance with generally accepted accounting
principles. There shall also be included any guarantee or other liability for
the debt of any other Person, not otherwise included on the balance sheet.
"Maturity" when used with respect to any Obligation, means the date
on which the principal of such Obligation becomes due and payable as therein
provided, whether at the Stated Maturity or by redemption, declaration of
acceleration or otherwise.
"Moneys Due with Respect to Construction of the Vessel" has the
meaning specified in Section 1.03 of the Security Agreement.
"Mortgage" means the first preferred ship mortgage on the Vessel,
Contract No. MA-13506, between the Shipowner and the Secretary, as originally
executed or as modified, amended
"Mortgagee" means the Secretary, as mortgagee under the Mortgage.
"Mortgagor" means the Shipowner, as mortgagor under the Mortgage.
"Net Worth" means, as of any date, the total of paid-in capital
stock, paid-in surplus, earned surplus and appropriated surplus, and all other
amounts that would be included in net worth in accordance with generally
accepted accounting principles, but exclusive of (1) any receivables from any
stockholder, director, Officer or employee of the Company or from any Related
Party (other than current receivables arising out of the ordinary course of
business and not outstanding for more than 60 days) and (2) any increment
resulting from the reappraisal of assets.
"Obligation" or "Obligations" shall mean the Floating Rate Note or
Fixed Rate Note(s) of the Shipowner bearing a Guarantee and authenticated and
delivered pursuant to the Indenture and the Authorization Agreement.
5
<PAGE>
"Obligation Register" has the meaning specified in Section 2.10
of the Indenture.
"Obligee" means each, and "Obligees" means every, Holder of an
Obligation.
"Offering Circular" means the offering circular relating to the
issuance and sale of each Fixed Rate Note.
"Officer's Certificate" means a certificate conforming to Section
1.02 of the Security Agreement or the Indenture as the context may require.
"Outstanding" when used with reference to the Obligations, shall
mean all Obligations theretofore issued under the Indenture, except: (1)
Obligations Retired or Paid; and (2) Obligations in lieu of which other
Obligations have been issued under the Indenture.
"Paying Agent" means any bank or trust company having the
qualifications set forth in clauses (1), (3), (4) and (5) of Section 7.02(a) of
Exhibit 1 to the Indenture, which shall be appointed by the Shipowner in
accordance with Section 4.02 of Exhibit 1 to the Indenture to pay the principal
of (and premium, if any) or interest on the Obligations on behalf of the
Shipowner.
"Payment Default" has the meaning specified in Section 6.01 of
the Security Agreement.
"Person" or "Persons" means any individual, corporation,
partnership, joint venture, association, limited liability company, joint-stock
company, trust, unincorporated organization, government, or any agency or
political subdivision thereof.
"Policies of Insurance" and "policies" means all cover notes,
binders, policies of insurance and certificates of entry in a protection and
indemnity association, club or syndicate with respect to the Vessel, (including
all endorsements and riders thereto), including but not limited to all insurance
required under Section 2.05 of the Security Agreement.
"Primary Lender" means GOVCO INCORPORATED, a Delaware corporation,
and its successors and assigns.
"Redemption Date" means a date fixed for the redemption of an
Obligation by the Indenture.
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"Related Party" means one that can exercise control or significant
influence over the management and/or operating policies of another Person, to
the extent that one of the Persons may be prevented from fully pursuing its own
separate interests. Related parties consist of all affiliates of an enterprise,
including (1) its management and their immediate families, (2) its principal
owners and their immediate families, (3) its investments accounted for by the
equity method, (4) beneficial employee trusts that are managed by the management
of the enterprise, and (5) any Person that may, or does, deal with the
enterprise and has ownership of, control over, or can significantly influence
the management or operating policies of another Person to the extent that an
arm's-length transaction may not be achieved.
"Request" means a written request to a Person for the action therein
specified, signed by a Responsible Officer of the Person making such request.
"Responsible Officer" means (1) in the case of any business
corporation, the chairman of the board of directors, the president, any
executive or senior vice president, the secretary, the treasurer, member or
partner, (2) in the case of any commercial bank, the chairman or vice-chairman
of the executive committee of the board of directors or trustees, the president,
any executive or senior vice president, the secretary, the treasurer, any trust
officer, and (3) with respect to the signing or authentication of Obligations
and Guarantees by the Indenture Trustee, any person specifically authorized by
the Indenture Trustee to sign or authenticate Obligations.
"Retired or Paid," as applied to Obligations and the indebtedness
evidenced thereby, means that such Obligations shall be deemed to have been so
retired or paid and shall no longer be entitled to any rights or benefits
provided in the Indenture if: (1) such Obligations shall have been paid in full;
(2) such Obligations shall have been canceled by the Indenture Trustee; or (3)
such Obligations shall have become due and payable at Maturity and funds
sufficient for the payment of such Obligations (including interest to the date
of Maturity, or in the case of a payment after Maturity, to the date of payment,
together with any premium thereon) and available for such payment and are held
by the Indenture Trustee or any Paying Agent with irrevocable directions, to pay
such Obligations; PROVIDED THAT, the foregoing definition is subject to Section
6.08 of the Indenture.
"Rights Under the Construction Contract and Related Contracts" shall
have the meaning specified in Section 1.03 of the Security Agreement.
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<PAGE>
"Secretary" means the Secretary of Transportation or any officials
duly authorized to perform the functions of the Secretary of Transportation
under Title XI of the Act.
"Secretary's Note" means a promissory note or promissory notes
issued and delivered by the Shipowner to the Secretary substantially in the form
of Exhibit 2 of the Security Agreement, including any promissory note issued in
substitution for, or any endorsement or supplement thereof.
"Secretary's Notice" means a notice from the Secretary to the
Indenture Trustee that a Default, within the meaning of Section 6.01(b) of the
Security Agreement has occurred.
"Secretary of Defense" means the Secretary of Defense of the United
States of America.
"Security" has the meaning specified in Section 1.03 of the Security
Agreement.
"Securities Account" has the meaning given by Article 8-501 of the
UCC.
"Securities Intermediary" has the meaning given by Article
8-102(a)(14) of the UCC and also means the Depository.
"Security Agreement" means the security agreement, Contract No.
MA-13505, dated as of the Closing Date, consisting of the special provisions,
the general provisions and this schedule X, executed by the Shipowner as
security for the Secretary, as originally executed or as modified, amended or
supplemented.
"Security Default" has the meaning specified in Section 6.01 of
the Security Agreement.
"Shipowner" means Petrodrill Four Limited, a British Virgin Islands
international business company, and shall include its successors and assigns.
"Shipyard" or "Shipbuilder" means TDI-Halter, Limited
Partnership, a Louisiana limited partnership.
"Stated Maturity" means the date determinable as set forth in any
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Obligation as the final date on which the principal of such Obligation is due
and payable.
"Successor" means a Person formed by or surviving a consolidation or
merger with the Shipowner or to which the Vessels have been sold.
"Supplemental Indenture" shall mean any indenture supplemental to
the Indenture entered into pursuant to Article X of the Indenture.
"Title XI" means Title XI of the Act.
"Title XI Reserve Fund" has the meaning specified in the Financial
Agreement.
"Title XI Reserve Fund and Financial Agreement" means the Financial
Agreement.
"UCC" means the Uniform Commercial Code as enacted in the State of
New York.
"Vessel" means the Shipowner's Semi-Submersible Drilling Rig to be
named the AMETHYST 4 and constructed by TDI-Halter, Limited Partnership in
accordance with the Construction Contract, including all work and material
heretofore or hereafter performed upon or installed in or placed on board such
Vessel, together with related appurtenances, additions, improvements, and
replacements.
"Working Capital" shall mean the excess of current assets over
current liabilities, both determined in accordance with generally accepted
accounting principles and adjusted as follows:
(1) In determining current assets, there shall also be deducted: (A)
Any securities, obligations or evidence of indebtedness of a Related Party
or of any stockholder, director, officer or employee (or any member of his
family) of the Company or of such Related Party, except advances to agents
required for the normal current operation of the Company's vessels and
current receivables arising out of the ordinary course of business and not
outstanding for more than 60 days; and (B) An amount equal to any excess
of unterminated voyage revenue over unterminated voyage expenses;
(2) In determining current liabilities, there shall be deducted any
excess of unterminated voyage expenses over unterminated voyage revenue;
and
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<PAGE>
(3) In determining current liabilities, there shall be added one
half of all annual charter hire and other lease obligations (having a term
of more than six months) due and payable within the succeeding fiscal
year, other than charter hire and such other lease obligations already
included and reported as a current liability on the Company's balance
sheet.
10
EXHIBIT 4.22
APPENDIX II TO GUARANTEE COMMITMENT DOCUMENT 4
---------------------------------------------------------
TRUST INDENTURE
Relating to United States Government Guaranteed
Ship Financing Obligations
Between
PETRODRILL FIVE LIMITED
Shipowner
AND
FMB TRUST COMPANY, NATIONAL ASSOCIATION
Indenture Trustee
Dated as of April 9, 1999
---------------------------------------------------------
<PAGE>
TRUST INDENTURE
Between
PETRODRILL FIVE LIMITED
Shipowner
AND
FMB TRUST COMPANY, NATIONAL ASSOCIATION
Indenture Trustee
Dated as of April 9, 1999
TABLE OF CONTENTS TO SPECIAL PROVISIONS OF THE INDENTURE 1/
PAGE
----
Parties......................................................................1
Recitals.....................................................................1
ARTICLE FIRST
Incorporation of General Provisions......................................... 2
ARTICLE SECOND
The Obligations .............................................................3
ARTICLE THIRD
Interest Rate Calculations...................................................3
ARTICLE FOUR
Certain Redemptions..........................................................4
- - ------------------
1/ This Table of Contents is not a part of the Indenture and has no bearing upon
the interpretation of any of its terms and provisions.
i
<PAGE>
ARTICLE FIFTH
Definitions..................................................................6
ARTICLE SIXTH
Additions, Deletions and Amendments to Exhibit 1.............................6
Signatures..................................................................23
Acknowledgements.........................................................24-25
EXHIBITS TO TRUST INDENTURE
SCHEDULE A Schedule of Definitions to Trust Indenture
EXHIBIT 1 General Provisions of the Indenture
Incorporated by Reference
EXHIBIT 2 Form of Floating Rate Note
EXHIBIT 3 Form of Fixed Rate Note
EXHIBIT 4 Authorization Agreement
EXHIBIT 5 Form of Secretary Supplemental Indenture
ii
<PAGE>
TRUST INDENTURE
SPECIAL PROVISIONS
THIS TRUST INDENTURE, is dated as of April 9, 1999 (said Trust Indenture,
as the same may be amended, modified or supplemented from time to time as
permitted hereunder, herein called the "Indenture"), is between (i) PETRODRILL
FIVE LIMITED, a British Virgin Islands international business company (herein
called the "Shipowner"), and (ii) FMB TRUST COMPANY, NATIONAL ASSOCIATION, a
national banking association (said banking association, any successor or assign
hereunder, herein called the "Indenture Trustee").
RECITALS:
A. As provided in Article Fifth hereof, the terms defined in Schedule A to
this Indenture shall have the respective meanings stated in said Schedule;
B. The Shipowner has duly executed this Indenture, and duly authorized the
issuance hereunder of $150,183,000 principal amount of its Obligations pursuant
to Section 2.03 of Exhibit 1 to this Indenture (herein together with any
Obligations issued in respect thereof pursuant to Sections 2.09, 2.10, 2.12 and
3.10(b) of said Exhibit 1, called the "Obligations") designated "United States
Government Guaranteed Export Ship Financing Obligations, AMETHYST 5 Series;"
C. The Obligations will be issued by the Shipowner to aid in the financing
of the cost of construction of a self-propelled semi-submersible drilling rig to
be named the AMETHYST 5 (the "Vessel");
D. To aid in financing the construction of the Vessel, the Shipowner has
entered into a credit agreement (the "Credit Agreement") with GOVCO INCORPORATED
a Delaware corporation (the "Primary Lender"), CITIBANK, N.A., a national
banking association (the "Alternate Lender'), CITIBANK INTERNATIONAL PLC, a bank
organized and existing under the laws of England (the "Facility Agent") and
CITICORP NORTH AMERICA, INC., a Delaware corporation (the "Administrative
Agent") providing for the delivery of no more than $150,183,000 principal amount
of notes designated "United States Government Guaranteed Export Ship Financing
Obligations, AMETHYST 5 Series";
<PAGE>
E. Under the Authorization Agreement in the form set forth as Exhibit 4
hereto, the Secretary, on behalf of the United States, has agreed and will agree
to execute on the Obligations to be issued, a Guarantee of the payment of the
unpaid interest to the date of such payment on, and the unpaid balance of the
principal of, such Obligation under the provisions of Title XI of the Act, and
the Indenture Trustee is authorized to cause the Guarantees, bearing the
facsimile signature of the Secretary, and the facsimile seal of the United
States Department of Transportation, to be imprinted on the Obligations, and to
authenticate and deliver the Obligations and the Guarantees issued on the
Closing Date and from time to time thereafter, such agreements and
authorizations being subject to the conditions set forth in the Authorization
Agreement;
F. Pursuant to Section 1104(b)(5) of the Act, the Secretary will determine
that the interest to be borne by the Obligations (exclusive of charges for the
guarantee fee and service charges, if any) is reasonable; and
G. All actions necessary have been or will be taken in order (1) to make
the Obligations, when executed by the Shipowner, authenticated by the Indenture
Trustee and issued under the Indenture, the valid, binding and legal obligations
of the Shipowner in accordance with their terms, (2) to make the Guarantees to
be endorsed on the Obligations, when executed on behalf of the Secretary,
authenticated by the Indenture Trustee and delivered under this Indenture, the
valid, binding and legal obligations of the United States in accordance with
their terms, and (3) to make this Indenture the valid, binding and legal
agreement of the parties hereto in accordance with its terms.
NOW THEREFORE, in consideration of the premises, of the mutual covenants
herein contained, of the purchase of the Obligations by the Holder and of other
good and valuable consideration, the receipt and adequacy of which the parties
hereby acknowledge, and for the equal and proportionate benefit of the present
and future Holder, the parties hereto agree as follows:
ARTICLE FIRST
INCORPORATION OF GENERAL PROVISIONS
This Indenture shall consist of two parts: the Special Provisions and the
General Provisions attached hereto as Exhibit 1, made a part of this Indenture
and incorporated herein by reference. In the event of a conflict, the terms of
the Special Provisions shall prevail.
2
<PAGE>
ARTICLE SECOND
THE OBLIGATIONS
(a) The Obligations issued hereunder shall be designated "United States
Government Guaranteed Export Ship Financing Obligations, AMETHYST 5 Series," and
shall be in the forms of Exhibits 2 and 3 to this Indenture; and, the aggregate
principal amount of Obligations which may be issued under this Indenture shall
not exceed $150,183,000 except as provided in Sections 2.09, 2.10, 2.12 and
3.10(b) of Exhibit 1 hereto.
(b) The Obligations shall be in the denominations of $1,000 or any
integral multiple thereof.
(c) The Shipowner shall at all times cause to be maintained in the City of
Baltimore, State of Maryland an office or agency for the purposes specified in
Section 5.03 of Exhibit 1 to this Indenture.
(d) The Indenture Trustee shall at all times have its Corporate Trust
Office in the City of Baltimore, State of Maryland.
ARTICLE THIRD
INTEREST RATE CALCULATIONS
Upon the terms and subject to the conditions contained in the Obligations,
and based on information received from the Facility Agent (but only in
connection with the Floating Rate Note), the Indenture Trustee will calculate
the Applicable Interest Rate on the Obligations in the manner and at the times
provided in the Obligations and shall communicate the same to the Shipowner, the
Secretary and any paying agent identified to it in writing as soon as
practicable after each determination. The Indenture Trustee, based on
information received from the Facility Agent (but only in connection with the
Floating Rate Note), will, upon the request of the Holder of the Obligations,
determine the Applicable Interest Rate then in effect with respect to the
Obligations.
3
<PAGE>
ARTICLE FOURTH
CERTAIN REDEMPTIONS
(a) SCHEDULED MANDATORY REDEMPTION. The Obligations are subject to
redemption at a Redemption Price equal to 100% of the principal amount thereof,
together with interest accrued thereon to the applicable Redemption Date,
through the operation of scheduled repayment providing for the semi-annual
redemption on March 15 and September 15 of each year, commencing March 15, 2001
of $6,257,000 of principal amount of Obligations, which amount represents
approximately one twenty-fourth (1/24) of the Original Principal Amount of
Obligations, plus interest accrued thereon to the Redemption Date. There shall
be a final redemption of the remaining outstanding principal of the Floating
Rate Note on the earlier of (i) September 15, 2002, or (ii) two (2) years after
the Delivery Date, and a final redemption of the remaining outstanding principal
of the Fixed Rate Notes on September 15, 2012.
Notwithstanding the foregoing provisions of this subsection (a), if the
principal amount of Outstanding Obligations shall be reduced by reason of any
redemption pursuant to Section 3.04 of Exhibit 1 to this Indenture, the
principal amount of Obligations to be redeemed pursuant to this subsection (a)
on each subsequent Redemption Date for such Obligations shall be reduced by an
amount equal to the principal amount of such Obligations retired by reason of
such redemption pursuant to Section 3.04 of Exhibit 1 hereto divided by the
number of Redemption Dates (including the Stated Maturity of such Obligations)
scheduled thereafter to September 15, 2002 in the case of the Floating Rate Note
and September 15, 2012 in the case of Fixed Rate Note(s) (subject to such
increase as shall be necessary so that the total principal amount of Obligations
to be redeemed on any such Redemption Date shall be an integral multiple of
$1,000); PROVIDED THAT, the entire unpaid principal amount of the Outstanding
Obligations shall be paid not later than September 15, 2002 in the case of the
Floating Rate Note and September 15, 2012 in the case of each Fixed Rate Note.
The Shipowner shall, in accordance with Section 3.02(d) of Exhibit 1 hereto,
promptly after each redemption pursuant to said Section 3.04, furnish to the
Secretary, the Indenture Trustee and each Holder a revised table of scheduled
repayments reflecting the reductions made pursuant to this subsection (a) as a
result of such redemption.
(b) OPTIONAL REDEMPTION OF OBLIGATIONS WITHOUT PREMIUM. At its option,
the Shipowner may without premium,
(i) prepay on any Interest Payment Date the Floating Rate Note, in
whole or in part, in a minimum principal amount of $10,000,000, at a
4
<PAGE>
Redemption Price equal to 100% of the principal amount thereof together
with interest accrued thereon to the Redemption Date, or
(ii) redeem or prepay the Floating Rate Note, in whole or in part,
on a Redemption Date designated by the Shipowner, from the proceeds from
the issuance of the Fixed Rate Notes.
(c) OPTIONAL REDEMPTIONS OF OBLIGATIONS AT MAKE-WHOLE PREMIUM. At its
option, the Shipowner may prepay on any Interest Payment Date the Fixed Rate
Notes, in whole or in part, in a minimum principal amount of $10,000,000, at a
Redemption Price equal to 100% of the principal amount thereof together with
interest accrued thereon to the Redemption Date plus the Make-Whole Premium, if
any. Prepayments shall be applied pro rata against each Fixed Rate Note and
applied against the scheduled principal payments in the inverse order of
scheduled maturity.
(d) OPTIONAL REDEMPTIONS. If the Shipowner shall elect to make any such
optional redemptions pursuant to this Article, the Shipowner shall, at least 40
days but not more than 60 days prior to the date fixed for redemption, deliver
to the Indenture Trustee (1) a Request stating that the Shipowner intends to
exercise its rights as above set forth to make such optional redemptions and
specifying the Redemption Date and the principal amount which the Shipowner
intends to redeem on such date, and (2) at least 35 days prior to the date fixed
for redemption in the case of the Fixed Rate Notes, deliver to the Indenture
Trustee an amount equal to the Make Whole Premium estimated by the Indenture
Trustee, based on information received from the Holder or a calculation agent,
to be paid on the Redemption Date. The Indenture Trustee, based on information
received from the Holder or a calculation agent, shall give an estimate of the
Make Whole Premium to the Shipowner within two (2) business days of the delivery
of the Shipowner's Request. In the event the amount of the Make Whole Premium
deposited by the Shipowner with the Indenture Trustee pursuant to this section
(and interest, if any, accrued thereon, less any losses incurred on the
investment thereof) is insufficient to pay the amount of the Make Whole Premium,
the Shipowner shall pay the amount of the shortfall to the Indenture Trustee in
immediately available funds upon one (1) day's notice. In the event the amount
of the Make Whole Premium deposited by the Shipowner pursuant to this section
(and interest, if any, accrued thereon, less any losses incurred on the
investment thereof) exceeds the Make Whole Premium, the excess amount shall be
refunded to the Shipowner by the Indenture Trustee in immediately available
funds on the Redemption Date.
ARTICLE FIFTH
5
<PAGE>
DEFINITIONS
For all purposes of this Indenture, unless otherwise expressly provided or
unless the context otherwise requires:
(1) All references herein to Articles, Sections or other
subdivisions, unless otherwise specified, refer to the corresponding
Articles, Sections and other subdivisions of this Indenture;
(2) The terms "hereof," "herein," "hereby," "hereto,"
"hereunder" and "herewith" refer to this Indenture; and
(3) The terms used herein and defined in Schedule A to this
Indenture shall have the respective meanings stated in said
Schedule.
ARTICLE SIXTH
ADDITIONS, DELETIONS AND AMENDMENTS TO EXHIBIT 1
The following additions, deletions and amendments are hereby made to
Exhibit 1 to this Indenture.
(a) CONCERNING IMMEDIATELY AVAILABLE FUNDS. Notwithstanding any provision
in Exhibit 1 to this Indenture to the contrary, all payments are to be made in
immediately available funds.
(b) CONCERNING MANDATORY SCHEDULED REDEMPTIONS. The terms "sinking fund
payment" and "sinking fund redemption" in Exhibit 1 to this Indenture refer to
the mandatory scheduled redemption.
(c) CONCERNING SECTION 2.02. Section 2.02(c) is revised to read as
follows:
(c) If the Maturity of any Obligation or an Interest Payment Date for any
Obligation shall be a day other than a Business Day, then such payment may
be made on the next succeeding Business Day, with the same force and
effect as if made on the Interest Payment Date for such payment; PROVIDED,
HOWEVER, that interest shall accrue thereon for the period after said
Interest Payment Date (whether or not such next succeeding Business Day
occurs in a succeeding month).
6
<PAGE>
(d) CONCERNING SECTION 2.04. Prior to the earlier of (i) September 15,
2002, or (ii) two (2) years from the Delivery Date, the Shipowner and the
Indenture Trustee may enter into a Supplemental Indenture, and the Indenture
Trustee may enter into a supplement to the Authorization Agreement, pursuant to
Section 2.04 of Exhibit 1 to this Indenture, to provide for the issuance of
fixed rate obligations in the form of Exhibit 3 hereto for the purpose of
repaying the Floating Rate Note; PROVIDED HOWEVER, that the Shipowner and
Indenture Trustee have obtained the prior written consent of the Secretary and
FURTHER PROVIDED, that (a) except for the final issuance, each issuance of a
Fixed Rate Note must be in a minimum aggregate principal amount of $50,000,000,
and (b) the proceeds from the issuance of Fixed Rate Notes shall be used to pay
off, satisfy and cancel the Floating Rate Note; PROVIDED, HOWEVER, that during
the Construction Period, the Floating Rate Note need not be paid off in its
entirety and need only be reduced by the net proceeds from the issuance of the
Fixed Rate Notes.
(e) CONCERNING SECTION 2.06. Interest at the Applicable Interest Rate
shall be due on each Disbursement at the end of each Interest Period. The
Indenture Trustee, based on information received from the Facility Agent (but
only in connection with the Floating Rate Note), will determine the Applicable
Interest Rate for each Interest Period.
(f) CONCERNING SECTION 2.10. The first paragraph of Section 2.10(c) is
revised to read as follows:
(c) The Shipowner or the Indenture Trustee shall not be required to
register transfers or make exchanges of (1) Obligations for a period of 15
days immediately prior to (A) an Interest Payment Date or (B) any
selection of Obligations to be redeemed, (2) Obligations after demand for
payment of the Guarantees and prior to the payment thereof or rescission
of such demand pursuant to Section 6.02(a), or (3) any Obligation which
has been selected for redemption in whole or in part, except as to the
unredeemed portion of any Obligation being redeemed in part.
(g) CONCERNING SECTION 2.12. With respect to clause (1) of the proviso to
Section 2.12 of Exhibit 1 to the Indenture, a written agreement of indemnity
which is satisfactory in form and substance to the Secretary, the Shipowner, and
the Indenture Trustee, executed and delivered by an institutional Holder having
a capital and surplus of at least $100,000,000 shall be considered sufficient
indemnity to the Secretary, the Shipowner, and the Indenture Trustee in
connection with the execution, authentication and delivery of any new
Obligations or the making of any payment as contemplated by said Section 2.12.
7
<PAGE>
(h) CONCERNING PAYMENT OF THE OBLIGATIONS. Notwithstanding anything to the
contrary in Exhibit 1 hereto, the Obligations to be issued hereunder shall be
payable as to principal, premium (if any), and interest, at an office or agency
maintained by the Shipowner for such purpose at the Corporate Trust Office of
the Indenture Trustee, or at the option of the Shipowner, as to payments of
principal, premium (if any), or interest by wire, in immediately available
funds, by such Corporate Trust Office to the Obligees as appear in the
Obligation Register, subject in any event to the provisions hereof concerning
home office payment and subject to the Indenture Trustee's prior receipt of
funds sufficient for the payment of principal, premium (if any) or interest by
wire or other immediately available funds. The Indenture Trustee shall have no
obligation to determine whether such wires or payments were received by the
Obligees.
(i) CONCERNING SECTION 3.02. Section 3.02(c) and (d) are revised to read
as follows:
(c) SCHEDULED REDEMPTIONS. If the Obligations of any series and Stated
Maturity or the Special Provisions hereof or the Supplemental Indenture
establishing such series shall so provide, such Obligations shall be
subject to (i) scheduled redemption through the operation of a mandatory
redemption schedule, in such amounts, at such times and subject to such
credits (if any) as may be specified therein, and (ii) redemption at the
option of the Shipowner, in connection with the operation of any such
mandatory redemption schedule, in such additional amounts and subject to
such conditions as may be specified therein.
(d) ADJUSTMENTS OF REDEMPTION PAYMENTS. If the Obligations of any series
and Stated Maturity or the Special Provisions hereof or of the
Supplemental Indenture establishing such series provide for an adjustment
in scheduled redemption payments as a result of any redemption or
cancellation of Obligations, the Shipowner shall recompute the remaining
scheduled redemption payments pursuant to such provisions and shall, at
least 60 days prior to the next Interest Payment Date which occurs at
least 60 days following any such redemption or cancellation of Obligations
of such series requiring such recomputation, submit to the Secretary for
his review such recomputation to ascertain compliance with the provisions
of such Obligations or the Special Provisions hereof or such Supplemental
Indenture, and table of revised mandatory redemption schedule payments on
the Obligations of such series reflecting the adjustments made pursuant to
such provisions as a result of such redemption or
8
<PAGE>
cancellation. Upon advice by the Secretary that he finds such
recomputation to comply with such provisions, the Shipowner shall submit
said table to the Indenture Trustee and the Indenture Trustee shall
promptly submit a copy thereof to each Holder of an Obligation of such
series.
(j) CONCERNING SECTION 3.03. The date required by Section 3.03 of Exhibit
1 hereto for the Floating Rate Note is the earlier of September15, 2002, or (ii)
two (2) years from the Delivery Date. The date required by Section 3.03 of
Exhibit 1 hereto for the Fixed Rate Notes is September 15, 2012.
(k) CONCERNING SECTION 3.06. Section 3.06 of Exhibit 1 hereto is hereby
amended in its entirety to read as follows:
SECTION 3.06. REDEMPTION AFTER ASSUMPTION BY THE SECRETARY. Upon receipt
by the Indenture Trustee of written instructions from the Secretary
stating that the principal amount of Obligations specified in such
instructions are required to be redeemed on the date specified therein
(which shall be not less than 40 nor more than 60 days from the receipt of
such instructions by the Indenture Trustee) at the option of the Secretary
at any time after the Secretary's assumption of the Obligations pursuant
to Section 6.09, the Indenture Trustee shall promptly give notice as
provided in Section 3.08 of the redemption on the Redemption Date of the
principal amount of Obligations specified in such instructions and the
Indenture Trustee shall, on such Redemption Date, redeem such Obligations
together with interest accrued thereon to such Redemption Date; PROVIDED
THAT, the Secretary shall redeem at the principal amount thereof and
interest accrued thereon the Outstanding Obligations relating to the
Vessel if the Vessel has been sold pursuant to Section 8.02 to a purchaser
or purchasers who have not assumed such Obligations by notice to the
Indenture Trustee in accordance with this Section 3.06 within 40 days of
the nonassumption of the Obligations by such purchaser.
(l) CONCERNING SECTION 3.07. (i) Section 3.07(a) of Exhibit 1 to this
Indenture is revised to delete the phrase "or 3.05."
(ii) Notwithstanding the provisions of Section 3.07(b) of Exhibit 1
to this Indenture, if less than all of the Obligations are to be redeemed
under any of the provisions contained or referred to in Article Fourth
hereof (excluding Article Fourth (c) or Article III of said Exhibit 1),
the Indenture Trustee shall select such Obligations to be redeemed on the
Redemption Date by allocating the principal amount to be redeemed first
between each
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maturity of Obligations in proportion to the Outstanding Obligations and
second among the holders of each maturity of Obligations in proportion to
the aggregate principal amount of such maturity of Obligations registered
in their respective names; provided that, the Indenture Trustee may select
for redemption portions of the principal amount of the Obligations of a
denomination larger than $1,000; but the portions of the principal amount
of the Obligations so selected shall be equal to $1,000 or an integral
multiple thereof.
(m) CONCERNING SECTION 3.09. Section 3.09 of Exhibit 1 to this Indenture
is revised to read as follows:
SECTION 3.09. DEPOSIT OF REDEMPTION MONEYS. No later than 11:00 a.m.
in Baltimore, Maryland on any Redemption Date, the Shipowner shall, except
as contemplated by Section 3.08(b) or Article Fourth (d) of the Special
Provisions, deposit or cause to be deposited with the Indenture Trustee or
with any Paying Agent an amount in immediately available funds sufficient
for such redemption (after taking into account any amounts then held by
the Indenture Trustee or such Paying Agent and available for such
redemption) with irrevocable directions to it to so apply the same.
(n) CONCERNING SECTION 4.01. Section 4.01(b) of Exhibit 1 hereto is hereby
amended in its entirety to read as follows:
"(b) Cash held by the Indenture Trustee or any Paying Agent (other
than the Shipowner) under this Indenture -
(i) need not be segregated;
(ii) shall not be invested except as permitted by clause (iv)
of this Section 4.01(b);
(iii) shall not bear interest except as the Shipowner and the
Indenture Trustee (or such Paying Agent) may agree in writing;
and
(iv) if the Shipowner shall have deposited or caused to be
deposited with the Indenture Trustee funds sufficient for the
payment of the Obligations at their Maturity, including
interest to the date of Maturity, and the date of Maturity is
more than one (1) Business Day after the deposit of such
funds, the Indenture Trustee upon the Request of the
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Shipowner shall invest such funds, as directed by the
Shipowner in writing, in direct obligations of the United
States Government maturing at or prior to the date of Maturity
of such Obligations and having a principal amount equal to not
less than the amount of the funds so invested. Such
investments shall be held in trust for the purpose for which
the funds so invested were held. After the Obligations in
respect of which the funds were deposited have been paid in
full (except as to unclaimed amounts as referred to in Section
4.03) any of such funds (including interest received in
respect of such investments and gain on matured investments
purchased at a discount) held by the Indenture Trustee in
excess of amounts to which Holders of such Obligations are
entitled shall upon the Request of the Shipowner be paid by
the Indenture Trustee to the Shipowner but only in the absence
of an Indenture Default hereunder."
(o) CONCERNING SECTION 4.02. The appointment of a Paying Agent by the
Shipowner is subject to the prior written consent of the Secretary and Indenture
Trustee, which consent shall not be unreasonably withheld.
(p) CONCERNING SECTION 4.03. Section 4.03 is revised to read as follows:
SECTION 4.03. UNCLAIMED AMOUNTS. Any moneys received by the Indenture
Trustee or a Paying Agent, for the payment of Obligations or Guarantees
and remaining unclaimed by the Holders thereof for 6 years after the date
of the Maturity of said Obligations or the date of payment by the
Secretary of the Guarantees shall, upon delivery to the Indenture Trustee
of a Request by the Shipowner, be paid to the Shipowner; PROVIDED THAT,
not less than 30 days prior to such payment, the Shipowner shall publish
notice thereof to the Obligees at least once in the Authorized Newspapers
and provide the Indenture Trustee with copies thereof. In such event, such
Holders shall thereafter be entitled to look only to the Shipowner (and
the settlor or settlors of any trust for which the Shipowner is trustee,
to the extent paid over to it or them) for the payment thereof, and the
Indenture Trustee or such Paying Agent, as the case may be, shall
thereupon be relieved from all responsibility to such Holders therefor. No
such Request, publication or payment shall be construed to extend any
statutory period of limitations which would have been applicable in the
absence of such Request, publication or payment.
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(q) CONCERNING SECTIONS 5.01 AND 5.02. Sections 5.01 and 5.02 are
revised to read as follows:
SECTION 5.01. AUTHORIZATION, EXECUTION AND DELIVERY OF INDENTURE AND
PERFORMANCE. The Shipowner has duly authorized the execution, delivery and
performance of this Indenture.
SECTION 5.02. PAYMENT AND PROCEDURE FOR PAYMENT OF OBLIGATIONS. The
Shipowner will duly and punctually pay the principal of (and premium, if
any) and interest on the Obligations according to the terms thereof and of
this Indenture. The Shipowner will deposit with the Indenture Trustee or
(subject to Section 3.09) a Paying Agent no later than 11:00 a.m. in
Baltimore, Maryland on each date fixed for such payment or as otherwise
provided by the Special Provisions hereof an amount in immediately
available funds sufficient for such payment (after taking into account any
amounts then held by the Indenture Trustee or such Paying Agent and
available for such payment) with irrevocable directions to it to so apply
the same; PROVIDED THAT, payments of interest may be made as provided in
Section 2.02(b)(4) as modified by Article Sixth (b) of the Special
Provisions; and PROVIDED FURTHER, that except with the consent of the
Secretary the Shipowner shall not deposit any such amount more than ten
(10) days prior to the date of the payment for which such amount is
deposited, unless otherwise provided by the Special Provisions hereof.
(r) CONCERNING SECTION 6.06. Section 6.06(a) revised to read as follows:
SECTION 6.06. (a) OBLIGEES' RIGHT TO DIRECT INDENTURE TRUSTEE AFTER
INDENTURE DEFAULT. During the continuance of any Indenture Default, the
Holders of a majority in principal amount of the Outstanding Obligations
shall have the right, by an Act of Obligees, to direct the Indenture
Trustee:
(1) to exercise or to refrain from exercising any right or to
enforce any remedy granted to it by this Indenture; and
(2) to direct the time, method and place of the exercise of
any such right or the enforcement of any such remedy;
PROVIDED THAT, subject to Section 7.03, the Indenture Trustee shall have
the right not to take any such action if it shall determine in good faith
that the action would involve it in personal liability, would subject it
to
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expenses and liability against which it had not been offered adequate
security, or would be unjustly prejudicial to the Obligees not parties to
such direction.
Anything in this Section 6.06(a) to the contrary notwithstanding, the
Indenture Trustee shall be obligated to demand payment of the Guarantees
as provided in Section 6.02(a) unless the Holders of all Outstanding
Obligations shall have elected to terminate the Guarantees as provided in
Section 6.04(a)(2), in which case the Indenture Trustee shall be obligated
to refrain from making such demand.
(s) CONCERNING SECTION 6.09. The reference to "Exhibit 4" in Section 6.09
is revised to read "Exhibit 5" and the following paragraph is added at the end
of Section 6.09:
In the event that the Obligations are registered in the name of The
Depository Trust Company ("DTC"), Cede & Co. ("Cede") or another nominee
of DTC or Cede pursuant to a Letter of Representations ("LOR") which is
executed among the Shipowner, the Indenture Trustee and DTC, and (i) if
the Secretary assumes the Obligations pursuant to Section 6.09(a) hereof,
or (ii) if the Secretary instructs the Shipowner and the Indenture Trustee
to terminate the LOR, the Shipowner and the Indenture Trustee, immediately
upon receipt of notice of such assumption or upon receipt of notice of
such termination, shall terminate or cause the termination of the LOR in
accordance with Section 11 thereof. The Indenture Trustee shall within 30
days from receipt of either such notice from the Secretary also instruct
DTC to notify its direct and indirect participants of the need to
re-register the Obligations in the names of the beneficial owners. Upon
surrender by DTC of the Obligations issued in its name, the name of Cede
or another nominee, the Shipowner shall issue at its sole expense, and the
Indenture Trustee shall authenticate Obligations in the names provided to
the Indenture Trustee by DTC.
(t) CONCERNING SECTION 7.02. The reference to "$3,000,000" in Section 7.02
is revised to read "$75,000,000."
(u) CONCERNING SECTION 7.03. Section 7.03(h) and (o) are revised to read
as follows:
(h) In all cases where this Indenture does not make express provision as
to the evidence on which the Indenture Trustee may act or refrain from
acting, the Indenture Trustee shall be entitled to receive and shall be
protected (subject to paragraph (c) of this Section) in acting or
refraining
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from acting hereunder in reliance upon an Officer's Certificate as to the
existence or nonexistence of any fact.
(o) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers.
(v) CONCERNING SECTION 7.04. Section 7.04 is revised to read as follows:
SECTION 7.04. COMPENSATION, EXPENSES AND INDEMNIFICATION OF INDENTURE
TRUSTEE. The Shipowner shall (1) pay such compensation to the Indenture
Trustee as they may agree upon in writing from time to time and reimburse
it for its reasonable expenses and disbursements (including counsel fees
and expenses) and (2) indemnify the Indenture Trustee for, and hold it
harmless against, any loss, liability or expense which it may incur or
suffer without negligence or bad faith in acting under this Indenture or
the Authorization Agreement. The compensation of the Indenture Trustee
shall not be limited to the compensation provided by law for a trustee
acting under an express trust. The obligations of the Shipowner under this
Section 7.04 shall survive the termination of the Indenture and
resignation or removal of the Indenture Trustee.
(w) CONCERNING SECTIONS 8.01 AND 8.02. Sections 8.01 and 8.02 are
revised to read as follows:
SECTION 8.01. CONSOLIDATION, MERGER OR SALE BY SHIPOWNER. Nothing in this
Indenture shall prevent any lawful consolidation or merger of the
Shipowner with or into any other Person, or any sale of the Vessel to any
other Person lawfully entitled to acquire and operate the Vessel or any
sale by the Shipowner of all or substantially all of its assets to any
other Person; PROVIDED THAT, except where the Shipowner shall be the
Person surviving a merger or consolidation, the Person formed by or
surviving such consolidation or merger, or to which the sale of the Vessel
shall be made, shall, by Supplemental Indenture, expressly assume the
payment of the principal of and interest (and premium, if any) on the
Outstanding Obligations relating to the Vessel in accordance with the
terms of the Obligations and of the Indenture and shall expressly assume
the performance of the agreements of the Shipowner in the Indenture;
PROVIDED FURTHER, that to the extent the Outstanding Obligations are not
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<PAGE>
so assumed, the Shipowner shall redeem or cause to be redeemed the
Outstanding Obligations, such redemption to be in accordance with the
terms of the Obligations and of the Indenture. When a Person so assumes
this Indenture and the Outstanding Obligations, the Supplemental Indenture
shall discharge and release the Shipowner from any and all obligations
thereunder relating to the Outstanding Obligations. In the event of such
an assumption by a Person to whom the Vessel has been sold (a) such Person
shall succeed to, and be substituted for, and may exercise every right and
power of the original Shipowner with the same effect as if such successor
Shipowner had been named as the Shipowner herein and (b) the Outstanding
Obligations shall be surrendered to the Indenture Trustee for appropriate
notation or for the issuance of new Obligations in exchange for the
Outstanding Obligations in the name of the successor Shipowner, as
required by the Secretary and at the expense of the successor Shipowner.
SECTION 8.02. SALE OF THE VESSEL BY THE SECRETARY. Nothing contained in
this Indenture shall prevent the sale of the Vessel to any other Person by
the Secretary, by a court of law or by the Shipowner following, in
connection with or in lieu of a foreclosure or similar action. Following
any such sale (1) the Person to whom the Vessel has been sold may, by
Supplemental Indenture, expressly assume the payment of principal and
interest (and premium, if any) on all of the Outstanding Obligations in
accordance with the terms of the Obligations and the Indenture and shall
expressly assume the performance of the agreements of the Shipowner in the
Indenture; and (2) in the event such Person does not so assume, the
Secretary shall prepay or redeem all of the Outstanding Obligations
without premium pursuant to Section 3.06 hereof; PROVIDED THAT, the
Secretary shall allow or permit the sale of the Vessel to the original
Shipowner or to any affiliate of the original Shipowner only if (i) the
Secretary has not prepaid or redeemed such Obligations prior to such sale,
and (ii) such purchaser assumes all of the Outstanding Obligations as
contemplated by the preceding clause (1). When a Person so assumes this
Indenture and all of the Outstanding Obligations, the Supplemental
Indenture shall discharge and release the Secretary from any and all
obligations thereunder in the Secretary's capacity as Shipowner relating
to the Outstanding Obligations. In the event of such an assumption by a
Person to whom the Vessel has been sold (a) such Person shall succeed to,
and be substituted for, and may exercise every right and power of the
original Shipowner with the same effect as if such successor Shipowner had
been named as the Shipowner herein and (b) the Outstanding Obligations
shall be surrendered to the Indenture Trustee for appropriate notation or
for the issuance of new Obligations in exchange for the
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<PAGE>
Outstanding Obligations in the name of the successor Shipowner, as
required by the Secretary and at the expense of the successor Shipowner.
Any such sale or the execution of a Supplemental Indenture by an successor
Shipowner shall not discharge or in any manner affect the obligation of
the United States to pay the Guarantees pursuant to the terms thereof.
(x) CONCERNING NOTICES. Subject to the provisions of Section 13.01 of
Exhibit 1 to this Indenture, any notice, request, demand, direction, consent,
waiver, approval or other communication to be given to a party hereto or the
Secretary, shall be deemed to have been sufficiently given or made when
addressed to:
The Indenture Trustee as: FMB TRUST COMPANY,
NATIONAL ASSOCIATION
25 South Charles St.
16th Floor
(Mail Code 101-591)
Baltimore, MD 21201
The Shipowner as: Petrodrill FIVE Limited
c/o Arias, Fabrega & Fabrega
P.O. Box 985
Omar Hodge Building
Wickham's Cay
Road Town, Tortola
British Virgin Islands
With Copies to: PETRODRILL ENGINEERING NV
K.P. van der Mandelelaan 38
3062 MB
Rotterdam (Brainpark)
The Netherlands
The Secretary as: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
Department of Transportation
400 Seventh Street, SW
Washington, D.C. 20590
Attention: Office of the Chief
Counsel
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(y) CONCERNING APPLICABLE LAW. This Indenture and each Obligation shall be
governed by the federal laws of the United States of America, but to the extend
that they are inapplicable by the laws of the State of Maryland.
(z) CONCERNING DISBURSEMENT NOTATIONS. Upon receipt from the Lender of
documents confirming Disbursements, the Indenture Trustee shall review Exhibit A
of the Floating Rate Note (the "Grid"), and calculate principal and applicable
interest thereon. If the Indenture Trustee's calculations are not consistent
with those of the Lender, the calculations of the former shall prevail. The
Indenture Trustee shall promptly thereafter send a copy of the Grid bearing its
calculations to the Holder, who shall endorse the Indenture Trustee's
calculations on the original Exhibit A to the Floating Rate Note, and send a
copy thereof, so noted, to the Indenture Trustee, who, in turn, shall promptly
send a copy thereof to the Secretary.
(aa) CONCERNING REGISTERED AND BENEFICIAL OWNERSHIP OF THE OBLIGATIONS;
LEGENDS.
(i) The Fixed Rate Notes may be issued initially in the form
of one or more permanent global Notes in definitive, fully registered form
without interest coupons (each, a "Global Obligation"). Except as provided
in paragraph (iii) below, owners of beneficial interests in Global
Obligations ("Obligation Owners") will not be entitled to receive separate
certificated Notes ("Definitive Obligation") and will not be considered
the holders thereof. Each such Global Obligation shall be deposited with
the Depository Trust Company (the "DTC") or the Indenture Trustee, as
custodian for DTC, registered in the name of DTC or a nominee of DTC, and
duly executed by the Shipowner and authenticated by the Indenture Trustee
as provided in the Indenture. Each Global Obligation shall bear such
legend as DTC may require.
(ii) Members of, or participants in, DTC shall have no rights
under the Indenture with respect to any Global Obligation held on their
behalf by DTC or by the Indenture Trustee, as the custodian of DTC, or
under such Global Obligation, and DTC may be treated by the Shipowner, the
Indenture Trustee and any agent of the Shipowner or the Indenture Trustee
as the absolute owner of such Global Obligation for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Shipowner, the Indenture Trustee or any agent of the Shipowner or the
Indenture Trustee from giving effect to any written certification, proxy
or other authorization furnished by DTC or impair, as between DTC and its
members and participants, the operation of
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customary practices of DTC governing the exercise of the rights of an
owner of a beneficial interest in any Global Obligation.
(iii) (1) The transfer and exchange of Global
Obligations or beneficial interests therein shall be effected through DTC
or the Indenture Trustee, as the custodian for DTC, in accordance with the
Indenture and the procedures of DTC therefor.
(2) A Global Obligation shall be
exchangeable for Definitive Obligations registered in the names of persons
owning beneficial interest in such Global Obligation only if any of the
following events shall have occurred: (1) DTC notifies the Shipowner, with
a copy to the Indenture Trustee, that it is unwilling or unable to
continue as depositary for such Global Obligation or DTC ceases to be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, at a time when DTC is required to be so registered in order to
act as depositary, and a successor depositary is not appointed by the
Shipowner within 90 days thereafter, (2) the Shipowner or the Indenture
Trustee elects to terminate DTC's services or the book entry system, (3)
the Secretary assumes the Obligations, or (4) the Secretary instructs the
Shipowner and Indenture Trustee to terminate the Letter of
Representations.
(3) Any Global Obligation that is
exchangeable for Definitive Obligations registered in the name of the
owners of beneficial interests therein pursuant to this paragraph (iii)
shall be surrendered by DTC to the Indenture Trustee to be so exchanged,
without charge, and the Shipowner shall execute and the Indenture Trustee
shall authenticate and deliver, upon such exchange of such Global
Obligation, an equal aggregate principal amount of Definitive Obligations
of authorized denominations. Definitive Obligations issued in exchange for
a beneficial interest in a Global Obligation pursuant hereto shall be
registered in such names and in such authorized denominations as DTC,
pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Indenture Trustee in writing. The Indenture
Trustee shall deliver such Definitive Obligations to the Obligation Owners
in whose names such Obligations are so registered in accordance with the
instructions of DTC.
(4) The registered holder of a Global Obligation
may grant proxies and otherwise authorize any Obligation Owner, including
DTC's members and participants and Obligation Owners that may hold
interest through such members and participants, to take any action which a
Holder is entitled to take under the Indenture or the
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Obligations.
(5) In the event of the occurrence of any of the
events specified in paragraph (iii)(2), the Shipowner will promptly make
available to the Indenture Trustee a reasonable supply of Definitive
Obligations.
(6) Notwithstanding any other provision of the
Indenture, a Global Obligation may not be transferred except as a whole by
DTC for such Global Obligation to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC.
(iv) At such time as all beneficial interests in a Global
Obligations have either been exchanged for Definitive Obligations,
redeemed, repurchased or canceled, such Global Obligation shall be
returned to the Indenture Trustee for cancellation or retained and
canceled by the Indenture Trustee.
(v) The Indenture Trustee shall have no responsibility or
obligation to any owner of a beneficial interest in a Global Obligation, a
member of, or a participant in DTC or any other Obligation Owner with
respect to the accuracy of the records of DTC or its nominee or of any
participant or member thereof, with respect to any ownership interest in
the Obligations or with respect to the delivery to any participant,
member, beneficial owner or other Obligation Owner (other than DTC) of any
notice (including any notice of redemption) or the payment of any amount
or delivery of any Obligations (or other security or property) under or
with respect to such Obligations. All notices and communications to be
given to the Holders and all payments to be made to Holders in respect to
the Obligations shall be given or made only to or upon the order of the
registered Holders (which shall be DTC or its nominee in the case of a
Global Obligation). The rights of owners of beneficial interests in any
Global Obligation shall be exercised only through DTC subject to the
applicable rules and procedures of DTC. The Indenture Trustee may rely and
shall be fully protected in relying upon information furnished by DTC with
respect to its members, participants and any beneficial owners.
(bb) JURISDICTION AND CONSENT TO SUIT. Any proceeding to enforce this
Agreement may be brought in the Federal courts of the United States of America
located in the State of Maryland of the United States of America. The Shipowner
and the Indenture Trustee hereby irrevocably waive any present or future
objection to such venue, and for each of itself and in respect of any of their
respective properties hereby irrevocably consents and submits
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unconditionally to the nonexclusive jurisdiction of those courts. The Shipowner
further irrevocably waives any claim that any such court is not a convenient
forum for any such proceeding. The Shipowner agrees that any service of process,
writ, judgment or other notice of legal process shall be deemed and held in
every respect to be effectively served upon it in connection with proceedings in
the State of Maryland, if delivered to Sher & Blackwell, 1850 M Street, N.W.,
Suite 900, Washington, DC 20036, which it irrevocably designates and appoints as
its authorized agent for the service of process in the State and Federal courts
in the State of Maryland. Nothing herein shall affect the right of the Indenture
Trustee to serve process in any other manner permitted by applicable law. The
Shipowner further agrees that final judgment against it in any such action or
proceeding arising out of or relating to this Indenture shall be conclusive and
may be enforced in any other jurisdiction within or outside the United States of
America by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of that fact and of the judgment.
(cc) PAYMENTS IN U.S. CURRENCY. This is an international loan transaction
in which the specification of United States Dollars is of the essence, and such
currency shall be the currency of account in all events. The respective payment
obligations of the Shipowner and the Indenture Trustee hereunder shall not be
discharged by an amount paid in another currency, whether pursuant to a judgment
or otherwise, to the extent that the amount so paid on prompt conversion of such
currency under normal banking procedures does not yield after deduction of any
and all fees, taxes or any other charges imposed on the payment, the amount of
United States Dollars then due. In the event that any payment by the Shipowner
or the Indenture Trustee, whether pursuant to a judgment or otherwise, upon
conversion and transfer, does not result in the payment of such amount of United
States Dollars at the place such amount is due, each shall be entitled to demand
immediate payment of, and shall have a separate cause of action against the
other for, the additional amount necessary to yield the amount then due. In the
event either the Shipowner or the Indenture Trustee, upon the conversion of such
judgment into Dollars, shall receive (as a result of currency exchange rate
fluctuations) an amount greater than that to which it was entitled, the
defaulting party shall be entitled to immediate reimbursement of the excess
amount.
(dd) SHIPOWNER NOT IMMUNE. The Shipowner represents and warrants that it
is subject to civil and commercial law with respect to its obligations under
this Indenture, that the making and performance of this Indenture constitutes
private and commercial acts rather than governmental or public acts and that
neither the Shipowner nor any of its properties or revenues has any right of
immunity on the grounds of sovereignty or otherwise from suit,
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<PAGE>
court jurisdiction, attachment prior to judgment, attachment in aid of execution
of a judgment, set-off, execution of a judgment or from any other legal process
with respect to its obligations under this Indenture. To the extent that the
Shipowner may hereafter be entitled, in any jurisdiction in which judicial
proceedings may at any time be commenced with respect to this Indenture to claim
for itself or its revenues or assets any such immunity, and to the extent that
in any such jurisdiction there may be attributed to the Shipowner such an
immunity (whether or not claimed), the Shipowner hereby irrevocably agrees not
to claim and hereby irrevocably waives such immunity. The foregoing waiver of
immunity shall have effect under the United States Sovereign Immunities Act of
1976.
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<PAGE>
IN WITNESS WHEREOF, this Trust Indenture has been duly executed by the
parties hereto as of the day and year first above written.
PETRODRILL FIVE LIMITED
Shipowner
ATTEST:
/s/ ROBERT W. RANDALL By: /s/ EARL W. MCNIEL
Secretary Treasurer
FMB TRUST COMPANY,
NATIONAL ASSOCIATION
Indenture Trustee
(Seal)
ATTEST:
/s/ DAVID L. WILLIAMS By: /s/ ROBERT D. BROWN
Vice President
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<PAGE>
DISTRICT OF COLUMBIA )
) SS:
CITY OF WASHINGTON )
On this 9th day of April, 1999, before me personally appeared Earl W.
McNiel to me known, who being by me duly sworn, did depose and say that he is
the Treasurer of PETRODRILL FIVE LIMITED, and that he signed his name thereto by
authority of the Board of Directors of said corporation.
In testimony whereof, I have hereunto set my hand and seal this 9th day of
April, 1999.
/s/ NORALYN RUSSELL
____________________
NOTARY PUBLIC
(Notarial Stamp and Seal)
23
<PAGE>
DISTRICT OF COLUMBIA )
) SS:
CITY OF WASHINGTON )
Be it known this 9th day of April, 1999, personally appeared before
me, Robert D. Brown, who after being duly sworn, deposed and said that he is a
Vice President of FMB Trust Company, National Association, a national banking
association, which is described in and executed the instrument hereto annexed,
and that he signed the instrument hereto annexed by order of the Board of
Directors of the said national banking association, and acknowledged the annexed
instrument to be the free act and deed of the said national banking association.
In testimony whereof, I have hereunto set my hand and seal this 9th day of
April, 1999.
/s/ NORALYN RUSSELL
____________________
NOTARY PUBLIC
(Notarial Stamp and Seal)
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Document 6
EXHIBIT 1
GENERAL PROVISIONS OF THE INDENTURE
INCORPORATED BY REFERENCE
TABLE OF CONTENTS
TO
EXHIBIT 1*
PAGE
ARTICLE I. DEFINITIONS; OFFICER'S CERTIFICATE AND OPINIONS OF COUNSEL.........1
SECTION 1.01. Definitions..........................................1
SECTION 1.02. Officer's Certificates and Opinions of Counsel.......1
ARTICLE II. THE OBLIGATIONS....................................................2
SECTION 2.01. Designation of Obligations..........................2
SECTION 2.02. Issue, Form, Principal Amount, Maturity,
Interest, Place of Payment, Denominations
and Redemption of Obligations...................2
SECTION 2.03. Issuance of Obligations of Initial Series...........3
SECTION 2.04. Additional Obligations; Obligations of
Additional Series...............................4
SECTION 2.05. Legends on Obligations..............................4
SECTION 2.06. Dates of Obligations; Interest Rates................4
SECTION 2.07. Execution of Obligations............................4
SECTION 2.08. Authentication of Obligations and Guarantees.......5
SECTION 2.09. Temporary Obligations...............................5
SECTION 2.10. Registration, Transfer and Exchange.................6
SECTION 2.11. Who Treated as Owners...............................7
SECTION 2.12. Lost, Stolen, Destroyed or Mutilated Obligations....7
SECTION 2.13. Reacquired Obligations, Cancellation
and Disposition of Obligations..................8
ARTICLE III. REDEMPTION OF OBLIGATIONS........................................8
SECTION 3.01. Redemptions Suspended During Default................8
SECTION 3.02. Redemptions.........................................9
(a) Redemptions With Premium........................9
(b) Redemptions Without Premium.....................9
(c) Sinking Fund Redemptions........................9
(d) Adjustments of Redemption Payments..............9
SECTION 3.03. Terminal Mandatory Redemption......................10
SECTION 3.04. Redemptions to Comply with Provisions
of Section 1104(b)(2) of the Act...............10
SECTION 3.05. Redemption After Total Loss, Requisition
of Title, Seizure or Forfeiture of a
Vessel or Termination of Certain Contracts.....10
SECTION 3.06. Redemption After Assumption by the Secretary.......11
SECTION 3.07. Determination of Obligations to be Redeemed........11
SECTION 3.08. Notices of Redemption..............................11
SECTION 3.09. Deposit of Redemption Moneys.......................12
SECTION 3.10. Payment of Redemption Price........................12
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ARTICLE IV. CASH HELD BY INDENTURE TRUSTEE OR PAYING AGENTS.................13
SECTION 4.01. Generally..........................................13
SECTION 4.02. Paying Agents Other Than Indenture Trustee.........13
SECTION 4.03. Unclaimed Amounts..................................14
SECTION 4.04. Application of Funds...............................14
ARTICLE V. REPRESENTATIONS AND AGREEMENTS OF SHIPOWNER.....................15
SECTION 5.01. Authorization, Execution and Delivery of Indenture.15
SECTION 5.02. Payment and Procedure for Payment of Obligations...15
SECTION 5.03. Offices or Agencies of Shipowner...................15
ARTICLE VI. INDENTURE DEFAULTS AND REMEDIES.................................16
SECTION 6.01. What Constitutes "Indenture Defaults...............16
SECTION 6.02. Demand for Payment of Guarantees...................16
SECTION 6.03. Appointment of Indenture Trustee and
Holders of Outstanding Obligations
as Attorneys-in-Fact..........................17
SECTION 6.04. Termination and Payment of the Guarantees..........17
SECTION 6.05. Rights of Indenture Trustee After Indenture
Default.......................................19
SECTION 6.06. (a) Obligees' Right to Direct Indenture
Trustee After Indenture Default...............19
(b) Limitations on Obligees' Right to Sue..........20
(c) Unconditional Right of Obligees to Sue for
Principal (and Premium, if any) and Interest..21
SECTION 6.07. Undertaking for Costs..............................21
SECTION 6.08. Recision of Payments...............................21
SECTION 6.09. Assumption of Obligations by Secretary.............22
ARTICLE VII. THE INDENTURE TRUSTEE...........................................23
SECTION 7.01. Acceptance of Trusts...............................23
SECTION 7.02. Eligibility of Indenture Trustee...................23
SECTION 7.03. Rights and Duties of Indenture Trustee.............23
SECTION 7.04. Compensation, Expenses and
Indemnification of Indenture Trustee...........27
SECTION 7.05. Resignation and Removal of Indenture Trustee.......27
SECTION 7.06. Appointment of Successor Indenture Trustee.........27
SECTION 7.07. Effect of Appointment of Successor Indenture
Trustee........................................28
SECTION 7.08. Merger, Consolidation and Sale of Indenture
Trustee........................................28
ARTICLE VIII. CONSOLIDATION, MERGER OR SALE BY SHIPOWNER......................29
SECTION 8.01. Consolidation, Merger or Sale by Shipowner.........29
SECTION 8.02. Sale of the Vessel or Vessels by the Secretary.....30
ARTICLE IX. ACTS OF OBLIGEES................................................30
SECTION 9.01. Acts of Obligees...................................30
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ARTICLE X. SUPPLEMENTAL INDENTURES.........................................31
SECTION 10.01. Permissible Without Action by Obligees............31
SECTION 10.02. Protection of Indenture Trustee...................32
SECTION 10.03. Reference in Obligations to Supplemental
Indentures...................................32
SECTION 10.04. Waivers and Supplemental Indentures with
Consent of Obligees..........................33
SECTION 10.05. Consent of Secretary..............................34
SECTION 10.06. Continued Validity of the Guarantees..............34
ARTICLE XI. PERFORMANCE OF OBLIGATIONS TO SECRETARY.........................34
SECTION 11.01. Performance of Obligations to Secretary...........34
ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE.........................34
SECTION 12.01. Satisfaction and Discharge of Indenture...........34
ARTICLE XIII. MISCELLANEOUS...................................................35
SECTION 13.01. Notices and Demands...............................35
SECTION 13.02. Waivers of Notice.................................35
SECTION 13.03. Benefit of Indenture..............................35
SECTION 13.04. Execution of Counterparts.........................35
SECTION 13.05. Table of Contents; Titles and Headings............35
SECTION 13.06. Integration with Special Provisions of the
Indenture.....................................36
SECTION 13.07. Immunity of Incorporators, Stockholders,
Officers and Directors........................36
SECTION 13.08. Applicable Law....................................36
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EXHIBIT 1
GENERAL PROVISIONS OF THE INDENTURE
INCORPORATED BY REFERENCE
ARTICLE I
DEFINITIONS; OFFICER'S CERTIFICATES
AND OPINIONS OF COUNSEL
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture, the terms
used herein shall have the meanings specified in the Special Provisions hereof,
including without limitation Schedule A to this Indenture.
SECTION 1.02. OFFICER'S CERTIFICATES AND OPINIONS OF COUNSEL. (a)
Each Officer's Certificate or Opinion of Counsel with respect to compliance
with a covenant or condition provided for herein (or waiver thereof) shall
include:
(1) A statement that the Person or Persons making such certificate
or rendering such opinion has or have read such covenant or condition;
(2) A brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) A statement that, in the opinion of such Person or Persons, he
or they have made or caused to be made such examination or investigation
as is necessary to enable him or them to express an informed opinion as to
whether or not such covenant or condition has been complied with (or
compliance therewith has been waived); and
(4) A statement as to whether or not, in the opinion of such Person
or Persons, such condition or covenant has been complied with (or such
compliance has been waived).
(b) An Opinion of Counsel may be based (insofar as it relates to factual
matters, information with respect to which is in the possession of any Person)
upon a certificate or opinion of or representations in writing signed by an
officer or officers of such Person or by such Person, as the case may be, and
may be based upon an Opinion of Counsel signed by another counsel.
An Opinion of Counsel may state that said opinion is subject to the
execution and delivery of designated instruments if copies of such instruments
in form approved by such counsel are delivered to the Indenture Trustee prior
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to or concurrently with the delivery of said opinion.
(c) A certificate or opinion of a Person or Persons other than counsel may
be based, insofar as it relates to legal matters, upon an Opinion of Counsel,
unless the Person or Persons signing such certificate or opinion knew that such
Opinion of Counsel was erroneous or, in the exercise of reasonable care, should
have known that the same was erroneous.
(d) If the Indenture requires or permits the execution of any document by
officers, counsel or other Persons, such document may be executed in
counterparts by different officers, counsel or other Persons, all of which shall
form one instrument.
(e) If the signer of any document is required to be approved by the
Indenture Trustee, the acceptance of such document by the Indenture Trustee
shall be sufficient and conclusive evidence of such approval.
(f) The fact that the delivery of any document is a condition precedent to
any action required or permitted hereby shall not preclude the withdrawal,
revocation, rescission, modification or amendment of such document at any time
prior to such action, and, in the event of any such withdrawal, revocation or
rescission, such document shall be disregarded for all purposes of this
Indenture.
ARTICLE II
THE OBLIGATIONS
SECTION 2.01. DESIGNATION OF OBLIGATIONS. The Obligations of each series
shall be designated as stated in the Special Provisions hereof or in the
Supplemental Indenture establishing such series.
SECTION 2.02. ISSUE, FORM, PRINCIPAL AMOUNT, MATURITY, INTEREST, PLACE OF
PAYMENT, DENOMINATIONS AND REDEMPTION OF OBLIGATIONS. (a) Upon or after the
execution and delivery of this Indenture the aggregate principal amount of
Obligations of the series and Stated Maturity or Maturities permitted by the
Special Provisions hereof may be executed by the Shipowner, authenticated by the
Indenture Trustee, and delivered as provided herein.
(b) The Obligations of each series and Stated Maturity to be issued
hereunder, the Guarantees of the United States to be endorsed thereon and the
Indenture Trustee's authentication certificates to be endorsed thereon shall, in
the case of the initial series of Obligations, be in the form or forms set forth
in Exhibit 2 to the Special Provisions hereof or, in the case of Obligations of
any
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additional series, in the form or forms set forth in the Supplemental Indenture
establishing such series, and said Obligations shall:
(1) be limited to the respective principal amounts stated in the
Special Provisions hereof or in the Supplemental Indenture establishing
such series;
(2) bear interest from the date specified in Section 2.06 at the
rate or rates per annum stated in such Obligations;
(3) mature in the amount or amounts and at the time or times stated
therein;
(4) be payable as to principal (and any premium thereon if premium
in case of redemption prior to Stated Maturity is provided for therein),
in any coin or currency of the United States which at the time of payment
is legal tender for public and private debts, at an office or agency
maintained from time to time by the Shipowner for such purpose as provided
in Section 5.03 at the place or places stated in the Special Provisions
hereof and payable as to interest as aforesaid or, at the option of the
Shipowner, by check mailed by such office or agency to the addresses of
the Obligees as such addresses shall appear in the Obligation Register;
(5) be issued in the denominations provided in the Special
Provisions hereof or in the Supplemental Indenture establishing such
series; and
(6) be subject to redemption to the extent and as provided in
Article III.
(c) If the Maturity of any Obligation or an Interest Payment Date for any
Obligation shall be a day other than a Business Day, then such payment may be
made on the next succeeding Business Day, with the same force and effect as if
made on the nominal date for such payment, and no interest shall accrue thereon
for the period after said nominal date (whether or not such next succeeding
Business Day occurs in a succeeding month).
SECTION 2.03. ISSUANCE OF OBLIGATIONS OF INITIAL SERIES. At any time and
from time to time after the execution and delivery of this Indenture, the
Shipowner may deliver to the Indenture Trustee Obligations of the initial series
issuable under this Indenture duly executed by the Shipowner as hereinafter
provided, accompanied by a Request of the Shipowner, and thereupon the Indenture
Trustee shall authenticate such Obligations, after endorsing thereon
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and authenticating the Guarantees of the United States in accordance with the
Authorization Agreement, and shall deliver such Obligations and Guarantees in
accordance with such Request. Each such Request shall specify the principal
amounts, interest rates and Stated Maturities of the Obligations to be
authenticated and the names and addresses of the Persons in whose name the
Obligations are to be registered.
SECTION 2.04. ADDITIONAL OBLIGATIONS; OBLIGATIONS OF ADDITIONAL SERIES. At
any time or from time to time, the Shipowner may, with the approval of the
Secretary, issue additional Obligations of any series and Stated Maturity
theretofore issued or of one or more additional series, which shall (i) be in
such principal amount, and (in the case of Obligations of any additional series)
mature on such dates, bear interest at such rate or rates, be in such form or
forms and have such other terms and provisions, as shall be set forth in a
Supplemental Indenture providing for the issue thereof and (ii) be guaranteed by
the United States under Title XI of the Act pursuant to a supplement to the
Authorization Agreement.
SECTION 2.05. LEGENDS ON OBLIGATIONS. Any Obligation may have imprinted or
stamped thereon any legend, consistent herewith, which is prescribed by the
Shipowner and approved by the Indenture Trustee, and, except for endorsements
permitted by the second paragraph of Section 2.10(c), by the Secretary.
SECTION 2.06. DATES OF OBLIGATIONS; INTEREST RATES. Each Obligation of any
series shall be dated the date of its authentication and except as otherwise
provided in this Section, shall bear interest from the Interest Payment Date for
Obligations of such series next preceding the date of such Obligation to which
interest on the Obligations of such series has been paid, unless (i) the date of
such Obligation is the date to which interest on the Obligations of such series
has been paid, in which case from the date of such Obligation, or (ii) no
interest has been paid on the Obligations of such series since the original
issue date (as defined below) of such Obligation, in which case from such
original issue date. The term "original issue date" of an Obligation shall mean
(a) in the case of an Obligation issued on original issue, the date of such
Obligation, or (b) in the case of an Obligation not issued on original issue,
the date of the Obligation (or portion thereof) issued on original issue for
which such Obligation was issued (directly or indirectly) on registration of
transfer, exchange or substitution.
SECTION 2.07. EXECUTION OF OBLIGATIONS. The Obligations shall from time to
time be executed on behalf of the Shipowner by a Responsible Officer thereof
(whose signature may be a facsimile), and its corporate seal (which may be a
facsimile) shall be affixed thereto or imprinted thereon and attested by its
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secretary, an assistant secretary or an assistant trust officer (whose signature
may be a facsimile).
If any officer of the Shipowner whose signature (facsimile or otherwise)
appears on any Obligation shall cease to be such officer before such Obligation
shall have been authenticated by the Indenture Trustee or delivered, such
Obligation nevertheless may be authenticated, issued and delivered with the same
force and effect as though the person or persons whose signature or signatures
(facsimile or otherwise) appear on such Obligation had not ceased to be such
officer or officers of the Shipowner.
SECTION 2.08. AUTHENTICATION OF OBLIGATIONS AND GUARANTEES. No Obligation
or the Guarantee of the United States thereon shall be valid unless such
Obligation shall bear thereon an authentication certificate, manually executed
by the Indenture Trustee in accordance with the terms and conditions of the
Authorization Agreement, substantially in the form or forms referred to in
Section 2.02(b). Such authentication certificate, so executed, on any Obligation
shall be conclusive evidence, and the only competent evidence, that such
Obligation and such Guarantee have been duly executed, authenticated and
delivered hereunder.
SECTION 2.09. TEMPORARY OBLIGATIONS. There may be issued from time to time
in lieu of (or in exchange for) any definitive Obligation or Obligations one or
more temporary Obligations of like series and Stated Maturity, with a Guarantee
of the United States endorsed thereon and authenticated by the Indenture
Trustee, substantially of the same tenor as the definitive Obligations in lieu
of (or in exchange for) which they are issued, with or without the specification
of any Redemption Price or Prices. Such temporary Obligation or Obligations may
be in such authorized denomination or denominations as shall be stated in a
Request of the Shipowner delivered to the Indenture Trustee prior to the
authentication thereof, which Request shall specify the aggregate principal
amounts and the series and Stated Maturities of such temporary Obligations.
If definitive Obligations are not ready for delivery, the Holder of any
temporary Obligation may, at the Corporate Trust Office, with the consent of the
Shipowner, exchange the same for a temporary Obligation or Obligations of like
series, tenor, interest accrual date and Stated Maturity of authorized
denominations for the same aggregate principal amount upon the surrender for
cancellation of such temporary Obligation or Obligations.
When definitive Obligations are ready for delivery, the Holder of any
temporary Obligation may, at the Corporate Trust Office, exchange the same
without charge for a definitive Obligation or Obligations of like series, tenor,
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interest accrual date and Stated Maturity of authorized denominations for the
same aggregate principal amount.
SECTION 2.10. REGISTRATION, TRANSFER AND EXCHANGE. (a) The Shipowner
shall cause the Indenture Trustee to keep an Obligation Register for the
registration of ownership, transfers and exchanges of Obligations, at the
Corporate Trust Office.
(b) Any Obligation may be transferred at the Corporate Trust Office, by
surrender of such Obligation for cancellation, accompanied by an instrument of
transfer in form satisfactory to the Shipowner and the Indenture Trustee, duly
executed by the registered Obligee or his duly authorized attorney, and
thereupon the Shipowner shall execute, and the Indenture Trustee shall
authenticate and deliver in the name of the transferee or transferees, a new
Obligation or Obligations, and the Guarantee or Guarantees of the United States
thereon, in authorized denominations of like series, tenor, interest accrual
date and Stated Maturity and for the same aggregate principal amount.
(c) The Shipowner shall not be required to register transfers or make
exchanges of (1) Obligations for a period of 15 days immediately prior to (A) an
Interest Payment Date or (B) any selection of Obligations to be redeemed, (2)
Obligations after demand for payment of the Guarantees and prior to the payment
thereof or rescission of such demand pursuant to Section 6.02(a), or (3) any
Obligation which has been selected for redemption in whole or in part.
If any Obligation surrendered for transfer or exchange has been selected
for redemption in whole or in part, there may be endorsed on any Obligation or
Obligations issued therefor an appropriate notation of such fact.
(d) Any Obligation shall be exchangeable for a like principal amount of
Obligations of the same series, tenor, interest accrual date and Stated Maturity
but of different authorized denominations. Obligations to be exchanged shall be
surrendered at the Corporate Trust Office, and the Shipowner shall execute, and
the Indenture Trustee shall authenticate and deliver in exchange therefor, the
Obligation or Obligations, and the Guarantee or Guarantees of the United States
endorsed thereon, requested by the Obligee in accordance with this paragraph
(d).
(e) As a condition precedent to any transfer or exchange of Obligations,
the Indenture Trustee may (except upon an exchange of temporary for definitive
Obligations) require the payment of a sum sufficient to reimburse it for any
taxes or other governmental charges that may be imposed with respect thereto and
a sum not exceeding $2.00 for each Obligation delivered upon any such transfer
or exchange.
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SECTION 2.11. WHO TREATED AS OWNERS. The Shipowner, the Indenture Trustee,
the Secretary, and any office or agency for the payment of principal of (and
premium, if any) or interest on the Obligations may deem and treat the Person in
whose name any Obligation is registered in the Obligation Register as the
absolute owner of such Obligation for all purposes, and neither the Shipowner,
the Indenture Trustee, the Secretary, nor any such office or agency shall be
affected by any notice to the contrary, whether such Obligation shall be past
due or not. All payments of or on account of principal (and premium, if any) or
interest, or pursuant to the Guarantee endorsed on such Obligation, to such
registered Obligee shall be valid and effectual to satisfy and discharge the
liability of the Shipowner and the Secretary to the extent of the sum or sums so
paid, except as otherwise provided in Section 6.08.
SECTION 2.12. LOST, STOLEN, DESTROYED OR MUTILATED OBLIGATIONS. Upon
receipt by the Shipowner and the Indenture Trustee of evidence satisfactory to
them of the loss, theft, destruction or mutilation of any Outstanding Obligation
and the ownership thereof, the Shipowner may execute, and upon request of the
Shipowner, the Indenture Trustee shall, but subject to all limitations imposed
by the Authorization Agreement and only to the extent authorized thereby,
authenticate and deliver, a new Obligation, and the Guarantee of the United
States endorsed thereon, of like series, tenor, interest accrual date, principal
amount and Stated Maturity (which may bear such notation as may be required by
the Indenture Trustee or by usage or by the rules of any stock exchange upon
which the Obligations are then listed and which shall bear a serial number
different from the serial number of the lost, stolen, destroyed or mutilated
Obligation) in lieu of such lost, stolen, destroyed or mutilated Obligation and,
similarly, upon receipt by the Shipowner and the Indenture Trustee of evidence
satisfactory to them of the loss, theft, destruction or mutilation of any
Obligation which has or is about to become due and payable, the Indenture
Trustee may deem the applicant with respect thereto to be the owner of said
Obligation for the purpose of receiving payment on account thereof of principal
(and premium, if any) upon maturity or interest or the payment of the Guarantee
thereof; PROVIDED THAT, as conditions precedent to the execution, authentication
and delivery of any new Obligation in place of said Obligation or to any payment
contemplated by this Section, (1) the Shipowner, the Indenture Trustee and the
Secretary shall receive indemnity satisfactory to the Shipowner, the Indenture
Trustee and the Secretary, (2) the Shipowner shall be reimbursed for all
reasonable expenses (including any fees or expenses of the Indenture Trustee)
incident thereto, and (3) said Obligation shall (unless the same shall have been
lost, stolen or destroyed) be surrendered.
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Obligations issued pursuant to this Section and the Guarantees endorsed
thereon shall constitute original contractual obligations of the Shipowner and
the United States, respectively, whether or not the lost, stolen or destroyed
Obligations be at any time enforceable by anyone, and shall be equally and
proportionately entitled to the benefits of this Indenture with all other
Outstanding Obligations issued hereunder.
The provisions of this Section 2.12 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of lost, stolen, destroyed or mutilated Obligations.
SECTION 2.13. REACQUIRED OBLIGATIONS; CANCELLATION AND DISPOSITION OF
OBLIGATIONS. In the event the Shipowner shall reacquire any Obligations (whether
by purchase or otherwise), such Obligations shall forthwith be delivered to the
Indenture Trustee for cancellation. Except as provided in Section 3.10(b), all
Obligations surrendered for the purpose of payment, redemption, transfer,
exchange, or substitution, or (if permitted in the Special Provisions hereof or
the Supplemental Indenture establishing any additional series of Obligations) in
discharge in whole or in part of any sinking fund payment shall, if surrendered
to the Shipowner or any Paying Agent, be delivered to the Indenture Trustee for
cancellation, or, if surrendered to the Indenture Trustee, shall be cancelled by
it. No Obligation shall be authenticated in lieu of or in exchange for any
Obligation cancelled as provided in this Section, except as may be expressly
permitted by this Indenture. Obligations cancelled by the Indenture Trustee
shall be delivered or disposed of as directed by a Request of the Shipowner.
ARTICLE III
REDEMPTION OF OBLIGATIONS
SECTION 3.01. REDEMPTIONS SUSPENDED DURING DEFAULT. Notwithstanding the
following provisions of this Article III, neither the Shipowner nor the
Indenture Trustee shall redeem any Obligations, except pursuant to Section 3.04
or 3.06 during the continuance of any Indenture Default or event which with the
lapse of time could constitute a Payment Default, except that, where the mailing
of notice of redemption of any Obligations shall have theretofore been made, the
Indenture Trustee shall redeem or cause to be redeemed such Obligations if it
shall have received a sum sufficient for such redemption. Except as aforesaid,
any moneys received by the Indenture Trustee for the redemption of Obligations
which may not be applied to the redemption thereof shall be held as security for
the payment of all the Obligations, and, (i) in case such Indenture Default or
such event shall no longer be continuing, such moneys shall thereafter be
applied to the
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redemption of Obligations in accordance with the applicable provisions of the
Obligations and of this Article III, (ii) in the event the Secretary shall have
assumed the Obligations pursuant to Section 6.09 or shall have been required to
pay the Guarantees, such moneys shall be paid over by the Indenture Trustee to
the Secretary or (iii) if no Obligation shall be Outstanding, other than by
payment of the Guarantees, such moneys shall be paid to the Shipowner.
SECTION 3.02. REDEMPTIONS. (a) REDEMPTIONS WITH PREMIUM. If the
Obligations of any series and Stated Maturity or the Special Provisions
hereof or the Supplemental Indenture establishing such series shall so
provide, such Obligations shall be subject to redemption at a premium in the
amounts, at the price or prices, at the time or times and subject to the
conditions specified therein.
(b) REDEMPTIONS WITHOUT PREMIUM. The Obligations of each series shall be
subject to redemption without premium in the amounts, at the time or times and
subject to the conditions specified in Sections 3.03, 3.04, 3.05 and 3.06. If
the Obligations of any series and Stated Maturity or the Special Provisions
hereof or the Supplemental Indenture establishing such series shall so provide,
such Obligations shall also be subject to redemption without premium in the
amounts, at the time or times and subject to the conditions specified therein or
as provided in subsection (c) of this Section 3.02.
(c) SINKING FUND REDEMPTIONS. If the Obligations of any series and Stated
Maturity or the Special Provisions hereof or the Supplemental Indenture
establishing such series shall so provide, such Obligations shall be subject to
(i) mandatory redemption through the operation of a sinking fund or similar
fund, in such amounts, at such times and subject to such credits (if any) as may
be specified therein, and (ii) redemption at the option of the Shipowner, in
connection with the operation of any such fund, in such additional amounts and
subject to such conditions as may be specified therein.
(d) ADJUSTMENTS OF REDEMPTION PAYMENTS. If the Obligations of any series
and Stated Maturity or the Special Provisions hereof or of the Supplemental
Indenture establishing such series provide for an adjustment in mandatory
redemption payments as a result of any redemption or cancellation of
Obligations, the Shipowner shall recompute the remaining mandatory redemption
payments pursuant to such provisions and shall, at least 60 days prior to the
next Interest Payment Date which occurs at least 60 days following any such
redemption or cancellation of Obligations of such series requiring such
recomputation, submit to the Secretary for his review of such recomputation to
ascertain compliance with the provisions of such Obligations or the Special
Provisions hereof or such Supplemental Indenture, a table of
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revised mandatory redemption payments on the Obligations of such series
reflecting the adjustments made pursuant to such provisions as a result of such
redemption or cancellation. Upon advice by the Secretary that he finds such
recomputation to comply with such provisions, the Shipowner shall submit said
table to the Indenture Trustee and the Indenture Trustee shall promptly submit a
copy thereof to each Holder of an Obligation of such series.
SECTION 3.03. TERMINAL MANDATORY REDEMPTION. The Shipowner shall redeem,
at the principal amount thereof and interest accrued thereon, all the
Obligations that shall be Outstanding on the date determined in accordance with
Section 1104(b)(3) of the Act and specified in the Special Provisions hereof so
that the final maturity of such Obligations shall not exceed the period
specified in said Section.
SECTION 3.04. REDEMPTIONS TO COMPLY WITH PROVISIONS OF SECTION 1104(B)(2)
OF THE ACT. Upon receipt by the Indenture Trustee of a written instruction
signed by the Secretary and a Responsible Officer of the Shipowner stating that
upon receipt of funds paid to the Indenture Trustee by the Shipowner or the
Secretary on behalf of the Shipowner such funds (i) shall be applied in the
manner specified in such instruction to redeem the principal amount of
Obligations specified in such instruction and (ii) are to be so applied in order
that the principal amount of Obligations that will be Outstanding after such
redemption will not exceed the principal amount thereof eligible for guarantee
by the United States under Section 1104(b)(2) of the Act, the Indenture Trustee
shall promptly give notice as provided in Section 3.08 of the redemption of such
Obligations on a date which is no more than 45 days from the date of receipt by
the Indenture Trustee of such instruction; and the Indenture Trustee shall, on
such date, redeem such Obligations at the principal amount thereof and interest
accrued thereon to such date. The Shipowner agrees to notify the Indenture
Trustee of the redemption at least 10 days prior to receipt by the Indenture
Trustee of such written instruction.
SECTION 3.05. REDEMPTION AFTER TOTAL LOSS, REQUISITION OF TITLE, SEIZURE
OR FORFEITURE OF A VESSEL OR TERMINATION OF CERTAIN CONTRACTS. Upon receipt by
the Indenture Trustee of written instructions from the Secretary and the
Shipowner stating that the principal amount of Obligations specified in such
instructions are required to be redeemed on the date specified therein (which
shall be not less than 40 nor more than 60 days from the receipt of such
instructions by the Indenture Trustee) by reason of (i) an actual, constructive,
agreed or compromised total loss of a Vessel, (ii) requisition of title to, or
seizure or forfeiture of a Vessel or (iii) termination of any contract for the
construction, reconstruction or reconditioning of a Vessel, the Indenture
Trustee shall promptly give notice as provided in Section 3.08 of the redemption
on such date of such principal amount of Obligations and the
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Indenture Trustee shall, on such date, redeem such principal amount of
Obligations together with interest accrued thereon to such Redemption Date.
SECTION 3.06. REDEMPTION AFTER ASSUMPTION BY THE SECRETARY. Upon receipt
by the Indenture Trustee of written instructions from the Secretary stating that
the principal amount of Obligations specified in such instructions are required
to be redeemed on the date specified therein (which shall be not less than 40
nor more than 60 days from the receipt of such instructions by the Indenture
Trustee) at the option of the Secretary at any time after the Secretary's
assumption of the Obligations pursuant to Section 6.09, the Indenture Trustee
shall promptly give notice as provided in Section 3.08 of the redemption on the
Redemption Date of the principal amount of Obligations specified in such
instructions and the Indenture Trustee shall, on such Redemption Date, redeem
such Obligations together with interest accrued thereon to such Redemption Date;
PROVIDED THAT, the Secretary shall redeem at the principal amount thereof and
interest accrued thereon the Proportionate Part of the Outstanding Obligations
relating to such Vessel or Vessels which have been sold pursuant to Section 8.02
to a purchaser or purchasers who have not assumed such Obligations by notice to
the Indenture Trustee in accordance with this Section 3.06 within 40 days of the
nonassumption of the Obligations by such purchaser. The principal amount of the
Proportionate Part of the Outstanding Obligations shall be determined by the
Secretary.
SECTION 3.07. DETERMINATION OF OBLIGATIONS TO BE REDEEMED. (a) If less
than all the Obligations are to be redeemed pursuant to Section 3.04 or 3.05,
the Indenture Trustee shall select Obligations of each series and Stated
Maturity for redemption in proportion to the respective principal amounts of
Obligations of such series and Stated Maturity then Outstanding, except as
otherwise provided in the Special Provisions or in the Supplemental Indenture
with respect to any series, making adjustment so that the principal amount of
any Obligation to be redeemed shall be $1,000 or an integral multiple thereof.
(b) If less than all the Obligations of any series or Stated Maturity are
to be redeemed under any of the provisions contained or referred to in this
Article III, the Indenture Trustee shall select, in such manner as it shall deem
appropriate and fair, the Obligations of such series or Stated Maturity to be
redeemed, and the Indenture Trustee shall, according to such method as it shall
in its reasonable discretion deem appropriate, make adjustments so that the
principal amount of any Obligation to be redeemed shall be $l,000 or an integral
multiple thereof.
SECTION 3.08. NOTICES OF REDEMPTION. (a) In case of any redemption of
Obligations, whether mandatory or optional, a notice of redemption (indicating
(1) the Redemption Date, (2) the Redemption Price, (3) if a part only of such
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Obligations is to be redeemed, the numbers or other identification of the
Obligations and the principal amount thereof to be redeemed, in whole or in
part, (4) the Place of Payment upon redemption and (5) that interest shall cease
to accrue after the Redemption Date (but only if the Indenture Trustee or any
Paying Agent shall have received the required moneys), shall be given by the
Shipowner or any authorized agent of the Shipowner (including the Indenture
Trustee), by mailing a copy of such notice, by first class mail, postage
prepaid, at least 30 days but not more than 60 days prior to the Redemption
Date, to each Holder of an Outstanding Obligation to be redeemed in whole or in
part at his last address appearing upon the Obligation Register.
(b) Any notice of optional redemption of Obligations shall state that the
redemption is subject to the receipt of the redemption moneys by the Indenture
Trustee or any Paying Agent. Such notice shall be of no effect unless prior to
the opening of business on the Redemption Date, the Indenture Trustee or such
Paying Agent shall receive an amount in cash sufficient for such redemption
(after taking into account any amounts then held by the Indenture Trustee or
such Paying Agent and available for such redemption).
SECTION 3.09. DEPOSIT OF REDEMPTION MONEYS. Prior to the opening of
business on any Redemption Date, the Shipowner shall, except as contemplated by
Section 3.08(b), deposit or cause to be deposited with the Indenture Trustee or
(except in the case of redemptions pursuant to Section 3.04, 3.05 or 3.06) with
any Paying Agent an amount sufficient for such redemption (after taking into
account any amounts then held by the Indenture Trustee or such Paying Agent and
available for such redemption) with irrevocable directions to it to so apply the
same.
SECTION 3.10. PAYMENT OF REDEMPTION PRICE. (a) If notice of redemption
shall have been given as provided above, the Obligations or portions thereof
specified in such notice shall, except as contemplated by Section 3.08(b),
become due and payable on the Redemption Date and at the Place of Payment and
the Redemption Price stated in such notice, and on and after said Redemption
Date (unless the Shipowner shall default in the payment of such Redemption
Price) interest on the Obligations or portions thereof so called for redemption
shall cease to accrue. Upon presentation and surrender of such Obligations in
accordance with such notice, such Obligations or the specified portions thereof
shall be paid and redeemed at the applicable Redemption Price.
(b) Upon presentation of any Obligation redeemed in part only, the
Shipowner shall execute and the Indenture Trustee shall authenticate and deliver
to or on the order of the Holder thereof, at the expense of the Shipowner, a new
Obligation or Obligations of like series and Stated Maturity,
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of authorized denominations, having endorsed thereon a Guarantee or Guarantees
executed by, or on behalf of, the Secretary, in principal amount equal to the
unredeemed portion of the Obligation so presented, or, at the option of such
Holder, there may be noted thereon by the Indenture Trustee or, at its
direction, by any Paying Agent the payment of the portion of the principal
amount of such Obligation so called for redemption.
ARTICLE IV
CASH HELD BY INDENTURE TRUSTEE OR PAYING AGENTS
SECTION 4.01. GENERALLY. (a) All cash held by the Indenture Trustee
or any Paying Agent under this Indenture shall be held as a special deposit
in trust for the purposes for which it is held (subject to Section 4.03).
(b) Cash held by the Indenture Trustee or any Paying Agent (other than the
Shipowner) under this Indenture:
(1) need not be segregated;
(2) shall not be invested; and
(3) shall not bear interest except to the extent the Indenture
Trustee or such Paying Agent allows interest on similar deposits or except
as the Shipowner and the Indenture Trustee (or such Paying Agent) may
agree.
SECTION 4.02. PAYING AGENTS OTHER THAN INDENTURE TRUSTEE. (a) The
Shipowner will cause any Paying Agent (other than the Indenture Trustee) which
it may appoint by a writing delivered to such Paying Agent, with copies to the
Indenture Trustee and the Secretary, to execute and deliver to the Indenture
Trustee an instrument in which such agent shall agree with the Indenture Trustee
that, subject to paragraph (b) of this Section and Section 4.03:
(1) it will hold in trust all sums held by it as such agent for the
payment of the principal of (and premium, if any) or interest on
Obligations for the benefit of the Holders of such Obligations, or for the
benefit of the Indenture Trustee;
(2) it will forthwith give the Indenture Trustee written notice
addressed to a Responsible Officer in the Corporate Trust Office of the
Indenture Trustee signed by a Responsible Officer of the Paying Agent of
(A) any payment by the Shipowner of the principal of (and premium, if
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any) or interest on Obligations, specifying the amount paid, segregated as
to principal (premium, if any) and interest, and identifying each
Obligation on which any payment was made by number, date, series, Stated
Maturity and the name of the Obligee, and/or (B) any failure of the
Shipowner to make any such payment when the same shall be due and payable;
and
(3) it will promptly, and in no event later than ten days after any
payment made by it hereunder, give the Indenture Trustee written notice
addressed to a Responsible Officer in the Corporate Trust Office of the
Indenture Trustee of all payments of Obligations made by it, including and
identifying all endorsements of payment made on Obligations by it, signed
and containing the specified information as provided in subparagraph (2)
above, and deliver to the Indenture Trustee all Obligations surrendered to
it, for cancellation by the Indenture Trustee.
(b) The Shipowner may at any time cause to be paid to the Indenture
Trustee all sums held in trust by any Paying Agent pursuant to this Section,
such sums to be held by the Indenture Trustee upon the same trusts.
SECTION 4.03. UNCLAIMED AMOUNTS. Any moneys received by the Indenture
Trustee or a Paying Agent, for the payment of Obligations or Guarantees and
remaining unclaimed by the Holders thereof for 6 years after the date of the
Maturity of said Obligations or the date of payment by the Secretary of the
Guarantees shall, upon delivery to the Indenture Trustee of a Request by the
Shipowner, be paid to the Shipowner; PROVIDED THAT, not less than 30 days prior
to such payment, the Shipowner shall publish notice thereof to the Obligees at
least once in the Authorized Newspapers, unless the Indenture Trustee, in its
discretion, waives the publication of such notice. In such event, such Holders
shall thereafter be entitled to look only to the Shipowner (and the settlor or
settlors of any trust for which the Shipowner is trustee, to the extent paid
over to it or them) for the payment thereof, and the Indenture Trustee or such
Paying Agent, as the case may be, shall thereupon be relieved from all
responsibility to such Holders therefor. No such Request, publication or payment
shall be construed to extend any statutory period of limitations which would
have been applicable in the absence of such Request, publication or payment.
SECTION 4.04. APPLICATION OF FUNDS. If at any time the Indenture Trustee
shall hold funds (other than any amounts received by the Indenture Trustee
pursuant to Section 7.04), the application, distribution or payment of which is
not governed by Request or written instruction of the Shipowner delivered
pursuant to any provision of the Indenture, the Indenture Trustee shall give
written notice thereof to the Shipowner, who shall promptly
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thereafter deliver to the Indenture Trustee a Request or written instruction
bearing the written consent of the Secretary and directing the application,
distribution or payment to be made of such funds.
ARTICLE V
REPRESENTATIONS AND AGREEMENTS OF SHIPOWNER
The Shipowner hereby represents and agrees, so long as Obligations are
Outstanding, as follows:
SECTION 5.01. AUTHORIZATION, EXECUTION AND DELIVERY OF INDENTURE. The
Shipowner has duly authorized the execution and delivery of this Indenture.
SECTION 5.02. PAYMENT AND PROCEDURE FOR PAYMENT OF OBLIGATIONS. The
Shipowner will duly and punctually pay the principal of (and premium, if any)
and interest on the Obligations according to the terms thereof and of this
Indenture. The Shipowner will deposit with the Indenture Trustee or (subject to
Section 3.09) a Paying Agent prior to the opening of business on each date fixed
for each payment an amount sufficient for such payment (after taking into
account any amounts then held by the Indenture Trustee or such Paying Agent and
available for such payment) with irrevocable directions to it to so apply the
same; PROVIDED THAT, payments of interest may be made as provided in Section
2.02(b)(4); and PROVIDED FURTHER, that except with the consent of the Secretary
the Shipowner shall not deposit any such amount more than ten days prior to the
date of the payment for which such amount is deposited.
SECTION 5.03. OFFICES OR AGENCIES OF SHIPOWNER. The Shipowner shall (1) at
all times cause one or more offices or agencies to be maintained within the
United States where Obligations may be presented for payment, registration of
transfer and exchange, and where demands to or upon the Shipowner with respect
thereto may be served, and (2) from time to time give written notice to the
Indenture Trustee and to the Secretary of the location of such offices or
agencies. The Corporate Trust Office shall be deemed to be such an office or
agency for such purposes until the Shipowner shall give the Indenture Trustee
and the Secretary written notice to the contrary.
Any such office or agency for payment of the Obligations (other than the
Corporate Trust Office) shall be a Paying Agent appointed in accordance with
Section 4.02.
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ARTICLE VI
INDENTURE DEFAULTS AND REMEDIES
SECTION 6.01. WHAT CONSTITUTES "INDENTURE DEFAULTS." Each of the following
events shall constitute an "Indenture Default":
(a) Default in the payment of the whole or any part of the interest
on any of the Outstanding Obligations when the same shall become due and payable
or default in the payment of the whole or any part of the principal of any of
the Outstanding Obligations when the same shall become due and payable, whether
by reason of Maturity, Redemption, acceleration or otherwise, or any default
referred to in Section 6.08, and continuation of any such default for a period
of 30 days (herein called a "Payment Default"); and
(b) The giving of a Secretary's Notice to the Indenture Trustee.
The Indenture Trustee shall give to the Obligees, the Secretary and the
Shipowner prompt notice in writing of any Payment Default (unless such default
shall have been remedied prior to the giving of such notice), and of the
occurrence of any Indenture Default which shall be continuing; PROVIDED THAT,
the Indenture Trustee shall have no duty to give any such notice unless and
until a Responsible Officer of the Indenture Trustee, who is a Responsible
Officer in its Corporate Trust Office, has actual knowledge of such default or
Indenture Default. Any such notice of an Indenture Default to the Obligees (i)
shall specify the nature of such Indenture Default, (ii) shall state that, by
reason thereof, the Indenture Trustee is entitled under the Indenture to demand
payment by the Secretary of the Guarantees, (iii) shall set forth the provisions
of Section 6.04(b)(3) and (5), and (iv) shall advise the Obligees of the
provisions of Section 6.02.
SECTION 6.02. DEMAND FOR PAYMENT OF GUARANTEES. (a) If an Indenture
Default shall have occurred and be continuing, the Indenture Trustee shall, not
later than 60 days from the date of such Indenture Default, demand payment by
the Secretary of the unpaid interest to the date of such payment on, and the
unpaid balance of the principal of, all Outstanding Obligations, whereupon the
entire unpaid principal amount of the Outstanding Obligations and all unpaid
interest thereon shall become due and payable on the first to occur of the date
which is 30 days from the date of such demand or the date on which the Secretary
pays the Guarantees; PROVIDED THAT, in the case of a demand made as a result of
a Payment Default, if, prior to the expiration of 30 days from the date of such
demand and prior to any payment of the Guarantees by the Secretary, the
Secretary shall find, and give written notice to the Shipowner and the Indenture
Trustee to the effect that, there was no
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Payment Default or that such Payment Default was remedied prior to such demand,
such demand and the consequences thereof shall be rescinded and annulled and the
Guarantees shall remain in full force and effect. The Indenture Trustee shall
give to each Obligee and to the Shipowner prompt written notice of any demand
made by the Indenture Trustee pursuant to this paragraph (a), any such notice to
Obligees to be given as provided in Section 6.04(c).
(b) If the Indenture Trustee shall not have made the demand referred to in
Section 6.02(a) on or before the 30th day following an Indenture Default which
shall have occurred and be continuing and if the Holders of all Outstanding
Obligations shall not have theretofore elected to terminate the Guarantees as
provided in Section 6.04(a)(2), any Holder of an Outstanding Obligation, by an
Act of Obligees delivered to the Secretary (with copies thereof to the Indenture
Trustee and the Shipowner), may, in place of the Indenture Trustee and on behalf
of all Holders of Outstanding Obligations, make such demand, subject to all the
provisions of, and with the effect provided in, Section 6.02(a); PROVIDED THAT,
the right of each Holder under this paragraph (b) shall be without prejudice to
the rights and duties of the Indenture Trustee under Section 6.02(a).
SECTION 6.03. APPOINTMENT OF INDENTURE TRUSTEE AND HOLDERS OF OUTSTANDING
OBLIGATIONS AS ATTORNEYS-IN-FACT. Each Holder of an Outstanding Obligation by
the purchase and acceptance of its Obligation, irrevocably appoints the
Indenture Trustee and each other Holder of an Outstanding Obligation its agent
and attorney-in-fact for the purpose of making the demand provided for in
Section 6.02 and (in the case of the Indenture Trustee) of receiving and
distributing any payment or payments by the Secretary made pursuant to any such
demand; PROVIDED THAT, no action or failure to act by the Indenture Trustee
shall affect the rights of any Holder of an Outstanding Obligation to take any
action whatsoever permitted by law and not in violation of the terms of the
Obligations or of the Indenture.
SECTION 6.04. TERMINATION AND PAYMENT OF THE GUARANTEES. (a) Except as
otherwise provided in Section 6.08, the Guarantee with respect to any Obligation
shall terminate in case, and only in case, one or more of the following events
shall occur:
(1) Such Obligation shall have been Retired or Paid;
(2) The Holders of all Outstanding Obligations shall have elected,
by Act of Obligees delivered to the Secretary, to terminate the
Guarantees;
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(3) Such Guarantee shall have been paid in full in cash by the
Secretary; or
(4) The Indenture Trustee and each Obligee shall have failed to
demand payment of such Guarantee as provided herein or in such Guarantee
or in the Act.
(b) Subject to the provisions of Section 6.08, when the Secretary shall
pay the Guarantees in full in cash to the Indenture Trustee:
(1) The Indenture Trustee shall hold the entire amount thereof in
trust for the sole purpose of providing for the payments specified in
subparagraph (5) below;
(2) No Obligation or Obligations shall thereafter be issued;
(3) The Obligations (A) shall represent only the right to receive
the payments from the Indenture Trustee specified in subparagraph (5)
below and, in the event the Indenture Trustee makes payment to the
Shipowner pursuant to Section 4.03, from the Shipowner, (B) shall
otherwise no longer constitute or represent an obligation of the
Shipowner, and (C) shall not be entitled to any other rights or benefits
under this Indenture;
(4) The Indenture Trustee shall forthwith give written notice to the
Shipowner and to each of the Obligees, stating that it has received
payment of the Guarantees in full in cash from the Secretary and that the
same is available for distribution to the Obligees in the manner specified
in subparagraph (5) below (and the Indenture Trustee shall give like
notice to the Holders of the Obligations at least annually thereafter for
a period of 6 years or until all Obligations shall have been cancelled,
whichever is earlier); and
(5) Upon the surrender for cancellation of any Obligation, the
Indenture Trustee shall forthwith pay to the Holder of such Obligation in
cash an amount (less the amount, if any, required to be withheld in
respect of transfer or other taxes on payment to such Holder) equal to the
unpaid principal amount of such Obligation and the unpaid interest accrued
thereon to the date on which the Secretary shall have paid the Guarantees
in full in cash to the Indenture Trustee; PROVIDED THAT, for the purposes
of this subparagraph (5), the Indenture Trustee (A) may deem any Person as
the owner of an Obligation in accordance with Section 2.11 and (B) shall
not be required to make any payment in violation of applicable law.
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(c) Each notice to Obligees required by this Section shall be given by the
Indenture Trustee by first class mail, postage prepaid, to the address of each
Obligee appearing upon the Obligation Register.
(d) If the Secretary shall not have paid the Guarantees in full in cash to
the Indenture Trustee within 30 days after any demand therefor pursuant to
Section 6.02 (whether or not because the Secretary makes either of the findings
referred to in the proviso of Section 6.02(a)), the Indenture Trustee shall give
prompt written notice of such nonpayment to each Obligee and the Shipowner. If
the Indenture Trustee shall have received notice of either of such findings,
such notice to each Obligee shall so state.
SECTION 6.05. RIGHTS OF INDENTURE TRUSTEE AFTER INDENTURE DEFAULT. During
the continuance of any Indenture Default, the Indenture Trustee shall have the
right to demand and to receive payment of the Guarantees and shall have, with
the consent of the Secretary as to matters other than the enforcement of the
Guarantees (unless all the Guarantees shall have terminated as provided herein):
(a) the right (in its name, as the trustee of an express trust, or
as agent and attorney-in-fact for each Holder of the Obligations as a class) to
take all action to enforce its rights and remedies (including the institution
and prosecution of all judicial and other proceedings and the filings of proofs
of claim and debt in connection therewith), and to enforce all existing rights
of the Holders of the Obligations as a class; and
(b) all other rights and remedies granted to the Indenture Trustee
by this Indenture, or the Authorization Agreement, or by law.
In addition, during the continuance of an Indenture Default and if all the
Guarantees shall have terminated as provided herein, the Indenture Trustee shall
have the right, by written notice to the Shipowner, to declare the entire unpaid
principal amount of the Outstanding Obligations and all unpaid interest to be
immediately due and payable.
SECTION 6.06. (a) OBLIGEES' RIGHT TO DIRECT INDENTURE TRUSTEE AFTER
INDENTURE DEFAULT. During the continuance of any Indenture Default, the Holders
of a majority in principal amount of the Outstanding Obligations shall have the
right, by an Act of Obligees, to direct the Indenture Trustee:
(1) to exercise or to refrain from exercising any right or to
enforce any remedy granted to it by this Indenture; and
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(2) to direct the time, method and place of the exercise of any such
right or the enforcement of any such remedy;
PROVIDED THAT, subject to Section 7.03, the Indenture Trustee shall have the
right not to take any such action if it shall determine in good faith that the
action would involve it in personal liability, would subject it to expenses
against which it had not been offered adequate security and indemnity or would
be unjustly prejudicial to the Obligees not parties to such direction.
Anything in this Section 6.06(a) to the contrary notwithstanding, the
Indenture Trustee shall be obligated to demand payment of the Guarantees as
provided in Section 6.02(a) unless the Holders of all Outstanding Obligations
shall have elected to terminate the Guarantees as provided in Section
6.04(a)(2), in which case the Indenture Trustee shall be obligated to refrain
from making such demand.
(b) LIMITATIONS ON OBLIGEES' RIGHT TO SUE. No Obligee shall have the right
to institute any judicial or other proceedings under this Indenture unless:
(1) the Indenture Trustee shall have been directed to institute such
proceeding by the Holders of at least 25% in aggregate principal amount of
the Obligations then Outstanding;
(2) the Indenture Trustee shall have been offered adequate security
and indemnity against the costs, expenses and liabilities to be incurred
by compliance with such direction;
(3) the Indenture Trustee shall not have instituted such proceeding
within 60 days after the receipt of both such direction and such offer of
security and indemnity;
(4) no direction inconsistent with such request shall have been
given to the Indenture Trustee during such 60-day period by the Holders of
a majority in principal amount of the Outstanding Obligations; and
(5) the institution and prosecution of such proceeding would not
result in an impairment of the rights of any other Obligee, it being
understood and intended that no one or more Obligees shall have any right
in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Obligees or to obtain or to seek to obtain priority or preference over any
other Obligees or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Obligees.
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(c) UNCONDITIONAL RIGHT OF OBLIGEES TO SUE FOR PRINCIPAL (AND PREMIUM, IF
ANY) AND INTEREST. Nothing in paragraph (b) shall (i) affect the obligation of
the Shipowner to pay the principal of (and premium, if any) and interest on the
Obligations in accordance with their terms or affect the right of any Obligee to
institute any judicial or other proceeding to enforce the payment of his
Obligations or (ii) limit the right of any Obligee to demand payment of the
Guarantees pursuant to Section 6.02(b) or to institute any judicial or other
proceeding to enforce the payment of the Guarantee of any Obligation of which he
is the Holder.
SECTION 6.07. UNDERTAKING FOR COSTS. In any proceeding for the enforcement
of any right or remedy under this Indenture, or in any proceeding against the
Indenture Trustee for any action taken or omitted by it as Indenture Trustee,
the court may in its discretion require the filing by any party litigant of an
undertaking to pay the cost of such proceeding and may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant, having due regard to the merits and good faith of the claims or
defense made by such party litigant. The provisions of this Section 6.07 shall
not apply to any proceeding instituted by the Indenture Trustee or any
proceeding instituted by any Obligee for the payment of the principal of (and
premium, if any) and interest on his Obligations.
SECTION 6.08. RECISION OF PAYMENTS. Notwithstanding any other provision of
this Indenture, or of the Obligations, in the event that any payment to or on
behalf of an Obligee of the principal of or interest due under any Obligation,
or any portion of any such payment, shall at any time be repaid by such Obligee
in compliance with an order (whether or not final) of a court of competent
jurisdiction pursuant to any provision of the Bankruptcy Code (Title 11 of the
United States Code) or any Federal Law replacing or superseding such Code, or
applicable state law, and regardless of whether there has been any previous
Indenture Default and any payment pursuant thereto, or whether such Obligation
shall theretofore have been acquired by the Shipowner or cancelled, or whether
an instrument satisfying and discharging this Indenture shall have been executed
and delivered, (1) such Obligation shall not be deemed to have been Retired or
Paid and shall be deemed to be Outstanding, (2) the return of such payment in
whole or in part (but not the mere possibility that any such payment or portion
thereof may be so required to be returned, nor any prior demand, suit or
proceeding for such return) in compliance with the order of such court shall
constitute a default in payment of such Obligation within the meaning of Section
6.01(a), which default shall be deemed to have occurred on the date of such
repayment and which default, if continued for 30 days, will constitute a Payment
Default, (3) the Guarantee of such Obligation and (to the extent necessary to
enforce such Obligation and Guarantee) this
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Indenture shall be in full force and effect, and (4) the Person required to
return such payment or portion thereof shall be deemed for all purposes to be a
Holder of such Obligation and entitled to enforce such Obligation and Guarantee
to the extent of such repayment and, if there shall not be any Indenture Trustee
hereunder then in office, such Person shall also be entitled to exercise on his
own behalf all the rights of the Indenture Trustee hereunder necessary for such
enforcement; PROVIDED THAT, in the event the Guarantee of any Obligation shall
have terminated for reasons set forth in paragraphs (2) or (4) of Section
6.04(a) of this Indenture prior to the aforesaid date of repayment the
provisions of this Section shall not apply to such Obligation.
SECTION 6.09. ASSUMPTION OF OBLIGATIONS BY SECRETARY. Notwithstanding
anything contained herein, (i) in the event the Shipowner shall fail to make any
payment of principal or interest due on the Obligations on an Interest Payment
Date and such failure to pay shall continue for a period of 25 days or (ii) in
the event of any other default under the Mortgage or the Security Agreement, the
Secretary shall have the right to and may, in his sole discretion, (a) by giving
to the Indenture Trustee at any time pursuant to clause (ii) above or, if
pursuant to clause (i) above, on or after the 25th day of said 25 day period of
such default (but prior to the receipt by the Secretary of any demand for
payment of the Guarantees pursuant to Section 6.02) a Secretary's Supplemental
Indenture in the form of Exhibit 4 attached hereto, which Exhibit is
incorporated herein by reference, assume the rights and obligations of the
Shipowner under this Indenture and all Outstanding Obligations as provided in
said Secretary's Supplemental Indenture; and (b) if applicable, make any payment
of principal or interest which is due under the Obligations. By the execution of
this Indenture by the Indenture Trustee and the Shipowner it is agreed hereunder
that a Secretary's Supplemental Indenture shall be effective and binding upon
the Indenture Trustee and the Shipowner and their respective successors or
assigns without further act or deed of either as of the date executed and given
to the Indenture Trustee by the Secretary as contemplated by this Section, and
each of them for itself, its successors and assigns hereby irrevocably appoints
the Secretary its true and lawful attorney-in-fact to execute and deliver said
Secretary's Supplemental Indenture. Upon any such assumption by the Secretary,
the Secretary shall succeed to and be substituted for and may exercise every
right and power of the Shipowner under this Indenture and the Obligations with
the same force and effect as if the Secretary has been named as the Shipowner
herein and therein. Upon any such assumption by the Secretary, the Indenture
Trustee, upon request of the Secretary, shall promptly notify the holders of the
Outstanding Obligations of such assumption. The Secretary may exercise its
rights under this Section 6.09 as often as it deems appropriate in its sole
discretion.
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ARTICLE VII
THE INDENTURE TRUSTEE
SECTION 7.01. ACCEPTANCE OF TRUSTS. The Indenture Trustee hereby
accepts the trusts of this Indenture.
SECTION 7.02. ELIGIBILITY OF INDENTURE TRUSTEE. (a) The Indenture Trustee
shall at all times be a bank or trust company which (1) is organized as a
corporation and doing business under the laws of the United States or any state
thereof, (2) is authorized under such laws to exercise corporate trust powers,
(3) is subject to supervision or examination by federal or state authority, (4)
has a combined capital and surplus (as set forth in its most recent published
report of condition) of at least $3,000,000 and (5) shall not have become
incapable of acting or have been adjudged a bankrupt or an insolvent nor have
had a receiver appointed for itself or for any of its property, nor have had a
public officer take charge or control of it or its property or affairs for the
purpose of rehabilitation, conservation or liquidation.
(b) Should the Indenture Trustee at any time cease to be eligible,
pursuant to this Section 7.02, to act as trustee, it shall promptly notify the
Obligees, the Shipowner and the Secretary of such fact; and should the Shipowner
obtain knowledge of such ineligibility, it shall promptly advise the Indenture
Trustee, the Secretary, and the Obligees of such fact. Any such notice (i) shall
set forth all the relevant facts known to the Indenture Trustee or the
Shipowner, as the case may be, (ii) if to the Secretary or the Shipowner, shall
be registered or certified mail, postage prepaid, and (iii) if to Obligees,
shall be sent to each Obligee in the manner provided in Section 6.04(c) at his
address as it appears on the Obligation Register, or at such other address as
such Obligee may have furnished to the Indenture Trustee for such purpose.
SECTION 7.03. RIGHTS AND DUTIES OF INDENTURE TRUSTEE. (a) The Indenture
Trustee shall not be responsible for the correctness of the Recitals in the
Special Provisions hereof or in the Obligations (except the Indenture Trustee's
authentication certificate thereon), all of which Recitals are statements made
solely by the Shipowner.
(b) The Indenture Trustee shall not be responsible for the validity,
execution by other parties thereto, or sufficiency of this Indenture, the
Authorization Agreement, the Obligations or the Guarantees.
(c) During the continuance of any Indenture Default (except for an
Indenture Default resulting from those defaults in payment or Payment
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Defaults referred to in paragraph (r) of this Section, concerning which the
Indenture Trustee has not received the notice referred to in said paragraph (r)
and the information relating to items (1) through (5) of said paragraph (r)),
the Indenture Trustee shall exercise such of the rights and powers vested in it
by Article VI, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(d) Except during the continuance of any Indenture Default (other than an
Indenture Default referred to in the parenthetical expression set forth in
paragraph (c) of this Section), the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee.
(e) No provision of this Indenture shall relieve the Indenture Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct; PROVIDED THAT:
(1) Except during the continuance of an Indenture Default (other
than an Indenture Default referred to in the parenthetical expression set
forth in paragraph (c) of this Section), (A) the duties of the Indenture
Trustee shall be limited as provided in paragraph (d) of this Section, and
(B) in the absence of bad faith on the part of the Indenture Trustee, the
Indenture Trustee may conclusively rely upon certificates or opinions
conforming to the requirements of this Indenture as to the truth of the
statements and the correctness of the opinions expressed therein;
(2) The Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Officers of the
Indenture Trustee unless it shall be proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(3) The Indenture Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
an Act of Obligees relating to the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee under
this Indenture.
(f) Subject to paragraph (i) of this Section, the Indenture Trustee shall
be under a duty to examine certificates and opinions required by this Indenture
to be furnished to it to determine whether or not they conform to the
requirements hereof.
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(g) Subject to paragraph (c) of this Section, the Indenture Trustee may
rely and shall be protected in acting upon any resolution, certificate, opinion,
notice, request, consent, order, appraisal, report, bond, or other paper or
document believed by it to be genuine, to have been signed by the proper party
or parties and to be in conformity with the provisions of this Indenture.
(h) In all cases where this Indenture does not make express provision as
to the evidence on which the Indenture Trustee may act or refrain from acting,
the Indenture Trustee shall be protected (subject to paragraph (c) of this
Section) in acting or refraining from acting hereunder in reliance upon an
Officer's Certificate as to the existence or nonexistence of any fact.
(i) The Indenture Trustee may consult with counsel satisfactory to the
Indenture Trustee (who may be counsel to the Shipowner), and an Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel.
(j) Subject to paragraph (c) of this Section, the Indenture Trustee shall
not be under any responsibility for the approval or selection of any expert for
any of the purposes expressed herein; PROVIDED THAT the Indenture Trustee shall
exercise reasonable care with respect to the approval or selection of
independent experts whom it approves or selects to furnish opinions or
certificates to the Indenture Trustee pursuant to this Indenture.
(k) Whenever it is provided that the Indenture Trustee shall take any
action, including the giving of any notice or the making of any demand, or
refrain from taking any action upon the happening or continuation of a specified
event (including an Indenture Default) or upon the fulfillment of any condition
or upon the Request of the Shipowner or of Obligees or upon receipt of any
notice, including a Secretary's Notice, the Indenture Trustee (1) shall, subject
to paragraph (c) of this Section, have no liability for failure to take such
action or for failure to refrain from taking such action unless and until a
Responsible Officer of the Indenture Trustee, who is a Responsible Officer in
the Corporate Trust Office, has actual knowledge of such event or continuation
thereof or the fulfillment of such conditions or shall have received such
Request, and (2) in taking or refraining from taking such action, shall have
full power to give any and all notices and to do any and all acts and things
incidental to such action.
(l) Subject to paragraph (c) of this Section, the Indenture Trustee shall
not be under any obligation to exercise any of the trusts or powers hereof at
the request, order or direction of any Obligees or the Secretary, unless such
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Obligees or the Secretary shall have offered to the Indenture Trustee security
or indemnity satisfactory to it against the costs, expenses and liabilities to
be incurred thereby.
(m) The Indenture Trustee, in its individual or any other capacity, may
become the owner or pledgee of Obligations with the same rights it would have if
it were not Indenture Trustee.
(n) Notwithstanding any other provision of this Indenture, the Indenture
Trustee shall not take any action contrary to the terms of the Authorization
Agreement, and any such purported action or any attempt to take such action
shall be void and of no effect and, except as provided in Section 7.06(b), shall
not enter into any amendment to the Authorization Agreement except as expressly
authorized by a Supplemental Indenture entered into pursuant to Article X.
(o) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(p) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee shall be subject to the provisions of this
Section.
(q) Upon the execution and delivery of an instrument satisfying and
discharging this Indenture as provided in Section 12.01 hereof, all duties and
obligations of the Indenture Trustee hereunder (except with respect to the
application of funds for the payment of Obligations then held by the Indenture
Trustee) shall cease and shall not thereafter be revived, whether or not the
Indenture shall thereafter be in full force and effect as provided in Section
6.08.
(r) Notwithstanding any other provisions of this Indenture or the
Authorization Agreement, the Indenture Trustee shall have no duty or obligation
to exercise any of its rights or powers hereunder with respect to a default in
payment or Payment Default by reason of a repayment referred to in Section 6.08
unless and until it shall have received notice of such default and information
concerning (1) the date thereof, (2) the Obligation to which such repayment
relates, (3) the Person making such repayment and the Holder of such Obligation,
(4) the amounts of such repayment attributable to principal, premium and
interest on such Obligation, and (5) the Interest Payment Date or
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other date on which the Obligee received the moneys to which the court order
mentioned in Section 6.08 relates.
SECTION 7.04. COMPENSATION, EXPENSES AND INDEMNIFICATION OF INDENTURE
TRUSTEE. The Shipowner shall (1) pay reasonable compensation to the Indenture
Trustee and reimburse it for its reasonable expenses and disbursements
(including counsel fees and expenses) and (2) indemnify the Indenture Trustee
for, and hold it harmless against, any loss, liability or expense which it may
incur or suffer without negligence or bad faith in acting under this Indenture
or the Authorization Agreement. The compensation of the Indenture Trustee shall
not be limited to the compensation provided by law for a trustee acting under an
express trust.
SECTION 7.05. RESIGNATION AND REMOVAL OF INDENTURE TRUSTEE. (a) The
Indenture Trustee may resign at any time by giving written notice to the
Shipowner. Within 10 days thereafter, the resigning Indenture Trustee shall give
notice of such resignation to the Obligees in the manner provided in Section
6.04(c). If the resigning Indenture Trustee fails to do so within such 10-day
period, within the next succeeding 10 days the Shipowner shall give such notice
in the same manner.
(b) The Indenture Trustee may at any time be removed by:
(1) written notice to the Indenture Trustee and the Shipowner by the
Holders of a majority in principal amount of the Outstanding Obligations;
or
(2) written notice to the Indenture Trustee by the Shipowner or the
Secretary that the Indenture Trustee has ceased to be eligible under
Section 7.02(a).
(c) Any resignation or removal of the Indenture Trustee shall be effective
only upon appointment of a successor Indenture Trustee approved by the Secretary
and the acceptance of such appointment by such successor Indenture Trustee.
SECTION 7.06. APPOINTMENT OF SUCCESSOR INDENTURE TRUSTEE. (a) If the
Indenture Trustee or the Shipowner shall have given notice of ineligibility of
the Indenture Trustee pursuant to Section 7.02(b), or if any notice of
resignation or of removal shall have been given pursuant to Section 7.05, then a
successor Indenture Trustee may be appointed by the Shipowner; provided THAT, if
such successor Indenture Trustee is not so appointed (or has not accepted such
appointment) within 15 calendar days after the giving of any such notice, such
appointment may be made (i) by the Secretary or (ii) by a court of competent
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jurisdiction upon the application of the Secretary, the Shipowner, the retiring
Indenture Trustee or any Person who then is, and has been, the Holder of an
Outstanding Obligation for at least 6 months.
(b) No successor Indenture Trustee shall be appointed without the prior
written consent of the Secretary and until such successor Indenture Trustee
shall enter into an amendment to the Authorization Agreement as set forth in the
first sentence of Section 4.04 thereof.
(c) If a successor Indenture Trustee is appointed, approved by the
Secretary and accepts such appointment, and the Shipowner shall have knowledge
thereof, the Shipowner shall give notice to the Obligees of such appointment in
the manner provided in Section 6.04(c). The failure of the Shipowner to give
such notice shall not affect the validity of any such appointment.
SECTION 7.07. EFFECT OF APPOINTMENT OF SUCCESSOR INDENTURE TRUSTEE. Upon
appointment and acceptance as Indenture Trustee, each successor Indenture
Trustee shall forthwith, without further act or deed, succeed to all the rights
and duties of its predecessor in trust under this Indenture and the
Authorization Agreement. Such predecessor shall promptly deliver to such
successor Indenture Trustee all sums held hereunder, together with all records
and other documents necessary or appropriate in connection with the performance
of the duties of the successor Indenture Trustee under this Indenture. Upon the
written request of the successor Indenture Trustee or the Shipowner and upon
payment of all amounts due to such predecessor under this Indenture, such
predecessor shall transfer, assign and confirm to the successor Indenture
Trustee all its rights under this Indenture by executing and delivering from
time to time to the successor Indenture Trustee such further instruments and by
taking such other action as may reasonably be deemed by such successor Indenture
Trustee or the Shipowner to be necessary or appropriate in connection therewith
and the predecessor Indenture Trustee shall have no liability for any actions
taken by the successor Indenture Trustee.
SECTION 7.08. MERGER, CONSOLIDATION AND SALE OF INDENTURE TRUSTEE. In the
event of any merger (including for the purposes of this Section, the conversion
of a state bank into a national banking association or vice versa) or
consolidation of the Indenture Trustee into any other Person or in the event of
the sale of all or substantially all the Indenture Trustee's corporate trust
business, the Person resulting from such merger (including any such conversion)
or consolidation, or the transferee in the case of any such sale, shall
forthwith notify the Shipowner and, subject to Section 7.02(a) and 7.06(b),
shall be the Indenture Trustee under this Indenture and the Authorization
Agreement without further act or deed.
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Obligations and Guarantees authenticated after any such merger,
consolidation or sale may be authenticated by the successor Indenture Trustee
either in its own name or in the name of any predecessor which shall have been
the Indenture Trustee.
ARTICLE VIII
CONSOLIDATION, MERGER OR SALE BY SHIPOWNER
SECTION 8.01. CONSOLIDATION, MERGER OR SALE BY SHIPOWNER. Nothing in this
Indenture shall prevent any lawful consolidation or merger of the Shipowner with
or into any other Person, or any sale of a Vessel or Vessels to any other Person
lawfully entitled to acquire and operate such Vessel or Vessels or any sale by
the Shipowner of all or substantially all of its assets to any other Person;
PROVIDED THAT, except where the Shipowner shall be the Person surviving a merger
or consolidation, the Person formed by or surviving such consolidation or
merger, or to which the sale of such Vessel or Vessels shall be made, shall, by
Supplemental Indenture, expressly assume the payment of the principal of and
interest (and premium, if any) on the Proportionate Part of the Outstanding
Obligations relating to such Vessel or Vessels in accordance with the terms of
the Obligations and of the Indenture and shall expressly assume the performance
of the agreements of the Shipowner in the Indenture; PROVIDED FURTHER, that to
the extent said Proportionate Part of the Outstanding Obligations is not so
assumed, the Shipowner shall redeem or cause to be redeemed the principal amount
of the Proportionate Part of the Outstanding Obligations as is required by the
Secretary, such redemption to be in accordance with the terms of the Obligations
and of the Indenture. When a Person so assumes this Indenture and such
Proportionate Part of the Outstanding Obligations, the Supplemental Indenture
shall discharge and release the Shipowner from any and all obligations
thereunder relating to such Proportionate Part of the Outstanding Obligations.
In the event of such an assumption by a Person to whom a Vessel or Vessels have
been sold (a) such Person shall succeed to, and be substituted for, and may
exercise every right and power of the original Shipowner with the same effect as
if such successor Shipowner had been named as the Shipowner herein and (b) such
Proportionate Part of the Outstanding Obligations shall be surrendered to the
Indenture Trustee for appropriate notation or for the issuance of new
Obligations in exchange for such Proportionate Part of the Outstanding
Obligations in the name of the successor Shipowner, as required by the
Secretary. The principal amount of the Proportionate Part of the Outstanding
Obligations shall be determined by the Secretary.
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SECTION 8.02. SALE OF THE VESSEL OR VESSELS BY THE SECRETARY. Nothing
contained in this Indenture shall prevent the sale of a Vessel or Vessels to any
other Person or Persons by the Secretary, by a court of law or by the Shipowner
following, in connection with or in lieu of a foreclosure or similar action.
Following any such sale (1) the Person to whom such Vessel or Vessels have been
sold may by Supplemental Indenture expressly assume the payment of and interest
(and premium, if any) on the Proportionate Part of the Outstanding Obligations
relating to such Vessel or Vessels in accordance with the terms of the
Obligations and the Indenture and shall expressly assume the performance of the
Shipowner in the Indenture; and (2) in the event such Person does not so assume,
the Secretary shall redeem the Proportionate Part of the Outstanding Obligations
relating to such Vessel or Vessels without premium pursuant to Section 3.06
hereof; PROVIDED THAT, the Secretary shall allow or permit the sale of a Vessel
or Vessels to the original Shipowner or to any affiliate of the of the Shipowner
only if (i) the Secretary has not redeemed such Obligations prior to such sale,
and (ii) such purchaser assumes such Proportionate Part of the Outstanding
Obligations as contemplated by the preceding clause (1). When a Person so
assumes this Indenture and such Proportionate Part of the Outstanding
Obligations, the Supplemental Indenture shall discharge and release the
Secretary from any and all obligations thereunder in the Secretary's capacity as
Shipowner relating to such Proportionate Part of the Outstanding Obligations. In
the event of such an assumption by a Person to whom a Vessel or Vessels have
been sold (a) such Person shall succeed to, and be substituted for, and may
exercise every right and power of the original Shipowner with the same effect as
if such successor Shipowner had been named as the Shipowner herein and (b) such
Proportionate Part of the Outstanding Obligations shall be surrendered to the
Indenture Trustee for appropriate notation or for the issuance of new
Obligations in exchange for such Proportionate Part of the Outstanding
Obligations in the name of the successor Shipowner, as required by the
Secretary. Any such sale or the execution of a Supplemental Indenture by any
successor Shipowner shall not discharge or in any manner affect the obligation
of the United States to pay the Guarantees pursuant to the terms thereof. The
principal amount of the Proportionate Part of the Outstanding Obligations shall
be determined by the Secretary.
ARTICLE IX
ACTS OF OBLIGEES
SECTION 9.01. ACTS OF OBLIGEES. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action required or permitted by this
Indenture to be given or taken by Obligees may be embodied in and evidenced by
one or more instruments of substantially similar tenor
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signed by such Obligees in person or by an agent or attorney duly appointed in
writing. Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Indenture
Trustee and, where it is hereby expressly required, to the Shipowner and the
Secretary. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act of Obligees."
Proof of execution of any such instrument or of a writing appointing any such
agent or attorney shall be sufficient for any purpose of this Indenture and
(subject to Section 7.03) conclusive in favor of the Indenture Trustee and the
Shipowner, if made in the manner provided in paragraph (b) of this Section.
(b) The fact and date of the execution by any Person of any instrument or
writing referred to in paragraph (a) of this Section may be proved by the
affidavit of a witness of such execution or by the certificate or acknowledgment
of any notary public or other officer authorized by law to take acknowledgments
of deeds, certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is by an officer
of a corporation or a member of a partnership, on behalf of such corporation or
partnership, such affidavit or certificate shall also constitute sufficient
proof of his authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Indenture Trustee (or, if such
instrument or writing is addressed to the Secretary, the Secretary) deems
sufficient.
(c) The ownership of Obligations shall be proved by the Obligation
Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Obligation shall bind every future Holder
of the same Obligation and the Holder of every Obligation issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Indenture Trustee, any Paying Agent
or the Shipowner in reliance thereon, whether or not notation of such action is
made upon such Obligation.
ARTICLE X
SUPPLEMENTAL INDENTURES
SECTION 10.01. PERMISSIBLE WITHOUT ACTION BY OBLIGEES. The Shipowner, the
Indenture Trustee, or, where applicable, the Secretary, from time to time and at
any time, may, without the consent of or notice to any of the Obligees, subject
to Sections 10.02 and 10.05, enter into an indenture or
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other instrument supplemental hereto and which thereafter shall form a part
hereof, for any one or more of the following purposes:
(1) to add to the covenants of the Shipowner, whether applicable
to one or more series of Obligations;
(2) to evidence the succession pursuant to Article VIII of another
corporation or entity to the Shipowner and the assumption by such
successor of the Obligations of the Shipowner hereunder;
(3) to eliminate any right reserved to or conferred upon the
Shipowner;
(4) to make such provisions for the purpose of curing any ambiguity
or correcting or supplementing any provisions in this Indenture as the
Shipowner or the Secretary may deem necessary or desirable, provided such
provisions are not inconsistent with this Indenture and shall not
adversely affect the interests of the Obligees;
(5) to provide for the issuance of additional Obligations of any
series and Stated Maturity theretofore issued under this Indenture or to
set forth the terms and provisions of any one or more additional series of
Obligations in accordance with Section 2.04; or
(6) to evidence the assumption pursuant to Section 6.09 by the
Secretary of the Shipowner's obligations under this Indenture and the
Outstanding Obligations.
SECTION 10.02. PROTECTION OF INDENTURE TRUSTEE. Upon receipt of a Request
of the Shipowner that the Indenture Trustee execute any Supplemental Indenture
and upon receipt of any Act of Obligees required pursuant to Section 10.04 and
the consent of the Secretary required pursuant to Section 10.05, the Indenture
Trustee shall enter into such Supplemental Indenture; PROVIDED THAT, the
Indenture Trustee shall not be obligated to enter into any Supplemental
Indenture which the Indenture Trustee believes adversely affects the Indenture
Trustee's own rights, duties or immunities under this Indenture.
SECTION 10.03. REFERENCE IN OBLIGATIONS TO SUPPLEMENTAL INDENTURES.
Obligations authenticated and delivered after the execution and delivery of any
Supplemental Indenture may, with the consent and approval of the Shipowner and
the Indenture Trustee, contain a text modified to conform to such Supplemental
Indenture or have imprinted or stamped thereon a legend with respect to such
Supplemental Indenture, but no such modification or legend
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shall be necessary to make such Supplemental Indenture effective.
SECTION 10.04. WAIVERS AND SUPPLEMENTAL INDENTURES WITH CONSENT OF
OBLIGEES. With the consent of the Holders of not less than 60% in principal
amount of the Outstanding Obligations of each series affected thereby, by Act of
Obligees delivered to the Shipowner and the Indenture Trustee, (x) compliance by
the Shipowner with any of the terms of the Indenture may be waived or (y) the
Shipowner and the Indenture Trustee may enter into any Supplemental Indenture
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders of the Obligations issued under this Indenture;
PROVIDED THAT, no such waiver or Supplemental Indenture shall:
(a) Without the consent of all Obligees affected thereby (1) change
the Stated Maturity or reduce the principal of any Obligation, (2) extend the
time of payment of, or reduce the rate of, interest thereon, (3) change the due
date of or reduce the amount of any mandatory sinking fund payment, (4) reduce
any premium payable upon the redemption of any Obligation, or (5) change the
coin or currency in which any Obligation or the interest thereon is payable; or
(b) Without the consent of all Obligees (l) terminate or modify any
of the Guarantees or the obligations of the Secretary thereunder, (2) reduce the
amount of any of the Guarantees, (3) eliminate, modify or condition the duties
of the Indenture Trustee to demand payment of the Guarantees or otherwise to
comply with the provisions of Sections 6.02 and 6.04, (4) eliminate or reduce
any of the eligibility requirements for the Indenture Trustee stated in Section
7.02, or (5) reduce the percentage in principal amount of the Outstanding
Obligations of any series, the consent of whose Holders is required for any such
Supplemental Indenture, or required for any waiver provided herein or to modify
any of the provisions of this Section except to increase any such percentage or
to provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of all Obligees affected thereby.
It shall not be necessary for any Act of Obligees under this Section to
approve the particular form of any proposed Supplemental Indenture, but it shall
be sufficient if such Act shall approve the substance thereof. Promptly after
the execution of any Supplemental Indenture pursuant to this Section, the
Shipowner shall give notice thereof to the Obligees in the manner provided in
Section 6.04(c). Any failure of the Shipowner to give such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such Supplemental Indenture.
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SECTION 10.05. CONSENT OF SECRETARY. Subject to the provisions of Section
11.01, no waiver pursuant to Section 10.04 shall be effective, and neither the
Shipowner nor the Indenture Trustee shall enter into any Supplemental Indenture,
without the prior written consent of the Secretary thereto, and any purported
action or attempt to take such action forbidden to be taken by this Section
shall be void and of no effect.
SECTION 10.06. CONTINUED VALIDITY OF THE GUARANTEES. Notwithstanding
anything herein to the contrary, this Indenture, the Guarantees and the
Authorization Agreement shall each remain in full force and effect
notwithstanding the assumption by the Secretary of the Obligations pursuant to
the Secretary's Supplemental Indenture entered into pursuant to Section 6.09,
and pursuant to Section 1103(e) of the Act, the validity of the Guarantee of any
Obligation shall be unaffected, and such Guarantee and all responsibilities,
requirements and consents relating to the Secretary under the terms and
provisions of this Indenture shall remain in full force and effect
notwithstanding any such assumption by the Secretary as aforesaid.
ARTICLE XI
PERFORMANCE OF OBLIGATIONS TO SECRETARY
SECTION 11.01. PERFORMANCE OF OBLIGATIONS TO SECRETARY. Notwithstanding
any other provisions of this Indenture to the contrary, each of the provisions
hereof which requires or permits action by the Secretary, the consent, approval
or authorization of the Secretary, the furnishing of any document, paper or
information to the Secretary, or the performance of any other obligation to the
Secretary, shall not be effective and the Sections containing such provisions
shall be read as though there were no such requirements or permissions, after
termination of the Guarantees pursuant to Section 6.04(a).
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 12.01. SATISFACTION AND DISCHARGE OF INDENTURE. Whenever all
Outstanding Obligations authenticated and delivered hereunder shall have been
Retired or Paid the Indenture Trustee shall forthwith deliver to the Shipowner
and the Secretary a duly executed instrument, in form submitted to it by the
Shipowner and reasonably satisfactory to the Indenture Trustee, satisfying and
discharging this Indenture and, at the time such form of instrument is submitted
to the Indenture Trustee the Shipowner shall deliver to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel
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each stating that all conditions precedent herein provided relating to the
satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
Obligations of the Shipowner to the Indenture Trustee under Section 7.04 shall
survive.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. NOTICES AND DEMANDS. Except as otherwise specifically
provided herein or in the Act, any notice, request, demand or direction upon, or
other communication to, the Indenture Trustee, the Shipowner or the Secretary
shall be deemed to have been sufficiently given or made by being mailed,
registered or certified mail, postage prepaid, addressed to the Indenture
Trustee, the Shipowner or the Secretary at their respective addresses appearing
in the Special Provisions of this Indenture or at such other address as any of
them may advise the others in writing from time to time. Except as otherwise
specifically provided herein or in the Act, any notice, request, demand or
direction upon, or other communication to, the Obligees shall be deemed to have
been sufficiently given or made by being mailed, registered or certified mail,
postage prepaid, to the address of each Obligee last appearing on the Obligation
Register.
SECTION 13.02. WAIVERS OF NOTICE. In any case where notice by mail or
otherwise is provided herein, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be deemed the equivalent of such notice. Waivers of notice shall be
filed with the Indenture Trustee, but such filing shall not be a condition
precedent to the validity of any action taken thereon in reliance upon any such
waiver.
SECTION 13.03. BENEFIT OF INDENTURE. This Indenture is for the sole
benefit of the Shipowner, the Indenture Trustee, the Holders from time to time
of the Outstanding Obligations and (until the obligations to the Secretary shall
have terminated as provided in Article XI) the Secretary.
SECTION 13.04. EXECUTION OF COUNTERPARTS. This Indenture may be
executed in any number of counterparts. All such counterparts shall be deemed
to be original and shall together constitute but one and the same instrument.
SECTION 13.05. TABLE OF CONTENTS; TITLES AND HEADINGS. Any table of
contents, the titles of the Articles and the headings of the Sections are not a
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part of this Indenture and shall not be deemed to affect the meaning or
construction of any of its provisions.
SECTION 13.06. INTEGRATION WITH SPECIAL PROVISIONS OF THE INDENTURE. In
the event of any conflict between the provisions of the Special Provisions of
the Indenture and of this Exhibit 1 thereto, the provisions of the Special
Provisions shall govern and the provisions of this Exhibit 1 to the Indenture
shall be deemed to be amended accordingly.
SECTION 13.07. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS. No recourse shall be had for the payment of the principal of, or the
premium, if any, or interest on any Obligation, or for any claim based thereon
or otherwise in respect thereof or of the indebtedness represented thereby, or
upon any obligation, covenant or agreement of this Indenture, against any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Shipowner or of any successor corporation, either directly or
through the Shipowner or any successor corporation, whether by virtue of any
constitutional provision, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood
that this Indenture and the Obligations are solely corporate obligations, and
that no personal liability whatsoever shall attach to, or be incurred by, any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Shipowner or of any successor corporation, either directly or
through the Shipowner or any successor corporation, because of the incurring of
the indebtedness hereby authorized or under, or by reason of, any of the
obligations, covenants, promises or agreements contained in this Indenture or in
any of the Obligations or to be implied herefrom or therefrom, and that all
liability, if any, of that character against every such incorporator,
stockholder, officer and director is, by the acceptance of the Obligations and
as a condition of, and as part of the consideration for, the execution of this
Indenture and the issue of the Obligations, expressly waived and released.
SECTION 13.08. APPLICABLE LAW. This Indenture and each Obligation
shall be governed by the laws referred to in the Special Provisions hereof,
except to the extent Federal law applies hereto.
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SCHEDULE A TO TRUST INDENTURE DOCUMENT 5
Schedule of Definitions to Trust Indenture
Dated as of April 9,1999
"Act" means the Merchant Marine Act, 1936, as amended, and in effect on
the Closing Date.
"Act of Obligees" means any request, demand, authorization, direction,
notice, consent, waiver or other action to be given or taken by the Obligees and
embodied in one or more documents of the type, and executed in the manner,
required by the Indenture.
"Administrative Agent" means CITICORP NORTH AMERICA, INC., a Delaware
corporation, as administrative agent for the Primary Lender and the commercial
paper holders of the Primary Lender (and their respective successors and
assigns), and its permitted successors and assigns.
"Actual Cost" means the actual cost of a Vessel, as set forth in Table A
of the Security Agreement or as subsequently redetermined by the Secretary
pursuant to the Security Agreement and the Act.
"Actual Knowledge" means actual knowledge of a Responsible Officer of a
Person.
"Affiliate" or "Affiliated" means any Person directly or indirectly
controlling, controlled by, or under common control with, another Person.
"Agent" means each of the Administrative Agent and the Facility Agent,
individually, and "Agents" means the Administrative Agent and the Facility
Agent, collectively.
"Alternate Lender" means CITIBANK, N.A., a national banking association
and its successors and assigns.
"Applicable Interest Rate" shall mean
(a)(i) with respect to any Disbursement or portion thereof that is funded
by the Primary Lender through its issuance of commercial paper notes and so long
as the Primary Lender is the holder of the indebtedness related to such funded
portion, a rate (the "CP Rate") equal to the sum of (A) the Primary Lender's
weighted average cost (defined below) related to the issuance of
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commercial paper notes and other short-term borrowings or the sale of
participation interests (collectively, "Commercial Paper"), which in each case
have been allocated by the Primary Lender to the Credit Facility, which rate
includes related issuance costs incurred by the Primary Lender, plus (B) during
the Construction Period, four-tenths of one percent (.40%) and thereafter,
nine-twentieths of one percent (0.45%), as calculated by the Administrative
Agent for each Interest Period and specified in a notice sent by the
Administrative Agent to the Facility Agent and by the Facility Agent to the
Shipowner and the Indenture Trustee at least three (3) Business Days prior to
each Interest Payment Date on which the interest so calculated is payable (For
purposes of the foregoing, the Primary Lender's "weighted average cost" of
Commercial Paper shall consist of (I) the actual interest rate paid to
purchasers of Commercial Paper, (II) the costs associated with the issuance of
the Commercial Paper and (III) other borrowings the Primary Lender may incur,
including the amount to fund small or odd dollar amounts that are not easily
accommodated in the commercial paper market); and
(ii) with respect to any Disbursement funded by the Alternate Lender
or to the extent that a Disbursement held by the Primary Lender is assigned to
the Alternate Lender or to any other assignee, then, from and after the
applicable Disbursement Date or the effective date of such assignment, as the
case may be, a rate per annum equal to LIBOR plus three tenths of one percent
(0.30%) per annum; provided, however, that, if the Alternate Lender shall have
determined, prior to the commencement of any Interest Period that: (A) Dollar
deposits of sufficient amount and maturity for funding a Disbursement are not
available to such Lender in the London interbank market in the ordinary course
of business; or (B) by reason of circumstances affecting the relevant market,
adequate and fair means do not exist for ascertaining the rate of interest to be
applicable to a Disbursement; or (C) the relevant rate of interest referred to
in the definition of LIBOR which is to be used to determine the rate of interest
for a Disbursement does not cover the funding cost to the Lender of making or
maintaining the Disbursement, then the Lender shall so notify the Indenture
Trustee, who shall give notice to the Shipowner of such condition and interest
shall, effective as of the date of such notice and so long as such condition
shall exist, accrue during each applicable Interest Period at the Base Rate;
provided, further, however that if, in the Lender's reasonable judgment, it
becomes unlawful at any time for such Lender to make or maintain Disbursements
based upon LIBOR, the Lender shall so notify the Indenture Trustee, who shall
give notice to the Shipowner of such determination and, effective as of the date
of such notice and so long as such condition shall exist, interest shall
thereafter accrue during each applicable Interest Period at the Base Rate.
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(b) with respect to Obligations which are Fixed Rate Notes, the interest
rate set forth in each such Obligation, which interest rate shall be as approved
by the Secretary as reasonable pursuant to Section 1104A (b)(5) of the Act.
"Authorization Agreement" means the Authorization Agreement, Contract No.
MA-13510, dated the Closing Date, between the Secretary and the Indenture
Trustee, whereby the Secretary authorizes the Guarantee of the United States of
America to be endorsed on each of the Obligations, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Authorized Newspapers" means THE WALL STREET JOURNAL and THE JOURNAL OF
COMMERCE, or if either ceases to exist, then in such other newspapers as the
Secretary may designate and a newspaper printed in English, approved by the
Secretary and of general circulation in Baltimore, Maryland.
"Base Rate" means, for any Interest Period or any other period, a
fluctuating interest rate per annum as shall be in effect from time to time
which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by Citibank, N.A. in New
York, New York, from time to time, as Citibank, N.A.'s base rate; or
(b) one-half of one percent (0.50%) per annum above the latest
three-week moving average of secondary market morning offering rates
in the United States for three-month certificates of deposit of
major United States money market banks, such three-week moving
average being determined weekly on each Monday (or, if any such day
is not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by Citibank, N.A. on
the basis of such rates reported by certificate of deposit dealers
to and published by the Federal Reserve Bank of New York, or, if
such publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank, N.A. from three New
York certificate of deposit dealers of recognized standing selected
by Citibank, N.A., in either case adjusted to the nearest one-fourth
of one percent (0.25%) or, if there is no nearest one-fourth of one
percent, to the next higher one-fourth of one percent.
"Borrower" means the Shipowner.
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"Business Day" shall mean any day on which dealings in Dollar deposits are
carried on in the London interbank market and on which commercial banks in
London and New York City are open for domestic and foreign exchange business.
"Cede" means Cede & Company.
"Certificate Authorizing Disbursement" shall mean, with respect to a
Disbursement, the United States Certificate Authorizing Disbursement
substantially in the form set forth in Annex A to the Credit Agreement.
"Closing Date" means April 9, 1999.
"Commercial Paper" shall have the meaning set forth in clause (a)(i)of the
definition of Applicable Interest Rate herein.
"Construction Contract" means that certain Semi-Submersible Drilling
Vessel Construction Contract (Hull No.1829), dated April 9, 1998, by and between
the Shipowner and the Shipyard, as the same may be amended, modified or
supplemented in accordance with the applicable provisions thereof.
"Construction Period" shall mean the period from the date hereof to the
Delivery Date.
"Construction Period Interest" shall mean all interest that accrues on the
Outstanding Principal during the Construction Period.
"Corporate Trust Office" means the principal corporate trust office of the
Indenture Trustee at which, at any time, its corporate trust business shall be
principally administered, which office at the date of execution of the Indenture
is located at 25 South Charles Street, 16th Floor, Mail Code 101-591, Baltimore,
Maryland 21201.
"CP Rate" shall have the meaning set forth in clause (a)(i) of the
definition of Applicable Interest Rate herein.
"Credit Agreement" or "Agreement" shall mean the Credit Agreement, dated
as of the Closing Date, among the Shipowner, the Lenders, and the Agents,
including any Exhibit, Annex, or other attachment thereto, as the same may be
amended, modified or supplemented.
"Credit Facility" shall have the meaning set forth in Whereas Clause (A)
of the Credit Agreement.
"DTC" means The Depository Trust Company.
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"Definitive Obligation" has the meaning specified in Article Sixth,
paragraph (aa) of the Special Provisions of the Indenture.
"Delivery Date" means the date on which the Vessel is delivered to and
accepted by the Shipowner.
"Depreciated Actual Cost" means the depreciated actual cost of the Vessel
as determined and re-determined by the Secretary pursuant to Sections 1101(g)
and 1104(b)(2) of the Act.
"Disbursement" shall have the meaning set forth in Section 2.03 of the
Credit Agreement.
"Disbursement Date" shall mean, in relation to any Disbursement, the
Business Day on which the Lender shall make such Disbursement.
"Dollars," "U.S. Dollars," "U.S.D.," "U.S.$" or "$" shall mean the
lawful currency of the United States of America.
"Facility Agent" means CITIBANK INTERNATIONAL PLC, a bank organized and
existing under the laws of England, as facility agent for both the Primary
Lender and the Alternative Lender (and their respective successors and assigns),
and its permitted successors and assigns.
"Final Disbursement Date" shall have the meaning set forth in Section 2.02
of the Credit Agreement.
"Fixed Rate Note" shall mean an Obligation substantially in the form of
Exhibit 3 to the Indenture, appropriately completed.
"Floating Rate Note" shall mean the Obligation substantially in the form
of Exhibit 2 to the Indenture, appropriately completed.
"Global Obligation" has the meaning specified in Article Sixth, paragraph
(aa) of the Special Provisions of the Indenture.
"Governmental Authority" shall mean the government of any country, any
agency, department or other administrative authority or instrumentality thereof,
and any local or other governmental authority within any such country.
"Guarantee" or "Guarantees" means the guarantee of an Obligation by the
United States of America pursuant to Title XI of the Act, as provided in the
Authorization Agreement.
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"Guarantee Commitment" means the Commitment to Guarantee Obligations,
Contract No. MA-13509, dated as of the Closing Date, executed by the Secretary
and accepted by the Shipowner with respect to the Guarantees, as originally
executed or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Guarantee Fees" shall mean the amounts described in the Guarantee
Commitment payable in consideration for the commitment therein described and
payable as provided in such Guarantee Commitment.
"Holder" means the holder of an Obligation.
"Indenture" means the Trust Indenture dated as of the Closing Date,
between the Shipowner and the Indenture Trustee, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Indenture Default" has the meaning specified in Article VI of Exhibit
1 to the Indenture.
"Indenture Trustee" means FMB Trust Company, National Association, a
national banking association, and any successor trustee permitted under the
Indenture.
"Interest Payment Date" means, with respect to any Obligation, the date
when any installment of interest on such Obligation is due and payable, which
are March 15 and September 15 of each year, beginning on September 15, 1999, and
the date of any prepayment of any Obligation.
"Interest Period" shall mean, with respect to any Disbursement, (i) the
period commencing on the Disbursement Date and extending up to, but not
including, the next Interest Payment Date; and (ii) thereafter the period
commencing on each Interest Payment Date and extending up to, but not including,
the next Interest Payment Date.
"Lender" shall mean shall mean either the Primary Lender or the Alternate
Lender, as the case may be, depending on which of the two parties made or will
make the relevant disbursement of funds under the Credit Agreement; provided,
however, that if the Primary Lender assigns its rights under the Credit
Agreement to the Alternate Lender, the term "Lender," shall mean only the
Alternate Lender, CITIBANK, N.A., a national banking association, and its
successors and assigns.
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"Letter of Representations" means the Letter of Representations between
the Shipowner and the Indenture Trustee and other documentation necessary or
desirable to effectuate the issuance of the Fixed Rate Notes as Global
Obligations.
"LIBOR" shall mean, in relation to any Interest Period, the rate of
interest per annum (rounded upward, if necessary, to the nearest 1/16 of 1%)
quoted by the principal London office of CITIBANK, N. A., at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for the offering to leading banks in the London interbank market of U.S.
Dollar deposits for a period and in an amount comparable to such Interest Period
and the principal amount upon which interest is to be paid during such Interest
Period.
"Make-Whole Premium" means an amount equal to the excess, if any, between
(i) the sum of the respective Payment Values of each Prospective Payment, over
(ii) 100% of the aggregate principal amount being prepaid on the Redemption
Date.
"Make-Whole Premium Determination Date" means the second Business Day
before the applicable Redemption Date.
"Maturity" when used with respect to any Obligation, means the date on
which the principal of, or interest on, such Obligation becomes due and payable
as therein provided, whether on a Payment Date, at the Stated Maturity or by
prepayment, repayment, redemption or declaration of acceleration or otherwise.
"Mortgage" means the first preferred ship mortgage on the Vessel, Contract
No. MA-13512, between the Shipowner and the Secretary, as originally executed or
as modified, amended or supplemented in accordance with the applicable
provisions thereof.
"Note" shall mean a Floating Rate Note or a Fixed Rate Note.
"Obligation" or "Obligations" shall mean the Floating Rate Note or Fixed
Rate Note(s) of the Shipowner bearing a Guarantee and authenticated and
delivered pursuant to the Indenture and the Authorization Agreement.
"Obligation Owners" has the meaning specified in Article Sixth, paragraph
(aa) of the Special Provisions of the Indenture.
"Obligation Register" has the meaning specified in Section 2.10 of
Exhibit 1 to the Indenture.
"Obligee" means each Holder.
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"Original Principal Amount" shall mean the maximum principal amount of
the Obligations.
"Officer's Certificate" means a certificate conforming to Section 1.02 of
Exhibit 1 to the Indenture and signed by a Responsible Officer of the Person
giving such certificate.
"Opinion of Counsel" means an opinion of counsel conforming to Section
1.02 of Exhibit 1 to the Indenture.
"Outstanding," when used with reference to the Obligations, shall mean all
Obligations theretofore issued under the Indenture, except:
(1) Obligations Retired or Paid; and
(2) Obligations in lieu of which other Obligations have been issued
under the Indenture.
For the purposes of Articles VI and X of Exhibit 1 to the Indenture, and also in
determining whether the Holders of a stated percentage of the principal amount
of Outstanding Obligations have taken any Act of Obligees required or permitted
by the Indenture, Obligations owned by the Shipowner or by any Affiliate of the
Shipowner (excluding (a) Obligations held by an Affiliate of the Shipowner when
such Affiliate is acting in a fiduciary capacity if it is established to the
satisfaction of the Indenture Trustee that neither the Shipowner nor another
Affiliate has a beneficial interest therein and (b) Obligations pledged in good
faith by the Shipowner or by any Affiliate of the Shipowner, if the pledgee (i)
is not an Affiliate of the pledgor and (ii) establishes to the satisfaction of
the Indenture Trustee that the pledgee has the right to vote such Obligations)
shall be disregarded and deemed not to be Outstanding; PROVIDED HOWEVER THAT,
for the purpose of determining whether the Indenture Trustee shall be protected
in relying on any such Act of Obligees, only Obligations which the Indenture
Trustee has actual knowledge are so owned shall be so disregarded and deemed not
to be Outstanding. Obligations which are not Outstanding shall not be entitled
to any rights or benefits provided in the Indenture.
"Outstanding Principal" shall have the meaning set forth in Section 2.01
of the Credit Agreement.
"Paying Agent" means any bank or trust company having the qualifications
set forth in clauses (1), (3), (4) and (5) of Section 7.02(a) of Exhibit 1 to
the Indenture, which shall be appointed by the Shipowner in accordance with
Section 4.02 of Exhibit 1 to the Indenture to pay the principal
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of (and premium, if any) or interest on the Obligations on behalf of the
Shipowner.
"Payment Date" shall mean March 15 and September 15 of each year,
beginning on March 15, 2001.
"Payment Default" has the meaning specified in Section 6.01(a) of
Exhibit 1 to the Indenture.
"Payment Value" of each Prospective Payment shall be determined by
discounting such Prospective Payment at the Reinvestment Rate for the period
from the Payment Date on which such Prospective Payment was scheduled to be paid
to the applicable Redemption Date.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment" means the place at which an Obligation is to be
redeemed pursuant to Article III of Exhibit 1 to the Indenture.
"Principal Office," when used with respect to the Shipowner, means the
office of the Shipowner at which, at any particular time, its corporate business
is principally administered, which office at the date of execution of the
Indenture is located in the British Virgin Islands.
"Primary Lender" means GOVCO INCORPORATED, a Delaware corporation, and
its successors and assigns.
"Prospective Payment" means, with respect to the Fixed Rate Notes: (i)
each scheduled interest payment on each scheduled principal amount to be
prepaid; and (ii) the scheduled principal amount to be prepaid.
"Redeem" means with respect to the redemption of Obligations, to repay
or prepay.
"Redemption" means with respect to the redemption of Obligations, the
repayment or prepayment of Obligations as applicable.
"Redemption Date" means, with respect to any Obligation, a date fixed for
the prepayment, repayment or redemption of such Obligation by or pursuant to
Article Fourth of the Indenture or Article III of Exhibit 1 to the Indenture.
"Redemption Price" means, with respect to any Obligation, the price at
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which an Obligation is to be prepaid, repaid, or redeemed pursuant to Article
Fourth of the Indenture or Article III of Exhibit 1 to the Indenture.
"Reinvestment Rate" means the yield determined by the Indenture Trustee,
based on information received from the Holder or calculation agent, to be the
yield of the issue of actively traded United States Treasury securities having a
maturity equal to the Weighted Average Life to Final Maturity; provided,
however, that if such Weighted Average Life to Final Maturity is not equal to
the maturity of an actively traded United States Treasury security (rounded to
the nearest one-twelfth of a year), such yield shall be obtained by linear
interpolation from the yields of actively traded United States Treasury
securities having the greater maturity closest to and the lesser maturity
closest to such Weighted Average Life to Final Maturity. The yields shall be
determined by reference to the yields as indicated by Telerate Access Service
(page 8003 or the relevant page at the date of determination indicating such
yields) (or, if such data ceases to be available, any publicly available sources
of similar market data) at approximately 11:00 a.m. (New York City time) on the
Make-Whole Premium Determination Date.
"Remaining Dollar Years" means the sum of the amounts obtained by
multiplying: (i) the amount of each remaining scheduled payment of principal of
the Fixed Rate Notes (without giving effect to such Redemption) by (ii) the
number of years (rounded to the nearest one-twelfth) which will elapse between
the Redemption Date and the Payment Date for such scheduled principal amount.
"Request" means a written request to a Person for the action therein
specified, signed by the Person making such request or a Responsible Officer
thereof.
"Responsible Officer" means (i) in the case of any business corporation,
the chairman of the board of directors, the president, any vice-president, the
secretary, assistant secretary, the treasurer or assistant treasurer thereof,
(ii) in the case of any commercial bank, the chairman or vice-chairman of the
executive committee of the board of directors or trustees, the president, any
vice president, the secretary, the treasurer, any trust officer, any executive,
senior, second or assistant vice president or any officer or assistant officer
customarily performing functions similar to those performed by the persons who
at the time shall be such officers or to whom any related matter is referred
because of his/her knowledge of and familiarity with the particular subject
thereof, (iii) in the case of the Indenture Trustee, any senior trust officer or
trust officer, or any vice president associated with the Corporate Trust Office,
and (iv) with respect to the signing or authentication of Obligations and
Guarantees by the Indenture Trustee, any person specifically authorized by the
Indenture Trustee to sign or authenticate Obligations.
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"Retired or Paid," as applied to Obligations and the indebtedness
evidenced thereby, means that such Obligations shall be deemed to have been
retired or paid and shall no longer be entitled to any rights or benefits
provided in the Indenture if:
(1) such Obligations shall have been paid in full in immediately
available funds;
(2) such Obligations shall have been cancelled by the Indenture
Trustee or shall have been delivered to the Indenture Trustee
for cancellation; or
(3) such Obligations shall have become due and payable at Maturity
and funds sufficient for the payment of such Obligations
(including interest to the date of Maturity, or in the case of
a payment after Maturity, to the date of payment, together
with any premium thereon) and available for such payment
(whether as a result of payment pursuant to the Guarantees or
otherwise) shall be held by the Indenture Trustee or any
Paying Agent pursuant to Section 4.02 of Exhibit 1 to the
Indenture (or shall have been so held and shall thereafter
have been paid to the Shipowner pursuant to Section 4.03 of
Exhibit 1 to the Indenture) in trust for the purpose or with
irrevocable directions, to apply the same;
PROVIDED THAT, the foregoing definition is subject to the provisions of Section
6.08 of Exhibit 1 to the Indenture.
"Secretary" means the Secretary of Transportation or any official or
official body from time to time duly authorized to perform the duties and
functions of the Secretary of Transportation under Title XI of the Act
(including the Maritime Administrator, the Acting Maritime Administrator, and to
the extent so authorized, the Deputy Maritime Administrator and other officials
of the Maritime Administration).
"Secretary's Note" means a promissory note or promissory notes issued and
delivered by the Shipowner to the Secretary described in Article Third of the
Special Provisions of the Security Agreement and shall also mean any promissory
note issued in substitution for and replacement thereof pursuant to the Security
Agreement.
"Secretary's Notice" means a notice from the Secretary to the Indenture
Trustee to the effect that (a) a default, within the meaning of Section 1105(b)
of the Act, has occurred under a mortgage, loan agreement, or other security
agreement that has been entered into between the Secretary, the Shipowner
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and any other parties in order to protect the interests of the United States of
America in connection with the Guarantees, (b) such notice is given for the
purposes of Section 6.01(b) of Exhibit 1 to the Indenture in order to protect
the security interests of the United States of America under such mortgage, loan
agreement or other security agreement, and (c) the Guarantees will terminate
upon the expiration of 60 days from the date of such notice if the Indenture
Trustee and each Obligee shall have failed to demand payment of the Guarantees
as provided in the Indenture, the Guarantees or the Act. Such notice shall be
given (i) in writing, by registered mail, return receipt requested, deposited in
the United States Mail on the date of such notice and addressed to a Responsible
Officer in the Corporate Trust Office of the Indenture Trustee in accordance
with the Special Provisions of the Indenture, (ii) by telegram, telex, telecopy
or similar means of transmission dispatched on such date and addressed to the
Responsible Officer in the Corporate Trust Office of the Indenture Trustee, as
aforesaid, and (iii) by collect telephone call made on such date to a
Responsible Officer in the Corporate Trust Office of the Indenture Trustee. A
Secretary's Notice shall not be deemed to have been given unless it shall have
been given in accordance with all the provisions of this definition, and the
date of any Secretary's Notice shall be deemed to be the last date on which it
is so given pursuant to clauses (i) through (iii) above.
"Secretary's Supplemental Indenture" means a Supplemental Indenture
evidencing the succession, pursuant to Section 6.09 of Exhibit 1 to the
Indenture, of the Secretary to the Shipowner, and the assumption by the
Secretary of the obligations of the Shipowner under the Indenture.
"Section 1104" means Section 1104A of the Act, and when used with
reference to subsections of Section 1104, means subsections of Section 1104A.
"Security Agreement" shall mean that certain security agreement, Contract
No. MA-13511, dated as of the Closing Date, with respect to the Vessel, executed
by the Shipowner and the Secretary relating to the security in respect to the
Guarantees, as originally executed or as modified, amended or supplemented in
accordance with the applicable provisions thereof.
"Shipowner" means PETRODRILL FIVE LIMITED, a British Virgin Islands
international business company, and subject to the provisions of Sections 6.09,
8.01 and 8.02 of Exhibit 1 to the Indenture, shall also include its successors
and assigns.
"Shipyard" or "Shipbuilder" means TDI-Halter, Limited Partnership, a
Louisiana limited partnership.
"Stated Maturity," when used with respect to any Obligation, means the
date determinable as set forth in such Obligation as the final date on which the
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<PAGE>
principal of such Obligation is due and payable, which shall include, without
limitation, each of the Payment Dates.
"Supplemental Indenture" shall mean any indenture supplement to the
Indenture entered into pursuant to Article X thereof.
"Title XI" means Title XI of the Act.
"Title XI Reserve Fund and Financial Agreement" means that certain Title
XI Reserve Fund and Financial Agreement, Contract No. MA-13513, dated as of the
Closing Date, executed by the Shipowner and the Secretary, as amended, modified
or supplemented in accordance with the applicable provisions thereof.
"United States" means the United States of America.
"Vessel" means the Shipowner's dynamic positioned semi-submersible
drilling rig to be named the AMETHYST 5 and constructed by TDI-Halter, Limited
Partnership in accordance with the Construction Contract, including all work and
material heretofore or hereafter performed upon or installed in or placed on
board such Vessel, together with related appurtenances, additions, improvements,
and replacements.
"Weighted Average Life to Final Maturity" means the number of years
(rounded up to the nearest one-twelfth of a year) obtained by dividing: (i) the
then Remaining Dollar Years by (ii) the total amount of the then remaining
aggregate unpaid principal amount of such Fixed Rate Notes (without giving
effect to the subject Redemption).
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EXHIBIT 4.23
APPENDIX II TO GUARANTEE COMMITMENT DOCUMENT 4
---------------------------------------------------------
TRUST INDENTURE
Relating to United States Government Guaranteed
Ship Financing Obligations
Between
PETRODRILL FOUR LIMITED
Shipowner
AND
FMB TRUST COMPANY, NATIONAL ASSOCIATION
Indenture Trustee
Dated as of April 9, 1999
---------------------------------------------------------
<PAGE>
TRUST INDENTURE
Between
PETRODRILL FOUR LIMITED
Shipowner
AND
FMB TRUST COMPANY, NATIONAL ASSOCIATION
Indenture Trustee
Dated as of April 9, 1999
TABLE OF CONTENTS TO SPECIAL PROVISIONS OF THE INDENTURE 1/
PAGE
Parties.................................................................... 1
Recitals................................................................... 1
ARTICLE FIRST
Incorporation of General Provisions........................................ 2
ARTICLE SECOND
The Obligations ........................................................... 3
ARTICLE THIRD
Interest Rate Calculations................................................. 3
ARTICLE FOUR
Certain Redemptions........................................................ 4
- - ------------------
1/ This Table of Contents is not a part of the Indenture and has no bearing upon
the interpretation of any of its terms and provisions.
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ARTICLE FIFTH
Definitions................................................................ 6
ARTICLE SIXTH
Additions, Deletions and Amendments to Exhibit 1........................... 6
Signatures................................................................. 23
Acknowledgements........................................................ 24-25
EXHIBITS TO TRUST INDENTURE
SCHEDULE A Schedule of Definitions to Trust Indenture
EXHIBIT 1 General Provisions of the Indenture
Incorporated by Reference
EXHIBIT 2 Form of Floating Rate Note
EXHIBIT 3 Form of Fixed Rate Note
EXHIBIT 4 Authorization Agreement
EXHIBIT 5 Form of Secretary Supplemental Indenture
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TRUST INDENTURE
SPECIAL PROVISIONS
THIS TRUST INDENTURE, is dated as of April 9, 1999 (said Trust Indenture,
as the same may be amended, modified or supplemented from time to time as
permitted hereunder, herein called the "Indenture"), is between (i) PETRODRILL
FOUR LIMITED, a British Virgin Islands international business company (herein
called the "Shipowner"), and (ii) FMB TRUST COMPANY, NATIONAL ASSOCIATION, a
national banking association (said banking association, any successor or assign
hereunder, herein called the "Indenture Trustee").
RECITALS:
A. As provided in Article Fifth hereof, the terms defined in Schedule A to
this Indenture shall have the respective meanings stated in said Schedule;
B. The Shipowner has duly executed this Indenture, and duly authorized the
issuance hereunder of $149,625,000 principal amount of its Obligations pursuant
to Section 2.03 of Exhibit 1 to this Indenture (herein together with any
Obligations issued in respect thereof pursuant to Sections 2.09, 2.10, 2.12 and
3.10(b) of said Exhibit 1, called the "Obligations") designated "United States
Government Guaranteed Export Ship Financing Obligations, AMETHYST 4 Series;"
C. The Obligations will be issued by the Shipowner to aid in the financing
of the cost of construction of a self-propelled semi-submersible drilling rig to
be named the AMETHYST 4 (the "Vessel");
D. To aid in financing the construction of the Vessel, the Shipowner has
entered into a credit agreement (the "Credit Agreement") with GOVCO INCORPORATED
a Delaware corporation (the "Primary Lender"), CITIBANK, N.A., a national
banking association (the "Alternate Lender'), CITIBANK INTERNATIONAL PLC, a bank
organized and existing under the laws of England (the "Facility Agent") and
CITICORP NORTH AMERICA, INC., a Delaware corporation (the "Administrative
Agent") providing for the delivery of no more than $149,625,000 principal amount
of notes designated "United States Government Guaranteed Export Ship Financing
Obligations, AMETHYST 4 Series";
<PAGE>
E. Under the Authorization Agreement in the form set forth as Exhibit 4
hereto, the Secretary, on behalf of the United States, has agreed and will agree
to execute on the Obligations to be issued, a Guarantee of the payment of the
unpaid interest to the date of such payment on, and the unpaid balance of the
principal of, such Obligation under the provisions of Title XI of the Act, and
the Indenture Trustee is authorized to cause the Guarantees, bearing the
facsimile signature of the Secretary, and the facsimile seal of the United
States Department of Transportation, to be imprinted on the Obligations, and to
authenticate and deliver the Obligations and the Guarantees issued on the
Closing Date and from time to time thereafter, such agreements and
authorizations being subject to the conditions set forth in the Authorization
Agreement;
F. Pursuant to Section 1104(b)(5) of the Act, the Secretary will determine
that the interest to be borne by the Obligations (exclusive of charges for the
guarantee fee and service charges, if any) is reasonable; and
G. All actions necessary have been or will be taken in order (1) to make
the Obligations, when executed by the Shipowner, authenticated by the Indenture
Trustee and issued under the Indenture, the valid, binding and legal obligations
of the Shipowner in accordance with their terms, (2) to make the Guarantees to
be endorsed on the Obligations, when executed on behalf of the Secretary,
authenticated by the Indenture Trustee and delivered under this Indenture, the
valid, binding and legal obligations of the United States in accordance with
their terms, and (3) to make this Indenture the valid, binding and legal
agreement of the parties hereto in accordance with its terms.
NOW THEREFORE, in consideration of the premises, of the mutual covenants
herein contained, of the purchase of the Obligations by the Holder and of other
good and valuable consideration, the receipt and adequacy of which the parties
hereby acknowledge, and for the equal and proportionate benefit of the present
and future Holder, the parties hereto agree as follows:
ARTICLE FIRST
INCORPORATION OF GENERAL PROVISIONS
This Indenture shall consist of two parts: the Special Provisions and the
General Provisions attached hereto as Exhibit 1, made a part of this Indenture
and incorporated herein by reference. In the event of a conflict, the terms of
the Special Provisions shall prevail.
2
<PAGE>
ARTICLE SECOND
THE OBLIGATIONS
(a) The Obligations issued hereunder shall be designated "United States
Government Guaranteed Export Ship Financing Obligations, AMETHYST 4 Series," and
shall be in the forms of Exhibits 2 and 3 to this Indenture; and, the aggregate
principal amount of Obligations which may be issued under this Indenture shall
not exceed $149,625,000 except as provided in Sections 2.09, 2.10, 2.12 and
3.10(b) of Exhibit 1 hereto.
(b) The Obligations shall be in the denominations of $1,000 or any
integral multiple thereof.
(c) The Shipowner shall at all times cause to be maintained in the City of
Baltimore, State of Maryland an office or agency for the purposes specified in
Section 5.03 of Exhibit 1 to this Indenture.
(d) The Indenture Trustee shall at all times have its Corporate Trust
Office in the City of Baltimore, State of Maryland.
ARTICLE THIRD
INTEREST RATE CALCULATIONS
Upon the terms and subject to the conditions contained in the Obligations,
and based on information received from the Facility Agent (but only in
connection with the Floating Rate Note), the Indenture Trustee will calculate
the Applicable Interest Rate on the Obligations in the manner and at the times
provided in the Obligations and shall communicate the same to the Shipowner, the
Secretary and any paying agent identified to it in writing as soon as
practicable after each determination. The Indenture Trustee, based on
information received from the Facility Agent (but only in connection with the
Floating Rate Note), will, upon the request of the Holder of the Obligations,
determine the Applicable Interest Rate then in effect with respect to the
Obligations.
3
<PAGE>
ARTICLE FOURTH
CERTAIN REDEMPTIONS
(a) SCHEDULED MANDATORY REDEMPTION. The Obligations are subject to
redemption at a Redemption Price equal to 100% of the principal amount thereof,
together with interest accrued thereon to the applicable Redemption Date,
through the operation of scheduled repayment providing for the semi-annual
redemption on February 15 and August 15 of each year, commencing February 15,
2001 of $6,234,000 of principal amount of Obligations, which amount represents
approximately one twenty-fourth (1/24) of the Original Principal Amount of
Obligations, plus interest accrued thereon to the Redemption Date. There shall
be a final redemption of the remaining outstanding principal of the Floating
Rate Note on the earlier of (i) August 15, 2002, or (ii) two (2) years after the
Delivery Date, and a final redemption of the remaining outstanding principal of
the Fixed Rate Notes on August 15, 2012.
Notwithstanding the foregoing provisions of this subsection (a), if the
principal amount of Outstanding Obligations shall be reduced by reason of any
redemption pursuant to Section 3.04 of Exhibit 1 to this Indenture, the
principal amount of Obligations to be redeemed pursuant to this subsection (a)
on each subsequent Redemption Date for such Obligations shall be reduced by an
amount equal to the principal amount of such Obligations retired by reason of
such redemption pursuant to Section 3.04 of Exhibit 1 hereto divided by the
number of Redemption Dates (including the Stated Maturity of such Obligations)
scheduled thereafter to August 15, 2002 in the case of the Floating Rate Note
and August 15, 2012 in the case of Fixed Rate Note(s) (subject to such increase
as shall be necessary so that the total principal amount of Obligations to be
redeemed on any such Redemption Date shall be an integral multiple of $1,000);
PROVIDED THAT, the entire unpaid principal amount of the Outstanding Obligations
shall be paid not later than August 15, 2002 in the case of the Floating Rate
Note and August 15, 2012 in the case of each Fixed Rate Note. The Shipowner
shall, in accordance with Section 3.02(d) of Exhibit 1 hereto, promptly after
each redemption pursuant to said Section 3.04, furnish to the Secretary, the
Indenture Trustee and each Holder a revised table of scheduled repayments
reflecting the reductions made pursuant to this subsection (a) as a result of
such redemption.
(b) OPTIONAL REDEMPTION OF OBLIGATIONS WITHOUT PREMIUM. At its option,
the Shipowner may without premium,
(i) prepay on any Interest Payment Date the Floating Rate Note, in
whole or in part, in a minimum principal amount of $10,000,000, at a
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<PAGE>
Redemption Price equal to 100% of the principal amount thereof together
with interest accrued thereon to the Redemption Date, or
(ii) redeem or prepay the Floating Rate Note, in whole or in part,
on a Redemption Date designated by the Shipowner, from the proceeds from
the issuance of the Fixed Rate Notes.
(c) OPTIONAL REDEMPTIONS OF OBLIGATIONS AT MAKE-WHOLE PREMIUM. At its
option, the Shipowner may prepay on any Interest Payment Date the Fixed Rate
Notes, in whole or in part, in a minimum principal amount of $10,000,000, at a
Redemption Price equal to 100% of the principal amount thereof together with
interest accrued thereon to the Redemption Date plus the Make-Whole Premium, if
any. Prepayments shall be applied pro rata against each Fixed Rate Note and
applied against the scheduled principal payments in the inverse order of
scheduled maturity.
(d) OPTIONAL REDEMPTIONS. If the Shipowner shall elect to make any such
optional redemptions pursuant to this Article, the Shipowner shall, at least 40
days but not more than 60 days prior to the date fixed for redemption, deliver
to the Indenture Trustee (1) a Request stating that the Shipowner intends to
exercise its rights as above set forth to make such optional redemptions and
specifying the Redemption Date and the principal amount which the Shipowner
intends to redeem on such date, and (2) at least 35 days prior to the date fixed
for redemption in the case of the Fixed Rate Notes, deliver to the Indenture
Trustee an amount equal to the Make Whole Premium estimated by the Indenture
Trustee, based on information received from the Holder or a calculation agent,
to be paid on the Redemption Date. The Indenture Trustee, based on information
received from the Holder or a calculation agent, shall give an estimate of the
Make Whole Premium to the Shipowner within two (2) business days of the delivery
of the Shipowner's Request. In the event the amount of the Make Whole Premium
deposited by the Shipowner with the Indenture Trustee pursuant to this section
(and interest, if any, accrued thereon, less any losses incurred on the
investment thereof) is insufficient to pay the amount of the Make Whole Premium,
the Shipowner shall pay the amount of the shortfall to the Indenture Trustee in
immediately available funds upon one (1) day's notice. In the event the amount
of the Make Whole Premium deposited by the Shipowner pursuant to this section
(and interest, if any, accrued thereon, less any losses incurred on the
investment thereof) exceeds the Make Whole Premium, the excess amount shall be
refunded to the Shipowner by the Indenture Trustee in immediately available
funds on the Redemption Date.
5
<PAGE>
ARTICLE FIFTH
DEFINITIONS
For all purposes of this Indenture, unless otherwise expressly provided or
unless the context otherwise requires:
(1) All references herein to Articles, Sections or other
subdivisions, unless otherwise specified, refer to the corresponding
Articles, Sections and other subdivisions of this Indenture;
(2) The terms "hereof," "herein," "hereby," "hereto,"
"hereunder" and "herewith" refer to this Indenture; and
(3) The terms used herein and defined in Schedule A to this
Indenture shall have the respective meanings stated in said
Schedule.
ARTICLE SIXTH
ADDITIONS, DELETIONS AND AMENDMENTS TO EXHIBIT 1
The following additions, deletions and amendments are hereby made to
Exhibit 1 to this Indenture.
(a) CONCERNING IMMEDIATELY AVAILABLE FUNDS. Notwithstanding any provision
in Exhibit 1 to this Indenture to the contrary, all payments are to be made in
immediately available funds.
(b) CONCERNING MANDATORY SCHEDULED REDEMPTIONS. The terms "sinking fund
payment" and "sinking fund redemption" in Exhibit 1 to this Indenture refer to
the mandatory scheduled redemption.
(c) CONCERNING SECTION 2.02. Section 2.02(c) is revised to read as
follows:
(c) If the Maturity of any Obligation or an Interest Payment Date for any
Obligation shall be a day other than a Business Day, then such payment may
be made on the next succeeding Business Day, with the same force and
effect as if made on the Interest Payment Date for such payment; PROVIDED,
HOWEVER, that interest shall accrue thereon for the period after said
Interest Payment Date (whether or not such next succeeding Business Day
occurs in a succeeding month).
6
<PAGE>
(d) CONCERNING SECTION 2.04. Prior to the earlier of (i) August 15, 2002,
or (ii) two (2) years from the Delivery Date, the Shipowner and the Indenture
Trustee may enter into a Supplemental Indenture, and the Indenture Trustee may
enter into a supplement to the Authorization Agreement, pursuant to Section 2.04
of Exhibit 1 to this Indenture, to provide for the issuance of fixed rate
obligations in the form of Exhibit 3 hereto for the purpose of repaying the
Floating Rate Note; PROVIDED HOWEVER, that the Shipowner and Indenture Trustee
have obtained the prior written consent of the Secretary and FURTHER PROVIDED,
that (a) except for the final issuance, each issuance of a Fixed Rate Note must
be in a minimum aggregate principal amount of $50,000,000, and (b) the proceeds
from the issuance of Fixed Rate Notes shall be used to pay off, satisfy and
cancel the Floating Rate Note; PROVIDED, HOWEVER, that during the Construction
Period, the Floating Rate Note need not be paid off in its entirety and need
only be reduced by the net proceeds from the issuance of the Fixed Rate Notes.
(e) CONCERNING SECTION 2.06. Interest at the Applicable Interest Rate
shall be due on each Disbursement at the end of each Interest Period. The
Indenture Trustee, based on information received from the Facility Agent (but
only in connection with the Floating Rate Note), will determine the Applicable
Interest Rate for each Interest Period.
(f) CONCERNING SECTION 2.10. The first paragraph of Section 2.10(c) is
revised to read as follows:
(c) The Shipowner or the Indenture Trustee shall not be required to
register transfers or make exchanges of (1) Obligations for a period of 15
days immediately prior to (A) an Interest Payment Date or (B) any
selection of Obligations to be redeemed, (2) Obligations after demand for
payment of the Guarantees and prior to the payment thereof or rescission
of such demand pursuant to Section 6.02(a), or (3) any Obligation which
has been selected for redemption in whole or in part, except as to the
unredeemed portion of any Obligation being redeemed in part.
(g) CONCERNING SECTION 2.12. With respect to clause (1) of the proviso to
Section 2.12 of Exhibit 1 to the Indenture, a written agreement of indemnity
which is satisfactory in form and substance to the Secretary, the Shipowner, and
the Indenture Trustee, executed and delivered by an institutional Holder having
a capital and surplus of at least $100,000,000 shall be considered sufficient
indemnity to the Secretary, the Shipowner, and the Indenture Trustee in
connection with the execution, authentication and delivery of any new
Obligations or the making of any payment as contemplated by said Section 2.12.
7
<PAGE>
(h) CONCERNING PAYMENT OF THE OBLIGATIONS. Notwithstanding anything to the
contrary in Exhibit 1 hereto, the Obligations to be issued hereunder shall be
payable as to principal, premium (if any), and interest, at an office or agency
maintained by the Shipowner for such purpose at the Corporate Trust Office of
the Indenture Trustee, or at the option of the Shipowner, as to payments of
principal, premium (if any), or interest by wire, in immediately available
funds, by such Corporate Trust Office to the Obligees as appear in the
Obligation Register, subject in any event to the provisions hereof concerning
home office payment and subject to the Indenture Trustee's prior receipt of
funds sufficient for the payment of principal, premium (if any) or interest by
wire or other immediately available funds. The Indenture Trustee shall have no
obligation to determine whether such wires or payments were received by the
Obligees.
(i) CONCERNING SECTION 3.02. Section 3.02(c) and (d) are revised to read
as follows:
(c) SCHEDULED REDEMPTIONS. If the Obligations of any series and Stated
Maturity or the Special Provisions hereof or the Supplemental Indenture
establishing such series shall so provide, such Obligations shall be
subject to (i) scheduled redemption through the operation of a mandatory
redemption schedule, in such amounts, at such times and subject to such
credits (if any) as may be specified therein, and (ii) redemption at the
option of the Shipowner, in connection with the operation of any such
mandatory redemption schedule, in such additional amounts and subject to
such conditions as may be specified therein.
(d) ADJUSTMENTS OF REDEMPTION PAYMENTS. If the Obligations of any series
and Stated Maturity or the Special Provisions hereof or of the
Supplemental Indenture establishing such series provide for an adjustment
in scheduled redemption payments as a result of any redemption or
cancellation of Obligations, the Shipowner shall recompute the remaining
scheduled redemption payments pursuant to such provisions and shall, at
least 60 days prior to the next Interest Payment Date which occurs at
least 60 days following any such redemption or cancellation of Obligations
of such series requiring such recomputation, submit to the Secretary for
his review such recomputation to ascertain compliance with the provisions
of such Obligations or the Special Provisions hereof or such Supplemental
Indenture, and table of revised mandatory redemption schedule payments on
the Obligations of such series reflecting the adjustments made pursuant to
such provisions as a result of such redemption or
8
<PAGE>
cancellation. Upon advice by the Secretary that he finds such
recomputation to comply with such provisions, the Shipowner shall submit
said table to the Indenture Trustee and the Indenture Trustee shall
promptly submit a copy thereof to each Holder of an Obligation of such
series.
(j) CONCERNING SECTION 3.03. The date required by Section 3.03 of Exhibit
1 hereto for the Floating Rate Note is the earlier of August 15, 2002, or (ii)
two (2) years from the Delivery Date. The date required by Section 3.03 of
Exhibit 1 hereto for the Fixed Rate Notes is August 15, 2012.
(k) CONCERNING SECTION 3.06. Section 3.06 of Exhibit 1 hereto is hereby
amended in its entirety to read as follows:
SECTION 3.06. REDEMPTION AFTER ASSUMPTION BY THE SECRETARY. Upon receipt
by the Indenture Trustee of written instructions from the Secretary
stating that the principal amount of Obligations specified in such
instructions are required to be redeemed on the date specified therein
(which shall be not less than 40 nor more than 60 days from the receipt of
such instructions by the Indenture Trustee) at the option of the Secretary
at any time after the Secretary's assumption of the Obligations pursuant
to Section 6.09, the Indenture Trustee shall promptly give notice as
provided in Section 3.08 of the redemption on the Redemption Date of the
principal amount of Obligations specified in such instructions and the
Indenture Trustee shall, on such Redemption Date, redeem such Obligations
together with interest accrued thereon to such Redemption Date; PROVIDED
THAT, the Secretary shall redeem at the principal amount thereof and
interest accrued thereon the Outstanding Obligations relating to the
Vessel if the Vessel has been sold pursuant to Section 8.02 to a purchaser
or purchasers who have not assumed such Obligations by notice to the
Indenture Trustee in accordance with this Section 3.06 within 40 days of
the nonassumption of the Obligations by such purchaser.
(l) CONCERNING SECTION 3.07. (i) Section 3.07(a) of Exhibit 1 to this
Indenture is revised to delete the phrase "or 3.05."
(ii) Notwithstanding the provisions of Section 3.07(b) of Exhibit 1
to this Indenture, if less than all of the Obligations are to be redeemed
under any of the provisions contained or referred to in Article Fourth
hereof (excluding Article Fourth (c) or Article III of said Exhibit 1),
the Indenture Trustee shall select such Obligations to be redeemed on the
Redemption Date by allocating the principal amount to be redeemed first
between each
9
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maturity of Obligations in proportion to the Outstanding
Obligations and second among the holders of each maturity of Obligations
in proportion to the aggregate principal amount of such maturity of
Obligations registered in their respective names; provided that, the
Indenture Trustee may select for redemption portions of the principal
amount of the Obligations of a denomination larger than $1,000; but the
portions of the principal amount of the Obligations so selected shall be
equal to $1,000 or an integral multiple thereof.
(m) CONCERNING SECTION 3.09. Section 3.09 of Exhibit 1 to this Indenture
is revised to read as follows:
SECTION 3.09. DEPOSIT OF REDEMPTION MONEYS. No later than 11:00 a.m.
in Baltimore, Maryland on any Redemption Date, the Shipowner shall, except
as contemplated by Section 3.08(b) or Article Fourth (d) of the Special
Provisions, deposit or cause to be deposited with the Indenture Trustee or
with any Paying Agent an amount in immediately available funds sufficient
for such redemption (after taking into account any amounts then held by
the Indenture Trustee or such Paying Agent and available for such
redemption) with irrevocable directions to it to so apply the same.
(n) CONCERNING SECTION 4.01. Section 4.01(b) of Exhibit 1 hereto is hereby
amended in its entirety to read as follows:
"(b) Cash held by the Indenture Trustee or any Paying Agent (other
than the Shipowner) under this Indenture -
(i) need not be segregated;
(ii) shall not be invested except as permitted by clause (iv)
of this Section 4.01(b);
(iii) shall not bear interest except as the Shipowner and the
Indenture Trustee (or such Paying Agent) may agree in writing;
and
(iv) if the Shipowner shall have deposited or caused to be
deposited with the Indenture Trustee funds sufficient for the
payment of the Obligations at their Maturity, including
interest to the date of Maturity, and the date of Maturity is
more than one (1) Business Day after the deposit of such
funds, the Indenture Trustee upon the Request of the
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Shipowner shall invest such funds, as directed by the
Shipowner in writing, in direct obligations of the United
States Government maturing at or prior to the date of Maturity
of such Obligations and having a principal amount equal to not
less than the amount of the funds so invested. Such
investments shall be held in trust for the purpose for which
the funds so invested were held. After the Obligations in
respect of which the funds were deposited have been paid in
full (except as to unclaimed amounts as referred to in Section
4.03) any of such funds (including interest received in
respect of such investments and gain on matured investments
purchased at a discount) held by the Indenture Trustee in
excess of amounts to which Holders of such Obligations are
entitled shall upon the Request of the Shipowner be paid by
the Indenture Trustee to the Shipowner but only in the absence
of an Indenture Default hereunder."
(o) CONCERNING SECTION 4.02. The appointment of a Paying Agent by the
Shipowner is subject to the prior written consent of the Secretary and Indenture
Trustee, which consent shall not be unreasonably withheld.
(p) CONCERNING SECTION 4.03. Section 4.03 is revised to read as follows:
SECTION 4.03. UNCLAIMED AMOUNTS. Any moneys received by the Indenture
Trustee or a Paying Agent, for the payment of Obligations or Guarantees
and remaining unclaimed by the Holders thereof for 6 years after the date
of the Maturity of said Obligations or the date of payment by the
Secretary of the Guarantees shall, upon delivery to the Indenture Trustee
of a Request by the Shipowner, be paid to the Shipowner; PROVIDED THAT,
not less than 30 days prior to such payment, the Shipowner shall publish
notice thereof to the Obligees at least once in the Authorized Newspapers
and provide the Indenture Trustee with copies thereof. In such event, such
Holders shall thereafter be entitled to look only to the Shipowner (and
the settlor or settlors of any trust for which the Shipowner is trustee,
to the extent paid over to it or them) for the payment thereof, and the
Indenture Trustee or such Paying Agent, as the case may be, shall
thereupon be relieved from all responsibility to such Holders therefor. No
such Request, publication or payment shall be construed to extend any
statutory period of limitations which would have been applicable in the
absence of such Request, publication or payment.
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(q) CONCERNING SECTIONS 5.01 AND 5.02. Sections 5.01 and 5.02 are
revised to read as follows:
SECTION 5.01. AUTHORIZATION, EXECUTION AND DELIVERY OF INDENTURE AND
PERFORMANCE. The Shipowner has duly authorized the execution, delivery
and performance of this Indenture.
SECTION 5.02. PAYMENT AND PROCEDURE FOR PAYMENT OF OBLIGATIONS. The
Shipowner will duly and punctually pay the principal of (and premium, if
any) and interest on the Obligations according to the terms thereof and of
this Indenture. The Shipowner will deposit with the Indenture Trustee or
(subject to Section 3.09) a Paying Agent no later than 11:00 a.m. in
Baltimore, Maryland on each date fixed for such payment or as otherwise
provided by the Special Provisions hereof an amount in immediately
available funds sufficient for such payment (after taking into account any
amounts then held by the Indenture Trustee or such Paying Agent and
available for such payment) with irrevocable directions to it to so apply
the same; PROVIDED THAT, payments of interest may be made as provided in
Section 2.02(b)(4) as modified by Article Sixth (b) of the Special
Provisions; and PROVIDED FURTHER, that except with the consent of the
Secretary the Shipowner shall not deposit any such amount more than ten
(10) days prior to the date of the payment for which such amount is
deposited, unless otherwise provided by the Special Provisions hereof.
(r) CONCERNING SECTION 6.06. Section 6.06(a) revised to read as follows:
SECTION 6.06. (a) OBLIGEES' RIGHT TO DIRECT INDENTURE TRUSTEE AFTER
INDENTURE DEFAULT. During the continuance of any Indenture Default, the
Holders of a majority in principal amount of the Outstanding Obligations
shall have the right, by an Act of Obligees, to direct the Indenture
Trustee:
(1) to exercise or to refrain from exercising any right or to
enforce any remedy granted to it by this Indenture; and
(2) to direct the time, method and place of the exercise of
any such right or the enforcement of any such remedy;
PROVIDED THAT, subject to Section 7.03, the Indenture Trustee shall have
the right not to take any such action if it shall determine in good faith
that the action would involve it in personal liability, would subject it
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to expenses and liability against which it had not been offered adequate
security, or would be unjustly prejudicial to the Obligees not parties to
such direction.
Anything in this Section 6.06(a) to the contrary notwithstanding, the
Indenture Trustee shall be obligated to demand payment of the Guarantees
as provided in Section 6.02(a) unless the Holders of all Outstanding
Obligations shall have elected to terminate the Guarantees as provided in
Section 6.04(a)(2), in which case the Indenture Trustee shall be obligated
to refrain from making such demand.
(s) CONCERNING SECTION 6.09. The reference to "Exhibit 4" in Section 6.09
is revised to read "Exhibit 5" and the following paragraph is added at the end
of Section 6.09:
In the event that the Obligations are registered in the name of The
Depository Trust Company ("DTC"), Cede & Co. ("Cede") or another nominee
of DTC or Cede pursuant to a Letter of Representations ("LOR") which is
executed among the Shipowner, the Indenture Trustee and DTC, and (i) if
the Secretary assumes the Obligations pursuant to Section 6.09(a) hereof,
or (ii) if the Secretary instructs the Shipowner and the Indenture Trustee
to terminate the LOR, the Shipowner and the Indenture Trustee, immediately
upon receipt of notice of such assumption or upon receipt of notice of
such termination, shall terminate or cause the termination of the LOR in
accordance with Section 11 thereof. The Indenture Trustee shall within 30
days from receipt of either such notice from the Secretary also instruct
DTC to notify its direct and indirect participants of the need to
re-register the Obligations in the names of the beneficial owners. Upon
surrender by DTC of the Obligations issued in its name, the name of Cede
or another nominee, the Shipowner shall issue at its sole expense, and the
Indenture Trustee shall authenticate Obligations in the names provided to
the Indenture Trustee by DTC.
(t) CONCERNING SECTION 7.02. The reference to "$3,000,000" in Section 7.02
is revised to read "$75,000,000."
(u) CONCERNING SECTION 7.03. Section 7.03(h) and (o) are revised to read
as follows:
(h) In all cases where this Indenture does not make express provision as
to the evidence on which the Indenture Trustee may act or refrain from
acting, the Indenture Trustee shall be entitled to receive and shall be
protected (subject to paragraph (c) of this Section) in acting or
refraining from acting hereunder in reliance upon an Officer's Certificate
as to the existence or nonexistence of any fact.
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(o) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers.
(v) CONCERNING SECTION 7.04. Section 7.04 is revised to read as follows:
SECTION 7.04. COMPENSATION, EXPENSES AND INDEMNIFICATION OF INDENTURE
TRUSTEE. The Shipowner shall (1) pay such compensation to the Indenture
Trustee as they may agree upon in writing from time to time and reimburse
it for its reasonable expenses and disbursements (including counsel fees
and expenses) and (2) indemnify the Indenture Trustee for, and hold it
harmless against, any loss, liability or expense which it may incur or
suffer without negligence or bad faith in acting under this Indenture or
the Authorization Agreement. The compensation of the Indenture Trustee
shall not be limited to the compensation provided by law for a trustee
acting under an express trust. The obligations of the Shipowner under this
Section 7.04 shall survive the termination of the Indenture and
resignation or removal of the Indenture Trustee.
(w) CONCERNING SECTIONS 8.01 AND 8.02. Sections 8.01 and 8.02 are
revised to read as follows:
SECTION 8.01. CONSOLIDATION, MERGER OR SALE BY SHIPOWNER. Nothing in this
Indenture shall prevent any lawful consolidation or merger of the
Shipowner with or into any other Person, or any sale of the Vessel to any
other Person lawfully entitled to acquire and operate the Vessel or any
sale by the Shipowner of all or substantially all of its assets to any
other Person; PROVIDED THAT, except where the Shipowner shall be the
Person surviving a merger or consolidation, the Person formed by or
surviving such consolidation or merger, or to which the sale of the Vessel
shall be made, shall, by Supplemental Indenture, expressly assume the
payment of the principal of and interest (and premium, if any) on the
Outstanding Obligations relating to the Vessel in accordance with the
terms of the Obligations and of the Indenture and shall expressly assume
the performance of the agreements of the Shipowner in the Indenture;
PROVIDED FURTHER, that to the extent the Outstanding Obligations are not
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so assumed, the Shipowner shall redeem or cause to be redeemed the
Outstanding Obligations, such redemption to be in accordance with the
terms of the Obligations and of the Indenture. When a Person so assumes
this Indenture and the Outstanding Obligations, the Supplemental Indenture
shall discharge and release the Shipowner from any and all obligations
thereunder relating to the Outstanding Obligations. In the event of such
an assumption by a Person to whom the Vessel has been sold (a) such Person
shall succeed to, and be substituted for, and may exercise every right and
power of the original Shipowner with the same effect as if such successor
Shipowner had been named as the Shipowner herein and (b) the Outstanding
Obligations shall be surrendered to the Indenture Trustee for appropriate
notation or for the issuance of new Obligations in exchange for the
Outstanding Obligations in the name of the successor Shipowner, as
required by the Secretary and at the expense of the successor Shipowner.
SECTION 8.02. SALE OF THE VESSEL BY THE SECRETARY. Nothing contained in
this Indenture shall prevent the sale of the Vessel to any other Person by
the Secretary, by a court of law or by the Shipowner following, in
connection with or in lieu of a foreclosure or similar action. Following
any such sale (1) the Person to whom the Vessel has been sold may, by
Supplemental Indenture, expressly assume the payment of principal and
interest (and premium, if any) on all of the Outstanding Obligations in
accordance with the terms of the Obligations and the Indenture and shall
expressly assume the performance of the agreements of the Shipowner in the
Indenture; and (2) in the event such Person does not so assume, the
Secretary shall prepay or redeem all of the Outstanding Obligations
without premium pursuant to Section 3.06 hereof; PROVIDED THAT, the
Secretary shall allow or permit the sale of the Vessel to the original
Shipowner or to any affiliate of the original Shipowner only if (i) the
Secretary has not prepaid or redeemed such Obligations prior to such sale,
and (ii) such purchaser assumes all of the Outstanding Obligations as
contemplated by the preceding clause (1). When a Person so assumes this
Indenture and all of the Outstanding Obligations, the Supplemental
Indenture shall discharge and release the Secretary from any and all
obligations thereunder in the Secretary's capacity as Shipowner relating
to the Outstanding Obligations. In the event of such an assumption by a
Person to whom the Vessel has been sold (a) such Person shall succeed to,
and be substituted for, and may exercise every right and power of the
original Shipowner with the same effect as if such successor Shipowner had
been named as the Shipowner herein and (b) the Outstanding Obligations
shall be surrendered to the Indenture Trustee for appropriate notation or
for the issuance of new Obligations in exchange for the Outstanding
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Obligations in the name of the successor Shipowner, as required by the
Secretary and at the expense of the successor Shipowner. Any such sale or
the execution of a Supplemental Indenture by an successor Shipowner shall
not discharge or in any manner affect the obligation of the United States
to pay the Guarantees pursuant to the terms thereof.
(x) CONCERNING NOTICES. Subject to the provisions of Section 13.01 of
Exhibit 1 to this Indenture, any notice, request, demand, direction, consent,
waiver, approval or other communication to be given to a party hereto or the
Secretary, shall be deemed to have been sufficiently given or made when
addressed to:
The Indenture Trustee as: FMB TRUST COMPANY,
NATIONAL ASSOCIATION
25 South Charles St.
16th Floor
(Mail Code 101-591)
Baltimore, MD 21201
The Shipowner as: Petrodrill Four Limited
c/o Arias, Fabrega & Fabrega
P.O. Box 985
Omar Hodge Building
Wickham's Cay
Road Town, Tortola
British Virgin Islands
With Copies to: PETRODRILL ENGINEERING NV
K.P. van der Mandelelaan 38
3062 MB
Rotterdam (Brainpark)
The Netherlands
The Secretary as: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
Department of Transportation
400 Seventh Street, SW
Washington, D.C. 20590
Attention: Office of the Chief
Counsel
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(y) CONCERNING APPLICABLE LAW. This Indenture and each Obligation shall be
governed by the federal laws of the United States of America, but to the extend
that they are inapplicable by the laws of the State of Maryland.
(z) CONCERNING DISBURSEMENT NOTATIONS. Upon receipt from the Lender of
documents confirming Disbursements, the Indenture Trustee shall review Exhibit A
of the Floating Rate Note (the "Grid"), and calculate principal and applicable
interest thereon. If the Indenture Trustee's calculations are not consistent
with those of the Lender, the calculations of the former shall prevail. The
Indenture Trustee shall promptly thereafter send a copy of the Grid bearing its
calculations to the Holder, who shall endorse the Indenture Trustee's
calculations on the original Exhibit A to the Floating Rate Note, and send a
copy thereof, so noted, to the Indenture Trustee, who, in turn, shall promptly
send a copy thereof to the Secretary.
(aa) CONCERNING REGISTERED AND BENEFICIAL OWNERSHIP OF THE
OBLIGATIONS; LEGENDS.
(i) The Fixed Rate Notes may be issued initially in the form
of one or more permanent global Notes in definitive, fully registered form
without interest coupons (each, a "Global Obligation"). Except as provided
in paragraph (iii) below, owners of beneficial interests in Global
Obligations ("Obligation Owners") will not be entitled to receive separate
certificated Notes ("Definitive Obligation") and will not be considered
the holders thereof. Each such Global Obligation shall be deposited with
the Depository Trust Company (the "DTC") or the Indenture Trustee, as
custodian for DTC, registered in the name of DTC or a nominee of DTC, and
duly executed by the Shipowner and authenticated by the Indenture Trustee
as provided in the Indenture. Each Global Obligation shall bear such
legend as DTC may require.
(ii) Members of, or participants in, DTC shall have no rights
under the Indenture with respect to any Global Obligation held on their
behalf by DTC or by the Indenture Trustee, as the custodian of DTC, or
under such Global Obligation, and DTC may be treated by the Shipowner, the
Indenture Trustee and any agent of the Shipowner or the Indenture Trustee
as the absolute owner of such Global Obligation for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Shipowner, the Indenture Trustee or any agent of the Shipowner or the
Indenture Trustee from giving effect to any written certification, proxy
or other authorization furnished by DTC or impair, as between DTC and its
members and participants, the operation of
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customary practices of DTC governing the exercise of the rights of an
owner of a beneficial interest in any Global Obligation.
(iii) (1) The transfer and exchange of Global Obligations or
beneficial interests therein shall be effected through DTC or the
Indenture Trustee, as the custodian for DTC, in accordance with the
Indenture and the procedures of DTC therefor.
(2) A Global Obligation shall be exchangeable
for Definitive Obligations registered in the names of persons owning
beneficial interest in such Global Obligation only if any of the following
events shall have occurred: (1) DTC notifies the Shipowner, with a copy to
the Indenture Trustee, that it is unwilling or unable to continue as
depositary for such Global Obligation or DTC ceases to be a clearing
agency registered under the Securities Exchange Act of 1934, as amended,
at a time when DTC is required to be so registered in order to act as
depositary, and a successor depositary is not appointed by the Shipowner
within 90 days thereafter, (2) the Shipowner or the Indenture Trustee
elects to terminate DTC's services or the book entry system, (3) the
Secretary assumes the Obligations, or (4) the Secretary instructs the
Shipowner and Indenture Trustee to terminate the Letter of
Representations.
(3) Any Global Obligation that is
exchangeable for Definitive Obligations registered in the name of the
owners of beneficial interests therein pursuant to this paragraph (iii)
shall be surrendered by DTC to the Indenture Trustee to be so exchanged,
without charge, and the Shipowner shall execute and the Indenture Trustee
shall authenticate and deliver, upon such exchange of such Global
Obligation, an equal aggregate principal amount of Definitive Obligations
of authorized denominations. Definitive Obligations issued in exchange for
a beneficial interest in a Global Obligation pursuant hereto shall be
registered in such names and in such authorized denominations as DTC,
pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Indenture Trustee in writing. The Indenture
Trustee shall deliver such Definitive Obligations to the Obligation Owners
in whose names such Obligations are so registered in accordance with the
instructions of DTC.
(4) The registered holder of a Global
Obligation may grant proxies and otherwise authorize any Obligation Owner,
including DTC's members and participants and Obligation Owners that may
hold interest through such members and participants, to take any action
which a Holder is entitled to take under the Indenture or the Obligations.
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(5) In the event of the occurrence of any of the
events specified in paragraph (iii)(2), the Shipowner will promptly make
available to the Indenture Trustee a reasonable supply of Definitive
Obligations.
(6) Notwithstanding any other provision of the
Indenture, a Global Obligation may not be transferred except as a whole by
DTC for such Global Obligation to a nominee of DTC or by a nominee of DTC
to DTC or another nominee of DTC.
(iv) At such time as all beneficial interests in a Global
Obligations have either been exchanged for Definitive Obligations,
redeemed, repurchased or canceled, such Global Obligation shall be
returned to the Indenture Trustee for cancellation or retained and
canceled by the Indenture Trustee.
(v) The Indenture Trustee shall have no responsibility or
obligation to any owner of a beneficial interest in a Global Obligation, a
member of, or a participant in DTC or any other Obligation Owner with
respect to the accuracy of the records of DTC or its nominee or of any
participant or member thereof, with respect to any ownership interest in
the Obligations or with respect to the delivery to any participant,
member, beneficial owner or other Obligation Owner (other than DTC) of any
notice (including any notice of redemption) or the payment of any amount
or delivery of any Obligations (or other security or property) under or
with respect to such Obligations. All notices and communications to be
given to the Holders and all payments to be made to Holders in respect to
the Obligations shall be given or made only to or upon the order of the
registered Holders (which shall be DTC or its nominee in the case of a
Global Obligation). The rights of owners of beneficial interests in any
Global Obligation shall be exercised only through DTC subject to the
applicable rules and procedures of DTC. The Indenture Trustee may rely and
shall be fully protected in relying upon information furnished by DTC with
respect to its members, participants and any beneficial owners.
(bb) JURISDICTION AND CONSENT TO SUIT. Any proceeding to enforce this
Agreement may be brought in the Federal courts of the United States of America
located in the State of Maryland of the United States of America. The Shipowner
and the Indenture Trustee hereby irrevocably waive any present or future
objection to such venue, and for each of itself and in respect of any of their
respective properties hereby irrevocably consents and submits unconditionally to
19
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the nonexclusive jurisdiction of those courts. The Shipowner further irrevocably
waives any claim that any such court is not a convenient forum for any such
proceeding. The Shipowner agrees that any service of process, writ, judgment or
other notice of legal process shall be deemed and held in every respect to be
effectively served upon it in connection with proceedings in the State of
Maryland, if delivered to Sher & Blackwell, 1850 M Street, N.W., Suite 900,
Washington, DC 20036, which it irrevocably designates and appoints as its
authorized agent for the service of process in the State and Federal courts in
the State of Maryland. Nothing herein shall affect the right of the Indenture
Trustee to serve process in any other manner permitted by applicable law. The
Shipowner further agrees that final judgment against it in any such action or
proceeding arising out of or relating to this Indenture shall be conclusive and
may be enforced in any other jurisdiction within or outside the United States of
America by suit on the judgment, a certified or exemplified copy of which shall
be conclusive evidence of that fact and of the judgment.
(cc) PAYMENTS IN U.S. CURRENCY. This is an international loan transaction
in which the specification of United States Dollars is of the essence, and such
currency shall be the currency of account in all events. The respective payment
obligations of the Shipowner and the Indenture Trustee hereunder shall not be
discharged by an amount paid in another currency, whether pursuant to a judgment
or otherwise, to the extent that the amount so paid on prompt conversion of such
currency under normal banking procedures does not yield after deduction of any
and all fees, taxes or any other charges imposed on the payment, the amount of
United States Dollars then due. In the event that any payment by the Shipowner
or the Indenture Trustee, whether pursuant to a judgment or otherwise, upon
conversion and transfer, does not result in the payment of such amount of United
States Dollars at the place such amount is due, each shall be entitled to demand
immediate payment of, and shall have a separate cause of action against the
other for, the additional amount necessary to yield the amount then due. In the
event either the Shipowner or the Indenture Trustee, upon the conversion of such
judgment into Dollars, shall receive (as a result of currency exchange rate
fluctuations) an amount greater than that to which it was entitled, the
defaulting party shall be entitled to immediate reimbursement of the excess
amount.
(dd) SHIPOWNER NOT IMMUNE. The Shipowner represents and warrants that it
is subject to civil and commercial law with respect to its obligations under
this Indenture, that the making and performance of this Indenture constitutes
private and commercial acts rather than governmental or public acts and that
neither the Shipowner nor any of its properties or revenues has any right of
immunity on the grounds of sovereignty or otherwise from suit,
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court jurisdiction, attachment prior to judgment, attachment in aid of execution
of a judgment, set-off, execution of a judgment or from any other legal process
with respect to its obligations under this Indenture. To the extent that the
Shipowner may hereafter be entitled, in any jurisdiction in which judicial
proceedings may at any time be commenced with respect to this Indenture to claim
for itself or its revenues or assets any such immunity, and to the extent that
in any such jurisdiction there may be attributed to the Shipowner such an
immunity (whether or not claimed), the Shipowner hereby irrevocably agrees not
to claim and hereby irrevocably waives such immunity. The foregoing waiver of
immunity shall have effect under the United States Sovereign Immunities Act of
1976.
21
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IN WITNESS WHEREOF, this Trust Indenture has been duly executed by the
parties hereto as of the day and year first above written.
PETRODRILL FOUR LIMITED
Shipowner
ATTEST:
/s/ ROBERT W. RANDALL By: /s/ EARL W. MCNIEL
Secretary Treasurer
FMB TRUST COMPANY,
NATIONAL ASSOCIATION
Indenture Trustee
(Seal)
ATTEST:
/s/ DAVID L. WILLIAMS By: /s/ ROBERT D. BROWN
Vice President
22
<PAGE>
DISTRICT OF COLUMBIA )
) SS:
CITY OF WASHINGTON )
On this 9th day of April, 1999, before me personally appeared Earl W.
McNiel to me known, who being by me duly sworn, did depose and say that he is
the Treasurer of PETRODRILL FOUR LIMITED, and that he signed his name thereto by
authority of the Board of Directors of said corporation.
In testimony whereof, I have hereunto set my hand and seal this 9th day of
April, 1999.
/s/ NORALYN RUSSELL
NOTARY PUBLIC
(Notarial Stamp and Seal)
23
<PAGE>
DISTRICT OF COLUMBIA )
) SS:
CITY OF WASHINGTON )
Be it known this 9th day of April, 1999, personally appeared before me,
Robert D. Brown, who after being duly sworn, deposed and said that he is a Vice
President of FMB Trust Company, National Association, a national banking
association, which is described in and executed the instrument hereto annexed,
and that he signed the instrument hereto annexed by order of the Board of
Directors of the said national banking association, and acknowledged the annexed
instrument to be the free act and deed of the said national banking association.
In testimony whereof, I have hereunto set my hand and seal this 9th day of
April, 1999.
/s/ NORALYN RUSSELL
NOTARY PUBLIC
(Notarial Stamp and Seal)
24
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Document 6
EXHIBIT 1
GENERAL PROVISIONS OF THE INDENTURE
INCORPORATED BY REFERENCE
TABLE OF CONTENTS
TO
EXHIBIT 1*
PAGE
ARTICLE I. DEFINITIONS; OFFICER'S CERTIFICATE AND OPINIONS OF COUNSEL.........1
SECTION 1.01. Definitions..........................................1
SECTION 1.02. Officer's Certificates and Opinions of Counsel.......1
ARTICLE II. THE OBLIGATIONS....................................................2
SECTION 2.01. Designation of Obligations..........................2
SECTION 2.02. Issue, Form, Principal Amount, Maturity,
Interest, Place of Payment, Denominations
and Redemption of Obligations...................2
SECTION 2.03. Issuance of Obligations of Initial Series...........3
SECTION 2.04. Additional Obligations; Obligations of
Additional Series...............................4
SECTION 2.05. Legends on Obligations..............................4
SECTION 2.06. Dates of Obligations; Interest Rates................4
SECTION 2.07. Execution of Obligations............................4
SECTION 2.08. Authentication of Obligations and Guarantees.......5
SECTION 2.09. Temporary Obligations...............................5
SECTION 2.10. Registration, Transfer and Exchange.................6
SECTION 2.11. Who Treated as Owners...............................7
SECTION 2.12. Lost, Stolen, Destroyed or Mutilated Obligations....7
SECTION 2.13. Reacquired Obligations, Cancellation
and Disposition of Obligations..................8
ARTICLE III. REDEMPTION OF OBLIGATIONS........................................8
SECTION 3.01. Redemptions Suspended During Default................8
SECTION 3.02. Redemptions.........................................9
(a) Redemptions With Premium........................9
(b) Redemptions Without Premium.....................9
(c) Sinking Fund Redemptions........................9
(d) Adjustments of Redemption Payments..............9
SECTION 3.03. Terminal Mandatory Redemption......................10
SECTION 3.04. Redemptions to Comply with Provisions
of Section 1104(b)(2) of the Act...............10
SECTION 3.05. Redemption After Total Loss, Requisition
of Title, Seizure or Forfeiture of a
Vessel or Termination of Certain Contracts.....10
SECTION 3.06. Redemption After Assumption by the Secretary.......11
SECTION 3.07. Determination of Obligations to be Redeemed........11
SECTION 3.08. Notices of Redemption..............................11
SECTION 3.09. Deposit of Redemption Moneys.......................12
SECTION 3.10. Payment of Redemption Price........................12
<PAGE>
ARTICLE IV. CASH HELD BY INDENTURE TRUSTEE OR PAYING AGENTS.................13
SECTION 4.01. Generally..........................................13
SECTION 4.02. Paying Agents Other Than Indenture Trustee.........13
SECTION 4.03. Unclaimed Amounts..................................14
SECTION 4.04. Application of Funds...............................14
ARTICLE V. REPRESENTATIONS AND AGREEMENTS OF SHIPOWNER.....................15
SECTION 5.01. Authorization, Execution and Delivery of Indenture.15
SECTION 5.02. Payment and Procedure for Payment of Obligations...15
SECTION 5.03. Offices or Agencies of Shipowner...................15
ARTICLE VI. INDENTURE DEFAULTS AND REMEDIES.................................16
SECTION 6.01. What Constitutes "Indenture Defaults...............16
SECTION 6.02. Demand for Payment of Guarantees...................16
SECTION 6.03. Appointment of Indenture Trustee and
Holders of Outstanding Obligations
as Attorneys-in-Fact..........................17
SECTION 6.04. Termination and Payment of the Guarantees..........17
SECTION 6.05. Rights of Indenture Trustee After Indenture
Default.......................................19
SECTION 6.06. (a) Obligees' Right to Direct Indenture
Trustee After Indenture Default...............19
(b) Limitations on Obligees' Right to Sue..........20
(c) Unconditional Right of Obligees to Sue for
Principal (and Premium, if any) and Interest..21
SECTION 6.07. Undertaking for Costs..............................21
SECTION 6.08. Recision of Payments...............................21
SECTION 6.09. Assumption of Obligations by Secretary.............22
ARTICLE VII. THE INDENTURE TRUSTEE...........................................23
SECTION 7.01. Acceptance of Trusts...............................23
SECTION 7.02. Eligibility of Indenture Trustee...................23
SECTION 7.03. Rights and Duties of Indenture Trustee.............23
SECTION 7.04. Compensation, Expenses and
Indemnification of Indenture Trustee...........27
SECTION 7.05. Resignation and Removal of Indenture Trustee.......27
SECTION 7.06. Appointment of Successor Indenture Trustee.........27
SECTION 7.07. Effect of Appointment of Successor Indenture
Trustee........................................28
SECTION 7.08. Merger, Consolidation and Sale of Indenture
Trustee........................................28
ARTICLE VIII. CONSOLIDATION, MERGER OR SALE BY SHIPOWNER......................29
SECTION 8.01. Consolidation, Merger or Sale by Shipowner.........29
SECTION 8.02. Sale of the Vessel or Vessels by the Secretary.....30
ARTICLE IX. ACTS OF OBLIGEES................................................30
SECTION 9.01. Acts of Obligees...................................30
-ii-
<PAGE>
ARTICLE X. SUPPLEMENTAL INDENTURES.........................................31
SECTION 10.01. Permissible Without Action by Obligees............31
SECTION 10.02. Protection of Indenture Trustee...................32
SECTION 10.03. Reference in Obligations to Supplemental
Indentures...................................32
SECTION 10.04. Waivers and Supplemental Indentures with
Consent of Obligees..........................33
SECTION 10.05. Consent of Secretary..............................34
SECTION 10.06. Continued Validity of the Guarantees..............34
ARTICLE XI. PERFORMANCE OF OBLIGATIONS TO SECRETARY.........................34
SECTION 11.01. Performance of Obligations to Secretary...........34
ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE.........................34
SECTION 12.01. Satisfaction and Discharge of Indenture...........34
ARTICLE XIII. MISCELLANEOUS...................................................35
SECTION 13.01. Notices and Demands...............................35
SECTION 13.02. Waivers of Notice.................................35
SECTION 13.03. Benefit of Indenture..............................35
SECTION 13.04. Execution of Counterparts.........................35
SECTION 13.05. Table of Contents; Titles and Headings............35
SECTION 13.06. Integration with Special Provisions of the
Indenture.....................................36
SECTION 13.07. Immunity of Incorporators, Stockholders,
Officers and Directors........................36
SECTION 13.08. Applicable Law....................................36
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EXHIBIT 1
GENERAL PROVISIONS OF THE INDENTURE
INCORPORATED BY REFERENCE
ARTICLE I
DEFINITIONS; OFFICER'S CERTIFICATES
AND OPINIONS OF COUNSEL
SECTION 1.01. DEFINITIONS. For all purposes of this Indenture, the terms
used herein shall have the meanings specified in the Special Provisions hereof,
including without limitation Schedule A to this Indenture.
SECTION 1.02. OFFICER'S CERTIFICATES AND OPINIONS OF COUNSEL. (a)
Each Officer's Certificate or Opinion of Counsel with respect to compliance
with a covenant or condition provided for herein (or waiver thereof) shall
include:
(1) A statement that the Person or Persons making such certificate
or rendering such opinion has or have read such covenant or condition;
(2) A brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) A statement that, in the opinion of such Person or Persons, he
or they have made or caused to be made such examination or investigation
as is necessary to enable him or them to express an informed opinion as to
whether or not such covenant or condition has been complied with (or
compliance therewith has been waived); and
(4) A statement as to whether or not, in the opinion of such Person
or Persons, such condition or covenant has been complied with (or such
compliance has been waived).
(b) An Opinion of Counsel may be based (insofar as it relates to factual
matters, information with respect to which is in the possession of any Person)
upon a certificate or opinion of or representations in writing signed by an
officer or officers of such Person or by such Person, as the case may be, and
may be based upon an Opinion of Counsel signed by another counsel.
An Opinion of Counsel may state that said opinion is subject to the
execution and delivery of designated instruments if copies of such instruments
in form approved by such counsel are delivered to the Indenture Trustee prior
<PAGE>
to or concurrently with the delivery of said opinion.
(c) A certificate or opinion of a Person or Persons other than counsel may
be based, insofar as it relates to legal matters, upon an Opinion of Counsel,
unless the Person or Persons signing such certificate or opinion knew that such
Opinion of Counsel was erroneous or, in the exercise of reasonable care, should
have known that the same was erroneous.
(d) If the Indenture requires or permits the execution of any document by
officers, counsel or other Persons, such document may be executed in
counterparts by different officers, counsel or other Persons, all of which shall
form one instrument.
(e) If the signer of any document is required to be approved by the
Indenture Trustee, the acceptance of such document by the Indenture Trustee
shall be sufficient and conclusive evidence of such approval.
(f) The fact that the delivery of any document is a condition precedent to
any action required or permitted hereby shall not preclude the withdrawal,
revocation, rescission, modification or amendment of such document at any time
prior to such action, and, in the event of any such withdrawal, revocation or
rescission, such document shall be disregarded for all purposes of this
Indenture.
ARTICLE II
THE OBLIGATIONS
SECTION 2.01. DESIGNATION OF OBLIGATIONS. The Obligations of each series
shall be designated as stated in the Special Provisions hereof or in the
Supplemental Indenture establishing such series.
SECTION 2.02. ISSUE, FORM, PRINCIPAL AMOUNT, MATURITY, INTEREST, PLACE OF
PAYMENT, DENOMINATIONS AND REDEMPTION OF OBLIGATIONS. (a) Upon or after the
execution and delivery of this Indenture the aggregate principal amount of
Obligations of the series and Stated Maturity or Maturities permitted by the
Special Provisions hereof may be executed by the Shipowner, authenticated by the
Indenture Trustee, and delivered as provided herein.
(b) The Obligations of each series and Stated Maturity to be issued
hereunder, the Guarantees of the United States to be endorsed thereon and the
Indenture Trustee's authentication certificates to be endorsed thereon shall, in
the case of the initial series of Obligations, be in the form or forms set forth
in Exhibit 2 to the Special Provisions hereof or, in the case of Obligations of
any
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additional series, in the form or forms set forth in the Supplemental Indenture
establishing such series, and said Obligations shall:
(1) be limited to the respective principal amounts stated in the
Special Provisions hereof or in the Supplemental Indenture establishing
such series;
(2) bear interest from the date specified in Section 2.06 at the
rate or rates per annum stated in such Obligations;
(3) mature in the amount or amounts and at the time or times stated
therein;
(4) be payable as to principal (and any premium thereon if premium
in case of redemption prior to Stated Maturity is provided for therein),
in any coin or currency of the United States which at the time of payment
is legal tender for public and private debts, at an office or agency
maintained from time to time by the Shipowner for such purpose as provided
in Section 5.03 at the place or places stated in the Special Provisions
hereof and payable as to interest as aforesaid or, at the option of the
Shipowner, by check mailed by such office or agency to the addresses of
the Obligees as such addresses shall appear in the Obligation Register;
(5) be issued in the denominations provided in the Special
Provisions hereof or in the Supplemental Indenture establishing such
series; and
(6) be subject to redemption to the extent and as provided in
Article III.
(c) If the Maturity of any Obligation or an Interest Payment Date for any
Obligation shall be a day other than a Business Day, then such payment may be
made on the next succeeding Business Day, with the same force and effect as if
made on the nominal date for such payment, and no interest shall accrue thereon
for the period after said nominal date (whether or not such next succeeding
Business Day occurs in a succeeding month).
SECTION 2.03. ISSUANCE OF OBLIGATIONS OF INITIAL SERIES. At any time and
from time to time after the execution and delivery of this Indenture, the
Shipowner may deliver to the Indenture Trustee Obligations of the initial series
issuable under this Indenture duly executed by the Shipowner as hereinafter
provided, accompanied by a Request of the Shipowner, and thereupon the Indenture
Trustee shall authenticate such Obligations, after endorsing thereon
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and authenticating the Guarantees of the United States in accordance with the
Authorization Agreement, and shall deliver such Obligations and Guarantees in
accordance with such Request. Each such Request shall specify the principal
amounts, interest rates and Stated Maturities of the Obligations to be
authenticated and the names and addresses of the Persons in whose name the
Obligations are to be registered.
SECTION 2.04. ADDITIONAL OBLIGATIONS; OBLIGATIONS OF ADDITIONAL SERIES. At
any time or from time to time, the Shipowner may, with the approval of the
Secretary, issue additional Obligations of any series and Stated Maturity
theretofore issued or of one or more additional series, which shall (i) be in
such principal amount, and (in the case of Obligations of any additional series)
mature on such dates, bear interest at such rate or rates, be in such form or
forms and have such other terms and provisions, as shall be set forth in a
Supplemental Indenture providing for the issue thereof and (ii) be guaranteed by
the United States under Title XI of the Act pursuant to a supplement to the
Authorization Agreement.
SECTION 2.05. LEGENDS ON OBLIGATIONS. Any Obligation may have imprinted or
stamped thereon any legend, consistent herewith, which is prescribed by the
Shipowner and approved by the Indenture Trustee, and, except for endorsements
permitted by the second paragraph of Section 2.10(c), by the Secretary.
SECTION 2.06. DATES OF OBLIGATIONS; INTEREST RATES. Each Obligation of any
series shall be dated the date of its authentication and except as otherwise
provided in this Section, shall bear interest from the Interest Payment Date for
Obligations of such series next preceding the date of such Obligation to which
interest on the Obligations of such series has been paid, unless (i) the date of
such Obligation is the date to which interest on the Obligations of such series
has been paid, in which case from the date of such Obligation, or (ii) no
interest has been paid on the Obligations of such series since the original
issue date (as defined below) of such Obligation, in which case from such
original issue date. The term "original issue date" of an Obligation shall mean
(a) in the case of an Obligation issued on original issue, the date of such
Obligation, or (b) in the case of an Obligation not issued on original issue,
the date of the Obligation (or portion thereof) issued on original issue for
which such Obligation was issued (directly or indirectly) on registration of
transfer, exchange or substitution.
SECTION 2.07. EXECUTION OF OBLIGATIONS. The Obligations shall from time to
time be executed on behalf of the Shipowner by a Responsible Officer thereof
(whose signature may be a facsimile), and its corporate seal (which may be a
facsimile) shall be affixed thereto or imprinted thereon and attested by its
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secretary, an assistant secretary or an assistant trust officer (whose signature
may be a facsimile).
If any officer of the Shipowner whose signature (facsimile or otherwise)
appears on any Obligation shall cease to be such officer before such Obligation
shall have been authenticated by the Indenture Trustee or delivered, such
Obligation nevertheless may be authenticated, issued and delivered with the same
force and effect as though the person or persons whose signature or signatures
(facsimile or otherwise) appear on such Obligation had not ceased to be such
officer or officers of the Shipowner.
SECTION 2.08. AUTHENTICATION OF OBLIGATIONS AND GUARANTEES. No Obligation
or the Guarantee of the United States thereon shall be valid unless such
Obligation shall bear thereon an authentication certificate, manually executed
by the Indenture Trustee in accordance with the terms and conditions of the
Authorization Agreement, substantially in the form or forms referred to in
Section 2.02(b). Such authentication certificate, so executed, on any Obligation
shall be conclusive evidence, and the only competent evidence, that such
Obligation and such Guarantee have been duly executed, authenticated and
delivered hereunder.
SECTION 2.09. TEMPORARY OBLIGATIONS. There may be issued from time to time
in lieu of (or in exchange for) any definitive Obligation or Obligations one or
more temporary Obligations of like series and Stated Maturity, with a Guarantee
of the United States endorsed thereon and authenticated by the Indenture
Trustee, substantially of the same tenor as the definitive Obligations in lieu
of (or in exchange for) which they are issued, with or without the specification
of any Redemption Price or Prices. Such temporary Obligation or Obligations may
be in such authorized denomination or denominations as shall be stated in a
Request of the Shipowner delivered to the Indenture Trustee prior to the
authentication thereof, which Request shall specify the aggregate principal
amounts and the series and Stated Maturities of such temporary Obligations.
If definitive Obligations are not ready for delivery, the Holder of any
temporary Obligation may, at the Corporate Trust Office, with the consent of the
Shipowner, exchange the same for a temporary Obligation or Obligations of like
series, tenor, interest accrual date and Stated Maturity of authorized
denominations for the same aggregate principal amount upon the surrender for
cancellation of such temporary Obligation or Obligations.
When definitive Obligations are ready for delivery, the Holder of any
temporary Obligation may, at the Corporate Trust Office, exchange the same
without charge for a definitive Obligation or Obligations of like series, tenor,
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interest accrual date and Stated Maturity of authorized denominations for the
same aggregate principal amount.
SECTION 2.10. REGISTRATION, TRANSFER AND EXCHANGE. (a) The Shipowner
shall cause the Indenture Trustee to keep an Obligation Register for the
registration of ownership, transfers and exchanges of Obligations, at the
Corporate Trust Office.
(b) Any Obligation may be transferred at the Corporate Trust Office, by
surrender of such Obligation for cancellation, accompanied by an instrument of
transfer in form satisfactory to the Shipowner and the Indenture Trustee, duly
executed by the registered Obligee or his duly authorized attorney, and
thereupon the Shipowner shall execute, and the Indenture Trustee shall
authenticate and deliver in the name of the transferee or transferees, a new
Obligation or Obligations, and the Guarantee or Guarantees of the United States
thereon, in authorized denominations of like series, tenor, interest accrual
date and Stated Maturity and for the same aggregate principal amount.
(c) The Shipowner shall not be required to register transfers or make
exchanges of (1) Obligations for a period of 15 days immediately prior to (A) an
Interest Payment Date or (B) any selection of Obligations to be redeemed, (2)
Obligations after demand for payment of the Guarantees and prior to the payment
thereof or rescission of such demand pursuant to Section 6.02(a), or (3) any
Obligation which has been selected for redemption in whole or in part.
If any Obligation surrendered for transfer or exchange has been selected
for redemption in whole or in part, there may be endorsed on any Obligation or
Obligations issued therefor an appropriate notation of such fact.
(d) Any Obligation shall be exchangeable for a like principal amount of
Obligations of the same series, tenor, interest accrual date and Stated Maturity
but of different authorized denominations. Obligations to be exchanged shall be
surrendered at the Corporate Trust Office, and the Shipowner shall execute, and
the Indenture Trustee shall authenticate and deliver in exchange therefor, the
Obligation or Obligations, and the Guarantee or Guarantees of the United States
endorsed thereon, requested by the Obligee in accordance with this paragraph
(d).
(e) As a condition precedent to any transfer or exchange of Obligations,
the Indenture Trustee may (except upon an exchange of temporary for definitive
Obligations) require the payment of a sum sufficient to reimburse it for any
taxes or other governmental charges that may be imposed with respect thereto and
a sum not exceeding $2.00 for each Obligation delivered upon any such transfer
or exchange.
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SECTION 2.11. WHO TREATED AS OWNERS. The Shipowner, the Indenture Trustee,
the Secretary, and any office or agency for the payment of principal of (and
premium, if any) or interest on the Obligations may deem and treat the Person in
whose name any Obligation is registered in the Obligation Register as the
absolute owner of such Obligation for all purposes, and neither the Shipowner,
the Indenture Trustee, the Secretary, nor any such office or agency shall be
affected by any notice to the contrary, whether such Obligation shall be past
due or not. All payments of or on account of principal (and premium, if any) or
interest, or pursuant to the Guarantee endorsed on such Obligation, to such
registered Obligee shall be valid and effectual to satisfy and discharge the
liability of the Shipowner and the Secretary to the extent of the sum or sums so
paid, except as otherwise provided in Section 6.08.
SECTION 2.12. LOST, STOLEN, DESTROYED OR MUTILATED OBLIGATIONS. Upon
receipt by the Shipowner and the Indenture Trustee of evidence satisfactory to
them of the loss, theft, destruction or mutilation of any Outstanding Obligation
and the ownership thereof, the Shipowner may execute, and upon request of the
Shipowner, the Indenture Trustee shall, but subject to all limitations imposed
by the Authorization Agreement and only to the extent authorized thereby,
authenticate and deliver, a new Obligation, and the Guarantee of the United
States endorsed thereon, of like series, tenor, interest accrual date, principal
amount and Stated Maturity (which may bear such notation as may be required by
the Indenture Trustee or by usage or by the rules of any stock exchange upon
which the Obligations are then listed and which shall bear a serial number
different from the serial number of the lost, stolen, destroyed or mutilated
Obligation) in lieu of such lost, stolen, destroyed or mutilated Obligation and,
similarly, upon receipt by the Shipowner and the Indenture Trustee of evidence
satisfactory to them of the loss, theft, destruction or mutilation of any
Obligation which has or is about to become due and payable, the Indenture
Trustee may deem the applicant with respect thereto to be the owner of said
Obligation for the purpose of receiving payment on account thereof of principal
(and premium, if any) upon maturity or interest or the payment of the Guarantee
thereof; PROVIDED THAT, as conditions precedent to the execution, authentication
and delivery of any new Obligation in place of said Obligation or to any payment
contemplated by this Section, (1) the Shipowner, the Indenture Trustee and the
Secretary shall receive indemnity satisfactory to the Shipowner, the Indenture
Trustee and the Secretary, (2) the Shipowner shall be reimbursed for all
reasonable expenses (including any fees or expenses of the Indenture Trustee)
incident thereto, and (3) said Obligation shall (unless the same shall have been
lost, stolen or destroyed) be surrendered.
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Obligations issued pursuant to this Section and the Guarantees endorsed
thereon shall constitute original contractual obligations of the Shipowner and
the United States, respectively, whether or not the lost, stolen or destroyed
Obligations be at any time enforceable by anyone, and shall be equally and
proportionately entitled to the benefits of this Indenture with all other
Outstanding Obligations issued hereunder.
The provisions of this Section 2.12 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of lost, stolen, destroyed or mutilated Obligations.
SECTION 2.13. REACQUIRED OBLIGATIONS; CANCELLATION AND DISPOSITION OF
OBLIGATIONS. In the event the Shipowner shall reacquire any Obligations (whether
by purchase or otherwise), such Obligations shall forthwith be delivered to the
Indenture Trustee for cancellation. Except as provided in Section 3.10(b), all
Obligations surrendered for the purpose of payment, redemption, transfer,
exchange, or substitution, or (if permitted in the Special Provisions hereof or
the Supplemental Indenture establishing any additional series of Obligations) in
discharge in whole or in part of any sinking fund payment shall, if surrendered
to the Shipowner or any Paying Agent, be delivered to the Indenture Trustee for
cancellation, or, if surrendered to the Indenture Trustee, shall be cancelled by
it. No Obligation shall be authenticated in lieu of or in exchange for any
Obligation cancelled as provided in this Section, except as may be expressly
permitted by this Indenture. Obligations cancelled by the Indenture Trustee
shall be delivered or disposed of as directed by a Request of the Shipowner.
ARTICLE III
REDEMPTION OF OBLIGATIONS
SECTION 3.01. REDEMPTIONS SUSPENDED DURING DEFAULT. Notwithstanding the
following provisions of this Article III, neither the Shipowner nor the
Indenture Trustee shall redeem any Obligations, except pursuant to Section 3.04
or 3.06 during the continuance of any Indenture Default or event which with the
lapse of time could constitute a Payment Default, except that, where the mailing
of notice of redemption of any Obligations shall have theretofore been made, the
Indenture Trustee shall redeem or cause to be redeemed such Obligations if it
shall have received a sum sufficient for such redemption. Except as aforesaid,
any moneys received by the Indenture Trustee for the redemption of Obligations
which may not be applied to the redemption thereof shall be held as security for
the payment of all the Obligations, and, (i) in case such Indenture Default or
such event shall no longer be continuing, such moneys shall thereafter be
applied to the
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redemption of Obligations in accordance with the applicable provisions of the
Obligations and of this Article III, (ii) in the event the Secretary shall have
assumed the Obligations pursuant to Section 6.09 or shall have been required to
pay the Guarantees, such moneys shall be paid over by the Indenture Trustee to
the Secretary or (iii) if no Obligation shall be Outstanding, other than by
payment of the Guarantees, such moneys shall be paid to the Shipowner.
SECTION 3.02. REDEMPTIONS. (a) REDEMPTIONS WITH PREMIUM. If the
Obligations of any series and Stated Maturity or the Special Provisions
hereof or the Supplemental Indenture establishing such series shall so
provide, such Obligations shall be subject to redemption at a premium in the
amounts, at the price or prices, at the time or times and subject to the
conditions specified therein.
(b) REDEMPTIONS WITHOUT PREMIUM. The Obligations of each series shall be
subject to redemption without premium in the amounts, at the time or times and
subject to the conditions specified in Sections 3.03, 3.04, 3.05 and 3.06. If
the Obligations of any series and Stated Maturity or the Special Provisions
hereof or the Supplemental Indenture establishing such series shall so provide,
such Obligations shall also be subject to redemption without premium in the
amounts, at the time or times and subject to the conditions specified therein or
as provided in subsection (c) of this Section 3.02.
(c) SINKING FUND REDEMPTIONS. If the Obligations of any series and Stated
Maturity or the Special Provisions hereof or the Supplemental Indenture
establishing such series shall so provide, such Obligations shall be subject to
(i) mandatory redemption through the operation of a sinking fund or similar
fund, in such amounts, at such times and subject to such credits (if any) as may
be specified therein, and (ii) redemption at the option of the Shipowner, in
connection with the operation of any such fund, in such additional amounts and
subject to such conditions as may be specified therein.
(d) ADJUSTMENTS OF REDEMPTION PAYMENTS. If the Obligations of any series
and Stated Maturity or the Special Provisions hereof or of the Supplemental
Indenture establishing such series provide for an adjustment in mandatory
redemption payments as a result of any redemption or cancellation of
Obligations, the Shipowner shall recompute the remaining mandatory redemption
payments pursuant to such provisions and shall, at least 60 days prior to the
next Interest Payment Date which occurs at least 60 days following any such
redemption or cancellation of Obligations of such series requiring such
recomputation, submit to the Secretary for his review of such recomputation to
ascertain compliance with the provisions of such Obligations or the Special
Provisions hereof or such Supplemental Indenture, a table of
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revised mandatory redemption payments on the Obligations of such series
reflecting the adjustments made pursuant to such provisions as a result of such
redemption or cancellation. Upon advice by the Secretary that he finds such
recomputation to comply with such provisions, the Shipowner shall submit said
table to the Indenture Trustee and the Indenture Trustee shall promptly submit a
copy thereof to each Holder of an Obligation of such series.
SECTION 3.03. TERMINAL MANDATORY REDEMPTION. The Shipowner shall redeem,
at the principal amount thereof and interest accrued thereon, all the
Obligations that shall be Outstanding on the date determined in accordance with
Section 1104(b)(3) of the Act and specified in the Special Provisions hereof so
that the final maturity of such Obligations shall not exceed the period
specified in said Section.
SECTION 3.04. REDEMPTIONS TO COMPLY WITH PROVISIONS OF SECTION 1104(B)(2)
OF THE ACT. Upon receipt by the Indenture Trustee of a written instruction
signed by the Secretary and a Responsible Officer of the Shipowner stating that
upon receipt of funds paid to the Indenture Trustee by the Shipowner or the
Secretary on behalf of the Shipowner such funds (i) shall be applied in the
manner specified in such instruction to redeem the principal amount of
Obligations specified in such instruction and (ii) are to be so applied in order
that the principal amount of Obligations that will be Outstanding after such
redemption will not exceed the principal amount thereof eligible for guarantee
by the United States under Section 1104(b)(2) of the Act, the Indenture Trustee
shall promptly give notice as provided in Section 3.08 of the redemption of such
Obligations on a date which is no more than 45 days from the date of receipt by
the Indenture Trustee of such instruction; and the Indenture Trustee shall, on
such date, redeem such Obligations at the principal amount thereof and interest
accrued thereon to such date. The Shipowner agrees to notify the Indenture
Trustee of the redemption at least 10 days prior to receipt by the Indenture
Trustee of such written instruction.
SECTION 3.05. REDEMPTION AFTER TOTAL LOSS, REQUISITION OF TITLE, SEIZURE
OR FORFEITURE OF A VESSEL OR TERMINATION OF CERTAIN CONTRACTS. Upon receipt by
the Indenture Trustee of written instructions from the Secretary and the
Shipowner stating that the principal amount of Obligations specified in such
instructions are required to be redeemed on the date specified therein (which
shall be not less than 40 nor more than 60 days from the receipt of such
instructions by the Indenture Trustee) by reason of (i) an actual, constructive,
agreed or compromised total loss of a Vessel, (ii) requisition of title to, or
seizure or forfeiture of a Vessel or (iii) termination of any contract for the
construction, reconstruction or reconditioning of a Vessel, the Indenture
Trustee shall promptly give notice as provided in Section 3.08 of the redemption
on such date of such principal amount of Obligations and the
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Indenture Trustee shall, on such date, redeem such principal amount of
Obligations together with interest accrued thereon to such Redemption Date.
SECTION 3.06. REDEMPTION AFTER ASSUMPTION BY THE SECRETARY. Upon receipt
by the Indenture Trustee of written instructions from the Secretary stating that
the principal amount of Obligations specified in such instructions are required
to be redeemed on the date specified therein (which shall be not less than 40
nor more than 60 days from the receipt of such instructions by the Indenture
Trustee) at the option of the Secretary at any time after the Secretary's
assumption of the Obligations pursuant to Section 6.09, the Indenture Trustee
shall promptly give notice as provided in Section 3.08 of the redemption on the
Redemption Date of the principal amount of Obligations specified in such
instructions and the Indenture Trustee shall, on such Redemption Date, redeem
such Obligations together with interest accrued thereon to such Redemption Date;
PROVIDED THAT, the Secretary shall redeem at the principal amount thereof and
interest accrued thereon the Proportionate Part of the Outstanding Obligations
relating to such Vessel or Vessels which have been sold pursuant to Section 8.02
to a purchaser or purchasers who have not assumed such Obligations by notice to
the Indenture Trustee in accordance with this Section 3.06 within 40 days of the
nonassumption of the Obligations by such purchaser. The principal amount of the
Proportionate Part of the Outstanding Obligations shall be determined by the
Secretary.
SECTION 3.07. DETERMINATION OF OBLIGATIONS TO BE REDEEMED. (a) If less
than all the Obligations are to be redeemed pursuant to Section 3.04 or 3.05,
the Indenture Trustee shall select Obligations of each series and Stated
Maturity for redemption in proportion to the respective principal amounts of
Obligations of such series and Stated Maturity then Outstanding, except as
otherwise provided in the Special Provisions or in the Supplemental Indenture
with respect to any series, making adjustment so that the principal amount of
any Obligation to be redeemed shall be $1,000 or an integral multiple thereof.
(b) If less than all the Obligations of any series or Stated Maturity are
to be redeemed under any of the provisions contained or referred to in this
Article III, the Indenture Trustee shall select, in such manner as it shall deem
appropriate and fair, the Obligations of such series or Stated Maturity to be
redeemed, and the Indenture Trustee shall, according to such method as it shall
in its reasonable discretion deem appropriate, make adjustments so that the
principal amount of any Obligation to be redeemed shall be $l,000 or an integral
multiple thereof.
SECTION 3.08. NOTICES OF REDEMPTION. (a) In case of any redemption of
Obligations, whether mandatory or optional, a notice of redemption (indicating
(1) the Redemption Date, (2) the Redemption Price, (3) if a part only of such
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Obligations is to be redeemed, the numbers or other identification of the
Obligations and the principal amount thereof to be redeemed, in whole or in
part, (4) the Place of Payment upon redemption and (5) that interest shall cease
to accrue after the Redemption Date (but only if the Indenture Trustee or any
Paying Agent shall have received the required moneys), shall be given by the
Shipowner or any authorized agent of the Shipowner (including the Indenture
Trustee), by mailing a copy of such notice, by first class mail, postage
prepaid, at least 30 days but not more than 60 days prior to the Redemption
Date, to each Holder of an Outstanding Obligation to be redeemed in whole or in
part at his last address appearing upon the Obligation Register.
(b) Any notice of optional redemption of Obligations shall state that the
redemption is subject to the receipt of the redemption moneys by the Indenture
Trustee or any Paying Agent. Such notice shall be of no effect unless prior to
the opening of business on the Redemption Date, the Indenture Trustee or such
Paying Agent shall receive an amount in cash sufficient for such redemption
(after taking into account any amounts then held by the Indenture Trustee or
such Paying Agent and available for such redemption).
SECTION 3.09. DEPOSIT OF REDEMPTION MONEYS. Prior to the opening of
business on any Redemption Date, the Shipowner shall, except as contemplated by
Section 3.08(b), deposit or cause to be deposited with the Indenture Trustee or
(except in the case of redemptions pursuant to Section 3.04, 3.05 or 3.06) with
any Paying Agent an amount sufficient for such redemption (after taking into
account any amounts then held by the Indenture Trustee or such Paying Agent and
available for such redemption) with irrevocable directions to it to so apply the
same.
SECTION 3.10. PAYMENT OF REDEMPTION PRICE. (a) If notice of redemption
shall have been given as provided above, the Obligations or portions thereof
specified in such notice shall, except as contemplated by Section 3.08(b),
become due and payable on the Redemption Date and at the Place of Payment and
the Redemption Price stated in such notice, and on and after said Redemption
Date (unless the Shipowner shall default in the payment of such Redemption
Price) interest on the Obligations or portions thereof so called for redemption
shall cease to accrue. Upon presentation and surrender of such Obligations in
accordance with such notice, such Obligations or the specified portions thereof
shall be paid and redeemed at the applicable Redemption Price.
(b) Upon presentation of any Obligation redeemed in part only, the
Shipowner shall execute and the Indenture Trustee shall authenticate and deliver
to or on the order of the Holder thereof, at the expense of the Shipowner, a new
Obligation or Obligations of like series and Stated Maturity,
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of authorized denominations, having endorsed thereon a Guarantee or Guarantees
executed by, or on behalf of, the Secretary, in principal amount equal to the
unredeemed portion of the Obligation so presented, or, at the option of such
Holder, there may be noted thereon by the Indenture Trustee or, at its
direction, by any Paying Agent the payment of the portion of the principal
amount of such Obligation so called for redemption.
ARTICLE IV
CASH HELD BY INDENTURE TRUSTEE OR PAYING AGENTS
SECTION 4.01. GENERALLY. (a) All cash held by the Indenture Trustee
or any Paying Agent under this Indenture shall be held as a special deposit
in trust for the purposes for which it is held (subject to Section 4.03).
(b) Cash held by the Indenture Trustee or any Paying Agent (other than the
Shipowner) under this Indenture:
(1) need not be segregated;
(2) shall not be invested; and
(3) shall not bear interest except to the extent the Indenture
Trustee or such Paying Agent allows interest on similar deposits or except
as the Shipowner and the Indenture Trustee (or such Paying Agent) may
agree.
SECTION 4.02. PAYING AGENTS OTHER THAN INDENTURE TRUSTEE. (a) The
Shipowner will cause any Paying Agent (other than the Indenture Trustee) which
it may appoint by a writing delivered to such Paying Agent, with copies to the
Indenture Trustee and the Secretary, to execute and deliver to the Indenture
Trustee an instrument in which such agent shall agree with the Indenture Trustee
that, subject to paragraph (b) of this Section and Section 4.03:
(1) it will hold in trust all sums held by it as such agent for the
payment of the principal of (and premium, if any) or interest on
Obligations for the benefit of the Holders of such Obligations, or for the
benefit of the Indenture Trustee;
(2) it will forthwith give the Indenture Trustee written notice
addressed to a Responsible Officer in the Corporate Trust Office of the
Indenture Trustee signed by a Responsible Officer of the Paying Agent of
(A) any payment by the Shipowner of the principal of (and premium, if
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any) or interest on Obligations, specifying the amount paid, segregated as
to principal (premium, if any) and interest, and identifying each
Obligation on which any payment was made by number, date, series, Stated
Maturity and the name of the Obligee, and/or (B) any failure of the
Shipowner to make any such payment when the same shall be due and payable;
and
(3) it will promptly, and in no event later than ten days after any
payment made by it hereunder, give the Indenture Trustee written notice
addressed to a Responsible Officer in the Corporate Trust Office of the
Indenture Trustee of all payments of Obligations made by it, including and
identifying all endorsements of payment made on Obligations by it, signed
and containing the specified information as provided in subparagraph (2)
above, and deliver to the Indenture Trustee all Obligations surrendered to
it, for cancellation by the Indenture Trustee.
(b) The Shipowner may at any time cause to be paid to the Indenture
Trustee all sums held in trust by any Paying Agent pursuant to this Section,
such sums to be held by the Indenture Trustee upon the same trusts.
SECTION 4.03. UNCLAIMED AMOUNTS. Any moneys received by the Indenture
Trustee or a Paying Agent, for the payment of Obligations or Guarantees and
remaining unclaimed by the Holders thereof for 6 years after the date of the
Maturity of said Obligations or the date of payment by the Secretary of the
Guarantees shall, upon delivery to the Indenture Trustee of a Request by the
Shipowner, be paid to the Shipowner; PROVIDED THAT, not less than 30 days prior
to such payment, the Shipowner shall publish notice thereof to the Obligees at
least once in the Authorized Newspapers, unless the Indenture Trustee, in its
discretion, waives the publication of such notice. In such event, such Holders
shall thereafter be entitled to look only to the Shipowner (and the settlor or
settlors of any trust for which the Shipowner is trustee, to the extent paid
over to it or them) for the payment thereof, and the Indenture Trustee or such
Paying Agent, as the case may be, shall thereupon be relieved from all
responsibility to such Holders therefor. No such Request, publication or payment
shall be construed to extend any statutory period of limitations which would
have been applicable in the absence of such Request, publication or payment.
SECTION 4.04. APPLICATION OF FUNDS. If at any time the Indenture Trustee
shall hold funds (other than any amounts received by the Indenture Trustee
pursuant to Section 7.04), the application, distribution or payment of which is
not governed by Request or written instruction of the Shipowner delivered
pursuant to any provision of the Indenture, the Indenture Trustee shall give
written notice thereof to the Shipowner, who shall promptly
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thereafter deliver to the Indenture Trustee a Request or written instruction
bearing the written consent of the Secretary and directing the application,
distribution or payment to be made of such funds.
ARTICLE V
REPRESENTATIONS AND AGREEMENTS OF SHIPOWNER
The Shipowner hereby represents and agrees, so long as Obligations are
Outstanding, as follows:
SECTION 5.01. AUTHORIZATION, EXECUTION AND DELIVERY OF INDENTURE. The
Shipowner has duly authorized the execution and delivery of this Indenture.
SECTION 5.02. PAYMENT AND PROCEDURE FOR PAYMENT OF OBLIGATIONS. The
Shipowner will duly and punctually pay the principal of (and premium, if any)
and interest on the Obligations according to the terms thereof and of this
Indenture. The Shipowner will deposit with the Indenture Trustee or (subject to
Section 3.09) a Paying Agent prior to the opening of business on each date fixed
for each payment an amount sufficient for such payment (after taking into
account any amounts then held by the Indenture Trustee or such Paying Agent and
available for such payment) with irrevocable directions to it to so apply the
same; PROVIDED THAT, payments of interest may be made as provided in Section
2.02(b)(4); and PROVIDED FURTHER, that except with the consent of the Secretary
the Shipowner shall not deposit any such amount more than ten days prior to the
date of the payment for which such amount is deposited.
SECTION 5.03. OFFICES OR AGENCIES OF SHIPOWNER. The Shipowner shall (1) at
all times cause one or more offices or agencies to be maintained within the
United States where Obligations may be presented for payment, registration of
transfer and exchange, and where demands to or upon the Shipowner with respect
thereto may be served, and (2) from time to time give written notice to the
Indenture Trustee and to the Secretary of the location of such offices or
agencies. The Corporate Trust Office shall be deemed to be such an office or
agency for such purposes until the Shipowner shall give the Indenture Trustee
and the Secretary written notice to the contrary.
Any such office or agency for payment of the Obligations (other than the
Corporate Trust Office) shall be a Paying Agent appointed in accordance with
Section 4.02.
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ARTICLE VI
INDENTURE DEFAULTS AND REMEDIES
SECTION 6.01. WHAT CONSTITUTES "INDENTURE DEFAULTS." Each of the following
events shall constitute an "Indenture Default":
(a) Default in the payment of the whole or any part of the interest
on any of the Outstanding Obligations when the same shall become due and payable
or default in the payment of the whole or any part of the principal of any of
the Outstanding Obligations when the same shall become due and payable, whether
by reason of Maturity, Redemption, acceleration or otherwise, or any default
referred to in Section 6.08, and continuation of any such default for a period
of 30 days (herein called a "Payment Default"); and
(b) The giving of a Secretary's Notice to the Indenture Trustee.
The Indenture Trustee shall give to the Obligees, the Secretary and the
Shipowner prompt notice in writing of any Payment Default (unless such default
shall have been remedied prior to the giving of such notice), and of the
occurrence of any Indenture Default which shall be continuing; PROVIDED THAT,
the Indenture Trustee shall have no duty to give any such notice unless and
until a Responsible Officer of the Indenture Trustee, who is a Responsible
Officer in its Corporate Trust Office, has actual knowledge of such default or
Indenture Default. Any such notice of an Indenture Default to the Obligees (i)
shall specify the nature of such Indenture Default, (ii) shall state that, by
reason thereof, the Indenture Trustee is entitled under the Indenture to demand
payment by the Secretary of the Guarantees, (iii) shall set forth the provisions
of Section 6.04(b)(3) and (5), and (iv) shall advise the Obligees of the
provisions of Section 6.02.
SECTION 6.02. DEMAND FOR PAYMENT OF GUARANTEES. (a) If an Indenture
Default shall have occurred and be continuing, the Indenture Trustee shall, not
later than 60 days from the date of such Indenture Default, demand payment by
the Secretary of the unpaid interest to the date of such payment on, and the
unpaid balance of the principal of, all Outstanding Obligations, whereupon the
entire unpaid principal amount of the Outstanding Obligations and all unpaid
interest thereon shall become due and payable on the first to occur of the date
which is 30 days from the date of such demand or the date on which the Secretary
pays the Guarantees; PROVIDED THAT, in the case of a demand made as a result of
a Payment Default, if, prior to the expiration of 30 days from the date of such
demand and prior to any payment of the Guarantees by the Secretary, the
Secretary shall find, and give written notice to the Shipowner and the Indenture
Trustee to the effect that, there was no
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Payment Default or that such Payment Default was remedied prior to such demand,
such demand and the consequences thereof shall be rescinded and annulled and the
Guarantees shall remain in full force and effect. The Indenture Trustee shall
give to each Obligee and to the Shipowner prompt written notice of any demand
made by the Indenture Trustee pursuant to this paragraph (a), any such notice to
Obligees to be given as provided in Section 6.04(c).
(b) If the Indenture Trustee shall not have made the demand referred to in
Section 6.02(a) on or before the 30th day following an Indenture Default which
shall have occurred and be continuing and if the Holders of all Outstanding
Obligations shall not have theretofore elected to terminate the Guarantees as
provided in Section 6.04(a)(2), any Holder of an Outstanding Obligation, by an
Act of Obligees delivered to the Secretary (with copies thereof to the Indenture
Trustee and the Shipowner), may, in place of the Indenture Trustee and on behalf
of all Holders of Outstanding Obligations, make such demand, subject to all the
provisions of, and with the effect provided in, Section 6.02(a); PROVIDED THAT,
the right of each Holder under this paragraph (b) shall be without prejudice to
the rights and duties of the Indenture Trustee under Section 6.02(a).
SECTION 6.03. APPOINTMENT OF INDENTURE TRUSTEE AND HOLDERS OF OUTSTANDING
OBLIGATIONS AS ATTORNEYS-IN-FACT. Each Holder of an Outstanding Obligation by
the purchase and acceptance of its Obligation, irrevocably appoints the
Indenture Trustee and each other Holder of an Outstanding Obligation its agent
and attorney-in-fact for the purpose of making the demand provided for in
Section 6.02 and (in the case of the Indenture Trustee) of receiving and
distributing any payment or payments by the Secretary made pursuant to any such
demand; PROVIDED THAT, no action or failure to act by the Indenture Trustee
shall affect the rights of any Holder of an Outstanding Obligation to take any
action whatsoever permitted by law and not in violation of the terms of the
Obligations or of the Indenture.
SECTION 6.04. TERMINATION AND PAYMENT OF THE GUARANTEES. (a) Except as
otherwise provided in Section 6.08, the Guarantee with respect to any Obligation
shall terminate in case, and only in case, one or more of the following events
shall occur:
(1) Such Obligation shall have been Retired or Paid;
(2) The Holders of all Outstanding Obligations shall have elected,
by Act of Obligees delivered to the Secretary, to terminate the
Guarantees;
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(3) Such Guarantee shall have been paid in full in cash by the
Secretary; or
(4) The Indenture Trustee and each Obligee shall have failed to
demand payment of such Guarantee as provided herein or in such Guarantee
or in the Act.
(b) Subject to the provisions of Section 6.08, when the Secretary shall
pay the Guarantees in full in cash to the Indenture Trustee:
(1) The Indenture Trustee shall hold the entire amount thereof in
trust for the sole purpose of providing for the payments specified in
subparagraph (5) below;
(2) No Obligation or Obligations shall thereafter be issued;
(3) The Obligations (A) shall represent only the right to receive
the payments from the Indenture Trustee specified in subparagraph (5)
below and, in the event the Indenture Trustee makes payment to the
Shipowner pursuant to Section 4.03, from the Shipowner, (B) shall
otherwise no longer constitute or represent an obligation of the
Shipowner, and (C) shall not be entitled to any other rights or benefits
under this Indenture;
(4) The Indenture Trustee shall forthwith give written notice to the
Shipowner and to each of the Obligees, stating that it has received
payment of the Guarantees in full in cash from the Secretary and that the
same is available for distribution to the Obligees in the manner specified
in subparagraph (5) below (and the Indenture Trustee shall give like
notice to the Holders of the Obligations at least annually thereafter for
a period of 6 years or until all Obligations shall have been cancelled,
whichever is earlier); and
(5) Upon the surrender for cancellation of any Obligation, the
Indenture Trustee shall forthwith pay to the Holder of such Obligation in
cash an amount (less the amount, if any, required to be withheld in
respect of transfer or other taxes on payment to such Holder) equal to the
unpaid principal amount of such Obligation and the unpaid interest accrued
thereon to the date on which the Secretary shall have paid the Guarantees
in full in cash to the Indenture Trustee; PROVIDED THAT, for the purposes
of this subparagraph (5), the Indenture Trustee (A) may deem any Person as
the owner of an Obligation in accordance with Section 2.11 and (B) shall
not be required to make any payment in violation of applicable law.
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(c) Each notice to Obligees required by this Section shall be given by the
Indenture Trustee by first class mail, postage prepaid, to the address of each
Obligee appearing upon the Obligation Register.
(d) If the Secretary shall not have paid the Guarantees in full in cash to
the Indenture Trustee within 30 days after any demand therefor pursuant to
Section 6.02 (whether or not because the Secretary makes either of the findings
referred to in the proviso of Section 6.02(a)), the Indenture Trustee shall give
prompt written notice of such nonpayment to each Obligee and the Shipowner. If
the Indenture Trustee shall have received notice of either of such findings,
such notice to each Obligee shall so state.
SECTION 6.05. RIGHTS OF INDENTURE TRUSTEE AFTER INDENTURE DEFAULT. During
the continuance of any Indenture Default, the Indenture Trustee shall have the
right to demand and to receive payment of the Guarantees and shall have, with
the consent of the Secretary as to matters other than the enforcement of the
Guarantees (unless all the Guarantees shall have terminated as provided herein):
(a) the right (in its name, as the trustee of an express trust, or
as agent and attorney-in-fact for each Holder of the Obligations as a class) to
take all action to enforce its rights and remedies (including the institution
and prosecution of all judicial and other proceedings and the filings of proofs
of claim and debt in connection therewith), and to enforce all existing rights
of the Holders of the Obligations as a class; and
(b) all other rights and remedies granted to the Indenture Trustee
by this Indenture, or the Authorization Agreement, or by law.
In addition, during the continuance of an Indenture Default and if all the
Guarantees shall have terminated as provided herein, the Indenture Trustee shall
have the right, by written notice to the Shipowner, to declare the entire unpaid
principal amount of the Outstanding Obligations and all unpaid interest to be
immediately due and payable.
SECTION 6.06. (a) OBLIGEES' RIGHT TO DIRECT INDENTURE TRUSTEE AFTER
INDENTURE DEFAULT. During the continuance of any Indenture Default, the Holders
of a majority in principal amount of the Outstanding Obligations shall have the
right, by an Act of Obligees, to direct the Indenture Trustee:
(1) to exercise or to refrain from exercising any right or to
enforce any remedy granted to it by this Indenture; and
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(2) to direct the time, method and place of the exercise of any such
right or the enforcement of any such remedy;
PROVIDED THAT, subject to Section 7.03, the Indenture Trustee shall have the
right not to take any such action if it shall determine in good faith that the
action would involve it in personal liability, would subject it to expenses
against which it had not been offered adequate security and indemnity or would
be unjustly prejudicial to the Obligees not parties to such direction.
Anything in this Section 6.06(a) to the contrary notwithstanding, the
Indenture Trustee shall be obligated to demand payment of the Guarantees as
provided in Section 6.02(a) unless the Holders of all Outstanding Obligations
shall have elected to terminate the Guarantees as provided in Section
6.04(a)(2), in which case the Indenture Trustee shall be obligated to refrain
from making such demand.
(b) LIMITATIONS ON OBLIGEES' RIGHT TO SUE. No Obligee shall have the right
to institute any judicial or other proceedings under this Indenture unless:
(1) the Indenture Trustee shall have been directed to institute such
proceeding by the Holders of at least 25% in aggregate principal amount of
the Obligations then Outstanding;
(2) the Indenture Trustee shall have been offered adequate security
and indemnity against the costs, expenses and liabilities to be incurred
by compliance with such direction;
(3) the Indenture Trustee shall not have instituted such proceeding
within 60 days after the receipt of both such direction and such offer of
security and indemnity;
(4) no direction inconsistent with such request shall have been
given to the Indenture Trustee during such 60-day period by the Holders of
a majority in principal amount of the Outstanding Obligations; and
(5) the institution and prosecution of such proceeding would not
result in an impairment of the rights of any other Obligee, it being
understood and intended that no one or more Obligees shall have any right
in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Obligees or to obtain or to seek to obtain priority or preference over any
other Obligees or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Obligees.
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(c) UNCONDITIONAL RIGHT OF OBLIGEES TO SUE FOR PRINCIPAL (AND PREMIUM, IF
ANY) AND INTEREST. Nothing in paragraph (b) shall (i) affect the obligation of
the Shipowner to pay the principal of (and premium, if any) and interest on the
Obligations in accordance with their terms or affect the right of any Obligee to
institute any judicial or other proceeding to enforce the payment of his
Obligations or (ii) limit the right of any Obligee to demand payment of the
Guarantees pursuant to Section 6.02(b) or to institute any judicial or other
proceeding to enforce the payment of the Guarantee of any Obligation of which he
is the Holder.
SECTION 6.07. UNDERTAKING FOR COSTS. In any proceeding for the enforcement
of any right or remedy under this Indenture, or in any proceeding against the
Indenture Trustee for any action taken or omitted by it as Indenture Trustee,
the court may in its discretion require the filing by any party litigant of an
undertaking to pay the cost of such proceeding and may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant, having due regard to the merits and good faith of the claims or
defense made by such party litigant. The provisions of this Section 6.07 shall
not apply to any proceeding instituted by the Indenture Trustee or any
proceeding instituted by any Obligee for the payment of the principal of (and
premium, if any) and interest on his Obligations.
SECTION 6.08. RECISION OF PAYMENTS. Notwithstanding any other provision of
this Indenture, or of the Obligations, in the event that any payment to or on
behalf of an Obligee of the principal of or interest due under any Obligation,
or any portion of any such payment, shall at any time be repaid by such Obligee
in compliance with an order (whether or not final) of a court of competent
jurisdiction pursuant to any provision of the Bankruptcy Code (Title 11 of the
United States Code) or any Federal Law replacing or superseding such Code, or
applicable state law, and regardless of whether there has been any previous
Indenture Default and any payment pursuant thereto, or whether such Obligation
shall theretofore have been acquired by the Shipowner or cancelled, or whether
an instrument satisfying and discharging this Indenture shall have been executed
and delivered, (1) such Obligation shall not be deemed to have been Retired or
Paid and shall be deemed to be Outstanding, (2) the return of such payment in
whole or in part (but not the mere possibility that any such payment or portion
thereof may be so required to be returned, nor any prior demand, suit or
proceeding for such return) in compliance with the order of such court shall
constitute a default in payment of such Obligation within the meaning of Section
6.01(a), which default shall be deemed to have occurred on the date of such
repayment and which default, if continued for 30 days, will constitute a Payment
Default, (3) the Guarantee of such Obligation and (to the extent necessary to
enforce such Obligation and Guarantee) this
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Indenture shall be in full force and effect, and (4) the Person required to
return such payment or portion thereof shall be deemed for all purposes to be a
Holder of such Obligation and entitled to enforce such Obligation and Guarantee
to the extent of such repayment and, if there shall not be any Indenture Trustee
hereunder then in office, such Person shall also be entitled to exercise on his
own behalf all the rights of the Indenture Trustee hereunder necessary for such
enforcement; PROVIDED THAT, in the event the Guarantee of any Obligation shall
have terminated for reasons set forth in paragraphs (2) or (4) of Section
6.04(a) of this Indenture prior to the aforesaid date of repayment the
provisions of this Section shall not apply to such Obligation.
SECTION 6.09. ASSUMPTION OF OBLIGATIONS BY SECRETARY. Notwithstanding
anything contained herein, (i) in the event the Shipowner shall fail to make any
payment of principal or interest due on the Obligations on an Interest Payment
Date and such failure to pay shall continue for a period of 25 days or (ii) in
the event of any other default under the Mortgage or the Security Agreement, the
Secretary shall have the right to and may, in his sole discretion, (a) by giving
to the Indenture Trustee at any time pursuant to clause (ii) above or, if
pursuant to clause (i) above, on or after the 25th day of said 25 day period of
such default (but prior to the receipt by the Secretary of any demand for
payment of the Guarantees pursuant to Section 6.02) a Secretary's Supplemental
Indenture in the form of Exhibit 4 attached hereto, which Exhibit is
incorporated herein by reference, assume the rights and obligations of the
Shipowner under this Indenture and all Outstanding Obligations as provided in
said Secretary's Supplemental Indenture; and (b) if applicable, make any payment
of principal or interest which is due under the Obligations. By the execution of
this Indenture by the Indenture Trustee and the Shipowner it is agreed hereunder
that a Secretary's Supplemental Indenture shall be effective and binding upon
the Indenture Trustee and the Shipowner and their respective successors or
assigns without further act or deed of either as of the date executed and given
to the Indenture Trustee by the Secretary as contemplated by this Section, and
each of them for itself, its successors and assigns hereby irrevocably appoints
the Secretary its true and lawful attorney-in-fact to execute and deliver said
Secretary's Supplemental Indenture. Upon any such assumption by the Secretary,
the Secretary shall succeed to and be substituted for and may exercise every
right and power of the Shipowner under this Indenture and the Obligations with
the same force and effect as if the Secretary has been named as the Shipowner
herein and therein. Upon any such assumption by the Secretary, the Indenture
Trustee, upon request of the Secretary, shall promptly notify the holders of the
Outstanding Obligations of such assumption. The Secretary may exercise its
rights under this Section 6.09 as often as it deems appropriate in its sole
discretion.
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ARTICLE VII
THE INDENTURE TRUSTEE
SECTION 7.01. ACCEPTANCE OF TRUSTS. The Indenture Trustee hereby
accepts the trusts of this Indenture.
SECTION 7.02. ELIGIBILITY OF INDENTURE TRUSTEE. (a) The Indenture Trustee
shall at all times be a bank or trust company which (1) is organized as a
corporation and doing business under the laws of the United States or any state
thereof, (2) is authorized under such laws to exercise corporate trust powers,
(3) is subject to supervision or examination by federal or state authority, (4)
has a combined capital and surplus (as set forth in its most recent published
report of condition) of at least $3,000,000 and (5) shall not have become
incapable of acting or have been adjudged a bankrupt or an insolvent nor have
had a receiver appointed for itself or for any of its property, nor have had a
public officer take charge or control of it or its property or affairs for the
purpose of rehabilitation, conservation or liquidation.
(b) Should the Indenture Trustee at any time cease to be eligible,
pursuant to this Section 7.02, to act as trustee, it shall promptly notify the
Obligees, the Shipowner and the Secretary of such fact; and should the Shipowner
obtain knowledge of such ineligibility, it shall promptly advise the Indenture
Trustee, the Secretary, and the Obligees of such fact. Any such notice (i) shall
set forth all the relevant facts known to the Indenture Trustee or the
Shipowner, as the case may be, (ii) if to the Secretary or the Shipowner, shall
be registered or certified mail, postage prepaid, and (iii) if to Obligees,
shall be sent to each Obligee in the manner provided in Section 6.04(c) at his
address as it appears on the Obligation Register, or at such other address as
such Obligee may have furnished to the Indenture Trustee for such purpose.
SECTION 7.03. RIGHTS AND DUTIES OF INDENTURE TRUSTEE. (a) The Indenture
Trustee shall not be responsible for the correctness of the Recitals in the
Special Provisions hereof or in the Obligations (except the Indenture Trustee's
authentication certificate thereon), all of which Recitals are statements made
solely by the Shipowner.
(b) The Indenture Trustee shall not be responsible for the validity,
execution by other parties thereto, or sufficiency of this Indenture, the
Authorization Agreement, the Obligations or the Guarantees.
(c) During the continuance of any Indenture Default (except for an
Indenture Default resulting from those defaults in payment or Payment
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Defaults referred to in paragraph (r) of this Section, concerning which the
Indenture Trustee has not received the notice referred to in said paragraph (r)
and the information relating to items (1) through (5) of said paragraph (r)),
the Indenture Trustee shall exercise such of the rights and powers vested in it
by Article VI, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(d) Except during the continuance of any Indenture Default (other than an
Indenture Default referred to in the parenthetical expression set forth in
paragraph (c) of this Section), the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee.
(e) No provision of this Indenture shall relieve the Indenture Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct; PROVIDED THAT:
(1) Except during the continuance of an Indenture Default (other
than an Indenture Default referred to in the parenthetical expression set
forth in paragraph (c) of this Section), (A) the duties of the Indenture
Trustee shall be limited as provided in paragraph (d) of this Section, and
(B) in the absence of bad faith on the part of the Indenture Trustee, the
Indenture Trustee may conclusively rely upon certificates or opinions
conforming to the requirements of this Indenture as to the truth of the
statements and the correctness of the opinions expressed therein;
(2) The Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Officers of the
Indenture Trustee unless it shall be proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(3) The Indenture Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
an Act of Obligees relating to the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred upon the Indenture Trustee under
this Indenture.
(f) Subject to paragraph (i) of this Section, the Indenture Trustee shall
be under a duty to examine certificates and opinions required by this Indenture
to be furnished to it to determine whether or not they conform to the
requirements hereof.
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(g) Subject to paragraph (c) of this Section, the Indenture Trustee may
rely and shall be protected in acting upon any resolution, certificate, opinion,
notice, request, consent, order, appraisal, report, bond, or other paper or
document believed by it to be genuine, to have been signed by the proper party
or parties and to be in conformity with the provisions of this Indenture.
(h) In all cases where this Indenture does not make express provision as
to the evidence on which the Indenture Trustee may act or refrain from acting,
the Indenture Trustee shall be protected (subject to paragraph (c) of this
Section) in acting or refraining from acting hereunder in reliance upon an
Officer's Certificate as to the existence or nonexistence of any fact.
(i) The Indenture Trustee may consult with counsel satisfactory to the
Indenture Trustee (who may be counsel to the Shipowner), and an Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel.
(j) Subject to paragraph (c) of this Section, the Indenture Trustee shall
not be under any responsibility for the approval or selection of any expert for
any of the purposes expressed herein; PROVIDED THAT the Indenture Trustee shall
exercise reasonable care with respect to the approval or selection of
independent experts whom it approves or selects to furnish opinions or
certificates to the Indenture Trustee pursuant to this Indenture.
(k) Whenever it is provided that the Indenture Trustee shall take any
action, including the giving of any notice or the making of any demand, or
refrain from taking any action upon the happening or continuation of a specified
event (including an Indenture Default) or upon the fulfillment of any condition
or upon the Request of the Shipowner or of Obligees or upon receipt of any
notice, including a Secretary's Notice, the Indenture Trustee (1) shall, subject
to paragraph (c) of this Section, have no liability for failure to take such
action or for failure to refrain from taking such action unless and until a
Responsible Officer of the Indenture Trustee, who is a Responsible Officer in
the Corporate Trust Office, has actual knowledge of such event or continuation
thereof or the fulfillment of such conditions or shall have received such
Request, and (2) in taking or refraining from taking such action, shall have
full power to give any and all notices and to do any and all acts and things
incidental to such action.
(l) Subject to paragraph (c) of this Section, the Indenture Trustee shall
not be under any obligation to exercise any of the trusts or powers hereof at
the request, order or direction of any Obligees or the Secretary, unless such
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Obligees or the Secretary shall have offered to the Indenture Trustee security
or indemnity satisfactory to it against the costs, expenses and liabilities to
be incurred thereby.
(m) The Indenture Trustee, in its individual or any other capacity, may
become the owner or pledgee of Obligations with the same rights it would have if
it were not Indenture Trustee.
(n) Notwithstanding any other provision of this Indenture, the Indenture
Trustee shall not take any action contrary to the terms of the Authorization
Agreement, and any such purported action or any attempt to take such action
shall be void and of no effect and, except as provided in Section 7.06(b), shall
not enter into any amendment to the Authorization Agreement except as expressly
authorized by a Supplemental Indenture entered into pursuant to Article X.
(o) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(p) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee shall be subject to the provisions of this
Section.
(q) Upon the execution and delivery of an instrument satisfying and
discharging this Indenture as provided in Section 12.01 hereof, all duties and
obligations of the Indenture Trustee hereunder (except with respect to the
application of funds for the payment of Obligations then held by the Indenture
Trustee) shall cease and shall not thereafter be revived, whether or not the
Indenture shall thereafter be in full force and effect as provided in Section
6.08.
(r) Notwithstanding any other provisions of this Indenture or the
Authorization Agreement, the Indenture Trustee shall have no duty or obligation
to exercise any of its rights or powers hereunder with respect to a default in
payment or Payment Default by reason of a repayment referred to in Section 6.08
unless and until it shall have received notice of such default and information
concerning (1) the date thereof, (2) the Obligation to which such repayment
relates, (3) the Person making such repayment and the Holder of such Obligation,
(4) the amounts of such repayment attributable to principal, premium and
interest on such Obligation, and (5) the Interest Payment Date or
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other date on which the Obligee received the moneys to which the court order
mentioned in Section 6.08 relates.
SECTION 7.04. COMPENSATION, EXPENSES AND INDEMNIFICATION OF INDENTURE
TRUSTEE. The Shipowner shall (1) pay reasonable compensation to the Indenture
Trustee and reimburse it for its reasonable expenses and disbursements
(including counsel fees and expenses) and (2) indemnify the Indenture Trustee
for, and hold it harmless against, any loss, liability or expense which it may
incur or suffer without negligence or bad faith in acting under this Indenture
or the Authorization Agreement. The compensation of the Indenture Trustee shall
not be limited to the compensation provided by law for a trustee acting under an
express trust.
SECTION 7.05. RESIGNATION AND REMOVAL OF INDENTURE TRUSTEE. (a) The
Indenture Trustee may resign at any time by giving written notice to the
Shipowner. Within 10 days thereafter, the resigning Indenture Trustee shall give
notice of such resignation to the Obligees in the manner provided in Section
6.04(c). If the resigning Indenture Trustee fails to do so within such 10-day
period, within the next succeeding 10 days the Shipowner shall give such notice
in the same manner.
(b) The Indenture Trustee may at any time be removed by:
(1) written notice to the Indenture Trustee and the Shipowner by the
Holders of a majority in principal amount of the Outstanding Obligations;
or
(2) written notice to the Indenture Trustee by the Shipowner or the
Secretary that the Indenture Trustee has ceased to be eligible under
Section 7.02(a).
(c) Any resignation or removal of the Indenture Trustee shall be effective
only upon appointment of a successor Indenture Trustee approved by the Secretary
and the acceptance of such appointment by such successor Indenture Trustee.
SECTION 7.06. APPOINTMENT OF SUCCESSOR INDENTURE TRUSTEE. (a) If the
Indenture Trustee or the Shipowner shall have given notice of ineligibility of
the Indenture Trustee pursuant to Section 7.02(b), or if any notice of
resignation or of removal shall have been given pursuant to Section 7.05, then a
successor Indenture Trustee may be appointed by the Shipowner; provided THAT, if
such successor Indenture Trustee is not so appointed (or has not accepted such
appointment) within 15 calendar days after the giving of any such notice, such
appointment may be made (i) by the Secretary or (ii) by a court of competent
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jurisdiction upon the application of the Secretary, the Shipowner, the retiring
Indenture Trustee or any Person who then is, and has been, the Holder of an
Outstanding Obligation for at least 6 months.
(b) No successor Indenture Trustee shall be appointed without the prior
written consent of the Secretary and until such successor Indenture Trustee
shall enter into an amendment to the Authorization Agreement as set forth in the
first sentence of Section 4.04 thereof.
(c) If a successor Indenture Trustee is appointed, approved by the
Secretary and accepts such appointment, and the Shipowner shall have knowledge
thereof, the Shipowner shall give notice to the Obligees of such appointment in
the manner provided in Section 6.04(c). The failure of the Shipowner to give
such notice shall not affect the validity of any such appointment.
SECTION 7.07. EFFECT OF APPOINTMENT OF SUCCESSOR INDENTURE TRUSTEE. Upon
appointment and acceptance as Indenture Trustee, each successor Indenture
Trustee shall forthwith, without further act or deed, succeed to all the rights
and duties of its predecessor in trust under this Indenture and the
Authorization Agreement. Such predecessor shall promptly deliver to such
successor Indenture Trustee all sums held hereunder, together with all records
and other documents necessary or appropriate in connection with the performance
of the duties of the successor Indenture Trustee under this Indenture. Upon the
written request of the successor Indenture Trustee or the Shipowner and upon
payment of all amounts due to such predecessor under this Indenture, such
predecessor shall transfer, assign and confirm to the successor Indenture
Trustee all its rights under this Indenture by executing and delivering from
time to time to the successor Indenture Trustee such further instruments and by
taking such other action as may reasonably be deemed by such successor Indenture
Trustee or the Shipowner to be necessary or appropriate in connection therewith
and the predecessor Indenture Trustee shall have no liability for any actions
taken by the successor Indenture Trustee.
SECTION 7.08. MERGER, CONSOLIDATION AND SALE OF INDENTURE TRUSTEE. In the
event of any merger (including for the purposes of this Section, the conversion
of a state bank into a national banking association or vice versa) or
consolidation of the Indenture Trustee into any other Person or in the event of
the sale of all or substantially all the Indenture Trustee's corporate trust
business, the Person resulting from such merger (including any such conversion)
or consolidation, or the transferee in the case of any such sale, shall
forthwith notify the Shipowner and, subject to Section 7.02(a) and 7.06(b),
shall be the Indenture Trustee under this Indenture and the Authorization
Agreement without further act or deed.
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Obligations and Guarantees authenticated after any such merger,
consolidation or sale may be authenticated by the successor Indenture Trustee
either in its own name or in the name of any predecessor which shall have been
the Indenture Trustee.
ARTICLE VIII
CONSOLIDATION, MERGER OR SALE BY SHIPOWNER
SECTION 8.01. CONSOLIDATION, MERGER OR SALE BY SHIPOWNER. Nothing in this
Indenture shall prevent any lawful consolidation or merger of the Shipowner with
or into any other Person, or any sale of a Vessel or Vessels to any other Person
lawfully entitled to acquire and operate such Vessel or Vessels or any sale by
the Shipowner of all or substantially all of its assets to any other Person;
PROVIDED THAT, except where the Shipowner shall be the Person surviving a merger
or consolidation, the Person formed by or surviving such consolidation or
merger, or to which the sale of such Vessel or Vessels shall be made, shall, by
Supplemental Indenture, expressly assume the payment of the principal of and
interest (and premium, if any) on the Proportionate Part of the Outstanding
Obligations relating to such Vessel or Vessels in accordance with the terms of
the Obligations and of the Indenture and shall expressly assume the performance
of the agreements of the Shipowner in the Indenture; PROVIDED FURTHER, that to
the extent said Proportionate Part of the Outstanding Obligations is not so
assumed, the Shipowner shall redeem or cause to be redeemed the principal amount
of the Proportionate Part of the Outstanding Obligations as is required by the
Secretary, such redemption to be in accordance with the terms of the Obligations
and of the Indenture. When a Person so assumes this Indenture and such
Proportionate Part of the Outstanding Obligations, the Supplemental Indenture
shall discharge and release the Shipowner from any and all obligations
thereunder relating to such Proportionate Part of the Outstanding Obligations.
In the event of such an assumption by a Person to whom a Vessel or Vessels have
been sold (a) such Person shall succeed to, and be substituted for, and may
exercise every right and power of the original Shipowner with the same effect as
if such successor Shipowner had been named as the Shipowner herein and (b) such
Proportionate Part of the Outstanding Obligations shall be surrendered to the
Indenture Trustee for appropriate notation or for the issuance of new
Obligations in exchange for such Proportionate Part of the Outstanding
Obligations in the name of the successor Shipowner, as required by the
Secretary. The principal amount of the Proportionate Part of the Outstanding
Obligations shall be determined by the Secretary.
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SECTION 8.02. SALE OF THE VESSEL OR VESSELS BY THE SECRETARY. Nothing
contained in this Indenture shall prevent the sale of a Vessel or Vessels to any
other Person or Persons by the Secretary, by a court of law or by the Shipowner
following, in connection with or in lieu of a foreclosure or similar action.
Following any such sale (1) the Person to whom such Vessel or Vessels have been
sold may by Supplemental Indenture expressly assume the payment of and interest
(and premium, if any) on the Proportionate Part of the Outstanding Obligations
relating to such Vessel or Vessels in accordance with the terms of the
Obligations and the Indenture and shall expressly assume the performance of the
Shipowner in the Indenture; and (2) in the event such Person does not so assume,
the Secretary shall redeem the Proportionate Part of the Outstanding Obligations
relating to such Vessel or Vessels without premium pursuant to Section 3.06
hereof; PROVIDED THAT, the Secretary shall allow or permit the sale of a Vessel
or Vessels to the original Shipowner or to any affiliate of the of the Shipowner
only if (i) the Secretary has not redeemed such Obligations prior to such sale,
and (ii) such purchaser assumes such Proportionate Part of the Outstanding
Obligations as contemplated by the preceding clause (1). When a Person so
assumes this Indenture and such Proportionate Part of the Outstanding
Obligations, the Supplemental Indenture shall discharge and release the
Secretary from any and all obligations thereunder in the Secretary's capacity as
Shipowner relating to such Proportionate Part of the Outstanding Obligations. In
the event of such an assumption by a Person to whom a Vessel or Vessels have
been sold (a) such Person shall succeed to, and be substituted for, and may
exercise every right and power of the original Shipowner with the same effect as
if such successor Shipowner had been named as the Shipowner herein and (b) such
Proportionate Part of the Outstanding Obligations shall be surrendered to the
Indenture Trustee for appropriate notation or for the issuance of new
Obligations in exchange for such Proportionate Part of the Outstanding
Obligations in the name of the successor Shipowner, as required by the
Secretary. Any such sale or the execution of a Supplemental Indenture by any
successor Shipowner shall not discharge or in any manner affect the obligation
of the United States to pay the Guarantees pursuant to the terms thereof. The
principal amount of the Proportionate Part of the Outstanding Obligations shall
be determined by the Secretary.
ARTICLE IX
ACTS OF OBLIGEES
SECTION 9.01. ACTS OF OBLIGEES. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action required or permitted by this
Indenture to be given or taken by Obligees may be embodied in and evidenced by
one or more instruments of substantially similar tenor
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signed by such Obligees in person or by an agent or attorney duly appointed in
writing. Except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Indenture
Trustee and, where it is hereby expressly required, to the Shipowner and the
Secretary. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act of Obligees."
Proof of execution of any such instrument or of a writing appointing any such
agent or attorney shall be sufficient for any purpose of this Indenture and
(subject to Section 7.03) conclusive in favor of the Indenture Trustee and the
Shipowner, if made in the manner provided in paragraph (b) of this Section.
(b) The fact and date of the execution by any Person of any instrument or
writing referred to in paragraph (a) of this Section may be proved by the
affidavit of a witness of such execution or by the certificate or acknowledgment
of any notary public or other officer authorized by law to take acknowledgments
of deeds, certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is by an officer
of a corporation or a member of a partnership, on behalf of such corporation or
partnership, such affidavit or certificate shall also constitute sufficient
proof of his authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing the same, may
also be proved in any other manner which the Indenture Trustee (or, if such
instrument or writing is addressed to the Secretary, the Secretary) deems
sufficient.
(c) The ownership of Obligations shall be proved by the Obligation
Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Obligation shall bind every future Holder
of the same Obligation and the Holder of every Obligation issued upon the
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done or suffered to be done by the Indenture Trustee, any Paying Agent
or the Shipowner in reliance thereon, whether or not notation of such action is
made upon such Obligation.
ARTICLE X
SUPPLEMENTAL INDENTURES
SECTION 10.01. PERMISSIBLE WITHOUT ACTION BY OBLIGEES. The Shipowner, the
Indenture Trustee, or, where applicable, the Secretary, from time to time and at
any time, may, without the consent of or notice to any of the Obligees, subject
to Sections 10.02 and 10.05, enter into an indenture or
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other instrument supplemental hereto and which thereafter shall form a part
hereof, for any one or more of the following purposes:
(1) to add to the covenants of the Shipowner, whether applicable
to one or more series of Obligations;
(2) to evidence the succession pursuant to Article VIII of another
corporation or entity to the Shipowner and the assumption by such
successor of the Obligations of the Shipowner hereunder;
(3) to eliminate any right reserved to or conferred upon the
Shipowner;
(4) to make such provisions for the purpose of curing any ambiguity
or correcting or supplementing any provisions in this Indenture as the
Shipowner or the Secretary may deem necessary or desirable, provided such
provisions are not inconsistent with this Indenture and shall not
adversely affect the interests of the Obligees;
(5) to provide for the issuance of additional Obligations of any
series and Stated Maturity theretofore issued under this Indenture or to
set forth the terms and provisions of any one or more additional series of
Obligations in accordance with Section 2.04; or
(6) to evidence the assumption pursuant to Section 6.09 by the
Secretary of the Shipowner's obligations under this Indenture and the
Outstanding Obligations.
SECTION 10.02. PROTECTION OF INDENTURE TRUSTEE. Upon receipt of a Request
of the Shipowner that the Indenture Trustee execute any Supplemental Indenture
and upon receipt of any Act of Obligees required pursuant to Section 10.04 and
the consent of the Secretary required pursuant to Section 10.05, the Indenture
Trustee shall enter into such Supplemental Indenture; PROVIDED THAT, the
Indenture Trustee shall not be obligated to enter into any Supplemental
Indenture which the Indenture Trustee believes adversely affects the Indenture
Trustee's own rights, duties or immunities under this Indenture.
SECTION 10.03. REFERENCE IN OBLIGATIONS TO SUPPLEMENTAL INDENTURES.
Obligations authenticated and delivered after the execution and delivery of any
Supplemental Indenture may, with the consent and approval of the Shipowner and
the Indenture Trustee, contain a text modified to conform to such Supplemental
Indenture or have imprinted or stamped thereon a legend with respect to such
Supplemental Indenture, but no such modification or legend
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shall be necessary to make such Supplemental Indenture effective.
SECTION 10.04. WAIVERS AND SUPPLEMENTAL INDENTURES WITH CONSENT OF
OBLIGEES. With the consent of the Holders of not less than 60% in principal
amount of the Outstanding Obligations of each series affected thereby, by Act of
Obligees delivered to the Shipowner and the Indenture Trustee, (x) compliance by
the Shipowner with any of the terms of the Indenture may be waived or (y) the
Shipowner and the Indenture Trustee may enter into any Supplemental Indenture
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Holders of the Obligations issued under this Indenture;
PROVIDED THAT, no such waiver or Supplemental Indenture shall:
(a) Without the consent of all Obligees affected thereby (1) change
the Stated Maturity or reduce the principal of any Obligation, (2) extend the
time of payment of, or reduce the rate of, interest thereon, (3) change the due
date of or reduce the amount of any mandatory sinking fund payment, (4) reduce
any premium payable upon the redemption of any Obligation, or (5) change the
coin or currency in which any Obligation or the interest thereon is payable; or
(b) Without the consent of all Obligees (l) terminate or modify any
of the Guarantees or the obligations of the Secretary thereunder, (2) reduce the
amount of any of the Guarantees, (3) eliminate, modify or condition the duties
of the Indenture Trustee to demand payment of the Guarantees or otherwise to
comply with the provisions of Sections 6.02 and 6.04, (4) eliminate or reduce
any of the eligibility requirements for the Indenture Trustee stated in Section
7.02, or (5) reduce the percentage in principal amount of the Outstanding
Obligations of any series, the consent of whose Holders is required for any such
Supplemental Indenture, or required for any waiver provided herein or to modify
any of the provisions of this Section except to increase any such percentage or
to provide that certain other provisions of this Indenture cannot be modified or
waived without the consent of all Obligees affected thereby.
It shall not be necessary for any Act of Obligees under this Section to
approve the particular form of any proposed Supplemental Indenture, but it shall
be sufficient if such Act shall approve the substance thereof. Promptly after
the execution of any Supplemental Indenture pursuant to this Section, the
Shipowner shall give notice thereof to the Obligees in the manner provided in
Section 6.04(c). Any failure of the Shipowner to give such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such Supplemental Indenture.
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SECTION 10.05. CONSENT OF SECRETARY. Subject to the provisions of Section
11.01, no waiver pursuant to Section 10.04 shall be effective, and neither the
Shipowner nor the Indenture Trustee shall enter into any Supplemental Indenture,
without the prior written consent of the Secretary thereto, and any purported
action or attempt to take such action forbidden to be taken by this Section
shall be void and of no effect.
SECTION 10.06. CONTINUED VALIDITY OF THE GUARANTEES. Notwithstanding
anything herein to the contrary, this Indenture, the Guarantees and the
Authorization Agreement shall each remain in full force and effect
notwithstanding the assumption by the Secretary of the Obligations pursuant to
the Secretary's Supplemental Indenture entered into pursuant to Section 6.09,
and pursuant to Section 1103(e) of the Act, the validity of the Guarantee of any
Obligation shall be unaffected, and such Guarantee and all responsibilities,
requirements and consents relating to the Secretary under the terms and
provisions of this Indenture shall remain in full force and effect
notwithstanding any such assumption by the Secretary as aforesaid.
ARTICLE XI
PERFORMANCE OF OBLIGATIONS TO SECRETARY
SECTION 11.01. PERFORMANCE OF OBLIGATIONS TO SECRETARY. Notwithstanding
any other provisions of this Indenture to the contrary, each of the provisions
hereof which requires or permits action by the Secretary, the consent, approval
or authorization of the Secretary, the furnishing of any document, paper or
information to the Secretary, or the performance of any other obligation to the
Secretary, shall not be effective and the Sections containing such provisions
shall be read as though there were no such requirements or permissions, after
termination of the Guarantees pursuant to Section 6.04(a).
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 12.01. SATISFACTION AND DISCHARGE OF INDENTURE. Whenever all
Outstanding Obligations authenticated and delivered hereunder shall have been
Retired or Paid the Indenture Trustee shall forthwith deliver to the Shipowner
and the Secretary a duly executed instrument, in form submitted to it by the
Shipowner and reasonably satisfactory to the Indenture Trustee, satisfying and
discharging this Indenture and, at the time such form of instrument is submitted
to the Indenture Trustee the Shipowner shall deliver to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel
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each stating that all conditions precedent herein provided relating to the
satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
Obligations of the Shipowner to the Indenture Trustee under Section 7.04 shall
survive.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. NOTICES AND DEMANDS. Except as otherwise specifically
provided herein or in the Act, any notice, request, demand or direction upon, or
other communication to, the Indenture Trustee, the Shipowner or the Secretary
shall be deemed to have been sufficiently given or made by being mailed,
registered or certified mail, postage prepaid, addressed to the Indenture
Trustee, the Shipowner or the Secretary at their respective addresses appearing
in the Special Provisions of this Indenture or at such other address as any of
them may advise the others in writing from time to time. Except as otherwise
specifically provided herein or in the Act, any notice, request, demand or
direction upon, or other communication to, the Obligees shall be deemed to have
been sufficiently given or made by being mailed, registered or certified mail,
postage prepaid, to the address of each Obligee last appearing on the Obligation
Register.
SECTION 13.02. WAIVERS OF NOTICE. In any case where notice by mail or
otherwise is provided herein, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and such
waiver shall be deemed the equivalent of such notice. Waivers of notice shall be
filed with the Indenture Trustee, but such filing shall not be a condition
precedent to the validity of any action taken thereon in reliance upon any such
waiver.
SECTION 13.03. BENEFIT OF INDENTURE. This Indenture is for the sole
benefit of the Shipowner, the Indenture Trustee, the Holders from time to time
of the Outstanding Obligations and (until the obligations to the Secretary shall
have terminated as provided in Article XI) the Secretary.
SECTION 13.04. EXECUTION OF COUNTERPARTS. This Indenture may be
executed in any number of counterparts. All such counterparts shall be deemed
to be original and shall together constitute but one and the same instrument.
SECTION 13.05. TABLE OF CONTENTS; TITLES AND HEADINGS. Any table of
contents, the titles of the Articles and the headings of the Sections are not a
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part of this Indenture and shall not be deemed to affect the meaning or
construction of any of its provisions.
SECTION 13.06. INTEGRATION WITH SPECIAL PROVISIONS OF THE INDENTURE. In
the event of any conflict between the provisions of the Special Provisions of
the Indenture and of this Exhibit 1 thereto, the provisions of the Special
Provisions shall govern and the provisions of this Exhibit 1 to the Indenture
shall be deemed to be amended accordingly.
SECTION 13.07. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND
DIRECTORS. No recourse shall be had for the payment of the principal of, or the
premium, if any, or interest on any Obligation, or for any claim based thereon
or otherwise in respect thereof or of the indebtedness represented thereby, or
upon any obligation, covenant or agreement of this Indenture, against any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Shipowner or of any successor corporation, either directly or
through the Shipowner or any successor corporation, whether by virtue of any
constitutional provision, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood
that this Indenture and the Obligations are solely corporate obligations, and
that no personal liability whatsoever shall attach to, or be incurred by, any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Shipowner or of any successor corporation, either directly or
through the Shipowner or any successor corporation, because of the incurring of
the indebtedness hereby authorized or under, or by reason of, any of the
obligations, covenants, promises or agreements contained in this Indenture or in
any of the Obligations or to be implied herefrom or therefrom, and that all
liability, if any, of that character against every such incorporator,
stockholder, officer and director is, by the acceptance of the Obligations and
as a condition of, and as part of the consideration for, the execution of this
Indenture and the issue of the Obligations, expressly waived and released.
SECTION 13.08. APPLICABLE LAW. This Indenture and each Obligation
shall be governed by the laws referred to in the Special Provisions hereof,
except to the extent Federal law applies hereto.
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SCHEDULE A TO TRUST INDENTURE DOCUMENT 5
Schedule of Definitions to Trust Indenture
Dated as of April 9,1999
"Act" means the Merchant Marine Act, 1936, as amended, and in effect on
the Closing Date.
"Act of Obligees" means any request, demand, authorization, direction,
notice, consent, waiver or other action to be given or taken by the Obligees and
embodied in one or more documents of the type, and executed in the manner,
required by the Indenture.
"Administrative Agent" means CITICORP NORTH AMERICA, INC., a Delaware
corporation, as administrative agent for the Primary Lender and the commercial
paper holders of the Primary Lender (and their respective successors and
assigns), and its permitted successors and assigns.
"Actual Cost" means the actual cost of a Vessel, as set forth in Table A
of the Security Agreement or as subsequently redetermined by the Secretary
pursuant to the Security Agreement and the Act.
"Actual Knowledge" means actual knowledge of a Responsible Officer of a
Person.
"Affiliate" or "Affiliated" means any Person directly or indirectly
controlling, controlled by, or under common control with, another Person.
"Agent" means each of the Administrative Agent and the Facility Agent,
individually, and "Agents" means the Administrative Agent and the Facility
Agent, collectively.
"Alternate Lender" means CITIBANK, N.A., a national banking association
and its successors and assigns.
"Applicable Interest Rate" shall mean
(a)(i) with respect to any Disbursement or portion thereof that is funded
by the Primary Lender through its issuance of commercial paper notes and so long
as the Primary Lender is the holder of the indebtedness related to such funded
portion, a rate (the "CP Rate") equal to the sum of (A) the Primary Lender's
weighted average cost (defined below) related to the issuance of
<PAGE>
commercial paper notes and other short-term borrowings or the sale of
participation interests (collectively, "Commercial Paper"), which in each case
have been allocated by the Primary Lender to the Credit Facility, which rate
includes related issuance costs incurred by the Primary Lender, plus (B) during
the Construction Period, four-tenths of one percent (.40%) and thereafter,
nine-twentieths of one percent (0.45%), as calculated by the Administrative
Agent for each Interest Period and specified in a notice sent by the
Administrative Agent to the Facility Agent and by the Facility Agent to the
Shipowner and the Indenture Trustee at least three (3) Business Days prior to
each Interest Payment Date on which the interest so calculated is payable (For
purposes of the foregoing, the Primary Lender's "weighted average cost" of
Commercial Paper shall consist of (I) the actual interest rate paid to
purchasers of Commercial Paper, (II) the costs associated with the issuance of
the Commercial Paper and (III) other borrowings the Primary Lender may incur,
including the amount to fund small or odd dollar amounts that are not easily
accommodated in the commercial paper market); and
(ii) with respect to any Disbursement funded by the Alternate Lender
or to the extent that a Disbursement held by the Primary Lender is assigned to
the Alternate Lender or to any other assignee, then, from and after the
applicable Disbursement Date or the effective date of such assignment, as the
case may be, a rate per annum equal to LIBOR plus three tenths of one percent
(0.30%) per annum; provided, however, that, if the Alternate Lender shall have
determined, prior to the commencement of any Interest Period that: (A) Dollar
deposits of sufficient amount and maturity for funding a Disbursement are not
available to such Lender in the London interbank market in the ordinary course
of business; or (B) by reason of circumstances affecting the relevant market,
adequate and fair means do not exist for ascertaining the rate of interest to be
applicable to a Disbursement; or (C) the relevant rate of interest referred to
in the definition of LIBOR which is to be used to determine the rate of interest
for a Disbursement does not cover the funding cost to the Lender of making or
maintaining the Disbursement, then the Lender shall so notify the Indenture
Trustee, who shall give notice to the Shipowner of such condition and interest
shall, effective as of the date of such notice and so long as such condition
shall exist, accrue during each applicable Interest Period at the Base Rate;
provided, further, however that if, in the Lender's reasonable judgment, it
becomes unlawful at any time for such Lender to make or maintain Disbursements
based upon LIBOR, the Lender shall so notify the Indenture Trustee, who shall
give notice to the Shipowner of such determination and, effective as of the date
of such notice and so long as such condition shall exist, interest shall
thereafter accrue during each applicable Interest Period at the Base Rate.
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(b) with respect to Obligations which are Fixed Rate Notes, the interest
rate set forth in each such Obligation, which interest rate shall be as approved
by the Secretary as reasonable pursuant to Section 1104A (b)(5) of the Act.
"Authorization Agreement" means the Authorization Agreement, Contract No.
MA-13504, dated the Closing Date, between the Secretary and the Indenture
Trustee, whereby the Secretary authorizes the Guarantee of the United States of
America to be endorsed on each of the Obligations, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Authorized Newspapers" means THE WALL STREET JOURNAL and THE JOURNAL OF
COMMERCE, or if either ceases to exist, then in such other newspapers as the
Secretary may designate and a newspaper printed in English, approved by the
Secretary and of general circulation in Baltimore, Maryland.
"Base Rate" means, for any Interest Period or any other period, a
fluctuating interest rate per annum as shall be in effect from time to time
which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by Citibank, N.A. in New
York, New York, from time to time, as Citibank, N.A.'s base rate; or
(b) one-half of one percent (0.50%) per annum above the latest
three-week moving average of secondary market morning offering rates
in the United States for three-month certificates of deposit of
major United States money market banks, such three-week moving
average being determined weekly on each Monday (or, if any such day
is not a Business Day, on the next succeeding Business Day) for the
three-week period ending on the previous Friday by Citibank, N.A. on
the basis of such rates reported by certificate of deposit dealers
to and published by the Federal Reserve Bank of New York, or, if
such publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank, N.A. from three New
York certificate of deposit dealers of recognized standing selected
by Citibank, N.A., in either case adjusted to the nearest one-fourth
of one percent (0.25%) or, if there is no nearest one-fourth of one
percent, to the next higher one-fourth of one percent.
"Borrower" means the Shipowner.
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"Business Day" shall mean any day on which dealings in Dollar deposits are
carried on in the London interbank market and on which commercial banks in
London and New York City are open for domestic and foreign exchange business.
"Cede" means Cede & Company.
"Certificate Authorizing Disbursement" shall mean, with respect to a
Disbursement, the United States Certificate Authorizing Disbursement
substantially in the form set forth in Annex A to the Credit Agreement.
"Closing Date" means April 9, 1999.
"Commercial Paper" shall have the meaning set forth in clause (a)(i)of the
definition of Applicable Interest Rate herein.
"Construction Contract" means that certain Semi-Submersible Drilling
Vessel Construction Contract (Hull No.1828), dated April 9, 1998, by and between
the Shipowner and the Shipyard, as the same may be amended, modified or
supplemented in accordance with the applicable provisions thereof.
"Construction Period" shall mean the period from the date hereof to the
Delivery Date.
"Construction Period Interest" shall mean all interest that accrues on the
Outstanding Principal during the Construction Period.
"Corporate Trust Office" means the principal corporate trust office of the
Indenture Trustee at which, at any time, its corporate trust business shall be
principally administered, which office at the date of execution of the Indenture
is located at 25 South Charles Street, 16th Floor, Mail Code 101-591, Baltimore,
Maryland 21201.
"CP Rate" shall have the meaning set forth in clause (a)(i) of the
definition of Applicable Interest Rate herein.
"Credit Agreement" or "Agreement" shall mean the Credit Agreement, dated
as of the Closing Date, among the Shipowner, the Lenders, and the Agents,
including any Exhibit, Annex, or other attachment thereto, as the same may be
amended, modified or supplemented.
"Credit Facility" shall have the meaning set forth in Whereas Clause (A)
of the Credit Agreement.
"DTC" means The Depository Trust Company.
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"Definitive Obligation" has the meaning specified in Article Sixth,
paragraph (aa) of the Special Provisions of the Indenture.
"Delivery Date" means the date on which the Vessel is delivered to and
accepted by the Shipowner.
"Depreciated Actual Cost" means the depreciated actual cost of the Vessel
as determined and re-determined by the Secretary pursuant to Sections 1101(g)
and 1104(b)(2) of the Act.
"Disbursement" shall have the meaning set forth in Section 2.03 of the
Credit Agreement.
"Disbursement Date" shall mean, in relation to any Disbursement, the
Business Day on which the Lender shall make such Disbursement.
"Dollars," "U.S. Dollars," "U.S.D.," "U.S.$" or "$" shall mean the
lawful currency of the United States of America.
"Facility Agent" means CITIBANK INTERNATIONAL PLC, a bank organized and
existing under the laws of England, as facility agent for both the Primary
Lender and the Alternative Lender (and their respective successors and assigns),
and its permitted successors and assigns.
"Final Disbursement Date" shall have the meaning set forth in Section 2.02
of the Credit Agreement.
"Fixed Rate Note" shall mean an Obligation substantially in the form of
Exhibit 3 to the Indenture, appropriately completed.
"Floating Rate Note" shall mean the Obligation substantially in the form
of Exhibit 2 to the Indenture, appropriately completed.
"Global Obligation" has the meaning specified in Article Sixth, paragraph
(aa) of the Special Provisions of the Indenture.
"Governmental Authority" shall mean the government of any country, any
agency, department or other administrative authority or instrumentality thereof,
and any local or other governmental authority within any such country.
"Guarantee" or "Guarantees" means the guarantee of an Obligation by the
United States of America pursuant to Title XI of the Act, as provided in the
Authorization Agreement.
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"Guarantee Commitment" means the Commitment to Guarantee Obligations,
Contract No. MA-13509, dated as of the Closing Date, executed by the Secretary
and accepted by the Shipowner with respect to the Guarantees, as originally
executed or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Guarantee Fees" shall mean the amounts described in the Guarantee
Commitment payable in consideration for the commitment therein described and
payable as provided in such Guarantee Commitment.
"Holder" means the holder of an Obligation.
"Indenture" means the Trust Indenture dated as of the Closing Date,
between the Shipowner and the Indenture Trustee, as the same is originally
executed, or as modified, amended or supplemented in accordance with the
applicable provisions thereof.
"Indenture Default" has the meaning specified in Article VI of Exhibit
1 to the Indenture.
"Indenture Trustee" means FMB Trust Company, National Association, a
national banking association, and any successor trustee permitted under the
Indenture.
"Interest Payment Date" means, with respect to any Obligation, the date
when any installment of interest on such Obligation is due and payable, which
are February 15 and August 15 of each year, beginning on August 15, 1999, and
the date of any prepayment of any Obligation.
"Interest Period" shall mean, with respect to any Disbursement, (i) the
period commencing on the Disbursement Date and extending up to, but not
including, the next Interest Payment Date; and (ii) thereafter the period
commencing on each Interest Payment Date and extending up to, but not including,
the next Interest Payment Date.
"Lender" shall mean shall mean either the Primary Lender or the Alternate
Lender, as the case may be, depending on which of the two parties made or will
make the relevant disbursement of funds under the Credit Agreement; provided,
however, that if the Primary Lender assigns its rights under the Credit
Agreement to the Alternate Lender, the term "Lender," shall mean only the
Alternate Lender, CITIBANK, N.A., a national banking association, and its
successors and assigns.
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"Letter of Representations" means the Letter of Representations between
the Shipowner and the Indenture Trustee and other documentation necessary or
desirable to effectuate the issuance of the Fixed Rate Notes as Global
Obligations.
"LIBOR" shall mean, in relation to any Interest Period, the rate of
interest per annum (rounded upward, if necessary, to the nearest 1/16 of 1%)
quoted by the principal London office of CITIBANK, N. A., at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for the offering to leading banks in the London interbank market of U.S.
Dollar deposits for a period and in an amount comparable to such Interest Period
and the principal amount upon which interest is to be paid during such Interest
Period.
"Make-Whole Premium" means an amount equal to the excess, if any, between
(i) the sum of the respective Payment Values of each Prospective Payment, over
(ii) 100% of the aggregate principal amount being prepaid on the Redemption
Date.
"Make-Whole Premium Determination Date" means the second Business Day
before the applicable Redemption Date.
"Maturity" when used with respect to any Obligation, means the date on
which the principal of, or interest on, such Obligation becomes due and payable
as therein provided, whether on a Payment Date, at the Stated Maturity or by
prepayment, repayment, redemption or declaration of acceleration or otherwise.
"Mortgage" means the first preferred ship mortgage on the Vessel, Contract
No. MA-13506, between the Shipowner and the Secretary, as originally executed or
as modified, amended or supplemented in accordance with the applicable
provisions thereof.
"Note" shall mean a Floating Rate Note or a Fixed Rate Note.
"Obligation" or "Obligations" shall mean the Floating Rate Note or Fixed
Rate Note(s) of the Shipowner bearing a Guarantee and authenticated and
delivered pursuant to the Indenture and the Authorization Agreement.
"Obligation Owners" has the meaning specified in Article Sixth, paragraph
(aa) of the Special Provisions of the Indenture.
"Obligation Register" has the meaning specified in Section 2.10 of
Exhibit 1 to the Indenture.
"Obligee" means each Holder.
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"Original Principal Amount" shall mean the maximum principal amount of
the Obligations.
"Officer's Certificate" means a certificate conforming to Section 1.02 of
Exhibit 1 to the Indenture and signed by a Responsible Officer of the Person
giving such certificate.
"Opinion of Counsel" means an opinion of counsel conforming to Section
1.02 of Exhibit 1 to the Indenture.
"Outstanding," when used with reference to the Obligations, shall mean all
Obligations theretofore issued under the Indenture, except:
(1) Obligations Retired or Paid; and
(2) Obligations in lieu of which other Obligations have been issued
under the Indenture.
For the purposes of Articles VI and X of Exhibit 1 to the Indenture, and also in
determining whether the Holders of a stated percentage of the principal amount
of Outstanding Obligations have taken any Act of Obligees required or permitted
by the Indenture, Obligations owned by the Shipowner or by any Affiliate of the
Shipowner (excluding (a) Obligations held by an Affiliate of the Shipowner when
such Affiliate is acting in a fiduciary capacity if it is established to the
satisfaction of the Indenture Trustee that neither the Shipowner nor another
Affiliate has a beneficial interest therein and (b) Obligations pledged in good
faith by the Shipowner or by any Affiliate of the Shipowner, if the pledgee (i)
is not an Affiliate of the pledgor and (ii) establishes to the satisfaction of
the Indenture Trustee that the pledgee has the right to vote such Obligations)
shall be disregarded and deemed not to be Outstanding; PROVIDED HOWEVER THAT,
for the purpose of determining whether the Indenture Trustee shall be protected
in relying on any such Act of Obligees, only Obligations which the Indenture
Trustee has actual knowledge are so owned shall be so disregarded and deemed not
to be Outstanding. Obligations which are not Outstanding shall not be entitled
to any rights or benefits provided in the Indenture.
"Outstanding Principal" shall have the meaning set forth in Section 2.01
of the Credit Agreement.
"Paying Agent" means any bank or trust company having the qualifications
set forth in clauses (1), (3), (4) and (5) of Section 7.02(a) of Exhibit 1 to
the Indenture, which shall be appointed by the Shipowner in accordance with
Section 4.02 of Exhibit 1 to the Indenture to pay the principal
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of (and premium, if any) or interest on the Obligations on behalf of the
Shipowner.
"Payment Date" shall mean February 15 and August 15 of each year,
beginning on February 15, 2001.
"Payment Default" has the meaning specified in Section 6.01(a) of
Exhibit 1 to the Indenture.
"Payment Value" of each Prospective Payment shall be determined by
discounting such Prospective Payment at the Reinvestment Rate for the period
from the Payment Date on which such Prospective Payment was scheduled to be paid
to the applicable Redemption Date.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Place of Payment" means the place at which an Obligation is to be
redeemed pursuant to Article III of Exhibit 1 to the Indenture.
"Principal Office," when used with respect to the Shipowner, means the
office of the Shipowner at which, at any particular time, its corporate business
is principally administered, which office at the date of execution of the
Indenture is located in the British Virgin Islands.
"Primary Lender" means GOVCO INCORPORATED, a Delaware corporation, and
its successors and assigns.
"Prospective Payment" means, with respect to the Fixed Rate Notes: (i)
each scheduled interest payment on each scheduled principal amount to be
prepaid; and (ii) the scheduled principal amount to be prepaid.
"Redeem" means with respect to the redemption of Obligations, to repay
or prepay.
"Redemption" means with respect to the redemption of Obligations, the
repayment or prepayment of Obligations as applicable.
"Redemption Date" means, with respect to any Obligation, a date fixed for
the prepayment, repayment or redemption of such Obligation by or pursuant to
Article Fourth of the Indenture or Article III of Exhibit 1 to the Indenture.
"Redemption Price" means, with respect to any Obligation, the price at
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which an Obligation is to be prepaid, repaid, or redeemed pursuant to Article
Fourth of the Indenture or Article III of Exhibit 1 to the Indenture.
"Reinvestment Rate" means the yield determined by the Indenture Trustee,
based on information received from the Holder or calculation agent, to be the
yield of the issue of actively traded United States Treasury securities having a
maturity equal to the Weighted Average Life to Final Maturity; provided,
however, that if such Weighted Average Life to Final Maturity is not equal to
the maturity of an actively traded United States Treasury security (rounded to
the nearest one-twelfth of a year), such yield shall be obtained by linear
interpolation from the yields of actively traded United States Treasury
securities having the greater maturity closest to and the lesser maturity
closest to such Weighted Average Life to Final Maturity. The yields shall be
determined by reference to the yields as indicated by Telerate Access Service
(page 8003 or the relevant page at the date of determination indicating such
yields) (or, if such data ceases to be available, any publicly available sources
of similar market data) at approximately 11:00 a.m. (New York City time) on the
Make-Whole Premium Determination Date.
"Remaining Dollar Years" means the sum of the amounts obtained by
multiplying: (i) the amount of each remaining scheduled payment of principal of
the Fixed Rate Notes (without giving effect to such Redemption) by (ii) the
number of years (rounded to the nearest one-twelfth) which will elapse between
the Redemption Date and the Payment Date for such scheduled principal amount.
"Request" means a written request to a Person for the action therein
specified, signed by the Person making such request or a Responsible Officer
thereof.
"Responsible Officer" means (i) in the case of any business corporation,
the chairman of the board of directors, the president, any vice-president, the
secretary, assistant secretary, the treasurer or assistant treasurer thereof,
(ii) in the case of any commercial bank, the chairman or vice-chairman of the
executive committee of the board of directors or trustees, the president, any
vice president, the secretary, the treasurer, any trust officer, any executive,
senior, second or assistant vice president or any officer or assistant officer
customarily performing functions similar to those performed by the persons who
at the time shall be such officers or to whom any related matter is referred
because of his/her knowledge of and familiarity with the particular subject
thereof, (iii) in the case of the Indenture Trustee, any senior trust officer or
trust officer, or any vice president associated with the Corporate Trust Office,
and (iv) with respect to the signing or authentication of Obligations and
Guarantees by the Indenture Trustee, any person specifically authorized by the
Indenture Trustee to sign or authenticate Obligations.
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"Retired or Paid," as applied to Obligations and the indebtedness
evidenced thereby, means that such Obligations shall be deemed to have been
retired or paid and shall no longer be entitled to any rights or benefits
provided in the Indenture if:
(1) such Obligations shall have been paid in full in immediately
available funds;
(2) such Obligations shall have been cancelled by the Indenture
Trustee or shall have been delivered to the Indenture Trustee
for cancellation; or
(3) such Obligations shall have become due and payable at Maturity
and funds sufficient for the payment of such Obligations
(including interest to the date of Maturity, or in the case of
a payment after Maturity, to the date of payment, together
with any premium thereon) and available for such payment
(whether as a result of payment pursuant to the Guarantees or
otherwise) shall be held by the Indenture Trustee or any
Paying Agent pursuant to Section 4.02 of Exhibit 1 to the
Indenture (or shall have been so held and shall thereafter
have been paid to the Shipowner pursuant to Section 4.03 of
Exhibit 1 to the Indenture) in trust for the purpose or with
irrevocable directions, to apply the same;
PROVIDED THAT, the foregoing definition is subject to the provisions of Section
6.08 of Exhibit 1 to the Indenture.
"Secretary" means the Secretary of Transportation or any official or
official body from time to time duly authorized to perform the duties and
functions of the Secretary of Transportation under Title XI of the Act
(including the Maritime Administrator, the Acting Maritime Administrator, and to
the extent so authorized, the Deputy Maritime Administrator and other officials
of the Maritime Administration).
"Secretary's Note" means a promissory note or promissory notes issued and
delivered by the Shipowner to the Secretary described in Article Third of the
Special Provisions of the Security Agreement and shall also mean any promissory
note issued in substitution for and replacement thereof pursuant to the Security
Agreement.
"Secretary's Notice" means a notice from the Secretary to the Indenture
Trustee to the effect that (a) a default, within the meaning of Section 1105(b)
of the Act, has occurred under a mortgage, loan agreement, or other security
agreement that has been entered into between the Secretary, the Shipowner
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and any other parties in order to protect the interests of the United States of
America in connection with the Guarantees, (b) such notice is given for the
purposes of Section 6.01(b) of Exhibit 1 to the Indenture in order to protect
the security interests of the United States of America under such mortgage, loan
agreement or other security agreement, and (c) the Guarantees will terminate
upon the expiration of 60 days from the date of such notice if the Indenture
Trustee and each Obligee shall have failed to demand payment of the Guarantees
as provided in the Indenture, the Guarantees or the Act. Such notice shall be
given (i) in writing, by registered mail, return receipt requested, deposited in
the United States Mail on the date of such notice and addressed to a Responsible
Officer in the Corporate Trust Office of the Indenture Trustee in accordance
with the Special Provisions of the Indenture, (ii) by telegram, telex, telecopy
or similar means of transmission dispatched on such date and addressed to the
Responsible Officer in the Corporate Trust Office of the Indenture Trustee, as
aforesaid, and (iii) by collect telephone call made on such date to a
Responsible Officer in the Corporate Trust Office of the Indenture Trustee. A
Secretary's Notice shall not be deemed to have been given unless it shall have
been given in accordance with all the provisions of this definition, and the
date of any Secretary's Notice shall be deemed to be the last date on which it
is so given pursuant to clauses (i) through (iii) above.
"Secretary's Supplemental Indenture" means a Supplemental Indenture
evidencing the succession, pursuant to Section 6.09 of Exhibit 1 to the
Indenture, of the Secretary to the Shipowner, and the assumption by the
Secretary of the obligations of the Shipowner under the Indenture.
"Section 1104" means Section 1104A of the Act, and when used with
reference to subsections of Section 1104, means subsections of Section 1104A.
"Security Agreement" shall mean that certain security agreement, Contract
No. MA-13505, dated as of the Closing Date, with respect to the Vessel, executed
by the Shipowner and the Secretary relating to the security in respect to the
Guarantees, as originally executed or as modified, amended or supplemented in
accordance with the applicable provisions thereof.
"Shipowner" means PETRODRILL FOUR LIMITED, a British Virgin Islands
international business company, and subject to the provisions of Sections 6.09,
8.01 and 8.02 of Exhibit 1 to the Indenture, shall also include its successors
and assigns.
"Shipyard" or "Shipbuilder" means TDI-Halter, Limited Partnership, a
Louisiana limited partnership.
"Stated Maturity," when used with respect to any Obligation, means the
date determinable as set forth in such Obligation as the final date on which the
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principal of such Obligation is due and payable, which shall include, without
limitation, each of the Payment Dates.
"Supplemental Indenture" shall mean any indenture supplement to the
Indenture entered into pursuant to Article X thereof.
"Title XI" means Title XI of the Act.
"Title XI Reserve Fund and Financial Agreement" means that certain Title
XI Reserve Fund and Financial Agreement, Contract No. MA-13513, dated as of the
Closing Date, executed by the Shipowner and the Secretary, as amended, modified
or supplemented in accordance with the applicable provisions thereof.
"United States" means the United States of America.
"Vessel" means the Shipowner's dynamic positioned semi-submersible
drilling rig to be named the AMETHYST 4 and constructed by TDI-Halter, Limited
Partnership in accordance with the Construction Contract, including all work and
material heretofore or hereafter performed upon or installed in or placed on
board such Vessel, together with related appurtenances, additions, improvements,
and replacements.
"Weighted Average Life to Final Maturity" means the number of years
(rounded up to the nearest one-twelfth of a year) obtained by dividing: (i) the
then Remaining Dollar Years by (ii) the total amount of the then remaining
aggregate unpaid principal amount of such Fixed Rate Notes (without giving
effect to the subject Redemption).
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EXHIBIT 4.24
GUARANTY AGREEMENT IN FAVOR OF THE UNITED STATES
This Guaranty Agreement (the "Guaranty Agreement") is dated this 9th day
April, 1999 by PETRODRILL FIVE LIMITED, a British Virgin Islands international
business company (the "Guarantor"), to the United States of America, represented
by the Secretary of Transportation, acting by and through the Maritime
Administrator (the "Secretary").
RECITALS:
A. WHEREAS, the Guarantor is the sister company of PETRODRILL FOUR
LIMITED, (the "Shipowner"); and
B. WHEREAS, the Shipowner, in connection with the financing of the cost of
construction of the AMETHYST 4, to be wholly owned by the Shipowner (the
"Vessels"), on the date hereof, borrowed certain funds and created and
authorized the issuance of obligations designated "United States Government
Guaranteed Export Ship Financing Obligations, AMETHYST 4 Series" (the
"Obligations"), consisting on the date hereof of $149,625,000 aggregate
principal amount of the Obligations, bearing interest at the rate specified
therein and issued under a trust indenture between the Shipowner and FMB Trust
Company, National Association, a national trust company as trustee, dated as of
the date hereof, said Obligations constituting the legal, valid and binding
obligations of the Shipowner; and
C. WHEREAS, the Shipowner, on the date hereof, accepted the Secretary's
Commitment to Guarantee Obligations (the "Commitment") pursuant to Title XI of
the Merchant Marine Act, 1936, as amended (the "Act"), whereby the Secretary
authorized a guarantee to be endorsed upon each of the Obligations (the
"Guarantees"); and
D. WHEREAS, the Shipowner has, in consideration of the issuance of the
Guarantees by the Secretary of the payment of the unpaid interest on, and the
unpaid balance of the principal of the Obligations, executed a security
agreement dated the date hereof, between the Shipowner and the Secretary (the
"Security Agreement") and issued and delivered to the Secretary a promissory
note in the principal amount of $149,625,000, (said promissory note, as
originally executed and as the same may hereafter be amended, modified,
supplemented or endorsed, herein called the "Secretary's Note").
E. WHEREAS, the Secretary has required this Guaranty Agreement from the
Guarantor as an integral part of the consideration offered by or on behalf of
the Shipowner as a condition of the Secretary's decision to enter into the
Commitment to issue the Guarantees, and the Guarantor has agreed to enter into
this Guaranty Agreement for the purpose of guaranteeing the Shipowner's
obligations to the Secretary under the Secretary's Note.
<PAGE>
NOW THEREFORE, in consideration of the premises, and of other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Guarantor hereby agrees as follows:
1. DEFINITIONS. Unless otherwise specifically defined herein, the
capitalized terms used herein which are defined in Schedule X to the Security
Agreement, dated the date hereof and any reference therein to other instruments
shall have the respective meanings stated in Schedule X of the Security
Agreement or such other instruments.
2. GUARANTEE.
a) The Guarantor hereby absolutely, irrevocably and unconditionally
guarantees the due and punctual payment of the principal of and the interest on
the Secretary's Note. The Guarantor shall be required to make said payments
under this Guaranty Agreement upon receipt of a written notice from the
Secretary which states that the Shipowner has not promptly, completely or
effectively made said payments. The failure of Guarantor to receive such a
written notice or the failure of the Secretary to send said notice shall not
relieve the Guarantor of its obligations under this Guaranty Agreement. The
Guarantor shall immediately pay to the Secretary or its designee in immediately
available funds such payments guaranteed herein.
b) The Guarantor hereby consents and agrees that its obligations
under this Guaranty Agreement will not be discharged by any act or omission to
act of any kind by the Secretary or any other person or any other circumstances
whatsoever (including, but not limited to, any extension, rearrangement or
renewal with respect to any indebtedness or other obligation of the Shipowner
with or without notice to the Guarantor, any waiver of any right of the
Secretary under the terms of the Secretary's Note, the Security Agreement, the
Mortgage or this Guaranty Agreement, any release of security, any transfer or
assignment of rights or obligations accruing to the Secretary under the
Secretary's Note, the Security Agreement, the Mortgage or this Guaranty
Agreement, any corporate reorganization, dissolution, merger, acquisition of or
by or other alteration of the corporate existence or structure of the Shipowner
or the Guarantor, discharge of the Shipowner in bankruptcy, the invalidity,
illegality or unenforceability of the Secretary's Note, the Security Agreement,
the Mortgage or this Guaranty Agreement or the absence of any action to enforce
the obligations of the Shipowner) which might constitute a legal or equitable
discharge of the Guarantor; it being the intention of the Guarantor that this
Guaranty Agreement be absolute, continuing and unconditional and the guarantee
hereunder shall only be discharged by the payment in full of all sums so
guaranteed hereunder.
c) The Guarantor hereby irrevocably and unconditionally waives: (i)
notice of any of the matters referred to in this Guaranty Agreement and any
action by the Secretary in reliance thereon; (ii) all notices which may be
required by statute, rule of law or otherwise to preserve any rights against the
Guarantor hereunder, including without limitations, any demand, protest, proof
of notice of non-payment of all sums payable under the Secretary's Note or any
notice of any failure on the part of the Shipowner to perform or comply with any
covenant, term or obligations of any agreement to which it is a party; (iii) any
requirement for the enforcement, assertion or exercise of
2
<PAGE>
any right, remedy, power or privilege under or with respect to the Mortgage, the
Security Agreement or the Secretary's Note; (iv) any requirement of diligence;
(v) any requirement that the Shipowner be joined as a party to any proceedings
for the enforcement of any provision of this Guaranty Agreement or that the
Secretary proceed against any other guarantor executing this Guaranty Agreement
or any other guaranty agreement; (vi) any and all defenses to payment hereunder,
except the defense of payment already made, and agree to confess without
contesting liability hereunder for any judgment entered hereon; (vii)
presentment, demand, protest, notice of protest and dishonor, notice of intent
to accelerate and notice of acceptance; or (viii) the right to require the
Secretary to pursue any remedy in the Secretary's power whatsoever.
d) The Guarantor hereby agrees that this Guaranty Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time payment of any sum hereby guaranteed is rescinded or must be otherwise
restored or returned by the Secretary, upon the insolvency, bankruptcy or
reorganization of the Shipowner, or otherwise, all as though such payment had
not been made. The Guarantor further agrees that if the maturity of any
obligations guaranteed herein be accelerated by bankruptcy or otherwise, such
maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to the Guarantor.
e) Any amount payable hereunder shall not be subject to any
reduction by reason of any counterclaim, set-off, deduction, abatement or
otherwise.
f) The Guarantor shall pay all reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred in
connection with the enforcement of the obligations of the Guarantor under this
Guaranty Agreement.
g) The Secretary's Note may be amended, modified or endorsed without
the consent of the Guarantor.
h) The Secretary may enforce the Guarantor's obligations hereunder
without in any way first pursuing or exhausting any other rights or remedies
which the Secretary may have against the Shipowner or any other person, firm or
corporation or against any security the Secretary may hold.
(i) The Guarantor hereby agrees that this Guaranty Agreement shall
be secured by a mortgage on the AMETHYST 5 upon its delivery.
3. SECRETARY'S RIGHTS. The Guarantor authorizes the Secretary, without
notice or demand and without affecting the Guarantor's liability hereunder, to
take and hold security for the payment of this Guaranty Agreement and/or any of
the obligations guaranteed herein and exchange, enforce, waive and release any
such security; and to apply such security and direct the order or manner of sale
thereof as the Secretary in his discretion may determine; and to obtain a
guarantee of any of the obligations guaranteed herein from any one or more
persons, corporations or entities whomsoever and at any time or times to
enforce, waive, rearrange, modify, limit or release such other persons,
corporations or entities from their obligations under such guarantees.
3
<PAGE>
4. PRIMARY LIABILITY. It is expressly agreed that the liability of the
Guarantor for the payment of the obligations guaranteed herein shall be primary
and not secondary.
5. REPRESENTATIONS AND WARRANTIES. The Guarantor represents and warrants
as follows:
a) The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the British Virgin Islands, and has full
power and authority (corporate, legal and other) to execute, deliver and carry
out the terms of this Guaranty Agreement;
b) This Guaranty Agreement has been duly authorized, executed and
delivered by the Guarantor and constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms;
c) The execution, delivery and performance the Guarantor of this
Guaranty Agreement does not require the approval or consent of its shareholders
or of any governmental authority and does not contravene the Guarantor's
Memorandum of Association and Articles of Association or any mortgage, indenture
or other agreement binding upon it, or any law, regulation, order, judgment or
decree applicable to the Guarantor; and
d) The Guarantor's guarantee pursuant to this Guaranty Agreement may
be expected to benefit, directly or indirectly, the Guarantor.
e) The Guarantor has fully adequate financial resources, funds, and
assets to satisfy its obligations under this Guaranty Agreement, and the
Guarantor will in the future retain financial resources, funds, and assets to
fully satisfy its obligations under this Guaranty Agreement.
6. CONTINUING GUARANTEE. This Guaranty Agreement is a continuing guarantee
of payment and collectibility and shall:
a) Remain in full force and effect so long as any obligation
of the Shipowner to the Secretary referred to herein exists;
b) Be binding upon the Guarantor, its successors and assigns; and
c) Be executed and issued for the sole and exclusive benefit of the
United States, and no other party shall be permitted to claim any benefit,
direct or indirect, therefrom. This Guaranty Agreement is nonassignable, any
assignment thereof shall be null and void and have no legal effect whatsoever.
d) Inure to the benefit of, and be enforceable by the Secretary, his
successors and assigns.
4
<PAGE>
7. DEFAULT. A default under the terms of this Guaranty Agreement shall be
deemed to occur if the Guarantor fails to make any payments guaranteed
hereunder.
8. NOTICES AND COMMUNICATIONS. All notices, requests, demands, directions,
consents, waivers, approvals or other communications shall be in writing, in the
English language (or accompanied by an accurate English translation upon which
the Secretary shall have the right to rely for all purposes under this
Agreement) and shall be made or delivered in person or by registered or
certified mail, postage prepaid, addressed to the Guarantor or the Secretary as
provided below or to such other address as the Guarantor or the Secretary may
hereafter specify in a written notice to the other, and shall be effective upon
receipt by the addressee thereof. In any conflict over the meaning of this
Guaranty Agreement or any notices, directions or other communications pursuant
thereto, the English language shall control, notwithstanding any relevant
translations of the English version into any other language.
Guarantor: PETRODRILL FIVE LIMITED
c/o Arias, Fabrega & Fabrega
P.O. Box 985
Omar Hodge Building
Wickham's Cay
Road Town, Tortola
British Virgin Islands
With a copy to: PETRODRILL ENGINEERING NV
K.P. van der Mandelelaan 38
3062 MB
Rotterdam (Brainpark)
The Netherlands
Secretary: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
Maritime Administration
U.S. Department of Transportation
400 Seventh Street, SW
Washington, DC 20590
Attention: Chief, Division of Ship Financing
Contracts
9. AMENDMENTS AND SUPPLEMENTS. No agreement shall be effective to change
or modify, supplement, amend or discharge in whole or in part this Guaranty
Agreement unless such agreement is in writing, signed by the Guarantor and the
Secretary.
10. GOVERNING LAW. This Guaranty Agreement and the rights and obligations
of the parties hereto shall be construed, enforced, and governed by the laws of
the United States of America, but to the extent they are inapplicable, then by
the laws of the District of Columbia of the United States of America without
regard to its conflict of laws provision.
5
<PAGE>
11. JURISDICTION AND CONSENT TO SUIT. Any proceeding to enforce this
Agreement may be brought in the Federal courts of the United States of America
located in the District of Columbia of the United States of America. The
Guarantor hereby irrevocably waives any present or future objection to such
venue, and for itself and in respect of any of its properties hereby irrevocably
consents and submits unconditionally to the exclusive jurisdiction of those
courts. The Guarantor further irrevocably waives any claim that any such court
is not a convenient forum for any such proceeding. The Guarantor agrees that any
service of process, writ, judgment or other notice of legal process shall be
deemed and held in every respect to be effectively served upon it in connection
with proceedings in the District of Columbia of the United States of America, if
delivered Sher & Blackwell, Suite 900, 1850 M Street, N.W., Washington D.C.
20036, which it irrevocably designates and appoints as its authorized agent for
the service of process in the District and Federal courts in the District of
Columbia of the United States of America. The Guarantor further agrees that
final judgment against it in any such action or proceeding arising out of or
relating to this Agreement shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States of America by suit on the
judgment, a certified or exemplified copy of which shall be conclusive evidence
of that fact and of the judgment.
12. PAYMENTS IN U.S. CURRENCY. This Guarantee is part of an international
financial transaction in which the specification of United States currency is of
the essence, and such currency shall be the currency of account in all events.
The payment obligations of the Guarantor hereunder shall not be discharged by an
amount paid in another currency, whether pursuant to a judgment or otherwise, to
the extent that the amount so paid on prompt conversion to such currency under
normal banking procedures does not yield after deduction of any and all fees,
taxes or any other charges imposed on the payment of such amount of United
States dollars then due. In the event that any payment by the Guarantor, whether
pursuant to a judgment or otherwise, upon conversion and transfer, does not
result in the payment of such amount of United States currency at the place such
amount is due, the Secretary shall be entitled to demand immediate payment of,
and shall have a cause of action against the Guarantor for, the additional
amount necessary to yield the amount then due. In the event the Secretary, upon
the conversion of such judgment into currency, shall receive (as a result of
currency exchange rate fluctuations) an amount greater than that to which it was
entitled, the Guarantor shall be entitled to immediate reimbursement of the
excess amount. The terms "U.S. currency" or the "dollars" or the symbol "$" as
used herein shall mean dollars in any coin or currency of the United States of
America.
13 IMMUNITY. The Guarantor represents and warrants that it is subject to
civil and commercial law with respect to its obligations under this Agreement,
that the making and performance of this Agreement constitutes private and
commercial acts rather than governmental or public acts and that neither the
Guarantor nor any of its properties or revenues has any right of immunity on the
grounds of Sovereignty or otherwise from suit, court jurisdiction, attachment
prior to judgment, attachment in aid of execution of a judgment, set-off,
execution of a judgment or from any other legal process with respect to its
obligations under this Agreement. To the extent that the Guarantor may hereafter
be entitled, in any jurisdiction in which judicial proceedings may at any time
be commenced with respect to this Agreement to claim for itself or its revenues
or assets any
6
<PAGE>
such immunity, and to the extent that in any such jurisdiction there may be
attributed to the Guarantor such an immunity (whether or not claimed), the
Guarantor hereby irrevocably agrees not to claim and hereby irrevocably waives
such immunity. The foregoing waiver of immunity shall have effect under the
United States Sovereign Immunities Act of 1976.
14. COUNTERPARTS. This Guaranty Agreement may be executed in one or more
counterparts. All such counterparts shall be deemed to be originals and shall
together constitute but one and the same instrument.
7
<PAGE>
IN WITNESS WHEREOF, this Guaranty Agreement has been executed on the day
and year first above written.
PETRODRILL FIVE LIMITED
By: /s/ EARL W. MCNIEL
---------------------
Name: Earl W. McNiel
Title: Treasurer
Attest:
/s/ ROBERT W. RANDALL
- - ----------------------
Name:Robert W. Randall
Title: Secretary
ACKNOWLEDGED BY:
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION
By: MARITIME ADMINISTRATOR
(Seal)
By: /s/ JOEL C. RICHARD
-----------------------
Secretary
Maritime Administration
ATTEST:
/s/ LARRY MAIN
- - -----------------------
Assistant Secretary
Maritime Administration
8
EXHIBIT 4.25
GUARANTY AGREEMENT IN FAVOR OF THE UNITED STATES
This Guaranty Agreement (the "Guaranty Agreement") is dated this 9th day
of April, 1999 by PETRODRILL FOUR LIMITED, a British Virgin Islands
international business company (the "Guarantor"), to the United States of
America, represented by the Secretary of Transportation, acting by and through
the Maritime Administrator (the "Secretary").
RECITALS:
A. WHEREAS, the Guarantor is the sister company of PETRODRILL FIVE
LIMITED, (the "Shipowner"); and
B. WHEREAS, the Shipowner, in connection with the financing of the cost of
construction of the AMETHYST 5, to be wholly owned by the Shipowner (the
"Vessels"), on the date hereof, borrowed certain funds and created and
authorized the issuance of obligations designated "United States Government
Guaranteed Export Ship Financing Obligations, AMETHYST 5 Series" (the
"Obligations"), consisting on the date hereof of $150,183,000 principal amount
of the Obligations, bearing interest at the rate specified therein and issued
under a trust indenture between the Shipowner and FMB Trust Company, National
Association, a national trust company as trustee, dated as of the date hereof,
said Obligations constituting the legal, valid and binding obligations of the
Shipowner; and
C. WHEREAS, the Shipowner, on the date hereof, accepted the Secretary's
Commitment to Guarantee Obligations (the "Commitment") pursuant to Title XI of
the Merchant Marine Act, 1936, as amended (the "Act"), whereby the Secretary
authorized a guarantee to be endorsed upon each of the Obligations (the
"Guarantees"); and
D. WHEREAS, the Shipowner has, in consideration of the issuance of the
Guarantees by the Secretary of the payment of the unpaid interest on, and the
unpaid balance of the principal of the Obligations, executed a security
agreement dated the date hereof, between the Shipowner and the Secretary (the
"Security Agreement") and issued and delivered to the Secretary a promissory
note in the principal amount of $150,183,000, (said promissory note, as
originally executed and as the same may hereafter be amended, modified,
supplemented or endorsed, herein called the "Secretary's Note").
E. WHEREAS, the Secretary has required this Guaranty Agreement from the
Guarantor as an integral part of the consideration offered by or on behalf of
the Shipowner as a condition of the Secretary's decision to enter into the
Commitment to issue the Guarantees, and the Guarantor has agreed to enter into
this Guaranty Agreement for the purpose of guaranteeing the Shipowner's
obligations to the Secretary under the Secretary's Note.
1
<PAGE>
NOW THEREFORE, in consideration of the premises, and of other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Guarantor hereby agrees as follows:
1. DEFINITIONS. Unless otherwise specifically defined herein, the
capitalized terms used herein which are defined in Schedule X to the Security
Agreement, dated the date hereof and any reference therein to other instruments
shall have the respective meanings stated in Schedule X of the Security
Agreement or such other instruments.
2. GUARANTEE.
a) The Guarantor hereby absolutely, irrevocably and unconditionally
guarantees the due and punctual payment of the principal of and the interest on
the Secretary's Note. The Guarantor shall be required to make said payments
under this Guaranty Agreement upon receipt of a written notice from the
Secretary which states that the Shipowner has not promptly, completely or
effectively made said payments. The failure of Guarantor to receive such a
written notice or the failure of the Secretary to send said notice shall not
relieve the Guarantor of its obligations under this Guaranty Agreement. The
Guarantor shall immediately pay to the Secretary or its designee in immediately
available funds such payments guaranteed herein.
b) The Guarantor hereby consents and agrees that its obligations
under this Guaranty Agreement will not be discharged by any act or omission to
act of any kind by the Secretary or any other person or any other circumstances
whatsoever (including, but not limited to, any extension, rearrangement or
renewal with respect to any indebtedness or other obligation of the Shipowner
with or without notice to the Guarantor, any waiver of any right of the
Secretary under the terms of the Secretary's Note, the Security Agreement, the
Mortgage or this Guaranty Agreement, any release of security, any transfer or
assignment of rights or obligations accruing to the Secretary under the
Secretary's Note, the Security Agreement, the Mortgage or this Guaranty
Agreement, any corporate reorganization, dissolution, merger, acquisition of or
by or other alteration of the corporate existence or structure of the Shipowner
or the Guarantor, discharge of the Shipowner in bankruptcy, the invalidity,
illegality or unenforceability of the Secretary's Note, the Security Agreement,
the Mortgage or this Guaranty Agreement or the absence of any action to enforce
the obligations of the Shipowner) which might constitute a legal or equitable
discharge of the Guarantor; it being the intention of the Guarantor that this
Guaranty Agreement be absolute, continuing and unconditional and the guarantee
hereunder shall only be discharged by the payment in full of all sums so
guaranteed hereunder.
c) The Guarantor hereby irrevocably and unconditionally waives: (i)
notice of any of the matters referred to in this Guaranty Agreement and any
action by the Secretary in reliance thereon; (ii) all notices which may be
required by statute, rule of law or otherwise to preserve any rights against the
Guarantor hereunder, including without limitations, any demand, protest, proof
of notice of non-payment of all sums payable under the Secretary's Note or any
notice of any failure on the part of the Shipowner to perform or comply with any
covenant, term or obligations of any agreement to which it is a party; (iii) any
requirement for the enforcement, assertion or exercise of
2
<PAGE>
any right, remedy, power or privilege under or with respect to the Mortgage, the
Security Agreement or the Secretary's Note; (iv) any requirement of diligence;
(v) any requirement that the Shipowner be joined as a party to any proceedings
for the enforcement of any provision of this Guaranty Agreement or that the
Secretary proceed against any other guarantor executing this Guaranty Agreement
or any other guaranty agreement; (vi) any and all defenses to payment hereunder,
except the defense of payment already made, and agree to confess without
contesting liability hereunder for any judgment entered hereon; (vii)
presentment, demand, protest, notice of protest and dishonor, notice of intent
to accelerate and notice of acceptance; or (viii) the right to require the
Secretary to pursue any remedy in the Secretary's power whatsoever.
d) The Guarantor hereby agrees that this Guaranty Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time payment of any sum hereby guaranteed is rescinded or must be otherwise
restored or returned by the Secretary, upon the insolvency, bankruptcy or
reorganization of the Shipowner, or otherwise, all as though such payment had
not been made. The Guarantor further agrees that if the maturity of any
obligations guaranteed herein be accelerated by bankruptcy or otherwise, such
maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to the Guarantor.
e) Any amount payable hereunder shall not be subject to any
reduction by reason of any counterclaim, set-off, deduction, abatement or
otherwise.
f) The Guarantor shall pay all reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred in
connection with the enforcement of the obligations of the Guarantor under this
Guaranty Agreement.
g) The Secretary's Note may be amended, modified or endorsed without
the consent of the Guarantor.
h) The Secretary may enforce the Guarantor's obligations hereunder
without in any way first pursuing or exhausting any other rights or remedies
which the Secretary may have against the Shipowner or any other person, firm or
corporation or against any security the Secretary may hold.
(i) The Guarantor hereby agrees that this Guaranty Agreement shall
be secured by a mortgage on the AMETHYST 4 upon its delivery.
3. SECRETARY'S RIGHTS. The Guarantor authorizes the Secretary, without
notice or demand and without affecting the Guarantor's liability hereunder, to
take and hold security for the payment of this Guaranty Agreement and/or any of
the obligations guaranteed herein and exchange, enforce, waive and release any
such security; and to apply such security and direct the order or manner of sale
thereof as the Secretary in his discretion may determine; and to obtain a
guarantee of any of the obligations guaranteed herein from any one or more
persons, corporations or entities whomsoever and at any time or times to
enforce, waive, rearrange, modify, limit or release such other persons,
corporations or entities from their obligations under such guarantees.
3
<PAGE>
4. PRIMARY LIABILITY. It is expressly agreed that the liability of the
Guarantor for the payment of the obligations guaranteed herein shall be primary
and not secondary.
5. REPRESENTATIONS AND WARRANTIES. The Guarantor represents and warrants
as follows:
a) The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the British Virgin Islands, and has full
power and authority (corporate, legal and other) to execute, deliver and carry
out the terms of this Guaranty Agreement;
b) This Guaranty Agreement has been duly authorized, executed and
delivered by the Guarantor and constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms;
c) The execution, delivery and performance the Guarantor of this
Guaranty Agreement does not require the approval or consent of its shareholders
or of any governmental authority and does not contravene the Guarantor's
Memorandum of Association and Articles of Association or any mortgage, indenture
or other agreement binding upon it, or any law, regulation, order, judgment or
decree applicable to the Guarantor; and
d) The Guarantor's guarantee pursuant to this Guaranty Agreement may
be expected to benefit, directly or indirectly, the Guarantor.
e) The Guarantor has fully adequate financial resources, funds, and
assets to satisfy its obligations under this Guaranty Agreement, and the
Guarantor will in the future retain financial resources, funds, and assets to
fully satisfy its obligations under this Guaranty Agreement.
6. CONTINUING GUARANTEE. This Guaranty Agreement is a continuing guarantee
of payment and collectibility and shall:
a) Remain in full force and effect so long as any obligation of
the Shipowner to the Secretary referred to herein exists;
b) Be binding upon the Guarantor, its successors and assigns; and
c) Be executed and issued for the sole and exclusive benefit of the
United States, and no other party shall be permitted to claim any benefit,
direct or indirect, therefrom. This Guaranty Agreement is nonassignable, any
assignment thereof shall be null and void and have no legal effect whatsoever.
d) Inure to the benefit of, and be enforceable by the Secretary, his
successors and assigns.
4
<PAGE>
7. DEFAULT. A default under the terms of this Guaranty Agreement shall be
deemed to occur if the Guarantor fails to make any payments guaranteed
hereunder.
8. NOTICES AND COMMUNICATIONS. All notices, requests, demands, directions,
consents, waivers, approvals or other communications shall be in writing, in the
English language (or accompanied by an accurate English translation upon which
the Secretary shall have the right to rely for all purposes under this
Agreement) and shall be made or delivered in person or by registered or
certified mail, postage prepaid, addressed to the Guarantor or the Secretary as
provided below or to such other address as the Guarantor or the Secretary may
hereafter specify in a written notice to the other, and shall be effective upon
receipt by the addressee thereof. In any conflict over the meaning of this
Guaranty Agreement or any notices, directions or other communications pursuant
thereto, the English language shall control, notwithstanding any relevant
translations of the English version into any other language.
Guarantor: PETRODRILL FOUR LIMITED
c/o Arias, Fabrega & Fabrega
P.O. Box 985
Omar Hodge Building
Wickham's Cay
Road Town, Tortola
British Virgin Islands
With a copy to: PETRODRILL ENGINEERING NV
K.P. van der Mandelelaan 38
3062 MB
Rotterdam (Brainpark)
The Netherlands
Secretary: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
Maritime Administration
U.S. Department of Transportation
400 Seventh Street, SW
Washington, DC 20590
Attention: Chief, Division of Ship Financing Contracts
9. AMENDMENTS AND SUPPLEMENTS. No agreement shall be effective to change
or modify, supplement, amend or discharge in whole or in part this Guaranty
Agreement unless such agreement is in writing, signed by the Guarantor and the
Secretary.
10. GOVERNING LAW. This Guaranty Agreement and the rights and obligations
of the parties hereto shall be construed, enforced, and governed by the laws of
the United States of America, but to the extent they are inapplicable, then by
the laws of the District of Columbia of the United States of America without
regard to its conflict of laws provision.
5
<PAGE>
11. JURISDICTION AND CONSENT TO SUIT. Any proceeding to enforce this
Agreement may be brought in the Federal courts of the United States of America
located in the District of Columbia of the United States of America. The
Guarantor hereby irrevocably waives any present or future objection to such
venue, and for itself and in respect of any of its properties hereby irrevocably
consents and submits unconditionally to the exclusive jurisdiction of those
courts. The Guarantor further irrevocably waives any claim that any such court
is not a convenient forum for any such proceeding. The Guarantor agrees that any
service of process, writ, judgment or other notice of legal process shall be
deemed and held in every respect to be effectively served upon it in connection
with proceedings in the District of Columbia of the United States of America, if
delivered Sher & Blackwell, Suite 900, 1850 M Street, N.W., Washington D.C.
20036, which it irrevocably designates and appoints as its authorized agent for
the service of process in the District and Federal courts in the District of
Columbia of the United States of America. The Guarantor further agrees that
final judgment against it in any such action or proceeding arising out of or
relating to this Agreement shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States of America by suit on the
judgment, a certified or exemplified copy of which shall be conclusive evidence
of that fact and of the judgment.
12. PAYMENTS IN U.S. CURRENCY. This Guarantee is part of an international
financial transaction in which the specification of United States currency is of
the essence, and such currency shall be the currency of account in all events.
The payment obligations of the Guarantor hereunder shall not be discharged by an
amount paid in another currency, whether pursuant to a judgment or otherwise, to
the extent that the amount so paid on prompt conversion to such currency under
normal banking procedures does not yield after deduction of any and all fees,
taxes or any other charges imposed on the payment of such amount of United
States dollars then due. In the event that any payment by the Guarantor, whether
pursuant to a judgment or otherwise, upon conversion and transfer, does not
result in the payment of such amount of United States currency at the place such
amount is due, the Secretary shall be entitled to demand immediate payment of,
and shall have a cause of action against the Guarantor for, the additional
amount necessary to yield the amount then due. In the event the Secretary, upon
the conversion of such judgment into currency, shall receive (as a result of
currency exchange rate fluctuations) an amount greater than that to which it was
entitled, the Guarantor shall be entitled to immediate reimbursement of the
excess amount. The terms "U.S. currency" or the "dollars" or the symbol "$" as
used herein shall mean dollars in any coin or currency of the United States of
America.
13. IMMUNITY. The Guarantor represents and warrants that it is subject to
civil and commercial law with respect to its obligations under this Agreement,
that the making and performance of this Agreement constitutes private and
commercial acts rather than governmental or public acts and that neither the
Guarantor nor any of its properties or revenues has any right of immunity on the
grounds of Sovereignty or otherwise from suit, court jurisdiction, attachment
prior to judgment, attachment in aid of execution of a judgment, set-off,
execution of a judgment or from any other legal process with respect to its
obligations under this Agreement. To the extent that the Guarantor may hereafter
be entitled, in any jurisdiction in which judicial proceedings may at any time
be commenced with respect to this Agreement to claim for itself or its revenues
or assets any
6
<PAGE>
such immunity, and to the extent that in any such jurisdiction there may be
attributed to the Guarantor such an immunity (whether or not claimed), the
Guarantor hereby irrevocably agrees not to claim and hereby irrevocably waives
such immunity. The foregoing waiver of immunity shall have effect under the
United States Sovereign Immunities Act of 1976.
14. COUNTERPARTS. This Guaranty Agreement may be executed in one or more
counterparts. All such counterparts shall be deemed to be originals and shall
together constitute but one and the same instrument.
7
<PAGE>
IN WITNESS WHEREOF, this Guaranty Agreement has been executed on the day
and year first above written.
PETRODRILL FOUR LIMITED
By: /s/ EARL W. MCNIEL
_____________________
Name: Earl W. McNiel
Title: Treasurer
Attest:
/s/ ROBERT W. RANDALL
Name: Robert W. Randall
Title: Secretary
ACKNOWLEDGED BY:
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION
By: MARITIME ADMINISTRATOR
(Seal)
By: /s/ JOEL C. RICHARD
___________________
Secretary
Maritime Administration
ATTEST:
/s/ LARRY MAIN
___________________
Assistant Secretary
Maritime Administration
8
EXHIBIT 4.26
GUARANTY AGREEMENT IN FAVOR OF THE UNITED STATES
This Guaranty Agreement (the "Guaranty Agreement") is dated this 9th day
of April, 1999 by Pride International, Inc. (the "Guarantor"), to the United
States of America, represented by the Secretary of Transportation, acting by and
through the Maritime Administrator (the "Secretary").
RECITALS:
A. WHEREAS, Petrodrill Four Limited and Petrodrill Five Limited, British
Virgin Islands international business companies (each a "Shipowner" and
collectively the "Shipowners") are indirectly owned in part by the Guarantor;
and
B. WHEREAS, the Shipowners, in connection with the financing of the cost
of the construction of the AMETHYST 4 and AMETHYST 5 (collectively, the
"Vessels"), on the date hereof, borrowed certain funds and created and
authorized the issuance of obligations designated "United States Government
Guaranteed Export Ship Financing Obligations, AMETHYST 4 Series" and "United
States Government Guaranteed Export Ship Financing Obligations, AMETHYST 5
Series" (the "Obligations"), consisting on the date hereof of $ 299,808,000
aggregate principal amount of the Obligations, bearing interest at the rate
specified therein and issued under trust indentures (the "Indentures") between
the Shipowners and FMB Trust Company, National Association, a national banking
association, (the "Indenture Trustee") as trustee, dated as of the date hereof,
said Obligations constituting the legal, valid and binding obligations of the
Shipowner; and
C. WHEREAS, each Shipowner, on the date hereof, accepted the Secretary's
Commitment to Guarantee Obligations (the "Commitment") pursuant to Title XI of
the Merchant Marine Act, 1936, as amended (the "Act"), whereby the Secretary
authorized a guarantee to be endorsed upon each of the Obligations (the
"Guarantees"); and
D. WHEREAS, each Shipowner has, in consideration of the issuance of the
Guarantees by the Secretary of the payment of the unpaid interest on, and the
unpaid balance of the principal of the Obligations issued by the Shipowners
pursuant to the terms and provisions of the Security Agreements dated the date
hereof, between the Shipowner and the Secretary (the "Security Agreements"),
granted a security interest in its Chartering Contract with Petroleo Brasileiro
S.A. ("Petrobras") to the Secretary.
E. WHEREAS, the AMETHYST 4 and AMETHYST 5 are expected to be delivered to
Petrobras on approximately June 9, 2000, and August 9, 2000, respectively,
approximately 392 and 434 days beyond the delivery date under their respective
Chartering Contracts (collectively "the Contracts").
F. WHEREAS, Petrobras has a contractual right to impose penalties if the
Vessels are not timely delivered (the "Late Arrival Penalties").
<PAGE>
G. WHEREAS, under the expected delivery schedule, the maximum aggregate
Late Arrival Penalties would be approximately $31,550,000.
H. WHEREAS, Petrobras has informed the Shipowners that its policy has been
to negotiate with its contractors on the form and timing of any penalties to
reduce their impact and that in the past Petrobras has negotiated installment
plans or discounted the penalties from the end of the relevant Contract.
I. WHEREAS, Petrobras has confirmed that it has no reason to expect that
it will not apply the same policy to the Late Arrival Penalties under the
Contracts, subject to the approval of its Board of Directors.
J. WHEREAS, the Secretary is concerned that there may be ad valorem taxes
imposed by the Federative Republic of Brazil on the Vessels when they are
delivered to Petrobras ("Ad Valorem Taxes").
K. WHEREAS, the Secretary has required this Guaranty Agreement from the
Guarantor in conjunction with the consideration offered by or on behalf of the
Shipowners as a condition of the Secretary's decision to enter into the
Commitments to issue the Guarantees, and the Guarantor has agreed to enter into
this Guaranty Agreement for the purpose of guaranteeing the Shipowners' payment
of Late Arrival Penalties and Ad Valorem Taxes up to an aggregate amount of
$20,500,000.
NOW THEREFORE, in consideration of the premises, and of other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Guarantor hereby agrees as follows:
1. DEFINITIONS. Unless otherwise specifically defined herein, the
capitalized terms used herein which are defined in Schedule X to the Security
Agreements, dated the date hereof and any reference therein to other instruments
shall have the respective meanings stated in Schedule X of the Security
Agreements or such other instruments.
2. GUARANTEE.
a) Whenever a Shipowner has been billed for any Late Arrival
Penalties or Ad Valorem Taxes (said Late Arrival Penalties or Ad Valorem Taxes,
collectively, the "Aggregate Amounts"), but is not permitted by the provisions
of the Title XI Reserve Fund and Financial Agreement (the "Financial Agreement")
to pay any or all of the Aggregate Amounts, the Guarantor hereby absolutely,
irrevocably and unconditionally promises to pay those portions of any Aggregate
Amounts which cannot be paid by the Shipowner by virtue of the provisions of the
Financial Agreement; PROVIDED, HOWEVER, that the maximum Aggregate Amount which
the Guarantor is obligated to pay hereunder for both Shipowners shall not exceed
Twenty Million Five Hundred Thousand Dollars ($20,500,000). The Guarantor shall
pay the Aggregate
2
<PAGE>
Amounts required hereunder, in immediately available funds, to the relevant
billing entity or its designee within the later of (i) ten (10) business days of
the Shipowner's receipt of each bill for Late Arrival Penalties and Ad Valorem
Taxes , (ii) if applicable, within ten (10) business days of a final ruling by
Petrobras on any appeal by the Shipowner to Petrobras against the imposition of
Late Arrival Penalties pursuant to Section 8.7 of the Chartering Contract, or
(iii) if the Shipowner's duty to pay such a bill has been continuously stayed by
a court of competent jurisdiction, within ten (10) business days of the issuance
of a final, unappealable order by a court of competent jurisdiction ordering the
Shipowner to pay such a bill. In the event the Guarantor fails to pay the
Aggregate Amounts in the manner and amounts required hereunder, the Secretary
shall have the right to compel the Guarantor to pay such Aggregate Amounts
directly to the Secretary for distribution, as the Secretary may decide, either
to relevant billing entity or to the Secretary to be retained and set off
against any indebtedness owed the Secretary by the Shipowner. The Shipowners
shall not be required to repay the Guarantor for any amounts paid hereunder
until permitted by the provisions of the Financial Agreements.
b) The Guarantor hereby consents and agrees that its obligations
under this Guaranty Agreement will not be discharged by any act or omission to
act of any kind by the Secretary or any other person or any other circumstances
whatsoever (including, but not limited to, any extension, rearrangement or
renewal with respect to any indebtedness or other obligation of the Shipowners
with or without notice to the Guarantor, any waiver of any right of the
Secretary under the terms of the Secretary's Note, the Security Agreement, the
Mortgage or this Guaranty Agreement, any release of security, any transfer or
assignment of rights or obligations accruing to the Secretary under the
Secretary's Note, the Security Agreement, the Mortgage or this Guaranty
Agreement, any corporate reorganization, dissolution, merger, acquisition of or
by or other alteration of the corporate existence or structure of the Shipowners
or the Guarantor, discharge of either Shipowner in bankruptcy, the invalidity,
illegality or unenforceability of the Secretary's Note, the Security Agreement,
the Mortgage or this Guaranty Agreement or the absence of any action to enforce
the obligations of either Shipowner) which might constitute a legal or equitable
discharge of the Guarantor; it being the intention of the Guarantor that this
Guaranty Agreement be absolute, continuing and unconditional and the guarantee
hereunder shall only be discharged by the payment in full of all sums so
guaranteed hereunder in an Aggregate Amount not to exceed Twenty Million Five
Hundred Thousand Dollars ($20,500,000).
c) The Guarantor hereby irrevocably and unconditionally waives: (i)
notice of any of the matters referred to in this Guaranty Agreement and any
action by the Secretary in reliance thereon; (ii) all notices which may be
required by statute, rule of law or otherwise to preserve any rights against the
Guarantor hereunder, including without limitations, any demand, protest, proof
of notice of non-payment of all sums payable under the Secretary's Note or to
Petrobras or any notice of any failure on the part of either Shipowner to
perform or comply with any covenant, term or obligations of any agreement to
which it is a party; (iii) any requirement for the enforcement, assertion or
exercise of any right, remedy, power or privilege under or with respect to this
Guaranty Agreement; (iv) any requirement of diligence; (v) any requirement that
the Shipowner be joined as a party to any proceedings for the enforcement of any
provision of this Guaranty Agreement or that the
3
<PAGE>
Secretary proceed against any other guarantor executing or any other guaranty
agreement; (vi) any and all defenses to payment hereunder, except the defense of
payment already made, and agree to confess without contesting liability
hereunder for any judgment entered hereon; (vii) presentment, demand, protest,
notice of protest and dishonor, notice of intent to accelerate and notice of
acceptance; or (viii) the right to require the Secretary to pursue any remedy in
the Secretary's power whatsoever.
d) The Guarantor hereby agrees that this Guaranty Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time payment of any sum hereby guaranteed is rescinded or must be otherwise
restored or returned by the Secretary or Petrobras, upon the insolvency,
bankruptcy or reorganization of the Shipowner, or otherwise, all as though such
payment had not been made. The Guarantor further agrees that if the maturity of
any obligations guaranteed herein be accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Guaranty
Agreement without demand or notice to the Guarantor.
e) Any amount payable hereunder shall not be subject to any
reduction by reason of any counterclaim, set-off, deduction, abatement or
otherwise.
f) The Guarantor shall pay all reasonable costs and expenses
(including, without limitation, attorneys' fees and expenses) incurred in
connection with the enforcement of the obligations of the Guarantor under this
Guaranty Agreement.
g) The Contracts may be amended, modified or endorsed without the
consent of the Guarantor.
h) The Secretary may enforce the Guarantor's obligations hereunder
without in any way first pursuing or exhausting any other rights or remedies
which the Secretary may have against the Shipowners or any other person, firm or
corporation or against any security the Secretary may hold.
3. SECRETARY'S RIGHTS. The Guarantor authorizes the Secretary, without
notice or demand and without affecting the Guarantor's liability hereunder, to
take and hold security from any entity (other than the Guarantor) to secure the
payment of this Guaranty Agreement and/or any of the obligations guaranteed
herein and exchange, enforce, waive and release any such security; and to apply
such security and direct the order or manner of sale thereof as the Secretary in
his discretion may determine; and to obtain a guarantee of any of the
obligations guaranteed herein from any one or more persons, corporations or
entities whomsoever (other than the Guarantor) and at any time or times to
enforce, waive, rearrange, modify, limit or release such other persons,
corporations or entities from their obligations under such guarantees.
4. PRIMARY LIABILITY. It is expressly agreed that the liability of the
Guarantor for the payment of the obligations guaranteed herein shall be primary
and not secondary. The liability of the Guarantor for payment of sums due
hereunder is joint and several with the liability of Maritima
4
<PAGE>
Petroleo e Engerharia Ltda. under its Payment Undertaking in favor of the
Secretary with respect to the Late Arrival Penalties and Ad Valorem Taxes;
PROVIDED that the maximum amount the Guarantor is obligated to pay hereunder
shall not exceed Twenty Million Five Hundred Thousand Dollars ($20,500,000).
5. REPRESENTATIONS AND WARRANTIES. The Guarantor represents and warrants
as follows:
a) The Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Louisiana and has full power
and authority (corporate, legal and other) to execute, deliver and carry out the
terms of this Guaranty Agreement;
b) This Guaranty Agreement has been duly authorized, executed and
delivered by the Guarantor and constitutes the legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in accordance with
its terms;
c) The execution, delivery and performance the Guarantor of this
Guaranty Agreement does not require the approval or consent of its shareholders
or of any governmental authority and does not contravene the Guarantor's
Certificate of Incorporation or any mortgage, indenture or other agreement
binding upon it, or any law, regulation, order, judgment or decree applicable to
the Guarantor; and
d) The Guarantor's guarantee pursuant to this Guaranty Agreement may
be expected to benefit, directly or indirectly, the Guarantor.
e) The Guarantor has fully adequate financial resources, funds, and
assets to satisfy its obligations under this Guaranty Agreement.
6. CONTINUING GUARANTEE. This Guaranty Agreement is a continuing guarantee
of payment and collectibility and shall:
a) Remain in full force and effect so long as either Shipowner may
be liable for the payment of Late Arrival Penalties and Ad Valorem Taxes and
shall terminate upon the Secretary's receipt of (i) written notice from
Petrobras to both Shipowners that any and all liabilities for Late Arrival
Penalties have been satisfied under the Contracts, and (ii) that evidence
satisfactory to the Secretary that no Ad Valorem Taxes are or will be due, but
if due, such taxes have been paid, provided, however, that this Guaranty shall
terminate at such time as the Guarantor or the Shipowners provide a Letter of
Credit in an amount equal to the amount hereunder guaranteed, which together
with any other agreements with the issuer relating to the Letter of Credit are
in form and substance satisfactory to the Secretary, and further provided that
the Shipowners may not collateralize this Letter of Credit or repay the issuer
with respect to any draws made under the Letter of Credit or incur any fees
unless such payments would be allowed as dividends under the Shipowners'
Financial Agreements
5
<PAGE>
b) Be binding upon the Guarantor, its successors and assigns such
taxes; and
c) Be executed and issued for the sole and exclusive benefit of the
United States, and no other party shall be permitted to claim any benefit,
direct or indirect, therefrom. This Guaranty Agreement is nonassignable, any
assignment thereof shall be null and void and have no legal effect whatsoever.
d) Inure to the benefit of, and be enforceable by the Secretary, his
successors and assigns.
7. DEFAULT. A default under the terms of this Guaranty Agreement shall be
deemed to occur if the Guarantor fails to make any payments guaranteed
hereunder.
8. NOTICES. All communications may be made or delivered in person or by
certified or registered mail, postage prepaid, addressed to the Guarantor or the
Secretary as provided below or to such other address as the Guarantor or the
Secretary may hereafter specify in a written notice to the other and all notices
or other communications shall be in writing so addressed and shall be effective
upon receipt by the addressee thereof:
Guarantor: Pride International Inc.
5847 San Felipe
Suite 3300
Houston, TX 77057
Attention: Chief Financial Officer
With a copy to: Sher & Blackwell
1850 M Street, NW
Suite 900
Washington, DC 20036
Attention: Jeffrey F. Lawrence/Anne E. Mickey
Secretary: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
Maritime Administration
U.S. Department of Transportation
400 Seventh Street, SW
Washington, DC 20590
Attention: Chief, Division of Ship Financing Contracts
9. AMENDMENTS AND SUPPLEMENTS. No agreement shall be effective to change
or modify, supplement, amend or discharge in whole or in part this Guaranty
Agreement unless such agreement is in writing, signed by the Guarantor and the
Secretary.
6
<PAGE>
10. GOVERNING LAW. This Guaranty Agreement shall be governed by the
federal law of the United States of America or in the absence of applicable
federal law by the laws of the District of Columbia.
11. CONFIDENTIALITY. Neither party shall, without the prior written
consent of the other, disclose to any third party (including Petrobras) the
terms and conditions of this Guaranty Agreement except as required by law or
governmental requirements, and then only with notice of such to the other party
12. COUNTERPARTS. This Guaranty Agreement may be executed in one or more
counterparts. All such counterparts shall be deemed to be originals and shall
together constitute but one and the same instrument.
7
<PAGE>
IN WITNESS WHEREOF, this Guaranty Agreement has been executed on the day
and year first above written.
PRIDE INTERNATIONAL, INC.
(Seal)
By: /s/ EARL W. MCNIEL
_____________________
Name: Earl W. McNiel
Title: Vice President
Attest:
/s/ ROBERT W. RANDALL
_________________________
Name: Robert W. Randall
Title: Secretary
ACKNOWLEDGED BY:
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION
By: MARITIME ADMINISTRATOR
(Seal)
By: /s/ JOEL C. RICHARD
_________________________________
Secretary
Maritime Administration
ATTEST:
/s/ LARRY MAIN
_________________________
Assistant Secretary
Maritime Administration
8
EXHIBIT 4.27
9.03
PAYMENT UNDERTAKING IN FAVOR OF THE UNITED STATES
This Payment Undertaking (the "Payment Undertaking") is dated this 9th day
of April, 1999 by Maritima Petroleo e Engenharia Ltda.. ("Maritima"), to the
United States of America, represented by the Secretary of Transportation, acting
by and through the Maritime Administrator (the "Secretary").
RECITALS:
A. WHEREAS, Petrodrill Four Limited and Petrodrill Five Limited, British
Virgin Islands international business companies (each a "Shipowner" and
collectively the "Shipowners") are indirectly owned in part by Maritima; and
B. WHEREAS, the Shipowners, in connection with the financing of the cost
of the construction of the AMETHYST 4 and AMETHYST 5 (collectively, the
"Vessels"), on the date hereof, borrowed certain funds and created and
authorized the issuance of obligations designated "United States Government
Guaranteed Export Ship Financing Obligations, AMETHYST 4 Series" and "United
States Government Guaranteed Export Ship Financing Obligations, AMETHYST 5
Series" (the "Obligations"), consisting on the date hereof of $299,808,000
aggregate principal amount of the Obligations, bearing interest at the rate
specified therein and issued under trust indentures (the "Indentures") between
the Shipowners and FMB Trust Company, National Association, a national banking
association, (the "Indenture Trustee") as trustee, dated as of the date hereof,
said Obligations constituting the legal, valid and binding obligations of the
Shipowner; and
C. WHEREAS, each Shipowner, on the date hereof, accepted the Secretary's
Commitment to Guarantee Obligations (the "Commitment") pursuant to Title XI of
the Merchant Marine Act, 1936, as amended (the "Act"), whereby the Secretary
authorized a guarantee to be endorsed upon each of the Obligations (the
"Guarantees"); and
D. WHEREAS, each Shipowner has, in consideration of the issuance of the
Guarantees by the Secretary of the payment of the unpaid interest on, and the
unpaid balance of the principal of the Obligations issued by the Shipowners
pursuant to the terms and provisions of the Security Agreements dated the date
hereof, between the Shipowner and the Secretary (the "Security Agreements"),
granted a security interest in its Chartering Contract with Petroleo Brasileiro
S.A. ("Petrobras") to the Secretary.
E. WHEREAS, the AMETHYST 4 and AMETHYST 5 are expected to be delivered to
Petrobras on approximately June 9, 2000, and August 9, 2000, respectively,
approximately 392 and 434 days beyond the delivery date under their respective
Chartering Contracts (collectively "the Contracts").
<PAGE>
2
F. WHEREAS, Petrobras has a contractual right to impose penalties if the
Vessels are not timely delivered (the "Late Arrival Penalties").
G. WHEREAS, under the expected delivery schedule, the maximum aggregate
Late Arrival Penalties would be approximately $31,550,000.
H. WHEREAS, Petrobras has informed the Shipowners that its policy has been
to negotiate with its contractors on the form and timing of any penalties to
reduce their impact and that in the past Petrobras has negotiated installment
plans or discounted the penalties from the end of the relevant Contract.
I. WHEREAS, Petrobras has confirmed that it has no reason to expect that
it will not apply the same policy to the Late Arrival Penalties under the
Contracts, subject to the approval of its Board of Directors.
J. WHEREAS, the Secretary is concerned that there may be ad valorem taxes
imposed by the Federative Republic of Brazil on the Vessels when they are
delivered to Petrobras ("Ad Valorem Taxes")
K. WHEREAS, the Secretary has required this Payment Undertaking from
Maritima in conjunction with the consideration offered by or on behalf of the
Shipowners as a condition of the Secretary's decision to enter into the
Commitments to issue the Guarantees, and Maritima has agreed to enter into this
Payment Undertaking for the purpose of guaranteeing the Shipowners' payment of
Late Arrival Penalties and Ad Valorem Taxes up to an aggregate amount of
$20,500,000.
NOW THEREFORE, in consideration of the premises, and of other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, Maritima hereby agrees as follows:
1. DEFINITIONS. Unless otherwise specifically defined herein, the
capitalized terms used herein which are defined in Schedule X to the Security
Agreements, dated the date hereof and any reference therein to other instruments
shall have the respective meanings stated in Schedule X of the Security
Agreements or such other instruments.
2. PAYMENT UNDERTAKING.
a) Whenever a Shipowner has been billed for any Late Arrival
Penalties or Ad Valorem Taxes (said Late Arrival Penalties or Ad Valorem Taxes,
collectively, the "Aggregate Amounts"), but is not permitted by the provisions
of the Title XI Reserve Fund and Financial Agreement (the "Financial Agreement")
to pay any or all of the Aggregate Amounts, Maritima hereby absolutely,
irrevocably and unconditionally promises to pay those portions of any Aggregate
Amounts which cannot be paid by the Shipowner by virtue of the provisions of the
Financial Agreement; PROVIDED, HOWEVER, that the maximum Aggregate Amount which
<PAGE>
3
Maritima is obligated to pay hereunder for both Shipowners shall not exceed
Twenty Million Five Hundred Thousand Dollars ($20,500,000). Maritima shall pay
the Aggregate Amounts required hereunder, in immediately available funds, to the
relevant billing entity or its designee within the later of (i) ten (10)
business days of the Shipowner's receipt of each bill for Late Arrival Penalties
and Ad Valorem Taxes , (ii) if applicable, within ten (10) business days of a
final ruling by Petrobras on any appeal by the Shipowner to Petrobras against
the imposition of Late Arrival Penalties pursuant to Section 8.7 of the
Chartering Contract, or (iii) if the Shipowner's duty to pay such a bill has
been continuously stayed by a court of competent jurisdiction, within ten (10)
business days of the issuance of a final, unappealable order by a court of
competent jurisdiction ordering the Shipowner to pay such a bill. In the event
Maritima fails to pay the Aggregate Amounts in the manner and amounts required
hereunder, the Secretary shall have the right to compel Maritima to pay such
Aggregate Amounts directly to the Secretary for distribution, as the Secretary
may decide, either to the relevant billing entity or to the Secretary to be
retained and set off against any indebtedness owed the Secretary by the
Shipowner. The Shipowners shall not be required to repay Maritima for any
amounts paid hereunder until permitted by the provisions of the Financial
Agreements.
b) Maritima hereby consents and agrees that its obligations under
this Payment Undertaking will not be discharged by any act or omission to act of
any kind by the Secretary or any other person or any other circumstances
whatsoever (including, but not limited to, any extension, rearrangement or
renewal with respect to any indebtedness or other obligation of the Shipowners
with or without notice to Maritima, any waiver of any right of the Secretary
under the terms of the Secretary's Note, the Security Agreement, the Mortgage or
this Payment Undertaking, any release of security, any transfer or assignment of
rights or obligations accruing to the Secretary under the Secretary's Note, the
Security Agreement, the Mortgage or this Payment Undertaking, any corporate
reorganization, dissolution, merger, acquisition of or by or other alteration of
the corporate existence or structure of the Shipowners or Maritima, discharge of
either Shipowner in bankruptcy, the invalidity, illegality or unenforceability
of the Secretary's Note, the Security Agreement, the Mortgage or this Payment
Undertaking or the absence of any action to enforce the obligations of either
Shipowner) which might constitute a legal or equitable discharge of Maritima; it
being the intention of Maritima that this Payment Undertaking be absolute,
continuing and unconditional and the undertaking hereunder shall only be
discharged by the payment in full of all sums so due hereunder in an Aggregate
Amount not to exceed Twenty Million Five Hundred Thousand Dollars ($20,500,000).
c) Maritima hereby irrevocably and unconditionally waives: (i)
notice of any of the matters referred to in this Payment Undertaking and any
action by the Secretary in reliance thereon; (ii) all notices which may be
required by statute, rule of law or otherwise to preserve any rights against
Maritima hereunder, including without limitations, any demand, protest, proof of
notice of non-payment of all sums payable under the Secretary's Note or to
Petrobras or any notice of any failure on the part of either Shipowner to
perform or comply with any covenant, term or obligations of any agreement to
which it is a party; (iii) any requirement for the enforcement, assertion or
exercise of any right, remedy, power or privilege under or with respect to this
Payment Undertaking; (iv) any requirement of diligence; (v) any requirement that
the Shipowner be joined as a party to any proceedings for the enforcement of any
<PAGE>
4
provision of this Payment Undertaking or that the Secretary proceed against any
other guarantor executing or any other Payment Undertaking; (vi) any and all
defenses to payment hereunder, except the defense of payment already made, and
agree to confess without contesting liability hereunder for any judgment entered
hereon; (vii) presentment, demand, protest, notice of protest and dishonor,
notice of intent to accelerate and notice of acceptance; or (viii) the right to
require the Secretary to pursue any remedy in the Secretary's power whatsoever.
d) Maritima hereby agrees that this Payment Undertaking shall
continue to be effective or shall be reinstated, as the case may be, if at any
time payment of any sum hereby due is rescinded or must be otherwise restored or
returned by the Secretary or Petrobras, upon the insolvency, bankruptcy or
reorganization of the Shipowner, or otherwise, all as though such payment had
not been made. Maritima further agrees that if the maturity of any obligations
whose payment is undertaken herein be accelerated by bankruptcy or otherwise,
such maturity shall also be deemed accelerated for the purpose of this Payment
Undertaking without demand or notice to Maritima.
e) Any amount payable hereunder shall not be subject to any
reduction by reason of any counterclaim, set-off, deduction, abatement or
otherwise.
f) Maritima shall pay all reasonable costs and expenses (including,
without limitation, attorneys' fees and expenses) incurred in connection with
the enforcement of the obligations of Maritima under this Payment Undertaking.
g) The Contracts may be amended, modified or endorsed without the
consent of Maritima.
h) The Secretary may enforce Maritima's obligations hereunder
without in any way first pursuing or exhausting any other rights or remedies
which the Secretary may have against the Shipowners or any other person, firm or
corporation or against any security the Secretary may hold.
3. SECRETARY'S RIGHTS. Maritima authorizes the Secretary, without notice
or demand and without affecting Maritima's liability hereunder, to take and hold
security from any entity (other than Maritima) to secure the payment of this
Payment Undertaking and/or any of the obligations guaranteed herein and
exchange, enforce, waive and release any such security; and to apply such
security and direct the order or manner of sale thereof as the Secretary in his
discretion may determine; and to obtain a guarantee of any of the obligations
guaranteed herein from any one or more persons, corporations or entities
whomsoever (other than Maritima) and at any time or times to enforce, waive,
rearrange, modify, limit or release such other persons, corporations or entities
from their obligations under such guarantees.
<PAGE>
5
4. PRIMARY LIABILITY. It is expressly agreed that the liability of
Maritima for the payment of the obligations due herein shall be primary and not
secondary. The liability of Maritima for payment of sums due hereunder is joint
and several with the liability of Pride International Inc. under its Guaranty
Agreement in favor of the Secretary with respect to the Late Arrival Penalties
and Ad Valorem Taxes; PROVIDED that the maximum amount Maritima is obligated to
pay hereunder shall not exceed Twenty Million Five Hundred Thousand Dollars
($20,500,000).
5. REPRESENTATIONS AND WARRANTIES. Maritima represents and warrants as
follows:
a) Maritima is a company duly organized, validly existing and in
good standing under the laws of the Federative Republic of Brazil and has full
power and authority (corporate, legal and other) to execute, deliver and carry
out the terms of this Payment Undertaking;
b) This Payment Undertaking has been duly authorized, executed and
delivered by Maritima and constitutes the legal, valid and binding obligation of
Maritima enforceable against Maritima in accordance with its terms;
c) The execution, delivery and performance Maritima of this Payment
Undertaking does not require the approval or consent of its shareholders or of
any governmental authority and does not contravene Maritima's Certificate of
Incorporation or any mortgage, indenture or other agreement binding upon it, or
any law, regulation, order, judgment or decree applicable to Maritima; and
d) Maritima's guarantee pursuant to this Payment Undertaking may be
expected to benefit, directly or indirectly, Maritima.
e) Maritima has fully adequate financial resources, funds, and
assets to satisfy its obligations under this Payment Undertaking.
6. CONTINUING UNDERTAKING. This Payment Undertaking shall:
a) Remain in full force and effect so long as either Shipowner may
be liable for the payment of Late Arrival Penalties and Ad Valorem Taxes and
shall terminate upon the Secretary's receipt of (i) written notice from
Petrobras to both Shipowners that any and all liabilities for Late Arrival
Penalties have been satisfied under the Contracts, and (ii) that evidence
satisfactory to the Secretary that no Ad Valorem Taxes are or will be due, but
if due, such taxes have been paid, provided, however, that this Payment
Undertaking shall terminate at such time as Maritima or the Shipowners provide a
Letter of Credit in an amount equal to the amount hereunder guaranteed, which
together with any other agreements with the issuer relating to the Letter of
Credit are in form and substance satisfactory to the Secretary, and further
provided that the Shipowners may not collateralize this Letter of Credit or
repay the issuer with respect to any draws made under the Letter of Credit or
incur any fees unless such payments would be allowed as dividends under the
Shipowners' Financial Agreements.
b) Be binding upon Maritima, its successors and assigns such taxes;
and
<PAGE>
6
c) Be executed and issued for the sole and exclusive benefit of the
United States, and no other party shall be permitted to claim any benefit,
direct or indirect, therefrom. This Payment Undertaking is nonassignable; any
assignment thereof shall be null and void and have no legal effect whatsoever.
d) Inure to the benefit of, and be enforceable by the Secretary, his
successors and assigns.
7. DEFAULT. A default under the terms of this Payment Undertaking shall be
deemed to occur if Maritima fails to make any payments due hereunder.
8. NOTICES AND COMMUNICATIONS. All notices, requests, demands, directions,
consents, waivers, approvals or other communications shall be in writing, in the
English language (or accompanied by an accurate English translation upon which
the Secretary shall have the right to rely for all purposes under this
Agreement) and shall be made or delivered in person or by registered or
certified mail, postage prepaid, addressed to Maritima or the Secretary as
provided below or to such other address as Maritima or the Secretary may
hereafter specify in a written notice to the other, and shall be effective upon
receipt by the addressee thereof. In any conflict over the meaning of this
Payment Undertaking or any notices, directions or other communications pursuant
thereto, the English language shall control, notwithstanding any relevant
translations of the English version into any other language.
Maritima: Maritima Petroleo e Engenharia Ltda.
Avenida Almirante Barroso 52
3400 GR, 20031.000 - Centro
Rio de Janeiro, Brazil
Attention: German Efromovich
With a copy to: Sher & Blackwell
1850 M Street, NW
Suite 900
Washington, DC 20036
Attention: Jeffrey F. Lawrence/Anne E. Mickey
Secretary: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
Maritime Administration
U.S. Department of Transportation
400 Seventh Street, SW
Washington, DC 20590
Attention: Chief, Division of Ship Financing Contracts
<PAGE>
7
9. AMENDMENTS AND SUPPLEMENTS. No agreement shall be effective to change
or modify, supplement, amend or discharge in whole or in part this Payment
Undertaking unless such agreement is in writing, signed by Maritima and the
Secretary.
10. GOVERNING LAW. This Payment Undertaking and the rights and obligations
of the parties hereto shall be construed, enforced, and governed by the laws of
the United States of America, but to the extent they are inapplicable, then by
the laws of the District of Columbia of the United States of America without
regard to its conflict of laws provision.
11. CONFIDENTIALITY. Neither party shall, without the prior written
consent of the other, disclose to any third party (including Petrobras) the
terms and conditions of this Payment Undertaking except as required by law or
governmental requirements, and then only with notice of such to the other party
12. JURISDICTION AND CONSENT TO SUIT. Any proceeding to enforce this
Agreement may be brought in the Federal courts of the United States of America
located in the District of Columbia of the United States of America. Maritima
hereby irrevocably waives any present or future objection to such venue, and for
itself and in respect of any of its properties hereby irrevocably consents and
submits unconditionally to the non-exclusive jurisdiction of those courts.
Maritima further irrevocably waives any claim that any such court is not a
convenient forum for any such proceeding. Maritima agrees that any service of
process, writ, judgment or other notice of legal process shall be deemed and
held in every respect to be effectively served upon it in connection with
proceedings in the District of Columbia of the United States of America, if
delivered to Sher & Blackwell, 1850 M Street, N.W., Suite 900, Washington, DC
20036, which it irrevocably designates and appoints as its authorized agent for
the service of process in the District and Federal courts in the District of
Columbia of the United States of America. Maritima further agrees that final
judgment against it in any such action or proceeding arising out of or relating
to this Agreement shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States of America by suit on the
judgment, a certified or exemplified copy of which shall be conclusive evidence
of that fact and of the judgment.
13. PAYMENTS IN U.S. CURRENCY. This Payment Undertaking is part of an
international financial transaction in which the specification of United States
currency is of the essence, and such currency shall be the currency of account
in all events where payments are due to the Secretary. The payment obligations
of Maritima hereunder to the Secretary shall not be discharged by an amount paid
in another currency, whether pursuant to a judgment or otherwise, to the extent
that the amount so paid on prompt conversion to such currency under normal
banking procedures does not yield after deduction of any and all fees, taxes or
any other charges imposed on the payment of such amount of United States dollars
then due. In the event that any payment by Maritima to the Secretary, whether
pursuant to a judgment or otherwise, upon conversion and transfer, does not
result in the payment of such amount of United States currency at the place such
amount is due, the Secretary shall be entitled to demand immediate payment of,
and shall have a cause of action against Maritima for, the additional amount
necessary to yield the amount then due. In the event the Secretary, upon the
conversion of such judgment into currency, shall receive (as a result of
currency exchange rate fluctuations) an amount greater than that to which it was
entitled, Maritima shall be entitled to immediate reimbursement of the excess
amount. The terms "U.S. currency" or the "dollars" or the symbol "$" as used
herein shall mean dollars in any coin or currency of the United States of
America.
<PAGE>
8
14. IMMUNITY. Maritima represents and warrants that it is subject to civil
and commercial law with respect to its obligations under this Agreement, that
the making and performance of this Agreement constitutes private and commercial
acts rather than governmental or public acts and that neither Maritima nor any
of its properties or revenues has any right of immunity on the grounds of
Sovereignty or otherwise from suit, court jurisdiction, attachment prior to
judgment, attachment in aid of execution of a judgment, set-off, execution of a
judgment or from any other legal process with respect to its obligations under
this Agreement. To the extent that Maritima may hereafter be entitled, in any
jurisdiction in which judicial proceedings may at any time be commenced with
respect to this Agreement to claim for itself or its revenues or assets any such
immunity, and to the extent that in any such jurisdiction there may be
attributed to Maritima such an immunity (whether or not claimed), Maritima
hereby irrevocably agrees not to claim and hereby irrevocably waives such
immunity. The foregoing waiver of immunity shall have effect under the United
States Sovereign Immunities Act of 1976.
15. COUNTERPARTS. This Payment Undertaking may be executed in one or more
counterparts. All such counterparts shall be deemed to be originals and shall
together constitute but one and the same instrument.
<PAGE>
9
IN WITNESS WHEREOF, this Payment Undertaking has been executed on the day
and year first above written.
MARITIMA PETROLEO E ENGENHARIA LTDA
By: /s/ GERMAN EFROMOVICH
________________________
Name: German Efromovich
Title: President
ATTEST:
/s/ MARCELO VIOLLAND
________________________
Name:
Title:
ACKNOWLEDGED BY:
UNITED STATES OF AMERICA
SECRETARY OF TRANSPORTATION
By: MARITIME ADMINISTRATOR
By: /s/ JOEL C. RICHARD
___________________
Secretary
Maritime Administration
ATTEST:
/s/ LARRY MAIN
______________
Assistant Secretary
Maritime Administration
EXHIBIT 4.28
INTERGUARANTOR AGREEMENT
This Interguarantor Agreement is made April 9, 1999, between on the one
hand, Maritima Petroleo e Engenharia Ltda. ("Maritima"), and on the other hand
Pride International, Inc. ("Pride"), (referred to herein individually as
"Party", and collectively as "Parties").
RECITALS:
A. WHEREAS, Petrodrill Four Limited and Petrodrill Five Limited, British
Virgin Islands international business companies (each a "Shipowner" and
collectively the "Shipowners") are each indirectly owned 70% by Maritima and 30%
by Pride; and
B. WHEREAS, the Shipowners, in connection with the financing of the cost
of the construction of the AMETHYST 4 and AMETHYST 5 (collectively, the
"Vessels"), on the date hereof, borrowed certain funds and created and
authorized the issuance of obligations designated "United States Government
Guaranteed Export Ship Financing Obligations, AMETHYST 4 Series" and "United
States Government Guaranteed Export Ship Financing Obligations, AMETHYST 5
Series" (the "Obligations") consisting on the date hereof of $299,808,000
aggregate principal amount of the Obligations, bearing interest at the rate
specified therein and issued under trust indentures (the "Indentures") between
the Shipowners and FMB Trust Company, National Association, a national banking
association, (the "Indenture Trustee") as trustee, dated as of the date hereof,
said Obligations constituting the legal, valid and binding obligations of the
Shipowners; and
C. WHEREAS, each Shipowner, on the date hereof, accepted the Secretary's
Commitment to Guarantee Obligations (the "Commitment") pursuant to Title XI of
the Merchant Marine Act, 1936, as amended (the "Act"), whereby the Secretary
authorized a guarantee to be endorsed upon each of the Obligations (the
"Guarantees"); and
D. WHEREAS, each Shipowner has, in consideration of the issuance of the
Guarantees by the Secretary of the payment of the unpaid interest on, and the
unpaid balance of the principal of the Obligations issued by the Shipowners
pursuant to the terms and provisions of the Security Agreements dated the date
hereof, between the Shipowner and the Secretary (the "Security Agreements"),
granted a security interest in its Chartering Contract with Petroleo Brasileiro
S.A. ("Petrobras") to the Secretary.
E. WHEREAS, the AMETHYST 4 and AMETHYST 5 are expected to be delivered to
Petrobras on approximately June 9, 2000, and August 9, 2000, respectively,
approximately 392 and 434 days beyond the delivery date under their respective
Chartering Contracts (collectively "the Contracts").
F. WHEREAS, Petrobras has a contractual right to impose penalties if the
Vessels are not timely delivered (the "Late Arrival Penalties").
<PAGE>
G. WHEREAS, under the expected delivery schedule, the maximum aggregate
Late Arrival Penalties would be approximately $31,550,000.
H. WHEREAS, Petrobras has informed the Shipowners that its policy has been
to negotiate with its contractors on the form and timing of any penalties to
reduce their impact and that in the past Petrobras has negotiated installment
plans or discounted the penalties from the end of the relevant Contract.
I. WHEREAS, Petrobras has confirmed that it has no reason to expect that
it will not apply the same policy to the Late Arrival Penalties under the
Contracts, subject to the approval of its Board of Directors.
J. WHEREAS, the Secretary is concerned that there may be ad valorem taxes
imposed by the Federative Republic of Brazil on the Vessels when they are
delivered to Petrobras ("Ad Valorem Taxes").
K. WHEREAS, the Secretary has required a Payment Undertaking from Maritima
and a Guaranty Agreement from Pride in conjunction with the consideration
offered by or on behalf of the Shipowners as a condition of the Secretary's
decision to enter into the Commitments to issue the Guarantees.
L. WHEREAS, Maritima has entered into a Payment Undertaking and Pride has
entered into a Guaranty Agreement for the purpose of guaranteeing to the United
States Government the Shipowners' payment of Late Arrival Penalties and Ad
Valorem Taxes up to an aggregate amount of $20,500,000.
M. WHEREAS under the Payment Undertaking and Guaranty Agreement, the
Parties may be held jointly and severally liable for the payment of Late Arrival
Penalties and Ad Valorem Taxes up to an aggregate amount of $20,5000,000 each.
NOW THEREFORE, in consideration of the premises, and of other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Parties hereby agree as follows:
1. Unless otherwise specifically defined herein, the capitalized terms
used herein which are defined in Schedule X to the Security Agreements, dated
the date hereof and any reference therein to other instruments shall have the
respective meanings stated in Schedule X of the Security Agreements or such
other instruments.
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<PAGE>
2. In the event one or both of the Shipowners default in their obligation
to pay the Late Arrival Penalties or Ad Valorem Taxes and one or more of the
Parties are required to make payment pursuant to the Payment Undertaking or
Guaranty Agreement for any part of the Late Arrival Fees, Ad Valorem Taxes, and
any interest, penalties, costs, attorney's fees or any other amounts related
thereto (collectively "Guarantee Payment"), the Parties shall be responsible
only for their respective Proportionate Share of the Guarantee Payment which
shall be based on each Party's direct and indirect percentage of ownership of
the Shipowners at the time of default. The percentage of ownership interest in
the Shipowners is referred to herein as the "Proportionate Share." By way of
example, if Maritima is required to pay a Guarantee Payment under the Payment
Undertaking because of a default by Petrodrill Four Limited, and Maritima's
ownership interest in Petrodrill Four Limited (directly or indirectly through
subsidiaries or affiliates) is 70%, then Martima's Proportionate Share equals
70%. In the same example, Pride's Proportionate Share would be 30%. In the event
one Party fails to pay its Proportionate Share and the other party pays the
defaulting Party's Proportionate Share or any part thereof, the paying Party
shall be indemnified by the non paying Party and shall promptly pay such amount
to the paying Party. Failing to make such indemnification payment, the paying
Party shall have its joint venture interest increased pursuant to the terms of
the Amethyst Financial Company Limited's Shareholder Agreement.
3. If, upon written demand by the United States Government pursuant to the
Guaranty Agreement or Payment Undertaking, one of the Parties pays more than its
Proportionate Share of the Guarantee Payment, the Party which paid the excess
amount shall be indemnified by the non paying Party and shall promptly pay such
amount to the paying Party. Failing to make such indemnification payment, the
paying Party shall be compensated for such excess by the other Party or its
joint venture interest increased pursuant to the terms of the Amethyst Financial
Company Limited's Shareholder Agreement.
4. This Interguarantor Agreement shall be governed and interpreted by the
federal law of the United States of America or in the absence of applicable
federal law by the laws of the District of Columbia.
5. Any proceeding to enforce this Interguarantor Agreement may be brought
in the Federal courts of the United States of America located in the District of
Columbia of the United States of America. The Parties hereby irrevocably waive
any present or future objection to such venue, and irrevocably consent and
submit unconditionally to the exclusive jurisdiction of those courts. The
Parties further irrevocably waive any claim that any such court is not a
convenient forum for any such proceeding.
6. Neither party shall, without the prior written consent of the other,
disclose to any third party (including Petrobras) the terms and conditions of
the Payment Undertaking or Guaranty Agreement except as required by law or
governmental requirements, and then only with notice of such to the other party.
7. This Interguarantor Agreement may be executed in one or more
counterparts. All such counterparts shall be deemed to be originals and shall
together constitute but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, this Interguarantor Agreement has been executed on the
day and year first above written.
MARITIMA PETROLEO E ENGENHARIA LTDA
By: /s/ GERMAN EFROMOVICH
--------------------------------
Name:
Title:
Attest:
- - -------------------------
PRIDE INTERNATIONAL, INC.
By: /s/ EARL W. MCNIEL
--------------------------------
Name: Earl W. McNiel
Title: Vice President
ATTEST:
/s/ ROBERT W. RANDALL
- - -------------------------
Robert W. Randall
Secretary
4
EXHIBIT 4.29
EXHIBIT 4 TO SECURITY AGREEMENT DOCUMENT 16
Contract No. MA -13513
TITLE XI RESERVE FUND
AND FINANCIAL AGREEMENT
THIS TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT (the "Financial
Agreement"), dated April 9, 1999 between PETRODRILL FIVE LIMITED, a British
Virgin Islands international business company, "the Company"), and THE UNITED
STATES OF AMERICA (the "United States"), represented by the Secretary of
Transportation, acting by and through the Maritime Administrator (the
"Secretary").
RECITALS:
Pursuant to the conditions and understandings set forth in the Recitals to
the Security Agreement executed on this date, the Company has authorized the
issuance of obligations designated "United States Government Guaranteed Export
Ship Financing Obligations, AMETHYST 5 Series" in an aggregate principal amount
not to exceed $150,183,000 to finance the cost of construction of the AMETHYST 5
the ("Vessel");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereby agree as follows:
SECTION 1. (a) GRANTING CLAUSE. The Company hereby sells, grants, conveys,
mortgages, assigns, transfers, pledges, confirms and sets over to the Secretary
a continuing security interest in all of its right, title and interest in and to
(1) the Title XI Reserve Fund, and (2) all sums, instruments, moneys, negotiable
documents, chattel paper and proceeds thereof currently on deposit, or hereafter
deposited in the Title XI Reserve Fund.
(b) DEFINITIONS. For all purposes of this Financial Agreement, unless
otherwise expressly provided or unless the context otherwise requires, the
capitalized terms used herein shall have the meaning specified in Schedule X to
the Security Agreement entered into on this date.
<PAGE>
SECTION 2. TITLE XI RESERVE FUND DEPOSITS. (a) Pursuant to the
Depository Agreement, the Company shall establish with the Depository a
depository account (herein called the "Title XI Reserve Fund").
(b)(1) Within 120 days after the end of each fiscal year of the Company,
the Company shall compute its net income attributable to the operation of the
Vessel ("Title XI Reserve Fund Net Income"). This computation requires the
multiplication of the Company's total net income after taxes by a fraction with
a numerator composed of the total original capitalized cost of all Company
vessels (whether leased or owned) and a denominator composed of the total
original capitalized cost of all the Company's assets. The net income after
taxes, computed in accordance with generally accepted accounting principles,
shall be adjusted as follows:
(A) The depreciation expense applicable to the accounting year shall
be added back.
(B) There shall be subtracted an amount equal to the principal
amount of debt required to be paid or redeemed, and actually paid or redeemed by
the Company during the year; and the principal amount of Obligations Retired or
Paid, prepaid or redeemed, in excess of the required Redemptions or payments
which may be used by the Company as a credit against future required Redemptions
or other required payments with respect to the Obligations, but excluding
payments from the Title XI Reserve Fund and the Title XI Escrow Fund.
(2) Promptly after the computation of the Title XI Reserve Fund Net
Income by the Company:
(A) If the Vessel is owned by the Company, then from the Title XI
Reserve Fund Net Income for the Vessel there shall be deducted, annually, an
amount (pro rated for a period of less than a full fiscal year) which is 10% of
the Company's aggregate original equity investment in said Vessel, as specified
in Attachment A.
(B) The Company shall, unless otherwise approved by the Secretary in
writing, deposit into the Title XI Reserve Fund an amount equal to sixty-five
percent (65%) of the balance of the Title XI Reserve Fund Net income remaining
after the above deductions.
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<PAGE>
(C) Irrespective of the Company's deposit requirements into the
Title XI Reserve Fund, the Company shall not be required to make any deposits
into the Title XI Reserve Fund if (i) the Obligations and the related
Secretary's Note shall have been satisfied and discharged and if the Company
shall have paid or caused to be paid all other sums secured under the Security
Agreement or the Mortgage, (ii) all of the Guarantees on the Outstanding
Obligations shall have been terminated pursuant to the provisions of the
Security Agreement, or (iii) the amount (including any securities at current
market value) in the Title XI Reserve Fund is equal to, or in excess of 50% of
the principal amount of the Outstanding Obligations;
(D) The Company shall deliver to the Secretary (with a copy to the
Depository) at the time of each deposit into the Title XI Reserve Fund pursuant
to Section 2(b)(2)(B), and any deposits required under the Security Agreement, a
statement of an independent certified public accountant (who may be the regular
auditors for the Company) stating that such deposit has been computed in
accordance with Section 2(b)(2)(B) (and the Security Agreement, if applicable)
and showing the pertinent calculations.
(E) In addition, the Company shall deliver to the Secretary (with a
copy to the Depository), within 120 days after the end of each fiscal year of
the Company, a statement by such certified public accountant stating (i) the
total amount of all deposits to be so deposited into the Title XI Reserve Fund
for such fiscal year (and showing the pertinent calculations), or (ii) that no
such deposit was required to be made for such fiscal year (and showing the
pertinent calculations) and that at the end of such fiscal year no adjustments
pursuant to Section 2(b)(2)(F) were required to be made (and, if such
adjustments were required to be made, stating the reasons therefor).
(F) The computation of all deposits required by this Section 2 shall
be made on the basis of information available to the Company at the time of each
such deposit. Each such deposit shall be subject to adjustments from time to
time in the event and to the extent that the same would be required or permitted
by mistakes or omissions, additional information becoming available to the
Company, or judicial or administrative determinations made subsequent to the
making of such deposits.
SECTION 3. WITHDRAWALS FROM THE TITLE XI RESERVE FUND. (a) From time to
time, moneys in the Title XI Reserve Fund shall be subject to withdrawal by
delivery by the Company to the Secretary of a Request for Payment (specifying
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<PAGE>
the Person or Persons to be paid and the amount of such payment) executed by the
Company, together with an Officer's Certificate of the Company stating the
reasons and purpose for the withdrawal.
(b) Upon approval by the Secretary of the Request for Payment evidenced by
the countersignature thereon of the Secretary, the Secretary shall cause the
Request for Payment to be delivered to the Depository, which shall promptly make
payment to such Person or Persons in accordance with the terms of such Request
for Payment.
(c) The purposes for which withdrawals may be made, subject to the prior
approval of the Secretary, are the following:
(1) for application toward the redemption of Title XI Bonds or
Obligations;
(2) for payment of debt service;
(3) for payment to the Company, as of the end of each tax year of
the Company (and thereafter as any tax adjustments of the Company may require),
in amounts equal to any increments in the Company's tax liability resulting from
net capital gains realized from capital transactions in the Title XI Reserve
Fund consummated during such tax year;
(4) for payment into the Company's general funds in an amount equal
to that portion of the Title XI Reserve Fund which is in excess of 50% of the
principal amount of the Outstanding Title XI Bonds or Obligations; and
(5) for any other payment with the prior written approval of the
Secretary.
SECTION 4. TERMINATION OF THE TITLE XI RESERVE FUND. (a) The Title XI
Reserve Fund shall terminate at such time as the Secretary's Note shall have
been satisfied and discharged and the Company shall have paid or caused to be
paid all sums secured under the Security Agreement or the Mortgage.
(b) Upon the termination of the Title XI Reserve Fund, pursuant to Section
4(a), the moneys remaining in the Title XI Reserve Fund shall be subject to
withdrawal and payment into the general funds of the Company.
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<PAGE>
(c) Upon payment by the Secretary to the Indenture Trustee of the
Guarantees pursuant to the Indenture, the Title XI Reserve Fund shall, upon
written instructions of the Secretary, be terminated and the balance remaining
in the Title XI Reserve Fund shall be paid to the Secretary and the Company as
determined by the Secretary.
(d) Any withdrawal from the Title XI Reserve Fund pursuant to Section 4
shall not effect a discharge of or diminish any obligations of the Company under
the Security Agreement, Mortgage or any other agreement as the case may be
except to the extent that the amount withdrawn is applied to payments required
to be made by the Company under the Security Agreement, Mortgage or any other
agreement.
SECTION 5. ELIGIBLE INVESTMENTS; FORM OF DEPOSITS. (a) Moneys in the
Title XI Reserve Fund shall, if so directed by a Request of the Company
delivered to the Depository (with a copy to the Secretary), be invested by
the Depository in the following Eligible Investments:
(1) time deposits, negotiable certificates of deposit, or similar
instruments of deposit with a bank or trust company organized as a corporation
under the laws of the United States or any State thereof, or of the District of
Columbia, subject to supervision or examination by Federal or State authority or
authority of the District of Columbia, and having a combined capital and surplus
of at least $3,000,000; PROVIDED THAT, the aggregate of all such time deposits
and certificates of deposit with any one bank or trust company shall not exceed
10% of the combined capital and surplus of such bank or trust company;
(2) short term commercial paper having either of the two highest
ratings for short term commercial paper assigned by any two nationally
recognized organizations regularly engaged in rating the investment quality of
such commercial paper; and
(3) securities (designated by the Company in such Request) which at
the date of such investment are --
(A) direct obligations of, or obligations (other than the
Obligations or Obligations related to the Company) fully guaranteed or insured
by, the United States or any agency of the United States or with the Secretary's
prior written consent and subject to such conditions imposed by him, obligations
or securities fully insured by an instrumentality of the United States;
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<PAGE>
(B) bonds, not in default as to principal or interest of any county,
municipality or state of the United States and having either of the two highest
ratings for bonds assigned by any two nationally recognized organizations
regularly engaged in rating the investment quality of such bonds;
(C) bonds, not in default as to principal or interest, of
corporations organized and existing under the laws of the United States or of
the District of Columbia or of any state of the United States and having one of
the three highest ratings for bonds assigned by any two nationally recognized
organizations regularly engaged in rating the investment quality of such bonds;
PROVIDED THAT, no investment under this subsection shall be made in any
obligations of the Company or a Related Party;
(D) capital stock, but limited at the time of acquisition to any
amounts in the Title XI Reserve Fund in excess of the principal amount of
Obligations to be redeemed pursuant to the mandatory sinking fund provisions of
the Indenture, during the next succeeding 12 months of (i) corporations
organized and existing under the laws of the United States or the District of
Columbia or of any state of the United States if such stock is currently fully
listed and registered upon an exchange registered with the Securities and
Exchange Commission as a national securities exchange and permitted for
investment by a savings bank under the laws of the State of New York without
regard to the provisions therein limiting such investments to a percentage of
the assets or surplus of such savings bank, (ii) banks either regulated by the
Comptroller of the Currency of the United States or subject to the Banking Law
of the State of New York, or (iii) insurance companies licensed to do business
in such state; PROVIDED THAT, no investment under this subsection shall be made
in stock of the Company or a Related Party; PROVIDED FURTHER that, any request
under this subsection shall be accompanied by an opinion of counsel satisfactory
to the Secretary as to the qualification of such securities under this clause
and PROVIDED FURTHER, that the Company shall cause to be sold, within 60 days,
or at any time if the Secretary so directs the Company in writing, any
securities which cease to qualify under this subsection.
(b) In any case where the Company is required to deposit or redeposit sums
into the Title XI Reserve Fund, the Company shall make the required deposit in
cash or, in lieu thereof, with the Secretary's prior written approval, may
deposit into the Title XI Reserve Fund, negotiable certificates of deposit,
short term commercial paper or securities which are (1) Eligible Investments (2)
owned by the Company and (3) of an equivalent current market value (based upon
the last sales
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<PAGE>
price thereof on the Business Day immediately preceding such deposit or, if
there shall have been no sale thereof on such day, the average of the last known
bid and asked prices). With the Secretary's prior written approval, the Company
may exchange Eligible Investments in the Title XI Reserve Fund at current market
value (determined as above provided) for an equivalent amount of cash.
(c) Cash held in the Title XI Reserve Fund will be held by the Depository
pursuant to the Depository Agreement.
SECTION 6. COMPANY'S RIGHTS WITH RESPECT TO SECURITIES HELD IN THE TITLE
XI RESERVE FUND. Unless there is an existing Default under the Security
Agreement, the Company shall have:
(a) the right to vote securities held in the Title XI Reserve Fund as to
(1) the sale of all or any part of the assets of the issuer or obligor thereof,
(2) the increase or reduction of the capital of such issuer or obligor, (3) the
liquidation, dissolution, merger or consolidation of such issuer or obligor, or
(4) any purpose which would not then impair the lien of, or the security
interest granted to the Secretary; and
(b) the right to exercise any and all rights of ownership of such
securities, including the right to consent or object to the extension,
modification or renewal of any thereof, the right to consent or object to any
plan of reorganization, or readjustment, and the right to exercise any right,
privilege or option pertaining thereto.
SECTION 7. ANNUAL STATEMENT OF COMPANY WITH RESPECT TO THE TITLE XI
RESERVE FUND. Within 120 days after the close of each fiscal year of the Company
at the end of which there are funds in the Title XI Reserve Fund (and at such
other times as the Secretary may request in writing), the Company shall submit
to the Secretary (with a copy to the Depository) (a) an opinion of counsel
satisfactory to the Secretary as to the qualification, under Section 5(a)(3)(D),
of securities acquired pursuant to Section 5(a)(3)(D) and then held in the Title
XI Reserve Fund and (b) a list of the Eligible Investments held in the Title XI
Reserve Fund at the close of said fiscal year (or at the time of the Secretary's
request as aforesaid).
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SECTION 8. FINANCIAL REQUIREMENTS OF THE COMPANY. (a) PRIMARY COVENANTS.
The Company shall not without the Secretary's prior written consent:
(1) Except as hereinafter provided, make any distribution of
earnings, except as may be permitted by (A) or (B) below:
(A) From retained earnings in an amount specified in Section
8(a)(1)(C) below, PROVIDED THAT, in the fiscal year in which the distribution of
earnings is made there is no operating loss to the date of such payment of such
distribution of earnings, and (i) there was no operating loss in the immediately
preceding three fiscal years, or (ii) there was a one-year operating loss during
the immediately preceding three fiscal years, but (a) such loss was not in the
immediately preceding fiscal year, and (b) there was positive net income for the
three year period;
(B) If distributions of earnings may not be made under (A) above, a
distribution can be made in an amount equal to the total operating net income
for the immediately preceding three fiscal year period, PROVIDED THAT, (i) there
were no two successive years of operating losses, (ii) in the fiscal year in
which such distribution is made, there is no operating loss to the date of such
distribution, and (iii) the distribution or earnings made would not exceed an
amount specified in Section 8(a)(1)(C) below;
(C) Distributions of earnings may be made from earnings of prior
years in an aggregate amount equal to (i) 40 percent of the Company's total net
income after tax for each of the prior years, less any distributions that were
made in such years; or (ii) the aggregate of the Company's total net income
after tax for such prior years, PROVIDED THAT, after making such distribution,
the Company's Long Term Debt does not exceed its Net Worth. In computing net
income for purposes of this subsection, extraordinary gains, such as gains from
the sale of assets, shall be excluded;
(2) Enter into any service, management or operating agreement for
the operation of the Vessel (excluding husbanding type agreements), or appoint
or designate a managing or operating agent for the operation of the Vessel
(excluding husbanding agents) unless approved by the Secretary;
(3) (A) Sell, mortgage, transfer, or demise charter the Vessel or
any assets to any non-Related Party except as permitted in subsection 8(a)(7)
below, or (B) sell, mortgage, transfer, or demise charter the Vessel or any
assets to a Related
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Party, unless such transaction is (i) at a fair market value as determined by an
independent appraiser acceptable to the Secretary, and (ii) a total cash
transaction or, in the case of demise charter, the charter payments are cash
payments;
(4) Enter into any agreement for both (A) sale and (B) leaseback of
the same assets so sold unless the proceeds from such sale are at least equal to
the fair market value of the property sold;
(5) Except as necessary to avoid arrest or the threat of arrest of
the Vessel or the Vessel of PETRODRILL FOUR LIMITED, or to arrange for the
release of the Vessel or the Vessel of PETRODRILL FOUR LIMITED, guarantee, or
otherwise become liable for the obligations of any Person, except in respect of
any undertakings as to the fees and expenses of the Indenture Trustee, except
endorsement for deposit of checks and other negotiable instruments acquired in
the ordinary course of business and except as otherwise permitted in Section
8(b);
(6) Directly or indirectly embark on any new enterprise or business
activity not directly connected with the business of shipping or other activity
in which the Company is actively engaged;
(7) Enter into any merger or consolidation or convey, sell, demise
charter, or otherwise transfer, or dispose of any portion of its properties or
assets (any and all of which acts are encompassed within the words "sale" or
"sold" as used herein), PROVIDED THAT, the Company shall not be deemed to have
sold such properties or assets if (A) the Net Book Value (defined as the
original book value of an asset less depreciation calculated on a straight line
basis over its useful life) of the aggregate of all the assets sold by the
Company during any period of 12 consecutive calendar months does not exceed 10%
of the total Net Book Value of all of the Company's assets (the assets which are
the basis for the calculation of the 10% of the Net Book Value are those
indicated on the most recent audited annual financial statement required to be
submitted pursuant to Section 9 hereof prior to the date of the sale); (B) the
Company retains the proceeds of the sale of assets for use in accordance with
the Company's regular business activities; and (C) the sale is not otherwise
prohibited by subsection 8(a)(3). Notwithstanding any other provision of this
subsection, the Company may not consummate such sale without the Secretary's
prior written consent if the Company has not, prior to the time of such sale,
submitted to the Secretary the financial statement in clause A of this
subsection, and any attempt to consummate a sale absent such approval shall be
null and void AB INITIO.
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(b) SUPPLEMENTAL COVENANTS. Unless, after giving effect to such
transaction or transactions, during any fiscal year of the Company, (1) the
Company's Working Capital is equal to at least one dollar, (2) the Company's
Long-Term Debt does not exceed two times the Company's Net Worth and (3) the
Company's Net Worth is at least the amount specified in Attachment A hereto, the
Company shall not, without the Secretary's prior written consent:
(A) Withdraw any capital;
(B) Redeem any share capital or convert any of the same into debt;
(C) Pay any dividend (except dividends payable in capital stock of
the Company);
(D) Make any loan or advance (except advances to cover current
expenses of the Company), either directly or indirectly, to any stockholder,
director, officer, or employee of the Company, or to any Related Party;
(E) Make any investments in the securities of any Related Party;
(F) Prepay in whole or in part any indebtedness to any stockholder,
director, officer or employee of the Company, or to any Related Party;
(G) Increase any direct employee compensation (as hereinafter
defined) paid to any employee in excess of $150,000 per annum; nor increase any
direct employee compensation which is already in excess of $150,000 per annum;
nor initially employ or re-employ any person at a direct employee compensation
rate in excess of $150,000 per annum; provided, however, that beginning with
January 1, 2000, the $150,000 limit may be increased annually based on the
previous year's closing CPI-U (Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics). For the purpose of this section
the term "direct employee compensation" is the total amount of any wage, salary,
bonus, commission, or other form of direct payment to any employee from all
companies with guarantees under Title XI of the Act as reported to the Internal
Revenue Service for any fiscal year;
(H) Acquire any fixed assets other than those required for the
maintenance and operations of the Company's existing assets, including the
normal maintenance and operation of any vessel or vessels owned or chartered by
the Company;
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(I) Either enter into or become liable (directly or indirectly)
under charters and leases (having a term of twelve months or more) for the
payment of charter hire and rent on all such charters and leases which have
annual payments aggregating in excess of $1,000,000 (which amount shall be
increased at the end of each of the Company's fiscal years by a percentage equal
to the CPI-U);
(J) Pay any indebtedness subordinated to the Obligations or to any
other Title XI obligations;
(K) Create, assume, incur, or in any manner become liable for any
indebtedness, except current liabilities, or short term loans, incurred or
assumed in the ordinary course of business as such business presently exists;
(L) Make any investment, whether by acquisition of stock or
indebtedness, or by loan, advance, transfer of property, capital contribution,
guarantee of indebtedness or otherwise, in any Person, other than obligations of
the United States, bank deposits or investments in securities of the character
permitted for moneys in the Title XI Reserve Fund;
(M) Create, assume, permit or suffer to exist or continue any
mortgage, lien, charge or encumbrance upon, or pledge of, or subject to the
prior payment of any indebtedness, any of its property or assets, real or
personal, tangible or intangible, whether now owned or hereafter acquired, or
own or acquire, or agree to acquire, title to any property of any kind subject
to or upon a chattel mortgage or conditional sales agreement or other title
retention agreement, except (i) loans, mortgages and indebtedness guaranteed by
the Secretary under Title XI of the Act or related to the construction of a
vessel approved for Title XI by the Secretary and (ii) liens incurred in the
ordinary course of business as such business presently exists;
(N) Pay any penalties if the Vessel is not timely delivered to
Petroleo Brasileiro S.A. ("Petrobras") under the chartering contract dated as of
December 5, 1997, between Petrobras and Maritima Petroleo e Engenharia Ltda
which has been assigned to the Shipowner (the "Chartering Contract"), in so far
as it relates to the chartering of the Vessel (the "Late Arrival Penalties");
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(O) Pay any ad valorem taxes on the Vessel imposed by the Federative
Republic of Brazil, or any agency, instrumentality or other entity thereof, or
any other state, local, municipal or other governmental entity located in Brazil
("Ad Valorem Taxes");
(P) Reimburse or repay any amount paid by Maritima Petroleo e
Engenharia Ltda or Pride International Inc. pursuant to their respective
guaranties to the Secretary issued on the Closing Date in connection with Late
Arrival Penalties and Ad Valorem Taxes.
SECTION 9. (a) ANNUAL FINANCIAL STATEMENTS. The Company shall furnish to
the Secretary, in duplicate, (1) within 120 days after the end of the
Shipowner's fiscal year commencing with the first fiscal year ending after the
date of the Security Agreement, the Company's Audited Financial Statements
including balance sheet and income statement for such fiscal year along with a
completed M.A. Form 172 or such other form approved by the Secretary, and (2)
within 90 days after the expiration of each semi-annual period of each fiscal
year commencing with the first such semi-annual period ending after the date of
the Security Agreement, a completed M.A. Form 172 or such other form approved by
the Secretary for such semi-annual period along with an Officer's Certificate
certifying its accuracy.
(b) ANNUAL NO DEFAULT CERTIFICATES. Within 120 days after the end of the
Company's fiscal year, the Company shall furnish to the Secretary, an Officer's
Certificate dated as of the close of such fiscal year stating whether or not,
the Company is in default in the performance of or in default in the compliance
with any covenant, agreement or condition contained herein or in the Mortgage,
Security Agreement or charter relating to any Vessel listed in Attachment A
hereto, and if so, specifying each such default and stating the nature thereof.
SECTION 10. QUALIFYING FINANCIAL REQUIREMENTS OF THE COMPANY. Immediately
upon the execution and delivery of this Agreement, the Company shall meet the
requirements with respect to Working Capital, Net Worth and Long Term Debt
specified in Section 8(b).
SECTION 11. NOTICES. Except as otherwise provided in this Agreement,
notices, requests, directions, instructions, waivers, approvals or other
communication may be made or delivered in person or by registered or certified
mail, postage prepaid, addressed to the party as provided below, or to such
other address as such party may hereafter specify in a written notice to the
other parties named herein, and all notices or other communications shall be in
writing
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so addressed and shall be effective upon receipt by the addressee thereof:
The Secretary as: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
Maritime Administration
400 Seventh Street, S.W.
Washington, D.C. 20590
The Title XI Reserve
Fund Depository as: CITIBANK, N.A.
111 Wall Street, 5th Floor
New York, New York 10005
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The Company as: PETRODRILL FIVE LIMITED
c/o Arias, Fabrega & Fabrega
P.O. Box 985
Omar Hodge Building
Wickham's Cay
Road Town, Tortola
British Virgin Islands
With a copy to: PETRODRILL ENGINEERING NV
K.P. van der Mandelelaan 38
3062 MB
Rotterdam (Brainpark)
The Netherlands
SECTION 12. AMENDMENTS AND SUPPLEMENTS. No agreement shall be effective to
amend, supplement, or discharge in whole or in part this Financial Agreement
unless such agreement is in writing signed by the parties hereto. Any
amendments, additions, deletions, substitutions or other changes not made in
accordance with this provision shall be invalid and of no effect.
SECTION 13. COUNTERPARTS. This Financial Agreement may be executed in
any number of counterparts. All such counterparts shall be deemed to be
originals, and shall together constitute but one and the same instrument.
SECTION 14. JURISDICTION AND CONSENT TO SUIT. This Title XI Reserve Fund
and Financial Agreement hereby adopts and incorporates by reference as if fully
set forth herein the provisions relating to Jurisdiction and Consent to Suit of
the Special Provisions of the Security Agreement.
SECTION 15. PAYMENTS IN U.S. CURRENCY. This Title XI Reserve Fund and
Financial Agreement hereby adopts and incorporates by reference as if fully
set forth herein Section 11.06 of the Security Agreement.
SECTION 16. IMMUNITY. This Title XI Reserve Fund and Financial
Agreement hereby adopts and incorporates by reference as fully set forth
herein Section 11.07 of the Security Agreement.
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IN WITNESS WHEREOF, this Title XI Reserve Fund and Financial Agreement has
been executed by the parties hereto as of the day and year first above written.
Attest: PETRODRILL FIVE LIMITED
/s/ ROBERT W. RANDALL BY: /s/ EARL W. MCNIEL
--------------------- ------------------
Secretary Treasurer
UNITED STATES OF AMERICA
Attest: SECRETARY OF TRANSPORTATION
(SEAL)
MARITIME ADMINISTRATOR
/s/ LARRY MAIN
--------------
BY: /s/ JOEL C. RICHARD
-------------------
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ATTACHMENT A
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT
(Contract No. MA - 13513)
1. This Financial Agreement shall apply to the following Vessel: AMETHYST 5
2. The Company's aggregate original equity investment for use in Section 2 for
the Vessel AMETHYST 5 is $26,455,175.
3. The Company's Net Worth for use in Section 8(b) is $26,455,175.
EXHIBIT 4.30
EXHIBIT 4 TO SECURITY AGREEMENT DOCUMENT 16
Contract No. MA -13507
TITLE XI RESERVE FUND
AND FINANCIAL AGREEMENT
THIS TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT (the "Financial
Agreement"), dated April 9, 1999 between PETRODRILL FOUR LIMITED, a British
Virgin Islands international business company, "the Company"), and THE UNITED
STATES OF AMERICA (the "United States"), represented by the Secretary of
Transportation, acting by and through the Maritime Administrator (the
"Secretary").
RECITALS:
Pursuant to the conditions and understandings set forth in the Recitals to
the Security Agreement executed on this date, the Company has authorized the
issuance of obligations designated "United States Government Guaranteed Export
Ship Financing Obligations, AMETHYST 4 Series" in an aggregate principal amount
not to exceed $149,625,000 to finance the cost of construction of the AMETHYST 4
the ("Vessel");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and of other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereby agree as follows:
SECTION 1. (a) GRANTING CLAUSE. The Company hereby sells, grants, conveys,
mortgages, assigns, transfers, pledges, confirms and sets over to the Secretary
a continuing security interest in all of its right, title and interest in and to
(1) the Title XI Reserve Fund, and (2) all sums, instruments, moneys, negotiable
documents, chattel paper and proceeds thereof currently on deposit, or hereafter
deposited in the Title XI Reserve Fund.
(b) DEFINITIONS. For all purposes of this Financial Agreement, unless
otherwise expressly provided or unless the context otherwise requires, the
capitalized terms used herein shall have the meaning specified in Schedule X to
the Security Agreement entered into on this date.
<PAGE>
SECTION 2. TITLE XI RESERVE FUND DEPOSITS. (a) Pursuant to the Depository
Agreement, the Company shall establish with the Depository a depository account
(herein called the "Title XI Reserve Fund").
(b)(1) Within 120 days after the end of each fiscal year of the Company,
the Company shall compute its net income attributable to the operation of the
Vessel ("Title XI Reserve Fund Net Income"). This computation requires the
multiplication of the Company's total net income after taxes by a fraction with
a numerator composed of the total original capitalized cost of all Company
vessels (whether leased or owned) and a denominator composed of the total
original capitalized cost of all the Company's assets. The net income after
taxes, computed in accordance with generally accepted accounting principles,
shall be adjusted as follows:
(A) The depreciation expense applicable to the accounting year shall
be added back.
(B) There shall be subtracted an amount equal to the principal
amount of debt required to be paid or redeemed, and actually paid or redeemed by
the Company during the year; and the principal amount of Obligations Retired or
Paid, prepaid or redeemed, in excess of the required Redemptions or payments
which may be used by the Company as a credit against future required Redemptions
or other required payments with respect to the Obligations, but excluding
payments from the Title XI Reserve Fund and the Title XI Escrow Fund.
(2) Promptly after the computation of the Title XI Reserve Fund Net
Income by the Company:
(A) If the Vessel is owned by the Company, then from the Title XI
Reserve Fund Net Income for the Vessel there shall be deducted, annually, an
amount (pro rated for a period of less than a full fiscal year) which is 10% of
the Company's aggregate original equity investment in said Vessel, as specified
in Attachment A.
(B) The Company shall, unless otherwise approved by the Secretary in
writing, deposit into the Title XI Reserve Fund an amount equal to sixty-five
percent (65%) of the balance of the Title XI Reserve Fund Net income remaining
after the above deductions.
(C) Irrespective of the Company's deposit requirements into the
Title
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XI Reserve Fund, the Company shall not be required to make any deposits into the
Title XI Reserve Fund if (i) the Obligations and the related Secretary's Note
shall have been satisfied and discharged and if the Company shall have paid or
caused to be paid all other sums secured under the Security Agreement or the
Mortgage, (ii) all of the Guarantees on the Outstanding Obligations shall have
been terminated pursuant to the provisions of the Security Agreement, or (iii)
the amount (including any securities at current market value) in the Title XI
Reserve Fund is equal to, or in excess of 50% of the principal amount of the
Outstanding Obligations;
(D) The Company shall deliver to the Secretary (with a copy to the
Depository) at the time of each deposit into the Title XI Reserve Fund pursuant
to Section 2(b)(2)(B), and any deposits required under the Security Agreement, a
statement of an independent certified public accountant (who may be the regular
auditors for the Company) stating that such deposit has been computed in
accordance with Section 2(b)(2)(B) (and the Security Agreement, if applicable)
and showing the pertinent calculations.
(E) In addition, the Company shall deliver to the Secretary (with a
copy to the Depository), within 120 days after the end of each fiscal year of
the Company, a statement by such certified public accountant stating (i) the
total amount of all deposits to be so deposited into the Title XI Reserve Fund
for such fiscal year (and showing the pertinent calculations), or (ii) that no
such deposit was required to be made for such fiscal year (and showing the
pertinent calculations) and that at the end of such fiscal year no adjustments
pursuant to Section 2(b)(2)(F) were required to be made (and, if such
adjustments were required to be made, stating the reasons therefor).
(F) The computation of all deposits required by this Section 2 shall
be made on the basis of information available to the Company at the time of each
such deposit. Each such deposit shall be subject to adjustments from time to
time in the event and to the extent that the same would be required or permitted
by mistakes or omissions, additional information becoming available to the
Company, or judicial or administrative determinations made subsequent to the
making of such deposits.
SECTION 3. WITHDRAWALS FROM THE TITLE XI RESERVE FUND. (a) From time to
time, moneys in the Title XI Reserve Fund shall be subject to withdrawal by
delivery by the Company to the Secretary of a Request for Payment (specifying
the Person or Persons to be paid and the amount of such payment) executed by
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the Company, together with an Officer's Certificate of the Company stating the
reasons and purpose for the withdrawal.
(b) Upon approval by the Secretary of the Request for Payment evidenced by
the countersignature thereon of the Secretary, the Secretary shall cause the
Request for Payment to be delivered to the Depository, which shall promptly make
payment to such Person or Persons in accordance with the terms of such Request
for Payment.
(c) The purposes for which withdrawals may be made, subject to the prior
approval of the Secretary, are the following:
(1) for application toward the redemption of Title XI Bonds or
Obligations;
(2) for payment of debt service;
(3) for payment to the Company, as of the end of each tax year of
the Company (and thereafter as any tax adjustments of the Company may require),
in amounts equal to any increments in the Company's tax liability resulting from
net capital gains realized from capital transactions in the Title XI Reserve
Fund consummated during such tax year;
(4) for payment into the Company's general funds in an amount equal
to that portion of the Title XI Reserve Fund which is in excess of 50% of the
principal amount of the Outstanding Title XI Bonds or Obligations; and
(5) for any other payment with the prior written approval of the
Secretary.
SECTION 4. TERMINATION OF THE TITLE XI RESERVE FUND. (a) The Title XI
Reserve Fund shall terminate at such time as the Secretary's Note shall have
been satisfied and discharged and the Company shall have paid or caused to be
paid all sums secured under the Security Agreement or the Mortgage.
(b) Upon the termination of the Title XI Reserve Fund, pursuant to Section
4(a), the moneys remaining in the Title XI Reserve Fund shall be subject to
withdrawal and payment into the general funds of the Company.
(c) Upon payment by the Secretary to the Indenture Trustee of the
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Guarantees pursuant to the Indenture, the Title XI Reserve Fund shall, upon
written instructions of the Secretary, be terminated and the balance remaining
in the Title XI Reserve Fund shall be paid to the Secretary and the Company as
determined by the Secretary.
(d) Any withdrawal from the Title XI Reserve Fund pursuant to Section 4
shall not effect a discharge of or diminish any obligations of the Company under
the Security Agreement, Mortgage or any other agreement as the case may be
except to the extent that the amount withdrawn is applied to payments required
to be made by the Company under the Security Agreement, Mortgage or any other
agreement.
SECTION 5. ELIGIBLE INVESTMENTS; FORM OF DEPOSITS. (a) Moneys in the Title
XI Reserve Fund shall, if so directed by a Request of the Company delivered to
the Depository (with a copy to the Secretary), be invested by the Depository in
the following Eligible Investments:
(1) time deposits, negotiable certificates of deposit, or similar
instruments of deposit with a bank or trust company organized as a corporation
under the laws of the United States or any State thereof, or of the District of
Columbia, subject to supervision or examination by Federal or State authority or
authority of the District of Columbia, and having a combined capital and surplus
of at least $3,000,000; PROVIDED THAT, the aggregate of all such time deposits
and certificates of deposit with any one bank or trust company shall not exceed
10% of the combined capital and surplus of such bank or trust company;
(2) short term commercial paper having either of the two highest
ratings for short term commercial paper assigned by any two nationally
recognized organizations regularly engaged in rating the investment quality of
such commercial paper; and
(3) securities (designated by the Company in such Request) which at
the date of such investment are --
(A) direct obligations of, or obligations (other than the
Obligations or Obligations related to the Company) fully guaranteed or insured
by, the United States or any agency of the United States or with the Secretary's
prior written consent and subject to such conditions imposed by him, obligations
or securities fully insured by an instrumentality of the United States;
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(B) bonds, not in default as to principal or interest of any county,
municipality or state of the United States and having either of the two highest
ratings for bonds assigned by any two nationally recognized organizations
regularly engaged in rating the investment quality of such bonds;
(C) bonds, not in default as to principal or interest, of
corporations organized and existing under the laws of the United States or of
the District of Columbia or of any state of the United States and having one of
the three highest ratings for bonds assigned by any two nationally recognized
organizations regularly engaged in rating the investment quality of such bonds;
PROVIDED THAT, no investment under this subsection shall be made in any
obligations of the Company or a Related Party;
(D) capital stock, but limited at the time of acquisition to any
amounts in the Title XI Reserve Fund in excess of the principal amount of
Obligations to be redeemed pursuant to the mandatory sinking fund provisions of
the Indenture, during the next succeeding 12 months of (i) corporations
organized and existing under the laws of the United States or the District of
Columbia or of any state of the United States if such stock is currently fully
listed and registered upon an exchange registered with the Securities and
Exchange Commission as a national securities exchange and permitted for
investment by a savings bank under the laws of the State of New York without
regard to the provisions therein limiting such investments to a percentage of
the assets or surplus of such savings bank, (ii) banks either regulated by the
Comptroller of the Currency of the United States or subject to the Banking Law
of the State of New York, or (iii) insurance companies licensed to do business
in such state; PROVIDED THAT, no investment under this subsection shall be made
in stock of the Company or a Related Party; PROVIDED FURTHER that, any request
under this subsection shall be accompanied by an opinion of counsel satisfactory
to the Secretary as to the qualification of such securities under this clause
and PROVIDED FURTHER, that the Company shall cause to be sold, within 60 days,
or at any time if the Secretary so directs the Company in writing, any
securities which cease to qualify under this subsection.
(b) In any case where the Company is required to deposit or redeposit sums
into the Title XI Reserve Fund, the Company shall make the required deposit in
cash or, in lieu thereof, with the Secretary's prior written approval, may
deposit into the Title XI Reserve Fund, negotiable certificates of deposit,
short term commercial paper or securities which are (1) Eligible Investments (2)
owned by the Company and (3) of an equivalent current market value (based upon
the last sales price thereof on the Business Day immediately preceding such
deposit or, if there
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shall have been no sale thereof on such day, the average of the last known bid
and asked prices). With the Secretary's prior written approval, the Company may
exchange Eligible Investments in the Title XI Reserve Fund at current market
value (determined as above provided) for an equivalent amount of cash.
(c) Cash held in the Title XI Reserve Fund will be held by the Depository
pursuant to the Depository Agreement.
SECTION 6. COMPANY'S RIGHTS WITH RESPECT TO SECURITIES HELD IN THE TITLE
XI RESERVE FUND. Unless there is an existing Default under the Security
Agreement, the Company shall have:
(a) the right to vote securities held in the Title XI Reserve Fund as to
(1) the sale of all or any part of the assets of the issuer or obligor thereof,
(2) the increase or reduction of the capital of such issuer or obligor, (3) the
liquidation, dissolution, merger or consolidation of such issuer or obligor, or
(4) any purpose which would not then impair the lien of, or the security
interest granted to the Secretary; and
(b) the right to exercise any and all rights of ownership of such
securities, including the right to consent or object to the extension,
modification or renewal of any thereof, the right to consent or object to any
plan of reorganization, or readjustment, and the right to exercise any right,
privilege or option pertaining thereto.
SECTION 7. ANNUAL STATEMENT OF COMPANY WITH RESPECT TO THE TITLE XI
RESERVE FUND. Within 120 days after the close of each fiscal year of the Company
at the end of which there are funds in the Title XI Reserve Fund (and at such
other times as the Secretary may request in writing), the Company shall submit
to the Secretary (with a copy to the Depository) (a) an opinion of counsel
satisfactory to the Secretary as to the qualification, under Section 5(a)(3)(D),
of securities acquired pursuant to Section 5(a)(3)(D) and then held in the Title
XI Reserve Fund and (b) a list of the Eligible Investments held in the Title XI
Reserve Fund at the close of said fiscal year (or at the time of the Secretary's
request as aforesaid).
SECTION 8. FINANCIAL REQUIREMENTS OF THE COMPANY. (a) PRIMARY Covenants.
The Company shall not without the Secretary's prior written consent:
(1) Except as hereinafter provided, make any distribution of
earnings, except as may be permitted by (A) or (B) below:
7
<PAGE>
(A) From retained earnings in an amount specified in Section
8(a)(1)(C) below, PROVIDED THAT, in the fiscal year in which the distribution of
earnings is made there is no operating loss to the date of such payment of such
distribution of earnings, and (i) there was no operating loss in the immediately
preceding three fiscal years, or (ii) there was a one-year operating loss during
the immediately preceding three fiscal years, but (a) such loss was not in the
immediately preceding fiscal year, and (b) there was positive net income for the
three year period;
(B) If distributions of earnings may not be made under (A) above, a
distribution can be made in an amount equal to the total operating net income
for the immediately preceding three fiscal year period, PROVIDED THAT, (i) there
were no two successive years of operating losses, (ii) in the fiscal year in
which such distribution is made, there is no operating loss to the date of such
distribution, and (iii) the distribution or earnings made would not exceed an
amount specified in Section 8(a)(1)(C) below;
(C) Distributions of earnings may be made from earnings of prior
years in an aggregate amount equal to (i) 40 percent of the Company's total net
income after tax for each of the prior years, less any distributions that were
made in such years; or (ii) the aggregate of the Company's total net income
after tax for such prior years, PROVIDED THAT, after making such distribution,
the Company's Long Term Debt does not exceed its Net Worth. In computing net
income for purposes of this subsection, extraordinary gains, such as gains from
the sale of assets, shall be excluded;
(2) Enter into any service, management or operating agreement for
the operation of the Vessel (excluding husbanding type agreements), or appoint
or designate a managing or operating agent for the operation of the Vessel
(excluding husbanding agents) unless approved by the Secretary;
(3) (A) Sell, mortgage, transfer, or demise charter the Vessel or
any assets to any nn-Related Party except as permitted in subsection 8(a)(7)
below, or (B) sell, mortgage, transfer, or demise charter the Vessel or any
assets to a Related Party, unless such transaction is (i) at a fair market value
as determined by an independent appraiser acceptable to the Secretary, and (ii)
a total cash transaction or, in the case of demise charter, the charter payments
are cash payments;
(4) Enter into any agreement for both (A) sale and (B) leaseback of
the
8
<PAGE>
same assets so sold unless the proceeds from such sale are at least equal to the
fair market value of the property sold;
(5) Except as necessary to avoid arrest or the threat of arrest of
the Vessel or the Vessel of PETRODRILL FIVE LIMITED, or to arrange for the
release of the Vessel or the Vessel of PETRODRILL FIVE LIMITED, guarantee, or
otherwise become liable for the obligations of any Person, except in respect of
any undertakings as to the fees and expenses of the Indenture Trustee, except
endorsement for deposit of checks and other negotiable instruments acquired in
the ordinary course of business and except as otherwise permitted in Section
8(b);
(6) Directly or indirectly embark on any new enterprise or business
activity not directly connected with the business of shipping or other activity
in which the Company is actively engaged;
(7) Enter into any merger or consolidation or convey, sell, demise
charter, or otherwise transfer, or dispose of any portion of its properties or
assets (any and all of which acts are encompassed within the words "sale" or
"sold" as used herein), PROVIDED THAT, the Company shall not be deemed to have
sold such properties or assets if (A) the Net Book Value (defined as the
original book value of an asset less depreciation calculated on a straight line
basis over its useful life) of the aggregate of all the assets sold by the
Company during any period of 12 consecutive calendar months does not exceed 10%
of the total Net Book Value of all of the Company's assets (the assets which are
the basis for the calculation of the 10% of the Net Book Value are those
indicated on the most recent audited annual financial statement required to be
submitted pursuant to Section 9 hereof prior to the date of the sale); (B) the
Company retains the proceeds of the sale of assets for use in accordance with
the Company's regular business activities; and (C) the sale is not otherwise
prohibited by subsection 8(a)(3). Notwithstanding any other provision of this
subsection, the Company may not consummate such sale without the Secretary's
prior written consent if the Company has not, prior to the time of such sale,
submitted to the Secretary the financial statement in clause A of this
subsection, and any attempt to consummate a sale absent such approval shall be
null and void AB INITIO.
(b) SUPPLEMENTAL COVENANTS. Unless, after giving effect to such
transaction or transactions, during any fiscal year of the Company, (1) the
Company's Working Capital is equal to at least one dollar, (2) the Company's
Long-Term Debt does not exceed two times the Company's Net Worth and (3) the
Company's Net Worth is at least the amount specified in Attachment A hereto, the
Company shall
9
<PAGE>
not, without the Secretary's prior written consent:
(A) Withdraw any capital;
(B) Redeem any share capital or convert any of the same into debt;
(C) Pay any dividend (except dividends payable in capital stock of
the Company);
(D) Make any loan or advance (except advances to cover current
expenses of the Company), either directly or indirectly, to any stockholder,
director, officer, or employee of the Company, or to any Related Party;
(E) Make any investments in the securities of any Related Party;
(F) Prepay in whole or in part any indebtedness to any stockholder,
director, officer or employee of the Company, or to any Related Party;
(G) Increase any direct employee compensation (as hereinafter
defined) paid to any employee in excess of $150,000 per annum; nor increase any
direct employee compensation which is already in excess of $150,000 per annum;
nor initially employ or re-employ any person at a direct employee compensation
rate in excess of $150,000 per annum; provided, however, that beginning with
January 1, 2000, the $150,000 limit may be increased annually based on the
previous year's closing CPI-U (Consumer Price Index for All Urban Consumers
published by the Bureau of Labor Statistics). For the purpose of this section
the term "direct employee compensation" is the total amount of any wage, salary,
bonus, commission, or other form of direct payment to any employee from all
companies with guarantees under Title XI of the Act as reported to the Internal
Revenue Service for any fiscal year;
(H) Acquire any fixed assets other than those required for the
maintenance and operations of the Company's existing assets, including the
normal maintenance and operation of any vessel or vessels owned or chartered by
the Company;
(I) Either enter into or become liable (directly or indirectly)
under charters and leases (having a term of twelve months or more) for the
payment of charter hire and rent on all such charters and leases which have
annual
10
<PAGE>
payments aggregating in excess of $1,000,000 (which amount shall be increased at
the end of each of the Company's fiscal years by a percentage equal to the
CPI-U);
(J) Pay any indebtedness subordinated to the Obligations or to any
other Title XI obligations;
(K) Create, assume, incur, or in any manner become liable for any
indebtedness, except current liabilities, or short term loans, incurred or
assumed in the ordinary course of business as such business presently exists;
(L) Make any investment, whether by acquisition of stock or
indebtedness, or by loan, advance, transfer of property, capital contribution,
guarantee of indebtedness or otherwise, in any Person, other than obligations of
the United States, bank deposits or investments in securities of the character
permitted for moneys in the Title XI Reserve Fund;
(M) Create, assume, permit or suffer to exist or continue any
mortgage, lien, charge or encumbrance upon, or pledge of, or subject to the
prior payment of any indebtedness, any of its property or assets, real or
personal, tangible or intangible, whether now owned or hereafter acquired, or
own or acquire, or agree to acquire, title to any property of any kind subject
to or upon a chattel mortgage or conditional sales agreement or other title
retention agreement, except (i) loans, mortgages and indebtedness guaranteed by
the Secretary under Title XI of the Act or related to the construction of a
vessel approved for Title XI by the Secretary and (ii) liens incurred in the
ordinary course of business as such business presently exists;
(N) Pay any penalties if the Vessel is not timely delivered to
Petroleo Brasileiro S.A. ("Petrobras") under the chartering contract dated as of
December 5, 1997, between Petrobras and Maritima Petroleo e Engenharia Ltda
which has been assigned to the Shipowner (the "Chartering Contract"), in so far
as it relates to the chartering of the Vessel (the "Late Arrival Penalties");
(O) Pay any ad valorem taxes on the Vessel imposed by the Federative
Republic of Brazil, or any agency, instrumentality or other entity thereof, or
any other state, local, municipal or other governmental entity located in Brazil
("Ad Valorem Taxes");
(P) Reimburse or repay any amount paid by Maritima Petroleo e
11
<PAGE>
Engenharia Ltda or Pride International Inc. pursuant to their respective
guaranties to the Secretary issued on the Closing Date in connection with Late
Arrival Penalties and Ad Valorem Taxes.
SECTION 9. (a) ANNUAL FINANCIAL STATEMENTS. The Company shall furnish to
the Secretary, in duplicate, (1) within 120 days after the end of the
Shipowner's fiscal year commencing with the first fiscal year ending after the
date of the Security Agreement, the Company's Audited Financial Statements
including balance sheet and income statement for such fiscal year along with a
completed M.A. Form 172 or such other form approved by the Secretary, and (2)
within 90 days after the expiration of each semi-annual period of each fiscal
year commencing with the first such semi-annual period ending after the date of
the Security Agreement, a completed M.A. Form 172 or such other form approved by
the Secretary for such semi-annual period along with an Officer's Certificate
certifying its accuracy.
(b) ANNUAL NO DEFAULT CERTIFICATES. Within 120 days after the end of the
Company's fiscal year, the Company shall furnish to the Secretary, an Officer's
Certificate dated as of the close of such fiscal year stating whether or not,
the Company is in default in the performance of or in default in the compliance
with any covenant, agreement or condition contained herein or in the Mortgage,
Security Agreement or charter relating to any Vessel listed in Attachment A
hereto, and if so, specifying each such default and stating the nature thereof.
SECTION 10. QUALIFYING FINANCIAL REQUIREMENTS OF THE COMPANY. Immediately
upon the execution and delivery of this Agreement, the Company shall meet the
requirements with respect to Working Capital, Net Worth and Long Term Debt
specified in Section 8(b).
SECTION 11. NOTICES. Except as otherwise provided in this Agreement,
notices, requests, directions, instructions, waivers, approvals or other
communication may be made or delivered in person or by registered or certified
mail, postage prepaid, addressed to the party as provided below, or to such
other address as such party may hereafter specify in a written notice to the
other parties named herein, and all notices or other communications shall be in
writing so addressed and shall be effective upon receipt by the addressee
thereof:
The Secretary as: SECRETARY OF TRANSPORTATION
12
<PAGE>
c/o Maritime Administrator
Maritime Administration
400 Seventh Street, S.W.
Washington, D.C. 20590
The Title XI Reserve
Fund Depository as: CITIBANK, N.A.
111 Wall Street, 5th Floor
New York, New York 10005
13
<PAGE>
The Company as: Petrodrill Four Limited
c/o Arias, Fabrega & Fabrega
P.O. Box 985
Omar Hodge Building
Wickham's Cay
Road Town, Tortola
British Virgin Islands
With a copy to: PETRODRILL ENGINEERING NV
K.P. van der Mandelelaan 38
3062 MB
Rotterdam (Brainpark)
The Netherlands
SECTION 12. AMENDMENTS AND SUPPLEMENTS. No agreement shall be effective to
amend, supplement, or discharge in whole or in part this Financial Agreement
unless such agreement is in writing signed by the parties hereto. Any
amendments, additions, deletions, substitutions or other changes not made in
accordance with this provision shall be invalid and of no effect.
SECTION 13. COUNTERPARTS. This Financial Agreement may be executed in
any number of counterparts. All such counterparts shall be deemed to be
originals, and shall together constitute but one and the same instrument.
SECTION 14. JURISDICTION AND CONSENT TO SUIT. This Title XI Reserve Fund
and Financial Agreement hereby adopts and incorporates by reference as if fully
set forth herein the provisions relating to Jurisdiction and Consent to Suit of
the Special Provisions of the Security Agreement.
SECTION 15. PAYMENTS IN U.S. CURRENCY. This Title XI Reserve Fund and
Financial Agreement hereby adopts and incorporates by reference as if fully
set forth herein Section 11.06 of the Security Agreement.
SECTION 16. IMMUNITY. This Title XI Reserve Fund and Financial
Agreement hereby adopts and incorporates by reference as fully set forth
herein Section 11.07 of the Security Agreement.
14
<PAGE>
IN WITNESS WHEREOF, this Title XI Reserve Fund and Financial Agreement has
been executed by the parties hereto as of the day and year first above written.
Attest: PETRODRILL FOUR LIMITED
/s/ ROBERT W. RANDALL BY: /s/ EARL W. MCNIEL
- - --------------------- ------------------
Secretary Treasurer
UNITED STATES OF AMERICA
Attest: SECRETARY OF TRANSPORTATION
(SEAL)
MARITIME ADMINISTRATOR
/s/ LARRY MAIN
- - --------------
BY: /s/ JOEL C. RICHARD
-------------------
<PAGE>
ATTACHMENT A
TITLE XI RESERVE FUND AND FINANCIAL AGREEMENT
(Contract No. MA - 13507)
1. This Financial Agreement shall apply to the following Vessel: AMETHYST 4
2. The Company's aggregate original equity investment for use in Section 2 for
the Vessel AMETHYST 4 is $26,455,175.
3. The Company's Net Worth for use in Section 8(b) is $26,455,175.
EXHIBIT 8.1
[BAKER & BOTTS LETTERHEAD]
066597.0102 December 8, 1999
Amethyst Financial Company Ltd.
c/o Arias Fabrega & Fabrega Trust
Co. BVI Limited
325 Waterfront Drive
Omar Hodge Bldg., Second Floor
Wickham's Cay, Road Town
Tortola, British Virgin Islands
Pride International, Inc.
5847 San Felipe, Suite 3300
Houston, Texas 77057
Gentlemen:
We have acted as special United States counsel to Amethyst Financial
Company Ltd., a British Virgin Islands international business company with
limited liability (the "Company"), and Pride International, Inc., a Louisiana
corporation ("Pride"), in connection with the registration of $53 million
aggregate principal amount of the Company's 11 3/4% Senior Secured Notes due
2001 (the "new notes") pursuant to a registration statement on Forms F-4 and S-4
(the "Registration Statement") filed by the Company with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"). The defined terms "old notes," "new notes" and "exchange
offer" used in this opinion have the meanings assigned to such terms in the
Registration Statement.
The following opinion is based on our review of the Registration
Statement and such other materials and documents as we have deemed appropriate.
In rendering our opinion, we have assumed the accuracy of the matters described
in the Registration Statement and that the transactions described in the
Registration Statement will take place as stated therein.
On the basis of the foregoing, we hereby confirm, based on existing
law and regulations, that the discussion set forth in the Prospectus included in
the Registration Statement under the caption "Tax Considerations -- Material
United States Federal Income Tax Considerations" is our opinion as to all
material United States federal income tax consequences of
<PAGE>
Amethyst Financial Company, Ltd. - 2 - December 8, 1999
the exchange of old notes for new notes pursuant to the exchange offer. Our
opinion is subject to the qualifications and limitations set forth in that
discussion.
We hereby consent to the reference to our Firm under the captions
"Tax Considerations -- Material United States Federal Income Tax Considerations"
and "Legal Matters" in the Prospectus included in the Registration Statement and
to the filing of this opinion with the Commission as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we are
within the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Commission thereunder.
Very truly yours,
BAKER & BOTTS, L.L.P.
By: /s/ BENJAMIN G. WELLS
LPT/BGW/ED
EXHIBIT 8.2
[DANCIA PENN & CO LETTERHEAD]
Your ref:
Our ref: 1168-66-003
8 December, 1999
Amethyst Financial Company Ltd.
c/o Arias Fabrega & Fabrega Trust
Co. BVI Limited
325 Waterfront Drive
Omar Hodge Bldg. Second Floor
Wickham's Cay, Road Town
Tortola, British Virgin Islands
Pride International, Inc.
5847 San Felipe, Suite 3300
Houston, TX 77057
Dear Gentlemen:
1. We are lawyers qualified to practice and practising in the British Virgin
Islands and have acted as counsel to Amethyst Financial Company Ltd. a
company with limited liability incorporated in the British Virgin Islands
under the provisions of the International Business Companies Act, 1984 (as
amended) (the "Company"), and Pride International Inc., a Louisiana
corporation ("Pride"), in connection with the registration of $53 million
aggregate principal amount of the Company's 11 3/4% Senior Secured Notes due
2001 pursuant to a Registration Statement on Forms F-4 and S-4 (the
"Registration Statement") to be filed by the Company and Pride with the
Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"). The terms "old notes", "new
notes" and "exchange offer" in this opinion have the same meanings as
defined in the Registration Statement.
2. In rendering this opinion, we have examined the Company's constitutional
documents and such corporate resolutions as we have considered necessary,
the Registration Rights Agreement dated 28th October, 1999 among Amethyst
Financial Company Limited, Pride International, Inc., Maritima Petroleo e
Engenharia Ltda., and Donaldson, Lufkin & Jenrette Securities Corporation
and the Registration Statement relating to the Exchange Offer referred to in
the said Registration Rights Agreement.
3. For the purpose of this opinion we have assumed:
(i) that all documents submitted to us as facsimile, copy or specimen
documents conform with their originals;
<PAGE>
2
Amethyst Financial Company Ltd.
Pride International, Inc.
December 6, 1999
(ii) that the signatures on the originals, certified or other copies
of all documents submitted to us are genuine;
(iii) that all documents submitted to us as originals are authentic; and
(iv) the accuracy of the matters described in the Registration Statement
and that the transactions described in the Registration Statement
will take place as stated therein.
4. On the basis of the foregoing, we hereby confirm based on existing law and
regulations, that the discussion set forth in the prospectus included in the
Registration Statement under the caption "Tax Considerations -- Material
British Virgin Islands Tax Considerations" is our opinion as to all
material British Virgin Islands tax consequences of the exchange of old
notes for new notes pursuant to the Exchange Offer.
5. We have updated our search of the company's records maintained at the
Companies Registry of the British Virgin Islands as of today's date and have
found no evidence of any steps having been taken or being taken to appoint a
receiver, manager or a liquidator for or to wind up the Company, or any
claims, litigation or arbitration proceedings being instituted against it
and certify that the Company, may, as of the date hereof enter into the said
Registration Statement relating to the Exchange Offer. Our opinion is
subject to the qualifications and limitations set forth in that discussion.
6. We hereby consent to the references to our firm under the captions "Risk
Factors -- Risk Factors Relating to Our Business", "Description of New
Notes -- Enforceability of Judgments", and "Tax Considerations -- Material
British Virgin Islands Considerations" in the prospectus included in the
Registration Statement and to the filing of this opinion with the Commission
as an exhibit to the Registration Statement. In giving such consent, we do
not admit that we are within the category of persons whose consent is
required under Section 7 of the Act or the rules and regulations of the
Commission thereunder.
Our opinion is given for the sole benefit of the addressees hereof and are not
to be relied upon by any other person, nor are they to be quoted or made public
in any way without our prior written consent.
Yours sincerely,
/s/ ASTRA D. PENN
Astra D. Penn
EXHIBIT 10.1
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt 301-Leblon-22450
ISS: 1261003-00-CIC: 606442227-00
Tel.: 274-3844
I, THE UNDERSIGNED, SWORN PUBLIC TRANSLATOR AND COMMERCIAL INTERPRETER IN AND
FOR THIS CITY AND STATE OF RIO DE JANEIRO, FEDERATIVE REPUBLIC OF BRAZIL,
REGISTERED AT THE COMMERCIAL BOARD OF RIO DE JANEIRO UNDER NUMBER 97, DO HEREBY
CERTIFY AND ATTEST THAT A DOCUMENT IN THE PORTUGUESE LANGUAGE WAS SUBMITTED TO
ME FOR TRANSLATION INTO ENGLISH, WHICH I PERFORMED ACCORDING TO MY OFFICE, AS
FOLLOWS:
TRANSLATION NO. 4016/98
(Xerox copy submitted for translation.).......................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)...........
CONTRACT No. 101.2.155.97-9...................................................
CHARTERING CONTRACT
CHARTERING CONTRACT OF THE DYNAMIC POSITIONING FLOATING UNIT
AMETHYST 7, ENTERED INTO BETWEEN PETROLEO BRASILEIRO S.A. -
PETROBRAS AND THE COMPANY MARITIMA NAVEGACAO E ENGENHARIA LTDA.--
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, organized and
existing under Law No. 2.004, dated 10/03/53, with head office at Av.
Republica do Chile, 65, City of Rio de Janeiro, State of Rio de Janeiro,
Federative Republic of Brazil enrolled in the General Taxpayers' Registry of
the Ministry of Finance under No. 33.000.167/0001-01, represented herein by
the Executive Superintendent of Exploration and Production South-Southeast
LUIZ EDUARDO G. CARNEIRO, hereforth called PETROBRAS, and the Company
MARITIMA NAVEGACAO E
1
<PAGE>
ENGENHARIA LTDA., with head office at Avenida Almirante Barroso, No. 42, 34th
floor, City of Rio de Janeiro, State of Rio de Janeiro, Federative Republic of
Brazil, enrolled in the General Taxpayers' Registry of the Ministry of Finance
under No. 46.828.596/0001-13, represented herein by its President, Mr. GERMAN
EFROMOVICH, have agreed upon the present CONTRACT for the chartering of the
Dynamic Positioning Floating Unit AMETHYST 7 and its accessories, described in
Attachment I, henceforth called the UNIT, according to the authorization of
PETROBRAS' Executive Board (MINUTES No. 4.129, Item No. 47, dated 12/19/97) the
parties being bound to the terms of the Invitation to Bid No. 101.0.016.97-5,
and subjected to the following Clauses and Conditions:..........................
(End of the Qualification).....................................................
2
<PAGE>
FIRST CLAUSE - OBJECT.........................................................
1.1. The object of the present CONTRACT is the chartering to PETROBRAS, of
the UNIT, in order to be used in the drilling and/or evaluation and/or
completion and/or workover of oil and/or gas (vertical, directional and
horizontal) wells, in the Brazilian continental shelf, down to a maximum
depth of 5,000 (five thousand) meters, in a water depth down to 1,200
(twelve hundred) meters...............................................
1.1.1. It is included, as an object of the CONTRACT, the performance, by the
CONTRACTOR, of any and all operations needed for the perfect
fulfillment of the chartering object of the CONTRACT, such as, but
not limited to, the performance and supervision of the positioning,
ballasting and movement of the UNIT...................................
1.2. PETROBRAS may determine that the CONTRACTOR makes the reentry in
wells already drilled, and it can install in the UNIT equipment and
production facilities, the provisions of item 14.1 of this CONTRACT
being complied with...................................................
1.3. The chartering object of the present CONTRACT is included in the
Annual Activities Plans, under the following codes:...................
B 12000 - Boring - Production Development............................
A 22000 - Boring - Exploratory Drilling..............................
B 13000 - Completion and Intervention for Evaluation - Production
Development..........................................................
A 24000 - Intervention for Evaluation - Exploratory Drilling.........
(End of Clause)...............................................................
3
<PAGE>
SECOND CLAUSE - PERIOD OF VALIDITY AND DURATION...............................
2.1. Period of Validity - The present CONTRACT binds the parties as of its
signature, but the payments in foreign currency can only be made after
the date of its registry in the Central Bank of Brazil..........
2.2 Duration - The present CONTRACT will have a duration of 2,190
(twenty-one hundred and ninety) days, and it can be ended after 1,825
(eighteen hundred and twenty-five) days have elapsed, by means of a
notice from PETROBRAS, with at least 45 (forty-five) days in advance..
2.2.1. Beginning of the CONTRACT - The beginning of the CONTRACT will occur
when the UNIT is released by PETROBRAS, through a written notice, to
begin the operations, after the general equipment testing foreseen in
item 3.1 of this CONTRACT is carried out..............................
2.2.2 Automatic Extension - If at the end of the duration mentioned in 2.2,
some operation is still being performed in a well, the duration of
the present CONTRACT will be automatically extended, until the
completion of the works in said well, considering as the final limit
the UNIT's arrival in the port or sheltered waters chosen by common
agreement between the parties and, also, in case there are still
PETROBRAS' equipment aboard the UNIT, the completion of the
withdrawal of such equipment will be considered as the final limit....
2.2.3 This CONTRACT may be extended for successive periods through a prior
agreement between the parties, by means of an Addendum, the other
contract conditions being complied with, and limited to a maximum
contract period of 2,190 (twenty-one hundred and ninety) days.........
4
<PAGE>
2.3. Arrival in Brazil - The Unit should arrive at the port or in sheltered
waters, in Macae-RJ. The beginning of operations should occur up to the
date of 12.29.99, the provision set forth in item 8.1 of this CONTRACT
being complied with...................................................
2.3.1. At the port or in sheltered waters mentioned in 2.3, the customs and
helideck inspections in the UNIT will be carried out, as well as the
loading/unloading of the CONTRACTOR's and PETROBRAS' materials, and
also the general equipment testing will begin as foreseen in item 3.1
of this CONTRACT......................................................
(End of Clause)...............................................................
5
<PAGE>
THIRD CLAUSE - CONTRACTOR's OBLIGATIONS.......................................
3.1. Before the beginning of the CONTRACT, the CONTRACTOR will arrange for
a general test of the operating conditions of all of the UNIT's
equipment, as provided for in ATTACHMENT VIII, in the presence of
PETROBRAS' Inspection. The occurrences found during the performance of
the tests will be duly recorded in the Daily Drilling Certificate (ADP)
signed by PETROBRAS' Inspection and by the CONTRACTOR's representative.
The UNIT will be released to sail to the first location after proving
the good operating conditions of the equipment which comprise the rig's
main systems, that is, energy generation and distribution system,
dynamic positioning system, industrial safety, liquid and bulk storage,
fluid circulation and processing, safety and wellhead, column elevation,
rotation and handling, columns, columns, instrumentation, formation test
equipment and communications system...
3.1.1. The tests referred to in 3.1 will be made in a period estimated in 3
(three) days, after which the UNIT will be released to sail to begin the
operations, provided there is nothing pending in the rig's main systems,
as set forth in item 3.1.....................................
3.1.1.1.In the event the tests last for a period exceeding 3 (three) days, for
reasons ascribed to PETROBRAS, the rate foreseen in REF 104 (WAITING
RATE) of ATTACHMENT II, will be due, applied as of the fourth day of
tests, until the UNIT is released. The periods spent with equipment
repair will not be calculated for the purposes of counting such
duration, and also no fees will be due during such periods.
3.1.2. PETROBRAS may opt for the partial or total performance of the receipt
tests, in sheltered waters, in the deepest water depth set forth in
the contract, or still in the first location..........................
6
<PAGE>
3.2. To maintain, during the contract period, the UNIT, its fittings, as
well as accessories and replacement elements and personnel in perfect
working conditions in a working regime of 24 (twenty-four) hours a
day, 7 (seven) days a week, and to guarantee that the UNIT is
calculated to carry out the activities object of this contract........
3.2.1. To strictly comply with the recommendations of the equipment
manufacturers. carrying out the maintenance foreseen in their operation
manuals, which will be provided for in the Unit's preventive maintenance
plan.
3.3. Technical Evaluation Award and Certificates - To submit copies of the
Registry, Survey, Classification and Technical Survey and Evaluation
Award Certificates of the UNIT and its fittings, signed by a qualified
and well-known organization, not related with the CONTRACTOR, notarized
in the Brazilian Consulate and translated by a Sworn Public Translator,
if issued abroad, and which should contain:..
3.3.1. Description of the UNIT and accessories;..............................
3.3.2. Operating conditions and physical conditions of the UNIT;.............
3.3.3. Light displacement of the UNIT (Light weight);........................
3.3.4. Year of construction;.................................................
3.3.5. Year of reconditioning, listing spare parts and parts replaced;.......
3.3.6. Technological differences between the UNIT surveyed and a more modern
UNIT of the same kind;................................................
3.3.7. Forecast of the average useful life of the good used and its new
analog;...............................................................
3.3.8. Market value; of reproduction and replacement;........................
3.3.9. Net weight of the equipment installed in the UNIT;....................
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3.3.10. Technical catalogues of the equipment installed in the UNIT...........
3.4. To regularize, before the proper authorities, the entry and stay of
the UNIT in Brazil, arranging, at its expense, for the Release,
Surveys, Registries and Temporary Admission...........................
3.4.1. Regarding new equipment and equipment without use, the "Technical Survey
and Evaluation Award" referred to in item 3.3 may be replaced by factory
catalogues or purchase invoices, with description, year of manufacture,
useful life forecast and value of each equipment.........
3.5. Safety, Sanitation and Labor Medicine - To carry out its operations
in strict compliance with the international safety, sanitation and
labor medicine standards, being liable for the violations committed.
To supply, for its account, and maintain in perfect operating
conditions, the safety equipment in accordance with the safety plan
("SAFETY PLAN") approved by the Administration of the vessel=s
Country of Registry, and with the good practice in the services of
completion/evaluation/workover........................................
3.5.1. The UNIT will comply with the IMO - MODU - CODE (Mobile Offshore
Drilling Unit) standard...............................................
3.6. Sea Operations - To manage the UNIT in strict compliance with
the laws, standards, regulations and administrative rules, as well as
with the instructions issued by the Shipping Office or by other
proper authorities, specially those regarding the spillage of oil and
other residues from the UNIT into the sea, being liable, as a result,
for any charges arising from the violation of such laws, standards,
regulations, administrative rules and instructions, the
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limit established in subitem 3.6.2. being complied with, and with the
exception of the cases provided for in item 3.20 of this CONTRACT.....
3.6.1. To plan and carry out operations aiming at preventing and
fighting oil and gas blow outs, fires, or other incidents, complying
with the provision of item 2.4 of ATTACHMENT II to this CONTRACT.
Although the CONTRACTOR is considered fully responsible for such
operations, it is obliged to discuss the methods to be adopted with
PETROBRAS, in order to find the best operating solution...............
3.6.2. Exception is made of the events arising from kick, blow out,
surging, or formation testing, which the CONTRACTOR will be kept free
and safe from. In the other cases of spillage of petroleum, oils and
other residues into the sea, the CONTRACTOR will be liable up to the
limit of US$500,000.00 (five hundred thousand dollars) per event and
its deployments.......................................................
3.7. To comply with all laws, standards, decrees, regulations,
administrative rules and instructions in force in Brazil, that govern
the exploration and research in the Brazilian submarine shelf,
including those regarding environmental protection....................
3.8. Replacement and Repairs - The replacement cost for equipment,
materials and accessories needed for the UNIT's perfect operation, as
well as the expenses with repairs of any kind, will run for the
CONTRACTOR's account..................................................
3.8.1. The above mentioned repair cost covers any and all expenses,
including taxes and duties due from the moment of the purchase of the
equipment, spare parts and materials, to their installation and
placement in the UNIT, with exception of expenses with transportation
between the support vessels port of operation and the UNIT...........
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3.8.2. Regarding the Temporary Admission of the UNIT, as well as the import of
the equipment, materials and accessories mentioned in item 3.8, the
CONTRACTOR will comply with the provisions of the Internal Revenue's
Rulling Instruction No. 136/87........................................
3.9. At the end of this CONTRACT or of its extension, to bear the charges
arising from the return of the UNIT, its fittings, accessories,
equipment, spare parts, and materials for replacement or repair, such
charges including, but not limited to, the preparation, packing,
shipping, transportation, unloading, stay, freight, clearance, storage,
wharfage, stowage, insurance and other similar expenses...............
3.10. To maintain, at its expenses, besides the UNIT, the crew adequate and
sufficient for its operation, being also obliged to comply with the
pertinent legal provisions, issued by Brazilian authorities and by those
of the CONTRACTOR's country of origin.................................
3.11. To bear all expenses with displacement of the crew mentioned in item
3.10, including transportation from abroad to the Port or Airport of
Macae-RJ, as indicated by PETROBRAS, and the return to the place of
origin, and any and all expenses with the crew's stay in Brazil, medical
and hospital expenses, meals, passports, and similar expenses.........
3.11.1. To maintain PETROBRAS safe from any complaints, claims from its
employees, representatives, as a result of the present contract.......
3.12. To promote, without charges to PETROBRAS, the replacement and immediate
withdrawal of any crew member that may be requested in writing by
PETROBRAS at any time, due to bad behavior, technical deficiency, or
health conditions.....................................................
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3.13. To maintain a special identification for the crew, so as to distinguish
it from PETROBRAS' and other companies' personnel who may eventually
work in other services related to the object of the present CONTRACT..
3.14. Radio-Communications - To supply, operate and maintain VRH, SSB and
Radio-Beacon and portable Transceptor equipment, adequate for PETROBRAS'
land communications system, for the guidance of helicopters, so as to
comply with the Radio Communications Plan supplied by PETROBRAS,
appearing in Attachment I.............................................
3.14.1. Other Radio Communications systems deemed necessary to support the
CONTRACTOR's operations, both in the UNIT and on land, will be supplied,
installed and operated by it. The CONTRACTOR will be responsible for the
obtainment of the licenses and frequencies to operate such equipment..
3.14.2. The CONTRACTOR will maintain, at its expenses, radio operators, fluent
in spoken Portuguese, who will remain 24 (twenty-four) hours a day
operating the equipment installed in the UNIT, whether they belong to
PETROBRAS or to the CONTRACTOR........................................
3.14.3. Immediately after the UNIT's arrival, the CONTRACTOR will arrange with
the proper authorities the issuing of the "Terms of Survey" regarding
the radio station existing on broad...................................
3.14.4. The CONTRACTOR will bear any expenses related to the telecommunications
equipment and services, with exception of those provided for in item 4.7
of this CONTRACT......................................................
3.15. Insurances - To provide for the contracting, at its expenses, of the
insurances necessary to fulfill this CONTRACT and the Brazilian Laws,
intended for the coverage of
11
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the Unit and all of its accessories, even when they are being
transported under PETROBRAS' responsibility, as well as the Civil
Liability insurance for damages and losses caused to third
parties....................................
3.15.1. MARITIMA NAVEGACAO E ENGENHARIA LTDA. will appear as co-insured in the
Civil Liability insurance policy which it makes, by force of item 3.12
of the SERVICE RENDERING CONTRACT entered into between it and
PETROBRAS............................................................
3.15.2. During the period of validity of this CONTRACT, the CONTRACTOR should
maintain insurance coverage for the UNIT and all of its accessories,
according to the conditions of the LONDON STANDARD DRILLING BARGE FORM -
ALL RISK, or similar.................................................
3.15.3. The redress due to the CONTRACTOR's Civil Liability arising from damages
provided for in this Clause, is not limited to the amount set forth in
subitem 3.12.1 of the SERVICES RENDERING CONTRACT entered into between
the parties, for the Civil Liability Insurance against Third Parties,
and will be ruled by the pertinent Brazilian laws.....................
3.16. Franchises that may be established for the insurances mentioned in item
3.15 and in its subitems, as well as the onus arising from the Insurers'
requirements and/or recommendations will fully run for the CONTRACTOR's
account...............................................................
3.17. To keep PETROBRAS free and safe from any and all indemnity claim for
damages and/or losses of any kind which the CONTRACTOR may have
sustained as a result of this CONTRACT, whether or not it has made
adequate and sufficient insurance for such circumstances..............
12
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3.17.1. PETROBRAS will be equally kept free and safe from any and all indemnity
claim for damages and/or losses of any kind which the CONTRACTOR may
have caused to third parties by its duly proven action or omission,
arising from this CONTRACT, whether or not it has made adequate and
sufficient insurance for such circumstances...........................
3.17.2. In return, the CONTRACTOR will be kept free and safe from any and all
indemnity claim for damages and/or losses of any kind, which PETROBRAS
may have sustained from third parties, or has caused to third parties by
its duly proven action or omission, as a result of this CONTRACT,
whether or not it has made adequate and sufficient insurance for such
circumstances.........................................................
3.18. The CONTRACTOR waives for itself and will require from its Insurers
and/or Subcontractors, in any and all insurance made as a result of this
CONTRACT, the inclusion, in each policy contracted, the provision
assuring the waiver of any right to subrogation against PETROBRAS.....
3.19. To submit to E&P/GETRAT, up to 30 (thirty) days after the beginning of
the performance, as provided for in item 2.2.1, the originals of the
certificates of the insurances made as a result of this CONTRACT,
containing all essential data, such as insurers, time limits, periods of
validity, amounts insured, and coverage conditions, and with PETROBRAS
appearing as co-insured, except in the civil liability insurance, of
which it will participate as a third party...........................
3.19.1. The certificates mentioned in item 3.19 will contain a provision that
the insurances mentioned cannot be amended and/or canceled without
PETROBRAS' prior authorization.......................................
13
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3.20. Losses and Damages - The CONTRACTOR will be liable for losses of and
damages to its own equipment and material, and to those which it and its
agents may cause to PETROBRAS or to third parties, as a result of its
duly proven action or omission, in the following cases:..............
3.20.1 In the event of losses of or damages to equipment and/or materials
belonging to PETROBRAS and/or to third parties, which are aboard the
UNIT, or during their movement between the UNIT, and the support
vessels, the CONTRACTOR's liability will be limited to the replacement
or repair of the equipment so lost or damaged due to the CONTRACTOR's or
its employees' duly proven fault. However, the CONTRACTOR will not be
liable and will be kept free and safe from in the event of damages to
reservoirs, indirect damages or loss of profit of PETROBRAS, losses and
damages arising from pollution coming from the well, resulting from kick
and/or blow-out;.....................................................
3.20.2. In case of losses and damages caused to the well, arising from the
events mentioned in subitem 2.1.5 of ATTACHMENT II, the CONTRACTOR will
reimburse PETROBRAS the payments it comes to make to third parties
referring to cementing, logging, or other services related to the object
of the present CONTRACT, as well as to materials (cement, casing, bits,
completion fluid materials). In the event PETROBRAS opts for the
definitive abandonment of the damaged well, the CONTRACTOR will
reimburse the expenses made by PETROBRAS to drill that well..........
3.20.3. In the cases mentioned in subitems 3.20.1 and 3.20.2 the limit for the
CONTRACTOR's liability is of US$500,000.00 per event and its
deployments..........................................................
14
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3.21. Secrecy - To maintain complete secrecy on the data and information
supplied by PETROBRAS, as well as on all of the results and analyses
arising from the operations carried out according to the present
CONTRACT.............................................................
3.21.1. All data, information and other documents, of any kind, related to the
fulfillment of the present CONTRACT, will be the exclusive property of
PETROBRAS............................................................
3.21.2. The CONTRACTOR and its crew cannot disclose nor supply to third parties
any materials or information obtained or developed as a result of this
CONTRACT, unless expressly authorized by PETROBRAS...................
3.21.3. The provision of this item 3.21 is a standing obligation, valid even
after the termination, in any fashion, of the present CONTRACT.......
3.22. UNIT's HELIDECK......................................................
3.22.1. To arrange for the release of the UNIT's helideck by the proper
Brazilian authorities (Ports and Coast Authority, Civil Aviation
Department of the Ministry of Aeronautics, Internal Revenue, Maritime
Police and Customs), bearing all expenses arising therefrom...........
3.22.2. The Unit's helideck shall be approved for operations with S-61 type
helicopters according to chapter 24 of the Administrative Directive #
005 from DPC - Standards and Procedures for Sea Navigation, dated
01.15.97, which deals with the Construction, Installation, Approval and
Changes of Helideck and Operations of Helicopters in Offshore Platforms
and Merchant Ships.- To submit to PETROBRAS, at least 30 (thirty) days
before the date foreseen for the Unit's arrival in Brazil, the following
documents referring to the helideck:.................................
15
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3.23. The CONTRACTOR should adopt procedures that minimize the consumption of
fuel and industrial water without prejudice for the operations.......
3.24. The CONTRACTOR should provide installations in the UNIT for the training
and leisure of all personnel abroad, and which should contain at least
the following:.......................................................
a) Parlor games room;................................................
b) TV room capable of tuning 5 (five) main channels available in
Brazil, in any location;..........................................
c) Movie theater with VCR;...........................................
d) Two other TV sets to be installed in cabins indicated by
PETROBRAS' Inspection;............................................
3.25. Besides sea water, the CONTRACTOR will judiciously use industrial water
to clean the UNIT, in order to avoid high consumption and always giving
priority to its use in the completion fluid..........................
3.26. All documents between the CONTRACTOR and PETROBRAS, when requested by
PETROBRAS, will be written and submitted in Portuguese...............
3.27. The CONTRACTOR undertakes to maintain throughout the fulfillment of the
contract, all conditions required in the bid stage...................
3.28. The redo any and all operation refused by the INSPECTION, without any
charge to PETROBRAS, as a result of irregular performance, bearing all
costs involved.......................................................
3.29. To maintain a representative accredited and accepted by PETROBRAS in the
UNIT or in a place previously designated by PETROBRAS, to represent the
CONTRACTOR in the fulfillment of the CONTRACT........................
16
<PAGE>
3.31. (sic) To comply with the requests contained in the Operation(s)
Authorization(s) issued by PETROBRAS..................................
3.32. To allow, after negotiations between the contracting parties, the
provisional installation in the chartered vessel, of complementary
euqipment such as, but not limited to: pipes or rises in catenary by
the J-lay method, or similar, submarine manifolds, provided they do
not jeopardize the Vessel's safety and are in accordance with the
rules of the Classification Society...................................
(End of Clause)...............................................................
17
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FOURTH CLAUSE - PETROBRAS' OBLIGATIONS........................................
4.1. To adopt the measures necessary for the request to register this
CONTRACT in the Central Bank of Brazil, soon after the proper
documents are received, and the submittal of which is the
CONTRACTOR's responsibility...........................................
4.2. To make, monthly, the payments due to the CONTRACTOR as a result of
the present CONTRACT, based on ATTACHMENT II and ATTACHMENT III and
under the conditions set forth in Clauses Sixth: Measurement, and
Seventh: Form or Payment, the other ATTACHMENTS, Clauses and
Conditions of this CONTRACT being complied with.......................
4.3. At its exclusive judgment, and without any co-responsibility,
PETROBRAS may cooperate with the CONTRACTOR, assisting it before the
proper authorities, referring to processes that are going through the
procedural stages in the respective Agencies, regarding the UNIT,
materials and/or equipment pertaining to the object of this
CONTRACT. Such cooperation, however, will not lessen the
CONTRACTOR's responsibility for the obtainment of the documents
and/or benefits that may be the object of the respective proceedings..
4.4. PETROBRAS will reimburse the CONTRACTOR, by means of submittal, by
the latter, of the corroborative documents, in the acquisition
currency, the cost of replacement or repair of the commands and other
components of the production string and of the fishing string
belonging to the CONTRACTOR, which are lost or damaged, by accident
not due to the normal wear nor to the CONTRACTOR's duly proven action
or omission, with the
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deduction of a 25% depreciation per contract year, with a 20% residual
value, applying, for its calculation, the least indemnity cost (Ci)
obtained by means of the following formulae:-
Ci = Vr.y (1 - 0.02083n), or Ci = Cr, where:.........................
Ci - indemnity cost;.................................................
Cr - repair cost;....................................................
Vr - replacement value;..............................................
n - number of months between the date of the beginning of the
CONTRACT and the date of the loss (the fraction of a month is
counted as a whole month);........................................
y - 1 (for new strings), and 0.9 (for "Premium" strings)............
4.4.1. In the event there is a renewal of the string or of a part of the
elements that comprise the production string (pipes, commands and other
components), during the period of validity of the CONTRACT, the
depreciation period to be considered - the "n" of the formula, will be
the one comprised between the purchase date and the date when the
element or the string was lost........................................
4.4.2. PETROBRAS may, at its discretion and expense, carry out inspections
in the drill string, its components and accessories, the CONTRACTOR
being obliged to repair or replace, for its account, the equipment
rejected..............................................................
4.5. Transportation:.......................................................
4.5.1. PETROBRAS will provide transportation for all crew members to the
UNIT from the port or airport, as indicated by PETROBRAS in the
beginning of this CONTRACT, and vice-versa. At its exclusive
discretion, the transportation to be provided will be by helicopter
or vessel.............................................................
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4.5.2. PETROBRAS will provide transportation of the material and equipment
object of this CONTRACT, from the port or airport designated, to the
UNIT and vice-versa...................................................
4.5.3. In any circumstances foreseen in items 4.5.1 and 4.5.2, the granting
of insurance coverage will not be PETROBRAS' competence, and the
CONTRACTOR waives immediately,, for itself and for its insurers, any
return action against PETROBRAS or third parties at its service, as a
result of the transportation provided.................................
4.5.4 In the cases when there is need to program exclusive air
transportation, for the Unit's inspection by the Navy and/or the
Shipping Office, the costs arising therefrom will be charged to the
CONTRACTOR............................................................
4.5.5. PETROBRAS may provide air or sea transportation for the CONTRACTOR's
materials, industrial or fresh water and fuel before the beginning of
the CONTRACT, as defined in subitem 2.2.1. The costs arising
therefrom will be reimbursed by the CONTRACTOR to PETROBRAS at the
time the first invoice is issued......................................
4.5.6. PETROBRAS will provide tugs and support vessels for the UNIT,
from the location where the equipment general testing is performed,
to the first location, between locations and from the last location
to the Brazilian port or sheltered waters closest thereto, which will
be chosen in common agreement by the parties..........................
4.5.6.1.PETROBRAS will supply support vessels for the positioning of the
Unit in the locations to be drilled under this contract...............
4.5.7 PETROBRAS may provide tugs and/or support vessels to load and unload
materials and to handle anchors, in a location to be defined between the
parties, in the cases of inspection and/or dockages, including those
arising from act of God or force majeure, as defined in
20
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the Twelfth Clause of this CONTRACT. The costs arising therefrom will be
reimbursed by the CONTRACTOR to PETROBRAS..............................
4.6 Fuel and Water - To supply, for its account, all fuel and water
necessary for the operations, complying with the provision set forth
in subitems 4.6.1 and 4.6.2, from the beginning of the CONTRACT,
until its termination, as defined in subitems 2.2.1 and 2.2.2,
respectively..........................................................
4.6.1. The supply of water mentioned in item 4.6 includes also the
industrial water intended for the cleaning of the UNIT, the provision
set forth in item 3.23 being complied with............................
4.6.2. PETROBRAS will supply, for its account, the fuel necessary for the
UNIT's equipment, up to the limit of 15,695m3/year. Over this limit the
onus will run for the CONTRACTOR's account.
4.6.2.1.PETROBRAS will carry out the measurement of the fuel existing aboard the
UNIT, at the beginning of the contract, at the end of each contract
year, and at the end of the contract, when the average consumption will
be calculated. The volume exceeding the established limit will be
charged to the CONTRACTOR at the time of the measurement, at the
consumer's sales price, on the date PETROBRAS issues the Debt Note, in
force in the City of Rio de Janeiro-RJ, duly adjusted in keeping with
the different ICMS aliquots in force in the State of Rio de Janeiro and
in the State where the UNIT is operating..................
4.6.3. During the UNIT's dockage periods, all fuel consumed will run for the
CONTRACTOR's full responsibility and cost, from the interruption of
the operations until the return to the same previous situation. The
fuel cost during that period will be charged to the
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CONTRACTOR, after the consumption calculation, and at a price to be
defined according to the criterium mentioned in 4.6.2.1................
4.7. To maintain, besides the CONTRACTOR's Radio communications equipment,
aboard the UNIT, equipment exclusively for PETROBRAS' communications
with its land bases...................................................
4.8. To notify the CONTRACTOR, in writing, on the imposition of eventual
fines. ...............................................................
4.9. To issue the Measurement Bulletin (MB), as set forth in the Sixth
Clause of this Contract...............................................
4.10. To issue the Operation(s) Authorization(s) with all the information
necessary for their performance, such as: location, time limit,
amount, scope, and beginning and end dates............................
4.11. PETROBRAS will reimburse the CONTRACTOR, by means of submittal by the
latter, of corroborative documents, in the acquisition currency, the
cost of replacement of VX rings, VX with Hycar and VX with lead
inserts for the BOP and WCT connections with wellheads and filter
elements, as provided for in items 24, 25 and 34 of Attachment IV -
Mutual Obligations of the Chartering Contract.........................
(End of Clause)...............................................................
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FIFTH CLAUSE - PRICES AND VALUE...............................................
5.1. For the chartering of the UNIT and its accessories, PETROBRAS will
pay the rates set forth in ATTACHMENT II and ATTACHMENT III to this
CONTRACT, under the conditions set forth in Clauses Sixth
Measurement, and Seventh: Form of Payment............................
5.1.1. The contract prices will include all specified tariffs, supervision,
administration, taxes, fiscal emoluments and all expenses that fall
directly or indirectly upon the chartering, including profit, needed
for its perfect fulfillment, until the end of the contract, no price
revision claims being therefore valid.................................
5.2. The total estimated value of this present CONTRACT is of
US$317,145,762.45 (three hundred and seventeen million, one hundred
and forth-five thousand, seven hundred and sixty-two dollars and
firty-five cents), equivalent to R$348,035,759.71 (three hundred and
forty-eight million, thirty-five thousand, seven hundred and
fifty-nine reais and seventy-one cents), converted at the exchange
rate of R$1,0974/US$1,00, referring to the chartering of the Unit.....
5.3. PETROBRAS does not undertake to make the payment of the total estimated
in item 5.2, but of the amount corresponding to the chartering
effectively occurred and accepted by PETROBRAS;.......................
5.4. In the event the Unit suffers a delay of up to 90 (ninety) days,
regarding the time limit granted in item 2.3 of the present contract,
the CONTRACTOR will have its total daily rate reduced in 10% (ten
percent), as of the beginning of the contract, for a period iqual to
the number of days of delay...........................................
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5.5. In the event the Unit suffers a delay exceeding 90 (ninety) days,
counted as of the time limit granted in item 2.3 of the present
contract, besides the reduction of the 10% (ten percent) in the total
daily rate for a period of 90 days, as defined in item 5.4, the
CONTRACTOR will also be subjected to the imposition of a fine
according to item 8.1 of this contract................................
5.6. The financial resources necessary for the payment of the chartering
object of the present CONTRACT are duly equated, and specifically
assured in the current year's budget and provided for in the
following ones, so as to cover the total contract period..............
(End of Clause)...............................................................
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SIXTH CLAUSE - MEASUREMENT OF THE CHARTERING
6.1. Periodicity of the measurement of the chartering and determination of
the reimbursable expenses.............................................
6.1.1. For the chartering, the measurement will be monthly, according to
the procedures mentioned below, with the consequent issuing of the
respective Measurement Bulletins (MB):................................
a) The initial measurement of the chartering will be made between
the date of the beginning of this CONTRACT and the last day of
the calendar month;...............................................
b) The intermediate measurements of the chartering, corresponding to
a given month of the order "m", cover the period between day 01
of the month "m" and the last day of the calendar month of the
order "m";........................................................
c) The final measurement of the chartering will be made between day 01
of the month "m" and this CONTRACT's termination date..........
6.1.2. The reimbursable expenses, if foreseen in the CONTRACT, will be
determined on any day of the month, according to the vouchers
submitted to and accepted by PETROBRAS, and more than one
determination can be made in the same period covered by the
measurement...........................................................
6.1.2.1.The results found will be submitted to the CONTRACTOR on the 5th (fifth)
working day, as of the submittal of said vouchers, by means of a
Reimbursement Document (RD), which will be signed by the Manager of this
CONTRACT, for invoicing purposes.................................
6.1.2.2.The reimbursable expenses and the deductions, if foreseen in the
CONTRACT, will be severally made evident in the Reimbursement Documents
(RD)....
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6.2. Issuing of the Measurement Bulletins (MB).............................
6.2.1. PETROBRAS, through the Manager of this CONTRACT, at the end of each
period as mentioned in the letters of subitem 6.1.1 of this Clause,
will carry out the measurement of the chartering, gathering the
results found in the Measurement Bulletin (MB), for the signature of
the Manager of this CONTRACT and of the CONTRACTOR, complying with
the following:........................................................
a) For the initial, intermediate and final measurements ending on
the last day of a given month of the order "m", the CONTRACTOR will
receive one of the copies of the MB up to the 5th (fifth) working
day of the subsequent month, so that it may submit the respective
collection documents, as provided for in subitem 6.3.1 of this
Clause;...................................................
b) For the final measurement, when the termination of the CONTRACT
does not occur in the last day of the month, the CONTRACTOR will
receive one of the copies of the MB, up to the 5th (fifth)
working day after the termination of the CONTRACT, so that it may
submit the respective collection documents, as provided for in
subitem 6.3.1 of this Clause;.....................................
c) For each measurement period of the chartering, only 1 (one)
collection document may be issued, being understood that collection
documents with partial values regarding said period will not be
taken into account for payment purposes;..............
d) The portions regarding the basic values and the deductions are to
be made evident in the Measurement Bulletins (MB), if foreseen in
the CONTRACT;.....................................................
6.3. Time for the submittal of collection documents........................
26
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6.3.1. The CONTRACTOR will submit the respective collection documents to
PETROBRAS' Financial Department, as mentioned in item 7.1 of this
CONTRACT, in the following conditions:................................
27
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- - -------------------------------------------------------------------------------
TYPE OF MEASUREMENT OCCASION FOR THE SUBMITTAL OF
MEASUREMENT DOCUMENT COLLECTION DOCUMENTS
- - -------------------------------------------------------------------------------
INITIAL MB Up to the 8th working day following the last
INTERMEDIATE day of the chartering performance period, and
AND FINAL PETROBRAS will make the payment on the
30th consecutive day, as of the final date of the
measured period, the provision in subitem
6.3.1.1 being complied with......................
- - -------------------------------------------------------------------------------
MOBILIZATION MB After the receipt of the MB, and PETROBRAS
OF THE UNIT will make the payment on the 30th consecutive
day, as of the date the collection document is
submitted........................................
- - -------------------------------------------------------------------------------
DETERMINATION RD In the first working day after the RD is issued,
OF and the payment will be made within 30 (thirty)
REIMBURSABLE days, as of the date of its submittal............
EXPENSES
- - -------------------------------------------------------------------------------
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6.3.1.1.The payments due by virtue of this CONTRACT, referring to the
chartering, will always occur on the 30th day as of the end of the
measured period, covered by the MB's, or on the 1st (first) working day
subsequent thereto, provided the CONTRACTOR complies with the time
limits for the submittal of the Collection Documents set forth herein.
In the event of non-compliance, by the CONTRACTOR, with said submittal
time limits, the payments will be postponed for the number of days equal
to the delay in the delivery of such documents........................
6.4. Measurements follow-up................................................
6.4.1. The CONTRACTOR undertakes to follow-up the measurements and the
determinations carried out by PETROBRAS, offering, at that time, the
impugnations or considerations it deems necessary, which will be
submitted for PETROBRAS' appraisal and decision.......................
6.4.2. The CONTRACTOR's signature by its representative before PETROBRAS
will imply in the acknowledgment of the accuracy of the Measurement
Bulletin (MB) for all legal purposes..................................
(End of Clause)...............................................................
SEVENTH CLAUSE - FORM OF PAYMENT..............................................
7.1. The payments due as a result of this contract will be made by
PETROBRAS to the CONTRACTOR in Brazilian currency, 30 (thirty)
consecutive days as of the last day of the period of execution of the
services, provided the CONTRACTOR submits the collection documents up to
the 8th (eighth) working day following the last day of the period of
execution of the services..........................................
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7.1.1. The payments will be made on the basis of the average exchange rate
of the American Dollar selling price, in force on the working day
immediately before the date of the effective payment..................
7.1.2. The payment of eventual diffrence in readjustment will be made on the
same day when the payment of the respective service occurs, provides
the CONTRACTOR submits the corresponding collection document up to
the 5th (fifth) working day following that when the indexes that
permit the issuing of the Readjustment Bulletin (RB) are known........
7.1.3. The payment of reimbursable expenses, if any, will be made 30 (thirty)
days after the submittal of the collection document..........
7.1.4. In the event of non-submittal of the collection documents within the
time limits set forth above, the payments will be postponed for the
number of days corresponding to those of the delay in the submittal
of the collection documents...........................................
7.2. The collection documents should be submitted, together with the
original of the document giving rise to it (MB, RB, RD) in the Docket
of the Financial Department indicated by PETROBRAS, for the purpose
of checking the time limits for the payment...........................
7.3. The collection documents will be issued without erasures, complying
with the pertinent laws in force, and will contain obligatorily the
following information:................................................
a) Place and date of its issuing and number of the collection
document;.........................................................
b) Number and date of signature of the contract deed;................
c) Number and date of the documents originating them (MB, RB, RD);...
d) Gross value of the collection document, both in numbers and in
writing;..........................................................
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e) Name and code of the banking establishment, branch, and the
respective code, and number of the current account of the payee,
where the payments will be made;..................................
f) In order that a particular payment is made in a banking
establishment different from the one indicated at the time the
contract deed was signed, such amendment will obligatorily be
preceded by a fax/correspondence from the CONTRACTOR or shall
appear in the payee's collection document.........................
7.3.1 In the event the collection document is inaccurate, it will be
returned to the CONTRACTOR and the time limit foreseen in item 7.1
will be postponed for as many days as those corresponding to the
delay in the submittal of such document...............................
7.3.2 In the event of re-submittal of the collection document, as a result
of a previous impugnation, this fact should appear in the history of
the collection document...............................................
7.3.3 The CONTRACTOR will obligatorily submit, every month to the Manager
of the Contract:......................................................
a) Payroll of the CONTRACTOR's employees who are involved in the
rendering of the services contracted..............................
b) A photocopy of the Social Security Payment Slip (GRPS), duly
settled and authenticated, obligatorily filling out the data that
identify PETROBRAS, informing in field "8" of the GRPS (other
information), the name, CGC/CEI of PETROBRAS, number, date and
amount of the Invoice or Bill of Sale referring to the services
rendered in the month.............................................
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<PAGE>
c) In case of a Cooperative, to submit the payment vouchers of the
amounts paid, distributed or credited to its members as remuneration
for the services rendered in the fulfillment of this
contract.........
7.3.4. The collection documents will not be accepted by PETROBRAS if
submitted with the Income Tax at Source already withheld..............
7.3.5. It is the responsibility of PETROBRAS' disbursing office the
explanations of doubts regarding the issuing of the collection
documents.............................................................
7.3.6. Eventual payments made for more or for less by PETROBRAS, will be
compensated as soon as they are detected, and the respective amounts
will be duly corrected................................................
7.3.7. The CONTRACTOR should indicate the place and fax number, if any, for
the receipt of the "Notice of Payment Foreseen"......................
7.4. The vouchers for reimbursable expenses due to the CONTRACTOR as a result
of this contract deed, will be previously submitted to the Manager of
the contract, for checking, besides being duly settled by the respective
supplier or service renderer, when such is the case....
7.4.1. If the originals cannot remain in PETROBRAS' hands, copies
thereof may be submitted, which will be checked by the Inspector and/or
Manager, and the following should appear in every original document:
"Copy Submitted for Reimbursement On ___/___/___", followed by the
signature and identification by name, position and registry number, and
the originals will be returned to the CONTRACTOR. The following text
will appear in the copies of each document in PETROBRAS' hands: "Checked
with the Original On
32
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___/___/___", which the Inspector and/or Manager will sign, identifying
the signature by name, position, and registry number..................
7.4.2. In special cases of reimbursement of import expenses (duties
and/or expenses), the CONTRACTOR will submit a letter forwarding the
vouchers for such expenses, together with the import process to the
department in charge of its follow-up.................................
7.4.3. The receipt, duly formalized by PETROBRAS of any reimbursable
expense voucher, does not represent the recognition of the debt, nor
the proof that the expenses were made.................................
7.4.4. The collection of reimbursable expenses will be made through the
issuing of a Services Invoice, after approval of said corroborative
documents and issuing by PETROBRAS of the respective Reimbursement
Document - DR, which will be issued up to 5 (five) working days, as
of the date of submittal of said documents............................
7.4.4.1.PETROBRAS' Inspection has 3 (three) working days to proceed with
the checking of of the expense vouchers and to notify its approval to
the CONTRACTOR, so that it may issue the Combined Invoice and Bill of
Sale..................................................................
7.4.5. The total amount of the collection document will be obtained by
applying the following formula:.......................................
VTD , where................................
--------
VTR = 1 - ICP
VTR = total amount to be reimbursed to the CONTRACTOR;............
VTD = total amount of the reimbursable expenses, actually
authorized;..................................................
ICP = total of the sum of the aliquots of taxes collected, in the
decimal form (ISS or ICMS, as the case may be, COFINS and
PIS/PASEP)...................................................
(End of Clause)...............................................................
33
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EIGHTH CLAUSE-FINES...........................................................
8.1. Non-compliance, by the CONTRACTOR, after 91 (ninety-one) days beyond
the time limit mentioned in item 2.3 of this CONTRACT, will imply in the
imposition of fine against the CONTRACTOR, in a written notice,
corresponding to 30% (thirty per cent) of the rate provided for in REF
101 of ATTACHMENT III, per day of delay exceeding 90 day..............
8.2. In the event of non-compliance, by the CONTRACTOR, with the
inspection's requirements within the time limit it may set, PETROBRAS
may, by a written notice, impose upon the CONTRACTOR, per day of
non-compliance with such requirements, as of the end of the time
limit set, a fine corresponding to 20% (twenty per cent) of the rate
provided for in REF 101 of ATTACHMENT III. ...........................
8.3. The penalties set forth in this Clause do not exclude any other provided
for in the laws in force and/or in this CONTRACT, nor the CONTRACTOR's
liability for damages it may cause to PETROBRAS, as a result of
non-fulfillment of the conditions agreed upon herein.
8.4. The amount corresponding to the sum of the values of the fines
applied is limited to 10% (ten percent) of the estimated value of the
present CONTRACT......................................................
8.5. The penalties to which the CONTRACTOR is subjected to due to the
provision set forth in this Clause, will be discounted in the first
payment and in the subsequent ones, which the CONTRACTOR is entitled
to, after the sanctions are applied by PETROBRAS......................
8.6. In the event of balance, PETROBRAS reserves itself the right to make
or complement the deduction in collection document(s) related to any
other contract deed eventually entered into with the CONTRACTOR, or
to use any other adequate means to settle the debt, if necessary......
34
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8.7. The CONTRACTOR may appeal against the imposition of the fine, in a
declaration, within the non-deferrable time limit of 15 (fifteen)
consecutive days as of the date the notice is received................
8.8. Non-appearance of the CONTRACTOR's personnel for boarding on the date
and time agreed upon between PETROBRAS and the CONTRACTOR, will
subject the CONTRACTOR to the payment of a fine of US$140.00 per
passenger in the case of air transportation, and US$40.00 in the case
of sea transportation.................................................
8.8.1. The fine set forth in item 8.8 will not be charged if the
CONTRACTOR asks PETROBRAS to change the boarding schedule at least
24 (twenty-four) hours in advance.....................................
8.9. In a written notice and without prejudice of the capacity to rescind the
contract, PETROBRAS may impose upon the CONTRACTOR a compensatory fine
of 100% (one hundred per cent) of the amount of the conviction, due to
default of its labor, social security or tax obligations..............
8.9.1. The payment of said fine will not exempt the CONTRACTOR from the
obligation to reimburse PETROBRAS for the amount imposed upon it as a
result of an eventual joint conviction passed by a Labor Court or by
the proper administrative jurisdictions...............................
8.9.2. The CONTRACTOR will be fined in the precentual of 5% (five
percent) on the amount of the invoice in the event it does not submit
the GRPS or submits at variance.......................................
(End of Clause)...............................................................
35
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NINTH CLAUSE - INSPECTION.....................................................
9.1. The inspection of the chartering contracted herein will be carried
out by PETROBRAS' representatives, and the CONTRACTOR undertakes to
allow their free access to the UNIT and to the operations locations,
and to comply immediately with the observations of such inspection,
which will have ample powers to:......................................
9.1.1. Determine, provided it comes to its knowledge and is within its
capacity, the suspension of the operations which perhaps are being
carried out in disagreement with the good technique or which threaten
the safety of persons or assets of PETROBRAS, third parties or of the
CONTRACTOR itself, the subitem 2.1.7 of ATTACHMENT II being complied
with..................................................................
9.1.2. Refuse the employment of condemned or improper equipment and
materials, tools and production string components, as well as
operations which do not comply with the established programs;.........
9.1.3. Order the withdrawal, from the work site, of any of the CONTRACTOR's
employees who, in PETROBRAS' opinion, may endanger the good performance
of the operations or hinder its inspecting activities;....
9.1.4. Certify on the accuracy of the information reported daily by the
CONTRACTOR;...........................................................
9.1.5. Notify the CONTRACTOR, in writing, on the imposition of the penalties
provide for in this CONTRACT, including those referring to the
CONTRACTOR's action or omission;......................................
9.1.6. Request from the CONTRACTOR a detailed report of any accident
occurred and on any operation or repair performed.....................
36
<PAGE>
9.2. However, the responsibility, operation, movement and administration
of the UNIT will be under the exclusive control and command of the
CONTRACTOR or its employees...........................................
9.3. The total or partial action or omission of the Inspection, does not
lessen at all the CONTRACTOR's full responsibility for the rendering
of the obligations agreed upon herein, nor does it imply any
reduction or change in the CONTRACTOR's obligations in the faithful
and perfect fulfillment of the present CONTRACT.......................
9.4. Notes - PETROBRAS' Inspection should record its observations on the
Driller's Log approved by the IADC and on the Daily Drilling
Certificate (ADP), to safeguard the rights and responsibilities
foreseen in this CONTRACT.............................................
9.5. During the contract period, PETROBRAS will carry out the CONTRACTOR's
performance evaluation, covering the groups in equipment and
material, human resources, installations, quality and efficiency.
The results of the performance evaluations will be notified and
consolidated by means of a service performance certificate............
(End of Clause)...............................................................
37
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TENTH CLAUSE - RESCISION......................................................
10.1. PETROBRAS may rescind the present CONTRACT, without the CONTRACTOR
being entitled to any right to indemnity and/or withholding in the
following cases:......................................................
10.1.1. Nonfulfillment, or irregular fulfillment of contract clauses,
specifications, operations and Inspection's requests, provided the
fact mentioned is not remedied within the time limit of 60 (sixty)
days, or the repeated commitment of faults in the fulfillment of the
CONTRACT;.............................................................
10.1.2. Total or partial subcontracting of the object of the present
CONTRACT, the association of the CONTRACTOR with another,
merger/division or total or partial incorporation, except if allowed
for in this CONTRACT, which affects the good performance of this
instrument;...........................................................
10.1.3. Interruption of the operations for more than 60 (sixty) days;.........
10.1.4. Decree of the CONTRACTOR's bankruptcy.............................
10.1.5. When the penalties provided for in item 8.4 of this contract is
attained;.............................................................
10.1.6. Slowness in the execution of the works, leading PETROBRAS to prove
the impossibility of completing the operations within the established
time limits;..........................................................
10.1.7. Non-compliance with the determinations of PETROBRAS' agent appointed
to follow-up and inspect the fulfillment of the CONTRACT, as well as
those of his superiors;...............................................
10.1.8. The dissolution of the CONTRACTOR;....................................
38
<PAGE>
10.1.9. The social change or the modification of the company's purpose or
structure, which in PETROBRAS' opinion, hinders the performance of
the operations;.......................................................
10.1.10.Delay in the beginning of the fulfillment of the CONTRACT for more than
180 (one hundred and eighty) days......................................
10.1.11.Rescision of the SERVICES RENDERING CONTRACT for Drilling and/or
Evaluation and/or Completion and/or Workover using the UNIT, entered
into between PETROBRAS and MARITIMA NAVEGACAO E ENGENHARIA LTDA........
10.1.12.If the limit set forth in subitem 2.1.9 of ATTACHMENT II to this
CONTRACT is attained.
10.1.13.If the limits set forth in NOTE 2 of REF. 102 of ATTACHMENT II to
this CONTRACT are attained............................................
10.1.14.Non-submittal of the proof of fulfillment of labor obligations
towards the employees directly involved in the services object of
this contract, including social security contributions and deposits
in the FGTS, when requested by the Inspection, or if such default is
proven;...............................................................
10.1.15.Non-submittal or submittal at variance of the GRPS, when the
corresponding invoice is delivered....................................
10.1.15.1.The rescision for this reason does not prevent PETROBRAS from
imposing the respective fine, foreseen in 8.7.2;......................
10.2. In the event of rescision of the contract deed for the reasons
foreseen in 10.1, PETROBRAS will:.....................................
a) take over the object of the contract deed, on the stage and
location where it is found;.......................................
39
<PAGE>
b) enforce the contract guarantee, if any, for the reimbursement of
the amounts of fines and indemnities due to it;...................
c) withhold the credits arising from the contract deed, up to the
limits of the damages caused to it................................
10.3. After the CONTRACT is rescinded, as set forth in this Clause, the
CONTRACTOR is liable, in legal and contract fashion, for the violation
or inadequate performance which gives rise to the rescision, as well as
for the reimbursement of damages which PETROBRAS may come to
sustain...............................................................
10.4 After the contract is rescinded, PETROBRAS, at its exclusive
judgment, may adjudicate the operations object thereof to whom it
deems appropriate, without behoving the CONTRACTOR any consultation
or interference, claim and/or indemnity, for whatever title, and the
CONTRACTOR will be liable to legal and contract penalties, besides
being liable for damages PETROBRAS may sustain........................
10.4.1. The CONTRACTOR is also liable for the pertinent administrative
sanctions, its full defense being guaranteed..........................
10.5. In the event PETROBRAS does not impose the right to rescind the
present CONTRACT according to this Clause, it may, at its absolute
discretion, withhold the payments of pending invoices, until the
CONTRACTOR fulfills the contract condition it has infringed, but such
fact will not represent novation nor will it generate rights that may
be claimed by the CONTRACTOR..........................................
(End of Clause)...............................................................
40
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ELEVENTH CLAUSE - FISCAL CHARGES..............................................
11.1. Taxes (taxes, fees, emoluments, fiscal and parafiscal contributions)
that are due as a direct or indirect result of the present CONTRACT, or
of its fulfillment, will be the exclusive responsibility of the
taxpayer, so defined in the tax rule, with no right to reimbursement.
PETROBRAS, as the withholding source, will withhold and pay within the
legal time period, from the payments it makes, the taxes it is liable to
by the laws in force.
11.1.1. The CONTRACTOR states that, in quoting its prices, it has taken into
account the taxes (taxes, fees, emoluments, fiscal and parafiscal
contributions) charged on the fulfillment of this CONTRACT, and it
cannot make any claim due to error on such evaluation, for the purpose
of requesting a price revision ou reimbursement of payments set down
by the property authority....................................
11.1.2. Once found, during the period of validity of the CONTRACT, that the
CONTRACTOR has unduly added to its prices amounts corresponding to
taxes, fiscal and/or parafiscal contributions and emoluments of any
kind that are not charged to the performance of the services agreed
upon, such values will be immediately excluded, with the consequent
reduction of the prices practiced and reimbursement of amounts that
may have been paid to the CONTRACTOR..................................
11.2. If, during the period of validity of this CONTRACT, any of the
following events occur:
o creation of new taxes;............................................
o extinction of existing taxes;.....................................
o changes in the aliquots;..........................................
o establishment of tax incentives of any kind; and..................
41
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o exemption or abatement of federal, state or county taxes,.........
which, provedly come to increase or reduce the burdens of the parties to
the contract, the prices will be revised, so as to fit them into the
changes made, compensating, at the first opportunity, any differences
arising from such changes. However, if it is a question of tax
incentives, the advantages arising therefrom will always be for
PETROBRAS.........................................................
(End of Clause)...............................................................
42
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TWELFTH CLAUSE - FORCE MAJEURE................................................
12.1. PETROBRAS and the CONTRACTOR will not be liable for the nonfulfillment
of their respective obligations in case of events that characterize an
act of God or force majeure defined in the sole paragraph of Article
1.058 of the Brazilian Civil Code. Any suspension of performance due to
this item 12.1 will be limited to the period during which such cause or
its consequences exist, and such period will be added to the duration of
the CONTRACT mentioned in the Second Clause of the present CONTRACT.
However, the CONTRACTOR is assured the right to receive the rate
provided for in REF 104 of ATTACHMENT III, with the exception of the
exemption from payment set forth in subitem 2.1.4 of the ATTACHMENT II,
and the reimbursements mentioned in this CONTRACT, and furthermore, the
parties will severally assume their losses............................
12.2 If the circumstances that justify the invoking of the existence of an
act of God or force majeure occurs, the party unable to fulfill its
obligations will immediately notify the other party, in writing, on
the occurrence of its consequences....................................
12.3. If the impediment arising from the force majeure lasts for more than
90 (ninety) consecutive days, any of the parties may opt for the
termination of the CONTRACT, with both parties complying with their
mutual obligations due until the date of the beginning of said
impediment............................................................
(End of Clause)...............................................................
43
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THIRTEENTH CLAUSE - ASSIGNMENT AND TRANSFER...................................
13.1. The CONTRACTOR cannot assign or transfer, in whole or in part, the
present CONTRACT, except with PETROBRAS' prior authorization in
writing...............................................................
13.2. The CONTRACTOR cannot assign or give in guarantee, at any title, in
whole or in part, the credits of any kind, arising or deriving from
the present CONTRACT, except with PETROBRAS' prior authorization in
writing. The prior authorization will obligatorily state that
PETROBRAS imposes upon the assignee of the credits the exceptions
that behooves it, mentioning expressly that the payments to the
assignee will be conditioned to the fulfillment, by the assignor, of
all of its contract obligations.......................................
13.3. The occurrence of the above mentioned events, duly authorized by
PETROBRAS, does not exempt the CONTRACTOR from any of its contract
obligations...........................................................
13.4. PETROBRAS may assign or transfer, in whole or in part, the present
contract, under commercial conditions to be agreed upon by the
parties. .............................................................
(End of Clause)...............................................................
44
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FOURTEENTH CLAUSE - ADDITIONAL EQUIPMENT......................................
14.1. PETROBRAS may install in the UNIT the additional equipment it deems
necessary for research, drilling, completion of wells or production.
It is agreed, however, that no structural change will be made in the
UNIT without the CONTRACTOR's consent in writing. All PETROBRAS'
equipment installed in the UNIT will remain its property, and it will
be removed by it before the end of this CONTRACT. The installation
and removal expenses will run for PETROBRAS' account. During the
installation and removal of PETROBRAS' equipment, the rate set forth
in REF 104 of ATTACHMENT III will be paid if the interruption of the
operations becomes necessary..........................................
(End of Clause)...............................................................
45
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FIFTEENTH CLAUSE - ATTORNEY OF RECORD.........................................
15.1. The CONTRACTOR undertakes to maintain, in the City of Rio de Janeiro,
State of Rio de Janeiro, Federative Republic of Brazil, during the
contract period and until the settlement of eventual demands arising
from the CONTRACT, a representative with "ad-judicia et extra" powers,
who may receive service of process, inclusive in execution proceedings,
as well as to sign compromise and settlements regarding controversies
resulting from this CONTRACT, and the summons can be made by
publication, in the event of absence or lack of an Attorney...........
15.1.1. Within 30 (thirty) days after the signature of the present CONTRACT,
the CONTRACTOR will notify PETROBRAS the name, qualification, office
and residence of its representative and attorney of record, as set
forth in item 15.1....................................................
(End of Clause)...............................................................
46
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SIXTEENTH CLAUSE - CONTRACT RELATIONSHIPS.....................................
16.1. This CONTRACT is related to another one for the rendering of services
of Drilling and/or evaluation and/or completion and/or workover, signed
on this same date between PETROBRAS and MARITIMA NAVEGACAO E ENGENHARIA
LTDA.
(End of Clause)...............................................................
47
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SEVENTEENTH CLAUSE - INTERVENIENCE............................................
17.1. Clause non-applicable in this CONTRACT................................
(End of Clause)...............................................................
48
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EIGHTEENTH CLAUSE - LIABILITY.................................................
18.1. PETROBRAS' and the CONTRACTOR's liability for damages will be limited
to the direct damages in accordance with the Brazilian Civil Code and
pertinent laws, with exception of loss of profit and indirect damages,
the direct damages being limited to 100% (one hundred percent) of the
total contract value..................................................
(End of Clause)...............................................................
49
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NINETEENTH CLAUSE - COMPLEMENTARY DOCUMENTS
19.l. The ATTACHMENTS mentioned below are an integral part of the present
CONTRACT and, in the event of disagreement between the ATTACHMENTS
and the CONTRACT, the text of the CONTRACT will prevail...............
ATTACHMENTS
I - Technical specifications of the Unit .................................
II - Applicability of the Rates and Incidents in the Performance...........
III. - Unit Prices Spreadsheet...............................................
IV - Mutual Obligations ...................................................
V - List of Specialized Personnel;........................................
VI - Environmental Operating Conditions
VII - PETROBRAS' Safety Rules...............................................
VIII - Equipment Testing Program.............................................
IX - Procedures In the Event of Fatal Accidents............................
(End of Clause)....................................... ........................
50
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TWENTIETH CLAUSE - PRICE READJUSTMENT.........................................
20.1. The contract prices are fixed and non-readjustable....................
(End of Clause) ..............................................................
51
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TWENTY-FIRST CLAUSE - ACCEPTANCE..............................................
21.1. After the chartering operations are completed in strict compliance
with the conditions set forth in this contract deed, PETROBRAS will
accept them by means of a Definite Deed of Definitive Receipt, signed
by both parties.......................................................
21.2. The signature of the Deed of Definitive Receipt does not exempt the
CONTRACTOR from the liabilities foreseen in this contract and in the
laws in force.........................................................
(End of Clause) ..............................................................
52
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TWENTY-SECOND CLAUSE - LOSS OR DISAPPEARANCE..................................
22.1. In the event the Vessel is lost or disappears, no payment regarding
the same will be due by PETROBRAS to the CONTRACTOR, as of the date or
as of the moment it was last heard of.................................
(End of Clause)...............................................................
53
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TWENTY-THIRD CLAUSE - GROSS OR GENERAL AVERAGE...............................
23.1. The gross or general average will be ruled in the Port of Rio de
Janeiro according to the York and Antuerp Rules/1974..................
(End of Clause) ..............................................................
54
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TWENTY-FOURTH CLAUSE - JURISDICTION...........................................
24.1. The Jurisdiction of the County of the Capital of the State of Rio de
Janeiro will be competent to settle any questions arising from the
present CONTRACT, with the express waiver, by the parties, of any
other, however privileged ............................................
(End of Clause) ..............................................................
AND BEING THUS AGREED, the parties sign the present deed in 3 (three) copies
with the same tenor, with the witnesses below ................................
Rio de Janeiro, (blank) ......................................................
(Signed:) LUIZ EDUARDO G. CARNEIRO...........................................
LUIZ EDUARDO G. CARNEIRO - EXECUTIVE SUPERINTENDENT OF EXPLORATION AND
PRODUCTION SOUTH - SOUTHEAST - PETROLEO BRASILEIRO S.A. - PETROBRAS...........
(Signed:) GERMAN EFROMOVICH..................................................
GERMAN EFROMOVICH - PRESIDENT.................................................
MARITIMA NAVEGACAO E ENGENHARIA LTDA..........................................
WITNESSES:
(Signed:) Elaine Brabo.......................................................
CPF No. 970.702.897-15........................................................
(Signed:) (illegible)........................................................
CPF No. 610.769.457-91........................................................
55
<PAGE>
CONTRACT NO. 101.2.155.97-9...................................................
CHARTERING
ATTACHMENT II
APPLICABILITY OF THE RATES AND, INCIDENTS IN
THE PERFORMANCE.
1 - APPLICABILITY OF THE RATES - DEFINITION OF THE CHARTERING RATES PER 24
(TWENTY-FOUR) HOUR DAY .......................................................
REF 101 - OPERATION RATE - It will be applied during the activities
requiring the use of the UNIT, such as electric logging, formation testing,
completion, workover operations, including line scouring and cutting
operations....................................................................
REF 102 - REPAIR RATE - In the periods when there is an interruption of the
activities that require the use of the UNIT, mentioned in REF 101 of this
ATTACHMENT and the operations for Moving the UNIT between locations, REF 105
of this ATTACHMENT, due to maintenance, including replacement of mud pump
spare parts, and/or repair in the UNIT's equipment, or in those which supply
is the CONTRACTOR's responsibility, no rate will be due ......................
NOTE 1. The repair period will be considered as of the interruption of the
operation that is being performed, until the return to the same situation
when the interruption occurred, except for the periods when the interruption
in the repair activities occur due to adverse sea conditions, as set forth in
NOTE 2 of REF. 104 ...........................................................
NOTE 2. In the event the CONTRACTOR remains in REPAIR RATE for an accumulated
total of 30% of the time, for any period of 6 (six) contract months,
PETROBRAS may rescind the present CONTRACT, based on subitem 10.1.14 of this
CONTRACT .....................................................................
56
<PAGE>
NOTE 3. It will be considered as repairs the occurrences due to wash outs in
the drill pipes and in the other elements of the drill string, belonging the
Contractor, with exception of those arising from the presence of H2S and from
abnormal mechanical conditions occurred in the well ..........................
NOTE 4. At the Inspection's discretion, for the maintenance of the BOP, the
CONTRACTOR may be granted a franchise of up to 24 hours between the instant
the BOP is set on the test stump, until its operating withdrawal, and the
moment of its movement for the next running in another well, without the
CONTRACTOR entering in repair rate, provided such maintenance is carried out
according to international standards. In the period within these 24 hours
intended exclusively for the BOP maintenance, the waiting rate (Ref. 104)
will be due...................................................................
REF. 103 - RATE ADDITIONAL (AT) - In each measurement period, as set forth in
subitem, 6.1.1 of the CONTRACT, the CONTRACTOR will be entitled to receive a
Rate Additional, calculated by means of the following formulae:...............
AT = 0.10 x (NT - NFM - NREP - NIPG - NTOR) X FOR PI (IS LESS THAN OR EQUAL TO)
0. 300 TO................................................................
AT - (0.16 - 2 x PI) x (NT - NFM - NREP - NIPG - FOR 0.03 (IS LESS THAN OR EQUAL
TO) PI 0,0800 NTOR) x TO................................................
AT = Zero..........................................................TO PI>0, 800
Where:........................................................................
AT = Rate Additional .........................................................
TO = Operation Rate (REF 101).................................................
PI = Unavailability Proportion, calculated with 4(four) decimal places, being:
PI = NREP + NIPG + NTOR
------------------
NT - NFM
..............................................................................
NT = Total number of days in the measurement period considered; ..............
NFM = Total number of days in which the act of God or force majeure occurs,
as defined in the TWELFTH CLAUSE of the CONTRACT, in the measurement period
considered;...................................................................
57
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NREP = Total number of days under repair rate (REF 102) in the measurement
period considered;............................................................
NIPG = Total number of days under exemption from payment (according to item
2.1 of this ATTACHMENT) in the measurement period considered;.................
NTOR = Total number of days with reduced operation rate (according to
subitems 2.2.3 and 2.2.4 of this ATTACHMENT) in the measurement period
considered ...................................................................
REF. 104 - WAITING RATE (TE) - corresponds to 95% of the operation rate (TO)
and which will be applied in BAD WEATHER, FORCE MAJEURE and WAITING
situations, as defined below:.................................................
1) BAD WEATHER SITUATIONS - in the event of stoppage of the operations when
environmental conditions are so severe as to endanger the UNIT's operating
capacity, the limitations in Attachment VI, being complied with, making the
operations unstable or unsafe or preventing support vessels from having
access to the UNIT, or preventing the tugs' operations, at the time of
change of locations, although the UNIT may operate normally, in spite of
the BAD WEATHER ...........................
2) FORCE MAJEURE SITUATIONS - during the period when the UNIT cannot
operate, due to act of God or force majeure, as defined in the TWELFTH
CLAUSE of the CONTRACT, until the removal of the impediment or the
rescision of the CONTRACT, as the case may be ...........................
3) WAITING - waiting for the arrival, maintenance or availability of
materials from PETROBRAS or third parties, under PETROBRAS' responsibility,
even if the Maintenance is made in the UNIT; waiting for daylight to carry
out formation tests; waiting for orders from PETROBRAS, such as, but not
limited to: change of programs, definition to proceed with the
58
<PAGE>
completion or other production activity, rest for PETROBRAS' team or of
those of third party at PETROBRAS' service; waiting for tugs or support
vessels................................................................
NOTE 1. The period spent in disconnecting the LMRP from the BOP due to
environmental conditions will be considered as BAD WEATHER situation, until
the return to the previous situation .........................................
NOTE 2. If a BAD WEATHER situation occurs which interrupts a repair activity,
the waiting Rate (REF 104) with a 40% (fourty percent) reduction, will be due
during that period ...........................................................
REF. 105 - MOVING RATE - corresponds to 95% (ninety-five percent) of the
Operation Rate (TO) and will be applied during the following periods: ........
a) Beginning of the Contract - After the acceptance of the UNIT's equipment
operating conditions, once the general testing provided for in ITEM 3.1
of the CONTRACT has been carried out, until the spud in of the first
well or reentry in the first well (beginning of running the first tool
for access to the well); ................................................
b) Between Locations - After the end of the completion or intervention
operations in a well, with the arrival of the BOP or tool used in the
well (the one which occurs last) in the moon pool, until the spud in or
reentry in a new well (beginning of running the first tool for access to
the well); ..............................................................
NOTE: This period includes the DP system calibration and tests, always on
each new location, and others in each contract year or at any time, when
requested by PETROBRAS........................................................
c) End of Contract - After the end of the spud in or intervention
operations in the last well, with the arrival of the BOP or tool used in
the well (the one which occurs last) in the moon pool, until the UNIT's
arrival in a place of sheltered waters, chosen in common agreement
between
59
<PAGE>
the parties, or, if there are PETROBRAS' equipment still aboard, until the
withdrawal of such equipment from the UNIT...............................
REF. 106 MOBILIZATION OF THE UNIT (MOB) - No rate will be due for the
mobilization of the Unit and its its fittings.................................
REP. 107 DEMOBILIZATION OF THE UNIT (DEMOB) - No rate will be due for the
demobilization of the UNIT and its fittings...................................
2 - INCIDENTS IN THE PERFORMANCE .............................................
2.1. Exemption from Payment - PETROBRAS will be exempted from the payment
of the rates foreseen in this ATTACHMENT, during the period in which
occurs:...............................................................
2.1.1. Interruption of the services due to the CONTRACTOR's duly proven
fault arising from operational error and/or lack of material or
equipment, inclusive due to the loss of subaquatic equipment or spare
parts ................................................................
2.1.2. Stoppage of the services and/or of the UNIT due to measures related
to impositions by made the insurers ..................................
2.1.3. CONTRACTOR's refusal to operate under the conditions foreseen in
ATTACHMENT VI - Environmental Operating Conditions ...................
2.1.4. Stoppage of the services and/or of the UNIT for inspection or dockage
purposes, including surveys and dockages arising from act of God or
force majeure, as defined in the TWELFTH CLAUSE of the CONTRACT, the
corresponding expenses also running for the CONTRACTOR's account .....
NOTE 1. The exemption from payment will begin in the moment there is an
interruption of the operational continuity object of this CONTRACT, even if
the withdrawal of all or part of
60
<PAGE>
PETROBRAS' and/or the CONTRACTOR's cargo becomes necessary for the inspection
and/or dockage...............................................................
NOTE 2. The end of the exemption from payment, due to the inspection and/or
dockage, will occur:..........................................................
a) On the return to the same location, the moment the operation
returns to the previous situation;................................
b) On the mobilization to another location, the moment the UNIT
starts sailing after PETROBRAS' and/or the CONTRACTOR's materials
have been put back on board.......................................
2.1.5. Occurrence of kick, drill string sticking, loss of circulation,
fishing or abandonment, caused by the CONTRACTOR's duly proven action
or omission, from the moment the problem was ascertained, until the
return to the situation prior to its occurrence, or displacement to
another location, in the event of abandonment ........................
2.1.5.1.The exemption from payment referred to in 2.1.5 will be limited to a
period of 15 (fifteen) days, per event, after which the reduction
foreseen in subitem 2.2.3 of this ATTACHMENT will be applied .........
2.1.6. Occurrence of blow out caused by the CONTRACTOR's duly proven action
or omission, from the moment the problem was ascertained, until the
return to the situation prior to its occurrence ......................
2.1.6.1.The exemption from payment referred to in item 2.1.6 will be limited to
a period of 45 (forty-five) days, after which the reduction foreseen in
subitem 2.2.4 of this ATTACHMENT will be applied......................
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<PAGE>
2.1.7. Suspension of the services, determined by PETROBRAS' Inspection, based
on item 9.1.1 of the CONTRACT.........................................
2.1.8. Interruption of the operations due to a failure occurred in any of the
UNIT's equipment, at the time of the testing to be carried out according
to item 3.1 of the CONTRACT ..........................................
2.1.9. In the occurrence of events of exemption from payment provided for in
subitems 2.1.1, 2.1.2, 2.1.3, and 2.1.7, for a total accumulated period
exceeding 30% (thirty percent) in any 6 (six) month period, PETROBRAS
may rescind the present CONTRACT, based on. its subitem 10.1.13.
2.2. REDUCTION IN THE DAILY OPERATION, WAITING AND MOVEMENT RATE
......................................................................
The rates foreseen in this ATTACHMENT will be reduced in the following cases .
2.2.1. Total or partial inoperativeness or malfunction of any equipment which
delays or hinders the operation, such as, but not limited to, winches,
top drive, kelly spinner, geolograph, current meter, air compressors,
shale shaker, mixing pumps, mud laboratory equipment and bulk receipt
and transfer systems, are reason for the reduction of the daily rate
provided for in REF 101, in 1% (one percent), cumulative per equipment,
provided the CONTRACTOR is notified in writing in the Daily Drilling
Certificate (ADP), by PETROBRAS' Inspection and which, after the time
limit the latter has set to repair said equipment, such repair has not
been made ............................................................
2.2.2. Low Efficiency - REFERENCE RATES 101 and 105 of this ATTACHMENT will
have a 20% (twenty percent) reduction, in the event low efficiency is
verified, according to the
62
<PAGE>
operating efficiency parameters listed below. Such reduction will be
applied during the whole period corresponding to the activity in which
low efficiency is verified:...........................................
Operating Parameters:.................................................
- Maneuver of the drill string in a cased well (except BHA):
o Inside the riser and 20" casing = 500 m/h.....................
o Inside the 13 3/8" casing = 600 m/h ..........................
o Inside of 9 5/8" casing = 700 m/h ............................
- Break of DP's per Unit - 25jt/h ....................................
- Casing string running in the sea/inside the riser/previous casing
(joints with approximately 12 m long) ..............................
o 30" Casing - 2 jt/h ..........................................
o 20" Casing - 5 jt/h ..........................................
o 13 3/8" Casing - 13 jt/h .....................................
o 9 5/8" Casing - 18 jt/h ......................................
o 7" Casing - 15 jt/h ..........................................
- Running of drilling riser, excluding normal time for testing (50 ft
joint): 45/m/h......................................................
- Pulling of drilling riser (50 ft joints): 60 m/h
- Installation or pulling of the kill/choke lines/ telescopic joint/
stretchers: 6.0h ...................................................
- Diverter installation or pulling: 2.0h .............................
- Assembly of the dampening lines in the M.R.: 1.5h..................
- Assembly of the flexitube equipment: 5.0h. .........................
- Assembly of the production tail: 2.0h ..............................
63
<PAGE>
- Tubing running or pulling, per unit - 150 m/h ......................
- Tubing running or pulling per section - 300 m/h.....................
- Completion risers running or pulling - 50 m/h ......................
- Assembly of terminal head and slings -2.0 h ........................
- Moving of WCT to/from the moon pool - 3.0 h.........................
- Moving of tree cap or tree running tool to/from the moon pool - 2.5h
- Assembly of lubricator and wire line BOP - 1.5h
NOTE: The above mentioned operating parameters are based on normal weather
conditions....................................................................
2.2.3. Beginning on the 16th (sixteenth day), inclusive, of the occurrence
of kick, drill string sticking, loss of circulation or fishing, caused
by the CONTRACTOR's duly proven action or omission, until the return to
the situation prior to its occurrence, the applicable rate will be
reduced by 50% (fifty percent) .......................................
2.2.4. Beginning on the 46th (forty-sixth) day, inclusive, of the occurrence
of Blow out caused by the CONTRACTOR's duly proven action or omission,
until the return to the situation prior to its occurrence, the
applicable rate will be reduced by 50% (fifty percent) ...............
2.3. Period of Validity of the Contract Rates the contract rates set forth
in this ATTACHMENT will apply in the period set forth below: .........
a) Beginning: release of the UNIT, by PETROBRAS, to sail to the first
location, after the equipment general testing provided for in item
3.1 of the CONTRACT has been carried out, with the exception of the
provision in its subitem 3.1.1.1 .................................
b) End: after the end of the completion of the last well, with the
UNIT's arrival at a port or sheltered waters chosen by common
agreement between the parties, and if there
64
<PAGE>
are PETROBRAS' equipment still aboard, with the withdrawal of such
equipment from the UNIT...........................................
2.4. Blow-Out - PETROBRAS will be responsible for the well control operation
costs, in the event of blow-out and caving caused by the blow-out. Such
provisions apply only to the well control costs and do not apply to the
loss of assets, lesions and/or damages caused by the blow-out, which are
protected by the provisions of the pertinent items of this CONTRACT. The
CONTRACTOR undertakes to place at PETROBRAS' disposal all of its
resources in personnel and equipment related to this CONTRACT, without
any additional charges to PETROBRAS. If the CONTRACTOR has contributed
with duly proven action or omission for the occurrence of the accident,
no rate will be due, until the solution of the problem, in compliance
with the provisions in subitems 2.1.6 and 2.2.4 of this ATTACHMENT
......................................................................
(End of ATTACHMENT)...........................................................
65
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RENDERING OF SERVICES
CONTRACT NO. 101.2.155.97-9...................................................
ATTACHMENT III - UNIT PRICES SPREADSHEET
CHARTERING
- - -------------------------------------------------------------------------------
UNIT PRICES SPREAD SHEET
- - -------------------------------------------------------------------------------
OBJECT OF BID: CHARTERING OF A FLOATING UNIT, PROVIDED WITH DYNAMIC
POSITIONING SYSTEM.
- - -------------------------------------------------------------------------------
PLACE OF OPERATION: BRAZILIAN CONTINENTAL SHELF AND INTERNATIONAL
WATERS
- - -------------------------------------------------------------------------------
UNIT'S NAME: AMETHYST 7
- - -------------------------------------------------------------------------------
COMPANY'S NAME: MARITIMA NAVEGACAO E ENGENHARIA LTDA.
- - -------------------------------------------------------------------------------
CODE ITEMIZATION UNIT UNIT PRICE (US$)
- - -------------------------------------------------------------------------------
02.222.305 OPERATION RATE DAY 128,999.70
(REF.101)
- - -------------------------------------------------------------------------------
02.222.306 REPAIR RATE DAY No rate will be due
(REF.102)
- - -------------------------------------------------------------------------------
02.222.307 WAITING RATE- DAY (95% OF REF. 101)
BAD WEATHER
(REF.104.1)
- - -------------------------------------------------------------------------------
02.222.308 WAITING RATE- DAY (95% OF REF. 101)
FORCE MAJEURE
RATE (REF. 104.2)
- - -------------------------------------------------------------------------------
02.222.309 WAITING RATE- DAY (95% OF REF.101)
- - -------------------------------------------------------------------------------
66
<PAGE>
- - -------------------------------------------------------------------------------
WAITING
(REF. 104.3)
- - -------------------------------------------------------------------------------
02.222.310 MOVEMENT RATE DAY (95% OF REF. 101)
(REF.105)
- - -------------------------------------------------------------------------------
02.222.311 MOBILIZATION UNIQUE NO RATE WILL BE
RATE (REF. 106) DUE.
- - -------------------------------------------------------------------------------
SIGNATURES DATE OF THE
PROPOSAL
- - -------------------------------------------------------------------------------
PETROBRAS CONTRACTOR 10/08/97
Andre de Mesquita Pinto (illegible)
- - -------------------------------------------------------------------------------
(Illegible rubber stamp.).....................................................
67
<PAGE>
CONTRACT NO. 101.2.155.97-9...................................................
CHARTERING
ATTACHMENT IV
MUTUAL OBLIGATIONS
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
------------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
1. Production Adaptor Base X X
and WCT
- - -------------------------------------------------------------------------------
2. Cement, bentonite, X X
baritine, and other
materials and
additives for
manufacturing mud
and cementing.
- - -------------------------------------------------------------------------------
2. (sic) Cementing and
logging Unit:
a) Installation and
removal X X
b) Maintenance X X
c) Rent X X
- - -------------------------------------------------------------------------------
3. Equipment and tools X X
specific for evaluation,
completion and
production operation
of wells.
- - -------------------------------------------------------------------------------
4. Fishing tools and
replacement materials
for pipes and production
tools
a) Foreseen in X X
Attachment I
b) Not foreseen in X X
Attachment I
- - -------------------------------------------------------------------------------
5. Equipment, tools and X X
replacement materials
needed
- - -------------------------------------------------------------------------------
68
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
------------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
for the services of
logging, formation
tests and/or production
and/or perforation, not
included in ATTACHMENT
I.
- - -------------------------------------------------------------------------------
6. Lubricants and greases X X
for the CONTRACTOR's
equipment.
- - -------------------------------------------------------------------------------
7. Industrial and fresh X X
water.
- - -------------------------------------------------------------------------------
8. Replacement materials, X X
including for fishing
tools and other
CONTRACTOR's equipment
listed in Attachment I.
- - -------------------------------------------------------------------------------
9. Consumer equipment and X X
materials for completion
fluid tests listed in
Attachment I. (Note:
PETROBRAS will inform
monthly on the minimum
stock needed).
- - -------------------------------------------------------------------------------
10. Steel ropes, slings, X X
sisal or nylon ropes
and cordage in general,
needed for tying
towlines, for mooring
support vessels and
in cargo evaluation,
completion and
handling.
- - -------------------------------------------------------------------------------
11. Hoses for loading and X X
unloading of liquids
and bulk material
with connections
- - -------------------------------------------------------------------------------
69
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
------------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
compatible with those
of the supply vessels.
- - -------------------------------------------------------------------------------
12. Materials to make X X
completion fluids.
- - -------------------------------------------------------------------------------
13. Conventional bits. X X
- - -------------------------------------------------------------------------------
14. Safety equipment for X X
individual use: gloves,
helmets, boots, masks,
ear protectors, and
other personal use
equipment for the
CONTRACTOR's employees.
- - -------------------------------------------------------------------------------
15. Services, materials and X X
equipment to mark
locations.
- - -------------------------------------------------------------------------------
16. Surveying of the sea X X
bottom, if necessary.
- - -------------------------------------------------------------------------------
17. Welding equipment and X X
materials needed for
well completion and
abandonment operations.
- - -------------------------------------------------------------------------------
18. Bulls eye for running X X
tools.
- - -------------------------------------------------------------------------------
19. Warehouses, office and X X
storage area for the
CONTRACTOR on land.
- - -------------------------------------------------------------------------------
20. Radio-beacon with X X
working frequencies
compatible with those
mentioned in Attachment
I.
- - -------------------------------------------------------------------------------
70
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
------------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
21. Safety and survival X X
equipment, including
maintenance (subjected
to periodical inspection
by PETROBRAS.
- - -------------------------------------------------------------------------------
22. Screens for mud sieves, X X
according to PETROBRAS'
specifications.
- - -------------------------------------------------------------------------------
23. Materials for X X
maintenance of equipment
and test lines, supplied
by the CONTRACTOR, for
formation testing and/
or production (painting,
boiler factory, and welding).
- - -------------------------------------------------------------------------------
24. VX ring, VX with HYCAR
and VX with lead insert
for connection BOP-
WELLHEAD, LMRP-BOP
STACK:
- - -------------------------------------------------------------------------------
a) In normal operation X X X
- - -------------------------------------------------------------------------------
b) In reinstallation due X X X
to problem with the
ESCP
- - -------------------------------------------------------------------------------
25. VX ring, VX with HYCAR X X X
and VX with lead insert
for WCT.
- - -------------------------------------------------------------------------------
26. Remote operation
submarine vehicle (ROV)
a) Installation and X X
removal
- - -------------------------------------------------------------------------------
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<PAGE>
b) Maintenance X X
c) Rent X X
- - -------------------------------------------------------------------------------
27. Hydraulic fluid for X X
BOP driving and tests.
- - -------------------------------------------------------------------------------
28. Hydraulic fluid for X X
WCT driving and tests.
- - -------------------------------------------------------------------------------
29. Special grease for pipes X X
and completion equipment.
- - -------------------------------------------------------------------------------
30. Individual safety X X
equipment for operation
in the moon pool.
- - -------------------------------------------------------------------------------
31. Paper and ink for X X
microcomputer printer.
- - -------------------------------------------------------------------------------
32. Beacons, hydrophones, X X
transducers,
transponders, betteries.
- - -------------------------------------------------------------------------------
33. Diesel oil
a) up to the limit set X X
forth in Clause
4.6.2
b) above the limit set X X
forth in Clause
4.6.2
- - -------------------------------------------------------------------------------
34. Filter elements for the X X
completion fluid
filtering Unit.
- - -------------------------------------------------------------------------------
(End of Attachment)...........................................................
72
<PAGE>
CONTRACT NO. 101.2.155.97-9...................................................
ATTACHMENT "V"
LIST OF (MINIMUM) SPECIALIZED PERSONNEL
ABOARD
- - - Captain or Barge 1
- - - Tool Pusher (1 board superintendent) 2
- - - Driller 2
- - - Assistant Driller 2
- - - Derrickman 2
- - - Roughneck 6
- - - Crane Operator 2
- - - Area Man 8
- - - Welder 2
- - - Watchstander 2
- - - Subsea Engineer 1
- - - Mechanic 1
- - - Assistant Mechanic 1
- - - Electrician 1
- - - Assistant Electrician 1
- - - Radio Operator (Portuguese speaking) 2
- - - Male nurse 1
- - - Storekeeper 1
- - - Safety guard 1
NOTE: Supplementary personnel will be supplied according to the CONTRACTOR's
conveniences and needs or to comply with the requirements of government laws..
73
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CONTRACT NO. 101.2.155.97-9...................................................
ATTACHMENT "VI"
ENVIRONMENTAL OPERATING CONDITIONS
(PERMISSIBLE LIMITS FOR ENVIRONMENTAL
CONDITIONS ACTING SIMULTANEOUSLY)
- - -------------------------------------------------------------------------------
OPERATION HEAVE PITCH WIND WAVE CURRENT
(FEET) OR (MPH) (FEET) (KNOTS)
ROLL
(DEGREES)
- - -------------------------------------------------------------------------------
Conductor's jetting/ 2.0 2.5 30 3.0 1.4
driving
- - -------------------------------------------------------------------------------
Drilling 2.5 3.0 30 3.0 1.4
- - -------------------------------------------------------------------------------
Casing running 2.0 3.0 30 3.0 1.4
- - -------------------------------------------------------------------------------
Casing hanger setting 1.5 2.0 30 2.1 1.4
- - -------------------------------------------------------------------------------
BOP running 1.5 1.5 19 2.1 2.5
- - -------------------------------------------------------------------------------
BOP setting 1.5 1.5 19 2.1 1.4
- - -------------------------------------------------------------------------------
Maneuvering 3.5 3.0 44 8.5 1.4
- - -------------------------------------------------------------------------------
LMPR disconnection 7 4 51 10.5 2.5
- - -------------------------------------------------------------------------------
LMPR connection 1.5 1.5 19 2.1 1.4
- - -------------------------------------------------------------------------------
Formation testing 3.5 4.0 44 8.5 1.4
- - -------------------------------------------------------------------------------
Operation with boats 2.5 3.0 39 6.7 1.4
- - -------------------------------------------------------------------------------
Running the WCT 1.5 1.5 19 2.1 2.5
(lay-away)
- - -------------------------------------------------------------------------------
74
<PAGE>
- - -------------------------------------------------------------------------------
Running the WCT 1.5 1.5 19 2.1 2.5
(without lines)
- - -------------------------------------------------------------------------------
Operation with flexitube 2.0 3.0 30 5.0 1.4
- - -------------------------------------------------------------------------------
Operation with wire-line 3.0 4.0 44 8.5 1.4
- - -------------------------------------------------------------------------------
Operation with BAP 2.5 3.0 39 6.7 1.4
- - -------------------------------------------------------------------------------
NOTE: These data may be corrected/adjusted later and in common agreement,
considering the Unit's operating performance.-----------------
75
<PAGE>
CONTRACT NO. 101.2.155.97-9...................................................
ATTACHMENT "VII"
PETROBRAS' SAFETY RULES
1. Service Rule No. 46/71:
o Safety Rules for Offshore Operations.
2. Service Order No. 01/72:
o Operational Safety Rules - Continental Shelf.
3. Service Rule No. 41/72:
o Electricity - Safety Rules
4. Service Order No. 01/76:
o Industrial Safety Rules (General)
o Industrial Safety Rules (Drilling)
o Industrial Safety Rules (Production)
5. General Safety Manual:
o Safety and Environmental Instruction for Contractors (E&P - BC).
76
<PAGE>
CONTRACT NO. 101.2.155.97-9...................................................
ATTACHMENT VIII
EQUIPMENT TESTING PROGRAM
In order to carry out the UNIT's equipment testing in an easier and
more agile manner, the CONTRACTOR is to submit to PETROBRAS, as quickly as
required the following documents:.............................................
1. CERTIFICATES............................................................
a) Survey and Appraisal Report, updated and valid for the fiscal
year regarding the UNIT offered, issued by one of the entities:
ABS, NOBLE & DENTON, DNV, LLOYDS or BUREAU VERITAS, and if the
report is issued abroad, it will be translated into Portuguese by
a sworn public translator and notarized in the Brazilian
Consulate.........................................................
b) Classification or Class Confirmation Certificate for hull and
equipment, compatible with the proposal submitted (certified
copy);............................................................
c) Report on claims from the classification societies mentioned in
the Class Confirmation Certificate (in the event there are
claims);..........................................................
NOTE:PETROBRAS will evaluate the above mentioned documents and will
indicate in what time limits eventual claims will be settled,
and at PETROBRAS' judgment, it can be at the time of the
UNIT's inspection or at mobilization after the contract is
signed..........................................
d) Freeboard Certificate;............................................
e) IOPP (International Oil Pollution Prevention) Certificate;........
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f) IMO-MUDU-CODE Certificate - Mobile Offshore Drilling Unit -
latest edition (unnecessary for Drill Ship);......................
g) Cargo Ship Safety Equipment Certificate;..........................
h) Cargo Ship Safety Construction;...................................
NOTE:All documents required are to be within their period of
validity....................................................
2. INDUSTRIAL SAFETY AND ENVIRONMENTAL CONTROL.............................
- Manuals and emergency plans in the Portuguese Language............
3. STORAGE CAPACITY........................................................
- Complete floor plan of bulk movement system, specifying:..........
a) Exclusive lines to move cement;.............................
b) Exclusive lines to move bentonite and baritine;.............
c) Location and type of bulk line valves and their respective
driving systems;............................................
d) Pneumatic lines for cleaning and clearing bulk lines;.......
e) Location of the manometers;.................................
f) Quantity, flow, operating pressure and location of
compressors;................................................
g) Quantity, flow, operation pressure and location of the air
drying Unit(s);.............................................
h) Schematic drawing of each silo with their respective
aeration systems and points of connection with the bulk
lines.......................................................
4. FLUID CIRCULATION AND PROCESSING SYSTEM.................................
- Sketch of the system emphasizing pulsation dampers (suction and
tamping), safety valves, feed pumps, position of the suction
lines in relation to suction sieves' tanks and filters............
78
<PAGE>
- Floor plan of the drilling fluid feed and discharge lines showing
the flexibility in relation to the sand traps and mud tanks.......
- Floor plan of the degasser instalation showing the active tank,
separate processed mud and gas discharge lines, emphasizing this
line's connection point with the gas discharge line...............
- Floor plan of the mud tanks system, emphasizing the supply lines,
gun lines, mixture funnel and centrifugal pumps interconnection
lines.............................................................
5. WELLHEAD SAFETY EQUIPMENT SYSTEM........................................
- Sketch of the BOP/LMRP, specifying lines, valves and
measures/dimensions...............................................
- Floor plan of the kill and choke lines from the BOP to the choke
manifold, specifying valves, connections, dampener chambers,
anchorage points and interconnection with the other systems.......
- Floor plan of the atmospheric air separator.......................
- Layout of the trip tank installation, giving the following
information:......................................................
a) Capacity;...................................................
b) Location;...................................................
c) Sensitivity;................................................
d) Measuring system;...........................................
e) Scale type;.................................................
f) Driller's scale visualization conditions;...................
g) Supply System for the above item............................
79
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- Floor plan of the stand pipe manifold, specifying lines, valves,
manometers and interconnections with the other systems............
- Inspection report on the riser, riser handling tools and
connectors, telescopic joint and flexible joint, according to the
API RP 2P and RP 2Q standards, with update date not exceeding 1
year..............................................................
NOTE: If the reports indicate the need of repair in some
equipment, the service performance certificates will also
be submitted................................................
- Biannual inspection certificate of the choke manifold, with
the manufacturer's approval.................................
- Biannual inspection certificate of the BOP Unit and driving
system, with the manufacturer's approval....................
- Biannual inspection certificate of the BOP, with the
manufacturer's approval.
- Proof of technical hability of the well drilling and
control personnel...........................................
- To supply an internal maintenance and rust prevention program
for the marine risers and kill and choke lines......
6. ENERGY GENERATION SYSTEM................................................
- Unifilar diagram of the energy generation and distribution system.
7. STABILITY...............................................................
- To submit the vessel's stability curve, updated in the proposal's
conditions, in keeping with the environmental conditions..........
8. DYNAMIC POSITIONING SYSTEM (including the moto-generators assembly,
thrusters and propellers)...............................................
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- Schematic diagram of the dynamic positioning system...............
- To submit the inspection and tests procedures to be carried out
at every new location.
- To submit the tests and inspections procedures to be carried out
at the end of each contract year..................................
9. DRILL STRINGS AND ACCESSORIES...........................................
- Inspection report on all equipment of the drill and completion
strings, subs and accessories (used equipment)....................
- Purchase voucher of the drill and completion strings, subs and
accessories (for new equipment)...................................
10. FISHING TOOLS AND ACCESSORIES...........................................
- Inspection report on all components of the fishing tools (used
equipment) or purchase vouchers (for new tools)...................
11. SUNDRY SYSTEMS..........................................................
- Winches load test certificate.....................................
- Description of the compressed air system, emphasizing
compressors, layout of lines, valves and interconnection with the
other systems.....................................................
- Preventive Maintenance Plans with their respective timecharts.....
- Ballast and sewer flowchart.......................................
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D to the chartering and service rendering
contracts.........................................................
NOTE: Such equipment must be in places of easy access for survey........
81
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A) RECEIPT TEST......................................................
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D to the chartering and services rendering
contracts.
NOTE: Such equipment must be in places of easy access for survey.
- The following systems, equipment and tools listed below
will be checked, inspected and tested:......................
1) DRILL STRING, COMPONENTS AND ACCESSORIES....................
- The CONTRACTOR will submit recent inspection reports,
according to the specification API RP7G for the whole
drill string and accessories such as, but not limited
to: drill pipes, drill collars, HW, Subs,
stabilizers, reamers, bumper subs, lift-sub, kelly,
slips, elevators, fishing tools, etc., which proves
the good conditions of the string and its
accessories. The information from the reports and
the general conditions of the string and its
accessories will be checked by PETROBRAS by means of
a sampling inspection. In the event of discrepancy
between the data submitted by the CONTRACTOR and
those checked by PETROBRAS, showing an inadequate
condition of the string and its accessories, the
CONTRACTOR will carry out another inspection, for its
own account...........................................
NOTE 1: Any equipment refused by the inspection will be
immediately repaired or replaced by the CONTRACTOR,
for its own account...................................
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NOTE 2: For the string, components and new accessories, no
inspection report will be required, documents proving
that such equipment is new will be sufficient.........
NOTE:3 The CONTRACTOR's equipment will be stored and
arranged so as to facilitate the inspection by
sampling to be carried out by PETROBRAS...............
- The same procedure will be adopted for the telescopic
joints and flexible joints............................
2) EXTRACTOR OF SOLIDS.........................................
The following will be examined:.............................
- sieves,...............................................
- dessander,............................................
- degasser-test suction and discharge...................
- centrifuge (if any)...................................
The operation and work pressure, as well as the existence
of manometers, will be checked..............................
3) MUD TANKS AND VALVES........................................
Waterproofness, working of the agitators, mixture funnel
and depth gun, besides the existence of fixed marks to
control the tanks volume will be checked....................
4) CENTRIFUGAL PUMPS...........................................
The following will be checked:..............................
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- working, vibration and noises;........................
- Packing (leaks);......................................
- Work pressures........................................
NOTE: Items 3 and 4 will be tested with sea water................
5) MUD LABORATORY AND TEST EQUIPMENT...........................
The existence on board and the adequacy to the requirements
described in Attachments B and C to this CONTRACT will be
checked.....................................................
6) DRILLING DERRICK............................................
Maintenance conditions (corrosion), fastening system and
the conditions of the traveling block rails will be
examined....................................................
7) CROWN BLOCK.................................................
The pulleys will be examined as to the profile wear,
alignment, clearance, buckling of the axles, lubrication,
etc.........................................................
8) MUD PUMPS...................................................
The following will be carried out:..........................
- observation of working, vibrations, noises;...........
- pressure and maximum work flows tests for the liner
user;.................................................
- safety valve working test;............................
- checking of the suction and discharge pulsation
dampeners;............................................
- watertightness tests with nominal pressure of the mud
pumps and of all manifold valves;.....................
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- watertightness tests with nominal pressure of all
manifold values of the stand pipe manifold and of the
kelly hose;...........................................
- random disassembling of the suction for visual
inspection of the piston, sleeve, packing, valve and
seat..................................................
9) SWIVEL......................................................
The mandril, gooseneck, body, etc., will be checked and
nominal pressure test with rotation will be performed.......
10) MOTION COMPENSATOR..........................................
The piston alignment, lock bar, alignment in the rail,
general conditions, leaks and chains will be checked........
11) RISER AND GUIDE LINE TENSIONERS.............................
The general conditions, leaks, pulleys and cables will be
inspected...................................................
12) RISER RECOIL SYSTEM/HANG OFF SYSTEM/FILL-UP VALVE (IF ANY)..
The systems' operation will be checked.
13) HIGH COMPRESSORS AND AIR RESERVOIRS.........................
The general conditions, leaks, lines and system yield will
be checked..................................................
14) TOP DRIVE...................................................
Working tests (connection and disconnection of one or more
sections of the DP's) will be carried out and the general
conditions will be inspected................................
15) KELLY SPINNER...............................................
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The general conditions, specially the rollers' wear, and
working will be checked, and connection and disconnection
operation of one or more DP's will be carried out...........
16) HOOK........................................................
The general conditions and the locking system will be
checked.....................................................
17) TRAVELING BLOCK.............................................
The pulleys wear, axles alignment, lubrication system,
retraction system, etc., will be inspected..................
18) DRAWWORKS...................................................
- The operation of the mechanical break system (brake
bands), electromagnetic (distance between irons,
voltage level and SCR feeder conditions), cooling
system and clutches will be checked...................
- The operation of the cat-heads and height limitator
with the assembly/ disassembly of one or more command
sections, will be checked.............................
19) ROTARY TABLE................................................
The operation in high and low, brake system, tachometer and
lubrication ................................................
20) TRIP TANK...................................................
Capacity, installation site, sensitivity of the level
indicator system, visualization condition and supply system
will be inspected...........................................
21) HYDRAULIC TONGS AND PNEUMATIC SPIDER FOR CASING AND
PNEUMATIC TONGS FOR DRILL PIPES.............................
Operation tests will be made and maintenance conditions
will be checked.............................................
86
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22) SAND-LINE OR WIRE-LINE SYSTEM...............................
- Operation of the clutches and brake will be tested by
lowering the photoclinometer inside the drill string
coinciding with the photoclinometer overshot test
(TOTCO) will be tested. Test to be made on location
before the beginning of the operations................
- The existence of an alignment guide for the sand-line
cable in the drum will be checked.....................
23) CHOKE MANIFOLD..............................................
All valves with low pressure (300 psi) and in high pressure
(system's work pressure). Manometers, hydraulic choke
operation, manual choke, remote control panel, etc., will
be tested...................................................
24) UPPER AND LOWER KELLY COCK, INSIDE BOP AND SAFETY VALVE
- Drivers will be tested and work pressure tests will
be made...............................................
- The end connections of each element will be checked
and tested with work pressure. The CONTRACTOR should
have end seal plugs adequate for the test.............
25) KILL AND CHOKE LINE HOSES...................................
The end connections will be checked and tested with the
system's work pressure. The CONTRACTOR should have end
seal plugs adequate for the test............................
26) DRILL INSTRUMENTATION SYSTEM................................
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The following will be tested:...............................
- geolograph;...........................................
- rotary table tachometer;..............................
- manometers;...........................................
- stroke counter;.......................................
- level control in the mud tanks;.......................
- torque indicator......................................
27) FLARE PIPE AND BOOMS........................................
Their existence on board will be checked, analyzing the
maintenance conditions of the lines by means of
inspections, and the facilities for installation of the
production test equipment system............................
28) BOP SYSTEM..................................................
The following will be carried out:..........................
- pressure tests of the slide valves with low pressure
and high pressure, compatible with the system.........
- pressure tests of the annulars with low pressure and
high pressure, compatible with the system.............
- complete function test in both POD's, through all
panels................................................
- choke and kill valves tested with low pressure and
high pressure, compatible with the system.............
- working of the shear ram valve will be checked with
opening for examination of the blades conditions......
88
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- the opening and closing of all ram, annular and kill
and choke valves chambers will be tested...............
- the hydraulic driving unit will be checked as to:
fluid used, fluid low level alarm, low air pressure
and low accumulators pressure, maintenance
conditions, leaks and mixing systems..................
- the volumetric capacity of accumulators and the capacity
of electric and pneumatic pumps of the hydraulic Unit
will be tested.
- the locking system of the ram valve(s) will be tested.
- the SPM valves conditions will be checked by opening and
inspecting one of them, chosen at random..........
- the locking/unlocking system of the H-4 hydraulic
connectors will be tested.............................
- the surface and bottom accumulators' pre-charge will
be checked............................................
- The operation of the following systems will be tested:
o Driving back-up.................................
o emergency recovery..............................
o handling........................................
29) TRAVELING TONGS, EZY-TORQ, TORQUE SENSOR, SLIPS, ETC........
One or more sections of the drill collars and drill pipes
will be assembled/disassembled to check the working of such
equipment. The general maintenance conditions, chuck jaws
and cables will be checked..................................
89
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30) BULK TRANSFER SYSTEM........................................
The following will be carried out:..........................
- the operation of the compressor will be checked, and
noise, oil and air leaks, and maintenance state,
filters and dehumidifier will be inspected............
- operation and watertightness of valves, lines and silos
will be checked, looking for possible clogging..
- transfer of cement from 1 silo to the daily silo (if
any) and from this to the surge-tank will be made.....
31) EMERGENCY ENERGY GENERATION SYSTEM..........................
- a black-out in the energy system generation system
will be simulated to see if the emergency generator
is automatically turned on............................
32) MAIN MOTOR GENERATOR ASSEMBLY...............................
The following will be carried out:
- vibration, noises, insulation, leaks, maintenance,
etc., will be checked.................................
- generators input and output in the bus bar,
synchronism and load divisions will be tested.........
- load and voltage and frequency regulation will be
tested................................................
33) DESSALTER...................................................
Operation and production capacity will be checked...........
34) CAT-LINES CRANES............................................
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The following will be carried out:
- operation of the winches and maintenance of the
cabled will be checked................................
- the elevation and rotation system, the operation with
flying boom and pulley block and the operation of the
boom height pawl will be checked......................
- the report of the last inspection carried out by the
UNIT's classification society in the winches will be
examined..............................................
35) DEJECTA TREATMENT UNIT......................................
Its operation will be inspected.............................
36) TELECOMMUNICATION SYSTEM....................................
Operational tests will be made in all radio equipment
existing on board, including radio-beacon...................
37) OVERHEAD TRAVELING CRANES...................................
Their operation, and the maintenance conditions of cables
and sliders will be examined................................
38) DC/SCR MOTORS...............................................
The maintenance conditions and insulation, as well as the
collectors and brushes will be examined.....................
- SCR functional test...................................
39) DIVERTER....................................................
The following will be tested:...............................
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- flow line wing valves;................................
- diverters and insert packer lock;.....................
- the control panel will be checked.....................
40) SAFETY EQUIPMENT............................................
SALVAGE.....................................................
Fireproof rigid vessels (capsules, whalers):................
- lowering, motor, fuels, sprinklers, start;............
- rations, garnishing, hatches, cleaning, fire
extinguisher, signaling equipment.....................
Inflatable rafts:...........................................
- quantity, capacity, location, height in relation to
the sea;..............................................
- validity of the last inspection, means of access to
the sea;..............................................
- conditions of the cocoon..............................
Jackets:....................................................
- quantity (sufficiency), location, protection, and
maintenance...........................................
Life-buoys:.................................................
- quantity (sufficiency), location, heaving-lines,
lanterns, smudge pots.................................
Escape routes:..............................................
- vertical and horizontal signaling (indicative plates);
- clearing, lighting(emergency).........................
WATER SUPPLY SYSTEM FOR FIRE FIGHTING.......................
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Fire ring:..................................................
- water system for the platform;........................
- sprinklers system;....................................
- painting, corrosion, signaling, visual conditions;....
- valves, hydrants, guns................................
Fire pumps:.................................................
- operation;............................................
- motor, fuel, start, panel, tests......................
FIRE FIGHTING FIXED SYSTEMS.................................
- Foam system: chambers, tanks, guns, hydrants and
carrier liquid;.......................................
- Cylinders; conditions, reloading, retesting (CO2 or
HALON, if any);.......................................
- Lines and diffusers: general conditions..............
- Automatic: feeding, panels, batteries, detectors,
tests.................................................
- Manual: commands, interconnections, tests............
- Alarms: interconnections.............................
FIRE EXTINGUISHERS
- water, carbon dioxide, chemical powder (portable and
carts);...............................................
- distribution, location, general conditions;...........
- revision, recharge, retest, control, meters,
replacement...........................................
FIRE POSTS..................................................
- hose, keys, sprinkler;................................
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- fiber boxes, general conditions, post identification;.
- visual signaling: sufficiency and general conditions.
EMERGENCY EQUIPMENT.........................................
- autonomous breathing apparatuses, reserve bottles,
breathable air fixed system, fire proximity clothing,
flashlight, ax, safety belt;..........................
- distribution, location, general conditions,
inventory, maintenance and replacement................
COMMUNICATIONS AND ALARMS...................................
- telephone (internal, external): Operating capacity;..
- radiophony: VHF. Operating capacity;................
- portable transceptors: quantity; distribution,
intrinsic safety;.....................................
- intercom: quantity, distribution, and horns
audibility, interconnection with the platform, coding
of sound alarm tones, amplifiers;.....................
- visual signaling: sufficiency, general conditions;...
- fire alarm, glass breaking type: batteries, bells,
tests.................................................
EMERGENCY LIGHTING..........................................
- charger, batteries and lanterns.......................
HELIDECK....................................................
- protection: guns, fire extinguishers, salvage
equipment;............................................
- painting, protection screen, net, landing lights,
safety warnings;......................................
- guest welcoming practices.............................
LOAD LIFTING................................................
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- winches: general conditions, separation, signaling,
maintenance;..........................................
- manual and electric tackles: general conditions,
operation, signalling, maintenance;...................
- material movement and storage areas...................
TRAINING....................................................
- abandonment, fire fighting, first aid and brigade.....
MANUALS AND PLANS...........................................
- emergency; safety;....................................
- disclosure, knowledge;................................
- distribution, control, updating;......................
- tasks schedules for emergency and abandonment
situations, including in Portuguese...................
ORDER AND CLEANLINESS.......................................
- installation's general aspect;........................
- particularly alarming places..........................
SMOKE, HEAT AND GAS DETECTION SYSTEM........................
- test of hydrocarbons detection sensors................
BALLAST AND SEWER SYSTEM....................................
- functional test.......................................
41) ANCHORING SYSTEM............................................
42) DYNAMIC POSITIONING SYSTEM..................................
43) PROPULSION SYSTEM...........................................
95
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B) LOCATION MOVING TEST..............................................
To be defined between the CONTRACTOR and PETROBRAS................
C) BEGINNING OF CONTRACT YEAR TEST...................................
To be defined between the CONTRACTOR and PETROBRAS................
96
<PAGE>
CONTRACT NO. 101.2.155.97-9...................................................
ATTACHMENT "IX"
PROCEDURES IN THE EVENT OF FATAL ACCIDENTS
1. If, during the period of validity of the CONTRACT, a fatal accident
occurs with a CONTRACTOR's employee, the CONTRACTOR should:.............
1.1. Notify the Inspection immediately, for the proper measures;.............
1.2. Take measures so that the employee's relatives be notified with the
utmost urgency on the event, giving them the social support due;........
1.3 Formally establish an Investigation Commission, within 48 hours after
the accident, in order to, in the maximum time limit of 15 days,
identify the causes and recommend the measures deemed necessary to
prevent similar accidents...............................................
2. The report should contain, at least, the following information
regarding the accident:.................................................
- description;......................................................
- exact location;...................................................
- data regarding the injured persons;...............................
- basic and immediate causes;.......................................
- measures to be taken in order to prevent its repetition...........
3. The CONTRACTOR should guarantee the Commission enough authority and
autonomy to carry out the investigations without any restrictions.......
4. A PETROBRAS' employee should participate in the Commission, appointed
by the authority in charge of the operational office....................
97
<PAGE>
5. After conclusion of the Commission's work, it will also behoove the
CONTRACTOR, at the Inspection's request, to disclose the results of the
report, so as to convey the experience from the accident to other
contractor companies....................................................
(All pages of the document were initialized.).................................
. - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - .
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on the 5th of
February, 1998, in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
_________________________
Marcia Barbosa Serra
Sworn Public Translator
98
EXHIBIT 10.1(A)
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt 301 - Leblon - 22450-190
ISS: 1261003-00 - CIC: 606442227-00
Tel.: 274-3844
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 2661/98
(On paper with letter of PETROBRAS.)./.
RIDER No. 01 FOR THE ASSIGNMENT OF RIGHTS
AND OBLIGATIONS ARISING FROM CONTRACT
101.2.155.97-9, ENTERED INTO BETWEEN
MARITIMA PETROLEO E ENGENHARIA LTDA.,
SUCCESSOR OF MARITIMA NAVEGACAO E
ENGENHARIA LTDA., and PETRODRILL SEVEN
LTD., WITH THE CONSENT OF PETROLEO
BRASILEIRO S.A.-PETROBRAS./.
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, with head office
at Av. Republica do Chile 65, in the City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers
Registry of the Ministry of Finance under No. 33.000.167/0001 01, henceforth
called PETROBRAS, represented herein by the Executive Superintendent of
Exploration and Production, Luiz Eduardo G. Carneiro, and the Company MARITIMA
PETROLEO E ENGENHARIA LTDA., successor of MARITIMA NAVEGACAO E ENGENHARIA LTDA.,
with head office at Av. Almirante Barroso, 52, Group 3400, City of Rio de
Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers
Registry of the Ministry of Finance under No. 46.828.596/0001/13, henceforth
called the ASSIGNOR, represented herein by its President, German Efromovich, and
the company PETRODRILL SEVEN LTD., with head office in Omar Hodge Building,
Wickhams Cay, Road Town, Tortola, Ilhas Virgens Britanicas, henceforth called
the ASSIGNEE, represented herein by its Director, German Efromovich, have agreed
to add a rider to contract 101.2.155.97-9 (AMETHYST 7), according to the
following clauses and conditions:/.
<PAGE>
FIRST CLAUSE OBJECT./.
1. The present Rider has as its object:/.
1.1.1 The total assignment, as of the date of the signature of this Rider,
henceforth called the ASSIGNMENT DATE, by the ASSIGNOR to the ASSIGNEE
of the rights and obligations arising from Contract No. 101.2.155.97-9
and its Attachments./.
1.1.2. To change the contract value foreseen in item 5.2 of the Fifth Clause-
PRICES AND VALUE./.
1.1.3. To change the redaction of the Seventh Clause-FORM OF PAYMENT./.
1.1.4. To change the Fourth Clause-PETROBRAS OBLIGATIONS, including item
4.12./.
SECOND CLAUSE-RESPONSIBILITY./.
2.1. The ASSIGNEE, as of the ASSIGNMENT DATE, becomes the CONTRACTOR, being
liable, before PETROBRAS for the fulfillment of all contract
obligations undertaken by the ASSIGNOR, and will also have all rights
arising from the Contract./.
2.2. The ASSIGNEE is liable before PETROBRAS for the fulfillment of all
contract obligations undertaken by the ASSIGNOR in the Contract, as
well as for eventual losses and damages arising from its acts or
omissions./.
2.3. The ASSIGNOR will be jointly liable with the ASSIGNEE for the complete
fulfillment of all obligations arising from the Contract./.
2.4. The ASSIGNOR, as of the ASSIGNMENT DATE, will have no right arising
from the Contract, giving PETROBRAS, full and complete acquittance for
any and all contract value./.
THIRD CLAUSE-PRICES AND VALUE./.
<PAGE>
3.1. The redaction of item 5.2 and its
subitems becomes:/.
"5.2. The total estimated value of the present Contract becomes US$
317,145,762.45 (three hundred and seventeen million, one
hundred and forty-five thousand, seven hundred and sixty-two
dollars and forty-five cents), equivalent to R$
348,035,759.91 (three hundred
forty-eight million, thirty-five thousand, seven hundred and
fifty-nine reais and ninety-one cents), converted at the
exchange rate of R$ 1,0974/US$1,00, referring to the
following charges:/.
3.2. Item 5.5 is included with the following
redaction:/.
"5.5. Besides the value mentioned in
5.2, the appropriation of
US$100,000.00 is foreseen for the
payment of eventual
reimbursements"./.
FOURTH CLAUSE-PETROBRAS' OBLIGATIONS./.
4.1. Item 4.12 is included, with the following
redaction:/.
"4.12. To adopt the measures necessary for the request to register
this Contract at the Central Bank of Brazil, immediately
after the receipt of the legal documents, the supply of which
is the CONTRACTOR's responsibility.".
FIFTH CLAUSE-FORM OF PAYMENT./.
5.1. The redaction of the Seventh Clause is changed to:/.
"7.1 The payments of the rates foreseen in Attachment II and
Attachment III shall be made by PETROBRAS to the CONTRACTOR in
American Dollars, by bank remittance to a bank account abroad it
indicates, after the present Contract is registered at the Central
Bank of Brazil, 30 (thirty) days as of the date of the end of the
measuring period considered, provided the CONTRACTOR has fulfilled the
time limits set forth in subitem 6.3.1., for the submittal of the
collection documents at the docket of the Financial Department
indicated by PETROBRAS, with exception of the provision appearing in
subitem 7.2.4./.
<PAGE>
7.1.1. For the reimbursable expenses foreseen in this Contract, the
instructions contained in item 7.4 and their developments should be
complied with, and the payments will be made in the currency of origin
of said expenses, within 30 (thirty) days after the submittal of the
collection documents at the docket of the Financial Department
indicated by PETROBRAS./.
7.1.2. Collection documents comprise any type of billing, such as:
Invoice, Invoice with separate Bill of Sale, Service Invoice, besides
others foreseen in fiscal laws./.
7.1.3. For payment purposes, the CONTRACTOR shall supply the Contract
Manager, after its signature, the following information:/.
a) Bank name and number;/.
b) Bank branch name and code;/.
c) Bank branch address;/.
d) CONTRACTOR's current account number./
7.1.3.1. Whenever a billing is submitted with information
different from those indicated in subitem 7.1.3, these changes will
only be considered if accompanied by a formal communication by the
CONTRACTOR and shall prevail only for the specific purpose of such
payment.
7.2. The collection documents shall be issued without erasures,
complying with the pertinent laws in force, for submittal at the Financial
Department indicated in item 7.1 of this Clause, in its original copy,
accompanied by 1 (one) copy of the respective Measurement Bulletin (MB), and/or
Reimbursement Document (RD), as the case may be, duly approved by this
contract's Manager, containing, obligatorily, but not exclusively, the following
information:/.
a) Number of the collection document;/.
b) Place and date of its issuing;/.
c) Brief description of the object of this Contract;/.
d) Indication of the number and date of this Contract;/.
e) Indication of the month/year or period which the collection
document refers to;/.
<PAGE>
f) Number and date of the Measurement Bulletin (MB) and/or
Reimbursement Document (RD)./.
g) Place of the rendering and/or execution of the chartering.
In the event the chartering has been rendered in different
locations, its value should be broken down by locations of
performance and the period in which it was rendered at each
of the locations shall be indicated;/.
h) Gross amount of the collection document, by numbers and in
writing;/.
i) Place for payment purpose, as provided for in subitem
7.1.3 of this Clause;/.
j) Signature by the CONTRACTOR'S representative, accredited
before PETROBRAS, above his/her name and position
typewritten or above the CONTRACTOR'S company stamp
identifying him/her;/.
l) In case of Rider or Letter of Agreement to the Contract
which implies in payments, mention its number and date of
signature, besides the data above./.
7.2.1. The omission of any of the above mentioned data will cause,
within 5 (five) working days, the return of the collection documents
by PETROBRAS' Financial Department./.
7.2.2. If the above situation occurs and in case the collection
document shows errors, it will be returned to the CONTRACTOR, and the
time limits for the payment foreseen in item 7.1 and subitem 7.1.1
shall be added to the period that becomes necessary for the
explanation and re-submittal of the collection document./.
7.2.2.1. The above mentioned condition also applies in case the
collection document is submitted in another department, and not as
indicated in item 7.1./.
7.2.3. Independent of the data above, the invoices in foreign
currency shall be also submitted in the Portuguese language , or if
issued abroad, they shall be notarizes at the Brazilian Consulate,
under which jurisdiction the CONTRACTOR is located, and translated by
a sworn public translator./.
7.2.4. The CONTRACTOR shall, obligatorily, submit monthly, together with the
invoice, the payroll of the CONTRACTOR's Brazilian crew who are involved in the
chartering object of this Contract, as well as with a photocopy of the GRPS
(Social Security Payment Slip), duly settled and authenticated, with the data
identifying the entity to whom the service was rendered being obligatorily
filled out, informing in field 8 of the GRPS (other information) PETROBRAS'
name and CGC, number, date, and amount of the invoice or bill of sale referring
to the chartering rendered in the month, subitems 8.9, 10.1.15, and 10.1.16
being also complied with./.
<PAGE>
7.3. The collection documents referring to reimbursements shall also be
issued, itemizing, individually, the reimbursable expenses, their total
amount, such itemization also to appear in the respective Reimbursement
Document (RD)./.
7.3.1. The original vouchers of the reimbursable expenses due to the
CONTRACTOR, by force of the contract instrument, shall be previously
submitted to the Contract Manager, for checking, besides being duly
paid for by the respective supplier or service rendered, when such is
the case./.
7.3.1.1. In the event the original vouchers cannot remain in PETROBRAS'
possession, copies thereof may be submitted, which shall be checked by the
Contract Manager, and the following text is to be placed on each original
document: "COPY SUBMITTED FOR REIMBURSEMENT ON (specify date)", followed by
the signature and identification by name, position and registry number, and the
original are to be returned to the CONTRACTOR.
In the copies that are in PETROBRAS' possession, the following text will be
place on each document: "CHECKED WITH THE ORIGINAL ON (specify the data)" and
the Contract Manager will sign, identifying the signature by name, position
and registry number./.
7.3.1.2. The receipt, duly made formal by PETROBRAS, of any reimbursable
expense voucher, does not represent the recognition of debt, nor
the proof that the expense has been made./.
7.3.2. The collection of reimbursable expenses can only be made by means
of issuing and submittal, by the CONTRACTOR, of the Bill of Sale
for the equipment and accessories, with the respective
Reimbursement Document (RD) duly attached thereto, and previously
approved by the Contract Manager./.
7.3.2.1. The submittal of the collection document mentioned in subitem
7.3.2, shall comply with the provisions appearing in items 7.1. and
7.2 of this Clause./.
7.3.2.2. The vouchers shall be legal documents to explain doubts referring
to the collections, which shall be settled, as a last resort, by
PETROBRAS' Disbursement Office, who will be in possession of the
vouchers approved by PETROBRAS to prepare the payment process./.
7.4. Eventual payments made for more or for less by PETROBRAS shall be
compensated as soon as they are detected, by issuing the Debit/
Credit Notes, as the case may be./.
7.5. The amounts corresponding to reimbursable expenses, without budget
allotment foreseen in this contract instrument, do not burden this contract's
estimated total, but should, however, be foreseen in the Budget Programs of the
Executive Superintendence of Exploration and Production (E&P)./.
<PAGE>
7.6. The collection documents submitted by the CONTRACTOR, as well
as the final collection document, shall be paid with the
deduction of amounts that, at any title, under the conditions
set forth in the contract, or others specially agreed upon,
that are due to PETROBRAS./.
7.7. The CONTRACTOR agrees that, at PETROBRAS exclusive option,
the present Contract can be paid by means of third party
financing, provided the time limits, currency amounts, and
place of payment, and the CONTRACTOR's rights foreseen in
this Contract, are complied with"./.
SIXTH CLAUSE-RESPONSIBILITY./.
6.1 The present rider brinds the parties as of the date of its signature and
enters in force as of the ASSIGNMENT DATE./.
SEVENTH CLAUSE-RATIFICATION./.
7.1. PETROBRAS, the ASSIGNOR and the ASSIGNEE ratify the terms and
conditions of the Contract that are not incompatible with the
provisions of this instrument./.
And being thus agreed, the parties sign the present Rider in 4 (four)
copies of the same tenor and fashion, together with the witnesses below./.
Rio de Janeiro, July 10, 1998./.
(Signed:) (Illegible)-Luiz Eduardo G. Carneiro./.
Executive Superintendent of Exploration and Production South-Southeast./.
PETROLEO BRASILEIRO S.A./.
(Signed:) (Illegible) - German Efromovich./.
President - MARITIMA PETROLEO E ENGENHARIA LTDA (ASSIGNOR)./.
(Signed:) (Illegible) - German Efromovich./.
Director - PETRODRILL SEVEN LTD. (ASSIGNEE)./.
WITNESSES:/.
(Signed:) Victor Archer (Rubber stamp:) Victor Archer - Administrator-Registry
012730-0./.
(Signed:) (Illegible)./.
(The rubber stamp and the initials of Victor Archer appeared on the first
page of the document.)/.
(An initial appeared on all pages of the documents.)/.
.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-
(.-THESE BEING) the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on November 20, 1998
in this City of Rio de Janeiro, Federative Republic of Brazil.
------------------------
/s/ MARCIA BARBOSA SERRA
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.2
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
SWORN PUBLIC TRANSLATOR AND COMMERCIAL INTERPRETER
Rua Aperana, 38 apt
301 - Leblon - 22450 - 190
ISS: 1261003-00- CIC: 606442227-00
Tel: 274-3844
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 4017/98
(Xerox copy submitted for translation.).......................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)...........
CONTRACT No. 101.0.156.97-1...................................................
SERVICES RENDERING CONTRACT
SERVICES RENDERING CONTRACT ENTERED INTO BETWEEN PETROLEO
BRASILEIRO S.A. - PETROBRAS AND THE COMPANY MARITIMA NAV. E ENG.
LTDA............................................................
PETROLEO BRASILEIRO S.A. - a mixed economy company, organized and existing
under Law No. 2.004, dated 10/03/53, with head office at Av. Republica do Chile,
65, City of Rio de Janeiro, State of Rio de Janeiro, Federative Republic of
Brazil, enrolled in the General Taxpayers' Registry of the Ministry of Finance
under No 33.000.167/0001-01, henceforth called PETROBRAS, represented herein by
the Executive Superintendent of Exploration and Production South-Southeast LUIZ
EDUARDO G. CARNEIRO, and the Company MARITIMA NAVEGACAO E
<PAGE>
ENGENHARIA LTDA., with head office at Avenida Almirante Barroso, no 42, 34th
floor, City of Rio de Janeiro, State of Rio de Janeiro, Federative Republic of
Brazil, enrolled in the General Taxpayers' Registry of the Ministry of Finance
under No. 46.828.596/0001-13, henceforth called the CONTRACTOR, represented
herein by its President, Mr. GERMAN EFROMOVICH, have agreed upon the present
contract to render services, with the use of the Dynamic Positioning Floating
Unit AMETHYST 7 and its accessories, described in Attachment I, henceforth
called the Unit, according to the authorization of PETROBRAS' Executive Board
(Minutes No. 4.129, Item No. 48, dated 12.19.97) the parties being bound to the
terms of the Invitation to Bid No. 101.0.015.97-2 and subjected to the following
Clauses and Conditions:.........................................................
(End of the Qualification)......................................................
2
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FIRST CLAUSE - OBJECT
1.1. The object of the present contract is the rendering, by the CONTRACTOR,
of the services of drilling and/or evaluation and/or completion and/or
workover of oil and/or gas (vertical, directional and horizontal)
wells, in the Brazilian continental shelf, down to a maximum depth of
5,000 (five thousand) meters, in a water depth down to 1,200 (twelve
hundred) meters by using the Unit......................................
1.1.1 For the fulfillment of the present contract, the CONTRACTOR is to
maintain its base of operations in the City of Macae-RJ................
1.2. The services object of the present contract are contained in the
Continental Shelf Activities and Disbursement and Cost Plans, under the
following codes: B 12000 - Boring - Production Development. A 22000 -
Boring - Exploratory Drilling B 13000 - Completion and Intervention for
Evaluation - Production Development. A 24000 - Intervention for
Evaluation - Exploratory Drilling......................................
(End of Clause)................................................................
3
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SECOND CLAUSE - PERIOD OF VALIDITY AND DURATION.................................
2.1. PERIOD OF VALIDITY - The present contract binds the parties as of its
signature..............................................................
2.2. DURATION - The present contract will have a duration of 2,190
(twenty-one hundred and ninety) days, and can be terminated, after
1,825 (eighteen hundred and twenty-five) days have elapsed, through a
notice from PETROBRAS, with at least 45 (forty-five) days in advance...
2.2.1. BEGINNING OF THE CONTRACT - The beginning of the contract will occur
when the Unit is released by PETROBRAS, through a written notice, to
begin the operations, after the general equipment testing foreseen in
item 3.1 is carried out................................................
2.2.2. AUTOMATIC EXTENSION - If at the end of the duration mentioned in 2.2,
some operation is still being performed in a well, the duration of the
present contract will be automatically extended, until the completion
of the works in said well, considering as the final limit the Unit's
arrival at the port or sheltered waters chosen by common agreement
between the parties and, also, in case there are still PETROBRAS'
equipment aboard the Unit, the completion of the withdrawal of such
equipment will be considered as the final limit........................
2.2.3. This contract may be extended for successive period, through a prior
agreement between the parties, by means of an Addendum, the other
contract conditions being complied with, and limited to a maximum
contract period of 2,190 (twenty-one hundred and ninety) days..........
2.3. ARRIVAL IN BRAZIL - The Unit should arrive at the port or in sheltered
waters, in Macae-RJ. The beginning of operations should occur up to the
date of 12.29.99, the provision set forth in item 9.1 of this contract
being complied with....................................................
2.3.1. At the port or in sheltered waters mentioned in 2.3, the customs and
helideck inspections in the Unit will be carried out, as well as the
loading /unloading of the CONTRACTOR's and
4
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PETROBRAS' materials, and also the general equipment testing will
begin as foreseen in item 3.1 of this contract.........................
(End of Clause)................................................................
5
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THIRD CLAUSE - CONTRACTOR'S OBLIGATIONS
3.1. Before the beginning of the contract, the CONTRACTOR will arrange for a
general test of the operating conditions of all of the Unit's
equipment, as provided for in Attachment VIII, in the presence of
PETROBRAS' Inspection. The occurrences found during the performance of
the tests will be duly recorded in the Daily Drilling Certificate (ADP)
signed by PETROBRAS ' Inspection and by the CONTRACTOR's
representative. The CONTRACTOR will be released to begin operations
after proving the good operating conditions of the equipment which
comprise the Unit's main systems, such as, energy generation and
distribution system, anchoring system, industrial safety, liquid and
bulk storage, fluid circulation and processing, safety and wellhead,
column elevation, rotation and handling, columns, instrumentation,
formation test equipment and communications system.....................
3.1.1. The tests referred to in 3.1 will be made in a period estimated in 3
(three) days, after which the Unit will be released to sail to the
first location, provided there is nothing pending in the Unit's main
systems, as defined in item 3.1........................................
3.1.1.1. In the event the tests last for a period exceeding 3 (three) days, for
reasons ascribed to PETROBRAS, the rate foreseen in Ref 104 (Waiting
Rate) of Attachment II, will be due, applied as of the fourth day of
tests, until the Unit is released. The periods spent with equipment
repair will not be calculated for the purpose of counting such
duration, and also no fee will be due during such periods..............
3.1.2. PETROBRAS may opt for the partial or total performance of the receipt
tests, in sheltered waters, in the deepest water depth set forth in the
contract, or still in the first location...............................
6
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3.2. OPERATION - To render the services object of this contract using the
Unit and the equipment listed in Attachment I, complying with the other
conditions of and Attachments to this contract, according to the
international standards recommended for services of such nature........
3.2.1. SAFETY STANDARDS - The CONTRACTOR will carry out the services in strict
compliance with the international safety standards for work of such
nature, aiming at the protection of personnel, materials and equipment
that belong to it, PETROBRAS and third parties. PETROBRAS' Safety
Rules, which the CONTRACTOR states to know will be particularly
complied with. In the event of conflict between PETROBRAS' standards
and the CONTRACTOR's, the CONTRACTOR's Standards will prevail, unless
PETROBRAS expressly requires to the contrary in each case..............
3.3. SUPPLY OF MATERIALS - To be responsible for the purchase, when
requested by PETROBRAS, in the domestic market, of other materials
needed to render the services object of this contract. The purchase of
the materials mentioned in this item will be submitted to the prior
approval by PETROBRAS which will reimburse them as set forth in item
4.2....................................................................
3.3.1. The materials mentioned in item 3.3 will be delivered by the CONTRACTOR
to PETROBRAS, at the port or airport the latter indicates..............
3.3.2. To submit the expense vouchers in the maximum period of 60 (sixty)
consecutive days after the actual date of the purchase.................
3.4. SERVICES BY THIRD PARTIES - To request, when asked by PETROBRAS, other
specialized services available in Brazil, related to the object of this
contract, behooving the CONTRACTOR all measures for their actual
performance, . including the obtainment of PETROBRAS' prior and express
approval of the costs arising therefrom, which will be reimbursed as
set forth in item 4.2..................................................
7
<PAGE>
3.5. PERSONNEL - To be liable, in its own name, and for its own
responsibility and onus, for all personnel needed for the efficient and
complete performance of the services object of this contract which will
operate on the basis of 24 (twenty-four) hours a day and 7 (seven) days
a week. The list of the minimum personnel to be used by the CONTRACTOR
is basically the one mentioned in Attachment V.........................
3.5.1. The CONTRACTOR guarantees that the personnel mentioned in Attachment V
will allow it to fully carry out the performance of the services object
of this contract, running, as a result, for its own account, all
charges arising from the need to increase the personnel................
3.5.2. The CONTRACTOR will be liable for the maintenance and cost of the
personnel required for the fulfillment of the operational and safety
rules and regulations issued by the proper authorities, including the
compliance with the provisions of the PORTOMARINST No. 1302, dated
06.26.85, and of the Navy Department, Ports and Coasts Authority.......
3.5.3. The technical personnel should possess proven competence in their
specialization, and the CONTRACTOR is to supply PETROBRAS with their
respective "curriculum vitae"..........................................
3.5.4. To provide for training and/or recycling of its personnel in the Course
on Basic Safety Notions, held by PETROBRAS, according to the program
and conditions to be agreed upon between the parties...................
3.5.4.1. For the Board Superintendents, for the Persons in Charge and for the
Drillers, a qualification certificate in well control supplied by
PETROBRAS or by a Training Center qualified by IADC or IWCS will be
required...............................................................
8
<PAGE>
3.6. To be liable for all charges regarding the contracting of its personnel
and any additionals that are or may become due, as well as for the
withholding and payment of social, labor and social security
contributions set down by the Law, and other charges that may become
due at any title, being for all purposes, the sole employer............
3.6.1. Whenever requested by PETROBRAS, the CONTRACTOR will submit the
documents regarding the proof of payment of its labor obligations,
including social security contributions (CND - Negative Debt
Certificate) and FGTS deposits, regarding its employees................
3.6.2. To make sure that its personnel, who work in activities or operations
that subject them to noxious agents, included in the list referred to
in Article 58 of Law No. 8.213/91, are not retired in this special
condition, according to the restriction expressly contained in Article
3rd of Law No. 9.032 dated 04.18.95....................................
3.7. To bear all measures and expenses with displacement of personnel, such
as, but not limited to, transportation from abroad to the port or
airport of Macae-RJ, as indicated by PETROBRAS, and the return to the
place of origin, and any and all expenses with personnel travel and
stay in Brazil, insurances, medical and hospital expenses, meals,
passports, as well as for extra expenses caused by delay or canceling
of flights, be it due to bad weather or to the non-availability of
planes.................................................................
3.8. To promote, without charges to PETROBRAS, the replacement and immediate
withdrawal of any of its employees that may be required by PETROBRAS at
any time, due to bad behavior, technical deficiency, inefficiency or
health conditions......................................................
3.9. Whenever requested, to train PETROBRAS' personnel in the services
object of the present contract.........................................
9
<PAGE>
3.10. All correspondence between the CONTRACTOR and PETROBRAS will be written
and forwarded in Portuguese............................................
3.11. To provide, in the Unit chartered for the performance of the services
object of this contract, lodging, food, mess room services, rendered by
a Brazilian company, for PETROBRAS' personnel and those of third
parties at PETROBRAS' service, up to the maximum of 26 (twenty-six)
persons, being agreed that the CONTRACTOR will freely supply 900 (nine
hundred) meals per month. The meals exceeding this number will be
paid by PETROBRAS, based on the rate set forth in the Unit Price
Spreadsheet appearing in Attachment III................................
3.11.1. The quality of the mess room services and the food supply are the
CONTRACTOR's responsibility, who will maintain a permanent supervision
by a male nurse on board and eventually by a qualified nutritionist.
PETROBRAS may require that the CONTRACTOR takes measures in the event
such services show a loss in quality standards.........................
3.12. INSURANCES - To provide, for its account, the contracting of the
insurances necessary to fulfill this contract and the Brazilian laws,
intended to cover its assets and its personnel, even when they are in
transportation under PETROBRAS' responsibility, as well as the Civil
Liability insurance for damages and losses caused to third parties,
which will not imply in limiting the CONTRACTOR's liability, and it
should also include PETROBRAS as a third party for the purposes of such
coverage...............................................................
3.12.1. The minimum mandatory value of the civil liability insurance is of
US$1,000.000.00 (one million dollars), per event, during the period of
validity of this contract and of its eventual extension, which amount
is to be converted into Brazilian currency on the date the present
contract is signed. MARITIMA NAVEGACAO E ENGENHARIA LTDA. is to appear
as co-insured in that policy...........................................
10
<PAGE>
3.13. The franchises which may be established for the insurances mentioned in
item 3.12, as well as the onus arising from the insurers' requirements
and/or recommendations will fully run for the CONTRACTOR 's account....
3.13.1. The provision of item 3.13 applies also to the insurances of
transportation made by the CONTRACTOR, regarding the CONTRACTOR's
equipment, tools, and materials to be transported by PETROBRAS, as set
forth in item 4.4......................................................
3.14. To keep PETROBRAS free and safe from any and all indemnity claim for
damages and/or losses of any kind which the CONTRACTOR may have
sustained as a result of this contract, whether or not it has made
adequate and sufficient insurance for such circumstances...............
3.14.1. PETROBRAS will be equally kept free and safe from any and all indemnity
claim for damages and/or losses of any kind which the CONTRACTOR may
have caused to third parties for its duly proven grossly negligent
action or omission, arising from this contract, whether or not it has
made adequate and sufficient insurance for such circumstances..........
3.14.2. In return, the CONTRACTOR will be kept free and safe from any and all
indemnity claim for damages and/or losses of any kind, which PETROBRAS
may have sustained from third parties, or has caused to third parties
by its duly proven grossly negligent action or omission, as a result of
this contract, whether or not it has made adequate and sufficient
insurance for such circumstances.......................................
3.15. To undertake, up to the limit equivalent to US$500,000.00 (five hundred
thousand United States dollars) per event, any and all liability for
death or damages to persons, provided they are caused by duly proven
grossly negligent action or omission on its part and/or its employees
and/or personnel.......................................................
11
<PAGE>
3.16. The CONTRACTOR waives for itself and will require from its Insurers
and/or Subcontractors, in any and all insurance made as a result of
this contract, the inclusion, in each policy contracted, the provision
assuring the waiver of any right to subrogation against PETROBRAS......
3.17. To submit to the contract Manager, up to 30 (thirty) consecutive days
after its inception, as foreseen in item 2.2.1, the originals of the
insurance policies made as a result of this contract, containing all
essential data, such as insurers, time limits, period of validity,
amounts insured, and coverage conditions, and with PETROBRAS appearing
as co-insured, except in the civil liability insurance, of which it
will participate as a third party......................................
3.17.1. The policies mentioned in item 3.17 will contain a provision that the
insurances mentioned cannot be amended and/or cancelled without
PETROBRAS' prior authorization.........................................
3.18. LOSSES AND DAMAGES - The CONTRACTOR will be liable for damages to its
own equipment and material, and to those which it and its agents may
cause to PETROBRAS or to third parties, as a result of its duly proven
grossly negligent action or omission, in the following cases:..........
3.18.1. In the event of losses of or damages to equipment and/or materials
belonging to PETROBRAS and/or to third parties, which are aboard the
Unit, or during their moving between the Unit and the support vessels,
the CONTRACTOR's liability will be limited to the replacement or repair
of the equipment so lost or damaged due to the CONTRACTOR's or its
employees' duly proven fault. However, the CONTRACTOR will not be
liable for and will be kept free and safe from in the event of damages
to reservoirs, indirect damages or loss of profit of PETROBRAS, losses
and damages arising from pollution coming from the well, resulting from
kick and/or blow-out...................................................
12
<PAGE>
3.18.2. In case of losses and damages caused to the well, arising from the
events mentioned in subitem 2.1.5 of Attachment II, the CONTRACTOR will
reimburse PETROBRAS the payments it comes to make to third parties
referring to cementing, logging or other services related to the object
of the present contract, as well as to materials (cement, casing, bits,
completion fluid materials). In the event PETROBRAS opts for the
definitive abandonment of the damaged well, the CONTRACTOR will
reimburse the expenses made by PETROBRAS to drill that well............
3.18.3. In the cases mentioned in subitems 3.18.1 and 3.18.2. the limit for the
CONTRACTOR's liability is of US$500,000.00 per event and its
deployments............................................................
3.19. SECRECY - To maintain complete secrecy on the data and information
supplied by PETROBRAS, as well as on all of the results and analyses
arising from the services referring to the present contract............
3.19.1. All data, information and other documents, of any kind, referring to
the fulfillment of this contract, are PETROBRAS' exclusive property....
3.19.2. The CONTRACTOR and its personnel cannot disclose or supply to third
parties any materials or information obtained as a result of this
contract, unless expressly authorized by PETROBRAS.....................
3.19.3. The provision of this item 3.19 is a standing obligation, valid even
after the termination, in any fashion, of the present contract.........
13
<PAGE>
3.20. To be liable for the violations it commits regarding author's right and
the use of materials and/or performance processes protected by
trade-marks and patents, as well as for any claims arising from the bad
use it makes of them, running for its account the payment of any
charges, royalties, fees, commission, indemnities, and, any other
expenses arising from said violation, including the legal ones.........
3.21. SEA OPERATIONS - To render the services object of this contract in
strict compliance with the laws, standards, regulations and
administrative rules, as well as the instructions issued by the
Shipping Office or by other proper authorities, specially those
regarding the spillage of oil and other residues from the Unit into the
sea, being liable, as a result, for any charges arising from the
violation of such laws, standards, regulations, administrative rules
and instructions, the limit established in subitem 3.21.2 being
complied with, and excepting the cases provided for in item 3.20 of
this contract..........................................................
3.21.1. To plan and carry out operations intended to prevent and fight oil or
gas blow outs, fires, or other accidents, complying with the provision
set forth in item 2.4 of the Attachment I to this contract. Although
the CONTRACTOR is considered fully responsible for such operations, it
is obliged to discuss the methods to be adopted with PETROBRAS, so as
to find the best operating solution....................................
3.21.2. With exception of the cases arising from kick, blow out, surging or
formation testing, which the CONTRACTOR will be kept free and safe
from, in the other cases of spillage of petroleum, oil and other
residues in the sea, the CONTRACTOR will be liable up to the limit of
US$500,000.00 (five hundred thousand dollars) per event and its
deployments............................................................
14
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3.22. The storage aboard the Unit, as well as the handling aboard, and
between the Unit and support vessels, of materials, equipment, drilling
or completion fluid additives, chemical additives belonging to
PETROBRAS or to third parties at the service of PETROBRAS, are the
CONTRACTOR's responsibility............................................
3.23. To bear all expenses, including with diesel oil and transportation of
the Unit for dockages, including those arising from act of God or force
majeure, as defined in the Thirteenth Clause of the contract...........
3.24. To maintain a hospital ward in the Unit with at least 2 (two) beds,
provided with equipment and medicine necessary for the prompt attention
to sick and injured persons, as determined by the Shipping Office, such
hospital ward being subjected to periodical inspections by PETROBRAS...
3.25. The CONTRACTOR undertakes to maintain all conditions required in the
bidding stage, during the performance of the services contracted.......
3.26. To maintain an agent accredited and accepted by PETROBRAS in the Unit
or in a place previously designated by PETROBRAS, to represent the
CONTRACTOR in the fulfillment of the contract..........................
3.27. To comply with the requests contained in the Service Authorization(s)
issued by PETROBRAS....................................................
3.28. To allow, after negotiations between the contracting parties, the
provisional installation in the chartered vessel, of complementary
equipment such as, but not limited to: pipes or risers in catenary by
the J-lay method, or similar, submarine manifolds, provided they do not
15
<PAGE>
jeopardize the Vessel's safety and are in accordance with the rules of
the Classification Society.............................................
(End of Clause)................................................................
16
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FOURTH CLAUSE - PETROBRAS' OBLIGATIONS
4.1. To make, monthly, the payments for the services rendered by the
CONTRACTOR due to the present contract, based on Attachment II and
Attachment III and on the conditions set forth in Clauses Sixth:
Readjustment - Seventh: Measurement - and Eighth: Form of Payment, the
other Attachments, Clauses and Conditions of this contract being
complied with..........................................................
4.2. To reimburse, by means of submittal of vouchers, the expenses with
materials and services of third parties, according to items 3.3 and 3.4
of this contract. The reimbursement will be comprised of:..............
a) Amount of the bill issued by the supplying and/or service rendering
company;............................................................
b) Expenses actually made to place the materials in the Unit;..........
c) Cost of the insurance for the materials, if authorized by PETROBRAS.
In the event PETROBRAS does not authorize such insurance, the
CONTRACTOR will not be liable for losses and damages of any kind
that they may sustain until their delivery to PETROBRAS at the port
or airport it indicates.............................................
4.3. OPERATIONS AND LOCATIONS PROGRAM - PETROBRAS will provide the
CONTRACTOR with the Operations Program, in writing and with due
antecedence, and it also will notify on the locations where the
services will be rendered, so that the CONTRACTOR may adopt, in due
time, the measures necessary for their performance.....................
4.4. Transportation:........................................................
4.4.1. PETROBRAS will provide transportation to the Unit of all of the
CONTRACTOR's personnel involved in the rendering of the services, from
the port or airport indicated by PETROBRAS in the beginning of this
contract, and vice-versa. At its exclusive discretion, the
transportation to be provided will be by helicopter or vessel..........
17
<PAGE>
4.4.2. PETROBRAS will provide transportation for the material and equipment,
related to the object of this contract, from the port or airport
designated, to the Unit and vice-versa.................................
4.4.3. In any circumstances foreseen in this item, the granting of insurance
coverage will not be PETROBRAS' competence, and the CONTRACTOR waives
immediately, for itself and for its insurers, any return action against
PETROBRAS or third parties at its service, as a result of the
transportation provided................................................
4.4.4. In the event there is need to program exclusive air transportation, to
survey the Unit, by the Navy and/or Shipping Office, the costs arising
therefrom will be charged to the CONTRACTOR............................
4.4.5. PETROBRAS may provide air or sea transportation for the CONTRACTOR's
materials, industrial or fresh water and fuel before the beginning of
the contract, as defined in item 2.2.1. The costs arising therefrom
will be reimbursed by the CONTRACTOR to PETROBRAS......................
4.4.6. PETROBRAS will provide tugs and support vessels for the Unit, from the
location where the general testing of the equipment is performed, to
the first location, between locations and from the last location to the
Brazilian port or sheltered waters closest thereto, which will be
chosen in common agreement between the parties.........................
4.4.6.1. PETROBRAS will provide the support vessels for the Unit's positioning
in the locations to be drilled during the fulfillment of this contract.
18
<PAGE>
4.4.7. PETROBRAS may provide tugs and/or support vessels to load and unload
materials and to handle anchors, in a place to be defined by the
parties, in cases of inspection and/or dockages, including those
arising from act of God or force majeure, as defined in the Thirteenth
Clause of this contract. The costs arising therefrom will be reimbursed
by the CONTRACTOR to PETROBRAS.........................................
4.5. FUEL AND WATER - To supply, for its account, all fuel and water
necessary for the performance of the services object of this contract,
from the beginning of the contract, as provided for in subitem 2.2.1,
the provisions of item 3.23 of this contract being complied with.......
4.5.1. The supply of water mentioned in item 4.5 includes also the industrial
water intended for cleaning the Unit...................................
4.6. COMPLETION FLUID - To maintain the control of the - properties of the
fluid by an accredited employee, as well as to control the stock of
materials necessary for such purpose...................................
4.7. ANCILLARY SERVICES - To provide, at its expenses and under its
responsibility, the ancillary services-referring to: cementing,
formation testing, electric logging, flexitube operation, operation
with nitrogen, electric wire operation, wireline operation, when they
derive from PETROBRAS' own programming.................................
4.8. At its exclusive judgment, and without any co-responsibility, PETROBRAS
may cooperate with the CONTRACTOR, assisting it before the Foreign
Trade Department - Trade Exchange Coordinating Office (CTIC), regarding
proceedings submitted to these Agencies, referring to materials and/or
equipment pertaining to the rendering of the services object of this
contract. Such cooperation, however, will not lessen the CONTRACTOR's
liability for the obtainment of the documents and/or benefits that may
be the object of the respective proceedings............................
19
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4.9. To issue Service Authorization(s) with all information necessary for
their performance, such as: location, time limit, value, scope, and
beginning and end dates................................................
4.10. To notify the CONTRACTOR, in writing, on the imposition of eventual
fines..................................................................
4.11. To issue the Measurement Bulletin (MB), as set forth in the Seventh
Clause: Measurement, of this contract..................................
(End of Clause)................................................................
20
<PAGE>
FIFTH CLAUSE - PRICES AND VALUE
5.1. For the rendering of the services object of this contract, PETROBRAS
will pay to the CONTRACTOR the rates set forth in Attachment II and
Attachment III to this contract, under the conditions set forth in
Clauses Sixth - Readjustment, Seventh - Measurement, and Eighth - Form
of Payment.............................................................
5.1.1. The contract prices include all specified tariffs, supervision,
administration, taxes, fiscal emoluments and all expenses that fall
directly or indirectly upon the rendering of the services, including
profit, needed for its perfect fulfillment, until the end of the
contract, no price revision claims being therefore valid...............
5.2. The total estimated value of this present contract is of
R$39,116,746.50 (thirty-nine million, one hundred and sixteen thousand,
seven hundred and forty-six reais and fifty cents).....................
5.3. PETROBRAS does not undertake to make the payment of the total estimated
in item 5.2, but of the amount corresponding to the services rendered
and accepted by PETROBRAS..............................................
5.4. In the event the Unit suffers a delay of up to 90 (ninety) days,
regarding the time limit granted in item 2.3 of the present contract,
the CONTRACTOR will have its total daily rate reduced by 10% (ten
percent), as of the beginning of the contract, for a period equal to
the number of days of delay............................................
5.5. In the event the Unit suffers a delay greater than 90 (ninety) days, as
of the time limit granted in item 2.3 of the present Contract, besides
the maximum reduction of 10% (ten percent) in the total daily rate for
a period of 90 days as defined in item 5.4, the CONTRACTOR will be
subjected to the imposition of fines according to item 8.1 of this
contract...............................................................
21
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5.6. The financial resources necessary for the payment of the services object
of the present contract are duly equated and specifically assured in the
budget for the present fiscal year and foreseen for the following ones to
cover the period for the total rendering of the services..................
(End of Clause)................................................................
22
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SIXTH CLAUSE - PRICE READJUSTMENT
6.1. The contract prices in Brazilian currency, will be readjusted yearly,
after 1 (one) year as of the month when the CONTRACTOR's proposal was
submitted has elapsed, for more or for less, as a result of the
variation of the elements that comprise the readjustment formulae, set
forth in subitems 6.2.1 and 6.2.2 below................................
6.1.1. If, during the period of validity of this contract, new legal
provisions are created which permit the reduction of the periodicity
referred to in 6.1, the parties will make a new agreement regarding the
contract prices, to expurgate eventual overprices arising from the
periodicity originally established for the application of the
readjustment...........................................................
6.2. The prices set forth in the Unit Prices Spreadsheet - Attachment III to
this contract, will be readjusted by applying the following calculation
formulae:..............................................................
6.2.1. For the prices of Ref 101, 104 and 105 of the Unit Prices Spreadsheet -
Attachment III:........................................................
INS USA MEQ
PCR = PCI. [0.55 -------- + 0.10 ---------- + 0.35 ----
INSo USAo MEQo
6.2.2. For the price referring to extra meals, appearing in the Unit Prices
Spreadsheet - Attachment III:...........................................
ABR
PRC = PCI . [-------]
ABRo
Where:..........................................................................
PCR= readjusted contract price;............................................
PCI= initial contract price, in force on the date of the CONTRACTOR's
proposal;.............................................................
INS= Index number of the National Consumer Price Index (INPC), published by
the Brazilian Institute of Geography and Statistics-IBGE,
corresponding to the months in which the readjustment is due..........
23
<PAGE>
INSo= Index number of the INS defined above, corresponding to the month when
the CONTRACTOR's proposal was submitted;........................................
USA= value of the United States dollar selling rate in the commercial
exchange in force on the 30th day of the month when the readjustment
is due;...............................................................
USAo= value of the same rate in force on the 30th day of the month when the
CONTRACTOR's proposal was submitted;..................................
MEQ= definitive value of the Wholesale Price Index - Domestic Availability
- Brazil - Production Goods - Machinery, Vehicles and Equipment -
Machinery and Equipment- Column 15 of the Getulio Vargas Foundation's
Magazine "Conjuntura Economica", code A0161724, corresponding to the
month when the readjustment is due;...................................
MEQo= definitive value of that same index, corresponding to the month when
the CONTRACTOR's proposal was submitted;..............................
ABR= definitive value of the Price Index - Consumer Price - Brazil-Cost of
Living - Food, Column 1, Code A0201475, of the Getulio Vargas
Foundation's Magazine "Conjuntura Economica" corresponding to the
month when the readjustment is due;...................................
ABRo= definitive value of this same index, corresponding to the month when
the CONTRACTOR's proposal was submitted...............................
6.2.3. The reference basis of the CONTRACTOR's proposal is the month of
(blank)...............................................................
6.3. PETROBRAS will make the readjustment calculation, expressing its
result, duly made evident, in the Measurement Bulletin (MB) of the
services to which it refers, for the purposes of issuing the
respective collection document........................................
24
<PAGE>
6.4. In the event of delay in the partial or total disclosure of the
indexes, a readjustment factor will be provisionally used, calculated
on the basis of the last indexes known by then, at the time the
Measurement Bulletin (MB) was issued..................................
6.4.1. The eventual difference between the definitive and the provisional
readjustment will be invoiced by the CONTRACTOR after the issuing of
the Readjustment Bulletin (RB) by PETROBRAS, as provided for in
subitem 7.3.1 of this contract........................................
6.5. The readjustment will not include the services performed before the
date when the reason that justifies it has occurred...................
6.6. The readjustment factor will be applied with 4 (four) decimal places,
without rounding off..................................................
6.7. The CONTRACTOR states that the prices proposed for the performance of
the services object of the contract have taken into account all costs,
inputs, expenses and other legal obligations for the complete
fulfillment of the contract provisions established....................
(End of Clause)................................................................
25
<PAGE>
SEVENTH CLAUSE - MEASUREMENT
7.1. Periodicity of the measurements of the services and determination
of the reimbursable expenses..........................................
7.1.1. For the services, the measurement will be made monthly, according to
the procedures mentioned below, with the consequent issuing of the
respective Measurement Bulletins (MB):................................
a) the initial measurement of the services will be made between the
date of the beginning of this contract and the last day of the
calendar month;.................................................
b) The intermediate measurements of the services, corresponding to
a given month, of the order "m", cover the period between day 01
and the last day of the calendar month of the order "m";........
c) The final measurement of the services will cover the period
between day 01 of the month "m" and the day of the termination
of this contract................................................
7.1.2. The reimbursable expenses, if provided for in the contract, will be
determined on any day of the month, according to the vouchers
submitted to and accepted by PETROBRAS, and more than one
determination can be made in the same period covered by the
measurement...........................................................
7.1.2.1. The results found will be submitted to the CONTRACTOR on the 5th
(fifth) working day, as of the submittal of said vouchers, by means of
a Reimbursement Document (RD), which will be signed by the Manager of
this contract, for invoicing purposes.................................
7.1.2.2. The reimbursable expenses and the deductions, if provided for in the
contract, are to be individually made evident in the Reimbursement
Documents (RD)........................................................
7.2. Issuing of the Measurement Bulletins (MB).............................
26
<PAGE>
7.2.1. PETROBRAS, through the Manager of this contract, at the end of each
period as mentioned in the letters of subitem 7.1.1 of this Clause,
will carry out the measurement of the services, gathering the results
found in the Measurement Bulletin (MB), for the signature of the
Manager of this contract and of the CONTRACTOR, complying with the
following:
a) For the initial, intermediate and final measurements ending on
the last day of a given month of the order "m", the CONTRACTOR
will receive one of the copies of the MB up to the 5th (fifth)
subsequent working day, so that he may submit the respective
collection documents, as provided for in subitem 7.4.1 of this
Clause;.........................................................
b) For the final measurement, when the termination of the contract
does not occur in the last day of the month, the CONTRACTOR will
receive one of the copies of the MB, up to the 5th (fifth)
working day after the termination of the contract, so that he
may submit the respective collection documents, as provided for
in subitem 7.4.1;...............................................
c) for each measurement period of the services, only 1 (one)
collection document may be issued, being understood that
collection documents with partial values regarding said period
will not be taken into account for payment purposes, with
exception of the cases of collection of differences in
readjustment, if any;...........................................
d) In the Measurement Bulletins (MB), the portions regarding the
basic and readjustment values, if any, will be made evident,
using the last definitive factor known by then, and the
deductions, if provided for in the contract.....................
7.3. Collection of the readjustment difference.............................
7.3.1. For the payment of an eventual .readjustment complement, due to the
non-availability of indexes at the time the MB is issued, PETROBRAS
will issue a Readjustment Bulletin (RB)...............................
27
<PAGE>
7.3.1.1. The Readjustment Bulletin (RB) will be submitted to the CONTRACTOR on
the third working day after the disclosure of the indexes applicable,
to the calculation of the definitive readjustment factor..............
7.4. Time for the submittal of collection documents........................
7.4.1. The CONTRACTOR will submit the respective collection documents to
PETROBRAS' Financial Department, as mentioned in item 8.1 of this
contract, in the following conditions:................................
--------------------------------------------------------------------------
OCCASION FOR THE SUBMITTAL OF
TYPE OF MEASURE-MENT MEASUREMENT COLLECTION DOCUMENTS
--------------------------------------------------------------------------
--------------------------------------------------------------------------
INITIAL INTERMEDIATE MB Up to the 8th working day
INTERMEDIATE AND FINAL following the last day of the
performance of the serviceds,
and PETROBRAS will make the
payment on the 30th consecutive
day, as of the final day of the
period measured, the provision
in subitem 7.4.1.1 being
complied with.------------------
--------------------------------------------------------------------------
INITIAL INTERMEDIATE RB In case of an eventual
INTERMEDIATE AND FINAL complement of readjustment
difference, the RB will be
issued up to the 3rd working day
after the index to calculate its
issuing is known and the payment
will be made together with the
payment of the principal, the
minimum of 10 (ten) working days
between the submittal of the
Collection Document and the date
of payment being complied with.-
--------------------------------------------------------------------------
DETERMINATION OF RD In the first working day after
REIMBURSABLE the DR is issued, and the
EXPENSES payment will be made in a period
of 30 (thirty) days, as of the
day of its submittal.-----------
--------------------------------------------------------------------------
28
<PAGE>
7.4.1.1. The payments due because of this contract, referring to the services,
will always occur on the 30th day as of the end of the measured
period, included in the MB's, or on the first subsequent working day,
provided the CONTRACTOR fulfills the time limits for the submittal of
the Collection Documents set forth herein. In the event of
noncompliance, by the CONTRACTOR, with said submittal time limits, the
payments will be postponed for the number of days equal to the delay
in the delivery of such documents.....................................
7.5. Measurement follow-up.................................................
7.5.1. The CONTRACTOR undertakes to follow-up the measurements and the
determinations carried out by PETROBRAS, offering, at that time, the
impugnations or considerations it deems necessary, which will be
submitted to PETROBRAS' appraisal and decision........................
7.5.2. The CONTRACTOR's signature by its representative before PETROBRAS will
imply in the acknowledgement of the accuracy of the Measurement
Bulletin (MB) and/or Readjustment Bulletin (RB) for all legal
purposes..............................................................
(End of Clause).................................................................
29
<PAGE>
EIGHTH CLAUSE - FORM AND PLACE OF PAYMENT.......................................
8.1. The monthly payments due as a result of this contract will be made by
PETROBRAS to the CONTRACTOR, in Brazilian currency, 30 (thirty)
consecutive days, as of the last day of the period of performance of
the services, provided the CONTRACTOR submits the collection documents
until the 8th (eighth) working day after the last day of the period of
performance of the services...........................................
8.1.1. The payment of an eventual difference in readjustment will be made on
the same day in which the payment of the respective service occurs,
provided the CONTRACTOR submits the corresponding collection document
up to the 5th (fifty) working day after the indexes that permit the
issuing of the Readjustment Bulletin (RB) are known...................
8.1.2. The payment of reimbursable expenses, if any, will be made 30 (thirty)
consecutive days after the submittal of the collection document.......
8.1.3. In the event of non-submittal of the collection documents in the time
limits set above, the payment will be postponed for as many
consecutive days as those corresponding to the delay in the delivery
of the collection documents...........................................
8.2. The collection documents will be submitted, together with the
original of the document giving rise to them (MB, RB, RD) in the
Docket of the Financial Department indicated by PETROBRAS, for the
purposes of checking the fulfillment of the time limits for their
payment...............................................................
8.3. The collection documents will be issued without erasures, complying
with the pertinent laws in force, and will contain obligatorily the
following information:................................................
a) Place and date of its emission and number of the collection
document;.........................................................
30
<PAGE>
b) Number and date of signature of the contract deed;................
c) Number and date of the documents originating them (MB, RB, RD);...
d) Gross value of the collection documents, both in numbers and in
writing;..........................................................
e) Name and code of the banking establishment, branch and the
respective code, and number of the current account of the payee,
where the payments will be made;..................................
f) In order that a particular payment is made in a banking
establishment different from the one indicated at the time the
contract deed was signed, such amendment will obligatorily be
preceded by a fax/correspondence from the CONTRACTOR or will
appear in the payee's collection document.........................
8.3.1. In the event the collection document is inaccurate, it will be
returned to the CONTRACTOR and the time limit foreseen in item 8.1
will be postponed for as many days as those corresponding to the delay
in the submittal of such document.....................................
8.3.2. In the event of re-submittal of the collection document, as a result
of a previous impugnation, this fact should appear in the history of
the collection document...............................................
8.3.3. The CONTRACTOR will obligatorily submit, every month to the Manager of
the contract:.........................................................
a) Payroll of the CONTRACTOR's employees who are involved in the
rendering of the services contracted;.............................
b) A photocopy of the Social Security Payment Slip (GRPS), duly
settled and certified, obligatorily filling out the data
identifying PETROBRAS, informing on field "8" (other
information), the name, CGC/CEI of PETROBRAS, number, date and
amount of the Invoice or Bill of Sale referring to the services
rendered in the month.............................................
31
<PAGE>
c) In case of a Cooperative, to submit the payment vouchers of the
amounts paid, distributed or credited to its members as a
remuneration for the services rendered in fulfillment of this
contract..........................................................
8.3.4. The collection documents will not be accepted by PETROBRAS if
submitted with Income Tax at Source already withheld..................
8.3.5. It is the responsibility of PETROBRAS' disbursing office the
explanation of doubts regarding the issuing of the collection
documents.............................................................
8.3.6. Eventual payments made for more or for less by PETROBRAS, will be
compensated as soon as they are detected, and the respective amounts
will be duly corrected................................................
8.3.7. The CONTRACTOR should indicate the place and fax number, if any, for
the receipt of the "Notice of Payment Foreseen".......................
8.4. The vouchers for the reimbursable expenses due to the CONTRACTOR as a
result of this contract deed, will be previously submitted to the
Manager of the contract, for checking, besides being duly settled by
the respective supplier or service renderer, when such is the case....
8.4.1. If the original cannot remain in PETROBRAS' hands, copies thereof may
be submitted, which will be checked by the Inspector and/or Manager,
and the following should appear in every original document: "Copy
Submitted for Reimbursement on _/_/_", followed by the signature and
identification by name, position and registry number, and the
originals will be returned to the CONTRACTOR. The following text will
appear in the copies of each document in PETROBRAS' hands: "Checked
with the Original On which the Inspector and/or Manager will sign,
identifying the signature by name, position, and registry number......
32
<PAGE>
8.4.2. In special cases of reimbursement of import costs (duties and/or
expenses), the CONTRACTOR will send a letter submitting the vouchers
for such expenses, together with the import proceeding, to the office
responsible for its follow-up.........................................
8.4.3. The receipt, duly formalized by PETROBRAS, of any reimbursable expense
voucher, does not represent the recognition of the debt, nor the proof
that the expenses was made............................................
8.4.4. The collection of reimbursable expenses will be made through the
issuing of a Services Invoice, after approval by PETROBRAS of the
respective Reimbursement Document-RD, which will be issued up to 5
(five) working days, as of the date of submittal of said documents....
8.4.4.1. PETROBRAS' Inspection has 3 (three) working days to proceed with the
checking of the expense voucher and to notify its approval to the
CONTRACTOR, so that it may issue the Combined Invoice and Bill of
Sale..................................................................
8.4.5. The total amount of the collection document will be obtained by
applying the following formula:.......................................
VTR = VTD , where:
----------
I - ICP
VTR = total amount to be reimbursed to the CONTRACTOR;...............
VTD = total amount of the reimbursable expenses, effectively
authorized;....................................................
ICP = total of the, sum of the aliquots of taxes collected, in the
decimal form (ISS or ICMS, as the case may be, COFFINS and
PIS/PASEP).....................................................
33
<PAGE>
(End of Clause).................................................................
34
<PAGE>
NINTH CLAUSE - FINES............................................................
9.1. Non-compliance, by the CONTRACTOR, after ninety-one days beyond the
time limit mentioned in item 2.3 of this contract have elapsed, will
imply in the imposition of fine against the CONTRACTOR, in a written
notice, corresponding to 30% (thirty percent) of the rate foreseen in
Ref 101 of Attachment III, per day of delay...........................
9.2. In the event of non-compliance, by the CONTRACTOR, with the
inspection's requirements within the time limit it may set, PETROBRAS
may, by a written notice, impose against the CONTRACTOR, per day of
non-compliance with such requirements, as of the end of the time limit
set, a fine corresponding to 20% (twenty percent) of the rate provided
for in Ref 101 of Attachment III......................................
9.3. The penalties set forth in this Clause do not exclude any other
provided for in the Laws in force and/or in this contract.............
9.4. The amount corresponding to the sum of the basic values of the fines
imposed is limited to 10% (ten per cent) of the estimated total value
of the present contract...............................................
9.5. The basic values of the fines will be readjusted by the readjustment
factor calculated by the formula shown in subitem 6.2.1 of this
contract and in force in the period of its imposition.................
9.5.1. The fines will be forwarded by the Inspection, for discount by the
Disbursing Office, as soon as the pertinent definitive readjustment
factors are known.....................................................
9.5.2. In the event of balance, PETROBRAS reserves itself the right to make
or complement the deduction in collection document(s) related to any
other contract deed eventually entered into with the CONTRACTOR, or to
use any other adequate means to settle the debt, if necessary.........
35
<PAGE>
9.6. In a written notice and without prejudice of the capacity to rescind
the contract, PETROBRAS may impose upon the CONTRACTOR a compensatory
fine of 100% (one hundred per cent) of the amount of the conviction,
due to default of its labor, social security or tax obligations.......
9.6.1. The payment of said fine will not exempt the CONTRACTOR from the
obligation to reimburse PETROBRAS for the amount imposed upon it as a
result of an eventual joint conviction passed by a Labor Court or by
the proper administrative jurisdictions...............................
9.6.2. The CONTRACTOR will be fined in the percentual of 5% (five percent) on
the amount of the invoice in the event it does not submit the GRPS or
submits it at variance................................................
9.6.2.1. The GRPS is considered at variance if it does not have proof of
payment of social security contributions of all of the CONTRACTOR's
Brazilian crew working in the fulfillment of the contract.............
9.7. The CONTRACTOR may appeal against the imposition of the fine, in a
declaration, within the non-deferrable time limit of 15 (fifteen)
consecutive days as of the date the notice is received................
(End of Clause)................................................................
36
<PAGE>
TENTH CLAUSE - INSPECTION
10.1. The inspection of the services contracted herein will be carried out
by PETROBRAS' representatives, and the CONTRACTOR undertakes to allow
their free access to the Unit and to the service locations, and to
comply immediately with the observations of such inspection, which
will have ample powers to:............................................
10.1.1. Determine the interruption of the evaluation and/or completion of the
well, for the purpose of carrying out formation testing, corings,
electric loggings and other services deemed necessary;................
10.1.2. Determine, provided it comes to its knowledge and is within its
capacity, the suspension of the services which perhaps are being
carried out in disagreement with the good technique or which threaten
the safety of persons or assets of PETROBRAS, third parties and of the
CONTRACTOR itself, complying with subitem 2.1.7 of Attachment I.......
10.1.3. Refuse the use of improper or inadequate techniques, as well as the
operations that do not comply with the established programs...........
10.11.4. Refuse the employment of condemned or improper materials, tools and
production string components, which do not comply with PETROBRAS' and
API's standards.......................................................
10.1.5. Order the withdrawal, from the worksite, of any of the CONTRACTOR's
employees who, in PETROBRAS' opinion, may endanger the good
performance of the services or hinder its inspecting activities.......
10.1.6. Certify on the accuracy of the information reported daily by the
CONTRACTOR............................................................
10.1.7. Notify the CONTRACTOR, in writing, on the imposition of the fines
provided for in this contract, including those referring to the
CONTRACTOR's action or omission.......................................
37
<PAGE>
10.1.8. Request from the CONTRACTOR a detailed report on any accident
occurred and on any operation or repair performed.....................
10.1.9. Request from the CONTRACTOR the documentation regarding the proof of
payment of its labor obligations, including social security
contributions (Negative Debt Certificate) and deposits in the FGTS,
for the crew members..................................................
10.2. RECORDINGS - PETROBRAS' Inspection should record its observations on
the Driller's Log approved by the IADC and on the Daily Drilling
Certificate (ADP), to safeguard the rights and liabilities foreseen
in this contract......................................................
10.3. During the period of validity of the contract, PETROBRAS will carry
out evaluation of the CONTRACTOR's performance, covering the groups in
equipment and material, human resources, installations, quality and
efficiency. The results of the performance evaluations will be
notified and consolidated by means of service performance
certificates..........................................................
(End of Clause).................................................................
38
<PAGE>
ELEVENTH CLAUSE - RESCISSION....................................................
11.1. PETROBRAS may rescind the present contract, without the CONTRACTOR
being entitled to any right to indemnity and/or withholding in the
following cases:......................................................
11.1.1. Nonfulfillment, or irregular fulfillment of contract clauses,
specifications, operations and Inspection's requests, provided the
fact mentioned is not remedied within the time limit of 60 (sixty)
days or the repeated commitment of faults in the fulfillment of the
contract;.............................................................
11.1.2. Total or partial subcontracting of the object of the present contract,
the association of the CONTRACTOR will another merger/division or
total or partial incorporation, except if allowed for in this
contract, which affects the good fulfillment of this instrument.......
11.1.3 Interruption of the services for more than 60 (sixty) days;...........
11.1.4. Decree of the CONTRACTOR's bankruptcy.................................
11.1.5. When the limit for the imposition of penalties provided for in item
9.4 of this contract is attained......................................
11.1.6. Slowness in the performance of the works, leading PETROBRAS to prove
the impossibility of completing the services within the established
time limits...........................................................
11.1.7. Non-compliance with the determinations of PETROBRAS' agent appointed
to follow-up and inspect the fulfillment of the contract, as well as
those of his superiors................................................
11.1.8. The dissolution of the CONTRACTOR.....................................
11.1.9. The corporate change or the modification of the company's purpose or
structure, which in PETROBRAS' opinion, hinders the performance of the
services;.............................................................
11.1.10. Delay in the beginning of the fulfillment of the contract for more
than 180 (one hundred and eighty) days................................
39
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11.1.11. Rescission of the Chartering contract of the unit entered into between
PETROBRAS and MARITIMA NAVEGACAO E ENGENHARIA LTDA....................
11.1.12. If the limit set forth in subitem 2.1.9 of Attachment II to this
contract is attained..................................................
11.1.13. If the limits set forth in Note 2 of Ref 102 of Attachment II to this
contract is attained..................................................
11.1.14. Non-submittal of the proof of fulfillment of labor obligations
towards the employees directly involved in the services object of this
contract, including social security contributions and deposits in the
FGTS, when requested by the Inspection, or if such default is proved..
11.1.15. Non-submittal or submittal at variance of the GRPS, when the
corresponding invoice is delivered....................................
11.1.15.1. The rescission for this reason does not prevent PETROBRAS from
imposing the respective fine, foreseen in 8.7.2;......................
11.2. In the event of rescission of the contract deed for the reasons
foreseen in 10.1, PETROBRAS:..........................................
a) will take over the object of the contract deed, on the stage and
location where it is found;......................................
b) will enforce the contract guarantee, if any, for the
reimbursement of the amounts of fines and indemnities due to it;.
c) will withhold the credits arising from the contract deed, up to
the limits of the damages caused to it;..........................
40
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11.3. After the contract is rescinded, as set forth in this Clause, the
CONTRACTOR is liable, in legal and contract fashion, for the violation
or inadequate performance which gives rise to the rescission, as well
as for the reimbursement of damages which PETROBRAS may come to
sustain...............................................................
11.4. After the contract is rescinded, PETROBRAS, at its exclusive judgment,
may adjudicate the operations object thereof to whom it deems
appropriate, without behooving the CONTRACTOR any consultation or
interference, claim and/or indemnity, for whatever title, and the
CONTRACTOR will be liable to legal and contract penalties, besides
answering for damages PETROBRAS may sustain...........................
11.4.1. The CONTRACTOR is also liable for the pertinent administrative
sanctions, its full defense being guaranteed..........................
11.5. In the event PETROBRAS does not impose the right to rescind the
present contract according to this Clause, it may, at its absolute
discretion, withhold the payments of pending invoices, until the
CONTRACTOR fulfills the contract condition it has infringed, but such
fact will not represent novation nor will it generate rights that may
be claimed by the CONTRACTOR..........................................
(End of Clause)................................................................
41
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TWELFTH CLAUSE - FISCAL CHARGES.................................................
12.1. Taxes (taxes, fees, emoluments, fiscal and parafiscal contributions)
that are due as a direct or indirect result of the present contract,
or of its fulfillment, will be the exclusive responsibility of the
taxpayer, so defined in the tax rule, with no right to reimbursement.
PETROBRAS, as the disbursing source, will discount and withhold within
the legal time period, from the payments it makes, the taxes it is
liable to by the laws in force........................................
12.1.1. The CONTRACTOR states that, in quoting its prices, it has taken into
account the taxes (taxes, fees, emoluments, fiscal and parafiscal
contributions) charged on the fulfillment of this contract, and it
cannot make any claim due to error on such evaluation, for the purpose
of requesting a price revision or reimbursement of payments set down
by the proper authority...............................................
12.1.2. Once found, during the period of validity of the contract, that the
CONTRACTOR has unduly added to its prices amounts corresponding to
taxes, fiscal and/or parafiscal contributions and emoluments of any
kind that are not charged to the performance of the services agreed
upon, such values will be immediately excluded, with the consequence,
reduction of the prices practiced and reimbursement of amounts that
may have been paid to the CONTRACTOR..................................
12.2. If, during the period of validity of this contract, any of the
following events occur:
- creation of new taxes;...............................................
- extinction of existing taxes;........................................
- changes in the aliquots;.............................................
- establishment of tax incentives of any kind; and.....................
42
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- exemption or abatement of federal, state or county taxes;............
which, provedly come to increase or reduce the burdens of the parties
to the contract, the prices will be revised, so as to f it them into
the changes made, compensating, at the first opportunity, any
differences arising from such changes. However, if it is a question of
tax incentives, the advantages arising therefrom will always be for
PETROBRAS..............................................................
(End of Clause).................................................................
43
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THIRTEENTH CLAUSE - FORCE MAJEURE
13.1. PETROBRAS and the CONTRACTOR will not be liable for the nonfulfillment
of their respective obligations in case of events that characterize an
act of God or force majeure defined in the sole paragraph of Article
1.058 of the Brazilian Civil Code. Any suspension of performance due
to this item will be limited to the period during which such cause or
its consequences exist, and such period will be added to the duration
of the contract mentioned in the Second Clause of the present
contract. However, the CONTRACTOR is assured the right to receive the
rate provided for in Ref 104 of Attachment III, with the exception of
the exemption from payment set forth in subitem 2.1.4 of the
Attachment II, and the reimbursements mentioned in this contract, and
furthermore, the parties will severally assume their losses...........
13.2. If the circumstance that justify the invoking of the existence of an
act of God or force majeure occurs, the party unable to fulfill
its obligations will immediately notify the other party, in writing,
on the occurrence and its consequences................................
13.3. If the impediment arising from the force majeure lasts for more than
90 (ninety) consecutive days, any of the parties may opt for the
termination of the contract, with both parties complying with their
mutual obligations due until the date of the beginning of said
impediment............................................................
(End of Clause).................................................................
44
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FOURTEENTH CLAUSE ASSIGNMENT AND TRANSFER.......................................
14.1. The CONTRACTOR cannot assign or transfer, in whole or in part, the
present contract, except with PETROBRAS' prior authorization in
writing...............................................................
14.2. The CONTRACTOR cannot assign or give in guarantee, at any title, in
whole or in part, the credits of any kind, arising or deriving from
the, present contract, except with PETROBRAS' prior authorization in
writing. The prior authorization will obligatorily state that
PETROBRAS imposes upon the assignee of the credits the exceptions that
behooves it, mentioning expressly that the payments to the assignee
will be conditioned to the fulfillment, by the assignor, of all of its
contract obligations..................................................
14.3. The occurrence of the above mentioned events, duly authorized by
PETROBRAS, does not exempt the CONTRACTOR from any of its contract
obligations...........................................................
14.4. PETROBRAS may assign or transfer, in whole or in part, the present
contract, under commercial conditions to be agreed upon by the
parties...............................................................
(End of Clause).................................................................
45
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FIFTEENTH CLAUSE - CONTRACT-RELATIONSHIPS.......................................
15.1. This contract is related to another one for chartering the Unit,
signed on this same date between PETROBRAS and MARITIMA NAVEGACAO E
ENGENHARIA LTDA.......................................................
(End of Clause).................................................................
46
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SIXTEENTH CLAUSE - INTERVENIENCE................................................
16.1. Clause-non-applicable in this Contract....................................
(End of Clause).................................................................
47
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SEVENTEENTH CLAUSE - ACCEPTANCE.................................................
17.1. After the services are completed in strict compliance with the
conditions set forth in the present deed, PETROBRAS will accept them
by means of a Definitive Acceptance Deed signed by the parties........
17.1.1. Before the signature of the Definitive Acceptance Deed the CONTRACTOR
will comply with all of the Inspection's requirements regarding
claims, without any charge to PETROBRAS...............................
17.1.2. The signature of the Definitive Acceptance Deed does not exempt the
CONTRACTOR from the liabilities provided for in this contract and in
the laws in force.....................................................
(End of Clause).................................................................
48
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EIGHTEENTH CLAUSE - LIABILITY...................................................
18.1. PETROBRAS' and the CONTRACTOR'S liability for damages will be limited
to the direct damages in accordance with the Brazilian Civil Code and
pertinent laws, with exception of loss of profit and indirect damages,
the indirect damages being limited to 100% (one hundred percent) of
the total contract value..............................................
(End of Clause).................................................................
49
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NINETEENTH CLAUSE - COMPLEMENTARY DOCUMENTS-------------------------------------
19.1. The Attachments mentioned below are an integral part of the present
contract and, in the event of disagreement between the Attachments and
the contract, the text of the contract will prevail...................
ATTACHMENTS
I - Technical specifications of the Unit...........................
II - Applicability- of the Rates and Incidents in the Performance...
III - Unit Prices Spreadsheet........................................
IV - Responsibilities in the Performance and Mutual Obligations.....
V - List of Specialized Personnel;.................................
VI - Environmental Operating Conditions.............................
VII - PETROBRAS' Safety Rules........................................
VIII - Radio Communication and Radio Beacon Frequency Plan............
IX - Equipment Testing Program......................................
X - Procedures in the Event of Fatal Accidents.....................
(End of Clause)................................................................
50
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TWENTIETH CLAUSE - JURISDICTION.................................................
20.1. The Jurisdiction of the County of the Capital of the State of Rio de
Janeiro will be competent to settle any questions arising from the
Present contract, with the express waiver, by the parties, of any
other, however privileged.............................................
(End of Clause).................................................................
51
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AND BEING THUS AGREED, the parties sign the present deed in 3 (three)
copies with the same tenor, with the witnesses below............................
Rio de Janeiro, (blank).........................................................
(SIGNED:) Luiz Eduardo G. Carneiro..............................................
LUIZ EDUARDO G. CARNEIRO - EXECUTIVE SUPERINTENDENT OF EXPLORATION AND
PRODUCTION SOUTH - SOUTHEAST....................................................
PETROLEO BRASILEIRO S.A. - PETROBRAS............................................
(SIGNED:) German Efromovich.....................................................
GERMAN EFROMOVICH - PRESIDENT...................................................
MARITIMA NAVEGACAO E ENGENHARIA LTDA............................................
WITNESSES:......................................................................
(SIGNED:) Elaine Brabo..........................................................
CPF No. 970.702.897-15..........................................................
(SIGNED:) Luiz Carlos Brazil Rodrigues..........................................
CPF No. 610.769.457.91..........................................................
52
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CONTRACT No. 101.2.156.97-1
SERVICES RENDERING
ATTACHMENT II
APPLICABILITY OF THE RATES AND INCIDENTS IN THE PERFORMANCE.
1 - APPLICABILITY OF THE RATES - DEFINITION OF THE SERVICE RATES PER 24
(TWENTY-FOUR) HOUR DAY....................................................
REF 101 - OPERATION RATE - It will be applied during the activities requiring
the use of the Unit, such as electric logging, formation testing, completion and
workover operations, including drilling lines scouring and cutting operations.--
REF 102 - REPAIR RATE - In the periods when there is an interruption of the
activities that require the use of the Unit, mentioned in Ref 101 of this
Attachment and the operations for Moving the Unit between locations, Ref 105 of
this Attachment, due to maintenance, including replacement of mud pump spare
parts, and/or repair in the Unit's equipment, or in those which supply is the
CONTRACTOR's responsibility, no rate will be due................................
NOTE 1. The repair period will be considered as of the interruption of the
operation that is being performed, until the return to the same
situation when the interruption occurred, except for the periods when
the interruption in the repair activities occurs due to adverse sea
conditions, as set forth in Note 2 of Ref. 104........................
NOTE 2. In the event the CONTRACTOR remains in Repair Rate for an
accumulated total of 30% (thirty percent) of the time, for any period
of 6 (six) contract months, PETROBRAS may rescind the present
contract, based on subitem 11.1.14 of this contract...................
53
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NOTE 3. It will be considered as repairs the occurrences due to wash outs
in the drill pipes and in the other elements of the drill string,
belonging the CONTRACTOR, with exception of those arising from the
presence of H2S and from abnormal mechanical conditions occurred in
the well..............................................................
NOTE 4. At the Inspection's discretion, for the maintenance of the BOP, the
CONTRACTOR may be granted a franchise of up to 24 (twenty-four) hours
between the instant the BOP is set of the test stump, until its
operational withdrawal, and the moment of its movement for the next
running in another well, without the CONTRACTOR entering in repair
rate, provided such maintenance is carried out according to
international standards. In the period within these 24 (twenty-four)
hours intended exclusively for the BOP maintenance, the waiting rate
(Ref. 104) will be due................................................
REF. 103 RATE ADDITIONAL (RA) - In each measurement period, as set forth in
subitem 7.1.1 of the contract, the CONTRACTOR will be entitled to the receipt of
a Rate Additional calculated by means of the following formulae:................
AT = 0.10 x (NT - NFM - NREP - NIPG - NTOR) x for PI less than or equal to
0.0300 TO..................................................................
AT = (0.16 - 2 x PI) x (NT - NFM - NREP - NIPG -for 0.03 less than or equal
PI 0.0800 NTOR) x TO......................................................
AT = Zero .........................to PI> 0.0800
Where:..........................................................................
AT = Rate Additional............................................................
TO = Operation Rate (REF 101)...................................................
PI = Unavailability Proportion, calculated with 4 (four) decimal places, being:.
54
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NREP + NIPG + NTOR
PI = _________________________
NT - NFM
NT = Total number of days in the measurement period considered;.............
NFM = Total number of days in which the act of God or force majeure occurs,
as defined in the Thirteenth Clause of the contract, in the measurement
period considered;.......................................................
NREP = Total number of days under repair rate (Ref 102) in the measurement
period considered;......................................................
NIPG = Total number of days under exemption from payment
(according to item 2.1 of this ATTACHMENT) in the measurement period
considered; .............................................................
NTOR = Total number of days with reduced operation rate (according to
subitems 2.2.3 and 2.2.4 of this Attachment) in the measurement
period considered........................................................
REF. 104 - WAITING RATE (TE) - corresponds to 95% (ninety-five percent) of the
Operation Rate (TO) and which will be applied in Bad Weather, Force Majeure and
waiting situations, as defined below:...........................................
1) Bad Weather Situations - in the event of stoppage of the operations when
environmental conditions are so severe as to endanger the unit's operating
capacity, the limitations in Attachment VI, being complied with, making the
operations unstable or unsafe or preventing support vessels to have access
to the Unit, or preventing the tugs' operations, at the time of change of
locations, although the Unit may operate normally, in spite of the bad
weather. ..................................................................
2) Force Majeure Situations - during the period when the Unit cannot operate,
due to act of God or force majeure, as defined in the Thirteenth Clause of
the contract, until the removal of the impediment or the rescission of the
contract, as the case may be...............................................
55
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3) Waiting - waiting for the arrival, maintenance or availability of materials
from PETROBRAS or third parties, under PETROBRAS' responsibility, even if
the maintenance is made in the Unit; waiting for daylight to carry out
formation tests; waiting for orders from PETROBRAS, such as, but not
limited to: change of programs, definition to proceed with the completion
or other production activity, rest for PETROBRAS' team or of those of third
party at PETROBRAS' service; waiting for tugs or support vessels...........
NOTE 1. The period spent in disconnecting the LMRP from the BOP due to
environmental conditions, will be considered as bad weather situation,
until the return to the previous situation............................
NOTE 2. If a bad weather situation occurs which interrupts a repair
activity, the Waiting Rate (Ref 104) with a 40% (forty percent)
reduction will be due during that period..............................
REF. 105 - MOVING RATE - corresponds to 95% (ninety-five percent) of the
Operation Rate (TO) and will be applied during the following periods:...........
a) Beginning of the Contract - After the acceptance of the Unit's equipment
operating conditions, once the general testing provided for in item 3.1.
of the contract has been carried out, until the spud in of the first well;
b) Between locations - After the end of the, completion or intervention
operations in a well, with the arrival of the BOP or tool used in the well
(the one which occurs last) in the moon pool, until the spud in or reentry
in a new well (beginning of running the first tool for access to the
well).....................................................................
56
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NOTE: In this period are included the DP system calibration and tests, always
in each new location, and others in each contract year or at any time,
when requested by PETROBRAS............................................
c) End of the Contract - After the end of the spud in or intervention
operations in the last well, with the arrival of the BOP or tool used in
the well (the one which occurs last) in the moon pool, until the Unit's
arrival in a sheltered waters location, chosen in common agreement between
the parties, or, if there are PETROBRAS' equipment still aboard, until the
withdrawal of such equipment from the Unit................................
2 - INCIDENTS IN THE PERFORMANCE................................................
2.1. Exemption from Payment - PETROBRAS will be exempted from the payment
of the rates foreseen in this Attachment, during the period in which
occurs:...............................................................
2.1.1. Interruption of the services due to the CONTRACTOR's duly proven fault
arising from operational error and/or lack of material or equipment,
inclusive due to the loss of equipment or subaquatic spare parts......
2.1.2. Stoppage of the services and/or of the Unit due to measures related to
impositions by made the insurers......................................
2.1.3. CONTRACTOR's refusal to operate under the conditions foreseen in
Attachment VI - Environmental Operating Conditions....................
2.1.4. Stoppage of the services and/or of the Unit for inspection or dockage
purposes, including surveys and dockages arising from act of God or
force majeure, as defined in the Thirteenth Clause of the contract,
the corresponding expenses also running for the CONTRACTOR's account..
57
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NOTE 1. The exemption from payment will begin in the moment there is an
interruption of the operational continuity object of this contract,
even if the withdrawal of all or part of PETROBRAS' and/or the
CONTRACTOR's cargo becomes necessary for the inspection and/or dockage.
NOTE 2. The end of the exemption from payment, due to the inspection and/or
dockage, will occur:..................................................
a) On the return to the same location, the moment the operations
returns to the previous situation;...............................
b) On the mobilization for another location, the moment the Unit
starts sailing after PETROBRAS' and/or the CONTRACTOR's materials
have been put back on board......................................
2.1.5. Occurrence of kick, drill string sticking, loss of circulation,
fishing or abandonment, caused by the CONTRACTOR's duly proven action
or omission, from the moment the problem was ascertained, until the
return to the situation prior to its occurrence, or displacement to
another location, in the event of abandonment.........................
2.1.5.1. The exemption from payment referred to in 2.1.5 will be limited to a
period of 15 (fifteen) days, per event, after which the reduction
foreseen in subitem 2.2.3 of this Attachment will be applied..........
2.1.6. Occurrence of blow out caused by the CONTRACTOR's duly proven action or
omission, from the moment the problem was ascertained, until the return
to the situation prior to its occurrence................................
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2.1.6.1. The exemption from payment referred to in item 2.1.6 will be limited
to a period of 45 (forty-five) days, after which the reduction
foreseen in subitem 2.2.4. of this Attachment will be applied.........
2.1.7. Suspension of the services, determined by PETROBRAS' Inspection, based
on item 10.1.1 of the contract........................................
2.1.8. Interruption of the operations due to a failure occurred- in any of
the Unit's equipment, at the time of the testing to be carried out
according to item 3.1 of the contract.................................
2.1.9. In the occurrence of events of exemption from payment foreseen in
subitems 2.1.1, 2.1.2, 2.1.3, and 2.1.7, for a total accumulated
period of time exceeding 30% (thirty percent) in any 6 (six) month
period, PETROBRAS may rescind the present contract, based on its
subitem 11.1.13.......................................................
2.2. Reduction in the Operation, Waiting and Movement Daily Rate.
The rates foreseen in this Attachment will be reduced in the following
cases:................................................................
2.2.1. Total or partial inoperativeness or malfunction of any equipment which
delays or hinders the operations, such as, but not limited to,
winches, kelly spinner, geolograph, current meter, air compressors,
shale shaker, mixing pumps, mud laboratory equipment and bulk receipt
and transfer systems, are reason for the reduction of the daily rate
foreseen in Ref 101, in 1% (one percent), cumulative per equipment,
provided the CONTRACTOR is notified in writing in the Daily Drilling
Certificate (ADP), by PETROBRAS' Inspection and which, after the time
limit the latter has set to repair said equipment, such repair has not
been made.............................................................
2.2.2. Low Efficiency - Reference Rates 101 and 105 of this Attachment will
suffer a 20% (twenty percent) reduction, in the event low efficiency
is verified, according to the operating efficiency parameters listed
below. Such reduction will be applied during the whole corresponding
activity period in which low efficiency is verified:..................
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Operating Parameters:
- - - Maneuver of the drill string in a cased well (except BHA):................
o Inside the riser and 20" casing = 500 m/h...........................
o Inside the 13 3/8" casing = 600 m/h.................................
o Inside of 9 5/8" casing = 700-m/h...................................
- - - Break of DP's per unit = 25jt/h...........................................
- - - Casing string - run in the sea/inside the riser/previous casing (joints
approximately 12 m long)..................................................
o 30" Casing - 2 jt/h
o 20" Casing - 5 jt/h
o 13 3/8" Casing 13 jt/h
o 9 5/8" Casing 18 jt/h
o 7" Casing - 15 jt/h
- - - Running of driller riser, excluding normal time for testing (50 ft
joint): 45m/h.............................................................
- - - Pulling of drilling riser (50 ft joints): 60 m/h..........................
- - - Installation or pulling of the kill/choke lines/ telescopic
joint/stretchers: 6.0h....................................................
- - - Diverter installation or pulling: 2.Oh....................................
- - - Assembly of the dampening lines in the M.R.: 1.5h.........................
- - - Assembly of the flexitube equipment: 5.0h.................................
- - - Assembly of the production tail: 2.0h.....................................
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- - - Tubing running or pulling, per unit - 150 m/h.............................
- - - Tubing running or pulling per section - 300 m/h Completion risers
running or pulling - 50 m/h...............................................
- - - Assembly of terminal head and slings -2.0 h...............................
- - - Moving of WCT to/from the moon pool - 3.0 h...............................
- - - Moving of tree cap or tree running tool to/from the moon pool - 2.5h......
- - - Assembly of lubricator and wire line BOP - 1.5h...........................
NOTE: The above mentioned operating parameters are based on normal weather
conditions.............................................................
2.2.3. Beginning on the 16th (sixteenth day), inclusive, of the occurrence of
kick, drill string sticking, loss of circulation or fishing, caused by
the CONTRACTOR's duly proven action or omission, until the return to
the situation prior to its occurrence, the applicable rate will be
reduced by 50% (fifty-percent)........................................
2.2.4. Beginning on the 46th (forty-sixth) day, inclusive, of the occurrence
of Blow-out caused by the CONTRACTOR's duly proven action or omission,
until the return to the situation prior to its occurrence, the
applicable rate will be reduced by 50% (fifty percent)................
2.3. Period of Validity of the Contract Rates - the contract rates set
forth in this Attachment will apply in the period set forth below:....
a) Beginning: release of the Unit, by PETROBRAS, to sail to the
first location, after the equipment general testing foreseen in
item 3.1 of the contract has been carried out, with the exception
of the provision in its subitem 3.1.1.1..........................
b) End: after the end of the completion of the last well, with the
Unit' s arrival at a port or sheltered waters chosen by common
agreement between the parties, and if there are PETROBRAS'
equipment still aboard, with the withdrawal of such equipment
from the Unit....................................................
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2.4. Blow-Out - PETROBRAS will be responsible for the well control operation
costs, in the event of blow-out and caving caused by the blow-out. Such
provisions apply only to the well control costs and do not apply to the
loss of assets, lesions and/or damages caused by the blow-out, which are
protected by the provisions of the pertinent items of this contract. The
CONTRACTOR undertakes to place at PETROBRAS' disposal all of its resources
in personnel and equipment related to this contract, without any
additional charges to PETROBRAS. If the CONTRACTOR has contributed with
duly proven action or omission for the occurrence of the accident, no rate
will be due, until the solution of the problem, subitems 2.1.6 and 2.2.4
of this being complied with...............................................
(End of Attachment).............................................................
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- - --------------------------------------------------------------------------------
CONTRACT No. 101.2 156.97-1.....................................................
ATTACHMENT III - UNIT PRICES SPREADSHEET
SERVICES RENDERING
- - --------------------------------------------------------------------------------
UNIT PRICES SPREADSHEET
- - --------------------------------------------------------------------------------
OBJECT OF BID: Services of Drilling, Completion, Evaluation and Workover of of
Oil and Gas Wells, by means of the use of a Floating Unit, provided with Dynamic
Positioning System.
- - --------------------------------------------------------------------------------
PLACE OF OPERATION: Brazilian Continental Shelf and International Waters.
- - --------------------------------------------------------------------------------
UNIT'S NAME: AMETHYST 7
- - --------------------------------------------------------------------------------
COMPANY'S NAME: MARITIMA NAVEGACAO E ENGENHARIA LTDA.
- - --------------------------------------------------------------------------------
CODE ITEMIZATION UNIT UNIT PRICE (R$)
- - --------------------------------------------------------------------------------
07.201.351 Operation Rate (Ref. 101) Day 15,729.00
- - --------------------------------------------------------------------------------
07.201.358 Repair Rate (Ref. 102) Day No rate will be
- - --------------------------------------------------------------------------------
07.201.362 Waiting Rate - Bad Weather (Ref. 104.1) Day (95% of Ref. 101)
- - --------------------------------------------------------------------------------
07.201.363 Waiting Rate - Force Majeure (Ref. 104.2) Day (95% of Ref 101)
- - --------------------------------------------------------------------------------
07.201.364 Waiting Rate - Waiting (Ref. 104.3) Day (95% of Ref. 101)
- - --------------------------------------------------------------------------------
07.201.366 Movement Rate - (Ref. 105) Day (95% of Ref. 101)
- - --------------------------------------------------------------------------------
09.252.008 Meals (Item 3.11 of Serv. Rendering Cont.) Each 20.00
- - --------------------------------------------------------------------------------
SIGNATURES DATE OF THE
PROPOSAL
- - --------------------------------------------------------------------------------
PETROBRAS CONTRACTOR 10/08/97
Andre de German Efromovich
Mesquita
Pinto
- - --------------------------------------------------------------------------------
(Rubber stamp: Andre de Mesquita Pinto - Register No. 014177.3.)...............
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CONTRACT No. 101.2.156.97-1.....................................................
SERVICES RENDERING
ATTACHMENT IV
RESPONSIBILITY IN THE PERFORMANCE AND
MUTUAL OBLIGATIONS
1 - RESPONSIBILITIES IN THE PERFORMANCE........................................
1.1. The CONTRACTOR should provide, at its own expenses, pipe inspection
according to API-RP 7 G Standard for drill string elements in use, at
every 15,000m drilled. This inspection should be necessarily made by
personnel accredited by PETROBRAS, and accompanied by PETROBRAS'
Inspection which will attest the drill string conditions in accordance
with the results of said inspection. The drill string elements
rejected by the Inspection will be immediately repaired and/or
replaced by the CONTRACTOR, who will undertake the corresponding
costs.................................................................
1.1.1. The CONTRACTOR should make provisions so that the same numbering of
the parts is maintained for the period of validity of the contract....
1.1.2. The reports on the inspections made on the drill string, riser column,
and handling equipment will be submitted to PETROBRAS immediately
after their performance...............................................
1.1.3. The CONTRACTOR should maintain a control of the elements of the string
used in each well, recording at each maneuver, in the driller's log,
which parts belong to the BHA in use, mentioning, the inspection
report numbering......................................................
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1.1.4. The CONTRACTOR will provide, for its own cost, for the inspection of
the drill string, when requested in writing by PETROBRAS, in the event
of abnormal occurrences, such as wash-out or frequent string breaks...
1.1.5. The CONTRACTOR will provide, for its own cost, for the inspection
according to API RP-8B standard, in each contract year, in all drill
string handling equipment, such as, but not limited to, slips,
elevators, travelling tongs, hook, elevator arms, spiders, drilling
winch, etc. This inspection should be necessarily accompanied by
PETROBRAS' Inspection which will attest the drill string conditions in
accordance with the results of said inspection. The equipment rejected
by the Inspection will be immediately repaired and/or replaced by the
CONTRACTOR............................................................
NOTE: The same procedure described in 1.1.5 will be applied to the riser
column and to its handling tools, complying with standard API RP2K.
1.2. Casing - The CONTRACTOR should measure and run the conductors and the
casing strings in accordance with the drilling programs established
by PETROBRAS..........................................................
1.2.1. The CONTRACTOR will keep the casing pipes with their respective
protectors............................................................
1.2.2. The CONTRACTOR will exert its best efforts to remove all recoverable
casing, when the well is abandoned....................................
1.3. Cementing, Formation Testing and Electric Logs - the CONTRACTOR will
provide facilities and give assistance to third parties, in charge by
PETROBRAS, for the performance of cementing, electric log, drill
string testing, and other related services, complying with the
programs and safety rules set down by PETROBRAS.......................
65
<PAGE>
1.4. Fishing - the CONTRACTOR should carry out all fishing operations that
may become necessary..................................................
1.5. Subsurface Pressures - the CONTRACTOR will exert its best efforts to
control subsurface pressures, always maintaining all safety equipment,
including the ancillary ones, in good operating conditions, so as to
avoid contamination of the drilling fluid by hydrocarbons and fires
resulting from blow-outs..............................................
1.6. Well Completion and Abandonment - the CONTRACTOR will complete or
abandon the wells in safety conditions, according to the programs set
down by PETROBRAS.....................................................
1.7. Drilling Reports - the CONTRACTOR undertakes to inform daily to
PETROBRAS, until 01:00h of the following day, on the progress of the
operations, weather conditions, bulk and liquid stock consumption, and
the status of the equipment that comprise the vessel's dynamic
positioning system, and of others that the Inspection considers
necessary, by means of bulletins, reports and records approved by the
IADC and/or required by the Inspection................................
1.7.1. The duration of the delays or wastes of time, their reasons, and other
facts deemed important, will be recorded in detail in the Daily
Drilling Data.........................................................
1.7.2. Whenever requested by PETROBRAS, the CONTRACTOR will submit detailed
reports on the progress of the operations carried out, or on any
accident that may have occurred.......................................
1.8. The CONTRACTOR undertakes to inform immediately to PETROBRAS,
Inspection when the Unit enters in a Degraded State...................
1.8.1. The following situations are considered Degraded State: (to be defined
in common agreement between the parties)..............................
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1.8.2. In the event of non-fulfillment of Clause 1.8, and the Unit comes to
enter into yellow alert or red alert, a 20% (twenty percent) fine will
be charged on the operation rate during the whole period in which the
abnormality persists..................................................
1.9. The CONTRACTOR undertakes to measure the sea current profiles
(intensity and direction with reference to the true North) from the
surface of the sea down to the sea bottom, carried out at 0600 and
1200 GMT (Greenwich Mean Time), and to deliver daily the data obtained
to PETROBRAS. Such profiles should obligatorily cover the following
depths: 20, 50, 150, 200, 250, 300, 350, 400m, and at every 100 (one
hundred) meters thereafter, until the last depth investigated
corresponds to 5 (five) meters from the bottom of the sea.............
1.9.1. The data should be delivered to PETROBRAS' Inspector, in disk and in a
format according to PETROBRAS' instructions...........................
1.10. Maintenance and Conservation - the CONTRACTOR will be responsible for
the maintenance, conservation and cleaning services of the Unit and of
all existing equipment and installations, maintaining all safety
devices in perfect operating and adjustment conditions................
1.10.1. The CONTRACTOR undertakes to keep and maintain PETROBRAS's materials
and equipment, aboard the Unit, as well as all that are object of the
loading and unloading operations in the support vessels...............
1.11. Ancillary Services in equal price, time limit and availability
conditions, the CONTRACTOR should give preference to the ancillary
services rendered by Brazilian companies, when they become necessary
for the rendering of the services object of this contract.............
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1.12. Lubricants - to preferably use lubricants of the make PETROBRAS
DISTRIBUIDORA-BR, submitting a justification in the event it uses
another make..........................................................
1.13. Wellhead inclination - the wellhead will not be installed with
inclinations exceeding 1 1/2 degrees (one and a half degree). If, by
the Inspection's decision, the well continues to be drilled with an
inclination exceeding that limit, the possible wear of the inner parts
of the BOP, Lower Marine Riser, Adapter Riser and Spool, resulting
therefrom, will be PETROBRAS, responsibility, provided the CONTRACTOR
proves that said wear resulted from the operation in that well with
wellhead inclination exceeding 2 degrees (two degrees)................
1.14. The CONTRACTOR should submit a description of its operating procedures
for the events of disconnection, formation testing, and BOP and choke
manifold testing......................................................
1.14.1. The procedures to be adopted will be discussed and approved by
PETROBRAS.............................................................
1.15. The Board -Superintendents, Tool Pushers, and Drillers will be
required to have proven technical competence in kick control, attested
by a certificate of training in an entity recognized by PETROBRAS.....
1.16. The CONTRACTOR should carry out well shutoff training exercises every
week, on an occasion to be agreed upon with the Inspection, and
according to the rules in force in PETROBRAS, which operation should
be entered in the Driller's Log.......................................
1.16.1. The CONTRACTOR should submit a Safety Project for BOP, Choke Manifold
and in well shutoff training test, which will be approved by
PETROBRAS' Inspection.................................................
1.17. Drill Riser - the CONTRACTOR will maintain the drill riser, inner
joints perfectly clean and free from debris and/or rust...............
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1.17.1. The CONTRACTOR should perform the inner cleaning of all drill riser
joints, using the proper tool and compressed air, whenever the
operation following the riser string run is a completion and/or
workover operation....................................................
69
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CONTRACT No. 101.2.156.97-1.....................................................
2. MUTUAL OBLIGATIONS
- - --------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
- - --------------------------------------------------------------------------------
PET CONT PET CONT
- - --------------------------------------------------------------------------------
1. Cementing, logging, formation X X and X
and/or production tests, directional
drilling, perforating, wireline,
nitrogen unit, flexitube, etc.
- - --------------------------------------------------------------------------------
2. Welding services necessary for X X
drilling, completion, well abandonment
and maintenance operations.
- - --------------------------------------------------------------------------------
3. Technical supervision for X X
manufacturing and control of
drilling fluid, completion.
- - --------------------------------------------------------------------------------
4. CONTRACTOR's land support X X
base (office and storehouse).
- - --------------------------------------------------------------------------------
5. Handling and storage of X X
materials and equipment belonging
to or supplied by the CONTRACTOR
on land or in the Unit.
- - --------------------------------------------------------------------------------
6. Handling and storage of X X
materials and equipment of
PETROBRAS or third parties,
aboard the Unit.
- - --------------------------------------------------------------------------------
7. Land transportation, cargo X X
loading and unloading of materials
under the CONTRACTOR's responsibility.
- - --------------------------------------------------------------------------------
8. Fishing services. X X
- - --------------------------------------------------------------------------------
9. Cleaning and painting services X X
aboard the Unit, including those
of PETROBRAS' materials and equipment
installed in the Unit.
- - --------------------------------------------------------------------------------
10. Mess room, hostelry and meal
supply services:
- - - CONTRACTOR's personnel X X
- - - PETROBRAS personnel (up to 1300 X X
meals a month)
- - - PETROBRAS personnel (exceeding X X X
900 meals a month)
- - --------------------------------------------------------------------------------
11. BOP and riser lines tests, X X
not programmed, carried out
with the Cementing Unit.
- - --------------------------------------------------------------------------------
12. Operations with special tools. X X
- - --------------------------------------------------------------------------------
13. Air or sea transportation X X
of the CONTRACTOR's equipment
and personnel in the area of operation.
- - --------------------------------------------------------------------------------
14. Air or sea transpiration X X or X
of the CONTRACTOR's personnel
in the area of operation, besides
those programmed for shift changes
and Supervision personnel.
- - --------------------------------------------------------------------------------
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- - --------------------------------------------------------------------------------
15. Air or sea transportation X X
programmed but not used by
the CONTRACTOR, without
prior notice to PETROBRAS.
- - --------------------------------------------------------------------------------
16. Air or sea transportation X X
of the CONTRACTOR's material
and/or personnel, in an emergency
character, due to the CONTRACTOR's
failure or lack of programming.
- - --------------------------------------------------------------------------------
17. All customs expenses, fees, X X
including agent services, licenses,
taxes or similar charges regarding
the import or shipment to the Unit
of all equipment, spare parts and
consumables of the CONTRACTOR.
- - --------------------------------------------------------------------------------
18. All expenses, including those X X
with licenses, taxes or similar
charges regarding the vessel's
adaptation and operation in
accordance with the Laws, Rules,
Decrees, Administration Rules and
Instructions in force in Brazil.
- - --------------------------------------------------------------------------------
19. Services of submarine X X
inspection, measurement,
intervention, etc. with a
remote operated submarine vehicle.
- - --------------------------------------------------------------------------------
20. Services to interconnect the X X
boom lines with the burners.
- - --------------------------------------------------------------------------------
21. Special repair and recovery
services with qualified welding
in equipments and lines belonging to:
a) PETROBRAS X X
b) CONTRACTOR X X
- - --------------------------------------------------------------------------------
22. Communication services
via satellite, when used by:
- PETROBRAS X X or X
- the CONTRACTOR X X or X
- - --------------------------------------------------------------------------------
23. Maintenance of communication X X or X
service via satellite
- - --------------------------------------------------------------------------------
24. Rental or Brasilsat X X or X
satellite signal
- - --------------------------------------------------------------------------------
25. Rental of satellite signal X X
for the DGPS
- - --------------------------------------------------------------------------------
26. Services in the burners
supplied by the CONTRACTOR.
- Operation during production tests X X
- Maintenance and repairs X X
- - --------------------------------------------------------------------------------
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- - --------------------------------------------------------------------------------
27. Services for the Remote | | | | |
| | | | |
- Operation Vehicle (ROV: | X | | X | |
Installation, operation, | | | | |
maintenance and removal of | | | | |
the vehicle | | | | |
- Welding services and adaptation | | X | | X |
work for the installation and | | | | |
removal of the vehicle, winch, | | | | |
command cabin, storehouse and | | | | |
workshop | | | | |
- - --------------------------------------------------------------------------------
(End of Attachment)-------------------------------------------------------------
72
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CONTRACT No. 101.2.156.97-1-----------------------------------------------------
ATTACHMENT "V"
LIST OF (MINIMUM) SPECIALIZED PERSONNEL
ABOARD
- - - Captain or Barge 1
- - - Tool Pusher (1 superintendent on board) 2
- - - Driller 2
- - - Assistant Driller 2
- - - Derrickman 2
- - - Roughneck 6
- - - Crane operator 2
- - - Area Man 8
- - - Welder 2
- - - Watchstander 2
- - - Subsea Engineer 1
- - - Mechanic 1
- - - Assistant Mechanic 1
- - - Electrician 1
- - - Assistant Electrician 1
- - - Radio Operator (Portuguese speaking) 2
- - - Male nurse 1
- - - Storekeeper 1
- - - Safety guard 1
NOTE: Supplementary personnel will be supplied according to the CONTRACTOR's
conveniences and needs or to comply with the requirements of government
laws.------------------------------------------------------------------
73
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CONTRACT No. 101.2.156.97-1-----------------------------------------------------
ATTACHMENT "VI"
ENVIRONMENTAL OPERATING CONDITIONS
(PERMISSIBLE LIMITS FOR ENVIRONMENTAL
CONDITIONS ACTING SIMULTANEOUSLY)
-------------------------------------------------------------------------------
PITCH OR
OPERATION HEAVE ROLL WIND WAVES CURRENT
(feet) (Degrees) (MPH) (feet) (knots)
-------------------------------------------------------------------------------
Conductor's jetting/driving 2.0 2.5 30 3.0 1.4
-------------------------------------------------------------------------------
Drilling 2.5 3.0 30 3.0 1.4
-------------------------------------------------------------------------------
Casing running 2.0 3.0 30 3.0 1.4
-------------------------------------------------------------------------------
Casing hanger setting 1.5 2.0 30 2.1 1.4
-------------------------------------------------------------------------------
BOP running 1.5 1.5 19 2.1 2.5
-------------------------------------------------------------------------------
BOP setting 3.5 1.5 19 2.1 1.4
-------------------------------------------------------------------------------
Maneuvering 3.5 3.0 44 8.5 1.4
-------------------------------------------------------------------------------
LMPR disconnection 7 4 51 10.5 2.5
-------------------------------------------------------------------------------
LMRP connection 1.5 1.5 19 2.1 1.4
-------------------------------------------------------------------------------
Formation testing 3.5 4.0 44 8.5 1.4
-------------------------------------------------------------------------------
Operating with boats 2.5 3.0 39 6.7 1.4
-------------------------------------------------------------------------------
Running the WCT (lay-away) 1.5 1.5 19 2.1 2.5
-------------------------------------------------------------------------------
Running the WCT (without
lines) 1.5 1.5 19 2.1 2.5
-------------------------------------------------------------------------------
Operation with flexitube 2.0 3.0 30 5.0 1.4
-------------------------------------------------------------------------------
Operation with wire-line 3.0 4.0 44 8.5 1.4
-------------------------------------------------------------------------------
Operation with BAP 2.5 3.0 39 6.7 1.4
-------------------------------------------------------------------------------
NOTE: These data may be corrected/adjusted later and in common agreement,
considering the Unit's operating performance---------------------------
74
<PAGE>
CONTRACT No. 101.2.156.97-1-----------------------------------------------------
ATTACHMENT "VII"
PETROBRAS' SAFETY RULES
1. Service Rule No. 46/71:
o Safety Rules for Offshore Operations.
2. Service Order No. 01/72:
o Operational Safety Rules - Continental Shelf.
3. Service Rule No. 41/72:
o Electricity - Safety Rules
4. Service Order No. 01/76:
o Industrial Safety Rules (general)
o Industrial Safety Rules (Drilling)
o Industrial Safety Rules (Production)
5. General Safety Manual:
o Safety and Environmental Instruction for Contractors (E&P - BC).
75
<PAGE>
CONTRACT NO. 101.2.156.97-1
ATTACHMENT VIII
EQUIPMENT TESTING PROGRAM
In order to carry out the Unit's equipment testing in an easier and
more agile manner, the CONTRACTOR is to submit to PETROBRAS, as quickly as
required the following documents:...............................................
1. CERTIFICATES..............................................................
a) Survey and Appraisal Report, updated and valid for the fiscal year
regarding the Unit offered, issued by one of the entities: ABS,
NOBLE & DENTON, DNV, LLOYDS or BUREAU VERITAS, and if the report is
issued abroad, it will be translated into Portuguese by a sworn
public translator and notarized in the Brazilian Consulate..........
b) Classification or Class Confirmation Certificate for hull and
equipment, compatible with the proposal submitted (certified copy);.
c) Report on claims from the classification societies mentioned in the
Class Confirmation Certificate (in the event there are claims);.....
NOTE: PETROBRAS will evaluate the above mentioned documents and will mention
in what time limits eventual claims are to be settled, and at
PETROBRAS' judgment, it can be at the time of the Unit's inspection or
at mobilization after the contract is signed...........................
d) Freeboard Certificate;..............................................
e) IOPP (International Oil Pollution Prevention) Certificate;..........
f) IMO-MUDU-CODE Certificate - Mobile Offshore Drilling Unit -
latest edition (unnecessary for Drill Ship);.......................
g) Cargo Ship Safety Equipment Certificate;............................
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<PAGE>
h) Cargo Ship Safety Construction;.....................................
NOTE: All documents required are to be within their period of validity.
2. INDUSTRIAL SAFETY AND ENVIRONMENTAL CONTROL...............................
- Manuals and emergency plans in the Portuguese language..............
3. STORAGE CAPACITY..........................................................
- Complete floor plan of bulk movement system, specifying:............
a) Exclusive lines to move cement;.....................................
b) Exclusive lines to move bentonite and baritine;.....................
c) Location and type of bulk line valves and their respective driving
systems;............................................................
d) Pneumatic lines for cleaning and clearing bulk lines;...............
e) Location of the manometers;.........................................
f) Quantity, flow, operation pressure and location of compressors;.....
g) Quantity, flow, operating pressure and location of the air drying
unit(s);............................................................
h) Schematic drawing of each silo with their respective aeration
systems and points of connection with the bulk lines................
4. FLUID CIRCULATION AND PROCESSING SYSTEM...................................
- Sketch of the system emphasizing pulsation dampers (suction and
tamping), safety valves, feed pumps, position of the suction lines
in relation to the suction sieves' tanks and filters................
- Floor plan of the drilling fluid feed and discharge lines showing
the flexibility in relation to the sand traps and mud tanks.........
77
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- Floor plan of the degasser installation showing the active tank,
separate processed mud and gas discharge lines, emphasizing the
connection point of this line with the gas discharge line...........
- Floor plan of the mud tanks system, emphasizing the supply lines,
gun lines, mixture funnel and centrifugal pumps interconnection
lines...............................................................
5. WELLHEAD SAFETY EQUIPMENT SYSTEM..........................................
- Sketch of the BOP/LMRP, specifying lines, valves and
measures/dimensions.................................................
- Floor plan of the kill and choke lines from the BOP to the choke
manifold, specifying valves, connections, dampener chambers,
anchorage points and interconnection with the other systems.........
- Floor plan of the atmospheric air separator ........................
- Layout of the trip tank installation, giving the following
information:........................................................
a) Capacity;.....................................................
b) Location;.....................................................
c) Sensitivity;..................................................
d) Measuring system;.............................................
e) Scale type;...................................................
f) Driller's scale visualization conditions;.....................
g) Supply System for the above item...............................
- Floor plan of the stand pipe manifold, specifying lines,
valves, manometers and interconnections with the other
systems.......................................................
78
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- Inspection report on the riser, riser handling tools and
connectors, telescopic joint and flexible joint, according to
the API RP 2P and RP 2Q standards, with update date not
exceeding 1 year..............................................
NOTE: If the reports show the need of repair in some equipment, the service
performance certificates will also be submitted.........................
- Biannual inspection certificate of the choke manifold, with the
manufacturer's approval.............................................
- Biannual inspection certificate of the BOP unit and driving system,
with the manufacturer's approval....................................
- Biannual inspection certificate of the BOP, with the manufacturer's
approval............................................................
- Proof of technical hability of the well drilling and control
personnel...........................................................
- To supply an internal maintenance and rust prevention program for
the marine risers: and kill and choke lines.........................
6. ENERGY GENERATION SYSTEM..................................................
- Unifilar diagram of the energy generation and distribution system...
7. STABILITY.................................................................
- To submit the vessel's stability curve, updated in the proposal's
conditions, in keeping with the environmental conditions............
8. DYNAMIC POSITIONING SYSTEM (including the motor generators assembly,
thrusters and propellers).................................................
- Schematic diagram of the dynamic positioning system.....................
79
<PAGE>
- To submit the inspection and tests procedures to be carried out at
every new location..................................................
- To submit the tests and inspections procedures to be carried out at
the end of each contract year.......................................
9. DRILLING STRING AND ACCESSORIES...........................................
- Inspection report on all equipment of the drilling and completion
strings, subs and accessories (used equipment)......................
- Purchase voucher of the drill and completion strings, subs and
accessories (for new equipment).....................................
10. FISHING TOOLS AND ACCESSORIES.............................................
- Inspection report on all components of the fishing tools (used
equipment) or purchase voucher (for new tools)......................
11. SUNDRY SYSTEMS............................................................
- Winches load test certificate........................................
- Description of the compressed air system, emphasizing compressors,
layout of lines, valves and interconnection with the other systems...
- Preventive Maintenance Plans with their respective timecharts........
- Ballast and sewer flowchart..........................................
Proof will be needed for the existence on board and for the operating
capacity of all equipment and accessories listed in Attachments C and D of
the chartering and services rendering contracts...........................
80
<PAGE>
NOTE: Such equipment must be in places of easy access for survey............
A) RECEIPT TEST..............................................................
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D of the chartering and services rendering
contracts...........................................................
NOTE: Such equipment must be in places of easy access for survey..............
The following systems, equipment and tools listed below will be
checked, inspected and tested:..................................................
1) DRILL STRING, COMPONENTS AND ACCESSORIES...........................
- The CONTRACTOR will submit recent inspection reports, according to
the specification API RP7G for the whole drill string and
accessories such as, but not limited to: drill pipes, drill collars,
HW, Subs, stabilizers, reamers, bumper subs, lift-sub, kelly, slips,
elevators, fishing tools, etc, which prove the good conditions of
the string and its accessories......................................
- The information from the reports and the general conditions of the
string and its accessories will be checked by PETROBRAS by means of
a sampling inspection. In the event of discrepancy between the data
submitted by the CONTRACTOR and those checked by PETROBRAS, showing
an inadequate condition of the string and its accessories, the
CONTRACTOR will carry out another inspection, for its own account...
NOTE 1: Any equipment refused by the inspection will be immediately
repaired or replaced by the CONTRACTOR, for its own account...........
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<PAGE>
NOTE 2: For the string, components and new accessories, no inspection
report will be required, documents proving that such equipment is new
will be sufficient....................................................
NOTE 3: The CONTRACTOR's equipment will be stored and arranged so as to
facilitate the inspection by sampling to be carried out by PETROBRAS.-
- The same procedure will be adopted for the telescopic joints and
flexible joints.....................................................
2) EXTRACTOR OF SOLIDS
The following will be examined:.....................................
- sieves,.......................................................
- dessander,....................................................
- degasser - test suction and discharge.........................
- centrifugue (if any)..........................................
The operation and work pressure, as well as the existence of
manometers, will be checked.....................................................
3) MUD TANKS AND VALVES
Waterproofness, working of the agitators, mixture funnel and depth
gun, besides the existence of fixed marks to control the tanks
volume will be checked..............................................
4) CENTRIFUGAL PUMPS
The following will be checked:......................................
- working, vibration and noises;................................
- Packing (leaks);..............................................
- Work pressures................................................
NOTE: Items 3 and 4 will be tested with sea water...........................
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<PAGE>
5) MUD LABORATORY AND TEST EQUIPMENT.
- The existence on board and the adequacy to the requirements
described in Attachments B and C to this contract will be
checked.......................................................
6) DRILLING DERRICK Maintenance conditions (corrosion), fastening
system and the conditions of the travelling block rails will be
examined............................................................
7) CROWN BLOCK The pulleys will be examined as to profiles wear,
alignments, clearance, buckling of the axles, lubrication, etc......
8) MUD PUMPS...........................................................
The following will be carried out:..................................
- observation of working, vibrations, noises;...................
- pressure and maximum work flows tests for the liner used;.....
- safety valve working test;....................................
- checking of the suction and discharge pulsation dampeners;
watertightness tests with nominal pressure of the mud pumps
and of all manifold valves;...................................
- watertightness tests with nominal pressure of all manifold
valves of the stand pipe manifold and of the kelly hose;......
- random disassembling of the suction for visual inspection of
the piston, sleeve, packing, valve and seat...................
9) SWIVEL
- The mandril, gooseneck, body, etc. will be checked and nominal
pressure test with rotation will be performed.................
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<PAGE>
10) MOTION COMPENSATOR
- The piston alignment, lock bar, alignment in the rail, general
conditions, leaks and chains will be checked..................
11) RISER AND GUIDE LINES TENSIONERS
- The general conditions, leaks, pulleys and cables will be
inspected.....................................................
12) RISER RECOIL SYSTEM/HANG OFF SYSTEM/ FILL-UP) VALVE (if any)
- The systems operation will be checked.........................
13) HIGH COMPRESSORS AND AIR RESERVOIRS
- The general conditions, leaks, lines and system yield will be
checked.......................................................
14) TOP DRIVE
- Working tests (connection and disconnection of one or more
sections of the DP's) will be carried out and the general conditions
will be inspected...................................................
15) KELLY SPINNER
- The general conditions, specially the rollers wear, and
working will be checked, and connection and disconnection operation
of one or more DP's will be carried out.............................
16) HOOK
- The general conditions and the locking system will be checked.
17) TRAVELLING BLOCK
- The pulleys wear, axles alignment, lubrication system,
retraction system, etc., will be inspected..........................
18) DRAWWORKS
- The operation of the mechanical break system (brake bands),
electromagnetic (distance between irons, voltage level and SCR
feeder conditions), cooling system and clutches will be checked.....
- The operation of the cat-heads and height limitator with the
assembly/disassembly of one or more command sections, will be
checked.............................................................
19) ROTARY TABLE
- The operation in high and low, brake system, tachometer and
lubrication system will be checked..................................
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20) TRIP TANK
- Capacity, installation site, sensitivity of the level
indicator system, visualization condition and supply system will be
inspected...........................................................
21) HYDRAULIC TONGS AND PNEUMATIC SPIDER OR CASING AND PNEUMATIC TONGS
FOR DRILL PIPES
- Operation tests will be made and maintenance conditions will
be checked..........................................................
22) SAND-LINE OR WIRE-LINE SYSTEM.......................................
- Operation of the clutches and brake will be tested by lowering the
photo-clinometer inside the drill string coinciding with the
photo-clinometer overshot test (TOTCO) will be tested. Test to be
made on location before the beginning of operations.................
- The existence of an alignment guide for the sand-line cable in
the drum will be checked............................................
23) CHOKE MANIFOLD......................................................
- All valves with low pressure (300 psi) and in high pressure
(system's work pressure). Manometers, hydraulic choke operation,
manual choke, remote control panel, etc. will be tested.............
24) UPPER AND LOWER KELLY COCK, INSIDE BOP AND SAFETY VALVE.............
- Drivers will be tested and work pressure tests will be made.........
- The end connections of each element will be checked and tested with
work pressure. The CONTRACTOR should have end seal plugs adequate
for the test........................................................
25) KILL AND CHOKE LINE HOSES...........................................
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<PAGE>
The end connections will be checked and tested with the system's
work pressure. The CONTRACTOR should have end seal plugs adequate
for the test........................................................
26) DRILL INSTRUMENTATION SYSTEM........................................
The following will be tested:.............................................
- geolograph;.........................................................
- rotary table tachometer;............................................
- manometers;.........................................................
- stroke counter;.....................................................
- level control in the mud tanks;.....................................
- torque indicator....................................................
27) FLARE PIPE AND BOOMS................................................
- Their existence on board will be checked, analyzing the maintenance
conditions of the lines by means of inspection, and the facilities
for installation of the production test equipment system............
28) BOP SYSTEM
- The following will be carried out:..................................
- pressure tests of the slide valves with low pressure and high
pressure, compatible with the system................................
- pressure tests of the annulars with low pressure and high pressure,
compatible with the system..........................................
- complete function test in both POD's, through all panels............
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- choke and kill valves tested with low pressure and high pressure,
compatible with the system..........................................
- working of the shear ram valve will be checked with opening for
examination of the blades conditions................................
- the opening and closing of all ram, annular and kill and choke
valves chambers will be tested......................................
- the hydraulic driving unit will be checked as to: fluid used, low
fluid level alarm, low air pressure and low accumulators pressure,
maintenance conditions, leaks and mixing systems....................
- the volumetric capacity of accumulators and the capacity of electric
and pneumatic pumps of the hydraulic unit will be tested............
- the locking system of the ram valve(s) will be tested...............
- the SPM valves conditions will be checked by opening and inspecting
one of them, chosen at random.......................................
- the locking/unlocking system of the H-4 hydraulic connectors will be
tested..............................................................
- the surface and bottom accumulators' precharge will be checked......
- The operation of the following systems will be tested:..............
o Driving back-up...............................................
o emergency recovery............................................
o handling......................................................
29) TRAVELLING TONGS, EZY TORQ, TORQUE SENSOR, SLIPS, ETC...............
One or more sections of the drill collars and drill pipes will be
assembled/disassembled to check the working of such equipment. The
general maintenance conditions, chuck Jaws and cables will be
checked.............................................................
87
<PAGE>
30) BULK TRANSFER SYSTEM................................................
The following will be carried out:..................................
- the operation of the compressor will be checked, and noises, oil and
air leaks, and maintenance state, filters and dehumidifier will be
inspected...........................................................
- operation and watertightness of valves, lines and silos will be
checked, looking for possible clogging..............................
- transfer of cement from 1 silo to the daily silo (if any) and from
this to the surge tank will be made.................................
31) EMERGENCY ENERGY GENERATION SYSTEM
- a black-out in the energy system generation system will be simulated
to see if the emergency generator is automatically turned on........
32) MAIN MOTO-GENERATOR ASSEMBLY
- The following will be carried out:..................................
- vibration, noises, insulation, leaks, maintenance, etc., will be
checked.............................................................
- generators input and output in the bus bar, synchronisms and load
divisions will be tested. ..........................................
- load and voltage and frequency regulation will be tested............
33) DESSALTER
Operation and production capacity will be checked...................
34) CAT-LINES CRANES
The following will be carried out:..................................
- operation of the winches and maintenance of the cables will be
checked.............................................................
88
<PAGE>
- the elevation and rotation system, the operation with flying boom
and pulley block and the operation of the boom height pawl will be
checked.............................................................
- the report of the last inspection carried out by the Unit's
classification society in the winches will be examined..............
35) DEJECTA TREATMENT UNIT
Its operation will be inspected.....................................
36) TELECOMMUNICATION SYSTEM
Operating tests will be made in all radio equipment existing on
board, including radio beacon.......................................
37) OVERHEAD TRAVELLING CRANES
Their operation, and the maintenance conditions of cables and
sliders will be examined............................................
38) DC/SCR MOTORS
The maintenance conditions and insulation, as well as the collectors
and brushes will be examined........................................
- SCR functional test...........................................
39) DIVERTER
- The following will be tested: flow line wing valves;..........
- diverters and insert packer lock;.............................
- the control panel will be checked.............................
40) SAFETY EQUIPMENT
Salvage.............................................................
89
<PAGE>
Fireproof rigid vessels (capsules, whalers):........................
- lowering, motor, fuels, sprinklers, start;..........................
- rations, garnishing, hatches, cleaning, fire extinguishers,
signaling equipment.................................................
Inflatable rafts:
- quantity, capacity, location, height relation to the sea;...........
- validity of the last inspection, means of access to the sea;........
- conditions of the cocoon............................................
Jackets:.................................................................
- quantity (sufficiency), location, protection, and maintenance.......
Life-buoys:..............................................................
- quantity (sufficiency), location, heaving-lines, lanterns, smudge
pots................................................................
Escape routes:...........................................................
- vertical and horizontal signaling (indicative plates);..............
- clearing, lighting (emergency)......................................
Water Supply System for Fire Fighting.....................................
Fire ring:................................................................
- water system for the rig;...........................................
- sprinklers system;..................................................
- painting, corrosion, signaling, visual conditions;..................
- valves, hydrants, guns..............................................
Fire pumps:..............................................................
- operation;..........................................................
90
<PAGE>
- motor, fuel, start, panel, tests....................................
Fire Fighting Fixed Systems..............................................
- Foam system: chambers, tanks, guns, hydrants and carrier liquid.....
- Cylinders; conditions, reloading, retesting (C02 or HALON, if any)..
- Lines and diffusers: general conditions.............................
- Automatic: feeding, panels, batteries, detectors, tests.............
- Manual: commands, interconnections, tests...........................
- Alarms: interconnections............................................
Fire Extinguishers........................................................
- water, carbon dioxyde, chemical powder (portable and carts);........
- distribution, location, general conditions;.........................
- revision, recharge, retest, control, meters, replacement............
- Fire Posts..........................................................
- hose, keys, sprinkler;..............................................
- fiber boxes, general conditions, post identification;...............
- visual signaling: sufficiency and general conditions................
Emergency Equipment......................................................
- autonomous breathing apparatuses, reserve bottle, breathable air
fixed system, fire proximity clothing, lantern, ax, safety belt;....
- distribution, location, general conditions, inventory, maintenance
and replacement.....................................................
Communications and Alarms................................................
- telephone (internal, external): Operating capacity;.................
91
<PAGE>
- radiophony: VHF. Operating capacity;...............................
- portable transceptors: quantity; distribution, intrinsic safety;....
- intercom: quantity, distribution, and horns audibility,
interconnection with the rig, coding of sound alarm tones,
amplifiers; ........................................................
- visual signaling: sufficiency, general conditions;..................
- fire alarm, glass breaking type: batteries, bells, tests............
Emergency Lighting.......................................................
- charger, batteries and lanterns.....................................
Helideck.................................................................
- protection: guns, fire extinguishers, salvage equipment;............
- painting, protection screen, net, landing lights, safety warnings;..
- guest welcoming practices...........................................
Load Lifting.............................................................
- winches: general conditions, operation, signaling, maintenance;.....
- manual and electric tackles: general conditions, operation,
signaling, maintenance;.............................................
- material movement and storage areas.................................
Training.................................................................
- abandonment, fire fighting, first aid and brigade...................
Manuals and Plans........................................................
- emergency; safety;..................................................
- disclosure, knowledge;..............................................
92
<PAGE>
- distribution, control, updating;....................................
- tasks schedules for emergency and abandonment situations, including
in Portuguese.......................................................
Order and Cleanliness.....................................................
- installation's general aspect;......................................
- particularly alarming places........................................
Smoke, Heat and Gas Detection System......................................
- test of hydrocarbons detection sensors..............................
Ballast and Sewer System.................................................
- functional test.....................................................
41) ANCHORING SYSTEM....................................................
42) DYNAMIC POSITIONING SYSTEM..........................................
43) PROPULSION SYSTEM...................................................
B) LOCATION MOVING TEST......................................................
To be defined between the CONTRACTOR and PETROBRAS........................
C) BEGINNING OF CONTRACT YEAR TEST...........................................
To be defined between the CONTRACTOR and PETROBRAS........................
93
<PAGE>
CONTRACT No. 101.2.156.97-1.....................................................
ATTACHMENT IX
PROCEDURES IN THE EVENT OF FATAL ACCIDENTS
1. If, during the period of validity of the contract, a fatal accident
occurs with a CONTRACTOR's employee, the CONTRACTOR should:...........
1.1. Notify the Inspection immediately, for the proper measures; ..........
1.2. Take measures so that the employee's relatives be notified with the
utmost urgency on the event, giving them the social support due;......
1.3. Formally establish an Investigation Commission, within 48 hours after
the accident, in order to, in the maximum time limit of 15 days,
identify the causes and recommend the measures deemed necessary to
prevent similar accidents.............................................
2. The report should contain, at least, the following information
regarding the accident:...............................................
- description; ....................................................
- exact location; .................................................
- data regarding the injured persons;..............................
- basic and immediate causes;......................................
- measures to be taken in order to prevent its repetition..........
3. The CONTRACTOR should guarantee the Commission enough authority and
autonomy to carry out the investigations without any restrictions.....
4. A PETROBRAS' employee should participate in the Commission, appointed
by the authority in charge of the operational office..................
5. After conclusion of the Commission's work, it will also behoove the
CONTRACTOR, at the Inspection's request, to disclose the results of
the report, so as to convey the experience from the accident to other
contractor companies..................................................
- - --------------------------------------------------------------------------------
94
<PAGE>
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on the 5th of
February, 1998 in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
_________________________________
Marcia Barbosa Serra
Sworn Public Translator
95
EXHIBIT 10.2(A)
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt
301 - Leblon - 22450 - 190
ISS: 1261003-00- CIC: 606442227-00
Tel: 274-3844
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 2660/98
(On paper with letterhead of PETROBRAS.)
RIDER No. 1 TO CONTRACT 101.2.156.97-1
ENTERED INTO BETWEEN PETROLEO BRASILEIRO
S/A AND THE COMPANY MARITIMA PETROLEO E
ENGENHARIA LTDA./.
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company,with head
office at Av. Republica do Chile 65, in the City of Rio de Janeiro, State of Rio
de Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayer
Registry of the Ministry of Finance under No. 33.000.167/0001-01, henceforth
called PETROBRAS, represented herein by the Executive Superintendent of
Exploration and Production South-Southeast, Luiz Eduardo G. Carneiro, and the
Company MARITIMA PETROLEO E ENGENHARIA LTDA., succesor of MARITIMA NAVEGACAO E
ENGENHARIA LTDA., with head office at Av. Almirante Barroso, 52, Group 3400,
City of Rio de Janeiro, Federative Republic of Brazil, enrolled in the General
Taxpayers Registry of the Ministry of Finance under No. 46.828.596/0001/13,
henceforth called the CONTRACTOR, represented herein by its President, German
Efromovich, have agreed to add a rider to contract 101.2.156.97-1, according to
the following clauses and conditions:/.
<PAGE>
FIRST CLAUSE - OBJECT.
1. The present Rider has as its object./.
1.1. To change the corporate name of the CONTRACTOR from MARITIMA NAVEGACAO E
ENGENHARIA LTDA. to MARITIMA PETROLEO E ENGENHARIA LTDA./.
1.2. To include as INTERVENIENT PARTY, to the present contract, the company
PETRODRILL SEVEN LTD., with head office in Omar Hodge Building, Wickhams Cay,
Road Town, Tortola, Ilhas Virgens Britanicas, represented by its Director GERMAN
EFROMOVICH./.
1.3. To change the redaction of items 3.12.1 and 3.21.2 of the THIRD CLAUSE -
CONTRACTOR'S OBLIGATIONS./.
1.4. To change the redaction of item 16.1 of the SIXTEENTH CLAUSE -
INTERVENIENCE./.
SECOND CLAUSE - CONTRACTOR'S OBLIGATIONS./.
2.1. The Redaction of items 3.12.1 and 3.21.2. change to:/.
3.12.1 "The minimum value of the civil liability insurance is of
US$1,000,000.00 (one million dollars), per occurrence, during the period of
validity of this CONTRACT and its eventual extension, which amount is to be
converted into Brazilian currency on the date of signature of this instrument.
THE INTERVENIENT PARTY IS TO APPEAR AS CO-INSURED IN THIS INSURANCE POLICY./.
3.21.2 "Exception is made to cases arising from kick, blow-out, surge or
formation testing, in which the CONTRACTOR will be kept free and safe from, in
the other cases of spillage of oil and other residues in the sea, the CONTRACTOR
AND THE INTERVENIENT PARTY WILL BE JOINTLY LIABLE, UP TO THE LIMIT OF
US$500,000.00 (FIVE HUNDRED THOUSAND DOLLARS), PER EVENT AND ITS DEVELOPMENTS./.
THIRD CLAUSE - INTERVENIENCE./.
3.1. The redaction of item 16.1 is changed to:/.
16.1. "THE INTERVENIENT PARTY SIGNS THE PRESENT CONTRACT, TOGETHER WITH
THE CONTRACTOR, BEING JOINTLY LIABLE WITH IT FOR ALL OBLIGATIONS ARISING FROM
THE PRESENT CONTRACT AND IT EXECUTION, INCLUDING FOR LOSSES.
FOURTH CLAUSE - RATIFICATION./.
<PAGE>
4.1 The parties ratify the other conditions of the CONTRACT that were not
changed by the present instrument./.
And being thus agreed, the parties sign the present Rider in 2 (two)
copies of the same tenor and fashion, together with the witnesses below./.
Rio de Janeiro, August 21, 1998./.
(Signed:) (Illegible) - Luiz Eduardo G. Carneiro./.
Executive Superintendent of Exploration and Production South-Southeast./.
PETROBRAS - PETROLEO BRASILEIRO S.A./. (Signed:) (Illegible) - German
Efromovich./.
President - MARITIMA PETROLEO E ENGENHARIA LTDA./. (Signed:) (Illegible) -
German
Efromovich ./. Director - PETRODRILL SEVEN LTD./.
WITNESSES./.
(Signed:) Elaine Brabo - Name: ELAINE BRABO./.
(Signed:) Andre de Mesquita Pinto - Name: ANDRE DE MESQUITA PINTO./.
(Two initials appeared on the first page of the document.)/.
- - --------------------------------------------------------------------------------
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on November 20,
1998 in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
____________________________________
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.3
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 Apt # 301 - Leblon - 22450
ISS: 1261003-00
CIC: 606442227-00
Tel.: 274-3844
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 4030/98
(Original submitted for translation.).........................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)...........
LETTER OF AGREEMENT
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company with head
office at Av. Republica do Chile, 65, City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil enrolled in the General Taxpayers'
Registry of the Ministry of Finance under No. 33.000.167/0001-01, represented
herein by the Executive Superintendent of Exploration and Production South -
Southeast, Engineer LUIZ EDUARDO G. CARNEIRO, henceforth called PETROBRAS, and
the Company MARITIMA NAVEGACAO E ENGENHARIA LTDA., with head office at Avenida
Almirante Barroso, no. 42, 34th floor, City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers'
Registry of the Ministry of Finance under No. 46.828.596/0001-13, represented
herein by its President, Mr. GERMAN EFROMOVICH, have agreed upon the present
Letter of Agreement regarding contracts 101.2.155.97-9 (Chartering) and
101.2.156.97-1 (Rendering of Services) for the Unit Amethyst 7, henceforth
called the Unit, as follows:..................................................
Item New Redaction
Chart./Services
1.1. (Charter.) The object of the present contract is the chartering to
PETROBRAS, of the Unit, which, according to the CONTRACTOR, is
to be built in a shipyard for the purpose of fulfilling this
contract, in order to be used in the drilling and/or
evaluation and/or completion and/or workover of oil and/or gas
(vertical, directional and horizontal) wells, in the Brazilian
continental shelf, down to a maximum depth of 5,000 (five
thousand) meters, in a water depth down to 1,200 (one thousand
twelve hundred) meters..................
<PAGE>
3.17.- (Serv.) To submit to the contract Manager, up to 30 (thirty)
consecutive days after its inception, as foreseen in item 2.2.1, the originals
or certified copies of the insurance policies made as a result of this contract,
containing all essencial data, such as insurers, time limits, period of
validity, amounts insured, and coverage conditions, and with PETROBRAS appearing
as co-insured, except in the civil liability insurance, of which it will
participate as a third party.................................................
3.19.- (Chart.) To submit to the Manager of this contract, up to 30 (thirty)
days after the beginning of the performance, as foreseen in
item 2.2.1, the originals or certified copies of the
certificates of the insurances made as a result of this
contract, containing all essential data, such as insurers,
time limits, periods of validity, amounts insured, and
coverage conditions, and with PETROBRAS appearing as
co-insured, except in the civil liability insurance, of which
it will participate as a third party.......................
7.7 (Chart.) The CONTRACTOR agrees that, at PETROBRAS' exclusive option,
the payments referring to the chartering object of the present
contract can be made through financing by third parties,
provided the time limits, currency, amounts and place of
payment set forth in the contract are complied
with.......................................................
12.5 - (Chart.) In the present contract, it will
13.5 - (Serv.) be considered as act of God the situation in which one of the
parties is prevented from fulfilling its obligations, provided
it proves that:............................................
o the non-fulfillment of the obligation was due to the
existence of an impediment beyond its control;.............
o the party impeded could not, within its ability, overcome
the impediment and its effects, in order to fulfill its
contract obligation within the time limit set down, and....
o the impediment and its effects could not be avoided nor
overcome...................................................
As an illustration of act of God or force majeure, one may mention
wars, strikes, submarine earthquakes, among other facts, which
effects were not possible to avoid or prevent....................
<PAGE>
And being thus agreed, the parties sign the present Letter of
Agreement, in 2 (two) copies with the same tenor, with the witnesses below...
Rio de Janeiro January 15, 1998..............................................
PETROLEO BRASILEIRO S/A - PETROBRAS..........................................
(Signed:) Luiz Eduardo G. Carneiro..........................................
Luiz Eduardo G. Carneiro - Executive Superintendent
of Exploration and Production South - Southeast..............................
MARITIMA NAVEGACAO E ENGENHARIA LTDA.........................................
(Signed:) German Efromovich.................................................
German Efromovich - President................................................
WITNESSES: .................................................................
(Signed:) Andre de Mesquita Pinto...........................................
for Claudio Fontes Nunes.....................................................
(Signed:) Hamylton P. Padilha Jr............................................
Hamylton P. Padilha Jr.......................................................
(Two initials appeared on the first page of the document.).............
- - --------------------------------------------------------------------------------
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on the 17th of
February 1998 in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
_________________________________
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.4
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt 301 - Leblon - 22450-190
ISS: 1261003-00
CIC: 606442227-00
Tel.: 274-3844
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 4029/98
LETTER OF AGREEMENT
(Original submitted for translation.).........................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)...........
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company with head
office at Av. Republica do Chile, 65, City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil enrolled in the General Taxpayers'
Registry of the Ministry of Finance under No. 33.000.167/0001-01, represented
herein by the Executive Superintendent of Exploration and Production South -
Southeast, Engineer LUIZ EDUARDO G. CARNEIRO, henceforth called PETROBRAS,
and the Company MARITIMA PETROLEO E ENGENHARIA LTDA., with head office at
Avenida Almirante Barroso, no. 42, 34th floor, City of Rio de Janeiro, State
of Rio de Janeiro, Federative Republic of Brazil, enrolled in the General
Taxpayers' Registry of the Ministry of Finance under No. 46.828.596/0001-13,
represented herein by its President, Mr. GERMAN EFROMOVICH, henceforth called
the CONTRACTOR, whereas:......................................................
1. the parties have entered into two contracts, one under No. 101.2.155.97-9,
the object of which is the chartering of the semi-submersible floating
Unit, provided with dynamic positioning (DP), called AMETHYST 7, to
operate in a water depth of up to 1,200m, and one under No.
101.2.156.97-1, for the rendering of drilling, completion, evaluation and
workover services........................................
2. the contract period set forth in subitem 2.2.3 of the second Clause of
said contracts is of 6 (six) years, with forecast for extention of the
time limit by means of an agreement.....................................
THE PARTIES RESOLVE
a) that the contract period of 6 (six) years, at its final term, will be
automatically extended for 2 (two) more years;..........................
b) that the other clauses of said contract deeds remain unchanged..........
<PAGE>
And being thus agreed, the parties sign the present Letter of
Agreement, in 2 (two) copies with the same tenor, with the witnesses below.
Rio de Janeiro January 15, 1998...............................................
(Signed:) Luiz Eduardo G. Carneiro...........................................
Luiz Eduardo G. Carneiro - Executive Superintendent
of Exploration and Production South - Southeast...............................
PETROLEO BRASILEIRO S/A - PETROBRAS...........................................
(Signed:) German Efromovich..................................................
German Efromovich - President.................................................
WITNESSES: ...................................................................
MARITIMA PETROLEO E ENGENHARIA LTDA. .........................................
(Signed:) Andre de Mesquita Pinto............................................
for/Claudio Fontes Nunes......................................................
(Signed:) Hamylton P. Padilha Jr. ...........................................
Hamylton P. Padilha Jr. ......................................................
(Two initials appeared on the first page of the document.)
- - --------------------------------------------------------------------------------
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on the 17th of
February, 1998 in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
______________________________
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.5
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt 301 - Leblon - 22450
ISS: 1261003-00 - CIC: 606442227-00
Tel.: 274-3844
I, THE UNDERSIGNED, SWORN PUBLIC TRANSLATOR AND COMMERCIAL INTERPRETER IN AND
FOR THIS CITY AND STATE OF RIO DE JANEIRO, FEDERATIVE REPUBLIC OF BRAZIL,
REGISTERED AT THE COMMERCIAL BOARD OF RIO DE JANEIRO UNDER NUMBER 97, DO HEREBY
CERTIFY AND ATTEST THAT A DOCUMENT IN THE PORTUGUESE LANGUAGE WAS SUBMITTED TO
ME FOR TRANSLATION INTO ENGLISH, WHICH I PERFORMED ACCORDING TO MY OFFICE, AS
FOLLOWS:
TRANSLATION NO. 4014/98
(Xerox copy submitted for translation.).......................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)...........
Contract No. 101.2.159.97-1...................................................
CHARTERING CONTRACT
CHARTERING Contract OF THE DYNAMIC POSITIONING FLOATING Unit
AMETHYST 6, ENTERED INTO BETWEEN PETROLEO BRASILEIRO S.A. -
PETROBRAS AND THE COMPANY MARITIMA NAVEGACAO E ENGENHARIA LTDA.--
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, organized and
existing under Law No. 2.004, dated 10/03/53, with head office at Av.
Republica do Chile, 65, City of Rio de Janeiro, State of Rio de Janeiro,
Federative Republic of Brazil enrolled in the General Taxpayers' Registry of
the Ministry of Finance under No. 33.000.167/0001-01, represented herein by
the Executive Superintendent of Exploration and Production South-Southeast
LUIZ EDUARDO G. CARNEIRO, hereforth called PETROBRAS, and the Company
MARITIMA NAVEGACAO E ENGENHARIA LTDA., with head office at Avenida Almirante
Barroso, No 42, 34th floor, City of Rio de Janeiro, State of Rio de Janeiro,
Federative Republic of Brazil, enrolled in the General Taxpayers' Registry of
the Ministry of Finance under No. 46.828.596/0001-13, represented herein by
its President, Mr. GERMAN EFROMOVICH, have agreed upon the present Contract
for the chartering of the Dynamic Positioning Floating Unit AMETHYST 6 and
1
<PAGE>
its accessories, described in Attachment I, henceforth called the Unit,
according to the authorization of PETROBRAS' Executive Board (MINUTES No.
4.129, Item No. 47, dated 12.19.97) the parties being bound to the terms of
the Invitation to Bid No. 101.0.016.97-5 and subjected to the following Clauses
and Conditions:...............................................................
(End of the Qualification)....................................................
2
<PAGE>
FIRST CLAUSE - OBJECT.........................................................
1.1. The object of the present Contract is the chartering to PETROBRAS, of
the Unit, in order to be used in the drilling and/or evaluation and/or
completion and/or workover of oil and/or gas (vertical, directional and
horizontal) wells, in the Brazilian continental shelf, down to a
maximum depth of 5,000 (five thousand) meters, in a water depth down to
1,200 (twelve hundred) meters.........................................
1.1.1. It is included, as an object of the Contract, the performance, by the
CONTRACTOR, of any and all operations needed for the perfect
fulfillment of the chartering object of the Contract, such as, but not
limited to, the performance and supervision of the positioning,
ballasting and movement of the Unit...................................
1.2. PETROBRAS may determine that the CONTRACTOR makes the reentry in wells
already drilled, and it can install in the Unit equipment and
production facilities, the provisions of item 14.1 of this Contract
being complied with...................................................
1.3. The chartering object of the present Contract is included in the
Annual Activities Plans, under the following codes:....................
B 12000 - Boring - Production Development.............................
A 22000 - Boring - Exploratory Drilling...............................
B 13000 - Completion and Intervention for Evaluation - Production
Development.................................................
A 24000 - Intervention for Evaluation - Exploratory Drilling..........
(End of Clause)................................................................
3
<PAGE>
SECOND CLAUSE - PERIOD OF VALIDITY AND DURATION...............................
2.1. PERIOD OF VALIDITY - The present Contract binds the parties as of its
signature, but the payments in foreign currency can only be made after
the date of its registry in the Central Bank of Brazil..........
2.2 DURATION - The present Contract will have a duration of
2,190(twenty-one hundred and ninety) days.............................
2.1.1. BEGINNING OF THE CONTRACT - The beginning of the Contract will occur
when the Unit is released by PETROBRAS, through a written notice, to
begin the operations, after the general equipment testing foreseen in
item 3.1 of this Contract is carried out..............................
2.2.2. AUTOMATIC EXTENSION - If at the end of the duration mentioned in 2.2,
some operation is still being performed in a well, the duration of the
present Contract will be automatically extended, until the completion
of the works in said well, considering as the final limit the Unit's
arrival in the port or sheltered waters chosen by common agreement
between the parties and, also, in case there are still PETROBRAS'
equipment aboard the Unit, the completion of the withdrawal of such
equipment will be considered as the final limit.......................
2.2.3. This Contract may be extended for successive periods through a prior
agreement between the parties, by means of an Addendum, the other
Contract conditions being complied with, and limited to a maximum
Contract period of 2,190 (twenty-one hundred and ninety) days.........
2.3. ARRIVAL IN BRASIL - The Unit should arrive at the port or in sheltered
waters, in Macae-RJ. The beginning of operations should occur up to the
date of 12.29.99, the provisions set forth in item 8.1 of this Contract
being complied with...................................................
4
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2.3.1. At the port or in sheltered waters mentioned in 2.3, the customs and
helideck inspections in the Unit will be carried out, as well as the
loading/unloading of the CONTRACTOR's and PETROBRAS' materials, and
also the general equipment testing will begin as foreseen in item 3.1
of this Contract......................................................
(End of Clause)................................................................
5
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THIRD CLAUSE - CONTRACTOR'S OBLIGATIONS.......................................
3.1. Before the beginning of the Contract, the CONTRACTOR will arrange for a
general test of the operating conditions of all of the Unit's
equipment, as provided for in Attachment VIII, in the presence of
PETROBRAS' Inspection. The occurrences found during the performance of
the tests will be duly recorded in the Daily Drilling Certificate (ADP)
signed by PETROBRAS' Inspection and by the CONTRACTOR's representative.
The Unit will be released to sail to the first location after proving
the good operating conditions of the equipment which comprise the rig's
main systems, that is, energy generation and distribution system,
dynamic positioning system, industrial safety, liquid and bulk storage,
fluid circulation and processing, safety and wellhead, column
elevation, rotation and handling, columns, columns, instrumentation,
formation test equipment and communications system...............
3.1.1. The tests referred to in 3.1 will be made in a period estimated in
(three) days, after which the Unit will be released to sail to begin
the operations, provided there is nothing pending in the rig's main
systems, as set forth in item 3.1.....................................
3.1.1.1. In the event the tests last for a period exceeding 3 (three) days, for
reasons ascribed to PETROBRAS, the rate foreseen in Ref 104 (Waiting
Rate) of Attachment II, will be due, applied as of the fourth day of
tests, until the Unit is released. The periods spent with equipment
repair will not be calculated for the purpose of counting such
duration, and also no fees will be due during such periods.
3.1.2. PETROBRAS may opt for the partial or total performance of the receipt
tests, in sheltered waters, in the deepest water depth set forth in the
Contract, or still in the first location..........................
7
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3.2. To maintain, during the Contract period, the Unit, its fittings, as
well as accessories and replacement elements and personnel in perfect
working conditions in a working regime of 24 (twenty-four) hours a day,
7 (seven) days a week, and to guarantee that the Unit is calculated to
carry out the activities object of this Contract........
3.2.1. To strictly comply with the recommendations of the equipment
manufacturers. carrying out the maintenance foreseen in their operation
manuals, which will be provided for in the Unit's preventative
maintenance plan.........................................
3.3. TECHNICAL EVALUATION AWARD AND CERTIFICATES - To submit copies of the
Registry, Survey, Classification and Technical Survey and Evaluation
Award Certificates of the Unit and its fittings, signed by a qualified
and well-known organization, not related with the CONTRACTOR, notarized
in the Brazilian Consulate and translated by a Sworn Public Translator,
if issued abroad, and which should contain:..
3.3.1. Description of the Unit and accessories;..............................
3.3.2. Operationing conditions and physical conditions of the Unit;..........
3.3.3. Light displacement of the Unit (Light weight);........................
3.3.4. Year of construction;.................................................
3.3.5. Year of reconditioning, listing spare parts and parts replaced;.......
3.3.6. Technological differences between the Unit surveyed and a more modern
Unit of the same kind;................................................
3.3.7. Forecast of the average useful life of the good used and its new
analog;...............................................................
3.3.8. Market value, of reproduction and replacement;........................
3.3.9. Net weight of the equipment installed in the Unit;....................
8
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3.3.10. Technical catalogues of the equipment installed in the Unit...........
3.4. To regularize, before the proper authorities, the entry and stay of the
Unit in Brazil, arranging, at its expenses, for the Release, Surveys,
Registries and Temporary Admission....................................
3.4.1. Regarding new equipment and equipment without use, the "Technical
Survey and Evaluation Award" referred to in item 3.3 may be replaced by
factory catalogues or purchase invoices, with description, year of
manufacture, useful life forecast and value of each equipment.........
3.5. Safety, Sanitation and Labor Medicine - To carry out its operations in
strict compliance with the international safety, sanitation and labor
medicine standards, being liable for the violations committed. To
supply, for its account, and maintain in perfect operating conditions,
the safety equipment in accordance with the safety plan ("Safety plan")
approved by the Administration of the vessel's Country of Registry, and
with the good practice in the services of
completion/evaluation/workover........................................
3.5.1 (sic) The Unit will comply with the IMO - MODU - CODE (Mobile Offshore
Drilling Unit) standard...............................................
3.6. (sic) SEA OPERATIONS - To manage the Unit in strict compliance with the
laws, standards, regulations and administrative rules, as well as with
the instructions issued by the Shipping Office or by other proper
authorities, specially those regarding the spillage of oil and other
residues from the Unit into the sea, being liable, as a result, for any
charges arising from the violation of such laws, standards,
regulations, administrative rules and instructions, the limit
established in subitem 3.6.2. being complied with, and with the
exception of the cases provided for in item 3.20 of this Contract.....
9
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3.6.1. (sic) To plan and carry out operations aiming at preventing and
fighting oil and gas blow outs, fires, or other incidents, complying
with the provision in item 2.4 of Attachment II to this Contract.
Although the CONTRACTOR is considered fully responsible for such
operations, it is obliged to discuss the methods to be adopted with
PETROBRAS, in order to find the best operating solution...............
3.6.2. (sic) Exception is made of the events arising from kick, blow out,
surging, or formation testing, which the CONTRACTOR will be kept free
and safe from. In the other cases of spillage of petroleum, oils and
other residues into the sea, the CONTRACTOR will be liable up to the
limit of US$500,000.00 (five hundred thousand dollars) per event and
its deployments.......................................................
3.7. (sic) To comply with all laws, standards, decrees, regulations,
administrative rules and instructions in force in Brazil, that govern
the exploration and research in the Brazilian submarine shelf,
including those regarding environmental protection....................
3.8. (sic) REPLACEMENT AND REPAIRS - The replacement cost for equipment,
materials and accessories needed for the Unit's perfect operation, as
well as the expenses with repairs of any kind, will run for the
CONTRACTOR's account..................................................
3.8.1. (sic) The above mentioned repair cost covers any and all expenses,
including taxes and duties due from the moment of the purchase of the
equipment, spare parts and materials, to their installation and
placement in the Unit, with exception of expenses with transportation
between the support vessels' port of operation and the Unit...........
10
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3.8.2. (sic) Regarding the Temporary Admission of the Unit, as well as the
import of the equipment, materials and accessories mentioned in item
3.8, the CONTRACTOR will comply with the provisions of the Internal
Revenue's Rulling Instruction No. 136/87...............................
3.9. (sic) At the end of this Contract or of its extension, to bear the
charges arising from the return of the Unit, its fittings, accessories,
equipment, spare parts, and materials for replacement or repair, such
charges including, but not limited to, the preparation, packing,
shipping, transportation, unloading, stay, freight, clearance, storage,
wharfage, stowage, insurance and other similar
expenses..............................................................
3.10. (sic) To maintain, at its expenses, besides the Unit, the crew adequate
and sufficient for its operation, being also obliged to comply with the
pertinent legal provisions, issued by Brazilian authorities and by
those of the CONTRACTOR's country of origin...........................
3.11. (sic) To bear all expenses with displacement of the crew, mentioned in
Item 3.10, including transportation from abroad to the Port or Airport
of Macae-RJ, as indicated by PETROBRAS, and the return to the place of
origin, and any and all expenses with the crew's stay in Brazil,
medical and hospital expenses, meals, passports, and similar
expenses..............................................................
3.11.1. To maintain PETROBRAS safe from any complaints, claims from its
employees, representatives, as a result of the present Contract.......
3.12. (sic) To promote, without charges to PETROBRAS, the replacement and
immediate withdrawal of any crew member that may be requested in
writing by PETROBRAS at any time, due to bad behavior, technical
deficiency, or health conditions......................................
11
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3.13. (sic) To maintain a special identification for the crew, so as to
distinguish it from PETROBRAS' and other companies' personnel who may
eventually work in other services related to the object of the present
Contract..............................................................
3.14. (sic) RADIO COMMUNICATIONS - To supply, operate and maintain VRH, SSB
and Radio-Beacon and portable Transceptor equipment, adequate for
PETROBRAS' land communications system, for the guidance of helicopters,
so as to comply with the Radio Communications Plan supplied by
PETROBRAS, appearing in Attachment I..................................
3.14.1. (sic) Other Radio Communications systems deemed necessary to support
the CONTRACTOR's operations, both in the Unit and on land, will be
supplied, installed and operated by it. The CONTRACTOR will be
responsible for the obtainment of the licenses and frequencies to
operate such equipment................................................
3.14.2. (sic) The CONTRACTOR will maintain, at its expenses, radio operators,
fluent in spoken Portuguese, who will remain 24 (twenty-four) hours a
day operating the equipment installed in the Unit, whether they belong
to PETROBRAS or to the CONTRACTOR.....................................
3.14.3. (sic) Immediately after the Unit's arrival, the CONTRACTOR will arrange
with the proper authorities for the issuing of the "Terms of Survey"
regarding the radio station existing on board.........................
3.14.4. (sic) The CONTRACTOR will bear any expenses related to the
telecommunications equipment and services, with exception of those
provided for in item 4.7 of this Contract.............................
3.15. (sic) INSURANCES - To provide for the Contracting, at its expenses, of
the insurances necessary to fulfill this Contract and the Brazilian
Laws, intended for the coverage of the Unit and all of its accessories,
even when they are being transported under PETROBRAS' responsibility,
as well as the Civil Liability insurance for damages and losses caused
to third parties.....................................................
12
<PAGE>
3.15.1. COMPANY MARITIMA NAVEGACAO E ENGENHARIA LTDA. will appear as co-insured
in the Civil Liability insurance policy which it makes, by force of
item 3.12 of the SERVICES RENDERING Contract entered into between it
and PETROBRAS.........................................................
3.15.2. (sic) During the period of validity of this Contract, the CONTRACTOR
should maintain insurance coverage for the Unit and all of its
accessories, according to the conditions of the London Standard
Drilling Barge Form All Risk, or similar. ............................
3.15.3. (sic) The redress due to the CONTRACTOR's Civil Liability arising from
damages provided for in this Clause, is not limited to the amount set
forth in subitem 3.12.1. of the Services Rendering Contract entered
into between the parties, for the Civil Liability Insurance against
Third Parties, and will be ruled by the pertinent Brazilian laws......
3.16. (sic) The Franchises that may be established for the insurances
mentioned in item 3.15 and in its subitems, as well as the onus
arising from the insurers' requirements and/or recommendations will
fully run for the CONTRACTOR's account.................................
3.17. (sic) To keep PETROBRAS free and safe from any and all indemnity
claim for damages and/or losses of any kind which the CONTRACTOR may
have sustained as a result of this Contract, whether or not it has
made adequate and sufficient insurance for such circumstances..........
13
<PAGE>
3.17.1. (sic) PETROBRAS will be equally kept free and safe from any and all
indemnity claim for damages and/or losses of any kind which the
CONTRACTOR may have caused to third parties by its duly proven action
or omission, arising from this Contract, whether or not it has made
adequate and sufficient insurance for such circumstances..............
3.17.2. (sic) In return, the CONTRACTOR will be kept free and safe from any and
all indemnity claim for damages and/or losses of any kind, which
PETROBRAS may have sustained from third parties, or has caused to third
parties by its duly proven action or omission, as a result of this
Contract, whether or not it has made adequate and sufficient insurance
for such circumstances................................................
3.18. (sic) The CONTRACTOR waives for itself and will require from its
Insurers and/or SubContractors, in any and all insurance made as a
result of this Contract, the inclusion, in each policy Contracted, the
provision assuring the waiver of any right of subrogation against
PETROBRAS.............................................................
3.19. (sic) To submit to E&P/GETRAT, up to 30 (thirty) days after the
beginning of the performance, as provided for in item 2.2.1, the
originals of the certificates of the insurances made as a result of
this Contract, containing all essential data, such as insurers, time
limits, periods of validity, amounts insured, and coverage conditions,
and with PETROBRAS appearing as co-insured, except in the civil
liability insurance, of which it will participate as a third party....
3.19.1. (sic) The certificates mentioned in item 3.19 will contain a provision
that the insurances mentioned cannot be amended and/or cancelled
without PETROBRAS' prior authorization................................
14
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3.20. (sic) Losses and Damages - The CONTRACTOR will be liable for losses of
and damages to its own equipment and material, and to those which it
and its agents may cause to PETROBRAS or to third parties, as a result
of its duly proven action or omission, in the following cases:........
3.20.1. (sic) In the event of losses of or damages to equipment and/or
materials belonging to PETROBRAS and/or to third parties, which are
aboard the Unit, or during their movement between the Unit and the
support vessels, the CONTRACTOR's liability will be limited to the
replacement or repair of the equipment so lost or damaged due to the
CONTRACTOR's or its employees' duly proven fault. However, the
CONTRACTOR will not be liable and will be kept free and safe from in
the event of damages to reservoirs, indirect damages or loss of profit
of PETROBRAS, losses and damages arising from pollution coming from the
well, resulting from kick and/or blow-out;............................
3.20.2. (sic) In case of losses and damages caused to the well, arising from
the events mentioned in subitem 2.1.5 of Attachment II, the CONTRACTOR
will reimburse PETROBRAS the payments it comes to make to third parties
referring to cementing, logging, or other services related to the
object of the present Contract, as well as to materials (cement,
casing, bits, completion fluid materials). In the event PETROBRAS opts
for the definitive abandonment of the damaged well, the CONTRACTOR will
reimburse the expenses made by PETROBRAS to drill that
well..................................................................
3.20.3. (sic) In the cases mentioned in subitems 3.20.1 and 3.20.2 the limit
for the CONTRACTOR's liability is of US$500,000.00 per event and its
deployments...........................................................
15
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3.21. (sic) SECRECY - To maintain complete secrecy on the data and
information supplied by PETROBRAS, as well as on all of the results and
analyses arising from the operations carried out according to the
present Contract......................................................
3.21.1. (sic) All data, information and other documents, of any kind, related
to the fulfillment of the present Contract, will be the exclusive
property of PETROBRAS.................................................
3.21.2. (sic) The CONTRACTOR and its crew cannot disclose nor supply to third
parties any materials or information obtained or developed as a result
of this Contract, unless expressly authorized by PETROBRAS............
3.21.3. (sic) The provision of this item 3.21 is a standing obligation, valid
even after the termination, in any fashion, of the present Contract...
3.22. (sic) Unit's Helideck.................................................
3.22.1. (sic) To arrange for the release of the Unit's helideck by the proper
Brazilian authorities (Ports and Coast Authority, Civil Aviation
Department of the Ministry of Aeronautics, Internal Revenue, Maritime
Police and Customs), bearing all expenses arising therefrom...........
3.22.2. The Unit's helideck shall be approved for operations with S-61 type
helicopters according to chapter 24 of the Administrative Directive
#005 from DPC - Standards and Procedures for Sea Navigation, dated
01/15/97, which deals with the Construction, Installation, Approval and
Changes of Helideck and Operations of Helicopters in Offshore Platforms
and Merchant Ships. - To submit to PETROBRAS, at least 30 (thirty) days
before the date foreseen for the Unit's arrival in Brazil, the
following documents referring to the helideck:........................
16
<PAGE>
3.23. (sic) The CONTRACTOR should adopt procedures that minimize the
consumption of fuel and industrial water without prejudice for the
operations............................................................
3.24. (sic) The CONTRACTOR should provide installations in the Unit for the
training and leisure of all personnel aboard, and which should contain
at least the following:...............................................
a) Parlor games room;................................................
b) TV room capable of tuning 5 (five) main channels available in
Brazil, in any location;..........................................
c) Movie theater with VCR;...........................................
d) Two other TV sets to be installed in cabins indicated by
PETROBRAS' Inspection.............................................
3.25. (sic) Besides sea water, the CONTRACTOR will judiciously use industrial
water to clean the Unit, in order to avoid high consumption and always
giving priority to its use in the completion fluid....................
3.26. (sic) All documents between the CONTRACTOR and PETROBRAS, when
requested by PETROBRAS, will be written and submitted in Portuguese...
3.27. (sic) The CONTRACTOR undertakes to maintain throughout the fulfillment
of the Contract, all conditions required in the bid stage.............
3.28. (sic) To redo any and all operation refused by the INSPECTION, without
any charge to PETROBRAS, as a result of irregular performance, bearing
all costs involved....................................................
3.29. (sic) To maintain a representative accredited and accepted by PETROBRAS
in the Unit or in a place previously designated by PETROBRAS, to
represent the CONTRACTOR in the fulfillment of the Contract...........
17
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3.31. (sic) To comply with the requests contained in the Operation(s)
Authorization(s) issued by PETROBRAS..................................
3.32. To allow, after negotiations between the Contracting parties, the
provisional installation in the chartered Vessel, of complementary
equipment such as, but not limited to: pipes or rises in catenary by
the J-lay method, or similar, submarine manifolds, provided they do not
jeopardize the Vessel's safety and are in accordance with the rules of
the Classification Society............................................
(End of Clause)................................................................
18
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FOURTH CLAUSE - PETROBRAS' OBLIGATIONS.........................................
4.1. To adopt the measures necessary for the request to register this
Contract in the Central Bank of Brazil, soon after the proper documents
are received, and the submittal of which is the CONTRACTOR's
responsibility........................................................
4.2. To make, monthly, the payments due to the CONTRACTOR as a result of the
present Contract, based on Attachment II and Attachment III and
under the conditions set forth in Clauses Sixth: Measurement, and
Seventh: Form or Payment, other Attachments, Clauses and Conditions
of this Contract being complied with..................................
4.3. At its exclusive judgment, and without any co-responsibility, PETROBRAS
may cooperate with the CONTRACTOR, assisting it before the proper
authorities, referring to processes that are going through the
procedural stages in the respective Agencies, regarding the Unit,
materials and/or equipment pertaining to the object of this Contract.
Such cooperation, however, will not lessen the CONTRACTOR's
responsibility for the obtainment of the documents and/or benefits that
may be the object of the respective proceedings.......................
4.4. PETROBRAS will reimburse the CONTRACTOR, by means of submittal, by the
latter, of the corroborative documents, in the acquisition currency,
the cost of replacement or repair of the commands and other components
of the production string and of the fishing string belonging to the
CONTRACTOR, which are lost or damaged, by accident not due to the
normal wear nor to the CONTRACTOR's duly proven action or omission,
with the deduction of a 25% depreciation per Contract year, with a 20%
residual value, applying, for its calculation, the least indemnity cost
(Ci) obtained by means of the following formulae:-....................
19
<PAGE>
Ci = Vr.y (1 - 0.02083n), or Ci = Cr, where:.........................
Ci - indemnity cost;.................................................
Cr - repair cost;....................................................
Vr - replacement value;..............................................
n - number of months between the date of the beginning of the
Contract and the date of the loss (the fraction of a month is
counted as a whole month);......................................
y - 1 (for new strings), and 0.9 (for "Premium" strings)............
4.4.1. In the event there is a renewal of the string or of a part of the
elements that comprise the production string (pipes, commands and other
components), during the period of validity of the Contract, the
depreciation period to be considered - the "n" of the formula, will be
the one comprised between the purchase date and the date when the
element or the string was lost.........................................
4.4.2. PETROBRAS may, at its discretion and expense, carry out inspections
in the drill string, its components and accessories, the CONTRACTOR
being obliged to repair or replace, for its account, the equipment
rejected...............................................................
4.5. Transportation:........................................................
4.5.1. PETROBRAS will provide transportation for all crew members to the
Unit from the port or airport, as indicated by PETROBRAS in the
beginning of this Contract, and vice-versa. At its exclusive discretion,
the transportation to be provided will be by helicopter or vessel.......
20
<PAGE>
4.5.2. PETROBRAS will provide transportation of the material and equipment
object of this Contract, from the port or airport designated, to the
Unit and vice-versa...................................................
4.5.3. In any circumstances foreseen in items 4.5.1 and 4.5.2, the granting of
insurance coverage will not be PETROBRAS' competence, and the
CONTRACTOR waives immediately, for itself and for its insurers, any
return action against PETROBRAS or third parties at its service, as a
result of the transportation provided.................................
4.5.4. In the cases when there is need to program exclusive air
transportation, for the Unit's inspection by the Navy and/or the
Shipping Office, the costs arising therefrom will be charged to the
CONTRACTOR............................................................
4.5.5. PETROBRAS may provide air or sea transportation for the CONTRACTOR's
materials, industrial or fresh water and fuel before the beginning of
the Contract, as defined in subitem 2.2.1. The costs arising therefrom
will be reimbursed by the CONTRACTOR to PETROBRAS at the time the first
invoice is issued.....................................................
4.5.6. PETROBRAS will provide tugs and support vessels for the Unit, from the
location where the equipment general testing is performed, to the first
location, between locations and from the last location to the Brazilian
port or sheltered waters closest thereto, which will be chosen in
common agreement by the parties.......................................
4.5.6.1. PETROBRAS will supply support vessels for the positioning of the United
in the locations to be drilled under this Contract....................
21
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4.5.7. PETROBRAS may provide tugs and/or support vessels to load and onload
materials and to handle anchors, in a location to be defined between
the parties, in the cases of inspection and/or dockages, including
those arising from act of God or force majeure, as defined in the
Twelfth Clause of this Contract. The costs arising therefrom will be
reimbursed by the CONTRACTOR to PETROBRAS.............................
4.6. FUEL AND WATER - To supply, for its account, all fuel and water
necessary for the operations, complying with the provision set forth in
subitems 4.6.1 and 4.6.2, from the beginning of the Contract, until
its termination, as defined in subitems 2.2.1 and 2.2.2, respectively.
4.6.1. The supply of water mentioned in item 4.6 includes also the industrial
water intended to clean the Unit, the provision set forth in item 3.23
being complied with......................................
4.6.2. PETROBRAS will supply, for its account, the fuel necessary for the
Unit's equipment, up to the limit of 15.695m3/year. Over this limit the
onus will run for the CONTRACTOR's account........................
4.6.2.1.PETROBRAS will carry out the measurement of the fuel existing aboard the
Unit, at the beginning of the Contract, at the end of each Contract
year, and at the end of the Contract, when the average consumption will
be calculated. The volume exceeding the established limit will be
charged to the CONTRACTOR at the time of the measurement, at the
consumer's sales price, on the date PETROBRAS issues the Debt Note, in
force in the City of Rio de Janeiro-RJ, duly adjusted in keeping with
the different ICMS aliquots in force in the State of Rio de Janeiro and
in the State where the Unit is operating..................
4.6.3. During the Unit's dockage periods, all fuel consumed will run for the
CONTRACTOR's full responsibility and cost, from the interruption of the
operations until the return to the same previous situation. The fuel
cost during that period will be charged to the CONTRACTOR, after the
consumption calculation, and at a price to be defined according to the
criterium mentioned in 4.6.2.1.................................
22
<PAGE>
4.7. To maintain, besides the CONTRACTOR's radio communications equipment,
aboard the Unit, equipment exclusively for PETROBRAS' communications
with its land bases...................................................
4.8. To notify the CONTRACTOR, in writing, on the imposition of eventual
fines.................................................................
4.9. To issue the Measurement Bulleting (MB), as set forth in the Sixth
Clause of this Contract...............................................
4.10. To issue the Operation's Authorization(s) with all the information
necessary for their performance, such as: location, time limit, amount,
scope, and beginning and end dates....................................
4.11. PETROBRAS will reimburse the CONTRACTOR, by means of submittal by the
latter, of corroborative documents, in the acquisition currency, the
cost of replacement of VX rings, VX with Hycar and VX with lead inserts
for the BOP and WCT connections with well-heads and filter elements, as
provided for in items 24, 25 and 34 of Attachment IV - Mutual
Obligations of the Chartering Contract................................
(End of Clause)................................................................
FIFTH CLAUSE - PRICES AND VALUE................................................
5.1. For the chartering of the Unit and its accessories, PETROBRAS will pay
the rates set forth in Attachment II and Attachment III to this
Contract, under the conditions set forth in Clauses Sixth: Measurement,
and Seventh: Form of Payment..........................................
23
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5.1.1. The Contract prices will include all specified tariffs, supervision,
administration, taxes, fiscal emoluments and all expenses that fall
directly or indirectly upon the chartering, including profit, needed
for its perfect fulfillment, until the end of the Contract, no price
revision claims being therefore valid................................
5.2. The total estimated value of this present Contract is of
US$295,019,262.45 (two hundred and ninety-five million, nineteen
thousand, two hundred and sixty-two dollars and forty-five cents),
equivalent to R$322,308,544.22 (three hundred and twenty-two million,
three hundred and eight thousand, five hundred and forty-four reais and
twenty-two cents), converted at the exchange rate of R$1,0925/US$1.00,
referring to the chartering of the Unit...............................
5.3. PETROBRAS does not undertake to make the payment of the total estimated
in item 5.2, but of the amount corresponding to the chartering
effectively occurred and accepted by PETROBRAS........................
5.4. In the event the Unit suffers a delay of up to 90 (ninety) days,
regarding the time limit granted in item 2.3 of the present Contract,
the CONTRACTOR will have its total daily rate reduced in 10% (ten
percent), as of the beginning of the Contract, for a period equal to
the number of days of delay...........................................
5.5. In the event the Unit suffers a delay exceeding 90 (ninety) days,
counted as of the time limit granted in item 2.3 of the present
Contract, besides the reduction of the 10% (ten percent) in the total
daily rate for a period of 90 days, as defined in item 5.4, the
CONTRACTOR will also be subjected to the imposition of a fine according
to item 8.1 of this Contract..........................................
24
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5.6. The financial resources necessary for the payment of the chartering
object of the present Contract are duly equated, and specifically
assured in the current year's budget and provided for in the following
ones, so as to cover the total Contract period........................
(End of Clause)...............................................................
25
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SIXTH CLAUSE - MEASUREMENT OF THE CHARTERING
6.1. Periodicity of the measurement of the chartering and determination of
the reimbursable expenses.............................................
6.1.1. For the chartering, the measurement will be monthly, according to the
procedures mentioned below, with the consequent issuing of the
respective Measurement Bulletins (MB):................................
a) The initial measurement of the chartering will be made between
the date of the beginning of this Contract and the last day of
the calendar month;...............................................
b) The intermediate measurements of the chartering, corresponding to
a given month of the order "m", cover the period between day 01
of the month "m" and the last day of the calendar month of the
order "m";........................................................
c) The final measurement of the chartering will be made between day 01
of the month "m" and this Contract's termination date..........
6.1.2. The reimbursable expenses, if foreseen in the Contract, will be
determined on any day of the month, according to the vouchers submitted
to and accepted by PETROBRAS, and more than one determination can be
made in the same period covered by the
measurement...........................................................
6.1.2.1. The results found will be submitted to the CONTRACTOR on the 5th
(fifth) working day, as of the submittal of said vouchers, by means of
a Reimbursement Document (RD), which will be signed by the Manager of
this Contract, for invoicing purposes.................................
6.1.2.2. The reimbursable expenses and the deductions, if foreseen in the
Contract, will be severally made evident in the Reimbursement Documents
(RD).........
6.2. Issuing of the Measurement Bulletins (MB).............................
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6.2.1. PETROBRAS, through the Manager of this Contract, at the end of each
period as mentioned in the letters of subitem 6.1.1 of this Clause,
will carry out the measurement of the chartering, gathering the
results found in the Measurement Bulletin (MB), for the signature of
the Manager of this Contract and of the CONTRACTOR, complying with
the following:.........................................................
a) For the initial, intermediate, and final measurements ending on the
last day of a given month of the order "m", the CONTRACTOR will
receive one of the copies of the MB up to the 5th (fifth) working
day of the subsequent month, so that it may submit the respective
collection documents, as provided for in subitem 6.3.1 of this
Clause;............................................................
b) For the final measurement, when the termination of the Contract does
not occur in the last day of the month, the CONTRACTOR will receive
one of the copies of the MB, up to the 5th (fifth) working day after
the termination of the Contract, so that it may submit the
respective collection documents, as provided for in subitem 6.3.1 of
this Clause;.......................................................
c) For each measurement period of the chartering, only 1 (one)
collection document may be issued, being understood that collection
documents with partial values regarding said period will not be
taken into account for payment purposes;...........................
d) The portions regarding the basic values and the deductions are to be
made evident in the Measurement Bulletins (MB), if foreseen in the
Contract;..........................................................
6.3. Time for the submittal of collection documents........................
27
<PAGE>
6.3.1. The CONTRACTOR will submit the respective collection documents to
PETROBRAS' Financial Department, as mentioned in item 7.1 of this
Contract, in the following conditions:................................
28
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- - --------------------------------------------------------------------------------
TYPE OF MEASUREMENT OCCASION FOR THE SUBMITTAL
MEASUREMENT DOCUMENT OF COLLECTION DOCUMENTS
- - --------------------------------------------------------------------------------
INITIAL MB Up to the 8th working day following
INTERMEDIATE the last day of the chartering
AND FINAL performance period, and PETROBRAS
will make the payment on the 30th
consecutive day, as of the final
date of the measured period, the
provision in subitem 6.3.1.1 being
complied with.
- - --------------------------------------------------------------------------------
MOBILIZATION MB After the receipt of the MB, and
OF THE Unit PETROBRAS will make the payment on
the 30th consecutive day, as of the
date the collection document is
submitted.
- - --------------------------------------------------------------------------------
DETERMINATION RD In the first working day after the
OF RD is issued, and the payment will
REIMBURSABLE be made within 30 (thirty) days, as
EXPENSES of the date of its submittal.
- - --------------------------------------------------------------------------------
29
<PAGE>
6.3.1.1. The payments due by virtue of this Contract, referring 1st (first) to
the chartering, will always occur on the 30th day as of the end of the
measured period, covered by the MB's, or on the first working day
subsequent thereto, provided the CONTRACTOR complies with the time
limits for the submittal of the Collection Documents set forth herein.
In the event of non-compliance, by the CONTRACTOR, with said submittal
time limits, the payments will be postponed for the number of days
equal to the delay in the delivery of such documents..................
6.4. Measurements follow-up................................................
6.4.1. The CONTRACTOR undertakes to follow-up the measurements and the
determinations carried out by PETROBRAS, offering, at that time, the
impugnations or considerations it deems necessary, which will be
submitted for PETROBRAS' appraisal and decision.......................
6.4.2. The CONTRACTOR's signature by its representative before PETROBRAS will
imply in the acknowledgment of the accuracy of the Measurement Bulletin
(MB) for all legal purposes...........................................
(End of Clause)................................................................
30
<PAGE>
SEVENTH CLAUSE - FORM OF PAYMENT...............................................
7.1. The payments due as a result of this Contract will be made by PETROBRAS
to the CONTRACTOR, in Brazilian currency, 30 (thirty) consecutive days
as of the last day of the period of execution of the services, provided
the CONTRACTOR submits the collection documents up to the 8th (eighth)
working day following the last day of the period of execution of the
services..............................................................
7.1.1. The payments will be made on the basis of the average exchange rate of
the American Dollar selling price, in force on the working day
immediately before the date of the effective payment..................
7.1.2. The payment of eventual difference in readjustment will be made on the
same day when the payment of the respective service occurs, provides
the CONTRACTOR submits the corresponding collection document up to the
5th (fifth) working day following that when the indexes that permit the
issuing of the Readjustment Bulletin (RB) are known...................
7.1.3. The payment of reimbursable expenses, if any, will be made 30 (thirty)
days after the submittal of the collection document...................
7.1.4. In the event of non-submittal of the collection documents within the
time limits set forth above, the payments will be postponed for the
number of days corresponding to those of the delay in the submittal of
the collection documents..............................................
31
<PAGE>
7.2. The collection documents should be submitted, together with the
original of the document giving rise to it (MB, RB, RD) in the Docket
of the Financial Department indicated by PETROBRAS, for the purpose of
checking the time limits for the payment.
32
<PAGE>
7.3. The collection documents will be issued without erasuares, complying
with the pertinent laws in force, and will contain obligatorily the
following information:................................................
a) Place and date of its issuing and number of the collection
document;..........................................................
b) Number and date of signature of the Contract deed;.................
c) Number and date of the documents originating them (MB, RB, RD);....
33
<PAGE>
d) Gross value of the collection document, both in numbers and in
writing;..........................................................
e) Name and code of the banking establishment, branch, and the
respective code, and number of the current account of the payee,
where the payments will be made;..................................
f) In order that a particular payment is made in a banking
establishment different from the one indicated at the time the
Contract deed was signed, such amendment will obligatorily be
preceded by a fax/correspondence from the CONTRACTOR or shall appear
in the payee's collection document.................................
7.3.1. In the event the collection document is inaccurate, it will be returned
to the CONTRACTOR and the time limit foreseen in item 7.1 will be
postponed for as many days as those corresponding to the delay in the
submittal of such document.
34
<PAGE>
7.3.3 The CONTRACTOR will obligatorily submit, every month to the Manager of
the Contract:.........................................................
a) Payroll of the CONTRACTOR's employees who are involved in the
rendering of the services Contracted...............................
b) A photocopy of the Social Security Payment Slip (GRPS), duly settled
and authenticated, obligatorily filling out the date that identify
PETROBRAS, informing in field "8" of the GRPS (other information),
the name, CGC/CEI of PETROBRAS, number, date and amount of the
Invoice or Bill of Sale referring to the services rendered in the
month..............................................................
35
<PAGE>
c) In case of a Cooperative, to submit the payment vouchers of the
amounts paid, distributed or credited to its members as remuneration
for the services rendered in the fulfillment of this Contract......
7.3.4. The collection documents will not be accepted by PETROBRAS if submitted
with the Income Tax at Source already withheld........................
7.3.5. It is the responsibility of PETROBRAS' disbursing office the
explanations of doubts regarding the issuing of the collection
documents.............................................................
7.3.6. Eventual payments made for more or for less by PETROBRAS, will be
compensated as soon as they are detected, and the respective amounts
will be duly corrected................................................
7.3.7. The CONTRACTOR should indicate the place and fax number, if any, for
the receipt of the "Notice of Payment Foreseen."......................
7.4. The vouchers for reimbursable expenses due to the CONTRACTOR as a
result of this Contract deed, will be previously submitted to the
Manager of the Contract, for checking, besides being duly settled by
the respective supplier or service renderer, when such is the case....
7.4.1. If the originals cannot remain in PETROBRAS' hands, copies thereof may
be submitted, which will be checked by the Inspector and/or Manager,
and the following should appear in every original document: "Copy
Submitted for Reimbursement On ___/___/___", followed by the signature
and identification by name, position and registry number, and the
originals will be returned to the CONTRACTOR. The following text will
appear in the copies of each document in PETROBRAS' hands: "Checked
with the Original On ___/___/___", which the Inspector and/or Manager
will sign, identifying the signature by name, position, and registry
number................................................................
36
<PAGE>
7.4.2. In special cases of reimbursement of import expenses (duties and/or
expenses), the CONTRACTOR will submit a letter forwarding the vouchers
for such expenses, together with the import process to the department in
charge of its follow-up................................................
7.4.3. The receipt, duly formalized by PETROBRAS of any reimbursable expense
voucher, does not represent the recognition of the debt, nor the proof
that the expenses were made............................................
7.4.4. The collection of reimbursable expenses will be made through the issuing
of a Services Invoice, after approval of said corroborative documents
and issuing by PETROBRAS of the respective Reimbursement Document - DR,
which will be issued up to 5 (five) working days, as of the date of
submittal of said documents............................................
7.4.4.1.PETROBRAS' Inspection has 3 (three) working days to proceed with the
checking of the expense vouchers and to notify its approval to the
CONTRACTOR, so that it may issue the Combined Invoice and Bill of Sale.
7.4.5. The total amount of the collection document will be obtained by applying
the following formula:.................................................
VTD
VTR = ---------------- , where.........................
1 - ICP
VTR = total amount to be reimbursed to the CONTRACTOR;...............
VTD = total amount of the reimbursable expenses, actually authorized;
ICP = total of the sum of the aliquots of taxes collected, in the
decimal form (ISS or ICMS, as the case may be, COFINS and
PIS/PASEP).....................................................
37
<PAGE>
EIGHTH CLAUSE FINES............................................................
8.1. Non-compliance, by the CONTRACTOR, after 91 (ninety-one) days beyond
the time limit mentioned in item 2.3 of this Contract, will imply
in the imposition of a fine against the CONTRACTOR, in a written
notice, corresponding to 30% (thirty per cent) of the rate provided for
in Ref 101 of Attachment III, per day of delay exceeding 90 days.......
8.2. In the event of non-compliance, by the CONTRACTOR, with the
inspection's requirements within the time limit it may set, PETROBRAS
may, by a written notice, impose upon the CONTRACTOR, per day of
non-compliance with such requirements, as of the end of the time limit
set, a fine corresponding to 20% (twenty per cent) of the rate provided
for in Ref 101 of Attachment III. ....................................
8.3. The penalties set forth in this Clause do not exclude any other
provided for by the laws in force and/or in this Contract, nor the
CONTRACTOR's liability for damages it may cause to PETROBRAS, as a
result of non-fulfillment of the conditions agreed upon herein.
8.4. The amount corresponding to the sum of the values of the fines applied
is limited to 10% (ten percent) of the estimated value of the present
Contract..............................................................
8.5. The penalties to which the CONTRACTOR is subjected to due to the
provision set forth in this Clause, will be discounted in the first
payment and in the subsequent ones, which the CONTRACTOR is entitled
to, after the sanctions are applied by PETROBRAS......................
8.6. In the event of balance, PETROBRAS reserves itself the right to make or
complement the deduction in collection document(s) related to any other
Contract deed eventually entered into with the CONTRACTOR, or to use
any other adequate means to settle the debt, if necessary.............
38
<PAGE>
8.7. The CONTRACTOR may appeal against the imposition of the fine, in a
declaration, within the non-deferrable time limit of 15 (fifteen)
consecutive days as of the date the notice is received................
8.8. Non-appearance of the CONTRACTOR's personnel for boarding on the date
and time agreed upon between PETROBRAS and the CONTRACTOR, will subject
the CONTRACTOR to the payment of a fine of US$140.00 per passenger in
the case of air transportation, and US$40.00 in the case of sea
transportation........................................................
8.8.1. The fine set forth in item 8.8 will not be charged if the CONTRACTOR
asks PETROBRAS to change the boarding schedule at least 24
(twenty-four) hours in advance........................................
8.9 In a written notice and without prejudice of the capacity to rescind
the Contract, PETROBRAS may impose upon the CONTRACTOR a compensatory
fine of 100% (one hundred per cent) of the amount of the conviction,
due to default of its labor, social security or tax obligations.......
8.9.1. The payment of said fine will not exempt the CONTRACTOR from the
obligation to reimburse PETROBRAS for the amount imposed upon it as a
result of an eventual joint conviction passed by a Labor Court or by
the proper administrative jurisdictions...............................
8.9.2 The CONTRACTOR will be fined in the percentual of 5% (five percent) on
the amount of the invoice in the event it does not submit the GRPS or
submits at variance...................................................
(End of Clause)................................................................
39
<PAGE>
NINTH CLAUSE INSPECTION........................................................
9.1. The inspection of the chartering Contracted herein will be carried out
by PETROBRAS' representatives, and the CONTRACTOR undertakes to allow
their free access to the Unit and to the operations locations, and to
comply immediately with the observations of such inspection, which will
have ample powers to:.................................................
9.1.1. Determine, provided it comes to its knowledge and is within its
capacity, the suspension of the operations which perhaps are being
carried out in disagreement with the good technique or which threaten
the safety of persons or assets of PETROBRAS, third parties or of the
CONTRACTOR itself, the subitem 2.1.7 of Attachment II being
complied with.........................................................
9.1.2. Refuse the employment of condemned or improper equipment and
materials, tools and production string components, as well as
operations which do not comply with the established programs;.........
9.1.3. Order the withdrawal from the work site, of any of the CONTRACTOR's
employees who, in PETROBRAS' opinion, may endanger the good performance
of the operations or hinder its inspecting activities;................
9.1.4. Certify on the accuracy of the information reported daily by the
CONTRACTOR;...........................................................
9.1.5. Notify the CONTRACTOR, in writing, on the imposition of the penalties
provided for in this Contract, including those referring to the
CONTRACTOR's action or omission;......................................
9.1.6. Request from the CONTRACTOR a detailed report on any accident occurred
and on any operation or repair performed.....................
40
<PAGE>
9.2. However, the responsibility, operation, movement and administration of
the Unit will be under the exclusive control and command of the
CONTRACTOR or its employees...........................................
9.3. The total or partial action or omission of the Inspection, does not
lessen at all the CONTRACTOR's full responsibility for the rendering of
the obligations agreed upon herein, nor does it imply any reduction or
change in the CONTRACTOR's obligations in the faithful and perfect
fulfillment of the present Contract...................................
9.4. PETROBRAS' Inspection should record its observations on the
Driller's Log approved by the IADC and on the Daily Drilling
Certificate (ADP), to safeguard the rights and responsibilities
foreseen in this Contract.............................................
9.5. During the Contract period, PETROBRAS will carry out the CONTRACTOR's
performance evaluation, covering the groups in equipment and material,
human resources, installations, quality and efficiency. The results of
the performance evaluations will be notified and consolidated by means
of a service performance certificate..................................
(End of Clause)................................................................
41
<PAGE>
TENTH CLAUSE - RESCISSION......................................................
10.1. PETROBRAS may rescind the present Contract, without the CONTRACTOR
being entitled to any right to indemnity and/or withholding in the
following cases:......................................................
10.1.1. Nonfulfillment, or irregular fulfillment of Contract clauses,
specifications, operations and Inspection's requests, provided the fact
mentioned is not remedied within the time limit of 60 (sixty) days, or
time limits, as well as the repeated commitment of faults in the
fulfillment of the Contract;..........................................
10.1.2. Total or partial subContracting of the object of the present Contract,
the association of the CONTRACTOR with another, merger/division or
total or partial incorporation, except if allowed for in this Contract,
which affects the good performance of this instrument;................
10.1.3. Interruption of the operations for more than 60 (sixty) days;.........
10.1.4. Decree of the CONTRACTOR's bankruptcy.................................
10.1.5. When the penalties provided for in item 8.4 of this Contract is
attained;.............................................................
10.1.6. Slowness in the execution of the works, leading PETROBRAS to prove the
impossibility of completing the operations within the established time
limits;...............................................................
10.1.7. Non-compliance with the determinations of PETROBRAS' agent appointed to
follow-up and inspect the fulfillment of the Contract, as well as those
of his superiors;......................................................
10.1.8. The dissolution of the CONTRACTOR;....................................
10.1.9. The social change or the modification of the company's purpose or
structure, which in PETROBRAS' opinion, hinders the performance of the
operations;...........................................................
42
<PAGE>
10.1.10. Delay in the beginning of the fulfillment of the Contract for more than
180 (one hundred and eighty) days......................................
10.1.11. Rescission of the Services Rendering Contract for Drilling and/or
Evaluation and/or Completion and/or Workover using the Unit, entered
into between PETROBRAS and MARITIMA NAVEGACAO E ENGENHARIA LTDA.......
10.1.12. If the limit set forth in subitem 2.1.9 of Attachment II to this
Contract is attained..................................................
10.1.13. If the limits set forth in NOTE 2 of Ref. 102 of Attachment II to this
Contract are attained.................................................
10.1.14. Non-submittal of the proof of fulfillment of labor obligations towards
the employees directly involved in the services object of this
Contract, including social security contributions and deposits in the
FGTS, when requested by the Inspection, or if such default is
proven;...............................................................
10.1.15. Non-submittal or submittal at variance of the GRPS, when the
corresponding invoice is delivered....................................
10.1.15.1The rescission for this reason does not prevent PETROBRAS from
imposing the respective fine, foreseen in 8.7.2;......................
10.2. In the event of rescission of the Contract deed for the reasons
foreseen in 10.1, PETROBRAS will:.....................................
a) take over the object of the Contract deed, on the stage and location
where it is found;.................................................
b) enforce the Contract guarantee, if any, for the reimbursement of the
amounts of fines and indemnities due to it;........................
43
<PAGE>
c) withhold the credits arising from the Contract deed, up to the
limits of the damages caused to it.................................
10.3 After the contract is rescinded, as set forth in this clause, the
CONTRACTOR is liable, in legal and contract fashion, for the violation
or inadequate performance which gives rise to the rescision, as well as
for the reimbursement of damages which PETROBAS may come to sustain....
10.4. After the Contract is rescinded, PETROBRAS at its exclusive judgment,
may adjudicate the operations object thereof to whom it deems
appropriate, without behoving the CONTRACTOR any consultation or
interference, claim and/or indemnity, for whatever title, and the
CONTRACTOR will be liable to legal and Contract penalties, besides being
liable for damages PETROBRAS may sustain...............................
10.4.1. The CONTRACTOR is also liable for the pertinent administrative
sanctions, its full defense being guaranteed..........................
10.5. In the event PETROBRAS does not impose the right to rescind the present
Contract according to this Clause, it may, at its absolute discretion,
withhold the payments of pending invoices, until the CONTRACTOR
fulfills the Contract condition it has infringed, but such fact will
not represent novation nor will it generate rights that may be claimed
by the CONTRACTOR.....................................................
(End of Clause)................................................................
44
<PAGE>
ELEVENTH CLAUSE - FISCAL CHARGES...............................................
11.1. Taxes (taxes, fees, emoluments, fiscal and parafiscal contributions)
that are due as a direct or indirect result of the present Contract, or
of its fulfillment, will be the exclusive responsibility of the
taxpayer, so defined in the tax rule, with no right to reimbursement.
PETROBRAS, as the withholding source, will withhold and pay within
the legal time period, from the payments it makes, the taxes it is
liable to by thelaws in force..........................................
11.1.1. The CONTRACTOR states that, in quoting its prices, it has taken into
account the taxes (taxes, fees, emoluments, fiscal and parafiscal
contributions) charged on the fulfillment of this Contract, and it
cannot make any claim due to error on such evaluation, for the purpose
of requesting a price revision [ou] reimbursement of payments set down
by the property authority.............................................
11.1.2. Once found, during the period of validity of the Contract, that the
CONTRACTOR has unduly added to its prices amounts corresponding to
taxes, fiscal and/or parafiscal contributions and emoluments of any
kind that are not charged to the performance of the services agreed
upon, such values will be immediately excluded, with the consequent
reduction of the prices practiced and reimbursement of amounts that may
have been paid to the CONTRACTOR......................................
11.2. If, during the period of validity of this Contract, any of the
following events occur:
creation of new taxes;..............................................
extinction of existing taxes;.......................................
changes in the aliquots;............................................
45
<PAGE>
establishment of tax incentives of any kind; and....................
exemption or abatement of federal, state or county taxes,...........
which, provedly come to increase or reduce the burdens of the
parties to the Contract, the prices will be revised, so as to fit
them into the changes made, compensating, at the first opportUnity,
any differences arising from such changes. However, if it is a
question of tax incentives, the advantages arising therefrom will
always be for PETROBRAS............................................
(End of Clause)................................................................
46
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TWELFTH CLAUSE - FORCE MAJEURE................................................
12.1. PETROBRAS and the CONTRACTOR will not be liable for the nonfulfillment
of their respective obligations in case of events that characterize an
act of God or force majeure defined in the sole paragraph of Article
1.058 of the Brazilian Civil Code. Any suspension of performance due to
this item 12.1 will be limited to the period during which such cause or
its consequences exist, and such period will be added to the duration
of the Contract mentioned in the Second Clause of the present Contract.
However, the CONTRACTOR is assured the right to receive the rate
provided for in Ref 104 of Attachment III, with the exception of the
exemption from payment set forth in subitem 2.1.4 of the Attachment II,
and the reimbursements mentioned in this Contract, and furthermore, the
parties will severally assume their losses............................
12.2 If the circumstances that justify the invoking of the existence of an
act of God or force majeure occurs, the party unable to fulfill its
obligations will immediately notify the other party, in writing, on the
occurrence of its consequences........................................
12.3. If the impediment arising from the force majeure lasts for more than 90
(ninety) consecutive days, any of the parties may opt for the
termination of the Contract, with both parties complying with their
mutual obligations due until the date of the beginning of said
impediment............................................................
(End of Clause)................................................................
47
<PAGE>
THIRTEENTH CLAUSE - ASSIGNMENT AND TRANSFER...................................
13.1. The CONTRACTOR cannot assign or transfer, in whole or in part, the
present Contract, except with PETROBRAS' prior authorization in
writing...............................................................
13.2. The CONTRACTOR cannot assign or give in guarantee, at any title, in
whole or in part, the credits of any kind, arising or deriving from the
present Contract, except with PETROBRAS' prior authorization in
writing. The prior authorization will obligatorily state that PETROBRAS
imposes upon the assignee of the credits the exceptions that behooves
it, mentioning expressly that the payments to the assignee will be
conditioned to the fulfillment, by the assignor, of all of its Contract
obligations.......................................
13.3. The occurrence of the above mentioned events, duly authorized by
PETROBRAS, does not exempt the CONTRACTOR form any of its Contract
obligations...........................................................
13.4. PETROBRAS may assign or transfer, in whole or in part, the present
Contract, under commercial conditions to be agreed upon by the parties.
.............................................................
(End of Clause)...............................................................
48
<PAGE>
FOURTEENTH CLAUSE - ADDITIONAL EQUIPMENT......................................
14.1. PETROBRAS may install in the Unit the additional equipment it deems
necessary for research, drilling, completion of wells or production. It
is agreed, however, that no structural change will be made in the Unit
without the CONTRACTOR's consent in writing. All PETROBRAS' equipment
installed in the Unit will remain its property, and it will be removed
by it before the end of this Contract. The installation and removal
expenses will run for PETROBRAS' account. During the installation and
removal of PETROBRAS' equipment, the rate set forth in Ref 104 of
Attachment III will be paid if the interruption of the operations
becomes necessary......................................................
(End of Clause)...............................................................
49
<PAGE>
FIFTEENTH CLAUSE - ATTORNEY OF RECORD.........................................
15.1. The CONTRACTOR undertakes to maintain, in the City of Rio de Janeiro,
State of Rio de Janeiro, Federative Republic of Brazil, during the
Contract period and until the settlement of eventual demands arising
from this Contract, a representative with "ad-judicia et extra" powers,
who may receive service of process, inclusive in execution proceedings,
as well as to sign compromise and settlements regarding controversies
resulting from this Contract, and the summons can be made by
publication, in the event or lack of an Attorney..............
15.1.1. Within 30 (thirty) days after the signature of the present contract,
the CONTRACTOR will notify PETROBRAS the name, qualification, office
and residence of its representative and attorney of record, as set
forth in item 15.1....................................................
(End of Clause)...............................................................
50
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SIXTEENTH CLAUSE - CONTRACT RELATIONSHIPS.....................................
16.1. This Contract is related to another one for the rendering of services
of drilling and/or evaluation and/or completion and/or workover, signed
on this same date between PETROBRAS and MARITIMA NAVEGACAO E ENGENHARIA
LTDA.
(End of Clause)...............................................................
51
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SEVENTEENTH CLAUSE - INTERVENIENCE............................................
17.1. Clause non-applicable in this Contract................................
(End of Clause)...............................................................
52
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EIGHTEENTH CLAUSE - LIABILITY.................................................
18.1. PETROBRAS' and the CONTRACTOR's liability for damages will be limited
to the direct damages in accordance with the Brazilian Civil Code and
pertinent laws, with exception of loss of profit and indirect damages,
the direct damages being limited to 100% (one hundred percent) of the
total Contract value..................................................
(End of Clause)...............................................................
53
<PAGE>
NINETEENTH CLAUSE - COMPLEMENTARY DOCUMENTS
19.l. The ATTACHMENTS mentioned below are an integral part of the present
Contract and, in the event of disagreement between the Attachments and
the contract, the text of the contract will prevail...............
ATTACHMENTS:..................................................................
I - Technical specifications of the Unit .............................
II - Applicability of the Rates and Incidents in the Performance......
III - Unit Prices Spreadsheet ........................................
IV - Mutual Obligations ..............................................
V - List of Specialized Personnel;....................................
VI - Environmental Operating Conditions...............................
VII - PETROBRAS' Safety Rules..........................................
VIII - Equipment Testing Program.......................................
IX - Procedures In the Event of Fatal Accidents........................
(End of Clause)...............................................................
54
<PAGE>
TWENTIETH CLAUSE - PRICE READJUSTMENT.........................................
20.1. The contract prices are fixed and non-readjustable....................
(End of Clause) ..............................................................
55
<PAGE>
TWENTY-FIRST CLAUSE - ACCEPTANCE..............................................
21.1. After the chartering operations are completed in strict conpliance
with the conditions set forth in this Contract deed, PETROBRAS will
accept them by means of a Deed of Definitive Receipt, signed by both
parties...............................................................
21.2. The signature of the Deed of Definitive Receipt does not exempt the
CONTRACTOR from the liabilities foreseen in this Contract and in the
laws in force.........................................................
(End of Clause) ..............................................................
56
<PAGE>
TWENTY-SECOND CLAUSE - LOSS OR DISAPPEARANCE..................................
22.1. In the event the vessel is lost or disappears, no payment regarding
the same will be due by PETROBRAS to the CONTRACTOR, as of the day or
as of the moment it was last heard of.................................
(End of Clause)...............................................................
57
<PAGE>
TWENTY-THIRD CLAUSE - GROSS OR GENERAL AVERAGE................................
23.1. The gross or general average will be ruled in the Port of Rio de
Janeiro according to the York and Antwerp Rules/1974..................
(End of Clause) ..............................................................
58
<PAGE>
TWENTY-FOURTH CLAUSE - JURISDICTION...........................................
24.1. The Jurisdiction of the County of the Capital of the State of Rio de
Janeiro will be competent to settle any questions arising from the
present Contract, with the express waiver, by the parties, of any
other, however privileged ............................................
(End of Clause) ..............................................................
AND BEING THUS AGREED, the parties sign the present deed in 3 (three) copies
with the same tenor, with the witnesses below ........................
Rio de Janeiro, January 12, 1998. ............................................
(Signed:) Luiz Eduardo G. Carneiro
LUIZ EDUARDO G. CARNEIRO - EXECUTIVE SUPERINTENDENT OF EXPLORATION AND
PRODUCTION SOUTH - SOUTHEAST - PETROLEO BRASILEIRO S.A. - PETROBRAS...........
(Signed:) German Efromovich
GERMAN EFROMOVICH - PRESIDENT.................................................
MARITIMA NAVEGACAO E ENGENHARIA LTDA..........................................
WITNESSES:....................................................................
(Signed:) Elaine Brabo .......................................................
CPF No. 970.702.897-15. ......................................................
(Signed:) (illegible) ........................................................
CPF No. 610.769.457-91. ......................................................
Contract 101.2.159 97-1.......................................................
59
<PAGE>
CHARTERING
ATTACHMENT II
APPLICABILITY OF THE RATES AND, INCIDENTS IN THE
PERFORMANCE.
1 - APPLICABILITY OF THE RATES - DEFINITION OF THE CHARTERING RATES PER 24
(TWENTY-FOUR) HOUR DAY .......................................................
REP 101 - OPERATION RATE - It will be applied during the activities requiring
the use of the Unit, such as electric logging, formation testing, completion,
and workover operations, including line scouring and cutting
operations....................................................................
REP 102 - REPAIR RATE - In the periods when there is an interruption of the
activities that require the use of the Unit, mentioned in Ref 101 of this
ATTACHMENT and the operations for Moving the Unit between locations, Ref 105 of
this ATTACHMENT, due to maintenance, including replacement of mud pump spare
parts, and/or repair in the Unit's equipment, or in those which supply is the
Contractor's responsibility, no rate will be due ......................
NOTE 1. The repair period will be considered as of the interruption of the
operation that is being performed, until the return to the same situation when
the interruption occurred, except for the periods when the interruption in the
repair activities occur due to adverse sea conditions, as set forth in NOTE 2 of
Ref. 104 ...........................................................
NOTE 2. In the event the CONTRACTOR remains in Repair Rate for an accumulated
total of 30% of the time, for any period of 6 (six) Contract months, PETROBRAS
may rescind the present Contract, based on subitem 10.1.14 of this contract.....
60
<PAGE>
NOTE 3. It will be considered as repairs the occurrences due to wash outs in
the drill pipes and in the other elements of the drill string, belonging the
CONTRACTOR, with exception of those arising from the presence of H2S and from
abnormal mechanical conditions occurred in the well ..........................
NOTE 4. At the Inspection's discretion, for the maintenance of the BOP, the
CONTRACTOR may be granted a franchise of up to 24 hours between the instant the
BOP is set on the test stump, until its operating withdrawal, and the moment of
its movement for the next running in another well, without the CONTRACTOR
entering in repair rate, provided such maintenance is carried out according to
international standards. In the period within these 24 hours intended
exclusively for the BOP maintenance, the waiting rate (Ref. 104) will be
due...................................................................
REP. 103 - RATE ADDITIONAL (AT) - In each measurement period, as agreed upon in
subitem, 6.1.1 of the contract, the CONTRACTOR will be entitled to receive a
Rate Additional, calculated by means of the following formulae:.............
AT = 0.10 x (NT - NFM - NREP - NIPG NTOR) x for PI less than or equal 0.0300 TO
AT = (0.16 - 2 x PI) x (NT - NFM - NREP - NIPG - for 0.03 less than or equal to
PI 0,0800 NTOR) x TO.........................................................
AT = Zero to PI> 0.0800
Where:........................................................................
AT = Rate Additional .........................................................
TO = Operation Rate (Ref 101).................................................
PI = Unavailability Proportion, calculated with 4 (four) decimal places,
being: .......................................................................
NREP + NIPG + NTOR
PI = ------------------
NT - NFM
NT = Total number of days in the measurement period considered;...............
61
<PAGE>
NFM = Total number of days in which the act of God or force majeure occurs, as
defined in the Twelfth Clause of the contract, in the measurement period
considered ...................................................................
NREP = Total number of days under repair rate (Ref 102) in the measurement
period considered;............................................................
NIPG = Total number of days under exemption from payment (according to item 2.1
of this Attachment) in the measurement period considered .................
NTOR = Total number of days with reduced operation rate (according to subitems
2.2.3 and 2.2.4 of this ATTACHMENT) in the measurement period considered
Ref. 104 - WAITING RATE (TE) - corresponds to 95% of the operation rate (TO) and
which will be applied in Bad Weather, Force Majeure and Waiting situations, as
defined below:.................................................
1) BAD WEATHER SITUATIONS - in the event of stoppage of the operations when
environmental conditions are so severe as to endanger the Unit's operating
capacity, the limitations in Attachment IV being complied with, making the
operations unstable or unsafe or preventing support vessels from having
access to the Unit, or preventing the tugs' operations, at the time of
change of locations, although the Unit may operate normally, in spite of
the Bad Weather .........................................................
2) FORCE MAJEURE SITUATIONS - during the period when the Unit cannot operate,
due to act of God or force majeure, as defined in the TWELFTH CLAUSE of the
Contract, until the removal of the impediment or the rescission of the
Contract, as the case may be ..........................
3) WAITING - waiting for the arrival, maintenance or availability of materials
from PETROBRAS or third parties, under PETROBRAS' responsibility, even if
the Maintenance is made in the Unit; waiting for daylight to carry out
formation tests; waiting for orders from PETROBRAS, such as, but not
limited to: change of programs, definition to proceed with the completion
or other production activity, rest for PETROBRAS' team or of those of third
party at PETROBRAS' service; waiting for tugs or support vessels........
62
<PAGE>
NOTE 1. The period spent in disconnecting the LMRP from the BOP due to
environmental conditions will be considered as Bad Weather situation, until the
return to the previous situation .........................................
NOTE 2. If a Bad Weather situation occurs which interrupts a Repair activity,
the waiting Rate (Ref 104) with a 40% (forty percent) reduction, will be due
during that period ...........................................................
Ref. 105 - Movement Rate - corresponds to 95% (ninety-five percent) of the
Operation Rate (TO) and will be applied during the following periods: ........
a) Beginning of the Contract - After the acceptance of the Unit's equipment
operating conditions, once the general testing provided for in Item 3.1. of
the contract has been carried out, until the spud in of the first well or
reentry in the first well (beginning of running the first tool for access
to the well); ................................................
b) Between locations - After the end of the completion or intervention
operations in a well, with the arrival of the BOP or tool used in the well
(the one which occurs last) in the moon pool, until the spud in or reentry
in a new well (beginning of running the first tool for access to the well);
NOTE: This period includes the DP system calibration and tests, always in each
new location, and in others in each Contract year or at any time, when requested
by PETROBRAS........................................................
63
<PAGE>
c) End of Contract - After the end of the spud in or intervention operations
in the last well, with the arrival of the BOP or tool used in the well (the
one which occurs last) in the moon pool, until the Unit's arrival in a
place of sheltered waters, chosen in common agreement between the parties,
or, if there are PETROBRAS' equipment still aboard, until the withdrawal
of such equipment from the Unit.............
Ref. 106 MOBILIZATION OF THE Unit (MOB) - No rate will be due for the
mobilization of the Unit and its fittings.....................................
Ref. 107 DEMOBILIZATION OF THE Unit (DEMOB) - No rate will be due for the
demobilization of the Unit and its fittings...................................
2 - INCIDENTS IN THE PERFORMANCE .............................................
2.1. Exemption from Payment - PETROBRAS will be exempted from the payment of
the rates foreseen in this ATTACHMENT, during the period in which
occurs ...............................................................
2.1.1. Interruption of the services due to the CONTRACTOR's duly proven fault
arising from operational error and/or lack of material or equipment,
inclusive due to the loss of subaquatic equipment or spare parts
2.1.2. Stoppage of the services and/or of the Unit due to measures related to
impositions by made the insurers ..................................
2.1.3. CONTRACTOR's refusal to operate under the conditions foreseen in
Attachment VI - Environmental Operating Conditions ..................
2.1.4. Stoppage of the services and/or of the Unit for inspection or dockage
purposes, including surveys and dockages arising from act of God or
force majeure, as defined in the Twelfth Clause of the contract, the
corresponding expenses also running for the CONTRACTOR's account .....
64
<PAGE>
NOTE 1. The exemption from payment will begin in the moment there is an
interruption of the operational continuity object of this contract, even if the
withdrawal of all or part of PETROBRAS' and/or the CONTRACTOR's cargo becomes
necessary for the inspection and/or dockage...........................
NOTE 2. The end of the exemption from payment, due to the inspection and/or
dockage, will occur:..........................................................
a) On the return to the same location, the moment the operation returns
to the previous situation;................................
b) On the mobilization to another location, the moment the Unit starts
sailing after PETROBRAS' or the CONTRACTOR's materials have been put
back on board. .....................................
2.1.5. Occurrence of kick, drill string sticking, loss of circulation, fishing
or abandonment, caused by the CONTRACTOR's duly proven action or
omission, from the moment the problem was ascertained, until the return
to the situation prior to its occurrence, or displacement to another
location, in the event of abandonment ........................
2.1.5.1. The exemption from payment referred to in 2.1.5 will be limited to a
period of 15 (fifteen) days, per event, after which the reduction
foreseen in subitem 2.2.3 of this ATTACHMENT will be applied
2.1.6. Occurrence of blow out caused by the CONTRACTOR's duly proven action or
omission, from the moment the problem was ascertained, until the return
to the situation prior to its occurrence ......................
65
<PAGE>
2.1.6.1. The exemption from payment referred to in item 2.1.6 will be limited to
a period of 45 (forty-five) days, after which the reduction foreseen in
subitem 2.2.4 of this ATTACHMENT will be applied......................
2.1.7. Suspension of the services, determined by PETROBRAS' Inspection, based
on item 9.1.1 of the Contract...................................
2.1.8. Interruption of the operations due to a failure occurred in any of the
Unit's equipment, at the time of the testing to be carried out
according to item 3.1 of the contract ................................
2.1.9. In the occurrence of events of exemption from payment provided for in
subitem 2.1.1, 2.1.2, 2.1.3, and 2.1.7, for a total accumulated period
exceeding 30% (thirty percent) in any 6 (six) month period, PETROBRAS
may rescind the present contract, based on its subitem 10.1.13.........
2.2. REDUCTION IN THE DAILY OPERATION, WAITING AND MOVEMENT RATE...........
The rates foreseen in this Attachment will be reduced in the following
cases .............................................................
2.2.1. Total or partial inoperativeness or malfunction of any equipment which
delays or hinders the operation, such as, but not limited to, winches,
top drive, kelly spinner, geolograph, current meter, air compressors,
shale shaker, mixing pumps, mud laboratory equipment and bulk receipt
and transfer systems, are reason for the reduction of the daily rate
provided for in Ref 101, in 1% (one percent), cumulative per equipment,
provided the CONTRACTOR is notified in writing in the Daily Drilling
Certificate (ADP), by PETROBRAS' Inspection and which, after the time
limit the latter has set to repair said equipment, such repair has not
been made..................
66
<PAGE>
2.2.2. Low Efficiency - Reference Rates 101 and 105 of this Attachment will
have suffer a 20% (twenty percent) reduction, in the event low
efficiency is verified, according to the operating efficiency parameters
listed below. Such reduction will be applied during the whole period
corresponding to the activity in which low efficiency is verified:....
Operating Parameters: ........................................................
- - - Maneuver of the drill string in a cased well (except BHA): ...............
o Inside the riser and 20" casing = 500 m/h.........................
o Inside the 13 3/8" casing = 600 m/h ..............................
o Inside of 9 5/8" casing = 700 m/h ................................
- - - Break of DP's per Unit - 25jt/h ..........................................
- - - Casing string running in the sea/inside the riser/previous casing (joints
with approximately 12 m long) ............................................
o 30" Casing - 2 jt/h ........................................
o 20" Casing - 5 jt/h ........................................
o 13 3/8" Casing - 13 jt/h ........................................
o 9 5/8" Casing - 18 jt/h ........................................
o 7" Casing - 15 jt/h ........................................
- - - Running of drilling riser, excluding normal time for testing (50 ft
joint): 45/m/h ...........................................................
- - - Pulling of drilling riser (50 ft joints): 60 m/h
- - - Installation or pulling of the kill/choke lines/ telescopic
joint/stretchers: 6.0h ...................................................
- - - Diverter installation or pulling: 2.0h ...................................
- - - Assembly of the dampening lines in the M.R.: 1.5h........................
67
<PAGE>
- - - Assembly of the flexitube equipment: 5.0h. ...............................
- - - Assembly of the production tail: 2.0h ....................................
- - - Tubing running or pulling, per Unit - 150 m/h ............................
- - - Tubing running or pulling per section - 300 m/h...........................
- - - Completion risers running or pulling - 50 m/h ............................
- - - Assembly of terminal head and sling's -2.0 h .............................
- - - Moving of WCT to/from the moon pool - 3.0 h...............................
- - - Moving of tree cap or tree running tool to/from the moon pool - 2.5h .....
- - - Assembly of lubricator and wire line BOP - 1.5h
NOTE: The above mentioned operating parameters are based on normal weather
condition.....................................................................
2.2.3. Beginning on the 16th (sixteenth day), inclusive, of the occurrence of
kick, drill string sticking, loss of circulation or fishing, caused by
the CONTRACTOR's duly proven action or omission, until the return to
the situation prior to its occurrence, the applicable rate will be
reduced by 50% (fifty percent) ...............................
2.2.4. Beginning on the 46th (forty-sixth) day, inclusive, of the occurrence
of Blow out caused by the CONTRACTOR's duly proven action or omission,
until the return to the situation prior to its occurrence, the
applicable rate will be reduced by 50% (fifty percent) ...........
2.3. Period of Validity of the Contract Rates-the contract rates set forth
in this Attachment will apply in the period set forth below: .........
a) Beginning: release of the Unit, by PETROBRAS, to sail to the first
location, after the equipment general testing provided for in item
3.1 of the Contract has been carried out, with the exception of the
provision in its subitem 3.1.1.1................
68
<PAGE>
b) End: after the end of the completion of the last well, with this
Unit's arrival at a port or sheltered waters chosen by common
agreement between the parties, and if there is PETROBRAS' equipment
still aboard, with the withdrawal of such equipment from the Unit.
2.4. Blow-Out - PETROBRAS will be responsible for the well control operation
costs, in the event of blow-out and caving caused by the blow-out. Such
provisions apply only to the well control costs and do not apply to the
loss of assets, lesions and/or damages caused by the blow-out, which
are protected by the provisions of the pertinent items of this
contract. The CONTRACTOR undertakes to place at PETROBRAS' disposal all
of its resources in personnel -and equipment related to this Contract,
without any additional charges to PETROBRAS. If the CONTRACTOR has
contributed with duly proven action or omission for the occurrence of
the accident, no rate will be due, until the solution of the problem,
in compliance with the provisions in subitems, 2.1.6 and 2.2.4 of this
Attachment ........................................
(End of ATTACHMENT)...........................................................
69
<PAGE>
ATTACHMENT III - Unit PRICES SPREADSHEET
CHARTERING
ATTACHMENT III - Unit PRICES SPREADSHEET
CHARTERING
- - -------------------------------------------------------------------------------
Unit PRICES SPREAD SHEET Contract NO. 101.2.008.97-9
- - -------------------------------------------------------------------------------
OBJECT OF BID: CHARTERING OF A FLOATING Unit, PROVIDED WITH DYNAMIC
POSITIONING SYSTEM.
- - -------------------------------------------------------------------------------
PLACE OF OPERATION: BRAZILIAN CONTINENTAL SHELF AND INTERNATIONAL WATERS
- - -------------------------------------------------------------------------------
Unit'S NAME: AMETHYST 6
- - -------------------------------------------------------------------------------
COMPANY'S NAME: MARITIMA NAVEGACAO E ENGENHARIA LTDA.
- - -------------------------------------------------------------------------------
CODE ITEMIZATION Unit Unit PRICE (US$)
- - -------------------------------------------------------------------------------
OPERATION RATE
02.222.305 (Ref. 101) DAY 119,999.70
- - -------------------------------------------------------------------------------
REPAIR RATE (Ref. No rate will be
02.222.306 102) DAY due
- - -------------------------------------------------------------------------------
WAIT. - BAD
WEATHER RATE
02.222.307 (Ref. 104.1) DAY (95% OF Ref. 101)
- - -------------------------------------------------------------------------------
WAITING RATE -
FORCE MAJEURE
02.222.308 (Ref. 104.2) DAY (95% OF Ref. 101)
- - -------------------------------------------------------------------------------
WAITING RATE -
WAITING
02.222.309 (Ref.104.3) DAY (95% OF Ref. 101)
- - -------------------------------------------------------------------------------
70
<PAGE>
- - -------------------------------------------------------------------------------
MOVEMENT RATE
02.222.310 (Ref. 105) DAY (95% OF Ref. 101)
- - -------------------------------------------------------------------------------
MOBILIZATION RATE NO RATE WILL BE
02.222.311 (Ref. 106) UNIQUE DUE.
- - -------------------------------------------------------------------------------
DATE OF THE
SIGNATURES PROPOSAL
- - -------------------------------------------------------------------------------
PETROBRAS CONTRACTOR
(illegible) (illegible) 09/08/97
- - -------------------------------------------------------------------------------
(Illegible rubber stamp.)......................................................
71
<PAGE>
Contract No. 101.2.159.97-1
CHARTERING
ATTACHMENT IV
MUTUAL OBLIGATIONS
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
1. Production Adaptor
Base and WCT X X
- - -------------------------------------------------------------------------------
2. Cement, bentonite,
baritine and other
materials and
additives for
manufacturing mud and
cementing. X X
- - -------------------------------------------------------------------------------
2. (sic) Cementing and logging Unit:
a) Installation and
removal X X
b) Maintenance X X
c) Rent X X
- - -------------------------------------------------------------------------------
3. Equipment and tools
specific for
evaluation, completion
and production
operations of wells. X X
- - -------------------------------------------------------------------------------
72
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
4. Fishing tools and
replacement materials
for pipes and production
tools:
a) Foreseen in
Attachment I X X
b) Not foreseen in
Attachment I X X
- - -------------------------------------------------------------------------------
5. Equipment, tools and
replacement materials
needed for the
services of logging,
formation tests and/or
production and/or
perforation, not
included in Attachment
I. X X
- - -------------------------------------------------------------------------------
6. Lubricants and
greases for the
CONTRACTORs equipment X X
- - -------------------------------------------------------------------------------
7. Industrial and
fresh water. X X
- - -------------------------------------------------------------------------------
73
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
8. Replacement
materials, including
for fishing tools and
other CONTRACTOR's
equipment listed in
Attachment I. X X
- - -------------------------------------------------------------------------------
9. Consumer equipment
and materials for
completion fluid tests
listed in Attachment
I. (Note: PETROBRAS
will inform monthly on
the minimum stock
needed). X X
- - -------------------------------------------------------------------------------
10.Steel ropes,
slings, sisal or nylon
ropes and cordage in
general, needed for
tying towlines, for
mooring support
vessels and in cargo
evaluation, completion
and handling. X X
- - -------------------------------------------------------------------------------
11.Hoses for loading
and unloading of
liquids and bulk
material with
connections compatible
with those of the
supply vessels. X X
- - -------------------------------------------------------------------------------
12.Materials to make
completion fluid. X X
- - -------------------------------------------------------------------------------
13.Conventional bits. X X
- - -------------------------------------------------------------------------------
74
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
14.Safety equipment
for individual use:
gloves, helmets,
boots, masks, ear
protectors, and other
personal use equipment
for the CONTRACTOR's
employees. X X
- - -------------------------------------------------------------------------------
15.Services, materials
and equipment to mark
locations. X X
- - -------------------------------------------------------------------------------
16.Surveying of the
sea bottom, if
necessary. X X
- - -------------------------------------------------------------------------------
17.Welding equipment
and material needed
for well completions
and abandonment
operations. X X
- - -------------------------------------------------------------------------------
18.Bulls eye for
running tools. X X
- - -------------------------------------------------------------------------------
19.Warehouses, office
and storage area for
the CONTRACTOR on land. X X
- - -------------------------------------------------------------------------------
20.Radio-beacon with
working frequencies
compatible with those
mentioned in
Attachment I. X X
- - -------------------------------------------------------------------------------
21.Safety and survival
equipment, including
maintenance (subjected
to periodical
inspection by
PETROBRAS. X X
- - -------------------------------------------------------------------------------
22.Screens for mud
sieves, according to
PETROBRAS'
specifications. X X
- - -------------------------------------------------------------------------------
75
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
23.Materials for the
maintenance of
equipment and test
lines, supplied by the
CONTRACTOR, for
formation testing
and/or production
(painting, boiler
factory and welding). X X
- - -------------------------------------------------------------------------------
24.VX ring, VX with
HYCAR and VX with lead
insert for connection
BOP-WELLHEAD, LMRP-BOP
STACK:
a) In normal operation X
b) In reinstallation X X
due to problem with
the ESCP X X X
- - -------------------------------------------------------------------------------
25.VX ring, VX with HYCAR
and VX with lead
insert for WCT. X X X
- - -------------------------------------------------------------------------------
76
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
26.Remote operation
submarine vehicle
(ROV)
a) Installation and
removal X X
b) Maintenance X X
c) Rent X X
- - -------------------------------------------------------------------------------
77
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
a) Supplied by the
CONTRACTOR X X
- - -------------------------------------------------------------------------------
b) Supplied by
PETROBRAS X X
- - -------------------------------------------------------------------------------
27.Hydraulic fluid for
BOP driving and test. X X
- - -------------------------------------------------------------------------------
28.Hydraulic fluid for
WCT driving and test. X X
- - -------------------------------------------------------------------------------
29.Special greases for
pipes and completion
equipment. X X
- - -------------------------------------------------------------------------------
30.Individual safety
equipment for
operation in the moon
pool. X X
- - -------------------------------------------------------------------------------
31.Paper and ink for
microcomputer printer. X X
- - -------------------------------------------------------------------------------
32.Beacons,
hydrophones, transducers,
transponders, batteries. X X
- - -------------------------------------------------------------------------------
33. Diesel oil
a) up to the limit set
forth in Clause
4.6.2. X X
b) above the limit set
forth in Clause
4.6.2. X X
- - -------------------------------------------------------------------------------
34.Filter elements for
the completion fluid
filtering Unit. X X
- - -------------------------------------------------------------------------------
78
<PAGE>
ATTACHMENT V
LIST OF (MINIMUM) SPECIALIZED PERSONNEL
ABOARD
----------------------------------------
- Captain or Barge 1
----------------------------------------
- Tool Pusher (1
board
superintendent) 2
----------------------------------------
- Driller 2
----------------------------------------
- Assistant Driller 2
----------------------------------------
- Derrickman 2
----------------------------------------
- Roughneck 6
----------------------------------------
- Crane Operator 2
----------------------------------------
- Area Man 8
----------------------------------------
- Welder 2
----------------------------------------
- Watchstander 2
----------------------------------------
- Subsea Engineer 1
----------------------------------------
- Mechanic 1
----------------------------------------
- Assistant Mechanic 1
----------------------------------------
- Electrician 1
----------------------------------------
79
<PAGE>
----------------------------------------
- Assistant
Electrician 1
----------------------------------------
- Radio Operator
(Portuguese
speaking) 2
----------------------------------------
- Male nurse 1
----------------------------------------
- Storekeeper 1
----------------------------------------
- Safety guard 1
----------------------------------------
NOTE: Supplementary personnel will be supplied according to the CONTRACTOR's
conveniences and needs or to comply with the requirements of government laws....
80
<PAGE>
CONTRACT NO. 101.2.159. 97-1...................................................
ATTACHMENT "VI"
ENVIRONMENTAL OPERATING CONDITIONS
(PERMISSIBLE LIMITS FOR ENVIRONMENTAL
CONDITIONS ACTING SIMULTANEOUSLY)
- - -------------------------------------------------------------------------------
PITCH
OR
HEAVE ROLL WIND WAVE CURRENT
OPERATION (FEET) (DEGREES) (MPH) (FEET) (KNOTS)
- - -------------------------------------------------------------------------------
Conductor's jetting/driving 2.0 2.5 30 3.0 1.4
- - -------------------------------------------------------------------------------
Drilling 2.5 3.0 30 3.0 1.4
- - -------------------------------------------------------------------------------
Casing running 2.0 3.0 30 3.0 1.4
- - -------------------------------------------------------------------------------
Casing hanger setting 1.5 2.0 30 2.1 1.4
- - -------------------------------------------------------------------------------
BOP running 1.5 1.5 19 2.1 2.5
- - -------------------------------------------------------------------------------
BOP setting 1.5 1.5 19 2.1 1.4
- - -------------------------------------------------------------------------------
Maneuvering 3.5 3.0 44 8.5 1.4
- - -------------------------------------------------------------------------------
LMPR disconnection 7 4 51 10.5 2.5
- - -------------------------------------------------------------------------------
LMPR connection 1.5 1.5 19 2.1 1.4
- - -------------------------------------------------------------------------------
Formation testing 3.5 4.0 44 8.5 1.4
- - -------------------------------------------------------------------------------
Operation with boats 2.5 3.0 39 6.7 1.4
- - -------------------------------------------------------------------------------
Running the WCT (lay-away) 1.5 1.5 19 2.1 2.5
- - -------------------------------------------------------------------------------
81
<PAGE>
- - -------------------------------------------------------------------------------
Running the WCT (without
lines) 1.5 1.5 19 2.1 2.5
- - -------------------------------------------------------------------------------
Operation with flexitube 2.0 3.0 30 5.0 1.4
- - -------------------------------------------------------------------------------
Operation with wire-line 3.0 4.0 44 8.5 1.4
- - -------------------------------------------------------------------------------
82
<PAGE>
CONTRACT NO 101.2.159. 97-1.....................................................
ATTACHMENT VIII
EQUIPMENT TESTING PROGRAM
In order to carry out the Unit's equipment testing in an easier and
more agile manner, the CONTRACTOR is to submit to PETROBRAS, as quickly as
required the following documents:.............................................
1. CERTIFICATES............................................................
a) Survey and Appraisal Report, updated and valid for the fiscal year
regarding the Unit offered, issued by one of the entities: ABS,
NOBLE & DENTON, DNV, LLOYDS or BUREAU VERITAS, and if the report is
issued abroad, it will be translated into Portuguese by a sworn
public translator and notarized in the Brazilian
Consulate.........................................................
b) Classification or Class Confirmation Certificate for hull and
equipment, compatible with the proposal submitted (certified
copy);............................................................
c) Report on claims from the classification societies mentioned in the
Class Confirmation Certificate (in the event there are
claims);..........................................................
NOTE:PETROBRAS will evaluate the above mentioned documents and will
indicate in what time limits eventual claims will be settled,
and at PETROBRAS' judgment, it can be at the time the Unit's
inspection or at mobilization after the Contract is
signed...................................................
d) Freeboard Certificate;............................................
e) IOPP (International Oil Pollution Prevention) Certificate;........
f) IMO-MUDU-CODE Certificate - Mobile Offshore Drilling Unit - latest
edition (unnecessary for Drill Ship);......................
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g) Cargo Ship Safety Equipment Certificate;..........................
h) Cargo Ship Safety Construction;...................................
NOTE: All documents required are to be within their period of
validity....................................................
2. INDUSTRIAL SAFETY AND ENVIRONMENTAL CONTROL.............................
- Manuals and emergency plans in the Portuguese Language............
3. STORAGE CAPACITY........................................................
- Complete floor plan of bulk movement system, specifying:..........
a) Exclusive lines to move cement;.............................
b) Exclusive lines to move bentonite and baritine;.............
c) Location and type of bulk line valves and their respective
driving systems;............................................
d) Pneumatic lines for cleaning and clearing bulk lines;.......
e) Location of the manometers;.................................
f) Quantity, flow, operation pressure and location of
compressors;................................................
g) Quantity, flow, operating pressure and location of the air
drying Unit(s);.............................................
h) Schematic drawing of each silo with their respective aeration
systems and points of connection with the bulk
lines.......................................................
4. FLUID CIRCULATION AND PROCESSING SYSTEM.................................
- Sketch of the system emphasizing pulsation dampers (suction and
tamping), safety valves, feed pumps, position of the suction lines
in relation to the suction sieves' tanks and filters........
- Floor plan of the drilling fluid feed and discharge lines showing
the flexibility in relation to the sand traps and mud tanks.......
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- Floor plan of the degasser installation showing the active tank,
separate processed mud and gas discharge lines, emphasizing this
line's connection point with the gas discharge line...............
- Floor plan of the mud tanks system, emphasizing the supply lines,
gun lines, mixture funnel and centrifugal pumps interconnection
lines.............................................................
5. WELLHEAD SAFETY EQUIPMENT SYSTEM........................................
- Sketch of the BOP/LMRP, specifying lines, valves and
measures/dimensions...............................................
- Floor plan of the kill and choke lines from the BOP to the choke
manifold, specifying valves, connections, dampener chambers,
anchorage points and interconnection with the other systems.......
- Floor plan of the atmospheric air separator.......................
- Layout of the trip tank installation, giving the following
information:......................................................
a) Capacity;...................................................
b) Location;...................................................
c) Sensitivity;................................................
d) Measuring system;...........................................
e) Scale type;.................................................
f) Driller's scale visualization conditions;...................
g) Supply System for the above item............................
- Floor plan of the stand pipe manifold, specifying lines, valves,
manometers and interconnections with the other systems............
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10. FISHING TOOLS AND ACCESSORIES...........................................
- Inspection report on all components of the fishing tools (used
equipment) or purchase vouchers (for new tools)...................
11. SUNDRY SYSTEMS..........................................................
- Winches load test certificate.....................................
- Description of the compressed air system, emphasizing compressors,
layout of lines, valves and interconnection with the other
systems.....................................................
- Preventive Maintenance Plans with their respective timecharts.....
- Ballast and sewer flowchart.......................................
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D to the chartering and services rendering
Contracts.........................................................
NOTE:Such equipment must be in places of easy access for survey.
A) RECEIPT TEST......................................................
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- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D to the chartering and service rendering
Contracts.
NOTE: Such equipment must be in places of easy access for inspection
- The following systems, equipment and tools listed below will
be checked, inspected and tested:......................
1) DRILL STRING, COMPONENTS AND ACCESSORIES....................
- The CONTRACTOR will submit recent inspection reports,
according to the specification API RP7G for the whole
drill string and accessories such as, but not limited
to: drill pipes, drill collars, HW, Subs, stabilizers,
reamers, bumper subs, lift-sub, kelly, slips, elevators,
fishing tools, etc., which prove the good conditions of
the string and its accessories. The information from the
reports and the general conditions of the string and its
accessories will be checked by PETROBRAS by means of a
sampling inspection. In the event of discrepancy between
the data submitted by the CONTRACTOR and those checked
by PETROBRAS, showing an inadequate condition of the
string and its accessories, the CONTRACTOR will carry
out another inspection, for its own account...........
NOTE 1: Any equipment refused by the inspection will be
immediately repaired or replaced by the
CONTRACTOR, for its own account.................
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NOTE 2: For the string, components and new accessories,
no inspection report will be required, documents
proving that such equipment is new will be
sufficient..............................
NOTE 3: The CONTRACTOR's equipment will be stored and
arranged so as to facilitate the inspection by
sampling to be carried out by PETROBRAS.........
- The same procedure will be adopted for the telescopic
joints and flexible joints............................
2) EXTRACTOR OF SOLIDS.........................................
The following will be examined:.............................
- sieves,...............................................
- desander,.............................................
- degasser, -test suction and discharge................
- centrifuge (if any)...................................
The operation and work pressure, as well as the existence
of manometers, will be checked..............................
3) MUD TANKS AND VALVES........................................
Waterproofness, working of the agitators, mixture funnel
and depth gun, besides the existence of fixed marks to
control the tanks volume will be checked....................
4) CENTRIFUGAL PUMPS...........................................
The following will be checked:..............................
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- working, vibration and noises;........................
- Packing (leaks);......................................
- Work pressures........................................
NOTE: Items 3 and 4 will be tested with sea water................
5) MUD LABORATORY AND TEST EQUIPMENT...........................
The existence on board and the adequacy to the requirements
described in Attachments B and C to this Contract will be
checked.....................................................
6) DRILLING DERRICK............................................
Maintenance conditions (corrosion), fastening system and the
conditions of the traveling block rails will be
examined....................................................
7) CROWN BLOCK.................................................
The pulleys will be examined as to the profile wear,
alignment, clearance, buckling of the axles, lubrication,
etc.........................................................
8) MUD PUMPS...................................................
The following will be carried out:..........................
- observation of working, vibrations, noises;...........
- pressure and maximum work flows tests for the liner
used;.................................................
- safety valve working test;............................
- checking of the suction and discharge pulsation
dampeners;............................................
- watertightness tests with nominal pressure of the mud
pumps and of all manifold valves;.....................
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- watertightness tests with nominal pressure of all
manifold values of the stand pipe manifold and of the
kelly hose;...........................................
- random disassembling of the suction for visual
inspection of the piston, sleeve, packing, valve and
seat..................................................
9) SWIVEL......................................................
The mandril, gooseneck, body, etc., will be check and nominal
pressure test with rotation will be performed.......
10) MOTION COMPENSATOR...........................................
The piston alignment, lock bar, alignment in the rail, general
conditions, leaks and chains will be checked........
11) RISER AND GUIDE LINE TENSIONERS.............................
The general conditions, leaks, pulleys and cables will be
inspected...................................................
12) RISER RECOIL SYSTEM/HANG OFF SYSTEM/FILL-UP SYSTEM VALVE
(IF ANY)....................................................
The systems' operation will be checked......................
13) HIGH COMPRESSORS AND AIR RESERVOIRS.........................
The general conditions, leaks, lines and system yield will be
checked..................................................
14) TOP DRIVE...................................................
Working tests (connection and disconnection of one or more
sections of the DP's) will be carried out and the general
conditions will be inspected................................
15) KELLY SPINNER...............................................
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The general conditions, specially the rollers' wear, and
working will be checked, and connection and disconnection
operation of one or more DP's will be carried out...........
16) HOOK........................................................
The general conditions and the locking system will be
checked.....................................................
17) TRAVELING BLOCK.............................................
The pulleys wear, axles alignment, lubrication system,
retraction system, etc., will be inspected..................
18) DRAWWORKS...................................................
- The operation of the mechanical break system (brake
bands), electromagnetic (distance between irons, voltage
level and SCR feeder conditions), cooling system and
clutcheads will be checked.................
- The operation of the cat-heads and height limitator with
the assembly/ disassembly of one or more command
sections, will be checked.............................
19) ROTARY TABLE................................................
The operation in high and low, brake system, tachometer and
lubrication ................................................
20) TRIP TANK...................................................
Capacity, installation site, sensitivity to the level
indicator system, visualization condition and supply system
will be inspected...........................................
21) HYDRAULIC TONGS AND PNEUMATIC SPIDER FOR CASING AND
PNEUMATIC TONGS FOR DRILL PIPES.............................
- Operation tests will be made and maintenance conditions
will be checked...............................................
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22) SAND-LINE OR WIRE-LINE SYSTEM...............................
- Operation of the clutches and brake will be tested by lowering
the photoclinometer inside the drill string coinciding with
the photoclinometer overshot test (TOTCO) will be tested. Test
to be made on location before the beginning of the
operations.................................
- The existence of an alignment guide for the sand-line cable in
the drum will be checked.................................
23) CHOKE MANIFOLD..............................................
All valves with low pressure (300 psi) and in high pressure
(system's work pressure), Manometers, hydraulic choke
operation, manual choke, remote control panel, etc., will
be tested...................................................
24) UPPER AND LOWER KELLY COCK, INSIDE BOP AND SAFETY VALUE
- Drivers will be tested and work pressure tests will be
made...............................................
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- The end connections of each element will be checked and
tested with work pressure. The CONTRACTOR should have
end seal plugs adequate for the test.............
25) KILL AND CHOKE LINES HOSES..................................
The end connections will be checked and tested with the
system's work pressure. The CONTRACTOR should have end
seal plugs adequate for the test............................
26) DRILL INSTRUMENTATION SYSTEM................................
The following will be tested:...............................
- geolograph;...........................................
- rotary table tachometer;..............................
- manometers;...........................................
- stroke counter;.......................................
- level control in the mud tanks;.......................
- torque indicator......................................
27) FLARE PIPE AND BOOMS........................................
Their existence on board will be checked, analyzing the
maintenance conditions of the lines by means of inspection,
and the facilities for installation of the production test
equipment system............................
28) BOP SYSTEM..................................................
The following will be carried out:..........................
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- pressure tests of the slide valves with low pressure and
high pressure, compatible with the system.........
- pressure tests of the annulars with low pressure and
high pressure, compatible with the system.............
- complete function test in both POD's, through all
panels................................................
- choke and kill valves tested with low pressure and high
pressure, compatible with the system.............
- working of the shear ram valve will be checked with
opening for examination of the blades conditions......
- the opening and closing of all ram, annular a kill and
choke valve chambers will be tested...............
- the hydraulic driving Unit will be checked as to: fluid
used, fluid low level alarm, low air pressure and low
accumulators pressure, maintenance conditions, leaks and
mixing systems..................
- the volumetric capacity of accumulators and the capacity
of electric and pneumatic pumps of the hydraulic Unit
will be tested.........................
- the locking system of the ram valve(s) will be tested.
- the SPM valves conditions will be checked by opening and
inspecting one of them, chosen at random..........
- the locking/unlocking system of the H-4 hydraulic
connectors will be tested.............................
- the surface and bottom accumulators' pre-charge will be
checked............................................
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- the operation of the following systems will be tested:
o driving back-up.................................
o emergency recovery..............................
o handling........................................
29) TRAVELING TONGS, EZY-TORQ, TORQUE SENSOR, SLIPS, ETC........
One or more sections of the drill collars and drill pipes
will be assembled/disassembled to check the working of such
equipment. The general maintenance conditions, chuck jaws
and cables will be checked..................................
30) BULK TRANSFER SYSTEM........................................
The following will be carried out:..........................
- the operation of the compressor will be checked, and
noise, oil and air leaks, and maintenance state, filters
and dehumidifier will be inspected............
- operation and watertightness of valves, lines and silos
will be checked, looking for possible clodding..
- transfer of cement from 1 silo to the daily silo (if
any) and from this to the surge- tank will be made....
31) EMERGENCY ENERGY GENERATION SYSTEM..........................
- a black-out in the energy system generation system will
be simulated to see if the emergency generator is
automatically turned on............................
32) MAIN MOTOR-GENERATORS ASSEMBLY..............................
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The following will be carried out:
- vibration, noises, insulation, leaks, maintenance, etc.,
will be checked.................................
- generators input and output in the bus bar, synchronism
and load divisions will be tested.........
- load and voltage and frequency regulation will be
tested................................................
33) DESSALTER...................................................
Operation and production capacity will be checked...........
34) CAT-LINES CRANES............................................
The following will be carried out:
- operation of the winches and maintenance of the cabled
will be checked................................
- the elevation and rotation system, the operation with
flying boom and pulley block and the operation of the
boom height pawl will be checked......................
- the report of the last inspection carried out by the
Unit's classification society in the winches will be
examined..............................................
35) DEJECTA TREATMENT Unit......................................
Its operation will be inspected.............................
36) TELECOMMUNICATION SYSTEM....................................
Operational tests will be made in all radio equipment existing
on board, including radio-beacon...................
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37) OVERHEAD TRAVELING CRANE....................................
Their operation, and the maintenance conditions of cables and
sliders will be examined................................
38) DC/SCR MOTORS...............................................
The maintenance conditions and insulation, as well as the
collectors and brushes will be examined.....................
- SCR functional test...................................
39) DIVERTER....................................................
The following will be tested:...............................
- flow line wing valves;................................
- diverters and insert packer lock;.....................
- the control panel will be checked.....................
40) SAFETY EQUIPMENT............................................
SALVAGE.....................................................
Fireproof rigid vessels (capsules, whalers):................
- lowering, motor, fuels, sprinklers, start;............
- rations, garnishing, hatches, cleaning, fire
extinguisher, signaling equipment.....................
Inflatable rafts:...........................................
- quantity, capacity, location, height in relation to the
sea;..............................................
- validity of the last inspection, means of access to the
sea;..............................................
- conditions of the cocoon..............................
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Jackets:....................................................
- quantity (sufficiency), location, protection, and
maintenance...........................................
Life-buoys:.................................................
- quantity (sufficiency), location, heaving-lines,
lanterns, smudge pots.................................
Escape routes:..............................................
- vertical and horizontal signaling (indicative plates);
- clearing, lighting(emergency).........................
WATER SUPPLY SYSTEM FOR FIRE FIGHTING.......................
Fire ring:..................................................
- water system for the platform;........................
- sprinkler system;.....................................
- painting, corrosion, signaling, visual conditions;....
- valves, hydrants, guns................................
Fire pumps:.................................................
- operation;............................................
- motor, fuel, start, panel, tests......................
FIRE FIGHTING FIXED SYSTEMS.................................
- Foam system: chambers, tanks, guns, hydrants and carrier
liquid........................................
- Cylinders; conditions, reloading, retesting (CO2 or
HALON, if any)........................................
- Lines and diffusers: general conditions..............
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- Automatic: feedings, panels, batteries, detectors,
tests;................................................
- Manual: commands, interconnections, tests;...........
- Alarms: interconnections.............................
FIRE EXTINGUISHERS
- water, carbon dioxide, chemical powder (portable and
carts);...............................................
- distribution, location, general conditions;...........
- revision, recharge, retest, control, meters,
replacement...........................................
FIRE POSTS..................................................
- hose, keys, sprinkler;................................
- fiber boxes, general conditions, post identification;.
- visual signaling: sufficiency and general conditions.
EMERGENCY EQUIPMENT.........................................
- autonomous breathing apparatuses, reserve bottles,
breathable air fixed system, fire proximity clothing,
flashlight, ax, safety belts;.........................
- distribution, location, general conditions, inventory,
maintenance and replacement...........................
COMMUNICATIONS AND ALARMS...................................
- telephone (internal, external): Operating capacity;..
- radiophony: VHF. Operating capacity;................
- portable transceptors: quantity; distribution, intrinsic
safety;.....................................
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- intercom: quantity, distribution, and horns audibility,
interconnection with the platform, coding of sound alarm
tones, amplifiers;.....................
- visual signaling: sufficiency, general conditions;...
- fire alarm, glass breaking type: batteries, bells,
tests.................................................
EMERGENCY LIGHTING..........................................
- charger, batteries and lanterns.......................
HELIDECK....................................................
- protection: guns, fire extinguishers, salvage
equipment;............................................
- painting, protection screen, net, landing lights, safety
warnings;......................................
- guest welcoming practices.............................
LOAD LIFTING................................................
- winches: general conditions, operation, signaling,
maintenance;..........................................
- manual and electric tackles: general conditions,
operation, signaling, maintenance;....................
- material movement and storage areas...................
TRAINING....................................................
- abandonment, fire fighting, first aid and brigade.....
MANUALS AND PLANS...........................................
- emergency; safety;....................................
- disclosure, knowledge;................................
- distribution, control, updating;......................
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- tasks schedules for emergency and abandonment
situations, including in Portuguese...................
ORDER AND CLEANLINESS.......................................
- installation's general aspect;........................
- particularly alarming places..........................
SMOKE, HEAT AND GAS DETECTION SYSTEM........................
- test of hydrocarbons detection sensors................
BALLAST AND SEWER SYSTEM....................................
- functional test.......................................
41) ANCHORING SYSTEM............................................
42) DYNAMIC POSITIONING SYSTEM..................................
43) PROPULSION SYSTEM...........................................
B) LOCATION MOVING TEST..............................................
To be defined between the CONTRACTOR and PETROBRAS................
C) BEGINNING OF Contract YEAR TEST...................................
To be defined between the CONTRACTOR and PETROBRAS................
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Contract No. 101.2.159.97-1...................................................
ATTACHMENT "IX"
PROCEDURES IN THE EVENT OF FATAL ACCIDENTS
1. If, during the period of validity of the Contract, a fatal accident occurs
with a CONTRACTOR's employee, the CONTRACTOR should:.............
1.1. Notify the Inspection immediately, for the proper measures;.............
1.2. Take measures so that the employee's relatives be notified with the utmost
urgency on the event, giving them the social support due;........
1.3 Formally establish an Investigation Commission, within 48 hours after the
accident, in order to, in the maximum time limit of 15 days, identify the
causes and recommend the measures deemed necessary to prevent similar
accidents...............................................
2. The report should contain, at least, the following information regarding
the accident:.................................................
- description;......................................................
- exact location;...................................................
- data regarding the injured persons;...............................
- basic and immediate causes;.......................................
- measures to be taken in order to prevent its repetition...........
3. The CONTRACTOR should guarantee the Commission enough authority and
autonomy to carry out the investigations without any restrictions.......
4. A PETROBRAS' employee should participate in the Commission, appointed by
the authority in charge of the operational office....................
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5. After conclusion of the Commission's work, it will also behoove the
CONTRACTOR, at the Inspection's request, to disclose the results of the
report, so as to convey the experience from the accident to other
Contractor companies....................................................
(All pages of the document were initialed.)...................................
- - --------------------------------------------------------------------------------
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on the 5th of
February, 1998, in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
____________________________________
Marcia Barbosa Serra
Sworn Public Translator
103
EXHIBIT 10.5(A)
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt. # 301 - Leblon - 22450-190
ISS: 1251003-00 - CIC: 606442227-00
Tel: 274-3544
I, THE UNDERSIGNED, SWORN PUBLIC TRANSLATOR AND COMMERCIAL INTERPRETER IN AND
FOR THIS CITY AND STATE OF RIO DE JANEIRO, FEDERATIVE REPUBLIC OF BRAZIL,
REGISTERED AT THE COMMERCIAL BOARD OF RIO DE JANEIRO UNDER NUMBER 97, DO HEREBY
CERTIFY AND ATTEST THAT A DOCUMENT IN THE PORTUGUESE LANGUAGE WAS SUBMITTED TO
ME FOR TRANSLATION INTO ENGLISH, WHICH I PERFORMED ACCORDING TO MY OFFICE, AS
FOLLOWS:
TRANSLATION NO. 2659/98
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)............
RIDER No. 01 FOR THE ASSIGNMENT OF RIGHTS AND OBLIGATIONS ARISING
FROM CONTRACT 101.2.159.97-1, ENTERED INTO BETWEEN MARITIMA PETROLEO
E ENGENHARIA LTDA., SUCCESSOR OF MARITIMA NAVEGACAO E ENGENHARIA
LTDA., and PETRODRILL SIX LTD., WITH THE CONSENT OF PETROLEO
BRASILEIRO S.A. - PETROBRAS./.
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, with head
office at Av. Republica do Chile 65, in the City of Rio de Janeiro, State of Rio
de Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers
Registry of the Ministry of Finance under No. 33.000.167/0001-01, henceforth
called PETROBRAS, represented herein by the Executive Superintendent of
Exploration and Production, Luiz Eduardo G. Carneiro, and the Company MARITIMA
PETROLEO E ENGENHARIA LTDA., successor of MARITIMA NAVEGACAO E ENGENHARIA LTDA.,
with head office at Av. Almirante Barroso, 52, Group 3400, City of Rio de
Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers
Registry of the Ministry of Finance under No. 46.828.596/0001/13, henceforth
called the ASSIGNOR, represented herein by its President, German Efromovich, and
the company PETRODRILL SIX LTD., with head office in Omar Hodge Building,
Wickhams Cay, Road Town, Tortola, Ilhas Virgens Britanicas, henceforth called
the ASSIGNEE, represented herein by its Director, German Efromovich, have agreed
to add a rider to contract 101.2.159.97-1 (AMETHYST 6), according to the
following clauses and conditions:/.
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FIRST CLAUSE - OBJECT./.
1. The present Rider has as its object:/.
1.1.1. The total assignment, as of the date of the signature of this Rider,
henceforth called the ASSIGNMENT DATE, by the ASSIGNOR to the ASSIGNEE
of the rights and obligations arising from Contract No. 101.2.159.97-1
and its Attachments./.
1.1.2. To change the contract value foreseen in item 5.2 of the Fifth Clause -
PRICES AND VALUE./.
1.1.3. To change the redaction of the Seventh Clause - FORM OF PAYMENT./.
1.1.4. To change the Fourth Clause - PETROBRAS' OBLIGATIONS, including item
4.12./.
SECOND CLAUSE - RESPONSIBILITY./.
2.1. The ASSIGNEE, as of the ASSIGNMENT DATE, becomes the CONTRACTOR, being
liable, before PETROBRAS for the fulfillment of all contract
obligations undertaken by the ASSIGNOR, and will also have all rights
arising from the Contract./.
2.2. The ASSIGNEE is liable before PETROBRAS for the fulfillment of all
contract obligations undertaken by the ASSIGNOR in the Contract, as
well as for eventual losses and damages arising from its acts or
omissions./.
2.3. The ASSIGNOR will be jointly liable with the ASSIGNEE for the complete
fulfillment of all obligations arising from the Contract./.
2.4. The ASSIGNOR, as of the ASSIGNMENT DATE, will have no right arising
from the Contract, giving PETROBRAS, full and complete acquittance for
any and all contract value./.
THIRD CLAUSE - PRICES AND VALUE./.
3.1. The redaction of item 5.2 and its subitems becomes:/.
"5.2. The total estimated value of the present Contract becomes US$
295,019,262.45 (two hundred and ninety-five million, nineteen
thousand, two hundred and sixty-two dollars and forty-five cents),
equivalent to R$ 322.308.544,22 (three hundred and twenty-two
million, three hundred and eight thousand, five hundred and
forty-four reais and twenty-two cents) , converted at the exchange
rate of R$1,0925/US$1,00, referring to the following charges:/.
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3.2. Item 5.5 is included with the following redaction:/. "5.5. Besides the
value mentioned in 5.2, the appropriation of US$100,000.00 is foreseen for
the payment of eventual reimbursements"./.
FOURTH CLAUSE - PETROBRAS' OBLIGATIONS./.
4.1. Item 4.12 is included, with the following redaction:/.
"4.12.To adopt the measures necessary for the request to register this
Contract at the Central Bank of Brazil, immediately after the
receipt of the legal documents, the supply of which is the
CONTRACTOR's responsibility.".
FIFTH CLAUSE - FORM OF PAYMENT./.
5.1. The redaction of the Seventh Clause is changed to:/.
"7.1 The payments of the rates foreseen in Attachment II and
Attachment III shall be made by PETROBRAS to the CONTRACTOR in
American Dollars, by bank remittance to a bank account abroad it
indicates, after the present Contract is registered at the Central
Bank of Brazil, 30 (thirty) days as of the date of the end of the
measuring period considered, provided the CONTRACTOR has fulfilled
the time limits set forth in subitem 6.3.1., for the submittal of
the collection documents at the docket of the Financial Department
indicated by PETROBRAS, with exception of the provision appearing in
subitem 7.2.4./.
7.1.1.For the reimbursable expenses foreseen in this Contract, the
instructions contained in item 7.4 and their developments should be
complied with, and the payments will be made in the currency of
origin of said expenses, within 30 (thirty) days after the submittal
of the collection documents at the docket of the Financial
Department indicated by PETROBRAS./.
7.1.2.Collection documents comprise any type of billing, such as:
Invoice, Invoice with separate Bill of Sale, Service Invoice,
besides others foreseen in fiscal laws./.
7.1.3.For payment purposes, the CONTRACTOR shall supply the Contract
Manager, after its signature, the following information:/.
a) Bank name and number;/.
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b) Bank branch name and code;/.
c) Bank branch address;/.
d) CONTRACTOR's current account number./
7.1.3.1. Whenever a billing is submitted with information different from
those indicated in subitem 7.1.3, these changes will only be
considered if accompanied by a formal communication by the
CONTRACTOR and shall prevail only for the specific purpose of such
payment.
7.2. The collection documents shall be issued without erasures, complying
with the pertinent laws in force, for submittal at the Financial
Department indicated in item 7.1 of this Clause, in its original
copy, accompanied by 1 (one) copy of the respective Measurement
Bulletin (MB), and/or Reimbursement Document (RD), as the case may
be, duly approved by this contract's Manager, containing,
obligatorily, but not exclusively, the following information:/.
a) Number of the collection document;/.
b) Place and date of its issuing;/.
c) Brief description of the object of this Contract;/.
d) Indication of the number and date of this Contract;/.
e) Indication of the month/year or period which the collection
document refers to;/.
f) Number and date of the Measurement Bulletin (MB) and/or
Reimbursement Document (RD)./.
g) Place of the rendering and/or execution of the chartering. In
the event the chartering has been rendered in different
locations, its value should be broken down by locations of
performance and the period in which it was rendered at each of
the locations shall be indicated;/.
h) Gross amount of the collection document, by numbers and in
writing;/.
i) Place for payment purpose, as provided for in subitem 7.1.3 of
this Clause;/.
j) Signature by the CONTRACTOR'S representative, accredited before
PETROBRAS, above his/her name and position typewritten or above
the CONTRACTOR'S company stamp identifying him/her;/.
<PAGE>
1) In case of Rider or Letter of Agreement to the Contract which
implies in payments, mention its number and date of signature,
besides the data above./.
7.2.1.The omission of any of the above mentioned data will cause, within
5 (five) working days, the return of the collection documents by
PETROBRAS' Financial Department./.
7.2.2.If the above situation occurs and in case the collection document
shows errors, it will be returned to the CONTRACTOR, and the time
limits ofr the payment foreseen in item 7.1 and subitem, 7.1.1 shall
be added to the period that becomes necessary for the explanation
and re-submittal of the collection document./.
7.2.2.1. The above mentioned condition also applies in case the collection
document is submitted in another department, and not as indicated in
item 7.1./.
7.2.3.Independent of the data above, the invoices in foreign currency
shall be also submitted in the Portuguese language, or if issued
abroad, they shall be notarizes at the Brazilian Consulate, under
which jurisdiction the CONTRACTOR is located, and translated by a
sworn public translator./.
7.2.4.The CONTRACTOR shall, obligatorily, submit monthly, together with
the invoice, the payroll of the CONTRACTOR's Brazilian crew who are
involved in the chartering object of this Contract, as well as with
a photocopy of the GRPS (Social Security Payment Slip), duly settled
and authenticated, with the data identifying the entity to whom the
service was rendered being obligatorily filled out, informing in
field 8 of the GRPS (other information) PETROBRAS' name and CGC,
number, date, and amount of the invoice or bill of sale referring to
the chartering rendered in the month, subitems 8.9, 10.1.15, and
10.1.16 being also complied with./.
7.3. The collection documents referring to reimbursements shall also be
issued, itemizing, individually, the reimbursable expenses, their
total amount, such itemization also to appear in the respective
Reimbursement Document (RD)./.
7.3.1.The original vouchers of the reimbursable expenses due to the
CONTRACTOR, by force of the contract instrument, shall be previously
submitted to the Contract Manager, for checking, besides being duly
paid for by the respective supplier or service rendered, when such
is the case./.
<PAGE>
7.3.1.1. In the event the original vouchers cannot remain in PETROBRAS'
possession, copies thereof may be submitted, which shall be checked
by the Contract Manager, and the following text is to be placed on
each original document: "COPY SUBMITTED FOR REIMBURSEMENT ON
(specify date)", followed by the signature and identification by
name, position and registry number, and the original are to be
returned to the CONTRACTOR. In the copies that are in PETROBRAS'
possession, the following text will be place on each document:
"CHECKED WITH THE ORIGINAL ON (specify the data)" and the Contract
Manager will sign, identifying the signature by name, position and
registry number./.
7.3.1.2.The receipt, duly made formal by PETROBRAS, of any reimbursable
expense voucher, does not represent the recognition of debt, nor the
proof that the expense has been made./.
7.3.2.The collection of reimbursable expenses can only be made by means
of issuing and submittal, by the CONTRACTOR, of the Bill of Sale for
the equipment and accessories, with the respective Reimbursement
Document (RD) duly attached thereto, and previously approved by the
Contract Manager./.
7.3.2.1. The submittal of the collection document mentioned in subitem
7.3.2, shall comply with the provisions appearing in items 7.1. and
7.2 of this Clause./.
7.3.2.2. The vouchers shall be legal documents to explain doubts referring
to the collections, which shall be settled, as a last resort, by
PETROBRAS' Disbursement Office, who will be in possession of the
vouchers approved by PETROBRAS to prepare the payment process./.
7.4. Eventual payments made for more or for less by PETROBRAS shall be
compensated as soon as they are detected, by issuing the Debit/
Credit Notes, as the case may be./.
7.5. The amounts corresponding to reimbursable expenses, without budget
allotment foreseen in this contract instrument, do not burden this
contract's estimated total, but should, however, be foreseen in the
Budget Programs of the Executive Superintendence of Exploration and
Production (E&P)./.
7.6. The collection documents submitted by the CONTRACTOR, as well as the
final collection document, shall be paid with the deduction of
amounts that, at any title, under the conditions set forth in the
contract, or others specially agreed upon, that are due to
PETROBRAS./.
<PAGE>
7.7. The CONTRACTOR agrees that, at PETROBRAS' exclusive option, the
present Contract can be paid by means of third party financing,
provided the time limits, currency, amounts, and place of payment,
and the CONTRACTOR's rights foreseen in this Contract, are complied
with"./.
SIXTH CLAUSE RESPONSIBILITY./.
6.1 The present rider binds the parties as of the date of its signature
and enters in force as of the ASSIGNMENT DATE./.
SEVENTH CLAUSE -- RATIFICATION./.
7.1. PETROBRAS, the ASSIGNOR and the ASSIGNEE ratify the terms and
conditions of the Contract that are not incompatible with the
provisions of this instrument./.
And being thus agreed, the parties sign the present Rider in 4 (four)
copies of the same tenor and fashion, together with the witnesses below./.
Rio de Janeiro, July 10, 1998./.
(Signed:) (Illegible) - Luiz Eduardo G. Carneiro./.
Executive Superintendent of Exploration and Production South-Southeast./.
PETROLEO BRASILEIRO S.A./.
(Signed:) (Illegible) - German Efromovich./.
President - MARITIMA PETROLEO E ENGENHARIA LTDA (ASSIGNOR)./.
(Signed:) (Illegible) - German Efromovich./. Director - PETRODRILL SIX LTD.
(ASSIGNEE)./. WITNESSES:/.
(Signed:) Victor Archer (Rubber stamp:) Victor Archer - Administrator-Registry
012730-0./.
(Signed:) (Illegible)./.
(The rubber stamp and the initials of Victor Archer appeared on the first
page of the document.)/.
(An initial appeared on all pages of the documents.)/.
.-THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on November 20, 1998
in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.6
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do
hereby CERTIFY and ATTEST that a document in the Portuguese Language was
submitted to me for translation into English, which I performed according to
my Office, as follows:........................................................
Translation No. 4015/98.......................................................
(Xerox copy submitted for translation.).......................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)...........
CONTRACT 101.2.160.97-0.......................................................
SERVICES RENDERING CONTRACT
SERVICES RENDERING CONTRACT ENTERED INTO BETWEEN PETROLEO BRASILEIRO
S.A. -PETROBRAS AND THE COMPANY MARITIMA NAV. E ENG. LTDA.........
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, organized and
existing under Law No. 2.004, dated 10/03/53, with head office at Av. Republica
do Chile, 65, City of Rio de Janeiro, State of Rio de Janeiro, Federative
Republic of Brazil, enrolled in the General Taxpayers' Registry of the Ministry
of Finance under No 33.000.167/0001-01, henceforth called PETROBRAS, represented
herein by the Executive Superintendent of Exploration and Production
South-Southeast LUIZ EDUARDO G. CARNEIRO, and the Company MARITIMA NAVEGACAO E
ENGENHARIA LTDA., with head office at Avenida Almirante Barroso, nO 42, 34th
floor, City of Rio de Janeiro, State of Rio de Janeiro, Federative Republic of
Brazil, enrolled in the General Taxpayers' Registry of the Ministry of Finance
under No. 46-828.596/0001-13, henceforth called the CONTRACTOR, represented
herein by its President, Mr. GERMAN EFROMOVICH, have agreed upon the present
contract to render services, with the use of the Dynamic Positioning Floating
Unit AMETHYST 6 and its accessories, described in Attachment I, henceforth
called the Unit, according to the authorization of PETROBRAS' Executive Board
(Minutes No. 4.129, Item No. 47, dated
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<PAGE>
12/19/97) the parties being bound to the terms of the Invitation to Bid No.
101.0.016.97-5 and subjected to the following Clauses and
Conditions:......................................
(End of the Qualification)....................................................
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<PAGE>
FIRST CLAUSE - OBJECT.........................................................
1.1. The object of the present. contract is the rendering, by the
CONTRACTOR, of the services of drilling and/or evaluation and/or
completion and/or workover of oil and/or gas (vertical, directional and
horizontal) wells, in the Brazilian continental shelf, down to a
maximum depth of 5,000 (five thousand) meters, in a water depth
down to 1,200 (twelve hundred) meters by using the
Unit................
1.1.1. For the fulfillment of the present contract, the CONTRACTOR is to
maintain its base of operations in the City of
Macae-RJ...................
1.2. The services object of the present contract are contained in the
Continental Shelf Activities and Disbursement and Cost Plans, under the
following codes:.....................................................
B 12000 - Boring - Production Development............................
A 22000 - Boring - Exploratory Drilling..............................
B 13000 - Completion and Intervention for Evaluation Production
Development ...............................................
A 24000 - Intervention for Evaluation -Exploratory Drilling .........
(End of Clause)...............................................................
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<PAGE>
SECOND- CLAUSE - - PERIOD OF VALIDITT AND DURATION .---------------
2.1. PERIOD OF VALIDITY - The present contract binds-the parties as of its
signature............................................................
2.2. DURATION - The present contract will have a duration of 2,190
(twenty-one hundred and ninety) days............................
2.2.1. BEGINNING OF THE CONTRACT - The beginning of the contract will occur
when the Unit is released by PETROBRAS, through a written notice, to
begin the operations, after the general equipment testing foreseen
in item 3.1 is carried out.....................................
2.2.2. AUTOMATIC EXTENSION - If at the end of the duration mentioned in 2.2,
some operation is still being performed in a well, the duration of the
present contract will be automatically extended, until the completion
of the works in said well, considering as the final limit the Unit's
arrival at the port or sheltered waters chosen by common agreement
between the parties and, also, in case there are still PETROBRAS'
equipment aboard the Unit, the completion of the withdrawal of such
equipment will be considered as the final limit.....
2.2.3. This contract may be extended for successive period, through a prior
agreement between the parties, by means of an Addendum, the other
contract conditions being complied with, and limited to a maximum
contract period of 2,190 (twenty-one hundred and ninety)
days...........
2.3. ARRIVAL IN BRAZIL - The Unit should arrive at the port or in sheltered
waters, in Macae-RJ. The beginning of operations should occur up to the
date of 12.29.99, the provision set forth in item 9.1 of this contract
being complied
with.....................................................
2.3.1. At the port or in sheltered waters mentioned in 2.3, the customs and
helideck inspections in the Unit will be carried out, as well as the
loading/unloading of the CONTRACTOR's and PETROBRAS' materials, and
also the general equipment testing will begin as foreseen in item 3.1
of this contract ..................................
(End of Clause) ..............................................................
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<PAGE>
THIRD CLAUSE - CONTRACTOR'S OBLIGATIONS ......................................
3.1. Before the beginning of the contract, the CONTRACTOR will arrange for a
general test of the operating conditions of all of the Unit's
equipment, as provided for in Attachment VIII, in the presence of
PETROBRAS' Inspection. The occurrences found during the performance of
the tests will be duly recorded in the Daily Drilling Certificate (ADP)
signed by PETROBRAS' Inspection and by the CONTRACTOR's representative.
The CONTRACTOR will be released to begin operations after proving the
good operating conditions of the equipment which comprise the Unit's
main systems, such as, energy generation and distribution system,
anchoring system, industrial safety, liquid and bulk storage, fluid
circulation and processing, safety and wellhead, column elevation,
rotation and handling, columns, instrumentation, formation test
equipment and communications system......................
3.1.1. The tests referred-to in 3.1 will be made in a period estimated in
3 (three) days, after which the Unit will be released to sail to the
first location, provided there is nothing pending in the unit's main
systems, as defined in item 3.1.............................
3.1.1.1. In the event the tests last for a period exceeding 3 (three) days, for
reasons ascribed to PETROBRAS, the rate foreseen in Ref 104 (Waiting
Rate) of Attachment II, will be due, applied as of the fourth day of
tests, until the Unit is released. The periods spent with equipment
repair will not be calculated for the purpose of counting such
duration, and also no fee will be due during such periods .........
3.1.2. PETROBRAS may opt for the partial or total performance of the receipt
tests, in sheltered waters, in the deepest water depth set forth in
the contract, or still in the first location...................
3.2. OPERATION - To render the services object of this contract using the
Unit and the equipment listed in Attachment I, complying with the other
conditions of and Attachments to this contract, according to the
international standards recommended for services of such nature.......
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<PAGE>
3.2.1. SAFETY STANDARDS - The CONTRACTOR will carry out the services in strict
compliance with the international safety standards for work of such
nature, aiming at the protection of personnel, materials and equipment
that belong to it, PETROBRAS and third parties. PETROBRAS' Safety Rules
which, the CONTRACTOR states to know will be particularly complied
with. In the event of conflict between PETROBRAS' standards and the
CONTRACTOR's, the CONTRACTOR's Standards will prevail, unless PETROBRAS
expressly requires to the contrary in each case..........
3.3. SUPPLY OF MATERIALS - To be responsible for the purchase, when
requested by PETROBRAS, in the domestic market, of other materials
needed to render the services object of this contract. The purchase of
the materials mentioned in this item will be submitted to the prior
approval by PETROBRAS which will reimburse them as set forth in item
4.2 ...............................................................
3.3.1. The materials mentioned in item 3.3 will be delivered by the
CONTRACTOR to PETROBRAS, at the port or airport the latter indicates.
3.3.2. To submit the expense vouchers in the maximum period of 60 (sixty)
consecutive days after the actual date of the purchase..........
3.4. SERVICES BY THIRD PARTIES - To request, when asked by PETROBRAS, other
specialized services available in Brazil, related to the object of this
contract, behooving the CONTRACTOR all measures for their actual
performance, including the obtainment of PETROBRAS' prior and express
approval of the costs arising therefrom, which will be reimbursed as
set forth in item 4.2.
3.5. PERSONNEL - To be liable, in its own name, and for its own
responsibility and onus, for all personnel needed for the efficient and
complete performance of the services object of this contract which will
operate on the basis of 24 (twenty-four) hours a day and 7 (seven) days
a week. The list of the minimum personnel to be used by the CONTRACTOR
is basically the one mentioned in Attachment V....................
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<PAGE>
3.5.1. The CONTRACTOR guarantees that the personnel mentioned in Attachment
V will allow it to fully carry out the performance of the services
object of this contract, running, as a result, for its own account,
all charges arising from the need to increase the personnel.
3.5.2. The CONTRACTOR will be liable for the maintenance and cost of the
personnel required for the fulfillment of the operational and
safety rules and regulations issued by the proper authorities,
including the compliance with the provisions of the PORTOMARINST No.
1302, dated 06.26.85, and of the Navy Department, Ports and Coasts
Authority............................................................
3.5.3. The technical personnel should possess proven competence in their
specialization, and the CONTRACTOR is to supply PETROBRAS with their
respective "curriculum vitae".....................................
3.5.4. To provide for training and/or recycling of its personnel in the Course
on Basic Safety Notions, held by PETROBRAS, according to the program
and conditions to be agreed upon between the parties........
3.5.4.1. For the Board Superintendents, for the Persons in Charge and for the
Drillers, a qualification certificate in well control supplied by
PETROBRAS or by a Training Center qualified by IADC or IWCS will be
required............................................................
3.6. To be liable for all charges regarding the contracting of its
personnel and any additionals that are or may become due, as well as
for the withholding and payment of social, labor and social security
contributions set down by the Law, and other charges that may become
due at any title, being for all purposes, the sole employer..........
3.6.1. Whenever requested by PETROBRAS, the CONTRACTOR will submit the
documents regarding the proof of payment of its labor obligations,
including social security contributions (CND - Negative Debt
Certificate) and FGTS deposits, regarding its employees.............
3.6.2. To make sure that its personnel, who work in activities or operations
that subject them to noxious agents, included in the list referred to
in Article 58 of Law No. 8.213/91, are not retired in this special
condition, according to the restriction expressly contained in Article
3rd of Law No. 9.032 dated 04.18.95.............................
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<PAGE>
3.7. To bear all measures and expenses with displacement of personnel, such
as, but not limited to, transportation from abroad to the port or
airport of Macae-RJ, as indicated by PETROBRAS, and the return to the
place of origin, and any and all expenses with personnel travel and
stay in Brazil, insurances, medical and hospital expenses, meals,
passports, as well as for extra expenses caused by delay or cancelling
of flights, be it due to bad weather or to the non-availability of
planes. ..........................................................
3.8. To promote, without charges to PETROBRAS, the replacement and immediate
withdrawal of any of its employees that may be required by PETROBRAS at
any time, due to bad behavior, technical deficiency, inefficiency or
health conditions. .....................................
3.9. Whenever requested, to train PETROBRAS' personnel in the services
object of the present contract........................................
3.10. All correspondence between the CONTRACTOR and PETROBRAS will be written
and forwarded in Portuguese. ................................
3.11. To provide, in the Unit chartered for the performance of the services
object of this contract, lodging, food, mess room services, rendered by
a Brazilian company, for PETROBRAS' personnel and those of third
parties at PETROBRAS' service, up to the maximum of 26 (twenty-six)
persons, being agreed that the CONTRACTOR will freely supply 900 (nine
hundred) meals per month. The meals exceeding this number will be paid
by PETROBRAS, based on the rate set forth in the Unit Price
Spreadsheet appearing in Attachment III.................
3.11.1. The quality of the mess room services and the food supply are the
CONTRACTOR's responsibility, who will maintain a permanent supervision
by a male nurse on board and eventually by a qualified nutricionist.
PETROBRAS may require that the CONTRACTOR takes measures in the event
such services show a loss in quality standards....................
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<PAGE>
3.12. INSURANCES - To provide, for its account, the contracting of the
insurances necessary to fulfill this contract and the Brazilian laws,
intended to cover its assets and its personnel, even when they are in
transportation under PETROBRAS' responsibility, as well as the Civil
Liability insurance for damages and losses caused to third parties,
which will not imply in limiting the CONTRACTOR's liability, and it
should also include PETROBRAS as and third party for the purposes of
such coverage...............................................
3.12.1. The minimum mandatory value of the civil liability insurance is of
US$1,000.000.00 (one million dollars), per event, during the period of
validity of this contract and of its eventual extension, which amount
is to be converted into Brazilian currency on the date the present
contract is signed. MARITIMA NAVEGACAO E ENGENHARIA LTDA. is to appear
as co-insured in that policy.....................................
3.13. The franchises which may be established for the insurances mentioned
in item 3.12, as well as the onus arising from the insurers
requirements and/or recommendations will fully run for the CONTRACTOR`s
account..............................................................
3.13.1. The provision of item 3.13 applies also to the insurances of
transportation made by the CONTRACTOR, regarding the CONTRACTOR's
equipment, tools, and materials to be transported by PETROBRAS as set
forth in item 4.4...................................................
3.14. To keep PETROBRAS free and safe from any and all indemnity claim for
damages and/or losses of any kind which the CONTRACTOR may have
sustained as a result of this contract, whether or not it has made
adequate and sufficient insurance for such circumstances.............
3.14.1. PETROBRAS will be equally kept free and safe from any and all indemnity
claim for damages and/or losses of any kind which the CONTRACTOR may
have caused to third parties for its duly proven grossly negligent
action or omission, arising from this contract, whether or not it has
made adequate and sufficient insurance for such circumstances.........
3.14.2 In return, the CONTRACTOR will be kept free and safe from any and all
indemnity claim for damages and/or losses of any kind, which PETROBRAS
may have sustained from, third parties, or has caused to third parties
by its duly proven grossly negligent action or omission, as a result of
this contract, whether or not it has made adequate and sufficient
insurance for such circumstances................
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<PAGE>
3.15. To undertake, up to the limit equivalent to US$500,000.00 (five hundred
thousand United States dollars) per event, any and all liability for
death or damages to persons, provided they are caused by duly proven
grossly negligent action or omission on its part and/or its employees
and/or personnel..............................................
3.16. The CONTRACTOR waives for itself and will require from its Insurers
and/or Subcontractors, in any and all insurance made as a result of
this contract, the inclusion, in each policy contracted, the provision
assuring the waiver of any right to subrogation against PETROBRAS..
3.17. To submit to the contract Manager, up to 30 (thirty) consecutive days
after its inception, as foreseen in item 2.2.1, the originals of the
insurance policies made as a result of this contract, containing all
essential data, such as insurers, time limits, period of validity,
amounts insured, and coverage conditions, and with PETROBRAS appearing
as co-insured, except in the civil liability insurance, of which it
will participate as a third party..............................
3.17.1. The policies mentioned in item 3.17 will contain a provision that the
insurances mentioned cannot be amended and/or cancelled without
PETROBRAS' prior authorization ....................................
3.18. LOSSES AND DAMAGES - The CONTRACTOR will be liable for damages to its
own equipment and material, and to those which it and its agents may
cause to PETROBRAS or to third parties, as a result of its duly proven
grossly negligent action or omission, in the following cases:......
3.18.1. In the event of losses of or damages to equipment and/or materials
belonging to PETROBRAS and/or to third parties, which are aboard the
Unit, or during their moving between the Unit and the support vessels,
the CONTRACTOR's liability will be limited to the replacement or repair
of the equipment so lost or damaged due to the CONTRACTOR's or its
employees' duly proven fault. However, the CONTRACTOR will not be
liable for and will be kept free and safe from in the event of damages
to reservoirs, indirect damages or loss of profit of PETROBRAS, losses
and damages arising from pollution coming from the well, resulting from
kick-and/or blow-out.
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<PAGE>
3.18.2. In case of losses and damages caused to the well, arising from the
events mentioned in subitem 2.1.5 of Attachment II, the CONTRACTOR will
reimburse PETROBRAS the payments it comes to make to third parties
referring to cementing, logging or other services related to the object
of the present contract, as well as to materials (cement, casing, bits,
completion fluid materials). In the event PETROBRAS opts for the
definitive abandonment of the damaged well, the CONTRACTOR will
reimburse the expenses made by PETROBRAS to drill that well..
3.18.3. In the cases mentioned in subitem 3.18.1 and 3.18.2. the limit for the
CONTRACTOR's liability is of US$500,000.00 per event and its
deployments.........................................................
3.19. SECRECY - To maintain complete secrecy on the data and information
supplied by PETROBRAS, as well as on all of the results and analyses
arising from the services referring to the present contract.......
3.19.1. All data, information and other documents, of any kind, referring to
the fulfillment of this contract, are PETROBRAS' exclusive property.
3.19.2. The CONTRACTOR and its personnel cannot disclose or supply to third
parties any materials or information obtained as a result of this
contract, unless expressly authorized by PETROBRAS.................
3.19.3. The provision of this item 3.19 is a standing obligation, valid even
after the termination, in any fashion, of the present contract....
3.20. To be liable for the violations it commits regarding author's right
and the use of materials and/or performance processes protected by
trade-marks and patents, as well as for any claims arising from the bad
use it makes of them, running for its account the payment of any
charges, royalties, fees, commission, indemnities, and any other
expenses arising from said violation, including the legal ones.......
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<PAGE>
3.21. SEA OPERATIONS - To render the services object of this contract in
strict compliance with the laws, standards, regulations and
administrative rules, as well as the instructions issued by the
Shipping Office or by other proper authorities, specially those
regarding the spillage of oil and other residues from the Unit into,
the sea, being liable, as a result, for any charges arising from the
violation of such laws, standards, regulations, administrative rules
and instructions, the limit established in subitem 3.21.2 being
complied with, and excepting the cases provided for in item 3.20 of
this contract.......................................................
3.21.1. To plan and carry out operations intended to prevent and fight oil or
gas blow outs, fires, or other accidents, complying with the provision
set forth in item 2.4 of the Attachment I to this contract. Although
the CONTRACTOR is considered fully responsible for such operations, it
is obliged to discuss the methods to be adopted with PETROBRAS, so as
to find the best operating solution...............
3.21.2. With exception of the cases arising from kick, blow out, surging or
formation testing, which the CONTRACTOR will be kept free and safe
from, in the other cases of spillage of petroleum, oil and other
residues in the sea, the CONTRACTOR will be liable up to the limit of
US$500,000.00 (five hundred thousand dollars) per event and its
deployments..........................................................
3.22. The storage aboard the Unit, as well as the handling aboard, and
between the Unit and support vessels, of materials, equipment, drilling
or completion fluid additives, chemical additives belonging to
PETROBRAS or to third parties at the service of PETROBRAS, are the
CONTRACTOR's responsibility.....................................
3.23. To bear all expenses, including with diesel oil and transportation of
the Unit for dockages, including those arising from act of God or force
majeure, as defined in the Thirteenth Clause of the contract.........
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<PAGE>
3.24. To maintain a hospital ward in the Unit with at least 2 (two) beds,
provided with equipment and medicine necessary for the prompt attention
to sick and injured persons, as determined by the Shipping office, such
hospital ward being subjected to periodical inspections by PETROBRAS.
3.25. The CONTRACTOR undertakes to maintain all conditions required in the
bidding stage, during the performance of the SERVICES contracted.
3.26. To maintain an agent accredited and accepted by PETROBRAS in the Unit
or in a place previously designated by PETROBRAS, to represent the
CONTRACTOR in the fulfillment of the contract.............
3.27. To comply with the requests contained in the Service Authorization(s)
issued by PETROBRAS...............................
3.28. To allow, after negotiations between the contracting parties, the
provisional installation in the chartered vessel, of complementary
equipment such as, but not limited to: pipes or risers in catenary by
the J-lay method, or similar, submarine manifolds, provided they do
not jeopardize the Vessel's safety and are in accordance with the rules
of the Classification Society.......................................
(End of Clause)...............................................................
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FOURTH-CLAUSE - PETROBRAS' OBLIGATIONS...................................
4.1. To make monthly, the payments for the services rendered by the
CONTRACTOR due to the present contract, based on Attachment II and
Attachment III and on the conditions set forth in Clauses Sixth:
Readjustment -Seventh: Measurement - and Eighth: Form of Payment, the
other Attachments, Clauses and Conditions of this contract being
complied
with...........................................................
4.2. To reimburse, by means of submittal of vouchers, the expenses with
materials and services of third parties, according to items 3.3 and 3.4
of -this contract. The reimbursement will be comprised
of:..............
a) Amount of the bill issued by the supplying and/or service
rendering company;............................................
b) Expenses actually made to place the materials in the Unit;.....
c) Cost of the insurance for the materials, if authorized by
PETROBRAS. In the event PETROBRAS does not authorize such
insurance, the CONTRACTOR will not be liable for losses and
damages of any kind that they may sustain until their delivery to
PETROBRAS at the port or airport it indicates................
4.3. OPERATIONS AND LOCATIONS PROGRAM - PETROBRAS will provide the CONTRACTOR
with the Operations Program, in writing and with due antecedence, and it
also will notify on the locations where the services will be rendered, so
that the CONTRACTOR may adopt, in due time, the measures necessary for
their performance......................
4.4. TRANSPORTATION:.........................................................
4.4.1. PETROBRAS will provide transportation to the Unit of all of the
CONTRACTOR's personnel involved in the rendering of the services, from
the port or airport indicated by PETROBRAS in the beginning of this
contract, and vice-versa. At its exclusive discretion, the
transportation to be provided will be by helicopter ou vessel........
4.4.2. PETROBRAS will provide transportation for the material and equipment,
related to the object of this contract, from the port or airport
designated, to the Unit and vice-versa .........................
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4.4.3. In any circumstances foreseen in this item, the granting of insurance
coverage will not be PETROBRAS' competence, and the CONTRACTOR waives
immediately, for itself and for its Insurers, any return action against
PETROBRAS or third parties at its service, as a result of the
transportation provided..............................
4.4.4. In the event there is need to program exclusive air transportation, to
survey the Unit, by the Navy and/or Shipping Office, the costs arising
therefrom will be charged to the CONTRACTOR...........
4.4.5. PETROBRAS may provide air or sea transportation for the CONTRACTOR's
materials, industrial or fresh water and fuel before the beginning of
the contract, as defined in item 2.2.1. The costs arising therefrom
will be reimbursed by the CONTRACTOR to PETROBRAS........
4.4.6. PETROBRAS will provide tugs and support vessels for the Unit, from the
location where the general testing of the equipment is performed, to
the first location, between locations and from the last location to the
Brazilian port or sheltered waters closest thereto, which will be
chosen in common agreement between the parties...........
4.4.6.1. PETROBRAS will provide the support vessels for the Unit's positioning
in the locations to be drilled during the fulfillment of this
contract............................................
4.4.7. PETROBRAS may provide tugs and/or support vessels to load and unload
materials and to handle anchors, in a place to be defined by the
parties, in cases of inspection and/or dockages, including those
arising from act of God or force majeure, as defined in the Thirteenth
Clause of this contract. The costs arising therefrom will be reimbursed
by the CONTRACTOR to PETROBRAS..................
4.5. FUEL AND WATER - To supply, for its account, all fuel and water
necessary for the performance of the services object of this contract,
from the beginning of the contract, as provided for in subitem 2.2.1,
the provisions of item 3.23 of this contract being complied with.....
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4.5.1. The supply of water mentioned in item 4.5 includes also the industrial
water intended for cleaning the Unit.........................
4.6. COMPLETION FLUID - To maintain the control of the properties of the
fluid by an accredited employee, as well as to control the stock of
materials necessary for such purpose................................
4.7. To provide, at its expenses and under its responsibility, the ancillary
services referring to: cementing, formation testing, electric logging,
flexitube operation, operation with nitrogen, electric wire operation,
wireline operation, when they derive from PETROBRAS' own programming.
4.8. At its exclusive judgment, and without any co-responsibility, PETROBRAS
may cooperate with the CONTRACTOR, assisting it before the Foreign
Trade Department - Trade Exchange Coordinating Office (CTIC), regarding
proceedings submitted to these Agencies, referring to materials and/or
equipment pertaining to the rendering of the services object of this
contract. Such cooperation, however, will not lessen the CONTRACTOR's
liability for the obtainment of the documents and/or benefits that may
be the object of the respective proceedings....
4.9. To issue Service Authorization(s) with all information necessary for
their performance, such as: location, time limit, value, scope, and
beginning and end dates..............................................
4.10. To notify the CONTRACTOR, in writing, on the imposition of eventual
fines................................................................
4.11. To issue the Measurement-Bulletin (MB), as set forth in the Seventh
Clause: Measurement, of this contract..............................
(End of Clause)...............................................................
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<PAGE>
FIFTH CLAUSE - PRICES AND VALUE ..............................................
5.1. For the rendering of the services object of this contract, PETROBRAS
will pay to the CONTRACTOR the rates set forth in Attachment II and
Attachment III to this contract, under the conditions set forth in
Clauses Sixth - Readjustment, Seventh - Measurement, and Eighth - Form
of Payment................................................
5.1.1. The contract prices include all specified tariffs, supervision,
administration, taxes, fiscal emoluments and all expenses that fall
directly or indirectly upon the rendering of the services, including
profit, needed for its perfect fulfillment, until the end of the
contract, no price revision claims being therefore valid.............
5.2. The total estimated value of this present contract is of
R$36,258.986.10 (thirty-six million, two hundred and fifty-eight
thousand, nine hundred and eighty-six reais and ten cents)............
5.3. PETROBRAS does not undertake to make the payment of the total estimated
in item 5.2, but of the amount corresponding to the services rendered
and accepted by PETROBRAS. ...............................
5.4. In the event the Unit suffers a delay of up to 90 (ninety) days,
regarding the time limit granted in item 2.3 of the present contract,
the CONTRACTOR will have its total daily rate reduced by 10% (ten
percent), as of the beginning of the contract, for a period iqual to
the number of days of delay...........................................
5.5. In the event the Unit suffers a delay greater than 90 (ninety) days, as
of the time limit granted in item 2.3 of the present Contract, besides
the maximum reduction of 10% (ten percent) in the total daily rate for
a period of 90 days as defined in item 5.4, the CONTRACTOR will be
subjected to the imposition of fines according to item 8.1 of this
contract...............................................................
5.6. The financial resources necessary for the payment of the services
object of the present contract are duly equated and specifically
assured in the budget for the present fiscal year and foreseen for the
following ones to cover the period for the total rendering of the
services. .............................................................
(End of Clause)...............................................................
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SIXTH CLAUSE - PRICE READJUSTMENT ............................................
6.1. The contract prices in Brazilian currency, will be readjusted yearly,
after 1 (one) year as of the month when the CONTRACTOR's proposal was
submitted has elapsed, for more or for less, as a result of the
variation of the elements that comprise the readjustment formulae, set
forth in subitems 6.2.1 and 6.2.2 below.............................
6.1.1. If, during the period of validity of this contract, new legal
provisions are created which permit the reduction of the periodicity
referred to in 6.1, the parties will make a new agreement regarding the
contract prices, to expurgate eventual overprices arising from the
periodicity originally established for the application of the
readjustment........................................................
6.2. The prices set forth in the Unit Prices Spreadsheet - Attachment III to
this contract, will be readjusted by applying the following calculation
formulae.............................................................
6.2.1. For the prices of Ref 101, 104 and 105 of the Unit Prices Spreadsheet -
Attachment III:
INS USA MEQ
PCR = PCI. [0.55 -------- +0.10 -------- +0.35 --------]
INSo USAo MEQo
6.2.2. For the price referring to extra meals, appearing in the Unit Prices
Spreadsheet - Attachment III:.......................................
ABR
PCR = PCI. [ ------- ]
ABRo
Where:........................................................................
PCR= readjusted contract price;........................................
PCI= initial contract price, in force on the date of the CONTRACTOR's
proposal;.........................................................
INS= index number of the National Consumer Price Index (INPC), published
by the Brazilian Institute of Geography and Statistics - IBGE,
corresponding to the months in which the readjustment is due.
INSO= index number of the INS defined above, corresponding to the month
when the CONTRACTOR's proposal was submitted;
USA= value of the United States dollar selling rate in the commercial
exchange in force on the 30th day of the month when the readjustment
is due;...........................................................
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USA= value of the same rate in force on the 30th day of the month when
the CONTRACTOR'S proposal was submitted; .........................
MEQ= definitive value of the Wholesale Price Index - Domestic
Availability - Brazil Production Goods - Machinery, Vehicles and
Equipment - Machinery and Equipment- Column 15 of the Getulio Vargas
Foundation's Magazine "Conjuntura Economica," code A0161724,
corresponding to the month when the readjustment is due;
MEQO= definitive value of that same index, corresponding to the month when
the CONTRACTOR's proposal was submitted;....................
ABR= definitive value of the Price Index - Consumer Price - Brazil - Cost
of Living Food, Column 1, Code A0201475, of the Getulio Vargas
Foundation's Magazine "Conjuntura Economica," corresponding to the
month when the readjustment is due;..........
ABRO= definitive value of this same index, corresponding to the month when
the CONTRACTOR's proposal was submitted......................
6.2.3. The reference basis of the CONTRACTOR's proposal is the month of
(blank)................................................................
6.3. PETROBRAS will make the readjustment calculation, expressing its
result, duly made evident, in the Measurement Bulletin (MB) of the
services to which it refers, for the purposes of issuing the respective
collection document. ........................................
6.4. In the event of delay in the partial or total disclosure of the
indexes, a readjustment factor will be provisionally used, calculated
on the basis of the last indexes known by then, at the time the
Measurement Bulletin (MB) was issued................................
6.4.1. The eventual difference between the definitive and the provisional
readjustment will be invoiced by the CONTRACTOR after the issuing of
the Readjustment Bulletin (RB) by PETROBRAS, as provided for in subitem
7.3.1 of this contract..........................
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6.5. The readjustment will not include the services performed before the
date when the reason that justifies it has occurred..................
6.6. The readjustment factor will be applied with 4 (four) decimal places,
without rounding off................................................
6.7. The CONTRACTOR states that the prices proposed for the performance of
the services object of the contract have taken into account all costs,
inputs, expenses and other legal obligations for the complete
fulfillment of the contract provisions established...................
(End of Clause)...............................................................
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<PAGE>
SEVENTH CLAUSE - MEASUREMENT .................................................
7.1. Periodicity of the measurements of the services and determination of
the reimbursable expenses............................................
7.1.1. For the services, the measurement will be made monthly, according to
the procedures mentioned below, with the consequent issuing of the
respective Measurement Bulletins (MB):...............................
a) the inimical measurement of the services will be made between the
date of the beginning of this contract and the last day of the
calendar month;................................................
b) The intermediate measurements of the services, corresponding to a
given month, of the order "m", cover the period between day 01
and the last day of the calendar month of the order "m";.......
c) The final measurement of the services will cover the period
between day 01 of the month "m" and the day of the termination
of this contract...............................................
7.1.2. The reimbursable expenses, if provided for in the contract, will be
determined on any day of the month, according to the vouchers submitted
to and accepted by PETROBRAS, and more than one determination can be
made in the same period covered by the measurement..................
7.1.2.1. The results found will be submitted to the CONTRACTOR on the 5th
(fifth) working day, as of the submittal of said vouchers, by means of
a Reimbursement Document (RD), which will be signed by the Manager of
this contract, for invoicing purposes................................
7.1.2.2. The reimbursable expenses and the deductions, if provided for in the
contract, are to be individually made evident in the Reimbursement
Documents (RD)......................................................
7.2. Issuing of the Measurement Bulletins (MB).
7.2.1. PETROBRAS, through the Manager of this contract, at the end of each
period as mentioned in the letters of subitem 7.1.1 of this Clause,
will carry out the measurement of the services, gathering the results
found in the Measurement Bulletin (MB) for the signature of the
Manager of this contract and of the CONTRACTOR, complying with the
following:
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a) For the initial intermediate and measurements ending on the last
final day of, a given month of the order "m", the CONTRACTOR will
receive one of the copies of the MB up of the 5th (fifth)
subsequent working day, so that he may submit the respective
collection documents, as provided for in subitem 7.4.1 of this
Clause;...........................................................
b) For the final measurement, when the termination of the contract does
not occur in the last day of the month, the CONTRACTOR will receive
one of the copies of the MB, up to the 5th (fifth) working day after
the termination of the contract, so that he may submit the
respective collection documents, as provided for in subitem 7.4.1;.
c) For each measurement period of the services, only 1 (one)
collection document may be issued, being understood that collection
documents with partial values regarding said period will not be
taken into account for payment purposes, with exception of the cases
of collection of differences in readjustment, if any;
d) In the Measurement Bulletins (MB), the portions regarding the basic
and readjustment values, if any, will be made evident, using the
last definitive factor known by then, and the deductions, if
provided for in the contract......................................
7.3. Collection of the readjustment difference............................
7.3.1. For the payment of an eventual readjustment complement, due to the
non-availability of indexes at the time the MB is issued, PETROBRAS
will issue a Readjustment Bulletin (RB)..................
7.3.1.1. The Readjustment Bulletin (RB) will be submitted to the CONTRACTOR on
the third working day after the disclosure of the indexes applicable to
the calculation of the definitive readjustment factor................
7.4 Time for the submittal of collection documents.......................
7.4.1. The CONTRACTOR will submit the respective collection documents to
PETROBRAS' Financial Department, as mentioned in item 8.1 of this
contract, in the following conditions:...............................
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- - --------------------------------------------------------------------------------
TYPE OF MEASUREMENT MEASUREMENT OCCASION FOR THE SUBMITTAL OF
DOCUMENT COLLECTION DOCUMENTS
- - --------------------------------------------------------------------------------
INITIAL INTERMEDIATE MB Up to the 8th working day following
AND FINAL the last day of the performance of
the serviced, and PETROBRAS will
make the payment on the 30th
consecutive day, as of the final day
of the period measured, the
provision in subitem 7.4.1.1 being
complied with.
- - --------------------------------------------------------------------------------
INITIAL INTERMEDIATE RB In case of an eventual complement of
AND FINAL readjustment difference, the RB will
be issued up to the 3rd working day
after the index to calculate its
issuing is known, and the payment
will be made together with the
payment of the principal, the
minimum of 10 (ten) working days
between the submittal of the
Collection Document and the date of
payment being complied with.
- - --------------------------------------------------------------------------------
DETERMINATION OF RD In the first working day after the
REIMBURSABLE DR is issued, and the payment will
EXPENSES be made in a period of 30 (thirty)
days, as of the day of its
submittal.
- - --------------------------------------------------------------------------------
7.4.1.1. The payments due because of this contract, referring to the services,
will always occur on the 30th day as of the end of the measured period,
included in the MB's, or on the first subsequent working day, provided
the CONTRACTOR fulfills the time limits for the submittal of the
Collection Documents set herein. In the event of non-compliance by the
CONTRACTOR, with said submittal time limits, the payments will be
postponed for the number of days equal to the delay in the delivery of
such documents.....
7.5. Measurement follow-up...............................................
7.5.1. The CONTRACTOR undertakes to follow-up the measurements and the
determinations carried but by PETROBRAS, offering, at that time, the
impugnations or considerations it deems necessary, which will be
submitted to PETROBRAS' appraisal and decision.....................
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7.5.2. The CONTRACTOR's signature by its representative before PETROBRAS will
imply in the acknowledgement of the accuracy of the Measurement
Bulletin (MB) and/or Readjustment Bulletin (RB) for all legal
purposes.........................................................
(End of Clause)...............................................................
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<PAGE>
EIGHTH CLAUSE - FORM AND PLACE OF PAYMENT.....................................
8.1. The monthly payments due as a result of this contract will be made by
PETROBRAS to the CONTRACTOR, in Brazilian currency, 30 (thirty)
consecutive days, as of the last day of the period of performance of
the services, provided the CONTRACTOR submits the collection documents
until the 8th (eighth) working day after the last day of the period of
performance of the services..........................................
8.1.1. The payment of an eventual difference in readjustment will be made on
the same day in which the payment of the respective service occurs,
provided the CONTRACTOR submits the corresponding collection document
up to the 5th (fifty) working day after the indexes that permit the
issuing of the Readjustment Bulletin (RB) are known..........
8.1.2. The payment of reimbursable expenses, if any, will be made 30 (thirty)
consecutive days after the submittal of the collection document.......
8.1.3. In the event of non-submittal of the collection documents in the time
limits set above, the payment will be postponed for as many consecutive
days as those corresponding to the delay in the delivery of the
collection documents ...............................................
8.2. The collection documents will be submitted, together with the original
of the document giving rise to them (MB, RB, RD) in the Docket of the
Financial Department indicated by PETROBRAS, for the purposes of
checking the fulfillment of the time limits for their payment........
8.3. The collection documents will be issued without erasures, complying
with the pertinent laws in force, and will contain obligatorily the
following information:...............................................
a) Place and date of its emission and number of the collection
document;......................................................
b) Number and date of signature of the contract deed;.............
c) Number and date of the documents originating them (MB, RB, RD);.
d) Gross value of the collection documents, both in numbers and in
writing;........................................................
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e) Name and code of the banking establishment, branch and the
respective code and number of the current account of the payee,
where the payments will be made;...............................
f) In order that a particular payment is made in a banking
establishment different from the one indicated at the time the
contract deed was signed, such amendment will obligatorily be
preceded by a fax/correspondence from the CONTRACTOR or will
appear in the payee's collection document.....................
8.3.1. In the event the collection document is inaccurate, it will be,
returned to the CONTRACTOR and the time limit foreseen in item 8.1 will
be postponed for as many days as those corresponding to the delay in
the submittal of such document.......................................
8.3.2. In the event of re-submittal of the collection document, as a result of
a previous impugnation, this fact should appear in the history of the
collection document
8.3.3. The CONTRACTOR will obligatorily submit, every month to the Manager of
the contract: ...............................................
a) Payroll of the CONTRACTOR's employees who are involved in the
rendering of the services contracted;
b) A photocopy of the Social Security Payment Slip (GRPS), duly settled
and certified, obligatorily filling out the data identifying
PETROBRAS, informing on field "8" (other information), the name,
CGC/CEI of PETROBRAS, number, date and amount of the Invoice or Bill
of Sale referring to the services rendered in the month.......
c) In case of a Cooperative, to submit the payment vouchers of the
amounts paid, distributed or credited to its members as a
remuneration for the services rendered in fulfillment of this
contract..........................................................
8.3.4. The collection documents will not be accepted by PETROBRAS if submitted
with Income Tax at Source already withheld.................
8.3.5. It is the responsibility of PETROBRAS' disbursing office the
explanation of doubts regarding the issuing of the collection
documents.............................................................
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8.3.6. Eventual payments made for more or for less by PETROBRAS, will be
compensated as soon as they are detected, and the respective amounts
will be duly corrected..........................................
8.3.7. The CONTRACTOR should indicate the place and fax number, if any, for
the receipt of the "Notice of Payment Foreseen".....................
8.4. The vouchers for the reimbursable expenses due to the CONTRACTOR as a
result of this contract deed, will be previously submitted to the
Manager of the contract, for checking, besides being duly settled by
the respective supplier or service renderer, when such is the case...
8.4.1. If the original cannot remain in PETROBRAS' hands, copies thereof may
be submitted, which will be checked by the Inspector and/or Manager,
and the following should appear in every original document: "Copy
Submitted for Reimbursement on __/__/__", followed by the signature and
identification by name, position and registry number, and the originals
will be returned to the CONTRACTOR. The following text will appear in
the copies of each document in PETROBRAS' hands: "Checked with the
Original On __/__/__", which the Inspector and/or Manager will sign,
identifying the signature by name, position, and registry number.
8.4.2. In special cases of reimbursement of import costs (duties and/or
expenses), the CONTRACTOR will send a letter submitting the vouchers
for such expenses, together with the import proceeding, to the office
responsible for its follow-up........................................
8.4.3. The receipt, duly formalized by PETROBRAS, of any reimbursable expense
voucher, does not represent the recognition of the debt, nor the proof
that the expenses was made....................................
8.4.4. The collection of reimbursable expenses will be made through the
issuing of a Services Invoice, after approval by PETROBRAS of the
respective Reimbursement Document - RD, which will be issued up to 5
(five) working days, as of the date of submittal of said documents...
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8.4.4.1. PETROBRAS' Inspection has 3 (three) working days to proceed with the
checking of the expense voucher and to notify its approval to the
CONTRACTOR, so that it may issue the Combined Invoice and Bill of Sale.
8.4.5. The total amount of the collection document will be obtained by
applying the following formula: ......................................
VTD
VTR = --------- , where
I - ICP
VTR= total amount to be reimbursed to the CONTRACTOR;..................
VTD= total amount of the reimbursable expenses, effectively authorized;
ICP= total of, the sum of the aliquots of taxes collected, in the decimal
form (ISS or ICMS, as the case may be, COFFINS and
PIS/PASEP)........................................................
(End of Clause)...............................................................
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NINTH CLAUSE - FINES .........................................................
9.1. Non-compliance, by the CONTRACTOR, after ninety-one days beyond the
time limit mentioned in item 2.3 of this contract have elapsed, will
imply in the imposition of fine against the CONTRACTOR, in a written
notice, corresponding to 30% (thirty percent) of the rate foreseen in
Ref 101 of Attachment III, per day of delay..........................
9.2. In the event of non-compliance, by the CONTRACTOR, with the
inspection's requirements within the time limit it may set, PETROBRAS
may, by a written notice, impose against the CONTRACTOR, per day of
noncompliance with such requirements, as of the end of the time limit
set, a fine corresponding to 20% (twenty percent) of the rate provided
for in Ref 101 of Attachment III..........................
9.3. The penalties set forth in this Clause do not exclude any other
provided for in the Laws in force and/or in this contract............
9.4. The amount corresponding to the sum of the basic values of the fines
imposed is limited to 10% (ten per cent) of the estimated total value
of the present contract..............................................
9.5. The basic values of the fines will be readjusted by the readjustment
factor calculated by the formula shown in subitem 6.2.1 of this
contract and in force in the period of its imposition................
9.5.1. The fines: will: be forwarded by the Inspection, for discount by the
Disbursing office, as soon as the pertinent definitive readjustment
factors are known..........................................
9.5.2. In the event of balance, PETROBRAS reserves itself the right to make or
complement the deduction in collection document(s) related to any other
contract deed eventually entered into with the CONTRACTOR, or to use
any other adequate means to settle the debt, if necessary.....
9.6. In a written notice and without prejudice of the capacity to rescind
the contract, PETROBRAS may impose upon the CONTRACTOR a compensatory
fine of 100% (one hundred per cent) of the amount of the conviction,
due to default of its labor, social security or tax obligations...
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9.6.1. The payment of said fine will not exempt the CONTRACTOR from the
obligation to reimburse PETROBRAS for the amount imposed upon it as a
result of an eventual joint conviction passed by a Labor Court or by
the proper administrative jurisdictions..............................
9.6.2. The CONTRACTOR will be fined in the percentual of 5% (five percent) on
the amount of the invoice in the event it does not submit the GRPS or
submits it at variance......................................
9.6.2.1. The GRPS is considered at variance if it does not have proof of payment
of social security contributions of all of the CONTRACTOR's Brazilian
crew working in the fulfillment of the contract...............
9.7. The CONTRACTOR may appeal against the imposition of the fine, in a
declaration, within the non-deferrable time limit of 15 (fifteen)
consecutive days as of the date the notice is received...............
(End of Clause)...............................................................
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<PAGE>
TENTH CLAUSE - INSPECTION ....................................................
10.1. The inspection of the services contracted herein will be carried out by
PETROBRAS' representatives, and the CONTRACTOR undertakes to allow
their free access to the Unit and to the service locations, and to
comply immediately with the observations of such inspection, which
will have ample powers to:..........................................
10.1.1. Determine the interruption of the evaluation and/or completion of the
well, for the purpose of carrying out formation testing, corings,
electric loggings and other services deemed necessary; ........
10.1.2. Determine, provided it comes to its knowledge and is within its
capacity, the suspension of the services which perhaps are being
carried out in disagreement with the good technique or which threaten
the safety of persons or assets of PETROBRAS, third parties and of the
CONTRACTOR itself, complying with subitem 2.1.7 of Attachment I.....
10.1.3. Refuse the use of improper or inadequate techniques, as well as the
operations that do not comply with the established programs ........
10.1.4. Refuse the employment of condemned or improper materials, tools and
production string components, which do not comply with PETROBRAS' and
API's standards....................................
10.1.5. Order the withdrawal, from the work site, of any of the CONTRACTOR's
employees who, in PETROBRAS' opinion, may endanger the good
performance of the services or hinder its inspecting activities...
10.1.6. Certify on the accuracy of the information reported daily by the
CONTRACTOR...........................................................
10.1.7. Notify the CONTRACTOR, in writing, on the imposition of the fines
provided for in this contract, including those referring to the
CONTRACTOR's action or omission ....................................
10.1.8. Request from the CONTRACTOR a detailed report on any accident occurred
and on any operation or repair performed ......................
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<PAGE>
10.1.9. Request from the CONTRACTOR the documentation regarding the proof of
payment of its labor obligations, including social security
contributions (Negative Debt Certificate) and deposits in the FGTS,
for the crew members...............................................
10.2. RECORDINGS - PETROBRAS' Inspection should record its observations on
the Driller's Log approved by the IADC and on the Daily Drilling
Certificate (ADP), to safeguard the rights and liabilities foreseen in
this contract........................................................
10.3. During the period of validity of the contract, PETROBRAS will carry out
evaluation of the CONTRACTOR's performance, covering the groups in
equipment and material, human resources, installations, quality and
efficiency. The results of the performance evaluations will be notified
and consolidated by means of service performance certificates.......
(End of Clause)...............................................................
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ELEVENTH CLAUSE - RESCISSION .................................................
11.1. PETROBRAS may rescind the present contract, without the CONTRACTOR
being entitled to any right to indemnity and/or withholding in the
following cases:.....................................................
11.1.1. Nonfulfillment, or irregular fulfillment of contract clauses,
specifications, operations and Inspection's requests, provided the fact
mentioned is not remedied within the time limit of 60 (sixty) days or
the repeated commitment of faults in the fulfillment of the
contract;...
11.1.2. Total or partial subcontracting of the object of the present contract,
the association of the CONTRACTOR will another, merger/division or
total or partial incorporation, except if allowed for in this contract,
which affects the good fulfillment of this
instrument.............................................................
11.1.3 Interruption of the services for more than 60 (sixty) days;.......
11.1.4. Decree of the CONTRACTOR's bankruptcy.............................
11.1.5. When the limit for the imposition of penalties provided for in item
9.4 of this contract is attained...................................
11.1.6. Slowness in the performance of the works, leading, PETROBRAS to prove
the impossibility of completing the services within the established
time limits.................................................
11.1.7. Non-compliance with the determinations of PETROBRAS' agent appointed to
follow-up and inspect the fulfillment of the contract, as well as those
of his superiors..........................................
11.1.8. The dissolution of the CONTRACTOR.................................
11.1.9. The corporate change or the modification of the company's purpose or
structure, which in PETROBRAS' opinion, hinders the performance of the
services;........................................................
11.1.10. Delay in the beginning of the fulfillment of the contract for more than
180 (one hundred and eighty) days..................................
11.1.11. Rescission of the Chartering contract of the Unit entered into between
PETROBRAS and MARITIMA NAVEGACAO E ENGENHARIA LTDA.........
11.1.12. If the limit set forth in subitem 2.1.9 of Attachment II to this
contract is
attained....................................................
11.1.13. If the limits set forth in Note 2 of Ref 102 of Attachment II to this
contract is attained...............................................
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11.1.14. Non-submittal of the proof of fulfillment of labor obligations towards
the employees directly involved in the services object of this
contract, including social security contributions and deposits in the
FGTS, when requested by the Inspection, or if such default is proved..
11.1.15. Non-submittal or submittal at variance of the GRPS, when the
corresponding invoice is delivered...................................
11.1.15.1. The rescision for this reason does not prevent PETROBRAS from
imposing the respective fine, foreseen in 8.7.2;...................
11.2. In the event of rescision of the contract deed for the reasons
foreseen in 10.1, PETROBRAS:.......................................
a) will take over the object of the contract deed, on the stage and
location where it is found;.......................................
b) will enforce the contract guarantee, if any, for the reimbursement
of the amounts of fines and indemnities due to it;................
c) will withhold the credits arising from the contract deed, up to the
limits of the damages caused to it;...........................
11.3. After the contract is rescinded, as set forth in this Clause, the
CONTRACTOR is liable, in legal and contract fashion, for the violation
or inadequate performance which gives rise to the rescission, as well
as for the reimbursement of damages which PETROBRAS may come to
sustain................................................................
11.4. After the contract is rescinded, PETROBRAS, at its exclusive judgment,
may adjudicate the operations object thereof to whom it deems
appropriate, without behoving the CONTRACTOR any consultation or
interference, claim and/or indemnity, for whatever title, and the
CONTRACTOR will be liable to legal and contract penalties, besides
answering for damages PETROBRAS may sustain........................
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11.4.1. The CONTRACTOR is also liable for the pertinent administrative
sanctions, its full defense being guaranteed........................
11.5. In the event PETROBRAS does not impose the right to rescind the present
contract according to this Clause, it may, at its absolute discretion,
withhold the payments of pending invoices, until the CONTRACTOR
fulfills the contract condition it has infringed, but such fact will
not represent novation nor will it generate rights that may be claimed
by the CONTRACTOR............................................
(End of Clause)...............................................................
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<PAGE>
TWELFTH CLAUSE - FISCAL CHARGES...............................................
12.1. Taxes (taxes, fees, emoluments, fiscal and parafiscal contributions)
that are due as a direct or indirect result of the present contract, or
of its fulfillment, will be the exclusive responsibility of the
taxpayer, so defined in the tax rule, with no right to reimbursement.
PETROBRAS, as the disbursing source, will discount and withhold within
the legal time period, from the payments it makes, the taxes it is
liable to by the laws in force.......................................
12.1.1. The CONTRACTOR states that, in quoting its prices, it has taken into
account the taxes, (taxes, fees, emoluments, fiscal and parafiscal
contributions) charged on the fulfillment of this contract, and it
cannot make any claim due to error on such evaluation, for the purpose
of requesting a price revision ou reimbursement of payments set down by
the proper
authority....................................................
12.1.2. Once found, during the period of validity of the contract, that the
CONTRACTOR has unduly added to its prices amounts corresponding to
taxes, fiscal and/or parafiscal contributions and emoluments of any
kind that are not charged to the performance of the services agreed
upon, such values will be immediately excluded, with the consequence
reduction of the prices practiced and reimbursement of amounts that may
have been paid to the
CONTRACTOR........................................
12.2. If, during the period of validity of this contract, any of the
following events occur: ............................................
- creation of new taxes;............................................
- extinction of existing taxes;.....................................
- changes in the aliquots;..........................................
- establishment of tax incentives of any kind; and .................
- exemption or abatement of federal, state or county taxes;.........
which, provedly come to increase or reduce the burdens of the parties to
the contract, the prices will be revised, so as to fit them into the
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changes made, compensating, at the first opportunity, any differences
arising from such changes. However, if it is a question of tax incentives,
the advantages arising therefrom will always be for PETROBRAS...........
(End of Clause)...............................................................
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THIRTEENTH CLAUSE - FORCE MAJEURE ............................................
13.1. PETROBRAS and the CONTRACTOR will not be liable for the nonfulfillment
of their respective obligations in case of events that characterize an
act of God or force majeure defined in the sole paragraph of Article
1.058 of the Brazilian Civil Code. Any suspension of performance due to
this item will be limited to the period during which such cause or its
consequences exist, and such period will be added to the duration of
the contract mentioned in the Second Clause of the present contract.
However, the CONTRACTOR is assured the right to receive the rate
provided for in Ref 104 of Attachment III, with the exception of the
exemption from payment set forth in subitem 2.1.4 of the Attachment II,
and the reimbursements mentioned in this contract, and furthermore, the
parties will severally assume their losses.........
13.2. If the circumstance that justify the invoking of the existence of an
act of God or force majeure occurs, the party unable to fulfill its
obligations will immediately notify the other party, in writing, on
the occurrence and its consequences...................................
13.3. If the impediment arising from the force majeure lasts for more than 90
(ninety) consecutive days, any of the parties may opt for the
termination of the contract, with both parties complying with their
mutual obligations due until the date of the beginning of said
impediment............................................................
(End of Clause)...............................................................
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<PAGE>
FOURTEENTH CLAUSE - ASSIGNMENT AND TRANSFER..................................
14.1. The CONTRACTOR cannot assign or transfer, in whole or in part, the
present contract, except with PETROBRAS' prior authorization in
writing................................................................
14.2. The CONTRACTOR cannot assign or give in guarantee, at any title, in
whole or in part, the credits of any kind, arising or deriving from the
present contract, except with PETROBRAS' prior authorization in
writing. The prior authorization will obligatorily state that PETROBRAS
imposes upon the assignee of the credits the exceptions that behooves
it, mentioning expressly that the payments to the assignee will be
conditioned to the fulfillment, by the assignor, of all of its contract
obligations.........................................
14.3. The occurrence of the above mentioned events, duly authorized by
PETROBRAS, does not exempt the CONTRACTOR from any of its contract
obligations............................................................
14.4. PETROBRAS may assign or transfer, in whole or in part, the present
contract, under commercial conditions to be agreed upon by the
parties.
(End of Clause)...............................................................
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<PAGE>
FIFTEENTH CLAUSE - CONTRACT RELATIONSHIPS.....................................
15.1. This contract is related to another one for chartering the Unit,
signed on this same date between PETROBRAS and MARITIMA NAVEGACAO E
ENGENHARIA LTDA.......................................................
(End of Clause)...............................................................
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<PAGE>
SIXTEENTH CLAUSE - INTERVENIENCE..............................................
16.1. Clause non-applicable in this Contract..................................
(End of Clause)...............................................................
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<PAGE>
SEVENTEENTH CLAUSE - ACCEPTANCE...............................................
17.1. After the services are completed in strict compliance with the
conditions set forth in the present deed, PETROBRAS will accept them by
means of a Definitive Acceptance Deed signed by the parties.....
17.1.1. Before the signature of the Definitive Acceptance Deed the CONTRACTOR
will comply with all of the Inspection's requirements regarding claims,
without any charge to PETROBRAS..................
17.1.2. The signature of the Definitive Acceptance Deed does not exempt the
CONTRACTOR from the liabilities provided for in this contract and in
the laws in force....................................................
(End of Clause)...............................................................
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<PAGE>
EIGHTEENTH - CLAUSE LIABILITY.................................................
18.1. PETROBRAS' and the CONTRACTOR'S liability for damages will be limited
to the direct damages in accordance with the Brazilian Civil Code and
pertinent laws, with exception of loss of profit and indirect
damages, the indirect damages being limited to: 100% (one hundred
percent) of the total contract value............................
(End of Clause) ..............................................................
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<PAGE>
NINETEENTH CLAUSE - COMPLEMENTARY DOCUMENTS...................................
19.1. The Attachments mentioned below are an integral part of the
present contract and, in the event of disagreement between the
Attachments and the contract, the text of the contract will prevail..
ATTACHMENTS:
I - Technical specifications of the Unit.............................
II - Applicability of the Rates and Incidents in the Performance.......
III- Unit Prices Spreadsheet...........................................
IV - Responsibilities in the Performance and Mutual Obligations........
V - List of Specialized Personnel.....................................
VI - Environmental operating Conditions................................
VII - PETROBRAS' Safety Rules...........................................
VIII - Radio Communication and Radio Beacon Frequency Plan...............
IX - Equipment Testing Program ........................................
X - Procedures in the Event of Fatal Accidents........................
(End of Clause) ..............................................................
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TWENTIETH CLAUSE - JURISDICTION...............................................
20.1. The Jurisdiction of the County of the Capital of the State of Rio de
Janeiro will be competent to settle any questions arising from the
present contract, with the express waiver, by the parties, of any
other, however
privileged...............................................
(End of Clause)...............................................................
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<PAGE>
AND BEING THUS AGREED, the parties sign the present deed in 3 (three)
copies with the same tenor, with the witnesses below .........................
Rio de Janeiro, January 12, 1998..............................................
(SIGNED:) LUIZ EDUARDO G. CARNEIRO............................................
LUIZ EDUARDO G. CARNEIRO - EXECUTIVE SUPERINTENDENT OF EXPLORATION AND
PRODUCTION SOUTH SOUTHEAST ...................................................
PETROLEO BASILEIRO S.A. - PETROBRAS .....................................
(SIGNED:) GERMAN EFROMOVICH..................................................
GERMAN EFROMOVICH - PRESIDENT.................................................
MARITIMA NAVEGACAO E ENGENHARIA LTDA..........................................
WITNESSES: ..................................................................
(SIGNED:) ELAINE BRABO........................................................
CPF No. 970.702.897-15........................................................
(SIGNED:) LUIS CARLOS BRAZIL RODRIGUES........................................
CPF NO. 610.769.457.91........................................................
CONTRACT 101.2.160.97-0.......................................................
SERVICES RENDERING
ATTACHMENT II
APPLICABILITY OF THE RATES AND INCIDENTS IN THE PERFORMANCE.
1 - APPLICABILITY OF THE RATES-DEFINITION OF THE SERVICE RATES PER 24
(TWENTY-FOUR) HOUR DAY............................................
REF 101 - OPERATION RATE - It will be applied during the activities requiring
the use, of the Unit, such as electric logging, formation testing, completion
and workover operations, including drilling lines scouring and cutting
operations.
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<PAGE>
REF 102 - REPAIR RATE - In the periods when there is an interruption of the
activities that require the use of the Unit, mentioned in Ref 101 of this
Attachment and the operations for Moving the Unit between locations, Ref 105
of this Attachment, due to maintenance, including replacement of mud pump
spare parts, and/or repair in the Unit's equipment, or in those which supply
is the CONTRACTOR's responsibility, no rate will be due.......................
NOTE1. The repair period will be considered as of the interruption of
the operation that is being performed, until the return to the same
situation when the interruption occurred, except for the periods
when the interruption in the repair activities occurs due to adverse
sea conditions, as set forth in Note 2 of Ref. 104.....
NOTE 2. In the event the CONTRACTOR remains in Repair Rate for an
accumulated total of 30% (thirty percent) of the time, for any
period of 6 (six) contract months, PETROBRAS may rescind the present
contract, based on subitem 11.1.14 of this contract......
NOTE 3. It will be considered as repairs the occurrences due to wash outs
in the drill pipes and in the other elements of the drill string,
belonging the CONTRACTOR, with exception of those arising from the
presence of H2S and from abnormal mechanical conditions occurred in
the well..............................................
NOTE 4. At the Inspection's discretion, for the maintenance of the BOP,
the CONTRACTOR may be granted a franchise of up to 24 (twenty-four)
hours between the instant the BOP is set of the test stump, until
its operational withdrawal, and the moment of its movement for the
next running in another well, without the CONTRACTOR entering in
repair rate, provided such maintenance is carried out according to
international standards. In the period within these 24 (twenty-four)
hours intended exclusively for the BOP maintenance, the waiting rate
(Ref. 104) will be due..........
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<PAGE>
REF. 103 - RATE ADDITIONAL (RA) - In each measurement period, as set forth in
subitem 7.1.1 of the contract, the CONTRACTOR will be entitled to the receipt
of a Rate Additional calculated by means of the following formulae: ..........
AT = 0.10 x (NT - NFM - NREP - NIPG - NTOR) x for PI less than or equal
to 0.0300 TO.......
AT = (0.16 - 2 x PI) x (NT - NFM - NREP - NIPG - for 0.03 < PI 0.0800
NTOR) x TO........................................................
AT = Zero................................................to PI> 0.0800
Where:........................................................................
AT = Rate Additional...................................................
TO = Operation Rate (REF 101)..........................................
PI = Unavailability Proportion, calculated with 4 (four) decimal places,
being:..........................................................
NREP + NIPG + NTOR
PI = ------------------
NT - NFM
NT = Total number of days in the measurement period considered;.......
NFM = Total number of days in which the act of God or force majeure
occurs, as defined in the Thirteenth Clause of the contract, in the
measurement period considered;................................
NREP = Total number of days under repair rate (Ref 102), in the
measurement period considered;....................................
NIPG = Total number of days under exemption from payment (according to
item 2.1 of this Attachment) in the measurement period considered;
NTOR = Total number of days with reduced operation rate (according to
subitems 2.2.3 and 2.2.4 of this Attachment) in the measurement
period considered.................................................
REF. 104 - WAITING RATE (TE) - corresponds to 95% (ninety-five percent) of the
Operation Rate (TO) and which will be applied in Bad Weather, Force Majeure and.
Waiting situations, as defined below: ....................
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<PAGE>
1) Bad Weather Situations - in the event of stoppage of the operations when
environmental conditions are so severe as to endanger the Unit's
operating-capacity, the limitations in Attachment VI, being complied with,
making the operations unstable or unsafe or preventing support vessels to
have access to the Unit, or preventing the tugs' operations, at the time
of change of locations, although the Unit may operate normally, inspite of
the bad weather....................................
2) Force Majeure Situations - during the period when the Unit cannot operate,
due to act of God or force majeure, as defined in the Thirteenth Clause of
the contract, until the removal of the impediment or the rescission of the
contract, as the case may be...................
3) Waiting - waiting for the arrival, maintenance or availability of
materials from PETROBRAS or third parties, under PETROBRAS responsibility,
even if the maintenance is made in the Unit; waiting for daylight to carry
out formation tests; waiting for orders from PETROBRAS, such as, but not
limited to: change of programs, definition to proceed with the completion
or other production activity, rest for PETROBRAS' team- or of those of
third party at PETROBRAS' service; waiting for tugs or support vessels
NOTE 1. The period spent in disconnecting the LMRP from the BOP due to
environmental conditions, will be considered as bad weather situation,
until the return to the previous situation..............................
NOTE 2. If a bad weather situation occurs which interrupts a repair activity,
the Waiting Rate (Ref 104) with a 40% (forty percent) reduction will be
due during that period................................
REF. 105 - MOVING RATE - corresponds to 95% (ninety-five percent) of the
Operation Rate (TO) and will be applied during the following periods:
a) Beginning of the Contract - After the acceptance of the Unit's
equipment operating conditions, once the general testing provided
for in item 3.1. of the contract has been carried out, until the
spud in of the first well;........................................
b) Between locations - After the end of the completion or
intervention operations in a well, with the arrival of the BOR or
tool used in the well (the one which occurs last) in the moon pool
until the spud in or reentry in a new well (beginning of running the
first tool for access to the well).................................
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<PAGE>
NOTE: In this period are included the DP system calibration and tests,
always in each new location, and others in each contract year or
at any time, when requested by PETROBRAS.....................
c) End of the Contract - After the end of the spud in or intervention
operations in the last well, with the arrival of the BOP or tool
used in the well (the one which occurs last) in the moon pool,
until the Unit's arrival in a sheltered waters location, chosen
in common agreement between the parties, or, if there are
PETROBRAS' equipment still aboard, until the withdrawal of
such equipment from the Unit......................................
2 - INCIDENTS IN THE PERFORMANCE .............................................
2.1. Exemption from Payment - PETROBRAS will be exempted from the payment of
the rates foreseen in this Attachment, during the period in which
occurs:...........................................................
2.1.1. Interruption of the services due to the CONTRACTOR's duly proven fault
arising from operational error and/or lack of material or equipment,
inclusive due to the loss of equipment or subaquatic spare
parts................................................................
2.1.2. Stoppage of the services and/or of the Unit due to measures related to
impositions by made the insurers.............................
2.1.3. CONTRACTOR's refusal to operate under the conditions foreseen in
Attachment VI Environmental Operating Conditions.....................
2.1.4. Stoppage of the services and/or of the Unit for inspection or dockage
purposes, including surveys and dockages arising from act of God or
force majeure, as defined in the Thirteenth Clause of the contract, the
corresponding expenses also running for the CONTRACTOR's
account................................................................
NOTE 1. The exemption from payment will begin in the moment there is an
interruption of the operational continuity object of this contract,
even if the withdrawal of all or part of PETROBRAS' and/or the
CONTRACTOR's cargo becomes necessary for the inspection and/or
dockage.................................
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<PAGE>
NOTE 2. The end of the exemption from payment, due to the inspection and/or
dockage, will occur:.......................................
a) on the return to the same location, the moment the operations
returns to the previous situation; ...............................
b) On the mobilization for another location, the moment the Unit starts
sailing after PETROBRAS' and/or the CONTRACTOR's materials have been
put back on board.......................................
2.1.5. Occurrence of kick, drill string sticking, loss of circulation, fishing
or abandonment, caused by the CONTRACTOR's duly proven action or
omission, from the moment the problem was ascertained, until the return
to the situation prior to its occurrence, or displacement to another
location, in the event of abandonment
2.1.5.1. The exemption from payment referred to in 2.1.5 will be limited to a
period of 15 (fifteen) days, per event, after which the reduction
foreseen in subitem 2.2.3 of this Attachment will be
applied........................
2.1.6. Occurrence of blow out caused by the CONTRACTOR's duly proven action or
omission, from the moment the problem was ascertained until the return
to the situation prior to its occurrence.....................
2.1.6.1. The exemption from payment referred to in item 2.1.6 will be limited to
a period of 45 (forty-five) days, after which the reduction foreseen in
subitem 2.2.4 of this Attachment will be applied............
2.1.7. Suspension of the services, determined by PETROBRAS' Inspection, based
on item 10.1.1 of the contract........................
2.1.8. Interruption of the operations due to a failure occurred in any of the
Unit's equipment, at the time of the testing to be carried out
according to item 3.1 of the contract................................
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2.1.9. In the occurrence of events of exemption from payment foreseen in
subitems 2.1.1, 2.1.2, 2.1.3, and 2.1.7, for a total accumulated period
of time exceeding 30% (thirty percent) in any 6 (six) month period,
PETROBRAS may rescind the present contract, based on its subitem
11.1.13................................................................
2.2. Reduction in the Operation, Waiting and Movement Daily Rate .........
The rates foreseen in this Attachment will be reduced in the following
cases:.................................................................
2.2.1. Total or partial inoperativeness or malfunction of any equipment which
delays or hinders the operations, such as, but not limited to, winches,
kelly spinner, geolograph, current meter, air compressors, shale
shaker, mixing pumps, mud laboratory equipment and bulk receipt and
transfer systems are reason for the reduction of the daily rate
foreseen in Ref 101, in 1% (one percent), cumulative per equipment,
provided the CONTRACTOR is notified in writing in the Daily Drilling
Certificate (ADP), by PETROBRAS' Inspection and which, after the time
limit the latter has set to repair said equipment, such repair has not
been made...........................................................
2.2.2. Low Efficiency - Reference Rates 101 and 105 of -this Attachment will
suffer a 20% (twenty percent) reduction, in the event low efficiency is
verified, according to the operating efficiency parameters listed
below. Such reduction will be applied during the whole corresponding
activity period in which low efficiency is verified:
Operating Parameters:.........................................................
- - - Maneuver of the drill string in a cased well (except BHA):..............
o Inside the riser and 20" casing = 500 m/h.........................
o Inside the 13 3/8" casing = 600 m/h..............................
o Inside of 9 5/8" casing = 700 m/h.................................
- - - Break of DP's per unit = 25jt/h.........................................
- - - Casing string run in the sea/inside the riser/previous casing (joints
approximately 12 m long)................................................
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30" Casing - 2 jt/h ....................................................
20" Casing - 5 jt/h.....................................................
13 3/8" Casing 13 jt/h .................................................
9 5/8" Casing 18 jt/h ..................................................
7" Casing 15 jt/h ......................................................
- - - Running of drilling riser, excluding normal time for testing (50 ft.
joint): 45m/h...........................................................
- - - Pulling of drilling riser (50 ft joints): 60m/h ........................
- - - Installation or pulling of the kill/choke lines/
telescopic joint/stretchers: 6.0h ......................................
- - - Diverter installation or pulling: 2.0h..................................
- - - Assembly of the dampening lines in the M.R.: 1.5h.......................
- - - Assembly of the flexitube equipment: 5.0h...............................
- - - Assembly of the production tail: 2.0h...................................
- - - Tubing running or pulling, per unit 150 m/h.............................
- - - Tubing running or pulling per section - 300 m/h.........................
- - - Completion risers running or pulling - 50 m/h...........................
- - - Assembly of terminal head and slings -2.0 h.............................
- - - Moving of WCT to/from the moon pool - 3.0 h.............................
- - - Moving of tree cap or tree running tool to/from the moon pool - 2.5h ...
- - - Assembly of lubricator and wire line BOP -1.5h..........................
NOTE: The above mentioned operating parameters are based on normal weather
conditions................................................
2.2.3. Beginning on the 16th (sixteenth day), inclusive, of the occurrence of
kick, drill string sticking, loss of circulation or fishing, caused by
the CONTRACTOR's duly proven action or omission, until the return to
the situation prior to its occurrence, the applicable rate will be
reduced by 50% (fifty percent)..................
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2.2.4. Beginning on the 46th (forty-sixth) day, inclusive, of the occurrence
of Blow-out caused by the CONTRACTOR's duly proven action or omission,
until the return to the situation prior to its occurrence, the
applicable rate will be reduced by 50% (fifty percent)..............
2.3. Period of Validity of the Contract Rates - the contract rates set forth
in this Attachment will apply in the period set forth below:........
a) Beginning: release of the Unit, by PETROBRAS, to sail to the
first location, after the equipment general testing foreseen in
item 3.1 of the contract has been carried out, with the exception
of the provision in its subitem 3.1.1.1...........................
b) End: after the end of the completion of the last well, with the
Unit's arrival at a port or sheltered waters chosen by common
agreement between the parties, and if there are PETROBRAS' equipment
still aboard, with the withdrawal of such equipment from the
Unit.....................................................
2.4. Blow-Out - PETROBRAS will be responsible for the well control operation
costs, in the event of blow-out and caving caused by the blow-out. Such
provisions apply only to the well control costs and do not apply to the
loss of assets, lesions and/or damages caused by the blow-out, which are
protected by the provisions of the pertinent items of this contract. The
CONTRACTOR undertakes to place at PETROBRAS' disposal all of its resources
in personnel and equipment related to this contract, without any
additional charges to PETROBRAS. If the CONTRACTOR has contributed with
duly proven action or omission for the occurrence of the accident, no rate
will be due, until the solution of the problem, subitems 2.1.6 and 2.2.4
of this being complied with....
(End of Attachment)...........................................................
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CONTRACT 101.2.160.97-0.......................................................
ATTACHMENT III - UNIT PRICES SPREADSHEET
SERVICES RENDERING
- - --------------------------------------------------------------------------------
UNIT PRICES SPREAD SHEET INVITATION TO BID E&P - 101.0.016.97-5
- - --------------------------------------------------------------------------------
OBJECT OF BID: Services of Drilling, Completion, Evaluation and Workover of Oil
and Gas Wells, by means of the use of a Floating Unit, provided with Dynamic
Positioning System.
- - --------------------------------------------------------------------------------
PLACE OF OPERATION: Brazilian Continental Shelf and International Waters.
- - --------------------------------------------------------------------------------
UNIT'S NAME: AMETHYST 6
- - --------------------------------------------------------------------------------
COMPANY'S NAME: MARITIMA NAVEGACAO E ENGENHARIA LTDA.
- - --------------------------------------------------------------------------------
CODE ITEMIZATION UNIT UNIT PRICE (R$)
- - --------------------------------------------------------------------------------
07.201.351 Operation Rate Day 14,566.60
(Ref. 101)
- - --------------------------------------------------------------------------------
07.201.358 Repair Rate Day No rate will be due
(Ref. 102)
- - --------------------------------------------------------------------------------
07.201.362 Waiting Rate - Bad Day (95% of Ref. 101)
Weather (Ref. 104.1)
- - --------------------------------------------------------------------------------
07.201.363 Waiting Rate - Force Day (95% of Ref. 101)
Majeure (Ref 104.2)
- - --------------------------------------------------------------------------------
07.201.364 Waiting Rate - Day (95% of Ref. 101)
Waiting (Ref. 104.3)
- - --------------------------------------------------------------------------------
07.201.366 Movement Rate - Day (95% of Ref. 101)
(Ref. 105)
- - --------------------------------------------------------------------------------
09.242.008 Meals (Item 3.11 of Each 20.00
Serv. Rendering Cont.
- - --------------------------------------------------------------------------------
SIGNATURES DATE OF THE
PROPOSAL
- - --------------------------------------------------------------------------------
PETROBRAS CONTRACTOR 09.08.97
Andre de Mesquita Pinto German Efromovich
- - --------------------------------------------------------------------------------
(Rubber stamp: Andre de Mesquita Pinto - Register NO. 014177.3)..............
- - --------------------------------------------------------------------------------
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<PAGE>
CONTRACT 101.2.160.97-0.......................................................
SERVICES RENDERING
ATTACHMENT IV
RESPONSIBILITY IN THE PERFORMANCE AND
MUTUAL OBLIGATIONS
1 - RESPONSIBILITIES IN THE PERFORMANCE.....................................
1.1. The CONTRACTOR should provide, at its own expenses, pipe inspection
according to API-RP 7 G Standard for drill string elements in use, at
every 15,000m drilled. This inspection should be necessarily made by
personnel accredited by PETROBRAS, and accompanied by PETROBRAS'
Inspection which will attest the drill string conditions in accordance
with the results of said inspection. The drill string elements rejected
by the Inspection will be immediately repaired and/or replaced by the
CONTRACTOR, who will undertake the corresponding
costs................................................................
1.1.1. The CONTRACTOR should make provisions so that the same numbering of the
parts is maintained for the period of validity of the contract...
1.1.2. The reports on the inspections made on the drill string, riser column,
and handling equipment will be submitted to PETROBRAS immediately after
their performance.....................................
1.1.3. The CONTRACTOR should maintain a control of the elements of the string
used in each well, recording at each maneuver, in the driller's log,
which parts belong to the BHA in use, mentioning the inspection
report numbering.............................................
1.1.4. The CONTRACTOR will provide, for its own cost, for the inspection of
the drill string, when requested in writing by PETROBRAS, in the
event of abnormal occurrences, such as wash-out or frequent string
breaks................................................................
1.1.5. The CONTRACTOR will provide, for its own cost, for the inspection
according to API RP-8B standard, in each contract year, in all drill
string handling equipment, such as, but not limited to, slips,
elevators, travelling tongs, hook, elevator arms, spiders, drilling
winch, etc. This inspection should be necessarily accompanied by
PETROBRAS' Inspection which will attest the drill string conditions
in accordance with the results of said inspection. The equipment
rejected by the Inspection will be immediately repaired and/or replaced
by the CONTRACTOR.......................................
-56-
<PAGE>
NOTE: The same procedure described in 1.1.5 will be applied to the riser
column and to its handling tools, complying with standard API RP2K......
1.2. Casing - The CONTRACTOR should measure and run the conductors and the
casing strings in accordance with the drilling programs established by
PETROBRAS..........................................................
1.2.1. The CONTRACTOR will keep the casing pipes with their respective
protectors...........................................................
1.2.2. The CONTRACTOR will exert its best efforts to remove all recoverable
casing, when the well is abandoned..........................
1.3. Cementing, Formation Testing and Electric Logs - the CONTRACTOR will
provide facilities and give assistance to third parties, in charge by
PETROBRAS, for the performance of cementing, electric log, drill string
testing, and other related services, complying with the programs and
safety rules set down by PETROBRAS.............................
1.4 Fishing - the CONTRACTOR should carry out all fishing operations that
may become necessary................................................
1.5 Subsurface Pressures - the CONTRACTOR will exert its best efforts to
control subsurface pressures, always maintaining all safety equipment,
including the ancillary ones in good operating conditions, so as to
avoid contamination of the drilling fluid by hydrocarbons and fires
resulting from blow-outs..............................................
1.6. Well Completion and Abandonment - the CONTRACTOR will complete or
abandon the wells in safety conditions, according to the program set
down by PETROBRAS..................................................
1.7. Drilling Reports - the CONTRACTOR undertakes to inform daily to
PETROBRAS, until 01:00h of the following day, on the progress of the
operations, weather conditions, bulk and liquid stock consumption, and
the status of the equipment that comprise the vessel's dynamic
positioning system, and of others that the Inspection considers
necessary, by means of bulletins, reports and records approved by the
IADC and/or required by the Inspection...............................
-57-
<PAGE>
1.7.1. The duration of the delays or wastes of time, their reasons, and other
facts deemed important, will be recorded in detail in the Daily
Drilling Data.......................................................
1.7.2. Whenever requested by PETROBRAS, the CONTRACTOR will submit detailed
reports on the progress of the operations carried out, or on any
accident that may have occurred......................................
1.8. The CONTRACTOR undertakes to inform immediately to PETROBRAS'
Inspection when the Unit enters in a Degraded State..................
1.8.1. The following situations are considered Degraded State: (to be defined
in common agreement between the parties)........................
1.8.2. In the event of non-fulfillment of Clause 1.8, and the Unit comes to
enter into yellow alert or red alert, a 20% (twenty percent) fine will
be charged on the operation rate during the whole period in which the
abnormality persists................................................
1.9. The CONTRACTOR undertakes to measure the sea current profiles
(intensity and direction with reference to the true North) from the
surface of the sea down to the sea bottom, carried out at 0600 and 1200
GMT (Greenwich Mean Time), and to deliver daily the data obtained to
PETROBRAS. Such profiles should obligatorily cover the following
depths: 20, 50, 150, 200, 250, 300, 350, 400m, and at every 100
(one-hundred) meters thereafter, until the last depth investigated
corresponds to 5 (five) meters from the bottom of the sea............
1.9.1. The data should be delivered to PETROBRAS' Inspector, in disk and in a
format according to PETROBRAS' instructions..........
1.10. Maintenance and Conservation - the CONTRACTOR will be responsible for
the maintenance, conservation and cleaning services of the Unit and of
all existing equipment and installations, maintaining all safety
devices in perfect operating and adjustment conditions................
-58-
<PAGE>
1.10.1. The CONTRACTOR undertakes to keep and maintain PETROBRAS's materials
and equipment, aboard the Unit, as well as all that are object of the
loading and unloading operations in the support vessels..........
1.11. Ancillary Services - in equal price, time limit and availability
conditions, the CONTRACTOR should give preference to the ancillary
services rendered by Brazilian companies, when they become necessary
for the rendering of the services object of this contract............
1.12. Lubricants - to preferably use lubricants of the make PETROBRAS
DISTRIBUIDORA-BR, submitting a justification in the event it uses
another make........................................................
1.13. Wellhead inclination - the wellhead will not be installed with
inclinations exceeding 1 1/2 (degree) (one and a half degree). If, by
the inspection's decision, the well continues to be drilled with an
inclination exceeding that limit, the possible wear of the inner parts
of the BOP, Lower Marine Riser, Adapter Riser and Spool, resulting
therefrom, will be PETROBRAS, responsibility, provided the CONTRACTOR
proves that said wear resulted from the operation in that well with
wellhead inclination exceeding 2(degree) (two degrees)...............
1.14. The CONTRACTOR should submit a description of its operating procedures
for the events of disconnection, formation testing, and BOP and choke
manifold testing....................................................
1.14.1. The procedures to be adopted will be discussed and approved by
PETROBRAS..........................................................
1.15. The Board Superintendents, Tool Pushers, and Drillers will be required
to have proven technical competence in kick control, attested by a
certificate of training in an entity recognized by PETROBRAS.......
1.16. The CONTRACTOR should carry out well shut off training exercises every
week, on an occasion to be agreed upon with the Inspection, and
according to the rules in force in PETROBRAS, which operation should be
entered in the Driller's Log..................................
1.16.1. The CONTRACTOR should submit a Safety Project for BOP, Choke Manifold
and in well shutoff training test, which will be approved by PETROBRAS'
Inspection..............................................
-59-
<PAGE>
1.17. Drill Riser - the CONTRACTOR will maintain the drill riser inner joints
perfectly clean and free from debris and/or
rust........................
1.17.1. The CONTRACTOR should perform the inner cleaning of all drill riser
joints, using the proper tool and compressed air, whenever the
operation following the riser string run is a completion and/or
workover
operation......................................................
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CONTRACT 101.2.160.97-0.......................................................
2. MUTUAL OBLIGATIONS
- - --------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
- - --------------------------------------------------------------------------------
PET CONT PET CONT
1. Cementing, logging, formation X X and X
and/or production tests, directional
drilling, perforating, wireline,
nitrogen unit, flexitube, etc.
- - --------------------------------------------------------------------------------
2. Welding services necessary for X X
drilling, completion, well abandonment
and maintenance operations.
- - --------------------------------------------------------------------------------
3. Technical supervision for X X
manufacturing and control of
drilling fluid, completion.
- - --------------------------------------------------------------------------------
4. CONTRACTOR's land support X X
base (office and storehouse).
- - --------------------------------------------------------------------------------
5. Handling and storage of X X
materials and equipment belonging
to or supplied by the CONTRACTOR
on land or in the Unit.
- - --------------------------------------------------------------------------------
6. Handling and storage of X X
materials and equipment of
PETROBRAS or third parties,
aboard the Unit.
- - --------------------------------------------------------------------------------
7. Land transportation, cargo X X
loading and unloading of materials
under the CONTRACTOR's responsibility.
- - --------------------------------------------------------------------------------
8. Fishing services. X X
- - --------------------------------------------------------------------------------
9. Cleaning and painting services X X
aboard the Unit, including those
of PETROBRAS' materials and equipment
installed in the Unit.
- - --------------------------------------------------------------------------------
10. Mess room, hostelry and meal
supply services:
- - - CONTRACTOR's personnel X X
- - - PETROBRAS' personnel (up to 1300 X X
meals a month)
- - - PETROBRAS' personnel (exceeding X X
900 meals a month)
- - --------------------------------------------------------------------------------
11. BOP and riser lines tests, X X
not programmed, carried out
with the Cementing Unit.
- - --------------------------------------------------------------------------------
12. Operations with special tools. X X
- - --------------------------------------------------------------------------------
13. Air or sea transportation X X
of the CONTRACTOR's equipment
and personnel in the area of operation.
- - --------------------------------------------------------------------------------
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<PAGE>
- - --------------------------------------------------------------------------------
14. Air or sea transportation X X or X
of the CONTRACTOR's personnel
in the area of operation, besides
those programmed for shift changes
and Supervision personnel.
- - --------------------------------------------------------------------------------
15. Air or sea transportation X X
programmed but not used by
the CONTRACTOR, without
prior notice to PETROBRAS.
- - --------------------------------------------------------------------------------
16. Air or sea transportation X X
of the CONTRACTOR's material
and/or personnel, in an emergency
character, due to the CONTRACTOR's
failure or lack of programming.
- - --------------------------------------------------------------------------------
17. All customs expenses, fees, X X
including agent services, licenses,
taxes or similar charges regarding
the import or shipment to the Unit
of all equipment, spare parts and
consumables of the CONTRACTOR.
- - --------------------------------------------------------------------------------
18. All expenses, including those X X
with licenses, taxes or similar
charges regarding the vessel's
adaptation and operation in
accordance with the Laws, Rules,
Decrees, Administration Rules and
Instructions in force in Brazil.
- - --------------------------------------------------------------------------------
19. Services of submarine X X
inspection, measurement,
intervention, etc. with a
remote operated submarine vehicle.
- - --------------------------------------------------------------------------------
20. Services to interconnect the X X
boom lines with the burners.
- - --------------------------------------------------------------------------------
21. Special repair and recovery
services with qualified welding
in equipments and lines belonging to:
a) PETROBRAS X X
b) CONTRACTOR X X
- - --------------------------------------------------------------------------------
22. Communication services
via satellite, when used by:
- PETROBRAS X X or X
- the CONTRACTOR X X or X
- - --------------------------------------------------------------------------------
23. Maintenance of communication X X or X
service via satellite
- - --------------------------------------------------------------------------------
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<PAGE>
- - --------------------------------------------------------------------------------
24. Rental or Brasilsat X X or X
satellite signal
- - --------------------------------------------------------------------------------
25. Rental of satellite signal X X
for the DGPS
- - --------------------------------------------------------------------------------
26. Services in the burners
supplied by the CONTRACTOR.
- - --------------------------------------------------------------------------------
* MISSING PAGES 108 AND 109**
and needs or to comply with the requirements of government laws.................
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CONTRACT 101.2.160.97-0.......................................................
ATTACHMENT "VI"
ENVIRONMENTAL OPERATING CONDITIONS
(PERMISSIBLE LIMITS FOR ENVIRONMENTAL
CONDITIONS ACTING SIMULTANEOUSLY)
- - --------------------------------------------------------------------------------
PITCH
HEAVE OR ROLL WIND WAV CURRENT
OPERATION (feet) (Degrees) (MPH) (feet) (knots)
- - --------------------------------------------------------------------------------
Conductor's jetting/driving 2.0 2.5 30 3.0 1.4
- - --------------------------------------------------------------------------------
Drilling 2.5 3.0 30 3.0 1.4
- - --------------------------------------------------------------------------------
Casing running 2.0 3.0 30 3.0 1.4
- - --------------------------------------------------------------------------------
Casing hanger setting 1.5 2.0 30 2.1 1.4
- - --------------------------------------------------------------------------------
BOP running 1.5 1.5 19 2.1 2.5
- - --------------------------------------------------------------------------------
BOP setting 3.5 1.5 19 2.1 1.4
- - --------------------------------------------------------------------------------
Maneuvering 3.5 3.0 44 8.5 1.4
- - --------------------------------------------------------------------------------
LMRP disconnection 7 4 51 10.5 2.5
- - --------------------------------------------------------------------------------
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- - --------------------------------------------------------------------------------
LMRP connection 1.5 1.5 19 2.1 1.4
- - --------------------------------------------------------------------------------
Formation testing 3.5 4.0 44 8.5 1.4
- - --------------------------------------------------------------------------------
Operation with boats 2.5 3.0 39 6.7 1.4
- - --------------------------------------------------------------------------------
Running the WCT (lay-away) 1.5 1.5 19 2.1 2.5
- - --------------------------------------------------------------------------------
Running the WCT (without lines) 1.5 1.5 19 2.1 2.5
- - --------------------------------------------------------------------------------
Operation with flexitube 2.0 3.0 30 5.0 1.4
- - --------------------------------------------------------------------------------
Operation with wireline 3.0 4.0 44 8.5 1.4
- - --------------------------------------------------------------------------------
Overation with BAP 2.5 3.0 39 6.7 1.4
- - --------------------------------------------------------------------------------
NOTE: These data may be corrected/adjusted later and in common agreement,
considering the Unit's operating performance......................
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<PAGE>
CONTRACT 101.2.160.97-0 ......................................................
ATTACHMENT "VII"
PETROBRAS' SAFETY RULES
1. Service Rule No. 46/71:
o Safety Rules for Offshore Operations.
2. Service Order No. 01/72:
o Operational Safety Rules - Continental Shelf.
3. Service Rule No. 41/72:
o Electricity - Safety Rules
4. Service Order No. 01/76:
o Industrial Safety Rules (general)
o Industrial Safety Rules (Drilling)
o Industrial Safety Rules (Production)
5. General Safety Manual:
o Safety and Environmental Instruction for Contractors (E&P - BC).
-66-
<PAGE>
CONTRACT 101.2.160.97-0.......................................................
ATTACHMENT XIII
EQUIPMENT TESTING PROGRAM
In order to carry out the Unit's equipment testing in an easier
and more agile manner, the CONTRACTOR is to submit to PETROBRAS, as quickly as
required the following documents:
1. CERTIFICATES................................................................
a) Survey and Appraisal Report, updated and valid for the fiscal
year regarding the Unit offered, issued by one of the entities: ABS,
NOBLE & DENTON, DNV, LLOYDS or BUREAU VERITAS, and if the report is
issued abroad, it will be translated into Portuguese by a sworn
public translator and notarized in the Brazilian
Consulate.........................................................
b) Classification or Class Confirmation Certificate for hull and
equipment, compatible with the proposal submitted (certified
copy);............................................................
c) Report on claims from the classification societies mentioned in the
Class Confirmation Certificate (in the event there are
claims);..........................................................
NOTE: PETROBRAS will evaluate the above mentioned documents and will
mention in what time limits eventual claims are to be settled, and
at PETROBRAS' judgment, it can be at the time of the Unit's
inspection or at mobilization after the contract is signed.............
d) Freeboard Certificate;............................................
e) IOPP (International Oil Pollution Prevention) Certificate;........
f) IMO-MUDU-CODE Certificate - Mobile Offshore Drilling Unit - latest
edition (unnecessary for Drill Ship);......................
g) Cargo Ship Safety Equipment Certificate;..........................
h) Cargo Ship Safety Construction;...................................
NOTE: All documents required are to be within their period of validity........
2. INDUSTRIAL SAFETY AND ENVIRONMENTAL CONTROL ...........................
- Manuals and emergency plans in the Portuguese language............
-67-
<PAGE>
3. STORAGE CAPACITY........................................................
- Complete floor plan of bulk movement system, specifying:..........
a) Exclusive lines to move cement;...................................
b) Exclusive lines to move bentonite and baritine;...................
c) Location and type of bulk line valves and their respective
driving systems;..................................................
d) Pneumatic lines for cleaning and clearing bulk lines;.............
e) Location of the manometers;.......................................
f) Quantity, flow, operation pressure and location of compressors;...
g) Quantity, flow, operating pressure and location of the air drying
unit(s);.........................................................
h) Schematic drawing of each silo with their respective aeration
systems and points of connection with the bulk lines..............
4. FLUID CIRCULATION AND PROCESSING SYSTEM.................................
- Sketch of the system emphasizing pulsation dampers (suction and
tamping), safety valves, feed pumps, position of the suction lines
in relation to the suction sieves' tanks and filters........
- Floor plan of the drilling fluid feed and discharge lines showing
the flexibility in relation to the sand traps and mud tanks.......
- Floor plan of the degasser instalation showing the active tank,
separate processed mud and gas discharge lines, emphasizing the
connection point of this line with the gas discharge line.........
- Floor plan of the mud tanks system, emphasizing the supply lines,
gun lines, mixture funnel and centrifugal pumps interconnection
lines.............................................................
5. WELLHEAD SAFETY EQUIPMENT SYSTEM .......................................
- Sketch of the BOP/LMRP, specifying lines, valves and
measures/dimensions...............................................
-68-
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- Floor plan of the kill and choke lines from the BOP to the choke
manifold, specifying valves, connections, dampener chambers,
anchorage points and interconnection with the other
systems.......................
- Floor plan of the atmospheric air separator.......................
- Layout of the trip tank installation, giving the following
information:......................................................
a) Capacity;...................................................
b) Location;...................................................
c) Sensitivity;................................................
d) Measuring system;...........................................
e) Scale type;.................................................
f) Driller's scale visualization conditions;...................
g) Supply System for the above item............................
- Floor plan of the stand pipe manifold, specifying lines, valves,
manometers and interconnections with the other systems...........
- Inspection report on the riser, riser handling tool, and
connectors, telescopic joint and flexible joint, according to the
API RP 2P and RP 2Q standards, with update date not exceeding 1
year.
NOTE: If the reports show the need of repair in some equipment, the
service performance certificates will also be submitted...........
- Biannual inspection certificate of the choke manifold, with the
manufacturer's approval...........................................
- Biannual inspection certificate of the BOP unit and driving system,
with the manufacturer's approval..........................
- Biannual inspection certificate of the BOP, with the manufacturer's
approval.................................................
- Proof of technical ability of the well drilling and control
personnel.........................................................
-69-
<PAGE>
- To supply an internal maintenance and rust prevention program for
the marine risers and kill and choke lines........................
6. ENERGY GENERATION SYSTEM ...............................................
- Unifilar diagram of the energy generation and distribution system.
7. STABILITY...............................................................
- To submit the vessel's stability curve, updated in the proposal's
conditions, in keeping with the environmental conditions..........
8. DYNAMIC POSITIONING SYSTEM (including the moto-generators assembly,
thrusters and propellers)...............................................
- Schematic diagram of the dynamic positioning system...............
- To submit the inspection and tests procedures to be carried out at
every new location.............................................
- To submit the tests and inspections procedures to be carried out at
the end of each contract year..................................
9. DRILLING STRING AND ACCESSORIES ........................................
- Inspection report on all equipment of the drilling and completion
strings, subs and accessories (used equipment)....................
- Purchase voucher of the drill and completion strings, subs and
accessories (for new equipment)...................................
10. FISHING TOOLS AND ACCESSORIES..........................................
- Inspection report on all components of the fishing tools (used
equipment) or purchase voucher (for new tools)...................
11. SUNDRY SYSTEMS .........................................................
- Winches load test certificate.....................................
- Description of the compressed air system, emphasizing compressors,
layout of lines, valves and interconnection with the other
systems.....................................................
-70-
<PAGE>
- Preventive Maintenance Plans with their respective timecharts.....
- Ballast and sewer flowchart.......................................
Proof will be needed for the existence on board and for the operating
capacity of all equipment and accessories listed in Attachments C and D of the
chartering and services rendering contracts...............................
NOTE: Such equipment must be in places of easy access for survey........
A) RECEIPT TEST ...........................................................
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D of the chartering and services rendering
contracts.........................................................
NOTE: Such equipment must be in places of easy access for survey........
- The following systems, equipment and tools listed below will be
checked, inspected and tested:....................................
1) DRILL STRING, COMPONENTS AND ACCESSORIES..........................
- The CONTRACTOR will submit recent inspection reports, according
to the specification API RP7G for the whole drill string and
accessories such as, but not limited to: drill pipes, drill collars,
HW, Subs, stabilizers, reamers, bumper subs, lift-sub, kelly, slips,
elevators, fishing tools, etc, which prove the good conditions of
the string and its accessories. The information from the reports and
the general conditions of the string and its accessories will be
checked by PETROBRAS by means of a sampling inspection. In the event
of discrepancy between the data submitted by the CONTRACTOR and
those checked by PETROBRAS, showing an inadequate condition
of the string and its accessories, the CONTRACTOR will carry out
another inspection, for its own account...........................
NOTE 1: Any equipment refused by the inspection will be immediately
repaired or replaced by the CONTRACTOR, for its own account.......
-71-
<PAGE>
NOTE 2: For the string, components and new accessories, no inspection
report will be required, documents proving that such equipment is
new will be sufficient ...........................................
NOTE 3: The CONTRACTOR's equipment will be stored and arranged so as to
facilitate the inspection by sampling to be carried out by
PETROBRAS....................................................
- The same procedure will be adopted for the telescopic joints and
flexible joints...................................................
2) EXTRACTOR OF SOLIDS ..............................................
The following will be examined:...................................
- sieves.......................................................
- dessander,...................................................
- degasser - test suction and discharge........................
- centrifugue (if any).........................................
The operation and work pressure, as well as the existence of
manometers, will be checked.......................................
3) MUD TANKS AND VALVES..............................................
Waterproofness, working of the agitators, mixture funnel and depth
gun, besides the existence fixed marks to control the tanks volume
will be checked...................................................
4) CENTRIFUGAL PUMPS.................................................
The following will be checked:....................................
- working, vibration and noises;..............................
- Packing (leaks);............................................
- Work pressures..............................................
NOTE: Items 3 and 4 will be tested with sea water.......................
5) MUD LABORATORY AND TEST EQUIPMENT
The existence on board and the adequacy to the requirements
described in Attachments B and C to this contract will be checked.
6) DRILLING DERRICK .................................................
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<PAGE>
Maintenance conditions (corrosion), fastening system and the
conditions of the travelling block rails will be examined........
7) CROWN BLOCK ......................................................
The pulleys will be examined as to profiles wear, alignments,
clearance, buckling of the axles, lubrication, etc................
8) MUD PUMOS ........................................................
The following will be carried out: ..............................
- observation of working, vibrations, noises; ................
- pressure and maximum work flows tests for the liner used;...
- safety valve working test; .................................
- checking of the suction and discharge pulsation dampeners;.
- watertightness tests with nominal pressure of the mud pumps
and of all manifold valves;.................................
- watertightness tests with nominal pressure of all manifold
valves of the stand pipe manifold and of the kelly hose;....
- random disassembling of the suction for visual inspection
of the piston, sleeve, packing, valve and seat..............
9) SWIVEL............................................................
The mandril, gooseneck, body, etc. will be checked and nominal pressure test
with rotation will be performed...............................................
10) MOTION COMPENSATOR................................................
The piston alignment, lock bar, alignment in the rail, general
conditions, leaks and chains will be checked......................
11) RISER AND GUIDE LINES TENSIONERS..................................
The general conditions, leaks, pulleys and cables will be
inspected.........................................................
12) RISER RECOIL SYSTEM/HANG OFF SYSTEM/ FILL-UP VALVE (if any) ......
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The systems' operation will be checked............................
13) HIGH COMPRESSORS AND AIR RESERVOIRS...............................
The general conditions, leaks, lines and system yield will be
checked...........................................................
14) TOP DRIVE.........................................................
Working tests (connection and disconnection of one or more sections
of the DP's) will be carried out and the general conditions will be
inspected......................................
15) KELLY SPINNER.....................................................
The general conditions, specially the rollers' wear, and working
will be checked, and connection and disconnection operation of one
or more DP's will be carried out..............................
16) HOOK..............................................................
The general conditions and the locking system will be checked.....
17) TRAVELLING BLOCK..................................................
The pulleys wear, axles alignment, lubrication system, retraction
system, etc., will be inspected...................................
18) DRAWWORKS.........................................................
- The operation of the mechanical break system (brake bands),
electromagnetic (distance between irons, voltage level and SCR
feeder conditions), cooling system and clutches will be
checked.....................................................
- The operation of the cat-heads and height limitator with the
assembly/disassembly of one or more command sections, will be
checked.............................................
19) ROTARY TABLE......................................................
- The operation in high and low, brake system, tachometer and
lubrication system will be checked..........................
20) TRIP TANK ........................................................
- Capacity, installation site, sensitivity of the level
indicator system, visualization condition and supply system
will be inspected...........................
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21) HYDRAULIC TONGS AND PNEUMATIC SPIDER FOR CASING AND PNEUMATIC
TONGS FOR DRILL PIPES ............................................
- Operation tests will be made and maintenance conditions will
be checked.............................................
22) SAND-LINE OR WIRE-LINE SYSTEM ....................................
- operation of the clutches and brake will be tested by lowering
the photo-clinometer inside the drill string coinciding with
the photo-clinometer overshot test (TOTCO) will be tested.
Test to be made on location before the beginning of
operations.....................................
- The existence of an alignment guide for the sand-line cable in
the drum will be checked.................................
23) CHOKE MANIFOLD....................................................
- All valves with low pressure (300 psi) and in high pressure
(system's work pressure). Manometers, hydraulic choke
operation, manual choke, remote control panel, etc. will be
tested..........................
24) UPPER AND LOWER KELLY COCK, INSIDE BOP AND SAFETY VALVE...........
- Drivers will be tested and work pressure tests will be made.
- The end connections of each element will be checked and tested
with work pressure. The CONTRACTOR should have end seal plugs
adequate for the test ...........................
25) KILL AND CHOKE LINE HOSES.........................................
The end connections will be checked and tested with the system's
work pressure. The CONTRACTOR should have end seal plugs adequate
for the test......................................................
26) DRILL INSTRUMENTATION SYSTEM .....................................
The following will be tested: ....................................
- geolograph;.................................................
- rotary table tachometer;....................................
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- manometers;.................................................
- stroke counter; ............................................
- level control in the mud tanks;.............................
- torque indicator............................................
27) FLARE PIPE AND BOOMS..............................................
Their existence on board will be checked, analyzing the maintenance
conditions of the lines by means of inspection, and the facilities
for instalation of the production test equipment
system............................................................
28) BOP SYSTEM .......................................................
The following will be carried out: ...............................
- pressure tests of the slide valves with low pressure and high
pressure, compatible with the system...................
- pressure tests of the annulars with low pressure and high
pressure, compatible with the system........................
- complete function test in both POD's, through all panels....
- choke and kill valves tested with low pressure and high
pressure, compatible with the system........................
- working of the shear ram valve will be checked with opening
for examination of the blades conditions....................
- the opening and closing of all ram, annular and kill and choke
valves chambers will be tested........................
- the hydraulic driving unit will be checked as to: fluid used,
low fluid level alarm, low air pressure and low accumulators
pressure, maintenance conditions, leaks and mixing
systems..............................................
- the volumetric capacity of accumulators and the capacity of
electric and pneumatic pumps of the hydraulic unit will be
tested......................................................
-76-
<PAGE>
- the locking system of the ram valve(s) will be tested ......
- the SPM valves conditions will be checked by opening and
inspecting one of them, chosen at random....................
- the locking /unlocking system of the H-4 hydraulic connectors
will be tested...................................
- the surface and bottom accumulators' pre-charge will be
checked.....................................................
- The operation of the following systems will be tested:......
o Driving back-up........................................
o emergency recovery ....................................
o handling ..............................................
29) TRAVELLING TONGS, EZY-TORG, TORGUE SENSOR, SLIPS, ETC.............
One or more sections of the drill collars and drill pipes will be
assembled/disassembled to check the working of such equipment. The
general maintenance conditions, chuck jaws and cables will be
checked.................
30) BULK TRANSFER SYSTEM .............................................
The following will be carried out:................................
- the operation of the compressor will be checked, and noises,
oil and air leaks, and maintenance state, filters and
dehumidifier will be inspected .........................
- operation and watertightness of valves, lines and silos will
be checked, looking for possible clogging..............
- transfer of cement from 1 silo to the daily silo (if any) and
from this to the surge-tank will be made................
31) EMERGENCY ENERGY GENERATION SYSTEM...............................
- a black-out in the energy system generation system will be
simulated to see if the emergency generator is automatically
turned on .........
32) MAIN MOTO-GENERATOR ASSEMBLY .....................................
-77-
<PAGE>
- The following will be carried out:..........................
- vibration, noises, insulation, leaks, maintenance, etc., will
be checked.
- generators input and output in the bus bar, synchronisms and
load divisions will be tested...............................
- load and voltage and frequency regulation will be tested....
33) DESSALTER.........................................................
- Operation and production capacity will be checked...........
34) CAT-LINES CRANES..................................................
The following will be carried out:................................
- operation of the winches and maintenance of the cables will be
checked..................................................
- the elevation and rotation system, the operation with flying
boom and pulley block and the operation of the boom height
pawl will be checked...
- the report of the last inspection carried out by the Unit's
classification society in the winches will be examined......
35) Dejecta Treatment Unit............................................
Its operation will be inspected...................................
36) TELECOMMUNICATION SYSTEM..........................................
Operating tests will be made in all radio equipment existing on
board, including radio-beacon.....................................
37) OVERHEAD TRAVELLING CRANES .......................................
Their operation, and the maintenance conditions of cables and
sliders will be examined..........................................
38) DC/SCR MOTORS ....................................................
The maintenance conditions and insulation, as well as the collectors
and brushes will be examined...........................
- SCR functional test ........................................
-78-
<PAGE>
39) DIVERTER..........................................................
The following will be tested: ....................................
- flow line wing valves;......................................
- diverters and insert packer lock;...........................
- the control panel will be checked...........................
40) SAFETY EQUIPMENT.................................................
Salvage ..........................................................
Fireproof rigid vessels (capsules, whalers):......................
- lowering, motor, fuels, sprinklers, start; .................
- rations, garnishing, hatches, cleaning, fire extinguishers,
signaling equipment ........................................
Inflatable rafts:
- quantity, capacity, location, height in relation to the sea;
- validity of the last inspection, means of access to the
sea; .......................................................
- conditions of the cocoon ...................................
Jackets: .........................................................
- quantity (sufficiency), location, protection, and
maintenance.................................................
Life-buoys:.......................................................
- quantity (sufficiency), location, heaving-lines, lanterns,
smudge pots.................................................
Escape routes:....................................................
- vertical and horizontal signaling (indicative plates).......
- clearing, lighting (emergency)................................
Water Supply System for Fire Fighting ............................
Fire ring: .......................................................
- water system for the rig;...................................
- sprinklers system;..........................................
- painting, corrosion, signaling, visual conditions;..........
-79-
<PAGE>
- valves, hydrants, guns......................................
Fire pumps:.......................................................
- operation;..................................................
- motor, fuel, start, panel, tests............................
Fire Fighting Fixed Systems ......................................
- Foam system: chambers, tanks, guns, hydrants and carrier
liquid .....................................................
- Cylinders; conditions, reloading, retesting (C02 or HALON, if
any).....................................................
- Lines and diffusers: general conditions.....................
- Automatic: feeding, panels, batteries, detectors, tests.....
- Manual: commands, interconnections, tests...................
- Alarms: interconnections....................................
Fire Extinguishers................................................
- water, carbon dioxyde, chemical powder (portable and carts);
- distribution, location, general conditions;.................
- revision, recharge, retest, control, meters, replacement....
Fire Posts........................................................
- hose, keys, sprinkler;......................................
- fiber boxes, general conditions, post identification;.......
- visual signaling: sufficiency and general conditions........
Emergency Equipment ..............................................
- autonomous breathing apparatuses, reserve bottle, breathable
air fixed system, fire proximity clothing, lantern, ax, safety
belt;................................................
- distribution, location, general conditions, inventory,
maintenance and replacement.................................
Communications and Alarms.........................................
- telephone (internal, external): Operating capacity;.........
-80-
<PAGE>
- radiophony: VHF. Operating capacity;........................
- portable transceptors: quantity; distribution, intrinsic
safety;.....................................................
- intercom: quantity, distribution, and horns audibility,
interconnection with the rig, coding of sound alarm tones,
amplifiers; ................................................
- visual signaling: sufficiency, general conditions;..........
- fire alarm, glass breaking type: batteries, bells, tests....
Emergency Lighting................................................
- charger, batteries and lanterns.............................
Helideck..........................................................
- protection: guns, fire extinguishers, salvage equipment; ...
- painting, protection screen, net, landing lights, safety
warnings;...................................................
- guest welcoming practices...................................
Load Lifting .....................................................
- winches: general conditions, operation, signaling,
maintenance;................................................
- manual and electric-tackles: general conditions, operation,
signaling, maintenance;.....................................
- material movement and storage areas........................
Training .........................................................
- abandonment, fire fighting, first aid and brigade...........
Manuals and Plans.................................................
- emergency; safety;..........................................
- disclosure, knowledge;......................................
- distribution, control, updating;............................
- tasks schedules for emergency and abandonment situations,
including in Portuguese.....................................
Order and Cleanliness ............................................
-81-
<PAGE>
- installation's general aspect;..............................
- particularly alarming places ...............................
Smoke, Heat and Gas Detection System..............................
- test of hydrocarbons detection sensors......................
Ballast and Sewer System..........................................
- functional test ............................................
41) Anchoring System..................................................
42) Dynamic Positioning System........................................
43) Propulsion System.................................................
B) LOCATION MOVING TEST ...................................................
To be defined between the CONTRACTOR and PETROBRAS.................
C) BEGINNING OF CONTRACT YEAR TEST ........................................
To be defined between the CONTRACTOR and PETROBRAS.................
-82-
<PAGE>
ATTACHMENT IX
PROCEDURES IN THE EVENT OF FATAL ACCIDENTS
1. If, during the period of validity of the contract, a fatal accident occurs
with a CONTRACTOR's employee, the CONTRACTOR should:.............
1.1. Notify the Inspection immediately, for the proper measures;.............
1.2. Take measures so that the employee's relatives be notified with the utmost
urgency on the event, giving them the social support due; .......
1.3. Formally establish an Investigation Commission, within 48 hours after the
accident, in order to, in the maximum time limit of 15 days, identify the
causes and recommend the measures deemed necessary to prevent similar
accidents...............................................
2. The report should contain, at least, the following information regarding
the accident:.................................................
- description;......................................................
- exact location;...................................................
- data regarding the injured persons;...............................
- basic and immediate causes;.......................................
- measures to be taken in order to prevent its repetition...........
3. The CONTRACTOR should guarantee the Commission enough authority and
autonomy to carry out the investigations without any restrictions.......
4. A PETROBRAS' employee should participate in the Commission, appointed by
the authority in charge of the operational office.........
5. After conclusion of the Commission's work, it will also behoove the
CONTRACTOR, at the Inspection's request, to disclose the results of the
report, so as to convey the experience from the accident to other
contractor companies....................................................
-83-
<PAGE>
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on the 5th of
February, 1998 in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
____________________________________
Marcia Barbosa Serra
Sworn Public Translator
-84-
EXHIBIT 10.6(A)
Marcia Barbosa Serra
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt. # 301 - Leblon - 22450-190
ISS: 1261003-00 - CIC: 606442227-00
Tel: 274-3844
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 2658/98
(On paper with letter of PETROBRAS.)./.
RIDER No. 1 TO CONTRACT 101.2.160.97-0 ENTERED INTO BETWEEN PETROLEO
BRASILEIRO S/A AND THE COMPANY MARITIMA PETROLEO E ENGENHARIA LTDA./.
PETROLEO BRASILEIRO S/A - PETROBRAS, a mixed economy, company., with head office
at Av. Republica do Chile 65, in the City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers
Registry of the Ministry of Finance under No. 33.000.167/0001-01,, henceforth
called PETROBRAS, represented herein by the Executive Superintendent of
Exploration and Production South-Southeast, Luiz Eduardo G. Carneiro, and the
Company MARITIMA PETROLEO E ENGENHARIA LTDA., successor of MARITIMA NAVEGACAO E
ENGENHARIA LTDA., with head office at Av. Almirante Barroso, 52, Group 3400,
City of Rio de Janeiro, Federative Republic of Brazil, enrolled in the General
Taxpayers Registry of the Ministry of Finance under No. 46.828.596/0001/13,
henceforth called the CONTRACTOR, represented herein by its President, German
Efromovich, have agreed to add a rider to contract 101.2.160.97-0, according to
the following clauses and conditions:/.
FIRST CLAUSE - OBJECT./.
1. The present Rider has as its object:/.
<PAGE>
1.1. To change the corporate name, of the CONTRACTOR from MARITIMA NAVEGACAO E
ENGENHARIA LTDA. to MARITIMA PETROLEO E ENGENHARIA LTDA./.
1.2. To include as INTERVENIENT PARTY, to the present contract, the company
PETRODRILL SIX LTD., with head office in Omar Hodge Building, Wickhams
Cay, Road Town, Tortola, Ilhas Virgens Britanicas, represented by its
Director GERMAN EFROMOVICH./.
1.3. To change the redaction of item 16. 1 of the SIXTEENTH CLAUSE -
INTERVENIENCE./.
SECOND CLAUSE - CONTRACTOR'S OBLIGATIONS./.
2.1. The Redaction of items 3.12.1 and 3.21.2. change to:/.
3.12.1. "The minimum value of the civil liability insurance is of
US$1,000,000.00 (one million dollars), per occurrence, during the period of
validity of this CONTRACT and its eventual extension, which amount is to be
converted into Brazilian currency on the date of signature of this instrument.
THE INTERVENIENT PARTY (IS TO APPEAR AS CO-INSURED IN THIS INSURANCE POLICY)./.
3.21.2. "Exception is made to cases arising from kick, blow-out, surge or
formation testing, in which the CONTRACTOR will be kept free and safe from, in
the other cases of spillage of oil and other residues in the sea, the CONTRACTOR
AND THE INTERVENIENT PARTY (WILL BE JOINTLY LIABLE, UP TO THE LIMIT OF
US$500,000.00 (FIVE HUNDRED THOUSAND DOLLARS), PER EVENT AND ITS
DEVELOPMENTS)./.
THIRD CLAUSE - INTERVENIENCE./.
3.1. The redaction of item 16.1 is changed to:/.
16.1. "The INTERVENIENT PARTY signs the present CONTRACT, together with
the CONTRACTOR, being jointly liable with it for all obligations arising from
the present CONTRACT
<PAGE>
and its execution, including for losses./.
FOURTH CLAUSE - RATIFICATION./.
4.1. The parties ratify the other conditions of the CONTRACT that were not
changed by the present instrument./.
And being thus agreed, the parties sign the present Rider in 2 (two)
copies of the same tenor and fashion, together with the witnesses below.
Rio de Janeiro, August 21, 1998./.
(Signed:) (Illegible) - Luiz Eduardo G. Carneiro./.
Executive Superintendent of Exploration and Production South-Southeast./.
PETROBRAS - PETROLEO BRASILEIRO S.A./.
(Signed:) (Illegible) - German Efromovich./.
President - MARITIMA PETROLEO E ENGENHARIA LTDA./.
(Signed:) (Illegible) - German Efromovich./.
Director - PETRODRILL SIX LTD./.
WITNESSES:/.
(Signed:) Elaine Brabo - Name: ELAINE BRABO./.
(Signed:) Andre de Mesquita Pinto - Name: ANDRE DE MESQUITA PINTO./.
(Two initials appeared on the first page of the document.)/.
- - --------------------------------------------------------------------------------
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on November 20, 1998
in this City of Rio de Janeiro, Federative Republic of Brazil.
<PAGE>
/s/ MARCIA BARBOSA SERRA
------------------------------
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.7
Marcia Barbosa Serra
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt. # 301 - Leblon - 22450-
ISS: 1261003-00 - CIC: 606442227-00
Tel: 274-3844
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 4031/98
(Original submitted for translation.)........................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)..........
LETTER OF AGREEMENT
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company with head
office at Av. Republica do Chile, 65, City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil enrolled in the General Taxpayers'
Registry of the Ministry of Finance under No. 33.000.167/0001-01, represented
herein by the Executive Superintendent of Exploration and Production South -
Southeast, Engineer LUIZ EDUARDO G. CARNEIRO, henceforth called PETROBRAS, and
the Company MARITIMA NAVEGACAO E ENGENHARIA LTDA., with head office at Avenida
Almirante Barroso, no. 42, 34th floor, City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers'
Registry of the Ministry of Finance under No. 46.828.596/0001-13, represented
herein by its President, Mr. GERMAN EFROMOVICH, have agreed upon the present
Letter of Agreement regarding contracts 101.2.159.97-2 (Chartering) and
101.2.160.97-0 (Rendering of Services) for the Unit Amethyst 6, henceforth
called the Unit, as follows:.................................................
Item New Redaction
1.1. (Charter.) The object of the present contract is the chartering to
PETROBRAS, of the Unit, which, according to the CONTRACTOR, is
to be built in a shipyard for the purpose of fulfilling this
contract, in order to be used in the drilling and/or
evaluation and/or completion and/or workover of oil and/or gas
(vertical, directional and horizontal) wells, in the Brazilian
continental shelf, down to a maximum depth of 5,000 (five
thousand) meters, in a water depth down to 1,200 (one thousand
twelve hundred) meters.....................................
<PAGE>
3.17.-(Serv.) To submit to the contract Manager, up to 30 (thirty)
consecutive days after its inception, as foreseen in item
2.2.1, the originals or certified copies of the insurance
policies made as a result of this contract, containing all
essencial data, such as insurers, time limits, period of
validity, amounts insured, and coverage conditions, and with
PETROBRAS appearing as co-insured, except in the civil
liability insurance, of which it will participate as a third
party .....................................................
3.19.-(Chart.) To submit to the Manager of this contract, up to 30 (thirty)
days after the beginning of the performance, as foreseen in
item 2.2.1, the originals or certified copies of the
certificates of the insurances made as a result of this
contract, containing all essential data, such as insurers,
time limits, periods of validity, amounts insured, and
coverage conditions, and with PETROBRAS appearing as
co-insured, except in the civil liability insurance, of which
it will participate as a third party.......................
7.7-(Chart.) The CONTRACTOR agrees that, at PETROBRAS' exclusive option,
the payments referring to the chartering object of the Present
contract can be made through financing by third parties,
provided the time limits, currency, amounts and place of
payment set forth in the contract are complied with........
12.5 - (Chart.) In the present contract, it will
13.5 - (Serv.) be considered as act of God the situation in which one of the
parties is prevented from fulfilling its obligations, provided
it proves that:............................................
o the non-fulfillment of the obligation was due to the existence
of an impediment beyond its control;.......................
o the party impeded could not, within its ability, overcome the
impediment and its effects, in order to fulfill its contract
obligation within the time limit set down, and.............
o the impediment and its effects could not be avoided nor
overcome...................................................
As an illustration of act of God or force majeure, one may mention
wars, strikes, submarine earthquakes, among other facts, which
effects were not possible to avoid or
prevent........................................................
<PAGE>
And being thus agreed, the parties sign the present Letter of
Agreement, in 2 (two) copies with the same tenor, with the
witnesses below................................................
Rio de Janeiro January 15, 1998.......................................
PETROLEO BRASILEIRO S/A - PETROBRAS...................................
(Signed:) Luiz Eduardo G. Carneiro....................................
Luiz Eduardo G. Carneiro - Executive Superintendentof Exploration and
Production South - Southeast........................................
MARITIMA NAVEGACAO E ENGENHARIA LTDA..................................
(Signed:) German Efromovich...........................................
German Efromovich - President.........................................
WITNESSES: ...........................................................
(Signed:) Andre de Mesquita Pinto.....................................
for/Claudio Fontes Nunes..............................................
(Signed:) Hamylton P. Padilha Jr......................................
Hamylton P. Padilha Jr......................................
(Two initials appeared on the first page of the document.)...
.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-
THESE BEING the precise terms and content of the aforementioned document,
I hereby set my Hand and Seal on this Translation, performed on the 17th
of February 1998 in this City of Rio de Janeiro, Federative Republic of
Brazil.
/s/ MARCIA BARBOSA SERRA
-----------------------------------------
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.8
Marcia Barbosa Serra
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt. # 301 - Leblon - 22450
ISS: 1261003-00 - CIC: 606442227-00
Tel: 274-3844
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 4033/98
LETTER OF AGREEMENT
(Original submitted for translation.).........................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)...........
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company with head
office at Av. Republica do Chile, 65, City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil enrolled in the General Taxpayers'
Registry of the Ministry of Finance under No. 33.000.167/0001-01, represented
herein by the Executive Superintendent of Exploration and Production South -
Southeast, Engineer LUIZ EDUARDO G. CARNEIRO, henceforth called PETROBRAS, and
the Company MARITIMA PETROLEO E ENGENHARIA LTDA., with head office at Avenida
Almirante Barroso, no. 42, 34th floor, City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers'
Registry of the Ministry of Finance under No. 46.828.596/0001-13, represented
herein by its President, Mr. GERMAN EFROMOVICH, henceforth called the
CONTRACTOR, whereas:......................................................
1. the parties have entered into two contracts, one under No. 101.2.159.97-1,
the object of which is the chartering of the semi-submersible floating
Unit, provided with dynamic positioning (DP), called AMETHYST 6, to
operate in a water depth of up to 1,200m, and one under No.
101.2.160.97-0, for the rendering of drilling, completion, evaluation and
workover services........................................
2. the contract period set forth in subitem 2.2.3 of the second Clause of
said contracts is of 6 (six) years, with forecast for extention of the
time limit by means of an agreement.....................................
THE PARTIES RESOLVE
a) that the contract period of 6 (six) years, at its final term, will be
automatically extended for 2 (two) more years;..........................
b) that the other clauses of said contract deeds remain unchanged..........
<PAGE>
And being thus agreed, the parties sign the present Letter of Agreement,
in 2 (two) copies with the same tenor, with the witnesses below....
Rio de Janeiro January 15, 1998...............................................
(Signed:) Luiz Eduardo G. Carneiro...........................................
Luiz Eduardo G. Carneiro - Executive Superintendent of Exploration and
Production South - Southeast...............................
PETROLEO BRASILEIRO S/A - PETROBRAS...........................................
(Signed:) German Efromovich..................................................
German Efromovich - President.................................................
WITNESSES: ..................................................................
MARITIMA PETROLEO E ENGENHARIA LTDA...........................................
(Signed:) Andre de Mesquita Pinto............................................
for/ Claudio Fontes Nunes.....................................................
(Signed:) Hamylton P. Padilha Jr.............................................
Hamylton P. Padilha Jr........................................................
(Two initials appeared on the first page of the document.)..............
- - --------------------------------------------------------------------------------
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on the 17th of
February, 1998 in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
_________________________________
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.9
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt 301-Leblon-22450
ISS: 1261003-00-CIC: 606442227-00
Tel.: 274-3844
I, THE UNDERSIGNED, SWORN PUBLIC TRANSLATOR AND COMMERCIAL INTERPRETER IN AND
FOR THIS CITY AND STATE OF RIO DE JANEIRO, FEDERATIVE REPUBLIC OF BRAZIL,
REGISTERED AT THE COMMERCIAL BOARD OF RIO DE JANEIRO UNDER NUMBER 97, DO HEREBY
CERTIFY AND ATTEST THAT A DOCUMENT IN THE PORTUGUESE LANGUAGE WAS SUBMITTED TO
ME FOR TRANSLATION INTO ENGLISH, WHICH I PERFORMED ACCORDING TO MY OFFICE, AS
FOLLOWS:
TRANSLATION NO. 3973/97
(Xerox copy submitted for translation.).......................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)...........
CONTRACT NO. 101.2.100.97-8...................................................
CHARTERING CONTRACT
CHARTERING CONTRACT OF THE DYNAMIC POSITIONING FLOATING UNIT
AMETHYST 5, ENTERED INTO BETWEEN PETROLEO BRASILEIRO S.A. -
PETROBRAS AND THE COMPANY MARITIMA NAV. E ENG. LTDA.--
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, organized and
existing under Law No. 2.004, dated 10/03/53, with head office at Av.
Republica do Chile, 65, City of Rio de Janeiro, State of Rio de Janeiro,
Federative Republic of Brazil enrolled in the General Taxpayers Registry of
the Ministry of Finance under No. 33.000.167/0001-01, represented herein by
the Executive Superintendent of Exploration and Production (E & P), Engineer
LUIZ EDUARDO G. CARNEIRO, hereforth called PETROBRAS, and the Company
MARITIMA NAVEGACAO E ENGENHARIA LTDA., with head office at Avenida Almirante
Barroso, No. 42, 34th floor, City of
1
<PAGE>
Rio de Janeiro, State of Rio de Janeiro, Federative Republic of Brazil, enrolled
in the General Taxpayers' Registry of the Ministry of Finance under No.
46.828.596/0001-13, represented herein by its President, Mr. GERMAN EFROMOVICH,
have agreed upon the present CONTRACT for the chartering of the Dynamic
Positioning Floating UNIT AMETHYST 5 and its accessories, described in
Attachment I, henceforth called the UNIT, according to the authorization of
PETROBRAS' Executive Board (MINUTES No. 4.116, Item No. 24, dated 09/18/97) the
parties being bound to the terms of the Invitation to Bid No. 101.0.001.97-6,
and subjected to the following Clauses and
Conditions:...................................................................
(End of the Qualification)....................................................
2
<PAGE>
FIRST CLAUSE - OBJECT.........................................................
1.1. The object of the present CONTRACT is the chartering to PETROBRAS, of
the UNIT, in order to be used in the evaluation and/or completion and/or
workover of oil and/or gas (vertical, directional and horizontal) wells,
in the Brazilian continental shelf, down to a maximum depth of 5,000
(five thousand) meters, in a water depth down to 1,200 (twelve hundred)
meters................................................................
1.1.1. It is included, as an object of the CONTRACT, the performance, by the
CONTRACTOR, of any and all operations needed for the perfect
fulfillment of the chartering object of the CONTRACT, such as, but
not limited to, the performance and supervision of the positioning,
ballasting and movement of the UNIT...................................
1.2. PETROBRAS may determine that the CONTRACTOR makes the reentry in
wells already drilled, and it can install in the UNIT equipment and
production facilities, the provisions of item 14.1 of this CONTRACT
being complied with...................................................
1.3. The chartering object of the present CONTRACT is included in the Annual
Activities Plans, under the following codes:..........................
B 12100 - Boring - Production Development............................
A 22100 - Boring - Exploratory Drilling..............................
B 13200 - Completion and Intervention for Evaluation - Production
Development...........................................................
A 24200 - Intervention for Evaluation - Exploratory Drilling.........
C 15200 - Well Workover Operation.....................................
(End of Clause)...............................................................
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SECOND CLAUSE - PERIOD OF VALIDITY AND DURATION...............................
2.1. Period of Validity - The present CONTRACT binds the parties as of its
signature, but the payments in foreign currency can only be made after
the date of its registry in the Central Bank of Brazil..........
2.2 Duration - The present CONTRACT will have a duration of 2,190
(twenty-one hundred and ninety) days..................................
2.1.1. Beginning of the CONTRACT - The beginning of the CONTRACT will occur
when the UNIT is released by PETROBRAS, through a written notice, to
begin the operations, after the general equipment testing foreseen in
item 3.1 of this CONTRACT is carried out..............................
2.2.2 Automatic Extension - If at the end of the duration mentioned in 2.2,
some operation is still being performed in a well, the duration of
the present CONTRACT will be automatically extended, until the
completion of the works in said well, considering as the final limit
the UNIT's arrival in the port or sheltered waters chosen by common
agreement between the parties and, also, in case there are still
PETROBRAS' equipment aboard the UNIT, the completion of the
withdrawal of such equipment will be considered as the final limit....
2.2.3 This CONTRACT may be extended for successive periods of 365 (three
hundred and sixty-five) running days, through a prior agreement
between the parties, by means of an Addendum, the other contract
conditions being complied with, and limited to a maximum contract
period of 2,190 (twenty-one hundred and ninety) days..................
2.3. Arrival in Brazil - The UNIT should arrive at the port or in
sheltered waters, in Macae-RJ. The beginning of operations should
occur up to the date of 07/06/99, the provision set forth in item 8.1
of this contract being complied with..................................
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2.3.1. At the port or in sheltered waters mentioned in 2.3, the customs and
helideck inspections in the UNIT will be carried out, as well as the
loading/unloading of the CONTRACTOR's and PETROBRAS' materials, and also
the general equipment testing will begin, as foreseen in item 3.1 of
this CONTRACT.........................................................
(End of Clause)...............................................................
5
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THIRD CLAUSE - CONTRACTOR'S OBLIGATIONS.......................................
3.1. Before the beginning of the CONTRACT, the CONTRACTOR will arrange for a
general test of the operational conditions of all of the UNIT's
equipment, as provided for in ATTACHMENT VIII, in the presence of
PETROBRAS' Inspection. The occurrences found during the performance of
the tests will be duly recorded in the Daily Drilling Certificate (ADP)
signed by PETROBRAS' Inspection and by the CONTRACTOR's representative.
The UNIT will be released to sail to the first location after proving
the good operating conditions of the equipment which comprise the
drill's main systems, that is, energy generation and distribution
system, dynamic positioning system, industrial safety, liquid and bulk
storage, fluid circulation and processing, safety and wellhead, column
elevation, rotation and handling, columns, columns instrumentation,
formation test equipment and communications system....................
3.1.1. The tests referred to in 3.1 will be made in a period estimated in 3
(three) days, after which the UNIT will be released to sail to begin the
operations, provided there is nothing pending in the rig's main systems,
as set forth in item 3.1.....................................
3.1.1.1.In the event the tests last for a period exceeding 3 (three) days, for
reasons ascribed to PETROBRAS, the rate foreseen in REF 104 (WAITING
RATE) of ATTACHMENT II, will be due, applied as of the fourth day of
tests, until the UNIT is released. The periods spent with equipment
repair will not be calculated for the purposes of counting such
duration, and no fees will be due during such periods.
3.1.2. PETROBRAS may opt for the partial or total performance of the receipt
tests, in sheltered waters, in the deepest water depth set forth in
the Contract, or still in the first location..........................
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3.2. To maintain, during the contract period, the UNIT, its fittings, as
well as accessories and replacement elements and personnel in perfect
working conditions in a working regime of 24 (twenty-four) hours a
day, 7 (seven) days a week, and to guarantee that the UNIT is
calculated to carry out the activities object of this contract........
3.2.1. To strictly comply with the recommendations of the equipment
manufacturers. carrying out the maintenance foreseen in their
operation manuals, which will be provided for in the UNIT's
preventive mainternance plan..........................................
3.3. Technical Evaluation Award and Certificates - To submit copies of the
Registry, Survey, Classification and Technical Survey and Evaluation
Award Certificates of the UNIT and its fittings, signed by a qualified
and well-known organization, not related with the CONTRACTOR notarized
in the Brazilian Consulate and translated by a Sworn Public Translator,
if issued abroad, and which should contain:..
3.3.1. Description o the UNIT and accessories;...............................
3.3.2. Operating conditions and physical conditions of the UNIT;...........
3.3.3. Light displacement of the UNIT (Light weight);........................
3.3.4. Year of construction;.................................................
3.3.5. Year of reconditioning, listing spare parts and parts replaced;.......
3.3.6. Technological differences between the UNIT surveyed and a more modern
UNIT of the same kind;................................................
3.3.7. Forecast of the average useful life of the good used and its new
analog;...............................................................
3.3.8. Market value, of reproduction and replacement;........................
3.3.9. Net weight of the equipment installed in the UNIT;....................
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3.3.10. Technical catalogues of the equipment installed in the UNIT...........
3.4. To regularize, before the proper authorities, the entry and stay of
the UNIT in Brazil, arranging, at its expense, for the Release,
Surveys, Registries and Temporary Admission...........................
3.4.1. Regarding new equipment and equipment without use, the "Technical Survey
and Evaluation Award" referred to in item 3.3 may be replaced by factory
catalogues or purchase invoices, with description, year of manufacture,
useful life forecast and value of each equipment;.....................
3.5. Safety, Sanitation and Labor Medicine - To carry out its operations
in strict compliance with the international safety, sanitation and
labor medicine standards, being liable for the violations committed.
To supply, for its account, and maintain in perfect operating
conditions, the safety equipment in accordance with the safety plan
("SAFETY PLAN") approved by the Administration of the VESSEL's
Country of Registry, and with the good completion/evaluation/workover
practice..............................................................
3.5.1. The UNIT will comply with the IMO - MODU - CODE (Mobile
Offshore Drilling Unit) standard......................................
3.6. Sea Operations - To manage the UNIT in strict compliance with
the laws, standards, regulations and administrative rules, as well as
the instructions issued by the Shipping Office or by other proper
authorities, specially those regarding the spillage of oil and other
residues from the UNIT into the sea, being liable, as a result, for
any charges arising from the violation of such laws, standards,
regulations, administrative rules and instructions, the
9
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limit established in subitem 3.6.2. being complied with, and with the
exception of the cases provided for in item 3.20 of this CONTRACT.....
3.6.1. To plan and carry out operations aiming at preventing and fighting oil
and gas blow outs, fires, or other accidents, complying with the
provision of item 2.4 of ATTACHMENT II to this CONTRACT. Although the
CONTRACTOR is considered fully responsible for such operations, it is
obliged to discuss the methods to be adopted with PETROBRAS, in order to
find the best operating solution......................................
3.6.2. Exception is made of the events arising from kick, blow out, surgings,
or formation testing, which the CONTRACTOR will be kept free and safe
from. In the other cases of spillage of petroleum, oils and other
residues into the sea, the CONTRACTOR will be liable up to the limit of
US$500000.00 (five hundred thousand dollars), per event and its
deployments..........................................................
3.7. To comply with all laws, standards, decrees, regulations, administrative
rules and instructions in force in Brazil, that govern the exploration
and research in the Brazilian submarine shelf, including those regarding
environmental protection.............................................
3.8. Replacement and Repairs - The replacement cost for equipment, materials
and accessories needed for the UNIT's perfect operation, as well as the
expenses with repairs of any kind, will run for the CONTRACTOR's
account...............................................................
3.8.1. The above mentioned repair cost covers any and all expenses, including
taxes and duties due from the moment of purchase of the equipment, spare
parts and materials, to their installation and placement in the UNIT,
with exception of expenses with transportation between the support
vessels' port of operation and the UNIT...............................
10
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3.8.2. Regarding the Temporary Admission of the UNIT, as well as the
import of the equipment, materials and accessories mentioned in item
3.8, the CONTRACTOR will comply with the provisions of the Internal
Revenue's Rulling Instruction No. 136/87.............................
3.9. At the end of this CONTRACT or of its extention, to bear the charges
arising from the return of the UNIT, its fittings, accessories,
equipment, spare parts, and materials for replacement or repair, such
charges including, but not limited to, the preparation, packing,
shipping, transportation, unloading, stay, freight, clearance, storage,
wharfage, stowage, insurance, and other similar expenses.............
3.10. To maintain, at its expenses, besides the UNIT, the crew adequate and
sufficient for its operation, being also obliged to comply with the
pertinent legal provisions, issued by Brazilian authorities and by those
of the CONTRACTOR's country of origin.................................
3.11. To bear all expenses with displacement of the crew mentioned in item
3.10, including transportation from abroad to the port or airport of
Macae-RJ, as indicated by PETROBRAS, and the return to the place of
origin, and any and all expenses with the crew's stay in Brazil, medical
and hospital expenses, meals, passports, and similar expenses.........
3.11.1 To maintain PETROBRAS safe from any complaints, claims from its
employees, representatives, as a result of the present contract.
3.12. To promote, without charges to PETROBRAS, the replacement and immediate
withdrawal of any crew member that may be requested in writing by
PETROBRAS at any time, due to bad behavior, technical deficiency, or
health conditions....................................................
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3.13. To maintain a special identification for the crew, so as to distinguish
it from PETROBRAS' and other companies' personnel who may eventually
work in other services related to the object of the present CONTRACT..
3.14. Radio Communications - To supply, operate and maintain VHR, SSB and
Radio-Beacon and portable Transceptor equipment, adequate for PETROBRAS'
land communications system, for the guidance of helicopters, so as to
comply with the Radio Communications Plan supplied by PETROBRAS,
appearing in ATTACHMENT I.............................................
3.14.1. Other Radio Communications systems deemed necessary to support the
CONTRACTOR's operations, both in the UNIT and on land, will be supplied,
installed and operated by it. The CONTRACTOR will be responsible for the
obtainment of the licenses and frequencies to operate such equipment..
3.14.2. The CONTRACTOR will maintain, at its expenses, radio operators, fluent
in spoken Portuguese, who will remain 24 (twenty-four) hours a day
operating the equipment installed in the UNIT, whether they belong to
PETROBRAS or to the CONTRACTOR........................................
3.14.3. Immediately after the UNIT's arrival, the CONTRACTOR will arrange with
the proper authorities for the issuing of the "Terms of Survey"
regarding the radio station existing on board........................
3.14.4. The CONTRACTOR will bear any expenses related to the telecommunications
equipment and services, with exception of those provided for in item 4.7
of this CONTRACT.....................................................
3.15. Insurances - To provide for the contracting, at its expenses, of the
insurances necessary to fulfill this CONTRACT and the Brazilian Laws,
intended for the coverage of.........................................
12
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the Unit and all of its accessories, even when they are being
transported under PETROBRAS' responsibility, as well as the Civil
Liability insurance for damages and losses caused to third
parties...............................................................
3.15.1. MARITIMA NAVEGACAO E ENGENHARIA LTDA. will appear as co-insured in the
Civil Liability insurance policy which it makes, by force of item 3.12
of the SERVICES RENDERING CONTRACT entered into with and PETROBRAS....
3.15.2. During the period of validity of this CONTRACT, the CONTRACTOR should
maintain insurance coverage for the UNIT and all of its accessories,
according to the conditions set forth in Coverage No. 3 of the Hull
Insurance Rate in Brazil. (Note: This reading of subitem 3.15.2 for
drill ships will be adopted.)........................................
3.15.2. During the period of validity of this Contract, the CONTRACTOR should
maintain insurance coverage for the UNIT and all of its accessories,
according to the conditions of the LONDON STANDARD DRILLING BARGE
FORM - ALL RISK, or similar. ........................................
3.15.3. The redress due to the CONTRACTOR's Civil Liability arising from damages
provided for in this Clause, is not limited to the amount set forth in
subitem 3.12.1 of the SERVICES RENDERING CONTRACT entered into between
the parties, for the Civil Liability Insurance against Third Parties,
and will be ruled by the pertinent Brazilian laws.....................
3.16. Franchises that may be established for the insurances mentioned in
item 3.15 and in its subitems, as well as the onus arising from the
insurers' requirements and/or recommendations will fully run for the
CONTRACTOR's account..................................................
13
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3.17. To keep PETROBRAS free and safe from any and all indemnity claim for
damages and/or losses of any kind which the CONTRACTOR may have
sustained as a result of this CONTRACT, whether or not it has made
adequate and sufficient insurance for such circumstances.............
3.17.1. PETROBRAS will be equally kept free and safe from any and all indemnity
claim for damages and/or losses of any kind which the CONTRACTOR may
have caused to third parties by its duly proven action or omission,
arising from this CONTRACT, whether or not it has made adequate and
sufficient insurance for such circumstances..........................
3.17.2. In return, the CONTRACTOR will be kept free and safe from any and all
indemnity claim for damages and/or losses of any kind, which PETROBRAS
may have sustained from third parties, or has caused to third parties by
its duly proven action or omission, as a result of this CONTRACT,
whether or not it has made adequate and sufficient insurance for such
circumstances........................................................
3.18. The CONTRACTOR waives for itself and will require from its Insurers
and/or Subcontractors, in any and all insurance made as a result of this
CONTRACT, the inclusion, in each policy contracted, the provision
assuring the waiver of any right of subrogation against PETROBRAS....
3.19. To submit to E&P/GETRAT, up to 30 (thirty) days after the beginning of
the performance, as provided for in item 2.2.1, the originals of the
certificates of the insurances made as a result of this CONTRACT,
containing all essential data, such as insurers, time limits, periods of
validity, amounts insured, and coverage conditions, and with
14
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PETROBRAS appearing as co-insured, except in the civil liability
insurance, of which it will participate as a third party....
3.19.1. The certificates mentioned in item 3.19 will contain a provision that
the insurances mentioned cannot be amended and/or canceled without
PETROBRAS' prior authorization........................................
3.20. Losses and Damages - The CONTRACTOR will be liable for losses of and
damages to its own equipment and material, and to those which it and its
agents may cause to PETROBRAS or to third parties, as a result of its
duly proven action or omission, in the following cases:...............
3.20.1 In the event of losses of or damages to equipment and/or materials
belonging to PETROBRAS and/or third parties, which are aboard the UNIT,
or during the movement between the UNIT, and the support vessels, the
CONTRACTOR's liability will be limited to the replacement or repair of
the equipment so lost or damaged due to the CONTRACTOR's or its
employees' duly proven fault. However, the CONTRACTOR will not be liable
and will be kept free and safe from in the event of damages to
reservoirs, indirect damages or loss of profit of PETROBRAS, losses and
damages arising from pollution coming from the well, resulting from kick
and/or blow-out;.....................................................
3.20.2. In case of losses and damages caused to the well, arising from the
events mentioned in subitem 2.1.5 of ATTACHMENT II, the CONTRACTOR will
reimburse PETROBRAS the payments it comes to make to third parties
referring to cementing, logging, or other services related to the object
of the present CONTRACT, as well as to materials (cement,
15
<PAGE>
casing, bits, completion fluid materials). In the event PETROBRAS opts
for the definitive abandonment of the damaged well, the CONTRACTOR will
reimburse the expenses made by PETROBRAS to drill that
well.................................................................
3.20.3. In the cases mentioned in subitems 3.20.1 and 3.20.2. The limit for the
CONTRACTOR's liability is of US$500,000.00 per event and its
deployments..........................................................
3.21. Secrecy - To maintain complete secrecy on the data and information
supplied by PETROBRAS, as well as on all of the results and analyses
arising from the operations carried out according to the present
CONTRACT.............................................................
3.21.1. All data, information and other documents, of any kind, related to the
fulfillment of the present Contract, will be the exclusive property of
PETROBRAS............................................................
3.21.2. The CONTRACTOR and its crew cannot disclose or supply to third parties
any materials or information obtained or developed as a result of this
CONTRACT, unless expressly authorized by PETROBRAS...................
3.21.3. The provision of this item 3.21 is a standing obligation, valid even
after the termination, in any fashion, of the present CONTRACT.......
3.22. UNIT'S HELIDECK......................................................
3.22.1. To arrange for the release of the UNIT's helideck by the proper
Brazilian authorities (Ports and Coast Authority, Civil Aviation
Department of the Ministry of Aeronautics, Internal Revenue, Maritime
Police and Customs), bearing all expenses arising therefrom..........
3.22.2. The Unit's helideck shall be approed for operations with S-61 type
helicopters according to chapter 24 of the Administrative Directive
005 from DPC - Standards and Procedures for Sea Navigation, dated
01/15/97, which deals with the Construction, Installation, Approval
16
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and Changes of Helideck and Operations of Helicopters in Offshore
Platforms and Merchant Ships..........................................
3.23. The CONTRACTOR should adopt procedures that minimize the consumption of
fuel and industrial water without prejudice for the operations........
3.24. The CONTRACTOR should provide installations in the UNIT for the
training and leisure of all personnel abroad, and which should
contain at least the following:.......................................
a) Parlor games room;................................................
b) TV room capable of tuning 5 (five) main channels available in
Brazil, in any location;..........................................
c) Movie theater with VCR;...........................................
d) Two other TV sets to be installed in cabins indicated by
PETROBRAS' Inspection.............................................
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3.25. Besides sea water, the CONTRACTOR will judiciously use industrial water
to clean the UNIT, in order to avoid high consumption and always giving
priority for its use in the completion fluid..........................
3.26. All documents between the CONTRACTOR and PETROBRAS, when requested by
PETROBRAS, will be written and submitted in Portuguese................
3.27. The CONTRACTOR undertakes to maintain throughout the fulfillmetn of the
CONTRACT, all conditions required in the bid stage....................
3.28. To redo any and all operation refused by the INSPECTION, without any
charge to PETROBRAS, as a result of irregular performance, bearing all
costs involved........................................................
3.30. (sic) To maintain a representative accredited and accepted by
PETROBRAS in the UNIT or in a place previously designated by
PETROBRAS, to represent the CONTRACTOR in the fulfillment of the
CONTRACT..............................................................
3.31. To comply with the requests contained in the Operation(s)
Authorization(s) issued by PETROBRAS..................................
3.32. To allow, after negotiations between the contracting parties, the
provisional installation in the charatered Vessel, of complementary
equipment such as, but not limited to: pipes or reises in catenary
by the J-lay method, or similar, submarine manifolds, provided they
do not jeopardize the Vessel's safety and are in accordance with the
rules of the Classification Society...................................
(End of Clause)...............................................................
18
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FOURTH CLAUSE - PETROBRAS' OBLIGATIONS........................................
4.1. To adopt the measures necessary for the request to register this
CONTRACT in the Central Bank of Brazil, soon after the proper
documents are received, and the submittal of which is the
CONTRACTOR's responsibility...........................................
4.2. To make, monthly, the payments due to the CONTRACTOR as a result of the
present CONTRACT, based on the ATTACHMENT II and ATTACHMENT III and on
the conditions set forth in Clauses Sixth: Measurement, and Seventh:
Form or Payment, the other ATTACHMENTS, Clauses and Conditions of this
CONTRACT being complied with.........................................
4.3. At its exclusive judgment, and without any co-responsibility,
PETROBRAS may cooperate with the CONTRACTOR, assisting it before the
proper authorities, referring to processes that are going through the
procedural stages in the respective Agencies, regarding the UNIT,
materials and/or equipment pertaining to the object of this
CONTRACT. Such cooperation, howver, will not lessen the
CONTRACTOR's responsibility for the obtainment of the documents
and/or benefits that may be the object of the respective proceedings..
4.4. PETROBRAS will reimburse the CONTRACTOR, by means of submittal, by the
latter, of the corroborative documents, in the acquisition currency, the
cost of replacement or repair of the commands and other components of
the production string and of the fishing string belonging to the
CONTRACTOR, which are lost or damaged, by accident not due to the normal
wear nor to the CONTRACTOR's duly proven action or omission, with the
deduction of a 25% depreciation per contract year, with a 20% residual
19
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value, applying, for its calculation, the least indemnity cost (Ci)
obtained by means of the following formulae:-
Ci = Vr.y (1 - 0.02083n), or Ci + Cr, where:.........................
Ci - indemnity cost;.................................................
Cr - repair cost;....................................................
Vr - replacement value;..............................................
n - number of months between the date of the beginning of the
CONTRACT and the date of the loss (the fraction of a month is
counted as a whole month);........................................
y - 1 (for new strings), and 0.9 (for "Premium" strings)............
4.4.1. In the event there is a renewal of the string or of part of the
elements that comprise the production string (pipes, commands and other
components), during the period of validity of the CONTRACT, the
depreciation period to be considered - the "n" of the formula, will be
the one comprised between the purchase date and the date when the
element or the string was lost........................................
4.4.2. PETROBRAS may, at its discretion and expense, carry out inspections
in the drill string, its components and accessories, the CONTRACTOR
being obliged to repair or replace, for its account, the equipment
rejected..............................................................
4.5. Transportation:.......................................................
4.5.1. PETROBRAS will provide transportation for all crew members of the
UNIT from the port or airport, as indicated by PETROBRAS in the
beginning of this CONTRACT, and vice-versa. At its exclusive
discretion, the transportation to be provided will be by helicopter
or vessel.............................................................
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4.5.2. PETROBRAS will provide transportation of the material and equipment
object of this CONTRACT, from the port or airport designated, to the
UNIT and vice-versa...................................................
4.5.3. In any circumstances foreseen in items 4.5.1 and 4.5.2, the granting
of insurance coverage will not be PETROBRAS' competence, and the
CONTRACTOR waives immediately,, for itself and for its insurers, any
return action against PETROBRAS or third parties at its service, as a
result of the transportation provided.................................
4.5.4. In the cases when there is need to program exclusive air transportation,
for the UNIT's inspection by the Navy and/or the SHIPPING OFFICE, the
costs arising therefrom will be charged to the CONTRACTOR.............
4.5.5. PETROBRAS may provide air or sea transportation for the CONTRACTOR's
materials, industrial or fresh water and fuel before the beginning of
the CONTRACT, as defined in item 2.2.1. The costs arising therefrom
will be reimbursed by the CONTRACTOR to PETROBRAS at the time the
first invoice is issued...............................................
4.5.6. PETROBRAS will provide tugs and support vessels for the UNIT, from
the location where the equipment general testing is performed, to the
first location, between locations
21
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and from the last location to the Brazilian port or sheltered waters
closest thereto, which will be chosen in common agreement by the
parties.............................
4.5.6.1.PETROBRAS will supply support vessels for the positioning of the UNIT in
the locations to be drilled under this CONTRACT.......................
4.5.7 PETROBRAS may provide tugs and/or support vessels to load and onload
materials and to handle anchors, in a location to be defined between
the parties, in the cases of inspection and/or dockages, including
those arising from act of God or force majeure, as defined in the
Twelfth Clause of this Contract. The costs arising therefrom will be
reimbursed by the CONTRACTOR to PETROBRAS.............................
4.6 Fuel and Water - To supply, for its account, all fuel and water
necessary for the operations, complying with the provision set forth
in subitems 4.6.1 and 4.6.2, from the beginning of the CONTRACT,
until its termination, as defined in subitems 2.2.1 and 2.2.2,
respectively..........................................................
4.6.1. The supply of water mentioned in item 4.6 includes also the
industrial water intended for the cleaning of the UNIT, the provision
set forth in item 3.23 being complied with............................
4.6.2. PETROBRAS will supply, for its account, the fuel necessary for the
UNIT's equipment, up to the limit of 12.775m3/year. Over this limit
the onus will run for the CONTRACTOR's account........................
4.6.2.1.PETROBRAS will carry out the measurement of the fuel existing aboard the
UNIT, at the beginning of the CONTRACT, at the end of each contract
year, and at the end of the CONTRACT,
22
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when the average consumption will be calculated. The volume exceeding
the established limit will be charged to the CONTRACTOR at the time of
the measurement, at the consumer's sales price, on the date PETROBRAS
issues the Debt Note, in force in the City of Rio de Janeiro-RJ, duly
adjusted in keeping with the different ICMS aliquots in force in the
State of Rio de Janeiro and in the State where the UNIT is
operating............................................................
4.6.3. During the UNIT's dockage periods, all fuel consumed will run for the
CONTRACTOR's full responsibility and cost, from the interruption of
the operation until the return to the same previous situation. The
fuel cost during that period will be charged to the CONTRACTOR, after
the consumption calculation, and at a price to be defined according
to the criterium mentioned in 4.6.2.1.................................
4.7. To maintain, besides the CONTRACTOR's Radio communications equipment,
aboard the UNIT, equipment exclusively for PETROBRAS' communications
with its land bases...................................................
4.8 To notify the CONTRACTOR, in writing, on the imposition of eventual
fines.................................................................
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4.9. To issue the Measurement Bulletin (MB), as set forth in the Sixth
Clause of this Contract...............................................
4.10. To issue the Operations Authorization(s) with all the information
necessary for their performance, such as: location, time limit,
amount, scope, and beginning and end dates............................
4.11 PETROBRAS will reimburse the CONTRACTOR, by means of submittal by the
latter, of corroborative documents, in the acquisition currency, the
cost of replacementof VX rings, VX with Hycar and VX with lead
inserts for the BOP and ANM connections with wellheads and filter
elements, as provided for in items 24, 25 and 34 of ATTACHMENT IV -
MUTUAL OBLIGATIONS of the Chartering Contract.........................
(End of Clause)...............................................................
24
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FIFTH CLAUSE - PRICES AND VALUE...............................................
5.1. For the chartering of the UNIT and its accessories, PETROBRAS will
pay the rates set forth in ATTACHMENT II and ATTACHMENT III to this
CONTRACT, under the conditions provided for in Clauses Sixth -
Measurement, and Seventh: Form of Payment............................
5.1.1. The contract prices include all specified tarriffs, supervision,
administration, taxes, fiscal emoluments and all expenses that fall
directly or indirectly upon the chartering, including profit, needed for
its perfect fulfillment, until the end of the contract, no price
revisions claims being therefore valid...............................
5.2. The total estimated value of this present contract is of
US$223,719,698.40, equivalent to R$238,485,198.49, converted at the
exchange rate of R$1,0660/US$1,00, referring to the following
charges:.............................................................
5.2.1. Chartering of the UNIT:US$217,239,765.00;.............................
5.2.2. Mobilization: US$6,479,933.40;.......................................
5.3. PETROBRAS does not undertake to make the payment of the total
estimated in item 5.2, but of the amount corresponding to the
chartering effectively occurred and accepted by PETROBRAS.............
5.4 In the event the UNIT offered begins the Contract before the time period
of 630 (six hundred and thirty) days granted according to item 2.3 of
the present Contract, PETROBRAS will grant a bonus for anticipation,
varying linearly from zero, for zero day of anticipation, up to a
maximum value of 30% (thirty percent) of the value of the
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mobilization rate, for an anticipation greater than or equal to 180 (one
hundre and eighty) days.
5.5 In the event the UNIT suffers a delay regarding the time limit granted
in item 2.3 of the present Contract, the CONTRACTOR will have its
mobilization rate reduced in up to 30% (thirty percent), for a delay
greater than or equal to 90 (ninety) days, which will vary linearly up
to zero, for zero day of delay.
5.6 In the event the UNIT suffers a delay exceeding 90 (ninety) days,
counted in relation to the time limit granted in item 2.3 of the
present Contract, besides the maximum reduction of 30% (thirty
percent) in the mobilization rate, the CONTRACTOR will be subjected
to the imposition of fines according to items 8.1 and 9.1 of the
Chartering and Services Contracts, as of the 91st (ninety-first) day
until the 180th (one hundred and eighthieth) day of delay.............
5.7. The financial resources necessary for the payment of the chartering
object of the present CONTRACT are duly equated, and specifically
assured in the current year's budget and provided for in the
following ones, so as to cover the total contract period..............
(End of Clause)...............................................................
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SIXTH CLAUSE - MEASUREMENT OF THE CHARTERING --
6.1. Periodicity of the measurement of the chartering and determination of
the reimbursable expenses.............................................
6.1.1. For the chartering, the measurement will be monthly, according to the
procedures mentioned below, with the consequent issuing of the
respective Measurement Bulletins (MB):................................
a) The initial measurement of the chartering will be made between
the date of the beginning of this CONTRACT and the last day of
the calendar month;...............................................
a.1.) MOBILIZATION measurement: The MOBILIZATION OF THE UNIT,
REF 106 of ATTACHMENT III to this CONTRACT, will have its
measurement made after the release of the UNIT, by PETROBRAS
to sail to the first location, after the general equipment
testing forseen in item 3.1 of the CONTRACT is carried
out.................................................
b) The intermediate measurements of the chartering, corresponding to
a given month of the order "m", cover the period between day 01
of the month "m" and the last day of the calendar month of the
order "m";........................................................
c) The final measurement of the chartering will be made between day 01
of the month "m" and this CONTRACT's termination date.............
6.1.2. The reimbursable expenses, if forseen in the CONTRACT, will be
determined on any day of the month, according to the vouchers
submitted to and accepted by PETROBRAS, and more than one
determination can be made in the same period covered by the
measurement...........................................................
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6.1.2.1.The results found will be submitted to the CONTRACTOR on the 5th (fifth)
working day, as of the submittal of said vouchers, by means of a
Reimbursement Document (RD), which will be signed by the Manager of this
CONTRACT, for invoicing purposes.................................
6.1.2.2.The reimbursable expenses and the deductions, if forseen in the
CONTRACT, will be severally made evident in the Reimbursement Documents
(RD).........
6.2. Issuing of the Measurement Bulletins (MB).............................
6.2.1. PETROBRAS, through the Manager of this CONTRACT, at the end of each
period as mentioned in the letters of subitem 6.1.1 of this Clause,
will carry out the measurement of the chartering, gathering the
results found in the Measurement Bulletin (MB), for the signature of
the Manager of this CONTRACT and of the CONTRACTOR, complying with
the following:........................................................
a) For the initial, intermediate and final measurements ending on
the last day of a given month of the order "m", the CONTRACTOR will
receive one of the copies of the MB up to the 5th (fifth) working
day of the subsequent month, so that it may submit the respective
collection documents, as provided for in subitem 6.3.1 of this
Clause;...................................................
b) For the final measurement, when the termination of the CONTRACT
does not occur in the last day of the month, the CONTRACTOR will
receive one of the copies of the MB, up to the 5th (fifth)
working day after the termination of the CONTRACT, so that it may
submit the respective collection documents, as provided for in
subitem 6.3.1 of this Clause......................................
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c) For each measurement period of the chartering, only 1 (one)
collection document may be issued, being understood that collection
documents with partial values regarding said period will not be
taken into account for payment purposes;..............
d) The portions regarding the basic values and the deductions are to
be made evident in the Measurement Bulletins (MB), if provided
for in the Contract;..............................................
6.3. Time for the submittal of collection documents........................
6.3.1. The CONTRACTOR will submit the respective collection documents to
PETROBRAS' Financial Department, as mentioned in item 7.1 of this
CONTRACT, in the following conditions:................................
29
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TYPE OF MEASUREMENT OCCASION FOR THE SUBMITTAL OF
MEASUREMENT DOCUMENT COLLECTION DOCUMENTS
- - --------------------------------------------------------------------------------
INITIAL MB Up to the 8th working day following
INTERMEDIATE the last day of the chartering
AND FINAL performance period, and PETROBRAS
will make the payment on the 30th
consecutive day, as of the final
date of the measured period, the
provision in subitem 6.3.1.1 being
complied with.
- - --------------------------------------------------------------------------------
MOBILIZATION MB After the receipt of the MB, and
OF THE UNIT PETROBRAS will make the payment on
the 30th consecutive day, as of the
date the collection document is
submitted.
- - --------------------------------------------------------------------------------
DETERMINATION RD In the first working day afer the RD
OF is issued, and the payment will be
REIMBURSABLE made within 30 (thirty) days, as of
EXPENSES the date of its submittal.
- - --------------------------------------------------------------------------------
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6.3.1.1.The payments due by virtue of this CONTRACT, referring to the
chartering, will always occur on the 30th day after the end of the
measured period, covered by the MB's, or on the first working day
subsequent thereto, provided the CONTRACTOR complies with the time
limits for the submittal of the Collection Documents set forth herein.
In the event of non-compliance, by the CONTRACTOR, with said submittal
time limits, the payments will be postponed for the number of days equal
to the delay in the delivery of such documents........................
6.4. Measurements follow-up................................................
6.4.1. The CONTRACTOR undertakes to follow-up the measurements and the
determinations carried out by PETROBRAS, offering, at that time, the
impugnation or considerations it deems necessary, which will be
submitted for PETROBRAS' appraisal and decision.......................
6.4.2. The CONTRACTOR's signature by its representative before PETROBRAS
will imply in the acknowledgment of the accuracy of the Measurement
Bulletin (MB) for all legal purposes..................................
(End of Clause)...............................................................
SEVENTH CLAUSE - FORM OF PAYMENT..............................................
7.1. The payments due as a result of this Contract will be made by
PETROBRAS to the CONTRACTOR, in Brazilian currency, 30 (thirty)
consecutive days as of the date of the end of the last day of the period
of execution of the service, provided the CONTRACTOR submits the
collection documents up to the 8th (eighth) working day following the
last day of the period of execution of the services.
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7.1.1. The payments will be made on the basis of the average exchange rate
of the American Dollar selling price, in force on the working day
immediately before the date of the effective payment..................
7.1.2. The payment of eventual difference in readjustment will be made on
the same day when the payment of the respective service occurs,
provides the CONTRACTOR submits the corresponding collection document
up to the 5th (fifth) working day the indexes that permit the issuing
of the Readjustment Bulletin (RB) are known...........................
7.1.3. The payment of reimburseable expenses, if any, will be made 30 (thirty)
days after the submittal of the collection document...................
7.1.4 In the event of non-submittal of the collection documents within the
time limits set forth above, the payments will be postponed for the
number of days corresponding to those of the delay in the submittal of
the collection documents.
7.2. The collection documents should be submitted, together with the original
of the document giving rise to it (MB, RB, RD) in the Docket of the
Financial Department indicated by PETROBRAS, for the purpose of checking
the time limits for the payment.
7.3. The collection documents will be issued without erasures, complying with
the pertinent laws in force, and will contain obligatorily the following
information:..........................................................
a) Place and date of its issuing and number of the collection
document;.........................................................
b) Number and date of signature of the contract deed;................
c) Number and date of the documents originating them (MB, RB, RD); ..
d) Gross value of the collectoin documents, numbers and in writing;
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e) Name and code of the banking establishment, branch, and the
respective code, and number of the current account of the payee,
where the payments will be made;
f) In order that a particular payment is made in a banking
establishment different from the one indicated at the time the
contract deed was signed, such amendment will obligatorily be
preceded by a fax/correspondence from the CONTRACTOR or shall appear
in the payee's collection document.
g) Location where the chartering was rendered and/or performed. If
the chartering was performed in several locations, its value will
be broken down for the locations of its performance and the
period in which it was rendered in each location should be
mentioned;........................................................
h) Gross amount of the collection document, both in numbers and in
writing;..........................................................
i) place for payment purposes, as provided for in subitem 7.1.3 of
this Clause;......................................................
j) Signature of the CONTRACTOR's representative, accredited before
PETROBRAS, above his name and position typewritten or with a
stamp of the CONTRACTOR company identifying him;..................
l) (sic) List of taxes charged on the amount invoiced and which
should be withheld by the disbursing office;......................
m) (sic) In the case of Addendum or Agreement-Letter to the CONTRACT
which implies in the payment, besides the above mentioned data, its
number and the date of its signature should also be added.....
7.2.1. The omission of any of the above-mentioned data will cause the return
of the collection document by PETROBRAS' Financial Department within
05 (five) working days................................................
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7.3.1. In the event the collection document is inaccurate, it will be returned
to the CONTRACTOR and the time limit foreseen in item 7.1 will be
postponed for as many days as those corresponding to the delay in the
submittal of such document.
34
<PAGE>
7.3.2. In the event of re-submittal of the collection document, as a result of
a previous impugnation, this fact should appear in the history of the
collection document.
7.3.3. The CONTRACTOR will obligatorily submit, every month to the Manager of
the Contract:---
a) Payroll of the CONTRACTOR's employees who are involved in the
rendering of the services contracted.............................
b) A photocopy of the Social Security Payment Slip (GRPS), duly settled
and authenticated, obligatorily filling out the data that identify
PETROBRAS, informing in field "8" of the GRPS (other information),
the name, CGC/CEI of PETROBRAS, number, date and amount of the
Invoice or Bill of Sale referring to the services rendered in the
month.............................................................
c) In case of a Cooperative, to submit the payment vouchers of the
amounts paid, distributed or credited to its members as remuneration
for the services rendered in the fulfillment of this Contract.....
7.3.4 The collection documents will not be accepted by PETROBRAS if submitted
with the INcome TAx at Source already withheld........................
7.3.5 It is the responsibility of PETROBRAS: disbursing office the
explanations of doubts regarding the issuing of the collection
documents.............................................................
7.3.6 Eventual payments made for more or for less by PETROBRAS, will be
compensated as soon as they are detected, and the respective amounts
will be duly corrected...............................................
7.3.7. The CONTRACTOR should indicate the place and fax number, if any, for
the receipt of the "Notice of Payment Foreseen".
7.4. The vouchers for reimbursable expenses due to CONTRACTOR as a result of
this contract deed, will be previously submitted to the Manager of the
Contract, for checking, besides being duly settled by the respective
supplier or service renderer, when such is the case...................
7.4.1. If the originals cannot remain in PETROBRAS' hands, copies thereof may
be submitted, which will be checked by the Inspector and/or Manager, and
the following should appear in every original document: "COPY SUBMITTED
FOR REIMBURSEMENT ON ____/___/___", followed by the signature and
identification by name, position and registry number, and the originals
will be returned to the CONTRACTOR. The following text will appear in
the copies of each document in PETROBRAS' hands: "CHECKED WITH THE
ORIGINAL ON ___/___/___", which the Inspector and/or Manager will sign,
identifying the signature by name, position, and registry number.....
7.4.2. In special cases of reimbursement of import expenses (duties and/or
expenses), the CONTRACTOR will submit a letter forwarding the vouchers
for such expenses, together with the import process to the department in
charge of its follow-up.
7.4.3. The receipt, duly formalized by PETROBRAS of any reimburseable
expense voucher, does not represent the recognition of the debt, nor
the proof that the expenses were made.................................
7.4.4. The collection of reimburseable expenses will be made through the
issuing of a Services Invoice, after approval of said corroborative
documents and issuing by PETROBRAS of
35
<PAGE>
the respective Reimbursement Document - DR, which will be issued up to 5
(five) working days, as of the date of submittal of said documents. -
7.4.4.1.PETROBRAS Inspection has 3 (three) working days to proceed with the
checking of the expense vouchers and to notify its approval to the
CONTRACTOR, so that it may issue the Combined Invoice and Bill of Sale.
7.4.5. The total amount of the collection document will be obtained by applying
the following formula:
VTD , where
--------
VTR = 1- ICP
VTR = total amount to be reimbursed to the CONTRACTOR;
VTD = total amount of the reimbursable expenses, actually authorized;
ICP = total of the sum of the aliquots of taxes collected, in the
decimal form (ISS or ICMS, as the case may be, COFINS and PIS/PASEP).
(End of Clause)...............................................................
36
<PAGE>
EIGHTH CLAUSE - FINES.........................................................
8.1. Non-compliance, by the CONTRACTOR, after ninety-one days beyond the
time limit mentioned in item 2.3 of this Contract, will imply in the
imposition of a fine against the CONTRACTOR, in a written notice,
corresponding to 30% (thirty per cent) of the rate provided for in REF
101 of ATTACHMENT III, per day of delay...........................
8.2. In the event of non-compliance, by the CONTRACTOR, with the
inspection's requirements within the time limit it may set, PETROBRAS
may, by a written notice, impose upon the CONTRACTOR, per day of
non-compliance with such requirements, as of the end of the time
limit set, a fine corresponding to 20% (twenty per cent) of the rate
provided for in REF 101 of ATTACHMENT III. ...........................
8.3. The penalties set forth in this Clause do not exclude any other provided
for by the Laws in force and/or in this CONTRACT, nor the CONTRACTOR's
liability for damages it may cause to PETROBRAS, as a result of
non-fulfillment of the conditions agreed upon herein.
8.4. The amount corresponding to the sum of the basic values of the fines
applied is limited to 10% (ten percent) of the estimated value of the
present CONTRACT......................................................
8.5. The penalties to which the CONTRACTOR is subjected to due to the
provision set forth in this Clause, will be discounted in the first
payment and in the subsequent ones, which the CONTRACTOR is entitled
to, after the sanctions are applied by PETROBRAS......................
8.6. In the event of balance, PETROBRAS reserves itself the right to make
or complement the deduction in collection document(s) related to any
other contract deed eventually entered into with the CONTRACTOR, or
to use any other adequate means to settle the debt, if necessary......
37
<PAGE>
8.7. The CONTRACTOR may appeal against the imposition of the fine, in a
declaration, within the non-deferrable time limit of 15 (fifteen)
consecutive days as of the date the notice is received................
8.8. Non-appearance of the CONTRACTOR's personnel for boarding on the date
and time agreed upon between PETROBRAS and the CONTRACTOR, will
subject the CONTRACTOR to the payment of a fine of US$140.00 per
passenger in the case of air transportation, and US$40.00 in the case
of sea transportation.................................................
8.8.1. The fine set forth in item 8.8 will not be charged if the CONTRACTOR
requests PETROBRAS to change the boarding schedule at least 24
(twenty-four) hours in advance.
8.9. In a written notice and without prejudice of the capacity to rescind the
CONTRACT, PETROBRAS may impose upon the CONTRACTOR a compensatory fine of
100% (one hundred percent) of the amount of the conviction, due to default
of its labor, social security or tax obligations.
8.9.1.The payment of said fine will not exempt the CONTRACTOR from the
obligation to reimburse PETROBRAS for the amount imposed upon it as a
result of an eventual joint conviction passed by a Labor Court or by the
proper administrative jurisdictions.
8.9.2.The CONTRACTOR will be fined in the percentual of 5% (five percent) on
the amount of the invoice in the event it does not submit the GRPS or
submits at variance.
(End of Clause)...............................................................
38
<PAGE>
NINTH CLAUSE - INSPECTION.....................................................
9.1. The inspection of the chartering contracted herein will be carried
out by PETROBRAS' representatives, and the CONTRACTOR undertakes to
allow their free access to the UNIT and to the operations locations,
and to comply immediately with the observations of such inspection,
which will have ample powers:.........................................
9.1.1. To determine, provided it comes to its knowledge and is within its
capacity, the suspension of the operations which perhaps are being
carried out in disagreement with the good technique or which threaten
the safety of persons or assets of PETROBRAS, third parties and of the
CONTRACTOR itself, subitem 2.1.7 of ATTACHMENT II being complied with.
9.1.2. To refuse the employment of condemned or improper equipment and
materials, tools and productions string components, as well as
operations which do not comply with the established programs;........
9.1.3. To order the withdrawal from the work site, of any of the CONTRACTOR's
employees who, in PETROBRAS' opinion, may endanger the good performance
of the operations or hinder its inspecting activities;...............
9.1.4. To certify on the accuracy of the information reported daily by the
CONTRACTOR;...........................................................
9.1.5. To notify the CONTRACTOR, in writing, on the imposition of the penalties
provided for in this CONTRACT, including those referring to the
CONTRACTOR's action or omission;......................................
9.1.6. To request from the CONTRACTOR a detailed report on any accident
occurred and on any operation or repair performed.....................
9.2. However, the responsibility, operation, movement and administration
of the UNIT will be under the exclusive control and command of the
CONTRACTOR or its employees...........................................
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<PAGE>
9.3. The total or partial action or omission of the Inspection, does not
lessen at all the CONTRACTOR's full responsibility for the rendering of
the obligations agreed upon herein, nor does it imply in any reduction
or change in the CONTRACTOR's obligations in the faithfull and perfect
fulfillment of the present CONTRACT...................................
9.4. Recording - PETROBRAS' Inspection should record its observations on the
Driller's Log approved by the IADC and on the Daily Drilling Certificate
(ADP), to safeguard the rights and responsibilities foreseen in this
CONTRACT..............................................................
9.5. During the contract period, PETROBRAS will carry out the CONTRACTOR's
performance evaluation, covering the groups in equipment and material,
human resources, installations, quality and efficiency. The results of
the performance evaluations will be notified and consolidated by means
of a service performance certificate..................................
(End of Clause)...............................................................
40
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TENTH CLAUSE - RECISSION......................................................
10.1. PETROBRAS may rescind the present CONTRACT, without the CONTRACTOR
being entitled to any right to indemnity and/or withholding in the
following cases:......................................................
10.1.1. Nonfulfillment, or irregular fulfillment of contract clauses,
specifications, operations and INSPECTION's requests, or the repeated
commitment of faults in the fulfillment of the CONTRACT;..............
10.1.2. Total or partial subcontracting of the object of the present CONTRACT,
the association of the CONTRACTOR will another, merger/division or total
or partial incorporation, except if allowed for in this CONTRACT, which
affects the good performance of this instrument;......................
10.1.3. Interruption of the operations for more than 60 (sixty) days;.........
10.1.4. Decree of the CONTRACTOR's bankruptcy.................................
10.1.5. Suspension of the operations for more than 60 (sixty) days;...........
10.1.6. When the limit for the imposition of penalties provided for in the
item 8.4 of this CONTRACT is attained;................................
10.1.7. Slowness in the performance of the works, leading PETROBRAS to prove
the impossibility of completing the operations within the established
time limits;..........................................................
10.1.8. Non-compliance with the determination of PETROBRAS' agent appointed
to follow-up and inspect the fulfillment of the CONTRACT, as well as
those of his superiors;...............................................
10.1.9. The dissolution of the CONTRACTOR;....................................
10.1.10.The social change or the modification of the company's purpose or
structure, which in PETROBRAS' opinion, hinders the performance of the
operations;...........................................................
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10.1.11.Delay in the beginning of the fulfillment of the CONTRACT for more than
180 (one hundred and eighty) days.....................................
10.1.12.Recision of the SERVICES RENDERING CONTRACT for Evaluation and/or
Completion and/or Workover using the UNIT, entered into between
PETROBRAS and MARITIMA NAVEGACAO E ENGENHARIA LTDA....................
10.1.13.If the limit set forth in subitem 2.1.9 of ATTACHMENT II to this
CONTRACT is attained..................................................
10.1.14.If the limits set forth in NOTE 2 of REF. 102 of ATTACHMENT II to this
CONTRACT is attained..................................................
10.1.15.Non-submittal of the proof of fulfillment of labor obligations towards
the employees directly involved in the services object of this CONTRACT,
including social security contributions and deposits in the FGTS, when
requested by the Inspection, or proof of such default;................
10.1.16.Non-submittal or submittal at variance of the GRPS, when the
corresponding invoice is delivered....................................
10.1.16.1 The rescision for this reason does not prevent PETROBRAS from imposing
the respective fine, foreseen in 8.7.2................................
10.2. In the event of rescision of the contract deed for the reasons foreseen
in 10.1, PETROBRAS will:..............................................
a) take over the object of the contract deed, on the stage and
location where it is found;.......................................
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<PAGE>
b) enforce the contract guarantee, if any, for the reimbursement of
the amounts of fines and indemnities due to it;...................
c) withhold the credits arising from the contract deed, up to the
limits of the damages caused to it;...............................
10.3. After the CONTRACT is rescinded, as set forth in this Clause, the
CONTRACTOR is liable, in legal and contract fashion, for the violation
or inadequate performance which gives rise to the rescision, as well as
for the reimbursement of damages which PETROBRAS may come to
sustain.........................................
10.4. After the CONTRACT is rescinded, PETROBRAS at its exclusive judgment,
may adjudicate the operations object thereof to whom it deems
appropriate, without behoving the CONTRACTOR any consultation or
interference, claim and/or indemnity, for whatever title, and the
CONTRACTOR will be liable to legal and contract penalties, besides
being liable for damages PETROBRAS may sustain........................
10.4.1. The CONTRACTOR is also liable for the pertinent administrative
sanctions, its full defense being guaranteed..........................
10.5. In the event PETROBRAS does not impose the right to rescind the
present CONTRACT according to this Clause, it may, at its absolute
discretion, withold the payments of pending invoices, until the
CONTRACTOR fulfills the contract condition it has infringed, but such
fact will not represent novation nor will it generate rights that may
be claimed by the CONTRACTOR..........................................
(End of Clause)...............................................................
43
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ELEVENTH CLAUSE - FISCAL CHARGES..............................................
11.1. Taxes (taxes, fees, emoluments, fiscal and parafiscal contributions)
that are due as a direct or indirect result of the present CONTRACT, or
of its fulfillment, will be the exclusive responsibility of the
taxpayer, so defined in the tax rule, with no right to reimbursement.
PETROBRAS, as the withholding source, will withhold and pay within the
legal time period, from the payments it makes, the taxes it is liable to
by the laws in force.................................................
11.1.1. The CONTRACTOR states that, in quoting its prices, it has taken into
account the taxes (taxes, fees, emoluments, fiscal and parafiscal
contributions) charged on the fulfillment of this CONTRACT, and it
cannot make any claim due to error on such evaluation, for the purpose
of requesting a price revision ou reimbursement of payments set down
by the property authority............................................
11.1.2. Once found, during the period of validity of the CONTRACT, that the
CONTRACTOR has unduly added to its prices amounts corresponding to
taxes, fiscal and/or parafiscal contributions and emoluments of any kind
that are not charged to the performance of the services agreed upon,
such values will be immediately excluded, with the consequent reduction
of the prices practiced and reimbursement of amounts that may have been
paid to the CONTRACTOR...............................................
11.2. If, during the period of validity of this CONTRACT, any of the
following events occur:
o creation of new taxes;............................................
o extinction of existing taxes;.....................................
o changes in the aliquots;..........................................
44
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o establishment of tax incentives of any kind; and..................
o exemption or abatement of federal, state or county taxes;.........
which, provedly come to increase or reduce the burdens of the parties
to the contract, the prices will be revised, so as to fit them into
the changes made, compensating, at the first opportunity, any
differences arising from such changes. However, if it is a question
of tax incentives, the advantages arising therefrom will always be
for PETROBRAS.........................................................
(End of Clause)...............................................................
11.2.1. The price revisions referred to in 11.2, be it for more or less, will be
done according to the following criterium:
[OBJECT OMITTED]
K = Factor inciding upon the initial price;
A1 =Aliquot referring to taxes due as a result of the Contract,
according to the laws in force on the date and the CONTRACTOR's
proposal is submitted;............................................
A2 =New aliquotes in force after the date the CONTRACTOR's proposal
is submitted and/or during the performance of the services object
of the Contract...................................................
(End of Clause)...............................................................
45
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TWELFTH CLAUSE - FORCE MAJEURE................................................
12.1. PETROBRAS and the CONTRACTOR will not be liable for the nonfulfillment
of their respective obligations in case of events that characterize an
act of God or force majeure defined in the sole paragraph of Article
1.058 of the Brazilian Civil Code. Any suspension of performance due to
such item 12.1 will be limited to the period during which such cause or
its consequences exist, and such period will be added to the duration of
the CONTRACT mentioned in the Second Clause of the present CONTRACT.
However, the CONTRACTOR is assured the right to receive the rate
provided for in REF 104 of ATTACHMENT III, with the exception of the
exemption from payment set forth in subitem 2.1.4 of the ATTACHMENT II,
and the reimbursements mentioned in this CONTRACT, and furthermore, the
parties will severally assume their losses............................
12.2 If the circumstances that justify the invoking of the existence of an
act of God or force majeure occurs, the party unable to fulfill its
obligations will immediately notify the other party, in writing, on
the occurrence and its consequences....................................
12.3. If the impediment arising from the force majeure lasts for more than
90 (ninety) consecutive days, any of the parties may opt for the
termination of the CONTRACT, with both parties complying with their
mutual obligations due until the date of the beginning of said
impediment............................................................
(End of Clause)...............................................................
46
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THIRTEENTH CLAUSE - ASSIGNMENT AND TRANSFER...................................
13.1. The CONTRACTOR cannot assign or transfer, in whole or in part, the
present CONTRACT, except with PETROBRAS' prior authorization in
writing...............................................................
13.2. The CONTRACTOR cannot assign or give in guarantee, at any title, in
whole or in part, the credits of any kind, arising or deriving from
the present CONTRACT, except with PETROBRAS' prior authorization in
writing. The prior authorization will obligatorily state that
PETROBRAS imposes upon the assignee of the credits the exceptions
that behooves it, mentioning expressly that the payments to the
assignee will be conditioned to the fulfillment, by the assignor, of
all of its contract obligations.......................................
13.3. The occurrence of the above mentioned events, duly authorized by
PETROBRAS, does not exempt the CONTRACTOR from any of its contract
obligations...........................................................
13.4. PETROBRAS may assign or transfer, in whole or in part, the present
CONTRACT, under commercial conditions to be agreed upon by the
parties. .............................................................
(End of Clause)...............................................................
47
<PAGE>
FOURTEENTH CLAUSE - ADDITIONAL EQUIPMENT......................................
14.1. PETROBRAS may install in the UNIT the additional equipment it deems
necessary for research, drilling, completion of wells or production.
It is agreed, however, that no structural change will be made in the
UNIT without the CONTRACTOR's consent in writing. All PETROBRAS'
equipment installed in the UNIT will remain its property, and it will
be removed by it before the end of this CONTRACT. The installation
and removal expenses will run for PETROBRAS' account. During the
installation and removal of PETROBRAS' equipment, the rate set forth
in REF 104 of ATTACHMENT III will be paid if the interruption of the
operations becomes necessary..........................................
(End of Clause)...............................................................
48
<PAGE>
FIFTEENTH CLAUSE - ATTORNEY OF RECORD.........................................
15.1. The CONTRACTOR undertakes to maintain, in the City of Rio de Janeiro,
State of Rio de Janeiro, Federative Republic of Brazil, during the
contract period and until the settlement of eventual demands arising
from this CONTRACT, a representative with "ad-judica et extra" powers,
who may receive service of process, inclusive in execution proceedings,
as well as to sign compromise and settlements regarding controversies
resulting from this CONTRACT, and the summons can be made by
publication, in the event of absence or lack of an Attorney...........
15.1.1. Within 30 (thirty) days after the signature of the present CONTRACT,
the CONTRACTOR will notify PETROBRAS the name, qualification, office
and residence of its representative and attorney of record, as set
forth in item 15.1....................................................
(End of Clause)...............................................................
49
<PAGE>
SIXTEENTH CLAUSE - CONTRACT RELATIONSHIPS.....................................
16.1. This CONTRACT is related to another one for the rendering of services
of evaluation and/or completion and/or workover, signed on this same
date between PETROBRAS and MARITIMA NAVEGACAO E ENGENHARIA LTDA.
(End of Clause)...............................................................
50
<PAGE>
SEVENTEENTH CLAUSE - INTERVENIENCE............................................
17.1. Clause non-applicable in this Contract................................
(End of Clause)...............................................................
51
<PAGE>
EIGHTEENTH CLAUSE - LIABILITY.................................................
18.1. PETROBRAS' and the CONTRACTOR's liability for damages will be limited
to the direct damages in accordance with the Brazilian Civil Code and
pertinent laws, with exception of loss of profit and indirect damages,
the direct damages being limited to 100% (one hundred percent) of the
total contract value..................................
(End of Clause)...............................................................
52
<PAGE>
NINETEENTH CLAUSE - COMPLEMENTARY DOCUMENTS
19.l. The ATTACHMENTS mentioned. below are an integral part of the present
CONTRACT and, in the event of disagreement between the Attachments
and the CONTRACT, the text of the CONTRACT will prevail...............
ATTACHMENTS:..................................................................
I - Technical specifications of the UNIT .....................................
II - Applicability of the Rates and Incidentals in the Performance............
III. - Unit Prices Spreadsheet ...............................................
IV - Mutual Obligations ......................................................
V - List of Specialized Personnel;............................................
VI - Environment Operating Conditions.........................................
VII - PETROBRAS' Safety Rules.................................................
VIII - Equipment Testing Program..............................................
IX - Procedures In the Event of Fatal Accidents...............................
(End of Clause)...............................................................
53
<PAGE>
TWENTIETH CLAUSE - PRICE READJUSTMENT.........................................
20.1. The contract prices are fixed and non-readjustable....................
(End of Clause) ..............................................................
54
<PAGE>
TWENTY-FIRST CLAUSE - ACCEPTANCE..............................................
21.1. After the chartering operations are completed in strict compliance
with the conditions set forth in this contract deed, PETROBRAS will
accept them by means of a Definite Deed of Receipt, signed by both
parties...............................................................
21.2. The signature of the Definite Deed of Receipt does not exempt the
CONTRACTOR from the liabilities foreseen in this contract and in the
laws in force.........................................................
(End of Clause) ..............................................................
55
<PAGE>
TWENTY-SECOND CLAUSE - LOSS OR DISAPPEARANCE..................................
22.1. In the event the Vessel is lost or disappears, no payment regarding
the same will be due by PETROBRAS to the CONTRACTOR, as of the day or
as of the moment it was last heard of.................................
(End of Clause)...............................................................
56
<PAGE>
TWENTY-THIRD CLAUSE - GROSS OR GENERAL AVERAGE...............................
23.1. The gross or general average will be ruled in the Port of Rio de
Janeiro according to the York and Antuerp Rules/1974..................
(End of Clause) ..............................................................
57
<PAGE>
TWENTY-FOURTH CLAUSE - JURISDICTION...........................................
24.1. The Jurisdiction of the County of the Capital of the State of Rio de
Janeiro will be competent to settle any questions arising from the
present CONTRACT, with the express waiver, by the parties, of any
other, however privileged ............................................
(End of Clause) ..............................................................
AND BEING THUS AGREED, the parties sign the present deed in 3 (three) copies
with the same tenor, with the witnesses below ........................
Rio de Janeiro, December 05, 1997.............................................
PETROLEO BRASILEIRO S.A. - PETROBRAS..........................................
(Signed:) (Luis Eduardo G. Carneiro)..........................................
------------------------
LUIZ EDUARDO G. CARNEIRO - EXECUTIVE SUPERINTENDENT OF EXPLORATION AND
PRODUCTION SOUTH - SOUTHEAST..................................................
MARITIMA NAVEGACAO E ENGENHARIA LTDA..........................................
(Signed:) German Efromovich...................................................
-----------------
GERMAN EFROMOVICH - PRESIDENT ................................................
WITNESSES:....................................................................
(Signed:) (illegible) CPF No. 299.579.427-49................................
(Signed:) Roberta Lomenha da Costa - CPF No. 034.053.477-00 ................
CONTRACT 101.2.100.97-8.......................................................
58
<PAGE>
CONTRACT 101.2.100.97.8.......................................................
CHARTERING
ATTACHMENT II
APPLICABILITY OF THE RATES AND
INCIDENTS IN THE PERFORMANCE.
1 - APPLICABILITY OF THE RATES - DEFINITION OF THE SERVICE RATES PER 24
(TWENTY-FOUR) HOUR DAY
REP 101 - OPERATION RATE - It will be applied during the activities
requiring the use of the UNIT, such as electric logging, formation testing,
completion, workover operations, including line scouring and cutting
operations....................................................................
REP 102 - REPAIR RATE - In the periods when there is an interruption of the
activities that require the use of the UNIT, mentioned in REF 101 of this
ATTACHMENT and the operations for Moving the UNIT between locations, REF 105
of this ATTACHMENT, due to maintenance, including replacement of mud pump
spare parts, and/or repair in the UNIT's equipment, or in those which supply
is the CONTRACTOR's responsibility, no rate will be due ......................
NOTE 1. The repair period will be considered as of the interruption of the
operation that is being performed, until the return to the same situation
when the interruption occurred, except for the periods when the interruption
in the repair activities occur due to adverse sea conditions, as set forth in
NOTE 2 of REF. 104 ...........................................................
NOTE 2. In the event the CONTRACTOR remains in REPAIR RATE for an accumulated
total of 30% of the time, for any period of 6 contract months, PETROBRAS may
rescind the present CONTRACT, based on subitem 10.1.14 of this CONTRACT ......
59
<PAGE>
NOTE 3. It will be considered as repairs the occurrences due to wash outs in
the drill pipe and in the other elements of the drill string, belonging the
CONTRACTOR, with exception of those arising from the presence of H2S and from
abnormal mechanical conditions occurred in the well ..........................
NOTE 4. At the Inspection's discretion, for the maintenance of the BOP, the
CONTRACTOR may be granted a franchise of up to 24 hours between the instant the
BOP is set on the test stump, until its operational withdrawal, and the moment
of its movement for the next running in another well, without the CONTRACTOR
entering into the repair rate, provided such maintenance is carried out
according to international standards. In the period within these 24 hours
intended exclusively for the BOP maintenance, the waiting rate (Ref. 104) will
be due........................................................................
REP. 103 - RATE ADDITIONAL (AT) - The CONTRACTOR will not be entitled to
receive a Rate Additional.....................................................
60
<PAGE>
REF. 104 - WAITING RATE (TE) - corresponds to 95% of the operation rate (TO)
and which will be applied in BAD WEATHER, FORCE MAJEURE and WAITING
situations, as defined below:.................................................
1) BAD WEATHER SITUATIONS - in the event of stoppage of the operations when
environmental conditions are so severe as to endanger the UNIT's operating
capacity, the limitations in ATTACHMENT VI, being complied with, making the
operations unstable or unsafe or preventing support vessels to have access
to the UNIT, or preventing the tugs operations, at the time of change of
locations, although the UNIT may operate normally, in spite of the BAD
WEATHER ...................................
2) FORCE MAJEURE SITUATIONS - during the period when the UNIT cannot
operate, due to act of God or force majeure, as defined in the TWELFTH
CLAUSE of the CONTRACT, until the removal of the impediment or the
rescision of the CONTRACT, as the case may be ..........................
3) WAITING - waiting for the arrival, maintenance or availability of
materials from PETROBRAS or third parties, under PETROBRAS'
responsibility, even if the maintenance is made in the UNIT; waiting for
daylight to carry out formation tests; waiting for orders from
PETROBRAS, such as, but not limited to, change of programs, definition
to proceed with the
61
<PAGE>
completion or other production activity, rest for PETROBRAS' team or of
those of third party at PETROBRAS' service; waiting for towage or support
vessels.......
NOTE 1. The period spent in disconnecting the LMRP from the BOP due to
environmental conditions, will be considered as bad weather, until the return
to the previous situation ....................................................
NOTE 2. If a BAD WEATHER situation occurs which interrupts a repair activity,
the Waiting Rate (REF 104) with a 25% (twenty-five percent) redution, will
be due during that period ....................................................
REF. 105 - MOVING RATE - corresponds to 95% (ninety-five percent) of the
Operation Rate (TO) and will be applied during the following periods:.........
a) Beginning of the Contract - After the acceptance of the UNIT's equipment
operating conditions, once the general testing provided for in ITEM 3.1.
of the CONTRACT has been carried out, until the spud in of the first
well or reentry in the first well (beginning of lowering the first tool
for access to the well); ................................................
b) Between locations - After the end of the completion or intervention
operations in a well, with the arrival of the BOP or tool used in the well
(the one which occurs last) in the moon pool, until the spud in or reentry
in a new well (beginning of lowering the first tool for access to the
well); ..................................................................
NOTE: This period includes the DP system calibration and tests, always on
each new location, and in others in each contract year or at any time, when
requested by PETROBRAS, ......................................................
c) End of Contract - After the end of the spud in or intervention
operations in the last well, with the arrival of the BOP or tool used in
the well (the one which occurs last) in the moon pool,
62
<PAGE>
until the UNIT's arrival in a place of sheltered waters location, chosen in
common agreement between the parties, or, if there is PETROBRAS' equipment.
still aboard, until the withdrawal of such equipment from the UNIT......
REF. 106 MOBILIZATION OF THE UNIT (MOB) - to the Santana Island, in the State of
Rio de Janeiro, or in a place in sheltered waters to be indicated by PETROBRAS,
included therein all the costs inherent to the displacement of the UNIT, such
as, but not limited to: insurances, customs clearance, port fees, fuel, crew,
tow, taxes referring to the UNIT, all costs incurred until the beginning of the
validity of the daily rates, as defined in item 2.3 of this ATTACHMENT, such as:
transportation and hostelry for PETROBRAS' and/or third party's personnel,
transportation of materials and transportation of equipment of the CONTRACTOR
between the UNIT and the cost, this total value being limited to the maximum
value of 60 (sixty) daily operations rate (the sum of the chartering and
services rendering rates), in United States Dollars..........................
REP. 107 DEMOBILIZATION OF THE UNIT (DEMOB) - No rate will be due or the
demobilization of the UNIT and its fittings...................................
2 - INCIDENTS IN THE PERFORMANCE .............................................
2.1. Exemption from Payment - PETROBRAS will be exempted from the payment
of the rates foreseen in this ATTACHMENT, during the period in which
occurs ...............................................................
2.1.1. Interruption of the services due to the CONTRACTOR's duly proven
fault arising from operational error, and/or lack of material or
equipment, inclusive due to the loss of equipment or subaquatic spare
parts ................................................................
63
<PAGE>
2.1.2. Stoppage of the services and/or of the UNIT due to measures related
to the impositions by made the insurers ..............................
2.1.3. CONTRACTOR's refusal to operate under the conditions foreseen in
ATTACHMENT VI - Environmental Operating Conditions ..................
2.1.4. Stoppage of the services and/or of the UNIT for inspection or dockage
purposes, including surveys and dockages arising from act of God or
force majeure, as defined in the TWELFTH CLAUSE of the CONTRACT, the
corresponding expenses also running for the CONTRACTOR's account......
NOTE 1. The exemption from payment will begin in the moment there is an
interruption of the operational continuity object of this CONTRACT, even if
the withdrawal of all or part of PETROBRAS' and/or the CONTRACTOR's cargo
becomes necessary for the inspection and/or dockage...........................
NOTE 2. The end of the exemption from payment, due to the inspection and/or
dockage, will occur:..........................................................
a) On the return to the same location, the moment the operations
returns to the previous situation;................................
b) In the mobilization to another location, the moment the UNIT
starts sailing after PETROBRAS' and/or the CONTRACTOR's materials
have been put back on board.......................................
2.1.5. Occurrence of kick, drill string sticking, loss of circulation,
fishing or abandonment, caused by the CONTRACTOR's duly proven action
or omission, from the moment the problem
64
<PAGE>
was ascertained, until the return to the situation prior to its
occurrence, or displacement to another location, in the event of
abandonment .........................................................
2.1.5.1.The exemption from payment referred to in 2.1.5 will be limited to a
period of 15 (fifteen) days, per event, after which the reduction
foreseen in subitem 2.2.3 of this ATTACHMENT will be applied
.....................................................................
2.1.6. Occurrence of blow out caused by the CONTRACTOR's duly proven action
or omission, from the moment the problem was ascertained, until the
return to the situation prior to its occurrence ......................
2.1.6.1.The exemption from payment referred to in item 2.1.6 will be limited to
a period of 45 (forty-five) days, after which the reduction foreseen in
subitem 2.2.4 of this ATTACHMENT will be applied......................
2.1.7. Suspension of the services, determined by PETROBRAS' Inspection,
based on item 9.1.1 of the CONTRACT...................................
2.1.8. Interruption of the operations due to a failure occurred in any of
the UNIT's equipment, at the time of the testing to be carried out
according to item 3.1 of the CONTRACT ................................
2.1.9. In the occurrence of events of exemption from payment provided for in
subitem 2.1.1, 2.1.2, 2.1.3, and 2.1.7, for a total accumulated period
exceeding 30% in any 6 month period, PETROBRAS may rescind the present
CONTRACT, based on its subitem 10.1.12.
2.2. REDUCTION IN THE DAILY OPERATION, WAITING AND MOVEMENT RATE...........
The rates foreseen in this ATTACHMENT will be reduced in the following
cases .
65
<PAGE>
2.2.1. Total or partial inoperativeness or malfunction of any equipment
which delays or hinders the operation, such as, but not limited to,
winches, top drive, kelly spinner, geolograph, current meter, air
compressors, shale shaker, mixing pumps, mud laboratory equipment and
bulk receipt and transfer systems, are reason for the reduction of
the daily rate provided for in REF 101, in 1% (one percent),
cumulative per equipment, provided the CONTRACTOR is notified in
writing in the Daily Drilling Certificate (ADP), by PETROBRAS'
Inspection and which, after the time limit the latter has set to
repair said equipment, such repair has not been made .................
2.2.2. Low Efficiency - REFERENCE RATES 101 and 105 of this ATTACHMENT will
have a 20% (twenty percent) reduction, in the event low efficiency
is verified, according to the operating efficiency parameters listed
below. Such reduction will be applied during the whole corresponding
activity period in which low efficiency is verified:..................
Operating Parameters: ........................................................
- - - Maneuver of the drill string in a cased well (except BHA): ...............
o Inside the riser and 20" casing = 500 m/h.........................
o Inside the 13 3/8" casing = 600 m/h ..............................
o Inside of 9 5/8" casing = 700 m/h ................................
- - - Break of DP's per unit - 25jt/h ..........................................
- - - Casing string run in the sea/inside the riser/previous casing (joints
approximately 12 m long) .................................................
o 30" Casing - 2 jt/h
o 20" Casing - 5 jt/h
66
<PAGE>
o 13 3/8" Casing - 13 jt/h
o 9 5/8" Casing - 18 jt/h
o 7" Casing - 15 jt/h
- - - Running of drilling riser, excluding normal time for testing (50 ft
joints): 45/m/h ..........................................................
- - - Pulling of drilling riser (50 ft joints): 60 m/h
- - - Installation or pulling of the kill/choke lines/ telescopic
joint/stretchers: 6,0h ...................................................
- - - Diverter installation or pulling: 2,0h ....................................
- - - Assembly of the dampening lines in the M.R.: 1,5h........................
- - - Assembly of the flexitube equipment: 5,0h. ...............................
- - - Assembly of the production tail: 2,0h ....................................
- - - Tubing running or pulling, per unit - 150 m/h ............................
- - - Tubing running or pulling per section - 300 m/h...........................
- - - Completion risers running or pulling - 50 m/h ............................
- - - Assembly of terminal head and slings -2,0 h .............................
- - - Moving of ANM to/from the moon pool - 3,0 h...............................
- - - Moving of tree cap or tree running tool to/from the moon pool - 2,5h .....
- - - Assembly of lubricator and wire line BOP - 1,5h
NOTE: The above mentioned operating parameters are based on normal weather
conditions....................................................................
2.2.3. Beginning on the 16th (sixteenth day), inclusive, of the occurrence of
kick, drill string sticking, loss of circulation or fishing, caused by
the CONTRACTOR's duly proven action or omission, until the return to the
situation prior to its occurrence, the applicable rate will be reduced
by 50% (fifty percent) ...............................................
67
<PAGE>
2.2.4. Beginning on the 46th (forty-sixth) day, inclusive, of the occurrence
of Blow out caused by the CONTRACTOR's duly proven action or
omission, until the return to the situation prior to its occurrence,
the applicable rate will be reduced by 50% (fifty percent) ...........
2.3. Period of Validity of the Contract Rates-the contract rates set forth
in this ATTACHMENT will apply in the period set forth below: .........
a) Beginning: release of the UNIT, by PETROBRAS, to sail to the
first location, after the equipment general testing provided for
in item 3.1 of the CONTRACT has been carried out, with the
exception of the provision in its subitem 3.1.1.1 ................
b) End: after the end of the completion of the last well, with this
UNIT's arrival at a port or sheltered waters chosen by common
agreement between the parties, and if there is PETROBRAS'
equipment still aboard, with the withdrawal of such equipment
from the UNIT.....................................................
2.4. Blow-Out - PETROBRAS will be responsible for the well control
operation costs, in the event of blow-out and caving caused by the
blow-out. Such provisions apply only to the well control costs and
do not apply to the loss of assets, lesions and/or damages caused by
the blow-out, which are protected by the provisions of the pertinent
items of this CONTRACT. The CONTRACTOR undertakes to place at
PETROBRAS' disposal all of its resources in personnel and equipment
related to this CONTRACT, without any additional charges to
PETROBRAS. If the CONTRACTOR has contributed with duly proven action
or omission for the occurrence of the accident, no rate will be due,
until the solution of the problem, in compliance with the provisions
in subitems, 2.1.6 and 2.2.4 of this ATTACHMENT ......................
(End of ATTACHMENT)...........................................................
68
<PAGE>
ATTACHMENT III - UNIT PRICES SPREADSHEET
CHARTERING
- - -------------------------------------------------------------------------------
UNIT PRICES SPREAD SHEET
- - -------------------------------------------------------------------------------
OBJECT OF BID: CHARTERING OF A FLOATING UNIT PROVIDED WITH DYNAMIC
POSITIONING SYSTEM.
- - -------------------------------------------------------------------------------
PLACE OF OPERATION: BRAZILIAN CONTINENTAL SHELF
- - -------------------------------------------------------------------------------
UNIT'S NAME: AMETHYST 5
- - -------------------------------------------------------------------------------
COMPANY'S NAME: MARITIMA NAVEGACAO E ENGENHARIA LTDA.
- - -------------------------------------------------------------------------------
CODE ITEMIZATION UNIT UNIT PRICE (US$)
- - -------------------------------------------------------------------------------
OPERATION RATE
02.222.305 (REF. 101) DAY
97,199.00
- - -------------------------------------------------------------------------------
REPAIR RATE (REF. No Rate Due
02.222.306 102) DAY
will
- - -------------------------------------------------------------------------------
WAIT. - BAD
WEATHER RATE
02.222.307 (REF. 104.1) DAY (95% OF 101)
- - -------------------------------------------------------------------------------
WAIT.
FORCE MAJEURE RATE
02.222.308 (REF. 104.2) DAY (95% OF REF. 101)
- - -------------------------------------------------------------------------------
WAIT. RATE -
WAITING
02.222.309 (REF.104.3) DAY (95% OF 101)
Ref.
- - -------------------------------------------------------------------------------
69
<PAGE>
- - -------------------------------------------------------------------------------
MOVEMENT RATE
02.222.310 (REF. 105) DAY (95% OF 101)
Ref.
- - -------------------------------------------------------------------------------
MOBILIZATION RATE
02.222.311 (REF. 106) Unique
6,479.933.40 (60 times the value
of the daily rate, max.)
- - -------------------------------------------------------------------------------
DATE OF THE
SIGNATURES PROPOSAL
- - -------------------------------------------------------------------------------
PETROBRAS CONTRACTOR
(illegible) (blank) 05/13/97
- - -------------------------------------------------------------------------------
70
<PAGE>
Contract 101.2.100.97-8
CHARTERING
ATTACHMENT IV
MUTUAL OBLIGATIONS
- - --------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------
PET CONT PET CONT
- - --------------------------------------------------------------------------------
1. Production Adaptor Base and ANM X X
- - --------------------------------------------------------------------------------
2. Cement, bentonite, baritine and X X
other materials and additives
for manufacturing mud and cementing.
- - --------------------------------------------------------------------------------
71
<PAGE>
- - --------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------
PET CONT PET CONT
- - --------------------------------------------------------------------------------
2. (sic) Cementing and logging unit:
a) Installation and removal X X
b) Maintenance X X
c) Rent X X
- - --------------------------------------------------------------------------------
3. Equipment and tools specific X X
for evaluation, completion and
production of wells.
- - --------------------------------------------------------------------------------
4. Fishing tools and replacement
materials for pipes and
production tools:
- - --------------------------------------------------------------------------------
a) Foreseen in ATTACHMENT I X X
- - --------------------------------------------------------------------------------
b) Not foreseen in ATTACHMENT I X X
- - --------------------------------------------------------------------------------
5. Equipment, tools and replacement X X
materials needed for the services
of logging, formation tests and/or
production and/or perforation, not
included in ATTACHMENT I
- - --------------------------------------------------------------------------------
72
<PAGE>
- - --------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------
PET CONT PET CONT
- - --------------------------------------------------------------------------------
6. Lubricants and greases for X X
the CONTRACTOR's equipment.
- - --------------------------------------------------------------------------------
7. Industrial and fresh water. X X
- - --------------------------------------------------------------------------------
8. Replacement materials, including X X
for fishing tools and other
CONTRACTOR's equipment listed
in ATTACHMENT I
- - --------------------------------------------------------------------------------
9. Consumer equipment and materials X X
for completion fluid tests listed
in Attachment I. (Note: PETROBRAS
will inform monthly on the
minimum stock needed).
- - --------------------------------------------------------------------------------
10. Steel ropes, slings, sisal or X X
nylon ropes and cordate in general,
needed for tying towlines, for
mooring support vessels and in
drilling, evaluation, completion
and handling.
- - --------------------------------------------------------------------------------
73
<PAGE>
- - --------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------
PET CONT PET CONT
- - --------------------------------------------------------------------------------
11. Hoses for loading and unloading X X
of liquids and bulk material
with connections compatible
with those of the supply vessels.
- - --------------------------------------------------------------------------------
12. Materials to make drilling and X X
completion fluid.
- - --------------------------------------------------------------------------------
13. Conventional bits. X X
- - --------------------------------------------------------------------------------
14. Safety equipment for individual X X
use: gloves, helmets, boots,
masks, ear protectors, and
other personal use equipment
for the CONTRACTOR's employees.
- - --------------------------------------------------------------------------------
15. Services, materials and X X
equipment to mark locations.
- - --------------------------------------------------------------------------------
16. Surveying of the sea bottom, X X
if necessary.
- - --------------------------------------------------------------------------------
17. Welding equipment and material X X
needed for well completions
and abandonment operations.
- - --------------------------------------------------------------------------------
18. Bulls eye for running tools X X
- - --------------------------------------------------------------------------------
74
<PAGE>
- - --------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------
PET CONT PET CONT
- - --------------------------------------------------------------------------------
19. Warehouses, office and X X
storage area for the
CONTRACTOR on land.
- - --------------------------------------------------------------------------------
20. Radio-beacon with working X X
frequencies compatible with
those mentioned in ATTACHMENT I.
- - --------------------------------------------------------------------------------
21. Safety and survival equipment, X X
including maintenance (subjected
to periodical inspection by
PETROBRAS
- - --------------------------------------------------------------------------------
22. Screens for mud sieves, X X
according to PETROBRAS'
specifications..
- - --------------------------------------------------------------------------------
23. Materials for the maintenance X X
of equipment and test lines,
supplied by the CONTRACTOR,
for formation testing and/or
production (painting, boiler
factory and welding).
- - --------------------------------------------------------------------------------
24. VX ring, VX with HYCAR and
VX with lead insert for
connection BOP-WELLHEAD,
LMRP-BOP STACK:
a) In normal operation X X X
b) In reinstallation due to X X X
problem with the ESCP
- - --------------------------------------------------------------------------------
75
<PAGE>
- - --------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------
PET CONT PET CONT
- - --------------------------------------------------------------------------------
25. VX ring, VX with HYCAR X X X
and VX with lead insert
for ANM.
- - --------------------------------------------------------------------------------
26. Remote operation submarine
vehicle (ROV)
- - --------------------------------------------------------------------------------
a) Installation and removal X X
b) maintenance X X
c) Rent X X
- - --------------------------------------------------------------------------------
27. Hydraulic fluid for BOP X X
driving and test.
- - --------------------------------------------------------------------------------
28. Hydraulic fluid for X X
ANM driving and test.
- - --------------------------------------------------------------------------------
29. Special greases for pipes X X
and completion equipment.
- - --------------------------------------------------------------------------------
30. Individual safety equipment X X
for operation in the moon pool.
- - --------------------------------------------------------------------------------
31. Paper and ink for micro-computer X X
printer.
- - --------------------------------------------------------------------------------
32. Becons, hydrophones, X X
transducers, transponders,
batteries.
- - --------------------------------------------------------------------------------
76
<PAGE>
- - --------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
----------------------------------
PET CONT PET CONT
- - --------------------------------------------------------------------------------
33. Diesel Oil
- - --------------------------------------------------------------------------------
a) up to the limit set X X
forth in clause 4.6.2
- - --------------------------------------------------------------------------------
b) above the limit set X X
forth in clause 4.6.2
- - --------------------------------------------------------------------------------
34. Filter elements for the X X
completion fluid filtering unit.
- - --------------------------------------------------------------------------------
(End of Attachment)...........................................................
77
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ATTACHMENT "V"
LIST OF (MINIMUM) SPECIALIZED PERSONNEL
ABOARD
--------------------------------------------------------------
Captain or Barge 1
--------------------------------------------------------------
Tool Pusher (1 superintendent aboard) 2
--------------------------------------------------------------
Driller 2
--------------------------------------------------------------
Assistant Driller 2
--------------------------------------------------------------
Derrickman 2
--------------------------------------------------------------
Roughneck 6
--------------------------------------------------------------
Crane Operator 2
--------------------------------------------------------------
Area Man 8
--------------------------------------------------------------
Welder 2
--------------------------------------------------------------
Watchstander 2
--------------------------------------------------------------
Subsea Engineer 1
--------------------------------------------------------------
Mechanic 3
--------------------------------------------------------------
Electrician 3
--------------------------------------------------------------
Radio Operator (Portuguese speaker) 2
--------------------------------------------------------------
Male nurse 1
--------------------------------------------------------------
Storekeeper 1
--------------------------------------------------------------
78
<PAGE>
Safety guard 1
--------------------------------------------------------------
NOTE: Supplementary personnel will be supplied according to the CONTRACTOR's
conveniences and needs or to comply with the requirements of government laws.
(End of Attachment)..........................................................
79
<PAGE>
ATTACHMENT "VI"
ENVIRONMENTAL OPERATING CONDITIONS
(PERMISSIBLE LIMITS FOR ENVIRONMENTAL
CONDITIONS ACTING SIMULTANEOUSLY)
OPERATION HEAVE PITCH WIND WAVES CURRENT
(FEET) or (MPH) (feet) (knots)
ROLL
(Degrees)
- - --------------------------------------------------------------------------------
Conductor jetting/driving 2.0 2.5 30 3.0 1.5
- - --------------------------------------------------------------------------------
Drilling 2.5 3.0 30 3.0 1.5
- - --------------------------------------------------------------------------------
Casing running 2.0 3.0 30 3.0 1.5
- - --------------------------------------------------------------------------------
Casing hanger setting 1.5 2.0 30 2.1 1.5
- - --------------------------------------------------------------------------------
BOP running 1.5 1.5 19 2.1 1.0
- - --------------------------------------------------------------------------------
BOP setting 1.5 1.5 19 2.1 0.75
- - --------------------------------------------------------------------------------
Maneuvering 3.5 3.0 44 8.5 1.5
- - --------------------------------------------------------------------------------
LMPR disconnection 7 4 51 10.5 1.0
- - --------------------------------------------------------------------------------
LMPR connection 1.5 1.5 19 2.1 0.75
- - --------------------------------------------------------------------------------
Formation testing 3.5 4.0 44 8.5 1.5
- - --------------------------------------------------------------------------------
Operation with boats 2.5 3.0 39 6.7 1.5
- - --------------------------------------------------------------------------------
Running the ANM (lay-away) 1.5 1.5 19 2.1 0.75
- - --------------------------------------------------------------------------------
Running the ANM (without lines) 1.5 1.5 19 2.1 0.75
- - --------------------------------------------------------------------------------
80
<PAGE>
- - --------------------------------------------------------------------------------
Operation with flexitube 2.0 3.0 30 5.0 1.5
- - --------------------------------------------------------------------------------
Operation with wire-line 3.0 4.0 44 8.5 1.5
- - --------------------------------------------------------------------------------
Operation with BAP 2.5 3.0 39 6.7 0.75
- - --------------------------------------------------------------------------------
(End of Attachment)...........................................................
81
<PAGE>
ATTACHMENT "VII"
PETROBRAS' SAFETY RULES
1. Service Rule No. 46/71:
o Safety Rules for Offshore Operations.
2. Service Order No. 01/72:
o Operational Safety Rules - Continental Shelf.
3. Service Rule No. 41/72:
o Electricity - Safety Rules
4. Service Order No. 01/76:
o Industrial Safety Rules (General)
o Industrial Safety Rules (Drilling)
o Industrial Safety Rules (Production)
5. General Safety Manual:
Safety and Environmental Instruction for Contractors (E&P - BC).
82
<PAGE>
ATTACHMENT "VIII"
EQUIPMENT TESTING PROGRAM
In order to carry out the UNIT's equipment testing in an easier and
more agile manner, the CONTRACTOR is to submit to PETROBRAS, as quickly as
required the following documents:.............................................
1. CERTIFICATES............................................................
a) Survey and Appraisal Report, updated and valid for the fiscal
year regarding the UNIT offered, issued by one of the entities:
ABS, NOBLE & DENTON, DNV, LLOYDS or BUREAU VERITAS, and if the
report is issued abroad, it will be translated into Portuguese by
a sworn public translator and notarized in the Brazilian
Consulate.........................................................
b) Classification or Class Confirmation Certificate for hull and
equipment, compatible with the proposal submitted (certified
copy);............................................................
c) Report on claims from the classification societies mentioned in
the Class Confirmation Certificate (in the event there are
claims);..........................................................
NOTE:PETROBRAS will evaluated the above mentioned documents and
will mention in what time limits eventual claims will be
settled, and at PETROBRAS' judgment, it can be at the time of
the UNIT's inspection or at mobilization after the contract is
signed..........................................
d) Freeboard Certificate;............................................
e) IOOP (International Oil Pollution Prevention) Certificate;........
f) IMO-MUDU-CODE - Mobile Offshore Drilling Unit - latest edition
(unnecessary for Drill Ship);.....................................
83
<PAGE>
g) Cargo Ship Safety Equipment Certificate;..........................
h) Cargo Ship Safety Construction;...................................
NOTE: All documents required are to be within their period of
validity....................................................
2. INDUSTRIAL SAFETY AND ENVIRONMENTAL CONTROL.............................
- Manuals and emergency plans in the Portuguese Language............
3. STORAGE CAPACITY........................................................
- Complete floor plan of bulk movement system, specifying:..........
a) Exclusive lines to move cement;.............................
b) Exclusive lines to move bentonite and baritine;.............
c) Location and type of bulk line valves and their respective
driving systems;............................................
d) Pneumatic lines for cleaning and clearing bulk lines;.......
e) Location of the manometers;.................................
f) Quantity, flow, operating pressure and location of
compressors;................................................
g) Quantity, flow, operating pressure and location of the air
drying unit(s);.............................................
h) Schematic drawing of each silo with their respective aeration
systems and points of connection with the bulk lines........
4. FLUID CIRCULATION AND PROCESSING SYSTEM.................................
- Sketch of the system emphasizing pulsation dampers (suction and
tamping), safety valves, feed pumps, position of the suction lines
in relation to the suction sieves' tanks and filters........
- Floor plan of the drilling fluid feed and discharge lines showing
the flexibility in relation to the sand traps and mud tanks.......
84
<PAGE>
- Floor plan of the degasser instalation showing the active tank,
separate processed mud and gas discharge lines, emphasizing the
connection point of this line with the gas discharge line.........
- Floor plan of the mud tanks system, emphasizing the supply lines,
gun lines, mixture funnel and centrifugal pumps interconnection
lines.............................................................
5. WELLHEAD SAFETY EQUIPMENT SYSTEM........................................
- Sketch of the BOP/LMRP, specifying lines, valves and
measures/dimensions...............................................
- Floor plan of the kill and choke lines from the BOP to the choke
manifold, specifying valves, connections, dampener chambers,
anchorage points and interconnection with the other systems.......
- Floor plan of the atmospheric air separator.......................
- Layout of the trip tank installation, giving the following
information:......................................................
a) Capacity;...................................................
b) Location;...................................................
c) Sensitivity;................................................
d) Measuring system;...........................................
e) Scale type;.................................................
f) Driller's scale visualization conditions;...................
g) Supply System for the above item............................
- Floor plan of the stand pipe manifold, specifying lines, valves,
manometers and interconnections with the other systems............
85
<PAGE>
- Inspection report on the riser, riser handling tools and
connectors, telescopic joint and flexible joint, according to the
ARPI RP 2P and RP 2Q standards, with update date not exceeding 1
year..............................................................
NOTE: If the reports indicate the need of repair in some
equipment, the service performance certificates will also
be submitted................................................
- Biannual inspection certificate of the choke manifold, with
the manufacturer's approval.................................
- Biannual inspection certificate of the BOP unit and driving
system, with the manufacturer's approval....................
- Biannual inspection certificate of the BOP, with the
manufacturer's approval.
- Proof of technical hability of the well drilling and
control personnel...........................................
- To supply an internal maintenance and rust prevention program
for the marine risers and kill and choke lines......
6. ENERGY GENERATION SYSTEM................................................
- Unifilar diagram of the energy generation and distribution system.
7. STABILITY...............................................................
- To submit the vessel's stability curve, updated in the proposal's
conditions, in keeping with the environmental conditions..........
8. DYNAMIC POSITIONING SYSTEM (including the motor-generators assembly,
thrusters and propellers)...............................................
- Schematic diagram of the dynamic positioning system...............
- To submit the inspection and tests procedures to be carried out
at every new location.
86
<PAGE>
- To submit the tests and inspections procedures to be carried out
at the end of each contract year..................................
9. DRILLING STRING AND ACCESSORIES.........................................
- Inspection report on all equipment of the drilling and completion
strings, subs and accessories (used equipment)....................
- Purchase voucher of the drill and completion strings, subs and
accessories (for new equipment)...................................
10. FISHING TOOLS AND ACCESSORIES...........................................
- Inspection report on all components of the fishing tools (used
equipment) or purchase vouchers (for new tools)...................
11. SUNDRY SYSTEMS..........................................................
- Winches load test certificate.....................................
- Description of the compressed air system, emphasizing
compressors, layout of lines, valves and interconnection with the
other systems.....................................................
- Preventive Maintenance Plans with their respective timecharts.....
- Ballast and sewer flowchart ......................................
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D of the chartering and services rendering
contracts.........................................................
NOTE: Such equipment must be in places of easy access for survey........
A) RECEIPT TEST......................................................
87
<PAGE>
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D of the chartering and services rendering
contracts.
NOTE: Such equipment must be in places of easy access for survey..
- The following systems, equipment and tools listed below
will be checked, inspected and tested:......................
1) Drill String, Components and Accessories....................
----------------------------------------
- The CONTRACTOR will submit recent inspection reports,
according to the specification API RP7G for the whole
drill string and accessories such as, but not limited
to: drill pipes, drill collars, HW, Subs,
stabilizers, reamers, bumper subs, lift-sub, kelly,
slips, elevators, fishing tools, etc., which prove
the good conditions of the string and its
accessories. The information from the reports and
the general conditions of the string and its
accessories will be checked by PETROBRAS by means of
a sampling inspection. In the event of discrepancy
between the data submitted by the CONTRACTOR and
those checked by PETROBRAS, showing an inadequate
condition of the string and its accessories, the
CONTRACTOR will carry out another inspection, for its
own account...........................................
NOTE 1: Any equipment refused by the inspection will be
immediately repaired or replaced by the CONTRACTOR,
for its own account...................................
88
<PAGE>
NOTE 2: For the string, components and new accessories, no
inspection report will be required, documents proving
that such equipment is new will be sufficient.........
NOTE 3: The CONTRACTOR's equipment will be stored and
arranged so as to facilitate the inspection by
sampling to be carried out by PETROBRAS...............
- The same procedure will be adopted for the telescopic
joints and flexible joints............................
2) Extractor Of Solids.........................................
-------------------
The following will be examined:.............................
- sieves,...............................................
- dessander,............................................
- degasser-test suction and discharge-- ................
- centrifugue (if any)...................................
The operation and work pressure, as well as the existence
of manometers, will be checked..............................
3) Mud Tanks and Valves........................................
--------------------
Waterproofness, working of the agitators, mixture funnel
and depth gun, besides the existence of fixed marks to
control the tanks volume will be checked....................
4) Centrifugal Pumps...........................................
-----------------
89
<PAGE>
The following will be checked:..............................
- working, vibration and noises;........................
- Packing (leaks);......................................
- Work pressures........................................
NOTE: Items 3 and 4 will be tested with sea water................
5) Mud Laboratory and Test Equipment...........................
---------------------------------
The existence on board and the adequacy to the requirements
described in Attachments B and C to this CONTRACT will be
checked.....................................................
6) Drilling Derrick............................................
----------------
Maintenance conditions (corrosion), fastening system and
the conditions of the traveling block rails will be
examined....................................................
7) Crown Block.................................................
-----------
The pulleys will be examined as to the profile wear,
alignment, clearance, buckling of the axles, lubrication,
etc.........................................................
8) Mud Pumps...................................................
---------
The following will be carried out:..........................
- observation of working, vibrations, noises;...........
- pressure and maximum work flows tests for the liner
user;.................................................
- safety valve working test;............................
- checking of the suction and discharge pulsation
dampeners;............................................
- watertightness tests with nominal pressure of the mud
pumps and of all manifold valves;.....................
90
<PAGE>
- watertightness tests with nominal pressure of all
manifold valves of the stand pipe manifold and of the
kelly hose;...........................................
- random disassembling of the suction for visual
inspection of the piston, sleeve, packing, valve and
seat..................................................
9) Swivel......................................................
------
The mandril, gooseneck, body, etc., will be checked and
nominal pressure test with rotation will be performed.......
10) Motion Compensator..........................................
-------------------
The piston alignment, lock bar, alignment in the rail,
general conditions, leaks and chains will be checked........
11) Riser and Guide Line Tensioners.............................
-------------------------------
The general conditions, leaks, pulleys and cables will be
inspected...................................................
12) Riser Recoil System/Hang Off System/Fill-Up System Valve
-----------------------------------------------------------
(if any)....................................................
The systems' operation will be checked.
13) High Compressors and Air Reservoirs.........................
-----------------------------------
The general conditions, leaks, lines and system yield will
be checked..................................................
14) Top Drive...................................................
---------
Working tests (connection and disconnection of one or more
sections of the DP's) will be carried out and the general
conditions will be inspected................................
15) Kelly Spinner...............................................
-------------
91
<PAGE>
The general conditions, specially the rollers' wear, and
working will be checked, and connection and disconnection
operation of one or more DP's will be carried out...........
16) Hook........................................................
----
The general conditions and the locking system will be
checked.....................................................
17) Traveling Block.............................................
---------------
The pulleys wear, axles alignment, lubrication system,
retraction system, etc., will be inspected..................
18) Drawworks...................................................
---------
- The operation of the mechanical break system (brake
bands), electromagnetic (distance between irons,
voltage level and SCR feeder conditions), cooling
system and clutches will be checked...................
- The operation of the cat-heads and height limitator
with the assembly/ disassembly of one or more command
sections, will be checked.............................
19) Rotary Table................................................
------------
The operation in high and low, brake system, tachometer and
lubrication system will be checked..........................
20) Trip Tank...................................................
---------
Capacity, installation site, sensitivity for the level
indicator system, visualization condition and supply system
will be inspected...........................................
21) Hydraulic Tongs and Pneumatic Spider for Casing and
Pneumatic Tongs for Drill Pipes.............................
92
<PAGE>
- Operation tests will be made and maintenance
conditions will be checked............................
22) Sand-Line or Wire-Line Systems..............................
------------------------------
- Operation of the clutches and brake will be tested by
lowering the photoclinometer inside the drill string
coinciding with the photoclinometer overshot test
(TOTCO) will be tested. Test to be made on location
before the beginning of the operations................
- The existence of an alignment guide for the sand-line
cable in the drum will be checked.....................
23) Choke Manifold..............................................
--------------
All valves with low pressure (300 psi) and in high pressure
(system's work pressure). Manometers, hydraulic choke
operation, manual choke, remote control panel, etc., will
be tested...................................................
24) Upper and Lower Kelly Cock, Inside Bop and Safety Value
-------------------------------------------------------
- Drivers will be tested and work pressure tests will
be made...............................................
- The end connections of each element will be checked
and tested with work pressure. The CONTRACTOR should
have end seal plugs adequate for the test.............
93
<PAGE>
25) Kill and Choke Lines Hoses..................................
--------------------------
The end connections will be checked and tested with the
system's work pressure. The CONTRACTOR should have end seal
plugs adequate for the test.................................
26) Drill Instrumentation System................................
----------------------------
The following will be tested:...............................
- geolograph;...........................................
- rotary table tachometer;..............................
- manometers;...........................................
- stroke counter;.......................................
- level control in the mud tanks;.......................
- torque indicator......................................
27) Flare Pipe and Booms........................................
--------------------
Their existence on board will be checked, analyzing the
maintenance conditions of the lines by means of
inspection, and the facilities for instalation of the
production test equipment system............................
28) BOP System..................................................
----------
The following will be carried out:..........................
- pressure tests of the slide valves with low pressure
and high pressure, compatible with the system.........
- pressure tests of the annulars with low pressure and
high pressure, compatible with the system..............
94
<PAGE>
- complete function test in both POD's, through all
panels................................................
- choke and kill valves tested with low pressure and
high pressure, compatible with the system. ...........
- working of the shear ram valve will be checked with
opening for examination of the blades conditions......
- the opening and closing of all ram, annular a kill
and choke valves chambers will be tested..............
- the hydraulic driving unit will be checked as to:
fluid used, fluid low level alarm, low air pressure
and low accumulators pressure, maintenance
conditions, leaks and mixing systems..................
- the volumetric capacity of accumulators and the
capacity of electric and pneumatic pumps of the
hydraulic unit will be tested.........................
- the locking system of the ram valve(s) will be tested.
- the SPM valves conditions will be checked by opening and
inspecting one of them, chosen at random..........
- the locking/unlocking system of the H-4 hydraulic
connectors will be tested.............................
- the surface and bottom accumulators' pre-charge will
be checked............................................
- the operation of the following systems will be tested:
o Driving back-up.................................
o emergency recovery..............................
o handling........................................
95
<PAGE>
29) Traveling Tongs, Ezy-Torq, Torque Sensor, Slips, Etc........
----------------------------------------------------
One or more sections of the drill collars and drill pipes
will be assembled/disassembled to check the working of such
equipment. The general maintenance conditions, chuck jaws
and cables will be checked..................................
30) Bulk Transfer System........................................
--------------------
The following will be carried out:..........................
- the operation of the compressor will be checked, and
noise, oil and air leaks, and maintenance state,
filters and dehumidifier will be inspected............
- operation and watertightness of valves, lines and silos
will be checked, looking for possible clogging..
- transfer of cement from 1 silo to the daily silo (if
any) and from this to the surge-tank will be made....
31) Emergency Energy Generation System..........................
----------------------------------
- a black-out in the energy system generation system
will be simulated to see if the emergency generator
is automatically turned on............................
32) Main Motor Generator Assembly..............................
------------------------------
The following will be carried out:
- vibration, noises, insulation, leaks, maintenance,
etc., will be checked.................................
96
<PAGE>
- generators input and output in the bus bar,
synchronism and load divisions will be tested.........
- load and voltage and frequency regulation will be
tested................................................
33) Dessalter...................................................
---------
Operation and production capacity will be checked...........
34) Cat-Lines Cranes............................................
The following will be carried out:
- operation of the winches and maintenance of the
cabled will be checked................................
- the elevation and rotation system, the operation with
flying boom and pulley block and the operation of the
boom height pawl will be checked......................
- the report of the last inspection carried out by the
UNIT's classification society in the winches will be
examined..............................................
35) Dejecta Treatment Unit......................................
----------------------
Its operation will be inspected.............................
36) Telecommunication System....................................
------------------------
Operational tests will be made in all radio equipment
existing on board, including radio-beacon...................
37) Overhead Traveling Crane....................................
------------------------
Their operation, and the maintenance conditions of cables
and sliders will be examined................................
97
<PAGE>
38) DC/SCR Motors...............................................
-------------
The maintenance conditions and insulation, as well as the
collectors and brushes will be examined.....................
- SCR functional test...................................
39) Diverter....................................................
--------
The following will be tested:...............................
- flow line wing valves;................................
- diverters and insert packer lock;.....................
- the control panel will be checked.....................
40) Safety Equipment............................................
----------------
Salvage.....................................................
Fireproof rigid vessels (capsules, whalers):................
- lowering, motor, fuels, sprinklers, start;............
- rations, garnishing, hatches, cleaning, fire
extinguisher, signaling equipment.....................
Inflatable rafts:...........................................
- quantity, capacity, location, height in relation to
the sea;..............................................
- validity of the last inspection, means of access to
the sea;..............................................
- conditions of the cocoon..............................
Jackets:..............................................
- quantity (sufficiency), location, pro-tection, and
maintenance...........................................
Life-buoys:.................................................
98
<PAGE>
- quantity (sufficiency), location, heaving-lines,
lanterns, smudge pots.................................
Escape routes:..............................................
- vertical and horizontal signaling (indicative plates);
- clearing, lighting(emergency).........................
Water Supply System for Fire Fighting.......................
-------------------------------------
Fire ring:..................................................
- water system for the platform;........................
- sprinkler system;.....................................
- painting, corrosion, signaling, visual conditions;....
- valves, hydrants, guns................................
Fire pumps:.................................................
- operation;............................................
- motor, fuel, start, panel, tests......................
Fire Fighting Fixed Systems.................................
---------------------------
- Foam system: chambers, tanks, guns, hydrants and
carrier liquid;.......................................
- Cylinders; conditions, reloading, retesting (CO2 or
HALON, if any).......................................
- Lines and diffusers: general conditions;.............
- Automatic: feedings, panels, batteries, detectors,
tests................................................
- Manual: commands, interconnections, tests...........
- Alarms: interconnections.............................
99
<PAGE>
Fire Extinguishers
------------------
- water, carbon dioxyde, chemical powder (portable and
carts);...............................................
- distribution, location, general conditions;...........
- revision, recharge, retest, control, meters,
replacement...........................................
Fire Posts..................................................
----------
- hose, keys, sprinkler;................................
- fiber boxes, general conditions, post identification;.
- visual signaling: sufficiency and general conditions.
Emergency Equipment.........................................
-------------------
- autonomous breathing apparatuses, reserve bottles,
breathable air fixed system, fire proximity clothing,
lantern, ax, safety belt;............................
- distribution, location, general conditions,
inventory, maintenance and replacement................
Communications and Alarms...................................
-------------------------
- telephone (internal, external): Operating capacity;..
- radiophony: VHF. Operating capacity;................
- portable transceptors: quantity; distribution,
intrinsic safety;.....................................
- intercom: quantity, distribution, and horns
audibility, interconnection with the platform, coding
of sound alarm tones, amplifiers;.....................
- visual signaling: sufficiency, general conditions;...
- fire alarm, glass breaking type: batteries, bells,
tests.................................................
100
<PAGE>
Emergency Lighting..........................................
------------------
- charger, batteries and lanterns.......................
Helideck....................................................
--------
- protection: guns, fire extinguishers, salvage
equipment;............................................
- painting, protection screen, net, landing lights,
safety warnings;......................................
- guest welcoming practices.............................
Load Lifting................................................
------------
- winches: general conditions, oparation, signaling,
maintenance;..........................................
- manual and electric tackles: general conditions,
operation, signalling, maintenance;...................
- material movement and storage areas...................
Training....................................................
--------
- abandonment, fire fighting, first aid and brigade.....
Manuals and Plans...........................................
-----------------
- emergency; safety;....................................
- disclosure, knowledge;................................
- tasks schedules for emergency and abandonment
situations, including in Portuguese...................
Order and Cleanliness.......................................
---------------------
- installation's general aspect;........................
- particularly alarming places..........................
Smoke, Heat and Gas Detection System........................
------------------------------------
101
<PAGE>
- test of hydrocarbons detection sensors................
Ballast and Sewer System....................................
------------------------
- functional test.......................................
41) Anchoring System............................................
----------------
42) Dynamic Positioning System..................................
--------------------------
43) Propulsion System...........................................
-----------------
B) Location Moving Test..............................................
--------------------
To be defined between the CONTRACTOR and PETROBRAS................
C) Beginning of Contract Year Test...................................
-------------------------------
To be defined between the CONTRACT and PETROBRAS..................
(End of Attachment) ....................................................
102
<PAGE>
ATTACHMENT IX
PROCEDURES IN THE EVENT OF FATAL ACCIDENTS
1. If, during the period of validity of the CONTRACT, a fatal accident
occurs with a CONTRACTOR's employee, the CONTRACTOR should:.............
1.1. Notify the Inspection immediately, for the proper measures;.............
1.2. Take measures so that the employee's relatives be notified with the
utmost urgency on the event, giving them the social support due;........
1.3 Formally establish an Investigation Commission, within 48 hours after
the accident, in order to, in the maximum time limit of 15 days,
identify the causes and recommend the measures deemed necessary to
prevent similar accidents...............................................
2. The report should contain, at least, the following information
regarding the accident:.................................................
- description;......................................................
- exact location;...................................................
- data regarding the injured persons;...............................
- basic and immediate causes;.......................................
- measures to be taken in order to prevent its repetition...........
3. The CONTRACTOR should guarantee the Commission enough authority and
autonomy to carry out the investigations without any restrictions.......
4. A PETROBRAS' employee should participate in the Commission, appointed
by the authority in charge of the operational office....................
103
<PAGE>
5. After conclusion of the Commission's work, it will also behoove the
CONTRACTOR, at the Inspection's request, to disclose the results of the
report, so as to convey the experience from the accident to other
contractor companies....................................................
(All pages of the document were initialized.).................................
. - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - .
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on the 22nd of
December, in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
------------------------
Marcia Barbosa Serra
Sworn Public Translator
104
EXHIBIT 10.9(A)
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 2674/98
(On paper with letterhead of PETROBRAS.)
RIDER No. 01 TO CONTRACT 101.2.100.97-8, ENTERED INTO BETWEEN MARITIMA
PETROLEO E ENGENHARIA LTDA., SUCCESSOR OF MARITIMA NAVEGACAO E ENGENHARIA
LTDA., and PETRODRILL FIVE LTD., WITH THE CONSENT OF PETROLEO BRASILEIRO
S.A. - PETROBRAS.
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, with head
office at Av. Republica do Chile 65, in the City of Rio de Janeiro, State of Rio
de Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers
Registry of the Ministry of Finance under No. 33.000.167/0001-01, henceforth
called PETROBRAS, represented herein by the Executive Superintendent of
Exploration and Production, Luiz Eduardo G. Carneiro, and the Company MARITIMA
PETROLEO E ENGENHARIA LTDA., successor of MARITIMA NAVEGACAO E ENGENHARIA LTDA.,
with head office at Av. Almirante Barroso, 52, 34th floor, City of Rio de
Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers
Registry of the Ministry of Finance under No. 46.828.596/0001/13, henceforth
called the ASSIGNOR, represented herein by its President, German Efromovich, and
the company PETRODRILL FIVE LTD., with head office in Omar Hodge Building,
Wickhams Cay, Road Town, Tortola, Ilhas Virgens Britanicas, henceforth
<PAGE>
called the ASSIGNEE, represented herein by its Director, German
Efromovich, have agreed to add a rider to contract 101.2.100.97-8 (AMETHYST 5),
according to the following, clauses and conditions: FIRST CLAUSE - OBJECT.
1.1. The present Rider has as its object:
1.1.1. The total assignment, as of the date of the signature of this Rider,
henceforth called the ASSIGNMENT DATE, by the ASSIGNOR to the ASSIGNEE of
the rights and obligations arising from Contract No. 101.2.100.97-8 and
its Attachments.
1.1.2. To change the contract value foreseen in item 5.2 of the Fifth Clause -
PRICES AND VALUE.
1.1.3. To change the redaction of the Seventh Clause - FORM OF PAYMENT.
1.1.4. To change the Fourth Clause - PETROBRAS' OBLIGATIONS, including item
4.12.
SECOND CLAUSE - RESPONSIBILITY.
2.1. The ASSIGNEE, as of the ASSIGNMENT DATE, becomes the CONTRACTOR, being
liable, before PETROBRAS for the fulfillment of all contract obligations
undertaken by the ASSIGNOR, and will also have all rights arising from
the Contract.
2.2. The ASSIGNEE is liable before PETROBRAS for the fulfillment of all
contract obligations undertaken by the ASSIGNOR in the Contract, as well
as for eventual losses and damages arising from its acts or omissions.
2.3. The ASSIGNOR will be jointly liable with the ASSIGNEE for the complete
fulfillment of all obligations arising from the Contract.
2.4. The ASSIGNOR, as of the ASSIGNMENT DATE, will have no right arising from
the Contract, giving PETROBRAS, full and complete acquittance for any and
all contract value.
<PAGE>
THIRD CLAUSE - PRICES AND VALUE.
3.1. The redaction of item 5.2 and its subitems becomes: 5.2. The total
estimated value of the present Contract becomes US$223,719,698.40 (two
hundred and twenty-three million, seven hundred and nineteen thousand,
six hundred and ninety-eight American dollars and forty cents),
equivalent to R$ 238,485,198.49 5.2.1. Chartering of the UNIT:
US$217,239,765.00; 5.2.2. Mobilization: US$6,479,933.40.
3.2. Item 5.5 is included with the following redaction: "5.5. Besides the
value mentioned in 5.2, the appropriation of US$100,000.00 is foreseen
for the payment of eventual reimbursements".
FOURTH CLAUSE - PETROBRAS' OBLIGATIONS.
4.1. Item 4.12 is included, with the following redaction: "4.12. To adopt the
measures necessary for the request to register this Contract at the
Central Bank of Brazil, immediately after the receipt of the legal
documents, the supply of which is the CONTRACTOR'S responsibility."
FIFTH CLAUSE - FORM OF PAYMENT.
5.1. The redaction of the Seventh Clause is changed to:
"7.1. The payments of the rates foreseen in Attachment II and Attachment
III shall be made by PETROBRAS to the CONTRACTOR in American
Dollars, by bank remittance to a bank account abroad it indicates,
after the present Contract is registered at the Central Bank of
Brazil, 30 (thirty) days as of the date of the end of the
measuring period considered, provided the CONTRACTOR has fulfilled
the time limits set forth in subitem 6.3.1, for the submittal of
the collection documents at the docket of
<PAGE>
the Financial Department indicated by PETROBRAS, with exception of
the provision appearing in subitem 7.2.4.
7.1.1. For the reimbursable expenses foreseen in this Contract, the
instructions contained in item 7.4 and their developments should
be of the Financial Department indicated by PETROBRAS, with
exception of the provision appearing in subitem 7.2.4.
7.1.1. For the reimbursable expenses foreseen in this Contract, the
instructions contained in item 7.4 and their developments should
be complied with, and the payments will be made in the currency of
origin of said expenses, within 30 (thirty) days after the
submittal of the collection documents at the docket of the
Financial Department indicated by PETROBRAS.
7.1.2. Collection documents comprise any type of billing, such as:
Invoice, Invoice with separate Bill of Sale, Service Invoice,
besides others foreseen in fiscal laws.
7.1.3. For payment purposes, the CONTRACTOR shall supply the Contract
Manager, after its signature, the following information:
a) Bank name and number;
b) Bank branch name and code;
c) Bank branch address;
d) CONTRACTOR'S current account number.
7.1.3.1. Whenever a billing is submitted with bank information different
from those indicated in subitem 7.1.3, these changes will only be
considered if accompanied by a formal communication by the
CONTRACTOR and shall prevail only for the specific purpose of such
payment.
7.2. The collection documents shall be issued without erasures,
complying with the
<PAGE>
pertinent laws in force, for submittal at the Financial Department
indicated in item 7.1 of this Clause, in its original copy,
accompanied by 1 (one) copy of the respective Measurement Bulletin
(MB), and/or Reimbursement Document (RD), as the case may be, duly
appointed by this contract's Manager, containing, obligatorily,
but not exclusively, the following information:
a) Number of the collection document;
b) Place and date of its issuing;
c) Brief description of the object of this Contract;
d) Indication of the number and date of this Contract;
e) Indication of the month/year or period which the collection
document refers to;
f) Number and date of the Measurement Bulletin (MB) and/or
Reimbursement Document (RD).
g) Place of the rendering and/or execution of the chartering. In
the event the chartering has been rendered in different
locations, its value should be broken down by locations of
performance and the period in which it was rendered at each of
the locations shall be indicated;
h) Gross amount of the collection document, by numbers and in
writing;
i) Place for payment purpose, as provided for in subitem 7.1.3 of
this Clause;
j) Signature by the CONTRACTOR'S representative, accredited before
PETROBRAS, above his/her name and position typewritten or above
the CONTRACTOR'S company stamp identifying him/her; 1) In case
of Rider or Letter of Agreement to the Contract which implies
<PAGE>
in payments, mention its number and date of signature, besides
the data above.
7.2.1. The omission of any of the above mentioned data will cause,
within 5 (five) working days, the return of the collection
documents by PETROBRAS' Financial Department.
7.2.2. If the above situation occurs and in the case the collection
document shows errors, it will be returned to the CONTRACTOR, and
the time limits of the payment foreseen in item 7.1 and subitem
7.1.1 shall be added to the period that becomes necessary for the
explanation and re-submittal of the collection document.
7.2.2.1. The above mentioned condition also applies in case the
collection document is submitted in another department, and not
as indicated in item 7.1.
7.2.3. Independent of the data above, the invoices in foreign currency
shall be also submitted in the Portuguese language, or if issued
abroad, they shall be notarized at the Brazilian Consulate, under
which jurisdiction the CONTRACTOR is located, and translated by a
sworn public translator.
7.2.4. The CONTRACTOR shall, obligatorily, submit monthly, together with
the invoice, the payroll of the CONTRACTOR'S Brazilian crew who
are involved in the chartering object of this Contract, as well
as with a photocopy of the GRPS (Social Security Payment Slip),
duly settled and authenticated, with the data identifying the
entity to whom the service was rendered being obligatorily filled
out, informing on field 8 of the GRPS (other information)
PETROBRAS' name and CGC, number, date, and amount of the invoice
or bill of sale referring to the chartering rendered in the
month, subitems 8.9, 10.1.15, and 10.1.16 being also complied
with.
7.3. The collection documents referring to reimbursements shall also
be issued, itemizing,
<PAGE>
individually, the reimbursable expenses, their total amount, such
itemization also to appear in the respective Reimbursement
Document (RD).
7.3.1. The original vouchers of the reimbursable expenses due to the
CONTRACTOR, by force of the contract instrument, shall be
previously submitted to the Contract Manager, for checking,
besides being duly paid for by the respective supplier or service
rendered, when such is the case.
7.3.1.1. In the event the original vouchers cannot remain in PETROBRAS'
possession, copies thereof may be submitted, which shall be
checked by the Contract Manager, and the following text is to be
placed on each original document: "COPY SUBMITTED FOR
REIMBURSEMENT ON (specify date)", followed by the signature and
identification by name, position and registry number, and the
original are to be returned to the CONTRACTOR. In the copies that
are in PETROBRAS' possession, the following text will be placed
on each document: "CHECKED WITH THE ORIGINAL ON (specify the
data)" and the Contract Manager will sign, identifying the
signature by name, position and registry number.
7.3.1.2. The receipt, duly made formal by PETROBRAS, of any reimbursable
expense voucher, does not represent the recognition of debt, nor
the proof that the expense has been made.
7.3.2. The collection of reimbursable expenses can only be made by means
of issuing and submittal, by the CONTRACTOR, of the Bill of Sale
for the equipment and accessories, with the respective
Reimbursement Document (RD) duly attached thereto, and previously
approved by the Contract Manager.
7.3.2.1. The submittal of the collection document mentioned in subitem
7.3.2, shall
<PAGE>
comply with the provisions appearing in items 7.1 and 7.2 of this
Clause.
7.3.2.2. The vouchers shall be the legal documents to explain doubts
referring to the collections, which shall be settled, as a last
resort, by PETROBRAS' Disbursement Office, who will be in
possession of the vouchers approved by PETROBRAS to prepare the
payment process.
7.4. Eventual payments made for more or less by PETROBRAS shall be
compensated as soon as they are detected, by issuing the
Debit/Credit Notes, as the case may be.
7.5. The amounts corresponding to reimbursable expenses, without
budget allotment foreseen in this contract instrument, do not
burden this contract's estimated total, but should, however, be
foreseen in the Budget Programs of the Executive Superintendence
of Exploration and Production (E&P).
7.6. The collection documents submitted by the CONTRACTOR, as well as
the final collection document, shall be paid with the deduction
of amounts that, at any title, under the conditions set forth in
the contract, or others specially agreed upon, are due to
PETROBRAS.
7.7. The CONTRACTOR agrees that, at PETROBRAS exclusive option, the
present Contract can be paid by means of third party financing,
provided the time limits, currency, amounts, and place of
payment, and the CONTRACTOR'S rights foreseen in this Contract,
are complied with".
SIXTH CLAUSE - RESPONSIBILITY.
6.1. The present rider binds the parties as of the date of its signature and
enters in force as of the ASSIGNMENT DATE.
SEVENTH CLAUSE - RATIFICATION.
<PAGE>
7.1. PETROBRAS, the ASSIGNOR and the ASSIGNEE ratify the terms and conditions
of the Contract that are not incompatible with the provisions of this
instrument.
And being thus agreed, the parties sign the present Rider in 4 (four)
copies of the same tenor and fashion, together with the witnesses below. Rio de
Janeiro, July 10, 1998.
(Signed:) (Illegible) - Luiz Eduardo G. Carneiro.
Executive Superintendent of Exploration and Production South-Southeast.
PETROLEO BRASILEIRO S.A.
(Signed:) (Illegible) - German Efromovich.
President - MARITIMA PETROLEO E ENGENHARIA LTDA (ASSIGNOR).
(Signed:) (Illegible) - German Efromovich.
Director - PETRODRILL FIVE LTD. (ASSIGNEE)
WITNESSES:
(Signed:) (Illegible) (Rubber stamp:) Jose Joao Afonso Filho - Administrator -
Registry 010979.7.
(Signed:) (Illegible).
(The rubber stamp and the signature of Jose Joao Afonso Filho appeared on
the first page of the document.)
(An ititial appeared on all other pages of the document.)
- - --------------------------------------------------------------------------------
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on November 26, 1998
in this City of Rio de Janeiro, Federative Republic of Brazil.
<PAGE>
/s/ MARCIA BARBOSA SERRA
------------------------
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.10
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
SWORN PUBLIC TRANSLATOR AND COMMERCIAL INTERPRETER
Rua Aperana, 38 apt 301 - Leblon -22450
ISS: 1261003-00 - CIC 606442227-00
Tel.: 274:3844
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
TRANSLATION NO. 3975/97
(Xerox copy submitted for translation.).......................................
(On paper with letterhead of Petroleo Brasileiro S.A. PETROBRAS.)............
CONTRACT 101.2.101.97-0.......................................................
SERVICES RENDERING CONTRACT
SERVICES RENDERING CONTRACT ENTERED INTO
BETWEEN PETROLEO BRASILEIRO S.A. - PETROBRAS AND THE COMPANY
MARITIMA NAVEGACAO E ENG. LTDA...........................
PETROLEO BRASILEIRO S.A. PETROBRAS, a mixed economy company, organized and
existing under Law No. 2.004, dated 10/03/53, with head office at Av.
Republica do Chile, 65, City of Rio de Janeiro, State of Rio de Janeiro,
Federative Republic of Brazil, enrolled in the General Taxpayers' Registry of
the Ministry of Finance under No 33.000.167/0001-01, represented herein by the
Executive Superintendent of Exploration and Production (E&P), Engineer LUIZ
EDUARDO G.
<PAGE>
(2)
CARNEIRO, henceforth called PETROBRAS, and the Company MARITIMA
NAVEGACAO E ENGENHARIA LTDA., with head office at Avenida Almirante Barroso,
no 42, 34th floor, City of Rio de Janeiro, State of Rio de Janeiro,
Federative Republic of Brazil, enrolled in the General Taxpayers' Registry
of the Ministry of Finance under No.46.828.596/0001-13, represented herein by
its President, Mr. GERMAN EFROMOVICH, have agreed upon the present CONTRACT
to render services, with the use of the Dynamic Positioning Floating Unit
AMETHYST 5 and its accessories, described in Attachment I, henceforth called
the UNIT, according to the authorization of PETROBRAS' Executive Board
(MINUTES No. 4.116, Item No. 24, dated 09/18/97) the parties being bound to
the terms of the Invitation to Bid No. 101.0.001.97-6 and subjected to the
following Clauses and Conditions: ............................................
(End of the Qualification) ...................................................
<PAGE>
(3)
FIRST CLAUSE - OBJECT.........................................................
1.1. The object of the present CONTRACT is the rendering, by the CONTRACTOR,
of the services of evaluation and/or completion and/or workover of oil
and/or gas (vertical, directional and horizontal) wells, in the
Brazilian continental shelf, down to a maximum depth of 5,000 (five
thousand) meters, in a water depth down to 1,200 (twelve hundred) meters
by using the UNIT................................................
1.1.1. For the fulfillment of the present CONTRACT, the CONTRACTOR is to
maintain its base of operation in the City of Macae-RJ................
1.2. The services object of the present CONTRACT are contained in the
Continental Shelf Activities and Disbursement and Cost Plans, under the
following codes: .....................................................
B 12100-Boring-Production Development.................................
A 22100-Boring-Exploratory Drilling...................................
B 13200-Completion and Intervention for Evaluation-Production
Development........................................................
A 24200-Intervention for Evaluation-Exploratory Drilling..............
C 15200 = Workover Operation..........................................
(End of Clause)...............................................................
<PAGE>
4
SECOND CLAUSE - PERIOD OF VALIDITY AND DURATION..............................
2.1. Period of Validity-The present CONTRACT binds the parties as of its
signature.............................................................
2.2. Duration-The present CONTRACT will have a duration of 2,190 (twenty-one
hundred and ninety) days..............................................
2.2.1. Beginning of the CONTRACT-The beginning of the CONTRACT will occur when
the UNIT is released by PETROBRAS, through a written notice, to begin
the operations, after the general equipment testing foreseen in item 3.1
is carried out........................................................
2.2.2. Automatic Extension-If at the end of the duration mentioned in 2.2, some
operation is still being performed in a well, the duration of the
present CONTRACT will be automatically extended, until the completion of
the works in said well, considering as the final limit the Unit's
arrival at the port or sheltered waters chosen by common agreement
between the parties and, also, in case there are still PETROBRAS'
equipment aboard the UNIT, the completion of the withdrawal of such
limit.................................................................
2.2.3. This CONTRACT may be extended for successive periods of 365 (three
hundred and sixty-five) consecutive days, through a prior agreement
between the parties, by means of an Addendum, the other contract
conditions being complied with, and limited to a maximum contract period
of 2,190 (twenty-one hundred and ninety) days ........................
2.3. Arrival in Brazil - The UNIT should arrive at the port or in sheltered
waters, in Macae-RJ. The beginning of operations should occur up to the
date of 07/06/99, the provision set forth in item 9.1 of this CONTRACT
being complied with ..................................................
2.3.1. At the port or in sheltered waters mentioned in 2.3, the customs and
helideck inspections in the UNIT will be carried out, as well as the
loading/unloading of the Contractor's and
<PAGE>
5
PETROBRAS' materials, and also the general equipment testing will begin
as foreseen in item 3.1 of this
CONTRACT..............................................................
(End of Clause)...............................................................
<PAGE>
6
THIRD CLAUSE - CONTRACTOR'S OBLIGATIONS.......................................
3.1. Before the beginning of the CONTRACT, the CONTRACTOR will arrange for a
general test of the operating conditions of all of the Unit's equipment,
as provided for in ATTACHMENT VIII, in the presence of PETROBRAS'
Inspection. The occurrences found during the performance of the tests
will be duly recorded in the Daily Drilling Certificate (ADP) signed by
PETROBRAS' Inspection and by the Contractor's representative. The
CONTRACTOR will be released to begin operations after proving the good
operating conditions of the equipment which comprise the Unit's main
systems, such as, energy generation and distribution system, anchoring
system, industrial safety, liquid and bulk storage, fluid circulation
and processing, safety and wellhead, column elevation, rotation and
handling, columns, instrumentation, formation test equipment and
communications system.................................................
3.1.1. The tests referred to in 3.1 will be made in a period estimated in 3
(three) days, after which the UNIT will be released to sail nothing
pending in the Unit's main systems, as defined in item 3.1............
3.1.1.1. In the event the tests last for a period exceeding 3 (three) days, for
reasons ascribed to PETROBRAS, the rate foreseen in REF 104 (WAITING
RATE) of ATTACHMENT II, will be due, applied as of the fourth day of
tests, until the UNIT is released. The periods spent with equipment
repair will not be calculated for the purpose of counting such duration,
and also no fee will be due during such periods......................
3.1.2. PETROBRAS may opt for the partial or total performance of the receipt
tests, in sheltered waters, in the deepest water depth set forth in the
CONTRACT, or still in the first location..............................
<PAGE>
7
3.2. Operation -To render the services object of this CONTRACT using the
UNIT and the equipment listed in ATTACHMENT I, complying with the other
conditions of and ATTACHMENTS to this CONTRACT, according to the
international standards recommended for services of such nature.........
3.2.1. Safety Standards - The CONTRACTOR will carry out the services in strict
compliance with the international safety standards for work of such
nature, aiming at the protection of personnel, materials and equipment
that belong to it, PETROBRAS and third parties. PETROBRAS' Safety Rules,
which the CONTRACTOR states to know will be particularly complied with.
In the event of conflict, between PETROBRAS' standards and the
Contractor's, the Contractor's Standards will prevail, unless PETROBRAS
expressly requires to the contrary in each case............... .......
3.3. Supply of Materials - To be responsible for the purchase, when requested
by PETROBRAS, in the domestic market, of other materials needed to
render the services object of this CONTRACT. The purchase of the
materials mentioned in this item will be submitted to the prior approval
by PETROBRAS which will reimburse them as set forth in item 4.2.....
3.3.1. The materials mentioned in item 3.3 will be delivered by the CONTRACTOR
to PETROBRAS, at the port or airport the latter indicates.............
3.3.2. To submit the expense vouchers in the maximum period of 60 (sixty)
consecutive days after the actual date of the purchase................
3.4. Services by Third Parties - To request, when asked by PETROBRAS, other
specialized services available in Brazil, related to the object of this
CONTRACT, behooving the CONTRACTOR all measures for their actual
performance, including the obtainment of PETROBRAS' prior and express
approval of the costs arising therefrom, which will be reimbursed as set
forth in item 4.2.....................................................
<PAGE>
8
3.5. Personnel - To be liable, in its own name, and for its own
responsibility and onus, for all personnel needed for the efficient and
complete performance of the services object of this CONTRACT which will
operate on the basis of 24 (twenty-four) hours a day and 7 (seven) days
a week. The list of the minimum personnel to be used by the CONTRACTOR
is basically the one mentioned in ATTACHMENT V.......................
3.5.1. The CONTRACTOR guarantees that the personnel mentioned in ATTACHMENT V
will allow it to fully carry out the performance of the services object
of this CONTRACT, running, as a result, for its own account, all
charges arising from the need to increase the personnel..............
3.5.2.The CONTRACTOR will be liable for the maintenance and cost of the
personnel required for the fulfillment of the operational and safety
rules and regulations issued by the proper authorities, including the
compliance with the provisions of the PORTOMARINST No. 13-02, dated
06/26/85, and of the Navy Department, Ports and Coasts Authority......
3.5.3. The technical personnel should possess proven competence in their
specialization, and the CONTRACTOR is to supply PETROBRAS with their
respective "curriculum vitae".........................................
3.5.4. To provide for training and/or recycling of its personnel in the Course
on BASIC SAFETY NOTIONS, held by PETROBRAS, according to the program and
conditions to be agreed upon between the parties .....................
3.5.4.1. For Superintendents on Board, for the Persons in Charge and for the
Drillers, a qualification certificate in well control supplied by
PETROBRAS or by a Training Center qualified by IADC or IWCS will be
required...................................
3.6. To be liable for all charges regarding the contracting of its personnel
and any additional that are or may become due, as well as for the
withholding and payment of social, labor and
<PAGE>
9
social security contributions set down by the Law, and other charges
that may become due at any title, being for all purposes, the sole
employer..............................................................
3.6.1. Whenever requested by PETROBRAS, the CONTRACTOR will submit the
documents regarding the proof of payment of its labor obligations,
including social security contributions (CD Negative Debt Certificate)
and FGT. deposits, regarding its employees............................
3.6.2. To make sure that its personnel, who work in activities or operations
that subject them to. noxious agents, included in the list referred to
in Article 58 of Law No. 8.213/91, are not retired in this special
condition, according to the restriction expressly contained in Article
3rd of Law No. 9.032 dated 04.18.95...................................
3.7. To bear all measures and expenses with displacement of personnel, such
as, but not limited to, transportation from abroad to the port or
airport of Macae-RJ, as indicated by PETROBRAS, and the, return to the
place of origin, and any and all expenses with personnel travel and
stay in Brazil, insurances, medical and hospital expenses, meals,
passports, as well as for extra expenses caused by delay or cancelling
of flights, be it due to bad weather or to the non-availability of
planes................................................................
3.8. To promote, without charges to PETROBRAS, the replacement and immediate
withdrawal of any of its employees that may be required by PETROBRAS at
any time, due to bad behavior, technical deficiency, inefficiency or
health conditions....................................................
<PAGE>
10
3.9. Whenever requested, to train PETROBRAS' personnel in the services object
of the present CONTRACT...............................................
3.10. All correspondence between the CONTRACTOR and PETROBRAS will be written
and forwarded in Portuguese
3.11 To provide, in the UNIT chartered for the performance of the services
object of this CONTRACT, lodging, food, mess room services, rendered by
a Brazilian company, for PETROBRAS' personnel and those of third parties
at PETROBRAS' service, up to the maximum of 26 (twenty-six) persons,
being agreed that the CONTRACTOR will freely supply 1300 (thirteen
hundred) meals per month. The meals exceeding this number will be paid
by PETROBRAS, based on the rate set forth in the Unit Price Spreadsheet
appearing in ATTACHMENT III.
3.11.1. The quality of the mess room services and the food supply are the
contractor's responsibility, who will maintain a permanent supervision
by a male nurse on board and eventually by a qualified nutritionist.
PETROBRAS may require that the CONTRACTOR takes measures in the event
such services show a loss in quality standards........................
3.12. Insurances - To provide, for its account, the contracting of the
insurances necessary to fulfill this CONTRACT and the Brazilian laws,
intended to cover its assets and its personnel, even when they are in
transportation under PETROBRAS' responsibility, as well as the Civil
Liability insurance for damages and losses caused to third parties,
which will not imply in limiting the contractor's liability, and it
should also include PETROBRAS as a third party for the purposes of such
coverage .............................................................
3.12.1. The minimum mandatory value of the civil liability insurance is of
US$1,000,000.00 (one million dollars), per event, during the period of
validity of this CONTRACT and of its eventual extension, which amount
is to be converted into Brazilian currency on the date the
<PAGE>
11
present CONTRACT is signed. MARITIMA NAVEGACAO E ENGENHARIA LTDA. is to
appear as co-insured in this policy...................................
3.13. The franchises which may be established for the insurances mentioned in
item 3.12, as well as the onus arising from the Insurers' requirements
and/or, recommendations will fully run for the contractor's account...
3.13.1. The provision of item 3.13 applies also to the insurances of
transportation made by the CONTRACTOR, regarding the contractor's
equipment by PETROBRAS, as set forth in item 4.4
3.14. The keep PETROBRAS free and safe from any and all indemnity claim for
damages and/or losses of any kind which the CONTRACTOR may have
sustained as a result of this CONTRACT, whether or not it has made
adequate and sufficient insurance for such
circumstances.........................................................
3.14.1. PETROBRAS will be equally kept free and safe from any and all indemnity
claim for damages and/or losses of any kind which the CONTRACTOR may
have caused to third parties for its duly proven grossly negligent
action or omission, arising from this CONTRACT, whether or not it has
made adequate and sufficient insurance for such circumstances.........
3.14.2. In return, the CONTRACTOR will be kept free and safe from any and all
indemnity claim for damages and/or losses of any kind, which PETROBRAS
may have sustained from third parties, or has caused to third parties by
its duly proven grossly negligent action or omission, as a result of
this CONTRACT, whether or not it has made adequate and sufficient
insurance for such circumstances......................................
3.15. To undertake, up to the limit equivalent to US$500,000.00 (five hundred
thousand United States dollars) per event, any and all liability for
death or damages to persons, provided they
<PAGE>
12
are caused by duly proven grossly negligent action or omission on its
part and/or its employees and/or personnel...........................
3.16. The CONTRACTOR waives for itself and will require from its Insurers,
and/or Subcontractors, in any and all insurance made as a result of this
CONTRACT, the inclusion, in each policy contracted, the provision
assuring the waiver of any right to subrogation against PETROBRAS.....
3.17. To submit to the CONTRACT Manager, up to 30 (thirty) consecutive days
after its inception, as foreseen, in item 2.2.1, the originals of the
insurance policies made as a result of this CONTRACT, containing all
essential data, such as insurers, time limits, period of validity,
amounts insured, and coverage conditions, and with PETROBRAS appearing
as coinsured, except in the civil liability insurance, of which it will
participate as a third party
3.17.1. The policies mentioned in item 3.17 will contain a provision that the
insurances mentioned cannot be amended and/or cancelled without
PETROBRAS' prior authorization........................................
3.18. Losses and Damages-The CONTRACTOR will be liable for damages to its own
equipment and material, and to those which; it and its agents may cause
to PETROBRAS or to third parties, as a result of its duly proven grossly
negligent action or omission, in the following cases:.................
3.18.1. In the event of losses of or damages to equipment and/or materials
belonging to PETROBRAS and/or to third parties, which are aboard the
UNIT, or during their moving between the UNIT and the support vessels,
the contractor's liability will be limited to the replacement or repair
of the equipment so lost or damaged due to the contractor's or its
employees' duly proven fault. However, the CONTRACTOR will not be liable
for and will
<PAGE>
13
be kept free and safe from in the event of damages to reservoirs,
indirect damages or loss of profit of PETROBRAS, losses and damages
arising from pollution coming from the well, resulting from kick and/or
blowout...............................................................
3.18.2. In case of losses and damages caused to the well, arising from the
events mentioned in subitem, 2.1.5 of ATTACHMENT II, the CONTRACTOR will
reimburse PETROBRAS the payments it comes to make to third parties
referring to cementing, logging, or other services related to the object
of the present CONTRACT, as well as to materials (cement, casing, bits,
completion fluid materials). In the event PETROBRAS opts for the
definitive abandonment of the damaged well, the CONTRACTOR will
reimburse the expenses made by PETROBRAS to drill that well...........
3.18.3. In the cases mentioned in subitems; 3.18.1 and 3.18.2. the limit for the
contractor's liability is of US$500,000.00 per event and its
deployments...........................................................
3.19. Secrecy - To maintain complete secrecy on the data and information
supplied by PETROBRAS, as well as on all of the results and analyses
arising from the services referring to the present CONTRACT.
3.19.1 All data, information and other documents of any kind, referring to the
fulfillment of this CONTRACT, are PETROBRAS' exclusive property.......
3.19.2. The CONTRACTOR and its personnel cannot disclose or supply to third
parties any materials or information obtained as a result of this
CONTRACT, unless expressly authorized by PETROBRAS....................
3.19.3. The provision of this item 3.19 is a standing obligation, valid even
after the termination, in any fashion, of the present CONTRACT........
3.20. The be liable for the violations it commits regarding author's right and
the use of materials and/or performance processes protected by
trademarks and patents, as well as for any claims
<PAGE>
14
arising from the bad use it makes of them, running for its account the
payment of any charges, royalties, fees, commission, indemnities, and
any other expenses arising from said violation, including the legal
ones..................................................................
3.21. Sea Operations To render the services object of this CONTRACT in strict
compliance with the laws, standards, regulations and administrative
rules, as well as the instructions issued by the Shipping Office or by
other proper authorities, specially those regarding the spillage of oil
and other residues from the UNIT into the sea, being liable, as a
result, for any charges arising from the violation of such laws,
standards, regulations, administrative rules and instructions, the limit
established in subitem 3.21.2 being complied with, and excepting the
cases provided for in item 3.20 of this CONTRACT......................
3.21.1. To plan and carry out operations intended to prevent and fight oil or
gas blow outs, fires, or other accidents, complying with the provision
set forth in item 2.4 of the ATTACHMENT I to this CONTRACT. Although the
CONTRACTOR is considered fully responsible for such operations, it is
obliged to discuss the methods to be adopted with PETROBRAS, so as to
find the best operating solution.......................................
3.21.2. With exception of the cases arising from kick, blow out, surging or
formation testing, which the CONTRACTOR will be kept free and safe from,
in the other cases of spillage of petroleum, oil and other residues in
the sea, the CONTRACTOR will be liable up to the limit of US$500,000.00
(five hundred thousand American dollars) per event and its deployments.
3.22. The storage aboard the UNIT, as well as the handling aboard, and between
the UNIT and support vessels, of materials, equipment, drilling or
completion fluid additives, chemical additives belonging to PETROBRAS or
to third parties at the service of PETROBRAS, are the contractor's
responsibility........................................................
<PAGE>
15
3.23. To bear all expenses, including with diesel oil and transportation of
the UNIT for dockages, including those arising from act of God or force
majeure, as defined in the Thirteenth Clause of the CONTRACT............
3.24. To maintain a hospital ward in the UNIT with at least 2 (two) beds,
provided with equipment and medicine necessary for the prompt attention
to sick and injured persons, as determined by the Shipping Office, such
hospital ward being subjected to periodical inspections by PETROBRAS..
3.25. The CONTRACTOR undertakes to maintain all conditions required in the
bidding. stage, during the performance of the SERVICES CONTRACTED.....
3.26. To maintain an agent accredited and accepted by PETROBRAS in the UNIT or
in a place previously designated by PETROBRAS, to represent the
CONTRACTOR in the fulfillment of the CONTRACT ....................
3.27. To comply with the requests contained in the Service Authorization(s)
issued by PETROBRAS...................................................
3.28. To allow, after negotiations between the contracting parties, the
provisional installation in the chartered vessel, of complementary
equipment such as, but not limited to: pipes or risers in catenary by
the J-lay method, or similar, submarine manifolds, provided they do not
jeopardize the Vessel's safety and are in accordance with the rules of
the Classification Society............................................
(End of Clause)...............................................................
<PAGE>
16
FOURTH CLAUSE - PETROBRAS' OBLIGATIONS.........................................
4.1. To make monthly payments for the services rendered by the CONTRACTOR due
to the present CONTRACT, based on the ATTACHMENT II and ATTACHMENT III
and on the conditions set forth in Clauses Sixth: Readjustment Seventh:
Measurement and Eighth: Form of Payment, the other ATTACHMENTS, Clauses
and Conditions of this CONTRACT being complied with.
4.2. To reimburse, by means of submittal of vouchers, the expenses. with
materials and services of third parties, according to items 3.3 and 3.4 of
this CONTRACT. The reimbursement will be comprised of:
a) Amount of the bill issued by the supplying and/or service rendering
company;.........................................................
b) Expenses actually made to place the materials in the UNIT;.......
c) Cost of the :insurance for the materials, as authorized by
PETROBRAS. In the event PETROBRAS does not authorize such
insurance, the CONTRACTOR will not be liable for losses and
damages of any kind that they may. sustain: until their
delivery to PETROBRAS at the port or airport it indicates:........
4.3. Operations and Locations Program PETROBRAS will provide the CONTRACTOR
with the Operations Program, in writing and with due antecedence, and it
also, will notify; on the locations where the services will be rendered,
so that the CONTRACTOR may adopt, in due time, the measures necessary
for their performance.......................................
4.4. Transportation:.......................................................
4.4.1. PETROBRAS will provide transportation to the UNIT of all of the
contractor's personnel involved in the rendering of the services, from
the port or airport indicated by
<PAGE>
17
PETROBRAS in the beginning of this CONTRACT, and vice versa. At its
exclusive discretion, the transportation to be provided will be by
helicopter or vessel.........
4.4.2. PETROBRAS will provide transportation for the material and equipment,
related to the object of this CONTRACT, from the port or airport
designated, to the UNIT and vice versa
4.4.3 In any circumstances foreseen in this Item, the granting of insurance
coverage will not be PETROBRAS' competence, and the CONTRACTOR waives
immediately, for itself and for its insurers, any return action against
PETROBRAS or third parties at its service, as a result of the
transportation provided...............................................
4.4.4. In the event there is need to program exclusive air transportation, to
survey the UNIT, by the Navy and/or SHIPPING OFFICE, the costs arising
therefrom will be charged to the CONTRACTOR ..........................
4.4.5. PETROBRAS may provide air or sea transportation for the contractor's
materials, industrial or fresh water and fuel before the beginning of
the CONTRACT, as defined in item 2.2.1. The costs arising therefrom will
be reimbursed by the CONTRACTOR to PETROBRAS..........................
4.4.6. PETROBRAS will provide tugs and support vessels for the UNIT, from the
location where the general, testing of the equipment is performed, to
the first location, between locations and from the last location to the
Brazilian port or sheltered waters closest thereto, which will be chosen
in common agreement between the parties...............................
4.4.6.1. PETROBRAS will provide the support vessels f or the Unit's positioning
in the locations to be drilled during the fulfillment of this
CONTRACT..............................................................
4.4.7. PETROBRAS may provide tugs and/or support vessels to load and unload
materials and to handle anchors, in a place to be defined by the
parties, in cases of inspection and/or dockages, including those arising
from act of God or force majeure, as defined in the
<PAGE>
18
Thirteenth Clause of this CONTRACT. The costs arising therefrom will be
reimbursed by the CONTRACTOR to PETROBRAS.............................
4.5. Fuel and Water To supply, for its account, all fuel and water necessary
for the performance of the services object of this CONTRACT, from the
beginning of the CONTRACT, as provided for in subitem, 2.2.1, the
provisions of item 3.23 of this CONTRACT being complied with..........
4.5.1. The supply of water mentioned in item 4.5 includes also the industrial
water intended for cleaning the UNIT.
4.6 Completion Fluid-To maintain the control of the properties of the fluid
by an accredited employee, as well as to control the stock of materials
necessary for such purpose...........................................
4.7. Ancillary Services-To provide, at its expenses and under its
responsibility, the ancillary services, referring to: cementing,
formation testing, electric logging, flexitube operation, operation with
nitrogen, electric wire operation, wireline operation, when they derive
from PETROBRAS' own programming.......................................
4.8. At its exclusive judgment, and without any coresponsibility, PETROBRAS
may cooperate with the CONTRACTOR, assisting it before the Foreign Trade
Department Trade Exchange Coordinating Office (CTIC), regarding
proceedings submitted to these Agencies, referring to materials and/or
equipment pertaining to the rendering of the services object of this
CONTRACT. Such cooperation, however, will not lessen , the contractor's
liability for the obtainment of the documents and/or benefits that may
be the object of the respective proceedings...........................
4.9. To issue Service Authorization (s) with all information necessary for
their performance, such as: location, time limit, value scope, and
beginning and end dates...............................................
4.10. To notify the CONTRACTOR, in writing, on the imposition of eventual
fines.................................................................
<PAGE>
19
4.11. To issue the Measurement Bulletin (MB), as set forth in the Seventh
Clause: Measurement, of this CONTRACT.................................
(End of Clause)...............................................................
<PAGE>
20
FIFTH CLAUSE - PRICES AND VALUE...............................................
5.1. For the rendering of the services object of this CONTRACT, PETROBRAS
will pay to the CONTRACTOR the rates set forth in ATTACHMENT II and
ATTACHMENT III to this CONTRACT, under the conditions set forth in
Clauses Sixth-Measurement Seventh-Measurement, and Eighth-Form of
Payment...............................................................
5.1.1. The contract prices include all specified tariffs, supervision,
administration, taxes, fiscal emoluments and all expenses that fall
directly or indirectly upon the rendering of the services, including
profit, needed for its perfect fulfillment, until the end of the
contract, no price revision claims being therefore valid..............
5.2. The total estimated value of this present contract is of R$26,117,862.95
(twenty-six million, one hundred and seventeen thousand, eight hundred
and sixty-two reais and ninety-five cents)............................
5.3. PETROBRAS does not undertake to make the payment of the total estimated
in item 5.2, but of the amount corresponding to the services rendered
and accepted by PETROBRAS.............................................
5.4. In the event the UNIT begins the Contract before the time limit of
630(six hundred and thirty) days granted according to item 2.3 of the
present CONTRACT, PETROBRAS will grant a bonus for anticipation, varying
linearly from zero, for zero days of anticipation, up to a maximum
amount of 30%..(thirty percent) of the value of the mobilization rate,
for an anticipation greater than or equal to 180 (one hundred and
eighty) days..........................................................
5.5. In the event the UNIT suffers a delay regarding the time limit granted
in item 2.3 of the present Contract, the CONTRACTOR will have its
mobilization rate reduced in up to 30% (thirty percent), for a delay
greater than or equal to 90 (ninety) days, which will vary linearly up
to zero; for zero day of delay.....................................
<PAGE>
21
5.6. In the event the UNIT suffers a delay greater than 90 (ninety) days, as
of the time limit granted in item 2.3 of the present Contract, besides
the maximum reduction of 30% (thirty percent) in the mobilization rate,
the CONTRACTOR will be subjected to the. imposition of fines according
to items 8.1 and 9.1 of the 91st (ninety-first) to the 180th (one
hundred and eightieth) day of delay...................................
5.7. The financial resources necessary for the payment of the services
object of the present CONTRACT are duly equated and specifically assured
in the budget for the present fiscal year and foreseen for the
following ones to cover the period for the total rendering of the
services..............................................................
(End of Clause)...............................................................
<PAGE>
22
SIXTH CLAUSE - PRICE READJUSTMENT.............................................
6.1. The contract prices in Brazilian currency, will be readjusted yearly,
after l (one) year as of the month when the CONTRACTOR's proposal was
submitted has elapsed, for more or for less, as a result of the
variation of the elements that comprise the readjustment formula, set
forth in subitems 6.2.1 and 6.2.2 below...............................
6.1.1. If during the period of validity of this CONTRACT, new legal provisions
are created which permit the reduction of the periodicity referred to in
6.1, the parties will make a new agreement regarding the contract
prices, to expurgate eventual overprices arising from the periodicity
originally established for the application of the readjustment........
6.2. The prices set forth in the Unit Prices Spreadsheet-ATTACHMENT III to
this CONTRACT, will be readjusted by applying the following calculation
formulae: ............................................................
6.2.1. For the prices of REF 101, 104 and 105 of the Unit Prices Spreadsheet-
ATTACHMENT III:
INS USA MEQ
PCR = PCI, [0.55 ----- + 0.10 ----- + 0.35 -----]
ISOo USAo MEQo
6.2.2. For the price referring to extra meals, appearing in the Unit Prices
Spreadsheet - ATTACHMENT III:....................................
ABR
PRC = PCI. [-----]
ABRo
Where: .......................................................................
PCR = readjusted contract price;..............................................
PCI = initial contract price, in force on the date of the contractor's
proposal;...................................................................
<PAGE>
23
INS = Index number of the National Consumer Price Index (INPC), published by
the Brazilian Institute of Geography and Statistics IBGE,
corresponding to the months in which the readjustment is due............
INSo= Index number of the INS defined above, corresponding to the month when
the CONTRACTOR's proposal was submitted;................................
USA = value of the United States dollar selling rate in the commercial
exchange in force on the 30th day of the month in which the
readjustment is due;....................................................
USAo = value of the same rate in force on the 30th day of the month the
CONTRACTOR's proposal was submitted;....................................
MEQ = definitive value of the Wholesale Index - Domestic - Availability -
Brazil-Production Goods - Machinery, Vehicles and Equipment - Machinery
and Equipment - Column 15 of the Getulio Vargas Foundation's Magazine
"Conjuntura Economica", code A0161724, corresponding to the month when the
readjustment is due;................................................
MEQo = definitive value of this same index, corresponding to the month when
the CONTRACTOR's proposal was submitted;...............................
ABR = definitive value of the Price Index - Consumer Price - Brazil - Cost of
Living - Food, Column 1, Code A0201475, of the Getulio Vargas Foundation's
Magazine "Conjuntura Economica", corresponding to the month when the
readjustment is due;.....................................
ABRo = definitive value of this same index, corresponding to the month when the
CONTRACTOR's proposal was submitted ..................................
6.2.3. The reference basis of the CONTRACTOR's proposal is the month of May/97.
<PAGE>
24
6.3 PETROBRAS will make the readjustment calculation, expressing its result,
duly made evident, in the Measurement Bulletin (MB) of the services to
which it refers, for the purposes of issuing the respective collection
document.....................................................
6.4. In the event of delay in the partial or total disclosure of the indexes,
a readjustment factor will be provisionally used, calculated on the
basis of the last indexes known by then, at the time the Measurement
Bulletin (MB) was issued..............................................
6.4.1. The eventual difference between the definitive and the provisional
readjustment will be invoiced by the CONTRACTOR after the issuing of the
Readjustment Bulletin (RB) by PETROBRAS, as provided for in subitem
7.3.1 of this CONTRACT................................................
6.5. The readjustment will not include the services performed before the date
when the reason that justifies it has occurred........................
6.6. The readjustment factor will be applied with 4 (four) decimal places,
without rounding off..................................................
6.7. The CONTRACTOR states that the prices proposed for the performance of
the services object of the contract have taken into account all costs,
inputs, expenses and other legal obligations for the complete
fulfillment of the contract provisions established....................
(End of Clause)...............................................................
<PAGE>
25
SEVENTH CLAUSE - MEASUREMENT..................................................
7.1. Periodicity of the measurements of the services and determination of the
reimbursable expenses.................................................
7.1.1. For the services, the measurement will be made monthly, according to the
procedures mentioned below, with the consequent issuing of the
respective Measurement Bulletins (MB).................................
a) the initial measurement of the services will be made between the date
of the beginning of this CONTRACT and the last day of the calendar
month;...................................................
b) The intermediate measurements of the services, corresponding to a
given month, of the order "m", cover the period between day 01 and
the last day of the calendar month of the order "m";................
c). The final measurement of the services will cover the period between
day 01 of the month "m" and the day of the termination of this
CONTRACT..........................................................
7.1.2. The reimbursable expenses, if provided for in the CONTRACT, will be
determined on any day of the month, according to the vouchers submitted
to and accepted by PETROBRAS, and more than one determination can be
made in the same period, covered by the measurement...................
7.1.2.1. The results found will be submitted to the CONTRACTOR on the 5th
(fifth) working day, as of the submittal of said vouchers, by means of a
Reimbursement Document (RD), which will be signed by the Manager of this
CONTRACT, for invoicing purposes......................................
7.1.2.2. The reimbursable expenses and the deductions, if provided. for in the
CONTRACT, are to be individually made evident in the Reimbursement
Documents (RD)........................................................
7.2. Issuing of the Measurement Bulletins (MB)...............................
<PAGE>
26
7.2.1. PETROBRAS, through the Manager of this CONTRACT, at the end of each
period as mentioned in the letters of subitem 7.1.1 of this Clause, will
carry out the measurement of the services, gathering the results found
in the Measurement Bulletin (MB), for the signature of the Manager of
this CONTRACT and of the CONTRACTOR, complying with the following:
a) For the initial, intermediate and final measurements ending on the
last day of CONTRACTOR will receive one of the copies of the MB up
to the 5th (fifth) subsequent working day, so that it may submit the
respective collection documents, As provided for in subitem 7.4.1 of
this Clause;.......................................................
b) For the final measurement, when the termination of the CONTRACT does
not occur in the last day of the month, the CONTRACTOR will receive
one of the copies of the MB, up to the 5th (fifth) working day after
the termination of the CONTRACT, so that it may submit the respective
collection documents, as provided for in subitem 7.4.1;............
c) For each measurement period of the services, only 1 (one) collection
document may be issued, being understood that collection documents
with partial values regarding said period will not be taken into
account for payment purposes, with exception of the cases of
collection of differences in readjustment, if any;.................
d) In the Measurement Bulletins (MB), the portions regarding the basic
and readjustment values, if any, will be made evident, using the last
definitive factor known by then, and the deductions, if provided for
in the CONTRACT....................................................
7.3. Collection of the readjustment difference.............................
<PAGE>
27
7.3.1. For the payment of an eventual readjustment complement, due to the
non-availability of indexes at the time the MB is issued, PETROBRAS will
issue a Readjustment Bulletin (RB)....................................
7.3.1.1. The Readjustment Bulletin (RB) will be submitted to the CONTRACTOR on
the third working day after the, disclosure of the indexes applicable to
the calculation of the definitive readjustment factor.................
7.4. Time for the submittal of collection documents..........................
7.4.1. The CONTRACTOR will submit the respective collection documents to
PETROBRAS' Financial Department, as mentioned in item 8.1 of this
CONTRACT, in the following conditions:................................
- - --------------------------------------------------------------------------------
MEASUREMENT OCCASION FOR THE SUBMITTAL OF COLLECTION
TYPE OF MEASUREMENT DOCUMENTS DOCUMENTS
- - ------------------- ----------- ----------------------------------------------
INITIAL MB Up to the 8th working day following the last
day of the performance of the services, and
INTERMEDIATE PETROBRAS will make the payment on the
30th consecutive day, as of the final day of
AND FINAL the period measured, the provision in subitem
4.1.1 being complied with.
INITIAL RB In case of an eventual complement of
readjustment difference, the RB will be issued
up to the 3rd working day after the index to
INTERMEDIATE calculate its issuing is known, and the
payment will be made together with the payment
AND FINAL of the principal, the minimum of 10 (ten)
working days between the submittal of the
Collection Document and the date of payment
being complied with
DETERMINATION OF RD In the first working day after the DR is
REIMBURSABLE issued, and the payment will be made in a
EXPENSES period of 30 (thirty) days as of the day of
its submittal.
- - --------------------------------------------------------------------------------
7.4.1.1 The payments due because of this CONTRACT, referring to the services,
will always occur on the 30th day after the end of the measured period,
included in the MB's, or on the
<PAGE>
28
first subsequent working day, provided the CONTRACTOR fulfills the time
limits for the submittal of the Collection Documents set forth herein.
In the event of non-compliance, by the CONTRACTOR, with said submittal
time limits, the payments will be postponed for the number of days
equal to the delay in the delivery of such documents..................
7.5. Measurement follow-up.................................................
7.5.1. The CONTRACTOR undertakes to follow-up the measurements and the
determinations carried out by PETROBRAS, offering, at that time, the
impugnations or considerations it deems necessary, which will be
submitted to PETROBRAS appraisal and decision........................
7.5.2 The CONTRACTOR's signature by its representative before PETROBRAS will
imply in the acknowledgement of the accuracy of the Measurement Bulletin
(MB) and/or Readjustment Bulletin (RB) for all legal purposes.........
(End of Clause)...............................................................
<PAGE>
29
EIGHTH CLAUSE - FORM AND PLACE OF PAYMENT
8.1. The monthly payments due as a result of this CONTRACT will be made by
PETROBRAS to the CONTRACTOR, in Brazilian currency, 30 (thirty)
consecutive days, as of the last day of the period of performance of the
services, provided the CONTRACTOR submits the collection documents until
the 8th (eighth)working day after the last day of the period of
performance of the services...........................................
8.1.1. The payment of an eventual difference in readjustment will be made on
the same day in which the payment of the respective service occurs,
provided the CONTRACTOR submits the corresponding collection document up
to the 5th (fifty) working day after the indexes that permit the issuing
of the Readjustment Bulletin (RB) are known...........................
8.1.2. The payment of reimbursable expenses, if any, will be made 30 (thirty)
consecutive days after the submittal of the collection document.......
8.1.3. In the event of non-submittal of the collection documents in the time
limits set above, the payment will be postponed for as many consecutive
days as those corresponding to the delay in the delivery of the
collection documents..................................................
8.2. The collection documents will be submitted, together with the original
of the document giving rise to them (MB, RB, RD) in the Docket of the
Financial Department indicated by PETROBRAS, for the purposes of
checking the fulfillment of the time limits for their payment.........
8.3. The collection documents will be issued without erasures, complying with
the pertinent laws in force, and will contain obligatorily the following
information: .........................................................
a) Place and date of its emission and number of the collection
document;..........................................................
b) Number and date of signature of the contract deed;.................
c) Number and date of the documents originating them (MB, RB, RD);....
<PAGE>
30
d) Gross value of the collection documents, both in numbers and in
writing;...........................................................
e) Name and code of the banking establishment, branch and the respective
code, and number of the current account of the payee, where the
payments will be made;.............................................
f) In order that a particular payment is made in a banking establishment
different from the one indicated at the time the contract deed was
signed, such amendment will obligatorily be preceded by a
fax/correspondence from the CONTRACTOR or will appear in the payee's
collection document................................................
8.3.1. In the event the collection document is inaccurate, it will be returned
to the CONTRACTOR and the time limit foreseen in item 8.1 will be
postponed for as many days as those corresponding to the delay in the
submittal of such document............................................
8.3.2. In the event of re-submittal of the collection document, as a result of
a previous impugnation, this fact should appear in the history of the
collection document...................................................
8.3.3. The CONTRACTOR will obligatorily submit, every month to the Manager of
the CONTRACT:.........................................................
a) Payroll of the CONTRACTOR's employees who are involved in the
rendering of the services contracted;..............................
b) A photocopy of the Social Security Payment Slip (GRPS), duly settled
and authenticated, obligatorily filling out field "8" (other
information), the name, CGC of PETROBRAS, number, date and amount of
the Invoice or Bill of Sale referring to the services rendered in the
month..............................................................
<PAGE>
31
c) In case of a Cooperative, to submit the payment vouchers of the
amount s paid, distributed or credited to its members as a
remuneration for the services rendered in the fulfillment of this
contract..........................................................
8.3.4. The collection documents will not be accepted by PETROBRAS if submitted
with Income Tax at Source already withheld...........................
8.3.5. It is the responsibility of PETROBRAS' disbursing office the explanation
of doubts regarding the issuing of the collection documents..........
8.3.6. Eventual payments made for more or for less by PETROBRAS, will be
compensated as soon as they are detected, and the respective amounts
will be duly corrected...............................................
8.3.7. The CONTRACTOR should indicate the place and fax number, if any, for the
receipt of the "Notice of Payment Foreseen"..........................
8.4. The vouchers for the reimbursable expenses due to the CONTRACTOR as a
result of this contract deed, will be previously submitted to the
Manager of the CONTRACT, for checking, besides being duly settled by the
respective supplier or service rendered, when such is the case........
8.4.1. If the original cannot remain in PETROBRAS' hands, copies thereof may be
submitted, which will be checked by the Inspector and/or Manager, and
the following should appear in every original document: "COPY SUBMITTED
FOR REIMBURSEMENT ON .../.../..." followed by the signature and
identification by name, position and registry number, and the originals
will be returned to the CONTRACTOR. The following text will appear in
the copies of each document in PETROBRAS' hands: "CHECKED WITH THE
ORIGINAL ON .../.../...", which the Inspector and/or Manager will sign,
identifying the signature by name, position, and registry number.
<PAGE>
32
8.4.2 In special cases of reimbursement of import costs (duties and/or
expenses), the CONTRACTOR will send a letter submitting the vouchers for
such expenses, together with the import proceeding, to the office
responsible for its follow-up.........................................
8.4.3. The receipt, duly formalized by PETROBRAS, of any reimbursable expense
voucher, does not represent the recognition of the debt, nor the proof
that the expenses was made............................................
8.4.4. The collection of reimbursable expenses can only be made through. the
issuing of a Services Invoice, after approval by PETROBRAS of the
respective Reimbursement Document RD, which will be issued up to 5
(five) working days, as of the date of submittal of said documents....
8.4.4.1. PETROBRAS' Inspection has 3 (three) working days to proceed with the
checking of the expense voucher and to notify its approval to the
CONTRACTOR, so that it may issue the Combined Invoice and Bill of Sale.
8.4.5. The total amount of the collection document will be obtained by applying
the following formula:................................................
VTD
VTR = ----- , where:
I-ICP
VTR = total amount to be reimbursed to the CONTRACTOR;........................
VTD = total amount of the reimbursable expenses, effectively authorized; .....
ICP = total of the sum of the aliquots of taxes collected, in the decimal
form (ISS or ICMS, as the case may be, COFFINS and PIS/PASEP)...........
(End of Clause)...............................................................
<PAGE>
33
NINTH CLAUSE - FINES..........................................................
9.1. Noncompliance, by the CONTRACTOR, after ninety-one days beyond the time
limit mentioned in item 2.3 of this CONTRACT have elapsed, will imply in
the imposition of fine against the CONTRACTOR, in a written notice,
corresponding to 30% (thirty per cent) of the rate foreseen in REF 101
of ATTACHMENT III, per day of delay..................................
9.2. In the event of noncompliance, by the CONTRACTOR, with the inspection's
requirements within the time limit it may set, PETROBRAS may, by a
written notice, impose against the CONTRACTOR, per day of noncompliance
with such requirements, as of the end of the time limit set, a fine
corresponding to 20% (twenty per cent) of the rate provided for in REF
101 of ATTACHMENT III.................................................
9.3. The penalties set forth in this Clause do not exclude any other provided
for in the Laws in force and/or in this CONTRACT......................
9.4. The amount corresponding to the sum of the basic values of the fines
imposed is limited damages to 10% (ten per cent) of the estimated total
value of the present CONTRACT.........................................
9.5. The basic values of the fines will be readjusted by the readjustment
factor calculated by the formula shown in subitem 6.2.1 of this CONTRACT
and in force in the period of its imposition..........................
9.5.1. The fines will be forwarded by the Inspection, for discount by the
Disbursing Office, as soon as the pertinent definitive readjustment
factors are known.....................................................
9.5.2. In the event of balance, PETROBRAS reserves itself the right to make or
complement the deduction in collection document(s) related to any other
contract deed eventually entered into with the CONTRACTOR, or to use any
other adequate means to settle the debt, if necessary.................
<PAGE>
34
9.6. In a written notice and without prejudice of the capacity to rescind
the CONTRACT, PETROBRAS may impose upon the CONTRACTOR a compensatory
fine of 100% (one hundred per cent) of the amount of the conviction,
due to default of its labor, social security or tax obligations.
9.6.1 The payment of said fine will not exempt the CONTRACTOR from the
obligation to reimburse PETROBRAS for the amount imposed upon it as a
result of an eventual joint conviction passed by a Labor Court or by the
proper administrative jurisdictions..................................
9.6.2 The CONTRACTOR will be fined in the percentual of 5% (five percent) on
the amount of the invoice in the event it does not submit the GRPS or
submits it at variance................................................
9.6.2.1. The GRPS is considered at variance if it does not have proof of
payment of social security contributions of all of the CONTRACTOR's
Brazilian crew working in the fulfillment of the CONTRACT.............
9.7. The CONTRACTOR may appeal against the imposition of the fine, in a
declaration, within the non-deferrable time limit of 15 (fifteen)
consecutive days as of the date the notice is received................
(End of Clause)...............................................................
<PAGE>
35
TENTH CLAUSE - INSPECTION.....................................................
10.1. The inspection of the services contracted herein will be carried out by
PETROBRAS' representatives, and the CONTRACTOR undertakes to allow
their free access to the UNIT and to the service locations and to
comply immediately with the observations of such inspection, which will
have ample powers to:.................................................
10.1.1. Determine the interruption of the evaluation and/or completion of the
well, for the purpose of carrying out formation testing, corings,
electric loggings and other services deemed necessary;................
10.1.2. Determine, provided it comes to its knowledge and is within its
capacity, the suspension of the services which perhaps are being carried
out in disagreement with the good technique or which threaten the safety
of persons or assets of PETROBRAS, third parties and of the CONTRACTOR
itself, complying with subitem 2.1.7 of ATTACHMENT I..................
10.1.3. Refuse the use of improper or inadequate techniques, as well as the
operations that do not comply with the established programs.
10.1.4 Refuse the employment of condemned or improper materials, tools and
production string components, which do not comply with PETROBRAS' and
API's standards.......................................................
10.1.5. Order the withdrawal, from the work site, of any of the CONTRACTOR's
employees who, in PETROBRAS' opinion, may endanger the good performance
of the services or hinder its inspecting activities ..................
10.1.6. Certify on the accuracy of the information reported daily by the
CONTRACTOR............................................................
10.1.7. Notify the CONTRACTOR, in writing, on the imposition of the fines
provided for in this CONTRACT, including those referring to the
CONTRACTOR's action or omission.......................................
10.1.8. Request from the CONTRACTOR a detailed report on any accident occurred
and on any operation or repair performed..............................
<PAGE>
36
10.1.9. Request from the CONTRACTOR the documentation regarding the proof of
payment of its labor obligations, including social security
contributions (Negative Debt Certificate) and deposits in the FGTS, for
the crew members......................................................
10.2. Recordings-PETROBRAS' Inspection should record its observations on the
Driller's Log approved by the IADC and on the Daily Drilling Certificate
(ADP), to safeguard the rights and liabilities foreseen in this
CONTRACT..............................................................
10.3. During the period of validity of the CONTRACT, PETROBRAS will carry out
evaluation of the CONTRACTOR's performance, covering the groups in equipment and
material, human resources, installations, quality and efficiency. The results of
the performance evaluations will be notified and consolidated by means of
service performance certificates.........
(End of Clause)...............................................................
<PAGE>
37
ELEVENTH CLAUSE - RECISION....................................................
11.1 PETROBRAS may rescind the present CONTRACT, without the CONTRACTOR being
entitled to any right to indemnity and/or withholding in the following
cases:................................................................
11.1.1. Nonfulfillment, or irregular fulfillment of contract clauses,
specifications, operations or time limits, as well as the repeated
perpetration of faults in the fulfillment of the CONTRACT;............
11.1.2. Total or partial subcontracting of the object of the present CONTRACT,
the association of the CONTRACTOR will another, merger/ division or
total or partial incorporation, except if allowed for in this CONTRACT,
which affects the good fulfillment of this instrument.................
11.1.3. Interruption of the services for more than 60 (sixty) days, without
good cause and previous notice to PETROBRAS;..........................
11.1.4. Decree of the CONTRACTOR's bankruptcy.................................
11.1.5. Suspension of the services for more than 60 (sixty) days .............
11.1.6. When the limit for the imposition of penalties provided for in item 9.4
of this CONTRACT is attained........................................
11.1.7. Slowness in the performance of the works, leading PETROBRAS to prove the
impossibility of completing the services within the established time
limits................................................................
11.1.8. Noncompliance with the determinations of PETROBRAS' agent appointed to
follow-up and inspect the fulfillment of the CONTRACT, as well as those
of his superiors......................................................
11.1.9. The dissolution of the CONTRACTOR.....................................
11.1.10 The social change or the modification of the company's purpose or
structure, which in PETROBRAS' opinion, hinders, the performance of the
services;.............................................................
11.1.11 Delay in the beginning of the fulfillment of the CONTRACT for more
than 180 (one hundred and eighty) days................................
<PAGE>
38
11.1.12 Rescision of the CHARTERING CONTRACT of the UNIT entered into between
PETROBRAS and the INTERVENIENT PARTY..................................
11.1.13. If the limit set forth in subitem 2.1.9 of ATTACHMENT II to this
CONTRACT is attained..................................................
11.1.14. If the limits set forth in NOTE 2 of REF 102 of ATTACHMENT II to this
CONTRACT is attained..................................................
11.1.15. Non-submittal of the proof of fulfillment of labor obligations towards
the employees directly involved in the services object of this CONTRACT,
including social security contributions and deposits in the FGTS, when
requested by the Inspection, or if such default is proved.............
11.1.16. Non-submittal or submittal at variance of the GRPS, when the
corresponding invoice is delivered....................................
11.1.16.1. The rescision for this reason does not prevent PETROBRAS from
imposing the respective fine, foreseen in 8.7.2;......................
11.2. In the event of rescision of the contract deed for the reasons foreseen
in 10.1, PETROBRAS:
a) will take over the object of the contract deed, on the stage and
location where it is found;........................................
b) will enforce the contract guarantee, if any, for the reimbursement of
the amounts of fines and indemnities due to it;.......................
c) will withhold the credits arising from the contract deed, up to the
limits of the damages caused to it;...................................
11.3. After the CONTRACT is rescinded, as set forth in this Clause, the
CONTRACTOR is liable, in legal and contract fashion, for the violation
or inadequate performance which gives rise to
<PAGE>
39
the rescision, as well as f or the reimbursement of damages which
PETROBRAS may come to sustain.........................................
11.4. After the CONTRACT is rescinded, PETROBRAS, at its exclusive judgment,
may adjudicate the operations object thereof to whom it deems
appropriate, without behoving the CONTRACTOR any consultation or
interference, claim and/or indemnity, for whatever title, and the
CONTRACTOR will be liable to legal and contract penalties, besides
answering for damages PETROBRAS may sustain...........................
11.4.1. The CONTRACTOR is also liable for the pertinent administrative
sanctions, its full defense being guaranteed..........................
11.5 In the event PETROBRAS does not impose the right to rescind the present
CONTRACT according to this Clause, it may, at its absolute discretion,
withhold the payments of pending invoices, until the CONTRACTOR fulfills
the contract condition it has infringed, but such fact will not
represent novation nor will it generate rights that may be claimed by
the CONTRACTOR........................................................
(End of Clause)...............................................................
<PAGE>
40
TWELFTH CLAUSE - FISCAL CHARGES...............................................
12.1. Taxes (taxes, fees, emoluments, fiscal and parafiscal contributions)
that are due as a direct or indirect result of the present CONTRACT,
or of its fulfillment, will be the exclusive responsibility of the
taxpayer, so defined in the tax rule, with no right to reimbursement.
PETROBRAS, as the disbursing source, will discount and withhold within
the legal time period, from the payments it makes, the taxes it is
liable to by the laws in force........................................
12.1.1. The CONTRACTOR states that, in quoting its prices, it has taken into
account the taxes (taxes, fees, emoluments, fiscal and parafiscal
contributions) charged on the fulfillment of this CONTRACT, and it
cannot make any claim due to error on such evaluation, for the purpose
of requesting a price revision or reimbursement of payments set down by
the proper authority..................................................
12.1.2. once found, during the period of validity of the CONTRACT, that the
CONTRACTOR has unduly added to its prices amounts corresponding to
taxes, fiscal and/or parafiscal contributors and emoluments of any kind
that are not charged to the performance of the services agreed upon,
such values will be immediately excluded, with the consequence reduction
of the prices practiced and reimbursement of 'amounts that may have been
paid to the CONTRACTOR...............................................
12.2. If, during the period of validity of this CONTRACT, any of the following
events occur: creation of new taxes; extinction of existing taxes;
changes in the aliquots; establishment of tax incentives of any kind;
and exemption or abatement of federal, state or county taxes; which,
provedly come to increase or reduce the burdens of the parties to the
contract, the prices will be revised, so as to fit them into the changes
made, compensating, at the first opportunity, any differences arising
from such changes. However, if it is a question of tax incentives, the
advantages arising therefrom will always be for PETROBRAS.............
<PAGE>
41
(End of Clause)...............................................................
<PAGE>
42
THIRTEENTH CLAUSE - FORCE MAJEURE.............................................
13.1 PETROBRAS and the CONTRACTOR will not be liable for the nonfulfillment
of their respective obligations in case of events that characterize an
act of God or force majeure defined in the sole paragraph of Article
1.058 of the Brazilian Civil Code. Any suspension of performance due to
this item will be limited to the period during which such cause or its
consequences exist, and such period will be added to the duration of the
CONTRACT mentioned in the Second Clause of the present CONTRACT.
However, the CONTRACTOR is assured the right to receive the rate
provided for in REF 104 of ATTACHMENT III, with the exception of the
exemption from payment set forth in subitem 2.1.4 of the ATTACHMENT II,
and the reimbursements mentioned in this CONTRACT, and furthermore, the
parties will severally assume their losses............................
13.2. If the circumstance that justify the invoking of the existence of an act
of God or force majeure occurs, the party unable to fulfill its
obligations will immediately notify the other party, in writing, on the
occurrence and its consequences.......................................
13.3. If the impediment arising from the force majeure lasts for more than
90 (ninety) consecutive days, any of the parties may opt for the
termination of the CONTRACT, with both parties complying with their
mutual obligations due until the date of the beginning of said
impediment............................................................
(End of Clause)...............................................................
<PAGE>
43
FOURTEENTH CLAUSE - ASSIGNMENT AND TRANSFER...................................
14.1. The CONTRACTOR cannot assign or transfer, in whole or in part, the
present CONTRACT, except with PETROBRAS' prior authorization in writing.
14.2. The CONTRACTOR cannot assign or give in guarantee, at any title, in
whole or in part, the credits of any kind, arising or deriving from the
present CONTRACT, except with PETROBRAS' prior authorization in writing.
The prior authorization will obligatorily state that PETROBRAS imposes
upon the assignee of the credits the exceptions that behooves it,
mentioning expressly that the payments to the assignee will be
conditioned to the fulfillment, by the assignor, of all of its contract
obligations....................................................
14.3. The occurrence of the above mentioned events, duly authorized by
PETROBRAS, does not exempt the CONTRACTOR from any of its contract
obligations...........................................................
14.4. PETROBRAS may assign or transfer, in whole or in part, the present
CONTRACT, under commercial conditions to be agreed upon by the parties.
(End of Clause)...............................................................
<PAGE>
44
FIFTEENTH CLAUSE - CONTRACT RELATIONSHIPS.....................................
15.1. This CONTRACT is related to another one for chartering the UNIT, signed
on this same date between PETROBRAS and MARITIMA NAVEGACAO E ENGENHARIA
LTDA.
(End of Clause)...............................................................
<PAGE>
45
SIXTEENTH CLAUSE - INTERVENIENCE..............................................
16.1. Clause non-applicable in this Contract...................................
(End of Clause)...............................................................
<PAGE>
46
SEVENTEENTH CLAUSE - ACCEPTANCE...............................................
17.1. After the services are completed in strict compliance with the
conditions set forth in the present deed, PETROBRAS will accept them
by means of a DEFINITIVE ACCEPTANCE DEED signed by the parties........
17.1.1. Before the signature of the DEFINITIVE ACCEPTANCE DEED, the CONTRACTOR
will comply with all of the Inspection's requirements regarding claims,
without any charge to PETROBRAS.......................................
17.1.2. The signature of the DEFINITIVE ACCEPTANCE DEED does not exempt the
CONTRACTOR from the liabilities provided for in this CONTRACT and in the
laws in force.........................................................
(End of Clause)...............................................................
<PAGE>
47
EIGHTEENTH - CLAUSE LIABILITY.................................................
18.1. PETROBRAS' and the CONTRACTOR'S liability f or damages will be limited
to the direct damages in accordance with the Brazilian Civil Code and
pertinent laws, with exception of loss of profit and indirect damages,
the indirect damages being limited to 100% (one hundred percent) of the
total contract value..................................................
(End of Clause)...............................................................
<PAGE>
48
NINETEENTH CLAUSE - COMPLEMENTARY DOCUMENTS...................................
19.1. The ATTACHMENTS mentioned below are an integral part of the present
CONTRACT and, in the event of disagreement between the Attachments and
the CONTRACT, the text of the CONTRACT will prevail...................
ATTACHMENTS
I - Technical specifications of the UNIT...................................
II - Applicability of the Rates and Incidents in the Performance............
III - Unit Prices Spreadsheet................................................
IV - Responsibilities in the Performance and Mutual Obligations.............
V - List of Specialized Personnel;.........................................
VI - Environment Operating Conditions.......................................
VII - PETROBRAS' Safety Rules................................................
VIII - Radio Communication and Radio Beacon Frequency Plan....................
IX - Equipment Testing Program..............................................
X - Procedures in the Event of Fatal Accidents.............................
(End of Clause)...............................................................
<PAGE>
49
TWENTIETH CLAUSE - JURISDICTION...............................................
20.1. The Jurisdiction of the County of the Capital of the State of Rio de
Janeiro will be competent to settle any questions arising from the
present CONTRACT, with the express waiver, by the parties, of any other,
however privileged ..............................................
AND BEING THUS AGREED, the parties sign the present deed in 3 (three)
copies with the same tenor, with the witnesses below..................
Rio de Janeiro, (blank).......................................................
PETROLEO BRASILEIRO S.A.-PETROBRAS............................................
(SIGNED:) LUIZ EDUARDO G. CARNEIRO............................................
LUIZ EDUARDO G. CARNEIRO-EXECUTIVE SUPERINTENDENT OF EXPLORATION AND PRODUCTION
SOUTH - SOUTHEAST.............................................................
MARITIMA NAVEGACAO E ENGENHARIA LTDA..........................................
(SIGNED:) GERMAN EFROMOVICH...................................................
GERMAN EFROMOVICH - PRESIDENT
WITNESSES:
(SIGNED:) ANDRE MESQUITA PINTO................................................
CPF No. 299.579.427-49
(SIGNED:) ROBERTA LOMENHA DA COSTA............................................
CPF No. 034.053.477-00........................................................
<PAGE>
50
CONTRACT 101.2.101.97-0.......................................................
SERVICES RENDERING
ATTACHMENT II
APPLICABILITY OF THE RATES AND INCIDENTS IN
THE PERFORMANCE.
1 - APPLICABILITY OF THE RATES - DEFINITION OF THE SERVICE RATES PER 24
(TWENTY-FOUR) HOUR DAY........................................................
REF 101 - OPERATION RATE - It will be applied during the activities requiring
the use of the UNIT, such as electric logging, formation testing, completion
and workover operations, including drilling lines scouring and cutting
operations....................................................................
REF 102 - REPAIR RATE - In the periods when there is an interruption of the
activities that require the use of the UNIT, mentioned in Ref 101 of this
ATTACHMENT and the operations for Moving the UNIT between locations, Ref 105
of this ATTACHMENT, due to maintenance, including replacement of mud pump
spare parts, and/or repair in the UNIT's equipment, or in those which supply
is the CONTRACTOR' s, responsibility, no rate will be due.....................
Note 1. The repair period will be considered as of the interruption of the
operation that is being performed, until the return to the same
situation when the interruption occurred, except for the periods when
the interruption in the repair activities occur due to adverse sea
conditions, as set forth in NOTE 2 of Ref. 104........................
Note 2. In the event the CONTRACTOR remains in Repair Rate for an accumulated
total of 30% (thirty percent) of the time, for any period of 6 (six)
contract months, PETROBRAS may rescind the present CONTRACT, based on
subitem 10.1.14 of this CONTRACT.....................................
<PAGE>
51
Note 3. It will be considered as repairs the occurrences due to wash outs in
the drill pipes and in the other elements of the drill string,
belonging the CONTRACTOR, with exception of those arising from the
presence of H2S and from abnormal mechanical conditions occurred in the
well.
Note 4. At the Inspections discretion, for the maintenance of the BOP, the
CONTRACTOR may be granted a franchise of up to 24 (twenty-four) hours
between the instant the BOP is set of the test stump, until its
operational withdrawal, and the moment of its movement for the next
lowering in another well, without the CONTRACTOR entering into the
repair rate, provided such maintenance is carried out according to
international standards. In the period within these 24 (twenty-four)
hours intended exclusively for the BOP maintenance, the waiting rate
(Ref. 104) will be due...............................................
REF. 103 - RATE ADDITIONAL (RA) - The CONTRACTOR will be entitled to the receipt
of a Rate Additional ........................................................
REF. 104 - WAITING RATE (TE) - corresponds to 95% (ninety-five percent) of the
operation rate (TO) and which will be applied in BAD WEATHER, FORCE MAJEURE and
WAITING situations, as defined below:
1) BAD WEATHER SITUATIONS - in the event of stoppage of the operations when
environmental conditions are so severe as to endanger the UNIT's operating
capacity, the limitations in ATTACHMENT VI, being complied with, making the
operations unstable or unsafe or preventing support vessels to have access
to the UNIT, or preventing the tugs' operations, at the time of change of
locations, although the UNIT may operate normally, in spite of the bad
weather..................................................................
2) FORCE MAJEURE SITUATIONS - during the period when the UNIT cannot operate,
due to act of God or force majeure, as defined in the THIRTEENTH CLAUSE of
the
<PAGE>
52
CONTRACT, until the removal of the impediment or the rescision of the
CONTRACT, as the case may be.
3) WAITING - waiting for the arrival, maintenance or availability of
materials from PETROBRAS or third parties, under PETROBRAS' responsibility,
even if the maintenance is made in the UNIT; waiting for daylight to carry
out formation tests; waiting for orders from PETROBRAS, such as, but not
limited to: change of programs, definition to proceed with the completion
or other production activity, rest for PETROBRAS' team or of those of third
party at PETROBRAS' service; waiting for towage or support vessels.......
NOTE 1. The period spent in disconnecting the LMRP from the BOP due to
environment conditions, will be considered as BAD WEATHER situation,
until the return to the previous situation............................
NOTE 2. If a BAD WEATHER situation occurs which interrupts a repair activity,
the Waiting Rate (Ref 104) with a 25% (twenty-five percent) reduction,
will be due during that period........................................
REF. 105 - MOVING RATE - corresponds to 95% (ninety-five percent) of the
Operation Rate (TO) and will be applied during the following periods:
a) Beginning of the CONTRACT-After the acceptance of the UNIT's
equipment operating conditions, once the general testing provided for
in ITEM 3. 1. of the CONTRACT has been carried out, until the spud in
of the first well or reentry in a new well (beginning of the running
of the first tool for access to the well):.........................
b) Between locations-After the end of the drilling operations,
completion or intervention in a well, with the arrival of the BOP or
tool used in the well (the one which occurs last) in the moon pool,
until the spud in or reentry in a new well (beginning of running the
first tool for access to the well).................................
<PAGE>
53
NOTE: In this period are included the DP system calibration and tests, always
in each new location, and in others in each contract year or at any
time, when requested by PETROBRAS.......................................
c) End of the Contract-After the end of the spud in or intervention
operations in the last well, with the arrival of the BOP or tool used
in the well (the one which occurs last) in the moon pool, until the
UNIT's arrival in a sheltered waters location, chosen in common
agreement between the parties, or, if there is PETROBRAS' equipment
still aboard, until the withdrawal of such equipment from the
UNIT...........................................................
2 - INCIDENTS IN THE PERFORMANCE..............................................
2.1. EXEMPTION FROM PAYMENT - PETROBRAS will be exempted from the payment of
the rates foreseen in this ATTACHMENT, during the period in which
occurs:...............................................................
2.1.1. Interruption of the services due to the CONTRACTOR's duly proven fault
arising from operational error and/or lack of material or equipment,
inclusive due to the loss of equipment or subaquatic spare parts......
2.1.2. Stoppage of the services and/or of the UNIT due to measures related to
impositions by made the insurers......................................
2.1.3. CONTRACTOR's refusal to operate under the conditions foreseen in
ATTACHMENT VI-Environmental Operation Conditions......................
2.1.4. Stoppage of the services and/or of the UNIT for inspection or dockage
purposes, including surveys and dockages arising from act of God or
force majeure, as defined in the THIRTEENTH CLAUSE of the CONTRACT, the
corresponding expenses also running for the CONTRACTOR's account......
NOTE 1. The exemption from payment will begin in the moment there is an
interruption of the operational continuity object of this CONTRACT,
even if the withdrawal of all or part of
<PAGE>
54
PETROBRAS' and/or the CONTRACTOR's cargo becomes necessary for the
inspection and/or dockage.............................................
NOTE 2. The end of the exemption from payment, due to the inspection and/or
dockage, will occur:
a) On the return to the same location, the moment the operations returns
to the previous situation;.........................................
b) In the mobilization for another location, the moment the UNIT starts
sailing after PETROBRAS' and/or the CONTRACTOR's materials have been
put back on board..................................................
2.1.5. Occurrence of kick, drill string sticking, loss of circulation, fishing
or abandonment, caused by the CONTRACTOR's duly proven action or
omission, from the moment the problem was ascertained, until the return
to the situation prior to its occurrence, or displacement to another
location, in the event of abandonment.................................
2.1.5.1.The exemption from payment referred to in 2.1.5 will be limited to a
period of 15 (fifteen) days, per event, after which the reduction
foreseen in subitem 2.2.3 of this ATTACHMENT will be applied..........
2.1.6. Occurrence of blow out caused by the CONTRACTOR's duly proven action or
omission, from the moment the problem was ascertained, until the return
to the situation prior to its occurrence..............................
2.1.6.1. The exemption from payment referred to in item 2.1.6 will be limited to
a period of 45 (forty-five) days, after which the reduction foreseen in
subitem 2.2.4 of this ATTACHMENT will be
applied.................................................................
2.1.7. Suspension of the services, determined by PETROBRAS' Inspection, based
on item 10.1.1 of the CONTRACT........................................
2.1.8. Interruption of the operations due to a failure occurred in any of the
UNIT's equipment, at the time of the testing to be carried out according
to item 3.1 of the CONTRACT...........................................
<PAGE>
55
2.1.9. In the occurrence of events of exemption from payment provided for in
subitems 2.1.1, 2.1.2, 2.1.3, and 2.1.7, for a total accumulated period
exceeding 30% (thirty percent) in any 6 (six) month period, PETROBRAS
may rescind the present CONTRACT, based on its subitem
11.1.13...............................................................
2.2. REDUCTION IN THE DAILY OPERATION, WAITING AND MOVEMENT RATE...........
The rates foreseen in this ATTACHMENT will be reduced in the following cases:.
2.2.1. Total or partial inoperativeness or malfunction of any equipment which
delays or hinders the operations, such as, but not limited to, winches,
kelly spinner, geolograph, current meter, air compressors, shale shaker,
mixing pumps, mud laboratory equipment and bulk receipt and transfer
systems, are reason for the reduction of the daily rate provided for in
Ref 101, in 1% (one percent), cumulative per equipment, provided the
CONTRACTOR is notified in writing in the Daily Drilling Certificate
(ADP), by PETROBRAS' Inspection and which, after the time limit the
latter has set to repair said equipment, such repair has not been
made...............................................................
2.2.2. Low Efficiency-REFERENCE RATES 101 and 105 of this ATTACHMENT will
suffer a 20% (twenty percent) reduction, in the event low efficiency is
verified, according to the operating efficiency parameters listed below.
Such reduction will be applied during the whole corresponding activity
period, which low efficiency is verified:
Operating Parameters:.........................................................
- - - Maneuver of the drill string in a cased well (except BHA):..................
o Inside the riser and 20" casing = 500 m/h............................
o Inside the 13 3/8" casing = 600 m/h..................................
o Inside of 9 5/8" casing = 700 m/h................................
<PAGE>
56
- - - Break of DP's per unit = 25jt/h.............................................
- - - Casing string run in the sea/inside the riser/previous casing (joints
approximately 12 m long)................................................
o 30" Casing - 2 jt/h..............................
o 20" Casing - 5 jt/h.............................
o 13 3/8" Casing - 13 jt/h.............................
o 9 5/8" Casing - 18 jt/h.............................
o 7" Casing - 15 jt/h.............................
- - - Running of drilling riser, excluding normal time for testing (50 ft joint):
45/m/h .................................................................
- - - Pulling of drilling riser (50 ft joints): 60 m/h............................
- - - Installation or pulling of the kill/choke lines/ telescopic joint/stretchers:
6.0h..................................................
- Diverter installation or pulling: 2.0h.....................................
- Assembly of the dampening lines in the M.R.: 1.5h..........................
- Assembly of the flexitube equipment: 5.Oh..............................
- Assembly of the production tail: 2.0h....................................
- Tubing running or pulling, per unit-150 m/h................................
- Tubing running or pulling per section-300 m/h..............................
- Completion risers running or pulling-50 m/h................................
- Assembly of terminal head and slings-2.0 h.................................
- Moving of ANM to/from the moon pool-3.0 h..................................
- Moving of tree cap or tree running tool to/from the moon pool-2.5h ........
- Assembly of lubricator and wire line BOP-1.5h..............................
NOTE: The above mentioned operating parameters are based on normal weather
conditions..............................................................
2.2.3. Beginning on the 16th (sixteenth day), inclusive, of the occurrence, of
kick, drill string sticking, loss of circulation or fishing, caused by
the CONTRACTOR's duly proven action or
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57
omission until the return to the situation prior to its occurrence, the
applicable rate will be reduced by 50%(fifty percent).................
2.2.4. Beginning on the 46th (forty-sixth) day, inclusive, of the occurrence of
Blow-out caused by the CONTRACTOR's duly proven action or omission,
until the return to the situation prior to its occurrence the applicable
rate will be reduced by 50% (fifty percent)...........................
2.3. Period of Validity of the CONTRACT Rates-the contract rates set forth in
this ATTACHMENT will apply in the period set forth below:
a) Beginning: release of the UNIT, by PETROBRAS, to sail to the first
location, after the equipment general testing provided for in item
3.1 of the CONTRACT has been carried out, with the exception of the
provision in its subitem 3.1.1.1.................
b) End: after the end of the drilling or completion of the last well,
with the UNIT's arrival at a port or sheltered waters chosen by
common agreement between the parties, and if there is PETROBRAS'
equipment still aboard, with the withdrawal of such equipment from
the UNIT...........................................
2.4. Blow-Out - PETROBRAS will be responsible for the well control operation
costs, in the event of blow-out and caving caused by the blow-out. Such
provisions apply only to the well control costs and do not, apply to the
loss of assets, lesions and/or damages caused by the blow-out, which are
protected by the provisions of the pertinent items of this CONTRACT. The
CONTRACTOR undertakes to place at PETROBRAS' disposal all of its
resources in personnel and equipment related to this CONTRACT, without
any additional charges to PETROBRAS. If the CONTRACTOR has contributed
with duly proven action or omission for the occurrence of the accident,
no rate will be due, until the solution of the problem, in compliance
with the provisions in subitems 2.1.6 and 2.2.4 of this ATTACHMENT....
<PAGE>
58
(End of ATTACHMENT)...........................................................
<PAGE>
59
ATTACHMENT III - UNIT PRICES SPREADSHEET
SERVICE RENDERING
UNIT PRICES SPREAD SHEET
OBJECT OF BID: SERVICES OF COMPLETION, EVALUATION AND OF OIL AND GAS WELLS, BY
MEANS OF THE USE OF THE FLOATING UNIT PROVIDED WITH DYNAMIC POSITIONING SYSTEM.
PLACE OF OPERATION: BRAZILIAN CONTINENTAL SHELF AND INTERNATIONAL WATERS.
UNIT'S NAME: AMETHYST 5
COMPANY'S NAME: MARITIMA NAVEGACAO E ENGENHARIA LTDA.
CODE ITEMIZATION UNIT UNIT PRICE. (US$)
07.201.351 OPERATION RATE (REF. 101) DAY 11,512.69
07.201.358 REPAIR RATE (REF. 102) DAY No rate will be due
07.201.362 WAIT. BAD-WEATHER RATE DAY (95% OF REF. 101)
08.201.363 WAIT.-FORCE MAJEURE RATE(REF.104.2) DAY (95% of Ref 101)
07.201.464 WAIT. RATE WAITING (REF.104.3) DAY (95% of Ref. 101)
07.201.366 MOVEMENT RATE (REF. 105) DAY (95% of Ref. 101)
09.252.008 MEALS (ITEM. 3.11. CONT. P.S.) EACH (MAXIMUM R$ 20.00/meal)
SIGNATURES DATE OF THE. PROPOSAL
PETROBRAS CONTRACTOR 05/13/97
(illegible) German Efromovich
<PAGE>
60
SERVICE RENDERING
ATTACHMENT IV
RESPONSIBILITY IN THE PERFORMANCE AND
MUTUAL OBLIGATIONS
1 - RESPONSIBILITIES IN THE PERFORMANCE
1. RESPONSIBILITIES IN THE PERFORMANCE.......................................
1.1. The CONTRACTOR should provide, at its own expenses, pipe inspection
according to API-RP 7 G Standard for drill string elements in use, at
every 15,000m drilled. This inspection should be necessarily made by
personnel accredited by PETROBRAS, and accompanied by PETROBRAS'
Inspection which will attest the drill string conditions in accordance
with the results of said inspection. The drill string elements rejected
by the Inspection will be immediately repaired and/or replaced by the
CONTRACTOR, which will assume the corresponding costs.................
1.1.1. The CONTRACTOR should make provisions so that the same numbering of the
parts is maintained for the period of validity of the CONTRACT........
1.1.2. The reports on the inspections made on the drill string, riser column,
and handling equipment will be submitted to PETROBRAS immediately after
their performance.....................................................
1.1.3. The CONTRACTOR should maintain a control of the elements of the string
used in each well, recording at each maneuver, in the driller's log,
which parts belong to the BHA in use, mentioning the inspection report
numbering.............................................................
1.1.4. The CONTRACTOR will provide, at its expenses, for the inspection of
the drill string, when requested in writing by PETROBRAS, in the event
of abnormal occurrences, such as wash-out or frequent string breaks...
<PAGE>
61
1.1.5. The CONTRACTOR will provide, at its expenses, for the inspection
according to API RP-8B standard, in each contract year, in all drill
string and casing handling equipment, such as, but not limited to,
slips, elevators, travelling tongs, hook, elevator arms, spiders,
drilling winch, etc. This inspection should be necessarily accompanied
by PETROBRAS' Inspection which will attest the drill string conditions
in accordance with the results of said inspection. The equipment
rejected by the Inspection will be immediately repaired and/or replaced
by the CONTRACTOR.....................................................
NOTE: The same procedure described in 1.1.5 will be applied to the riser
column and to its handling tools, complying with standard API RP2K....
1.2. Casing-The CONTRACTOR should measure and run the conductors and the
casing strings in accordance with the drilling programs established by
PETROBRAS.............................................................
1.2.1. The CONTRACTOR will keep the casing pipes with their respective
protectors............................................................
1.2.2. The CONTRACTOR will exert its best efforts to remove all recoverable
casing, when the well is abandoned....................................
1.3. Cementing, Formation Testing and Electric Logs-the CONTRACTOR will
provide facilities and give assistance to third parties, charged by
PETROBRAS, for the performance of cementing, electric log, drill string
testing, and other related services, complying with the programs and
safety rules set down by PETROBRAS....................................
1.4. Fishing-the CONTRACTOR should carry out all fishing operations that may
become necessary......................................................
1.5. Subsurface Pressures-the CONTRACTOR will exert its best efforts to
control subsurface pressures, always maintaining all safety equipment,
including, the ancillary ones, in good
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62
operating conditions, so as to avoid contamination of the drilling fluid
by hydrocarbons and fires resulting from blowouts.....................
1.6. Well Completion and Abandonment-the CONTRACTOR will complete or abandon
the wells in safety conditions, according to the programs set down by
PETROBRAS.............................................................
1.7. Drilling Reports-the CONTRACTOR undertakes to inform daily to PETROBRAS,
until 01:00h of the following day, the progress of the operations,
weather conditions, bulk and liquid stock consumption, and the status
of the equipment that comprise the vessel's dynamic positioning system,
and of others that the Inspection considers necessary, by means of
bulletins, reports and records approved by the IADC and/or required by
the Inspection........................................................
1.7.1. The duration of the delays or wastes of time, their reasons, and other
facts deemed important, will be recorded in detail in the Daily Drilling
Data..................................................................
1.7.2. Whenever PETROBRAS requests it, the CONTRACTOR will submit detailed
reports on the progress of the operations carried out, or on any
accident that may have occurred.......................................
1.8. The CONTRACTOR undertakes to inform immediately to PETROBRAS' Inspection
when the UNIT enters in a DEGRADED STATE..............................
1.8.1. The following situations are considered DEGRADED STATE: (to be defined
in common agreement between the parties)..............................
1.8.2. In the event of non-fulfillment of Clause 1.8, and the UNIT comes to
enter into yellow alert or red alert, a 20% (twenty percent) fine will
be charged on the operation rate during the whole period in which the
abnormality persists..................................................
1.9. The CONTRACTOR undertakes to measure the sea current profiles (intensity
and direction with reference to the true North) from the surface of the
sea down to the sea bottom, carried out at 0600 and 1200 GMT (Greenwich
Mean Time), and to deliver daily the data obtained to
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63
PETROBRAS. Such profiles should obligatorily cover the following depths:
20, 50, 150, 200, 250, 300, 350, 400m, and at every 100 (one hundred)
meters thereafter, until the last depth investigated corresponds to 5
(five) meters from the bottom of the sea...............................
1.9.1. The data should be delivered to PETROBRAS' Inspector, in disk and in a
format according to PETROBRAS' instructions...........................
1.10. Maintenance and Conservation-the CONTRACTOR will be responsible for the
maintenance, conservation and cleaning services of the UNIT and of all
existing equipment and installations, maintaining all safety devices in
perfect operating and adjustment conditions...........................
1.10.1. The CONTRACTOR undertakes to keep and maintain PETROBRAS's materials and
equipment, aboard the UNIT, as well as all that are object of the
loading and unloading operations in the support vessels...............
1.11. Ancillary Services-in equal price, time limit and availability
conditions, the CONTRACTOR should give preference to the ancillary
services rendered by Brazilian companies, when they become necessary for
the rendering of the services object of this CONTRACT.................
1.12. Lubricants-to preferably use lubricants of the make PETROBRAS
DISTRIBUIDORA-BR, submitting a justification in the event it uses
another make..........................................................
1.13. Wellhead inclination-the wellhead will not be installed with
inclinations exceeding 1 1/2 degree (one and a half degree). If, by the
Inspection's decision, the well continues to be drilled with an
inclination exceeding that limit, the possible wear of the inner parts
of the BOP, Lower Marine Riser, Adapt Riser and Spool, resulting
therefrom, will be PETROBRAS' responsibility, provided the CONTRACTOR
proves that said wear resulted from the operation in that well with
wellhead inclination exceeding 2 degrees (two degrees)................
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64
1.14. The CONTRACTOR should submit a description of its operating procedures
for the events of disconnection, formation testing, and BOP and choke
manifold testing......................................................
1.14.1. The procedures to be adopted will be discussed and approved by
PETROBRAS.............................................................
1.15. The Board Superintendents, Tool Pushers, and Drillers will be required
to have proven technical competence in kick control, attested by a
certificate of training in an entity recognized by PETROBRAS..........
1.16. The CONTRACTOR should carry out well shutoff training exercises every
week, on an occasion to be agreed upon with the Inspection, and
according to the rules in force in PETROBRAS, which operation should be
entered in the Driller's Log..........................................
1.16.1. The CONTRACTOR should submit a Safety Project for BOP, Choke Manifold
and in well shutoff training test, which will be approved by PETROBRAS'
Inspection............................................................
1.17. Drill Riser-the CONTRACTOR will maintain the drill riser inner joints
perfectly clean and free from debris and/or rust......................
1.17.1. The CONTRACTOR should perform the inner cleaning of all drill riser
joints, using the proper tool and compressed air, whenever the operation
following the riser string run is a completion and/or workover
operation.............................................................
<PAGE>
65
2. MUTUAL OBLIGATIONS
- - --------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
- - ----------------------------------------- --------------- --------------
PET CONT PET CONT
------- ------ ----- -------
1. Cementing, logging, formation and/or
production tests, directional drilling,
perforating, wireline, nitrogen unit,
flexitube, etc. X X and
2. Welding services necessary for drilling,
completion, well abandonment and
maintenance operations. X X
3. Technical supervision for manufacturing
and control of drilling fluid, completion. X X
4. CONTRACTOR's land support base (office
and storehouse). X X
5. Handling and storage of materials and
equipment belonging to or supplied by the
CONTRACTOR on land or in the UNIT. X X
6. Handling and storage of materials and
equipment of PETROBRAS or third parties,
aboard the UNIT. X X
7. Land transportation, cargo loading and
unloading of materials under the
CONTRACTOR's responsibility. X X
8. Fishing services. X X
9. Cleaning and painting services aboard the
UNIT, including those of PETROBRAS'
materials and equipment installed in
the UNIT. X X
10. Mess room, hostelry and meal supply
services:
- - - CONTRACTOR's personnel X X
- - - PETROBRAS' personnel (up to 1300 meals
a month) X X
- - - PETROBRAS' personnel (exceeding 1300 meals
a month) X X
11. BOP and riser lines tests, not programmed,
carried out with the Cementing Unit. X X
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66
12. Operations with special tools. X X
13. Air or sea transportation of the
CONTRACTOR's equipment and personnel
in the area of operation. X X
14. Air or sea transportation of the
CONTRACTOR's personnel in the area
of operation, besides those programmed
for shift changes and Supervision
personnel. X X or X
15. Air or sea transportation programmed
but not used by the CONTRACTOR,
without prior notice to PETROBRAS. X X
16. Air or sea transportation of the
CONTRACTOR's material and/or personnel,
in an emergency character, due to the
CONTRACTOR's failure or lack of
programming. X X
17. All customs expenses, fees, including
agent services, licences, taxes or
similar charges regarding the import
or shipment to the UNIT of all
equipment, spare parts and
consumables of the CONTRACTOR. X X
18. All expenses, including those with
licences, taxes or similar charges
regarding the vessel's adaptation and
operation in accordance with the Laws,
Rules, Decrees, Administrative Rules
and Instructions in force in Brazil. X X
19. Services of submarine inspection,
measurement, intervention, etc. with a
remote operated submarine vehicle. X X
20 Services to interconnect the boom lines
with the burners. X X
21 Special repair and recovery services
with qualified welding in equipments
and lines belonging to:
a) PETROBRAS X X
b) CONTRACTOR X X
22. Communication services via satellite,
when used by:
- PETROBRAS X X or X
- the CONTRACTOR X X or X
23. Maintenance of communication service
via satellite. X X or X
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67
24. Rental of Brasilsat satellite signal X X or X
25. Rental of satellite signal for the DGPS X X
26. Services in the burners supplied by
Contractor.
- Operation during production tests X X
- Maintenance and repairs X X
27. Services for the Remote
- Operation Vehicle (ROV): Installation,
operation, maintenance and removal of
the vehicle X X
- Welding services and adaptation work
for the installation and removal of
the vehicle, winch, command cabin,
storehouse and workshop X X
End of Attachment)............................................................
<PAGE>
68
ATTACHMENT V
LIST OF (MINIMUM) SPECIALIZED PERSONNEL ABOARD
- Captain or Barge 1
- Tool Pusher (1 superintendent on board) 2
- Driller 2
- Assistant Driller 2
- Derrickman 2
- Roughneck 6
- Crane operator 2
- Area Man 8
- Welder 2
- Watchstander 2
- Subsea Engineer 1
- Mechanic 3
- Electrician 3
- Radio Operator (Portuguese speaker) 2
- Male nurse 1
- Storekeeper 1
- Safety guard 1
NOTE: Supplementary personnel will be supplied according to the CONTRACTOR's
conveniences and needs or to comply with the requirements of government
laws....................................................................
(End of Attachment)...........................................................
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69
ATTACHMENT VI
ENVIRONMENTAL OPERATING CONDITIONS
(PERMISSIBLE LIMITS FOR ENVIRONMENTAL CONDITIONS ACTING SIMULTANEOUSLY)
- - --------------------------------------------------------------------------------
PITCH
HEAVE OR ROLL WIND WAVE CURRENT
OPERATIONs (feet) (Degrees) (MPH) (feet) (knots)
- - --------------------------------------------------------------------------------
Conductor's jetting/driving 2.0 2.5 30 3.0 1.5
Drilling 2.5 3.0 30 3.0 1.5
Casing running 2.0 3.0 30 3.0 1.5
Casing hanger setting 1.5 2.0 30 2.1 1.5
BOP running 1.5 1.5 19 2.1 1.0
BOP setting 1.5 1.5 19 2.1 0.75
Maneuvering 3.5 3.0 44 8.5 1.5
LMPR disconnection 7 4 51 10.5 1.0
LMRP connection 1.5 1.5 19 2.1 0.75
Formation testing 3.5 4.0 44 8.5 1.5
Operation with boats 2.5 3.0 39 6.7 1.5
Running the ANM (lay-away) 1.5 1.5 19 2.1 0.75
Running the ANM (without lines) 1.5 1.5 19 2.1 0.75
Operation with flexitube 2.0 3.0 30 5.0 1.5
Operation with wire-line 3.0 4.0 44 8.5 1.5
Operation with BAP 2.5 3.0 39 6.7 0.75
(End of Attachment)...........................................................
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70
ATTACHMENT VII
PETROBRAS' SAFETY RULES
1. Service Rule No. 46/71:_________________________________________________
o Safety Rules for Offshore Operations______________________________
2 Service Order No. 01/72:________________________________________________
o Operational Safety Rules - Continental Shelf______________________
3. Service Rule No. 41/72L_________________________________________________
o Electricity-Safety Rules__________________________________________
4. Service Order No. 01/76:________________________________________________
o Industrial Safety Rules (general)_________________________________
o Industrial Safety Rules (Drilling)________________________________
o Industrial Safety Rules (Production)______________________________
5. General Safety Manual___________________________________________________
o Safety and Environmental Instruction for Contractors (E&P-BC)____
(End of Attachment)...........................................................
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71
ATTACHMENT VIII
EQUIPMENT TESTING PROGRAM
In order to carry out the UNIT's equipment testing in an easier and
more agile manner, the CONTRACTOR is to submit to PETROBRAS, as quickly as
required the following documents:.............................................
1. CERTIFICATES............................................................
a) Survey and Appraisal Report, updated and valid for the fiscal
year regarding the Unit offered, issued by one of the entities:
ABS, NOBLE & DENTON, DNV, LLOYDS or BUREAU VERITAS, and if the
report is issued abroad, it will be translated into Portuguese by
a sworn public translator and notarized in the Brazilian
Consulate.........................................................
b) Classification or Class Confirmation Certificate for hull and
equipment, compatible with the proposal submitted (certified
copy);............................................................
c) Report on claims from the classification societies mentioned in
the Class Confirmation Certificate (in the event there are
claims);..........................................................
NOTE: PETROBRAS will evaluated the above mentioned documents and will
mention in what time limits eventual claims will be settled, and at
PETROBRAS' judgment, it can be at the time of the Unit' s inspection or
at mobilization after the contract is signed............................
d) Freeboard Certificate;............................................
e) IOOP (International Oil Pollution Prevention) Certificate;........
f) IMO-MUD-CODE Certificate-Mobile Offshore Drilling Unit-latest
edition (unnecessary for Drill Ship);.............................
g) Cargo Ship Safety Equipment Certificate;..........................
h) Cargo Ship Safety Construction;...................................
NOTE: All documents required are to be within their period of validity........
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72
2. INDUSTRIAL SAFETY AND ENVIRONMENTAL CONTROL.............................
- Manuals and emergency plans in the Portuguese Language............
3. STORAGE CAPACITY........................................................
- Complete floor plan of bulk movement system, specifying:.........
a) Exclusive lines to move cement;...................................
b) Exclusive lines to move bentonite and baritine;...................
c) Location and type of bulk line valves and their respective
driving systems;..................................................
d) Pneumatic lines for cleaning and clearing bulk lines;.............
e) Location of the manometers;.......................................
f) Quantity, flow, operation pressure and location of compressors;...
g) Quantity, flow, operating pressure and location of the air drying
unit(s);..........................................................
h) Schematic drawing of each silo with their respective aeration
systems and points of connection with the bulk lines..............
4. FLUID CIRCULATION AND PROCESSING SYSTEM.................................
- Sketch of the system emphasizing pulsation dampers (suction and
tamping), safety valves, feed pumps, position of the suction
lines in relation to the suction sieves' tanks and filters........
- Floor plan of the drilling fluid feed and discharge lines showing
the flexibility in relation to the sand traps and mud tanks.......
- Floor plan of the degasser instalation showing the active tank,
separate processed mud and gas discharge lines, emphasizing the
connection point of this line with the gas discharge line.........
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73
- Floor plan of the mud tanks system, emphasizing the supply lines,
gun lines, mixture funnel and centrifugal pumps interconnection
lines.............................................................
5. WELLHEAD SAFETY EQUIPMENT SYSTEM........................................
- Sketch of the BOP/LMRP, specifying lines, valves and
measures/dimensions...............................................
- Floor plan of the kill and choke lines from the BOP to the choke
manifold, specifying valves, connections, dampener chambers,
anchorage points and interconnection with the other systems.......
- Floor plan of the atmospheric air separator.......................
- Layout, of the trip tank instalation giving the following
information:................................................
a) Capacity;..................................................
b) Location;...................................................
c) Sensitivity;...............................................
d) Measuring system;..........................................
e) Scale type;.................................................
f) Driller's scale visualization conditions;..................
g) Supply System for the above item...........................
- Floor plan of the stand pipe manifold, specifying lines, valves,
manometers and interconnections with the other systems............
- Inspection report on the riser, riser handling tools and
connectors, telescopic joint and flexible joint, according to the
API RP 2P and RP 2Q standards, with update date not exceeding 1
year..............................................................
NOTE: If the reports indicate the need of repair in some equipment, the
service performance certificates will also be submitted.................
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74
- Biannual inspection certificate of the BOP, with the
manufacturer's approval...........................................
- Proof of technical hability of the well drilling and control
personnel.........................................................
- To supply an internal maintenance and rust prevention program for
the marine risers and kill and choke lines........................
6. ENERGY GENERATION SYSTEM................................................
- Unifilar diagram of the energy generation and distribution
system............................................................
7. STABILITY
- To submit the vessel's stability curve, updated in the proposal's
conditions, in keeping with the environmental conditions...........
8. DYNAMIC POSITIONING SYSTEM (including the motor generators assembly,
thrusters and propellers)..............................................
- Schematic diagram of the dynamic positioning system...............
- To submit the inspection and tests procedures to be carried out
at every new location.............................................
- To submit the tests and inspections procedures to be carried out
at the end of each contract year..................................
9. DRILLING STRING AND ACCESSORIES.........................................
- Inspection report on all equipment of the drilling and completion
strings, subs and accessories (used equipment)....................
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75
- Purchase voucher of the drill and completion strings, subs and
accessories (for new equipment)...................................
10. FISHING TOOLS AND ACCESSORIES...........................................
- Inspection report on all components of the fishing tools (used
equipment) or purchase voucher (for new tools)....................
11. SUNDRY SYSTEMS..........................................................
- Winches load test certificate.....................................
- Description of the compressed air system, emphasizing compressors,
layout of lines, valves and interconnection with the other
systems...........................................................
- Preventive Maintenance Plans with their respective timecharts
- Ballast and sewer flowchart.......................................
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D of the chartering and services rendering
contracts.........................................................
NOTE: Such equipment must be in places of easy access for survey........
A) RECEIPT TEST............................................................
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D of the chartering and services rendering
contracts.........................................................
NOTE: Such equipment must be in places of easy access for survey........
- The following systems, equipment and tools listed below will be
checked, inspected and tested:.....................................
1) DRILL STRING, COMPONENTS AND ACCESSORIES..........................
----------------------------------------
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76
- The CONTRACTOR will submit recent inspection reports, according
to the specification API RP7G for the whole drill string and
accessories such as, but not limited to: drill pipes, drill
collars, HW, Subs, stabilizers, reamers, bumper subs, lift-sub,
kelly, slips, elevators, fishing tools, etc, wich prove the good
conditions of the string and its accessories. The information
from the reports and the general conditions of the string and its
accessories will be checked by PETROBRAS by means of a sampling
inspection. In the event of discrepancy between the data
submitted by the CONTRACTOR and those checked by PETROBRAS,
showing an inadequate condition of the string and its
accessories, the CONTRACTOR will carry out another inspection,
for its own account...............................................
NOTE 1: Any equipment refused by the inspection will be immediately
repaired or replaced by the CONTRACTOR, for its own account...........
NOTE 2: For the string, components and new accessories, no inspection
report will be required, documents proving that such equipment is new
will be sufficient ...................................................
NOTE 3: The CONTRACTOR's equipment will be stored and arranged so as to
facilitate the inspection by sampling to be carried out by PETROBRAS..
- The same procedure will be adopted for the telescopic joints and
flexible joints...................................................
2) EXTRACTOR OF SOLIDS...............................................
The following will be examined:.........................................
- sieves,...........................................................
- dessander,........................................................
- degasser - test suction and discharge............................
- centrifugue (if any)..............................................
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77
The operation and work pressure, as well as the existence of manometers,
will be checked...................................................
3) MUD TANKS AND VALVES..............................................
Water proofness, working of the agitators, mixture funnel and
depthgun, besides the existence of fixed marks to control the tanks
volume will be checked............................................
4) CENTRIFUGAL PUMPS................................................
The following will be checked:..........................................
- working, vibration and noises;....................................
- Packing (leaks);..................................................
- Work pressures....................................................
NOTE: Items 3 and 4 will be tested with sea water.............................
5) MUD LABORATORY AND TEST EQUIPMENT.................................
The existence on board and the adequacy to the requirements
described in Attachments B and C to this CONTRACT will be checked..
6) DRILLING DERRICK..................................................
Maintenance conditions (corrosion), fastening system and the
conditions of the travelling block rails will be examined.........
7) CROWN BLOCK.......................................................
The pulleys will be examined as to the profile wear, alignment,
clearance, buckling of the axles, lubrication, etc................
8) MUD PUMPS.........................................................
The following will be carried out:................................
- observation of working, vibrations, noises;.......................
- pressure and maximum work flows tests for the liner used;.........
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78
- safety valve working test;........................................
- checking of the suction and discharge pulsation dampeners;........
- watertightness tests with nominal pressure of the mud pumps and
of all manifold valves;...........................................
- watertightness tests with nominal pressure of all manifold
valves of the stand pipe manifold and of the kelly hose;..........
- random disassembling of the suction for visual inspection of the
piston, sleeve, packing, valve and seat...........................
9) SWIVEL............................................................
The mandril, gooseneck, body, etc. will be checked and nominal
pressure test with rotation will be performed.....................
10) MOTION COMPENSATOR................................................
The piston alignment, lock bar, alignment in the rail, general
conditions, leaks and chains will be checked......................
11) RISER AND GUIDE LINES TENSIONERS..................................
The general conditions, leaks, pulleys and cables will be
inspected.........................................................
12) RISER RECOIL SYSTEM/HANG OFF SYSTEM/ FILL-UP VALVE (if any)........
The systems' operation will be checked ...........................
13) HIGH COMPRESSORS AND AIR RESERVOIRS...............................
The general conditions, leaks, lines and system yield will be
checked...........................................................
14) TOP DRIVE.........................................................
Working tests (connection and disconnection of one or more
sections of the DP's) will be carried out and the general
conditions will be inspected......................................
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79
15) KELLY SPINNER.....................................................
The general conditions, specially the rollers' wear, and working
will be checked, and connection and disconnection operation of
one or more DP's will be carried out..............................
16) HOOK..............................................................
The general conditions and the locking system will be checked.....
17) TREAVELLING BLOCK.................................................
- The pulleys wear, axles alignment, lubrication system,
retraction system, etc., will be inspected..................
18) DRAWWORKS.........................................................
- The operation of the mechanical break system (brake bands),
electromagnetic (distance between irons, voltage level and
SCR feeder conditions), cooling system and clutches will
be checked..................................................
- The operation of the cat-heads and height limitator with the
assembly /disassembly of one or more command sections, will
be checked..................................................
19) ROTARY TABLE......................................................
The operation in high and low, brake system, tachometer and
lubrication system will be checked...............................
20) TRIO TANK.........................................................
Capacity, installation site, sensitivity of the level indicator
system, visualization condition and supply system will be
inspected.........................................................
21) HYDRAULIC TONGS AND PNEUMATIC SPIDER FOR CASING AND PNEUMATIC
TONGS FOR DRILL PIPES.............................................
- Operation tests will be made and maintenance conditions will be
checked...........................................................
<PAGE>
80
22) SAND-LINE OR WIRE-LINE SYSTEM.....................................
- Operation of the clutches and brake will be tested by
lowering the photo-clinometer inside the drill string
coinciding with the photoclinometer overshot test (TOTCO)
will be tested. Test to be made on location before the
beginning of the operations.................................
- The existence of an alignment guide for the sand-line cable
in the drum will be checked.................................
23) CHOKE MANIFOLD....................................................
All valves with low pressure (300 psi) and in high pressure
(system's work pressure). Manometers, hydraulic choke operation,
manual choke, remote control panel, etc. will be tested............
24) UPPER AND LOWER KELLY COCK, INSIDE BOP AND SAFETY VALVE............
- Drivers will be tested and work pressure tests will be made..
- The end connections of each element will be checked and
tested with work pressure. The CONTRACTOR should have end
seal plugs adequate for the test............................
25) KILL AND CHOKE LINE HOSES.........................................
The end connections will be checked and tested with the system's
work pressure. The CONTRACTOR should have end seal plugs adequate
for the test......................................................
26) DRILL INSTRUMENTATION SYSTEM......................................
The following will be tested:.....................................
- geolograph;.................................................
- rotary table tachometer;....................................
<PAGE>
81
- manometers;.................................................
- stroke counter;.............................................
- level control in the mud tanks;.............................
- torque indicator ...........................................
Their existence on board will be checked, analysing the
maintenance conditions of the lines by means of inspection, and
the facilities for instalation of the production test equipment
system............................................................
28) BOP SYSTEM........................................................
The following will be carried out:................................
- pressure tests of the slide valves with low pressure and high
pressure compatible with the system.........................
- pressure tests of the annulars with low pressure and high
pressure, compatible with the system........................
- complete function test in both POD's, through all panels....
- choke and kill valves tested with low pressure and high
pressure, compatible with the system........................
- working of the shear ram valve will be checked with opening
for examination of the blades conditions....................
- the opening and closing of all ram, annular and kill and
choke valves chambers will be tested........................
<PAGE>
82
- the hydraulic driving unit will be checked as to: fluid
used, fluid low level alarm, low air pressure and low
accumulators pressure, maintenance conditions, leaks and
mixing systems..............................................
- the volumetric capacity of accumulators and the capacity of
electric and pneumatic pumps of the hydraulic unit will be
tested......................................................
- the locking system of the ram valve(s) will be tested.......
- the SPM valves conditions will be checked by opening and
inspecting one of them, chosen at random....................
- the locking/unlocking system of the H-4 hydraulic connectors
will be tested.............................................
- the surface and bottom accumulators' pre-charge will be
checked.....................................................
- The operation of the following systems will be tested:......
o Driving back-up...........................................
o emergency recovery.......................................
o handling..................................................
29) TRAVELLING TONGS, EZY-TORG, TORQUE SENSOR, SLIPS, ETC.............
One or more sections of the drill collars and drill pipes will be
assembled/disassembled to check the working of such equipment.
The general maintenance conditions, chuck jaws and cables will be
checked...........................................................
30) BULK TRANSFER SYSTEM..............................................
The following will be carried out: ...............................
- the operation of the compressor will be checked, and
noises, oil and air leaks, and maintenance state, filters
and dehumidifier will be inspected..........................
<PAGE>
83
- operation and watertightness of valves, lines and silos
will be checked, looking for possible clogging..............
- transfer of cement from 1 silo to the daily silo (if any)
and from this to the surge-tank will be made...............
31) EMERGENCY ENERGY GENERATION SYSTEM................................
- a black-out in the energy system generation system will be
simulated to see if the emergency generator is automatically
turned on.........................................................
32) MAIN MOTOR GENERATOR ASSEMBLY.....................................
The following will be carried out:................................
- vibration, noises, insulation, leaks, maintenance, etc.
will be checked.............................................
- generators input and output in the bus bar, synchronisms
and load divisions will be tested...........................
- load and voltage and frequency regulation will be tested...
33) DESSALTER.........................................................
Operation and production capacity will be checked.................
34) CAT-LINES CRANES...................................................
The following will be carried out:................................
- operation of the winches and maintenance of the cabled
will be checked.............................................
- the elevation and rotation system, the operation with
flying boom and pulley block and the operation of the boom
height pawl will be checked.................................
- the report of the last inspection carried out by the Unit's
classification society in the winches will be examined......
35) DEJECTA TREATMENT UNIT............................................
<PAGE>
84
Its operation will be inspected...................................
36) TELECOMMUNICATION SYSTEM..........................................
Operational tests will be made in all radio equipment existing on
board, including radio-beacon.....................................
37) OVERHEAD TRAVELLING CRANES........................................
Their operation, and the maintenance conditions of cables and
sliders will be examined..........................................
38) DC/SCR MOTORS.....................................................
The maintenance conditions and insulation, as well as the
collectors and brushes will be examined...........................
- SCR functional test.............................................
39) DIVERTER..........................................................
The following will be tested:.....................................
- flow line wing valves;......................................
- diverters and insert packer lock;...........................
- the control panel will be checked...........................
40) SAFETY EQUIPMENT..................................................
Salvage...........................................................
Fireproof rigid vessels (capsules, whalers):......................
- lowering, motor, fuels, sprinklers, start;..................
- rations, garnishing, hatches, cleaning, fire extinguishers,
signalling equipment........................................
Inflatable rafts:.................................................
- quantity, capacity, location, height in relation to the sea;
<PAGE>
85
- validity of the last inspection, means of access to the
sea;........................................................
- conditions of the cocoon....................................
Jackets:
- quantity (sufficiency), location, protection, and
maintenance.................................................
Life-buoys:.......................................................
- quantity (sufficiency), location, heaving-lines, lanterns,
smudge pots.................................................
Escape routes:....................................................
- vertical and horizontal signalling (indicative plates);.....
- clearing, lighting (emergency)..............................
Water Supply System for Fire Fighting.............................
Fire ring:........................................................
- water system for the platform;..............................
- sprinklers system; .........................................
- painting, corrosion, signaling, visual conditions;..........
- valves, hydrants, guns......................................
Fire pumps:.......................................................
- operation; .................................................
- motor, fuel, start, panel, tests............................
Fire Fighting Fixed Systems.......................................
- Foam system: chambers, tanks, guns, hydrants and carrier
liquid......................................................
- Cylinders; conditions, reloading, retesting (C02 or HALON,
if any).....................................................
- Lines and diffusers: general conditions.....................
- Automatic: feeding, panels, batteries, detectors, tests.....
<PAGE>
86
- Manual: commands, interconnections, tests...................
- Alarms: interconnections:...................................
Fire Extinguishers................................................
- water, carbon dioxyde, chemical powder (portable and carts);
- distribution, location, general conditions;.................
- revision, recharge, retest, control, meters, replacement....
Fire Posts........................................................
- hose, keys, sprinkler;......................................
- fiber boxes, general conditions, post identification;.......
- visual signaling: sufficiency and general conditions.......
Emergency Equipment...............................................
- autonomous breathing apparatuses,reserve bottles,
breathable air fixed system, fire proximity clothing,
lantern, ax, safety belt;...................................
- distribution, location, general conditions, inventory,
maintenance and replacement.................................
Communications and Alarms.........................................
- telephone (internal, external): Operating capacity;.........
- radiophony: VHF. operating capacity;........................
- portable transceptors: quantity; distribution, intrinsic
safety;.....................................................
- intercom: quantity, distribution, and horns audibility,
interconnection with the platform, coding of sound alarm
tones, amplifiers;..........................................
- visual signaling: sufficiency, general conditions;..........
<PAGE>
87
- fire alarm, glass breaking type: batteries, bells, tests...
Emergency Lighting................................................
- charger, batteries and lanterns.............................
Helideck..........................................................
- protection: guns, fireextinguishers, salvage equipment;.....
- painting, protection screen, net, landing lights, safety
warnings;...................................................
- guest welcoming practices...................................
Load Lifting......................................................
- winches: general conditions, operation, signaling,
maintenance;................................................
- manual and electric tackles: general conditions,
operation, signalling, maintenance;.........................
- material movement and storage areas.........................
Training..........................................................
- abandonment, fire fighting, first aid and brigade...........
Manuals and Plans.................................................
- emergency; safety;..........................................
- disclosure, knowledge;......................................
- distribution, control, updating;............................
- tasks schedules for emergency and abandonment situations,
including in Portuguese.....................................
Order and Cleanliness.............................................
- installation's general aspect;..............................
- particularly alarming places................................
<PAGE>
88
Smoke, Heat and Gas Detection System..............................
- test of hydrocarbons detection sensors......................
Ballast and Sewer System..........................................
- functional test.............................................
41) ANCHORING SYSTEM..................................................
42) DYNAMIC POSITIONING SYSTEM........................................
43) PROPULSION SYSTEM.................................................
B) LOCATION MOVING TEST....................................................
To be defined between the CONTRACTOR and PETROBRAS......................
C) BEGINNING OF CONTRACT YEAR TEST.........................................
To be defined between the CONTRACTOR and PETROBRAS .....................
(End of Attachment)...........................................................
<PAGE>
89
ATTACHMENT IX
PROCEDURES IN THE EVENT OF FATAL ACCIDENTS
1. If, during the period of validity of the CONTRACT, a fatal accident
occurs with a CONTRACTOR's employee, the CONTRACTOR should:...........
1.1. Notify the Inspection immediately, for the proper measures;...........
1.2. Take measures so that the employee's relatives be notified with the
utmost urgency on the event, giving them the social support due;......
1.3. Formally establish an Investigation Commission, within 48 hours after
the accident, in order to, in the maximum time limit of 15 days,
identify the causes and recommend the measures deemed necessary to
prevent similar accidents.............................................
2. The report should contain, at least, the following information
regarding the accident
- description;........................................................
- exact location;.....................................................
- data regarding the injured persons; ................................
- basic and immediate causes;.........................................
- measures to be taken in order to prevent its repetition.............
3. The CONTRACTOR should guarantee the Commission enough authority and
autonomy to carry out the investigations without any restrictions.....
4. A PETROBRAS' employee should participate in the Commission, appointed by
the authority in charge of the operational office....................
5. After conclusion of the Commission's work, it will also behoove the
CONTRACTOR, at the Inspection's request, to disclose the results of the
report, so as to convey the experience from the accident to other
contractor companies..................................................
<PAGE>
90
(End of Attachment)...........................................................
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on December 22nd,
1997 in this City of Rio de Janeiro, Federative Republic of Brazil............
/s/ MARCIA BARBOSA SERRA
------------------------
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.10(A)
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 2669/98
(On paper with letterhead of PETROBRAS.)
RIDER No. 1 TO CONTRACT 101.2.101.97 -0 ENTERED INTO BETWEEN PETROLEO
BRASILEIRO S/A AND THE COMPANY MARITIMA PETROLEO E ENGENHARIA LTDA.
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, with head office
at Av. Republica do Chile 65, in the City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers
Registry of the Ministry of Finance under No. 33.000.167/0001-01, henceforth
called PETROBRAS, represented herein by the Executive Superintendent of
Exploration and Production South -Southeast, Luiz Eduardo G. Carneiro, and and
the Company MARITIMA PETROLEO E ENGENHARIA LTDA., successor of MARITIMA
NAVEGACAO E ENGENHARIA LTDA., with head office at Av. Almirante Barroso, 52,
Group 3400, City of Rio de Janeiro, Federative Republic of Brazil, enrolled in
the General Taxpayers Registry of the Ministry of Finance under No.
46.828.596/0001/13, henceforth called the CONTRACTOR, represented herein by its
President, German Efromovich, have agreed to add a rider to contract
101.2.101.97 -0, according to the following clauses and conditions:
FIRST CLAUSE OBJECT.
1. The present Rider has as its object:
1.1. To change the corporate name of the CONTRACTOR from MARITIMA NAVEGACAO E
<PAGE>
ENGENHARIA LTDA. to MARITIMA PETROLEO E ENGENHARIA LTDA.
1.2. To include as INTERVENIENT PARTY, to the present contract, the company
PETRODRILL FIVE LTD., with head office in Omar Hodge Building, Wickhams
Cay, Road Town, Tortola, Ilhas Virgens Britanicas, represented by its
Director GERMAN EFROMOVICH.
1.3. To change the redaction of items 3.12. l. and 3.21.2, of the THIRD CLAUSE
- CONTRACTOR'S RESPONSIBILITIES.
1.4. To change the redaction of item 16.1 of the SIXTEENTH CLAUSE -
INTERVENIENCE. SECOND CLAUSE - CONTRACTOR'S OBLIGATIONS.
2.1. The Redaction of items 3.12.1 and 3.21.2. is changed to
3.12.1. "The minimum value of the civil liability insurance is of
US$1,000,000.00 (one million dollars), per occurrence, during the period of
validity of this CONTRACT and its eventual extension, which amount is to be
converted into Brazilian currency on the date of signature of this instrument.
THE INTERVENIENT PARTY IS TO APPEAR AS CO -INSURED IN THIS INSURANCE POLICY.
3.21.2. "Exception is made to cases arising from kick, blow -out, surge or
formation testing, in which the CONTRACTOR will be kept free and safe from, in
the other cases of spillage of oil and other residues in the sea, the CONTRACTOR
AND THE INTERVENIENT PARTY WILL BE JOINTLY LIABLE, UP TO THE LIMIT OF
US$500,000.00 (FIVE HUNDRED THOUSAND DOLLARS), PER EVENT AND ITS DEVELOPMENTS.
THIRD CLAUSE - INTERVENIENCE
3.1. The redaction of item 16.1 is changed to:
16.1. "THE INTERVENIENT PARTY SIGNS THE PRESENT CONTRACT, TOGETHER WITH
THE CONTRACTOR, BEING JOINTLY LIABLE WITH IT FOR ALL OBLIGATIONS ARISING FROM
THE PRESENT
<PAGE>
CONTRACT AND ITS EXECUTION, INCLUDING FOR LOSSES.
FOURTH CLAUSE - RATIFICATION.
4.1. The parties ratify the other conditions of the CONTRACT that were not
changed by the present instrument.
And being thus agreed, the parties sign the present Rider in 2 (two)
copies of the same tenor and fashion, together with the witnesses below.
Rio de Janeiro, August 21, 1998.
(Signed:) (Illegible) - Luiz Eduardo G. Carneiro.
Executive Superintendent of Exploration and Production South -Southeast.
PETROBRAS PETROLEO BRASILEIRO S.A.
(Signed:) (Illegible) - German Efromovich.
President - MARITIMA PETROLEO E ENGENHARIA LTDA.
(Signed:) (Illegible) - German Efromovich.
Director - PETRODRILL FIVE LTD.
WITNESSES:
(Signed:) Elaine Brabo - Name: ELAINE BRABO.
(Signed:) Andre de Mesquita Pinto - Name: ANDRE DE MESQUITA PINTO.
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on November 26, 1998
in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.11
1
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 3974/97
(Xerox copy submitted for translation.).......................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.).
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, organized
and existing under Law No. 2.004, dated 10/03/53, with head office at Av.
Republica do Chile, 65, City of Rio de Janeiro, State of Rio de Janeiro,
Federative Republic of Brazil enrolled in the General Taxpayers' Registry of the
Ministry of Finance under No. 33.000.167/0001-01, represented herein by the
Executive Superintendent of Exploration and Production South and Southeast
(SUEX-SSE), Engineer LUIZ EDUARDO G. CARNEIRO, henceforth called PETROBRAS, and
the Company MARITIMA NAVEGACAO E ENGENHARIA LTDA., with head office at Avenida
Almirante Barroso, No. 42, 34th floor, City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers'
Registry of the Ministry of Finance under No. 46.828.596/0001-13, represented
herein by its President, Mr. GERMAN EFROMOVICH, have agreed upon the present
Letter of Agreement regarding contracts 101.2.100.97-8 (Chartering) and
101.2.100.97-0 (Rendering of Services) for the Unith Amethyst 5, henceforth
called the Unit, as follows:
Item New Redaction
<PAGE>
2
Chartering/ Services
1.1. - (Chart.) The object of the present CONTRACT is the chartering to
PETROBRAS, of the Unit, which, according to the
CONTRACTOR, is to be built in a shipyard for the purpose
of fulfilling this Contract, in order to be used in the
drilling and/or evaluation and/or completion and/or
workover of oil and/or gas (vertical, directional and
horizontal) wells, in the Brazilian continental shelf,
down to a maximum depth of 5,000 (five thousand) meters,
in a water depth down to 1,000 (one thousand)
meters.........................................
3.17.- (Serv.) To submit to the CONTRACT Manager, up to 30 (thirty)
consecutive days after its inception, as foreseen in
item 2.2.1, the originals or certified copies of the
insurance policies made as a result of this Contract,
containing all essential data, such as insurers, time
limits, period of validity, amounts insured, and
coverage conditions, and with PETROBRAS appearing as
co-insured, except in the civil liability insurance, of
which it will participate as a third party......
3.19.- (Chart.) To submit to the Manager of this Contract, up to 30
(thirty) days after the beginning of the performance, as
provided for in item 2.2.1, the originals or certified
copies of the certificates of the insurances made as a
result of this Contract, containing all essential data,
such as insurers, time limits, periods of validity,
amounts insured, and coverage conditions, and with
PETROBRAS appearing as co-insured, except in the civil
liability insurance, of which it will participate as a
third party....................................
7.7 (Chart.) The CONTRACTOR agrees that, at PETROBRAS' exclusive
option, the payments referring to the chartering object
of the present contract can be made through financing by
third parties,
<PAGE>
3
provided the time limits, currency, amounts and place
of payment set forth in the contract are complied
with............................................
12.5 - (Chart.) In the present Contract, it will be considered as act
of God the situation in which one of the parties is
prevented from fulfilling its obligations, provided
it proves that:.................................
o the non-fulfillment of the obligation was due to the
existence of an impediment beyond its control;..
o the party impeded could not, within its ability,
overcome the impediment and its effects, in order to
fulfill its contract obligation within the time limit
set down, and...................................
o the impediment and its effects could not be avoided
nor overcome....................................
As an illustration of act of God or force majeure,
one may mention wars, strikes, submarine earthquakes,
among other facts, which effects were not possible to
avoid or prevent.................................
AND BEING THUS AGREED, the parties sign the present Letter of
Agreement, in 2 (two) copies with the same tenor, with the witnesses
below..............................................................
Rio de Janeiro December 5, 1997..........................................
PETROLEO BRASILEIRO S/A - PETROBRAS......................................
(SIGNED:) LUIZ EDUARDO G. CARNEIRO.......................................
Luiz Eduardo G. Carneiro - Executive Superintendent of Exploration and
Production South-Southeast (SUEX-SSE)..................................
MARITIMA NAVEGACAO E ENGENHARIA LTDA. ....................................
<PAGE>
4
(SIGNED:) GERMAN EFROMOVICH..............................................
German Efromovich - President............................................
WITNESSES:...............................................................
Claudio Fontes Nunes.....................................................
(SIGNED:) HAMYLTON P. PADILHA JR. ........................................
Hamylton P. Padilha Jr. ..................................................
CPF: 215.551.175-20.....................................................
(Two initials appeared on the first page of the document.).........
.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-.-
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on the 22nd of
December, 1997 in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
------------------------
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.12
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt #301 - Leblon - 22450
ISS: 1261003-00
CIC: 606442227-00
Tel.: 274-3844
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 4032/98
LETTER OF AGREEMENT
(Original submitted for translation.).........................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)...........
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company with head
office at Av. Republica do Chile, 65, City of Rio de Janeiro, State of Rio de
Janeiro, Federative Republic of Brazil enrolled in the General Taxpayers'
Registry of the Ministry of Finance under No. 33.000.167/0001-01, represented
herein by the Executive Superintendent of Exploration and Production South -
Southeast, Engineer LUIZ EDUARDO G. CARNEIRO, henceforth called PETROBRAS,
and the Company MARITIMA PETROLEO E ENGENHARIA LTDA., with head office at
Avenida Almirante Barroso, no. 42, 34th floor, City of Rio de Janeiro, State
of Rio de Janeiro, Federative Republic of Brazil, enrolled in the General
Taxpayers' Registry of the Ministry of Finance under No. 46.828.596/0001-13,
represented herein by its President, Mr. GERMAN EFROMOVICH, henceforth called
the CONTRACTOR, whereas:......................................................
1. the parties have entered into two contracts, one under No.
101.2.100.97-8, the object of which is the chartering of the
semi-submersible floating Unit, provided with dynamic positioning (DP),
called AMETHYST 5, to operate in a water depth of up to 1,200m, and one
under No. 101.2.101.97-0, for the rendering of completion, evaluation
and workover services...................................................
2. The contract period set forth in subitem 2.2.3 of the second Clause of
said contracts is of 6 (six) years, with forecast for extention of the
time limit by means of an agreement.....................................
THE PARTIES RESOLVE
a) that the contract period of 6 (six) years, at its final term, will be
automatically extended for 2 (two) more years;..........................
<PAGE>
b) that after the 6th (sixth) year of the contract's period of validity,
30 (thirty) days will be granted, remunerated at the Waiting Rate (Ref.
104, of Attachment II to the above-mentioned contracts), to mobilize
the Unit for docking, to carry out inspection works and to return with
the Unit to the location determined. The selection of the periods when
such works will be performed will be made by common agreement between
the parties:............................................................
c) that the other clauses of said contract deeds remain unchanged..........
And being thus agreed, the parties sign the present Letter of
Agreement, in 2 (two) copies with the same tenor, with the witnesses
below...................................................................
Rio de Janeiro January 15, 1998...............................................
(Signed:) Luiz Eduardo G. Carneiro...........................................
Luiz Eduardo G. Carneiro - Executive Superintendent
of Exploration and Production South - Southeast...............................
PETROLEO BRASILEIRO S/A - PETROBRAS...........................................
(Signed:) German Efromovich..................................................
German Efromovich - President.................................................
MARITIMA PETROLEO E ENGENHARIA LTDA...........................................
WITNESSES: ..................................................................
(Signed:) Andre de Mesquita Filho............................................
for/ Claudio Fontes Nunes.....................................................
(Signed:) Hamylton P. Padilha Jr.............................................
Hamylton P. Padilha Jr........................................................
(Two initials appeared on the first page of the document.)..............
- - --------------------------------------------------------------------------------
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on the 17th of
February, 1998 in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
__________________________
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.13
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
I, THE UNDERSIGNED, SWORN PUBLIC TRANSLATOR AND COMMERCIAL INTERPRETER IN AND
FOR THIS CITY AND STATE OF RIO DE JANEIRO, FEDERATIVE REPUBLIC OF BRAZIL,
REGISTERED AT THE COMMERCIAL BOARD OF RIO DE JANEIRO UNDER NUMBER 97, DO HEREBY
CERTIFY AND ATTEST THAT A DOCUMENT IN THE PORTUGUESE LANGUAGE WAS SUBMITTED TO
ME FOR TRANSLATION INTO ENGLISH, WHICH I PERFORMED ACCORDING TO MY OFFICE, AS
FOLLOWS:
TRANSLATION NO. 2507/97
(Xerox copy submitted for translation.).......................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.)...........
INVITATION TO BID No. 101.2.063.97-8..........................................
CHARTERING CONTRACT
CHARTERING CONTRACT OF THE DYNAMIC POSITIONING FLOATING Unit
AMETHYST 4, ENTERED INTO BETWEEN PETROLEO BRASILEIRO S.A. -
PETROBRAS AND THE COMPANY MARITIMA NAV. E. ENG. LTDA.--
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, organized and
existing under Law No. 2.004, dated 10/03/53, with head office at Av.
Republica do Chile, 65, City of Rio de Janeiro, State of Rio de Janeiro,
Federative Republic of Brazil, enrolled in the General Taxpayers Registry of
the Ministry of Finance under No. 33.000.167/0001-01, represented herein by
the Executive Superintendent of Exploration and Production (E & P), Engineer
LUIZ EDUARDO G. CARNEIRO, hereforth called PETROBRAS, and the Company
MARITIMA NAVEGACAO E ENGENHARIA LTDA., with head office at Avenida Almirante
Barroso, no. 42, 34th floor, City of
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Rio de Janeiro, State of Rio de Janeiro, Federative Republic of Brazil, enrolled
in the General Taxpayers Registry of the Ministry of Finance under No.
46.828.596/0001-13, henceforth called the CONTRACTOR, represented herein by its
President, Mr. GERMAN EFROMOVICH, have agreed upon the present CONTRACT for the
chartering of the Dynamic Positioning Floating Unit AMETHYST 4 and its
accessories, described in Attachment I, henceforth called the Unit, according to
the authorization of PETROBRAS Executive Board (MINUTES No. 4111, Item No. 30,
dated 08/14/97) the parties being bound to the terms of the Invitation to Bid
No. 101.001.97-7 and subjected to the following Clauses and
Conditions:...........
(End of the Qualification)....................................................
2
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FIRST CLAUSE - OBJECT.........................................................
1.1. The object of the present CONTRACT is the chartering to PETROBRAS, of
the Unit, which, according to the CONTRACTOR, will be built in a
shipyard with the purpose of fulfilling this contract, in order to be
used in the drilling and/or evaluation and/or completion and/or workover
of oil and/or gas (vertical, directional and horizontal) wells, in the
Brazilian continental shelf, down to a maximum depth of 5,000 (five
thousand) meters, in a water depth down to 1,200 (twelve hundred)
meters.......................................................
1.1.1. It is included, as an object of the CONTRACT, the performance, by the
CONTRACTOR, of any and all operations needed for the perfect
fulfillment of the chartering object of the CONTRACT, such as, but
not limited to, the performance and supervision of the positioning,
ballasting and movement of the Unit...................................
1.2. PETROBRAS may determine that the CONTRACTOR makes the reentry in
wells already drilled, and it can install in the Unit equipment and
production facilities, the provisions of item 14.1 of this CONTRACT
being complied with...................................................
1.3. The chartering object of the present CONTRACT is included in the
Annual Activities Plan, under the following codesd:...................
B 12000 - Boring - Production Development............................
A 22000 - Boring - Exploratory Drilling..............................
B 13000 - Completion an Intervention for Evaluation - Production
Development...........................................................
Evaluation - Production Development...................................
A 24000 - Intervention for Evaluation - Exploratory Drilling.........
(End of Clause)...............................................................
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SECOND CLAUSE - PERIOD OF VALIDITY AND DURATION...............................
2.1. Period of Validity - The present CONTRACT binds the parties as of its
signature, but the payments in foreign currency can only be made after
the date of its registry in the Central Bank of Brazil................
2.2 Duration - The present CONTRACT will have a duration of 2,190 (two
thousand one hundred and ninety) days.................................
2.1.1. BEGINNING OF THE CONTRACT - The beginning of the CONTRACT will occur
when the Unit is released by PETROBRAS, through a written notice, to
begin the operations, after the general equipment testing foreseen in
item 3.1 of this CONTRACT is carried out..............................
2.2.2 AUTOMATIC EXTENSION - If at the end of the duration mentioned in 2.2,
some operation is still being performed in a well, the duration of
the present CONTRACT will be automatically extended, until the
completion of the works in said well, considering as the final limit
the Unit's arrival in the port or sheltered waters chosen by common
agreement between the parties and, also, in case there are still
PETROBRAS' equipment aboard the Unit, the completion of the
withdrawal of such equipment will be considered as the final limit....
2.2.3 This CONTRACT may be extended for successive periods of 365 (three
hundred and sixty-five) running days, through a prior agreement
between the parties, by means of an Addendum, the other contract
conditions being complied with, and limited to a maximum contract
period of 2,190 (two thousand one hundred and ninety) day.............
2.3. ARRIVAL IN BRAZIL - The Unit should arrive at the port or in
sheltered waters, in Macae - RJ. The beginning of operations should
occur up to the date of 06/17/99, the provision set forth in item 8.1
of this CONTRACT being complied with..................................
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2.3.1. At the port or in sheltered waters mentioned in 2.3, the customs and
helipoint inspections in the Unit will be carried out, as well as the
loading/unloading of the CONTRACTOR's and PETROBRAS' materials, and
also the general equipment testing will begin, as foreseen in item
3.1 of this CONTRACT..................................................
(End of Clause)...............................................................
5
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- - ------------------------------------------------------------------------------
CHARTERING AND SERVICE RENDERING CONTRACT OF THE DYNAMIC POSITIONING FLOATING
Unit AMETHYST 2, ENTERED INTO BETWEEN PETROLEO BRASILEIRO S.A. - PETROBRAS
AND THE COMPANY MARITIMA NAVEGACAO E ENGENHARIA LTDA.
- - ------------------------------------------------------------------------------
6
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THIRD CLAUSE - CONTRACTOR's OBLIGATIONS.......................................
3.1. Before the beginning of the contract, the CONTRACTOR will arrange for
a general test of the operational conditions of all of the Unit's
equipment, as provided for in Attachment VIII, in the presence of
PETROBRAS' Inspection. The occurrences found during the performance of
the tests will be duly recorded in the Daily Drilling Certificate (ADP)
signed by PETROBRAS' Inspection and by the CONTRACTOR's representative.
The Unit will be released to sail to the first location after proving
the good operating conditions of the equipment which comprise the
drill's main systems, that is, energy generation and distribution
system, dynamic positioning system, industrial safety, liquid and bulk
storage, fluid circulation and processing, safety and wellhead, column
elevation, rotation and handling, columns, instrumentation, formation
test equipment and communications
system................................................................
3.1.1. The tests referred to in 3.1 will be made in a period estimated in 3
(three) days, after which the Unit will be released to sail to begin the
operations, provided there is nothing pending in the rig's main systems,
as set forth in item 3.1.....................................
3.1.1.1.In the event the tests last for a period exceeding 3 (three) days, for
reasons ascribed to PETROBRAS, the rate foreseen in REF 104 (Waiting
Rate) of Attachment II, will be due, applied as of the fourth day of
tests, until the Unit is released. The periods spent with equipment
repair will not be calculated for the purposes of counting such
duration, and no fees will be due during such periods.
3.1.2. PETROBRAS may opt for the partial or total performance of the receipt
tests, in sheltered waters, in the deepest water depth set forth in
the Contract, or also in the first location...........................
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3.2. To maintain, during the contract period, the Unit, its fittings, as
well as accessories and replacement elements and personnel, during
the contract period, in perfect working conditions in a working
regime of 24 (twenty-four) hours a day, 7 (seven) days a week, and to
guarantee that the Unit is calculated to carry out the activities
object of this contract...............................................
3.2.1. To strictly comply with the recommendations of the equipment
manufacturers foreseen in their operation manuals, which will be
provided for in the Unit's preventive maintenance plan................
3.3. TECHNICAL EVALUATION AWARD AND CERTIFICATES - To submit copies of the
Registry, Survey, Classification and Technical Award Certificates of
the Unit and its fittings, signed by a qualified and well-known
organization, not related with the CONTRACTOR, notarized in the
Brazilian Consulate and translated by a Sworn Public Translator, if
issued abroad, and which should contain:..............................
3.3.1. Description o the Unit and accessories;...............................
3.3.2. Operational conditions and physical conditions of the Unit;...........
3.3.3. Light displacement of the Unit (Light weight);........................
3.3.4. Year of construction;.................................................
3.3.5. Year of reconditioning, listing spare parts the parts replaced;.......
3.3.6. Technological difference between the Unit surveyed and a more modern
Unit of the same kind;................................................
3.3.7. Forecast of the average useful life of the good used and its new
analog;...............................................................
3.3.8. Market value, of reproduction and replacement;........................
8
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3.3.9. Net weight of the equipment installed in the Unit;....................
3.3.10. Technical catalogues of the equipment installed in the Unit...........
3.4. To regularize, before the proper authorities, the entry and stay of
the Unit in Brazil, arranging, at its expense, for the Release,
Surveys, Registries and Temporary Admission...........................
3.4.1. Regarding new equipment and equipment without use, the "Technical Survey
and Evaluation Award" referred to in item 3.3 may be replaced by factory
catalogues or purchase invoices, with description, year of manufacture,
useful life forecast and value of each equipment......................
3.5. SAFETY, SANITATION AND LABOR MEDICINE - To carry out its operations
in strict compliance with the international safety, sanitation and
labor medicine standards, being liable for violations committed. To
supply, for its account, and maintain in perfect operating
conditions, the safety equipment in accordance with the safety plan
("SAFETY PLAN") approved by the Administration of the Unit's Country
of Registry, and with the good marine drilling/evaluation/workover
practice..............................................................
3.5.1. The Unit will comply with the IMO - MODU - CODE (Mobile Offshore
Drilling Unit) standard...............................................
3.6. SEA OPERATIONS - To manage the Unit in strict compliance with the
laws, standards, regulations and administrative rules, as well as the
instructions issued by the Shipping Office or by other proper
authorities, specially those regarding the spillage of oil and other
residues from the Unit into the sea, being liable, as a result, for
any charges arising from the violation of such laws, standards,
regulations, administrative rules and instructions, the
9
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limit established in subitem 3.6.2. being complied with, and with the
exception of the cases provided for in item 3.20 of this Contract.....
3.6.1. To plan and carry out operations aiming at preventing and fighting
oil and gas blow outs, fires, or other incidents, complying with the
provision in item 2.4 of Attachment II to this Contract. Although
the CONTRACTOR is considered fully responsible for such operations,
it is obliged to discuss the methods to be adopted with PETROBRAS, in
order to find the best operating solution.............................
3.6.2. Exception is made of the events arising from kick, blow out, surgings,
or formation testing, which the CONTRACTOR will be kept free and safe
from. In the other cases of spillage of petroleum, oils and other
residues into the sea, the CONTRACTOR will be liable up to the limit
of US$500,000.00 (five hundred thousand dollars), per event and its
deployments...........................................................
3.7. To comply with all laws, standards, decrees, regulations,
administrative rules and instructions in force in Brazil, that govern
the exploration and research in the Brazilian submarine shelf,
including those regarding environmental protection....................
3.8. REPLACEMENT AND REPAIRS - The replacement cost for equipment,
materials and accessories needed for the Unit's perfect operation, as
well as the expenses with repairs of any kind, will run for the
CONTRACTOR's account..................................................
3.8.1. The above mentioned repair cost covers any and all expenses,
including taxes and duties due from the time of the purchase of the
equipment, spare parts and materials, to their installation and
placement in the Unit, with exception of expenses with transportation
between the support vessels' port of operation and the Unit...........
10
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3.8.2. Regarding the Temporary Admission of the Unit, as well as the import
of the equipment, materials and accessories mentioned in item 3.8,
the CONTRACTOR will comply with the provisions of the Internal
Revenue's Ruling Instruction No. 136/87...............................
3.9. At the end of this CONTRACT or of its extension, to bear the charges
arising from the return of the Unit, its fittings, accessories,
equipment, spare parts, and materials for replacement or repair, such
charges including, but not limited to, the preparation, packing,
shipping, transportation, unloading, stay, freight, clearance,
storage, wharfage, stowage, insurance and other similar expenses......
3.10. To maintain, at its expenses, besides the Unit, the crew adequate and
sufficient for its operation, being also obliged to comply with the
pertinent legal provisions, issued by Brazilian authorities and by
those of the CONTRACTOR's country of origin...........................
3.11. To bear all expenses with displacement of the crew mentioned in item
3.10, including transportation form abroad to the port or airport of
Macae-RJ, as indicated by PETROBRAS, and the return to the place of
origin, and any and all expenses with the crew's stay in Brazil, medical
and hospital expenses, meals, passports, and similar expenses.
3.11.1. To maintain PETROBRAS free and safe from any complaints, claims from its
employees, representatives, as a result of the present contract...
3.12. To promote, without charges to PETROBRAS, the replacement and
immediate withdrawal of any crew member that may be requested in
writing by PETROBRAS at any time, due to bad behavior, technical
deficiency, inefficiency or health conditions.........................
11
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3.13. To maintain a special identification for the crew, so as to
distinguish it from PETROBRAS' and other companies' personnel who may
eventually work in other services related to the object of the
present CONTRACT......................................................
3.14. RADIO COMMUNICATIONS - To supply, operate and maintain VRH, SSB and
Radio-Beacon and portable Transceptor equipment, adequate for
PETROBRAS= land communications system, to guide helicopters, so as to
comply with the Radio-Communications Plan supplied by PETROBRAS,
appearing in Attachment I.............................................
3.14.1. Other Radio Communications systems deemed necessary to support the
CONTRACTOR's operations, both in the Unit and on land, will be
supplied, installed and operated by it. The CONTRACTOR will be
responsible for the obtainment of the licenses and frequencies to
operate such equipment................................................
3.14.2. The CONTRACTOR will maintain, at its expenses, radio operators,
fluent in spoken Portuguese, who will remain 24 (twenty-four) hours a
day operating the equipment installed in the Unit, whether they
belong to PETROBRAS or to the CONTRACTOR..............................
3.14.3. Immediately after the Unit's arrival, the CONTRACTOR will arrange
with the proper authorities the issuing of the "Certificate of
Survey" regarding the radio station existing on board.................
3.14.4. The CONTRACTOR will bear any expenses related to the
telecommunications equipment and services, with exception of those
provided for in item 4.7 of this Contract.............................
3.15. Insurances - To provide for the contracting, at its expenses, of the
insurances necessary to fulfill this CONTRACT and the Brazilian Laws,
intended for the coverage of all of its
12
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accessories, even when they are being transported under PETROBRAS'
responsibility, as well as the Civil Liability insurance for damages and
losses caused to third
parties...............................................................
3.15.1. The CONTRACTOR will appear as co-insured in the Civil Liability
Insurance made, by force of item 3.12 of the Service Rendering
Policy entered into between that company and PETROBRAS................
3.15.2. During the period of validity of this Contract, the CONTRACTOR should
maintain insurance coverage for the Unit and all of its accessories,
according to the conditions of the London Standard Drilling Barge
Form - All Risk, or similar...........................................
3.15.3. The redress due to the CONTRACTOR's Civil Liability arising from
damages provided for in this Clause, is not limited to the amount set
forth in subitem 3.12.1 of the Service Rendering Contract entered
into between INTERVENIENT PARTY and PETROBRAS, for the Civil
Liability Insurance against Third Parties, and will be ruled by the
pertinent Brazilian laws..............................................
3.16. The franchises that may be established for the insurances mentioned
in item 3.15 and in its subitems, as well as the onus arising from
the insurers' requirements and/or recommendations will fully run for
the CONTRACTOR's account..............................................
3.17. To keep PETROBRAS free and safe from any and all indemnity claim for
damages and/or losses of any kind which the CONTRACTOR may have
sustained as a result of this CONTRACT, whether or not it has made
adequate and sufficient insurance for such circumstances..............
3.17.1. PETROBRAS will be equally kept free and safe from any and all
indemnity claim for damages and/or losses of any kind which the
CONTRACTOR may have caused to third
13
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parties for its duly proven grossly negligent action or omission,
arising from this CONTRACT, whether or not it has made adequate and
sufficient insurance for such
circumstances.........................................................
3.17.2. In return, the CONTRACTOR will be kept free and safe from any
and all indemnity claim for damages and/or losses of any kind, which
PETROBRAS may have sustained from third parties, or has caused to
third parties by its duly proven grossly negligent action or
omission, as a result of this CONTRACT, whether or not it has made
adequate and sufficient insurance for such circumstances..............
3.18. The CONTRACTOR waives for itself and will required from its
Insurers and/or Subcontractors, in any and all insurance made as a
result of this CONTRACT, the inclusion, in each policy contracted,
the provision assuring the waiver of any right of subrogation against
PETROBRAS.............................................................
3.19. To submit to E&P/GETRAT, up to 30 (thirty) days after they have
been signed, as provided for in item 2.2.1, the originals, or
certified copies of the certificates of the insurances made as a
result of this CONTRACT, containing all essential data, such as
insurers, time limits, period of validity, amounts insured, and
coverage conditions, and with PETROBRAS appearing as co-insured,
except in the civil liability insurance, of which it will participate
as a third party......................................................
3.19.1. The certificates mentioned in item 3.19 will contain a
provision that the insurances mentioned cannot be amended and/or
canceled without PETROBRAS' prior authorization.......................
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3.20. LOSSES AND DAMAGES - The CONTRACTOR will be liable for losses of
and damages to its own equipment and material, and to those which it
and its agents may cause to PETROBRAS or to third parties, as a
result of its duly proven grossly negligent action or omission, in
the following cases:..................................................
3.20.1 In the event of losses or damages to equipment and/or materials
belonging to PETROBRAS and/or third parties, which are aboard the
Unit, or during the movement between the Unit and the support
vessels, the CONTRACTOR's liability will be limited to the
replacement or repair of the equipment so lost or damaged due
to the CONTRACTOR's or its employees= duly proven fault. However,
the CONTRACTOR will not be liable and will be kept free and safe from
in the event of damages to reservoirs, indirect damages or loss of
profit of PETROBRAS, losses and damages arising from pollution
coming from the well, resulting from kick and/or blow-out;...........
3.20.2. In case of losses and damages caused to the well, arising from
the events mentioned in subitem 2.1.5 of Attachment II, the
CONTRACTOR will reimburse PETROBRAS the payments it comes to make to
third parties referring to cementing, logging, or other..........
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3.21.2. developed as a result of this CONTRACT, unless expressly authorized by
PETROBRAS.............................................................
3.21.3. The provision of this item 3.21 is a standing obligation, valid
even after the termination, in any fashion, of the present CONTRACT...
3.22. UNIT'S HELIPOINT................................................
3.22.1. To arrange for the release of the Unit's helipoint by the
Brazilian proper authorities (Ports and Coast Authority, Civil Aviation
Department of the Ministry of Aeronautics, Internal Revenue, Maritime
Police, Customs), bearing all expenses arising therefrom.....
3.22.2. The Unit's helipoint should be approved for operations with
helicopters of the S-61 type, according to chapter 24 of
Administrative Rule No. 005 of the DPC - "Standards and Procedures
for Maritime Navigation", dated 01.15.97, which deals with the
Construction Installation, Homologation, and Modifications of
Helipoint and Operations of Helicopters in Offshore Platforms and
Merchant Ships........................................................
16
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To submit to PETROBRAS, at least 30 (thirty) days before the date
foreseen for the Unit's arrival in Brazil, the following documents
regarding the helipoint:..............................................
3.23. The CONTRACTOR should adopt procedures that minimize the
consumption of fuel and industrial water without prejudice for the
operations............................................................
3.24. The CONTRACTOR should provide installations in the Unit for the
training and leisure of all personnel abroad, and which should
contain at least the following:.......................................
a) Parlor game room;.................................................
b) TV room capable of tuning 5 (five) main channels available in
Brazil, in any location;..........................................
c) Movie theater with VCR;...........................................
d) Two other TV sets to be installed in cabins indicated by
PETROBRAS' Inspection.............................................
3.25. Besides sea water, the CONTRACTOR will judiciously use
industrial water to clean the Unit, in order to avoid high
consumption and always giving priority to its use in the drilling
fluid.................................................................
3.26. All documents between the CONTRACTOR and PETROBRAS, when requested
by PETROBRAS, will be written and submitted in Portuguese...
3.27. The CONTRACTOR undertakes to maintain all conditions required in
the bid stage during all of the fulfillment of the CONTRACT........
3.28. To redo any and all operation refused by PETROBRAS, with any
charge to PETROBRAS, as a result of irregular performance, bearing
all costs involved....................................................
17
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3.29. To maintain a representative accredited and accepted by
PETROBRAS in the Unit or in a place previously designated by
PETROBRAS, to represent the CONTRACTOR in the fulfillment of the
CONTRACT..............................................................
3.31. To comply with the requests contained in the Operation(s)
Authorization(s) issued by PETROBRAS..................................
3.32 To allow, after negotiations between the contracting parties, the
provisional installation in the chartered vessel, of complementary
equipment such as, but not limited to: pipes or rises in catenary by
the J-lay method, or similar, submarine manifolds, provided they do
not jeopardize the Vessel's safety and are in accordance with the
rules of the Classification Society...................................
(End of Clause)...............................................................
18
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FOURTH CLAUSE - PETROBRAS' OBLIGATIONS........................................
4.1. To adopt the measures necessary for the request to register this
CONTRACT in the Central Bank of Brazil, soon after the proper
documents are received, and the supply of which is the CONTRACTOR's
responsibility........................................................
4.2. To make monthly payments due to the CONTRACTOR as a result of the
present CONTRACT, based on Attachment I and Attachment II and on the
conditions set forth in Clauses Sixth: Measurement, and Seventh:
Form of Payment, and other Attachments, Clauses and Conditions of
this CONTRACT being complied with.....................................
4.3. At its exclusive judgment, and without any co-responsibility,
PETROBRAS may cooperate with the CONTRACTOR, assisting it before the
proper authorities, referring to processes that are going through the
procedural stages in the respective Agencies, regarding the Unit,
materials and/or equipment pertaining to the object of this
Contract. Such cooperation, however, will not lessen the
CONTRACTOR's responsibility for the obtainment of the documents
and/or benefits that may be the object of the respective proceedings..
4.4. PETROBRAS will reimburse the CONTRACTOR, by means of submittal, by
the latter, of the corroborative documents, in the acquisition
currency, the cost of replacement or repair commands and other
components of the production string and of the fishing string
belonging to the CONTRACTOR, which are lost or damaged, by accident
and not due to the normal wear nor to the CONTRACTOR's duly proven
grossly negligent action or omission, with the deduction of a 25%
depreciation per contract year, with a 20% residual
19
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value, applying, for its calculation, the least indemnity cost (Ci)
obtained by means of the following formulae:-
Ci = Vr.y (1 - 0.02083n), or Ci + Cr, where:.........................
Ci - indemnity cost;.................................................
Cr - repair cost;....................................................
Vr - replacement value;..............................................
n - number of months or fraction of a month between the date of the
beginning of the CONTRACT and the date of the loss (the fraction
of a month is counted as a whole month);..........................
y - 1 (for new strings), and 0.9 (for "Premium" strings)............
4.4.1. In the event there is a renewal of the string or of a part of the
elements that comprise the production string (pipes, commands and other
components), during the period of validity of the Contract, the
depreciation period to be considered - the "n" of the formula, will be
the one between the purchase date and the date when the element or the
string was lost...................................................
4.4.2. PETROBRAS may, at its discretion and expense, carry out inspection
in the drill string, its components and accessories, the CONTRACTOR
being obliged to repair or replace, for its account, the equipment
rejected..............................................................
4.5. Transportation:.......................................................
4.5.1. PETROBRAS will provide transportation for all crew members of the Unit
from the port or airport as indicated by PETROBRAS in the
beginning of this CONTRACT, and vice-versa. At its exclusive discretion,
the transportation to be provided will be by helicopter...
20
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4.5.2. PETROBRAS will provide transportation of the material and equipment
object of this Contract, from the port or airport designated to the
Unit and vice-versa...................................................
4.5.3. In any circumstances foreseen in items 4.5.1 and 4.5.2, the granting
of insurance coverage will not be PETROBRAS' competence, and the
CONTRACTOR waives immediately,, for itself and for its insurers, any
return action against PETROBRAS or third parties at its service, as a
result of the transportation provided.................................
4.5.4 In the cases when there is need to program exclusive air
transportation, for the Unit's inspection by the Navy and/or the
Shipping Office, the costs arising therefrom will be charged to the
CONTRACTOR............................................................
4.5.5. PETROBRAS may provide air or sea transportation for the CONTRACTOR's
materials, industrial or fresh water and fuel before the beginning of
the Contract, as defined in item 2.2.1. The cost arising therefrom
will be reimbursed by the CONTRACTOR to PETROBRAS at the time the
first invoice is issued...............................................
4.5.6. PETROBRAS will provide tugs and support vessels for the Unit, from
the location where the equipment general testing is performed, to the
first location, between locations and from the last location to the
Brazilian port or sheltered waters closest thereto, which will be
chosen in common agreement between the parties........................
4.5.6.1 PETROBRAS will supply support vessels for the positioning of the Unit
in the locations to be drilled under this Contract....................
4.5.7 PETROBRAS may provide tugs and/or support vessels to load and unload
materials and to handle anchors, in a location to be defined by the
parties, in the cases of inspection and/or dockages, including those
arising from act of God or force majeure, as defined in the
21
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Twelfth Clause of this Contract. The costs arising therefrom will be
reimbursed by the CONTRACTOR to PETROBRAS.............................
4.6 FUEL AND WATER - To supply, for its account, all fuel and water
necessary for the operations, complying with the provision set forth
in subitem 4.6.1, from the beginning of the Contract, until its
termination, as defined in subitems 2.2.1 and 2.2.2, respectively.....
4.6.1. The supply of water mentioned in item 4.6 includes also the
industrial water intended for the cleaning of the Unit, the provision
set forth in item 3.23 being complied with............................
4.6.2. PETROBRAS will supply, for its account, the fuel necessary for the
Unit's equipment, up to the limit of (blank)/year. What exceeds this
limit the onus will be for the CONTRACTOR's...........................
4.6.2.1.PETROBRAS will carry out the measurement of the fuel existing aboard the
Unit, at the beginning of the CONTRACT, at the end of each contract
year, and at the end of the CONTRACT, when the average consumption will
be calculated. The volume exceeding the established limit will be
charged to the CONTRACTOR at the time of the measurement, at the
consumer's sales price, on the date PETROBRAS issued the Debt Note, in
force in the City of Rio de Janeiro-RJ, duly adjusted in keeping with
the different ICMN aliquots in force in the State of Rio de Janeiro and
in the State where the Unit is operating..................
4.6.3. During the Unit's dockage periods, all fuel consumed will run for the
CONTRACTOR's full responsibility and cost, from the interruption of
the operation until the return to the same previous situation. The
fuel cost during that period will be charged to the CONTRACTOR, after
the consumption calculation, and at a price to be defined according
to the criterium mentioned in 4.6.2.1.................................
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4.7. To maintain, besides the CONTRACTOR's radio communications equipment,
aboard the Unit, equipment exclusively for PETROBRAS' communications
with its land bases...................................................
4.8. To notify the CONTRACTOR, in writing, on the application of eventual
fines.................................................................
4.9. To issue the Measurement Bulletin (MB), as set forth in the Sixth
Clause of this Contract...............................................
4.10. To issue the Operation(s) Authorization(s) with all the information
necessary for their performance, such as: location, time limit,
amount, scope and beginning and end dates.............................
4.11 PETROBRAS will reimburse the CONTRACTOR, by means of submittal by the
latter, of corroborative documents, in the acquisition currency, the
cost of replacement of VX rings, VX with Hycar and VX with lead
inserts for BOP and ANM connections with wellheads and filter
elements, as provided for in items 24, 25 and 34 of Attachment IV -
Mutual Obligations of the Chartering Contract.........................
(End of Clause)...............................................................
23
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FIFTH CLAUSE - PRICES AND VALUE...............................................
5.1. For the chartering of the Unit and its accessories, PETROBRAS will
pay the rates set forth in Attachment I and Attachment III I to this
CONTRACT, under the conditions set forth in Clauses Sixth:
Measurement, and Seventh: Form of Payment............................
5.1.1. The contract prices include all specified tariffs, supervision,
administration, taxes, fiscal emoluments and all expenses that fall
directly or indirectly upon the chartering, including profit, needed
for its perfect fulfillment, until the end of the contract, no price
revision claims being therefore valid.................................
5.2. The total estimated balue of this present CONTRACT is of
US$281,743,362.45, equivalent to R$303,662,926.00 (three hundred and
three million, six hundred and sixty-two thousand, nine hundred and
ninety-six reais), converted at the exchange rate of
R$1,060/US$1.,00, referring to the following charges:.................
5.3. PETROBRAS does not undertake to make the payment of the total
estimated in item 5.2, but of the amount corresponding to the
chartering effectively occurred and accepted by PETROBRAS;............
5.4. The financial resources necessary for the payment of the chartering
object of the present Contract are duly equated, and specifically
assured in the current year's budget and provided for in the
following ones, so as to cover the total contract period..............
(End of Clause)...............................................................
24
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SIXTH CLAUSE - MEASUREMENT OF THE CHARTERING
6.1. Periodicity of the measurement of the chartering and determination of
the reimbursable expenses.............................................
6.2. For the chartering, the measurement will be monthly, according to the
procedure mentioned below, with the consequent issuing of the
respective Measurement Bulletins (MB):................................
a) The initial measurement of the chartering will be made between
the date of the beginning of this Contract and the last day of
the calendar month;...............................................
b) The intermediate measurements of the chartering, corresponding to
a given month of the order "m", include the period between day 01
of the month "m" and the last day of the calendar month of the
order "m";........................................................
c) The final measurement of the chartering will be made between day 01
of the month "m" and this Contract's termination date..........
6.1.2. The reimbursable expenses, if foreseen in the Contract, will be
determined on any day of the month, according to the vouchers
submitted to and accepted by PETROBRAS, and more than one
determination can be made in the same period covered by the
measurement...........................................................
6.1.2.1.The results found will be submitted to the CONTRACTOR on the 5th (fifth)
working day, as of the submittal of said vouchers, by means of a
Reimbursement Document (RD), which will be signed by the Manager of this
CONTRACT, for invoicing purposes.................................
6.2. Issuing of the Measurement Bulletins (MB).............................
6.2.1. PETROBRAS, through the Manager of this Contract, at the end of each
period as mentioned in the letters of subitem 6.1.1 of this Clause,
will carry out the measurement of
25
<PAGE>
the chartering, gathering the results found in the Measurement Bulletin
(MB), for the signature of the Manager of this Contract and of the
CONTRACTOR, complying with the
following:........................................................
a) For the initial, intermediate, and final measurements ending on
the last day of a given month of the order "m", the CONTRACTOR will
receive one of the copies of the MB up to the 5th (fifth) subsequent
working day, so that it may submit the respective collection
documents, as provided for in subitem 6.3.1 of this
Clause;...........................................................
b) For the final measurement, when the termination of the Contract
does not occur in the last day of the month, the CONTRACTOR will
receive one of the copies of the MB, up to the 5th (fifth)
working day after the termination of the Contract, so that it may
submit the respective collection documents, as provided for in
subitem 6.3.1 of this Clause;.....................................
c) For each chartering measurement period, only 1 (one) collection
document may be issued, being understood that collection
documents with partial values regarding said period will not be
taken into account for payment purposes;..........................
d) The portions regarding the basic values and the deductions are to
be made evident in the Measurement Bulletins (MB), if provided
for in the Contract;..............................................
6.3. Time for the submittal of collection documents........................
Chart on following page
6.3.1. The CONTRACTOR will submit the respective collection documents to
PETROBRAS' Financial Department, as mentioned in item 7.1 of this
Contract, in the following conditions:................................
- - -------------------------------------------------------------------------------
TYPE OF MEASUREMENT OCCASION FOR THE SUBMITTAL OF
MEASUREMENT DOCUMENT COLLECTION DOCUMENTS
INITIAL MB Up to the 8th working day following the
INTERMEDIATE last day of the chartering performance
AND FINAL period, and PETROBRAS' will make the
payment on the 30th consecutive day, as
of the final date of the measured period,
the provision in subitem 6.3.1.1 being
complied with..........................
MOBILIZATION MB After the receipt of the MB, and
OF THE Unit PETROBRAS will make the payment on the
30th consecutive day, as of the date the
Collection Document is submitted........
DETERMINATION RD In the first working day after the RD is
OF issued, and the payment will be made
REIMBURSABLE within 30 (thirty) days, as of the date
EXPENSES of its submittal........................
- - -------------------------------------------------------------------------------
26
<PAGE>
6.3.1.1.The payments due because of this Contract, referring to the chartering,
will always occur on the 30th (thirtieth) day after the end of the
measured period, included in the MB's, or on the 1st (first) subsequent
working day, provided the CONTRACTOR complies with the time limits for
the submittal of the Collection Documents set forth herein. In the event
of non-compliance, by the CONTRACTOR, with said submittal time limits,
the payments will be postponed for the number of days equal to the delay
in the delivery of such documents..................
6.4. Measurements follow-up................................................
6.4.1. The CONTRACTOR undertakes to follow-up the measurements and the
determinations carried out by PETROBRAS, offering, at that time, the
impugnations or considerations it deems necessary, which will be
submitted to PETROBRAS' appraisal and decision........................
6.4.2. The CONTRACTOR's signature by its representative before PETROBRAS
will imply in the acknowledgment of the accuracy of the Measurement
Bulletin (MB) for all legal purposes..................................
(End of Clause)...............................................................
27
<PAGE>
SEVENTH CLAUSE - FORM OF PAYMENT..............................................
7.1. The payments due as a result of this contract will be made by
PETROBRAS to the CONTRACTOR, in Brazilian currency, 30 (thirty)
consecutive days as of the last day of the period of execution of the
service, provided the CONTRACTOR submits the collection documents up to
the 8th (eighth) working day following the last day of the period of
execution of the services..........................................
7.1.1. The payments will be made on the basis of the average exchange rate
of the American Dollar selling price, in force on the working day
immediately beore the date of the effective payment..................
7.1.2. The payment of eventual difference in readjustment will be made on
the same day when the payment of the respective service occurs,
provides the CONTRACTOR submits the corresponding collection document
up to the 5th (fifty) working day the indexes that permit the issuing
of the Readjustment Bulletin (RB) are known...........................
7.1.3. The payment of reimbursable expenses, if any, will be made 30
(thirty) consecutive days after the submittal of the collection
documents.............................................................
7.1.4. In the event of non-submittal of the collection documents within the
time limits set forth above, the payments will be postponed for the
number of days corresponding to those of the delay in the submittal
of the collection documents...........................................
7.2. The collection documents should be submitted, together with the
original of the documents giving rise to it (MB, RB, RD) in the
Docket of the Financial Departments indicated by PETROBRAS, for the
purpose of checking the time limits for the payment...................
28
<PAGE>
7.3. The collection departments will be issued without erasures, complying
with the pertinent laws in force, and will contain obligatorily the
following information:................................................
a) Place and date of its emission and number of the collection
document;.........................................................
b) Number and date of signature of the contract deed;................
c) Number and date of the documents originating them (MB, RB, RD);...
d) Gross value of the collection documents, both in numbers and in
writing;..........................................................
e) Name and code of the banking establishment, branch and the
respective code, and number of the current account of the payee,
where the payments will be made;..................................
f) In order that a particular payment is made in a banking
establishment different from the one indicated at the time the
contract deed was signed, such amendment will obligatorily be
preceded by a fax/correspondence from the CONTRACTOR or will
appear in the payee's collection document.........................
7.3.1. In the event the collection documents is inaccurate, it will be
returned to the CONTRACTOR and the time limit foreseen in item 7.1
will be postponed for as many days as those corresponding to the
delay in the submittal of such document...............................
7.3.2. In the event of re-submittal of the collection document, as a result
of a previous impugnation, this fact should appear in the history of
the collection document...............................................
7.3.3 The CONTRACTOR will obligatorily submit, every month to the Manager
of the contract:......................................................
a) Payroll of the CONTRACTOR's employees who are involved in the
rendering of the services contracted;.............................
<PAGE>
b) A photocopy of the Social Security Payment Slip (GRPS), duly
settled and authenticated, obligatorily filling out field "8" of
the GRPS (other information), the name, CGC of PETROBRAS, number,
date and amount of the Invoice or Bill of Sale referring to the
services rendered in the month....................................
c) In case of a Cooperative, to submit the payment vouchers of the
amounts paid, distributed or to its members as remuneration for
the services rendered in the fulfillment of this contract.........
7.3.4 The collection documents will not be accepted by PETROBRAS if
submitted with the Income Tax at Source already withheld..............
7.3.5 It is the responsibility of PETROBRAS' disbursing office the
explanations of doubts regarding the issuing of the collection
documents.............................................................
7.3.6 Eventual payments made for more or for less by PETROBRAS will be
compensated as soon as they are detected, and the respective amounts
will be duly corrected................................................
7.3.7 The CONTRACTOR should indicate the place and fax number, if any, for
the receipt of the "Notice of Payment Foreseen".......................
7.4 The vouchers for reimbursable expenses due to the CONTRACTOR as a
result of this contract deed, will be previously submitted to the
Manager of the Contract, for checking, besides being duly settled by
the respective supplier or service renderer, when such is the case....
7.4.1 If the originals cannot remain in PETROBRAS' hands, copies thereof
may be submitted, which will be checked by the Inspector and/or
Manager, and the following should appear in every original document:
"Copy Submitted for Reimbursement on.../.../...", followed by
30
<PAGE>
the signature and identification by name, position and registry number,
and the originals will be returned to the CONTRACTOR. The following text
will appear in the copies of each document in PETROBRAS' hands: "Checked
With the Original On.../.../...", which the Inspector and/or Manager
will sign, identifying the signature by name, position, and registry
number.......................................................
7.4.2 The receipt duly formalized by PETROBRAS of any reimbursable expense
voucher, does not represent the recognition of the debt, nor the
proof that the expenses were made.....................................
7.4.4 The collection of reimbursable expenses can only be made through the
issuing of a Services Invoice, after approval of said corroborative
documents and issuing by PETROBRAS of the respective Reimbursement
Document - DR, which will be issued up to 5 (five) working days, as
of the date of submittal of said documents............................
7.4.4.1 PETROBRAS' Inspection has 3 (three) working days to proceed with the
checking of the expense vouchers and to notify its approval to the
CONTRACTOR, so that it may issue the Combined Invoice and Bill of
Sale..................................................................
7.4.5 The total amount of the collection document will be obtained by
applying the following formula:.......................................
VTR = VTD, where
-----
1-ICP
VTR = total amount to be reimbursed to the CONTRACTOR;................
VTD = total amount of the reimbursable expenses, effectively
authorized;...........................................................
ICP = total of the sum of the aliquots of taxes collected, in the
decimal form (ISS or ICMS, as the case may be, CONFINS and PIS/PASEP).
31
<PAGE>
7.5 The CONTRACTOR agrees that, at PETROBRAS' exclusive option, the
payment referring to the chartering object of the present Contract
may be made by means of financing by third parties, provided the time
limits, currencies, amounts and places for payment set forth in the
Contract are complied with............................................
(End of Clause)...............................................................
32
<PAGE>
EIGHTH CLAUSE - FINES.........................................................
8.1. Non-compliance, by the CONTRACTOR, after 92 (ninety-one) days beyond
the time limit mentioned in item 2.3 of this Contract, will imply in the
imposition of fine against the CONTRACTOR, in a written notice,
corresponding to 30% (thirty per cent) of the rate provided for in REF
101 of Attachment III, per day of delay...........................
8.2. In the event of non-compliance, by the CONTRACTOR, with the
inspection's requirements within the time limit it may set, PETROBRAS
may, by a written notice, impose against the CONTRACTOR, per day of
non-compliance with such requirements, as of the end of the time
limit set, a fine corresponding to 20% (twenty per cent) of the rate
provided for in REF 101 of Attachment III. ...........................
8.3. The penalties set forth in this Clause do not exclude any other provided
for in the Laws in force and/or in this Contract, nor the CONTRACTOR's
liability for damages it may cause to PETROBRAS, as a result of
non-fulfillment of the conditions agreed upon herein.
8.4. The amount corresponding to the sum of the basic values of the fines
applied is limited to 10% (ten percent) of the estimated value of the
present Contract......................................................
8.5. The penalties to which the CONTRACTOR is subjected to due to the
provision set forth in this Clause, will be discounted in the first
payment and in the subsequent ones, which the CONTRACTOR is entitled
to, after the sanctions are applied by PETROBRAS......................
8.6. In the event of balance, PETROBRAS reserves itself the right to make
or complement the deduction in collection document(s) related to any
other contract deed eventually entered into with the CONTRACTOR, or
to use any other adequate means to settle the debt, if necessary......
34
<PAGE>
8.7. The CONTRACTOR may appeal against the imposition of the fine, in a
declaration, within the non-deferrable time limit of 15 (fifteen)
consecutive days as of the date the notice is received................
8.8. Non-appearance of the CONTRACTOR's personnel for boarding on the date
and time agreed upon between PETROBRAS and the CONTRACTOR, will
subject the CONTRACTOR to the payment of a fine of US$140.00 per
passenger in the case of air transportation, and US$40.00 in the case
of sea transportation.................................................
8.8.1. The fine set forth in item 8.8 will not be charged if the CONTRACTOR
requests PETROBRAS to change the boarding schedule at least 24
(twenty-four) hours in advance.
8.9 In a written notice and without prejudice of the capacity to rescind
the contract, PETROBRAS may impose upon the CONTRACTOR a compensatory
fine of 100% (one hundred per cent) of the amount of the conviction,
due to default of its labor, social security or tax obligations.......
8.9.1 The payment of said fine will not exempt the CONTRACTOR from the
obligation to reimburse PETROBRAS for the amount imposed upon it as a
result of an eventual joint conviction passed by a Labor Court or by
the proper administrative jurisdictions...............................
8.9.2 The CONTRACTOR will be fined in the percentual of 5% (five percent)
on the amount of the invoice in the event it does not submit the GRPS
or submits at variance................................................
(End of Clause)...............................................................
35
<PAGE>
NINTH CLAUSE - INSPECTION.....................................................
9.1. The inspection of the chartering contracted herein will be carried
out by PETROBRAS' representatives, and the CONTRACTOR undertakes to
allow their free access to the Unit and to the operations locations,
and to comply immediately with the observations of such inspection,
which will have ample powers:.........................................
9.1.1. To determine, provided it comes to its knowledge and is within its
capacity, the suspension of the operations which perhaps are being
carried out in disagreement with the good technique or which
threatens the safety of persons or assets of PETROBRAS, third parties
and of the CONTRACTOR itself, subitem 2.1.7 of Attachment II being
complied with.........................................................
9.1.2. To refuse the employment of equipment and materials, tools and
production string components condemned or improper, as well as
operations which do not comply with the established programs;.........
9.1.3. To order the withdrawal, from the work site, of any of the
CONTRACTOR's employees who, in PETROBRAS' opinion, may endanger the
good performance of the operations or hinder its inspecting
activities;...........................................................
9.1.4. To certify the accuracy of the information reported daily by the
CONTRACTOR;...........................................................
9.1.5. To notify the CONTRACTOR, in writing, on the imposition of the fines
provided for in this Contract, including those referring to the
CONTRACTOR's action or omission;......................................
9.1.6. To request from the CONTRACTOR a detailed report on any accident
occurred and on any operation or repair performed.....................
36
<PAGE>
9.2. However, the responsibility, operation, movement and administration
of the Unit will be under the exclusive control and command of the
CONTRACTOR or its employees...........................................
9.3. The total or partial action or omission of the Inspection, does not
lessen at all the CONTRACTOR's full responsibility for the rendering
of the obligations agreed upon herein, nor does it imply in any
reduction or change in the CONTRACTOR's obligations in the faithful
and perfect fulfillment of the present Contract.......................
9.4. Recording - PETROBRAS' Inspection should record its observations on
the Driller=s Log approved by the IADC and on the Daily Drilling
Certificate (ADP), to safeguard the rights and responsibilities
foreseen in this CONTRACT.............................................
9.5. During the contract period, PETROBRAS will carry out the CONTRACTOR's
performance evaluation, covering the groups in equipment and
material, human resources, installations, quality and efficiency.
The results of the performance evaluations will be notified and
consolidated by means of a service performance certificate............
(End of Clause)...............................................................
37
<PAGE>
TENTH CLAUSE - REsISSION......................................................
10.1. PETROBRAS may rescind the present CONTRACT, without the CONTRACTOR
being entitled to any right to indemnity and/or withholding in the
following cases:......................................................
10.1.1. Nonfulfillment, or irregular fulfillment of contract clauses,
specifications, operations or time limits, as well as the repeated
commitment of faults in the fulfillment of the Contract;..............
10.1.2. Total or partial subcontracting of the object of the present Contract,
the association of the CONTRACTOR will another, merger/division or total
or partial incorporation, except if allowed for in this Contract, which
affects the good fulfillment of this instrument.
10.1.3. Interruption of the operations for more than 60 (sixty) days, in the
cases in which an act of God does not clearly apply (clause 12.4).....
10.1.4. Decree of the CONTRACTOR's bankruptcy.................................
10.1.5. Suspension of the operations for more than 60 (sixty) days............
10.1.6. When the limit for the imposition of penalties provided for in
item 8.4 of this Contract is attained.................................
10.1.7. Slowness in the performance of the works, leading PETROBRAS to prove
the impossibility of completing the operations within the established
time limits...........................................................
10.1.8. Non-compliance with the determination of PETROBRAS' agent appointed
to follow-up and inspect the fulfillment of the CONTRACT, as well as
those of his superiors................................................
10.1.9. The dissolution of the CONTRACTOR.....................................
10.1.10.The social change or the modification of the company's purpose or
structure, which in PETROBRAS' opinion, hinders the performance of the
operations;...........................................................
38
<PAGE>
10.1.11.Delay in the beginning of the fulfillment of the CONTRACT for more than
180 (one hundred and eighty) days.....................................
10.1.12.Rescission of the Services Rendering Contract for drilling and/or
Evaluation and/or Completion and/or Workover using the Unit. entered
into between PETROBRAS and the INTERVENIENT PARTY.....................
10.1.13.If the limit set forth in subitem 2.1.9 of Attachment II to this
Contract is attained.
10.1.14.If the limits set forth in NOTE 2 of REF. 102 of Attachment II to this
CONTRACT is attained..................................................
10.1.15.Non-submittal of the proof of default of labor obligations towards the
employees directly involved in the services object of this Contract,
including social security contributions and deposits in the FGTS, when
requested by the Inspection, or if such default is proved.............
10.1.16.Non-submittal or submittal at variance of the GRPS, when the
corresponding invoice is delivered....................................
10.1.16.1.The rescision for this reason does not prevent PETROBRAS from
imposing the respective fine, foreseenm in 8.7.2.;...................
10.2. In the event of rescision of the contract deed for the reasons
foreseen in 10.1, PETROBRAS:..........................................
a) will take over the object of the contract deed, on the stage and
location where it is found;.......................................
b) will enforce the contract guarantee, if any, for the
reimbursement of the amounts of fines and indemnities due to it;..
39
<PAGE>
c) will withhold the credits arising from the contract deed, up to
the limits of the damages caused to it;...........................
10.3. After the Contract is rescinded, as set forth in this Clause, the
CONTRACTOR is liable, in legal and contract fashion, for the violation
or inadequate performance which gives rise to the rescision, as well as
for the reimbursement of damages which PETROBRAS may come to
sustain...............................................................
10.4 After the Contract is rescinded, PETROBRAS, at its exclusive
judgment, may adjudicate the operations object thereof to which it
deems appropriate, without behoving the CONTRACTOR any consultation
or interference, claim and/or indemnity, for whatever title, and the
CONTRACTOR will be liable to legal and contract penalties, besides
answering for damages PETROBRAS may sustain...........................
10.4.1. The CONTRACTOR is also liable for the pertinent administrative
sanctions, its full defense being guaranteed..........................
10.5. In the event PETROBRAS does not impose the right to rescind the
present CONTRACT according to this Clause, it may, at its absolute
discretion, withhold the payments of pending invoices, until the
CONTRACTOR fulfills the contract condition it has infringed, but such
fact will not represent novation nor will it generate rights that may
be claimed by the CONTRACTOR..........................................
(End of Clause)...............................................................
40
<PAGE>
ELEVENTH CLAUSE - FISCAL CHARGES..............................................
11.1. Taxes (taxes, fees, emoluments, fiscal and parafiscal contributions)
that are due as a direct or indirect result of the present CONTRACT, or
its fulfillment, will be the exclusive responsibility of the taxpayer,
so defined in the tax rule, with no right to reimbursement. PETROBRAS,
as the paying source, will discount and withhold within the legal time
period, from the payments it makes, the taxes it is liable to by the
laws in force.........................................................
11.1.1. The CONTRACTOR states that, in quoting its prices, it has taken into
account the taxes (taxes, fees, emoluments, fiscal and parafiscal
contributions) charged on the fulfillment of this Contract, and it
cannot make any claim due to error on such evaluation, for the purpose
of requesting a price revision [or] reimbursement of payments set down
by the proper authority...............................................
11.1.2. Once found, during the period of validity of the Contract, that the
CONTRACTOR has unduly added to its prices amounts corresponding to
taxes, fiscal and/or parafiscal contributions and emoluments of any
kind that are not charged to the performance of the services agreed
upon, such values will be immediately excluded, with the consequence
reduction of the prices practice and reimbursement of amounts that
may have been paid to the CONTRACTOR..................................
11.2. If, during the period of validity of this CONTRACT, any of the
following events occur:...............................................
o creation of new taxes;............................................
o extinction of existing taxes;.....................................
o changes in the aliquots;..........................................
o establishment of tax incentives of any kind; and..................
41
<PAGE>
o exemption or abatement of federal, state or county taxes;.........
which, provedly come to increase or reduce the burdens of the parties
to the contract, the prices will be revised, so as to fit them into
the changes made, compensating, at the first opportUnity, any
differences arising from such changes. However, if it is a question
of tax incentives, the advantages arising therefrom will always be
for PETROBRAS.........................................................
(End of Clause)...............................................................
42
<PAGE>
TWELFTH CLAUSE - FORCE MAJEURE................................................
12.1. PETROBRAS and the CONTRACTOR will not be liable for the
nonfulfillment of their respective obligations in case of events that
characterize an act of God or force majeure defined in the sole
paragraph of Article 1.058 of the Brazilian Civil Code. Any suspension
of performance due to such item 12.1 will be limited to the period
during which such cause or its consequences exist, and such period will
be added to the duration of the Contract mentioned in the Second Clause
of the present Contract. However, the CONTRACTOR is assured the right to
receive the rate provided for in Ref 104 of Attachment III, with the
exception of the exemption from payment set forth in subitem 2.1.4 of
the Attachment II, and the reimbursements mentioned in this Contract,
and furthermore, the parties will severally assume their
losses................................................................
12.2 If the circumstances that justify the invoking of the existence of an
act of God or force majeure occurs, the party unable to fulfill its
obligations will immediately notify the other party, in writing, on
the occurrence and its consequences...................................
12.3. If the impediment arising from the force majeure lasts for more than
30 (thirty) consecutive days, any of the parties may opt for the
termination of the Contract, with both parties complying with their
mutual obligations due until the date of the beginning of said
impediment............................................................
12.4 In the present Contract it will be considered as act of God the
situation in which one of the parties is prevented from fulfilling
its obligations, provided it proves that:.............................
the non-fulfillment of the obligation was due to the existence of an
impediment beyond its control,........................................
43
<PAGE>
the party impeded could not, within its ability, overcome the
impediment and its effects, in order to fulfill its contract
obligation within the time limit set down, and........................
the impediment and its effects could not be avoided nor overcome......
(End of Clause)...............................................................
44
<PAGE>
THIRTEENTH CLAUSE - ASSIGNMENT AND TRANSFER...................................
13.1. The CONTRACTOR cannot assign or transfer, in whole or in part, the
present Contract, except with PETROBRAS' prior authorization in
writing...............................................................
13.2. The CONTRACTOR cannot assign or give in guarantee, at any title, in
whole or in part, the credits of any kind, arising or deriving from
the present CONTRACT, except with PETROBRAS' prior authorization in
writing. The prior authorization will obligatorily state that
PETROBRAS imposes upon the assignee of the credits the exceptions
that behooves it, mentioning expressly that the payments to the
assignee will be conditioned to the fulfillment, by the assignor, of
all of its contract obligations.......................................
13.3. The occurrence of the above mentioned events, duly authorized by
PETROBRAS, does not exempt the CONTRACTOR form any of its contract
obligations...........................................................
13.4. PETROBRAS may assign or transfer, in whole or in part, the present
Contract, under commercial conditions to be agreed upon by the
parties. .............................................................
(End of Clause)...............................................................
45
<PAGE>
FOURTEENTH CLAUSE - ADDITIONAL EQUIPMENT......................................
14.1. PETROBRAS may install in the Unit the additional equipment it deems
necessary for research, drilling, completion of wells or production.
It is agreed, however, that no structural change will be made in the
Unit without the CONTRACTOR's consent in writing. All PETROBRAS'
equipment installed in the Unit will remain its property, and it will
be removed by it before the end of this Contract. The installation
and removal expenses will run for PETROBRAS' account. During the
installation and removal of PETROBRAS' equipment, the rate set forth
in Ref 104 of Attachment III will be paid if the interruption of the
operations becomes necessary..........................................
(End of Clause)...............................................................
46
<PAGE>
FIFTEENTH CLAUSE - ATTORNEY OF RECORD.........................................
15.1. The CONTRACTOR undertakes to maintain, in the City of Rio de Janeiro,
State of Rio de Janeiro, Federative Republic of Brazil, during the
period of validity of the CONTRACT and until the settlement of eventual
demands arising from this CONTRACT, a representative with ad-judicia et
extra powers, who may receive service of process, inclusive in
execution proceedings, and also sign compromise and settlements
regarding controversies resulting from this CONTRACT, and the summons
can be made by publication, in the event or absence or lack of an
Attorney..............................................................
15.1.1. Within 30 (thirty) days after the signature of the present Contract,
the CONTRACTOR will notify PETROBRAS the name, qualification, office
and residence of its representative and attorney of record, as set
forth in item 15.1....................................................
(End of Clause)...............................................................
47
<PAGE>
SIXTEENTH CLAUSE - CONTRACT RELATIONSHIPS.....................................
16.1 This CONTRACT is related to another one for the rendering of services
of drilling and/or evaluation and/or completion and/or workover, signed
on this same date between PETROBRAS and the INTERVENIENT PARTY........
(End of Clause)...............................................................
48
<PAGE>
SEVENTEENTH CLAUSE - INTERVENIENCE............................................
17.1. The INTERVENIENT PARTY signs the present Contract, together with the
CONTRACTOR, being jointly liable with it for all obligations arising
from the present Contract and from its fulfillment, including for
losses................................................................
(End of Clause)...............................................................
49
<PAGE>
EIGHTEENTH CLAUSE - LIABILITY.................................................
18.1. PETROBRAS' and the CONTRACTOR's liability for damages will be limited
to the direct damages in accordance with the Brazilian Civil Code and
pertinent laws, with exception of loss of profit and indirect damages,
the direct damages being limited to 100% (one hundred percent) of the
total contract value..................................................
(End of Clause)...............................................................
50
<PAGE>
NINETEENTH CLAUSE - COMPLEMENTARY DOCUMENTS
19.l. The AttachmentS mentioned below are an integral part of the present
CONTRACT and, in the event of disagreement between the Attachments
and the CONTRACT, the text of the CONTRACT will prevail...............
Attachments:
I - Technical specifications of the Unit .....................................
II - Applicability of the Rates and Incidental in the Performance.............
III. - Unit Prices Spreadsheet ...............................................
IV - Mutual Obligations ......................................................
V - List of Specialized Personnel.............................................
VI - Environmental Operating Conditions
VII - PETROBRAS' Safety Rules.................................................
VIII - Equipment Testing Program..............................................
IX - Procedures In the Event of Fatal Accidents...............................
(End of Clause)...............................................................
51
<PAGE>
TWENTIETH CLAUSE - PRICE READJUSTMENT.........................................
20.1. The contract prices are fixed and non-readjustable....................
(End of Clause) ..............................................................
52
<PAGE>
TWENTY-FIRST CLAUSE - ACCEPTANCE..............................................
21.1. After the chartering operations are completed in strict compliance
with the conditions set forth in this contract deed, PETROBRAS will
accept them by means of a Definite Deed of Receipt, signed by both
parties...............................................................
21.2. The signature of the Definite Deed of Receipt does not exempt the
CONTRACTOR from the liabilities foreseen in this contract and in the
laws in force.........................................................
(End of Clause) ..............................................................
53
<PAGE>
TWENTY-SECOND CLAUSE - LOSS OR DISAPPEARANCE..................................
22.1. In the event the Vessel is lost or disappears, no payment regarding
the same will be due by PETROBRAS to the CONTRACTOR, as of the day or
as of the moment it was last heard of.................................
(End of Clause)...............................................................
54
<PAGE>
TWENTY-THIRD CLAUSE - GROSS OR GENERAL AVERAGE...............................
23.1. The gross or general average will be ruled in the Port of Rio de
Janeiro according to the York and Antuerp Rules/1974..................
(End of Clause) ..............................................................
55
<PAGE>
TWENTY-FOURTH CLAUSE - JURISDICTION...........................................
24.1. The Jurisdiction of the County of the Capital of the State of Rio de
Janeiro will be competent to settle any questions arising from the
present Contract, with the express waiver, by the parties, of any
other, however privileged ............................................
(End of Clause) ..............................................................
AND BEING THUS AGREED, the parties sign the present deed in 4 (four) copies
with the same tenor, with the witnesses below ........................
Rio de Janeiro, (blank) ......................................................
PETROLEO BRASILEIRO S.A. - PETROBRAS
(BLANK)
LUIZ EDUARDO G. CARNEIRO - EXECUTIVE SUPERINTENDENT OF EXPLORATION AND
PRODUCTION SOUTH AND SOUTHEAST (E&P-SSE) .....................................
MARITIMA NAVEGACAO E ENGENHARIA LTDA.
(BLANK)
GERMAN EFROMOVICH - PRESIDENT ................................................
WITNESSES:
(Blank) - CPF No. (Blank) ....................................................
(Blank) - CPF No. (Blank) ....................................................
(Attachment I not included in the original document.).........................
56
<PAGE>
Attachment "I"
TECHNICAL SPECIFICATIONS OF THE Unit AND ITS ACCESSORIES
(Attachment I not included in the original document.)
57
<PAGE>
CONTRACT 101.2.063.97-8...............................................
CHARTERING
Attachment II
APPLICABILITY OF THE RATES AND,
INCIDENTALS IN THE PERFORMANCE.
1 - APPLICABILITY OF THE RATES - DEFINITION OF THE SERVICE RATES PER 24
(TWENTY-FOUR) HOUR DAY .......................................................
Ref 101 - OPERATION RATE - It will be applied during the activities
requiring the use of the Unit, such as drilling, coring, electric logging,
formation testing, completion and workover operations, including drilling
lines scouring and cutting operations.........................................
Ref 102 - REPAIR RATE - In the periods when there is an interruption of the
activities that require the use of the Unit, mentioned in Ref 101 of this
Attachment and the operations for Moving the Unit between locations, Ref 105
of this Attachment, due to maintenance, including replacement of mud pump
spare parts, and/or repair in the Unit's equipment, or in those which supply
is the CONTRACTOR's responsibility, no rate will be due ......................
NOTE 1. The repair period will be considered as of the interruption of the
operation that is being performed, until the return to the same situation
when the interruption occurred, except for the periods when the interruption
in the repair activities occur due to adverse sea conditions, as set forth in
NOTE 2 of Ref. 104 ...........................................................
NOTE 2. In the event the CONTRACTOR remains in Repair Rate for an accumulated
total of 30% (thirty percent) of the time, for any period of 6 (six) contract
months, PETROBRAS may rescind the present Contract, based on subitem 10.1.14
of this Contract .............................................................
58
<PAGE>
NOTE 3. It will be considered as repairs the occurrences due to wash outs in
the drill pipes and in the other elements of the drill string, belonging the
Contractor, with exception of those arising from the presence of H2S and from
abnormal mechanical conditions occurred in the well ..........................
NOTE 4. At the Inspections discretion, for the maintenance of the BOP, the
CONTRACTOR may be granted a franchise of up to 24 (twenty-four) hours between
the instant the BOP is set on the test stump, until its operational
withdrawal, and the moment of its movement for the next lowering in another
well, without the CONTRACTOR entering into the repair rate, provided such
maintenance is carried out according to international standards. In the
period within these 24 (twenty-four) hours intended exclusively for the BOP
maintenance, the waiting rate (Ref. 104) will be due..........................
Ref. 103 - RATE ADDITIONAL (RA) - In each measurement period, as agreed upon
in subitem, 6.1.1 of the CONTRACT, the CONTRACTOR will be entitled to the
receipt of a Rate Additional, calculated by the following formulae:...........
AT = 0.10 x (NT - NFM - NREP - NIPG-NTOR) X TO .......... for PI (less than or
equal to) 0,0300..............................................................
AT =(0.16 - 2 x PI) x (NT= NFM - NREP - NIPG - NTOR) x TO ....... for 0,03 (less
than or equal to) PI (less than or equal to) PI
0,0800 AT = Zero .............. to PI>0,800
Where:........................................................................
AT = Rate Additional .........................................................
TO = Operation Rate (REF 101).................................................
PI = Unavailability Proportion, calculated with 4 (four) decimal places,
being: .......................................................................
PI= NREP + NIPG + NTOR
------------------
NT - NFM
NT = Total number of days in the measurement period considered ...............
59
<PAGE>
NFM = Total number of days in which the act of God or force majeure occurs,
as defined in the Twelfth Clause of the Contract, in the measurement period
considered ...................................................................
NREP = Total number of days under repair rate (REF 102) in the measurement
period considered ............................................................
NIPG = Total number of days under exemption from payment (according to item
2.1 of this Attachment) in the measurement period considered .................
NTOR = Total number of days with reduced operation rate (according to
subitems 2.2.3 and 2.2.4 of this Attachment) in the measurement period
considered ...................................................................
REF. 104 - WAITING RATE (TE) - corresponds to 95% (ninety-five percent) of
the operation rate (TO) and which will be applied in Bad Weather, Force
Majeure and Waiting situations, as defined below:.............................
1) Bad Weather Situations - in the event of stoppage of the operations when
environmental conditions are so severe as to endanger the Unit's operating
capacity, the limitations in Attachment VI, being complied with, making the
operations unstable or unsafe or preventing support vessels to have access
to the Unit, or preventing the tugs operations, at the time of change of
locations, although the Unit may operate normally, in spite of the Bad
Weather ...................................
2) Force Majeure Situations - during the period when the Unit cannot
operate, due to act of God or force majeure, as defined in the Twelfth
Clause of the Contract, until the removal of the impediment or the
rescision of the Contract, as the case may be ............................
3) Waiting - waiting for the arrival, maintenance or availability of materials
from PETROBRAS or third parties, under PETROBRAS' responsibility, even if
the Maintenance is made in the Unit; waiting for daylight to carry out
formation tests; waiting for orders from PETROBRAS, such as, but not
limited to, change of programs, definition to proceed with the drilling or
other activity, from geology, from production, rest for PETROBRAS' team or
of those of third party at PETROBRAS' service; waiting for towage or
support vessels..........................................................
60
<PAGE>
NOTE 1. The period spent in disconnecting the LMRP from the BOP due to
environmental conditions, will be considered as Bad Weather, until the return
to the previous situation ....................................................
NOTE 2. If a Bad Weather situation occurs which interrupts a Repair activity,
the waiting Rate (REF 104) with a 25% (twenty-five percent) reduction, will
be due during that period ....................................................
REF. 105 - MOVING RATE - corresponds to 95% of the Operation Rate (TO) and
will be applied during the following periods: ................................
a) Beginning of the Contract - After the acceptance of the Unit's equipment
operating conditions, once the general testing provided for in Item 3.1.
of the Contract has been carried out, until the spud in of the first
well or reentry in the first well (beginning of lowering the first tool
for access to the well); ................................................
b) Between locations - After the end of the drilling operations, completion
or intervention in a well, with the arrival of the BOP or tool used in
the well (the one which occurs last) in the moon pool, until the spud in
or reentry in a new well (beginning of lowering the first tool for
access to the well); ....................................................
NOTE: This period includes the DP system calibration and tests, always in
each new location, and in others in each contract year or at any time, when
requested by PETROBRAS........................................................
c) End of Contract - After the end of spud in or intervention operations in
the last well, with the arrival of the BOP or tool used in the well (the
one which occurs last) in the moon pool, until the Unit's arrival in a
sheltered waters location, chosen in common agreement between the parties,
or, if there is PETROBRAS' equipment. still aboard, until the withdrawal of
such equipment from the Unit.............................................
61
<PAGE>
Ref. 106 MOBILIZATION OF THE Unit (MOB) - No rate will be due for the
mobilization of the Unit and its accessories..................................
Ref. 107 DEMOBILIZATION OF THE Unit (DEMOB) - No rate will be due or the
demobilization of the Unit and its belongings.................................
2 - INCIDENTS IN THE PERFORMANCE .............................................
2.1. Exemption from Payment - PETROBRAS will be exempted from the payment
of the rates foreseen in this Attachment, during the period in which
occurs ...............................................................
2.1.1. Interruption of the services due to the CONTRACTOR's duly proven
fault arising from operational error, and/or lack of material or
equipment, inclusive due to the loss of equipment or subaquatic spare
parts ................................................................
2.1.2. Stoppage of the services and/or of the Unit due to measures related
to impositions by made the insurers ..................................
2.1.3. CONTRACTOR's refusal to operate under the conditions foreseen in
Attachment VI - Environmental Operating conditions ...................
2.1.4. Stoppage of the services and/or of the Unit for inspection or dockage
purposes, including surveys and dockages arising from act of God or
force majeure, as defined in the Twelfth Clause of the Contract, the
corresponding expenses also running for the CONTRACTOR's account .....
62
<PAGE>
NOTE 1. The exemption from payment will begin in the moment there is an
interruption of the operational continuity object of this Contract, even if
the withdrawal of all or part of PETROBRAS' and/or the CONTRACTOR's cargo
becomes necessary for the inspection and/or dockage...........................
NOTE 2. The end of the exemption from payment, due to the inspection and/or
dockage, will occur:..........................................................
a) On the return to the same location, the moment the operation
returns to the previous situation;................................
b) In the mobilization for another location, the moment the Unit
starts sailing after PETROBRAS' or the CONTRACTOR's materials
have been put back on board.......................................
2.1.5. Occurrence of kick, drill string sticking, loss of circulation,
fishing or abandonment, caused by the CONTRACTOR's duly proven action
or omission, from the moment the problem was ascertained, until the
return to the situation prior to its occurrence, or displacement to
another location, in the event of abandonment ........................
2.1.5.1.The exemption from payment referred to in 2.1.5 will be limited to a
period of 15 (fifteen) days, per event, after which the reduction
foreseen in subitem 2.2.3 of this Attachment will be applied..........
2.1.6. Occurrence of blow out caused by the CONTRACTOR's duly proven action
or omission, from the moment the problem was ascertained, until the
return to the situation prior to its occurrence ......................
63
<PAGE>
2.1.6.1.The exemption from payment referred to in item 2.1.6 will be limited to
a period of 45 (forty-five) days, after which the reduction foreseen in
subitem 2.2.4 of this Attachment will be applied......................
2.1.7. Suspension of the services, determined by PETROBRAS' Inspection,
based on item 9.1.1 of the Contract...................................
2.1.8. Interruption of the operations due to a failure occurred in any of
the Unit's equipment, at the time of the testing to be carried out
according to item 3.1 of the Contract ................................
2.1.9. In the occurrence of events of exemption from payment provided for in
subitem 2.1.1, 2.1.2, 2.1.3, and 2.1.7, for a total accumulated period
exceeding 30% (thirty percent) in any 6 (six) month period, PETROBRAS
may rescind the present Contract, based on. its subitem 10.1.8
2.2. Reduction in the Daily Operation, Waiting and Movement Rate ..........
The rates foreseen in this Attachment will be reduced in the following cases .
2.2.1. Total or partial inoperativeness or malfunction of any equipment
which delays or hinders the operation, such as, but not limited to,
winches, top drive, kelly spinner, geolograph, current meter, air
compressors, shale shaker, desander; desilter, mixing pumps, mud
laboratory equipment and bulk receipt and transfer systems, are
reason for the reduction of the daily rate provided for in Ref 101,
in 1% (one percent), cumulative per equipment, provided the
CONTRACTOR is notified in writing in the Daily Drilling Certificate
(ADP), by PETROBRAS' Inspection and which, after the time limit the
latter has set to repair said equipment, such repair has not been
made .................................................................
64
<PAGE>
2.2.2. Low Efficiency - Reference Rates 101 and 105 of this Attachment will
suffer a 20% (twenty percent) reduction, in the event low efficiency
is verified, according to the operating efficiency parameters listed
below. Such reduction will be applied during the whole corresponding
activity period in which low efficiency is verified:..................
Operating Parameters: ........................................................
- - - Maneuver of the drill string in a cased well (except BHA): ...............
o Inside the riser and 20" casing = 500 m/h.........................
o Inside the 13 3/8" casing = 600 m/h ..............................
o Inside of 9 5/8" casing = 700 m/h ................................
- - - Break of DP's per Unit - 25jt/h ..........................................
- - - Casing string run in the sea/inside the riser/previous casing (joints
with approximately 12 m long) ............................................
o 30" Casing - 2 jt/h..........................................
o 20" Casing - 5 jt/h..........................................
o 13 3/8" Casing - 13 jt/h ........................................
o 9 5/8" Casing - 18 jt/h ........................................
o 7" Casing - 15 jt/h.........................................
- - - Running of drilling riser, excluding normal time for testing (50 ft
joint): 45/m/h ...........................................................
- - - Pulling of drilling riser (50 ft joints): 60 m/h..........................
- - - Installation or pulling of the kill/choke lines/telescopic
joint/stretchers: 6.0h ...................................................
- - - Diverter installation or pulling: 2.0h ...................................
- - - Assembly of the dampening lines in the M.R.: 1.5h........................
65
<PAGE>
- - - Assembly of the flexitube equipment: 5.0h. ...............................
- - - Assembly of the production tail: 2.0h ....................................
- - - Tubing running or pulling, per Unit - 150 m/h ............................
- - - Tubing running or pulling per section - 300 m/h...........................
- - - Completion risers running or pulling - 50 m/h ............................
- - - Assembly of terminal head and sling's -2.0 h .............................
- - - Moving of ANM to/from the moon pool - 3.0 h...............................
- - - Moving of tree cap or tree running tool to/from the moon pool - 2.5h .....
- - - Assembly of lubricator and wire line SOP - 1.5h
NOTE: The above mentioned operating parameters are based on normal weather
condition.....................................................................
2.2.3. Beginning on the 16th '(sixteenth day), inclusive, of the occurrence of
kick, drill string sticking, loss of circulation or fishing, caused by
the CONTRACTOR's duly proven action or omission, until the return to the
situation prior to its occurrence, the applicable rate will be reduced
by 50% (fifty percent) ...............................................
2.2.4. Beginning on the 46th (forty-sixth) day, inclusive, of the occurrence of
Blow out caused by the CONTRACTOR's duly proven action or omission,
until the return to the situation prior to its occurrence, the
applicable rate will be reduced by 50% (fifty percent)................
2.3. Period of Validity of the Contract Rates the contract rates set forth
in this Attachment will apply in the period set forth below: .........
66
<PAGE>
a) Beginning: release of the Unit, by PETROBRAS, to sail to the
first location, after the equipment general testing provided for
in item 3.1 of the CONTRACT has been carried out, with the
exception of the provision in its subitem 3.1.1.1 ................
b) End: after the end of the drilling or completion of the last
well, with this Unit's arrival at a port or sheltered waters
chosen by common agreement between the parties, and if there is
PETROBRAS' equipment still aboard, with the withdrawal of such
equipment from the Unit...........................................
2.4. Blow-Out - PETROBRAS will be responsible for the well control
operation costs, in the event of blow-out and caving caused by the
blow-out. Such provisions apply only to the well control costs and
do not apply to the loss of assets, lesions and/or damages caused by
the blow-out, which are protected by the provisions of the pertinent
items of this Contract. The CONTRACTOR undertakes to place at
PETROBRAS' disposal all of its resources in personnel and equipment
related to this COontract without any additional charges to
PETROBRAS. If the CONTRACTOR has contributed with duly proven
grossly negligent action or omission for the occurrence of the
accident, no rate will be due, until the solution of the problem, in
compliance with the provisions in subitems, 2.1.6 and 2.2.4 of this
Attachment ...........................................................
(End of Attachment)...........................................................
67
<PAGE>
RENDERING OF SERVICES
- - -------------------------------------------------------------------------------
Unit PRICES SPREAD SHEET CONTRACT NO. 101.2.008.97-9
- - -------------------------------------------------------------------------------
OBJECT OF BID: CHARTERING OF THE FLOATING Unit PROVIDED WITH
DYNAMIC POSITIONING SYSTEM.
- - -------------------------------------------------------------------------------
PLACE OF OPERATION: BRAZILIAN CONTINENTAL SHELF
- - -------------------------------------------------------------------------------
Unit'S NAME: AMETHYST 4
- - -------------------------------------------------------------------------------
COMPANY'S NAME: MARITIMA NAVEGACAO E ENGENHARIA LTDA.
- - -------------------------------------------------------------------------------
CODE ITEMIZATION Unit Unit PRICE (US$)
- - -------------------------------------------------------------------------------
02.222.305 OPERATION RATE DAY 114,599.70
(REF. 101)
- - -------------------------------------------------------------------------------
02.222.306 REPAIR RATE DAY No Rate Will Be Due
(REF. 102)
- - -------------------------------------------------------------------------------
02.222.307 WAIT. BAD DAY (95% OF Ref. 101)
WEATHER RATE
(REF. 104.1)
- - -------------------------------------------------------------------------------
02.222.308 WAIT. FORCE DAY (95% OF Ref. 101)
MAJEURE RATE
(REF. 104.2)
- - -------------------------------------------------------------------------------
02.222.309 WAIT. RATE DAY (95% OF Ref. 101)
WAITING
(REF. 104.3)
- - -------------------------------------------------------------------------------
02.222.310 MOVEMENT RATE DAY (95% OF Ref. 101)
(REF. 105)
- - -------------------------------------------------------------------------------
68
<PAGE>
- - -------------------------------------------------------------------------------
02.222.311 MOBILIZATION UNIQUE No Rate Will Be Due
RATE (REF. 106)
- - -------------------------------------------------------------------------------
SIGNATURES DATE OF THE
PROPOSAL
- - -------------------------------------------------------------------------------
PETROBRAS CONTRACTOR (blank) 07/07/97
(blank)
- - -------------------------------------------------------------------------------
69
<PAGE>
Contract 101.2.063.97-8.......................................................
CHARTERING
Attachment IV
MUTUAL OBLIGATIONS
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
--------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
1. Production Adaptor Base an X X
AMN.
- - -------------------------------------------------------------------------------
2. Cement, bentonite, baritine X X
and other materials and
additives for manufacturing
mud and cementing.
- - -------------------------------------------------------------------------------
2. (sic) Cementing and logging
Unit:
a) Installation and removal X X
b) Maintenance X X
c) Rent X X
- - -------------------------------------------------------------------------------
3. Equipment and tools specific X X
for evaluation, completion and
production of wells.
- - -------------------------------------------------------------------------------
4. Fishing tools and replacement
materials for pipes and
production tools.
- - -------------------------------------------------------------------------------
a) Foreseen in X X
Attachment I
- - -------------------------------------------------------------------------------
b) Not foreseen in X X
Attachment I
- - -------------------------------------------------------------------------------
70
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
--------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
5. Equipment, tools and X X
replacement materials needed
for the services of logging,
formation tests and/or
production and/or perforation,
not included in Attachment I.
- - -------------------------------------------------------------------------------
6. Lubricants and greases for the X X
CONTRACTOR's equipment.
- - -------------------------------------------------------------------------------
7. Industrial and fresh water. X X
- - -------------------------------------------------------------------------------
8. Replacement materials, X X
including fishing tools and
other CONTRACTOR's
equipment listed in
Attachment I.
- - -------------------------------------------------------------------------------
9. Consumer equipment and X X
materials for completion
fluid tests listed in
Attachment I. (Note:
PETROBRAS will inform
inform monthly on the
minimum stock needed).
- - -------------------------------------------------------------------------------
10. Steel ropes, slings, sisal X X
or nylon ropes and cordate
in general, needed for
tying towlines, for mooring
support vessels and in cargo
evaluation completion and
handling.
- - -------------------------------------------------------------------------------
11. Boxes for loading and
- - -------------------------------------------------------------------------------
71
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
--------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
unloading of liquids and bulk X X
material with connections
compatible with those of the
supply vessels.
- - -------------------------------------------------------------------------------
12. Materials to make drilling X X
and completion fluid.
- - -------------------------------------------------------------------------------
13. Conventional bits. X X
- - -------------------------------------------------------------------------------
14. Safety equipment for X X
individual use: gloves,
helmets, boots, masks,
ear protectors and other
personal use equipment
for the CONTRACTOR's
employees.
- - -------------------------------------------------------------------------------
15. Services, materials and X X
equipment to mark locations.
- - -------------------------------------------------------------------------------
16. Surveyinf o the sea bottom, X X
if necessary.
- - -------------------------------------------------------------------------------
17. Welding equipment and X X
material needed for well
completion and abandonment
operations.
- - -------------------------------------------------------------------------------
18. Bulls eye for running X X
tools
- - -------------------------------------------------------------------------------
19. Warehouses, office and X X
storage area for the
CONTRACTOR on land.
- - -------------------------------------------------------------------------------
72
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
--------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
20. Radio-beacon with working X X
frequencies compatible with
those mentioned in Attachment
I.
- - -------------------------------------------------------------------------------
21. Safety and survival equipment, X X
including maintenance
(subjected to periodical
inspection by PETROBRAS
- - -------------------------------------------------------------------------------
22. Screens for mud sieves, X X
according to
PETROBRAS'
specifications.
- - -------------------------------------------------------------------------------
23. Materials for the maintenance X X
of equipment and test lines,
supplied by the CONTRACTOR,
for formation testing and/
or production painting,
boiler factor and welding).
- - -------------------------------------------------------------------------------
24. VX ring, VX with HYCAR
and VX with lead insert
for connection BOP-
WELLHEAD, LMRP-BOP
STACK:
a) In normal operation X X X
b) In reinstallation due X X X
to problem with the ESCP
- - -------------------------------------------------------------------------------
25. VX ring, VX with X X X
HYCAR and VX with
- - -------------------------------------------------------------------------------
73
<PAGE>
- - -------------------------------------------------------------------------------
DESCRIPTION ON ACCOUNT OF SUPPLIED BY
--------------------------------------------
PET CONT PET CONT
- - -------------------------------------------------------------------------------
lead insert for ANM'
- - -------------------------------------------------------------------------------
26. Remote operation
submarine vehicle (ROV)
a) Installation and removal X X
b) Maintenance X X
c) Rent X X
- - -------------------------------------------------------------------------------
27. Hydraulic fluid for X X
BOP driving and test
- - -------------------------------------------------------------------------------
28. Hydraulic fluid for X X X
ANM driving and test
- - -------------------------------------------------------------------------------
29. Special greases for X X
pipes and completion
equipment
- - -------------------------------------------------------------------------------
30. Individual safety X X
equipment for operation
in the moon pool.
- - -------------------------------------------------------------------------------
31. Paper and ink for X X
microcomputer printer.
- - -------------------------------------------------------------------------------
32. Beacons, hydrophones, X X
transducers, transponders,
batteries.
- - -------------------------------------------------------------------------------
33. Diesel Oil
- - -------------------------------------------------------------------------------
a) up to the limit set X X
forth in Clause 4.6.2
- - -------------------------------------------------------------------------------
b) above the limit set X X
forth in Clause 4.6.2
- - -------------------------------------------------------------------------------
34. Filter elements for the X X
completion fluid filtering
Unit.
- - -------------------------------------------------------------------------------
(End of Attachment)...........................................................
74
<PAGE>
Attachment V
LIST OF (MINIMUM) SPECIALIZED PERSONNEL
ABOARD
- - ----------------------------------------
Captain or Barge 1
- - ----------------------------------------
Tool Pusher (1 2
superintendent
aboard)
- - ----------------------------------------
Driller 2
- - ----------------------------------------
Assistant Driller 2
- - ----------------------------------------
Derrickman 2
- - ----------------------------------------
Roughneck 6
- - ----------------------------------------
Crane Operator 2
- - ----------------------------------------
Area Man 8
- - ----------------------------------------
Welder 2
- - ----------------------------------------
Watchstander 2
- - ----------------------------------------
Subsea Engineer 1
- - ----------------------------------------
Mechanic 3
- - ----------------------------------------
Electrician 3
- - ----------------------------------------
Radio Operator 2
(Portuguese speaker)
- - ----------------------------------------
75
<PAGE>
- - ----------------------------------------
Male nurse 1
- - ----------------------------------------
Storekeeper 1
- - ----------------------------------------
Safety guard 1
- - ----------------------------------------
NOTE: Supplementary personnel will be supplied according to the CONTRACTOR's
conveniences and needs or to comply with the requirements of government laws..
76
<PAGE>
Attachment VI
ENVIRONMENTAL OPERATING CONDITIONS
(PERMISSIBLE LIMITS FOR ENVIRONMENTAL
CONDITIONS ACTING SIMULTANEOUSLY)
- - -------------------------------------------------------------------------------
OPERATION HEAVE PITCH WIND WAVE CURRENT
(FEET) OR (MPH) (FEET) (KNOTS)
ROLL
(DEGREES)
- - -------------------------------------------------------------------------------
Jetting/driving 2,0 2,5 30 3,0 1,5
- - -------------------------------------------------------------------------------
Drilling 2,5 3,0 30 3,0 1,5
- - -------------------------------------------------------------------------------
Casing Running 2,0 3,0 30 3,0 1,5
- - -------------------------------------------------------------------------------
Casing hanger setting 1,5 2,0 30 2,1 1,5
- - -------------------------------------------------------------------------------
BOP running 1,5 1,5 19 2,1 1,0
- - -------------------------------------------------------------------------------
BOP setting 1,5 1,5 19 2,1 0,75
- - -------------------------------------------------------------------------------
Maneuvering 3,5 3,0 44 8,5 1,5
- - -------------------------------------------------------------------------------
LMPR disconnection 7 4 51 10,5 1,0
- - -------------------------------------------------------------------------------
LMPR connection 1,5 1,5 19 2,1 0,75
- - -------------------------------------------------------------------------------
Formation testing 3,5 4,0 44 8,5 1,5
- - -------------------------------------------------------------------------------
Operation with boats 2,5 3,0 39 6,7 1,5
- - -------------------------------------------------------------------------------
Running the ANM (lay-away) 1,5 1,5 19 2,1 0,75
- - -------------------------------------------------------------------------------
Running the ANM (without 1,5 1,5 19 2,1 0,75
- - -------------------------------------------------------------------------------
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- - -------------------------------------------------------------------------------
lines)
- - -------------------------------------------------------------------------------
Operation with flexitube 2,0 3,0 30 5,0 1,5
- - -------------------------------------------------------------------------------
Operation with wire-line 3,0 4,0 44 8,5 1,5
- - -------------------------------------------------------------------------------
Operation with BOP 2,5 3,0 39 6,7 0,75
78
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Attachment VII
PETROBRAS' SAFETY RULES
1. Service Rule No. 46/71:
o Safety Rules for Offshore Operations.
2. Service Order No. 01/72:
o Operational Safety Rules - Continental Shelf.
3. Service Rule No. 41/72:
o Electricity - Safety Rules
4. Service Order No. 01/76:
o Industrial Safety Rules (General)
o Industrial Safety Rules (Drilling)
o Industrial Safety Rules (Production)
5. General Safety Manual:
o Safety and Environmental Instruction for Contractors (E&P - BC).
79
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Attachment VIII
EQUIPMENT TESTING PROGRAM
In order to carry out the Unit's equipment testing in an easier and
more agile manner, the CONTRACTOR is to submit to PETROBRAS, as quickly as
required the following documents:.............................................
1. CERTIFICATES............................................................
a) Survey and Appraisal Report, updated and valid for the fiscal
year regarding the Unit offered, issued by one of the entities:
ABS, NOBLE & DENTON, DNV, LLOYDS or BUREAU VERITAS, and if the
report is issued abroad, it will be translated into Portuguese by
a sworn public translator and notarized in the Brazilian
Consulate.........................................................
b) Classification or Class Confirmation Certificate for hull and
equipment, compatible with the proposal submitted (certified
copy);............................................................
c) Report on claims from the classification societies mentioned in
the Class Confirmation Certificate (in the event there are
claims);..........................................................
NOTE:PETROBRAS will evaluate the above mentioned documents and will
mention in what time limited eventual claims will be settled,
and at PETROBRAS' judgment, it can be at the time of the
Unit's inspection or at mobilization after the contract is
signed..........................................
d) Freeboard Certificate;............................................
e) IOOP (International Oil Pollution Prevention) Certificate;........
f) IMO-MUDU-CODE - Mobile Offshore Drilling Unit - latest edition
(unnecessary for Drill Ship);.....................................
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g) Cargo Ship Safety Equipment Certificate;..........................
h) Cargo Ship Safety Construction Equipment;.........................
NOTE:All documents required are to be within their period of
validity....................................................
2. INDUSTRIAL SAFETY AND ENVIRONMENTAL CONTROL.............................
- Manuals and emergency plans in the Portuguese Language............
3. STORAGE CAPACITY........................................................
- Complete floor plan of bulk movement system, specifying:..........
a) Exclusive lines to move cement;.............................
b) Exclusive lines to move bentonite and baritine;.............
c) Location and type of bulk line valves and their respective
driving systems;............................................
d) Pneumatic lines for cleaning and clearing bulk lines;.......
e) Location of the manometers;.................................
f) Quantity, flow, operating pressure and location of the air
drying Unit(s);.............................................
g) Schematic drawing of each silo with their respective
aeration systems and points of connection with the bulk
lines.......................................................
4. FLUID CIRCULATION AND PROCESSING SYSTEM.................................
- Sketch of the system emphasizing pulsation dampers (suction and
tamping), safety valves, feed pumps, position of the suction lines
in relation to t suction sieves' tanks and filters................
- Floor plan of the drilling fluid feed and discharge lines showing
the flexibility in relation to the sand traps and mud tanks.......
81
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- Floor plan of the degasser instalation showing the active tank,
separate processed mud and gas discharge lines, emphasizing the
connection point of this line with the gas discharge line.........
- Floor plan of the mud tanks system, emphasizing the supply lines,
guns lines, mixture funnel and centrifugal pumps interconnection
lines.............................................................
5. WELLHEAD SAFETY EQUIPMENT SYSTEM........................................
- Sketch of the BOP/LMRP, specifying lines, valves and
measures/dimensions...............................................
- Floor plan of the kill and choke lines from the BOP to the choke
manifold, specifying valves, connections, dampener chambers,
anchorage points and interconnection with the other systems.......
- Floor plan of the atmospheric air separator.......................
- Layout of the trip tank installation, giving the following
information:......................................................
a) Capacity;...................................................
b) Location;...................................................
c) Sensitivity;................................................
d) Measuring system;...........................................
e) Scale type;.................................................
f) Driller=s scale visualization conditions;...................
g) Supply System for the above item............................
- Floor plan of the stand pipe manifold, specifying lines, valves,
manometers and interconnections with the other systems............
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- Inspection report on the riser, riser handling tools and
connectors, telescopic joint and flexible joint, according the
API RP 2P and RP 2Q standards, with update date not exceeding 1
year..............................................................
NOTE:If the reports indicate the need of repair in some
equipment, the service performance certificates will also
be submitted................................................
- Biannual inspection certificate of the choke manifold, with
the manufacturer's approval.................................
- Biannual inspection certificate of the BOP Unit and driving
system, with the manufacturer's approval....................
- Biannual inspection certificate of the BOP, with the
manufacturer=s approval.
- Proof of technical hability of the well drilling and
control personnel...........................................
- To supply an internal rusting maintenance and prevention plan
for the marine risers and kill and choke lines.........
6. ENERGY GENERATION SYSTEM................................................
- Unifilar diagram of the energy generation and distribution system.
7. STABILITY...............................................................
- To submit the vessel=s stability curve, updated in the proposal=s
conditions, in keeping with the environmental conditions..........
8. DYNAMIC POSITIONING SYSTEM (INCLUDING THE MONOGENERATORS ASSEMBLY,
THRUSTERS AND PROPELLERS)...............................................
- Schematic diagram of the dynamic positioning system...............
- To submit the inspection and tests procedures to be carried out
at every new location.
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- To submit the tests and inspections procedures to be carried out
at the end of each contract year..................................
9. DRILLING STRING AND ACCESSORIES.........................................
- Inspection report on all equipment of the drilling and completion
strings, subs and accessories (used equipment)....................
- Purchase voucher of the drill and completion strings, subs and
accessories (for new equipment)...................................
10. FISHING TOOLS AND ACCESSORIES...........................................
- Inspection report on all components of the fishing tools (used
equipment) or purchase vouchers (for new tools)...................
11. SUNDRY SYSTEMS..........................................................
- Winches load test certificate.....................................
- Description of the compressed air system, emphasizing
compressors, layout of lines, valves and interconnection with the
other systems.....................................................
- Preventive Maintenance Plans with their respective timecharts.....
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D of the chartering and service rendering
contracts.........................................................
NOTE:Such equipment must be in places of easy access for inspection.
A) RECEIPT TEST......................................................
84
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- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D of the chartering and service rendering
contracts.
NOTE:Such equipment must be in places of easy access for
inspection..................................................
- The following systems, equipment and tools listed below
will be checked, inspected and tested:......................
1) DRILL STRING, COMPONENTS AND ACCESSORIES....................
- The CONTRACTOR will submit recent inspection reports,
according to the specification API RP7G for the whole
drill string and accessories such as, but not limited
to: drill pipes, drill collars, HW, Subs,
stabilizers, reamers, bumper subs, lift-sub, kelly,
slips, elevators, fishing tools, etc., which proves
the good conditions of the string and its
accessories. The information from the reports and
the general conditions of the string and its
accessories will be checked by PETROBRAS by means of
a sampling inspection. In the event of discrepancy
between the data submitted by the CONTRACTOR and
those checked by PETROBRAS, showing an inadequate
condition of the string and its accessories, the
CONTRACTOR will carry out another inspection, for its
own account...........................................
NOTE 1: Any equipment refused by the inspection will be immediately repaired
or replaced by the CONTRACTOR, for its own account...................
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NOTE 2: For the string, components and new accessories, no inspection report
will be required, documents proving that such equipment is new will
be sufficient........................................................
NOTE 3: The CONTRACTOR's equipment will be stored and arranged so as to
facilitate the inspection by sampling to be carried out by PETROBRAS.
- The same procedure will be adopted for the telescopic
joints and flexible joints............................
2) EXTRACTOR OF SOLIDS.........................................
The following will be examined:.............................
- sieves,...............................................
- desander..............................................
- degasser, test suction and discharge..................
- centrifuge (if any)...................................
The operation and work pressure, as well as the existence
of manometers, will be checked..............................
3) MUD TANKS AND VALVES........................................
Waterproofness, working of the agitators, mixture funnel
and depth gun, besides the existence of fixed marks to
control the tanks volume will be checked....................
4) CENTRIFUGAL PUMPS...........................................
The following will be checked:..............................
- working, vibration and noises;........................
- Packing (leaks);......................................
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- Work pressures........................................
NOTE: Items 3 and 4 will be tested with sea water................
5) MUD LABORATORY AND TEST EQUIPMENT...........................
The existence on board and the adequacy to the requirements
described in Attachments C and D to this CONTRACT will be
checked.....................................................
6) DRILLING DERRICK............................................
Maintenance conditions (corrosion), fastening system and
the conditions of the traveling block rails will be
examined....................................................
7) CROWN BLOCK.................................................
The pulleys will be examined as to the profile wear,
alignment, clearance, buckling of the axles, lubrication,
etc.........................................................
8) MUD PUMPS...................................................
The following will be carried out:..........................
- observation of working, vibrations, noises;...........
- pressure and maximum work flows tests for the liner
used;.................................................
- safety valve working test;............................
- checking of the suction and discharge pulsation
dampeners;............................................
- watertightness tests with nominal pressure of the mud
pumps and of all manifold valves;.....................
- watertightness tests with nominal pressure of all
manifold values of the stand pipe manifold and of the
kelly hose;...........................................
87
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- random disassembling of the suction for visual
inspection of the piston, sleeve, packing, valve and
seat..................................................
9) SWIVEL......................................................
The mandril, gooseneck, body, etc., will be check and
nominal pressure test with rotation will be performed.......
10) MOTION COMPENSATOR..........................................
The piston alignment, lock bar, alignment in the rail,
general conditions, leaks and chains will be checked........
11) RISER AND GUIDE LINE TENSIONERS.............................
The general conditions, leaks, pulleys and cables will be
inspected...................................................
12) RISER RECOIL SYSTEM/HANG OFF SYSTEM/FILL-UP SYSTEM VALVE
(IF ANY)....................................................
The systems' operation will be checked.
13) HIGH COMPRESSORS AND AIR RESERVOIRS.........................
The general conditions, leaks, lines and system yield will
be checked..................................................
14) TOP DRIVE...................................................
Working tests (connection and disconnection of one or more
sections of the DP's) will be carried out and the general
conditions will be inspected................................
15) KELLY SPINNER...............................................
The general conditions, specially the rollers' wear, and
working will be checked, and connection and disconnection
operation of one or more DP=s will be carried out...........
88
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16) HOOK........................................................
The general conditions and the locking system will be
checked.....................................................
17) TRAVELLING BLOCK.............................................
The pulleys wear, axles alignment, lubrication system,
retraction system, etc., will be inspected..................
18) DRAWWORKS...................................................
- The operation of the mechanical break system (brake
bands), electromagnetic (distance between irons,
voltage level and SCR feeder conditions), cooling
system and clutches will be checked...................
- The operation of the cat-heads and height limitator
with the assembly/ disassembly of one or more command
sections, will be checked.............................
19) ROTARY TABLE................................................
The operation in high and low, brake system, tachometer and
lubrication system will be checked..........................
20) TRIP TANK...................................................
Capacity, installation site, sensitivity to the level
indicator system, visualization condition and supply system
will be inspected...........................................
21) HYDRAULIC TONGS AND PNEUMATIC SPIDER FOR CASING AND
PNEUMATIC TONGS FOR DRILL PIPES.............................
- Operation tests will be made and maintenance
conditions will be checked............................
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- The existence of an alignment guide for the sand-line
cable in the drum will be checked.....................
22) SAND-LINE OF WIRE-LINE SYSTEM...............................
- Operation of the clutches and brake will be tested by
lowering the photoclinometer inside the drill string
coinciding with the photoclinometer overshot test (TOTCO)
will be tested. Test to be made on location before the
beginning of the operations.................................
23) CHOKE MANIFOLD..............................................
All valves with low pressure (300 psi) and in high pressure
(system's work pressure). Manometers, hydraulic choke
operation, manual choke, remote control panel, etc. will be
tested......................................................
24) UPPER AND LOWER KELLY COCK, INSIDE BOP AND SAFETY VALUE
- Drivers will be tested and work pressure tests will
be made...............................................
- The end connections of each element will be checked
and tested with work pressure. The CONTRACTOR should
have end seal plugs adequate for the test.............
25) KILL AND CHOKE LINES HOSES..................................
The end connections will be checked and tested with the
system's work pressure. The CONTRACTOR should have end
seal plugs adequate for the test............................
26) DRILL INSTRUMENTATION SYSTEM................................
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The following will be tested:...............................
- geolograph;...........................................
- rotary table tachometer;..............................
- manometers;...........................................
- stroke counter;.......................................
- level control in the mud tanks;.......................
- torque indicator......................................
27) FLARE PIPE AND BOOMS........................................
Their existence on board will be checked, analyzing the
maintenance conditions of the lines by means of
inspections, and the facilities for installation of the
production test equipment system............................
28) BOP SYSTEM..................................................
The following will be carried out:..........................
- pressure tests of the slide valves with low pressure
and high pressure, compatible with the system.........
- pressure tests of the annulars with low pressure and
high pressure, compatible with the system.............
- complete function test in both POD's, through all
panels................................................
- choke and kill valves tested with low pressure and
high pressure, compatible with the system.............
- working of the shear ram valve will be checked with
opening for examination of the blades conditions......
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- the opening and closing of all ram, annular a kill
and choke valve chambers will be tested...............
- the hydraulic driving Unit will be checked as to:
fluid used, fluid low level alarm, low air pressure
and low accumulators pressure, maintenance
conditions, leaks and mixing systems..................
- the volumetric capacity of accumulators and the
capacity of electric and pneumatic pumps of the
hydraulic Unit will be tested.........................
- the locking system of the ram valve(s) will be tested.
- the SPM valves conditions will be checked by opening and
inspecting one of them, chosen at random..........
- the locking/unlocking system of the H-4 hydraulic
connectors will be tested.............................
- the surface and bottom accumulators' pre-charge will
be checked............................................
- the operation of the following systems will be tested:
o driving back-up.................................
o emergency recovery..............................
o handling........................................
29) TRAVELING TONGS, EZY-TORQ, TORQUE SENSOR, SLIPS, ETC........
One or more sections of the drill collars and drill pipes
will be assembled/disassembled to check the working of such
equipment. The general maintenance conditions, chuck jaws
and cables will be checked..................................
92
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30) BULK TRANSFER SYSTEM........................................
The following will be carried out:..........................
- the operation of the compressor will be checked, and
noise, oil and air leaks, and maintenance state,
filters and dehumidifier will be inspected............
- operation and watertightness of valves, lines and silos
will be checked, looking for possible clogging..
- transfer of cement from 1 silo to the daily silo (if
any) and from this to the surge- tank will be made....
31) EMERGENCY ENERGY GENERATION SYSTEM..........................
- a black-out in the energy system generation system
will be simulated to see if the emergency generator
is automatically turned on............................
32) MAIN MOTOR-GENERATORS ASSEMBLY..............................
The following will be carried out:
- vibration, noises, insulation, leaks, maintenance,
etc., will be checked.................................
- generators input and output in the bus bar,
synchronism and load divisions will be tested.........
- load and voltage and frequency regulation will be
tested................................................
33) DESSALTER...................................................
Operation and production capacity will be checked...........
34) CAT-LINES CRANES............................................
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The following will be carried out:
- operation of the winches and maintenance of the
cabled will be checked................................
- the elevation and rotation system, the operation with
flying boom and pulley block and the operation of the
boom height pawl will be checked......................
- the report of the last inspection carried out by the
Unit's classification society in the winches will be
examined..............................................
35) DEJECTA TREATMENT Unit......................................
Its operation will be inspected.............................
36) TELECOMMUNICATION SYSTEM....................................
Operational tests will be made in all radio equipment
existing on board, including radio-beacon...................
37) OVERHEAD TRAVELING CRANE....................................
Their operation, and the maintenance conditions of cables
and sliders will be examined................................
38) DC/SCR MOTORS...............................................
The maintenance conditions and insulation, as well as the
collectors and brushes will be examined.....................
- SCR functional test...................................
39) DIVERTER....................................................
The following will be tested:...............................
94
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- flow line wing valves;................................
- diverters and insert packer lock;.....................
- the control panel will be checked.....................
40) SAFETY EQUIPMENT............................................
SALVAGE.....................................................
Fireproof rigid vessels (capsules, whalers):................
- lowering, motor, fuels, sprinklers, start;............
- rations, garnishing, hatches, cleaning, fire
extinguisher, signaling equipment.....................
Inflatable rafts:...........................................
- quantity, capacity, location, height in relation to
the sea;..............................................
- validity of the last inspection, means of access to
the sea;..............................................
- conditions of the cocoon..............................
Jackets:....................................................
- quantity (sufficiency), location, protection, and
maintenance...........................................
Life-buoys:.................................................
- quantity (sufficiency), location, heaving-lines,
lanterns, smudge pots.................................
Escape routes:..............................................
- vertical and horizontal signaling (indicative plates);
- clearing, lighting(emergency).........................
WATER SUPPLY SYSTEM FOR FIRE FIGHTING.......................
95
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Fire ring:..................................................
- water system for the platform;........................
- sprinkler system;.....................................
- painting, corrosion, signaling, visual conditions;....
- valves, hydrants, guns................................
Fire pumps:.................................................
- operation;............................................
- motor, fuel, start, panel, tests......................
FIRE FIGHTING FIXED SYSTEMS.................................
- Foam system: chambers, tanks, guns, hydrants and
carrier liquid;.......................................
- Cylinders; conditions, reloading, retesting (CO2 or
HALON, if any);.......................................
- Lines and diffusers: general conditions;.............
- Automatic: feedings, panels, batteries, detectors,
tests;................................................
- Manual: commands, interconnections, tests;...........
- Alarms: interconnections.............................
FIRE EXTINGUISHERS
- water, carbon dioxide, chemical powder (portable and
carts);...............................................
- distribution, location, general conditions;...........
- revision, recharge, retest, control, meters,
replacement...........................................
FIRE POSTS..................................................
- hose, keys, sprinkler;................................
96
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- fiber boxes, general conditions, post identification;.
- visual signaling: sufficiency and general conditions.
EMERGENCY EQUIPMENT.........................................
- autonomous breathing apparatus, reserve bottles,
breathable air fixed system, fire proximity clothing,
lantern, ax, safety belts;............................
- distribution, location, general conditions,
inventory, maintenance and replacement................
COMMUNICATIONS AND ALARMS...................................
- telephone (internal, external): Operating capacity;..
- radiophony: VHF. Operating capacity;................
- portable transceptors: quantity; distribution,
intrinsic safety;.....................................
- intercom: quantity, distribution, and horns
audibility, interconnection with the platform, coding
of sound alarm tones, amplifiers;.....................
- visual signaling: sufficiency, general conditions;...
- fire alarm, glass breaking type: batteries, bells,
tests.................................................
EMERGENCY LIGHTING..........................................
- charger, batteries and lanterns.......................
HELIPOINT...................................................
- protection: guns, fire extinguishers, salvage
equipment;............................................
- painting, protection screen, net, landing lights,
safety warnings;......................................
- guest welcoming practices.............................
LOAD LIFTING................................................
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- winches: general conditions, operation, signaling,
maintenance;..........................................
- manual and electric tackles: general conditions,
operation, signaling, maintenance;....................
- material movement and storage areas...................
TRAINING....................................................
- abandonment, fire fighting, first aid and brigade.....
MANUALS AND PLANS...........................................
- emergency; safety;....................................
- disclosure, knowledge;................................
- tasks schedules for emergency and abandonment
situations, including in Portuguese...................
ORDER AND CLEANLINESS.......................................
- installation's general aspect;........................
- particularly alarming places..........................
SMOKE, HEAT AND GAS DETECTION SYSTEM........................
- test of hydrocarbons detection sensors................
BALLAST AND SEWER SYSTEM....................................
- functional test.......................................
41) ANCHORING SYSTEM............................................
42) DYNAMIC POSITIONING SYSTEM..................................
43) PROPULSION SYSTEM...........................................
B) LOCATION MOVING TEST..............................................
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To be defined between the CONTRACTOR and PETROBRAS................
C) BEGINNING OF CONTRACT YEAR TEST...................................
To be defined between the CONTRACTOR and PETROBRAS................
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Attachment IX
PROCEDURES IN THE EVENT OF FATAL ACCIDENTS
1. If, during the period of validity of the CONTRACT, a fatal accident
occurs with a CONTRACTOR's employee, the CONTRACTOR should:.............
1.1. Notify the Inspection immediately, for the proper measures;.............
1.2. Take measures so that the employee's relatives be notified with the
utmost urgency on the event, giving them the social support due;........
1.3 Formally establish an Investigation Commission, within 48 hours after
the accident, in order to, in the maximum time limit of 15 days,
identify the causes and recommend the measures deemed necessary to
prevent similar accidents...............................................
2. The report should contain, at least, the following information
regarding the accident:.................................................
- description;......................................................
- exact location;...................................................
- data regarding the injured persons;...............................
- basic and immediate causes;.......................................
- measures to be taken in order to prevent its repetition...........
3. The CONTRACTOR should guarantee the Commission enough authority and
autonomy to carry out the investigations without any restrictions.......
4. A PETROBRAS= employee should participate in the Commission, appointed
by the authority in charge of the operational office....................
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5. After conclusion of the Commission's work, it will also behoove the
CONTRACTOR, at the Inspection's request, to disclose the results of the
report, so as to convey the experience from the accident to other
contractor companies....................................................
. - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - . - .
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on September 18,
1997, in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
_____________________________
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.13(A)
MARCIA BARBOSA SERRA
Tradutora Publica Juramentada e Interprete Comercial
Sworn Public Translator and Commercial Interpreter
Rua Aperana, 38 apt 301 - Leblon - 22450-190
ISS: 1261003-00 - CIC: 606442227-00
Tel.: 274-3844
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 2668/98
(On paper with letterhead of PETROBRAS.)./.
RIDER No. 01 FOR THE ASSIGNMENT OF RIGHTS AND OBLIGATIONS ARISING FROM
CONTRACT 101.2.063.97-8, ENTERED INTO BETWEEN MARITIMA PETROLEO E
ENGENHARIA LTDA., SUCCESSOR OF MARITIMA NAVEGACAO E ENGENHARIA LTDA.,
and PETRODRILL FOUR LTD., WITH THE CONSENT OF PETROLEO BRASILEIRO S.A.
- PETROBRAS./.
PETROLEO BRASILEIRO S.A. - PETROBRAS, - a mixed economy company, with
head office at Av. Republica do Chile 65, in the City of Rio de Janeiro, State
of Rio de Janeiro, Federative Republic of Brazil, enrolled in the General
Taxpayers Registry of the Ministry of Finance under No. 33.000.167/0001-01,
henceforth called PETROBRAS, represented herein by the Executive Superintendent
of Exploration and Production, Luiz Eduardo G. Carneiro, and the Company
MARITIMA PETROLEO E ENGENHARIA LTDA., successor of MARITIMA NAVEGACAO E
ENGENHARIA LTDA., with head office at Av. Almirante Barroso, 52, 34th floor, in
the City of Rio de Janeiro, State of Rio de Janeiro, Federative Republic of
Brazil, enrolled in the General Taxpayers Registry of the Ministry of Finance
under No. 46.828.596/0001/13, henceforth called the ASSIGNOR, represented herein
by its President, German Efromovich, and the company PETRODRILL FOUR LTD., with
head office in Omar Hodge Building, Wickhams Cay, Road
<PAGE>
Town, Tortola, Ilhas Virgens Britanicas, henceforth called the ASSIGNEE,
represented herein by its Director, German Efromovich, have agreed to add a
rider to contract 101.2.063.97-8 (AMETHYST 4), according to the following
clauses and conditions:/.
FIRST CLAUSE - OBJECT./.
1.1. The present Rider has as its object:/.
1.1.1. The total assignment, as of the date of the signature of this Rider,
henceforth called the ASSIGNMENT DATE, by the ASSIGNOR to the ASSIGNEE of
the rights and obligations arising from Contract No. 101.2.063.97-8 and
its Attachments./.
1.1.2. To change the contract value foreseen in item 5.2 of the Fifth Clause -
PRICES AND VALUE./.
1.1.3. To change the redaction of the Seventh Clause - FORM OF PAYMENT./.
1.1.4. To change the Fourth Clause - PETROBRAS' OBLIGATIONS, including item
4.12./.
SECOND CLAUSE - RESPONSIBILITY./.
2.1. The ASSIGNEE, as of the ASSIGNMENT DATE, becomes the CONTRACTOR, being
liable, before PETROBRAS for the fulfillment of all contract obligations
undertaken by the ASSIGNOR, and will also have all rights arising from
the Contract./.
2.2. The ASSIGNEE is liable before PETROBRAS for the fulfillment of all
contract obligations undertaken by the ASSIGNOR in the Contract, as well
as for eventual losses and damages arising from its acts or omissions./.
2.3. The ASSIGNOR will be jointly liable with the ASSIGNEE for the complete
fulfillment of all obligations arising from the Contract./.
2.4. The ASSIGNOR, as of the ASSIGNMENT DATE, will have no right arising from
the
<PAGE>
Contract, giving PETROBRAS, full and complete acquittance for any and all
contract value./.
THIRD CLAUSE - PRICES AND VALUE./.
3.1. The redaction of item 5.2 and its subitems becomes:/.
"5.2. The total estimated value of the present Contract becomes US$
281,743,362.45 (two hundred and eighty-one million, seven hundred
and forty-three thousand, three hundred and sixty-two American
dollars and forty-five cents), equivalent to R$ 303,747,519.00
converted at the exchange rate of R$1,0781/US$1,00, referring to
the following charges:/.
3.2. Item 5.5 is included with the following redaction:/.
"5.5. Besides the value mentioned in 5.2, the appropriation of
US$1.000,000.00 is foreseen for the payment of eventual
reimbursements"./.
FOURTH CLAUSE - PETROBRAS' OBLIGATIONS./.
4.1. Item 4.12 is included, with the following redaction:/.
"4.12. To adopt the measures necessary for the request to register this
Contract at the Central Bank of Brazil, immediately after the
receipt of the legal documents, the supply of which is the
CONTRACTOR'S responsibility./.
FIFTH CLAUSE - FORM OF PAYMENT./.
5.1. The redaction of the Seventh Clause is changed to:/.
"7.1. The payments of the rates foreseen in Attachment II and Attachment
III shall be made by PETROBRAS to the CONTRACTOR in American
Dollars, by bank remittance to a bank account abroad it indicates,
after the present Contract is registered at the Central Bank of
Brazil, 30 (thirty) days as of the date of the end of the
measuring
<PAGE>
period considered, provided the CONTRACTOR has fulfilled the time
limits set forth in subitem. 6.3.1, for the submittal of the
collection documents at the docket of the Financial Department
indicated by PETROBRAS, with exception of the provision appearing
in subitem 7.2.4./.
7.1.1. For the reimbursable expenses foreseen in this Contract, the
instructions contained in item 7.4 and their developments should
be complied with, and the payments will be made in the currency of
origin of said expenses, within 30 (thirty) days after the
submittal of the collection documents at the docket of the
Financial Department indicated by PETROBRAS./.
7.1.2. Collection documents comprise any type of billing, such as:
Invoice, Invoice with separate Bill of Sale, Service Invoice,
besides others foreseen in fiscal laws./.
7.1.3. For payment purposes, the CONTRACTOR shall supply the Contract
Manager, after its signature, the following information:./.
a) Bank name and number;/.
b) Bank branch name and code;/.
c) Bank branch address;/.
d) CONTRACTOR'S current account number./.
7.1.3.1. Whenever a billing is submitted with information different from
those indicated in subitem 7.1.3, these changes will only be
considered if accompanied by a formal communication by the
CONTRACTOR and shall prevail only for the specific purpose of
such payment./.
7.2. The collection documents shall be issued without erasures, complying
with the pertinent laws in force, for submittal at the Financial
Department indicated in item 7.1 of this Clause, in its original
copy, accompanied by 1 (one) copy of the respective
<PAGE>
Measurement Bulletin (MB), and/or Reimbursement Document (RD), as
the case may be, duly approved by this contract's Manager,
containing, obligatorily, but not exclusively, the following
information:/.
a) Number of the collection document;/.
b) Place and date of its issuing;/.
c) Brief description of the object of this Contract;/.
d) Indication of the number and date of this Contract;/.
e) Indication of the month/year or period which the collection
document refers to;/.
f) Number and date of the Measurement Bulletin. (MB) and/or
Reimbursement Document (RD)./.
g) Place of the rendering and/or execution of the chartering. In the
event the chartering has been rendered in different locations,
its value should be broken down by locations of performance and
the period in which it was rendered at each of the locations
shall be indicated;/.
h) Gross amount of the collection document, by numbers and in
writing;/.
i) Place for payment purpose, as provided for in subitem 7.1.3 of
this Clause;/.
j) Signature by the CONTRACTOR'S representative, accredited before
PETROBRAS, above his/her name and position typewritten or above
the CONTRACTOR'S company stamp identifying him/her;/.
l) In case of Rider or Letter of Agreement to the Contract which
implies in payments, mention its number and date of signature,
besides the data above./.
7.2.1. The omission of any of the above mentioned data will cause, within
5 (five) working
<PAGE>
days, the return of the collection documents by PETROBRAS'
Financial Department./.
7.2.2. If the above situation occurs and in case the collection document
shows errors, it will be returned to the CONTRACTOR, and the time
limits of the payment foreseen in item 7.1 and subitem. 7.1.1
shall be added to the period that becomes necessary for the
explanation and re-submittal of the collection document./.
7.2.2.1. The above mentioned condition also applies in case the
collection document is submitted in another department, and not
as indicated in item 7.1./.
7.2.3. Independent of the data above, the invoices in foreign currency
shall be also submitted in the Portuguese language, or if issued
abroad, they shall be notarized at the Brazilian Consulate, under
which jurisdiction the CONTRACTOR is located, and translated by a
sworn public translator./.
7.2.4. The CONTRACTOR shall, obligatorily, submit monthly, together with
the invoice, the payroll of the CONTRACTOR'S Brazilian crew who
are involved in the chartering object of this Contract, as well as
with a photocopy of the GRPS (Social Security Payment Slip), duly
settled and authenticated, with the data identifying the entity to
whom the service was rendered being obligatorily filled out,
informing on field 8 of the GRPS (other information) PETROBRAS'
name and CGC, number, date, and amount of the invoice or bill of
sale referring to the chartering rendered in the month, subitems
8.9, 10.1.15, and 10.1.16 being also complied with./.
7.3. The collection documents referring to reimbursements shall also be
issued, itemizing, individually, the reimbursable expenses, their
total amount, such itemization also to appear in the respective
Reimbursement Document (RD)./.
7.3.1. The original vouchers of the reimbursable expenses due to the
CONTRACTOR, by
<PAGE>
force of the contract instrument, shall be previously submitted to
the Contract Manager, for checking, besides being duly paid for by
the respective supplier or service rendered, when such is the
case./.
7.3.1.1. In the event the original vouchers cannot remain in PETROBRAS'
possession, copies thereof may be submitted, which shall be
checked by the Contract Manager, and the following text is to be
placed on each original document: "COPY SUBMITTED FOR
REIMBURSEMENT ON (specify date)", followed by the signature and
identification by name, position and registry number, and the
original are to be returned to the CONTRACTOR. In the copies
that are in PETROBRAS' possession, the following text will be
placed on each document: "CHECKED WITH THE ORIGINAL ON (specify
the data)" and the Contract Manager will sign, identifying the
signature by name, position and registry number./.
7.3.1.2. The receipt, duly made formal by PETROBRAS, of any reimbursable
expense voucher, does not represent the recognition of debt, nor
the proof that the expense has been made./.
7.3.2. The collection of reimbursable expenses can only be made by
means of issuing and submittal, by the CONTRACTOR, of the Bill
of Sale for the equipment and accessories, with the respective
Reimbursement Document (RD) duly attached thereto, and
previously approved by the Contract Manager./.
7.3.2.1. The submittal of the collection document mentioned in subitem
7.3.2, shall comply with the provisions appearing in items 7.1.
and 7.2 of this Clause./.
7.3.2.2. The vouchers shall be the legal documents to explain doubts
referring to the
<PAGE>
collections, which shall be settled, as a last resort, by
PETROBRAS' Disbursement office, who will be in possession of the
vouchers approved by PETROBRAS to prepare the payment process./.
7.4. Eventual payments made for more or for less by PETROBRAS shall be
compensated as soon as they are detected, by issuing the
Debit/Credit Notes, as the case may be./.
7.5. The amounts corresponding to reimbursable expenses, without budget
allotment foreseen in this contract instrument, do not burden this
contract's estimated total, but should, however, be foreseen in
the Budget Programs of the Executive Superintendence of
Exploration and Production (E&P)./.
7.6. The collection documents submitted by the CONTRACTOR, as well as
the final collection document, shall be paid with the deduction of
amounts that, at any title, under the conditions set forth in the
contract, or others specially agreed upon, are due to PETROBRAS./.
7.7. The CONTRACTOR agrees that, at PETROBRAS exclusive option, the
present Contract can be paid by means of third party financing,
provided the time limits, currency, amounts, and place of payment,
and the CONTRACTOR'S rights foreseen in this Contract, are
complied with"./.
SIXTH CLAUSE-RESPONSIBILITY./.
6.1 The present rider binds the parties as of the date of its
signature and enters in force as of the ASSIGNMENT DATE./.
SEVENTH-CLAUSE - RATIFICATION./.
7.1. PETROBRAS, the ASSIGNOR and the ASSIGNEE ratify the terms and
conditions of the Contract that are not incompatible with the
provisions of this instrument./.
<PAGE>
And being thus agreed, the parties sign the present Rider in 4 (four)
copies of the same tenor and fashion, together with the witnesses below./.
Rio de Janeiro, July 10, 1998./.
(Signed:) (Illegible) - Luiz Eduardo G. Carneiro./.
Executive Superintendent of Exploration and Production South-Southeast./.
PETROLEO BRASILEIRO S.A./.
(Signed:) (Illegible) - German Efromovich./.
President - MARITIMA PETROLEO E ENGENHARIA LTDA (ASSIGNOR)./.
(Signed:) (Illegible) - German Efromovich./.
Director - PETRODRILL FOUR LTD. (ASSIGNEE)./.
WITNESSES:/.
(Signed:) (Illegible) (Rubber stamp:) Jose Joao Afonso Filho - Administrator -
Registry 010979-7./.
(Signed:) (Illegible)./.
(The rubber stamp and the signature of Jose Joao Afonso Filho appeared on
the first page of the document.)./.
(Two initials appeared on page 2 and one initial appeared on all other
pages of the document.)/.
- - --------------------------------------------------------------------------------
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on November 26, 1998
in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
------------------------
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.14
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 2620/97
(Xerox copy submitted for translation.).......................................
(On paper with letterhead of Petroleo Brasileiro S. A. - PETROBRAS.)
INVITATION TO BID No. 101.2.064.97-0..........................................
SERVICES RENDERING CONTRACT
SERVICE RENDERING CONTRACT ENTERED INTO BETWEEN PETROLEO
BRASILEIRO S.A. - PETROBRAS AND THE COMPANY MARITIMA NAV. E
ENG. LTDA.
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, organized and
existing under Law No. 2.004, dated 10/03/53, with head office at Av. Republica
do Chile, 65, City of Rio de Janeiro, State of Rio de Janeiro, Federative
Republic of Brazil, enrolled in the General Taxpayers' Registry of the Ministry
of Finance under No. 33.000.167/0001-01, represented herein by the Executive
Superintendent of Exploration and Production (E&P), Engineer LUIZ EDUARDO G.
CARNEIRO, henceforth called PETROBAS, and the Company MARITIMA NAVEGACAO E
ENGENHARIA LTDA., with head office at Avenida Almirante Barroso, nO 42, 34th
floor, City of Rio de Janeiro, State of Rio de Janeiro, Federative Republic of
Braail, enrolled in the General Taxpayers' Registry of the Ministry of Finance
under No. 46:828.596/0001-13, henceforth called the CONTRACTOR, represented
herein by its President, Mr. GERMAN EFROMOVICH, have agreed upon the present
CONTRACT to render services, with the use of the Dynamic Positioning Floating
Unit AMETHYST 4 and its accessories, described in Attachment I, henceforth
called the UNIT, according to authorization of PETROBRAS' Executive Board
(MINUTES No. 4111, Item No. 3, dated 08/14/97) the parties being bound to the
terms of the Invitation to Bid No. 101.005.97-7 and subjected to the following
Clauses and Conditions:....... (End of the
Qualification)....................................................
<PAGE>
FIRST CLAUSE - OBJECT.........................................................
1.1 The object of the present CONTRACT is the rendering, by the CONTRACTOR,
of the services of drilling and/or evaluation and/or completion and/or
workover of oil and/or gas (vertical, directional and horizontal) wells,
in the Brazilian continental shelf, down to a maximum depth of 5,000
(five thousand) meters, in a water depth down to 1,200 (twelve hundred)
meters.................................................................
1.1.1 For the fulfillment of the present Contract, the CONTRACTOR is to
maintain its bases of operation in the City of
Macae-RJ...............................................................
1.2 The services object of the present Contract are contained in the
Continental Shelf Activities Plan, Disbursement and Cost Plan, under the
following codes:.......................................................
B 1200 - Boring - Production Development...............................
A 22000 - Boring - Completion an Intervention for Evaluation - Production
Development............................................................
A 2400 - Intervention for Evaluation - Exploratory Drilling............
(End of Clause)...............................................................
<PAGE>
SECOND CLAUSE - PERIOD OF VALIDITY AND DURATION...............................
2.1. PERIOD OF VALIDITY - The present Contract binds the parties as of its
signature..............................................................
2.2. DURATION - The present Contract will have a duration of 2,190 (two
thousand one hundred and ninety) days..................................
2.2.1 BEGINNING OF THE CONTRACT - The beginning of the Contract will occur when
the Unit is released by PETROBRAS, through a written notice, to begin the
operations, after the general equipment testing foreseen in item 3.1 is
carried out............................................................
2.2.2 AUTOMATIC EXTENSION - If at the end of the duration mentioned in 2.2,
some operation is still being performed in a well, the duration of the
present Contract will be automatically extended, until the completion of
the works in said well, considering as the final limit the Unit's arrival
in the port or sheltered waters chosen by common agreement between the
parties and, also, in case there are still PETROBRAS' - equipment aboard
the Unit, the completion of the withdrawal of such equipment will be
considered as the final limit..........................................
2.2.3 This Contract may be extended for successive periods of 365 (three
hundred and sixty-five) running days, through a prior agreement between
the parties, by means of an Addendum, the other contract conditions being
complied with, and limited to a maximum contract period of 2,190 (two
thousand one hundred and ninety)day....................................
2.3. ARRIVAL IN BRAZIL - The Unit should arrive at the port or in sheltered
waters, in Macae-RJ. The beginning of operations should occur up to the
date of 06/17/99, the provision set forth in item 8.1 of this contract
being complied
with...................................................................
2.3.1 At the port or in sheltered waters mentioned in 2.3, the customs and
helipoint inspections in the Unit will be carried out, as well as the
loading/unloading of the CONTRACTOR's and PETROBRAS' materials, and also
the general equipment testing will begin as foreseen in item 3.1 of this
CONTRACT...............................................................
(End of Clause)...............................................................
<PAGE>
THIRD CLAUSE - CONTRACTOR'S OBLIGATIONS......................................
3.1. Before the beginning of the Contract, the CONTRACTOR will arrange for a
general test of the operating conditions of all of the Unit's equipment,
as provided for in Attachment VIII, in the presence of PETROBRAS'
Inspection. The occurrences found during the performance of the tests
will be duly recorded in the Daily Drilling Certificate (ADP) signed by
PETROBRAS' Inspection and by the CONTRACTOR's representative. The Unit
will be released to sail to the first location after proving the good
operating conditions of the equipment which comprise the drill's main
systems, that is, energy generation and distribution system, dynamic
positioning system, industrial safety, liquid and bulk storage, fluid
circulation and processing, safety and wellhead, column elevation,
rotation and handling, columns, instrumentation, formation test equipment
and communications system..............................................
3.1.1 The tests referred to in 3.1 will be made in a period estimated in 3
(three) days, after which the Unit will be released to said to begin the
operations, provided there is nothing pending in the rig's main systems,
as set forth in item 3.1...............................................
3.1.1.1. In the event the tests last for a period exceeding 3 (three) days, for
reasons ascribed to PETROBRAS, the rate foreseen in Ref 104 (Waiting
Rate) of Attachment II, will be due, applied as of the fourth day of
tests, until the Unit is released. The periods spent with equipment
repair will not be calculated for the purpose of counting such duration,
and also no fees will be due during such periods.......................
3.1.2 PETROBRAS may opt for the partial or total performance of the receipt
tests, in sheltered waters, in the deepest water depth set forth in the
Contract, or also in the first
location...............................................................
3.2. OPERATION - To render the services object of this Contract using the Unit
and the equipment listed in Attachment I, complying with the other
conditions of and Attachments to this Contract, complying with the
international standards recommended for services of such
nature.................................................................
3.2.1 SAFETY STANDARDS - The CONTRACTOR will carry out the services in strict
compliance with the international safety standards for work of such
nature, aiming at the protection of personnel, materials and equipment
that belong to it, PETROBRAS and third parties.
<PAGE>
PETROBRAS' Safety Rules, which the CONTRACTOR states to know will be
particularly complied with. In the event of conflict between PETROBRAS'
standards and the CONTRACTOR's, the CONTRACTOR's Standards will prevail,
unless PETROBRAS expressly requires to the contrary in each
case...................................................................
3.3. SUPPLY OF MATERIALS - To be responsible for the purchase, when requested
by PETROBRAS, in the domestic market, of other materials needed to render
the services object of this Contract. The purchase of the materials
mentioned in this item will be submitted to the prior approval by
PETROBRAS which will reimburse them as set forth in item
4.2....................................................................
3.3.1 The materials mentioned in item 3.3 will be delivered by the CONTRACTOR
to PETROBRAS, at the port or airport the latter
indicates..............................................................
3.3.2 To submit the expense vouchers in the maximum period of 60 (sixty)
consecutive days after the actual date of the purchase.................
3.4. SERVICES BY THIRD PARTIES - To request, when asked by PETROBRAS, other
specialized services available in Brazil, related to the object of this
CONTRACT, behoving the CONTRACTOR all measures for their actual
performance, including the obtainment of PETROBRAS' prior and express
approval of the costs arising therefrom, which will be reimbursed as set
forth in item 4.2......................................................
3.5. PERSONNEL - To be liable, in its own name, and for its own responsibility
and onus, for all personnel needed for the efficient and complete
performance of the services object of this CONTRACT which will operate on
the basis of 24 (twenty-four) hours a day and 7 (seven) days a week. The
list of the minimum personnel to be used by the CONTRACTOR is basically
the one mentioned in Attachment V......................................
3.5.1 The CONTRACTOR guarantees that the personnel mentioned in Attachment V
will allow it to fully carry out the performance of the services object
of this Contract, running, as a result, for its own account, all charges
arising from the need to increase the personnel.
3.5.2 The CONTRACTOR will be liable for the maintenance and cost of the
personnel required for the fulfillment of the operational and safety
rules and regulations issued by the proper authorities, including the
compliance with the provisions of the
<PAGE>
PORTOMARINST No. 13-02, dated 06/26/85, and of the Navy Department, Ports
and Coasts Authority.
3.5.3 The technical personnel should possess proven competence in their
specialization, and the CONTRACTOR is to supply PETROBRAS with their
respective "curriculum vitae"..........................................
3.5.4 To provide for training and/or recycling of its personnel in the Course
on Safety Basic Notions, held by PETROBRAS, according to the program and
conditions to be agreed upon between the parties.......................
3.5.4.1. As required by PETROBRAS or by a Training Center approved by the IADC
ou IWCS, the qualification in well control is compulsory for the
Superintendents on Board, for the Persons in Charge and for the
Drillers...............................................................
3.6. To be liable for all charges regarding the contracting of its
personnel and any additionals that are or may become due, as well as for
the withholding and payment of social, labor and social security
contributions set down by the Law, and other charges that may become due
at any title, being for all purposes, the sole employer................
3.6.1 Whenever requested by PETROBRAS, the CONTRACTOR will submit the documents
regarding the proof of payment of its labor obligations, including social
security contributions (CND - Negative Debt Certificate) and FGTS
deposits, regarding its employees......................................
3.6.2 To make sure that its personnel, who work in activities or operations
that subject them to noxious agents, included in the list referred to in
Article 58 of the Law No. 8.213/91, are not retired in this special
condition, according to the restriction expressly contained in Article
3rd of Law NO. 9.032 dated 04.18.95....................................
3.7. To bear all measures and expenses with displacement of personnel, such
as, but not limited to, transportation from abroad to the port or airport
of Macae-RJ, as indicated by PETROBRAS, and the return to the place of
origin, and any and all expenses with personnel travel and stay in
Brazil, insurances, medical and hospital expenses, meals, passports, as
well as for extra expenses caused by delay or cancelling of flights, be
it due to bad weather or to the non-availability of planes.............
<PAGE>
3.8. To promote, without charges to PETROBRAS, the replacement and immediate
withdrawal of any of its employees that may be required by PETROBRAS at
any time, due to bad behavior, technical deficiency, inefficiency or
health conditions......................................................
3.9. Whenever requested, to train PETROBRAS' personnel in the services object
of the present CONTRACT................................................
3.10. All correspondence between the CONTRACTOR and PETROBRAS will be written
and forwarded in Portuguese............................................
3.11. To provide, in the UNIT chartered for the performance of the services
object of this CONTRACT, lodging, food, mess room services, rendered by a
Brazilian company, for PETROBRAS' personnel and those of third parties at
PETROBRAS' service, up to the maximum of 26 (twenty-six) persons, being
agreed that the CONTRACTOR will freely supply 900 (nine hundred) meals
per month. The meals exceeding this number will be paid by PETROBRAS,
based on the rate set forth in the Unit Price Spreadsheet appearing in
Attachment III.........................................................
3.11.1 The quality of the mess room services and the food supply is the
CONTRACTOR's responsibility, which will maintain a permanent supervision
by a male nurse on board and eventually by a qualified nutricionist.
PETROBRAS may require that the CONTRACTOR takes measures in the event
such services show a loss in quality standards.........................
3.12. INSURANCES - To provide, for its account, the contracting of the
insurances necessary to fulfill this Contract and the Brazilian laws,
intended to cover its assets and its personnel, even when they are in
transportation under PETROBRAS' responsibility, as well as the Civil
Liability insurance for damages and losses caused to third parties, which
will not imply in limiting the CONTRACTOR's liability, and it should also
include PETROBRAS as a third party for the purposes of such coverage.
3.12.1 The minimum mandatory value of the civil liability insurance is of
US$1,000,000.00 (one million dollars), per event, during the period of
validity of this Contract and of its eventual extension, which amount is
to be converted into Brazilian currency on the date the present Contract
is signed. The INTERVENIENT PARTY is to appear as co-insured in this
policy.................................................................
<PAGE>
3.13. The franchises which may be established for the insurances mentioned in
item 3.12, as well as the onus arising from the insurers' requirements
and/or recommendations will fully run for the CONTRACTOR's account.....
3.13.1 The provision of item 3.13 applies also to the insurances of
transportation made by the CONTRACTOR, regarding the CONTRACTOR'S
equipment, tools, and materials to be transported by PETROBRAS, as set
forth item 4.4.........................................................
3.14. The keep PETROBRAS free and safe from any and all indemnity claim for
damages and/or losses of any kind which the CONTRACTOR may have sustained
as a result of this Contract, whether or not it has made adequate and
sufficient insurance for such circumstances............................
3.14.1 PETROBRAS will be equally kept free and safe from any and all indemnity
claim for damages and/or losses of any kind which the CONTRACTOR may have
caused to third parties for its duly proven grossly negligent action or
omission, arising from this Contract, whether or not it has made adequate
and sufficient insurance for such circumstances........................
3.14.2 In return, the CONTRACTOR will be kept free and safe from any and all
indemnity claim for damages and/or losses of any kind, which PETROBRAS
may have sustained from third parties, or has caused to third parties by
its duly proven grossly negligent action or omission, as a result of this
CONTRACT, whether or not it has made adequate and sufficient insurance
for such circumstances.................................................
3.15. To assume, up to the limit equivalent to US$500,000.00 (five hundred
thousand American dollars) per event, any and all liability for death or
damages to persons, provided they are caused by duly proven grossly
negligent action or omission on its part and/or its employees and/or
personnel..............................................................
3.16. The CONTRACTOR waives for itself and will require from its Insurers
and/or Subcontractors, in any and all insurance made as a result of this
CONTRACT, the inclusion, in each policy contracted, the provision
assuring the waiver of any right to subrogation against PETROBRAS......
3.17. To submit to the Contract Manager, up to 30 (thirty) consecutive
days after its inception, as provided for in item 2.2.1, the originals of
the insurance policies made as a result of
<PAGE>
this CONTRACT, containing all essential data, such as insurers, time
limits, period of validity, amounts insured, and coverage conditions, and
with PETROBRAS appearing as co-insured, except in the civil liability
insurance, of which it will participate as a third party...............
3.17.1 The policies mentioned in item 3.17 will contain a provision that the
insurances mentioned cannot be amended and/or cancelled without PETROBRAS
prior authorization....................................................
3.18. DAMAGES - The CONTRACTOR will be liable for damages to its own equipment
and material, and to those which it and its agents may cause to PETROBRAS
or to third parties, as a result of its duly proven grossly negligent
action or omission, in the following cases:............................
3.18.1 In the event of losses or damages to equipment and/or materials belonging
to PETROBRAS and/or to third parties, which are abroad the Unit, or
during their moving between the UNIT and the support vessels, the
CONTRACTOR's liability will be limited to the replacement or repair of
the equipment so lost or damaged due to the CONTRACTOR's or its
employees' duly proven fault. However, the CONTRACTOR will not be liable
for and will be kept free and safe from in the event of damages to
reservoirs, indirect damages or loss of profit of PETROBRAS, losses and
damages arising from pollution coming from the well, resulting from kick
and/or blow-out........................................................
3.18.2 In case of losses and damages caused to the well, arising from the events
mentioned in subitem 2.1.5 of Attachment II, the CONTRACTOR will
reimburse PETROBRAS the payments it comes to make to third parties
referring to cementing, logging or other services related to the object
of the present CONTRACT, as well as to materials (cement, casing, bits,
completion fluid materials). In the event PETROBRAS opts for the
definitive abandonment of the damaged well, the CONTRACTOR will reimburse
the expenses made by PETROBRAS to drill that well......................
3.18.3 In the cases mentioned in subitems 3.18.1. and 3.18.2. the limit for the
CONTRACTOR's liability is of US$500,000.00 per event and its
deployments............................................................
<PAGE>
3.19. SECRECY - To maintain complete secrecy on the data and information
supplied by PETROBRAS, as well as on all of the results and analyses
arising from the services referring to the present CONTRACT............
3.19.1 All data, information and other documents, of any kind, referring to the
fulfillment of this CONTRACT, are PETROBRAS' exclusive property........
3.19.2 The CONTRACTOR and its personnel cannot disclose or supply to third
parties any materials or information obtained as a result of this
CONTRACT, unless it is expressly authorized by PETROBRAS...............
3.19.3 The provision of this item 3.19 is a standing obligation, valid even
after the termination, in any fashion, of the present CONTRACT.........
3.20. The be liable for the violations it commits regarding author's right and
the use of materials and/or performance processes protected by
trade-marks and patents, as well as for any claims arising from the bad
use it makes of them, running for its account the payment of any charges,
royalties, fees, commission, indemnities, and any other expenses arising
from said violation, including the legal ones..........................
3.21. SEA OPERATIONS - To render the services object to this CONTRACT in strict
compliance with the laws, standards, regulations and administrative
rules, as well as the instructions issued by the Shipping Office or by
other proper authorities, specially those regarding the spillage of oil
and other residues from the UNIT into the sea, being liable, as a result,
for any charges arising from the violation of such laws, standards,
regulations, administrative rules and instructions, the limit established
in subitem 3.21.2 being complied with, and excepting the cases provided
for in item 3.20 of this CONTRACT......................................
3.21.1 To plan and carry out operations intended to prevent and fight oil or gas
blow outs, fires, or other accidents, complying with the provision set
forth in item 2.4 of the ATTACHMENT I to this CONTRACT. Although the
CONTRACTOR is considered fully responsible for such operations, it is
obliged to discuss on the methods to be adopted with PETROBRAS, so as to
find the best operating solution.......................................
3.21.2 With exception of the cases arising from kick, blow out, surging or
formation testing, which the CONTRACTOR will be kept free and safe from,
in the other cases of spillage of petroleum, oil and other residues in
the sea, the CONTRACTOR will be liable up to the limit of US$500,000.00
(five hundred thousand American dollars) per event and its deployment..
3.22. The storage aboard the UNIT, as well as the handling aboard, and between
the UNIT and support vessels, of materials, equipment, drilling or
completion fluid additives, chemical additives belonging to PETROBRAS or
to third parties at the service of PETROBRAS, are the CONTRACTOR's
responsibility.........................................................
3.23. To bear all expenses, including with diesel oil and transportation of the
UNIT to dockages, including those arising from act of God or force
majeure, as defined in the Thirteenth Clause of the CONTRACT...........
3.24. To maintain a hospital ward in the UNIT with at least 2 (two) beds,
provided with equipment and medicine necessary for the prompt attention
to sick and injured persons, as determined by the Shipping Office, such
hospital ward being subjected to periodical inspections by PETROBRAS...
3.25. The CONTRACTOR undertakes to maintain all conditions required in the
bidding stage, during the performance of the CONTRACTED SERVICES.......
3.26. To maintain an agent accredited and accepted by PETROBRAS in the UNIT or
in a place previously designed by PETROBRAS, to represent the CONTRACTOR
in the fulfillment of the CONTRACT.
3.27. To comply with the requests contained in the Service Authorization(s)
issued by PETROBRAS....................................................
3.28. To allow, after negotiations between the contracting parties, the
provisional installation in the chartered vessel, of complementary
equipment with as, but not limited to: pipes or rises in catenary by the
J-lay method, or similar, submarine manifolds, provided they do not
jeopardize the Vessel's safety and are in accordance with the rules of
the Classification Society. ...........................................
(End of Clause)...............................................................
<PAGE>
FOURTH CLAUSE - PETROBRAS OBLIGATIONS.........................................
4.1. To make monthly payments for the services rendered by the CONTRACTOR due
to the present CONTRACT; based on the Attachment II and on the conditions
set forth in Clauses Sixth: Readjustment - Seventh: Measurement - and
Eighth: Form of Payment, the other ATTACHMENTS, Clauses and Conditions of
this CONTRACT being complied with......................................
4.2. To reimburse, by means of submittal of vouchers, the expenses with
materials and services of third parties, according to items 3.3 and 3.4
of this CONTRACT. The reimbursement will be comprised of:..............
a) Amount of the bill issued by the supplying and/or service rendering
company;............................................................
b) Expenses actually made to place the materials in the UNIT;..........
c) Cost of the insurance for the materials, if authorized by PETROBRAS.
In the event PETROBRAS does not authorize such insurance, the
CONTRACTOR will not be liable for losses and damages of any kind that
they may suffer until their delivery to PETROBRAS at the port or
airport it indicates................................................
4.3 Operations and Locations Program-PETROBRAS will provide the CONTRACTOR
with the Operations Program, in writing and with due antecedence, and it
also will notify on the locations where the services will be rendered, so
that the CONTRACTOR may adopt, in due time, the measures necessary for
their performance.....................................................
4.4. TRANSPORTATION:........................................................
4.4.1. PETROBRAS will provide transportation to the UNIT of all of the
CONTRACTOR's personnel involved in the rendering of the services, from
the port or airport indicated by PETROBRAS in the beginning of this
CONTRACT, and vice-versa. At its exclusive discretion, the transportation
to be provided will be by helicopter ou vessel.........................
4.4.2. PETROBRAS will provide transportation for the material and equipment,
related to the object of this CONTRACT, from the port or airport
designated, to the UNIT and vice-versa.
4.4.3. In any circumstances foreseen in this item, the granting of insurance
coverage will not be PETROBRAS' competence, and the CONTRACTOR waives
immediately, for itself and for its insurers, any return action against
PETROBRAS or third parties at its service, as a result of the
transportation provided................................................
4.4.4. In the event there is need to program exclusive air transportation, to
survey the Unit, by the Navy and/or Shipping Office, the costs arising
therefrom will be charged to the CONTRACTOR............................
<PAGE>
4.4.5. PETROBRAS may provide air or sea transportation for the CONTRACTOR's
materials, industrial or fresh water and fuel before the beginning of the
CONTRACT, as defined in item 2.2.1. The costs arising therefrom will be
reimbursed by the CONTRACTOR to PETROBRAS..............................
4.4.6. PETROBRAS will provide tugs and support vessels for the UNIT, from the
location where the equipment general testing is performed, to the first
location, between locations and from the last location to Brazilian port
or sheltered waters closest thereto, which will be chosen in common
agreement between the parties..........................................
4.4.6.1. PETROBRAS will provide the support vessels for the UNIT's positioning
in the locations to be drilled during the fulfillment of this
CONTRACT...............................................................
4.4.7. PETROBRAS may provide tugs and/or support vessels to load and unload
materials and to handle anchors, in a place to be defined by the parties,
in cases of inspection and/or dockages, including those arising from act
of God or force majeure, as defined in the Thirteenth Clause of this
CONTRACT. The costs arising therefrom will be reimbursed by the
CONTRACTOR to PETROBRAS................................................
4.5. FUEL AND WATER - To supply, for its account, all fuel and water necessary
for the performance of the services object of the services object of this
CONTRACT, from the beginning of the CONTRACT, as provided for in subitem
2.2.1, the provisions of item 3.23 of this CONTRACT being complied
with...................................................................
4.5.1. The supply of water mentioned in item 4.5 includes also the industrial
water intended for cleaning the UNIT...................................
4.6. COMPLETION FLUID - To maintain the control of the properties of the fluid
by an accredited employee, as well as to control the stock of materials
necessary for such purpose.............................................
4.7. ANCILLARY SERVICES - To provide, at its expenses and under its
responsibility, the ancillary services referring to: cementing, formation
testing, electric logging, flexitube operation, nitrogen operation,
electric wire operation, wireline operation, when they arise from
PETROBRAS' own programming.............................................
4.8. At its exclusive judgment, and without any co-responsibility, PETROBRAS
may cooperate with the CONTRACTOR, assisting it before the Foreign Trade
Department -
<PAGE>
Trade Exchange Coordinating Office (CTIC), regarding proceedings
submitted to these Agencies, referring to materials and/or equipment
pertaining to the rendering of the services object of this CONTRACT. Such
cooperation, however, will not lessen the CONTRACTOR's liability for the
obtainment of the documents and/or benefits that may be the object of the
respective proceedings.................................................
4.9. To issue Service Authorization(s) with all information necessary for
their performance, such as: location, time limit, value, scope, and
beginning and end dates................................................
4.10. To notify the CONTRACTOR, in writing, on the application of eventual
fines...................................................................
4.11. To issue the Measurement Bulletin (MB), as set forth in the Seventh
Clause: Measurement, of this Contract..................................
(End of Clause)...............................................................
<PAGE>
FIFTH CLAUSE - PRICES AND VALUE...............................................
5.1. For the rendering of the services object of this Contract, PETROBRAS will
pay the rates set forth in Attachment II and Attachment III to this
Contract, under the conditions set forth in Clauses Sixth - Measurement,
and Seventh: Form of Payment...........................................
5.1.1. The contract prices include all specified tariffs, supervision,
administration, taxes, fiscal emoluments and all expenses that fall
directly or indirectly upon the rendering of the services, including
profit, needed for its perfect fulfillment, until the end of the
contract, no price revision claims being therefore valid...............
5.2. The total estimated value of this present contract is of R$34,303,151.00
(thirty-four million, three hundred and three thousand and fifty-one
reais).................................................................
5.3. PETROBRAS does not undertake to make the payment of the total estimated
in item 5.2, but of the amount corresponding to the services effectively
rendered and accepted by PETROBRAS.....................................
5.4. In the event the Unit suffers a delay of up to 90 (ninety) days, as of
the date set forth in item 2.3 of the present Contract, the CONTRACTOR
will have its daily rate reduced in 10% (ten percent), as of the
beginning of the Contract, for a period equal to the number of days of
delay..................................................................
5.5. The financial resources necessary for the payment of the services
object of the presente Contract are duly equated and specifically
assured in the budget for the present fiscal year and foreseen for the
following ones to cover the period for the total rendering of the
services................................................................
(End of Clause)...............................................................
<PAGE>
SIXTH CLAUSE - PRICE READJUSTMENT.............................................
6.1. The contract prices in Brazilian currency, will be readjusted yearly,
after 1 (one) year as of the month when the CONTRACTOR's proposal was
submitted has elapsed, for more or less, as a result of the variation of
the elements that comprise the readjustment formula, set forth in
subitems 6.2.1 and 6.2.2 below.........................................
6.1.1. If, during the period of validity of this CONTRACT, new legal provisions
are created which permit the reduction of the periodicity referred to in
6.1., the parties will make a new agreement regarding the contract
prices, to expurgate eventual overprices arising from the periodicity
originally established for the application of the readjustment.........
6.2. The prices set forth in the Unit Prices Spreadsheet - Attachment III to
this Contract, will be readjusted by applying the following calculation
formulae:..............................................................
6.2.1. For the prices of Ref 101, 104 and 105 of the Unit Prices Spreadsheet -
Attachment III:........................................................
INS USA MEQ
PCR=PCI.[0.55 ---- +0.10 ----- + 0.35 ------]
ISOo USAo MEQo
6.2.2. For the price referring to extra meals, appearing in the Unit Prices
Spreadsheet - Attachment III:..........................................
ABR
PR = PCI o [------] where:
ABRo
PRC = readjustment contract price;...........................................
PCI = initial contract price, in force on the date of the CONTRACTOR's
proposal;..............................................................
INS = Index number of the National Consumer Price Index (INPC), published by
the Brazilian Institute of Geography and Statistics IBGE, corresponding
to the months in which the readjustment is due.........................
INSo = Index number of the INS defined above, corresponding to the month when
the CONTRACTOR's proposal was submitted................................
INSo = Index number of the INS defined above, corresponding to the month when
the CONTRACTOR's proposal was submitted;...............................
<PAGE>
USA = value of the North-American dollar selling rate in the commercial
exchange in force on the 30th day of the month in which the readjustment
is due; ...............................................................
USAo = value of the same rate in force on the 30th day of the month the
CONTRACTOR's proposal was submitted;...................................
MEQ = definitive value of the Wholesale Index - Domestic Availability - Brazil
- Production Goods - Machinery, Vehicles and Equipment-Machinery and
Equipment - Column 15 of the Getulio Vargas Foundation's Magazine
"Conjuntura Economica", corresponding to the month when the readjustment
is due;................................................................
MEQo = definitive value of this same index, corresponding to the month when the
CONTRACTOR's proposal was submitted;...................................
ABRo = definitive value of this same index, corresponding to the month when the
CONTRACTOR's proposal was submitted....................................
6.2.3. The reference basis of the CONTRACTOR's proposal is the month of July/
97.....................................................................
6.3. PETROBRAS will make the readjustment calculation, expressing its result,
duly made evident, in the Measurement Bulletin (MB) of the services to
which it refers, for the purposes of issuing the respective collection
document...............................................................
6.4. In the event of delay in the partial or total disclosure of the indexes,
a readjustment factor will be provisionally used, calculated on the basis
of the last indexes, known by then, at the time the Measurement Bulletin
(MB) was issued........................................................
6.4.1. The eventual difference between the definitive and the provisional
readjustment will be invoiced by the CONTRACTOR after the issuing of the
Readjustment Bulletin (RB) by PETROBRAS, as provided for in subitem
7.3.1. of this CONTRACT................................................
6.5. The readjustment will not include the services performed before the date
when the reason that justifies it has occurred.........................
6.6. The readjustment factor will be applied with 4 (four) decimal places,
without rounding off...................................................
6.7. The CONTRACTOR states that the prices proposed for the performance of the
services object of the contract have taken into account all costs,
inputs, expenses and other legal obligations for the complete fulfillment
of the contract provisions established.
(End of Clause)...............................................................
<PAGE>
SEVENTH CLAUSE - MEASUREMENT..................................................
7.1. Periodicity of the measurements of the services and determination of
the reimbursable expenses............................................
7.1.1. For the services, the measurement will be made monthly, according to
the procedures mentioned below, with the consequent issuing of the
respective Measurement Bulletins (MB):...............................
a) the initial measurement of the services will be made between the
date of the beginning of this CONTRACT and the last day of the
calendar month;..................................................
b) The intermediary measurements of the services, corresponding to a
given month, of the order "m", include the period between day 01
and the last day of the calendar month of the order "m";.........
c) The final measurement of the services will be made between day 01
of the month "m" and the day of the termination of this CONTRACT.
7.1.2. The reimbursable expenses, if provided for in the CONTRACT, will be
determined on any day of the month, according to the vouchers submitted
to and accepted by PETROBRAS, and more than one determination can be
made in the same period included in the measurement.
7.1.2.1. The results found will be submitted to the CONTRACTOR on the 5th
(fifth) working day, as of the submittal of said vouchers, by means of
a Reimbursement Document (RD), which will be signed by the Manager of
this CONTRACT, for invoicing purposes................................
7.1.2.2. The reimbursable expenses and the deductions, if provided for in the
CONTRACT, are to be individually made evident in the Reimbursement
Documents (RD).......................................................
7.2. Issuing of the Measurement - Bulletins (MB)..........................
7.2.1. PETROBRAS, through the Manager of this CONTRACT, at the end of each
period as mentioned in the letters of subitem 7.1.1 of this Clause,
will carry out the measurement of the services, gathering the results
found in the Measurement Bulletin (MB), for the signature of the
Manager of this CONTRACT and of the CONTRACTOR, complying with the
following:...........................................................
a) For the initial, intermediate and final measurements ending on the
last day of a given month of the order "m", the CONTRACTOR will
receive one of the copies of the MB up to the 5th (fifth)
subsequent working day, so that it may submit the respective
collection documents, as provided for in subitem 7.4.1 of this
Clause;..........................................................
<PAGE>
b) For the final measurement, when the termination of the CONTRACT
does not occur in the last day of the month, the CONTRACTOR will
receive one of the copies of the MB, up to the 5th (fifth) working
day after the termination of the CONTRACT, so that it may submit
the respective collection documents, as provided for in subitem
7.4.1;..........................................................
c) for each measurement period of the services, only 1 (one)
collection document may be issued, being understood that collection
documents with partial values regarding said period will not be
taken into account for payment purposes, with exception of the
cases of collection of differences in readjustment, if
any;.............................................................
d) In the Measurement Bulletins (MB), the portions regarding the basic
and readjustment values, if any, will be made evident, using the
last definitive factor known by then, and the deductions, if
provided for in the CONTRACT.....................................
7.3. Collection of readjustment difference................................
7.3.1 For the payment of an eventual readjustment complement, due to the
non-availability of indexes at the time the MB is issued, PETROBRAS
will issue a Readjustment Bulletin (RB)..............................
7.3.1.1. The Readjustment Bulletin (RB) will be submitted to the CONTRACTOR on
the third working day after the disclosure of the indexes applicable to
the calculation of the definitive readjustment factor................
7.4. Time for the submittal of collection documents.......................
7.4.1 The CONTRACTOR will submit the respective collection documents to
PETROBRAS Financial Department, as mentioned in item 8.1 of this
CONTRACT, in the following conditions:...............................
<PAGE>
MEASUREMENT OCCASION FOR THE SUBMITTAL
TYPE OF MEASUREMENT DOCUMENT OF COLLECTION DOCUMENTS
- - ------------------- ----------- -------------------------------------------
INITIAL INTERMEDIATE MB Up to the 8th working day following the
AND FINAL last day of the performance of the
services, and PETROBRAS will make
the payment on the 30th consecutive day, as
of the final day of the period measured,
the provision in subitem 4.1.1. being
complied with............................
INITIAL INTERMEDIATE RB In case of an eventual complement of
AND FINAL readjustment difference, the RB will be
issued up to the 3rd working day after the
index to calculate its issuing is known,
together with the payment of the principal,
the minimum of 10 (ten) working days
between the submittal of the Collection
Document and the date of payment being
complied with............................
DETERMINATION OF RD In the first working day afte rthe DR is
REIMBURSABLE issued, and the payment will be made in a
EXPENSES period of 30 (thirty) days, as of the day
of its submittal. .......................
7.4.1.1. The payments due because of this CONTRACT, referring to the services,
will always occur on the 30th day after the end of the measure period,
included in the MB's, or on the first subsequent working day, provided
the CONTRACTOR fulfills the time limits for the submittal of the
Collection Documents set forth herein. In the event of non-compliance,
by the CONTRACTOR, with said submittal time limits, the payments will
be postponed for the number of days equal to the delay in the delivery
of such documents....................................................
7.5. Measurement follow-up................................................
7.5.1 The CONTRACTOR undertakes to follow-up the measurements and the
determinations carried out by PETROBRAS, offering, at that time, the
impugnations or considerations it deems necessary, which will be
submitted to PETROBRAS' appraisal and
decision.............................................................
7.5.2 The CONTRACTOR's signature by its representative before PETROBRAS will
imply in the acknowledgement of the accuracy of the Measurement
Bulletin (MB) and/or Readjustment Bulletin (RB) for all legal
purposes.............................................................
(End of Clause)...............................................................
<PAGE>
EIGHTH CAUSE - FORM OF PAYMENT................................................
8.1. The monthly payments due as a result of this CONTRACT will be made by
PETROBRAS to the CONTRACTOR, in Brazilian currency, 30 (thirty)
consecutive days, as of the last day of the period of performance of
the services, provided the CONTRACTOR submits the collection documents
until the 8th (eighth) working day after the last day of the period of
performance of the services..........................................
8.1.1 The payment of an eventual difference in readjustment will be made on
the same day in which the payment of the respective service occurs,
provided the CONTRACTOR submits the corresponding collection document
up to the 5th (fifty) working day after the indexes that permit the
issuing of the Readjustment Bulletin (RB) are known..................
8.1.2 The payment of reimbursable expenses, if any, will be made 30 (thirty)
consecutive days after the submittal of the collection document......
8.1.3 In the event of non-submittal of the collection documents in the time
limits set above, the payment will be postponed for as many consecutive
days as correspond to the delay in the delivery of the collection
documents............................................................
8.2. The collection documents will be submitted, together with the original
of the document giving rise to them (MB, RB, RD) in the Docket of the
Financial Department indicated by PETROBRAS, for the purposes of
checking the fulfillment of the time limits for their payment........
8.3. The collection documents will be issued without erasures, complying
with the pertinent laws in force, and will contain obligatorily the
following information:...............................................
a) Place and date of its emission and number of the collection
document;........................................................
b) Number and date of signature of the contract deed;...............
c) Number and date of the documents originating them (MB, RB, RD);..
d) Gross value of the collection documents, both in numbers and in
writing;.........................................................
e) Name and code of the banking establishment, branch and the
respective code, and number of the current account of the payee,
where the payments will be made;.................................
f) In order that a particular payment is made in a banking
establishment different from the one indicated at the time the
contract deed was signed, such amendment
<PAGE>
will obligatorily be preceded by a fax/correspondence from the
CONTRACTOR or will appear in the payee's collection document.....
8.3.1 In the event the collection document is inaccurate, it will be returned
to the CONTRACTOR and the time limit foreseen in item 8.1 will be
postponed for as many days as those corresponding to the delay in the
submittal of such document...........................................
8.3.2 In the event of re-submittal of the collection document, as a result of
a previous impugnation, this fact should appear in the history of the
collective document..................................................
8.3.3 The CONTRACTOR will obligatorily submit, every month to the Manager of
the Contract:........................................................
a) Payroll of the CONTRACTOR's employees who are involved in the
rendering of the services contracted;............................
b) A photocopy of the Social Security Payment Slip (GRPS), duly
settled and authenticated, obligatorily filling out field "8"
(other information), the name, CGC of PETROBRAS, number, date and
amount of the Invoice or Bill of Sale referring to the services
rendered in the month............................................
c) In case of a Cooperative, to submit the payment vouchers of the
amounts paid, distributed or credited to its members as a
remuneration for the services rendered in the fulfillment of this
contract.........................................................
8.3.4. The collection documents will not be accepted by PETROBRAS if submitted
with Income Tax at Source already withheld...........................
8.3.5. It is the responsibility of PETROBRAS' disbursing office the
explanation of doubts regarding the issuing of the collection
documents............................................................
8.3.6. Eventual payments made for more or for less by PETROBRAS, will be
compensated as soon as they are detected, and the respective amounts
will be duly corrected...............................................
8.3.7. The CONTRACTOR should indicate the place and fax number, if any, for
the receipt of the "Notice of Payment Foreseen.".....................
8.4. The vouchers for the reimbursable expenses due to the CONTRACTOR as a
result of this contract deed, will be previously submitted to the
Manager of the Contract, for checking, besides being duly settled by
the respective supplier or service rendered, when such is the case...
<PAGE>
8.4.1. If the original cannot remain in PETROBRAS' hands, copies thereof may
be submitted, which will be checked by the Inspector and/or Manager,
and the following should appear in every original document: "Copy
Submitted for Reimbursement on ___/___/___", followed by the signature
and identification by name, position and registry number, and the
originals will be returned to the CONTRACTOR. The following text will
appear in the copies of each document in PETROBRAS' hands: "Checked
With the Original On ___/___/___", which the Inspector and/or Manager
will sign, identifying the signature by name, position, and registry
number...............................................................
8.4.2. In special cases of reimbursement of import costs (duties and/or
expenses), the CONTRACTOR will send a letter submitting the vouchers
for such expenses, together with the import proceeding, to the office
responsible for its follow-up........................................
8.4.3. The receipt, duly formalized by PETROBRAS, of any reimbursable expense
voucher, does not represent the recognition of the debt, nor the proof
that the expenses was made...........................................
8.4.4. The collection of reimbursable expenses can only be made through the
issuing of a Services Invoice, after approval by PETROBRAS of the
respective Reimbursement Document - RD, which will be issued up to 5
(five) working days, as of the date of submittal of said documents...
8.4.4.1. PETROBRAS' Inspection has 3 (three) working days to proceed with the
checking of the expense voucher and to notify its approval to the
CONTRACTOR, so that it may issue the Combined Invoice and Bill of
Sale.................................................................
8.4.5. The total amount of the collection document will be obtained by
applying the following formula:
VTD
VTR = -------, where:
I - ICP
VTR = total amount to be reimbursed to the CONTRACTOR;..............
VTD = total amount of the reimbursable expenses, effectively
authorized;
ICP = total of the sum of the aliquots of taxes collected, in the
decimal form (ISS or ICMS, as the case may be, COFFINS and
PIS/PASEP)....................................................
(End of Clause)...............................................................
<PAGE>
NINTH CLAUSE - FINES..........................................................
9.1. Non-compliance, by the CONTRACTOR, after ninety-one days beyond the
time limit mentioned in item 2.3 of this Contract, will imply in the
imposition of fine against the CONTRACTOR, in a written notice,
corresponding to 30% (thirty per cent) of the rate provided for in Ref
101 of Attachment III, per day of delay..............................
9.2. In the event of non-compliance, by the CONTRACTOR, with the
inspection's requirements within the time limit it may set, PETROBRAS
may, by a written notice, impose against the CONTRACTOR, per day of
non-compliance with such requirements, as of the end of the time limit
set, a fine corresponding to 20% (twenty per cent) of the rate provided
for in Ref 101 of Attachment III.....................................
9.3. The penalties set forth in this Clause do not exclude any other
provided for in the Laws in force and/or in this Contract............
9.4. The amount corresponding to the sum of the basic values of the fines
applied is limited to 10% (ten per cent) of the estimated value of the
present Contract.....................................................
9.5. The basic values of the fines will be readjusted by the readjustment
factor calculated by the formula shown in subitem 6.2.1 of this
Contract and in force in the period of its imposition................
9.5.1. The fines will be forwarded by the Inspection, for discount by the
Disbursing Office, as soon as the pertinent definitive readjustment
factors are known....................................................
9.5.2. In the event of balance, PETROBRAS reserves itself the right to make or
complement the deduction in collection document(s) related to any other
contract deed eventually entered into with the CONTRACTOR, or to use
any other adequate means to settle the debt, if necessary............
9.6. In a written notice and without prejudice of the capacity to rescind
the contract, PETROBRAS may impose upon the CONTRACTOR a compensatory
fine of 100% (one hundred per cent) of the amount of the conviction,
due to default of its labor, social security or tax obligations......
9.6.1. The payment of said fine will not exempt the CONTRACTOR from the
obligation to reimburse PETROBRAS for the amount imposed upon it as a
result of an eventual joint conviction passed by a Labor Court or by
the proper administrative jurisdictions..............................
<PAGE>
9.6.2. The CONTRACTOR will be fined in the percentual of 5% (five percent) on
the amount of the invoice in the event it does not submit the GRPS or
submits at variance..................................................
9.6.2.1. The GRPS is considered at variance if it does not have proof of payment
of social security contributions of all of the CONTRACTOR's Brazilian
crew working in the fulfillment of the CONTRACT......................
9.7. The CONTRACTOR may appeal against the imposition of the fine, in a
declaration, within the non-deferrable time limit of 15 (fifteen)
consecutive days as of the date the notice is received...............
(End of Clause)...............................................................
<PAGE>
TENTH CLAUSE - INSPECTION.....................................................
10.1 The inspection of the services contracted herein will be carried out by
PETROBRAS' representatives, and the CONTRACTOR undertakes to allow
their free access to the UNIT and to the service locations, and to
comply immediately with the observations of such inspection, which will
have ample powers:...................................................
10.1.1. To determine the interruption of the drilling and/or evaluation and/or
completion of the well, for the purpose of carrying out formation
testing, corings, electric loggings and other services deemed
necessary;
10.1.2. To determine, provided it comes to its knowledge and is within its
capacity, the suspension of the services which perhaps are being
carried out in disagreement with the good technique or which threatens
the safety of persons or assets of PETROBRAS, third parties and of the
CONTRACTOR itself, complying with subitem 2.1.7 of Attachment I......
10.1.3. To refuse the use of improper or inadequate techniques, as well as the
operations that do not comply with the established programs..........
10.1.4. To refuse the employment of condemned or improper materials, tools and
string components, which do not comply with PETROBRAS' and API's
standards............................................................
10.1.5. To order the withdrawal, from the work site, of any of the CONTRACTOR's
employees who, in PETROBRAS' opinion, may endanger the good performance
of the services or hinder its inspecting activities..................
10.1.6. To certify the accuracy of the information reported daily by the
CONTRACTOR...........................................................
10.1.7. To notify the CONTRACTOR, in writing, on the imposition of the fines
provided for in this CONTRACT, including those referring to the
CONTRACTOR's action or omission......................................
10.1.8. To request from the CONTRACTOR a detailed report on any accident
occurred and on any operation or repair performed....................
10.1.9. To request from the CONTRACTOR the documentation regarding the proof of
payment of its labor obligations, including social security
contributions (Negative Debt Certificate) and deposits in the FGTS, for
the crew members.....................................................
10.2. Recording - PETROBRAS' Inspection should record its observations on the
Driller's Log approved by the LADC and on the Daily Drilling
Certificate (ADP), to safeguard the rights and liabilities foreseen in
this CONTRACT........................................................
<PAGE>
10.3. During the period of validity of the Contract, PETROBRAS will carry out
evaluation of the CONTRACTOR's performance, covering the groups in
equipment and material, human resources, installations, quality and
efficiency. The results of the performance evaluations will be notified
and consolidated by means of service performance certificates.
(End of Clause)...............................................................
<PAGE>
ELEVENTH CLAUSE - RESCISION...................................................
11.1. PETROBRAS may rescind the present CONTRACT, without the CONTRACTOR
being entitled to any right to indemnity and/or withholding in the
following cases:
11.1.1. Nonfulfillment, or irregular fulfillment of contract clauses,
specifications, operations and Inspection's requests, provided the
fact mentioned isn't solved within the time limit of 60 (sixty) days
or the repeated perpetration of faults in the fulfillment of the
Contract;..........................................................
11.1.2. Total or partial subcontracting of the object of the present
Contract, the association of the CONTRACTOR will another,
merger/division or total or partial incorporation, except if allowed
for in this Contract, which affects the good fulfillment of this
instrument..................
11.1.3. Interruption of the operations for more than 60 (sixty) days, in the
cases in which an act of God does not clearly apply (clause
12.4)..............................................................
11.1.4. Decree of the CONTRACTOR's bankruptcy..............................
11.1.5. Suspension of the operations for more than 60 (sixty)
days...............................................................
11.1.6. When the limit for the imposition of penalties provided for in item
9.4 of this Contract is attained...................................
11.1.7. Slowness in the performance of the works, leading PETROBRAS to prove
the impossibility of completing the services within the established
time limits........................................................
11.1.8. Non-compliance with the determinations of PETROBRAS' agent appointed
to follow-up and inspect the fulfillment of the Contract, as well as
those of his superiors.............................................
11.1.9. The dissolution of the CONTRACTOR..................................
11.1.10. The social change or the modification of the company's purpose or
structure, which in PETROBRAS' opinion, hinders the performance of
the services.......................................................
11.1.11. Delay in the beginning of the fulfillment of the CONTRACT for more
than 180 (one hundred and eighty) days.............................
11.1.12. Rescision of the Unit's Chartering Contract entered into between
PETROBRAS and the INTERVENIENT PARTY...............................
11.1.13. If the limit set forth in subitem 2.1.9 of Attachment II to this
Contract is attained...............................................
11.1.14. If the limits set forth in NOTE 2 of Ref. 102 of Attachment II to
this Contract is attained..........................................
<PAGE>
11.1.15. Non-submittal of the proof of default of labor obligations towards
the employees directly involved in the services object of this
Contract, including social security contributions and deposits in the
FGTS, when requested by the Inspection, or if such default is
proved.............................................................
11.1.16. Non-submittal or submittal at variance of the GRPS, when the
corresponding invoice is delivered.................................
11.1.16.1. The rescision for this reason does not prevent PETROBRAS from
imposing the respective fine, foreseen in 8.7.2;...................
11.2. In the event of rescision of the contract deed for the reasons
foreseen in 10.1, PETROBRAS:.......................................
a) will take over the object of the contract deed, on the stage and
location where it is found;.....................................
b) will enforce the contract guarantee, if any, for the reimbursement
of the amounts of fines and indemnities due to it;..............
c) will withhold the credits arising from the contract deed, up to
the limits of the damages caused to it;.........................
11.3. After the Contract is rescinded, as set forth in this Clause, the
CONTRACTOR is liable, in legal and contract fashion, for the
violation or inadequate performance which gives rise to the
rescision, as well as for the reimbursement of damages which
PETROBRAS may come to sustain......................................
11.4. After the Contract is rescinded, PETROBRAS, at its exclusive
judgment, may adjudicate the operations object thereof to which it
deems appropriate, without behoving the CONTRACTOR any consultation
or interference, claim and/or indemnity, for whatever title, and the
CONTRACTOR will be liable to legal and contract penalties, besides
answering for damages PETROBRAS may sustain........................
11.4.1. The CONTRACTOR is also liable for the pertinent administrative
sanctions, its full defense bein guaranteed........................
11.5. In the event PETROBRAS does not impose the right to rescind the
present CONTRACT according to this Clause, it may, at its absolute
discretion, withhold the payments of pending invoices, until the
CONTRACTOR fulfills the contract condition it has
<PAGE>
infringed, but such fact will not represent novation nor will it
generate rights that may be claimed by the CONTRACTOR..............
(End of Clause)...............................................................
<PAGE>
TWELFTH CLAUSE - FISCAL CHARGES...............................................
12.1. Taxes (taxes, fees, emoluments, fiscal and parafiscal contributions)
that are due as a direct or indirect result of the present CONTRACT, or
of its fulfillment, will be the exclusive responsibility of the
taxpayer, so defined in the tax rule, with no right to reimbursement.
PETROBRAS, as the paying source, will discount and withhold within the
legal time period, from the payments it makes, the taxes it is liable
to by the laws in force.................................................
12.1.1 The CONTRACTOR states that, in quoting its prices, it has taken into
account the taxes (taxes, fees, emoluments, fiscal and parafiscal
contributions) charged on the fulfillment of this Contract, and it
cannot make nay claim due to error on such evaluation, for the purpose
of requesting a price revision ou reimbursement of payments set down by
the proper authority.................................................
12.1.2 Once found, during the period of validity of the Contract, that the
CONTRACTOR has unduly added to its prices amounts corresponding to
taxes, fiscal and/or parafiscal contributions and emoluments of any
kind that are not charged to the performance of the services agreed
upon, such values will be immediately excluded, with the consequence
reduction of the prices practiced and reimbursement of amounts that may
have been paid to the CONTRACTOR.....................................
12.2. If, during the period of validity of this CONTRACT, any of the
following events occur:..............................................
- creation of new taxes;.............................................
- extinction of existing taxes;......................................
- changes in the aliquots;...........................................
- establishment of tax incentives of any kind; and...................
- exemption or abatement of federal, state or county taxes;..........
which, provedly come to increase or reduce the burdens of the parties
to the contract, the prices will be revised, so as to fit them into
the changes made, compensating, at the first opportunity, any
differences arising from such changes. However, if it is a question
of tax incentives, the advantages arising therefrom will always be
for PETROBRAS......................................................
(End of Clause)...............................................................
<PAGE>
THIRTEENTH CLAUSE - FORCE MAJEURE.............................................
13.1. PETROBRAS and the CONTRACTOR will not be liable for the nonfulfillment
of their respective obligations in case of events that characterize an
act of God or force majeure defined in the sole paragraph of Article
1.058 of the Brazilian Civil Code. Any suspension of performance due to
such item 12.1 will be limited to the period during which such cause or
its consequences exist, and such period will be added to the duration of
the Contract mentioned in the Second Clause of the present Contract.
However, the CONTRACTOR is assured the right to receive the rate
provided for in Ref 104 of Attachment III, with the exception of the
exemption from payment set forth in subitem 2.1.4 of the Attachment II,
and the reimbursements mentioned in this Contract, and furthermore, the
parties will severally assume their losses............................
13.2. If the circumstance that justify the invoking of the existence of an act
of God or force majeure occurs, the party unable to fulfill its
obligations will immediately notify the other party, in writing, on the
occurrence and its consequences.......................................
13.3. If the impediment arising form the force majeure lasts for more than 30
(thirty) consecutive days, any of the parties may opt for the
termination of the Contract, with both parties complying with their
mutual obligations due until the date of the beginning of said
impediment............................................................
13.4. In the present Contract it will be considered as act of God the
situation in which one of the parties is prevented from fulfilling its
obligations, provided it proves that:.................................
the non-fulfillment of the obligation was due to the existence of an
impediment beyond its control;........................................
the party impeded could not, within its ability, overcome the impediment
and its effects, in order to fulfill its contract obligation within the
time limit set down, and..............................................
the impediment and its effects could not be avoided nor overcome......
(End of Clause)...............................................................
<PAGE>
FOURTEENTH CLAUSE - ASSIGNMENT AND TRANSFER
14.1. The CONTRACTOR cannot assign or transfer, in whole or in part, the
present Contract, except with PETROBRAS' prior authorization in writing.
14.2. The CONTRACTOR cannot assign or give in guarantee, at any title, in
whole or in part, the credits of any kind, arising or deriving from the
present Contract, except with PETROBRAS' prior authorization in writing.
The prior authorization will obligatorily state the PETROBRAS imposes
upon the assignee of the credits the exceptions that behooves it,
mentioning expressly that the payments to the assignee will be
conditioned to the fulfillment, by the assignor, of all of its contract
obligations...........................................................
14.3 The occurrence of the above mentioned events, duly authorized by
PETROBRAS, does not exempt the CONTRACTOR from any of its contract
obligations...........................................................
14.4 PETROBRAS may assign or transfer, in whole or in part, the present
Contract, under commercial conditions to be agreed upon by the parties..
(End of Clause)...............................................................
<PAGE>
FIFTEENTH CLAUSE - CONTRACT RELATIONSHIPS.....................................
15.1. This Contract is related to another one for chartering the Unit, signed
on this same date between PETROBRAS and the INTERVENIENT PARTY.
(End of Clause)...............................................................
<PAGE>
SIXTEENTH CLAUSE - INTERVENIENCE..............................................
16.1. The INTERVENIENT PARTY signs the present Contract, together with the
CONTRACTOR, being jointly liable with it for all obligations arising
from the present Contract and its fulfillment, including for damages..
(End of Clause)...............................................................
<PAGE>
SEVENTEENTH CLAUSE - ACCEPTANCE...............................................
17.1. After the services are completed in strict compliance with the
conditions set forth in the present deed, PETROBRAS will accept them by
means of a Definitive Acceptance Deed signed by the parties.
17.1.1. Before the signature of the Definitive Acceptance Deed, the CONTRACTOR
will comply with all of the Inspection's requirements regarding claims,
without any charge to PETROBRAS.......................................
17.1.2. The signature of the Definitive Acceptance Deed does not exempt the
CONTRACTOR from the liabilities provided for in this CONTRACT and in the
laws in force.........................................................
(End of Clause)...............................................................
<PAGE>
EIGHTEENTH CLAUSE - LIABILITY.................................................
18.1. PETROBRAS and the CONTRACTOR's liability for damages will be limited to
the direct damages in accordance with the Brazilian Civil Code and
pertinent laws, with exception of loss of profit and indirect damages,
the indirect damages being limited to 100% (one hundred percent) of the
total contract value..................................................
(End of Clause)...............................................................
<PAGE>
NINETEENTH CLAUSE - COMPLEMENTARY DOCUMENTS...................................
19.1. The Attachments mentioned below are an integral part of the present
Contract and, in the event of disagreement between the Attachments and
the Contract, the text of the Contract will prevail...................
ATTACHMENTS
I - Technical specifications of the Unit...................................
II - Applicability of the Rates and Incidentals in the Performance..........
III - Unit Prices Spreadsheet................................................
IV - Responsibilities in the Performance and Mutual Obligations.............
V - List of Specialized Personnel;.........................................
VI - Environmental Operating Conditions.....................................
VII - PETROBRAS' Safety Rules................................................
VIII - Radio Communication and Radio-Beacon Frequency Plan....................
IX - Equipment Testing Program..............................................
X - Procedures in the Event of Fatal Accidents..............................
(End of Clause)...............................................................
<PAGE>
TWENTIETH CLAUSE - JURISDICTION...............................................
20.1. The Jurisdiction of the County of the Capital of the State of Rio de
Janeiro will be competent to settle any questions arising from the
present CONTRACT, with the express waiver, by the parties, of any
other, however privileged...............................................
(End of Clause)...............................................................
<PAGE>
AND BEING THUS AGREED, the parties sign the present deed in 4 (four) copies
with the same tenor, with the witnesses below...........................
Rio de Janeiro, (blank).......................................................
PETROLEO BRASILEIRO S.A. - PETROBRAS
____________________________________(blank)___________________________________
LUIZ EDUARDO G. CARNEIRO - EXECUTIVE SUPERINTENDENT OF EXPLORATION AND
PRODUCTION SOUTH AND SOUTHEAST (E&P-SSE)......................................
MARITIMA NAVEGACAO E ENGENHARIA LTDA.
(blank)
GERMAN EFROMOVICH - PRESIDENT.................................................
WITNESSES:
(Blank) - CPF No. (Blank).....................................................
Blank) - CPF No. (Blank).....................................................
<PAGE>
(Attachment I not included in the original document.).........................
<PAGE>
CONTRACT 101.2.064.97-0.......................................................
SERVICES RENDERING
ATTACHMENT II
APPLICABILITY OF THE RATES AND INCIDENTALS
IN THE PERFORMANCE.
1 - APPLICABILITY OF THE RATES - DEFINITION OF THE SERVICE RATES PER 24
(TWENTY-FOUR) HOUR DAY........................................................
REF 101 - OPERATION RATE - It will be applied during the activities requiring
the use of the Unit, such as drilling, coring, electric logging, formation
testing, completion and workover operations, including drilling lines
scouring and cutting operations.
REF 102 - REPAIR RATE - In the periods when there is an interruption of the
activities that require the use of the Unit, mentioned in Ref 101 of this
Attachment and the operations for Moving the Unit between locations, Ref 105
of this Attachment, due to maintenance, including replacement of mud pump
spare parts, and/or repair in the Unit's equipment, or in those which supply
is the CONTRACTOR's responsibility, no rate will be due.......................
NOTE 1. The repair period will be considered as of the interruption of the
operation that is being performed, until the return to the same
situation when the interruption occurred, except for the periods when
the interruption in the repair activities occur due to adverse sea
conditions, as set forth in NOTE 2 of Ref. 104........................
NOTE 2. In the event the CONTRACTOR remains in Repair Rate for an accumulated
total of 30% (thirty percent) of the time, for any period of 6 (six)
contract months, PETROBRAS may rescind the present Contract, based on
subitem 10.1.14 of this Contract......................................
NOTE 3. It will be considered as repairs the occurrences due to wash outs in
the drill pipes and in the other elements of the drill string, belonging
the Contractor, with exception of those arising from the presence of H2S
and from abnormal mechanical conditions occurred in the
well..................................................................
NOTE 4. At the Inspections discretion, for the maintenance of the BOP, the
CONTRACTOR may be granted a franchise of up to 24 (twenty-four) hours
between the instant the BOP is set of
<PAGE>
the test stump, until its operational withdrawal, and the moment of its movement
for the next lowering in another well, without the CONTRACTOR entering into the
repair rate, provided such maintenance is carried out according to international
standards. In the period within these 24 (twenty-four) hours intended
exclusively for the BOP maintenance; the waiting rate (Ref. 104) will be
due...........................................................................
Ref. 103 - Rate Additional (RA) - In each measurement period, as agreed upon in
subitem 6.1.1 of the Contract, the CONTRACTOR will be entitled to the receipt of
a Rate Additional, calculated by the following
formulae:.....................................................................
AT = 0.10 x (NT - NFM - NREP - NIPG - NTOR) x
TO ...................TO PI (less than or equal to) 0,0300
AT = (0,16 - 2 x PI) x (NT = NFM - NREP - NIPG - NTOR) x TO....
for 0,03 less than or equal to PI less than or equal to PI 0,0800
AT = Zero.............TO PI > 0,0800
Where:........................................................................
AT = Rate Additional..........................................................
TO = Operation Rate (REF 101).................................................
PI = Unavailable Proportion, calculated with 4 (four) decimal places,
being:.....................................................................
NREP + NIPG + NTOR
PI = ---------------------
NT - NFM
NT = Total number of days in the measurement period considered................
NFM = Total number of days in which the act of God or force majeure occurs,
as defined in the Twelfth Clause of the Contract, in the measurement period
considered....................................................................
NREP = Total number of days under repair rate (REF 102) in the measurement
period considered.............................................................
NIPG = Total number of days under exemption from payment (according to item
2.1 of this Attachment) in the measurement period considered..................
NTOR = Total number of days with reduced operation rate (according to
subitems 2.2.3 and 2.2.4 of this Attachment) in the measurement period
considered....................................................................
<PAGE>
Ref. 104 - Waiting Rate (TE) - corresponds to 95% (ninety-five percent) of
the operation rate (TO) and which will be applied in Bad Weather, Force
Majeure and Waiting situations, as defined below:.............................
1) Bad Weather Situations - in the event of stoppage of the operations
when environmental conditions are so severe as to endanger the Unit's
operating capacity, the limitations in Attachment VI, being complied with,
making the operations unstable or unsafe or preventing support vessels to
have access to the Unit, or preventing the tugs' operations, at the time
of change of locations, although the Unit may operate normally, in spite
of the bad weather......................................................
2) Force Majeure Situations - during the period when the Unit cannot
operate, due to act of God or force majeure, as defined in the Twelfth
Clause of the Contract, until the removal of the impediment or the
rescision of the Contract, as the case may be...........................
3) Waiting - waiting for the arrival, maintenance or availability of
materials from PETROBRAS or third parties, under PETROBRAS'
responsibility, even if the maintenance is made in the Unit; waiting
for daylight to carry out formation tests; waiting for orders from
PETROBRAS, such as, but not limited to: change of programs, definition
to proceed with the completion or other production activity, rest for
PETROBRAS' team or of those of third party at PETROBRAS' service;
waiting for towage or support vessels...................................
NOTE 1. The period spent in disconnecting the LMRP from the BOP due to
environmental conditions, will be considered as bad weather
situation, until the return to the previous situation..............
NOTE 2. If a bad weather situation occurs which interrupts a repair
activity, the Waiting Rata (Ref. 104) with a 25% (twenty-five
percent) reduction, will be due during that period.................
Ref. 105 - Moving Rate - corresponds to 95% (ninety-five percent) of the
Operation Rate (TO) and will be applied during the following periods:.........
a) Beginning of the Contract - After the acceptance of the Unit's
equipment operating conditions, once the general testing provided for in
item 3.1 of the Contract has been carried out, until the spud in of the
first well or reentry in the first well (beginning of lowering the first
tool for access to the well);...........................................
b) Between locations - After the end of the drilling operations,
completion or intervention in a well, with the arrival of the BOP or
tool used in the well (the one which occurs last) in
<PAGE>
the moon pool, until the spud in or reentry in a new well (beginning of
lowering the first tool for access to the
well);..................................................................
NOTE: This period includes the DP system calibration and tests, always in
each new location, and in others in each contract year or at any
time, when requested by PETROBRAS....................................
c) End of Contract - After the end of the spud in or intervention
operations in the last well, with the arrival of the BOP or tool used
in the well (the one which occurs last) in the moon pool, until the
Unit's arrival in a sheltered waters location, chosen in common
agreement between the parties, or, if there is PETROBRAS' equipment
still aboard, until the withdrawal of such equipment from the Unit......
2 - INCIDENTS IN THE PERFORMANCE............................................
2.1. Exemption from Payment - PETROBRAS will be exempted from the payment of
the rates foreseen in this ATTACHMENT, during the period in which
occurs:...............................................................
2.1.1. Interruption of the services due to the CONTRACTOR's duly proven fault
arising from operational error and/or lack of material or equipment,
inclusive due to the loss of equipment or subaquatic spare
parts.................................................................
2.1.2. Stoppage of the services and/or of the Unit due to measures related to
impositions by made the insurers......................................
2.1.3. Stoppage of the services and/or of the Unit for inspection or dockage
purposes, including surveys and dockages arising from act of God or
force majeure, as defined in the Twelfth Clause of the Contract, the
corresponding expenses also running for the CONTRACTOR's account......
NOTE 1. The exemption from payment will begin in the moment there is an
interruption of the operational continuity object of this Contract,
even if the withdrawal of all or part of PETROBRAS and/or the
CONTRACTOR's cargo becomes necessary for the inspection and/or
dockage.............................................................
NOTE 2. The end of the exemption from payment, due to the inspection and/or
dockage, will occur:................................................
a) On the return to the same location, the moment the operations
returns to the previous situation;...........................
<PAGE>
b) In the mobilization for another location, the moment the Unit
starts sailing after PETROBRAS or the CONTRACTOR's materials
have been put back on board.
2.1.5. Occurrence of kick, drill string sticking, loss of circulation, fishing
or abandonment, caused by the CONTRACTOR's duly proven action or
omission, from the moment the problem was ascertained, until the return
to the situation prior to its occurrence, or displacement to another
location, in the event of abandonment.................................
2.1.5.1. The exemption from payment referred to in 2.1.5 will be limited
to a period of 15 (fifteen) days, per event, after which the
reduction foreseen in subitem 2.2.3 of this Attachment will be
applied..........................................................
2.1.6. Occurrence of blow out caused by the CONTRACTOR's duly proven action
or omission, from the moment the problem was ascertained, until the
return to the situation prior to its occurrence.........
2.1.6.1.The exemption from payment referred to in item 2.1.6 will be
limited to a period of 45 (forty-five) days, after which the
reduction foreseen in subitem 2.2.4 of this Attachment will be
applied......
2.1.7. Suspension of the services, determined by PETROBRAS' Inspection,
based on item 10.1.1 of the Contract..............................
2.1.8. Interruption of the operations due to a failure occurred in any
of the Unit's equipment, at the time of the testing to be carried
out according to item 3.1 of the Contract.........................
2.1.9. In the occurrence of events of exemption from payment provided
for in subitems 2.1.1, 2.1.2, 2.1.3, and 2.1.7, for a total
accumulated period exceeding 30% (thirty percent) in any 6 (six)
month period, PETROBRAS may rescind the present Contract, based
on its subitem 11.1.13............................................
2.2. Reduction in the Daily Operation, Waiting and Movement Rate.......
The rates foreseen in this Attachment will be reduced in the following
cases:............................................................
2.2.1. Total or partial inoperativeness or malfunction of any equipment
which delays or hinders the operations, such as, but not limited to,
winches, top drive, kelly spinner, geolograph, current meter, air
compressors, shale shaker, desander,
<PAGE>
desilter, mixing pumps, mud laboratory equipment and bulk receipt
and transfer systems, are reason for the reduction of the daily rate
provided for in Ref 101, in 1% (one percent), cumulative per
equipment, provided the CONTRACTOR is notified in writing in the
Daily Drilling Certificate (ADP), by PETROBRAS' Inspection and
which, after the time limit the latter has set to repair said
equipment, such repair has not been
made..........................................
2.2.2. Low Efficiency - Reference Rates 101 and 105 of this Attachment
will suffer a 20% (twenty percent) reduction, in the event low
efficiency is verified, according to the operating efficiency
parameters listed below. Such reduction will be applied during
the whole corresponding activity period in which low efficiency
is verified:......................................................
Operating Parameters:.....................................................
- Maneuver of the drill string in a cased well (except BHA):..............
o Inside the riser and 20" casing = 500 m/h....................
o Inside the 13 3/8" casing = 600 m/h..........................
o Inside of 9 5/8" casing = 700 m/h............................
- - - Break of DP's per unit = 25jt/h.........................................
- - - Casing string run in the sea/inside the riser/previous casing (joints
approximately 12 m long)................................................
o 30" Casing - 2 jt/h...................................
o 20" Casing - 5 jt/h...................................
o 13 3/8" Casing - 13 jt/h.....................................
o 9 5/8" Casing - 18 jt/h....................................
o 7" Casing - 15 jt/h..................................
- - - Running of drilling riser, excluding normal time for testing (50 ft.
joint): 45/m/h............................................................
- - - Pulling of drilling riser (50 ft. joints): 60 m/h.........................
- - - Installation or pulling of the kill/choke lines/telescopic joint/stretchers:
6,0h.......................................................................
- - - Diverter installation or pulling: 2,Oh....................................
- - - Assembly of the dampening lines in the M.R.: 1,5h.........................
- - - Assembly of the flexitube equipment: 5,Oh.................................
- - - Assembly of the production tail: 2,Oh....................................
<PAGE>
- - - Tubing running or pulling, per unit - 150 m/h..............................
- - - Tubing running or pulling, per section - 300 m/h...........................
- - - Completion risers running or pulling - 50 m/h..............................
- - - Assembly of terminal head and slings - 2,Oh................................
- - - Moving of ANM to/from the moon pool - 3,Oh.................................
- - - Moving of tree cap or tree running tool to/from the moon pool - 2,5h.......
- - - Assembly of lubricator and wire line BOP - 1,5h............................
NOTE: The above mentioned operating parameters are based on normal weather
conditions............................................................
2.2.3 Beginning on the 16th (sixteenth day), inclusive, of the occurrence
of kick, drill string sticking, loss of circulation or fishing, caused
by the CONTRACTOR's duly proven action or omission, until the return to
the situation prior to its occurrence, the applicable rate will be
reduced by 50% (fifty percent)................................
2.2.4 Beginning on the 46th (forty-sixth) day, inclusive, of the occurrence of
Blow out caused by the CONTRACTOR's duly proven action or omission,
until the return to the situation prior to its occurrence, the
applicable rate will be reduced by 50% (fifty percent).
2.3. Period of Validity of the Contract Rates - the contract rates set
forth in this Attachment will apply in the period set forth below:....
a) Beginning: release of the Unit, by PETROBRAS, to sail to the
first location, after the equipment general testing provided for
in item 3.1 of the CONTRACT has been carried out, with the
exception of the provision in its subitem 3.1.1.1................
b) End: after the end of the drilling or completion of the last
well, with the Unit's arrival at a port or sheltered waters
chosen by common agreement between the parties, and if there is
PETROBRAS equipment still aboard, with the withdrawal of such
equipment from the Unit..........................................
2.4. Blow-Out - PETROBRAS will be responsible for the well control
operation costs, in the event of blow-out and caving caused by the
blow-out. Such provisions apply only to the well control costs and
do not apply to the loss of assets, lesions and/or damages caused by
the blow-out, which are protected by the provisions of the pertinent
items of this Contract. The CONTRACTOR undertakes to place at
PETROBRAS' disposal all
<PAGE>
of its resources in personnel and equipment related to this Contract,
without any additional charges to PETROBRAS. If the CONTRACTOR has
contributed with duly proven grossly negligent action or omission for
the occurrence of the accident, no rate will be due, until the solution
of the problem, in compliance with the provisions in subitems 2.1.6 and
2.2.4 of this Attachment..............................................
(End of Attachment)...........................................................
<PAGE>
- - --------------------------------------------------------------------------------
Rendering of Services
- - --------------------------------------------------------------------------------
UNIT PRICES SPREAD SHEET CONTRACT No. 101.2.064.97-0
- - --------------------------------------------------------------------------------
OBJECT OF BID: Serviced of Drilling, Completion, Evaluation and Workover of
Oil and Gas Wells, by means of using the Floating Unit, provided with Dynamic
Positioning System.
- - --------------------------------------------------------------------------------
PLACE OF OPERATION: BRAZILIAN CONTINENTAL SHELF
- - --------------------------------------------------------------------------------
UNIT'S NAME: AMETHYST 4
- - --------------------------------------------------------------------------------
COMPANY'S NAME: MARITIMA NAVEGACAO E ENGENHARIA LTDA.
- - --------------------------------------------------------------------------------
CODE ITEMIZATION UNIT UNIT PRICE (US$)
- - --------------------------------------------------------------------------------
07.201.351 OPERATION RATE DAY 13,771.06
(REF. 101)
- - --------------------------------------------------------------------------------
07.201.358 REPAIR RATE DAY No Rate will be due
(REF. 102)
- - --------------------------------------------------------------------------------
07.201.362 WAIT.-BAD WEATHER RATE
(REF. 104.1) DAY (95% OF REF. 101)
- - --------------------------------------------------------------------------------
07.201.363 WAIT.-FORCE MAJEURE
RATE
(REF. 104.2) DAY (95% OF REF. 101)
- - --------------------------------------------------------------------------------
WAIT. RATE - WAITING
07.201.364 (REF. 104.3) DAY (95% OF REF. 101)
- - --------------------------------------------------------------------------------
07.201.366 MOVEMENT RATE
(REF. 105) DAY (95% OF REF. 101)
- - --------------------------------------------------------------------------------
009.252.008 MEALS (ITEM 3.11 OF THE
SERVICE RENDERING CONTRACT EACH 20.00
- - --------------------------------------------------------------------------------
SIGNATURES DATE OF THE PROPOSAL
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
PETROBRAS CONTRACTOR 07/07/97
(BLANK)
- - --------------------------------------------------------------------------------
Contract 101.2.064.97-0.......................................................
1 - RESPONSIBILITIES IN THE PERFORMANCE
1. RESPONSIBILITIES IN THE PERFORMANCE.....................................
1.1. The CONTRACTOR should provide, at its own expenses, pipe inspection
according to API-RP 7 G Standard for drill string elements in use, at
every 15,000m drilled, complying also with item 3.1 of this CONTRACT.
This inspection should be necessarily made by personnel accredited by
PETROBRAS, and accompanied by PETROBRAS' Inspection which will attest
the drill string conditions in accordance with the results of said
inspection. The drill string elements rejected by the Inspection will
be immediately repaired and/or replaced by the CONTRACTOR, which will
assume the corresponding costs.........................................
1.1.1.The CONTRACTOR should make provisions so that the same numbering of the
parts is maintained for the period of validity of the CONTRACT.........
1.1.2.The reports on the inspections made on the drill string, riser column, and
handling equipment will be submitted to PETROBRAS immediately after their
performance............................................................
1.1.3.The CONTRACTOR should maintain a control of the elements of the string
used in each well, recording at each maneuver, in the driller's log, which
parts belong to the BHA in use, mentioning the inspection report
numbering...............................................................
1.1.4.The CONTRACTOR will provide, at its expenses, for the inspection of the
drill string, when requested in writing by PETROBRAS, in the event of
abnormal occurrences, such as wash-out or frequent string breaks........
1.1.5.The CONTRACTOR will provide, at its expenses, for the inspection according
to API RP-8B standard, in each contract year, in all drill string and
casing handling equipment, such as, but not limited to, slips,
elevators, traveling tongs, hook, elevator arms, spiders, drilling
winch, etc. This inspection should be necessarily accompanied by
PETROBRAS' Inspection which will attest the drill string conditions in
accordance with
<PAGE>
the results of said inspection. The equipment rejected by the Inspection
will be immediately repaired and/or replaced by the
CONTRACTOR..............................................................
NOTE: The same procedure described in 1.1.5 will be applied to the riser
column and to its handling tools, complying with standard API RP2K...
1.2. Casing - The CONTRACTOR should measure and run the conductors and the
casing strings in accordance with the drilling programs established by
PETROBRAS...............................................................
1.2.1.The CONTRACTOR will keep the casing pipes with their respective
protectors.
1.2.2.The CONTRACTOR will exert its best efforts to remove all recoverable
casing, when the well is abandoned.
1.3. Cementing, Formation Testing and Electric Logging - the CONTRACTOR will
provide facilities and give assistance to third parties, charged by
PETROBRAS, for the performance of cementing, electric logging, drill
string testing, and other related services, complying with the programs
and safety rules set down by PETROBRAS..................................
1.4 Fishing - the CONTRACTOR should carry out all fishing operations that
may become necessary....................................................
1.5 Subsurface Pressures - the CONTRACTOR will exert its best efforts to
control subsurface pressures, always maintaining all safety equipment,
including the ancillary ones, in good operating conditions, so as to
avoid contamination of the drilling fluid by hydrocarbons and fires
resulting from blow-outs................................................
1.6. Well Completion and Abandonment - the CONTRACTOR will complete or
abandon the wells in safety conditions, according to the programs set
down by PETROBRAS.......................................................
1.7 Drilling Reports - the CONTRACTOR undertakes to inform daily to PETROBRAS,
until 01:00h of the following day, the progress of the operations, weather
conditions, bulk and liquid stock consumption, and the status of the
equipment that comprise the vessel's dynamic positioning system, and of
others that the Inspection considers necessary, by means of bulletins,
reports and records approved by the IADC and/or required by the
Inspection.
1.7.1.The duration of the delays or wastes of time, their reasons, and other
facts deemed important, will be recorded in detail in the Daily
Drilling Data...........................................................
<PAGE>
1.7.2.Whenever PETROBRAS requests it, the CONTRACTOR will submit detailed
reports on the progress of the operations carried out, or on any accident
that may have occurred..................................................
1.8. The CONTRACTOR undertakes to inform immediately to PETROBRAS' Inspection
when the Unit enters in a Degraded State................................
1.8.1.The following situations are considered Degraded State (to be defined in
common agreement between the parties)...................................
1.8.2.In the event of non-fulfillment of Clause 1.8, and the Unit comes to enter
into yellow alert or red alert, a 20% (twenty percent) fine will be
charged on the operation rate during the whole duration of the
abnormality period......................................................
1.9. The CONTRACTOR undertakes to measure the sea current profiles
(intensity and direction with reference to the true North) from the
surface of the sea down to the sea bottom, carried out at 0600 and 1200
GMT (Greenwich Mean Time), and to deliver daily the obtained data to
PETROBRAS. Such profiles should obligatorily cover the following
depths: 20, 50, 150, 200, 250, 300, 350, 400m, and at every 100 (one
hundred) meters thereafter, until the last depth investigated
corresponds to 5 (five) meters from the bottom of the sea.
1.9.1.The data should be delivered to PETROBRAS' Inspector, in disk and in a
format according to PETROBRAS' instructions.............................
1.10. Maintenance and Conservation - the CONTRACTOR will be responsible for
the maintenance, conservation and cleaning services of the Unit and of
all existing equipment and installations, maintaining all safety
devices in perfect operating and adjustment conditions..................
1.10.1.The CONTRACTOR undertakes to keep and maintain PETROBRAS's materials and
equipment, aboard the UNIT, as well as all that are object of the
loading and unloading operations in the support vessels.................
1.11. Ancillary Services - in equal price, time limit and availability
conditions, the CONTRACTOR should give preference to the ancillary
services rendered by Brazilian companies, when they become necessary
for the rendering of the services object of this CONTRACT...............
<PAGE>
1.12. Lubricants - to preferably use lubricants of the make PETROBRAS
DISTRIBUIDORA-BR, submitting a justification in the event it uses
another make..........................................................
1.13. Wellhead inclination - the wellhead will not be installed with
inclinations exceeding 2(degree) (two degrees). If, by the Inspection's
decision, the well continues to be drilled with an inclination exceeding
that limit, the possible wear of the inner parts of the BOP, Lower
Marine Riser, Adapt Riser and spool, resulting therefrom, will be
PETROBRAS' responsibility.............................................
1.14. The CONTRACTOR should submit a description of its operating procedures
for the events of disconnection, formation testing, and BOP and choke
manifold testing......................................................
1.14.1. The procedures to be adopted will be discussed and approved by
PETROBRAS.............................................................
1.15. The Board Superintendents, Tool Pushers, and Drillers will be
required to have proven technical competence in the kick control,
attested by a training certificate from an entity recognized by
PETROBRAS.............................................................
1.16. The CONTRACTOR should carry out well shutoff training exercises every
week, on an occasion to be agreed upon with the Inspection, and
according to the rules in force in PETROBRAS. This operation should
be entered in the Driller's Log.......................................
1.16.1. The CONTRACTOR should submit a Safety Project for BOP, Choke Manifold
and in well shutoff training test, which will be approved by
PETROBRAS' Inspection.................................................
1.17. Drill Riser - the CONTRACTOR will maintain the drill riser inner
joints perfectly clean and free from debris and/or rust...............
1.17.1. The CONTRACTOR should perform the inner cleaning of all drill riser
joints, using the proper tool and compressed air, whenever the
operation following the riser string run is a completion and/or
workover operation....................................................
2. MUTUAL OBLIGATIONS
- - --------------------------------------------------------------------------------
ON ACCOUNT OF SUPPLIED BY
-----------------------------------
DESCRIPTION PET CONT PET CONT
- - --------------------------------------------------------------------------------
1. Cementing, logging, formation and/or
production tests, directional drilling,
perforating, wireline, nitrogen unit,
flexitube, etc. X Xand X
- - --------------------------------------------------------------------------------
2. Welding services necessary for drilling,
completion, well abandonment and
maintenance operations. X X
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
3. Technical supervision for manufacturing
and control of drilling fluid,
completion. X X
- - --------------------------------------------------------------------------------
4. CONTRACTOR's land support base
(office and storehouse). X X
- - --------------------------------------------------------------------------------
5. Handling and storage of materials
and equipment belonging to or
supplied by the CONTRACTOR on
land or in the UNIT. X X
- - --------------------------------------------------------------------------------
6. Handling and storage of materials
and equipment of PETROBRAS or
third parties, abroad the UNIT. X X
- - --------------------------------------------------------------------------------
7. Land transportation, cargo loading
and unloading of materials under
the CONTRACTOR's responsibility. X X
- - --------------------------------------------------------------------------------
8. Fishing, services. X X
- - --------------------------------------------------------------------------------
9. Cleaning and painting services
aboard the Unit, including those
of PETROBRAS' materials and
equipment installed in the Unit. X X
- - --------------------------------------------------------------------------------
10. Mess room, hostelry and meal
supply services:
- - - CONTRACTOR's personnel X X
- - - PETROBRAS' personnel (up to 900
meals a month) X X
- - - PETROBRAS' personnel (exceeding
900 meals a month) X X
- - --------------------------------------------------------------------------------
11. BOP and riser lines tests,
not programmed, carried out
with the Cementing Unit. X X
- - --------------------------------------------------------------------------------
12. Operations with special tools. X X
- - --------------------------------------------------------------------------------
13. Air or sea transportation of
the CONTRACTOR's equipment and
personnel in the area of operation. X X
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
14. Air or sea transportation of
the CONTRACTOR's personnel in
the area of operation, besides
those programmed for shift
changes and Supervision personnel. X Xor X
- - --------------------------------------------------------------------------------
15. Air or sea transportation programmed
but not used by the CONTRACTOR,
without prior notice to PETROBRAS. X X
- - --------------------------------------------------------------------------------
16. Air or sea transportation of the
CONTRACTOR's material and/or
personnel, in an emergency
character, due to the CONTRACTOR's
failure or lack of programming. X X
- - --------------------------------------------------------------------------------
17. All customs expenses, fees, including
agent services, licences, taxes or
similar charges regarding the import
or shipment to the Unit of all
equipment, spare parts and consumables
of the CONTRACTOR. X X
- - --------------------------------------------------------------------------------
18. All expenses, including those with
licences, taxes or similar charges
regarding the vessel's adaptation
and operation in accordance with
the Laws, Rules, Decrees,
Administrative Rules and
Instructions in force in Brazil. X X
- - --------------------------------------------------------------------------------
19. Services of submarine inspection,
measurement, intervention, etc.
with a remote operated submarine
vehicle. X X
- - --------------------------------------------------------------------------------
20. Services to interconnect the boom
lines with the burners. X X
- - --------------------------------------------------------------------------------
21. Special repair and recovery services
with qualified welding in equipments
and lines belonging to:
a) PETROBRAS X X
b) CONTRACTOR X X
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
22. Communication service via satellite:
- - - when used by PETROBRAS X X or X
- - - when used by the CONTRACTOR X X or X
- - --------------------------------------------------------------------------------
23. Maintenance of communication system
via satellite. X X or X
- - --------------------------------------------------------------------------------
24. Rental of Brasilsat satellite
signal X X or X
- - --------------------------------------------------------------------------------
25. Rental of satellite signal
for the DGPS X X
- - --------------------------------------------------------------------------------
26. Services in the Flares supplied
by the Contractor.
- - - Operation during production tests X X
- - - Maintenance and repairs X X
- - --------------------------------------------------------------------------------
27. Services for the Remote-Operation
Vehicle (ROV):
Installation, operation, maintenance
and removal of the ROV. X X
- - - Welding services and adaptation works
for the installation and withdrawal
of the vehicle, winch, command cabine,
warehouse and works X X
- - --------------------------------------------------------------------------------
(End of Attachment)...........................................................
ATTACHMENT V
LIST OF (MINIMUM) SPECIALIZED PERSONNEL
ABOARD
- - - Captain or Barge 1
- - - Tool Pusher (1 superintendent aboard) 2
- - - Driller 2
<PAGE>
- - - Assistant Driller 2
- - - Derrickman 2
- - - Roughneck 6
- - - Crane operator 2
- - - Area Man 8
- - - Welder 2
- - - Watchstander 2
- - - Subsea Engineer 1
- - - Mechanic 3
- - - Electrician 3
- - - Radio Operator (Portuguese speaker) 2
- - - Male nurse 1
- - - Storekeeper 1
- - - Safety guard 1
NOTE: Supplementary personnel will be supplied according to the
CONTRACTOR's conveniences and needs or to comply with the
requirements of government laws.......................................
<PAGE>
ATTACHMENT VI
ENVIRONMENTAL OPERATING CONDITIONS
(Permissible limits for environmental
conditions acting simultaneously)
- - --------------------------------------------------------------------------------
PITCH OR
HEAVE ROLL WIND WAVE CURRENT
OPERATION (FEET) (DEGREES) (MPH) (FEET) (KNOTS)
- - --------------------------------------------------------------------------------
Jetting/ driving 2,0 2,5 30 3,0 1,5
conductor 2,5 3,0 30 3,0 1,5
Drilling 2,5 3,0 30 3,0 1,5
Casing running 1,5 2,0 30 2,1 1,5
Casing hanger 1,5 1,5 19 2,1 1,0
setting 1,5 1,5 19 2,1 0,75
BOP running 3,5 3,0 44 8,5 1,5
BOP setting 7 4 51 10,5 1,0
Maneuvering 1,5 1,5 19 2,1 0,75
LMPR disconnection 3,5 4,0 44 8,5 1,5
LMPR connection 2,5 3,0 39 6,7 1,5
Formatiop testing 1,5 1,5 19 2,1 0,75
Operation with boats 1,5 1,5 19 2,1 0,75
Running the ANM
(lay-away) 2,0 3,0 30 5,0 1,5
Running the ANM
(without lines) 3,0 4,0 44 8,5 1,5
Operation with
flexitube 2,5 3,0 39 6,7 0,75
Operation with
wire-line
Operation with BAP
- - --------------------------------------------------------------------------------
<PAGE>
ATTACHMENT VII
PETROBRAS' SAFETY RULES
1. Service Rule No. 46/71:
o Safety Rules for Offshore Operations.
2. Service Rule No. 01/72:
o Operational Safety Rules - Continental Shelf.
3. Service Rule No. 41/72:
o Electricity - Safety Rules
4. Service Order No. 01/76:
o Industrial Safety Rules (general)
o Industrial Safety Rules (Drilling)
o Industrial Safety Rules (Production)
5. General Safety Manual:
o Safety and Environmental Instruction for Contractors (E&P - BC).
<PAGE>
ATTACHMENT VIII
EQUIPMENT TESTING PROGRAM
In order to carry out the UNIT's equipment testing in an easier and
more agile manner, the CONTRACTOR is to submit to PETROBRAS, as quickly as
required the following documents:.............................................
1. CERTIFICATES............................................................
a) Survey and Appraisal Report, updated and valid for the fiscal year
regarding the Unit offered, issued by one of the entities: ABS,
NOBLE & DENTON, DNV, LLOYDS or BUREAU VERITAS, and if the report is
issued abroad, it will be translated into Portuguese by a sworn
public translator and notarized in the Brazilian Consulate........
b) Classification or Class Confirmation Certificate for hull and
equipment, compatible with the proposal submitted (certified
copy);............................................................
c) Report on claims from the classification societies mentioned in
the Class Confirmation Certificate (in the event there are
claims);..........................................................
NOTE: PETROBRAS will evaluate the above mentioned documents and will mention
in what time limited eventual claims will be settled, and at PETROBRAS'
judgment, it can be at the time of the Unit's inspection or at
mobilization after the contract is signed...............................
d) Freeboard Certificate;............................................
e) IOOP (International Oil Pollution Prevention) Certificate;........
f) IMO-MUDU-CODE Certificate - Mobile Offshore Drilling Unit -
latest edition (unnecessary for Drill Ship);......................
g) Cargo Ship Safety Equipment Certificate;..........................
h) Cargo Ship Safety Construction Equipment;.........................
NOTE: All documents required are to be within their period of validity........
2. INDUSTRIAL SAFETY AND ENVIRONMENTAL CONTROL.............................
- Manuals and emergency plans in the Portuguese Language............
3. STORAGE CAPACITY........................................................
- Complete floor plan of bulk movement system, specifying:..........
a) Exclusive lines to move cement;...................................
<PAGE>
b) Exclusive lines to move bentonite and baritine;...................
c) Location and type of bulk line valves and their respective
driving systems;..................................................
d) Pneumatic lines for cleaning and clearing bulk lines;.............
e) Location of the manometers;.......................................
f) Quantity, flow, operating pressure and location of the air drying
unit(s);..........................................................
h) Schmematic drawing of each silo with their respective
aeration systems and points of connection with the bulk lines.....
4. FLUID CIRCULATION AND PROCESSING SYSTEM
- Sketch of the system emphasizing pulsation dampers (suction and
tamping), safety valves, feed pumps, position of the suction lines
in relation to the suction sieves' tanks and filters..............
- Floor plan of the drilling fluid feed and discharge lines showing
the flexibility in relation to the sand traps and mud tanks.......
- Floor plan of the degasser installation showing the active tank,
separate processed mud and gas discharge lines, emphasizing the
connection point of this line with the gas discharge line.........
- Floor plan of the mud tanks system, emphasizing the supply lines,
guns lines, mixture funnel and centrifugal pumps interconnection
lines.............................................................
5. WELLHEAD SAFETY EQUIPMENT SYSTEM........................................
- Sketch of the BOP/LMRP, specifying lines, valves and
measures/dimensions...............................................
- Floor plan of the kill and choke lines from the BOP to the choke
manifold, specifying valves, connections, dampener chambers,
anchorage points and interconnection with the other systems.......
- Floor plan of the atmospheric air separator.......................
- Layout of the trip tank installation, giving the following
information:......................................................
a) Capacity;...................................................
b) Location;...................................................
c) Sensitivity;................................................
d) Measuring system;...........................................
e) Scale type;.................................................
<PAGE>
f) Driller's scale visualization conditions;...................
g) Supply System for the above item............................
- Floor plan of the stand pipe manifold, specifying lines, valves,
manometers and interconnections with the other systems............
- Inspection report on the riser, riser handling tools and
connectors, telescopic joint and flexible joint, according to the
API RP 2P and RP 2Q standards, with update date not exceeding 1
year..............................................................
NOTE: If the reports indicate the need of repair in some equipment, the
service performance certificates will also be submitted.................
- Biannual inspection certificate of the choke manifold, with the
manufacturer's approval...........................................
- Biannual inspection certificate of the BOP unit and driving
system, with the manufacturer's approval..........................
- Biannual inspection certificate of the BOP, with the
manufacturer's approval...........................................
- Proof of technical hability of the well drilling and control
personnel.........................................................
- To supply an internal rusting maintenance and prevention plan for
the marine risers and kill and choke lines........................
6. ENERGY GENERATION SYSTEM................................................
- Unifilar diagram of the energy generation and distribution system.
7. STABILITY...............................................................
- To submit the vessel's stability curve, updated in the proposal's
conditions, in keeping with the environmental conditions..........
8. DYNAMIC POSITIONING SYSTEM (including the monogenerators assembly,
thrusters and propellers)...............................................
- Schematic diagram of the dynamic positioning system...............
- To submit the inspection and tests procedures to be carried out
at every new location.............................................
- To submit the tests and inspections procedures to be carried out
at the end of each contract year..................................
9. DRILLING STRING AND ACCESSORIES.........................................
<PAGE>
- Inspection report on all equipment of the drilling and completion
strings, subs and accessories (used equipment)....................
- Purchase voucher of the drill and completion strings, subs and
accessories (for new equipment)...................................
10. FISHING TOOLS AND ACCESSORIES...........................................
- Inspection report on all components of the fishing tools (used
equipment) or purchaser voucher (for new tools)...................
11. SUNDRY SYSTEMS..........................................................
- Winches load test certificate.....................................
- Description of the compressed air system, emphasizing
compressors, layout of lines, valves and interconnection with the
other systems.....................................................
- Preventive Maintenance Plans with their respective timecharts.....
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D of the chartering and service rendering
contracts.........................................................
NOTE: Such equipment must be in places of easy access for inspection..........
A) RECEIPT TEST............................................................
- Proof will be needed for the existence on board and for the
operating capacity of all equipment and accessories listed in
Attachments C and D of the chartering and service rendering
contracts.
NOTE: Such equipment must be in places of easy access for inspection..........
- The following systems, equipment and tools listed below will be
checked, inspected and tested:....................................
1) DRILL STRING, COMPONENTS AND ACCESSORIES..........................
- The CONTRACTOR will submit recent inspection reports,
according to the specification API RP7G for the whole drill
string and accessories such as, but not limited to: drill
pipes, drill collars, HW, Subs, stabilizers, reamers,
bumper subs, lift-sub, kelly, slips, elevators, fishing
tools, etc., which proves the good conditions of the string
and its accessories. The information from the reports and
the general conditions of the string and
<PAGE>
its accessories will be checked by PETROBRAS by means of a
sampling inspection. In the event of discrepancy between the
data submitted by the CONTRACTOR and those checked by
PETROBRAS, showing an inadequate condition of the string and
its accessories, the CONTRACTOR will carry out another
inspection, for its own account.............................
NOTE 1: Any equipment refused by the inspection will be immediately repaired
or replaced by the CONTRACTOR, for its own account...................
NOTE 2: For the string, components and new accessories, no inspection report
will be required, documents proving that such equipment is new will
be sufficient........................................................
NOTE 3: The CONTRACTOR's equipment will be stored and arranged so as to
facilitate the inspection by sampling to be carried out by PETROBRAS.
- The same procedure will be adoted for the telescopic joints and
flexible joints...................................................
2) EXTRACTOR OF SOLIDS...............................................
The following will be examined:...................................
- sieves,.....................................................
- dessander,..................................................
- degasser - test suction and discharge.......................
- centrifuge (if any).........................................
The operation and work pressure, as well as the existence of
manometers, will be checked.......................................
3) MUD TANKS AND VALVES
Waterproofness, working of the agitators, mixture funnel and
depth gun, besides the existence of fixed marks to control the
tanks volume will be checked......................................
4) CENTRIFUGAL PUMPS.................................................
The following will be checked:....................................
- working, vibration and noises;..............................
- Packing (leaks);............................................
- Work pressures..............................................
NOTE: Items 3 and 4 will be tested with sea water............................
5) MUD LABORATORY AND TEST EQUIPMENT.................................
<PAGE>
The existence on board and the adequacy to the requirements
described in Attachments C and D to this Contract will be checked.
6) DRILLING DERRICK..................................................
Maintenance conditions (corrosion), fastening system and the
conditions of the travelling block rails will be examined.........
7) CROWN BLOCK.......................................................
The pulleys will be examined as to the profile wear, alignment,
clearance, buckling of the axles, lubrication, etc................
8) MUD PUMPS.........................................................
The following will be carried out:................................
- observation of working, vibrations, noises;.................
- pressure and maximum work flows tests for the liner used;...
- safety valve working test;..................................
- checking of the suction and discharge pulsation dampeners;..
- watertightness tests with nominal pressure of the mud pumps
and of all manifold valves;.................................
- watertightness tests with nominal pressure of all manifold
valves of the stand pipe manifold and of the kelly hose;....
- random disassembling of the suction for visual inspection
of the piston, sleeve, packing, valve and seat..............
9) SWIVEL............................................................
The mandril, gooseneck, body, etc. will be checked and nominal
pressure test with rotation will be performed.....................
10) MOTION COMPENSATOR................................................
The piston alignment, lock bar, alignment in the rail, general
conditions, leaks and chains will be checked......................
11) RISER AND GUIDE LINE TENSIONERS...................................
The general conditions, leaks, pulleys and cables will be
inspected.........................................................
12) RISER RECOIL SYSTEM/HANG OFF SYSTEM/FILL-UP SYSTEM VALVE (IF ANY).
<PAGE>
The systems' operation will be checked.
13) HIGH COMPRESSORS AND AIR RESERVOIRS...............................
The general conditions, leaks, lines and system yield will be
checked...........................................................
14) TOP DRIVE.........................................................
Working tests (connection and disconnection of one or more
sections of the DP's) will be carried out and the general
conditions will be inspected......................................
15) KELLY SPINNER.....................................................
The general conditions, specially the rollers' wear, and working
will be checked, and connection and disconnection operation of
one or more DP's will be carried out..............................
16) HOOK..............................................................
The general conditions and the locking system will be checked.....
17) TRAVELLING BLOCK..................................................
The pulleys wear, axles alignment, lubrication system, retraction
system, etc., will be inspected...................................
18) DRAWWORKS.........................................................
- The operation of the mechanical break system (brake bands),
electromagnetic (distance between irons, voltage level and
SCR feeder conditions), cooling system and clutches will be
checked.....................................................
- The operation of the cat-heads and height imitator with the
assembly/disassembly of one or more command sections, will
be checked..................................................
19) ROTARY TABLE......................................................
The operation in high and low, brake system, tachometer and
lubrication system will be checked................................
20) TRIP TANK.........................................................
Capacity, installation site, sensitivity of the level indicator
system, visualization condition and supply system will be
inspected.........................................................
21) HYDRAULIC TONGS AND PNEUMATIC SPIDER FOR CASING AND PNEUMATIC
TONGS FOR DRILL PIPES.............................................
- Operation tests will be made and maintenance conditions
will be checked.............................................
<PAGE>
- The existence of an alignment guide for the sand-line cable
in the drum will be checked.................................
22) SAND-LINE OR WIRE-LINE SYSTEM.....................................
- Operation of the clutches and brake will be tested by lowering
the photoclinometer inside the drill string coinciding with the
photoclinometer overshot test (TOTCO) will be tested. Test to be
made on location before the beginning of the operations...........
23) CHOKE MANIFOLD....................................................
All valves with low pressure (300 psi) and in high pressure
(system's work pressure). Manometers, hydraulic choke operation,
manual choke, remote control panel, etc. will be tested...........
24) UPPER AND LOWER KELLY COCK, INSIDE BOP AND SAFETY VALVE...........
- Drivers will be tested and work pressure tests will be made.
- The end connections of each element will be checked and
tested with work pressure. The CONTRACTOR should have end
seal plugs adequate for the test............................
25) KILL AND CHOKE LINES HOSES........................................
The end connections will be checked and tested with the system's
work pressure. The CONTRACTOR should have end seal plugs
adequate for the test.............................................
26) DRILL INSTRUMENTATION SYSTEM......................................
The following will be tested:.....................................
- geolograph;.................................................
- rotary table tachometer;....................................
- manometers;.................................................
- stroke counter;.............................................
- level control in the mud tanks;.............................
- torque indicator............................................
27) FLARE PIPE AND BOOMS
<PAGE>
Their existence on board will be checked, analysing the
maintenance conditions of the lines by means of inspection, and
the facilities for installation of the production test equipment
system............................................................
28) BOP SYSTEM........................................................
The following will be carried out:................................
- pressure tests of the slide valves with low pressure and
high pressure, compatible with the system...................
- pressure tests of the annulars with low pressure and high
pressure, compatible with the system........................
- complete function test in both POD's, through all panels....
- choke and kill valves tested with low pressure and high
pressure, compatible with the system........................
- working of the shear ram valve will be checked with opening
for examination of the blades conditions....................
- the opening and closing of all ram, annular a kill and
choke valves chambers will be tested........................
- the hydraulic driving unit will be checked as to: fluid
used, fluid low level alarm, low air pressure and low
accumulators pressure, maintenance conditions, leaks and
mixing systems..............................................
- the volumetric capacity of accumulators and the capacity of
electric and pneumatic pumps of the hydraulic unit will be
tested......................................................
- the locking system of the ram valve(s) will be tested.......
- the SPM valves conditions will be checked by opening and
inspecting one of them, chosen at random....................
- the locking/unlocking system of the H-4 hydraulic
connectors will be tested...................................
- the surface and bottom accumulators' pre-charge will be
checked.....................................................
- the operation of the following systems will be tested:......
o driving back-up.......................................
o emergency recovery....................................
<PAGE>
o handling..............................................
29) TRAVELLING TONGS, EZY-TORQ, TORQUE SENSOR, SLIPS, ETC.............
One or more sections of the drill collars and drill pipes will be
assembled/disassembled to check the working of such equipment.
The general maintenance conditions, chuck jaws and cables will be
checked...........................................................
30) BULK TRANSFER SYSTEM..............................................
The following will be carried out:................................
- the operation of the compressor will be checked, and
noises, oil and air leaks, and maintenance state, filters
and dehumidifier will be inspected..........................
- operation and watertightness of valves, lines and silos
will be checked, looking for possible clogging..............
- transfer of cement from 1 silo to the daily silo (if any)
and from this to the surge-tank will be made................
31) EMERGENCY ENERGY GENERATION SYSTEM
- a black-out in the energy system generation system will be
simulated to see if the emergency generator is
automatically turned on.....................................
32) MAIN MOTOR-GENERATORS ASSEMBLY....................................
The following will be carried out:
- vibration, noises, insulation, leaks, maintenance, etc.,
will be checked.............................................
- generators input and output in the bus bar, synchronism and
load divisions will be tested...............................
- load and voltage and frequency regulation will be tested....
33) DESSALTER
Operation and production capacity will be checked.................
34) CAT-LINES CRANES..................................................
The following will be carried out:
- operation of the winches and maintenance of the cabled will
be checked..................................................
- the elevation and rotation system, the operation of flying
boom and pulley block and the operation of the boom height
pawl will be checked........................................
<PAGE>
- the report of the last inspection carried out by the Unit's
classification society in the winches will be examined......
35) DEJECTA TREATMENT UNIT............................................
Its operation will be inspected...................................
36) TELECOMMUNICATION SYSTEM..........................................
Operational tests will be made in all radio equipment existing on
board, including radio-beacon.....................................
37) OVERHEAD TRAVELLING CRANE.........................................
Their operation, and the maintenance conditions of cables and
sliders will be examined..........................................
38) DC/SCR MOTORS.....................................................
The maintenance conditions and insulation, as well as the
collectors and brushes will be examined...........................
- SCR functional test.........................................
39) DIVERTER..........................................................
The following will be tested:.....................................
- flow line wing valves;......................................
- diverters and inset packer lock;............................
- the control panel will be checked...........................
40) SAFETY EQUIPMENT..................................................
SALVAGE...........................................................
Fireproof rigid vessels (capsules, whalers):......................
- lowering, motor, fuels, sprinklers, start;..................
- rations, garnishing, hatches, cleaning, fire extinguishers,
signaling equipment.........................................
Inflatable rafts:.................................................
- quantity, capacity, location, height in relation to the sea;
- validity of the last inspection, means of access to the sea;
- conditions of the cocoon....................................
Jackets:..........................................................
<PAGE>
- quantity (sufficiency), location, protection, and
maintenance.................................................
Life-buoys:.......................................................
- quantity (sufficiency), location, heaving-lines, lanterns,
smudge pots.................................................
Escape routes:....................................................
- vertical and horizontal signaling (indicative plates);......
- clearing, lighting (emergency)..............................
WATER SUPPLY SYSTEM FOR FIRE FIGHTING.............................
Fire ring:........................................................
- water system for the platform;..............................
- sprinklers system;..........................................
- painting, corrosion, signaling, visual conditions;..........
- valves, hydrants, guns......................................
Fire pumps:.......................................................
- operation;..................................................
- motor, fuel, start, panel, tests............................
FIRE FIGHTING FIXED SYSTEMS.......................................
- Foam system: chambers, tanks, guns, hydrants and carrier
liquid.
- Cylinders; conditions, reloading, retesting (CO2 or HALON,
if any).
- Lines and diffusers: general conditions....................
- Automatic: feeding, panels, batteries, detectors, tests....
- Manual: commands, interconnections, tests..................
- Alarms: interconnections...................................
FIRE EXTINGUISHERS................................................
- water, carbon dioxide, chemical powder (portable and carts);
- distribution, location, general conditions;.................
- revision, recharge, retest, control, meters, replacement....
FIRE POSTS........................................................
- hose, keys, sprinkler;......................................
- fiber boxes, general conditions, post identifications.......
- visual signaling: sufficiency and general conditions.......
<PAGE>
EMERGENCY EQUIPMENT...............................................
- autonomous breathing apparatus, reserve bottles, breathable
air fixed system, fire proximity clothing, lantern, ax,
safety belt;................................................
- distribution, location, general conditions, inventory,
maintenance and replacement.................................
COMMUNICATIONS AND ALARMS.........................................
- telephone (internal, external): Operating capacity;........
- radiophony: VHF. Operating capacity;......................
- portable transceptors: quantity; distribution, intrinsic
safety;.....................................................
- intercom: quantity, distribution, and horns audibility,
interconnection with the platform, coding of sound alarm
tones, amplifiers;..........................................
- visual signaling: sufficiency, general conditions;.........
- fire alarm, glass breaking type: batteries, bells, tests...
EMERGENCY LIGHTING................................................
- charger, batteries and lanterns.............................
HELIPOINT.........................................................
- protection: guns, fire extinguishers, salvage equipment;...
- painting, protection screen, net, landing lights, safety
warnings;...................................................
- guest welcoming practices...................................
LOAD LIFTING......................................................
- winches: general conditions, operation, signaling,
maintenance;................................................
- manual and electric tackles: general conditions, operation,
signaling, maintenance;.....................................
- material movement and storage areas.........................
TRAINING..........................................................
- abandonment, fire fighting, first aid and brigade...........
MANUALS AND PLANS.................................................
- emergency; safety;..........................................
- disclosure, knowledge;......................................
<PAGE>
- tasks schedules for emergency and abandonment situations,
including in Portuguese.....................................
ORDER AND CLEANLINESS.............................................
- installation's general aspect;..............................
- particularly alarming places................................
SMOKE, HEAT AND GAS DETECTION SYSTEM..............................
- test of hydrocarbons detection sensors......................
BALLAST AND SEWER SYSTEM..........................................
- functional test.............................................
41) ANCHORING SYSTEM..................................................
42) DYNAMIC POSITIONING SYSTEM........................................
43) PROPULSION SYSTEM.................................................
B) LOCATION MOVING TEST....................................................
To be defined between the CONTRACTOR and PETROBRAS......................
C) BEGINNING OF CONTRACT YEAR TEST.........................................
To be defined between the CONTRACTOR and PETROBRAS......................
ATTACHMENT IX
PROCEDURES IN THE EVENT OF FATAL ACCIDENTS
1. If, during the period of validity of the CONTRACT, a fatal accident
occurs with a CONTRACTOR's employee, the CONTRACTOR should:.............
1.1. Notify the Inspection immediately, for the proper measures;.............
1.2. Take measures so that the employee's relatives be notified with the
utmost urgency on the event, giving them the social support due;........
1.3. Formally establish an Investigation Commission, within 48 hours after
the accident, in order to, in the maximum time limit of 15 days,
identify the causes and recommend the measures deemed necessary to
prevent similar accidents...............................................
2. The report should contain, at least, the following information regarding
the accident:
- description;......................................................
- exact location;...................................................
- data regarding the injured persons;...............................
- basic and immediate causes;.......................................
<PAGE>
- measures to be taken in order to prevent its repetition...........
3. The CONTRACTOR should guarantee the Commission enough authority and
autonomy to carry out the investigations without any restrictions.......
4. A PETROBRAS' employee should participate in the Commission, appointed by
the authority in charge of the operational office.......................
5. After conclusion of the Commission's work, it will also behoove the
CONTRACTOR, at the Inspection's request, to disclose the results of the
report, so as to convey the experience from the accident to other
contractor companies....................................................
. ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ . ~ .
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on September 18,
1997 in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
------------------------
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.14(A)
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese Language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 2667/98
(On paper with letterhead of PETROBRAS.)
RIDER No. 1 TO CONTRACT 101.2.064.97-0 ENTERED INTO BETWEEN PETROLEO
BRASILEIRO S/A AND THE COMPANY MARITIMA PETROLEO E ENGENHARIA LTDA.
PETROLEO BRASILEIRO S.A. PETROBRAS.- a mixed economy company, with head office
at Av. Republica do Chile 65, in the City of Rio de Janeiro, State Of Rio de
Janeiro, Federative Republic of Brazil, enrolled in the General Taxpayers
Registry of the Ministry of Finance under No. 33.000.167/0001-01, henceforth
called PETROBRAS, represented herein by the Executive Superintendent of
Exploration and Production South-Southeast, Luiz Eduardo G. Carneiro, and the
Company MARITIMA PETROLEO E ENGENHARIA LTDA., successor of MARITIMA NAVEGACAO E
ENGENHARIA LTDA., with head office at Av. Almirante Barroso, 52, Group 3400,
City of Rio de Janeiro, Federative Republic of Brazil, enrolled in the General
Taxpayers Registry of the Ministry of Finance under No. 46.828.596/0001/13,
henceforth called the CONTRACTOR, represented herein by its President, German
Efromovich, have agreed to add a rider to contract 101.2.064.97-0, according to
the following, clauses and conditions:
<PAGE>
FIRST CLAUSE - OBJECT
1. The present Rider has as its object:
1.1. To change the corporate name of the CONTRACTOR from MARITIMA NAVEGACAO E
ENGENHARIA LTDA. to MARITIMA PETROLEO E ENGENHARIA LTDA.
1.2. To include as INTERVENIENT PARTY, to the present contract, the company
PETRODRILL FOUR LTD., with head office in Omar Hodge Building, Wickhams Cay,
Road Town, Tortola, Ilhas Virgens Britanicas, represented by its Director GERMAN
EFROMOVICH.
1.3. To change the redaction of items 3.12. 1. and 3.21.2, of the THIRD CLAUSE
- - -- CONTRACTOR'S RESPONSIBILITIES.
1.4. To change the redaction of item 16.1 of the SIXTEENTH CLAUSE -
INTERVENIENCE.
SECOND CLAUSE - CONTRACTOR'S OBLIGATIONS.
2.1. The Redaction of items 3.12.1 and 3.21.2. is changed to:
3.12.1. "The minimum value of the civil liability insurance is of
US$1,000,000.00 (one million dollars), per occurrence, during the period of
validity of this CONTRACT and its eventual extension, which amount is to be
converted into Brazilian currency on the date of signature of this instrument.
The INTERVENIENT PARTY is to appear as co-insured in this insurance policy.
3.21.2. "Exception is made to cases arising from kick, blow-out, surge or
formation testing, in which the CONTRACTOR will be kept free and safe from, in
the other cases of spillage of oil and other residues in the sea, the CONTRACTOR
and the INTERVENIENT PARTY will be jointly liable, up to the limit of
US$500,000.00 (five hundred thousand dollars), per event and its developments.
<PAGE>
THIRD CLAUSE - INTERVENIENCE.
3.1. The redaction of item 16.1 is changed to:
16.1. "THE INTERVENIENT PARTY SIGNS THE PRESENT CONTRACT, TOGETHER WITH THE
CONTRACTOR, BEING JOINTLY LIABLE WITH IT FOR ALL OBLIGATIONS ARISING
FROM THE PRESENT CONTRACT AND ITS EXECUTION, INCLUDING FOR LOSSES.
FOURTH CLAUSE - RATIFICATION.
4.1. The parties ratify the other conditions of the CONTRACT that were not
changed by the present instrument.
And being thus agreed, the parties sign the present Rider in 2 (two) copies
of the same tenor and fashion, together with the witnesses below.
Rio de Janeiro, August 21, 1998.
(Signed:) (Illegible) - Luiz Eduardo G. Carneiro.
Executive Superintendent of Exploration and Production South-Southeast.
PETROBRAS - PETROLEO BRASILEIRO S.A.
(Signed:) (Illegible) - German Efromovich.
President - MARITIMA PETROLEO E ENGENHARIA LTDA.
(Signed:) (Illegible) - German Efromovich.
Director - PETRODRILL FOUR LTD.
WITNESSES:
(Signed:) Elaine Brabo - Name: ELAINE BRABO.
(Signed:) Andre de Mesquita Pinto - Name: ANDRE DE MESQUITA PINTO.
- - --------------------------------------------------------------------------------
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on November 26, 1998
in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
------------------------
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.15
I, the undersigned, Sworn Public Translator and Commercial Interpreter in and
for this City and State of Rio de Janeiro, Federative Republic of Brazil,
registered at the Commercial Board of Rio de Janeiro under Number 97, do hereby
CERTIFY and ATTEST that a document in the Portuguese language was submitted to
me for translation into English, which I performed according to my Office, as
follows:
Translation No. 3999/98
(Xerox copy submitted for translation.).........................................
(On paper with letterhead of Petroleo Brasileiro S.A. - PETROBRAS.).............
LETTER OF AGREEMENT
PETROLEO BRASILEIRO S.A. - PETROBRAS, a mixed economy company, organized
and existing under Law No. 2.004, dated 10/03/53, with head office at Av.
Republica do Chile, 65, City of Rio de Janeiro, State of Rio de Janeiro,
Federative Republic of Brazil enrolled in the General Taxpayers' Registry of the
Ministry of Finance under No. 33.000.167/0001-01, represented herein by the
Executive Superintendent of Exploration and Production South and Southeast,
Engineer LUIA EDUARDO G. CARNEIRO, henceforth called PETROBRAS, and the Company
MARITIMA NAVEGACAO E ENGENHARIA LTDA., with head office at Avenida Almirante
Barroso, no. 42, 34th floor, City of Rio de Janeiro, State of Rio de Janeiro,
Federative Republic of Brazil, enrolled in the General Taxpayers' Registry of
the Ministry of Finance under No. 46.828.596/0001-13, represented herein by its
President, Mr. GERMAN EFROMOVICH, have agreed upon the present Letter of
Agreement regarding contracts 101.2.063.97-2 (Chartering) and 101.2.064.97-2
(Rendering of Services) for the Unit Amethyst 4, henceforth called the Unit, as
follows:........................................................................
Item New Redaction
1.1. Chartering The object of the present CONTRACT is the chartering to
PETROBRAS, of the Unit, which, according to the CONTRACTOR,
is to be built in a shipyard for the purpose of fulfilling
this contract, in order to be used in the drilling and/or
completion and/or workover of oil and/or gas (vertical,
directional and horizontal) wells, in the Brazilian
continental shelf, down to a maximum depth of 5,000 (five
thousand) meters, in a water depth down to 1,000 (one
thousand) meters.............................................
<PAGE>
3.17.- (Serv.) To submit to the contract Manager, up to 30 days after its
inception, as foreseen in item 2.2.1, the originals or
certified copies of the insurance policies made as a result
of this contract, containing all essencial data, such as
insurers, time limits, period of validity, amounts insured,
and coverage conditions, and with PETROBRAS appearing as
co-insured, except in the civil liability insurance, of which
it will participate as a third party.........................
3.19.- (Chart) To submit to the Manager of this contract, up to 30
(thirty) days after the beginning of the performance, as
foreseen in item 2.2.1, the originals or certified copies of
the certificates of the insurances made as a result of this
contract, containing all essential data, such as insurers,
time limits, periods of validity, amounts insured, and
coverage conditions, and with PETROBRAS appearing as
co-insured, except in the civil liability insurance, of which
it will participate as a third party.........................
7.7 (Chart) The CONTRACTOR agrees that, at PETROBRAS' exclusive option,
the payments referring to the chartering object of the
present contract can be made through financing by third
parties, provided the time limits, currency, amounts and
place of payment set forth in the contract are complied
with.........................................................
12.5- (Chart.) In the present contract, it will
13.5- (Serv.) be considered as act of God the situation in which one of the
parties is prevented form fulfilling its obligations,
provided it proves that:.....................................
o the non-fulfillment of the obligation was due to the
existence of an impediment beyond its control;...............
o the party impeded could not, within its ability, overcome the
impediment and its effects, in order to fulfill its contract
obligation within the time limit set down, and...............
As an illustration of act of God or force majeure, one may mention
wars, strikes, submarine earthquakes, among other facts, which
effects were not possible to avoid or prevent......................
AND BEING THUS AGREED, the parties sign the present Letter of Agreement,
in 2 (two) copies with the same tenor, with the witnesses
below...................................................................
<PAGE>
Rio de Janeiro December 5, 1997.................................................
PETROLEO BRASILEIRO S/A - PETROBRAS.............................................
(SIGNED:) LUIZ EDUARDO G. CARNEIRO..............................................
Luiz Eduardo G. Carneiro - Executive Superintendent of Exploration and
Production South - Southeast....................................................
MARITIMA NAVEGACAO E ENGENHARIA LTDA............................................
(SIGNED:) GERMAN EFROMOVICH.....................................................
German Efromovich - President...................................................
WITNESSES: .....................................................................
Claudio Fontes Nunes............................................................
(SIGNED:) HAMYLTON P. PADILHA JR. ..............................................
Hamylton P. Padilha Jr. ........................................................
(Three initials appeared on the first page of the document.)...............
THESE BEING the precise terms and content of the aforementioned document, I
hereby set my Hand and Seal on this Translation, performed on the 6th of January
1998 in this City of Rio de Janeiro, Federative Republic of Brazil.
/s/ MARCIA BARBOSA SERRA
------------------------
Marcia Barbosa Serra
Sworn Public Translator
EXHIBIT 10.16
BR PETROLEO BRASILEIRO B.A.
PETROBRAS
E&P/SUEX-SSE-048-98 Rio de Janeiro, 28 May 1998
MARITIMA - PETROLEO E ENGENHARIA LTDA.
Av. Almirante Barroso, 52 - Gr. 3400
Centro - Rio de Janeiro - RJ
Ref.: Amethyst-class rigs - Charter and Service Contracts
Dear Sirs,
We refer to the six charter contracts (the "Charter Contracts") and the
six service rendering contracts (the "Service Contracts") between yourselves and
ourselves regarding six Amethyst-class semi-submersible drilling rigs (each, a
"Rig").
Notwithstanding the information which has come to our attention in
connection with the financing of the Rigs, that the period allocated under the
Charter Contracts and the Service Contracts for the construction of the Rigs
will need to be extended, we inform you that, due to legal reasons, no extension
in such period shall be acceptable. Thus, in case of delay in the arrival of one
Rig, the fines established in the Contracts shall be applied.
According to the contractual terms, these fines, set in Articles Eight
(Charter Contract) and Nine (Service Contract), are payable in the beginning of
the Contracts. However, in order to reduce their impact, it has been a policy of
this Superintendency to negociate with CONTRACTOR other forms of payments, such
as an agreed installment plan, as well as the discount of the fines from the
back end of the Contract. We also confirm we do not see any reason for not to
apply the same rules in the Contracts under reference, after the approval of
PETROBRAS' Board of Directors.
Regarding our rights to terminate a Charter Contract or a Service
Contract, we hereby agree that we will exercise such rights only if there is a
delay in the arrival of the Rig subject to the Charter Contract or Service
Contract or the beginning of the fulfillment of such contract for more than 540
days, and we further agree not to exercise such right at that time, if
contractor can demonstrate to PETROBRAS that it is using its best endeavors to
deliver the rigs.
In addition, we would like to take this opportunity to clarify that
certain sections of these Contracts providing for the termination of a Charter
Contract or Service Contract in the event of the non-fulfillment, or irregular
fulfillment of the contract clauses, specifications, operations or time limits,
as well as the repeated commitment of faults in the fulfillment of such contract
are to be interpreted given other provisions of these Contracts providing for
notice of non-compliance and the imposition of fines and penalties.
Specifically, we hereby confirm our understanding that prior to terminating a
Charter Contract or Service Contract for a non-fulfillment, irregular
fulfillment or repeated faults, we will notify you such non-compliance and
follow the procedures for the impositions of fines provided in such Contracts.
<PAGE>
In accordance with Articles Thirteen (Charter Contract) and Fourteen
(Service Contract) - "ASSIGNMENT" - we hereby confirm that, at any time,
CONTRACTOR may assign the Contracts upon prior written authorization from
PETROBRAS.
Specifically for the Service Contract, once CONTRACTOR is notified about
PETROBRAS intention to terminate the Contracts, based on the conditions
established therein, CONTRACTOR shall have the right to assign the instrument to
a company registered to do similar business with PETROBRAS to fulfill all the
requirements for qualification set forth in the edict which originated the
Contracts.
Very truly yours,
/s/ LUIZ EDUARDO G. CARNEIRO
LUIZ EDUARDO G. CARNEIRO
Executive Superintendent
of Exploration and Production South-Southeast
PETROLEO BRASILEIRO S.A. - PETROBRAS
Agreed as of the date first above written:
MARITIMA PETROLEO E ENGENHARIA LTDA.
EXHIBIT 10.17
HULL NO 3015
CONTRACT
FOR CONSTRUCTION AND SALE OF A
DYNAMIC POSITIONED SEMI-SUBMERSIBLE
DRILLING VESSEL
BETWEEN
DAEWOO CORPORATION &
DAEWOO HEAVY INDUSTRIES LTD
AND
PETRODRILL CONSTRUCTION INC.
1
<PAGE>
INDEX
PAGE
DEFINITIONS
1. PURPOSE OF THIS CONTRACT
2. DESIGN: PRINCIPAL DIMENSIONS AND CHARACTERISTICS:
CLASSIFICATION: MANDATORY REGULATIONS: REGISTRATION
3. CONTRACT PRICE
4. PAYMENT SCHEDULE
5. APPROVAL OF PLANS: SUBCONTRACTING
6. VARIABLE LOAD CAPACITY
7. MODIFICATIONS AND ALTERATIONS
8. INSPECTION
9. PLANNED PROGRAMME, PROGRESS CONTROL AND REPORTING
10. TITLE
11. RISK AND INSURANCE
12. LOSS OR DAMAGE TO THE VESSEL
13. TRIALS: TECHNICAL ACCEPTANCE
14. DELIVERY OF THE VESSEL
15. EXTENSION OF TIME FOR DELIVERY: PERMISSIBLE DELAY
16. DELAY IN DELIVERY
17. DEFECTS AND BUILDER'S GUARANTEE
18. DEFAULT BY THE PURCHASER
19. DEFAULT BY THE BUILDER
20. PATENT INDEMNITY
21. NOT USED
22. TAXES AND DUTIES
23. ASSIGNMENT
24. PRIORITY OF DOCUMENTS
2
<PAGE>
25. NOTICES
26. RECORDS AND AUDITS
27. LAW
28. DISPUTES
29. MISCELLANEOUS
30. SPARE PARTS
31. SAFETY AND HEALTH STANDARDS
32. EFFECTIVENESS
APPENDICES
APPENDIX I LIST OF PRINCIPAL DRAWINGS AND OTHER CONTRACT DOCUMENTS
APPENDIX II PLANNED PROGRAMME
APPENDIX IIA LISTED ITEMS
APPENDIX III FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
APPENDIX IV FORM OF REFUND GUARANTEE
APPENDIX V FORM OF STAGE CERTIFICATE
APPENDIX VI SCHEDULE OF LABOUR COSTS FOR MODIFICATIONS
APPENDIX VII LIST OF CERTIFICATES TO BE SUPPLIED ON DELIVERY OF THE VESSEL
APPENDIX VIII MAKERS LIST
3
<PAGE>
CONTRACT
FOR CONSTRUCTION AND SALE OF A DYNAMIC POSITIONED
SEMI-SUBMERSIBLE DRILLING VESSEL
This CONTRACT made this 9th day of April 1998, by and between:-
DAEWOO CORPORATION & DAEWOO HEAVY INDUSTRIES LTD both corporations organised
under the laws of Republic of Korea (hereinafter jointly and severally called
"Builder"), both having their principal offices at 541, 5-GA, Namdaemunro,
Jung-Gu, Seoul, Korea,
and
PETRODRILL CONSTRUCTION INC a corporation organised under the laws of Bahamas
(hereinafter called "Purchaser"), having its principal office at:
Suite 205, Saffrey Square PO Box N8188, Nassau, Bahamas
WITNESSETH THAT THE PARTIES HAVE AGREED AS FOLLOWS:-
DEFINITIONS
In this Contract the following expressions shall have the meanings hereby
assigned to them:-
"Banking Day" means any day on which banks in each of London, New York and
Seoul are open for the transaction of normal banking business;
"Basic Design" means the drawings as detailed in section 99000 Appendix to
the Specification.
"Classification Society" means Lloyds Register of Shipping;
"Classification Surveyor" shall mean any surveyor appointed by the
Classification Society to supervise the Vessel's construction;
"Contract Price" means the price stated in Clause 3.1;
"Contractual Delivery Date" means the date referred to in Clause 14.1 as
the same may from time to time be extended in accordance with the
provisions of this Contract;
"Contract Documents" means the Specifications, the Principal Drawings and
the other documents listed in Appendix I;
"Delivery" means the delivery by the Builder, and acceptance by the
Purchaser, of the Vessel pursuant to Clause 14.2;
"LIBOR" means the interest rate per annum which Citibank, London is
offering to prime banks in the London Interbank market for deposits in
United States Dollars for a three month period, determined at 11.00 a.m.
London time, as quoted on the date from which interest is accrued under
this Contract. All interest hereunder shall be calculated on the basis of
a 360 day year and compounded quarterly and shall be paid on the date when
payment is made of the sum on which interest is accrued:
"Makers' List" means the list of contractors approved by the Purchaser and
set out in Appendix VIII to the Specifications:
"Mandatory Regulations" has the meaning assigned to it in Clause 2.7;
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"Materials" means all materials and supplies, including, without
limitation, all machinery, equipment, outfittings and spare parts (but
excluding the Listed Items and Purchaser's Supplies), intended for the
Vessel's construction to the extent that the same have been appropriated
to, or incorporated in, the Vessel;
"Planned Programme" means the programme for performance of this Contract
by the Builder detailed in Appendix II hereto:
"Plans" means those drawings, documents and specifications which are
required under this Contract and the Specifications to be submitted to the
Purchaser for approval;
"Principal Drawings" means the drawings initialled by or on behalf of the
Purchaser and the Builder and listed in Appendix I;
"Purchasers Supplies" means all equipment supplied by the Purchaser for
its own use on board the vessel which specifically excludes the Listed
Items.
"Specifications" means:-
(a) Specification no P-95019 Jan 1998 rev I plus Addendum as
issued March 1998 initialled by or on behalf of the Purchaser
and the Builder on 1st April 1998; and
(b) any additions or amendments thereto hereafter agreed between
the parties;
"Stage Certificate" means a certificate in the form set out in Appendix V,
"Statutory Modifications" means modifications applicable to the Vessel as
a result of changes to any of (i) the rules, regulations and requirements
of the Classification Society or (ii) the Mandatory Regulations;
"Working Day" means any day (other than Saturdays or Sundays) on which
work is normally carried out at the Shipyard.
Further terms used in this Contract are defined hereinafter.
1. PURPOSE OF THIS CONTRACT
1.1. Upon the terms and conditions set out in this Contract, the Builder, as an
independent contractor. undertakes to design, construct, build, launch, equip,
complete, test and load out at its shipyard at Okpo Korea (hereinafter called
the "Shipyard") and sell and deliver to Purchaser or the Purchaser's nominee for
the Contract Price referred to in Clause 3 below, one (1) fully operational and
fit for purpose self-propelled Dynamic Positioned Semi-Submersible Drilling
Vessel (hereinafter called the "Vessel") more fully described in Clause 2 below.
Subject to the performance of the Builder's obligations hereunder, the Purchaser
agrees to purchase and take delivery of the Vessel when duly completed.
1.2. References herein to the Vessel shall, except where otherwise expressly
provided, be deemed to include all Materials.
2. DESIGN: PRINCIPAL DIMENSIONS AND CHARACTERISTICS:
CLASSIFICATION: MANDATORY REGULATIONS: REGISTRATION
2.1. The Vessel, which is to be assigned the Builder's Hull No 3015, shall be
designed, constructed and completed in all respects in accordance with the
Specifications. To the extent not defined in the Specifications, the Vessel's
construction is to meet the generally acceptable offshore semi-submersible
construction standards and practices, including without limitation such
standards and practices relating to Quality Assurance. At the time of Delivery
hereunder, the Vessel, which shall conform strictly with the terms and
conditions of this Contract and the
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Specifications, shall be delivered safely afloat and ready for sail-out as a
self-propelled Dynamic Positioned Semi Submersible Drilling Vessel.
DESIGN
2.2. The basic elements of the Vessel's design (the "Basic Design") will be
delivered by the Purchaser to the Builder. If the Builder considers that any
aspect of the Basic Design might prevent the Vessel when constructed from
complying with the requirements of Clause 2, it will inform the Purchaser
accordingly and the Purchaser may either procure the modification of the Basic
Design to remedy this deficiency or may require the Builder to modify the Basic
Design to remedy this deficiency. If the Purchaser shall require the Builder to
modify the Basic Design, the work required to do so shall constitute an
Purchaser's Modification for the purposes of Clause 7 of this Contract.
2.3. The Builder shall develop a detailed design from the delivered Basic
Design. It is expressly understood that the Purchaser shall be solely
responsible for any errors, omissions and inconsistencies in the Basic Design.
The Builder shall accept responsibility for its own work of developing the
detailed working drawings from the Basic Design and all other design development
work it shall perform in connection with this Contract.
PRINCIPAL DIMENSIONS AND CHARACTERISTICS
2.4. The Vessel shall have the dimensions and characteristics stated in the
Specifications.
CLASSIFICATION
2.5. The Vessel shall be constructed under Special Survey of the Classification
Society and in accordance with its rules, regulations and requirements current
at the date of execution of this Contract, incorporating all additions and
amendments thereof applicable to the Vessel in force or announced but awaiting
ratification, enactment or implementation, so as to achieve on Delivery the
following notation:-
"Unrestricted Service O.U. +100A1, +LMC, UMS, DP (AA), PC, DRILL, OIWS
with the descriptive notation
Semi Submersible, self propelled drilling vessel"
free of all recommendations, reservations and qualifications of any nature
whatsoever.
2.6. Decisions of the Classification Society as to whether or not the Vessel
complies with its rules, regulations and requirements shall be final and shall
bind both parties to this Contract.
MANDATORY REGULATIONS
2.7. The Vessel shall also comply with (i) all requirements of the regulatory
bodies listed in the Specifications and (ii) the following rules, regulations
and requirements, in each case current at the date of execution of this Contract
((i) and (ii) being known herein jointly as the "Mandatory Regulations"):-
a. IMO, Resolution A 649 (16) adopted on 19 October 1989, Code for the
Construction and Equipment of Mobile Offshore Drilling Units.
b. International Convention for the Safety of Life at Sea SOLAS 1974,
protocols of 1978, 1981,1983 and all Amendments in force.
c. International Convention of Load Lines, 1966 with resolutions A 231 (VII)
and A 320 (IX).
d. International Telecommunication Convention and Radio Regulation 1973, 1976
and 1982 and latest GMDSS Rules for radio communications.
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e. International Convention for Tonnage Measurement 1967/1969.
f. Suez Canal Tonnage Regulations.
g. International Convention for the Prevention of Pollution from Ships
(MARPOL) 1974/1978, Consolidation Edition, IMO, 1991, including 1992
amendments to Annex 1.
h. International Regulations for Preventing Collision at Sea, 1972 including
amendments.
i. International Labour Organisation (ILO) Convention No. 92 and No. 133 for
crew accommodation.
j. International Electronical Commission (IEC), Electrical Installation in
Ship Publication No. 92.
k. API specifications as applicable.
REGISTRATION
2.8 Vessel shall upon Delivery fly the Dutch Antilles flag and be registered
in the Register of Shipping. Registration of the Vessel as aforesaid shall be
effected by the Purchaser and all costs and expenses thereof shall be for the
Purchaser's account.
3. CONTRACT PRICE
3.1. In consideration of the performance by the Builder of all its obligations
under this Contract the Purchaser shall pay to the Builder a Contract Price
comprised of two elements:-
a. US $ 85,000,000 (the "Construction Price") which shall include the cost
of installation of the Listed Items, and
b. a further amount, to be agreed between the parties hereto, in respect of
the purchase cost of the Listed Items. The parties have provisionally
budgeted this cost at US S 51 million and the aggregate of the same and
the Construction Price is known herein as the "Provisional Contract Price"
which is US $136,000,000
3.2. The Construction Price, which is exclusive of the cost of the Listed Items
and Purchaser's Supplies, shall be a fixed price subject to upward or downward
adjustment only in accordance with the provisions of Clause 7 hereof. It
includes:-
a. the cost of the Vessel completed in accordance with the requirements of
this Contract and the Specifications;
b. the cost of all tests and trials of the Vessel to be performed by the
Builder in accordance with the specification;
c. the cost of procuring the classification of the Vessel and of obtaining
all certificates and documents which are required to be delivered pursuant
to this Contract and the Specifications; and
d. all other costs and expenses of the Builder as provided for herein or
otherwise incurred by the Builder unless expressly provided herein as
being for the Purchaser's account.
4. PAYMENT SCHEDULE
4.1. The Purchaser shall pay the Contract Price to the Builder in five
instalments as follows, the pre-delivery instalments being paid as advances and
not as deposits:-
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FIRST INSTALMENT:
10 per cent (ten %) of the Provisional Contract Price, being $13,600.000
shall be paid within three Banking Days of the Effective Date.
SECOND INSTALMENT:
30 per cent (thirty %) of the Provisional Contract Price, being $40,800,000,
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor ),
certifying that it is 6 months after the Effective Date of the contract
has taken place.
THIRD INSTALMENT:
20 per cent (twenty %) of the Provisional Contract Price, being $27,200,000
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that Keel laying has taken place.
FOURTH INSTALMENT:
20 per cent (twenty %) of the Provisional Contract Price $27,200,000, shall be
paid within three Banking Days from receipt by the Purchaser of a telefax
notice from the Builder attaching a Stage Certificate in the form of the
draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that launch [ float out ] has taken place.
FIFTH INSTALMENT:
20 percent(twenty %)of the Provisional Contract Price, together with the
aggregate of (i) any excess of the Contract Price over the Provisional
Contract Price and (ii) any increase or any decrease of the Contract Price
arising from the provisions of Clauses 7 and 16 below, shall be paid upon
Delivery.
4.2. The Builder shall notify the Purchaser in writing ten Banking Days in
advance of the estimated dates of occurrence of each of the events before
Delivery referred to above, excluding the First Instalment.
REFUND GUARANTEE
4.3. The Builder shall at its own expense supply to the Purchaser concurrently
with payment of the First Instalment of the Contract Price a letter of guarantee
in favour of the Purchaser in the form attached as Appendix IV (the "Refund
Guarantee"). Such guarantee shall be unconditional and be given by the
Export-Import Bank of Korea as approved by the Purchaser.
PAYMENT FOR MODIFICATIONS AND OTHER ITEMS
4.4. Any sums due to either parry under Clause 7 as a result of Purchaser's
Modifications and/or Statutory Modifications shall be paid with the Instalment
payment which becomes due on a milestone payment coming first after agreement on
such modification.
PAYMENT FOR FUELS ETC AND LIQUIDATED DAMAGES
4.5. All amounts due to the Purchaser (i) under Clause 13-2 hereof and (ii) by
way of liquidated damages in respect of delay in Delivery under Clause 16 shall
be calculated and determined before Delivery and shall be paid on, and as a
condition of, Delivery.
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PAYMENT PROCEDURES
4.6. Payment of sums due to the Builder in accordance with the provisions of
this Contract shall be made, by telex transfer to the account of the
Export-Import Bank of Korea Account No 04-029-695 at the Bankers Trust Company
of New York. Church Street Station, New York, NY 10015, USA in favour of the
Daewoo Corporation, free of all transfer charges.
4.7. If the date on which any payment is due in accordance with the provisions
of this Contract does not fall on a Banking Day, payment shall be made on the
immediately succeeding Banking Day.
5. APPROVAL OF PLANS: SUBCONTRACTING
APPROVAL OF PLANS
5.1. In respect of all Plans required for the completion of the works envisaged
by this Contract, the same shall be submitted to the Purchaser in four copies as
soon as possible following their production. The Purchaser shall, within
fourteen (14) Calendar Days after receipt thereof, return to the Builder one
copy of such Plans with the Purchaser's approval or the Purchaser's remarks and
amendments (if any) written thereon. The approval of plans by the Purchaser
shall not relieve the Builder of any of its obligations under this contract.
5.2. In the event that the Purchaser shall fail to return the Plans to the
Builder within the time limit as herein above provided, such Plans shall be
deemed to have been approved without comment.
5.3. The Builder shall take due note of the Purchaser's remarks and amendments
(if any) on Plans submitted pursuant to this Clause and, if such remarks or
amendments are not of such a nature or extent as to constitute modifications of
the Specifications within the meaning of Clause 7 hereof, then the Builder shall
commence or continue construction of the Vessel in accordance with the corrected
or amended Plans. If such remarks or amendments are not clearly specified or
detailed, the Builder shall in all cases seek clarification of the same from the
Purchaser before implementing the same.
5.4. Copies of all correspondence to and the Classification Society and the
regulatory authorities referred to in the Specifications, together with all
Plans approved by the Classification Society, shall be furnished to the
Purchaser by the Builder as soon as practicable upon dispatch and receipt.
SUBCONTRACTING
5.5. Save as regards those works delegated to those Subcontractors defined in
the Makers' List, the Builder shall not, without the Purchaser's prior approval
in writing, subcontract any part of the works contemplated by this Contract
which exceed in value US $100,000 or its equivalent in local currency. Where
such approval has been given, the Builder shall nevertheless remain fully
responsible for the performance of the same as if it had personally undertaken
such works.
MAKER'S LIST
5.6. The Builder shall select for the supply of each of the Materials listed in
the Makers' List the Subcontractor named therein in relation to the same. Where
the Makers' List provides for more than one Subcontractor to supply any element
of the Materials, the Builder shall, with reasonable notice, provide the
Purchaser with a copy of the Purchase Order to be issued to its intended choice
of Subcontractor before any subcontract is awarded. The Makers' List shall
indicate Purchasers preferred Sub-contractor (if any) for a given element. Where
there is a Purchase preferred subcontractor stated, such Purchase Order shall
contain full technical and commercial details and also a comparison of same with
Purchaser's preferred Subcontractor. If within 5 days thereafter, the Purchaser
shall request the Builder to order that element of the Materials from
Purchaser's preferred Subcontractor named in the Makers' List in relation
thereto, then the Builder will take all reasonable steps to comply with such
request and the Purchaser shall reimburse to the Builder any difference in price
between that quoted by the Builder's chosen
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Subcontractor and the Subcontractor chosen by the Purchaser together with an
adjustment in the Delivery Date if any.
NOMINATED SUBCONTRACTORS
5.7. Unless the Purchaser shall otherwise agree, the Builder shall supply those
items of Materials set out in Appendix II (the "Listed Items") from suppliers
and subcontractors nominated by the Purchaser. The Purchaser, as agent for and
on behalf of the Builder, shall negotiate with each of the Nominated
Subcontractors terms for the supply of the Listed Items set out in Appendix II.
It is, however, expressly agreed that the Purchaser shall contract with each of
the suppliers of the Listed Items as agent for and on behalf of the Builder and
the ownership in such Listed Items shall vest with the Builder.
5.8. The price for the Listed Items, including delivery to the Builders yard,
negotiated by the Purchaser, on behalf of the Builder, with the Nominated
Subcontractors shall be included in the contract price based on the overall
budget as set out in Appendix II. In the event of any variations in the actual
price then the Provisional Contract Price shall be increased or decreased by an
amount equal to the amount of such variations. Any such variations shall be
payable by the Purchaser by means of an adjustment of the final instalment of
the Provisional Contract Price.
5.9. Furthermore, in the event that delivery to the Builder of any Listed Item
is delayed beyond the Target Delivery Date for the same set out in Appendix IIA,
the Builder shall be entitled to a postponement of the Contractual Delivery Date
for a period as it shall demonstrate, by reference to the "critical path", that
the Vessel's construction and completion has actually been delayed. Delays in
delivery of more than Listed Item occurring simultaneously shall have give rise
only to concurrent (rather than consecutive) extensions.
5.10. Furthermore, acting on behalf of the Builder, the Purchaser shall ensure
that all the articles to be supplied as per clause 5.7 above shall be supplied
to the Builder at the Shipyard in a condition read, for installation. In
addition, in order to facilitate the installation of the Listed Items by the
Builder, the Purchaser shall ensure that the Nominated Subcontractors furnish
the Builder with instruction books, test reports, certificates and vendor
furnished information as required by applicable rules or regulations.
5.11. On the basis that the Purchaser has price, delivery and quality risk in
terms of clauses 5.8, 5.9 and 5.10 above, Builder acknowledges that, not
withstanding that it is the party to the contract with the Nominated
Subcontractor, the Purchaser shall be fully entitled to liase with the Nominated
Subcontractors on pricing, quality and delivery issues and Builder appoints
Purchaser as its agent for this purpose.
5.12. It is also agreed that any costs incurred by the Builder in the repair of
Listed Items occasioned by their defective material or poor workmanship or
failure to perform, or by damage caused to them during transportation to the
Shipyard shall be for the Purchasers account.
ASSIGNMENT OF EXISTING SUBCONTRACTS / LETTER OF INTENT
In relation to the following "long lead" items of Materials, it is
understood that the Purchaser has already entered into agreements with certain
suppliers.
5.13. Concurrently with signature of this Contract, the benefit together with
the burden of all such contracts are to be assigned by the Purchaser to the
Builder, whereupon the Materials to which they relate are to be treated as
Builders supply . The Builder shall, upon assignment of each such subcontract,
reimburse to the Purchaser all of the instalments of the contract price paid by
the latter in respect thereof.
5.14. Packages included under this provision cover items supplied by LIPS,
Caterpillar and GEC Alsthom.
OBLIGATIONS UNAFFECTED
5.15 Nothing in this Clause shall affect the other obligations of the Builder
under this Contract nor diminish the responsibility of the Builder in respect of
the Materials, design or workmanship required hereunder.
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6. VARIABLE LOAD CAPACITY
6.1. The Builders commitment to the lightship weight excluding the weight and
centre of gravity of the Listed Items shall be 8,950 metric ton at a VCG of
21.43 m ( the "Required Lightship Weight" ). A detailed Light Weight Estimation
and VCG Calculation justifying the Required Lightship Weight, shall be included
as part of the "Basic Design" to be provided by the Purchaser.
6.2. The lightship weight and centre of gravity of the Vessel shall be
verified by an Inclining Experiment prior to Delivery.
6.3. The results of the Inclining Experiment referred to in Clause 6.2 shall be
used to demonstrate a Variable Load Capacity (Deck and Column) in the conditions
referred to in the Specifications as a minimum of 3,500 metric tons in the
operational condition
6.4. Builder shall pay liquidated damages to the Purchaser as follows if the
lightship weight increases above the Required Lightship Weight.
Excess from 1% to 2% : USD 5,000 per ton
Excess from 2% to 4% : USD 7,500 per ton
Excess 4% and above : USD 10,000 per ton
In any event the Builder's liability, for the above liquidated damages shall be
limited to 5% of the Construction Price.
6.5. The Purchaser shall pay to the Builder a bonus if the lightship weight is
below the Required Lightship Weight on the same basis as the liquidated damages
in 6.4 above but without the application of any grace.
6.6. The Purchaser shall have no obligation to accept delivery of the Vessel if
the ship lightweight, as defined in 6.2 above, is more than 400 tonnes over the
Required Lightship Weight. The Builder shall, however, in such context be
entitled to make modifications to the Vessel in order to either reduce the
weight or ensure that the VLC is restored to its original level provided that
the same (i) are approved in advance by the Classification Society and the
Purchaser, such approval not to be unreasonably withheld, (ii) do not
significantly affect the motion characteristics or operational capability of the
Vessel.
7. MODIFICATIONS
PURCHASER'S MODIFICATIONS
7.1. The Purchaser may at any time after the date hereof submit a request in
writing to the Builder for changes (the "Purchaser's Modifications") to be made
to the Specifications and shall supply with such request sufficient particulars,
documentation and details to describe the change requested.
7.2. If the change so requested (the "Requested Change") can be reasonably
undertaken having regard to the stage of construction of the Vessel and the
Planned Programme, then the Builder shall be obliged to effect the same but
shall be entitled to any increase (and shall concede any decrease) in
construction cost or adjustment of the Contractual Delivery Date or any other
provisions of his Contract or the Specifications which the Requested Change
reasonably necessitates and which is agreed in writing by the Builder and the
Purchaser. The Builder shall notify the Purchaser in writing no later than seven
Working Days after receipt of the written request for the Requested Change, of
any such adjustments which it will require.
7.3. On the basis of such notification the Purchaser shall no later than
fifteen Working Days thereafter elect in writing to:
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a. agree to the adjustments notified, in which case the Builder shall
construct the Vessel in accordance with the Requested Change;
b. contest the reasonableness of the adjustment notified, in which case
subc1ause 7.5 below shall apply; or
c. withdraw the Requested Change. in which case the Vessel shall be built
without reference to the same.
7.4. If within fifteen Working Days after such notification the Purchaser has
made no election as aforesaid, then the Requested Change shall be deemed to have
been withdrawn by the Purchaser.
7.5. If, however, the Purchaser notifies the Builder in writing that the
Purchaser wishes to implement the Requested Change but disputes the
reasonableness of the adjustments, the matters shall be determined by an expert.
acting as such and not as an arbitrator, to be appointed by agreement between
the parties. In the event that the parties are unable to agree as to any
appointment within thirty days of the Purchaser's written notice, the
appointment shall be made, upon the written application of either party, by the
Classification Society. The decision of the said expert shall be final and
binding upon the parties and the costs of such expert in reaching his decision
shall be shared by the Parties. Pending the decision of the aforesaid expert,
the Builder shall continue construction of the Vessel in accordance with the
Requested Change.
7.6. The agreed extra cost of any Requested Change or that decided by the
expert shall be paid by the Purchaser and any cost savings by the Builder as a
result of any Requested Change shall be paid to the Purchaser in accordance with
Clause 4.4.
STATUTORY MODIFICATIONS
7.7. In the event of any Statutory Modifications arising the Builder shall
within seven Working Days of its becoming aware of the same, give notice to the
Purchaser of:-
a. the change required to be made to the Specifications (the "Required
Change");
b. any estimated extra or reduced cost of construction of the Vessel in
accordance with the Required Change together with any documentation
substantiating such cost which the Purchaser reasonably requires; and
c. the effect of the Required Change on any other provisions of this Contract
or the Specifications (including without limitation any change to the
Contractual Delivery Date).
7.8. The Purchaser may apply for a formal waiver of compliance with the
Required Change from the body having power to grant such waiver if the Purchaser
considers that the operation of the Vessel in its intended service would permit
of such waiver, and shall notify the Builder as soon as possibly after receiving
the decision of such body. In applying for any waiver, the Purchaser may call
upon the Builder for assistance and the Builder will provide reasonably
co-operation to the Purchaser in this respect.
7.9. If no waiver has been obtained and notified by the Purchaser to the
Builder within thirty Working Days of the receipt by the Purchaser of the notice
referred to above, the Builder shall build the Vessel in accordance with the
Required Change and the reasonable extra cost thereof, if any, shall be paid by
the Purchaser. Before the expiry of such time the Builder shall continue with
tile construction of the Vessel in accordance with the Required Change but it
shall, in so doing, use its best endeavours to minimise any costs and loss of
time which might arise if a waiver were obtained.
7.10. If the Purchaser notifies the Builder in writing that the Purchaser
disputes the reasonableness of the extension or variation notified, the issue of
what is a reasonable extension or variation may be put, by the Purchaser or the
Builder to an expert, acting as such and not as arbitrator, to be appointed by
agreement between the parties. In the event that the parties are unable to agree
as to an appointment within thirty days of the Purchaser's written notice as
aforesaid the appointment shall be made, upon the written application of either
party, by the Classification Society. The decision of the expert shall be final
and binding upon the parties and the costs of such expert in
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reaching his decision shared by the Parties. Pending the decision of the said
expert, the Builder shall continue construction of the Vessel in accordance with
the Required Change.
PRICING OF MODIFICATIONS
7.11. In relation both to Purchaser's Modifications and Statutory Modifications
as aforesaid, the Builder's quotations in respect of any increase or decrease in
the Contract Price relating thereto shall, if requested in writing by the
Purchaser, be calculated both on "lump sum" and a "time and materials" basis. In
relation to quotations effected on a "time and materials" basis, the Builder
shall apply the following parameters:-
a. labour costs shall be charged at the agreed hourly rates set out in
Appendix VI;
b. the cost of all materials and equipment shall not exceed one hundred and
ten per cent (110%) of the cost to the Builder of the same (inclusive of
the costs of delivery of those materials and equipment to the Shipyard);
provided, however, that the Builder shall in all cases endeavour to obtain
the best price terms and trade discounts from suppliers and subcontractors
for the benefit of the Purchaser.
SUBSTITUTION OF MATERIALS
7.12. If at any time during the construction of the Vessel, any Materials are
not available (other than as the result of any neglect or omission on the part
of the Builder) then, subject to the prior approval in writing of the Purchaser
and, where necessary, of the Classification Society, the Builder may use or
install other Materials provided that such other Materials used or installed in
substitution for those specified are equivalent in quality to, or better than,
those specified, and which meet the requirements of the Classification Society
and the other requirements of this Contract.
8. INSPECTION
AUTHORISED REPRESENTATIVES
8.1. The Purchaser shall have the right to retain up to fifteen supervisors
"Authorised Representatives"), whose names and scope of authority shall be
notified in writing to the Builder, permanently at the Shipyard during all times
until Delivery. The Builder shall provide suitable office accommodation
(including adequate parking spaces), photocopying and canteen facilities and the
installation of telephones and telefax machines with reasonable and safe access
to work areas for, and permit and afford every facility to, the Authorised
Representatives from time to time and at all times whilst work is proceeding to
examine and inspect the work being done under this Contract and every part
thereof, together with the materials being used or about to be used thereon, and
to call for and witness such tests as may be required. The costs of
telecommunication facilities outside the country in which the Shipyard is
located and the use of the canteen shall be for the Purchaser's account.
8.2. In addition to the Authorised Representatives, the Purchaser may from time
to time employ further personnel and contractors on site and the Builder shall
afford the same facilities to them on the basis set out above.
8.3. The Authorised Representatives shall have the right to attend all tests,
trials and inspections of the Vessel, her machinery and equipment, which shall
in each case be conducted within the Shipyard's normal working hours. The
Builder shall give notice to the Authorised Representatives in advance of the
date and place of such tests, trials and inspections in accordance with the
provisions of the Specifications. Failure of the Purchaser or its Authorised
Representatives to be present at such tests, trials and inspections after due
notice as above provided shall be deemed to be a waiver of the Purchaser's right
to be present. The Builder shall obtain for the Purchaser and the Authorised
Representatives rights of access to the Subcontractors' premises for the purpose
of inspection of workmanship and Materials.
8.4. The Builder shall carry out in strict compliance with the Specifications
all the tests and trials of the Vessel and commissioning of the Materials which
are detailed therein so as to demonstrate that the same are in accordance with
the requirements of the Specifications and that all of her systems function in
their intended manner. Any Materials or workmanship found to be faulty or
inadequate shall be replaced or made good by the Builder prior to
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Delivery, at its expense and without additional expense to the Purchaser, by
suitable and sound Materials and workmanship.
8.5. Nothing done or omitted to be done by or on behalf of the Purchaser under
this Clause shall be deemed to be a waiver of any objection to, or an acceptance
of, faulty or inadequate Materials or workmanship, or an admission that any
Materials or workmanship are of the standard required for due performance of
this Contract.
8.6. The Authorised Representatives shall be deemed to be employees of the
Purchaser and not the Builder. The Builder shall be under no liability to the
Authorised Representatives for death, personal injury or damage to their
property during the time when they are engaged in the duties contemplated under
this Contract either on the Vessel or within the premises of the Builder or its
Subcontractors unless such death, personal injury or damage to property was
caused by the wilful act, omission or negligence of the Builder, or any of its
employees, agents or Subcontractors.
QUALITY ASSURANCE SYSTEM AUDITS
8.7. Quality Assurance System Audits may be carried out by the Purchaser, and
regulatory authorities to verify compliance with the quality requirements
stipulated in this Contract and with regulatory requirements. Such requirements
shall include but not necessarily be limited to quality records, personnel and
procedure qualifications records, material traceability records, inspection
plans etc. The Builder is required to provide to the Purchaser any documentation
and administrative systems necessary to verify compliance. Inspection and
testing and Quality Assurance System Audits by the Purchaser as described in
this Clause or otherwise shall not imply any diminution of the Builder's
responsibilities and obligations under this Contract.
9. PLANNED PROGRAMME, PROGRESS CONTROL AND REPORTING
PLANNED PROGRAMME
9.1. The Vessel shall be constructed by the Builder in accordance with the
Planned Programme set out in Appendix II hereof A detailed copy of this plan,
including the sub-level planning identifying critical paths, shall be made
available to the Purchaser and updated on a regular basis. The plan will define
certain stages of the construction process ("Milestones") which must be
completed by the dates specified therein. The Planned Programme will include a
comprehensive statement of the dates on which the Listed Items are required to
be delivered to the Shipyard.
PROGRESS CONTROL AND REPORTING
9.2. At the commencement of the contract a "kick off' meeting shall be held
during which the major parameters by which performance of the Builder will be
measured are to be mutually agreed. These shall include, but not necessarily be
limited to a detailed weight budget, a steel procurement and processing
schedule, an engineering schedule, outfitting targets, manning schedules etc.
Unless mutually agreed otherwise such meeting shall be held within 30 days on
contract signature.
9.3. During the course of performance of this Contract the Builder shall submit
to the Purchaser on a fortnightly basis, commencing on the date failing fourteen
days after the "kick off meeting" and thereafter fortnightly.
a. a status report on the Vessel's construction as compared with the Planned
Programme, including the critical path;
b. a report setting out the actual progress in performance of this Contract
during the previous month as compared with the Planned Programme; Such
report to identify progress against the agreed performance parameters.
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c. a report setting out the forecast lightship weight, identifying any
variances from the agreed weight budget and in the case of negative
variations including proposals for reducing the variance to within
acceptable levels.
d. a list of Purchaser's Modifications and Statutory Modifications (if any)
agreed or resolved by an expert during the previous month, as the case may
be, including adjustments, if any, agreed or resolved by an expert, to the
Contract;
e. a report on the delivery of sub-contracted Materials during the pervious
month (the precise nature of which report shall be agreed, from time to
time, between the Purchaser and the Builder).
9.4. Without prejudice to the Builder's obligations under this Contract, if the
construction of the Vessel should for any reason whatsoever be delayed beyond
the time-frame envisaged in the Planned Programme, the Builder shall immediately
notify the Purchaser and shall within seven Working Days thereof provide to the
Purchaser a schedule indicating, in so far as the delay which has occurred is
not Permissible Delay, the steps (including any appropriate increase in manpower
and material resources) the Builder intends to take to recover the time so lost.
The Builder and the Purchaser shall thereafter meet at the earliest opportunity
to discuss the schedule and the Builder's detailed plans for implementation of
the same.
9.5. The Builder shall take monthly progress photographs illustrating the
progress of the Vessel's construction up to and including trials and delivery.
The Builder shall also supply the Purchaser with sufficient number of
photographs (size: approximately 18 x 24 cms) depicting the final stage of the
Vessel as delivered: this set will be at least 25 percent colour prints. One set
of standard transparencies will be supplied, free of charge to the Purchaser.
Additional copies of photographs and transparencies will be made available by
Builder, at the Purchaser's request and expense.
10. TITLE
10.1. Title to the Vessel shall pass to the Purchaser upon Delivery. Subject to
the provisions of this Contract, title to the Purchaser's Supplies shall,
however, remain with the Purchaser at all times.
11. RISK AND INSURANCE
RISK
11.1. The Vessel and all Materials (including, from the time of their delivery
to the Shipyard, the Purchaser's Supplies) shall remain at the risk of the
Builder until Delivery.
INSURANCE
11.2. The Builder undertakes to keep the Vessel and all Materials (including the
Listed Items) in its or its Subcontractors' custody fully insured at all times
and until Delivery at its own cost with first class insurers approved by the
Purchaser in the amount of the higher of (1) the value of the Vessel as from
time to time constructed and (2) the aggregate of (i) the instalments of the
Contract Price for the time being paid by the Purchaser to the Builder, (ii) the
interest payable to the Purchaser on such instalments in the event of the
Purchaser's termination of this Contract and (iii) the value of the Purchaser's
Supplies delivered to the Shipyard or built into or installed in or upon the
Vessel.
11.3. The policy or policies (the "Stipulated Insurances"), which shall be
subject to English law and jurisdiction, shall incorporate the following
clauses:-
a. the Institute of London Underwriters ("ILU") Clauses for Builder's Risks:
b. the ILU Strikes Clauses - Builder's Risks; and
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c. (from the date of the Vessel's launching) the ILU War Clauses - Builder's
Risks.
11.4. The policies shall be taken out in the joint names of the Purchaser and
the Builder but on terms that the Builder alone shall be responsible for all
premiums payable thereunder. The Builder shall furnish the Purchaser promptly
with certified copies of the policies and the originals shall be made available
to the Purchaser, its employees or agents for inspection at all reasonable
times.
11.5. The policies taken out shall contain a provision to the effect that, in
the event of an actual, constructive, arranged or compromised total loss, such
insurance proceeds as the Purchaser is entitled to hereunder shall be payable to
the Purchaser and such policies shall be so endorsed as to enable the Purchaser
by its brokers or agents or personally to collect such proceeds pursuant to the
provisions of this Clause. In addition, all such policies shall include
provision that they shall not be capable of cancellation by the insurers without
not less than thirty (30) days' prior written notice being given to the
Purchaser and that not less than ten (10) days' prior written notice of
non-renewal or lapse shall be given by the insurers to the Purchaser before the
same shall take effect.
12. LOSS OR DAMAGE TO THE VESSEL
12.1. Should the Vessel or any items insured pursuant to the provisions of
Clause 11 sustain loss or damage prior to Delivery and should such loss or
damage not make the Vessel a total loss, actual, constructive, arranged or
compromised, the Builder shall, at its own expense and with all due despatch,
make good such damage to the satisfaction of the Purchaser and (if applicable)
the Classification Surveyor, and any monies payable in respect of any insurance
effected under Clause II shall be payable to the Builder.
12.2. Should the Vessel sustain loss or damage prior to Delivery hereunder such
that it is either conceded by the insurers liable therefor, or determined by a
court of competent jurisdiction, that the Vessel has become a total loss,
actual, constructive, arranged or compromised, then the Builder shall not be
liable to repair the damage or replace the Vessel but, where the Purchaser has
not made recovery of such sums under the Stipulated Insurances within twenty-one
Working Days of the total loss, the Builder shall:-
a. refund promptly to the Purchaser in full the aggregate amount of
instalments of the Contract Price already paid by the Purchaser with
interest thereon at a fixed rate of 10 percent from the date of payment of
each instalment until the date of refund (calculated on the same basis as
a commercial banking transaction in London ); and
b. return to the Purchaser all Purchaser's Supplies or refund to the
Purchaser a sum equivalent to the value of any of same which have been
lost or which cannot be removed in a sound condition from the Vessel.
12.3. When the conditions set out in sub-clause (2) above have been satisfied by
the Builder, the Purchaser shall instruct the insurers to pay to the Builder or,
as the case may be, if instructed by the Builder to the Export-Import Bank of
Korea any further sums due and payable under the Stipulated Insurances in
respect of the total loss but subject to a limit equal to the cost to the
Builder of those parts of the works which were already undertaken as at the date
of the casualty giving rise to the total loss. Save as elsewhere herein
specifically provided to the contrary, the parties' obligations under this
Contract shall thereupon cease and terminate.
13. TRIALS: TECHNICAL ACCEPTANCE
13.1. At least 120 days before the scheduled commencement of the same the
Builder shall submit to the Purchaser for approval comprehensive testing and
trials programmes covering the Full Scale Test and Trials (collectively the
"Trials") as generally described in Section 03000 of the Specifications,
including (i) Workshop Tests, (ii) Quayside Trials (including the Inclining
Test), and (iii) Sea Trials (including trial runs and all other tests at sea).
13.2. The Trials shall be conducted at the risk and expense of the Builder which
shall provide and pay for the personnel necessary for the safe management and
navigation of the Vessel during the same. The Builder shall also provide and pay
for all necessary ballast and fresh water and shall meet all other costs
associated with the Trials.
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The fuels, lubricants and consumable stores required for the Trials shall be
specified, supplied and paid for by the Purchaser, who shall upon Delivery be
entitled to reimbursement from the Builder of the costs of such fuels,
lubricants and consumable stores as are consumed during the Trials.
13.3. The Builder shall give the Purchaser not less than seven Working Days'
notice of the date and place of commencement of each of the Trials and
representatives of the Purchaser shall be afforded every opportunity to observe
and determine the performance of the Vessel during the same. Failure by the
Purchaser to attend any Trial following due notice shall be deemed to be a
waiver by the Purchaser of its rights of attendance in respect of such Trial.
SEA TRIALS
13.4. The Sea Trials shall be carried out following satisfactory conclusion of
all other Trials and after the Vessel's construction has been completed with
only minor items of work outstanding which are agreed by the Authorised
Representatives as suitable for completion after the Sea Trials but before
Delivery.
13.5. The Sea Trials shall have the objective of permitting the Builder to
demonstrate fulfilment of the quality and performance requirements for the
Vessel as set forth in the Specifications. The course to be followed during the
Sea Trials shall be determined by the Builder, but shall be in open waters off
Korea. The Purchaser shall be allowed to maintain a shadow crew and other
necessary personnel on board the Vessel during the sea trials to familiarise
themselves with the Vessel and its operation.
13.6. The safe management and navigation of the Vessel in transit to, during and
from the Sea Trials shall remain the sole responsibility of the Builder. Neither
the Purchaser nor any of its representatives shall bear or be liable for loss or
damage of any description done by or to the Vessel, or personal injury or loss
of life arising from any cause whatsoever during the same, except where such
liability is directly attributable to the Purchaser as a result of a wilful act
by any representative of the Purchaser on board the Vessel during such trials;
the Builder shall pay for and indemnify the Purchaser and its representatives
against all such loss, damage and the consequences of personal injury and loss
of life as aforesaid.
13.7. Should the weather conditions at the time scheduled for the Sea Trials be
such that they cannot be carried out properly, the Builder shall postpone them
or such part of them as necessary to the earliest possible time when suitable
weather conditions occur to ensure that all readings and results are obtained in
a manner satisfactory to the Purchaser. Any delay to the Sea Trials caused by
such unfavourable weather conditions, if the delay exceeds five (5) days, shall
operate to postpone the Contractual Delivery Date by the period of delay.
involved and such delay shall be deemed to be Permissible Delay.
13.8. If during the Sea Trials any, breakdown occurs which entails interruption
or irregular performance and the breakdown can be repaired by the normal means
available on board, this shall be done as soon as possible and the trial shall
be continued after repairs are completed. However, if the Vessel must return to
a port to enable the breakdown to be remedied, a further complete trial shall be
undertaken at the earliest opportunity.
13.9. On completion of the Sea Trials to the satisfaction of the Purchaser the
Vessel shall be brought back to a berth in the Shipyard, or elsewhere as may be
agreed, for the inspection of the machinery required in the Specifications, and
during this period all defects or omissions found in the Vessel shall be
remedied and made good by the Builder to the satisfaction of the Purchaser, and
the machinery closed up by the Builder ready for sea at its expense and without
expense to the Purchaser.
TECHNICAL ACCEPTANCE
13.10. Within three Working Days of completion of the Trials and the closing up
of machinery referred to in sub-clause 9 above, the Builder shall notify the
Purchaser in writing of the results of the Trials and shall, where the same is
appropriate, confirm to the Purchaser that the Vessel conforms with the
requirements of the Contract and Specifications. If the Purchaser is in
agreement with the Builder, the Purchaser shall, within four (4) Working Days
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of receipt of the Builder's notice as aforesaid, advise the Builder in writing
of its Technical Acceptance of the Vessel.
13.11. If, however, in the view of the Purchaser the Vessel or any part thereof
does not conform to the requirements of this Contract and/or the Specifications,
the Purchaser shall so advise the Builder (again within four (4) Working Days of
the receipt of the Builder's notice as aforesaid) and shall specify the respects
in which the Vessel fails to conform with the requirements of this Contract and
Specifications. The Builder shall thereupon take the necessary steps to correct
such non-conformities and, upon completion of such works, the Builder shall
advise the Purchaser who shall, in the reasonable exercise of its discretion, be
entitled to require the Builder to undertake further trials of the Vessel; in
such event the Builder shall give the Purchaser three Working Days' notice of
such further trials.
13.12. Upon satisfactory completion of such remedial works and/or trials, the
Purchaser shall, within four (4) Working Days after receipt of a further notice
from the Builder that the Vessel conforms with the requirements of the Contract
and Specifications, notify the Builder of its Technical Acceptance of the Vessel
or the respects in which the Vessel still fails to conform with the requirements
of this Contract and the Specifications. This process shall be repeated until
the earlier of (a) the Purchaser's Technical Acceptance of the Vessel or (b) the
valid and proper termination or rescission of this Contract by either the
Purchaser or the Builder.
13.13. If the Purchaser fails to notify the Builder in writing of its Technical
Acceptance or otherwise of the Vessel within the periods as provided above the
Purchaser shall be deemed to have accepted the Vessel.
13.14. The Purchaser's Technical Acceptance of the Vessel as above provided
shall preclude the Purchaser from refusing Delivery of the Vessel as hereinafter
provided, if the Builder complies with the procedural requirements for Delivery
of the Vessel as provided in Clause 14 hereof.
14. DELIVERY OF THE VESSEL
DELIVERY
14.1. The Vessel shall be delivered by the Builder to the Purchaser at the
Shipyard (or other place as may be agreed with unrestricted access to the open
sea) on 9th February 2000 except that, in the event of Permissible Delay as
defined in Clause 15.2 hereof, the aforementioned date shall be postponed
accordingly. The aforementioned date, or such later date to which requirement to
deliver may be postponed, is herein called the "Contractual Delivery Date".
14.2. Delivery shall take place on a Working/Banking Day to be nominated by the
Builder following Technical Acceptance of the Vessel by the Purchaser and with
not less than thirty (30) Working Days' advance notice to the Purchaser.
Delivery shall be effected by the execution by the Parties of a Protocol of
Delivery and Acceptance in the form set out in Appendix III, acknowledging
delivery by the Builder and acceptance thereof by the Purchaser. The Builder
shall give the Purchaser at least ninety (90) days' (plus or minus seven (7)
days) calendar notice of the estimated date of Delivery.
14.3. The Builder guarantees that at the time of Delivery title to the Vessel
and every part thereof shall pass to the Purchaser free and clear of any and all
liens, claims, mortgages or other encumbrances upon it and in particular, but
without limitation, that she shall be free of all burdens in the nature of
imposts, taxes or charges imposed by any liabilities arising from the
construction of the Vessel or from its operation on Trials or otherwise.
DOCUMENTS TO BE PROVIDED TO THE PURCHASER
14.4. The Builder shall provide to the Purchaser the following documents prior
to Delivery failing which the Purchaser may refuse to accept Delivery.
a. Records of inventory of the Vessel's equipment including spare gear and
the like as detailed in the Specifications;
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b. Records of any and all fuels, lubricants, consumable stores and fresh
water supplied to this Contract by either the Builder or the Purchaser
together with such quantities same as remain on board at Delivery;
c. All certificates (including Class and other regulatory certificates)
required to be furnished prior to or upon Delivery of the Vessel pursuant
to the Specifications; such certificates are to be clean and free of all
qualifications, reservations and recommendations whatsoever;
d. Declaration of Warranty of the Builder in accordance with Clause 14.3
above;
e. The following technical documentation:-
e.1. Four (4) copies and one reproducible of all the "As Built"
drawings of the Vessel required for its operation and
maintenance in accordance with its design and purpose.
e.2. Four (4) complete documentation and instructions (Operation
and Maintenance) books covering builder supplied equipment.
e.3. Four (4) sets of Operating Manuals and Instruction Books
according to MODU CODE 1989 with all the necessary data
including sea preparation and any other data or documents
required by Owner's insurers.
e.4. Four (4) copies of a complete maintenance guide including all
drawings.
e.5. One (1) copy of all the test and commissioning trials and
results which have been done prior to delivery.
e.6. Lightship weight, variable load and centre of gravity of
lightship weight calculations.
f. The certificates listed in Appendix VII, together with (i) Builder's
Certificate or (at the Purchaser's option) Bill of Sale in favour of the
Purchaser notarised and legalised to permit registration of the Vessel on
the [ ] Register of Shipping and (ii) any other document relating to the
condition and/or performance of the Vessel which the Purchaser may
reasonably require provided the same is requested no later than seven
Working Days prior to Delivery.
14.5. The documents listed in sub-clauses 14.4.e. 1-6 above are also to be
supplied as a diskette in a format to be agreed between the Parties.
REMOVAL OF THE VESSEL
14.6. Following Delivery of the Vessel, the Purchaser shall in seven (7) Working
Days remove her from the Shipyard. If the Purchaser fails to remove the Vessel
within this period, it shall pay to the Builder reasonable mooring charges
thereafter until removal.
15. EXTENSION OF TIME FOR DELIVERY: PERMISSIBLE DELAY
CAUSES OF DELAY
15.1. If at any time before the Contractual Delivery Date the construction of
the Vessel is delayed due to Acts of God, acts of princes or rulers, war or
other hostilities or preparations therefor, blockade, civil commotion or riots,
strike, epidemics, floods, hurricanes, earthquakes, tidal waves, landslides,
fires, lightning, explosions, collisions or strandings, shortage of materials or
equipment other than resulting from any act, omission or improvidence of the
Builder or its Subcontractors, prolonged failure, shortage or restriction of
electric current, oil or gas or destruction of or damage to the Shipyard or
works of the Builder or its Subcontractors by any causes herein described and
other causes or accidents beyond control of the Builder or its major
subcontractors or suppliers of similar nature, the
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Contractual Delivery Date and any Milestones not then achieved shall be
postponed for the period of time during which construction of the Vessel is
directly and unavoidably delayed by the same.
15.2. Any periods of time by which the Contractual Delivery Date of the Vessel
and any Milestones not then achieved is properly and justifiably claimed by the
Builder to be extended by reason of matters falling within (a) subclause I above
or (b) Clauses 5.6, 5.9, 7, 13.7 or 18.2 hereof shall be defined herein as
"Permissible Delay".
15.3. The Builder's entitlement to a Permissible Delay shall, however, be
subject to:-
a. the delay in respect of which the Builder is claiming relief not being
within its control or contemplation at the date of signing of this
Contract nor caused or contributed to by its error, neglect, act or
omission or that of its agents, employees or Subcontractors:
b. the delay affecting the "critical path" of the Vessel's construction as
the time of commencement of the event;
c. since the occurrence of the event in respect of which relief is claimed,
the Builder having taken all steps open to it to mitigate the effect of
the event upon the Contractual Delivery Date and any Milestones not then
achieved; and
d. the Builder having duly given all the notices required under sub-clause
15.4 below within the time-limits therein laid down.
NOTICES
15.4. Upon the occurrence of any of the events potentially constituting
permissible delay listed in sub-clause (1) above, the Builder shall:-
a. within seven (7) Working Days of the date on which it became aware of the
event, give the Purchaser notice in writing of the occurrence of the
event;
b. as soon as possible thereafter, and in any event not more than seven (7)
Working Days after the giving of the said notice, submit to the Purchaser
a statement in writing, specifying as far as possible, with full
particulars, the nature and the cause of the event, the effect on the item
involved, the likely overall effect computed from the Planned Programme
upon the Contractual Delivery Date and any Milestones not then achieved
and the steps which are being taken by it to mitigate any delay which may
result from the event;
c. within seven (7) Working Days after the date on which it becomes aware
that the event is at an end, give the Purchaser notice in writing of the
date when the event ended;
d. within seven (7) Working Days of the date of the Builder's notice under
sub-paragraph (c), notify the Purchaser of the period of time by which it
claims the Contractual Delivery Date of the Vessel and any Milestones not
then achieved should be extended by reason of the event.
16. DELAY IN DELIVERY
LIQUIDATED DAMAGES
16.1. In the event that Delivery should be delayed beyond midnight local time on
the Contractual Delivery Date, the Builder shall, subject to the provisions of
Clause 15 above, pay to the Purchaser by way of liquidated damages, not by way
of penalty, for loss of use of the Vessel, the amounts set out below:-
1 - 150 days of delay US$ 42,500 per day
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However, the total amount of the liquidated damages shall not be more than as
would be the case for a delay of 150 days. The liquidated damages shall be due
at the date of actual delivery of the vessel.
TERMINATION FOR DELAY IN DELIVERY
16.2. Furthermore, if Delivery should not have occurred prior to either:-
a. the expiry of 90 days from the Contractual Delivery Date (as extended by
Permissible Delays); or
b. The expiry of 180 days from the Contractual Delivery Date extended by such
days of Permissible Delay as are attributable to the Purchasers fault.
the Purchaser, as an alternative to receiving the above mentioned liquidated
damages, may elect to rescind this Contract. If the Purchaser elects to rescind
this Contract, then the Purchaser shall give notice in writing to the Builder in
which case Clause 19.2 shall apply. Such notice, which shall be effective from
receipt thereof by the Builder, shall operate without prejudice to the
Purchaser's rights at law generally, but exclusive of its right to liquidated
damages.
17. DEFECTS AND BUILDER'S GUARANTEE
GUARANTEE PERIOD
17.1 The Builder guarantees the Vessel for a period of twelve months from
Delivery or, in respect of individual items as provided for in the
Specification, for such greater period as may be agreed, against all defects
whether attributable to Materials, workmanship, construction or detail design,
and against all physical damage caused to the Vessel thereby. The aforesaid
period of twelve months from Delivery shall be known herein as the "Guarantee
Period".
17.2. This guarantee shall not extend to Listed Items or to any damage caused by
any defect therein not attributable to the Builder, but it shall extend to
defects in Materials, workmanship or design and to physical damage caused
therein resulting from the Builder's installation of the Listed Items.
17.3. The Builder guarantees repairs or replacements to the Vessel made under
the guarantee in sub-clause (1) above for a further period of twelve months from
the date of completion of such repair or replacement, provided that the total
guarantee period shall not exceed twenty-four months from Delivery.
REMEDY OF DEFECTS
17.4. The Purchaser shall notify the Builder in writing within thirty days after
discovery of any defect or physical damage falling within the provisions of this
Clause 17. The Purchaser's notice shall include such particulars as can
reasonably be given as to the nature of such defect or physical damage, the date
of discovery and the place at which the Vessel can be made available for
earliest inspection by or on behalf of the Builder. The Purchaser shall furnish
to the Builder as soon as practicable copies of any relevant survey or
inspection reports.
17.5. The Purchaser may require the Builder to make good any defect or physical
damage for which the Builder is liable under this Clause 17 by giving notice of
such requirement to the Builder. Any parts replaced shall on their removal
become the property of and shall be at the risk of the Builder whilst the
replacement parts fitted to the Vessel shall upon fitting become the property of
the Purchaser.
17.6. The Builder shall execute the necessary work including the carrying out of
any essential dismantling and reassembling with the utmost despatch in
accordance with the quality standards which are applicable hereunder to the
Vessel's original construction.
17.7. In the event that the Builder is unable to make good any defect at the
Shipyard, it shall forthwith nominate a yard suitable for such purpose for the
Purchaser's approval, and should the Purchaser consider such yard
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acceptable the Builder shall arrange for the making good of the defect and the
carrying out of any essential dismantling and reassembling at its own expense.
17.8. Should the Purchaser consider the yard nominated by the Builder
unacceptable, or should the Purchaser elect to have the work referred to above
carried out elsewhere than at the Shipyard, the Purchaser shall nominate a yard
acceptable to it. In such case the Builder shall pay to the Purchaser for
repairs and/or replacements such sum as would equate to the costs of effecting
such repairs at a first-class North-West European shipyard. The Builder may, at
its own expense, have its representative in attendance during execution of the
work. The Purchaser shall ensure that any parts replaced under this sub-clause
are returned to the Builder (if required by the Builder) at the Builder's
expenses, and in such case those parts returned shall on their replacement
become the property of and shall be at the risk of the Builder.
17.9. In the event of defects arising which fall within the provisions of this
Clause 17, whether or not such defects require the Vessel to be dry-docked, the
Builder shall pay for any costs incurred by the Purchaser in making the Vessel
available to the Builder or to any other yard for the making good of any such
defect as aforesaid. Such additional costs shall include, but shall not be
limited to, port charges and the cost of fuels, lubricants and consumable stores
consumed in excess of those which would have been consumed had the Vessel not
deviated to allow the Builder to make good any such defects as aforesaid. The
Purchaser shall use all reasonable endeavours to mitigate the incidence of such
costs chargeable to the Builder's account. Excepting the abovesaid additional
costs, the Builder shall not be responsible or liable for any exceptional or
special losses, damages or expenses including, but not limited to, loss of time,
loss of profit or earning or demurrage directly or due to repairs or other works
done to the Vessel to remedy such defects.
17.10. In the event that the Vessel is idle for more than 15 days in total
accumulated time due to defects under this Clause 17 the Guarantee Period shall
be extended by the number of all days during which the Vessel is idle commencing
with the sixteenth day, whether or not other work is undertaken simultaneously
with the guarantee work.
GUARANTEE ENGINEER
17.11. Where so requested by the Purchaser, the Builder shall appoint a suitably
qualified English-speaking Guarantee Engineer to serve on the Vessel as the
representative of the Builder for such portion of the Guarantee Period as the
Purchaser shall require, the Purchaser and its employees shall give the
Guarantee Engineer full co-operation in carrying out his duties as the
representative of the Builder on board the Vessel. In particular, the Purchaser
shall accord the Guarantee Engineer treatment and subsistence on board the
Vessel comparable to the Vessel's Chief Engineer (except that the Purchaser
shall provide him accommodation in a standard passenger cabin) at no cost to the
Builder.
17.12. The Purchaser shall pay the expenses of the Guarantee Engineer's
repatriation by air to Korea upon termination of his services on the Vessel.
However, save as aforesaid, the Purchaser shall be responsible for no other
expenses in connection with the Guarantee Engineer, who shall at all times be
conclusively deemed an employee of the Builder. The Builder shall indemnify and
hold harmless the Purchaser from and against personal injury, including death,
of, or loss of or damage to property of the Guarantee Engineer unless the same
shall been caused by the gross negligence of the Purchaser or any of its
employees, agents or sub-contractors. If the Purchaser has reason to be
dissatisfied with the conduct or competence of the Guarantee Engineer, the
Builder, on receiving particulars of the complaint, shall promptly investigate
the matter and, if the complaint is found to be justified, make a change in the
appointment.
ASSIGNMENT OF SUBCONTRACTORS' GUARANTEES
17.13. The Builder agrees upon the expiry of the Guarantee Period to assign (to
the extent to which it may validly do so) to the Purchaser, or as the Purchaser
may direct, all the right, title and interest of the Builder in and to all
guarantees or warranties given by the Subcontractors save insofar as the same
relate to existing claims by the Purchaser against the Builder.
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<PAGE>
ASSIGNMENT OF BUILDER'S GUARANTEE
17.14. It is expressly agreed and understood that the benefit of this Guarantee
shall be capable of transfer by the Purchaser to any Assignee. The Builder shall
in such circumstances enter into any documentation reasonably requested by
either the Purchaser or the Assignee to evidence such transfer and the vesting
in the Assignee pursuant to such assignment of all rights in respect of this
Guarantee.
18. DEFAULT BY THE PURCHASER
EVENTS OF PURCHASER'S DEFAULT
18.1. The Purchaser shall be deemed to be in default of performance of its
obligations under this Contract in the following cases:
a. if the Purchaser fails to pay the amount of any of the Instalments of the
Contract Price due to the Builder in the period prior to Delivery on the
due date for payment thereof,
b. if the Purchaser fails without legal justification to take delivery of the
Vessel in accordance with Clause 14 and to pay the instalment of the
Contract Price due thereon;
c. if an order or an effective resolution is passed for the winding up of the
Purchaser (otherwise than for the purposes of a reconstruction or
amalgamation previously approved by the Builder) or if a receiver is
appointed over the whole or any part of the undertaking or property of the
Purchaser or if the Purchaser becomes insolvent or suspends payment
generally of its debts or ceases to carry on its business or makes any
special arrangement composition with its creditors.
18.2. If the Purchaser is in default as to the payment of any instalment as
provided in (a) or (b) of sub-clause (1) above, then without prejudice to any
other rights of the Builder or of the Purchaser, the Purchaser shall be liable
to pay interest at 2 % per cent over LIBOR on the unpaid amount from the day
from which the same became due to the Builder up until the date of actual
payment thereof. The Builder shall further be entitled to claim as Permissible
Delay within the meaning of Clause 15.2 any period of time during which the
construction or completion of the Vessel has been delayed in consequence of the
Purchaser's default as aforesaid.
TERMINATION BY THE BUILDER
18.3. If default on the part of the Purchaser continues for a period of thirty
days, the Builder shall have the right at its sole discretion to rescind this
Contract by giving written notice to the Purchaser. The Builder shall in such
event be entitled to retain all of the instalments received from the Purchaser.
Upon completion of this Contract in accordance with this clause, title to the
Vessel shall be temporarily transferred to the joint ownership of the Builder
and the Purchaser and remain as such until disposal of the Vessel by the Builder
in accordance with this clause.
18.4. In the event of rescission of this Contract in accordance with this Clause
the Builder shall have the right and power either to complete or not to complete
the Vessel as it deems fit but in any event shall sell the Vessel (either in its
complete or incomplete form) at the best available price at a public or private
sale on such reasonable terms and conditions. If the Builder sells the Vessel in
an incomplete form then the Builder shall give credit to the Purchaser for any
and all savings which arise from not having to complete the construction of the
Vessel.
18.5. In the event of the sale of the Vessel in its completed state the proceeds
of sale received by the Builder shall be applied to payment of all expenses
attending such sale and otherwise incurred by the Builder as a result of the
Purchaser's default and then to payment of all unpaid instalments of the
Contract Price and interest on such instalments at the rate of 2 per cent above
LIBOR from the respective due dates thereof to the date of application.
18.6. In the event of sale of the Vessel in its incomplete state the proceeds of
sale received by the Builder shall be applied first to all expenses attending
such sale incurred by the Builder as result of the Purchaser's default and then
23
<PAGE>
to payment of all costs of part-construction of the Vessel less the instalments
retained by the Builder and compensation to the Builder for damages suffered by
the Builder in consequence of such default.
18.7. In either of the above events of sale, if the proceeds of sale exceed the
sums to which such proceeds are to be applied as aforesaid the Builder shall
promptly pay any such excess to [he Purchaser without interest thereon and shall
at the same time either permit the Purchaser to remove the Purchaser's Supplies
from the Shipyard or pay to the Purchaser the full value thereof.
18.8. If the proceeds of sale of the Vessel are insufficient to pay such total
amounts payable as aforesaid the Purchaser shall be liable to pay to the Builder
upon demand the amount of such deficiency.
19. DEFAULT BY THE BUILDER
EVENTS OF BUILDER'S DEFAULT
19.1. In the event that any of the following events should occur:-
a. the Builder shall without legal justification fail to proceed with
construction of the Vessel with all reasonable despatch so that it fails
to meet two consecutive Milestones within ninety days of the respective
dates agreed for the same;
b. the Builder shall commit any material breach of this Contract and shall
fail to initiate the remedy work for the same within five Working Days of
receipt by the Builder of written notice from the Purchaser;
c. the making of any order or the passing of an effective resolution for the
winding-up of the Builder (other than for the purposes of reconstruction
or amalgamation which has been previously approved in writing by the
Purchaser such approval not to be unreasonably withheld), or the
appointment of a receiver of the undertaking or property of the Builder,
or the insolvency of or a suspension of payment by the Builder, or the
cessation of the carrying on of business by the Builder, or the making by
the Builder of any special arrangement or composition with creditors of
the Builder, and failure by the Builder
the Purchaser may elect either (a) to rescind this Contract or (b) to exercise
its option to purchase the Vessel pursuant to sub-clause.3 hereof. If the
Purchaser elects to rescind this Contract. then the Purchaser shall give notice
in writing to the Builder in which case the provisions of sub-clause 2 below
shall apply. Such notice shall be effective from receipt thereof by the Builder.
RESCISSION BY THE PURCHASER
19.2. If, in accordance with (1) the provisions of sub-clause 1 above or (2)
Clause 16.3 above the Purchaser exercises its right to rescind this Contract,
then the Builder shall, without prejudice to the Purchaser's general remedies at
law, promptly repay to the Purchaser the amount of all monies paid by the
Purchaser on account of the Contract Price together with interest thereon at a
fixed rate of 10% p.a. from the date when such monies were paid by the Purchaser
to the Builder up to the date of the repayment thereof calculated on the same
basis as an commercial inter-bank transaction carried out in London. The Builder
shall also redeliver to the Purchaser at the Shipyard all of the Purchaser's
Supplies delivered to the Builder at the time of the Purchaser's rescission.
Upon such refund by the Builder to the Purchasers, all obligations, duties and
liabilities of each of the parties to the other under this Contract shall be
completely discharged.
PURCHASE OF THE VESSEL
19.3. In the event that the Purchaser shall exercise its option to purchase the
Vessel, the Builder shall give notice in writing to the Builder. The Builder
shall thereupon:
a. secure the immediate discharge of all liens, claims, mortgages or other
encumbrances upon the Vessel;
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<PAGE>
b. complete at its own cost all works required as a minimum to permit the
Vessel to depart from the Shipyard in a safe and seaworthy condition,
remove its employees, agents and contractors, together with their
equipment, from the Vessel and render all necessary assistance to the
Vessel in leaving the Shipyard at the earliest moment convenient to the
Purchaser;
c. execute and deliver to the Purchaser an original of the Protocol of
Delivery and Acceptance together with any and all documentation (including
but not limited to a bill of sale or builder's certificate) in such form
and such manner as the Purchaser shall in its absolute discretion
determine shall be required or desirable for the purposes of transferring
to the Purchaser title to the Vessel in her then current state of
construction; and
d. execute and deliver to the Purchaser all of the documentation listed in
Clause 14.4 hereof to the extent that the same is at that time capable of
production by the Builder.
19.4. Title to the Vessel, and all risk of loss thereof, shall in such
circumstances transfer to the Purchaser upon execution by the Purchaser of the
Protocol of Delivery and Acceptance following receipt of all of the
documentation received above. The Purchaser may, however, elect to execute the
Protocol of Delivery and Acceptance notwithstanding the Builder's failure to
deliver all or part of the other documentation required to be delivered by the
Builder pursuant to subclause 3 above.
19.5. The Purchaser shall thereafter be entitled to retain and apply any balance
which may be otherwise due under this Contract by it to the Builder, or such
part thereof as may be necessary to meet the cost of completing the works
envisaged under this Contract elsewhere, together with the supervision thereof
(the "Completion Costs"). If the Completion Costs exceed the balance which would
otherwise have been due from the Purchaser to the Builder hereunder, the Builder
shall pay the amount of such excess to the Purchaser. However, if the Completion
Costs are less than the balance which would otherwise have been due from the
Purchaser to the Builder, the Builder shall be entitled to receive from
Purchaser an amount equal to the difference between such price and the
Completion Costs.
NON-PAYMENT BY THE BUILDER
19.6. Should the Builder default in payment of any amount due under this
Contract (including, without limitation, payment of liquidated damages), then
the Builder shall pay to the Purchaser interest thereon at the rate of 2 percent
over LIBOR from the date when the amount became due to the Purchaser to the date
of the payment thereof.
20. PATENT INDEMNITY
20.1. The Builder warrants that the Purchaser and its successors in title shall
enjoy quiet possession of the Vessel and that the Purchaser's possession,
ownership or operation of the Vessel shall not at any time infringe any patent
rights, utility model rights, trade mark rights or copyrights in any country.
The purchaser shall protect, defend, hold harmless and indemnity the Builder in
respect of any claim or infringement of a patent right, utility model rights,
trade mark rights or copyrights related to the basic design, Listed Items or
material or equipment provided by the Purchaser to the Builder.
20.2. The Builder shall indemnify and hold the Purchaser harmless against any
loss, damage, claim, demand, proceeding or liability whatsoever arising out of
relating to:
a. any lawful claims of superior title by a third party against the
Purchaser's quiet possession of the Vessel and
b. the infringement of any of the rights set out in sub-clause (1) above by
reason of the Purchaser's possession, ownership or operation of the
Vessel.
20.3. The loss referred to in sub-clause (2) above shall include, but shall not
be limited to:
a. the costs and expenses of considering and defending any claim, demand or
proceeding;
25
<PAGE>
b. any sum paid or payable by the Purchaser in respect of any settlement or
any such claim, demand or proceeding;
c. any sum paid or payable by the Purchaser to acquire a license under any of
the rights set out in sub-clause (1) above; and
d. any sum paid or payable by the Purchaser to its servants or agents or to
any operator of the Vessel to indemnify them or any of them against any
such loss, damage, claim demand, processing or liability or the cost of
acquiring a license under any of the such rights.
21. TAXES AND DUTIES
21.1. The Builder shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed in Korea in connection with the
execution and performance of this Contract, However personal income taxes
imposed by Korean Authority upon employees of the Purchaser, if any, shall be
the Purchasers account.
21.2. The Purchaser shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed outside Korea in connection with the
execution and performance of this Contract.
22. ASSIGNMENT
22.1. The Purchaser may transfer, by assignment or novation, to any third party
or parties (herein "Assignee(s)") any of its rights and/or obligations under
this Contract. Provided, however, that, to the extent that any such assignment
or novation transfers to an Assignee the obligations of this Contract, the
purchaser shall be responsible, jointly and severally with the Assignee, to
perform the obligations of this Contract.
22.2. The Builder may, with the prior written approval of the Purchaser assign
the benefit of this Contract.
23. PRIORITY OF DOCUMENTS
23.1. The Appendices hereto shall form an integral part of this Contract as if
the same were expressly set out herein.
23.2. If there is any discrepancy between the following documents priority
between them shall be as follows:-
a. between the terms of this Contract (excluding the Specifications) and the
terms of the Specifications, the terms of the former shall prevail;
b. between the Principal Drawings and the Specifications, the Specifications
shall prevail;
c. between the Principal Drawings, in the order of precedence contained in
Appendix I;
d. between one approved Plan and another approved Plan, the later in date
shall prevail;
24. NOTICES
24.1. Every notice, consent or approval (individually and collectively called
"Communications" for the purposes of this Clause 24) given or required, whether
expressly or impliedly, under this Contract shall be in writing.
24.2. Communications shall be given by the Builder to the Purchaser as follows:
Address: to be advised
Attn:
Facsimile
24.3. Communications shall be given by the Purchaser to the Builder as follows:
Address: to be advised
26
<PAGE>
Attn:
Facsimile
25. RECORDS AND AUDITS
25.1. The Builder shall maintain true and complete records in connection with
the construction of the Vessel and all transactions related thereto, and shall
retain all such records for not less than twenty-four (24) months following
Delivery.
25.2. No director, employee or agent of the Builder shall give or receive any
commission, fee, rebate, gift or entertainment of significant cost or value in
connection with the work under this Contract, or enter into any business
arrangement with any director, employee or agent of the Purchaser.
25.3. If any violation of sub-clause (2) above is found to have occurred prior
to the date of signing this Contact and such violation is determined to have
resulted directly or indirectly in the Purchaser's consent to enter into this
Contract with the Builder the Purchaser may rescind this Contract by notice in
writing to the Builder in which case the provisions of Clause 19.2 shall apply.
25.4. The Builder shall use its best endeavours to procure that all
Subcontractors:-
a. maintain records in accordance with sub-clause (1) above;
b. enter into obligations with the Builder, to the like intent and effect as
those which bind the Builder as above. The Builder shall promptly notify
the Purchaser of any violation of such obligations involving
Subcontractors which comes to the Builder's notice.
26. LAW
26.1. The construction, validity and performance of this Contract shall be
governed by English Law.
27. DISPUTES
27.1. Any claim, difference or dispute which may arise out of this Contract
shall be decided by the Commercial Court of the Queen's Bench Division of the
High Court of England and Wales to whose exclusive jurisdiction the parties
hereby agree.
27.2. For the purposes of any proceedings pursuant to sub-clause (1) above, the
parties hereby irrevocably appoint the following as their agents for the service
of process:
THE BUILDER
To be advised
Ref: [ ]
THE PURCHASER
To be advised
Ref: [ ]
27
<PAGE>
27.3. Without prejudice to the generality of sub-clause (1) above and without
prejudice to any express provision contained herein for referral of any matter
to an expert, any dispute or difference of opinion between the parties relating
to conformity of the construction of the Vessel, Materials or workmanship with
this Contract, the Specifications and the other Contract Documents may, by
agreement between the Parties, be referred to an expert, acting as an expert and
not an arbitrator, to be appointed by agreement between them and whose opinion
on the matter shall be final and binding upon the parties hereto.
27.4. If the parties shall fail to agree either (i) to submit the dispute to a
technical expert or (ii) upon the identity of a mutually acceptable technical
expert as aforesaid, such dispute shall be settled in the manner as defined in
sub-clause 1 above.
28. MISCELLANEOUS
28.1 The terms of this Contract are to remain confidential to the parties and no
disclosure of the same may be made to any third party other than for the
purposes of permitting or ensuring its due performance by either party hereto.
This obligation shall survive termination of this Contract for any reason
whatsoever.
28.2. The Builder undertakes to ensure that all its supervisory staff, both on
and off the construction site, are fluent in the English language and are
capable of understanding any written or verbal instructions in the English
language.
29. SPARE PARTS
29.1. The Builder shall furnish spare parts and maintenance tools of the kind
and in at least the specified quantities in accordance with the Specifications,
Classification Society requirements, and the maker's standards, for items
furnished by the Builder. The cost of these spare parts is included in the
Contract Price.
29.2. In addition, the Builder shall supply to the Purchaser a list of the
maker's recommended spare parts for two (2) years of continuous operations
covering items supplied by Builder, at least six months prior to the Vessel's
completion.
29.3. The spare parts furnished by the Builder shall be properly protected
against physical decay, corrosion and mechanical damage and shall be properly
listed so that replacements may be readily ordered.
29.4. The Builder shall complete the storage spaces installation in time to
enable to positioning, labelling and listing of all spare parts (the Builder and
Purchaser supplied) prior to Delivery. The Builder at his own cost shall be
responsible for handling, bringing on board and storage on the Vessel of all
spare parts, tools and supplies under instruction and supervision of Purchaser's
Representative.
30. SAFETY AND HEALTH STANDARDS
30.1. The Purchaser's Representative will have authority to monitor the
performance of the work done by the Builder to ensure safe and workmanlike
performance.
30.2. It is the Purchaser's policy not only to comply with the safety and health
measures required by law but to act positively to prevent injury, ill health,
damages and loss arising from its operations. The Purchaser requires the Builder
and his sub-contractors to apply health, safety and local environmental
standards in order to achieve high levels of performance. it is essential that
the Builder and his sub-contractors undertaking work consistently show a high
level of safety awareness and prove that they are capable of conducting
themselves in a safe and competent manner in their area of activity.
30.3. The Builder acknowledges the Purchaser's strong commitment to safety and
affirms that he has a written safety policy which has been signed and is
actively supported and endorsed by Builder's management. The Builder further
affirms that his safety policy is widely disseminated, understood and
implemented by and among Builder's
28
<PAGE>
and Builder's sub-contractors' employees. This policy shall be in English and
such other language(s) as required. A copy of Builder's Safety Policy shall be
furnished to the Purchaser prior to start of the work.
30.4. It is essential that good housekeeping is maintained by the Builder's
employees throughout the term of this Contract. The working areas shall be kept
tidy at all times, access ways kept clear and surplus/scrap material removed
daily. Cleaning up at end of the job is not considered sufficient. Spillage of
oil or chemicals shall be cleared up immediately to avoid fire hazards, slippery
surfaces, contact with toxic substance and other hazards. Appropriate safety
precautions shall be taken during cleaning up. No oil grade with flash points
lower than 55 degrees C shall be used for cleaning purposes.
30.5. Asbestos containing products are not to be applied on board the Vessel.
Substitutes therefor shall be applied only after authorisation by the Purchaser.
30.6. The Builder shall report immediately to the Purchaser all accidents
occurring during the term of this Contract and related to work thereunder, that
result in injury to or death of any person and/or damage to or loss of property.
Accidents are defined as "Unintentional or unplanned events that may or may not
result in personal injury or equipment, plant, or property damage, or any
combination of these. The Purchaser reserves the right to stop part or all of
the work at no cost to the Purchaser until relevant unsafe acts and situations
have been rectified and the period work is so stopped shall not be a permitted
reason for extending the of Delivery Date. Any such stoppage of work shall be
confirmed to the Builder in writing by the Purchaser stating the reasons for
stoppage and the actions that the Builder has to implement for work to be
permitted to resume. For minor violation of safety regulations the Purchaser may
choose not to require work stoppage provided that the Builder promptly rectifies
such violation.
30.7. The Purchaser may require the Builder to permanently remove and replace
any of Builder's or Builder's sub-contractors' employees who violate safety
regulations and any equipment which is obviously unsafe.
30.8. The Builder shall, at his own expense, supply his personnel and his
sub-contractors' personnel with adequate protective personal clothing, safety
helmets, safety shoes, and other protective equipment required for the type of
work to be carried out.
31. EFFECTIVENESS
31.1. This Contract is subject to, and shall become effective and legally
binding on the parties as at the date of execution.
31.2. The date upon which the above conditions shall all have been satisfied
shall be known hereunder as the "Effective Date".
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<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Contract to be duly
executed the day and year first above written.
THE PURCHASER: THE BUILDER:
PETRODRILL CONSTRUCTION INC. DAEWOO CORPORATION
/s/ DEREK LEACH /s/ YOUNG-KYUN SHIN
By: Derek Leach By: Young-Kyun Shin
Title: Attorney-in-Fact Title: Attorney-in-Fact
DAEWOO HEAVY
INDUSTRIES LTD
/s/ YOUNG-KYUN SHIN
By: Young-Kyun Shin
Title: President
30
<PAGE>
APPENDIX III
FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
It is this day agreed that m.v. [ ], built by the Builder as
Hull No.[ ] at its[ ] yard in [ ] under a Contract
dated [ ] 1998 and made between the Builder and the Purchaser therein
described has today been delivered by the Builder and accepted by the Purchaser.
Dated:
Signed ....................
for
[ ].
The Builder
Signed ....................
for [ ].
The Purchaser
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APPENDIX VII
LIST OF CERTIFICATES TO BE SUPPLIED
ON DELIVERY OF THE VESSEL
The Builder shall furnish, at the Builder's expense, to the Purchaser the
following certificates upon delivery of the Vessel:
From the Classification Society:
a. Classification certificates for hull, machinery and electricals of the
Vessel.
b. Safety radio telegraph certificate.
c. Load line certificate.
d. Register tonnage certificate.
e. Suez Canal tonnage certificate.
f. MODU CODE certificate.
g. Safety Construction certificate.
h. Certificate of Navigation Lights.
i. Certificate of Lifesaving Equipment, Fire Fighting and Fire Detection
System.
j. Compass Certificate.
k. Compass Deviation Table.
1. MARPOL International Oil Pollution Prevention Certificate (IOPPC).
m. Load test and lifting appliances certificate.
n. Test Certificate of Pressure Vessels.
From the Local Government Authority:
a. De-ratting exemption certificate.
b. Potable water analysis certificate.
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APPENDIX VIII
MAKERS LIST
In accordance with Clause 5.6 of the contract the following maker's list details
the Purchaser's preference based on (1) being the preferred supplier.
- - -------------------------------------------------------------------------------
AMETHYST - APPROVED SUPPLIERS LSIT
- - -------------------------------------------------------------------------------
Steel Suppliers (2) British Steel
(1) Inexa
(2) Posco
Sumitomo
NSC
- - -------------------------------------------------------------------------------
Casting "TBA"
- - -------------------------------------------------------------------------------
16.000 Helideck (3) Baynards
(2) Raufoss
(1) Marine Aluminium
- - -------------------------------------------------------------------------------
19.000 Painting (4) Sigma
(3) Hempel
(5) Carboline
(3) International
(1) Jotun
- - -------------------------------------------------------------------------------
19.000 Cathodic Protection (3) Wilson Walton
(1) Jotun
(4) Impalloy
(2) Electrocataltic
- - -------------------------------------------------------------------------------
32.200 Mooring winches - Capstans (4) Navel
(2) Norwinch
(1) Ulstein
(3) Pusness
(6) Zicom
(5) Plimsol
- - -------------------------------------------------------------------------------
34.010 Liferafts (2) Zodiac
34.200 (1) Viking
(3) Beaufort
(4) RFD
Lifeboats (1) Norsafe
(3) Harding
(2) Schat-Watercraft
- - -------------------------------------------------------------------------------
34.150 Fire Detection (1) Thom Security
(4) Minervia
(2) Autronica
(3) Siemens
- - -------------------------------------------------------------------------------
34.520 C02 system (1) Unitor
(2) LPG
(3) Walter Kidde
(4) Heisn Larsen
- - -------------------------------------------------------------------------------
36.000 Air Conditioning (4) ABB Flakt Marine
(5) Semco
(1) Stork
- - -------------------------------------------------------------------------------
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- - -------------------------------------------------------------------------------
73.000 Fuel Transfer Pumps (2) Hamworthy
(3) Allweiler
(1) IMO
- - -------------------------------------------------------------------------------
75.000 Fresh water pumps (1) Hamworthy
76.000 Sea water pumps (5) Grundfoss
81.000 Ballast pumps (6) Allweiler
(4) Kvaerner
(7) Shinko
(2) Iron
(3) Itvr
- - -------------------------------------------------------------------------------
81.500 Bilge / Dirty Oil Separator (4) Gefico
(3) Blohm & Voss
(2) Alfa Laval
(1) Hermond Marine
- - -------------------------------------------------------------------------------
88.300 Fresh water makers (1) Alfa-laval
(2) Atlas
- - -------------------------------------------------------------------------------
34
EXHIBIT 10.17(A)
SIDE LETTER NO. 1. 9th April 1998
Petrodrill Construction Inc.
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
Daewoo Corporation &
Daewoo Heavy Industries Ltd.
Gentlemen,
Hull No 3015
We refer to the contract executed between us today in respect of the above hull.
This letter serves to confirm the agreement between us that, not withstanding
the terms of the said contract, that portion of the First Instalment which is
calculated as the balance between 10% of the Construction Price and 10% of the
Provisional Contract Price shall only become payable on the Sixtieth day after
the Effective Date of the contract.
Similarly that portion of the Fifth Instalment which is calculated as the
balance between 10% of the Construction Price and 10% of the Provisional
Contract Price shall become payable within seven days of receipt from your
notice, in good-faith that delivery of the Vessel is anticipated within sixty
days.
Further we jointly agree to enter into a formal amendment to the contract and to
the amendment of the KEXIM Refund Guarantee to reflect this arrangement if so
required.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
ACCEPTED ON BEHALF OF DAEWOO CORPORATION AND DAEWOO HEAVY INDUSTRIES LTD.
/s/ YOUNG-KYUN SHIN
YOUNG-KYUN SHIN
ATTORNEY-IN-FACT
9TH APRIL 9, 1998
EXHIBIT 10.17(B)
SIDE LETTER NO. 2. 9th April 1998
Petrodrill Construction Inc.
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
Daewoo Corporation &
Daewoo Heavy Industries Ltd.
Gentlemen,
Hull No 3015
You have expressed a desire to make us an alternative proposal after the
commencement of the contract regarding "neutral funding" of the Listed Items to
be procured under the terms of the contract.
We confirm that we will be prepared to positively consider such a proposal
provided that we are satisfied that:
a) the funding proposed does indeed constitute "neutral funding" with
no gain or loss being made by you; and
b) that the KEXIM Refundment Guarantee provided in the terms of the
contract is in no way prejudiced as regards either the Listed Items
or the Construction Price.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
ACCEPTED ON BEHALF OF DAEWOO CORPORATION AND DAEWOO HEAVY INDUSTRIES LTD.
/s/ YOUNG-KYUN SHIN
Young-Kyun Shin
ATTORNEY-IN-FACT
9TH APRIL 9, 1998
EXHIBIT 10.17(C)
NOVATION AGREEMENT
This NOVATION AGREEMENT is made the 4th day of December 1998 between:
(1) DAEWOO CORPORATION whose principal office is at 541, 5-Ga, Namdaemunro,
Jung-Gu, Seoul, Korea;
(2) DAEWOO HEAVY INDUSTRIES LTD. (together with Daewoo Corporation the
"BUILDER" whose principal office is at 541, 5-Ga, Namdaemunro, Jung-Gu,
Seoul, Korea.;
(3) PETRODRILL OFFSHORE, INC. (formerly "PETRODRILL CONSTRUCTION INC.") (the
"PURCHASER") whose principal office is at Suite 205, Saffrey Square, P.O.
Box N8188, Nassau, Bahamas; and
(4) PETRODRILL SEVEN LIMITED (the "NEW PURCHASER") whose registered office is
at Arias Fabrega & Fabrega, Omar Hodge Building, 2nd Floor, Wickam's Cay
1, Road Town, Tortola, British Virgin Islands.
(together referred to as the PARTIES)
WHEREAS
(A) The Builder and the Purchaser are parties to an agreement relating
to the construction and sale of a dynamic positioned
semi-submersible drilling vessel with Builders Hull No. 3016 dated 9
April 1998 (including any amendments included in the associated
memorandum, meeting minute and/or side letter made from time to time
thereto) (herein called the "AGREEMENT" which expression shall mean
the said Agreement as amended by this Novation Agreement.
(B) The Parties hereto have agreed to novate the Agreement upon the
terms and subject to the conditions set out herein.
NOW IT IS AGREED THAT, WITH EFFECT FROM THE DATE OF THIS NOVATION AGREEMENT:
(1) Terms and expressions defined in the Agreement shall, unless the context
otherwise requires, have the same meanings when used in this Novation
Agreement.
(2) Upon and with effect from the date of this Novation Agreement, the
Purchaser releases and discharges and agrees to release and discharge the
Builder from the various covenants, undertakings, warranties and other
obligations contained in the Agreement which are enjoyed by the Purchaser,
and from all claims and demands whatsoever arising out of or in respect of
the Agreement whether prior to, on or subsequent to the date of this
Novation Agreement.
(3) Upon and with effect from the date of this Novation Agreement, the Builder
releases and discharges and agrees to release and discharge the Purchaser
from the various covenants, undertakings, warranties and other obligations
contained in the Agreement which are enjoyed by the Builder, and from all
claims and demands whatsoever arising out of or in respect of the
Agreement whether prior to, on or subsequent to the date of the Novation
Agreement whether prior to, on or subsequent to the date of the Novation
Agreement.
-1-
<PAGE>
(4) Upon and with effect from the date of this Novation Agreement, the New
Purchaser accepts and agrees to accept the liabilities of the Purchaser
under the Agreement and agrees to perform all the duties and to discharge
all the obligations of the Purchaser under it and to be bound by all the
terms and conditions of this Agreement in every way as if the New
Purchaser were named in the Agreement as a party ab initio in place of the
Purchaser. Without limiting the generality of the foregoing, the New
Purchaser acknowledges and agrees that the Builder shall have the right to
enforce the Agreement and pursue all claims and demands (future or
existing) whatsoever arising out of or in respect of the Agreement whether
prior to, on or subsequent to the date of this Novation Agreement.
(5) Upon and with effect from the date of this Novation Agreement, the Builder
agrees to perform all its duties and to discharge all its obligations
under the Agreement and to be bound by all the terms and conditions of the
Agreement in every way as if the New Purchaser were named in the Agreement
as a party ab initio in place of the Purchaser. Without limiting the
generality of the foregoing, the Builder acknowledges and agrees that the
New Purchaser shall have the right to enforce the Agreement and pursue all
claims and demands (future or existing) whatsoever arising out of or in
respect of the Agreement whether prior to, on or subsequent to the date
of this Novation Agreement.
(6) The New Purchaser confirms that it has received a copy of the Agreement
and that it is familiar with the terms thereof.
(7) Each Party shall take all steps, execute all documents and do everything
reasonably required by any other Party to give effect to the transactions
contemplated by this Novation Agreement provided that the Purchaser and
the New Purchaser shall jointly and severally reimburse the Builder on a
full indemnity basis for all reasonable costs and expenses (including
legal fees) incurred by the Builder pursuant to this Clause 7 or otherwise
howsoever in connection with the negotiation and execution of this
Novation Agreement.
(8) If the second Instalment of the Contract Price is not received by the
Builder by 15 December 1998, the Builder shall be entitled immediately
thereafter to rescind the Agreement by giving written notice to the New
Purchaser and to exercise all the Builder's rights under the Agreement.
-2-
<PAGE>
SIGNED by DAEWOO CORPORATION
on behalf of BUILDER in the presence of: /s/ YOUNG-KYUN SHIN
Young-Kyun Shin
Attorney-In-Fact
SIGNED by DAEWOO HEAVY INDUSTRIES
LTD. on behalf of BUILDER in the presence of: /s/ YOUNG-KYUN SHIN
Young-Kyun Shin
President
SIGNED by PETRODRILL OFFSHORE INC.
on behalf of PURCHASER in the presence of: /s/ STEVE ASSITER
Steve Assiter
Attorney-In-Fact
SIGNED by PETRODRILL SEVEN LIMITED
on behalf of NEW PURCHASER in the presence of: /s/ STEVE ASSITER
Steve Assiter
Attorney-In-Fact
-3-
EXHIBIT 10.17(D)
DAEWOO CORPORATION & DAEWOO HEAVY INDUSTRIES LTD
AND
PETRODRILL SEVEN LIMITED.
MAIN CONTRACT AMENDMENT AGREEMENT
HULL 3015
<PAGE>
This Agreement made and entered into this day of December, 1998 by and
between:
1. Daewoo Corporation & Daewoo Heavy Industries Ltd., both corporations
organised and existing under the laws of Republic of Korea and having their
principal offices at 541, Namdaemun-Ro 5-Ga, Chung-Gu, Seoul, Korea
(hereinafter jointly and severally referred to as "BUILDER") of the first
Part;
2. Petrodrill Seven Limited a corporation organised under the laws of the
British Virgin Islands having its principal office at 325 Waterfront Drive,
Omar Hodge Building, 2nd Floor Wickham's Cay 1, PO Box 985, Road Town,
Tortola, British Virgin Islands ("PURCHASER") of the Second Part;
3. Petrodrill Offshore Inc (formerly Petrodrill Construction Inc.) a
corporation organised under the laws of the Bahamas having its principal
office at Suite 205, Saffrey Square, PO Box N8188, Nassau, Bahamas
("CONSENTOR").
WHEREAS,
(1) Builder and Purchaser are parties to a contract dated 9 April 1998 for the
construction and sale of a dynamic positioned semi-submersible drilling
vessel Hull No. 3015 (the "MAIN CONTRACT") as novated in the Purchasers
favour by the Novation Agreement dated 4th December 1998 (THE NOVATION
AGREEMENT).
(2) Builder and Purchaser wish to amend certain of the payment provisions and
the delivery date specified in the Main Contract in the manner hereinafter
written.
NOW, THEREFORE, in consideration of the mutual promises herein contained, it is
agreed as follows:
1.0 - MAIN CONTRACT AMENDMENT
1.1 The payment date for the Second Instalment under Clause 4.1 of the
Main Contract is to be amended to reflect that payment will be made on
the 23rd December 1998:
1.2 Clause 14.1 of the Main Contract is amended as follows:
"The Vessel shall be delivered by the Builder to the Purchaser at the
Shipyard (or other place as may be agreed with unrestricted access to
the open sea) on the 30th June 2000 except that, in the event of
Permissible Delay, as defined in Clause 15.2 hereof, the
aforementioned date shall be postponed accordingly. The aforementioned
date, or such later date to which requirement to deliver may be
postponed, is herein called the "Contract Delivery Date".
2 MISCELLANEOUS:
2.1 This Agreement is supplemental to the Main Contract. Except as
expressly amended as set out herein the Main Contract remains in full
force and effect.
2.2 The amendments contained in Clause 1.0 hereof shall be deemed to have
been in effect from the 9th April 1998, notwithstanding the date of
this Agreement.
2.3 The construction, validity and performance of this Agreement shall be
governed by English law.
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Daewoo Main Contract Amendment II -- Hull 3015 16-Dec-98
- 1 -
<PAGE>
2.4 This Agreement may be signed in any number of counterparts all of
which when taken together will constitute one and the same document.
3 NOVATION AGREEMENT CORRECTION:
3.1 The Parties hereto and the Consentor acknowledge that the Novation
Agreement erroneously referred, to "Hull 3016" in its description of
the Main Contract in Recital (A) thereof, where as its correct
designation is "Hull 3015" and the Parties and the Consentor hereby
agree that the Novation Agreement should be construed and deemed amended
accordingly.
4 CONDITION SUBSEQUENT
4.1 This Agreement is entirely conditional upon the Purchaser making payment
of the Second Instalment by the date specified in Clause 1.1 hereof,
otherwise this Agreement shall be deemed null and void and the Main
Contract shall have effect unamended.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed the day and year first above written.
For and on behalf of For and on behalf of
DAEWOO CORPORATION PETRODRILL SEVEN LIMITED
/s/ KYU-SANG SHIM /s/ D. LEACH
Name: KYU-SANG SHIM Name: D. Leach
Title: Attorney-in-Fact Title: Attorney
For and on behalf of For and on behalf of
DAEWOO HEAVY INDUSTRIES LTD. PETRODRILL OFFSHORE Inc
/s/ KYU-SANG SHIM /s/ D. LEACH
Name: KYU-SANG SHIM Name: D. Leach
Title: Attorney-in-Fact Title: Attorney
We THE EXPORT-IMPORT BANK of KOREA hereby acknowledge the terms of this
Amendment:
______________________________
Name: Title:
Date
- - --------------------------------------------------------------------------------
Daewoo Main Contract Amendment II -- Hull 3015 16-Dec-98
- 2 -
<PAGE>
[DAEWOO LETTERHEAD]
POWER OF ATTORNEY
Know All Men By These Presents:
That DAEWOO HEAVY INDUSTRIES LTD., a corporation duly organized and existing
under the laws of the Republic of Korea (the "Korea") and having its principal
office at 541, Namdaemun-no 5-ga, Chung-gu, Seoul, Korea (the "Company"),
hereby authorizes anyone of the following people: Kyu-Sang Shim/Executive
Director and Wan-Soo Ryu/General Manager of the Company to discuss, negotiate
and/or sign individually in the name and on behalf of the Company the
Construction Contracts for two (2) Dynamic Positioned Semi-Submersible Drilling
Vessels Identified as Daewoo Hull Nos. 3015 and 3016 between PETRODRILL
CONSTRUCTION INC. a corporation duly organized and existing under the laws of
Bahamas, having its principal office at Suite 205, Saffrey Square PO Box N8188,
Nassau, Bahamas, (hereinafter called "Purchaser"), or its nominee and the
Company, and all documents, including any of Specifications, Amendments,
Addenda, Memoranda and Agreements etc. to be executed/entered into in respect
to/in connection with the aforesaid Construction Contracts.
This Power of Attorney shall remain in full force and effect unless this
authority shall be revoked and notice of such revocation shall be received by
you.
IN WITNESS WHEREOF, I have hereunto set may hand and signature this April 6,
1998.
Daewoo Heavy Industries Ltd.
By : /s/ Y. K. SHIN
Name : Young-Kyun Shin
Title: President
<PAGE>
[DAEWOO CORPORATION LETTERHEAD]
POWER OF ATTORNEY
We, Daewoo Corporation, a corporation duly organized and existing under the
laws of the Republic of Korea and having its principal office at 541,
Namdaemun-ro 5-Ga, Jung-Gu, Seoul, Korea (hereinafter called "Company"),
hereby authorize each of Young-Kyun Shin/President, Kyu-Sang Shim/Executive
Director and Wan-Soo Ryu/General Manager of Daewoo Heavy Industries Ltd. to
discuss, negotiate and/or sign not jointly but separately in the name and on
behalf of the Company THE CONTRACT FOR CONSTRUCTION OF DYNAMIC POSITIONED
SEMI-SUBMERSIBLE DRILLING VESSELS between PETRODRILL N.V. and the company, and
all documents including any of specifications, amendments, addenda, agreements,
etc. to be executed/entered into in respect to/in connection with the aforesaid
Contract.
This Power of Attorney shall remain in full force and effect unless this
authority shall be revoked and notice of such revocation shall be received by
you.
IN WITNESS WHEREOF, I have hereto set my hand and signature this April 6, 1998.
Yours faithfully,
For Daewoo Corporation
/s/ BYUNG-JU CHANG
Byung-Ju Chang
President
EXHIBIT 10.17(E)
DAEWOO CORPORATION & DAEWOO HEAVY INDUSTRIES LTD
AND
PETRODRILL SEVEN LTD.
MAIN CONTRACT AMENDMENT AGREEMENT II
HULL 3015
<PAGE>
This Agreement made and entered into this 28th day of January, 1999 by and
between:
1 Daewoo Corporation & Daewoo Heavy Industries Ltd., both corporations
organised and existing under the laws of Republic of Korea and having their
principal offices at 541, Namdaemun-Ro 5-Ga, Chung-Gu, Seoul, Korea
(hereinafter jointly and severally referred to as "BUILDER"); and
2 Petrodrill Seven Limited, a corporation organised under the laws of the
British Virgin Islands having its principle office at 325 Waterfront Drive,
Omar Hodge Building, 2nd Floor Wickhams Cay 1, PO Box 985, Road Town,
Tortola, British Virgin Islands. ("PURCHASER").
WHEREAS,
(1) Builder and Purchaser are parties to a contract dated 9 April 1998 for
the construction and sale of a dynamic positioned semi-submersible
drilling vessel Hull No. 3015 (the "MAIN CONTRACT").
(2) Builder and Purchaser are parties to the Main Contract Amendment
Agreement dated 17 December 1998.
(3) Builder and Purchaser wish to amend the payment terms set out in the
Main Contract in accordance with the terms and conditions set out in
this Agreement.
(4) The Export-Import Bank of Korea ("KEXIM") has by a Refund Guarantee
dated 16 April 1998 (the "REFUND GUARANTEE") guaranteed certain
repayment obligations of the Builder to the Purchaser under the Main
Contract.
(5) The parties have agreed that this Agreement and the things contemplated
by it are in all respects subject to and conditional upon KEXIM issuing
a letter of amendment to the Refund Guarantee in the form required by
this Agreement.
(6) The parties wish to record the terms of their agreements on the terms
and conditions set out in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein contained, it
is agreed as follows:
1 CONDITION PRECEDENT
This Agreement is in all respects subject to and conditional upon the
Builder obtaining from KEXIM and delivering to the Purchaser a letter of
amendment to the Refund Guarantee in the form attached as Appendix A duly
executed on behalf of KEXIM.
2 MAIN CONTRACT AMENDMENT
2.1 Clause 4.1 of the Main Contract is amended as follows:
"4.1 The Purchaser shall pay the Construction Price to the Builder
in five instalments as follows, the pre-delivery instalments being
paid as advances and not as deposits:
FIRST INSTALMENT
Ten percent (10%) of the Construction Price, being $8,500,000 shall
be paid within three Banking Days of the Effective Date.
SECOND INSTALMENT
Thirty percent (30%) of the Construction Price, being $25,500,000,
shall be paid within three Banking Days from receipt by the
Purchaser of a telefax notice from the Builder attaching a Stage
Certificate in the form of the draft attached as Appendix V,
countersigned by an Authorized Representative (or, in default
thereof, the Classification Surveyor), certifying that it is 6
months after the Effective Date of the contract has taken place.
THIRD INSTALMENT
Twenty percent (20%) of the Construction Price, being $17,000,000
shall be paid within three Banking Days of receipt by the Purchaser
of a telefax notice from the Builder attaching a Stage Certificate
in the form of the draft attached as Appendix V, countersigned by
an
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Daewoo Main Contract Amendment II -- Hull 3015 -- Petrodrill Seven
Ltd 28-Jan-99
- 2 -
<PAGE>
Authorised Representative (or, in default thereof, the
Classification Surveyor), certifying that Keel laying has taken
place.
FOURTH INSTALMENT:
Twenty percent (20%) of the Construction Price, being $17,000,000
shall be paid within three Banking Days of receipt by the Purchaser
of a telefax notice from the Builder attaching a Stage Certificate
in the form of the draft attached as Appendix V, countersigned by
an Authorised Representative (or, in default thereof, the
Classification Surveyor), certifying that launch [float out] laying
has taken place.
FIFTH INSTALMENT:
Twenty percent (20% of the Construction Price, together with any
increase or any decrease of the Construction Price arising from the
Provisions of Clauses 7 and 16 below, shall be paid upon
Delivery."
2.2 A new provision is inserted as Clause 4.1A of the Main
Contract as follows:
"4.1A The Purchaser shall pay the difference between the
Construction Price and the Provisional Contract Price
(the "LISTED ITEMS PRICE") to the Builder in nine
instalments as follows, the pre-delivery instalments
being paid as advances and not as deposits:
FIRST INSTALMENT:
Ten percent (10%) of the Listed Items Price, being
$5,100,000, shall be paid on or before 9th June 1998.
SECOND INSTALMENT:
Fifteen percent (15%) of the Listed Items Price, being
$7,650,000 shall be paid on or before 17th March 1999.
THIRD INSTALMENT:
Five percent (5%) of the Listed Items Price, being
$2,550,000, shall be paid on or before 30th March 1999.
FOURTH INSTALMENT:
Ten percent (10%) of the Listed Items Price, being
$5,100,000 shall be paid on or before 30 April 1999.
FIFTH INSTALMENT
Fifteen percent (15%) of the Listed Items Price, being
$7,650,000, shall be paid on or before 30 June 1999.
SIXTH INSTALMENT
Ten percent (10%) of the Listed Items Price, being
$5,100,000, shall be paid on or before 30 August 1999.
SEVENTH INSTALMENT
Ten percent (10%) of the Listed Items Price, being
$5,100,000, shall be paid on or before 30 October 1999.
EIGHTH INSTALMENT:
Ten percent (10%) of the Listed Items Price, being
$5,100,000, shall be paid on or before 30 December 1999.
NINTH INSTALMENT:
Ten percent (10%) of the Listed Items Price, being
$5,100,000, shall be paid on or before 28th February
2000.
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Daewoo Main Contract Amendment II -- Hull 3015 -- Petrodrill Seven
Ltd 28-Jan-99
- 3 -
<PAGE>
TENTH INSTALMENT:
Five percent (5%) of the Listed Items Price, being
$2,550,000 together with (or minus) any anticipated
excess or (shortfall) of the Listed Items Price over (or
under) the provisional Listed Items Price, shall be paid
on or before 30 April 2000."
23. Clause 5.7 of the Main Contract is amended as follows:
5.7 Unless the Purchaser shall otherwise agree the Builder shall supply
those items of Materials set out in Appendix IIA (the Listed Items) from
suppliers and subcontractors nominated by the Purchaser. The Purchaser,
as agent for and on behalf of the Builder, shall negotiate terms and
expedite equipment with each of the Nominated Subcontractors in order to
supply the Listed Items set out in Appendix IIA. It is however,
expressly agreed that the Purchaser shall contract and expedite with
each of the suppliers of the Listed Items as agent for and on behalf of
the Builder and the ownership in such Listed Items shall vest with the
Builder.
2.4 Clause 5.8 of the Main Contract is amended as follows:
"5.8 The price for the Listed Items, including delivery to the Builder's
yard, negotiated by the Purchaser, on behalf of the Builder, with the
Nominated Subcontractors shall be included in the contract price based
on the overall budget as set out in Clause 3.1 (b). In the event of any
variations in the actual price then the Listed Items Price shall be
increased or decreased by an amount equal to the amount of such
variations. Any such variations shall be payable by the Purchaser by
means of an adjustment of the final instalments of the Construction
Price."
2.5 Clause 5.9 of the Main Contract is amended as follows:
5.9 Furthermore, in the event that delivery to the Builder of any Listed
Item is delayed beyond the Target Delivery Date for the same set out in
Appendix IIA, the Builder shall be entitled to a postponement of the
Contractual Delivery Date for a period as it shall demonstrate, by
reference to the "critical path" that the Vessel's construction and
completion has actually been delayed. Delays in delivery of more than
one Listed Item occurring simultaneously, shall have given rise only to
concurrent (rather than consecutive) extensions. Any verified and
documented delays caused, or contributed to by the Builder taking more
than 14 days, after receipt, to pay approved Nominated Subcontractors
invoices that have been submitted by the Purchaser in the agreed format
will become cause for an adjustment in the delivery date of the Listed
Items as detailed in Appendix IIA. Such adjustments shall reflect the
ultimate delay in the arrival of the Listed Item at the Builder's yard.
3. MISCELLANEOUS
3.1 Any capitalised terms in this Agreement not defined in this Agreement
shall have the same meaning as defined in the Main Contract.
3.2 This Agreement shall become effective as soon as executed by all
parties subject to Clause 1 of this Agreement.
3.3 This Agreement is supplemental to the Main Contract and the Main
Contract Amendment Agreement. Except as expressly amended as set out
herein the Main Contract and the Main Contract Amendment Agreement
remain in full force and effect.
3.4 The construction, validity and performance of this Agreement shall be
governed by English law.
3.5 This Agreement may be signed in any number of counterparts all of which
when taken together will constitute one and the same document.
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Daewoo Main Contract Amendment II -- Hull 3015 -- Petrodrill Seven
Ltd 28-Jan-99
- 4 -
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed the day and year first above written.
For and on behalf of For and on behalf of
DAEWOO CORPORATION PETRODRILL SEVEN Limited.
/s/ K. S. SHIM /s/ D. LEACH
Name: K. S. SHIM Name: D. Leach
Title: Attorney-in-fact Title: Attorney-in-fact
Attested by Attested by
For and on behalf of
DAEWOO HEAVY INDUSTRIES LTD.
/s/ K. S. SHIM
Name: K. S. SHIM
Title: Managing Director
Attested by
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Daewoo Main Contract Amendment II -- Hull 3015 -- Petrodrill Seven
Ltd 28-Jan-99
- 5 -
EXHIBIT 10.18
THE EXPORT-IMPORT BANK OF KOREA
[LETTERHEAD]
REFUND GUARANTEE
To: PETRODRILL CONSTRUCTION INC April 16, 1998
Daewoo Heavy Industries Ltd's Hull Number 3015
We hereby issue our irrevocable guarantee No.M0902-804-LG-00040 in favour of
yourselves, Petrodrill Construction Inc, for the account of Daewoo Corporation
and Deawoo Heavy Industries Ltd (hereinafter called the "Builder") in connection
with the shipbuilding contract dated 9th April 1998 (hereinafter called the
"Contract") made by and between yourselves and the Builder for the construction
and sale of one Dynamic Positioned Semi-Submersible Drilling Vessel having
Builder's Hull No.3015 (hereinafter called the "Vessel"). Other terms and
expressions employed herein shall bear the same meaning as in the Contract, a
copy of which has been provided to us.
Under the terms of the Contract you are to pay to the Builder a Contract Price
for the Vessel in five instalments payable as follows:-
(a) FIRST INSTALMENT:
10 percent (ten %) of the Provisional Contract Price, being $13,600,000
shall be paid within three Banking Days of the Effective Date.
(b) SECOND INSTALMENT:
30 percent (thirty %) of the Provisional Contract Price, being $40,800,000
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that it is 6 months after the Effective Date of the contract has
taken place.
(c) THIRD INSTALMENT:
20 percent (twenty %) of the Provisional Contract Price, being $27,200,000
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that Keel laying has taken place.
-- Continued on Page 2 --
<PAGE>
-- Page 2 --
(d) FOURTH INSTALMENT:
20 percent (twenty %) of the Provisional Contract Price, being $27,200,000
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that launcing [float out] has taken place.
(e) FIFTH INSTALMENT:
20 percent (twenty %) of the Provisional Contract Price, together with the
aggregate of (i) any excess of the Contract Price over the Provisional
Contract Price and (ii) any increase or any decrease of the Contract Price
arising from the provisions of Clauses 7 and 16 below, shall be paid upon
Delivery.
In accordance with the terms of the Contract you are entitled either upon your
rescission therof or upon a Total Loss of the Vessel to repayment of the
instalments of the Contract Price paid by you prior to such rescission, together
with interest thereon at a fixed rate of 10% p.a. (calculated on the same basis
as any London inter-bank commercial transaction) from the date of payment by the
Purchaser to the date such instalments plus interest are returned to the
Purchaser. In the event that the Builder shall fail to make such repayment, we
shall pay to you the sum or sums due to you from the Builder against your
written statement (or that of your assignee) that demand for repayment has been
made and that the Builder has within thirty(30) Business Days of such demand
failed to comply therewith. Such written statement shall identify (i) the number
and amount of Instalments in respect of which repayment has not been received
and (ii) the total interest payable in respect of the same on the assumption
that payment of the principal sum outstanding is made by us thirty (30) Business
Days from the date of receipt of such statement.
This guarantee shall initially secure repayment of the First Instalment of the
Contract Price (plus interest thereon as hereinbefore provided) from the date of
receipt of the same by the Builder. The maximum sum claimable by you hereunder
will thereafter be automatically increased upon Builder's receipt of each
further Instalment of the Contract Price payable prior to Delivery of the
Vessel, each time by the amount of such Instalment plus interest thereon as
hereinbefore provided, but in any eventuality our total liability hereunder
shall not exceed the sum of US$108,800,000 plus interest thereon as hereinbefore
provided.
-- Continued on Page 3 --
<PAGE>
-- Page 3 --
THE EXPORT-IMPORT BANK OF KOREA
[LETTERHEAD]
Notwithstanding the provisions here in above in case we receive notification
from you or the Builder stating that the question of your rescission of the
Contract or your claim for refundment thereunder has been disputed and referred
to the Commercial Court in accordance with the provisions of the Contract, this
Guarantee shall be valid until 30 days after the final judgement shall be
rendered in said Court. In such case this Guarantee shall only be available to
the extent of a final judgement in your favour by such Court justifying your
claim for refundment as presented to us or specifying such lesser amount as the
Court may determine as being due to you.
Our liability hereunder shall not be affected by any alteration to, or variation
of, the terms of the Contract you may hereafter agree with the Builder or any
other matter or circumstance which would, but for this clause, operate to
exclude or limit our liability hereunder.
This guarantee shall be fully assignable by you. It shall expire and become null
and void upon the earliest of (i) receipt by you or your assignee of the amount
guaranteed hereunder and (ii) Delivery of the Vessel in accordance with the
provisions of the Contract or (iii) valid rescission by the Builder in
accordance with the terms of the Contract. In such case, this guarantee shall be
returned to us.
This guarantee shall be governed by, and construed in accordance with English
law, and we hereby (i) agree for your exclusive benefit that any legal action or
proceeding arising hereunder may be brought in the High Court of Justice in
England (ii) irrevocably submit to the jurisdiction of that court and (iii)
irrevocably designate, appoint and empower London Representative Office of The
Export-Import Bank of Korea (the present address of whose registered office is
3rd floor Boston House, 63 New Broad Street, London EC2M 1JJ, United Kingdom) to
receive for us and on our behalf of process in England.
Yours very truly,
For and on behalf of
The Export-Import Bank of Korea
By: /s/ WON-YOUNG CHUN By: /s/ JONG BOK LEE
Name: Won-Young Chun Name: Jong Bok Lee
Title: Senior Manager & Title: Assistant Manager &
Senior Loan Officer Loan Officer
/Ship Export Credit Dept. /Ship Export Credit Dept.
<PAGE>
THE EXPORT-IMPORT BANK OF KOREA
LIST OF
AUTHORIZED SIGNATURES
THE EXPORT-IMPORT BANK OF KOREA
INSTRUCTIONS
This booklet contains the facsimile signatures in alphabetical order of the
officers, who are authorized to sign on behalf of this bank.
1. Each member of the Board of Executive Directors has full and complete
authority to sign alone for this bank.
2. The transactions mentioned below in excess of U$10,000 (or the equivalent
thereof in other currency) shall be signed by two officers, at least one of
whom must be an officer in A Class.
A. Issuance of check, bill of exchange or promissory note.
B. Instructions to effect the payment or transfer of funds not involving
the documentary letter of credit.
C. Opening and amendment of letter of guarantee.
D. Opening and amendment of clean letter of credit.
We will inform you of any change of list whenever it occurs.
- 1 -
<PAGE>
THE EXPORT-IMPORT BANK OF KOREA
Chang-Jin Chong A
/s/ CHANG-JIN CHONG
049
Won-Young Chun A
/s/ WON-YOUNG CHUN
050
Chang-Ho Chung B
/s/ CHANG-HO CHUNG
051
Chul-Choong Chung A
/s/ CHUL-CHOONG CHUNG
052
THE EXPORT-IMPORT BANK OF KOREA
Young-Kon Kim B
/s/ YOUNG-KON KIM
Hyung-Ju Lee B
/s/ HYUNG-JU LEE
Jae-Hong Lee B
/s/ JAE-HONG LEE
Jong-Bok Lee B
/s/ JONG-BOK LEE
EXHIBIT 10.18(A)
NOVATION AGREEMENT
This NOVATION AGREEMENT is made the 4 day of Dec 1998
between:
(1) THE EXPORT-IMPORT BANK OF KOREA (the Bank) whose principal office is at
16-1, Yoidodong, Youngdungpo Gu, Seoul, Korea;
(2) PETRODRILL OFFSHORE INC. (formerly Petrodrill Construction Inc.) (the
BENEFICIARY) whose principal office is at Suite 205, Saffrey Square, PO
Box N8188, Nassau, Bahamas; and
(3) PETRODRILL SEVEN LIMITED (the NEW BENEFICIARY ), whose registered office
is at Arias, Fabrega & Fabrega, Omar Hodge Building, 2nd Floor, Wickham's
Cay 1, PO BOX 986, Road Town, Tortola, British Virgin Islands.
(together referred to as the PARTIES)
Whereas
(A) The Bank and the Beneficiary are parties to a Refund Guarantee dated
16 April 1998 securing the obligations of Daewoo Corporation &
Daewoo Heavy Industries Ltd. In respect of the construction and sale
of a dynamic positioned semi-submersible drilling vessel with
Builders Hull No. 3015 (including any amendments described in the
associated memorandum, meeting minute and/or side letter made from
time to time thereto) (the Guarantee).
(B) The Parties hereto have agreed to novate the Guarantee.
Now it is agreed that, with effect from the date of this Novation Agreement:
(1) Terms and expressions defined in the Guarantee shall, unless the context
otherwise requires, have the same meanings in this Novation Agreement.
(2) The Beneficiary releases and discharges the Bank from the various
covenants, undertakings, warranties and other obligations contained in the
Guarantee which are enjoyed by the Beneficiary, and from all claims and
demands whatsoever arising out of or in respect of the Guarantee whether
prior to, on or subsequent to the date of this Novation Agreement.
(3) The Bank agrees to perform all its duties and to discharge all its
obligations under the Guarantee and to be bound by all the terms and
conditions of the Guarantee in every way as if the New Beneficiary were
named in the Guarantee as a party AB INITIO in place of the Beneficiary.
Without limiting the generality of the foregoing, the Bank acknowledges
and agrees that the New Beneficiary shall have the right to enforce the
Guarantee and pursue all claims and demands (future or existing)
whatsoever arising out of or in respect of the Guarantee whether arising
prior to, on or subsequent to the date of this Novation Agreement.
-1-
<PAGE>
(4) Each party shall take all steps, execute all documents and do everything
reasonably required by any other Party to give effect to the transactions
contemplated by this Novation Agreement.
(5) This Novation Agreement is governed by and shall be construed in
accordance with the laws of England and the Parties hereby submit to the
exclusive jurisdiction of the courts of England.
In witness whereof this Novation Agreement has been signed on behalf of
the Parties the day and year first before written.
SIGNED on behalf of EXPORT-IMPORT
BANK OF KOREA in the presence of: )/s/ Illegible
)/s/ Illegible
SIGNED on behalf of PETRODRILL
OFFSHORE INC. in the presence of: )/s/ DEREK LEACH
D. Leach
Attorney
)/s/ H. STEPHEN ASSITER
H.S. Assiter Witness
SIGNED on behalf of PETRODRILL
SEVEN LIMITED in the presence of: )/s/ DEREK LEACH
D. Leach
Attorney
)/s/ H. STEPHEN ASSITER
H.S. Assiter Witness
-2-
EXHIBIT 10.18(B)
THE EXPORT-IMPORT BANK OF KOREA
[LETTERHEAD]
TO: PETRODRILL SEVEN Ltd. April 6, 1999
Re: Daewoo Heavy Industries Ltd.'s Hull Number 3015
1. We refer to our irrevocable guarantee No. M0902-804-LG-00040 (the "Refund
Guarantee") in favour of yourselves, Petrodrill Seven Limited, for the
account of Daewoo Corporation and Daewoo Heavy Industries Ltd. (the
"Builder") in connection with the shipbuilding contract dated 9th April,
1998 made by and between yourselves and the Builder for the construction and
sale of one Dynamic Positioned Semi-Submersible Drilling Vessel having
Builder's Hull No. 3015. Other terms and expressions employed herein shall
bear the same meaning as in the Contract, a copy of which has been provided
to us.
2. In consideration for your entering into a Main Contract Amendment Agreement
dated 28th January, 1999 between yourselves and the Builder, we hereby agree
that from the date of this letter the Refund Guarantee is amended as
follows:
2.1 The second paragraph shall read as follows:
"Under the terms of the Contract you are to pay to the Builder a
Contract Price, comprising the Construction Price and the Listed Items
Price, for the Vessel as follows:
(a) The Construction Price in five installments as follows:
(i) First Instalment:
Ten Percent (10%) of the Construction Price, being $8,500,000,
shall be paid within three Banking Days of the Effective Date.
(ii) Second Instalment:
Thirty percent (30%) of the Construction Price, being $25,500.00,
shall be paid within three Banking Days from receipt by the
Purchaser of a telefax notice from the Builder attaching a Stage
Certificate in the form of the draft attached as Appendix V,
countersigned by an Authorised Representative (or, in default
thereof, the Classification Surveyor), certifying that it is 6
months after the Effective Date of the contract has taken place.
(iii) Third Instalment:
Twenty percent (20%) of the Construction Price, being $17,000,000,
shall be paid within three Banking Days from receipt by the
Purchaser of a telefax notice from the Builder attaching a Stage
Certificate in the form of the draft attached as Appendix V,
countersigned by an Authorised Representative (or, in default
thereof, the Classification Surveyor), certifying that Keel laying
has taken place.
(iv) Fourth Instalment:
Twenty percent (20%) of the Construction Price, being $17,000,000,
shall be paid within three Banking Days from receipt by the
Purchaser of a telefax notice from the Builder attaching a Stage
Certificate in the form of the draft attached as Appendix V,
countersigned by an Authorised Representative (or, in default
thereof, the Classification Surveyor), certifying that launching
[float out] has taken place.
(v) Fifth Instalment:
Twenty percent (20%) of the Construction Price, together with any
increase or any decrease of the Construction Price arising from
the provisions of Clauses 7 and 16 of the Contract, shall be paid
upon Delivery.
(b) The Listed Items Price in ten instalments as follows:
-- Continued on Page 2 --
<PAGE>
THE EXPORT-IMPORT BANK OF KOREA
[LETTERHEAD]
-- Page 2 --
(i) First Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000, shall be
paid on or before 9th June 1998.
(ii) Second Instalment:
Fifteen percent (15%) of the Listed Items Price, being $7,650,000, shall be
paid on or before 17th March 1999.
(iii) Third Instalment:
Five percent (5%) of the Listed Items Price, being $2,550,000, shall be
paid on or before 30th March 1999.
(iv) Fourth Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000, shall be
paid on or before 30th April 1999.
(v) Fifth Instalment:
Fifteen percent (15%) of the Listed Items Price, being $7,650,000, shall be
paid on or before 30th June 1999.
(vi) Sixth Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000, shall be
paid on or before 30th August 1999.
(vii) Seventh Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000, shall be
paid on or before 30th October 1999.
(viii) Eighth Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000, shall be
paid on or before 30th December 1999.
(ix) Ninth Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000, shall be
paid on or before 28th February 2000.
(x) Tenth Instalment:
Five percent (5%) of the Listed Items Price, being $2,550,000, together
with (or minus) any excess (or shortfall) of the Listed Items Price over (or
under) the provisional Listed Items Price, shall be paid on or before 30th April
2000.
2.2 In the fourth paragraph, the sum of "US$108,800,000" is deleted and
replaced by the sum of "US$119,000,000."
3. We confirm that, except as expressly amended herein, the Refund Guarantee
remains in full force and effect.
4. The terms of this letter shall be governed by, and construed in accordance
with, English law.
5. Please sign and return the attached copy of this letter to signify your
acceptance of the terms set out herein.
-- Continued on Page 3 --
<PAGE>
THE EXPORT-IMPORT BANK OF KOREA
[LETTERHEAD]
-- Page 3 --
Yours very truly,
For and on behalf of
The Export-Import Bank of Korea
By: /s/ JONG-BOK LEE By; /s/ WON-YOUNG CHUN
Jong-Bok Lee Won-Young Chun
Assistant Manager & Senior Manager &
Loan Officer Senior Loan Officer
/Ship Export Credit Dept. /Ship Export Credit Dept.
We hereby agree to the terms set out herein.
/s/ D LEACH
For and on behalf of Petrodrill Seven Limited
EXHIBIT 10.19
HULL NO 3016
CONTRACT
FOR CONSTRUCTION AND SALE OF A
DYNAMIC POSITIONED SEMI-SUBMERSIBLE
DRILLING VESSEL
BETWEEN
DAEWOO CORPORATION & DAEWOO HEAVY INDUSTRIES LTD
AND
PETRODRILL CONSTRUCTION INC.
<PAGE>
INDEX
PAGE
DEFINITIONS ........................................................... 4
1. PURPOSE OF THIS CONTRACT .............................................. 2
2. DESIGN: PRINCIPAL DIMENSIONS AND CHARACTERISTICS:
CLASSIFICATION: MANDATORY REGULATIONS: REGISTRATION ................... 2
3. CONTRACT PRICE ........................................................ 2
4. PAYMENT SCHEDULE ...................................................... 2
5. APPROVAL OF PLANS: SUBCONTRACTING ..................................... 2
6. VARIABLE LOAD CAPACITY ................................................ 2
7. MODIFICATIONS.......................................................... 2
8. INSPECTION ............................................................ 2
9. PLANNED PROGRAMME, PROGRESS CONTROL AND REPORTING ..................... 2
10. TITLE ................................................................. 2
11. RISK AND INSURANCE .................................................... 2
12. LOSS OR DAMAGE TO THE VESSEL .......................................... 2
13. TRIALS: TECHNICAL ACCEPTANCE ......................................... 2
14. DELIVERY OF THE VESSEL ................................................ 2
15. EXTENSION OF TIME FOR DELIVERY: PERMISSIBLE DELAY ..................... 2
16. DELAY IN DELIVERY ..................................................... 2
17. DEFECTS AND BUILDER'S GUARANTEE ....................................... 2
18. DEFAULT BY THE PURCHASER .............................................. 2
19. DEFAULT BY THE BUILDER ................................................ 2
20. PATENT INDEMNITY ...................................................... 2
21. TAXES AND DUTIES ...................................................... 2
22. ASSIGNMENT ............................................................ 2
23. PRIORITY OF DOCUMENTS ................................................. 2
24. NOTICES ............................................................... 2
<PAGE>
25. RECORDS AND AUDITS .................................................... 2
26. LAW ................................................................... 2
27. DISPUTES .............................................................. 2
28. MISCELLANEOUS ......................................................... 2
29. SPARE PARTS ........................................................... 2
30. SAFETY AND HEALTH STANDARDS ........................................... 2
31. EFFECTIVENESS ......................................................... 2
APPENDICES
APPENDIX I LIST OF PRINCIPAL DRAWINGS AND OTHER CONTRACT DOCUMENTS
APPENDIX II PLANNED PROGRAMME
APPENDIX IIA LISTED ITEMS
APPENDIX III FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
APPENDIX IV FORM OF REFUND GUARANTEE
APPENDIX V FORM OF STAGE CERTIFICATE
APPENDIX VI SCHEDULE OF LABOUR COSTS FOR MODIFICATIONS
APPENDIX VII LIST OF CERTIFICATES TO BE SUPPLIED ON DELIVERY OF THE VESSEL
APPENDIX VIII MAKERS LIST
<PAGE>
CONTRACT
FOR CONSTRUCTION AND SALE OF A DYNAMIC POSITIONED
SEMI-SUBMERSIBLE DRILLING VESSEL
This CONTRACT made this 9th day of April 1998, by and between:-
DAEWOO CORPORATION & DAEWOO HEAVY INDUSTRIES LTD both corporations organised
under the laws of Republic of Korea (hereinafter jointly and severally called
"Builder"), both having their principal offices at
541, 5-GA, Namdaemunro, Jung-Gu, Seoul, Korea,
and
PETRODRILL CONSTRUCTION INC. a corporation organised under the laws of Bahamas
(hereinafter called "Purchaser"), having its principal office at:
Suite 205, Saffrey Square PO Box N8188, Nassau, Bahamas.
WITNESSETH THAT THE PARTIES HAVE AGREED AS FOLLOWS:-
DEFINITIONS In this Contract the following expressions shall have the
meanings hereby assigned to them:-
"Banking Day" means any day on which banks in each of London, New York and
Seoul are open for the transaction of normal banking business;
"Basic Design" means the drawings as detailed in section 99000 Appendix to
the Specification.
"Classification Society" means Lloyds Register of Shipping;
"Classification Surveyor" shall mean any surveyor appointed by the
Classification Society to supervise the Vessel's construction;
"Contract Price" means the price stated in Clause 3. 1;
"Contractual Delivery Date" means the date referred to in Clause 14.1 as
the same may from time to time be extended in accordance with the
provisions of this Contract;
"Contract Documents" means the Specifications, the Principal Drawings and
the other documents listed in Appendix 1;
"Delivery" means the delivery by the Builder, and acceptance by the
Purchaser, of the Vessel pursuant to Clause 14.2;
"LIBOR" means the interest rate per annum which Citibank, London is
offering to prime banks in the London Interbank market for deposits in
United States Dollars for a three month period, determined at 11.00 a.m.
London time, as quoted on the date from which interest is accrued under
this Contract. All interest hereunder shall be calculated on the basis of
a 360 day year and compounded quarterly and shall be paid on the date when
payment is made of the sum on which interest is accrued:
"Makers' List" means the list of contractors approved by the Purchaser and
set out in Appendix VIII to the Specifications;
<PAGE>
"Mandatory Regulations" has the meaning assigned to it in Clause 2.7;
"Materials" means all materials and supplies, including, without
limitation, all machinery, equipment, outfittings and spare parts (but
excluding the Listed Items and Purchaser's Supplies), intended for the
Vessel's construction to the extent that the same have been appropriated
to, or incorporated in, the Vessel;
"Planned Programme" means the programme for performance of this Contract
by the Builder detailed in Appendix II hereto:
"Plans" means those drawings, documents and specifications which are
required under this Contract and the Specifications to be submitted to the
Purchaser for approval;
"Principal Drawings" means the drawings initialled by or on behalf of the
Purchaser and the Builder and listed in Appendix I;
"Purchasers Supplies" means all equipment supplied by the Purchaser for
its own use oil board the vessel which specifically excludes the Listed
Items.
"Specifications" means:-
(a) Specification no P-95019 Jan 1998 rev 1 plus Addendum as
issued March 1998 initialled by or on behalf of the Purchaser
and the Builder on 1st April 1998; and
(b) any additions or amendments thereto hereafter agreed between
the parties;
"Stage Certificate" means a certificate in the form set out in Appendix V;
"Statutory Modifications" means modifications applicable to the Vessel as
a result of changes to any of (i) the rules, regulations and requirements
of the Classification Society or (ii) the Mandatory Regulations;
"Working Day" means any day (other than Saturdays or Sundays) on which
work is normally carried out at the Shipyard.
Further terms used in this Contract are defined hereinafter.
1. PURPOSE OF THIS CONTRACT
1.1. Upon the terms and conditions set out in this Contract, the Builder, as an
Independent contractor, undertakes to design, construct, build, launch, equip,
complete, test and load out at its shipyard at Okpo Korea (hereinafter called
the "Shipyard") and sell and deliver to Purchaser or the Purchaser's nominee for
the Contract Price referred to in Clause 3 below, one (1) fully operational and
fit for purpose self-propelled Dynamic Positioned Semi-Submersible Drilling
Vessel (hereinafter called the "Vessel") more fully described in Clause 2 below.
Subject to the performance of the Builder's obligations hereunder, the Purchaser
agrees to purchase and take delivery of the Vessel when duly completed.
1.2. References herein to the Vessel shall, except where otherwise expressly
provided, be deemed to include all Materials.
2. DESIGN: PRINCIPAL DIMENSIONS AND CHARACTERISTICS: CLASSIFICATION:
MANDATORY REGULATIONS: REGISTRATION
2.1. The Vessel, which is to be assigned the Builder's Hull No 3016, shall be
designed, constructed and completed in all respects in accordance with the
Specifications. To the extent not defined in the Specifications, the Vessel's
construction is to meet the generally acceptable offshore semi-submersible
construction standards and
<PAGE>
practices, including without limitation such standards and practices relating to
Quality Assurance. At the time of Delivery hereunder, the Vessel, which shall
conform strictly with the terms and conditions of this Contract and the
Specifications, shall be delivered safely afloat and ready for sail-out as a
self-propelled Dynamic Positioned Semi-Submersible Drilling Vessel.
DESIGN
2.2. The basic elements of the Vessel's design (the "Basic Design") will be
delivered by tile Purchaser to the Builder. If the Builder considers that any
aspect of the Basic Design might prevent the Vessel when constructed from
complying with the requirements of Clause 2, it will inform the Purchaser
accordingly and the Purchaser may either procure the modification of the Basic
Design to remedy this deficiency or may require the Builder to modify the Basic
Design to remedy this deficiency. If the Purchaser shall require the Builder to
modify the Basic Design, the work required to do so shall constitute an
Purchaser's Modification for the purposes of Clause 7 of this Contract.
2.3. The Builder shall develop a detailed design from the delivered Basic
Design. It is expressly understood that the Purchaser shall be solely
responsible for any errors, omissions and inconsistencies in the Basic Design.
The Builder shall accept responsibility for its own work of developing the
detailed working drawings from the Basic Design and all other design development
work it shall perform in connection with this Contract.
PRINCIPAL DIMENSIONS AND CHARACTERISTICS
2.4. The Vessel shall have the dimensions and characteristics stated in the
Specifications.
CLASSIFICATION
2.5. The Vessel shall be constructed under Special Survey of the Classification
Society and in accordance with its rules, regulations and requirements current
at the date of execution of this Contract, incorporating all additions and
amendments thereof applicable to tile Vessel in force or announced but awaiting
ratification, enactment or implementation, so as to achieve on Delivery the
following notation:-
"Unrestricted Service O.U. + 100A1, +LMC, UMS, DP (AA), PC, DRILL, OIWS
with the descriptive notation
Semi Submersible, self propelled drilling vessel"
free of all recommendations, reservations and qualifications of any nature
whatsoever.
2.6. Decisions of the Classification Society as to whether or not the Vessel
complies with its rules, regulations and requirements shall be final and shall
bind both parties to this Contract.
MANDATORY REGULATIONS
2.7. The Vessel shall also comply with (i) all requirements of the regulatory
bodies listed in the Specifications and (ii) the following rules, regulations
and requirements, in each case current at the date of execution of this Contract
((i) and (ii) being known herein jointly as the "Mandatory Regulations"):-
a. IMO, Resolution A 649 (16) adopted on 19 October 1989, Code for the
Construction and Equipment of Mobile Offshore Drilling Units.
b. International Convention for the Safety of Life at Sea SOLAS 1974,
protocols of 1978, 1981, 1983 and all Amendments in force.
c. International Convention of Load Lines, 1966 with resolutions A 231 (VII)
and A 320 (IX).
<PAGE>
d. International Telecommunication Convention and Radio Regulation 1973, 1976
and 1982 and latest GMDSS Rules for radio communications.
e. International Convention for Tonnage Measurement 1967/1969.
f. Suez Canal Tonnage Regulations.
g. International Convention for the Prevention of Pollution from Ships
(MARPOL) 1974/1978, Consolidation Edition, IMO, 1991, including 1992
amendments to Annex 1.
h. International Regulations for Preventing Collision at Sea, 1972 including
amendments.
i. International Labour Organisation (ILO) Convention No. 92 and No. 133 for
crew accommodation.
j. International Electronical Commission (IEC), Electrical Installation in
Ship Publication No. 92.
k. API specifications as applicable.
REGISTRATION
2.8. The Vessel shall upon Delivery fly the Dutch Antilles flag and be
registered in the [ ] Register of Shipping. Registration of the Vessel as
aforesaid shall be effected by the Purchaser and all costs and expenses thereof
shall be for the Purchaser's account.
3. CONTRACT PRICE
3.1. In consideration of the performance by the Builder of all its obligations
under this Contract the Purchaser shall pay to the Builder a Contract Price
comprised of two elements:-
a. US $ 85,000,000 (the "Construction Price") which shall include the cost of
installation of the Listed Items; and
b. a further amount, to be agreed between the parties hereto, in respect of
the purchase cost of the Listed Items. The parties have provisionally
budgeted this cost at US $ 51 million and the aggregate of the same and
the Construction Price is known herein as the "Provisional Contract Price"
which is US $136,000,000
3.2. The Construction Price, which is exclusive of the cost of the Listed Items
and Purchaser's Supplies, shall be a fixed price subject to upward or downward
adjustment only in accordance with the provisions of Clause 7 hereof. It
includes:-
a. the cost of the Vessel completed in accordance with the requirements of
this Contract and the Specifications;
b. the cost of all tests and trials of the Vessel to be performed by the
Builder in accordance with the specification;
c. the cost of procuring the classification of the Vessel and of obtaining
all certificates and documents which are required to be delivered pursuant
to this Contract and the Specifications; and
d. all other costs and expenses of the Builder as provided for herein or
otherwise incurred by the Builder unless expressly provided herein as
being for the Purchaser's account.
4. PAYMENT SCHEDULE
<PAGE>
4.1. The Purchaser shall pay the Contract Price to the Builder in five
instalments as follows, the pre-delivery instalments being paid as advances and
not as deposits:-
FIRST INSTALMENT:
10 per cent (ten %) of the Provisional Contract Price, being $ 13,600.000
shall be paid within three Banking Days of the Effective Date.
SECOND INSTALMENT:
30 per cent (thirty %) of the Provisional Contract Price, being $40,800,000,
shall be paid within three Banking Days from receipt by the Purchaser of
a telefax notice from the Builder attaching a Stage Certificate in the
form of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that it is 6 months after the Effective Date of the contract
has taken place.
THIRD INSTALMENT:
20 per cent (twenty %) of the Provisional Contract Price, being $ 27,200,000
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that Keel laying has taken place.
FOURTH INSTALMENT:
20 per cent ( twenty %) of the Provisional Contract Price, being $27,200,000,
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax. notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that launch [ float out ] has taken place.
FIFTH INSTALMENT:
20 per cent ( twenty %) of the Provisional Contract Price, together with the
aggregate of (i) any excess of the Contract Price over the Provisional
Contract Price and (ii) any increase or any decrease of the Contract Price
arising from the provisions of Clauses 7 and 16 below, shall be paid upon
Delivery.
4.2. The Builder shall notify the Purchaser in writing ten Banking Days in
advance of the estimated dates of occurrence of each of the events before
Delivery referred to above, excluding the First Instalment.
REFUND GUARANTEE
4.3. The Builder shall at its own expense supply to the Purchaser concurrently
with payment of the First Instalment of the Contract Price a letter of guarantee
in favour of the Purchaser in the form attached as Appendix IV (the "Refund
Guarantee"). Such guarantee shall be unconditional and be given by the
Export-Import Bank of Korea as approved by the Purchaser.
PAYMENT FOR MODIFICATIONS AND OTHER ITEMS
4.4. Any sums due to either party under Clause 7 as a result of Purchaser's
Modifications and/or Statutory Modifications shall be paid with the Instalment
payment which becomes due on a milestone payment coming first after agreement
on such modification.
PAYMENT FOR FUELS ETC AND LIQUIDATED DAMAGES
<PAGE>
4.5. All amounts due to the Purchaser (i) under Clause 13.2 hereof and (ii) by
way of liquidated damages in respect of delay in Delivery under Clause 16 shall
be calculated and determined before Delivery and shall be paid on, and as a
condition of, Delivery.
PAYMENT PROCEDURES
4.6. Payment of sums due to the Builder in accordance with the provisions of
this Contract shall be made, by telex transfer to the account of the
Export-Import Bank of Korea Account No 04-029695 at the Bankers Trust Company of
New York, Church Street Station, New York, NY 1000 15, USA in favour of the
Daewoo Corporation, free of all transfer charges.
4.7. If the date on which any payment is due in accordance with the provisions
of this Contract does not fall on a Banking Day, payment shall be made on the
immediately succeeding Banking Day.
5. APPROVAL OF PLANS: SUBCONTRACTING
APPROVAL OF PLANS
5.1. In respect of all Plans required for the completion of the works envisaged
by this Contract, the same shall be submitted to the Purchaser in four copies as
soon as possible following their production. The Purchaser shall, within
fourteen (14) Calendar Days after receipt thereof, return to the Builder one
copy of such Plans with the Purchaser's approval or the Purchaser's remarks and
amendments (if any) written thereon. The approval of plans by the Purchaser
shall not relieve the Builder of any of its obligations under this contract.
5.2. In the event that the Purchaser shall fail to return the Plans to the
Builder within the time limit as hereinabove provided, such Plans shall be
deemed to have been approved without comment.
5.3. The Builder shall take due note of the Purchaser's remarks and amendments
(if any) on Plans submitted pursuant to this Clause and, if such remarks or
amendments are not of such a nature or extent as to constitute modifications of
the Specifications within the meaning of Clause 7 hereof, then the Builder shall
commence or continue construction of the Vessel in accordance with the corrected
or amended Plans. If such remarks or amendments are not clearly specified or
detailed, the Builder shall in all cases seek clarification of the same from the
Purchaser before implementing the same.
5.4. Copies of all correspondence to and from the Classification Society and
the regulatory authorities referred to in the Specifications, together with all
Plans approved by the Classification Society, shall be furnished to the
Purchaser by the Builder as soon as practicable upon dispatch and receipt.
SUBCONTRACTING
5.5. Save as regards those works delegated to those Subcontractors defined in
the Makers' List, the Builder shall not, without the Purchaser's prior approval
in writing, subcontract any part of the works contemplated by this Contract
which exceed in value US $ 100,000 or its equivalent in local currency. Where
such approval has been given, the Builder shall nevertheless remain fully
responsible for the performance of the same as if it had personally undertaken
such works.
MAKER'S LIST
5.6. The Builder shall select for the supply of each of the Materials listed in
the Makers' List the Subcontractor named therein in relation to the same. Where
the Makers' List provides for more than one Subcontractor to supply any element
of the Materials, the Builder shall, with reasonable notice, provide the
Purchaser with a copy of the Purchase Order to be issued to its intended choice
of Subcontractor before any subcontract is awarded. The Makers' List shall
indicate Purchasers preferred Sub-contractor (if any) for a given element. Where
there is a Purchase preferred subcontractor stated, such Purchase Order shall
contain full technical and commercial details and also a
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comparison of same with Purchaser's preferred Subcontractor. If within 5 days
thereafter, the Purchaser shall request the Builder to order that element of
the Materials from Purchaser's preferred Subcontractor named in the Makers' List
in relation thereto, then the Builder will take all reasonable steps to comply
with such request and the Purchaser shall reimburse to the Builder any
difference in price between that quoted by the Builder's chosen Subcontractor
and the Subcontractor chosen by the Purchaser together with an adjustment in the
Delivery Date if any.
NOMINATED SUBCONTRACTORS
5.7. Unless the Purchaser shall otherwise agree, the Builder shall supply those
items of Materials set out in Appendix II (the "Listed Items") from suppliers
and subcontractors nominated by the Purchaser. The Purchaser, as agent for and
on behalf of the Builder, shall negotiate with each of the Nominated
Subcontractors terms for the supply of the Listed Items set out in Appendix II.
It is, however, expressly agreed that the Purchaser shall contract with each of
tile suppliers of the Listed Items as agent for and on behalf of the Builder and
the ownership in such Listed Items shall vest with the Builder.
5.8. The price for the Listed Items, including delivery to the Builders yard,
negotiated by the Purchaser, on behalf of tile Builder, with the Nominated
Subcontractors shall be included in the contract price based on the overall
budget as set out in Appendix II. In the event of any variations in the actual
price then the Provisional Contract Price shall be increased or decreased by an
amount equal to the amount of such variations. Any such variations shall be
payable by tile Purchaser by means of an adjustment of the final instalment of
the Provisional Contract Price.
5.9. Furthermore, in the event that delivery to the Builder of any Listed Item
is delayed beyond the Target Delivery Date for the same set out in Appendix IIA,
the Builder shall be entitled to a postponement of the Contractual Delivery Date
for a period as it shall demonstrate, by reference to the "critical path", that
the Vessel's construction and completion has actually been delayed. Delays in
delivery of more than Listed Item occurring simultaneously shall have give rise
only to concurrent (rather than consecutive) extensions.
5.10. Furthermore, acting on behalf of the Builder, tile Purchaser shall ensure
that all the articles to be supplied as per clause 5.7 above shall be supplied
to the Builder at the Shipyard in a condition ready for installation. In
addition, in order to facilitate the installation of the Listed Items by the
Builder, the Purchaser shall ensure that the Nominated Subcontractors furnish
the Builder with instruction books, test reports, certificates and vendor
furnished information as required by applicable rules or regulations.
5.11. On the basis that the Purchaser has price, delivery and quality risk in
terms of clauses 5.8, 5.9 and 5. 10 above, Builder acknowledges that, not
withstanding that it is the party to the contract with the Nominated
Subcontractor, the Purchaser shall be fully entitled to liase with the Nominated
Subcontractors on pricing, quality and delivery issues and Builder appoints
Purchaser as its agent for this purpose.
5.12. It is also agreed that any costs incurred by the Builder in the repair of
Listed Items occasioned by their defective material or poor workmanship or
failure to perform, or by damage caused to them during transportation to the
Shipyard shall be for the Purchasers account.
ASSIGNMENT OF EXISTING SUBCONTRACTS / LETTER OF INTENT
In relation to the following "long lead" items of Materials, it is
understood that the Purchaser has already entered into agreements with certain
suppliers.
5.13. Concurrently with signature of this Contract, the benefit together with
the burden of all such contracts are to be assigned by the Purchaser to the
Builder, whereupon the Materials to which they relate are to be treated as
Builders supply . The Builder shall, upon assignment of each such subcontract,
reimburse to the Purchaser all of the instalments of the contract price paid by
the latter in respect thereof.
5.14. Packages included under this provision cover items supplied by LIPS,
Caterpillar and GEC Alsthom.
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OBLIGATIONS UNAFFECTED
5.15. Nothing in this Clause shall affect the other obligations of the Builder
under this Contract nor diminish the responsibility of the Builder in respect of
the Materials, design or workmanship required hereunder.
6. VARIABLE LOAD CAPACITY
6.1. The Builders commitment to the lightship weight excluding the weight and
centre of gravity of the Listed Items shall be 8,950 metric ton at a VCG of
21.43 m ( the "Required Lightship Weight" ). A detailed Light Weight Estimation
and VCG Calculation justifying the Required Lightship Weight, shall be included
as part of the "Basic Design" to be provided by the Purchaser.
6.2. The lightship weight and centre of gravity of the Vessel shall be verified
by an Inclining Experiment prior to Delivery.
6.3. The results of the Inclining Experiment referred to in Clause 6.2 shall be
used to demonstrate a Variable Load Capacity (Deck and Column) in the conditions
referred to in the Specifications as a minimum of 3,500 metric tons in the
operational condition
6.4. Builder shall pay liquidated damages to the Purchaser as follows if the
lightship weight increases above the Required Lightship Weight.
Excess from 1% to 2% USD 5,000 per ton
Excess from 2% to 4% USD 7,500 per ton
Excess 4% and above USD 10,000 per ton
In any event the Builder's liability for the above liquidated damages shall be
limited to 5% of the Construction Price.
6.5. The Purchaser shall pay to the Builder a bonus if the lightship weight is
below the Required Lightship Weight on the same basis as the liquidated damages
in 6.4 above but without the application of any grace.
6.6. The Purchaser shall have no obligation to accept delivery of the Vessel if
the ship lightweight, as defined in 6.2 above, is more than 400 tonnes over the
Required Lightship Weight. The Builder shall, however, in such context be
entitled to make modifications to the Vessel in order to either reduce the
weight or ensure that the VLC is restored to its original level provided that
the same (i) are approved in advance by the Classification Society and the
Purchaser, such approval not to be unreasonably withheld, (ii) do not
significantly affect the motion characteristics or operational capability of the
Vessel.
7. MODIFICATIONS
7.1. Purchaser's Modifications
7.2. The Purchaser may at any time after the date hereof submit a request in
writing to the Builder for changes (the "Purchaser's Modifications") to be made
to the Specifications and shall supply with such request sufficient particulars,
documentation and details to describe the change requested.
7.3. If the change so requested (the "Requested Change") can be reasonably
undertaken having regard to the stage of construction of the Vessel and the
Planned Programme, then the Builder shall be obliged to effect the same but
shall be entitled to any increase (and shall concede any decrease) in
construction cost or adjustment of the Contractual Delivery Date or any other
provisions of his Contract or the Specifications which the Requested Change
reasonably necessitates and which is agreed in writing by the Builder and the
Purchaser. The Builder shall notify the Purchaser in writing no later than
seven Working Days after receipt of the written request for the Requested
Change, of any such adjustments which it will require.
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7.4. On the basis of such notification the Purchaser shall no later than
fifteen Working Days thereafter elect in writing to:
a. agree to the adjustments notified, in which case the Builder shall
construct the Vessel in accordance with tile Requested Change;
b. contest the reasonableness of the adjustment notified, in which case
subclause 7.5 below shall apply; or
c. withdraw the Requested Change, in which case the Vessel shall be
built without reference to the same.
7.5. If within fifteen Working Days after such notification the Purchaser has
made no election as aforesaid, then the Requested Change shall be deemed to have
been withdrawn by the Purchaser.
7.6. If, however, the Purchaser notifies the Builder in writing that the
Purchaser wishes to implement the Requested Change but disputes the
reasonableness of the adjustments, the matters shall be determined by an expert,
acting as such and not as an arbitrator, to be appointed by agreement between
the parties. In the event that the parties are unable to agree as to any
appointment within thirty days of the Purchaser's written notice, the
appointment shall be made, upon the written application of either party, by the
Classification Society. The decision of the said expert shall be final and
binding upon the parties and the costs of such expert in reaching his decision
shall be shared by the Parties. Pending the decision of the aforesaid expert,
the Builder shall continue construction of the Vessel in accordance with the
Requested Change.
7.7. The agreed extra cost of any Requested Change or that decided by the
expert shall be paid by the Purchaser and any cost savings by the Builder as a
result of any Requested Change shall be paid to the Purchaser in accordance with
Clause 4.4.
STATUTORY MODIFICATIONS
7.8. In the event of any Statutory Modifications arising the Builder shall
within seven Working Days of its becoming aware of the same, give notice to the
Purchaser of.-
a. the change required to be made to the Specifications (the "Required
Change");
b. any estimated extra or reduced cost of construction of the Vessel in
accordance with the Required Change together with any documentation
substantiating such cost which the Purchaser reasonably requires;
and
c. the effect of the Required Change on any other provisions of this
Contract or the Specifications (including without limitation any
change to the Contractual Delivery Date).
7.9. The Purchaser may apply for a formal waiver of compliance with the
Required Change from the body having power to grant such waiver. If the
Purchaser considers that the operation of the Vessel in its intended service
would permit of such waiver, and shall notify the Builder as soon as possible
after receiving the decision of such body. In applying for any waiver, the
Purchaser may call upon the Builder for assistance and the Builder will provide
reasonable co-operation to the Purchaser in this respect.
7.10. If no waiver has been obtained and notified by the Purchaser to the
Builder within thirty Working Days of the receipt by the Purchaser of the notice
referred to above, the Builder shall build the Vessel in accordance with the
Required Change and the reasonable extra cost thereof, if any, shall be paid by
the Purchaser. Before the expiry of such time the Builder shall continue with
the construction of the Vessel in accordance with the Required Change but it
shall, in so doing, use its best endeavours to minimise any costs and loss of
time which might arise if a waiver were obtained.
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7.11. If the Purchaser notifies the Builder in writing that the Purchaser
disputes the reasonableness of the extension or variation notified, the issue of
what is a reasonable extension or variation may be put, by the Purchaser or the
Builder, to an expert, acting as such and not as arbitrator, to be appointed by
agreement between the parties. In the event that the parties are unable to agree
as to an appointment within thirty days of the Purchaser's written notice as
aforesaid the appointment shall be made, upon the written application of either
party, by the Classification Society. The decision of the expert shall be final
and binding upon the parties and the costs of such expert in reaching his
decision shared by the Parties. Pending the decision of the said expert, the
Builder shall continue construction of the Vessel in accordance with the
Required Change.
PRICING OF MODIFICATIONS
7.12. In relation both to Purchaser's Modifications and Statutory Modifications
as aforesaid, the Builder's quotations in respect of any increase or decrease in
the Contract Price relating thereto shall, if requested in writing by the
Purchaser, be calculated both on "lump sum" and a "time and materials" basis. In
relation to quotations effected on a "time and materials" basis, the Builder
shall apply tile following parameters:-
a. labour costs shall be charged at the agreed hourly rates set out in
Appendix VI;
b. the cost of all materials and equipment shall not exceed one hundred and
ten per cent (10%) of the cost to the Builder of the same (inclusive of the
costs of delivery of those materials and equipment to the Shipyard); provided,
however, that the Builder shall in all cases endeavour to obtain the best price
terms and trade discounts from suppliers and subcontractors for the benefit of
the Purchaser.
SUBSTITUTION OF MATERIALS
If at any time during the construction of the Vessel, any Materials are not
available (other than as the result of any neglect or omission on the part of
the Builder) then, subject to the prior approval in writing of the Purchaser
and, where necessary, of the Classification Society, the Builder may use or
install other Materials provided that such other Materials used or installed in
substitution for those specified are equivalent in quality to, or better than,
those specified, and which meet the requirements of the Classification Society
and the other requirements of this Contract,
8. INSPECTION
AUTHORISED REPRESENTATIVES
8.1. The Purchaser shall have the right to retain up to fifteen supervisors
("Authorised Representatives"), whose names and scope of authority shall be
notified in writing to the Builder, permanently at the Shipyard during all times
until Delivery. The Builder shall provide suitable office accommodation
(including adequate parking spaces), photocopying and canteen facilities and the
installation of telephones and telefax machines with reasonable and safe access
to work areas for, and permit and afford every facility to, the Authorised
Representatives from time to time and at all times whilst work is proceeding to
examine and inspect the work being done under this Contract and every part
thereof, together with the materials being used or about to be used thereon, and
to call for and witness such tests as may be required. The costs of
telecommunication facilities outside the country in which the Shipyard is
located and the use of the canteen shall be for the Purchaser's account.
8.2. In addition to the Authorised Representatives, the Purchaser may from time
to time employ further personnel and contractors on site and the Builder shall
afford the same facilities to them on the basis set out above.
8.3. The Authorised Representatives shall have the right to attend all tests,
trials and inspections of the Vessel, her machinery and equipment, which shall
in each case be conducted within the Shipyard's normal working hours. The
Builder shall give notice to the Authorised Representatives in advance of the
date and place of such tests, trials and inspections in accordance with the
provisions of the Specifications. Failure of the Purchaser or its Authorised
Representatives to be present at such tests, trials and inspections after due
notice as above provided shall be deemed to be a waiver of the Purchaser's right
to be present. The Builder shall obtain for the Purchaser and the Authorised
<PAGE>
Representatives rights of access to the Subcontractors' premises for the purpose
of inspection of workmanship and Materials.
8.4. The Builder shall carry out in strict compliance with the Specifications
all the tests and trials of the Vessel and commissioning of the Materials which
are detailed therein so as to demonstrate that the same are in accordance with
the requirements of the Specifications and that all of her systems function in
their intended manner. Any Materials or workmanship found to be faulty or
inadequate shall be replaced or made good by the Builder prior to Delivery, at
its expense and without additional expense to the Purchaser, by suitable and
sound Materials and workmanship.
8.5. Nothing done or omitted to be done by or on behalf of the Purchaser under
this Clause shall be deemed to be a waiver of any objection to, or an acceptance
of, faulty or inadequate Materials or workmanship, or an admission that any
Materials or workmanship are of the standard required for due performance of
this Contract.
8.6. The Authorised Representatives shall be deemed to be employees of the
Purchaser and not the Builder. The Builder shall be under no liability to the
Authorised Representatives for death, personal injury or damage to their
property during the time when they are engaged in the duties contemplated under
this Contract either on the Vessel or within the premises of the Builder or Its
Subcontractors unless such death, personal injury or damage to property was
caused by the wilful act, omission or negligence of the Builder, or any of its
employees, agents or Subcontractors.
QUALITY ASSURANCE SYSTEM AUDITS
8.7. Quality Assurance System Audits may be carried out by the Purchaser, and
regulatory authorities to verify compliance with the quality requirements
stipulated in this Contract and with regulatory requirements. Such requirements
shall include but not necessarily be limited to quality records, personnel and
procedure qualifications records, material traceability records, inspection
plans etc. The Builder is required to provide to the Purchaser any
documentation and administrative systems necessary to verify compliance.
Inspection and testing and Quality Assurance System Audits by the Purchaser as
described in this Clause or otherwise shall not imply any diminution of the
Builder's responsibilities and obligations under this Contract.
9. PLANNED PROGRAMME, PROGRESS CONTROL AND REPORTING
PLANNED PROGRAMME
9.1. The Vessel shall be constructed by the Builder in accordance with the
Planned Programme set out in Appendix II hereof A detailed copy of this plan ,
including the sub-level planning identifying critical paths, shall be made
available to the Purchaser and updated on a regular basis. The plan will define
certain stages of the construction process ("Milestones") which must be
completed by the dates specified therein. The Planned Programme will include a
comprehensive statement of the dates on which the Listed Items are required to
be delivered to tile Shipyard.
PROGRESS CONTROL AND REPORTING
9.2. At the commencement of the contract a "kick off" meeting shall be held
during which the major parameters by which performance of the Builder will be
measured are to be mutually agreed. These shall include, but not necessarily be
limited to a detailed weight budget, a steel procurement and processing
schedule, an engineering schedule, outfitting targets, manning schedules etc.
Unless mutually agreed otherwise such meeting shall be held within 30 days on
contract signature.
9.3. During the course of performance of this Contract the Builder shall submit
to the Purchaser on a fortnightly basis, commencing on the date failing fourteen
days after the "kick off meeting" and thereafter fortnightly
<PAGE>
a. a status report on the Vessel's construction as compared with the Planned
Programme, including the critical path;
b. a report setting out the actual progress in performance of this Contract
during the previous month as compared with the Planned Programme; Such
report to identify progress against the agreed performance parameters.
c. a report setting out the forecast lightship weight, identifying any
variances from the agreed weight budget and in the case of negative
variations including proposals for reducing the variance to within
acceptable levels.
d. a list of Purchaser's Modifications and Statutory Modifications (if any)
agreed or resolved by an expert during the previous month, as the case may
be, including adjustments, if any, agreed or resolved by an expert, to the
Contract;
e. a report on the delivery of sub-contracted Materials during the previous
month (the precise nature of which report shall be agreed, from time to
time, between the Purchaser and the Builder).
9.4. Without prejudice to the Builder's obligations under this Contract, if the
construction of the Vessel should for any reason whatsoever be delayed beyond
the time-frame envisaged in the Planned Programme, the Builder shall immediately
notify the Purchaser and shall within seven Working Days thereof provide to the
Purchaser a schedule indicating, in so far as the delay which has occurred is
not Permissible Delay, the steps (including any appropriate increase in manpower
and material resources) the Builder intends to take to recover the time so lost.
The Builder and the Purchaser shall thereafter meet at the earliest opportunity
to discuss the schedule and the Builder's detailed plans for implementation of
the same.
9.5. The Builder shall take monthly progress photographs illustrating the
progress of the Vessel's construction up to and including trials and delivery.
The Builder shall also supply the Purchaser with sufficient number of
photographs (size: approximately 18 x 24 cms) depicting the final stage of the
Vessel as delivered: this set will be at least 25 percent colour prints. One set
of standard transparencies will be supplied, free of charge to the Purchaser.
Additional copies of photographs and transparencies will be made available by
Builder, at the Purchaser's request and expense.
10. TITLE
10.1. Title to the Vessel shall pass to the Purchaser upon Delivery. Subject to
the provisions of this Contract, title to the Purchaser's Supplies shall,
however, remain with the Purchaser at all times.
11. RISK AND INSURANCE
RISK
11.1. The Vessel and all Materials (including, from the time of their delivery
to the Shipyard, the Purchaser's Supplies) shall remain at the risk of the
Builder until Delivery.
INSURANCE
11.2. The Builder undertakes to keep the Vessel and all Materials (including the
Listed Items) in its or its Subcontractors' custody fully insured at all times
and until Delivery at its own cost with first class insurers approved by the
Purchaser in the amount of the higher of (1) the value of the Vessel as from
time to time constructed and (2) the aggregate of (i) the instalments of the
Contract Price for the time being paid by the Purchaser to the Builder, (ii) the
interest payable to the Purchaser on such instalments in the event of the
Purchaser's termination of this Contract and (iii) the value of the Purchaser's
Supplies delivered to the Shipyard or built into or installed in or upon the
Vessel.
<PAGE>
11.3. The policy or policies (the "Stipulated Insurances"), which shall be
subject to English law and jurisdiction, shall incorporate the following
clauses:-
a. the Institute of London Underwriters ("ILU") Clauses for Builder's Risks:
b. the ILU Strikes Clauses - Builder's Risks; and
c. (from the date of the Vessel's launching) the ILU War Clauses - Builder's
Risks.
11.4. The policies shall be taken out in the joint names of the Purchaser and
the Builder but on terms that the Builder alone shall be responsible for all
premiums payable thereunder. The Builder shall furnish the Purchaser promptly
with certified copies of the policies and the originals shall be made available
to the Purchaser, its employees or agents for inspection at all reasonable
times.
11.5. The policies taken out shall contain a provision to the effect that, in
the event of an actual, constructive, arranged or compromised total loss, such
insurance proceeds as the Purchaser is entitled to hereunder shall be payable to
the Purchaser and such policies shall be so endorsed as to enable the Purchaser
by its brokers or agents or personally to collect such proceeds pursuant to the
provisions of this Clause. In addition, all such policies shall include
provision that they shall not be capable of cancellation by the insurers without
not less than thirty (30) days' prior written notice being given to the
Purchaser and that not less than ten (10) days' prior written notice of
non-renewal or lapse shall be given by the insurers to the Purchaser before the
same shall take effect.
12. LOSS OR DAMAGE TO THE VESSEL
12.1. Should the Vessel or any items insured pursuant to the provisions of
Clause 11 sustain loss or damage prior to Delivery and should such loss or
damage not make the Vessel a total loss, actual, constructive, arranged or
compromised, the Builder shall, at its own expense and with all due despatch,
make good such damage to the satisfaction of the Purchaser and (if applicable)
the Classification Surveyor, and any monies payable in respect of any insurance
effected under Clause 11 shall be payable to the Builder.
12.2. Should the Vessel sustain loss or damage prior to Delivery hereunder such
that it is either conceded by the insurers liable therefor, or determined by a
court of competent jurisdiction, that the Vessel has become a total loss,
actual, constructive, arranged or compromised, then the Builder shall not be
liable to repair the damage or replace the Vessel but, where the Purchaser has
not made recovery of such sums under the Stipulated Insurances within twenty-one
Working Days of the total loss, the Builder shall:-
a. refund promptly to the Purchaser in full the aggregate amount of
instalments of the Contract Price already paid by the Purchaser with
interest thereon at a fixed rate of 10 percent from the date of payment of
each instalment until the date of refund ( calculated on the same basis as
a commercial banking transaction in London ); and
b. return to the Purchaser all Purchaser's Supplies or refund to the
Purchaser a sum equivalent to the value of any of same which have been
lost or which cannot be removed in a sound condition from the Vessel.
12.3. When the conditions set out in sub-clause (2) above have been satisfied by
the Builder, the Purchaser shall instruct the insurers to pay to the Builder or,
as the case may be, if instructed by the Builder to the Export-Import Bank of
Korea any further sums due and payable under the Stipulated Insurances in
respect of the total loss but subject to a limit equal to the cost to the
Builder of those parts of the works which were already undertaken as at the date
of the casualty giving rise to the total loss. Save as elsewhere herein
specifically provided to the contrary, the parties' obligations under this
Contract shall thereupon cease and terminate.
13. TRIALS: TECHNICAL ACCEPTANCE
<PAGE>
13.1. At least 120 days before the scheduled commencement of the same the
Builder shall submit to the Purchaser for approval comprehensive testing and
trials programmes covering the Full Scale Test and Trials (collectively the
"Trials") as generally described in Section 03000 of the Specifications,
including (i) Workshop Tests, (ii) Quayside Trials (including the Inclining
Test), and (iii) Sea Trials (including trial runs and all other tests at sea).
13.2. The Trials shall be conducted at the risk and expense of the Builder which
shall provide and pay for the personnel necessary for the safe management and
navigation of tile Vessel during the same. The Builder shall also provide and
pay for all necessary ballast and fresh water and shall meet all other costs
associated with the Trials. The fuels, lubricants and consumable stores required
for the Trials shall be specified, supplied and paid for by the Purchaser, who
shall upon Delivery be entitled to reimbursement from the Builder of the costs
of such fuels, lubricants and consumable stores as are consumed during the
Trials.
13.3. The Builder shall give the Purchaser not less than seven Working Days'
notice of the date and place of commencement of each of the Trials and
representatives of the Purchaser shall be afforded every opportunity to observe
and determine the performance of the Vessel during the same. Failure by the
Purchaser to attend any Trial following due notice shall be deemed to be a
waiver by the Purchaser of its rights of attendance in respect of such Trial.
SEA TRIALS
13.4. The Sea Trials shall be carried out following satisfactory conclusion of
all other Trials and after the Vessel's construction has been completed with
only minor items of work outstanding which are agreed by the Authorised
Representatives as suitable for completion after the Sea Trials but before
Delivery.
13.5. The Sea Trials shall have the objective of permitting the Builder to
demonstrate fulfilment of the quality and performance requirements for the
Vessel as set forth in the Specifications. The course to be followed during the
Sea Trials shall be determined by the Builder, but shall be in open waters off
Korea. The Purchaser shall be allowed to maintain a shadow crew and other
necessary personnel on board the Vessel during the sea trials to familiarise
themselves with the Vessel and its operation.
13.6. The safe management and navigation of the Vessel in transit to, during and
from the Sea Trials shall remain the sole responsibility of the Builder.
Neither the Purchaser nor any of its representatives shall bear or be liable
for loss or damage of any description done by or to the Vessel, or personal
injury or loss of life arising from any cause whatsoever during the same, except
where such liability is directly attributable to the Purchaser as a result of a
wilful act by any representative of the Purchaser on board the Vessel during
such trials; the Builder shall pay for and indemnify tile Purchaser and its
representatives against all such loss, damage and the consequences of personal
injury and loss of life as aforesaid.
13.7. Should the weather conditions at the time scheduled for the Sea Trials be
such that they cannot be carried out properly, the Builder shall postpone them
or such part of them as necessary to the earliest possible time when suitable
weather conditions occur to ensure that all readings and results are obtained in
a manner satisfactory to the Purchaser. Any delay to the Sea Trials caused by
such unfavourable weather conditions, if the delay exceeds five (5) days, shall
operate to postpone the Contractual Delivery Date by the period of delay
involved and such delay shall be deemed to be Permissible Delay.
13.8. If during the Sea Trials any breakdown occurs which entails interruption
or irregular performance and the breakdown can be repaired by the normal means
available on board, this shall be done as soon as possible and the trial shall
be continued after repairs are completed. However, if the Vessel must return to
a port to enable the breakdown to be remedied, a further complete trial shall be
undertaken at the earliest opportunity.
13.9. On completion of the Sea Trials to the satisfaction of the Purchaser the
Vessel shall be brought back to a berth in the Shipyard, or elsewhere as may be
agreed, for the inspection of the machinery required in the Specifications, and
during this period all defects or omissions found in the Vessel shall be
remedied and made good
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by the Builder to the satisfaction of the Purchaser, and the machinery closed up
by the Builder ready for sea at its expense and without expense to the
Purchaser.
TECHNICAL ACCEPTANCE
13.10. Within three Working Days of completion of the Trials and the closing up
of machinery referred to in sub-clause 9 above, the Builder shall notify the
Purchaser in writing of the results of the Trials and shall, where the same is
appropriate, confirm to the Purchaser that the Vessel conforms with the
requirements of the Contract and Specifications. If the Purchaser is in
agreement with the Builder, the Purchaser shall, within four (4) Working Days of
receipt of the Builder's notice as aforesaid, advise the Builder in writing of
its Technical Acceptance of the Vessel.
13.11. If, however, in the view of the Purchaser the Vessel or any part thereof
does not conform to the requirements of this Contract and/or the Specifications,
the Purchaser shall so advise the Builder (again within four (4) Working Days of
the receipt of the Builder's notice as aforesaid) and shall specify the respects
in which the Vessel falls to conform with the requirements of this Contract and
Specifications. The Builder shall thereupon take the necessary steps to correct
such non-conformities and, upon completion of such works, the Builder shall
advise the Purchaser who shall, in the reasonable exercise of its discretion, be
entitled to require the Builder to undertake further trials of the Vessel; in
such event the Builder shall give the Purchaser three Working Days' notice of
such further trials.
13.12. Upon satisfactory completion of such remedial works and/or trials, the
Purchaser shall, within four (4) Working Days after receipt of a further notice
from the Builder that the Vessel conforms with the requirements of the Contract
and Specifications, notify the Builder of its Technical Acceptance of the
Vessel or the respects in which the Vessel still fails to conform with the
requirements of this Contract and the Specifications. This process shall be
repeated until the earlier of (a) the Purchaser's Technical Acceptance of the
Vessel or (b) the valid and proper termination or rescission of this Contract by
either the Purchaser or the Builder.
13.13. If the Purchaser falls to notify the Builder in writing of its Technical
Acceptance or otherwise of the Vessel within the periods as provided above the
Purchaser shall be deemed to have accepted the Vessel.
13.14. The Purchaser's Technical Acceptance of the Vessel as above provided
shall preclude the Purchaser from refusing Delivery of the Vessel as hereinafter
provided, if the Builder complies with the procedural requirements for Delivery
of the Vessel as provided in Clause 14 hereof.
14. DELIVERY OF THE VESSEL
DELIVERY
14.1. The Vessel shall be delivered by the Builder to the Purchaser at the
Shipyard (or other place as may be agreed with unrestricted access to the open
sea) on 9th March 2000 except that, in the event of Permissible Delay as defined
in Clause 15.2 hereof, the aforementioned date shall be postponed accordingly.
The aforementioned date, or such later date to which requirement to deliver may
be postponed, is herein called the "Contractual Delivery Date."
14.2. Delivery shall take place on a Working/Banking Day to be nominated by the
Builder following Technical Acceptance of the Vessel by the Purchaser and with
not less than thirty (30) Working Days' advance notice to the Purchaser.
Delivery shall be effected by the execution by the Parties of a Protocol of
Delivery and Acceptance in the form set out in Appendix III, acknowledging
delivery by the Builder and acceptance thereof by the Purchaser. The Builder
shall give the Purchaser at least ninety (90) days' (plus or minus seven (7)
days) calendar notice of the estimated date of Delivery.
The Builder guarantees that at the time of Delivery title to the Vessel and
every part thereof shall pass to the Purchaser free and clear of any and all
liens, claims, mortgages or other encumbrances upon it and in particular, but
<PAGE>
without limitation, that she shall be free of all burdens in the nature of
imposts, taxes or charges imposed by any liabilities arising from the
construction of the Vessel or from its operation on Trials or otherwise.
DOCUMENTS TO BE PROVIDED TO THE PURCHASER
14.3. The Builder shall provide to tile Purchaser the following documents prior
to Delivery failing which the Purchaser may refuse to accept Delivery
a. Records of inventory of the Vessel's equipment including spare gear and
the like as detailed in the Specifications;
b. Records of any and all fuels, lubricants, consumable stores and fresh
water supplied pursuant to this Contract by either the Builder or the
Purchaser together with such quantities of the same as remain on board at
Delivery;
c. All certificates (including Class and other regulatory certificates)
required to be furnished prior to or upon Delivery of the Vessel pursuant
to the Specifications; such certificates are to be clean and free of all
qualifications, reservations and recommendations whatsoever.
d. Declaration of Warranty of the Builder in accordance with Clause 14.3
above;
e. The following technical documentation:-
e.1. Four (4) copies and one reproducible of all the "As Built" drawings
of tile Vessel required for its operation and maintenance in
accordance with its design and purpose.
e.2. Four (4) complete documentation and instructions (Operation and
Maintenance) books covering builder supplied equipment
e.3. Four (4) sets of Operating Manuals and Instruction Books according
to MODU CODE 1989 with all the necessary data including sea
preparation and any other data or documents required by Owner's
insurers.
e.4. Four (4) copies of a complete maintenance guide including all
drawings.
e.5. One (1) copy of all the test and commissioning trials and results
which have been done prior to delivery.
e.6. Lightship weight, variable load and centre of gravity of lightship
weight calculations.
f. The certificates listed in Appendix VII, together with (i) Builder's
Certificate or (at the Purchaser's option) Bill of Sale in favour of the
Purchaser notarised and legalised to permit registration of tile Vessel on
the [ ] Register of Shipping and (ii) any other document relating to the
condition and/or performance of the Vessel which the Purchaser may
reasonably require provided the same is requested no later than seven
Working Days prior to Delivery.
14.4. The documents listed in sub-clauses 14.4.e.1-6 above are also to be
supplied as a diskette in a format to be agreed between the Parties.
REMOVAL OF THE VESSEL
14.5. Following Delivery of the Vessel, the Purchaser shall in seven (7) Working
Days remove her from the Shipyard. If the Purchaser falls to remove the Vessel
within this period, it shall pay to the Builder reasonable mooring charges
thereafter until removal.
<PAGE>
15. EXTENSION OF TIME FOR DELIVERY: PERMISSIBLE DELAY
CAUSES OF DELAY
15.1. If at any time before the Contractual Delivery Date the construction of
the Vessel is delayed due to Acts of God, acts of princes or rulers, war or
other hostilities or preparations therefor, blockade, civil commotion or riots,
strike, epidemics, floods, hurricanes, earthquakes, tidal waves, landslides,
fires, lightning, explosions, collisions or strandings, shortage of materials or
equipment other than resulting from any act, omission or improvidence of the
Builder or its Subcontractors, prolonged failure, shortage or restriction of
electric current, oil or gas or destruction of or damage to the Shipyard or
works of the Builder or its Subcontractors by any causes herein described and
other causes or accidents beyond control of the Builder or its major
subcontractors or suppliers of similar nature, the Contractual Delivery Date and
any Milestones not then achieved shall be postponed for the period of time
during which construction of the Vessel is directly and unavoidably delayed by
the same.
15.2. Any periods of time by which the Contractual Delivery Date of the Vessel
and any Milestones not then achieved is properly and justifiably claimed by the
Builder to be extended by reason of matters falling within (a) subclause 1 above
or (b) Clauses 5.6, 5.9, 7, 13.7 or 18.2 hereof shall be defined herein as
"Permissible Delay".
15.3. The Builder's entitlement to a Permissible Delay shall, however, be
subject to:-
a. the delay in respect of which the Builder is claiming relief not being
within its control or contemplation at the date of signing of this
Contract nor caused or contributed to by its error, neglect, act or
omission or that of its agents, employees or Subcontractors:
b. the delay affecting the "critical path" of the Vessel's construction as
the time of commencement of the event;
c. since the occurrence of the event in respect of which relief is claimed,
the Builder having taken all steps open to it to mitigate the effect of
the event upon the Contractual Delivery Date and any Milestones not then
achieved; and
d. the Builder having duly given all the notices required under sub-clause
15.4 below within the time-limits therein laid down.
NOTICES
15.4. Upon the occurrence of any of the events potentially constituting
permissible delay listed in sub-clause (1) above, the Builder shall:-
a. within seven (7) Working Days of the date on which it became aware of the
event, give the Purchaser notice in writing of the occurrence of the
event;
b. as soon as possible thereafter, and in any event not more than seven (7)
Working Days after the giving of the said notice, submit to the Purchaser
a statement in writing, specifying as far as possible, with full
particulars, the nature and the cause of the event, the effect on the item
involved, the likely overall effect computed from the Planned Programme
upon the Contractual Delivery Date and any Milestones not then achieved
and the steps which are being taken by it to mitigate any delay which may
result from the event;
c. within seven (7) Working Days after the date on which it becomes aware
that the event is at an end, give the Purchaser notice in writing of the
date when the event ended;
d. within seven (7) Working Days of the date of the Builder's notice under
sub-paragraph (c), notify the Purchaser of the period of time by which it
claims the Contractual Delivery Date of the Vessel and any Milestones not
then achieved should be extended by reason of the event.
<PAGE>
16. DELAY IN DELIVERY
LIQUIDATED DAMAGES
16.1. In the event that Delivery should be delayed beyond midnight local time on
the Contractual Delivery Date, the Builder shall, subject to the provisions of
Clause 15 above, pay to the Purchaser by way of liquidated damages, not by way
of penalty, for loss of use of the Vessel, the amounts set out below:-
1 - 150 days of delay US$ 42,500 per day
However, the total amount of the liquidated damages shall not be more than as
would be the case for a delay of 150 days. The liquidated damages shall be due
at the date of actual delivery of the vessel.
TERMINATION FOR DELAY IN DELIVERY
16.2. Furthermore, if Delivery should not have occurred prior to either:-
a. the expiry of 90 days from the Contractual Delivery Date (as extended by
Permissible Delays); or
b. The expiry of 180 days from the Contractual Delivery Date extended by such
days of Permissible Delay as are attributable to the Purchasers fault.
the Purchaser, as all alternative to receiving the above mentioned liquidated
damages, may elect to rescind this Contract. If the Purchaser elects to rescind
this Contract, then tile Purchaser shall give notice in writing to the Builder
in which case Clause 19.2 shall apply. Such notice, which shall be effective
from receipt thereof by the Builder, shall operate without prejudice to the
Purchaser's rights at law generally, but exclusive of its right to liquidated
damages.
17. DEFECTS AND BUILDER'S GUARANTEE
GUARANTEE PERIOD
17.1. The Builder guarantees the Vessel for a period of twelve months from
Delivery or, in respect of individual items as provided for in the
Specification, for such greater period as may be agreed, against all defects
whether attributable to Materials, workmanship, construction or detail design,
and against all physical damage caused to the Vessel thereby. The aforesaid
period of twelve months from Delivery shall be known herein as the "Guarantee
Period."
17.2. This guarantee shall not extend to Listed Items or to any damage caused by
any defect therein not attributable to the Builder, but it shall extend to
defects in Materials, workmanship or design and to physical damage caused
therein resulting from the Builder's installation of the Listed Items.
17.3. The Builder guarantees repairs or replacements to the Vessel made under
the guarantee in sub-clause (I ) above for a further period of twelve months
from the date of completion of such repair or replacement, provided that the
total guarantee period shall not exceed twenty-four months from Delivery
REMEDY OF DEFECTS
17.4. The Purchaser shall notify the Builder in writing within thirty days after
discovery of any defect or physical damage failing within the provisions of this
Clause 17. The Purchaser's notice shall include such particulars as can
reasonably be given as to the nature of such defect or physical damage, the date
of discovery and the place at which the Vessel can be made available for
earliest inspection by or on behalf of the Builder. The Purchaser shall furnish
to the Builder as soon as practicable copies of any relevant survey or
inspection reports.
<PAGE>
17.5 The Purchaser may require the Builder to make good any defect or physical
damage for which the Builder is liable under this Clause 17 by giving notice of
such requirement to the Builder. Any parts replaced shall on their removal
become the property of and shall be at the risk of the Builder whilst the
replacement parts fitted to the Vessel shall upon fitting become the property
of the Purchaser.
17.6. The Builder shall execute the necessary work including the carrying out of
any essential dismantling and reassembling with the utmost despatch in
accordance with the quality standards which are applicable hereunder to the
Vessel's original construction.
17.7. In the event that the Builder is unable to make good any defect at the
Shipyard, it shall forthwith nominate a yard suitable for such purpose for the
Purchaser's approval, and should the Purchaser consider such yard acceptable the
Builder shall arrange for the making good of the defect and the carrying out of
any essential dismantling and reassembling at its own expense.
17.8. Should the Purchaser consider the yard nominated by the Builder
unacceptable, or should the Purchaser elect to have the work referred to above
carried out elsewhere than at the Shipyard, the Purchaser shall nominate a yard
acceptable to it. In such case the Builder shall pay to the Purchaser for
repairs and/or replacements such sum as would equate to the costs of effecting
such repairs at a first- class North-West European shipyard. The Builder may, at
its own expense, have its representative in attendance during execution of the
work. The Purchaser shall ensure that any parts replaced under this sub-clause
are returned to the Builder (if required by the Builder) at the Builder's
expenses, and in such case those parts returned shall on their replacement
become the property of and shall be at the risk of the Builder.
17.9. In the event of defects arising which fall within the provisions of this
Clause 17, whether or not such defects require the Vessel to be dry-docked, the
Builder shall pay for any costs incurred by the Purchaser in making the Vessel
available to the Builder or to any other yard for the making good of any such
defect as aforesaid. Such additional costs shall include, but shall not be
limited to, port charges and the cost of fuels, lubricants and consumable stores
consumed in excess of those which would have been consumed had the Vessel not
deviated to allow the Builder to make good any such defects as aforesaid. The
Purchaser shall use all reasonable endeavours to mitigate the incidence of such
costs chargeable to the Builder's account. Excepting the abovesaid additional
costs, the Builder shall not be responsible or liable for any exceptional or
special losses, damages or expenses including, but not limited to, loss of time,
loss of profit or earning or demurrage directly or due to repairs or other works
done to the Vessel to remedy such defects.
17.10. In the event that the Vessel is idle for more than 15 days in total
accumulated time due to defects under this Clause 17 the Guarantee Period shall
be extended by the number of all days during which the Vessel is idle commencing
with the sixteenth day, whether or not other work is undertaken simultaneously
with the guarantee work.
GUARANTEE ENGINEER
17.11. Where so requested by the Purchaser, the Builder shall appoint a suitably
qualified English-speaking Guarantee Engineer to serve on the Vessel as the
representative of the Builder for such portion of the Guarantee Period as the
Purchaser shall require; the Purchaser and its employees shall give the
Guarantee Engineer full co-operation in carrying out his duties as the
representative of the Builder on board the Vessel. In particular, the Purchaser
shall accord the Guarantee Engineer treatment and subsistence on board the
Vessel comparable to the Vessel's Chief Engineer (except that the Purchaser
shall provide him accommodation in a standard passenger cabin) at no cost to the
Builder.
17.12. The Purchaser shall pay the expenses of the Guarantee Engineer's
repatriation by air to Korea upon termination of his services on the Vessel.
However, save as aforesaid, the Purchaser shall be responsible for no other
expenses in connection with the Guarantee Engineer, who shall at all times be
conclusively deemed an employee of the Builder. The Builder shall indemnify and
hold harmless the Purchaser from and against personal injury, including death,
of, or loss of or damage to property of the Guarantee Engineer unless the same
shall been caused by the gross
<PAGE>
negligence of the Purchaser or any of its employees, agents or sub-contractors.
If the Purchaser has reason to be dissatisfied with the conduct or competence of
the Guarantee Engineer, the Builder, on receiving particulars of the complaint,
shall promptly investigate the matter and, if the complaint is found to be
justified, make a change in the appointment.
ASSIGNMENT OF SUBCONTRACTORS' GUARANTEES
17.13. The Builder agrees upon the expiry of the Guarantee Period to assign (to
the extent to which it may validly do so) to the Purchaser, or as the Purchaser
may direct, all the right, title and interest of the Builder in and to all
guarantees or warranties given by the Subcontractors save insofar as the same
relate to existing claims by the Purchaser against the Builder.
ASSIGNMENT OF BUILDER'S GUARANTEE
17.14. It is expressly agreed and understood that the benefit of this Guarantee
shall be capable of transfer by the Purchaser to any Assignee. The Builder shall
in such circumstances enter into any documentation reasonably requested by
either the Purchaser or the Assignee to evidence such transfer and the vesting
in the Assignee pursuant to such assignment of all rights in respect of this
Guarantee.
18. DEFAULT BY THE PURCHASER
EVENTS OF PURCHASER'S DEFAULT
18.1. The Purchaser shall be deemed to be in default of performance of its
obligations under this Contract in the following cases:
a. if the Purchaser fails to pay the amount of any of the Instalments of the
Contract Price due to the Builder in the period prior to Delivery on the
due date for payment thereof,
b. if the Purchaser fails without legal justification to take delivery of the
Vessel in accordance with Clause 14 and to pay the instalment of the
Contract Price due thereon;
c. if an order or an effective resolution is passed for the winding up of the
Purchaser (otherwise than for the purposes of a reconstruction or
amalgamation previously approved by the Builder) or if a receiver is
appointed over the whole or any part of the undertaking or property of the
Purchaser or if the Purchaser becomes insolvent or suspends payment
generally of its debts or ceases to carry on its business or makes any
special arrangement or composition with its creditors.
18.2. If the Purchaser is in default as to the payment of any instalment as
provided in (a) or (b) of sub-clause (1) above, then without prejudice to any
other rights of the Builder or of the Purchaser, the Purchaser shall be liable
to pay interest at 2 % per cent over LIBOR on the unpaid amount from the day
from which the same became due to the Builder up until the date of actual
payment thereof. The Builder shall further be entitled to claim as Permissible
Delay within the meaning of Clause 15.2 any period of time during which the
construction or completion of the Vessel has been delayed in consequence of the
Purchaser's default as aforesaid.
TERMINATION BY THE BUILDER
18.3. If default on the part of the Purchaser continues for a period of thirty
days, the Builder shall have the right at its sole discretion to rescind this
Contract by giving written notice to the Purchaser. The Builder shall in such
event be entitled to retain all of the instalments received from the Purchaser.
Upon recession of this Contract in accordance with this clause, title to the
Vessel shall be temporarily transferred to the joint ownership of the Builder
and the Purchaser and remain as such until disposal of the Vessel by the Builder
in accordance with this clause.
<PAGE>
18.4. In the event of rescission of this Contract in accordance with this Clause
the Builder shall have the right and power either to complete or not to complete
the Vessel as it deems fit but in any event shall sell the Vessel (either in its
complete or incomplete form) at the best available price at a public or private
sale on such reasonable terms and conditions. If the Builder sells the Vessel in
an incomplete form then the Builder shall give credit to the Purchaser for any
and all savings which arise from not having to complete the construction of the
Vessel.
18.5. In the event of the sale of the Vessel in its completed state the proceeds
of sale received by the Builder shall be applied to payment of all expenses
attending such sale and otherwise incurred by the Builder as a result of the
Purchaser's default and then to payment of all unpaid instalments of the
Contract Price and interest on such instalments at the rate of 2 per cent above
LIBOR from the respective due dates thereof to the date of application.
18.6. In the event of sale of the Vessel in its incomplete state the proceeds of
sale received by the Builder shall be applied first to all expenses attending
such sale incurred by the Builder as result of the Purchaser's default and then
to payment of all costs of part-construction of the Vessel less the instalments
retained by the Builder and compensation to the Builder for damages suffered by
the Builder in consequence of such default.
18.7. In either of the above events of sale, if the proceeds of sale exceed the
sums to which such proceeds are to be applied as aforesaid the Builder shall
promptly pay any such excess to the Purchaser without interest thereon and shall
at the same time either permit the Purchaser to remove the Purchaser's Supplies
from the Shipyard or pay to the Purchaser the full value thereof.
18.8. If the proceeds of sale of the Vessel are insufficient to pay such total
amounts payable as aforesaid the Purchaser shall be liable to pay to the Builder
upon demand the amount of such deficiency.
19. DEFAULT BY THE BUILDER
EVENTS OF BUILDER'S DEFAULT
19.1. In the event that any of the following events should occur:-
a. the Builder shall without legal justification fail to proceed with
construction of the Vessel with all reasonable despatch so that it fails
to meet two consecutive Milestones within ninety days of the respective
dates agreed for the same;
b. the Builder shall commit any material breach of this Contract and shall
fail to initiate the remedy work for the same within five Working Days of
receipt by the Builder of written notice from the Purchaser;
c. the making of any order or tile passing of an effective resolution for
the winding-up of the Builder (other than for the purposes of
reconstruction or amalgamation which has been previously approved in
writing by the Purchaser such approval not to be unreasonably withheld),
or the appointment of a receiver of the undertaking or property of the
Builder, or the insolvency of or a suspension of payment by the Builder,
or the cessation of the carrying oil of business by the Builder, or the
making by the Builder of any special arrangement or composition with
creditors of the Builder, and failure by the Builder
the Purchaser may elect either (a) to rescind this Contract or (b) to exercise
its option to purchase the Vessel pursuant to sub-clause 3 hereof. If the
Purchaser elects to rescind this Contract, then the Purchaser shall give notice
in writing to the Builder in which case the provisions of sub-clause 2 below
shall apply. Such notice shall be effective from receipt thereof by the Builder.
RESCISSION BY THE PURCHASER
19.2. If, in accordance with (1) the provisions of sub-clause I above or (2)
Clause 16.3 above the Purchaser exercises its right to rescind this Contract,
then the Builder shall, without prejudice to the Purchaser's general remedies at
law, promptly repay to the Purchaser the amount of all monies paid by the
Purchaser on account of the
<PAGE>
Contract Price together with interest thereon at a fixed rate of 10% p.a. from
the date when such monies were paid by the Purchaser to the Builder up to the
date of the repayment thereof calculated on the same basis as an commercial
inter-bank transaction carried out in London. The Builder shall also redeliver
to the Purchaser at the Shipyard all of the Purchaser's Supplies delivered to
the Builder at the time of the Purchaser's rescission. Upon such refund by the
Builder to the Purchasers, all obligations, duties and liabilities of each of
the parties to the other under this Contract shall be completely discharged.
PURCHASE OF THE VESSEL
19.3. In the event that the Purchaser shall exercise its option to purchase the
Vessel, the Builder shall give notice in writing to the Builder. The Builder
shall thereupon-
a. secure the immediate discharge of all liens, claims, mortgages or other
encumbrances upon the Vessel;
b. complete at its own cost all works required as a minimum to permit the
Vessel to depart from the Shipyard in a safe and seaworthy condition,
remove its employees, agents and contractors, together with their
equipment, from the Vessel and render all necessary assistance to the
Vessel in leaving the Shipyard at the earliest moment convenient to the
Purchaser;
c. execute and deliver to the Purchaser an original of the Protocol of
Delivery and Acceptance together with any and all documentation (including
but not limited to a bill of sale or builder's certificate) in such form
and such manner as the Purchaser shall in its absolute discretion
determine shall be required or desirable for the purposes of transferring
to the Purchaser title to the Vessel in her then current state of
construction; and
d. execute and deliver to the Purchaser all of the documentation listed in
Clause 14.4 hereof to the extent that tile same is at that time capable of
production by the Builder.
19.4. Title to the Vessel, and all risk of loss thereof, shall in such
circumstances transfer to the Purchaser upon execution by the Purchaser of the
Protocol of Delivery and Acceptance following receipt of all of the
documentation received above. The Purchaser may, however, elect to execute the
Protocol of Delivery and Acceptance notwithstanding the Builder's failure to
deliver all or part of the other documentation required to be delivered by the
Builder pursuant to subclause 3 above.
19.5. The Purchaser shall thereafter be entitled to retain and apply any balance
which may be otherwise due under this Contract by it to the Builder, or such
part thereof as may be necessary to meet the cost of completing the works
envisaged under this Contract elsewhere, together with the supervision thereof
(the "Completion Costs"). If the Completion Costs exceed the balance which would
otherwise have been due from the Purchaser to the Builder hereunder, the Builder
shall pay the amount of such excess to the Purchaser. However, if the Completion
Costs are less than the balance which would otherwise have been due from the
Purchaser to the Builder, the Builder shall be entitled to receive from
Purchaser an amount equal to the difference between such price and the
Completion Costs.
NON-PAYMENT BY THE BUILDER
19.6. Should the Builder default in payment of any amount due under this
Contract (including, without limitation, payment of liquidated damages), then
the Builder shall pay to the Purchaser interest thereon at the rate of 2 percent
over LIBOR from the date when the amount became due to the Purchaser to the date
of the payment thereof.
20. PATENT INDEMNITY
20.1. The Builder warrants that the Purchaser and its successors in title shall
enjoy quiet possession of the Vessel and that the Purchaser's possession,
ownership or operation of the Vessel shall not at any time infringe any patent
rights, utility model rights, trade mark rights or copyrights in any country.
The purchaser shall protect, defend, hold harmless and indemnify the Builder in
respect of any claim or infringement of a patent right, utility model rights,
<PAGE>
trade mark rights or copyrights related to the basic design, Listed Items or
material or equipment provided by the Purchaser to the Builder.
20.2. The Builder shall indemnify and hold the Purchaser harmless against any
loss, damage, claim, demand, proceeding or liability whatsoever arising out of
relating to:
a. any lawful claims of superior title by a third party against the
Purchaser's quiet possession of the Vessel; and
b. the infringement of any of the rights set out in sub-clause (1) above by
reason of the Purchaser's possession, ownership or operation of the
Vessel.
20.3. The loss referred to in sub-clause (2) above shall include, but shall not
be limited to:
a. the costs and expenses of considering and defending any claim, demand or
proceeding;
b. any sum paid or payable by the Purchaser in respect of any settlement or
any such claim, demand or proceeding;
c. any sum paid or payable by the Purchaser to acquire a license under any
of the rights set out in sub-clause (1) above; and
d. any sum paid or payable by the Purchaser to its servants or agents or to
any operator of the Vessel to indemnify them or any of them against any
such loss, damage, claim, demand, proceeding or liability or the cost of
acquiring a license under any of the such rights.
21. TAXES AND DUTIES
21.1. The Builder shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed in Korea in connection with the
execution and performance of this Contract, However personal income taxes
imposed by Korean Authority upon employees of the Purchaser, if any, shall be
the Purchasers account.
21.2. The Purchaser shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed outside Korea in connection with the
execution and performance of this Contract.
22. ASSIGNMENT
22.1. The Purchaser may transfer, by assignment or novation, to any third party
or parties (herein "Assignee(s)") any of its rights and/or obligations under
this Contract. Provided, however, that, to the extent that any such assignment
or novation transfers to an Assignee the obligations of this Contract, the
purchaser shall be responsible, jointly and severally with the Assignee, to
perform the obligations of this Contract.
22.2. The Builder may, with the prior written approval of the Purchaser, assign
the benefit of this Contract.
23. PRIORITY OF DOCUMENTS
23.1. The Appendices hereto shall form an integral part of this Contract as if
the same were expressly set out herein.
23.2. If there is any discrepancy between the following documents priority
between them shall be as follows:-
a. between the terms of this Contract (excluding the Specifications) and the
terms of the Specifications, the terms of the former shall prevail;
<PAGE>
b. between the Principal Drawings and the Specifications, the Specifications
shall prevail;
c. between the Principal Drawings, in the order of precedence contained ill
Appendix I;
d. between one approved Plan and another approved Plan, the later in date
shall prevail;
24. NOTICES
24.1. Every notice, consent or approval (individually and collectively called
"Communications" for the purposes of this Clause 24) given or required, whether
expressly or impliedly, under this Contract shall be in writing.
24.2. Communications shall be given by the Builder to the Purchaser as follows:
Address: to be advised
Attn:
Facsimile
24.3. Communications shall be given by the Purchaser to the Builder as follows:
Address: to be advised
Attn:
Facsimile
25. RECORDS AND AUDITS
25.1. The Builder shall maintain true and complete records in connection with
the construction of the Vessel and all transactions related thereto, and shall
retain all such records for not less than twenty-four (24) months following
Delivery.
25.2. No director, employee or agent of the Builder shall give or receive any
commission, fee, rebate, gift or entertainment of significant cost or value in
connection with the work under this Contract, or enter into any business
arrangement with any director, employee or agent of the Purchaser.
25.3. If any violation of sub-clause (2) above is found to have occurred prior
to the date of signing this Contact and such violation is determined to have
resulted directly or indirectly in tile Purchaser's consent to enter into this
Contract with the Builder the Purchaser may rescind this Contract by notice in
writing to the Builder in which case the provisions of Clause 19.2 shall apply.
25.4. The Builder shall use its best endeavours to procure that all
Subcontractors:-
a. maintain records in accordance with sub-clause (1) above;
<PAGE>
b. enter into obligations with the Builder, to the like intent and effect as
those which bind the Builder as above. The Builder shall promptly notify
the Purchaser of any violation of such obligations involving
Subcontractors which comes to the Builder's notice.
26. LAW
26.1. The construction, validity and performance of this Contract shall be
governed by English Law.
27. DISPUTES
27.1. Any claim, difference or dispute which may arise out of this Contract
shall be decided by the Commercial Court of the Queen's Bench Division of the
High Court of England and Wales to whose exclusive jurisdiction the parties
hereby agree.
27.2. For the purposes of any proceedings pursuant to sub-clause (1) above, the
parties hereby irrevocably appoint the following as their agents for the service
of process:-
THE BUILDER
To be advised
Ref: [ ]
THE PURCHASER
To be advised
Ref: [ ]
27.3. Without prejudice to the generality of sub-clause (1) above and without
prejudice to any express provision contained herein for referral of any matter
to an expert, any dispute or difference of opinion between the parties relating
to conformity of the construction of the Vessel, Materials or workmanship with
this Contract, the Specifications and the other Contract Documents may, by
agreement between the Parties, be referred to an expert, acting as an expert and
not an arbitrator, to be appointed by agreement between them and whose opinion
on the matter shall be final and binding upon the parties hereto.
27.4. If the parties shall fail to agree either (i) to submit the dispute to a
technical expert or (ii) upon the identity of a mutually acceptable technical
expert as aforesaid, such dispute shall be settled in the manner as defined in
sub-clause 1 above.
28. MISCELLANEOUS
28.1. The terms of this Contract are to remain confidential to the parties and
no disclosure of the same may be made to any third party other than for the
purposes of permitting or ensuring its due performance by either party hereto.
This obligation shall survive termination of this Contract for any reason
whatsoever.
28.2. The Builder undertakes to ensure that all its supervisory staff, both on
and off the construction site, are fluent in the English language and are
capable of understanding any written or verbal instructions in the English
language.
<PAGE>
29. SPARE PARTS
29.1. The Builder shall furnish spare parts and maintenance tools of the kind
and in at least the specified quantities in accordance with the Specifications,
Classification Society requirements, and the maker's standards, for items
furnished by the Builder. The cost of these spare parts is included in the
Contract Price.
29.2. In addition, the Builder shall supply to the Purchaser a list of the
maker's recommended spare parts for two (2) years of continuous operations
covering items supplied by Builder, at least six months prior to the Vessel's
completion.
29.3. The spare parts furnished by the Builder shall be properly protected
against physical decay, corrosion and mechanical damage and shall be properly
listed so that replacements may be readily ordered.
29.4. The Builder shall complete the storage spaces installation in time to
enable to positioning, labelling and listing of all spare parts (the Builder and
Purchaser supplied) prior to Delivery. The Builder at his own cost shall be
responsible for handling, bringing on board and storage on the Vessel of all
spare parts, tools and supplies under instruction and supervision of Purchaser's
Representative.
30. SAFETY AND HEALTH STANDARDS
30.1. The Purchaser's Representative will have authority to monitor the
performance of the work done by the Builder to ensure safe and workmanlike
performance.
30.2. It is the Purchaser's policy not only to comply with the safety and health
measures required by law but to act positively to prevent injury, ill health,
damages and loss arising from its operations. The Purchaser requires the Builder
and his sub-contractors to apply health, safety and local environmental
standards in order to achieve high levels of performance. It is essential that
the Builder and his sub-contractors undertaking work consistently show a high
level of safety awareness and prove that they are capable of conducting
themselves in a safe and competent manner in their area of activity.
30.3. The Builder acknowledges the Purchaser's strong commitment to safety and
affirms that lie has a written safety policy which has been signed and is
actively supported and endorsed by Builder's management. The Builder further
affirms that its safety policy is widely dissefilinated, understood and
implemented by and among Builder's and Builder's sub-contractors' employees.
This policy shall be in English and such other language(s) as required. A copy
of Builder's Safety Policy shall be furnished to the Purchaser prior to start of
tile work.
30.4. It is essential that good housekeeping is maintained by the Builder's
employees throughout the term of this Contract. The working areas shall be kept
tidy at all times, access ways kept clear and surplus/scrap material removed
daily. Cleaning up at end of the Job is not considered Sufficient. Spillage of
oil or chemicals shall be cleared up immediately to avoid fire hazards, slippery
surfaces, contact with toxic substance and other hazards. Appropriate safety
precautions shall be taken during cleaning up. No oil grade with flash points
lower than 550C shall be used for cleaning purposes.
30.5. Asbestos containing products are not to be applied on board the Vessel.
Substitutes therefor shall be applied only after authorisation by the Purchaser.
30.6. The Builder shall report immediately to the Purchaser all accidents
occurring during the term of this Contract and related to work thereunder, that
result in injury to or death of any person and/or damage to or loss of property.
Accidents are defined as "Unintentional or unplanned events that may or may not
result in personal injury or equipment, plant, or property damage, or any
combination of these". The Purchaser reserves the right to stop part or all of
the work at no cost to the Purchaser until relevant unsafe acts and situations
have been rectified and the period work is so stopped shall not be a permitted
reason for extending the of Delivery Date. Any such stoppage of work shall be
confirmed to the Builder in writing by the Purchaser stating the reasons for
stoppage and the actions
<PAGE>
that the Builder has to implement for work to be permitted to resume. For minor
violation of safety regulations the Purchaser may choose not to require work
stoppage provided that the Builder promptly rectifies such violation.
30.7. The Purchaser may require the Builder to permanently remove and replace
any of Builder's or Builder's sub-contractors' employees who violate safety
regulations and any equipment which is obviously unsafe.
30.8. The Builder shall, at his own expense, supply his personnel and his
sub-contractors' personnel with adequate protective personal clothing, safety
helmets, safety shoes, and other protective equipment required for the type of
work to be carried out.
31. EFFECTIVENESS
31.1. This Contract is subject to, and shall become effective and legally
binding oil tile parties as at the date of execution.
31.2. Tile date upon which the above conditions shall all have been satisfied
shall be known hereunder as the "Effective Date".
IN WITNESS WHEREOF the parties hereto have caused this Contract to be duly
executed the day and year first above written.
THE PURCHASER: THE BUILDER:
PETRODRILL CONSTRUCTION INC DAEWOO CORPORATION
/s/ DEREK LEACH /s/ YOUNG-KYUN SHIN
By: Derek Leach By: Young-Kyun Shin
Title: Attorney-in-Fact Title: Attorney-in-Fact
DAEWOO HEAVY
INDUSTRIES LTD
/s/ YOUNG-KYUN SHIN
By: Young-Kyun Shin
Title: President
<PAGE>
APPENDIX I
PRINCIPAL DRAWINGS
AND OTHER CONTRACT DOCUMENTS
Are as defined in section 99.000 of the specification
<PAGE>
AMETHYST 4
SEMI - SUBMERSIBLE DRILLING VESSEL PROJECT
MASTER SCHEDULE (23 MONTH)
<PAGE>
APPENDIX IIA
LISTED ITEMS
For this purpose "Listed Items" shall mean those items identified as Owner
Furnished Equipment in tile attached Specification. The budget for such items,
delivered to the Builder shall be US $51.0 million.
Reference clause 5.8 the following target delivery dates shall apply however
reasonable endeavours shall be made to improve such dates in order to fit with
the Builders overall construction schedule.
- - --------------------------------------------------------------------------------
ITEM REFERENCE DATE
- - --------------------------------------------------------------------------------
Derrick 25100 1/9/99
- - --------------------------------------------------------------------------------
Racking System 25100 1/9/99
- - --------------------------------------------------------------------------------
Heave Compensating System 25100/71110 1/9/99
- - --------------------------------------------------------------------------------
Hoisting 25100 1/9/99
- - --------------------------------------------------------------------------------
Top Drive System 25100 1/9/99
- - --------------------------------------------------------------------------------
Drawworks Assembly 25110 15/9/99
- - --------------------------------------------------------------------------------
Rotary System 25200 1/9/99
- - --------------------------------------------------------------------------------
Winches 25200 1/9/99
- - --------------------------------------------------------------------------------
Drilling Controls 25210/56400 1/9/99
- - --------------------------------------------------------------------------------
Drill Floor Handling 25220 1/11/99
- - --------------------------------------------------------------------------------
Choke Manifold 25220 1/9/99
- - --------------------------------------------------------------------------------
Diverter System 25220 1/9/99
- - --------------------------------------------------------------------------------
BOP Control Unit 25230 15/10/99
- - --------------------------------------------------------------------------------
HP Mud and Cement System 25300 1/6/99
- - --------------------------------------------------------------------------------
Mud Process 25300/25320/25330/25920 15/2/99
- - --------------------------------------------------------------------------------
BOP 18 3/4 25400 15/1/20
- - --------------------------------------------------------------------------------
Riser Tensioner 25500/71110 15/7/99
- - --------------------------------------------------------------------------------
Risers 25600/25700 15/1/20
- - --------------------------------------------------------------------------------
Production Equipment 25800 1/11/99
- - --------------------------------------------------------------------------------
Offshore Cranes 33050 1/10/99
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
BOP Handling 33600/33700 1/10/99
- - --------------------------------------------------------------------------------
Riser Handling 33800 1/10/99
- - --------------------------------------------------------------------------------
Electrical System 51110 1/6/99
- - --------------------------------------------------------------------------------
Subsea Instrumentation 56400 1/9/99
- - --------------------------------------------------------------------------------
Miscellaneous Instrumentation 56400/57700 1/5/99
- - --------------------------------------------------------------------------------
<PAGE>
APPENDIX III
FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE.
It is this day agreed that m.v. [ ], built by the Builder as Hull
No.[ ] at its [ ] yard in [ ] under a Contract dated [ ] 1998
and made between the Builder and the Purchaser therein described has today been
delivered by the Builder and accepted by the Purchaser.
Dated:
Signed ......................
for
[ ].
The Builder
Signed ......................
for
[ ].
The Purchaser
<PAGE>
APPENDIX IV
FORM OF GUARANTEE
To: PETRODRILL CONSTRUCTION INC [date]
([SHIPYARD COMPANY]) HULL NUMBER 3016
We hereby issue our irrevocable guarantee No. [ ] in favour of yourselves,
Petrodrill Construction Inc, for the account of Daewoo Corporation and Deawoo
Heavy Industries Ltd (hereinafter called the "Builder") in connection with the
shipbuilding contract dated 9th April 1998 (hereinafter called the "Contract")
made by and between yourselves and the Builder for the construction and sale of
one Dynamic Positioned Semi-Submersible Drilling Vessel having Builder's Hull
No.3016 (hereinafter called the "Vessel"). Other terms and expressions employed
herein shall bear the same meaning as in the Contract, a copy of which has been
provided to us.
Under the terms of the Contract you are to pay to the Builder a Contract Price
for the Vessel six instalments payable as follows:-
a) FIRST INSTALMENT:
10 per cent (ten %) of the Provisional Contract Price, being $ 13,600,000
shall be paid within three Banking Days of the Effective Date.
b) SECOND INSTALMENT:
30 per cent (thirty %) of the Provisional Contract Price, being
$40,800,000, shall be paid within three Banking Days from receipt by the
Purchaser of a telefax notice from the Builder attaching a Stage
Certificate in the form of the draft attached as Appendix V, countersigned
by an Authorised Representative (or, in default thereof, the
Classification Surveyor), certifying that it is 6 months after the
Effective Date of the contract has taken place.
c) THIRD INSTALMENT:
20 per cent (twenty %) of the Provisional Contract Price, being $
27,200,000 shall be paid within three Banking Days from receipt by the
Purchaser of a telefax. notice from the Builder attaching a Stage
Certificate in the form of the draft attached as Appendix V, countersigned
by an Authorised Representative (or, in default thereof, the
Classification Surveyor), certifying that Keel laying has taken place.
d) FOURTH INSTALMENT:
20 per cent (twenty %) of the Provisional Contract Price, being
$27,200,000, shall be paid within three Banking Days from receipt by the
Purchaser of a telefax notice from the Builder attaching a Stage
Certificate in the form of the draft attached as Appendix V, countersigned
by an Authorised Representative (or, in default thereof, the
Classification Surveyor), certifying that launching [float out] has taken
place.
e. FIFTH INSTALMENT:
20 percent(twenty %)of the Provisional Contract Price, together with the
aggregate of (i) any excess of the Contract Price over the Provisional
Contract Price and (ii) any increase or any decrease of the Contract Price
arising from the provisions of Clauses 7 and 16 below, shall be paid upon
Delivery.
<PAGE>
In accordance with the terms of the Contract you are entitled either upon your
rescission thereof or upon a Total Loss of the Vessel to repayment of the
instalments of the Contract Price paid by you prior to such rescission, together
with interest thereon at a fixed rate of 10 % p.a. ( calculated on the same
basis as any London inter-bank commercial transaction ) from the date of payment
by the Purchaser to the date such installments plus interest are returned to the
Purchaser. In the event that the Builder shall fail to make such repayment, we
shall pay to you the sum or sums due to you from the Builder against your
written statement (or that of your assignee) that demand for repayment has been
made and that the Builder has within thirty (30) Business Days of such demand
failed to comply therewith. Such written statement shall identify (i) the
number and amount of Instalments in respect of which repayment has not been
received and (ii) the total interest payable in respect of the same on the
assumption that payment of the principal sum outstanding is made by us thirty
(30) Business Days from the date of receipt of such statement.
This guarantee shall initially secure repayment of the First Instalment of the
Contract Price (plus interest thereon as here in before provided) from the date
of receipt of the same by the Builder. The maximum sum claimable by you
hereunder will thereafter be automatically increased upon Builder's receipt of
each further Instalment of the Contract Price payable prior to Delivery of the
Vessel, each time by the amount of such Instalment plus interest thereon as here
in before provided, but in any eventuality our total liability hereunder shall
not exceed the sum of US $ [ ] plus interest thereon as here in before provided.
Not withstanding the provisions here in above in case we receive notification
from you or the Builder stating that the question of your rescission of the
Contract or your claim for refundment thereunder has been disputed and referred
to the Commercial Court in accordance with the provisions of the Contract, this
Guarantee shall be valid until 30 days after the final judgement shall be
rendered in said Court. In such case this Guarantee shall only be available to
the extent of a final judgement in your favour by such Court justifying your
claim for refundment as presented to us or specifying such lesser amount as the
Court may determine as being due to you.
Our liability hereunder shall not be affected by any alteration to, or variation
of, the terms of the Contract you may hereafter agree with the Builder or any
other matter or circumstance which would, but for this clause, operate to
exclude or limit our liability hereunder.
This guarantee shall be fully assignable by you. It shall expire and become null
and void upon the earliest of (i) receipt by you or your assignee of the amount
guaranteed hereunder and (ii) Delivery of the Vessel in accordance with the
provisions of the Contract or (iii) valid rescission by the Builder in
accordance with the terms of the Contract. In such case, this guarantee shall
be returned to us.
This guarantee shall be governed by, and construed in accordance with English
law, and we hereby (i) agree for your exclusive benefit that any legal action or
proceeding arising hereunder may be brought in the High Court of Justice in
England (ii) irrevocably submit to the jurisdiction of that court and (iii)
irrevocably designate, appoint and empower ( ) (the present address of whose
registered office is ( ), London, England) to receiver for us and on our behalf
of process in England.
(Bank)
By:
(Title)(Name)
<PAGE>
APPENDIX V
FORM OF STAGE CERTIFICATE
Hull No [ ] under a Contract dated the day of 1998, made
between (Purchaser) and (Builder)
We hereby certify in connection with the building of the above Vessel that
[[ ] has taken place]
[the Vessel has successfully been launched]
For and on behalf of
Builder
...........................
Dated [ ] 199 .
For and on behalf of
Purchaser
...........................
(Authorised Representative)
Dated [ ] 199 .
For and on behalf of
Classification Society
...........................
Dated [ ] 199 .
<PAGE>
APPENDIX VI
SCHEDULE OF LABOUR COSTS FOR MODIFICATIONS
<PAGE>
APPENDIX VI
UNIT RATE FOR MODIFICATIONS
I. STEEL UNIT RATE FOR STEEL WORK
MILD HIGH-TON
---- --------
a. Unit rate for hull steel work : U$ 2,585 / Ton U$ 2,750 / Ton
b. Unit rate for outfitting steel work : U$ 4,125 / Ton U$ 4,290 / Ton
The steel unit rates above shall include the cost of steel, labour, facilities,
consumables and all other general expenses except engineering cost related to
such steel work which shall be calculated by engineering manhours and unit rates
of the same provided in item II below. The steel unit rate shall be used only
for steelwork.
II. LABOR UNIT RATE
UNIT PRICE
UNIT OF WORKING
DESCRIPTION MEASUREMENT (USD)
----------- ----------- ----------
A. ENGINEERING
Engineering Manager Hour 110
-----------
Project Engineer Hour 110
-----------
Civil/Structural/Architectural Engineer Hour 87
-----------
Mechanical Equipment Engineer Hour 80
-----------
Electrical Engineer Hour 80
-----------
Controls Systems Engineer Hour 80
-----------
Plant Layout & Piping Engineer Hour 80
-----------
Process Engineer Hour 80
-----------
Subsea Systems Engineer Hour 80
-----------
Offshore Structural Engineer Hour 80
-----------
Process & Utility Systems Engineer Hour 80
-----------
Production Systems Engineer Hour 80
-----------
Loss Prevention Engineer Hour 80
-----------
<PAGE>
Vessels Engineer Hour 80
-----------
Automation Technology Operations Engineer Hour 103
-----------
Project Manager Hour 150
-----------
Quality Assurance Engineer Hour 94
-----------
Construction Manager Hour 80
-----------
Start-up & Facility Operations Engineer Hour 103
-----------
Project Accountant Hour 93
-----------
Project Procurement Manager Hour 88
-----------
Purchasing Engineering Hour 88
-----------
Subcontracts Engineer Hour 94
-----------
Supplier Quality Engineer Hour 80
-----------
Expediting Engineer Hour 80
-----------
Logistics/Traffic Engineer Hour 80
-----------
Technical Services Manager Hour 80
-----------
Estimator Hour 93
-----------
Cost/Scheduling Supervisor Hour 93
-----------
Cost Engineer Hour 93
-----------
Planning & Scheduling Engineer Hour 93
-----------
Engineering Coordinator Hour 93
-----------
Documentation Engineer Hour 93
-----------
Instrumentation Engineer Hour 93
-----------
CAD Draftsman Hour 93
-----------
Draftsman (Table) Hour 67
-----------
B. LABOR
Supervisor/Foreman Hour 93
-----------
<PAGE>
Skilled Labor Hour 55
-----------
Driver Hour 55
-----------
Crane Operator Hour 55
-----------
Unskilled Labor Hour 50
-----------
QA/QC Inspector Hour Hour 93
-----------
The labor unit rate in this item II above shall include all yard expenses except
material cost provided in Item III below and extra facility and equipment cost
specified in item IV below.
III. MATERIAL COST
1. Materials supplied by Builder
1) Invoices up to 1,000 USD: CIF price actually purchased by
Builder plus 15% of CIF price as
handling charge.
2) Invoices over 1,000 USD: CIF price actually purchased by
Builder plus 10% of CEF price as
handling charge.
2. Materials supplied by Owner: 10% of CIF price as handling charge.
IV. EXTRA FACILITY AND EQUIPMENT COST
1. Extra Facility Unit Rate
UNIT PRICE
UNIT OF WORKING
DESCRIPTION CAPA. MEASUREMENT (USD)
----------- ---- ----------- ----------
Goliath Crane 900 Ton Hour 7053
450 Ton Hour 2500
--------
Crawler Crane 450 Ton Hour 972
--------
300 Ton Hour 620
--------
225 Ton Hour 518
--------
Jib Crane 200 Ton Hour 1126
--------
50 Ton Hour 945
--------
30 Ton Hour 463
--------
Tire Crane 200 Ton Hour 98
--------
80 Ton Hour 63
--------
55 Ton Hour 56
--------
30 Ton Hour 42
--------
18 Ton Hour 35
--------
<PAGE>
Tower Crane 10 Ton Hour 146
--------
12 Ton Hour 163
--------
60 Ton Hour 371
--------
Overhead Shop Crane 10 Ton Hour 58
--------
15 Ton Hour 75
--------
20 Ton Hour 99
--------
25 Ton Hour 123
--------
30 Ton Hour 147
--------
35 Ton Hour 158
--------
40 Ton Hour 179
--------
Fork Lift 37 Ton Hour 111
--------
25 Ton Hour 84
--------
15 Ton Hour 59
--------
10 Ton Hour 41
--------
7 Ton Hour 26
--------
5 Ton Hour 24
--------
3.5 Ton Hour 21
--------
2.5 Ton Hour 17
--------
Transporter 500 Ton Hour 536
--------
300 Ton Hour 414
--------
200 Ton Hour 276
--------
100 Ton Hour 137
--------
Tractor 110 Hour 56
--------
53 Ton Hour 45
--------
Trailers 50 Ton Hour 136
--------
32 Ton Hour 125
--------
25 Ton Hour 96
--------
11 Ton Hour 67
--------
4.5 Ton Hour 42
--------
Hydraulic Jacks 200 Ton Hour 132
--------
100 Ton Hour 65
--------
50 Ton Hour 46
--------
30 Ton Hour 35
--------
Plat Form 40 m Hour 77
--------
33 m Hour 54
--------
26 m Hour 42
--------
23 m Hour 37
--------
21 m Hour 33
--------
18 m Hour 28
--------
Table Lift 12 - 14 m Hour 21
--------
9.4 m Hour 20
--------
Excavator 1.0 m3 Hour 39
--------
0.28 m3 Hour 25
--------
0.12 m3 Hour 21
--------
Loader 2.9 m3 Hour 41
--------
<PAGE>
0.30 m3 Hour 19
--------
Dozer 4.5 Ton Hour 25
--------
Dump Truck 15 Ton Hour 40
--------
AC Manual Metal ARC Welding Machine Hour 20
--------
DC Manual Metal ARC Welding Machine Hour 20
--------
Tig Welding Machine (Manual) Hour 12
Gouging Machine (Manual) Hour 20
Co2 Welding Machine (Semi Auto.) Hour 20
Mig Welding Machine (Semi Auto.) Hour 35
Sport Welding Machine (Semi Auto.) Hour 35
Stud Welding Machine (Semi Auto.) Hour 35
Column & Boom Welding (Auto.) Hour 77
Elec. Gas Welding Machine (Auto.) Hour 35
Elec. Slag Welding Machine (Auto.) Hour 35
Self Power Welding Machine (Auto.) Hour 35
Sub Welding Machine (Auto.) Hour 132
Under Water Welding Machine (Auto.) Hour 35
Pre-heating Device Hour 29
Radio Graphic (X-ray Irradiator 300 KVP) Hour 68
--------
Radio Graphic (X-ray Irradiator 250 KVP) Hour 47
--------
U/T Machine Hour 33
MIT Machine Hour 33
Cutting Machine Hour 36
Auto FP Cutting Machine Hour 116
Profile Pipe Cutting Machine Hour 118
1500 Press Machine Hour 86
--------
Magnetic Drill Hour 29
Heavy Roll Bending Machine Hour 83
<PAGE>
Grinder Hour 20
Theodolite Hour 20
Agitator Hour 11
Chipping Hammer Hour 10
Automatic Sandblast Equipment Hour 43
Airless Paint Spray Equipment Hour 33
Turning Roller (200 Ton) 200 Ton Hour 33
--------
50 Ton Hour 12
--------
20 Ton Hour 10
--------
Tug Boat 2600 HP Day 12000
--------
3000 HP Day 12000
--------
Barge (without Tug Boat) 600 Ton Day 400
--------
800 Ton Day 470
The facility unit rate in this Item IV above shall include operation cost,
maintenance cost and all other expenses related to such facilities but not
include labor cost.
2. Leased or Rended Equipment
If there are any leased or rented equipment for modification, changes and
extras.. Owner shall bear the cost actually incurred by Builder plus 15%
of such lease or rent expense as handling charge.
<PAGE>
APPENDIX VI
SCHEDULE OF LABOUR COSTS FOR MODIFICATIONS
APPENDIX VII
LIST OF CERTIFICATES TO BE SUPPLIED
ON DELIVERY OF THE VESSEL
The Builder shall furnish, at the Builder's expense, to the Purchaser the
following certificates upon delivery of the Vessel:
From the Classification Society:
a. Classification certificates for hull, machinery and electricals of the
Vessel.
b. Safety radio telegraph certificate.
c. Load line certificate.
d. Register tonnage certificate.
e. Suez Canal tonnage certificate.
f MODU CODE certificate.
g. Safety Construction certificate.
h. Certificate of Navigation Lights.
i. Certificate of Lifesaving Equipment, Fire Fighting and Fire Detection
System.
j. Compass Certificate.
k. Compass Deviation Table.
l. MARPOL International Oil Pollution Prevention Certificate (IOPPC).
m. Load test and lifting appliances certificate.
n. Test Certificate of Pressure Vessels.
From the Local Government Authority:
a. De-ratting exemption certificate.
b. Potable water analysis certificate.
<PAGE>
APPENDIX VII
LIST OF CERTIFICATES TO BE SUPPLIED
ON DELIVERY OF THE VESSEL
The Builder shall furnish, at the Builder's expense, to the Purchaser the
following certificates upon delivery of the Vessel:
From the Classification Society:
a. Classification certificates for hull, machinery and electricals of the
Vessel.
b. Safety radio telegraph certificate.
c. Load line certificate.
d. Register tonnage certificate.
e. Suez Canal tonnage certificate.
f. MODU CODE certificate.
g. Safety Construction certificate.
h. Certificate of Navigation Lights.
i. Certificate of Lifesaving Equipment, Fire Fighting and Fire Detection
System.
j. Compass Certificate.
k. Compass Deviation Table.
l. MARPOL International Oil Pollution Prevention Certificate (IOPPC).
m. Load test and lifting appliances certificate.
n. Test Certificate of Pressure Vessels.
From the Local Government Authority:
a. De-ratting exemption certificate.
b. Potable water analysis certificate.
<PAGE>
APPENDIX VIII
MAKERS LIST
In accordance with Clause 5.6 of the contract the following maker's list details
the Purchaser's preference based on (1) being the preferred supplier.
- - --------------------------------------------------------------------------------
AMEHTYST - APPROVED SUPPLIERS LIST
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Steel Suppliers (2) British Steel
(1) Inexa
(3) Posco
Sumitomo
NSC
- - --------------------------------------------------------------------------------
Casting TBA
- - --------------------------------------------------------------------------------
16.000 Helideck (3) Baynards
(2) Raufoss
(1) Marine Aluminium
- - --------------------------------------------------------------------------------
19.000 Painting (4) Sigma
(3) Hempel
(5) Carboline
(2) International
(1) Jotun
- - --------------------------------------------------------------------------------
19.000 Cathodic Protection (3) Wilson Walton
(1) Jotun
(4) Impalloy
(2) Electrocataltic
- - --------------------------------------------------------------------------------
32.200 Mooring winches - Capstans (4) Navel
(2) Norwinch
(1) Ulstein
(3) Pusness
(6) Zicom
(5) Plimsol
- - --------------------------------------------------------------------------------
34.010 Liferafts (2) Zodiac
34.200 (1) Viking
(3) Beaufort
(4) RFD
Lifeboats (I) Norsafe
(3) Harding
(2) Schat- Watercraft
- - --------------------------------------------------------------------------------
34.150 Fire Detection (1) Thom Security
(4) Minervia
(2) Autronica
(3) Siemens
- - --------------------------------------------------------------------------------
34.520 CO2 system (1) Unitor
(2) LPG
(3) Walter Kidde
(4) He Isn La:sen
- - --------------------------------------------------------------------------------
36.000 Air Conditioning (4) ABB Flakt Marine
(5) Semco
(1) Stork
(6) Direct (Australia)
<PAGE>
(3) Carrier
(7) Nam irei
(8) Novenco Hi-press
(2) Heinen Hopman
- - --------------------------------------------------------------------------------
High Voltage Generator & Switch
51.100 boards GEC Alsthom
- - --------------------------------------------------------------------------------
51.200 Transformers GEC Alslitom
- - --------------------------------------------------------------------------------
52.000 Generators Leroy Somer
- - --------------------------------------------------------------------------------
53.000 Thruster electric motors GEC Alsthom
- - --------------------------------------------------------------------------------
54.000 Communication Equipment Racal Decca
Kelvin Hughes
Sailor
Siemens
Raytheon
Skanti
- - --------------------------------------------------------------------------------
54.400 PA System (1) GEC AlsthomAkusta
Redifon
Vingtor
Phonetec
Steenhans
- - --------------------------------------------------------------------------------
55.000 Positioning equipment Raytheon
Sait
Kongsberg - Simrad
Cegelec
- - --------------------------------------------------------------------------------
58.000 Vessel Management System Autronic
58.100 ABB
58.200 (1) GEC-Alsthom
Simrad
- - --------------------------------------------------------------------------------
58.400 Alarm System Siemens
Autronic
ABB
(1) GEC Alshtom
Cerberus
- - --------------------------------------------------------------------------------
61.000 Diesel Engines Caterpillar
- - --------------------------------------------------------------------------------
64.000 Thruster units LIPS
- - --------------------------------------------------------------------------------
71.000 Air Compressors (1) Ingersoll Rand
(3) Tanabe
(2) Compair Luchard
Atlas Copco
- - --------------------------------------------------------------------------------
71.000 Air Dryers (5) Deno
(3) Atlas Copco
(4) Auxitrol
(2) Compair Luchard
(6) Norgen Martonair
(1) Ingersol Rand
- - --------------------------------------------------------------------------------
72.000 Fuel Oil Separators (2) Mitsubishi
(1) Alfa-Laval
(3) Westfalia
- - --------------------------------------------------------------------------------
73.000 Lube Oil, Separators (2) Mitsubishi
(1) Alfa-Laval
(3) Westfalia
- - --------------------------------------------------------------------------------
72.000 Oil Pumps (4) Worthington
73.000 Fuel Transfer Pumps (2) Hamworthy
(3) Allweiler
(1) IMO
- - --------------------------------------------------------------------------------
<PAGE>
- - --------------------------------------------------------------------------------
75.000 Fresh water pumps (1) Hamworthy
76.000 Sea water pumps (5) Grundfoss
81.000 Ballast pumps (6) Allweiler
(4) Kvaerner
(7) Shinko
(2) Iron
(3) Itvr
- - --------------------------------------------------------------------------------
81.500 Bilge / Dirty Oil Separator (4) Gefico
(3) Blohm & Voss
(2)Alfa Laval
(1) Hern-lond Marine
- - --------------------------------------------------------------------------------
88.300 Fresh water makers (1) Alfa-laval
(2) Atlas
- - -------------------------------------------------------------------------------
EXHIBIT 10.19(A)
SIDE LETTER NO. 1. 9th April 1998
Petrodrill Construction Inc.
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
Daewoo Corporation &
Daewoo Heavy Industries Ltd.
Gentlemen,
Hull No 3016
We refer to the contract executed between us today in respect of the above hull.
This letter serves to confirm the agreement between us that, not withstanding
the terms of the said contract, that portion of the First Instalment which is
calculated as the balance between 10% of the Construction Price and 10% of the
Provisional Contract Price shall only become payable on the Sixtieth day after
the Effective Date of the contract.
Similarly that portion of the Fifth Instalment which is calculated as the
balance between 10% of the Construction Price and 10% of the Provisional
Contract Price shall become payable within seven days of receipt from your
notice, in good-faith that delivery of the Vessel is anticipated within sixty
days.
Further we jointly agree to enter into a formal amendment to the contract and to
the amendment of the KEXIM Refund Guarantee to reflect this arrangement if so
required.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
ACCEPTED ON BEHALF OF DAEWOO CORPORATION AND DAEWOO HEAVY INDUSTRIES LTD.
/s/ YOUNG-KYUN SHIN
YOUNG-KYUN SHIN
ATTORNEY-IN-FACT
9TH APRIL 9, 1998
EXHIBIT 10.19(B)
SIDE LETTER NO. 2. 9th April 1998
Petrodrill Construction Inc.
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
Daewoo Corporation &
Daewoo Heavy Industries Ltd.
Gentlemen,
Hull No 3016
You have expressed a desire to make us an alternative proposal after the
commencement of the contract regarding "neutral funding" of the Listed Items to
be procured under the terms of the contract.
We confirm that we will be prepared to positively consider such a proposal
provided that we are satisfied that:
a) the funding proposed does indeed constitute "neutral funding"
with no gain or loss being made by you; and
b) that the KEXIM Refundment Guarantee provided in the terms of the
contract is in no way prejudiced as regards either the Listed Items
or the Construction Price.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
ACCEPTED ON BEHALF OF DAEWOO CORPORATION AND DAEWOO HEAVY INDUSTRIES LTD.
/s/ YOUNG-KYUN SHIN
YOUNG-KYUN SHIN
ATTORNEY-IN-FACT
9TH APRIL 9, 1998
EXHIBIT 10.19(C)
NOVATION AGREEMENT
This NOVATION AGREEMENT is made the 4th day of December 1998 between:
(1) DAEWOO CORPORATION whose principal office is at 541, 5-Ga, Namdaemunro,
Jung-Gu, Seoul, Korea;
(2) DAEWOO HEAVY INDUSTRIES LTD. (together with Daewoo Corporation the
"BUILDER") whose principal office is at 541, 5-Ga, Namdaemunro, Jung-Gu,
Seoul, Korea;
(3) PETRODRILL OFFSHORE, INC. (formerly PETRODRILL CONSTRUCTION INC.) (the
"PURCHASER") whose principal office is at Suite 205, Saffrey Square,
P.O. Box N8188, Nassau, Bahamas; and
(4) PETRODRILL SIX LIMITED (the "NEW PURCHASER"), whose registered office is
at Arias Fabrega & Fabrega, Omar Hodge Building, 2nd Floor, Wickam's Cay
1, Road Town, Tortola, British Virgin Islands.
(together referred to as the PARTIES)
WHEREAS
(A) The Builder and the Purchaser are parties to an agreement relating
to the construction and sale of a dynamic positioned
semi-submersible drilling vessel with Builder's Hull No. 3015 dated
9 April 1998 (including any amendments included in the associated
memorandum, meeting minute and/or side letter made from time to time
thereto) (herein called the "AGREEMENT") which expression shall mean
the said Agreement as amended and novated by this Novation
Agreement.
(B) The Parties hereto have agreed to novate the Agreement upon the
terms and subject to the conditions set out herein.
NOW IT IS AGREED AS FOLLOWS:
(1) Terms and expressions defined in the Agreement shall, unless the context
otherwise requires, have the same meanings when used in this Novation
Agreement.
(2) Upon and with effect from the date of this Novation Agreement the
Purchaser releases and discharges and agrees to release and discharge the
Builder from the various covenants, undertakings, warranties and other
obligations contained in the Agreement which are enjoyed by the Purchaser,
and from all claims and demands whatsoever arising out of or in respect of
the Agreement whether prior to, on or subsequent to the date of this
Novation Agreement.
(3) Upon and with effect from the date of this Novation Agreement, the Builder
releases and discharges and agrees to release and discharge the Purchaser
from the various covenants, undertakings, warranties and other obligations
contained in the Agreement which are enjoyed by the Builder, and from all
claims and demands whatsoever arising out of or in respect of the
Agreement whether prior to, on or subsequent to the date of this Novation
Agreement.
-1-
<PAGE>
(4) Upon and with effect from the date of this Novation Agreement, the New
Purchaser accepts and agrees to accept the liabilities of the Purchaser
under the Agreement and agrees to perform all the duties and to discharge
all the obligations of the Purchaser under it and to be bound by all the
terms and conditions of this Agreement in every way as if the New
Purchaser were named in the Agreement as a party ab initio in place of the
Purchaser. Without limiting the generality of the foregoing, the New
Purchaser acknowledges and agrees that the Builder shall have the right to
enforce the Agreement and pursue all claims and demands (future or
existing) whatsoever arising out of or in respect of the Agreement
whether prior to, on or subsequent to the date of this Novation Agreement.
(5) Upon and with effect from the date of this Novation Agreement, the Builder
agrees to perform all its duties and to discharge all its obligations
under the Agreement and to be bound by all the terms and conditions of the
Agreement in every way as if the New Purchaser were named in the Agreement
as a party ab initio in place of the Purchaser. Without limiting the
generality of the foregoing, the Builder acknowledges and agrees that the
New Purchaser shall have the right to enforce the Agreement and pursue all
claims and demands (future or existing) whatsoever arising out of or in
respect of the Agreement whether prior to, on or subsequent to the date of
this Novation Agreement.
(6) The New Purchaser confirms that it has received a copy of the Agreement
and that it is familiar with the terms thereof.
(7) Each Party shall take all steps, execute all documents and do everything
reasonably required by any other Party to give effect to the transactions
contemplated by this Novation Agreement provided that the Purchaser and
the New Purchaser shall jointly and severally reimburse the Builder on a
full indemnity basis for all reasonable costs and expenses (including
legal fees) incurred by the Builder pursuant to this Clause 7 or otherwise
howsoever in connection with the negotiation and execution of this
Novation Agreement.
(8) If the second Instalment of the Contract Price is not received by the
Builder by 15 December 1998, the Builder shall be entitled immediately
thereafter to rescind the Agreement by giving written notice to the New
Purchaser and to exercise all the Builder's rights under the Agreement.
-2-
<PAGE>
SIGNED by DAEWOO CORPORATION
on behalf of BUILDER in the presence of: /s/ YOUNG KYUN SHIN
Young Kyun Shin
Attorney-InFact
SIGNED by DAEWOO HEAVY INDUSTRIES
LTD. on behalf of BUILDER in the presence of: /s/ YOUNG KYUN SHIN
Young Kyun Shin
Attorney-In-Fact
SIGNED by PETRODRILL OFFSHORE INC.
on behalf of PURCHASER in the presence of: /s/ STEVE ASSITER
Steve Assiter
Attorney-In-Fact
SIGNED by PETRODRILL SIX LIMITED
on behalf of NEW PURCHASER in the presence of: /s/ STEVE ASSITER
Steve Assiter
Attorney-In-Fact
-3-
EXHIBIT 10.19(D)
DAEWOO CORPORATION & DAEWOO HEAVY INDUSTRIES LTD
AND
PETRODRILL SIX LIMITED.
MAIN CONTRACT AMENDMENT AGREEMENT
HULL 3016
<PAGE>
This Agreement made and entered into this day of December, 1998 by and
between:
1. Daewoo Corporation & Daewoo Heavy Industries Ltd., both corporations
organised and existing under the laws of Republic of Korea and having
their principal offices at 541, Namdaemun-Ro 5-Ga, Chung-Gu, Seoul, Korea
(hereinafter jointly and severally referred to as "BUILDER") of the
First Part;
2. Petrodrill Six Limited a corporation organised under the laws of the
British Virgin Islands having its principal office at 325 Waterfront
Drive, Omar Hodge Building, 2nd Floor Wickham's Cay 1, PO Box 985, Road
Town, Tortola, British Virgin Islands ("PURCHASER") of the Second Part:
3. Petrodrill Offshore Inc. (formerly Petrodrill Construction Inc.) a
corporation organised under the laws of the Bahamas having its principle
office at Suite 205, Saffrey Square, PO Box N8188, Nassau, Bahamas
("CONSENTOR")
WHEREAS,
(1) Builder and Purchaser are parties to a contract dated 9 April 1998 for the
construction and sale of a dynamic positioned semi-submersible drilling
vessel Hull No. 3016 (THE MAIN CONTRACT) as novated in the Purchasers
favour by the Novation Agreement dated 4th December 1998 (THE NOVATION
AGREEMENT).
(2) Builder and Purchaser wish to amend certain of the payment provisions and
the delivery date specified in the Main Contract in the manner hereinafter
written.
NOW, THEREFORE, in consideration of the mutual promises herein contained, it is
agreed as follows:
1.0 - MAIN CONTRACT AMENDMENT
1.1 The payment date for the Second Instalment under Clause 4.1 of the
Main Contract is to be amended to reflect that payment will be made
on the 23rd December 1998
1.2 Clause 14.1 of the Main Contract is amended as follows:
"The Vessel shall be delivered by the Builder to the Purchaser at
the Shipyard (or other place as may be agreed with unrestricted
access to the open sea) on the 30th July 2000 except that, in the
event of Permissible Delay, as defined in Clause 15.2 hereof, the
aforementioned date shall be postponed accordingly. The
aforementioned date, or such later date to which requirement to
deliver may be postponed, is hereinafter called the "Contract
Delivery Date"
2 MISCELLANEOUS:
2.1 This Agreement is supplemental to the Main Contract. Except as
expressly amended as set out herein the Main Contract remains in
full force and effect.
2.2 The amendments contained in clause 1.0 hereof shall be deemed to
have been in effect from the 9th April 1998, notwithstanding the
date of this Agreement.
2.3 The construction, validity and performance of this Agreement shall
be governed by English law.
- - --------------------------------------------------------------------------------
Daewoo Main Contract Amendment II -- Hull 3016 16-Dec-98
- 1 -
<PAGE>
2.4 This Agreement may be signed in any number of counterparts all of
which when taken together will constitute one and the same
document.
3 NOVATION AGREEMENT CORRECTION:
3.1 The Parties hereto and the Consentor acknowledge that the Novation
Agreement erroneously referred, to "Hull 3015", in its description
of the Main Contract in Recital (A) thereof, where as its correct
designation is "Hull 3016" and the Parties and the Consentor
hereby agree that the Novation Agreement should be construed and
deemed amended accordingly.
4. CONDITION SUBSEQUENT
4.1 This Agreement is entirely conditional upon the Purchaser making
payment of the Second Instalment by the date specified in clause 1.1
hereof, otherwise this Agreement shall be deemed null and void and
the Main Contract shall have effect unamended.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed the day and year first above written.
For and on behalf of For and on behalf of
DAEWOO CORPORATION PETRODRILL SIX LIMITED.
/s/ KYU-SANG SHIM /s/ D. LEACH
Name: Kyu-Sang Shim Name: D. Leach
Title: Attorney-in-Fact Title: Attorney
For and on behalf of For and on behalf of
DAEWOO HEAVY INDUSTRIES LTD. PETRODRILL OFFSHORE Inc.
/s/ KYU-SANG SHIM /s/ D. LEACH
Name: Kyu-Sang Shim Name: D. Leach
Title: Attorney-in-Fact Title: Attorney
We THE EXPORT-IMPORT BANK of KOREA hereby acknowledge the terms of this
Amendment
______________________________
Name: Title:
Date:
- - --------------------------------------------------------------------------------
Daewoo Main Contract Amendment -- Hull 3016 16-Dec-98
- 2 -
EXHIBIT 10.19(E)
DAEWOO CORPORATION & DAEWOO HEAVY INDUSTRIES LTD
AND
PETRODRILL SIX LTD.
MAIN CONTRACT AMENDMENT AGREEMENT II
HULL 3016
<PAGE>
This Agreement made and entered into this 28th day of January, 1999 by and
between:
1 Daewoo Corporation & Daewoo Heavy Industries Ltd., both corporations
organised and existing under the laws of Republic of Korea and having their
principal offices at 541, Namdaemun-Ro 5-Ga, Chung-Gu, Seoul, Korea
(hereinafter jointly and severally referred to as "BUILDER"); and
2 Petrodrill Six Limited, a corporation organised under the laws of the
British Virgin Islands having its principle office at 325 Waterfront Drive,
Omar Hodge Building, 2nd Floor Wickhams Cay 1, PO Box 985, Road Town,
Tortola, British Virgin Islands. ("PURCHASER").
WHEREAS,
(1) Builder and Purchaser are parties to a contract dated 9 April 1998 for the
construction and sale of a dynamic positioned semi-submersible drilling
vessel Hull No. 3016 (the "MAIN CONTRACT").
(2) Builder and Purchaser are parties to the Main Contract Amendment Agreement
dated 17 December 1998.
(3) Builder and Purchaser wish to amend the payment terms set out in the Main
Contract in accordance with the terms and conditions set out in this
Agreement.
(4) The Export-Import Bank of Korea ("KEXIM") has by a Refund Guarantee dated
16 April 1998 (the "REFUND GUARANTEE") guaranteed certain repayment
obligations of the Builder to the Purchaser under the Main Contract.
(5) The parties have agreed that this Agreement and the things contemplated by
it are in all respects subject to and conditional upon KEXIM issuing a
letter of amendment to the Refund Guarantee in the form required by this
Agreement.
(6) The parties wish to record the terms of their agreements on the terms and
conditions set out in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein contained, it is
agreed as follows:
1 CONDITION PRECEDENT
This Agreement is in all respects subject to and conditional upon the
Builder obtaining from KEXIM and delivering to the Purchaser a letter of
amendment to the Refund Guarantee in the form attached as Appendix A duly
executed on behalf of KEXIM.
2 MAIN CONTRACT AMENDMENT
2.1 Clause 4.1 of the Main Contract is amended as follows:
"4.1 The Purchaser shall pay the Construction Price to the Builder in five
instalments as follows, the pre-delivery instalments being paid as advances
and not as deposits:
FIRST INSTALMENT:
Ten percent (10%) of the Construction Price, being $8,500,000 shall be paid
within three Banking Days of the Effective Date.
SECOND INSTALMENT:
Thirty percent (30%) of the Construction Price, being $25,500,000, shall be
paid within three Banking Days from receipt by the Purchaser of a telefax
notice from the Builder attaching a Stage Certificate in the form of the
draft attached as Appendix V, countersigned by an Authorized Representative
(or, in default thereof, the Classification Surveyor), certifying that it
is 6 months after the Effective Date of the contract has taken place.
THIRD INSTALMENT:
Twenty percent (20%) of the Construction Price, being $17,000,000 shall be
paid within three Banking Days of receipt by the Purchaser of a telefax
notice from the Builder attaching a Stage Certificate in the form of the
draft attached as Appendix V,
- - --------------------------------------------------------------------------------
Daewoo Main Contract Amendment II -- Hull 3016 -- Petrodrill Six Ltd 28-Jan-99
- 2 -
<PAGE>
countersigned by an Authorised Representative (or, in default thereof, the
Classification Surveyor), certifying that Keel laying has taken place.
FOURTH INSTALMENT:
Twenty percent (20%) of the Construction Price, being $17,000,000 shall be
paid within three Banking Days of receipt by the Purchaser of a telefax
notice from the Builder attaching a Stage Certificate in the form of the
draft attached as Appendix V, countersigned by an Authorised Representative
(or, in default thereof, the Classification Surveyor), certifying that
launch [float out] laying has taken place.
FIFTH INSTALMENT:
Twenty percent (20% of the Construction Price, together with any increase
or any decrease of the Construction Price arising from the Provisions of
Clauses 7 and 16 below, shall be paid upon Delivery."
2.2 A new provision is inserted as Clause 4.1A of the Main Contract as follows:
"4.1A The Purchaser shall pay the difference between the Construction Price
and the Provisional Contract Price (the "LISTED ITEMS PRICE") to the
Builder in nine instalments as follows, the pre-delivery instalments being
paid as advances and not as deposits:
FIRST INSTALMENT:
Ten percent (10%) of the Listed Items Price, being $5,100,000, shall be
paid on or before 9th June 1998.
SECOND INSTALMENT:
Fifteen percent (15%) of the Listed Items Price, being
$7,650,000 shall be paid on or before 26th February 1999.
THIRD INSTALMENT:
Five percent (5%) of the Listed Items Price, being
$2,550,000, shall be paid on or before 30 March 1999.
FOURTH INSTALMENT:
Ten percent (10%) of the Listed Items Price, being
$5,100,000 shall be paid on or before 30 May 1999.
FIFTH INSTALMENT:
Fifteen percent (15%) of the Listed Items Price, being
$7,650,000, shall be paid on or before 30 July 1999.
SIXTH INSTALMENT:
Ten percent (10%) of the Listed Items Price, being
$5,100,000, shall be paid on or before 30 September 1999.
SEVENTH INSTALMENT:
Ten percent (10%) of the Listed Items Price, being
$5,100,000, shall be paid on or before 30 November 1999.
EIGHTH INSTALMENT:
Ten percent (10%) of the Listed Items Price, being
$5,100,000, shall be paid on or before 30 January 2000.
NINTH INSTALMENT:
Ten percent (10%) of the Listed Items Price, being
$5,100,000, shall be paid on or before 30th March 2000.
TENTH INSTALMENT:
- - --------------------------------------------------------------------------------
Daewoo Main Contract Amendment II -- Hull 3016 -- Petrodrill Six Ltd 28-Jan-99
- 3 -
<PAGE>
Five percent (5%) of the Listed Items Price, being
$2,550,000 together with (or minus) any anticipated
excess (or shortfall) of the Listed Items Price over (or
under) the provisional Listed Items Price, shall be paid
on or before 30 May 2000."
23. Clause 5.7 of the Main Contract is amended as follows:
5.7 Unless the Purchaser shall otherwise agree the Builder shall supply
those items of Materials set out in Appendix IIA (the Listed Items) from
suppliers and subcontractors nominated by the Purchaser. The Purchaser, as
agent for and on behalf of the Builder, shall negotiate terms and expedite
equipment with each of the Nominated Subcontractors in order to supply the
Listed Items set out in Appendix IIA. It is however, expressly agreed that
the Purchaser shall contract and expedite with each of the suppliers of the
Listed Items as agent for and on behalf of the Builder and the ownership in
such Listed Items shall vest with the Builder.
2.4 Clause 5.8 of the Main Contract is amended as follows:
"5.8 The price for the Listed Items, including delivery to the Builder's
yard, negotiated by the Purchaser, on behalf of the Builder, with the
Nominated Subcontractors shall be included in the contract price based on
the overall budget as set out in Clause 3.1 (b). In the event of any
variations in the actual price then the Listed Items Price shall be
increased or decreased by an amount equal to the amount of such variations.
Any such variations shall be payable by the Purchaser by means of an
adjustment of the final instalments of the Construction Price."
2.5 Clause 5.9 of the Main Contract is amended as follows:
5.9 Furthermore, in the event that delivery to the Builder of any Listed
Item is delayed beyond the Target Delivery Date for the same set out in
Appendix IIA, the Builder shall be entitled to a postponement of the
Contractual Delivery Date for a period as it shall demonstrate, by
reference to the "critical path" that the Vessel's construction and
completion has actually been delayed. Delays in delivery of more than one
Listed Item occurring simultaneously, shall have given rise only to
concurrent (rather than consecutive) extensions. Any verified and
documented delays caused, or contributed to, by the Builder taking more
than 14 days, after receipt, to pay approved Nominated Subcontractors
invoices that have been submitted by the Purchaser in the agreed format
will become cause for an adjustment in the delivery date of the Listed
Items as detailed in Appendix IIA. Such adjustment shall reflect the
ultimate delay in the arrival of the Listed Item at the Builders yard.
3. MISCELLANEOUS
3.1 Any capitalised terms in this Agreement not defined in this Agreement shall
have the same meaning as defined in the Main Contract.
3.2 This Agreement shall become effective as soon as executed by all parties
subject to Clause 1 of this Agreement.
3.3 This Agreement is supplemental to the Main Contract and the Main Contract
Amendment Agreement. Except as expressly amended as set out herein the Main
Contract and the Main Contract Amendment Agreement remain in full force and
effect.
3.4 The construction, validity and performance of this Agreement shall be
governed by English law.
- - --------------------------------------------------------------------------------
Daewoo Main Contract Amendment II -- Hull 3016 -- Petrodrill Six Ltd 28-Jan-99
- 4 -
<PAGE>
3.5 This Agreement may be signed in any number of counterparts all of which
when taken together will constitute one and the same document.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly
executed the day and year first above written.
For and on behalf of For and on behalf of
DAEWOO CORPORATION PETRODRILL SIX Limited.
/s/ K. S. SHIM /s/ D. LEACH
Name: K. S. Shim Name: D. Leach
Title: Attorney in Fact Title: Attorney in Fact
Attested by Attested by
For and on behalf of
DAEWOO HEAVY INDUSTRIES LTD.
/s/ K. S. SHIM
Name: K. S. Shim
Title: Managing Director
Attested by
- - --------------------------------------------------------------------------------
Daewoo Main Contract Amendment II -- Hull 3016 -- Petrodrill Six Ltd 28-Jan-99
- 5 -
EXHIBIT 10.20
THE EXPORT-IMPORT BANK OF KOREA
[LETTERHEAD]
REFUND GUARANTEE
To: PETRODRILL CONSTRUCTION INC April 16, 1998
Daewoo Heavy Industries Ltd's Hull Number 3016
We hereby issue our irrevocable guarantee No.M0902-804-LG-00057 in favour of
yourselves, Petrodrill Construction Inc, for the account of Daewoo Corporation
and Daewoo Heavy Industries Ltd (hereinafter called the "Builder") in connection
with the shipbuilding contract dated 9th April 1998 (hereinafter called the
"Contract") made by and between yourselves and the Builder for the construction
and sale of one Dynamic Positioned Semi-Submersible Drilling Vessel having
Builders' Hull No.3016 (hereinafter called the "Vessel"). Other terms and
expressions employed herein shall bear the same meaning as in the Contract, a
copy of which has been provided to us.
Under the terms of the Contract you are to pay to the Builder a Contract Price
for the Vessel in five instalments payable as follows:-
(a) FIRST INSTALMENT:
10 percent (ten %) of the Provisional Contract Price, being $13,600,000
shall be paid within three Banking Days of the Effective Date.
(b) SECOND INSTALMENT:
30 percent (thirty %) of the Provisional Contract Price, being $40,800,000
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that it is 6 months after the Effective Date of the contranct
has taken place.
(c) THIRD INSTALLMENT:
20 percent (twenty %) of the Provisional Contract Price, being $27,200,000
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that Keel laying has taken place.
-- Continued on Page 2 --
<PAGE>
-- Page 2 --
(d) FOURTH INSTALMENT:
20 percent (twenty %) of the Provisional Contract Price, being $27,200,000
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that launcing[float out] has taken place.
(e) FIFTH INSTALMENT:
20 percent (twenty %) of the Provisional Contract Price, together with the
aggregate of (i) any excess of the Contract Price over the Provisional
Contract Price and (ii) any increase or any decrease of the Contract Price
arising from the provisions of Clauses 7 and 16 below, shall be paid upon
Delivery.
In accordance with the terms of the Contract you are entitled either upon your
rescission thereof or upon a Total Loss of the Vessel to repayment of the
instalments of the Contract Price paid by you prior to such rescission, together
with interest thereon at a fixed rate of 10% p.a. (calculated on the same basis
as any London inter-bank commercial transaction) from the date of payment by the
Purchaser to the date such instalments plus interest are returned to the
Purchaser. In the event that the Builder shall fail to make such repayment, we
shall pay to you the sum or sums due to you from the Builder against your
written statement (or that of your assignee) that demand for repayment has been
made and that the Builder has within thirty (30) Business Days of such demand
failed to comply therewith. Such written statement shall identify (i) the number
and amount of Instalments in respect of which repayment has not been received
and (ii) the total interest payable in respect of the same on the assumption
that payment of the principal sum outstanding is made by us thirty (30) Business
Days from the date of receipt of such statement.
This guarantee shall initially secure repayment of the First Instalment of the
Contract Price (plus interest thereon as here in before provided) from the date
of receipt of the same by the Builder. The maximum sum claimable by you
hereunder will thereafter by automatically increased upon Builder's receipt of
each further Instalment of the Contract Price payable prior to Delivery of the
Vessel, each time by the amount of such Instalment plus interest thereon as
hereinbefore provided, but in any eventuality our total liability hereunder
shall not exceed the sum of US$108,800,000 plus interest thereon as here in
before provided.
-- Continued on Page 3 --
<PAGE>
-- Page 3 --
THE EXPORT-IMPORT BANK OF KOREA
[LETTERHEAD]
Notwithstanding the provisions here in above in case we receive notification
from you or the Builder stating that the question of your rescission of the
Contract or your claim for refundment thereunder has been disputed and referred
to the Commercial Court in accordance with the provisions of the Contract, this
Guarantee shall be valid until 30 days after the final judgement shall be
rendered in said Court. In such case this Guarantee shall only be available to
the extent of a final judgement in your favour by such Court justifying your
claim for refundment as presented to us or specifying such lesser amount as the
Court may determine as being due to you.
Our liability hereunder shall not be affected by any alteration to, or variation
of, the terms of the Contract you may hereafter agree with the Builder or any
other matter or circumstance which would, but for this clause, operate to
exclude or limit our liability hereunder.
This guarantee shall be fully assignable by you. It shall expire and become null
and void upon the earliest of (i) receipt by you or your assignee of the amount
guaranteed hereunder and (ii) Delivery of the Vessel in accordance with the
provisions of the Contract or (iii) valid rescission by the Builder in
accordance with the terms of the Contract. In such case, this guarantee shall be
returned to us.
This guarantee shall be governed by, and construed in accordance with English
law, and we hereby (i) agree for your exclusive benefit that any legal action or
proceeding arising hereunder may be brought in the High Court of Justice in
England (ii) irrevocably submit to the jurisdiction of that court and (iii)
irrevocably designate, appoint and empower London Representative Office of The
Export-Import Bank of Korea (the present address of whose registered office is
3rd floor Boston House, 63 New Broad Street, London EC2M 1JJ, United Kingdom) to
receive for us and on our behalf of process in England.
Yours very truly,
For and on behalf of
The Export-Import Bank of Korea
By: /s/ WON-YOUNG CHUN
Name: Won-Young Chun
Title : Senior Manager &
Senior Loan Officer
/Ship Export Credit Dept.
By: /s/ JONG BOK LEE
Name: Jong Bok Lee
Title : Assistant Manager &
Loan Officer
/Ship Export Credit Dept.
<PAGE>
THE EXPORT-IMPORT BANK OF KOREA
LIST OF
AUTHORIZED SIGNATURES
THE EXPORT-IMPORT BANK OF KOREA
INSTRUCTIONS
This booklet contains the facsimile signatures in alphabetical order of the
officers, who are authorized to sign on behalf of this bank.
1. Each member of the Board of Executive Directors has full and complete
authority to sign alone for this bank.
2. The transactions mentioned below in excess of U$10,000 (or the
equivalent thereof in other currency) shall be signed by two officers,
at least one of whom must be an officer in A Class.
A. Issuance of check, bill of exchange or promissory note.
B. Instructions to effect the payment or transfer of funds not
involving the documentary letter of credit.
C. Opening and amendment of letter of guarantee.
D. Opening and amendment of clean letter of credit.
We will inform you of any change of list whenever it occurs.
- 1 -
<PAGE>
THE EXPORT-IMPORT BANK OF KOREA
Chang-Jin Chong A
/s/ CHANG-JIN CHONG
049
Won-Young Chun A
/s/ WON-YOUNG CHUN
050
Chang-Ho Chung B
/s/ CHANG-HO CHUNG
051
Chul-Choong Chung A
/s/ CHUL-CHOONG CHUNG
052
THE EXPORT-IMPORT BANK OF KOREA
Young-Kon Kim B
/s/ YOUNG-KON KIM
Hyung-Ju Lee B
/s/ HYUNG-JU LEE
Jae-Hong Lee B
/s/ JAE-HONG LEE
Jong-Bok Lee B
/s/ JONG-BOK LEE
EXHIBIT 10.20(A)
NOVATION AGREEMENT
This NOVATION AGREEMENT is made the 4 day of Dec 1998
between:
(1) THE EXPORT-IMPORT BANK OF KOREA (the Bank) whose principal office is at
16-1, Yoidodong, Youngdungpo Gu, Seoul, Korea;
(2) PETRODRILL OFFSHORE INC. (formerly Petrodrill Construction Inc.) (the
BENEFICIARY) whose principal office is at Suite 205, Saffrey Square, PO
Box N8188, Nassau, Bahamas; and
(3) PETRODRILL SIX LIMITED (the NEW BENEFICIARY) whose registered office
is at Arias, Fabrega & Fabrega, Omar Hodge Building, 2nd Floor, Wickham's
Cay 1, PO Box 985, Road Town, Tortola, British Virgin Islands,
(together referred to as the PARTIES)
Whereas
(A) The Bank and the Beneficiary are parties to a Refund Guarantee dated
16 April 1998 securing the obligations of Daewoo Corporation &
Daewoo Heavy Industries Ltd. In respect of the construction and sale
of a dynamic positioned semi-submersible drilling vessel with
Builders Hull No. 3016 (including any amendments described in the
associated memorandum, meeting minute and/or side letter made from
time to time thereto) (the Guarantee).
(B) The Parties hereto have agreed to novate the Guarantee.
Now it is agreed that, with effect from the date of this Novation Agreement:
(1) Terms and expressions defined in the Guarantee shall, unless the context
otherwise requires, have the same meanings in this Novation Agreement.
(2) The Beneficiary releases and discharges the Bank from the various
covenants, undertakings, warranties and other obligations contained in the
Guarantee which are enjoyed by the Beneficiary, and from all claims and
demands whatsoever arising out of or in respect of the Guarantee whether
prior to, on or subsequent to the date of this Novation Agreement.
(3) The Bank agrees to perform all its duties and to discharge all its
obligations under the Guarantee and to be bound by all the terms and
conditions of the Guarantee in every way as if the New Beneficiary were
named in the Guarantee as a party AB INITIO in place of the Beneficiary.
Without limiting the generality of the foregoing, the Bank acknowledges
and agrees that the New Beneficiary shall have the right to enforce the
Guarantee and pursue all claims and demands (future or existing)
whatsoever arising out of or in respect of the Guarantee whether arising
prior to, on or subsequent to the date of this Novation Agreement.
-1-
<PAGE>
(4) Each party shall take all steps, execute all documents and do everything
reasonably required by any other Party to give effect to the transactions
contemplated by this Novation Agreement.
(5) This Novation Agreement is governed by and shall be construed in
accordance with the laws of England and the Parties hereby submit to the
exclusive jurisdiction of the courts of England.
In witness whereof this Novation Agreement has been signed on behalf of
the Parties the day and year first before written.
SIGNED on behalf of EXPORT-IMPORT
BANK OF KOREA in the presence of: )/s/ Illegible
)/s/ Illegible
SIGNED on behalf of PETRODRILL
OFFSHORE INC. in the presence of: )/s/ DEREK LEACH
D. Leach
Attorney
)/s/ H. STEPHEN ASSITER
H.S. Assiter Witness
SIGNED on behalf of PETRODRILL
SIX LIMITED in the presence of: )/s/ DEREK LEACH
D. Leach
Attorney
)/s/ H. STEPHEN ASSITER
H.S. Assiter Witness
-2-
EXHIBIT 10.20(B)
THE EXPORT-IMPORT BANK OF KOREA
[LETTERHEAD]
TO: PETRODRILL SIX Ltd. April 6, 1999
Re: Daewoo Heavy Industries Ltd.'s Hull Number 3016
1. We refer to our irrevocable guarantee No. M0902-804-LG-00057 (the "Refund
Guarantee") in favour of yourselves, Petrodrill Six Limited, for the
account of Daewoo Corporation and Daewoo Heavy Industries Ltd. (the
"Builder") in connection with the shipbuilding contract dated 9th April,
1998 made by and between yourselves and the Builder for the construction and
sale of one Dynamic Positioned Semi-Submersible Drilling Vessel having
Builder's Hull No. 3016. Other terms and expressions employed herein shall
bear the same meaning as in the Contract, a copy of which has been provided
to us.
2. In consideration for your entering into a Main Contract Amendment Agreement
dated 28th January, 1999 between yourselves and the Builder, we hereby agree
that from the date of this letter the Refund Guarantee is amended as
follows:
2.1 The second paragraph shall read as follows:
"Under the terms of the Contract you are to pay to the Builder a
Contract Price, comprising the Construction Price and the Listed Items
Price, for the Vessel as follows:
(a) The Construction Price in five installments as follows:
(i) First Instalment:
Ten Percent (10%) of the Construction Price, being $8,500,000,
shall be paid within three Banking Days of the Effective Date.
(ii) Second Instalment:
Thirty percent (30%) of the Construction Price, being $25,500.00,
shall be paid within three Banking Days from receipt by the
Purchaser of a telefax notice from the Builder attaching a Stage
Certificate in the form of the draft attached as Appendix V,
countersigned by an Authorised Representative (or, in default
thereof, the Classification Surveyor), certifying that it is 6
months after the Effective Date of the contract has taken place.
-- Continued on Page 2 --
<PAGE>
THE EXPORT-IMPORT BANK OF KOREA
[LETTERHEAD]
-- Page 2 --
(iii) Third Instalment:
Twenty percent (20%) of the Construction Price, being $17,000,000,
shall be paid within three Banking Days from receipt by the
Purchaser of a telefax notice from the Builder attaching a Stage
Certificate in the form of the draft attached as Appendix V,
countersigned by an Authorised Representative (or, in default
thereof, the Classification Surveyor), certifying that Keel laying
has taken place.
(iv) Fourth Instalment:
Twenty percent (20%) of the Construction Price, being $17,000,000,
shall be paid within three Banking Days from receipt by the
Purchaser of a telefax notice from the Builder attaching a Stage
Certificate in the form of the draft attached as Appendix V,
countersigned by an Authorised Representative (or, in default
thereof, the Classification Surveyor), certifying that launching
[float out] has taken place.
(v) Fifth Instalment:
Twenty percent (20%) of the Construction Price, together with any
increase or any decrease of the Construction Price arising from
the provisions of Clauses 7 and 16 of the Contract, shall be paid
upon Delivery.
(b) The Listed Items Price in ten instalments as follows:
(i) First Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000,
shall be paid on or before 9th June 1998.
(ii) Second Instalment:
Fifteen percent (15%) of the Listed Items Price, being $7,650,000,
shall be paid on or before 26th February 1999.
(iii) Third Instalment:
Five percent (5%) of the Listed Items Price, being $2,550,000,
shall be paid on or before 30th March 1999.
-- Continued on Page 3 --
<PAGE>
THE EXPORT-IMPORT BANK OF KOREA
[LETTERHEAD]
-- Page 3 --
(iv) Fourth Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000,
shall be paid on or before 30th May 1999.
(v) Fifth Instalment:
Fifteen percent (15%) of the Listed Items Price, being $7,650,000,
shall be paid on or before 30th July 1999.
(vi) Sixth Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000,
shall be paid on or before 30th September 1999.
(vii) Seventh Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000,
shall be paid on or before 30th November 1999.
(viii) Eighth Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000,
shall be paid on or before 30th January 2000.
(ix) Ninth Instalment:
Ten percent (10%) of the Listed Items Price, being $5,100,000,
shall be paid on or before 30th March 2000.
(x) Tenth Instalment:
Five percent (5%) of the Listed Items Price, being $2,550,000,
together with (or minus) any excess (or shortfall) of the Listed
Items Price over (or under) the provisional Listed Items Price,
shall be paid on or before 30 May 2000.
2.2 In the fourth paragraph, the sum of "US$108,800,000" is deleted and
replaced by the sum of "US$119,000,000."
3. We confirm that, except as expressly amended herein, the Refund Guarantee
remains in full force and effect.
4. The terms of this letter shall be governed by, and construed in accordance
with, English law.
-- Continued on Page 4 --
<PAGE>
THE EXPORT-IMPORT BANK OF KOREA
[LETTERHEAD]
-- Page 4 --
5. Please sign and return the attached copy of this letter to signify your
acceptance of the terms set out herein.
Yours very truly,
For and on behalf of
The Export-Import Bank of Korea
By: /s/ JONG-BOK LEE By: /s/ WON-YOUNG CHUN
Jong-Bok Lee Won-Young Chun
Assistant Manager & Senior Manager &
Loan Officer Senior Loan Officer
/Ship Export Credit Dept. /Ship Export Credit Dept.
We hereby agree to the terms set out herein.
/s/ D LEACH
For and on behalf of Petrodrill Six Limited.
EXHIBIT 10.21
TDI-HALTER/PETRODRILL CONTRACT
HULL NO. 1829
CONTRACT
FOR CONSTRUCTION OF A
DYNAMIC POSITIONED SEMI-SUBMERSIBLE
DRILLING VESSEL
BETWEEN
TDI-HALTER, L.P.
AND
PETRODRILL CONSTRUCTION, INC.
HULL NUMBER 1829
<PAGE>
INDEX
PAGE
DEFINITIONS.............................................................4
1. PURPOSE OF THIS CONTRACT................................................5
2. DESIGN: PRINCIPAL DIMENSIONS AND CHARACTERISTICS: CLASSIFICATION:
MANDATORY REGULATIONS: REGISTRATION.....................................6
3. CONTRACT PRICE..........................................................8
4. PAYMENT SCHEDULE: PERFORMANCE BOND/PARENT GUARANTEE: PAYMENT FOR
MODIFICATIONS AND OTHER ITEMS: PAYMENT FOR FUELS ETC AND LIQUIDATED
DAMAGES: PAYMENT PROCEDURES.............................................8
5. APPROVAL OF PLANS: SUBCONTRACTING: MAKER'S LIST: NOMINATED
SUBCONTRACTORS: ASSIGNMENT OF EXISTING SUBCONTRACTS: OBLIGATIONS
UNAFFECTED.............................................................11
6. LIGHTSHIP WEIGHT.......................................................14
7. MODIFICATIONS: PURCHASER'S MODIFICATIONS: STATUTORY MODIFICATIONS:
PRICING OF MODIFICATIONS: SUBSTITUTION OF MATERIALS....................14
8. INSPECTION: AUTHORISED REPRESENTATIVES: QUALITY ASSURANCE SYSTEM
AUDITS: INDEPENDENT CONTRACTOR, INDEMNITY AND LIABILITY PROVISIONS.....17
9. PLANNED PROGRAMME, PROGRESS CONTROL AND REPORTING......................22
10. TITLE..................................................................23
11. RISK AND INSURANCE.....................................................24
12. LOSS OR DAMAGE TO THE VESSEL...........................................25
13. SEA TRIALS: TECHNICAL ACCEPTANCE.......................................26
14. DELIVERY OF THE VESSEL: DOCUMENTS TO BE PROVIDED TO THE PURCHASER:
REMOVAL OF THE VESSEL..................................................28
15. EXTENSION OF TIME FOR DELIVERY: PERMISSIBLE DELAY:
CAUSES OF DELAY: NOTICES...............................................30
16. DELAY IN DELIVERY: LIQUIDATED DAMAGES: TERMINATION FOR DELAY
IN DELIVERY............................................................31
17. DEFECTS AND BUILDER'S GUARANTEE WARRANTY: GUARANTEE ENGINEER:
ASSIGNMENT OF BUILDER'S GUARANTEE......................................32
18. DEFAULT BY THE PURCHASER: EVENTS OF PURCHASER'S DEFAULT: TERMINATION
BY THE BUILDER.........................................................35
19. DEFAULT BY THE BUILDER: EVENTS OF BUILDER'S DEFAULT: RECISSION BY THE
PURCHASER..............................................................36
20. PATENT INDEMNITY: PATENT NUMBERS AND TRADEMARKS: HOLD HARMLESS, THE
PURCHASER: HOLD HARMLESS, THE BUILDER: DESIGNS AND PROPERTY OF THE
PURCHASER..............................................................39
21. OWNER FURNISHED EQUIPMENT: DELIVERY OF OWNER FURNISHED EQUIPMENT:
RESPONSIBILITY OF THE BUILDER..........................................40
22. TAXES AND DUTIES.......................................................41
23. ASSIGNMENT.............................................................41
2
<PAGE>
24. PRIORITY OF DOCUMENTS..................................................42
25. NOTICES................................................................42
26. RECORDS AND AUDITS.....................................................43
27. LAW....................................................................44
28. DISPUTES...............................................................44
29. MISCELLANEOUS..........................................................44
30. SPARE PARTS............................................................45
31. SAFETY AND HEALTH STANDARDS............................................45
32. EFFECTIVENESS..........................................................46
APPENDICES
APPENDIX I LIST OF PRINCIPAL DRAWINGS AND OTHER CONTRACT DOCUMENTS
APPENDIX II PLANNED PROGRAMME
APPENDIX IIA OWNER FURNISHED EQUIPMENT
APPENDIX III FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
APPENDIX IV FORM OF PERFORMANCE BOND
APPENDIX V FORM OF STAGE CERTIFICATE
APPENDIX VI SCHEDULE OF LABOUR COSTS FOR MODIFICATIONS
APPENDIX VII LIST OF CERTIFICATES TO BE SUPPLIED ON DELIVERY OF THE
VESSEL
APPENDIX VIII LIST OF BASIC DESIGN DRAWINGS
APPENDIX IX FORM OF PARENT COMPANY GUARANTEE
3
<PAGE>
CONTRACT
FOR CONSTRUCTION AND SALE OF A DYNAMIC POSITIONED
SEMI-SUBMERSIBLE DRILLING VESSEL
This CONTRACT made this 9th day of April, 1998, by and between:-
TDI-Halter, L.P. a limited partnership organised under the laws of the State of
Louisiana (hereinafter called "Builder"), having its principal office at 1601
South Childers Road, Orange, Texas 77631,
and
Petrodrill Construction, Inc. a corporation organised under the laws of Bahamas
(hereinafter called Purchaser"), having its principal office at Suite 205,
Saffrey Square, P.O. Box N8188, Nassau, Bahamas.
WITNESSETH THAT THE PARTIES HAVE AGREED AS FOLLOWS:-
DEFINITIONS
In this Contract the following expressions shall have the meanings hereby
assigned to them:-
"Basic Design" means the design drawings provided by the Purchaser listed
Section 99000 in Appendix VIII;
"Banking Day" means any day on which banks in each of London, New York and
Houston are open for the transaction of normal banking business;
"Classification Society" means Lloyds Register of Shipping;
"Classification Surveyor" shall mean any surveyor appointed by the
Classification Society to supervise the Vessel's construction;
"Contract Price" means the price stated in Clause 3.1;
"Contractual Delivery Date" means the date referred to in Clause 14.1 as
the same may from time to time be extended in accordance with the
provisions of this Contract;
"Contract Documents" means the Specifications, the Principal Drawings and
the other documents listed in Appendix I;
"Delivery" means the delivery by the Builder, and acceptance by the
Purchaser, of the Vessel pursuant to Clause 14.2;
4
<PAGE>
"LIBOR" means the interest rate per annum. which Citibank, London is
offering to prime banks in the London Interbank market for deposits in
United States Dollars for a three month period, determined at 11.00 a.m.
London time, as quoted on the date from which interest is accrued under
this Contract. All interest hereunder shall be calculated on the basis of
a 360 day year and compounded quarterly and shall be paid on the date when
payment is made of the sum on which interest is accrued:
"Makers' List" means the list of contractors approved by the Purchaser and
set out in Appendix X hereto;
"Mandatory Regulations" has the meaning assigned to it in Clause 2.7;
"Materials" means all materials and supplies, including, without
limitation, all machinery, equipment, outfittings and spare parts (but
excluding the Owner Furnished Equipment), intended for the Vessel's
construction to the extent that the same have been appropriated to, or
incorporated in, the Vessel;
"Planned Programme" means the programme for performance of this Contract
by the Builder detailed in Appendix H hereto:
"Plans" means those drawings, documents and specifications which are
required under this Contract and the Specification (Section 990 10) to be
submitted to the Purchaser for approval;
"Specifications" means:-
(a) Specification no 95019 initialled by or on behalf of the
Purchaser and the Builder on April 1", 1998; and
(b) any additions or amendments thereto hereafter agreed between
the parties;
"Stage Certificate" means a certificate in the form set out in Appendix V;
"Statutory Modifications" means modifications applicable to the Vessel as
a result of changes to any of (i) the rules, regulations and requirements
of the Classification Society or (ii) the Mandatory Regulations;
"Working Day" means any day (other than Saturdays or Sundays) on which
work is normally carried out at the Shipyard.
Further terms used in this Contract are defined hereinafter.
1. PURPOSE OF THIS CONTRACT
1.1. Upon the terms and conditions set out in this Contract, the Builder, as an
independent contractor, undertakes to engineer, construct, build, launch, equip,
complete, and test at various
5
<PAGE>
of its shipyards at located on the U.S. Gulf Coast, exact locations to be
determined later (hereinafter called the "Shipyard") and deliver to Purchaser or
the Purchaser's nominee, as defined in Clause 23 below, for the Contract Price
referred to in Clause 2 below, one (1) fully operational and complete
self-propelled Dynamic Positioned Semi-Submersible Drilling Vessel (hereinafter
called the "Vessel") more fully described in Clause 2 below. Subject to the
performance of the Builder's obligations hereunder, the Purchaser expressly
agrees to take delivery of the Vessel when duly completed and to pay Builder all
amounts due Builder.
1.2. References herein to the Vessel shall, except where otherwise expressly
provided, be deemed to include all Materials.
2. DESIGN: PRINCIPAL DIMENSIONS AND CHARACTERISTICS: CLASSIFICATION: MANDATORY
REGULATIONS: REGISTRATION
2.1. The Vessel, which is to be assigned the Builder's Hull No 1829, shall be
constructed and completed in all respects in accordance with the Specifications.
To the extent not defined in the Specifications, the Vessel's construction is to
meet good offshore construction standards and practices. At the time of Delivery
hereunder, the Vessel, which shall conform strictly with the terms and
conditions of this Contract and the Specification and shall be delivered safely
afloat.
DESIGN
2.2. The basic elements of the Vessel's design (the "Basic Design") will be
delivered by the Purchaser to the Builder. It is expressly understood that the
Purchaser shall be solely responsible for the suitability of the vessel design
supplied by it and for any errors, omissions and inconsistencies in the Basic
Design. If the Purchaser shall require the Builder to modify the Basic Design,
the work required to do so shall constitute an Purchaser's Modification for the
purposes of Clause 7 of this Contract.
2.3. The Builder shall develop all required detailed engineering from the
delivered Basic Deign. The Builder shall accept responsibility for its own work
of developing the detailed working drawings from the Basic Design and all other
engineering it shall perform in connection with this Contract. If the Builder
considers during such detailed engineering that any aspect of the Basic Design
might prevent the Vessel when constructed from complying with the requirements
of Clause 2, it will inform the Purchaser accordingly and the Purchaser may
either procure the modification of the Basic Design to remedy this deficiency or
may require the Builder to modify the Basic Design to remedy this deficiency.
PRINCIPAL DIMENSIONS AND CHARACTERISTICS
2.4. The Vessel shall have the dimensions and characteristics stated in the
Specifications.
CLASSIFICATION
2.5. The Vessel shall be constructed according to the rules and regulations of
the Classification Society current at the date of execution of this Contract,
incorporating all additions and
6
<PAGE>
amendments thereof applicable to the Vessel in force or published, so as to
achieve on Delivery the following notation:-
Unrestricted Service OU +100A1, +LMC, UMS, DP(AAA), PC, DRILL, IWS
with the description notation
semi- submersible, self propelled drilling vessel
Provided that the Purchaser shall not be entitled to refuse delivery where such
recommendations etc. are of such a minor nature as not to adversely affect the
operation of the Vessel. In any event, such recommendations etc. shall be
remedied by the Builder within 90 days of Delivery or such other period as the
parties may mutually agree and Purchaser shall be entitled to retain $250,000
pending such rectification.
2.6. Decisions of the Classification Society as to whether or not the Vessel
complies with its rules, regulations and requirements shall be final and shall
bind both parties to this Contract.
MANDATORY REGULATIONS
2.7. The Vessel shall also comply with (i) all requirements of the regulatory
bodies listed in the Specifications and (ii) the following rules, regulations
and requirements, in each case current at the date of execution of this Contract
(i) and (ii) being known herein jointly as the "Mandatory Regulations"):-
a. IMO, Resolution A 649 (16) adopted on 19 October 1989, Code for the
Construction and Equipment of Mobile Offshore Drilling Units.
b. International Convention for the Safety of Life at Sea SOLAS 1974,
protocols of 1978, 1981, 1983 and all Amendments in force.
c. International Convention of Load Lines, 1966 with resolutions A 231 (VII)
and A 320 (IX).
d. International Telecommunication Convention and Radio Regulation 1973, 1976
and 1982 and latest GMDSS Rules for radio communications.
e. International Convention for Tonnage Measurement 1967/1969.
f. Suez Canal Tonnage Regulations.
g. International Convention for the Prevention of Pollution from Ships
(MARPOL) 1974/1978, Consolidation Edition, IMO, 1991, including 1992
amendments to Annex 1.
h. International Regulations for Preventing Collision at Sea, 1972 including
amendments.
7
<PAGE>
i. International Labour Organisation (ILO) Convention No. 92 and No. 133 for
crew accommodation.
j. International Electronical Commission (IEC), Electrical Installation in
Ship Publication No. 92 or IEEE 45 Subject to the Purchaser's prior
approval, such approval not to be unreasonably withheld.
k. API specifications as applicable.
REGISTRATION
2.8. The Vessel shall upon Delivery fly the Netherland Antilles flag and be
registered in the Netherland Antilles Register of Shipping. Registration of the
Vessel as aforesaid shall be effected by thePurchaser and all costs and expenses
thereof shall be for the Purchaser's account.
3. CONTRACT PRICE
3.1. In consideration of the performance by the Builder of all its obligations
under this Contract the Purchaser shall pay to the Builder the price of
Eighty-four Million United State Dollars (US $ 84,000,000), (the "Contract
Price"), which shall include the cost of installation of the Owner Furnished
Equipment.
3.2. The Contract Price, which is exclusive of the cost of the Owner Furnished
Equipment, shall be a fixed price subject to upward or downward adjustment only
in accordance with the provisions of Clause 7 hereof. It includes:-
a. the cost of the Vessel completed in accordance with the requirements of
this Contract and the Specifications;
b. the cost of all tests and trials of the Vessel to be performed by the
Builder;
c. the cost of procuring the classification of the Vessel and of obtaining
all certificates and documents (save for those in respect of the Owner
Furnished Equipment), which are required to be delivered pursuant to this
Contract and the Specifications; and
d. all other costs and expenses of the Builder as provided for herein or
otherwise incurred by the Builder unless expressly provided herein as
being for the Purchaser's account.
4. PAYMENT SCHEDULE
4.1. The Purchaser shall pay the Contract Price to the Builder in ten (10)
instalments as follows:-
FIRST INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) shall be paid within three Banking Days
of the Execution Date.
8
<PAGE>
SECOND INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) shall be paid within three Banking Days
from receipt by the Purchaser of a telefax notice from the Builder attaching a
Stage Certificate in the form of the draft attached as Appendix V, countersigned
by an Authorised Representative (or, in default thereof, the Classification
Surveyor), certifying that Builder has placed the orders for the major
equipment, herein defined as the Main Engines, the Thrusters, and the Electrical
Integration Subcontract.
THIRD INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) shall be paid within three Banking Days
from receipt by the Purchaser of a telefax notice from the Builder attaching a
Stage Certificate in the form of the draft attached as Appendix V, countersigned
by an Authorised Representative (or, in default thereof, the Classification
Surveyor), certifying that Start of Fabrication has taken place.
FOURTH INSTALMENT:
Fifteen per cent (15%) of the Contract Price, being Twelve Million Six Hundred
Thousand U.S. Dollars, (US$ 12,600,000) shall be paid within three Banking Days
from receipt by the Purchaser of a telefax. notice from the Builder attaching a
Stage Certificate in the form of the draft attached as Appendix V, countersigned
by an Authorised Representative (or, in default thereof, the Classification
Surveyor), certifying that the keel laying for the pontoons has taken place.
FIFTH INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) within three Banking Days from receipt by
the Purchaser of a telefax notice from the Builder attaching a Stage Certificate
in the form of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor), certifying
that the Pontoons of the Vessel have successfully been launched.
SIXTH INSTALMENT:
Five per cent (5%) of the Contract Price, being Four Million Two Hundred
Thousand U.S. Dollars, (US$ 4,200,000) within three Banking Days from receipt by
the Purchaser of a telefax notice from the Builder attaching a Stage Certificate
in the form of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor), certifying
that the Substructure has successfully been erected on the Deck Box.
SEVENTH INSTALMENT:
9
<PAGE>
Five per cent (5%) of the Contract Price, being Four Million Two Hundred
Thousand U.S. Dollars, (US$ 4,200,000) within three Banking Days from receipt by
the Purchaser of a telefax notice from the Builder attaching a Stage Certificate
in the form of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor), certifying
that the Pontoons have successfully been joined.
EIGHTH INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) within three Banking Days from receipt by
the Purchaser of a telefax notice from the Builder attaching a Stage Certificate
in the form of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor), certifying
that the Deck Box has been launched and successfully mated with the Pontoons and
Columns.
NINTH INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) within three Banking Days from receipt by
the Purchaser of a telefax notice from the Builder attaching a Stage Certificate
in the form of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor), certifying
that the Main Engines have been started.
TENTH INSTALMENT:
Fifteen per cent (15 %) of the Contract Price, being Twelve Million Six Hundred
Thousand U.S. Dollars, (US$ 12,600,000) together with any increase or any
decrease of the Contract Price arising from the provisions of Clauses 6, and 16
below, shall be paid upon Delivery.
4.2. The Builder shall notify the Purchaser in writing ten Banking Days in
advance of the estimated dates of occurrence of each of the events before
Delivery referred to above, excluding the First Instalment. Not withstanding
anything to the contrary contained herein, or in Appendix V hereto, if Purchaser
fails to execute any Stage Certificate and such Stage Certificate has been
executed by the Classification Surveyor, then Purchaser shall be obligated to
pay such Instalment within three banking days of execution by the Classification
Surveyor. In addition, in no event shall the Second or Third Instalments be paid
prior to a date ninety (90) days from the Execution Date.
PERFORMANCE BOND/PARENT GUARANTEE
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4.3. The Builder shall at its own expense supply to the Purchaser concurrently
with payment of the First Instalment of the Contract Price a Performance Bond,
for an amount equal to 100% of the Contract Price, in the form specified in
Appendix IV and given by Fireman's Fund Insurance Company, California, USA. The
Builder shall also, at the same time, provide a form of Parent Guarantee from
its ultimate parent company substantially similar to that contained in Appendix
IX hereto.
PAYMENT FOR MODIFICATIONS AND OTHER ITEMS
4.4. Any sums due to either party under Clause 7 as a result of Purchaser's
Modifications and/or Statutory Modifications shall be payable upon builder
achieving certain milestones and in conjunction with the above payment schedule,
and shall be payable on or before the Delivery Date.
PAYMENT FOR FUELS ETC AND LIQUIDATED DAMAGES
4.5. All amounts due to the Purchaser (i) under Clause 13.2 hereof and (ii) by
way of liquidated damages in respect of delay in Delivery under Clause 16 shall
be calculated and determined before Delivery and shall be paid on, and as a
condition of, Delivery.
PAYMENT PROCEDURES
4.6. Payment of sums due to the Builder in accordance with the provisions of
this Contract shall be made, by telex transfer to the Builder's account with
Hibernia National Bank, New Orleans, Louisiana, free of all transfer charges.
4.7. If the date on which any payment is due in accordance with the provisions
of this Contract does not fall on a Banking Day, payment shall be made on the
immediately succeeding Banking Day.
5. APPROVAL OF PLANS: SUBCONTRACTING
APPROVAL OF PLANS
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5.1. In respect of all Plans required for the completion of the works envisaged
by this Contract, the same shall be submitted to the Purchaser in four copies as
soon as possible following their production. The Purchaser shall, within ten (
10 ) Working Days after receipt thereof, return to the Builder one copy of such
Plans with the Purchaser's approval or the Purchaser's remarks and amendments
(if any) written thereon.
5.2. Should the Builder elect to enter into a subcontract to purchase the detail
engineering with a Shipyard also contracted with the Purchaser who is
constructing a vessel of the same design and in the event that Purchaser elects
to remark or comment previously approved drawings, such remarks or amendments
shall be dealt with under the modification procedure within the meaning of
clause 7 hereof.
5.3. In the event that the Purchaser shall fail to return the Plans to the
Builder within the time limit as hereinabove provided, such Plans shall be
deemed to have been approved without comment.
5.4. The Builder shall take due note of the Purchaser's remarks and amendments
(if any) on Plans submitted pursuant to this Clause and, if such remarks or
amendments are not of such a nature or extent as to constitute a modification
within the meaning of Clause 7 hereof, then the Builder shall commence or
continue construction of the Vessel in accordance with the corrected or amended
Plans. If such remarks or amendments are not clearly specified or detailed, the
Builder shall in all cases seek clarification of the same from the Purchaser
before implementing the same.
5.5. Copies of all correspondence to and from the Classification Society and the
regulatory authorities referred to in the Specifications, together with all
Plans approved by the Classification Society, shall be furnished to the
Purchaser by the Builder as soon as practicable upon dispatch and receipt.
SUBCONTRACTING
5.6. Save as regards those works delegated to those Subcontractors defined in
the Makers' List, the Builder shall not, without the Purchaser's prior approval
in writing , which shall not be unreasonably with held, subcontract any part of
the works contemplated by this Contract which exceed in value US $ 100,000 or
its equivalent in local currency. Where such approval has been given, the
Builder shall nevertheless remain fully responsible for the performance of the
same as if it had personally undertaken such works.
MAKER'S LIST
5.7. The Builder shall select for the supply of each of the Materials listed in
the Makers' List the Vendor named therein in relation to the same. Where the
Makers' List provides for more than one Vendor to supply any element of the
Materials, the Builder shall with reasonable notice provide the Purchaser with a
copy of the Purchase Order to be issued to its intended choice of Subcontractor
before any subcontract is awarded. Such purchase order shall contain full
technical and commercial details. If thereafter, the Purchaser shall request the
Builder to order
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that element of the Materials from another Subcontractor named in the Makers'
List in relation thereto, then the Builder will take all reasonable steps to
comply with such request and the Purchaser shall reimburse to the Builder any
difference in price between that quoted by the Builder's chosen Subcontractor
and the Subcontractor chosen by the Purchaser.
NOMINATED SUBCONTRACTORS
5.8. ASSIGNMENT OF EXISTING SUBCONTRACTS
In relation to the following "long lead" items of Materials, (the cost of which
is included in the Contract Price) it is understood that the Purchaser has had
advanced negotiations with the following suppliers and the Builder will enter
into subcontracts for the following based on the references below:
SUPPLIER NAME SUPPLIED ITEM REFERENCE
- - -------------------------------------------
Caterpillar Engine Generator Sets Fax transmission between Caterpillar
and Petrodrill on the 11th and 29th
January plus 6th February
GEC Alsthom Electrical Integrator Offer No. P354-A01
5.9. The Purchaser has also entered into an agreement with LIPS Thrusters BV for
the supply of thrusters Ref Petrodrill PO No. 1.9001/Lips order No. T07387/94
for Dutch Guilders 6.2 Million per set delivered Europe.
Concurrently with the receipt of the First Instalment, the benefit together with
the burden of all such existing contracts are to be assigned by the Purchaser
to the Builder, to the extent that it relates to only one shipset of equipment,
where upon the Materials to which they relate are to be treated as Builder's
supply. The Builder shall, upon assignment of each sub-contract, reimburse to
the Purchaser all of the instalments of the contract price paid by the latter in
respect thereof. It being understood that the cost of said thrusters is included
in the Contract Price.
OBLIGATIONS UNAFFECTED
Nothing in this Clause shall affect the other obligations of the Builder under
this Contract nor diminish the responsibility of the Builder in respect of the
Materials, detailed engineering or workmanship required hereunder.
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6. LIGHTSHIP WEIGHT
6.1. The Builder shall meet the target figures set out for Lightship Weight and
Centre of Gravity as specified in section 12000 page 3 of the Addendum to Rev 3
P-95019 of the Specification.
6.2. The lightship weight and centre of gravity of the Vessel shall be verified
by an Inclining Experiment prior to Delivery.
6.3. The results of the Inclining Experiment referred to in Clause 6.2 shall be
used to demonstrate a Lightship Weight in the conditions referred to in the
Specifications.
6.4. The Builder shall have no liability for the Owner Furnished Equipment
lightweight and centre of gravity as specified in section 12000 page 3 of the
Addendum to Rev 3 P-95019 of the specification. If the remaining lightship
weight so demonstrated is more than 9075 metric tons the Builder shall pay to
the Purchaser on Delivery as liquidated damages US $12,500 per full metric tons
of the increase above 9075 metric tonnes up to a maximum of 2.5 million U.S.
Dollars, (U.S.$2,500,000).
6.5. The Purchaser shall have no obligation to accept delivery of the Vessel if
the ship lightweight as defined on page 3 of the addendum to the specification
is more than 9,275 metric tons. The Builder shall, however, in such context be
entitled to make modifications to the Vessel in order to either reduce the
weight or ensure that the Operational VLC is restored to its original level
provided that the same (i) are approved in advance by the Classification Society
and (ii) do not significantly affect the motion characteristics or operational
performance of the Vessel.
6.6. In the event that the lightship weight demonstrated as a result of Clause
6.2 is less than 8,875 tonnes the Purchaser shall pay the Builder $12,500 per
tonne for each complete tonne that the weight is below 8,875 tonnes up to a
maximum of 3.0 million U.S. Dollars, (U.S. $3,000,000).
6.7. The Builders shall also have the option of exercising its rights as per
clause 6.5 in the event that the liquidated damages due is in excess of $ 1.0
million. In this case the level of liquidated damages that is finally paid will
be reduced from the calculated level by the same percentage that the Builder is
able to recover the VDL that has been lost as a result of the changes in the
lightship weight.
6.8. The parties hereto agree that the above liquidated damages shall ( subject
always to the provisions of clause 16.2 and 16.3 below ) be the sole and
exclusive remedy for damages being due as a result of increases in lightship
weight as set forth in this section.
6.9. The weights described in this Section 6 shall be adjusted for any
Modifications pursuant to Section 7.
7. MODIFICATIONS
PURCHASER'S MODIFICATIONS
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7.1. The Purchaser may at any time after the date hereof submit a request in
writing to the Builder for changes (the "Purchaser's Modifications") to be made
to the Specifications and shall supply with such request sufficient particulars,
documentation and details to describe the change requested.
If the change so requested (the "Requested Change") can be reasonably undertaken
having regard to the stage of construction of the Vessel and the Planned
Programme, then the Builder shall be obliged to effect the same but shall be
entitled to any increase (and shall concede any decrease) in construction cost
or adjustment of the Contractual Delivery Date or any other provisions of this
Contract or the Specifications which the Requested Change reasonably
necessitates and which is agreed in writing by the Builder and the Purchaser.
The Builder shall notify the Purchaser in writing no later than ten (10) Working
Days after receipt of the written request for the Requested Change, of any such
adjustments which it will require.
On the basis of such notification the Purchaser shall no later than seven (7)
Working Days thereafter elect in writing to:
a. agree to the adjustments notified, in which case the Builder shall
construct the Vessel in accordance with the Requested Change;
b. contest the reasonableness of the adjustment notified, in which case
subclause 7.5 below shall apply; or
c. withdraw the Requested Change, in which case the Vessel shall be built
without reference to the same.
7.2. If within seven (7) Working Days after such notification the Purchaser has
made no election as aforesaid, then the adjustments notified by the Builder
shall be deemed to have been withdrawn by the Purchaser.
7.3. If, however, the Purchaser notifies the Builder in writing that the
Purchaser wishes to implement the Requested Change but disputes the
reasonableness of the adjustments, the matters shall be determined by an expert,
acting as such and not as an arbitrator, to be appointed by agreement between
the parties. In the event that the parties are unable to agree as to any
appointment within thirty days of the Purchaser's written notice, the
appointment shall be made, upon the written application of either party, by Det
Norske Veritas. The decision of the said expert shall be final and binding upon
the parties and the costs of such expert in reaching his decision shall be
shared by the parties. Pending the decision of the aforesaid expert, the
Builder shall continue construction of the Vessel in accordance with the
Requested Change.
7.4. The agreed extra cost of any Requested Change or that decided by the expert
shall be paid by the Purchaser and any cost savings by the Builder as a result
of any Requested Change shall be paid to the Purchaser in accordance with Clause
4.4.
STATUTORY MODIFICATIONS
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7.5. In the event of any Statutory Modifications arising the Builder shall
within seven Working Days of its becoming aware of the same, give notice to the
Purchaser of:-
a. the change required to be made to the Specifications (the "Required
Change");
b. any estimated extra or reduced cost of construction of the Vessel in
accordance with the Required Change together with any documentation
substantiating such cost which the Purchaser reasonably requires; and
c. the effect of the Required Change on any other provisions of this Contract
or the Specifications (including without limitation any change to the
Contractual Delivery Date).
7.6. The Purchaser may apply for a formal waiver of compliance with the Required
Change from the body having power to grant such waiver if the Purchaser
considers that the operation of the Vessel in its intended service would permit
such waiver, and shall notify the Builder as soon as possible after receiving
the decision of such body. In applying for any waiver, the Purchaser may call
upon the Builder for assistance and the Builder will provide reasonable
co-operation to the Purchaser in this respect.
7.7. If no waiver has been obtained and notified by the Purchaser to the Builder
within thirty Working Days of the receipt by the Purchaser of the notice
referred to above, the Builder shall build the Vessel in accordance with the
Required Change and the reasonable extra cost thereof, if any, shall be paid by
the Purchaser. Before the expiry of such time the Builder shall continue with
the construction of the Vessel in accordance with the Required Change but it
shall, in so doing, use its best endeavours to minimise any costs and loss of
time which might arise if a waiver were obtained.
7.8. If the Purchaser notifies the Builder in writing that the Purchaser
disputes the reasonableness of the extension or variation notified, the issue of
what is a reasonable extension or variation may be put, by the Purchaser or the
Builder, to an expert, acting as such and not as arbitrator, to be appointed by
agreement between the parties. In the event that the parties are unable to agree
as to an appointment within thirty days of the Purchaser's written notice as
aforesaid the appointment shall be made, upon the written application of either
party, by Det Norske Veritas. The decision of the expert shall be final and
binding upon the parties and the costs of such expert in reaching his decision
shall be shared by the parties. Pending the decision of the said expert, the
Builder shall continue construction of the Vessel in accordance with the
Required Change.
PRICING OF MODIFICATIONS
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7.9. In relation both to Purchaser's Modifications and Statutory Modifications
as aforesaid, the Builder's quotations in respect of any increase or decrease in
the Contract Price relating thereto shall, if requested in writing by the
Purchaser, be calculated both on "lump sum" and a "time and materials" basis. In
relation to quotations effected on a "time and materials" basis, the Builder
shall apply the following parameters:-
a. labour costs shall be charged at the agreed hourly rates set out in
Appendix VI;
b. the cost of all materials and equipment shall not exceed one hundred and
fifteen per cent (115%) of the cost to the Builder of the same (inclusive
of the costs of delivery of those materials and equipment to the
Shipyard); provided, however, that the Builder shall in all cases
endeavour to obtain the best price terms and trade discounts from
suppliers and subcontractors for the benefit of the Purchaser.
SUBSTITUTION OF MATERIALS
7.10. If at any time during the construction of the Vessel, any Materials are
not available (other than as the result of any neglect or omission on the part
of the Builder) then, subject to the prior approval in writing of the Purchaser
and, where necessary, of the Classification Society, the Builder may use or
install other Materials provided that such other Materials used or installed in
substitution for those specified are equivalent in quality to, or better than,
those specified, and which meet the requirements of the Classification Society
and the other requirements of this Contract.
8. INSPECTION
AUTHORISED REPRESENTATIVES
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8.1. The Purchaser shall have the right to retain up to fifteen supervisors
("Authorised Representatives"), whose names and scope of authority shall be
notified in writing to the Builder, permanently at the Shipyard during all times
until Delivery. The Builder shall provide suitable office accommodation
(including adequate parking spaces), photocopying and canteen facilities where
available and the installation of telephones and telefax machines with
reasonable and safe access to work areas for, and permit and afford every
facility to, the Authorised Representatives from time to time and at all times
whilst work is proceeding to examine and inspect the work being done under this
Contract and every part thereof, together with the materials being used or about
to be used thereon, and to call for and witness such tests as may be required.
The costs of telecommunication facilities outside the local area in which the
Shipyard is located and the use of the canteen shall be for the Purchaser's
account. Purchaser shall designate one Representative authorised to make
contractual decisions and/or commitments on behalf of the Purchaser and likewise
Builder shall designate one Representative authorised to make contractual
decisions and/or commitments on behalf of the Builder. Builder and Purchaser
shall notify each other of the name of their respective designated
Representative within thirty (30) days of the Execution Date. To the extent that
Builder or Purchaser elects to change its designated Representative, it shall
notify of such change, in writing, within five (5) Working Days of such change.
8.2. In addition to the Authorised Representatives, the Purchaser may from time
to time employ further personnel and contractors on site.
8.3. The Authorised Representatives shall have the right to attend all tests,
trials and inspections of the Vessel, her machinery and equipment, which shall
in each case be conducted within the Shipyard's normal working hours. The
Builder shall give notice to the Authorised Representatives in advance of the
date and place of such tests, trials and inspections in accordance with the
provisions of the Specifications. Failure of the Purchaser or its Authorised
Representatives to be present at such tests, trials and inspections after due
notice as above provided shall be deemed to be a waiver of the Purchaser's right
to be present. The Builder shall obtain for the Purchaser and the Authorised
Representatives rights of access to the Subcontractors' premises, within normal
working hours, for the purpose of inspection of workmanship and Materials.
8.4. The Builder shall carry out in strict compliance with the Specifications
all the tests and trials of the Vessel and commissioning of the Materials which
are detailed therein so as to demonstrate that the same are in accordance with
the requirements of the Specifications and that all of her systems function in
their intended manner. Any Materials or workmanship found to be faulty or
inadequate shall be replaced or made good by the Builder prior to Delivery, at
its expense and without additional expense to the Purchaser, by suitable and
sound Materials and workmanship.
8.5. Nothing done or omitted to be done by or on behalf of the Purchaser under
this Clause shall be deemed to be a waiver of any objection to, or an acceptance
of, faulty or inadequate Materials or workmanship, or an admission that any
Materials or workmanship are of the standard required for due performance of
this Contract.
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8.6. The Authorised Representatives shall be deemed to be employees of the
Purchaser and not the Builder. The Builder shall be under no liability to the
Authorised Representatives for death, personal injury or damage to their
property during the time when they are engaged in the duties contemplated under
this Contract either on the Vessel or within the premises of the Builder or its
Subcontractors.
QUALITY ASSURANCE SYSTEM AUDITS
8.7. Quality Assurance System Audits may be carried out by the Purchaser, and/or
regulatory authorities to verify compliance with the quality requirements
stipulated in this Contract and with regulatory requirements. Such requirements
shall include but not necessarily be limited to quality records, personnel and
procedure qualifications, material traceability records, inspection plans etc.
The Builder is required to provide to the Purchaser any documentation and
administrative systems necessary to verify compliance. Inspection and testing
and Quality Assurance System Audits by the Purchaser as described in this Clause
or otherwise shall not imply any diminution of the Builder's responsibilities
and obligations under this Contract.
INDEPENDENT CONTRACTOR, INDEMNITY AND LIABILITY PROVISIONS
8.8. It is understood that Builder is an independent contractor as to all Work
performed hereunder and that the detailed manner and method of doing the Work
and the areas of the Vessel where the Work is being performed shall be under the
exclusive control of the Builder. Purchaser shall have the right to supervise
the performance of the Work as to the results to be achieved and the compliance
of the Contractor with the terms of this Contract and the specifications.
A. Indemnification
a.1. BUILDER INDEMNIFICATION
a.l.a.Builder Personnel and Property
Builder shall release, defend, indemnify, and hold Purchaser, its
parent or affiliated companies, and their respective officers, directors,
employees, contractors, subcontractors, invitees, licensees and agents,
except any of the foregoing which are part of the Builder Group
(hereinafter called the Purchaser Group) harmless from and against all
liability, claims, losses, damages, punitive damages, costs, expenses,
attorney's fees, demands, suits and causes of action of every kind and
character (the "claims"), arising in favor of any officer, director, or
employee of the Builder or its sublessees, contractors and subcontractors,
their respective parent and affiliated companies, and their respective
officers, directors, employees, vendors, invitees, licensees and agents
(hereinafter collectively called the "Builder Group") on account of
personal injury or death or damage to property owned by any member of the
Builder Group, or, prior to Delivery, the Vessel and/or Owner Furnished
Equipment in Builder's care, custody and control, in any way incident to
or in connection with or arising out of or under this Contract, regardless
of the sole, joint or concurrent negligence, negligence per se, gross
negligence, statutory fault, or strict liability of any member of the
Purchaser Group or the unseaworthiness of the Vessel or any vessel owned
operated or chartered by any member of the Purchaser Group
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that may have caused or contributed to the claims, to the extent such
indemnity obligations are not prohibited by applicable law.
a.1.b. Third Parties
Prior to the Delivery of the Vessel, Builder shall release, defend,
indemnify, and hold the Purchaser Group harmless from and against all
liability, claims, losses, damages, punitive damages, costs, expenses,
attorney's fees, demands, suits and causes of action of every kind and
character (the "claims"), arising in favor of any Third Party on account
of personal injury or death and/or damage to Third Party property in any
way incident to or in connection with or arising out of or under this
Contract, resulting from the joint or concurrent negligence, negligence
per se, gross negligence, (collectively "negligence") statutory fault or
strict liability of any member of the Builder Group or the unseaworthiness
of the Vessel or any vessel owned operated or chartered by any member of
the Builder Group, to the extent such claims were caused by the negligence
or other legal liability of any member of the Builder Group. As used
herein, a Third Party is any person of entity not included in either the
Purchaser Group or the Builder Group.
a.1.c. Pollution
Notwithstanding anything to the contrary herein, Builder shall
release, defend, indemnify, and hold the Purchaser Group harmless from and
against all, claims, demands, suits, causes of action, damages, natural
resource damage assessments, response, clean up, containment or disposal
expenses and other liabilities, including but not limited to attorney's
fees and the costs of litigation or administrative proceedings but
excluding any claim covered by a. 1. or a.2. above (the "Purchaser
pollution claims"), arising from any spill, discharge, escape, release of
or exposure to any waste, rubbish, petroleum, chemical or hazardous
substance, whether solid, liquid or gas, originating from any equipment,
facility or property of the Builder Group and, prior to Delivery, from the
Vessel, or from handling, removal, transportation or disposal thereof,
except to the extent such claims may have resulted from the negligence of
a member of the Purchaser Group.
a.2. PURCHASER INDEMNIFICATION
a.2.a.Purchaser Personnel and Property
Purchaser shall release, defend, indemnify, and hold the Builder
Group harmless from and against all liability, claims, losses, damages,
punitive damages, costs, expenses, attorney's fees, demands, suits and
causes of action of every kind and character (the "claims"), arising in
favor of any officer, director, or employee of the Purchaser Group on
account of personal injury or death or damage to property owned by any
member of the Purchaser Group except, prior to Delivery, the Vessel and/or
Owner Furnished Equipment in Builders care, custody and control, in any
way incident to or in connection with or arising out of or under this
Contract, regardless of the sole, joint or concurrent negligence,
negligence per se, gross negligence, (collectively "negligence") statutory
fault, or strict liability of any member of the Builder Group or the
unseaworthiness of the Vessel or any vessel owned operated or chartered by
any member of the Builder Group
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that may have caused or contributed to the claims, to the extent such
indemnity obligations are not prohibited by applicable law.
a.2.b. Third Parties
Purchaser shall release, defend, indemnify, and hold the Builder
Group harmless from and against all liability, claims, losses, damages,
punitive damages, costs, expenses, attorney's fees, demands, suits and
causes of action of every kind and character (the "claims"), arising in
favor of any Third Party on account of personal injury or death and/or
damage to Third Party property in any way incident to or in connection
with or arising out of or under this Contract, resulting from the joint or
concurrent negligence, negligence per se, gross negligence, statutory
fault, or strict liability of any member of the Purchaser Group or the
unseaworthiness of the Vessel or any vessel owned operated or chartered by
any member of the Purchaser Group, to the extent such claims were caused
by the negligence or other legal liability of any member of the Purchaser
Group. As used herein, a Third Party is any person of entity not included
in either the Purchaser Group or the Builder Group.
a.2.c. Pollution
Notwithstanding anything to the contrary herein, Purchaser shall
release, defend, indemnify, and hold the Builder Group harmless from and
against all, claims, demands, suits, causes of action, damages, natural
resource damage assessments, response, clean up, containment or disposal
expenses and other liabilities, including but not limited to attorney's
fees and the costs of litigation or administrative proceedings but
excluding any claim covered by a.2.a. or a.2.b. above (the "Builder
pollution claims"), arrising from any spill, discharge, escape, release of
or exposure to any waste, rubbish, petroleum, chemical or hazardous
substance, whether solid, liquid or gas, originating from any equipment,
facility or property of the Purchaser Group including, after Delivery,
from the Vessel or from handling, removal, transportation or disposal
thereof, except to the extent such claims may have resulted from the
negligence of a member of the Builder Group.
B. Builder shall indemnify Purchaser for loss of or damage to Purchaser's
property intended to be incorporated into or used in the Vessel to be
performed while in Builder's care, custody or control prior to
installation aboard the Vessel provided such loss or damage does not
result from the negligence of any member of the Purchaser Group.
C. Risk of loss of the Vessel shall rest with the Builder at all times prior
to acceptance of the Vessel by Purchaser.
D. In no event, except for the liquidated damages as provided in Sections 6
and 16 shall any member of the Purchaser Group, or the Builder Group be
liable to each other for any incidental, consequential or special damages
incurred by the other, including but not limited to, loss of profit, loss
of business opportunities, loss of earnings or downtime, arising directly
or indirectly out of or relating in any way to this Contract or any
activities or omissions or delays in connection herewith, whether arising
out of the negligence (in
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whole or in part), gross negligence or strict liability of either Party or
the unseaworthiness of the Vessel or otherwise. The Purchaser Group and
Builder Group hereby mutually release each other from all such losses.
9. PLANNED PROGRAMME, PROGRESS CONTROL AND REPORTING
PLANNED PROGRAMME
9.1. The Vessel shall be constructed by the Builder in accordance with the
Planned Programme set out in Appendix II hereof. A detailed copy of this plan,
including sub level planning identifying critical paths, shall be made available
to the Purchaser and updated on a regular basis. The plan will define certain
stages of the construction process ("Milestones") which must be completed by the
dates specified therein. The Planned Programme will include a comprehensive
statement of the dates on which the Owner Furnished Equipment are required to be
delivered to the Shipyard.
PROGRESS CONTROL AND REPORTING
9.2. At the commencement of the contract a "kick off " meeting shall be held
during which the major parameters by which performance of the Builder will be
measured are to be mutually agreed. These shall include but not necessarily be
limited to a detailed weight budget, a steel procurement and processing
schedule, an engineering schedule, outfitting targets, manning schedules etc .
Unless mutually agreed otherwise such meeting shall be held within 30 days of
contract signature.
9.3. During the course of the performance of this Contract the Builder shall
submit to the Purchaser on a fortnightly basis, commencing on the date falling
fourteen days after the kick off meeting and thereafter fortnightly
a. a status report on the Vessel's construction as compared with the Planned
Programme, including the critical path;
b. a report setting out the actual progress in performance of this Contract
during the previous month as compared with the Planned Programme. Such
report to identify progress against the agreed performance parameters
c. a report setting out the forecast lightship weight, identifying any
variances from the agreed weight budget and in the case of negative
variations including proposals for reducing the variance to within
acceptable levels
d. a list of Purchaser's Modifications and Statutory Modifications (if any)
agreed or resolved by an expert during the previous month, as the case may
be, including adjustments, if any, agreed or resolved by an expert, to the
Contract;
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e. a report on the delivery of sub-contracted Materials during the previous
month (the precise nature of which report shall be agreed, from time to
time, between the Purchaser and the Builder).
9.4. Without prejudice to the Builder's obligations under this Contract, if the
construction of the Vessel should for any reason whatsoever be delayed beyond
the time-frame envisaged in the Planned Programme, the Builder shall immediately
notify the Purchaser and shall within seven Working Days thereof provide to the
Purchaser a schedule indicating, in so far as the delay which has occurred is
not Permissible Delay, the steps (including any appropriate increase in manpower
and material resources) the Builder intends to take to recover the time so lost.
The Builder and the Purchaser shall thereafter meet at the earliest opportunity
to discuss the schedule and the Builder's detailed plans for implementation of
the same.
9.5. The Builder shall take monthly progress photographs illustrating the
progress of the Vessel's construction up to and including trials and delivery.
The Builder shall also supply the Purchaser with sufficient number of
photographs (size: approximately 18 x 24 cms) depicting the final stage of the
Vessel as delivered: this set will be at least 25 percent colour prints. One set
of standard transparencies will be supplied, free of charge to the Purchaser.
Additional copies of photographs and transparencies will be made available by
Builder, at the Purchaser's request and expense.
10. TITLE
10.1. To the extent Builder has been paid by the Purchaser, therefore the Vessel
and all Materials from time to time purchased by Builder for use in connection
with this Contract whether unfinished or partly or wholly finished and whether
at the Shipyard or at the premises of the Builder's subcontractors shall become
and remain the absolute property of the Purchaser. The Purchaser shall be
entitled to mortgage the Vessel to the extent title to the Vessel has passed to
Purchaser as aforesaid in connection with the financing of its purchase of the
Vessel and the Builder will execute any reasonable and necessary documentation
required by the Purchaser to effect such mortgage. The Builder shall have no
authority or entitlement to create any lien, encumbrance or charge over the
Vessel, the Material or the Owner Furnished Equipment at any time except to the
extent said lien or encumbrance is created by applicable law.
10.2. In furtherance of the provisions of Clause 10. 1 above the Builder shall
(i) use all reasonable endeavours to procure that all subcontracts placed with
all suppliers and manufacturers of Materials contain provisions similar to the
above and (ii) ensure that all substantial items of Materials and owner
Furnished Equipment shall be clearly marked with the notation "Hull 1829"
immediately upon their appropriation for use in connection with this Contract
and in no circumstances more than twenty-four hours following their delivery to
the Shipyard.
Title to the Owner Furnished Equipment shall at all times from the date hereof
vest in the Purchaser absolutely.
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11. RISK AND INSURANCE
RISK
11.1. The Vessel and all Materials (including, from the time of their delivery
to the Shipyard, the Owner Furnished Equipment) shall remain at the risk of the
Builder until Delivery,
INSURANCE
11.2. The Builder undertakes to keep the Vessel and all Materials (including the
Owner Furnished Equipment) in its or its Subcontractors' custody fully insured
at all times and until Delivery at its own cost with first class insurers
approved by the Purchaser, such approval not to be unreasonably withheld, in the
amount of the higher of (1) the value of the Vessel as from time to time
constructed or (i) the instalments of the Contract Price for the time being paid
by the Purchaser to the Builder, (ii) the value of the Owner Furnished Equipment
delivered to the Shipyard or built into or installed in or upon the Vessel.
11.3. The policy or policies (the "Stipulated Insurances"), which shall be
subject to English law and jurisdiction, shall incorporate the following
clauses:-
a. the Institute of London Underwriters ("ILU") Clauses for Builder's Risks:
b. the ILU Strikes Clauses - Builder's Risks; and
c. (from the date of the Vessel's launching) the ILU War Clauses - Builder's
Risks.
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11.4. The policies shall name the Purchaser and the Builder as joint loss payees
as their interest may appear but on terms that the Builder alone shall be
responsible for all premiums payable thereunder. The Builder shall furnish the
Purchaser promptly with certificates evidencing coverage and upon request copies
of the policies. The originals shall be made available to the Purchaser, its
employees or agents for inspection at Builder's corporate offices in Gulfport,
Mississippi at all reasonable times.
11.5. The policies taken out shall contain a provision to the effect that, in
the event of an actual, constructive, arranged or compromised total loss, such
insurance proceeds as the Purchaser is entitled to hereunder shall be payable to
the Purchaser as its interest may appear and such policies shall be so endorsed
as to enable the Purchaser by its brokers or agents or personally to collect
such proceeds pursuant to the provisions of this Clause. In addition, all such
policies shall include provision that they shall not be capable of cancellation
by the insurers without not less than thirty (30) days' prior written notice
being given to the Purchaser and that not less than ten (10) days' prior written
notice of non-renewal or lapse shall be given by the insurers to the Purchaser
before the same shall take effect.
12. LOSS OR DAMAGE TO THE VESSEL
12.1. Should the Vessel or any items insured pursuant to the provisions of
Clause 11 sustain loss or damage prior to Delivery and should such loss or
damage not make the Vessel a total loss, actual, constructive, arranged or
compromised, the Builder shall, at its own expense and with all due despatch,
make good such damage to the satisfaction of the Purchaser and (if applicable)
the Classification Surveyor, and any monies payable in respect of any insurance
effected under Clause 11 shall be payable to the Builder.
12.2. Should the Vessel sustain loss or damage prior to Delivery hereunder such
that it is either conceded by the insurers liable therefor, or determined by a
court of competent jurisdiction, that the Vessel has become a total loss,
actual, constructive, arranged or compromised, then the Builder shall not be
liable to repair the damage or replace the Vessel and insurance proceeds shall
be payable to Purchaser and Builder as their interest may appear. but, to the
extent that the Purchaser has not made recovery of such sums under the
Stipulated Insurances within sixty (60) Working Days of the total loss, the
Builder shall:-
a. refund promptly to the Purchaser in full the aggregate amount of
instalments of the Contract Price, already paid by the Purchaser: and
b. return to the Purchaser all Owner Furnished Equipment or refund to the
Purchaser a sum equivalent to the value of any of same which have been
lost or which cannot be removed in a sound condition from the Vessel.
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12.3. When the conditions set out in sub-clause (2) above have been satisfied by
the Builder, the Purchaser shall instruct the insurers to pay to the Builder all
sums due and payable under the Stipulated Insurances in respect of the total
loss. Save as elsewhere herein specifically provided to the contrary, the
parties' obligations under this Contract shall thereupon cease and terminate.
13. TRIALS: TECHNICAL ACCEPTANCE
13.1. At least 120 days before the scheduled commencement of the same the
Builder shall submit to the Purchaser for approval comprehensive testing and
trials programmes covering the Full Scale Test and Trials (collectively the
"Trials") described in Chapter 03000 of the Specifications, including (i)
Workshop Tests, (ii) Quayside Trials (including the Inclining Test), and (iii)
Sea Trials (including trial runs and all other tests at sea).
13.2. The Trials shall be conducted at the risk and expense of the Builder which
shall provide and pay for the personnel necessary for the safe management and
navigation of the Vessel during the same. The Builder shall also provide and pay
for all necessary ballast and fresh water and shall meet ALL other costs
associated with the Trials. The fuels, lubricants and consumable stores required
for the Trials shall be specified, supplied and paid for by the Purchaser, who
shall upon Delivery be entitled to reimbursement from the Builder of the costs
of such fuels, lubricants and consumable stores as are consumed during the
Trials.
13.3. The Builder shall give the Purchaser not less than seven Working Days'
notice of the date and place of commencement of each of the Trials and
representatives of the Purchaser shall be afforded every opportunity to observe
and determine the performance of the Vessel during the same. Failure by the
Purchaser to attend any Trial following due notice shall be deemed to be a
waiver by the Purchaser of its rights of attendance in respect of such Trial.
SEA TRIALS
13.4. The Sea Trials shall be carried out following satisfactory conclusion of
all other Trials and after the Vessel's construction has been completed with
only minor items of work outstanding which are agreed by the Authorised
Representatives as suitable for completion after the Sea Trials but before
Delivery.
13.5. The Sea Trials shall have the objective of permitting the Builder to
demonstrate fulfilment of the quality and performance requirements for the
Vessel as set forth in the Specifications. The course to be followed during the
Sea Trials shall be determined by the Builder, but shall be in open waters off
the Gulf Coast of the United States. The Purchaser shall be allowed to maintain
a shadow crew and other necessary personnel on board the Vessel during the sea
trials to familiarise themselves with the Vessel and its operation.
13.6. The safe management and navigation of the Vessel in transit to, during and
from the Sea Trials shall remain the sole responsibility of the Builder.
13.7. Should the weather conditions at the time scheduled for the Sea Trials be
such that they cannot be carried out properly, the Builder shall postpone them
or such part of them as necessary
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to the earliest possible time when suitable weather conditions occur to ensure
that all readings and results are obtained in a manner satisfactory to the
Purchaser. Any delay to the Sea Trials caused by such unfavourable weather
conditions, if the delay exceeds a total of seven (7) days, shall operate to
postpone the Contractual Delivery Date by the period of delay involved and such
delay shall be deemed to be Permissible Delay.
13.8. If during the Sea Trials any breakdown occurs which entails interruption
or irregular performance and the breakdown can be repaired by the normal means
available on board, this shall be done as soon as possible and the trial shall
be continued after repairs are completed. However, if the Vessel must return to
a port to enable the breakdown to be remedied, a further complete trial shall be
undertaken at the earliest opportunity.
13.9. On completion of the Sea Trials to the satisfaction of the agreed Trial
Procedure the Vessel shall be brought back to a berth in the Shipyard, or
elsewhere as may be agreed, for the inspection of the machinery required in the
Specifications, and during this period all defects or omissions found in the
Vessel shall be remedied and made good by the Builder to the reasonable
satisfaction of the Purchaser, and the machinery closed up by the Builder ready
for sea at its expense and without expense to the Purchaser.
TECHNICAL ACCEPTANCE
13.10. Within three (3) Working Days of completion of the Trials and the closing
up of machinery referred to in sub-clause 9 above, the Builder shall notify the
Purchaser in writing of the results of the Trials and shall, where the same is
appropriate, confirm to the Purchaser that the Vessel conforms with the
requirements of the Contract and Specifications. If the Purchaser is in
agreement with the Builder, the Purchaser shall, within three (3) Working Days
of receipt of the Builder's notice as aforesaid, advise the Builder in writing
of its Technical Acceptance of the Vessel.
13.11. If, however, in the view of the Purchaser the Vessel or any part thereof
does not conform to the requirements of this Contract and/or the Specifications,
the Purchaser shall so advise the Builder (again within seven (7) Working Days
of the receipt of the Builder's notice as aforesaid) and shall specify the
respects in which the Vessel fails to conform with the requirements of this
Contract and Specifications. The Builder shall thereupon take the necessary
steps to correct such non-conformities and, upon completion of such works, the
Builder shall advise the Purchaser who shall, in the reasonable exercise of its
discretion, be entitled to require the Builder to undertake further trials of
the Vessel; in such event the Builder shall give the Purchaser three Working
Days' notice of such further trials.
13.12. Upon satisfactory completion of such remedial works and/or trials, the
Purchaser shall, within four (4) Working Days after receipt of a further notice
from the Builder that the Vessel conforms with the requirements of the Contract
and Specifications, notify the Builder of its Technical Acceptance of the Vessel
or the respects in which the Vessel still fails to conform with the requirements
of this Contract and the Specifications. This process shall be repeated until
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the earlier of (a) the Purchaser's Technical Acceptance of the Vessel or (b) the
valid and proper termination or rescission of this Contract by either the
Purchaser or the Builder.
13.13. If the Purchaser fails to notify the Builder in writing of its Technical
Acceptance or otherwise of the Vessel within the periods as provided above the
Purchaser shall be deemed to have accepted the Vessel.
13.14. The Purchaser's Technical Acceptance of the Vessel as above provided
shall preclude the Purchaser from refusing Delivery of the Vessel as hereinafter
provided, if the Builder complies with the procedural requirements for Delivery
of the Vessel as provided in Clause 14 hereof.
14. DELIVERY OF THE VESSEL
DELIVERY
14.1. The Vessel shall be delivered by the Builder to the Purchaser at the
Shipyard (or other place as may be agreed with unrestricted access to the open
sea) on 9th February, 2000 except that, in the event of Permissible Delay as
defined in Clause 15.4 hereof, the aforementioned date shall be postponed
accordingly. The aforementioned date, or such later date to which requirement to
deliver may be postponed, is herein called the "Contractual Delivery Date."
14.2. Delivery shall take place on a Working/Banking Day to be nominated by the
Builder following Technical Acceptance of the Vessel by the Purchaser and with
not less than five (5) Working Days' advance notice to the Purchaser. Delivery
shall be effected by the execution by the Parties of a Protocol of Delivery and
Acceptance in the form set out in Appendix II, acknowledging delivery by the
Builder and acceptance thereof by the Purchaser. The Builder shall give the
Purchaser at least sixty (60 ) days' (plus or minus seven (7) days) calendar
notice of the estimated date of Delivery.
14.3. The Builder guarantees that at the time of Delivery title to the Vessel
(to the extent not already transferred to Purchaser) and every part thereof
shall pass to the Purchaser free and clear of any and all liens, except liens
created by Purchaser, claims, mortgages or other encumbrances upon it and in
particular, but without limitation, that she shall be free of all burdens in the
nature of imposts, taxes or charges imposed by any liabilities arising from the
construction of the Vessel or from its operation on Trials or otherwise.
DOCUMENTS TO BE PROVIDED TO THE PURCHASER
14.4. The Builder shall provide to the Purchaser the following documents prior
to Delivery failing which the Purchaser may refuse to accept Deliver;-
a. Records of inventory of the Vessel's equipment including spare gear and
the like as detailed in the Specifications;
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b. Records of any and all fuels, lubricants, consumable stores and fresh
water supplied pursuant to this Contract by either the Builder or the
Purchaser together with such quantities of the same as remain on board at
Delivery;
c. All certificates (including Class and other regulatory certificates)
required to be furnished prior to or upon Delivery of the Vessel pursuant
to the Specifications; such certificates save as noted in clause 2.5 are
to be clean and free of all qualifications, reservations and
recommendations whatsoever.
d. Declaration of Warranty of the Builder in accordance with Clause 14.3
above;
e. The following technical documentation:-
e.1. Four (4) copies and one reproducible of all the "As Built"
drawings of the Vessel required for its operation and
maintenance in accordance with its design and purpose.
e.2. Four (4) complete documentation and instructions (Operation
and Maintenance) books covering builder supplied equipment.
e.3. Four (4) sets of Operating Manuals and Instruction Books
according to MODU CODE 1989 with all the necessary data
including sea preparation
e.4. Four (4) copies of a complete maintenance guide including all
drawings.
e.5. One (1) copy of all the test and commissioning trials and
results which have been done prior to delivery.
e.6. Lightship weight, variable load and centre of gravity of
lightship weight calculations.
f. The certificates listed in Appendix VII, together with (i) Builder's
Certificate or (at the Purchaser's option) Bill of Sale in favour of the
Purchaser notarised and legalised to permit registration of the Vessel on
the Netherland Antilles Register of Shipping and (ii) any other document
relating to the condition and/or performance of the Vessel which the
Purchaser may reasonably require provided the same is requested no later
than seven Working Days prior to Delivery.
14.5. The documents listed in sub-clauses 14.4.e. 1-6 above are also to the
extent that is practical to be supplied as a diskette in a format to be agreed
between the Parties.
REMOVAL OF THE VESSEL
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14.6. Following Delivery of the Vessel, the Purchaser shall in seven (7) Working
Days remove her from the Shipyard. If the Purchaser fails to remove the Vessel
within this period, it shall pay to the Builder reasonable mooring charges
thereafter until removal.
15. EXTENSION OF TIME FOR DELIVERY: PERMISSIBLE DELAY
CAUSES OF DELAY
15.1. If at any time before the Contractual Delivery Date the construction of
the Vessel is delayed due to Acts of God, acts of princes or rulers, war or
other hostilities or preparations therefor, blockade, civil commotion or riots,
epidemics, floods, hurricanes, earthquakes, tidal waves, landslides, fires,
lightning, explosions, unusually severe inclement weather which stops production
at the yard and can be shown to be in excess of the a five year statistical
average, collisions or strandings, shortage of materials or equipment (other
than resulting from any act, omission or improvidence of the Builder or its
Subcontractors / Suppliers ), prolonged failure, shortage or restriction of
electric current, oil or gas or destruction of or damage to the Shipyard or
works of the Builder or its Subcontractors / Suppliers by any causes herein
described, the Contractual Delivery Date and any Milestones not then achieved
shall be postponed for the period of time during which construction of the
Vessel is directly and unavoidably delayed by the same.
15.2. Any periods of time by which the Contractual Delivery Date of the Vessel
and any Milestones not then achieved is properly and justifiably claimed by the
Builder to be extended by reason of matters falling within (a) subclause 1 above
or (b) Clauses 7.1-7.12, 13.7, 18.2 or 21.2 hereof shall be defined herein as
"Permissible Delay."
15.3. The Builder's entitlement to a postponement of the Contractual Delivery
Date and any Milestones not then achieved shall, however, be subject to:-
a. the delay in respect of which the Builder is claiming relief not being
within its reasonable control or contemplation at the date of signing of
this Contract nor caused or contributed to by its error, neglect, act or
omission or that of its agents, employees, suppliers or Subcontractors.
Provided, however that in respect of suppliers / subcontractors for i) the
"long lead" items identified in clause 5.12 above, together with ii) the
Builders requirement for minimum tolerance steel as identified in the
Specification and if applicable, (iii) the detailed engineering
sub-contractor referred to in clause 5.2 above where the Builder can show
it exercised all due diligence in the placing and prosecuting of the
orders and the management of these suppliers / subcontractors, errors,
neglect, act or omission of such suppliers / subcontractors shall not
preclude the Builders entitlement to a Permissible Delay
b. the delay affecting the "critical path" of the Vessel's construction as at
the time of commencement of the event;
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c. since the occurrence of the event in respect of which relief is claimed,
the Builder having taken all reasonable steps open to it to mitigate the
effect of the event upon the Contractual Delivery Date and any Milestones
not then achieved; and
d. the Builder having duly given all the notices required under sub-clause
(3) below within the time-limits therein laid down.
NOTICES
15.4. Upon the occurrence of any of the events listed in sub-clause (1) above,
the Builder shall:-
a. within seven (7) Working Days of the date on which it became aware of the
event, give the Purchaser notice in writing of the occurrence of the
event;
b. as soon as possible thereafter, and in any event not more than seven (7)
Working Days after the giving of the said notice, submit to the Purchaser
a statement in writing, specifying as far as possible, with full
particulars, the nature and the cause of the event, the effect on the item
involved, the likely overall effect computed from the Planned Programme
upon the Contractual Delivery Date and any Milestones not then achieved
and the steps which are being taken by it to mitigate any delay which may
result from the event;
c. within seven (7) Working Days after the date on which it becomes aware
that the event is at an end, give the Purchaser notice in writing of the
date when the event ended;
d. within seven (7) Working Days of the date of the Builder's notice under
sub-paragraph (c), notify the Purchaser of the period of time by which it
claims the Contractual Delivery Date of the Vessel and any Milestones not
then achieved should be extended by reason of the event.
16. DELAY IN DELIVERY
LIQUIDATED DAMAGES
16.1. In the event that Delivery should be delayed beyond midnight local time on
the Contractual Delivery Date, and any permitted extension thereof, the Builder
shall, subject to the provisions of sub-clauses 4 and 5 of this Clause 15, pay
to the Purchaser by way of liquidated damages for loss of use of the Vessel the
amounts set out below:-
16.2. If the delivery of the Vessel is delayed, then, in such event, beginning
at twelve o'clock midnight on the Delivery Date, the Builder shall pay to the
Purchaser as agreed liquidated damages and not by way of penalty, the following
amounts:-
a. 1 - 30 days of delay US$ 10,000 per day
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b. 31 - to actual delivery US$ 20,000 per day
It being understood that in no event shall the Builder's obligation for such
liquidated damages exceeds 1,000,000.-.
In this connection, the parties acknowledge that if the Vessel is not delivered
by the Delivery Date, as allowed for extension, Purchaser will suffer damages
from such later delivery and that Purchaser should be compensated for such
damages. The parties further acknowledge, however, that it is not possible to
accurately calculate such damages at this time and that therefore the parties
agree that the liquidated damages are a fair and reasonable forecast of
anticipated actual damages under the circumstances and will provide just
compensation for the harm that is caused to Purchaser as a result of any late
delivery. In the event of any such delays in delivery the said liquidated
damages shall be deducted from the amounts otherwise due to Builder at the time
of execution of the Protocol of Acceptance and Delivery. Parties hereto agree
that the above shall be the sole and exclusive remedy for damages due to the
late delivery save as set forth in section 16.3
TERMINATION FOR DELAY IN DELIVERY
16.3. Furthermore, if Delivery should not have occurred prior to the expiry of
one hundred thirty five (135) days from the Contractual Delivery Date (as
extended by Permissible Delays) the Builder shall be in default, in which case
Clause 19.2 shall apply.
17. DEFECTS AND BUILDER'S GUARANTEE WARRANTY:
17.1. From the date of this Contract until the expiration of the Warranty Period
(subject to Purchaser's right to report any defect, claim or loss within 30 days
of the expiration of the Warranty Period pursuant to the term of the following
paragraph), Builder warrants that all labor furnished by Builder hereunder shall
have been performed in a good and workmanlike manner. The provisions set forth
herein as to the liabilities of the Builder are to apply also to all labor and
workmanship furnished by any sub-contractor in Builder's performance of this
Contract.
Builder shall have no responsibility whatsoever with respect to any defect,
claim, or loss of the Vessel not reported in writing to Builder within three
hundred and sixty-five (365) days from the Delivery Date (as specifically
defined in Sections 14 and 15) (such 365 day period being hereinafter referred
to as the "Warranty Period"); provided, however, Purchaser may report to Builder
warranty claims arising during the final thirty (30) days of the Warranty Period
within thirty (30) days of the expiration of the Warranty Period.
The warranty granted to Purchaser by Builder shall extend only to those claims
reported in writing to Builder within such Warranty Period or within thirty (30)
days thereafter (as set forth above). For purposes solely for this Section 17,
"Delivery Date" shall be defined as the earlier of the following: (1) fourteen
(14) days after date of the final invoice from Builder upon completion of the
Vessel, or (2) the date of actual delivery and acceptance of the Vessel. In the
event Purchaser notifies Builder of any claim covered under this Warranty,
Builder will make repairs and/or replacement at its option, at one of Builder's
yards without expense to Builder for
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transporting the Vessel, or any component thereof, to or from that yard;
provided, however, that if it is not practical to have the Vessel proceed to
such yard, purchaser may, with prior written consent of Builder, have such
repairs and/or replacement made elsewhere, and, in such event, Builder shall
reimburse Purchaser a sum equivalent to (i) the amount Builder would have
expended, at its own yard at Builder's then Prevailing rates, or (ii) the amount
actually expended by purchaser, whichever is less. In no event shall Builder be
responsible for any sum in excess of the cost of the repairs and/or replacement
as specified herein, and Builder shall in no event be responsible for any claims
to property, persons, and/or punitive or consequential damages, including, but
not limited to claims for bodily injury, illness, disease, death, loss of
service, loss of society, maintenance, cure wages, and any other consequential
or punitive damages arising out of any breach of this Contract or faulty or
negligent performance thereof.
As to the installation of all third-party supplied components, materials or
equipment, if the manufacturer or supplier has a representative at the job site
during such installation, and if the installation is completed to the
satisfaction of such representative, with all requirements of such
representative having been satisfied by Builder, it shall be conclusively
presumed that such installation has been completed by Builder in accordance with
the manufacturer's recommendations, in a proper and satisfactory manner.
Builder does not warrant that any equipment or materials purchased by it from a
supplier or manufacturer for installation in the Vessel is free from
manufacturers' defects and deficiencies and Purchaser specifically releases
Builder from any such implied warranty of fitness or workmanship or freedom from
defects relating thereto. To the extent available, Builder agrees to transfer
and assign to Purchaser, without warranty of Builder with respect thereto, any
warranties relative to material, equipment and/or labor furnished by others
which warranties shall not be adversely affected by any limitation period set
forth herein. Builder agrees that Manufacturer's Warranty on major components,
including, but not limited to, main engines, gears, jacks, winches, generators,
pumps, etc., shall be a minimum of six (6) months after the Delivery Date of the
Vessel. Should Purchaser be required to enforce-any such warranty, Builder will
cooperate with Purchaser's efforts, short of instituting legal action on
Purchaser's behalf and/or incurring other legal fees.
Nothing contained herein shall obligate Builder at any time to repair or replace
the Vessel, or any component part thereof, where such repair and/or replacement
is caused, in whole or in part, by normal wear or unusual handling, by the
negligent operation or maintenance of the Vessel, or its equipment or by abuse,
rough weather, accident, fire, by Purchaser or Purchaser's agents, employees or
representatives.
With respect to paint, Builder warrants that it will purchase paint of good
marine quality and that it will apply the paint in accordance with the
manufacturer's specifications, recommendations, and inspection, and Builder
makes no warranty, express or implied, with respect to the fitness of the paint
or the manufacturer's specifications and recommendations.
For any claim for damages to or loss of the Vessel, and/or damages to persons
and/or property (including, but not limited to claims, demands, or actions for
bodily injury, illness, disease,
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death, loss of service, loss of society, maintenance and cure, wages or
property) made as a result of any defect in the Vessel, or any component parts
thereof, after the said Warranty Period, Purchaser shall have no claim or
actions whatsoever against Builder, regardless of any negligence, tort, fault,
strict liability or otherwise of Builder, its employees or sub-contractors, and
Purchaser hereby waives and releases Builder and its employees and
sub-contractors from and against any and all liability and any and all damages
resulting therefrom, including, but not limited to, for personal injury, death,
property damage, damage to and/or loss of the Vessel, delay, demurrage, loss of
profits, loss of use, or any other consequential or punitive damages of any
kind, whether such claim is based in contract, redhibition, negligence, strict
liability, or otherwise, arising out of any defect and/or negligent design, the
selection or choice of specifications and/or materials and/or component parts,
manufacture, construction, fabrication, workmanship, labor and/or installation
of equipment, materials and/or components or from any unseaworthy condition or
any other defective condition of the Vessel, it being specifically understood
and agreed that any such defects reported and/or occurring after the Warranty
Period and all damages, loss of profits, demurrages, delay, losses of use or
other consequential or punitive damages of any kind whatsoever resulting
therefrom, shall not be the responsibility of Builder, but shall be borne
exclusively by Purchaser.
"THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR THAT THE VESSELS,
MATERIAL OR SERVICES ARE FIT FOR ANY PARTICULAR PURPOSE OR USE, AND
SPECIFICALLY IN LIEU OF ALL INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL
DAMAGES."
17.2. This guarantee shall not extend to Owner Furnished Equipment or to any
damage caused by any defect therein not attributable to the Builder.
GUARANTEE ENGINEER
17.3. Where so requested by the Purchaser, the Builder shall appoint a suitably
qualified English-speaking Guarantee Engineer to serve on the Vessel as the
representative of the Builder for such portion of the Guarantee Period as the
Purchaser shall require; the Purchaser and its employees shall give the
Guarantee Engineer full co-operation in carrying out his duties as the
representative of the Builder on board the Vessel. In particular, the Purchaser
shall accord the Guarantee Engineer treatment and subsistence on board the
Vessel comparable to the Vessel's Chief Engineer (except that the Purchaser
shall provide him accommodation in a standard passenger cabin) at no cost to the
Builder.
17.4. The Purchaser shall pay the expenses of the Guarantee Engineer's
repatriation by air to the point of origin upon termination of his services on
the Vessel together with a daily rate of US$ 700 per day worked.. However, save
as aforesaid, the Purchaser shall be responsible for no other expenses in
connection with the Guarantee Engineer, who shall at all times be conclusively
deemed an employee of the Builder. The Builder shall indemnify and hold harmless
the Purchaser from and against personal injury, including death, of, or loss of
or damage to property
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of the Guarantee Engineer unless the same shall been caused by the gross
negligence of the Purchaser or any of its employees, agents or sub-contractors.
If the Purchaser has reason to be dissatisfied with the conduct or competence of
the Guarantee Engineer, the Builder, on receiving particulars of the complaint,
shall promptly investigate the matter and, if the complaint is found to be
justified, make a change in the appointment.
ASSIGNMENT OF BUILDER'S GUARANTEE
17.5. It is expressly agreed and understood that the benefit of this Guarantee
shall be capable of transfer by the Purchaser to any Assignee. The Builder shall
in such circumstances enter into any documentation reasonably requested by
either the Purchaser or the Assignee to evidence such transfer and the vesting
in the Assignee pursuant to such assignment of all rights in respect of this
Guarantee.
18. DEFAULT BY THE PURCHASER
EVENTS OF PURCHASER'S DEFAULT
18.1. The Purchaser shall be deemed to be in default of performance of its
obligations under this Contract in the following cases:
a. if the Purchaser fails to pay the amount of any of the Instalments of the
Contract Price due to the Builder in the period prior to Delivery on the
due date for payment thereof,
b. if the Purchaser fails without legal justification to take delivery of the
Vessel in accordance with Clause 14 and to pay the instalment of the
Contract Price due thereon;
c. if an order or an effective resolution is passed for the winding up of the
Purchaser (otherwise than for the purposes of a reconstruction or
amalgamation previously approved by the Builder) or if a receiver is
appointed over the whole or any part of the undertaking or property of the
Purchaser or if the Purchaser becomes insolvent or suspends payment
generally of its debts or ceases to carry on its business or makes any
special arrangement or composition with its creditors.
18.2. If the Purchaser is in default as to the payment of any instalment as
provided in (a) or (b) of sub-clause (1) above, then without prejudice to any
other rights of the Builder or of the Purchaser, the Purchaser shall be liable
to pay interest at 2% per cent above LIBOR on the unpaid amount from the day
from which the same became due to the Builder up until the date of actual
payment thereof. The Builder shall further be entitled to claim as Permissible
Delay within the meaning of Clause 14.4 any period of time during which the
construction or completion of the Vessel has been delayed in consequence of the
Purchaser's default as aforesaid.
TERMINATION BY THE BUILDER
18.3. If default on the part of the Purchaser continues for a period of thirty
days, the Builder shall have the right at its sole discretion to rescind this
Contract by giving written notice to the
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Purchaser. The Builder shall in such event hold all of the installments received
from the Purchaser in trust both for itself and the Purchaser until disposal of
the Vessel whereupon the same shall either be retained by the Builder to
compensate it for any shortfall between the Contract Price and the actual price
obtained for the Vessel on disposal together.
18.4. In the event of rescission of this Contract in accordance with this Clause
the Builder shall have the right and power either to complete or not to complete
the Vessel as it deems fit but in any event shall sell the Vessel (either in its
complete or incomplete form) at the best available price at a public or private
sale on such reasonable terms and conditions. If the Builder sells the Vessel in
an incomplete form then the Builder shall give credit to the Purchaser for any
and all savings which arise from not having to complete the construction of the
Vessel.
18.5. In the event of the sale of the Vessel in its completed state the proceeds
of sale received by the Builder shall be applied to payment of all expenses
attending such sale and otherwise incurred by the Builder as a result of the
Purchaser's default and then to payment of all unpaid instalments of the
Contract Price and interest on such instalments at the rate of 2 per cent above
LIBOR from the respective due dates thereof to the date of application.
18.6. In the event of sale of the Vessel in its incomplete state the proceeds of
sale received by the Builder shall be applied first to all expenses attending
such sale incurred by the Builder as result of the Purchaser's default and then
to payment of all costs of part-construction of the Vessel less the instalments
retained by the Builder and compensation to the Builder for damages suffered by
the Builder as a result of such default.
18.7. In either of the above events of sale, if the proceeds of sale exceed the
sums to which such proceeds are to be applied as aforesaid the Builder shall
promptly pay any such excess to the Purchaser without interest thereon and shall
at the same time either permit the Purchaser to remove the Owner Furnished
Equipment from the Shipyard or pay to the Purchaser the full value thereof.
18.8. If the proceeds of sale of the Vessel are insufficient to pay such total
amounts payable as aforesaid the Purchaser shall be liable to pay to the Builder
upon demand the amount of such deficiency.
19. DEFAULT BY THE BUILDER
EVENTS OF BUILDER'S DEFAULT
19.1. In the event that any of the following events should occur:-
a. the Builder shall without legal justification fail to proceed with
construction of the Vessel with all reasonable despatch so that it fails
to meet two consecutive Milestones within one hundred and thirty five days
of the respective dates agreed for the same as extended by permissible
delays;
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b. the Builder shall commit any material breach of this Contract and shall
fail to remedy the same within five Working Days of receipt by the
Builder of written notice from the Purchaser;
c. the making of any order or the passing of an effective resolution for the
winding-up of the Builder (other than for the purposes of reconstruction
or amalgamation which has been previously approved in writing by the
Purchaser), or the appointment of a receiver of the undertaking or
property of the Builder, or the insolvency of or a suspension of payment
by the Builder, or the cessation of the carrying on of business by the
Builder, or the making by the Builder of any special arrangement or
composition with creditors of the Builder, and failure by the Builder
The purchaser may by notice in writing to the Builder elect to rescind this
Contract.
RESCISSION BY THE PURCHASER
19.2. In the event that the Purchaser shall exercise its option to rescind this
Contract, the Purchaser shall give notice in writing to the Builder. the Builder
shall thereupon immediately comply with either the provisions of clause 19.3 or
clause 19.6 below as may be elected by Purchased in said notice:-
19.3. The Builder shall:
a. secure the immediate discharge of all liens (including its own), claims,
mortgages or other encumbrances upon the Vessel other than in favour of
the Purchaser and/or its financiers;
b. complete all works required as a minimum to permit the Vessel to depart
from the Shipyard in a safe and seaworthy condition, remove its employees,
agents and contractors, together with their equipment, from the Vessel and
render all necessary assistance to the Vessel in leaving the Shipyard at
the, earliest moment convenient to the Purchaser;
c. execute and deliver to the Purchaser an original of the Protocol of
Delivery and Acceptance together with any and all documentation (including
but not limited to a bill of sale or builder's certificate) in such form
and such manner as the Purchaser shall in its absolute discretion
determine shall be required for the purposes of registration of the Vessel
in a shipbuilding or shipowning register other than the Newbuilding
registry; and
d. execute and deliver to the Purchaser all of the documentation listed in
Clause 14.4 hereof to the extent that the same is at that time capable of
production by the Builder.
19.4. All risk of loss of or damage to the Vessel shall where Purchaser elects
to proceed per clause transfer to the Purchaser upon execution by the Purchaser
of the Protocol of Delivery and Acceptance following receipt of all of the
documentation received above. The Purchaser may, however, elect to execute the
Protocol of Delivery and Acceptance notwithstanding the Builder's
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failure to deliver all or part of the other documentation required to be
delivered by the Builder pursuant to subclauses 19.3.c and d above.
19.5. In the event that the Purchaser elects to proceed per clause 19.3 the
Builder shall remain liable: -
a. to pay all liquidated damages to which the Purchaser may have become
entitled to prior to the election to rescind;
b. To indemnify the purchaser for any infringement for which the Builder
would have been liable for pursuant to Clause 20 hereof but excluding
liability for work done or Materials supplied other than by the Builder or
its subcontractors pursuant to this Contract; and
c. pursuant to its guarantee contained in Clause 17 hereof excluding
liability for work done or Materials supplied other than by the Builder or
its subcontractors pursuant to this Contract.
d. if the reasonable expense of completion of the Work plus any reasonable
expense incurred as a result of the Event of Default of Builder exceeds
the balance of the Contract Price remaining unpaid, then such excess shall
be immediately due and payable by Builder to Purchaser. The rights and
remedies available to Purchaser under this Section shall not be exclusive,
but shall be in addition to any and all rights and remedies available to
Purchaser under this Contract or applicable law or equity practice.
Furthermore, the designation of specific events of default of Builder and
certain rights and remedies therefor shall not preclude Purchaser from
exercising any rights or remedies available to it under this Contract for
any breach of this Contract by Builder not constituting an Event of
Default of Builder.
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19.6. As an alternative to clause 19.3 if Purchaser so elects per clause 19.2
Builder shall promptly ( but no later than seven days of such receipt of such
notice ) repay to the Purchaser the amount of all monies paid by the Purchaser
in respect of the Contract Price together with interest thereon at a rate of 2 %
over LEBOR from the date when such monies were paid by the Purchaser to the
Builder up to the date of the repayment therefore. Upon receipt of such
repayment, Purchaser shall execute all documentation required to vest title in
the Vessel in its then condition to Builder.
19.7. In the event that Purchaser elects to proceed per clause 19.6, the Builder
shall additionally purchase from the Purchaser and/or alternatively accept
assignment / novation of purchase orders of such of the Owner Furnished
Equipment as the Purchaser shall evidence it has either purchased or has a
binding commitment to purchaser. The price payable for such OFE shall be
evidenced by the Purchaser as what the Purchaser has expended plus interest from
the date of such expenditure at two percent over LIBOR. Payment shall be made by
the Builder within seven days of such evidence by the Purchaser. Upon such
payment, Purchaser shall execute all documentation required to transfer title in
such OFE to the Builder.
20. PATENT INDEMNITY
PATENT NUMBERS AND TRADEMARKS
20.1. Machinery and equipment of the Vessel may bear the patent numbers,
trademarks or trade names of the manufacturer. Nothing contained herein shall be
construed as transferring any patent or trademark rights or copyrights in
equipment covered by this Agreement, and all such rights are hereby expressly
reserved to the true and lawful of Purchaser thereof.
HOLD HARMLESS, THE PURCHASER
20.2. The Purchaser shall defend the Builder and hold it harmless in respect of
infringement of any patent rights, copy rights or other intellectual property on
account of the Purchaser Furnished Equipment or the Basic Design.
HOLD HARMLESS, THE BUILDER
20.3. The Builder shall defend the Purchaser and hold it harmless in respect of
infringement of any patent rights, copy rights or other intellectual property of
the Vessel or construction components or equipment for the Vessel furnished by
the Builder, except to the extent the Specifications require Builder to use the
infringing method of work or construction of components or equipment.
DESIGNS AND PROPERTY OF THE PURCHASER
20.4. The Builder agrees that the designs, drawings, specifications and ideas
submitted by the Purchaser to the Builder are the property of the Purchaser,
some of which are protected by U.S. or other, foreign patents and the remainder
of which constitutes the trade secrets and know-how of the Purchaser. These
designs, drawings, specifications and ideas shall not be copied or used in
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whole or in part by the Builder or divulged by the Builder to others for any
purpose other than the proper performance of this Agreement. The Builder further
agrees to notify its employees and subcontractors of the confidential nature of
this property and the limitations upon its use.
The parties expressly agree that the obligations of the builder under this
Section 20 shall survive and remain effective notwithstanding the cancellation
or termination of this Agreement for any reason whatsoever.
21. OWNER FURNISHED EQUIPMENT
DELIVERY OF OWNER FURNISHED EQUIPMENT
21.1. The Purchaser shall, at its own expense, supply all articles specifically
listed in Appendix II as ("Owner Furnished Equipment") to the Builder at the
Shipyard in a condition ready for installation and by the date listed in
Appendix IIa
21.2. Should the Purchaser fail to deliver to the Builder any item of Owner
Furnished Equipment by the date so notified, any delay in the construction or
completion of the Vessel thereby resulting shall be deemed Permissible Delay
within the meaning of Clause 15.4.
21.3. In order to facilitate the installation of Owner Furnished Equipment by
the Builder, the Purchaser shall at its own expense furnish the Builder with
Vendor Information which shall generally consist of , necessary plans,
instruction books, test reports and certificates required by applicable rules or
regulations, and if necessary and if requested by the Builder, shall use all
reasonable endeavours, at its own expense, to cause the manufacturers of Owner
Furnished Equipment to assist the Builder in the installation thereof or to make
any necessary adjustment thereto at the Shipyard. In the event that any
manufacturers representatives incur unnecessary standby time while attending at
the Builders request such standby time shall be at the Builders expense.
21.4. The Purchaser shall be liable for the cost incurred by the Builder in the
repair of Owner Furnished Equipment occasioned by their defective material or
poor workmanship or failure to perform, or by damage caused to them during
transportation to the Shipyard.
21.5. Any Owner Furnished Equipment found to be faulty or defective which
require replacement or retesting shall be for the purchaser's account.
Furthermore, delays or damage resulting from faulty or defective equipment shall
be considered Permissible Delays under the terms of Section 15 of this Contract.
RESPONSIBILITY OF THE BUILDER
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21.6. The Builder shall be responsible for storing and handing Owner Furnished
Equipment after their delivery to the Shipyard and shall install them on board
the Vessel at the Builder's expense. The Owner Furnished Equipment shall be at
the Builder's risk from the time of their delivery to the Shipyard until the
time of their redelivery to the Purchaser either as part of the Vessel or
otherwise.
21.7. Upon delivery of the Owner Furnished Equipment the Builder shall check by
external inspection that the items appear to be in accordance with the relevant
order and undamaged and if any item is not delivered with a weight certificate
issued by a reputable body the Builder shall weigh the same in order to
incorporate the actual weight and the actual weight control procedure. The
Builder shall promptly inform the Purchaser if any item of the Owner Furnished
Equipment does not conform to the relevant purchase order to enable the
Purchaser to take corrective action. If the Builder fails to comply with this
requirement, any additional cost shall be for the Builder's account and any
delay shall not count as Permissible Delay hereunder.
21.8. In the event of termination or rescission of this Contract by the
Purchaser and election by the Purchaser under clause 19.3 above, the Builder
shall, at his own expense return to the Purchaser all Owner Furnished Equipment.
22. TAXES AND DUTIES
22.1. The Builder shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed by any state of the United States in
connection with its performance of its obligations under this Contract,
excluding any taxes, duties, fees and stamp duties imposed in by any state of
the United States upon the Owner Furnished Equipment.
22.2. The Purchaser shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed outside [ the United States in
connection with the execution and performance of this Contract, except for
taxes, duties, fees and stamp duties imposed upon those items and services to be
procured by the Builder and further excluding any taxes measured by he net
income of the Builder.
23. ASSIGNMENT
23.1. The Purchaser may transfer, by assignment or novation, to any third party
or parties (herein "Assignee(s)") any of its rights and/or obligations under
this Contract. Provided, however, that, to the extent that any such assignment
or novation transfers to an Assignee the obligations of this Contract, the
Purchaser shall guarantee in a form acceptable to the Builder the performance by
such Assignee of any of its obligations.
23.2. The Builder may, with the prior written approval of the Purchaser, assign
the benefit of this Contract.
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24. PRIORITY OF DOCUMENTS
24.1. The Appendices hereto shall form an integral part of this Contract as if
the same were expressly set out herein.
24.2. If there is any discrepancy between the following documents priority
between them shall be as follows:-
a. between the terms of this Contract (excluding the Specifications) and the
terms of the Specifications, the terms of the former shall prevail;
b. between the Principal Drawings and the Specifications, the Specifications
shall prevail;
c. between the Principal Drawings, in the order of precedence contained in
Appendix I;
d. between one approved Plan and another approved Plan, the later in date
shall prevail;
25. NOTICES
25.1. Every notice, consent or approval (individually and collectively called
"Communications" for the purposes of this Clause 25) given or required, whether
expressly or impliedly, under this Contract shall be in writing.
25.2. Communications shall be given by the Builder to the Purchaser as follows:
Address:
Suite 205, Saffrey Square
P.O. Box N8188
Nassau, Bahamas
Attn: Company Secretary
Facsimile: To be provided
25.3. Communications shall be given by the Purchaser to the Builder as follows:
Address:
13085 Industrial Seaway Rd.
Gulfport, Mississippi
39503
Attn: Mr. Daniel J. Mortimer
Facsimile: 228-897-4803
with copy to:
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1601 S. Childers Rd.
Orange, Texas
77631
Attn: Mr. Don O. Covington
Facsimile: 409-882-9010
26. RECORDS AND AUDITS
26.1. The Builder shall maintain true and complete records in connection with
the construction of the Vessel and all transactions related thereto, and shall
retain all such records for not less than twenty-four (24) months following
Delivery.
26.2. No director, employee or agent of the Builder shall give or receive any
commission, fee, rebate, gift or entertainment of significant cost or value in
connection with the work under this Contract, or enter into any business
arrangement with any director, employee or agent of the Purchaser.
26.3. If any violation of sub-clause (2) above is found to have occurred prior
to the date of signing this Contact and such violation is determined to have
resulted directly or indirectly in the Purchaser's consent to enter into this
Contract with the Builder the Purchaser may terminate this Contract in which
case the provisions of Clause 19.2 shall apply.
26.4. The Builder shall use its best endeavours to procure that all
Subcontractors:-
a. maintain records in accordance with sub-clause (1) above;
b. enter into obligations with the Builder, to the like intent and effect as
those which bind the Builder as above. The Builder shall promptly notify
the Purchaser of any violation of such obligations involving
Subcontractors which comes to the Builder's notice.
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27. LAW
27.1. The construction, validity and performance of this Contract shall be
governed by English Law.
28. DISPUTES
28.1. Any claim, difference or dispute which may arise out of this Contract
shall be decided by the Commercial Court of the Queen's Bench Division of the
High Court of England and Wales to whose exclusive jurisdiction the parties
hereby agree.
28.2. For the purposes of any proceedings pursuant to sub-clause (1) above, the
parties hereby irrevocably appoint the following as their agents for the service
of process:-
THE BUILDER:
Hewett Battersby of St. Michael's Rectory
Cornhill, London EC3V 9DS
United Kingdom
THE PURCHASER:
Ince & Co., Solicitors
Knollys House
#11 Byward Street
London EC3R 5EN
United Kingdom
28.3. Without prejudice to the generality of sub-clause (1) above and without
prejudice to any express provision contained herein for referral of any matter
to an expert, any dispute or difference of opinion between the parties relating
to conformity of the construction of the Vessel, Materials or workmanship with
this Contract, the Specifications and the other Contract Documents may, by
agreement between the Parties, be referred to an expert, acting as an expert and
not an arbitrator, to be appointed by agreement between them and whose opinion
on the matter shall be final and binding upon the parties hereto.
28.4. If the parties shall fail to agree either (i) to submit the dispute to a
technical expert or (ii) upon the identity of a mutually acceptable technical
expert as aforesaid, such dispute shall be settled in the manner as defined in
sub-clause 1 above.
29. MISCELLANEOUS
29.1. The terms of this Contract are to remain confidential to the parties and
no disclosure of the same may be made to any third party other than for the
purposes of permitting or ensuring its due performance by either party hereto or
financial reporting as may be required under the applicable laws and regulations
governing said financial reports. This obligation shall survive
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termination of this Contract for any reason whatsoever. The parties agree that
within twenty-four hours of the execution of this Contract that the parties will
use their reasonable endeavours to agree upon language of a press release to be
jointly published.
30. SPARE PARTS
30.1. The Builder shall furnish spare parts and maintenance tools of the kind
and in at least the specified quantities in accordance with the Specifications,
Classification Society requirements, and the maker's standards, for items
furnished by the Builder. The cost of these spare parts is included in the
Contract Price.
30.2. In addition, the Builder shall supply to the Purchaser a list of the
maker's recommended spare parts for two (2) years of continuous operations
covering items supplied by Builder, at least six months prior to the Vessel's
completion.
30.3. The spare parts furnished by the Builder shall be properly protected
against physical decay, corrosion and mechanical damage and shall be properly
listed so that replacements may be readily ordered.
30.4. The Builder shall complete the storage spaces installation in time to
enable to positioning, labeling and listing of all spare parts (the Builder and
Purchaser supplied) prior to Delivery. The Builder at his own cost shall be
responsible for handling, bringing on board and storage on the Vessel of all
spare parts, tools and supplies under instruction and supervision of Purchaser's
Representative.
31. SAFETY AND HEALTH STANDARDS
31.1. The Purchaser's Representative will have authority to monitor the
performance of the work done by the Builder to ensure safe and workmanlike
performance.
31.2. It is the Purchaser's policy not only to comply with the safety and health
measures required by law but to act positively to prevent injury, ill health,
damages and loss arising from its operations. The Purchaser requires the Builder
and his sub-contractors to apply health, safety and local environmental
standards in order to achieve high levels of performance. It is essential that
the Builder and his sub-contractors undertaking work consistently show a high
level of safety awareness and demonstrate that they are capable of conducting
themselves in a safe and competent manner in their area of activity.
31.3. The Builder acknowledges the Purchaser's strong commitment to safety and
affirms that he has a written safety policy which has been signed and is
actively supported and endorsed by Builder's management. The Builder further
affirms that his safety policy is widely disseminated, understood and
implemented by and among Builder's and Builder's sub-contractors' employees.
This policy shall be in English and such other language(s) as required. A copy
of Builder's Safety Policy shall be furnished to the Purchaser prior to start of
the work.
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31.4. It is essential that good housekeeping is maintained by the Builder's
employees throughout the term of this Contract. The working areas shall be kept
tidy at all times, access ways kept clear and surplus/scrap material removed
daily. Cleaning up at end of the job is not considered sufficient. Spillage of
oil or chemicals shall be cleared up immediately to avoid fire hazards, slippery
surfaces, contact with toxic substance and other hazards. Appropriate safety
precautions shall be taken during cleaning up. No oil grade with flash points
lower than 55*C shall be used for cleaning purposes.
31.5. Asbestos containing products are not to be applied on board the Vessel.
Substitutes therefor shall be applied only after authorisation by the Purchaser.
31.6. The Builder shall report immediately to the Purchaser all accidents
occurring during the term of this Contract and related to work thereunder, that
result in injury to or death of any person and/or damage to or loss of property.
Accidents are defined as "Unintentional or unplanned events that may or may not
result in personal injury or equipment, plant, or property damage, or any
combination of these". Purchaser and Builder agree to cooperate to reach
mutually agreeable resolutions and immediate rectification of any perceived
unsafe practices.
31.7. The Purchaser may require the Builder to permanently remove and replace
any of Builder's or Builder's sub-contractors' employees who violate safety
regulations and any equipment which is obviously unsafe.
31.8. The Builder shall, at his own expense, supply his personnel and his
sub-contractors' personnel with adequate protective personal clothing, safety
helmets, safety shoes, and other protective equipment required for the type of
work to be carried out.
32. EFFECTIVENESS
32.1. This Contract is subject to, and shall become effective and legally
binding on the parties at the date of execution.
32.2. The date upon which the above conditions shall all have been satisfied
shall be known hereunder as the "Execution Date."
IN WITNESS WHEREOF the parties hereto have caused this Contract to be duly
executed the day and year first above written.
THE PURCHASER: THE BUILDER:
BY: Derek Leach BY: Richard M. Currence, Jr.
Title: Attorney-in-Fact Title
/s/ DEREK LEACH /s/ RICHARD M. CURRENCE, JR.
- - -------------------------------- --------------------------------
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APPENDIX VII
LIST OF CERTIFICATES TO BE SUPPLIED
ON DELIVERY OF THE VESSEL
The Builder shall furnish, at the Builder's expense, to the Purchaser the
following certificates upon delivery of the Vessel:
From the Classification Society:
a. Classification certificates for hull, machinery and electricals of the
Vessel.
b. Safety radio telegraph certificate.
c. Load line certificate.
d. Register tonnage certificate.
e. Suez Canal tonnage certificate.
f. MODO CODE certificate.
g. Safety Construction certificate.
h. Certificate of Navigation Lights.
i. Certificate of Lifesaving Equipment, Fire Fighting and Fire Detection
System.
j. Compass Certificate.
k. Compass Deviation Table.
l. MARPOL International Oil Pollution Prevention Certificate (IOPPC).
m. Load test and lifting appliances certificate.
n. Test Certificate of Pressure Vessels.
From the Local Government Authority:
a. De-ratting exemption certificate.
b. Potable water analysis certificate.
<PAGE>
APPENDIX VIII
BASIC DESIGN
As per Section 99000 of the Specification.
<PAGE>
APPENDIX IX
PARENT COMPANY GUARANTEE
<PAGE>
PARENT GUARANTEE
In order to induce PETRODRILL, N.V. and/or any AMU e or sister company of
Petrodrill, N.V., to enter into that those certain Vessel Connection Contract(s)
(the "Contract' between Purchaser and TDI-HALTER, L.P. ("Builder"), dated on or
about April 8, 1998, Halter Marine, Inc., a Nevada corporation ("Guarantor")
represented herein by its duly authorized President and CEO, John Dane III, does
hereby unconditionally and irrevocably guarantee to Purchaser pro t and faithful
performance of, and compliance with, all obligations, covenants, terms,
conditions and undertakings of Builder contained in the Contract in accordance
with the respective terms thereof. Such guarantee is an absolute, unconditional,
present and continuing guarantee of performance and compliance.
IN WITNESS WHEREOF, Guarantor has executed this Parent Guarantee as of this
7" day of April, 1998.
HALTER MARINE, INC.
By:____________________
John Dane III
President and CEO
EXHIBIT 10.21(A)
SIDE LETTER NO 1. 9TH APRIL 1998
- - --------------------------------------------------------------------------------
Petrodrill Construction Inc
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
TDI-Halter L.P.
1800 West Loop South
Houston
Texas 77027
Gentlemen,
Hull No 1829
We refer to the contract executed between us today in respect of the above hull.
With respect to the target figures referred to in clause 6 of the contract it is
agreed that these shall be amended to reflect those ultimately agreed between
the Purchaser and Davie Industries in respect of Amethyst 2 & 3.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
WE HEREBY ACKNOWLEDGE OUR UNDERSTANDING AND ACCEPTANCE OF THIS LETTER:
/s/ RICHARD M CURRENCE JNR.
RICHARD M CURRENCE JNR.
TDI-HALTER INC.
9TH APRIL 9, 1998
EXHIBIT 10.21(B)
SIDE LETTER NO 2. 9TH APRIL 1998
- - --------------------------------------------------------------------------------
Petrodrill Construction Inc
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
TDI-Halter L.P.
1800 West Loop South
Houston
Texas 77027
Gentlemen,
Hull No 1829
We refer to the contract executed between us today in respect of the above hull.
This letter serves to confirm the agreement between us that we shall have the
option by way of Purchasers Modification, to delete the provision of Builders
All Risk Insurance per clause 11.2 from your workscope and provide same
ourselves.
In this event you confirm that you will provide us with a credit against the
Contract Price which will reflect the higher of your evidenced quoted cost for
the same or USD 400,000.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
WE HEREBY ACKNOWLEDGE OUR UNDERSTANDING AND ACCEPTANCE OF THIS LETTER:
/s/ RICHARD M CURRENCE JNR.
RICHARD M CURRENCE JNR.
TDI-HALTER INC.
9TH APRIL 9, 1998
EXHIBIT 10.21(C)
SIDE LETTER NO 3. 9TH APRIL 1998
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Petrodrill Construction Inc
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
TDI-Halter L.P.
1800 West Loop South
Houston
Texas 77027
Gentlemen,
Hull No 1829
We refer to the contract executed between us today in respect of the above hull.
It is hereby recognised by the Purchaser that the contract between the Builder
and Purchaser for the supply of the Amethyst drilling units includes a budget of
$8.6 million in respect to the electrical integrators package defined in clause
5.8 of the main contract.
The package is related to GEC Alsthom offer No P354-A01 as discussed with the
Builder on the 28th March in Rotterdam and modified in the meeting notes dated
March 28th.
The Purchaser and Builder will jointly finalise the technical and commercial
requirements included in the offer and in the event that the final price of the
package, delivered to the Builders yard, is less than $8.6 million the Purchaser
will receive a credit from the Builder to the extent of 80% of any such
variance.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
WE HEREBY ACKNOWLEDGE OUR UNDERSTANDING AND ACCEPTANCE OF THIS LETTER:
/s/ RICHARD M CURRENCE JNR.
RICHARD M CURRENCE JNR.
TDI-HALTER INC.
9TH APRIL 9, 1998
EXHIBIT 10.21(D)
SIDE LETTER NO 4. 9TH APRIL 1998
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Petrodrill Construction Inc
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
TDI-Halter L.P.
1800 West Loop South
Houston
Texas 77027
Gentlemen,
Hull No 1829
We refer to the contract executed between us today in respect of the above hull.
It is agreed between the parties hereto that in lieu of the Warranty in Section
17 of the Contract the Purchaser, at its option, may elect to purchase from the
Builder a more extensive warranty than that which is currently in the contract,
for the price of $500,000 per vessel, or alternatively, again at its option to
enter into an Escrow/Warranty Reserve Agreement. Under the terms of the Warranty
Reserve agreement, the Purchaser would pay the additional $500,000 into an
Escrow Account to be drawn down upon by direct warranty costs. Funds remaining
in the account at the end of the warranty period would be split evenly between
the parties, any funds used, over and above the $500,000 would be for the
Purchaser's account.
Attached hereto is the agreed language for the more extensive warranty which
would replace the existing Clause 17 and which defines the scope of work
supplied, should the Purchaser elect to purchase this warranty for an additional
$500,000.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
WE HEREBY ACKNOWLEDGE OUR UNDERSTANDING AND ACCEPTANCE OF THIS LETTER:
/s/ RICHARD M. CURRENCE JNR.
Richard M Currence Jnr.
TDI-Halter Inc.
9th April 9, 1998
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Side Letter No 4 Page 1 of 4
<PAGE>
OPTION WARRANTY
17. DEFECTS AND BUILDER'S GUARANTEE
GUARANTEE PERIOD
17.1. The Builder guarantees the Vessel for a period of twelve months from
Delivery or, in respect of individual items as provided for in the
Specification, for such greater period as may be agreed, against all defects
whether attributable to Materials, workmanship, construction or detailed
engineering, caused to the Vessel thereby. The aforesaid period of twelve months
from Delivery shall be known herein as the "Guarantee Period".
17.2. This guarantee shall not extend to Owner Furnished Equipment or to any
damage caused by any defect therein not attributable to the Builder, but it
shall extend to defects in Materials, workmanship, installation engineering and
to physical damage caused therein resulting from the Builder's installation of
the Owner Furnished Equipment.
17.3. The Builder guarantees repairs or replacements to the Vessel made under
the guarantee in sub-clause (1) above for a further period of twelve months from
the date of completion of such repair or replacement subject to a maximum of 24
months.
REMEDY OF DEFECTS
17.4. The Purchaser shall notify the Builder in writing within thirty days
after discovery of any defect falling within the provisions of this Clause 17.
The Purchaser's notice shall include such particulars as can reasonably be given
as to the nature of such defect, the date of discovery and the place at which
the Vessel can be made available for earliest inspection by or on behalf of the
Builder. The Purchaser shall furnish to the Builder as soon as practicable
copies of any relevant survey or inspection reports.
17.5. The Purchaser may require the Builder to make good any defect or physical
damage for which the Builder is liable under this Clause 17 by giving notice of
such requirement to the Builder. Any parts replaced shall on their removal
become the property of and shall be at the risk of the Builder whilst the
replacement parts fitted to the Vessel shall upon fitting become the property of
the Purchaser.
17.6. The Builder shall execute the necessary work including the carrying out
of any essential dismantling and reassembling with the utmost despatch in
accordance with the quality standards which are applicable hereunder to the
Vessel's original construction.
17.7. In the event that the Builder is unable to make good any defect at the
Shipyard, it shall forthwith nominate a yard suitable for such purpose for the
Purchaser's approval, and should the Purchaser consider such yard acceptable the
Builder shall arrange for the making good of the defect and the carrying out of
any essential dismantling and reassembling at its own expense.
17.8. Should the Purchaser consider the yard nominated by the Builder
unacceptable, or should the Purchaser elect to have the work referred to above
carried out elsewhere than at the Shipyard, the Purchaser shall nominate a yard
acceptable to it. In such case the Builder shall pay to the Purchaser for
repairs and/or replacements such sum as would equate to the costs of effecting
such repairs at a first-class US Gulf Coast Commercial shipyard. The Builder
may, at its own expense, have its representative in attendance during execution
of the work. The Purchaser shall ensure that any parts replaced under this
sub-clause are returned to the Builder (if required by the Builder) at the
Builder's expenses, and in such case those parts returned shall on their
replacement become the property of and shall be at the risk of the Builder.
17.9. In the event of defects arising which fall within the provision of this
Clause 17, whether or not such defects require the Vessel to be drydocked, the
Builder shall pay for any costs incurred by the Purchaser in making the Vessel
available to the Builder or to any other yard for the making good of any such
defect as aforesaid. Such additional costs shall exclude however the costs of
transportation, port charges and the cost
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Side Letter No 4 Page 2 of 4
<PAGE>
of fuels, lubricants and consumable stores consumed in excess of those which
would have been consumed had the Vessel not deviated to allow the Builder to
make good any such defects as aforesaid.
17.10. In the event that the Vessel is idle for more than 15 days in total
accumulated time due to defects under this Clause 17 the Guarantee Period shall
be extended by the number of all days during which the Vessel is idle commencing
with the sixteenth day, whether or not other work is undertaken simultaneously
with the guarantee work.
17.11. Nothing contained herein shall obligate Builder at any time to repair or
replace the Vessel, or any component part therof, where such repair and/or
replacement is caused, in whole or in part, by normal wear or unusual handling,
by the negligent operation or maintenance of the Vessel, or its equipment or by
abuse, rough weather, accident, fire, by Purchaser or Purchaser's agents,
employees or representatives.
17.12. With respect to paint, Builder warrants that it will purchase paint of
good marine quality and that it will apply the paint in accordance with the
manufacturer's specifications, recommendations, and inspection, and Builder
makes no warranty, express or implied, with respect to the fitness of the paint
or the manufacturer's specifications and recommendations. The Builder will
purchase paint insurance for the Purchaser.
17.13. For any claim for damages to or loss of the Vessel, and/or damages to
persons and/or property (including, but not limited to claims, demands, or
actions for bodily injury, illness, disease, death, loss of service, loss of
society, maintenance and cure, wages or property) made as a result of any defect
in the Vessel, or any component parts thereof, after the said Warranty Period,
Purchaser shall have no claim or actions whatsoever against Builder, regardless
of any negligence, tort, fault, strict liability or otherwise of Builder, its
employees or subcontractors, and Purchaser hereby waives and releases Builder
and its employees and subcontractors from and against any and all liability and
any and all damages resulting therefrom, including, but not limited to, for
personal injury, death, property damage, damage to and/or loss of the Vessel,
delay, demurrage, loss of profits, loss of use, or any other consequential or
punitive damages of any kind, whether such claim is based in contract,
redhibition, negligence, strict liability, or otherwise, arising out of any
defect and/or negligent design, the selection or choice of specifications and/or
materials and/or component parts, manufacture, construction, fabrication,
workmanship, labor and/or installation of equipment, materials and/or components
or from any unseaworthy condition or any other defective condition of the
Vessel, it being specifically understood and agreed that any such defects
reported and/or occurring after the Warranty Period and all damages, loss of
profits, demurrages, delay, losses of use or other consequential or puntive
damages of any kind whatsoever resulting therefrom, shall not be the
responsibility of Builder, but shall be borne exclusively by Purchaser.
"THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR THAT THE VESSELS, MATERIAL OR
SERVICES ARE FIT FOR ANY PARTICULAR PURPOSE OR USE, AND SPECIFICALLY IN LIEU OF
ALL INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES".
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Side Letter No 4 Page 3 of 4
<PAGE>
ASSIGNMENT OF SUBCONTRACTOR'S GUARANTEES
17.13. The Builder agrees upon the expiry of the Guarantee Period to assign (to
the extent to which it may validly do so) to the Purchaser, or as the Purchaser
may direct, all the right, title and interest of the Builder in and to all
guarantees or warranties given by the Subcontractors save insofar as the same
relate to existing claims by the Purchaser against the Builder.
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Side Letter No 4 Page 4 of 4
EXHIBIT 10.21(E)
SIDE LETTER NO 5. 9TH APRIL 1998
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Petrodrill Construction Inc
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
TDI-Halter L.P.
1800 West Loop South
Houston
Texas 77027
Gentlemen,
Hull No 1829
We refer to the contract executed between us today in respect of the above hull.
This letter serves to confirm your undertaking to us that you will procure that
without prejudice to the provisions of clause 17 of the Contract you will, at
your own cost, procure a paint warranty insurance policy in amounts and on terms
that we shall reasonably agree and you shall further procure that we shall have
full benefit of and access to such insurance.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
WE HEREBY ACKNOWLEDGE OUR UNDERSTANDING AND ACCEPTANCE OF THIS LETTER:
/s/ RICHARD M. CURRENCE JNR.
Richard M Currence Jnr.
TDI-Halter Inc.
9th April 9, 1998
EXHIBIT 10.21(F)
NOVATION AGREEMENT
THIS DEED (THE "NOVATION AGREEMENT")is made the 9th day of December, 1998
between:
(1) TDI-HALTER, LIMITED PARTNERSHIP, a Louisiana limited partnership (the
"BUILDER"), whose principal office is at 1601 South Childers Road, Orange,
Texas 77631
(2) PETRODRILL OFFSHORE, INC. (formerly PETRODRILL CONSTRUCTION INC. ) (the
"PURCHASER"), a corporation organised under the laws of Bahamas, whose
principal office is at Suite 205, Saffrey Square, PO Box N8188, Nassau,
Bahamas; and
(3) PETRODRILL FIVE LIMITED (the "NEW PURCHASER"), a limited company organised
under the laws of British Virgin Islands, whose registered office is at
Arias Fabrega & Fabrega, Omar Hodge Building, 2nd Floor, Wickams City,
Tortola, British Virgin Islands.
(together referred to as the PARTIES)
Whereas
(A) Builder and the Purchaser are parties to an agreement relating to
the construction and sale of a dynamic positioned semi-submersible
drilling vessel with Builder's Hull No. 1829 dated 9 April 1998
(including any amendments included in the associated memorandum,
meeting minutes and/or side letters made from time to time thereto
(herein called the "AGREEMENT") which expression shall mean the said
Agreement as transferred by this Novation Agreement.
(B) The parties hereto have agreed that in consideration for entering
into this Novation Agreement the Purchaser may transfer to the New
Purchaser its rights and obligations under the Agreement upon the
terms and subject to the conditions set out herein.
NOW IT IS AGREED AS FOLLOWS:
(1) Terms and expressions defined in the Agreement shall, unless the context
otherwise requires, have the same meanings when used in this Novation
Agreement.
(2) Upon and with effect from the date of this Novation Agreement and subject
to clause 6 of this Novation Agreement, Purchaser does hereby transfer to
the New Purchaser all of its obligations, liabilities, rights, title and
interest in and to the Agreement. Upon and with effect from the date of
this Novation Agreement, the Purchaser releases and discharges and agrees
to release and discharge the Builder from the various covenants,
undertakings, warranties and other obligations contained in the Agreement
which are enjoyed by the Purchaser, and from all claims and demands
whatsoever arising out of or in respect of the Agreement whether prior to,
on or subsequent to the date of this Novation Agreement.
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<PAGE>
(3) Upon and with effect from the date of this Novation Agreement and subject
to clause 6 of this Novation Agreement, the New Purchaser accepts and
agrees to accept the transfer of all liabilities and obligations of the
Purchaser under the Agreement (whether now existing or hereafter arising)
and agrees to perform all the duties and to discharge all the liabilities
and obligations of the Purchaser under the Agreement (whether now existing
or hereafter arising.
(4) Upon and with effect from the date of this Novation Agreement, the Builder
agrees to perform all its duties and to discharge all of its obligations
under the Agreement and to be bound by all the terms and conditions of the
Agreement in every way as if the New Purchaser were named in the Agreement
as a party ab initio in place of the Purchaser. Without limiting the
generality of the foregoing, the Builder acknowledges and agrees that the
New Purchaser shall have the right to enforce the Agreement and pursue all
claims and demands (future or existing) whatsoever arising out of or in
respect of the Agreement. The New Purchaser agrees and acknowledges that
Builder's satisfactory performance of any obligation under the Agreement
for the benefit of the Purchaser shall be deemed to satisfy the Builder's
obligations to perform the obligations for the New Purchaser.
(5) The New Purchaser confirms that it has received a copy of the Agreement
and that it is familiar with the terms thereof.
(6) Notwithstanding the above clauses it shall be a condition precedent to
this Novation Agreement that the Purchaser shall provide to the Builder a
Guarantee in the form attached in the schedule hereto, and this Novation
Agreement shall not become effective until the Guarantee is provided by
the Purchaser to the Builder in the form that appears in the schedule.
(7) Each Party shall take all steps, execute all documents and do everything
reasonably required by any other Party to give effect to the transactions
contemplated by this Novation Agreement provided that the Purchaser and
the New Purchaser shall jointly and severally reimburse the Builder on a
full indemnity basis for all reasonable costs and expenses (including
legal fees) incurred by the Builder pursuant to this Clause 7 or otherwise
howsoever in connection with the negotiation and execution of this
Novation Agreement.
(8) The construction, validity and performance of this Novation Agreement
shall be governed by English Law. Any claim, difference or dispute which
may arise out of this Novation Agreement shall be decided by the
commercial Court of the Queen's Bench Division of the High Court of
England and Wales to whose exclusive jurisdiction the parties hereto
agree.
Nothing contained in this Novation Agreement shall waive any rights or
remedies of the Builder under the Agreement including without limitation
any rights or remedies related to any default under the Agreement or any
event, act or omission which with the passing of time or the giving of
notice would constitute a default under the Agreement.
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<PAGE>
SIGNED by TDI-HALTER LIMITED PARTNERSHIP
on behalf of the BUILDER in the presence of: /s/ Illegible
SIGNED by PETRODRILL OFFSHORE INC.
on behalf of the PURCHASER in the presence of: /s/ Illegible
SIGNED by PETRODRILL FIVE LIMITED
on behalf of NEW PURCHASER in the presence of: /s/ Illegible
-3-
EXHIBIT 10.21(G)
EXHIBIT 6 TO SECURITY AGREEMENT DOCUMENT 18
AMENDMENT NO. 1 TO
SEMI-SUBMERSIBLE DRILLING VESSEL CONSTRUCTION CONTRACT
BETWEEN
TDI-HALTER, LIMITED PARTNERSHIP
AND
PETRODRILL FIVE LIMITED
DATED APRIL 9, 1999
This Amendment No. 1 is entered into this 9th day of April, 1999,
between TDI-HALTER, LIMITED PARTNERSHIP ("Builder"), and PETRODRILL FIVE LIMITED
("Purchaser") to that Semi-Submersible Drilling Vessel Construction Contract
dated April 9, 1998 (Hull No. 1829) (the "Original Contract").
WHEREAS, the Original Contract was novated by PETRODRILL
OFFSHORE, INC. (formerly Petrodrill Construction Inc.) to Purchaser by
Novation Agreement dated as of December 9, 1998;
WHEREAS, on the Closing Date the Purchaser will issue its United
States Government Guaranteed Export Ship Financing Obligations, AMETHYST 5
Series (the "Obligations"), in order to finance the construction of the Vessel
which is the subject of the Original Contract;
WHEREAS, the United States of America, represented by the Secretary
of Transportation, acting by and through the Maritime Administrator, is
guaranteeing the payment of the outstanding principal of and interest on the
Obligations pursuant to Title XI of the Merchant Marine Act, 1936, as amended;
WHEREAS, the proceeds of the Obligations will be used for payment to
the Builder in accordance with the terms of this Contract; and
WHEREAS, the Purchaser and the Builder in order to induce the
Secretary to guarantee the Obligations, wish to amend the Original Contract as
detailed herein;
NOW THEREFORE, in consideration of these premises, the mutual
benefit set forth herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Purchaser and Builder
agree as follows:
<PAGE>
1. INSPECTION BY THE SECRETARY'S REPRESENTATIVES. The Builder shall
permit inspection by, supply information to, and cooperate with representatives
of the Secretary at its yard where the assembly of the Vessel is now taking
place and at such other yards of the Builder, its affiliates and subcontractors
where parts of the Construction Contract or subcontracts may be performed.
Builder acknowledges that such cooperation may include, but is not limited, to
providing the Secretary 1) reasonable access to the Vessel and areas of the
Builder where work related to the Vessel is being performed by the Builder, its
contractors and subcontractors, at all reasonable times during normal working
hours to inspect performance of the Work and to observe trials and other tests,
2) copies of detailed production schedules for the Vessel along with changes to
such schedules as they occur, 3) reasonable access to contract plans and
specifications for the Vessel, 4) reasonable access to Builder's production
manager or supervisor, 5) information on the origination and source of
materials, and 6) reasonable access to progress payment and construction
milestone information for the purpose of verifying (i) completion in accordance
with the representations made to the Secretary, including, but not limited to,
representations concerning the Vessel's Actual Cost, as defined in the Security
Agreement, and (ii) compliance of the construction with the plans and
specifications and the other terms of the Construction Contract. In conjunction
with any such inspections by the Secretary, the Builder will furnish, on a
temporary basis, reasonable space at its yard for the Secretary representatives
and communication, copying and other facilities as appropriate. The Secretary's
access to the Vessel shall be at the Secretary's and Purchaser's sole risk. The
Builder assumes no responsibility save for its own gross negligence or
intentional acts, and Purchaser assumes full liability for any injury that the
Secretary or its representatives, agent or contractor may sustain on the Vessel
during its construction and the Purchaser hereby fully releases and discharges
the Builder from any liability with respect thereto.
2. CHANGES IN CONSTRUCTION CONTRACT. Notwithstanding anything to the
contrary contained in the Construction Contract, the Construction Contract shall
not be amended, modified or terminated after April 9, 1999, except in writing
duly signed by the Builder and Purchaser with the prior written consent of the
Secretary, provided that the Secretary's prior written consent shall not be
necessary, but written notice to the Secretary shall be given, for (a) any
mandatory change to the Construction Contract as a result of any requirements of
any governmental agency, or (b) any non-mandatory changes that Builder and
Purchaser desire to make which do not exceed, with respect to any item of the
Vessel's construction, one (1%) percent of the Vessel's Contract Price and which
do not, in the aggregate, cause the Vessel's Contract Price to be increased more
than five (5%) percent or the delivery and completion date of the Vessel to be
extended more than ten (10) days. Notwithstanding the foregoing, no change shall
be made in the general dimensions and/or characteristics of the Vessel which
would diminish the capacity of the Vessel to perform as originally intended by
the Construction Contract, without the prior written consent of the Secretary.
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<PAGE>
3. INSURANCE.
a. Until each Vessel has been completed, physically delivered at the
place of delivery and accepted by Purchaser, Purchaser shall cause such Vessel
and all materials, outfitting, equipment and appliances to be installed in the
Vessel including all materials, outfitting, equipment and appliances provided by
the Builder or Purchaser and delivered to Builder for the construction of the
Vessel or in the construction thereof, to be insured under a full form Builder's
Risk Policy under the latest American Institute Builder's Risk Form in force and
effect at the time that the construction of the Vessel is commenced when the
Vessel's keel is laid, all at Purchaser's expense. Such policy(ies) shall name
the Builder, the Purchaser and the United States of America as assureds. The
policy(ies) shall provide that there shall be no recourse against the Builder
and the United States of America for payment of any premiums; provided, however,
the United States of America and Builder shall be subject to cancellation upon
30 days prior written notice as set forth below. The policy(ies) shall also
provide a 30 day prior written notice of cancellation or material change in the
policy to the Builder and the United States of America (U.S. Department of
Transportation, Maritime Administration 400 Seventh St. S.W., Washington D.C.
20590 Attention, Chief, Division of Marine Insurance). The amounts, terms and
conditions, deductibles and underwriters of the Builder's Risk Policy(ies) shall
at all times be satisfactory to the Builder and the Secretary.
b. The Builder's Risk policy(ies) shall provide that all losses in
excess of $500,000 shall be paid to the Secretary for distribution by him to
himself, the Builder and the Purchaser in accordance with the Security Agreement
between the Purchaser and the Secretary, MA-13511, dated April 9, 1999,
involving the Vessel and the Construction Contract.
c. Builder shall also purchase and maintain, at its expense, during
the life of the Construction Contract, Worker's Compensation Insurance at
statutory amounts, with Longshoreman & Harbor Workers Compensation Act coverage
endorsements and Employer's Liability Insurance in the amount of at least Two
Million Dollars ($2,000,000).
d. A satisfactory confirmation of insurance outlining the pertinent
terms and conditions of the Builder's Risk Policy(ies) referred to above shall
be provided to the Builder and the Secretary. The Purchaser shall be furnished a
certificate of insurance for all other policies required hereunder. The original
of the said Builder's Risk Policy shall be available in the Purchaser's office.
All of the policies of insurance and certificates referred to herein shall
contain a provision requiring the insurer at risk to give Purchaser, Builder and
the Secretary thirty (30) days' notice, in writing prior to cancellation of any
such insurance.
4. PROGRESS PAYMENTS. The Construction Contract shall contain
provisions for making periodic payments for the work performed based performance
milestones related to the construction of the Vessel, after such milestones are
certified by the Purchaser and the Builder, or as otherwise provided in Clauses
4.1 and 4.2 of the Construction Contract.
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<PAGE>
5. CERTIFICATE OF NO LIENS. At the time of Closing, now scheduled for
April 9, 1999, and at the time of delivery of the Vessel and from time to time
as payments will be requested from amounts held in escrow by the Secretary or
from drawdowns from the Credit Facility established by the Credit Agreement, the
Builder agrees, on behalf of itself, or any party claiming through the Builder,
to execute certificates of no liens, in form and substance satisfactory to the
Secretary to the extent that the Builder has been paid for such items but with
exception for any liens, claims, security interests and encumbrances which may
have been placed thereon by Purchaser in favor of a third party other than the
Builder or its employees, and liens for non-delinquent payments arising in the
ordinary course of Builder's business which liens Builder hereby warrants will
be discharged by Builder when due, with respect to the applicable Vessel, hull
or component parts for which payment is requested and with respect to all work
that has previously been accomplished.
6. SUBORDINATION. The Builder agrees to, and does hereby fully
subordinate to the rights of the Secretary all liens and security rights and
remedies to enforce such rights which the Builder has or may have with respect
to (i) all work, materials and components, incorporated in, or to be
incorporated in the hull and the Vessel ("the Equipment") to which title has
passed to Purchaser, and (ii) the Equipment that has not been paid for by the
Purchaser only to the extent that such unpaid for Equipment has actually been
incorporated into other Equipment, part of which has actually been paid for by
Purchaser. Prior to the Closing Date, the Builder shall provide to the Secretary
either (1) the release or subordination of any claim to a security interest or
other encumbrance relating to the Equipment, and the remedies to enforce such
rights, held or claimed by any of the Builder's lenders (which release or
subordination shall be in form and substance satisfactory to the Secretary), or
(2) an officer's certificate that the Builder has no lenders with any claim to a
security interest or other encumbrance relating to the Equipment.
7. EQUIPMENT PROCEEDS.
a. In the event that prior to delivery of the Vessel, following the
occurrence or during the continuance of any default by Purchaser under any
agreements with the Secretary, including but not limited to the Security
Agreement (the "Secretary's Documents") or by the Builder under the Construction
Contract, the Secretary shall have the sole right to sell the Equipment,
provided that the Secretary complies with Section 7(c) of this Amendment. Any
proceeds the Secretary receives from the sale of the Equipment, after deducting
any fees or costs it incurs in connection with the enforcement of its rights
under the Secretary's Documents, shall be distributed promptly between the
Builder and the Secretary on a Pro Rata Basis (as defined below) based on the
"Amount Due" (as defined below) to the Builder and the Secretary.
b. For the purposes of this section, the "Amount Due" to the Builder
shall include all payments then due to the Builder for materials purchased or
work performed, provided, however, if the Builder is in material default under
the Construction Contract as amended, such "Amount Due" to the Builder shall be
zero. For the purposes of this section, the "Amounts Due" to the Secretary shall
include all amounts secured by the Secretary's Documents
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<PAGE>
related to the Equipment. For the purposes of this section, the share to be
distributed to a party under the Pro Rata Basis shall be the net amount realized
from the sale of the Equipment times a fraction equal to the Amount Due that
party divided by the sum of the Amount Due both parties.
c. In the event of a Purchaser default and an enforcement of the
Secretary's Documents, the Secretary shall use reasonable efforts to expedite
the enforcement and foreclosure process for the enforcement of the Secretary's
Documents.
8. CONSENT OF BUILDER. The Builder will separately enter into a Consent
of Shipyard to the assignment by Purchaser to the Secretary, for purposes of
security, of all of Purchaser's right, title and interest in the Construction
Contract, and the proceeds thereof, if any such exist, or shall exist in the
future. Such proceeds include any amounts that may be due to be refunded to
Purchaser by the Builder or by any subcontractor or supplier to the Builder
arising out of the Construction Contract, as amended, and any subcontracts or
supply contracts into which the Builder has entered into or may enter into as a
part of construction process. In the event of a default of the Builder under the
Construction Contract, the Secretary may enforce Purchaser's rights hereunder.
In the event of any discrepancy between a position of the Secretary and a
position of the Purchaser, the Secretary's decision shall be binding on the
Purchaser.
9. DISTINCT OBLIGATIONS. Builder hereby agrees and acknowledges that
the obligations of Purchaser under the Construction Contract with regard to the
Vessel are separate, distinct and independent of any other obligation or
agreement of Purchaser and that a default by Purchaser under such other
obligation or agreement shall not in any way affect the obligations of Builder
under the Construction Contract with regard to the Vessel or permit Builder to
exercise any right of set-off or other remedy (all of which Builder expressly
waives and agrees not to assert) which could materially adversely affect the
Construction Contract, the Vessel or the construction thereof.
10. RIGHT TO CURE. Notwithstanding anything to the contrary contained in
the Construction Contract, Builder agrees to give the Secretary written notice,
concurrent with any notice given to the Purchaser under the Construction
Contract of any default by Purchaser and hereby grants the Secretary thirty (30)
days from the receipt of any such notice to cure any default under the
Construction Contract, and Builder agrees to take no action to enforce its
rights pursuant to the Construction Contract until the elapse of said thirty
(30) days.
11. SHIPYARD PLANS. Upon the delivery of the Vessel, or earlier if
feasible, upon the Secretary's request, Builder and Purchaser agree (at
Purchaser's expense) to submit to the Secretary one set of Builder plans, in
form and substance satisfactory to the Secretary, for the Vessel as built. The
Secretary shall not release the Plans to any third party unless required to do
so by court order; provided that the Secretary shall give notice to the
Purchaser and Builder of any request for such an order. Purchaser shall use its
best efforts to include a provision setting forth the terms of this Paragraph 11
in the Security Agreement between the Secretary and the Purchaser.
-5-
<PAGE>
12. NOTICES. Any, notice or other communication required or permitted to
the Secretary under shall be sent by (i) certified mail, postage prepaid, (ii)
by nationally recognized overnight courier service, (iii) or by facsimile
transmission, confirmed by certified mail postage prepaid or by nationally
recognized overnight courier service, addressed as follows:
United States Maritime Administration
400 Seventh Street, S.W.
Washington, D.C. 20590
Attention: Office of Ship Finance
13. FURTHER AMENDMENTS TO CONTRACT. The Contract is further amended as
follows:
(a) REGISTRATION. The first sentence of Clause 2.8 is revised to
read as follows:
The Vessel shall upon delivery fly the flag of the
Commonwealth of The Bahamas and be registered in the Register of
Shipping in the Commonwealth of The Bahamas, all in accordance with
Purchaser's Modification Request number 1829-0001. The price for
this change order shall be determined in accordance with Clause 7 of
the Contract.
(b) PAYMENT SCHEDULE. The provisions relating to the Third through
Tenth Installments in Clause 4.1 are revised to read as follows:
THIRD INSTALLMENT:
Ten percent (10%) of the Contract Price, being Eight Million Four
Hundred Thousand U.S. Dollars (US$ 8,400,000), shall be paid within
three Banking Days from receipt by the Purchaser of a telefax notice
from the Builder attaching a Stage Certificate in the form of the
draft attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that Start of Fabrication has taken place,
which is defined as the welding together of the first two plates on
the basis that it is the start of a continuous production program.
FOURTH INSTALLMENT:
Fifteen percent (15%) of the Contract Price, being Twelve Million
Six Hundred Thousand U.S. Dollars (US $12,600,000), shall be paid
within three Banking Days from receipt by the Purchaser of a telefax
notice from the Builder attaching a Stage Certificate in the form of
the draft attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
-6-
<PAGE>
Surveyor), certifying that the keel laying for the pontoons has
taken place, which is defined as 200 tons of steel having been
erected which can either be in one or two pontoons.
FIFTH INSTALLMENT:
Ten percent (10%) of the Contract Price, being Eight Million Four
Hundred Thousand U.S. Dollars (US $8,400,000), within three Banking
Days from receipt by the Purchaser of a telefax notice from the
Builder attaching a Stage Certificate in the form of the draft
attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that 60% of the total 2400 tons for the
pontoons (or 1440 tons) of steel have been erected.
SIXTH INSTALLMENT:
Five percent (5%) of the Contract Price, being Four Million Two
Hundred Thousand U.S. Dollars (US $4,200,000), within three Banking
Days from receipt by the Purchaser of a telefax notice from the
Builder attaching a Stage Certificate in the form of the draft
attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that the Pontoons of the Vessel have
successfully been launched, which is defined as the pontoons being
afloat without any global structural damage having been incurred.
For the sake of clarification, localized structural damage shall not
constitute a reason for non-payment of the milestone.
SEVENTH INSTALLMENT:
Five percent (5%) of the Contract Price, being Four Million Two
Hundred Thousand U.S. Dollars (US $4,200,000), within three Banking
Days from receipt by the Purchaser of a telefax notice from the
Builder attaching a Stage Certificate in the form of the draft
attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that the main engines have been started, which
is defined as all engines having been started and run for a period
of at least 4 hours.
EIGHTH INSTALLMENT:
Ten percent (10%) of the Contract Price, being Eight Million Four
Hundred Thousand U.S. Dollars (US $8,400,000), within three Banking
Days from receipt by the Purchaser of a telefax notice from the
Builder attaching a Stage Certificate in the form of the draft
attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that
-7-
<PAGE>
the substructure and drillfloor has been installed on the deckbox,
which is defined as the drillfloor having been fitted upon its
supports, tacked in place and being ready for permanent welding.
NINTH INSTALLMENT:
Ten percent (10%) of the Contract Price, being Eight Million Four
Hundred Thousand U.S. Dollars (US $8,400,000), within three Banking
Days from receipt by the Purchaser of a telefax notice from the
Builder attaching a Stage Certificate in the form of the draft
attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that the deckbox has been launched and
successfully mated with the Pontoons and Columns, which is defined
as the deckbox having been fitted up, tacked in place and the rig
safely returned to the quayside with all barges removed and being
ready to start permanent welding of the deck box connections.
TENTH INSTALLMENT:
Seven and a half percent (7.5%) of the Contract Price, being Six
Million Three Hundred Thousand U.S. Dollars (US $6,300,000), within
three Banking Days from receipt by the Purchaser of a telefax notice
from the Builder attaching a Stage Certificate in the form of the
draft attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that Seatrials have commenced, which is
defined as the Vessel having left the quayside to commence trials at
sea.
ELEVENTH INSTALLMENT:
Seven and a half percent (7.5%) of the Contract Price, being Six
Million Three Hundred Thousand U.S. Dollars (US $6,300,000),
together with any increase or any decrease of the Contract Price
arising from the provisions of Clauses 4.8, 6, and 16 below, shall
be paid upon delivery.
(c) BONUS SCHEDULE. A new Clause 4.8 is added to read as follows:
If the Vessel is delivered prior to the Contractual Delivery
Date (as amended by this Amendment No. 1 and as extended by
Permissible Delays), the Purchaser shall pay to Builder Sixty
Thousand U.S. Dollars ($60,000) for each day that the Vessel is
delivered before the Contractual Delivery Date (as amended by this
Amendment No. 1 and as extended by Permissible Delays).
(d) THIRD INSTALLMENT. Not withstanding any other provision of the
Contract,
-8-
<PAGE>
the parties agree that the Third Installment shall be due April 11, 1999.
(e) LIGHTSHIP WEIGHT. With respect to Clause 6, the Purchaser will
at its own cost and expense engineer the detailed design of blisters as a
contingency measure. The size of each blister will be as large as possible
with the existing constraints of the Vessel such that it does not
significantly effect the Vessel's motion characteristics or operational
performance. In the event that such blisters are required to be installed,
Purchaser will not exercise its rights to rescind the Contract by reason
of delay for the fabrication, installation or testing of the blisters
under Clause 16.3 for an additional period of ninety (90) days, beyond the
date that Builder is in default under Clause 16.3 of the Contract provided
that Builder has otherwise completed its scope of work for the Vessel
except for the fabrication, installation or testing of the blisters, and
except as a result of any scope of work that cannot be completed as a
result of the need to install the blisters, such as sea trials.
(f) DELIVERY. The first sentence of Clause 14.1 of the contract is
revised to read as follows:
The Vessel shall be delivered by the Builder to the Purchaser
at the Shipyard (or other place as may be agreed with unrestricted
access to the open sea) on 9th August, 2000, except that, in the
event of Permissible Delay as defined in Clause 15.4 hereof, the
aforementioned date shall be postponed accordingly.
(g) LIQUIDATED DAMAGES. The first two sentences of Clause 16.2 are
revised to read as follows:
If the delivery of the Vessel is delayed, then, in such event,
beginning at twelve o'clock midnight on the Contractual Delivery
Date, the Builder shall pay to the Purchaser as agreed liquidated
damages and not by way of penalty, the following amounts:
a. 1- 30 days of delay USD $20,000 per day
b. 31-to actual delivery USD $40,000 per day
It being understood that in no event shall the Builder's obligations
for such liquidated damages exceed USD $2,000,000.
(h) ENGINEERING. The Purchaser shall use its best efforts to assist
the Builder in the completion of Builder's engineering, and to advise
Builder of preferred solutions, all in order to expedite the engineering
process in as efficient a manner as possible. Builder and Purchaser agree
to address these issues in a separate Teaming Agreement.
-9-
<PAGE>
14. DEFINITIONS. As used in this Amendment No. 1:
"Secretary" means the Secretary of Transportation or any
official or official body from time to time duly authorized to
perform the duties and functions of the Secretary of Transportation
under Title XI of the Act (including the Maritime Administration,
the Acting Maritime Administrator, and to the extent so authorized,
the Deputy Maritime Administrator and other officials of the
Maritime Administration).
"Security Agreement" means the security agreement, Contract No.
MA-13511, with respect to the Vessel, executed by the Purchaser and
the Secretary.
Capitalized terms not otherwise defined herein shall have the
meaning set forth in the Security Agreement.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 1 as of the date set forth above.
WITNESS: TDI-HALTER, LIMITED PARTNERSHIP
Builder
BY: MARITIME HOLDINGS, INC.,
ITS GENERAL PARTNER
/s/ CHRISTINE B. ZUCKMAN By: /s/ CHUCK DE CUIR
- - ------------------------------ -----------------------------
Vice President
WITNESS: PETRODRILL FIVE LIMITED
Purchaser
/s/ ROBERT W. RANDALL By: /s/ EARL W. MCNIEL
- - ------------------------------ -----------------------------
Secretary Treasurer
AGREED AND APPROVED:
Secretary of Transportation
Maritime Administrator
By: /s/ JOEL C. RICHARD
- - ------------------------------
Secretary
Maritime Administration
-11-
EXHIBIT 10.22
Bond No. SC 111 3329 7124
PERFORMANCE BOND
KNOW ALL MEN BY THESE PRESENTS: That we, TDI-Halter, L.P. (hereinafter called
"Principal") as Principal, and Fireman's Fund Insurance Company, a corporation
organized and existing under the laws of the State of California, and authorized
to transact business in the State of Mississippi (hereinafter called "Surety"),
as Surety, are held firmly bound unto Petrodrill Construction, Inc. (hereinafter
called "Obligee"), as Obligee, in the penal sum of Eighty Four Million and
no/100 US Dollars ($84,000,000.00), good and lawful money of the United States
of America, for the payment of which, well and truly to be made, we bind
ourselves, our heirs, administrators, executors, successors, and assigns,
jointly and severally, firmly by these presents.
Signed, Sealed and Dated this 13th day of April, 1998.
Whereas, the above bounden Principal has entered into a certain written contract
with the above-named Obligee, dated the 9th day of April, 1998 for
One (1) fully operational and complete self-propelled Dynamic Positioned
Semi-Submersible Drilling Vessel - Hull Number 1829
which contract is hereby referred to and made a part hereof as fully and to the
same extent as if copied at length herein.
NOW, THEREFORE, THE CONDITION OF THE ABOVE OBLIGATION IS SUCH That if the above
bounden Principal shall well and truly keep, do and perform, each and every, all
and singular, the matters and things in said contract set forth and specified to
be by the said Principal kept, done and performed at the time and in the manner
in said contract specified, and shall pay over, make good and reimburse to the
above-named Obligee, all loss and damage which said Obligee may sustain by
reason of failure or default on the part of said Principal, then this obligation
shall be void; otherwise to be and remain in full force and effect.
TDI-Halter, L.P.
Principal
By: /s/ Illegible
________________________________________
Fireman's Fund Insurance Company
Surety
By: /s/ Illegible
________________________________________
Attorney-in-Fact
Tomi J. Braun
<PAGE>
GENERAL
POWER OF
ATTORNEY
FIREMAN'S FUND INSURANCE COMPANY
KNOW ALL MEN BY THESE PRESENTS: That FIREMAN'S FUND INSURANCE COMPANY, a
Corporation duly organized and existing under the laws of the State of
California, and having its principal office in the County of Marin, State of
California, has made, constituted and appointed, and does by these presents
make, constitute and appoint JERRY P. ROSE, TOMI J. BRAUN, DON E. CORNELL, L.
RAY PITTS, JR., ROBBI MORALES, jointly or severally, DALLAS TX its true and
lawful Attorney(s)-in-Facet, with full power and authority hereby conferred in
its name, place and stead, to execute, seal, acknowledge and deliver any and all
bonds, undertaking, recognizances or other written obligations in the nature
thereof, and to bind the Corporation thereby as fully and to the same extent as
if such bonds were signed by the President, sealed with the corporate seal of
the Corporation and duly attested by its Secretary, hereby ratifying and
confirming all that the said Attorney(s)-in-Fact may do in the premises.
This power of attorney is granted pursuant to Article VII, Sections 45 and 46 of
By-laws of FIREMAN'S FUND INSURANCE COMPANY now in full force and effect.
"ARTICLE VII. APPOINTMENT AND AUTHORITY OF RESIDENT SECRETARIES,
ATTORNEY-IN-FACT AND AGENTS TO ACCEPT LEGAL PROCESS AND MAKE APPEARANCES.
SECTION 45. APPOINTMENT. THE CHAIRMAN OF THE BOARD OF DIRECTORS, THE
PRESIDENT, ANY VICE-PRESIDENT OR ANY OTHER PERSON AUTHORIZED BY THE BOARD OF
DIRECTORS, THE CHAIRMAN OF THE BOARD OF DIRECTORS, THE PRESIDENT OR ANY
VICE-PRESIDENT MAY, FROM TIME TO TIME, APPOINT RESIDENT ASSISTANT SECRETARIES
AND ATTORNEYS-IN-FACT TO REPRESENT AND ACT FOR AND ON BEHALF OF THE CORPORATION
AND AGENTS TO ACCEPT LEGAL PROCESS AND MAKE APPEARANCES FOR AN ON BEHALF OF THE
CORPORATION.
SECTION 46. AUTHORITY. THE AUTHORITY OF SUCH RESIDENT ASSISTANT
SECRETARIES, ATTORNEYS-IN-FACT AND AGENTS SHALL BE AS PRESCRIBED IN THE
INSTRUMENT EVIDENCING THEIR APPOINTMENT. ANY SUCH APPOINTMENT AND ALL AUTHORITY
GRANTED THEREBY MAY BE REVOKED AT ANY TIME BY THE BOARD OF DIRECTORS OR BY ANY
PERSON EMPOWERED TO MAKE SUCH APPOINTMENT"
This power of attorney is signed and sealed under and by the authority of the
following Resolution adopted by the Board of Directors of FIREMAN'S FUND
INSURANCE COMPANY at a meeting duly called and held on the 7th day of August,
1984, and said Resolution has not been amended or repealed:
"RESOLVED, that the signature of any Vice-President, Assistant Secretary, and
Resident Assistant Secretary of this Corporation, and the seal of this
Corporation may be affixed or printed on any power of attorney, on any
revocation of any power of attorney, or on any certificate relating thereto, by
facsimile, and any power of attorney, any revocation of any power of attorney,
or certificate bearing such facsimile signature or facsimile seal shall be valid
and binding upon the Corporation."
IN WITNESS WHEREOF, FIREMAN'S FUND INSURANCE COMPANY has caused these presents
to be signed by its Vice-President, and its corporate seal to be hereunto
affixed this 23rd day of September, 1997.
FIREMAN'S FUND INSURANCE COMPANY
By /s/ Illegible
____________________________________________________
Vice-President
<PAGE>
STATE OF CALIFORNIA )
) ss.
COUNTY OF MARIN )
On this 23rd day of September, 1997, before me personally came M. A. Mallonee,
to me known, who, being by me duly sworn, did depose and say: that he is
Vice-President of FIREMAN'S FUND INSURANCE COMPANY, the Corporation described in
and which executed the above instrument; that he knows the seal of said
Corporation; that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
Corporation and that he signed his name thereto by like order.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal,
the day and year herein first above written.
/s/ Illegible
______________________________________________
Notary Public
CERTIFICATE
STATE OF CALIFORNIA )
) ss.
COUNTY OF MARIN )
I, the undersigned, Resident Assistant Secretary of FIREMAN'S FUND INSURANCE
COMPANY, a CALIFORNIA Corporation, DO HEREBY CERTIFY that the foregoing and
attached POWER OF ATTORNEY remains in full force and has not been revoked; and
furthermore that Article VII, Sections 45 and 46 of the By-laws of the
Corporation, and the Resolution of the Board of Directors; set forth in the
Power of Attorney, are now in force.
Signed and sealed at the County of Marin. Dated the 13th day of April, 1998.
/s/ Illegible
________________________________________________
Resident Assistant Secretary
EXHIBIT 10.23
LABOR & MATERIAL PAYMENT BOND
THIS BOND IS ISSUED SIMULTANEOUSLY WITH PERFORMANCE BOND IN FAVOR OF THE
OWNER CONDITIONED ON THE FULL AND FAITHFUL PERFORMANCE OF THE CONTRACT
KNOW ALL MEN BY THESE PRESENTS:
That TDI-HALTER, L.P.
(Here insert full name and address or legal title of Contractor)
1601 SOUTH CHILDERS ROAD, ORANGE, TEXAS 77631
as Principal, hereinafter called Principal, and FIREMAN'S FUND INSURANCE
COMPANY 777 SAN MARIN DR., NOVATO, CA 94998
(Here insert full name and address or legal title of Surety)
as Surety, hereinafter called Surety, are held and firmly bound unto
PETRODRILL CONSTRUCTION, INC.
SUITE 205, SAFFREY SQUARE, P.O. BOX N8188 NASSAU, BAHAMAS
(Here insert full name and address or legal title of Owner)
as Obligee, hereinafter called Owner, for the use and benefit of claimants as
hereinbelow defined, in the amount of Eighty Four Million And NO/100
US DOLLARS ($84,000,000.00),
(Here insert a sum equal to at least one-half of the contract price)
for the payment whereof Principal and Surety bind themselves, their heirs,
executors, administrators, successors and assigns, jointly and severally, firmly
by these presents.
WHEREAS, Principal has by written agreement dated APRIL 9, 1998
entered into a contract with Owner for ONE (1) FULLY OPERATIONAL AND COMPLETE
SELF-PROPELLED DYNAMIC POSITIONED SEMI-SUBMERSIBLE DRILLING VESSEL -
HULL NUMBER 1829
in accordance with drawings and specifications prepared by PETRODRILL
CONSTRUCTION, INC.
(Here insert full name and address or legal title of Architect)
which contract is by reference made a part hereof, and is hereinafter referred
to as the Contract.
NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION is such that, if Principal
shall promptly make payment to all claimants as hereinafter defined, for all
labor and material used or reasonably required for use in the performance of the
Contract, then this obligation shall be void; otherwise it shall remain in full
force and effect, subject, however, to the following conditions:
1. A claimant is defined as one having a direct contract with the Principal
or with a Subcontractor of the Principal for labor, material, or both, used or
reasonably required for use in the performance of the Contract, labor and
material being construed to include that part of water, gas, power, light, heat,
oil, gasoline, telephone service or rental of equipment directly applicable to
the Contract.
2. The above named Principal and Surety hereby jointly and severally agree
with the Owner that every claimant as herein defined, who has not been paid in
full before the expiration of a period of ninety (90) days after the date on
which the last of such claimant's work or labor was done or performed, or
materials were furnished by such claimant, may sue on this bond for the use of
such claimant, prosecute the suit to final judgment for such sum or sums as may
be justly due claimant, and have execution thereon. The Owner shall not be
liable for the payment of any costs or expenses of any such suit.
3. No suit or action shall be commenced hereunder by any claimant:
a) Unless claimant, other than one having a direct contract with the
Principal, shall have given written notice to any two of the following: The
Principal, the Owner, or the Surety above named, within ninety (90) days after
such claimant did or performed the last of the work or labor, or furnished the
last of the materials for which said claim is made, stating with substantial
accuracy the amount claimed and the name of the party to whom the materials were
furnished, or for whom the work or labor was done or performed. Such notice
shall be served by mailing the same by registered mail or certified mail,
postage prepaid, in an envelope addressed to the Principal, Owner or Surety, at
any place where an office is regularly maintained for the transaction of
business, or served in any manner in which legal process may be served in the
state in which the aforesaid project is located, save that such service need not
be made by a public officer.
b) After the expiration of one (1) year following the date on which Principal
ceased Work on said Contract, it being understood, however, that if any
limitation embodied in this bond is prohibited by any law controlling the
construction hereof such limitation shall be deemed to be amended so as to be
equal to the minimum period of limitation permitted by such law.
(c) Other than in a state court of competent jurisdiction in and for the
county or other political subdivision of the state in which the Project, or any
part thereof, is situated, or in the United States District Court for the
district in which the Project, or any part thereof, is situated and not
elsewhere.
4. The amount of this bond shall be reduced by and to the extent of any
payment or payments made in good faith hereunder, inclusive of the payment by
Surety of mechanics' liens which may be filed of record against said
improvement, whether or not claim for the amount of such lien be presented under
and against this bond.
Signed and sealed this 13TH day of APRIL A.D. 1998
TDI HALTER, L.P.
______________________________________
(Principal) (Seal)
/s/ Illegible
___________________________________
(Witness) By: /s/ Illegible
__________________________________
(Title)
FIREMAN'S FUND INSURANCE COMPANY
/s/ Illegible ______________________________________
__________________________________ (Surety) (Seal)
By: /s/ Illegible
__________________________________
Tomi J. Braun Attorney-in-Fact
<PAGE>
GENERAL
POWER OF
ATTORNEY FIREMAN'S FUND INSURANCE COMPANY
KNOW ALL MEN BY THESE PRESENTS: That FIREMAN'S FUND INSURANCE COMPANY, a
Corporation duly organized and existing under the laws of the State of
California, and having its principal office in the County of Marin, State of
California, has made, constituted and appointed, and does by these presents
make, constitute and appoint JERRY P. ROSE, TOMI J. BRAUN, DON E. CORNELL, L.
RAY PITTS, JR., ROBBI MORALES, jointly or severally
DALLAS, TX
its true and lawful Attorney(s)-in-Fact, with full power and authority hereby
conferred in its name, place and stead, to execute, seal, acknowledge and
deliver any and all bonds, undertaking, recognizances or other written
obligations in the nature thereof------------------------
and to bind the Corporation thereby as fully and to the same extent as if such
bonds were signed by the President, sealed with the corporate seal of the
Corporation and duly attested by its Secretary, hereby ratifying and confirming
al that the said Attorney(s)-in-Fact may do in the premises.
This power of attorney is granted pursuant to Article VII, Sections 45 and 46 of
By-laws of FIREMAN'S FUND INSURANCE COMPANY now in full force and effect.
"ARTICLE VII. APPOINTMENT AND AUTHORITY OF RESIDENT SECRETARIES,
ATTORNEY-IN-FACT AND AGENTS TO ACCEPT AND MAKE APPEARANCES.
SECTION 45. APPOINTMENT. THE CHAIRMAN OF THE BOARD OF DIRECTORS, THE
PRESENT, ANY VICE-PRESIDENT OR ANY OTHER PERSON AUTHORIZED BY THE BOARD OF
DIRECTORS, THE CHAIRMAN OF THE BOARD OF DIRECTORS, THE PRESIDENT OR ANY
VICE-PRESIDENT MAY, FROM TIME TO TIME, APPOINT RESIDENT ASSISTANT SECRETARIES
AND ATTORNEYS-IN-FACT TO REPRESENT AND ACT FOR AND ON BEHALF OF THE CORPORATION
AND AGENTS TO ACCEPT LEGAL PROCESS AND MAKE APPEARANCES FOR AN ON BEHALF OF THE
CORPORATION.
SECTION 46. AUTHORITY. THE AUTHORITY OF SUCH RESIDENT ASSISTANT
SECRETARIES, ATTORNEYS-IN-FACT AND AGENTS SHALL BE AS PRESCRIBED IN THE
INSTRUMENT EVIDENCING THEIR APPOINTMENT. ANY SUCH APPOINTMENT AND ALL AUTHORITY
GRANTED THEREBY MAY BE REVOKED AT ANY TIME BY THE BOARD OF DIRECTORS OR BY ANY
PERSON EMPOWERED TO MAKE SUCH APPOINTMENT."
This power of attorney is signed and sealed under and by the authority of the
following Resolution adopted by the Board of Directors of FIREMAN'S FUND
INSURANCE COMPANY at a meeting duly called and held on the 7th day of August
1984, and said Resolution has not been amended or repealed:
"RESOLVED, that the signature of any Vice-President, Assistant Secretary, and
Resident Assistant Secretary of this Corporation, and the seal of this
Corporation may be affixed or printed on any power of attorney, on any
revocation of any power of attorney, or on any certificate relating thereto, by
facsimile, and any power of attorney, any revocation of any power of attorney,
or certificate bearing such facsimile signature or facsimile seal shall be valid
and binding upon the Corporation."
IN WITNESS WHEREOF, FIREMAN'S FUND INSURANCE COMPANY has caused these presents
to be signed by its Vice-President, and its corporate seal to be hereunto
affixed this 23RD day of SEPTEMBER , 1997.
FIREMAN'S FUND INSURANCE COMPANY
By /s/ Illegible
_______________________________
Vice-President
STATE OF CALIFORNIA
COUNTY OF MARIN ss.
On this 23RD day of SEPTEMBER , 1997, before me personally came M.A. MALLONEE ,
to me known, who, being by me duly sworn, did depose and say: that he is
Vice-President of FIREMAN'S FUND INSURANCE COMPANY, the Corporation described in
and which executed the above instrument; that he knows the seal of said
Corporation; that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
Corporation and that he signed his name thereto by like order.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal,
the day and year herein first above written.
By /s/ Illegible
_______________________________
Notary Public
CERTIFICATE
STATE OF CALIFORNIA
COUNTY OF MARIN ss.
I, the undersigned, Resident Assistant Secretary of FIREMAN'S FUND INSURANCE
COMPANY, a CALIFORNIA Corporation, DO HEREBY CERTIFY that the foregoing and
attached POWER OF ATTORNEY remains in full force and has not been revoked; and
furthermore that Article VII, Sections 45 and 46 of the By-laws of the
Corporation, and the Resolution of the Board of Directors; set forth in the
Power of Attorney, are now in force.
Signed and sealed at the County of Marin. Date the 13TH day of APRIL , 1998.
By /s/ Illegible
_______________________________
Resident Assistant Secretary
EXHIBIT 10.24
PETRODRILL CONSTRUCTION, INC.
HULL 1829
PARENT GUARANTEE
In order to induce PETRODRILL, CONSTRUCTION, INC. (Purchaser) and/or any
affiliate or sister company of Petrodrill Construction, Inc. to enter into
that/those certain Vessel Construction Contract(s) (the "Contract") between
Purchaser and TDI-HALTER, L.P. ("Builder"), dated on or about April 9, 1998,
Halter Marine Group, Inc. a Delaware corporation ("Guarantor") represented
herein by its duly authorized Chief Operating Officer (COO), Daniel J. Mortimer,
does hereby unconditionally and irrevocably guarantee to Purchaser prompt and
faithful performance of, and compliance with, all obligations, covenants, terms,
conditions and undertakings of Builder contained in the Contract in accordance
with the respective terms thereof. Such guarantee is an absolute, unconditional,
present and continuing guarantee of performance and compliance.
IN WITNESS WHEREOF, Guarantor has executed this Parent Guarantee as of this
15th day of April, 1998.
HALTER MARINE GROUP, INC.
By: /s/ DANIEL J. MORTIMER
Daniel J. Mortimer
Chief Operating Officer
EXHIBIT 10.25
TDI-HALTER/PETRODRILL CONTRACT
HULL NO. 1828
CONTRACT
FOR CONSTRUCTION OF A
DYNAMIC POSITIONED SEMI-SUBMERSIBLE
DRILLING VESSEL
BETWEEN
TDI-HALTER, L.P.
AND
PETRODRILL CONSTRUCTION, INC.
HULL NUMBER 1828
<PAGE>
INDEX
PAGE
DEFINITIONS...........................................................5
1. PURPOSE OF THIS CONTRACT..............................................6
2. DESIGN: PRINCIPAL DIMENSIONS AND CHARACTERISTICS: CLASSIFICATION:
MANDATORY REGULATIONS: REGISTRATION...................................7
3. CONTRACT PRICE........................................................9
4. PAYMENT SCHEDULE: PERFORMANCE BOND/PARENT GUARANTEE: PAYMENT FOR
MODIFICATIONS AND OTHER ITEMS: PAYMENT FOR FUELS ETC AND LIQUIDATED
DAMAGES: PAYMENT PROCEDURES...........................................9
5. APPROVAL OF PLANS: SUBCONTRACTING: MAKER'S LIST: NOMINATED
SUBCONTRACTORS: ASSIGNMENT OF EXISTING SUBCONTRACTS: OBLIGATIONS
UNAFFECTED ..........................................................12
6. LIGHTSHIP WEIGHT.....................................................14
7. MODIFICATIONS: PURCHASER'S MODIFICATIONS: STATUTORY MODIFICATIONS:
PRICING OF MODIFICATIONS: SUBSTITUTION OF MATERIALS..................15
8. INSPECTION: AUTHORISED REPRESENTATIVES: QUALITY ASSURANCE SYSTEM
AUDITS: INDEPENDENT CONTRACTOR, INDEMNITY AND LIABILITY PROVISIONS...18
9. PLANNED PROGRAMME, PROGRESS CONTROL AND REPORTING....................22
10. TITLE................................................................23
11. RISK AND INSURANCE...................................................24
12. LOSS OR DAMAGE TO THE VESSEL.........................................25
13. SEA TRIALS: TECHNICAL ACCEPTANCE.....................................25
14. DELIVERY OF THE VESSEL: DOCUMENTS TO BE PROVIDED TO THE PURCHASER:
REMOVAL OF THE VESSEL................................................28
15. EXTENSION OF TIME FOR DELIVERY: PERMISSIBLE DELAY:
CAUSES OF DELAY: NOTICES.............................................29
16. DELAY IN DELIVERY: LIQUIDATED DAMAGES: TERMINATION FOR DELAY
IN DELIVERY..........................................................31
17. DEFECTS AND BUILDER'S GUARANTEE: WARRANTY: GUARANTEE ENGINEER:
ASSIGNMENT OF BUILDER'S GUARANTEE....................................32
18. DEFAULT BY THE PURCHASER: EVENTS OF PURCHASER'S DEFAULT: TERMINATION
BY THE BUILDER.......................................................35
19. DEFAULT BY THE BUILDER: EVENTS OF BUILDER'S DEFAULT: RECISSION BY THE
PURCHASER............................................................36
20. PATENT INDEMNITY: PATENT NUMBERS AND TRADEMARKS: HOLD HARMLESS, THE
PURCHASER: HOLD HARMLESS, THE BUILDER: DESIGNS AND PROPERTY OF THE
PURCHASER............................................................38
21. OWNER FURNISHED EQUIPMENT: DELIVERY OF THE OWNER FURNISHED EQUIPMENT:
RESPONSIBILITY OF THE BUILDER........................................39
22. TAXES AND DUTIES.....................................................40
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23. ASSIGNMENT...........................................................41
24. PRIORITY OF DOCUMENTS................................................41
25. NOTICES..............................................................41
26. RECORDS AND AUDITS...................................................42
27. LAW..................................................................42
28. DISPUTES.............................................................43
29. MISCELLANEOUS........................................................43
30. SPARE PARTS..........................................................44
31. SAFETY AND HEALTH STANDARDS..........................................44
32. EFFECTIVENESS........................................................45
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APPENDICES
APPENDIX I LIST OF PRINCIPAL DRAWINGS AND OTHER CONTRACT DOCUMENTS
APPENDIX II PLANNED PROGRAMME
APPENDIX IIA OWNER FURNISHED EQUIPMENT
APPENDIX III FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
APPENDIX IV FORM OF PERFORMANCE BOND
APPENDIX V FORM OF STAGE CERTIFICATE
APPENDIX VI SCHEDULE OF LABOUR COSTS FOR MODIFICATIONS
APPENDIX VII LIST OF CERTIFICATES TO BE SUPPLIED ON DELIVERY OF THE VESSEL
APPENDIX VIII LIST OF BASIC DESIGN DRAWINGS
APPENDIX IX FORM OF PARENT COMPANY GUARANTEE
4
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CONTRACT
FOR CONSTRUCTION AND SALE OF A DYNAMIC POSITIONED
SEMI-SUBMERSIBLE DRILLING VESSEL
This CONTRACT made this 9th day of April, 1998, by and between:-
TDI-Halter, L.P. a limited partnership organised under the laws of the State of
Louisiana (hereinafter called "Builder"), having its principal office at 1601
South Childers Road, Orange, Texas 77631,
and
Petrodrill Construction, Inc. a corporation organised under the laws of Bahamas
(hereinafter called "Purchaser"), having its principal office at Suite 205,
Saffrey Square, P.O. Box N8188, Nassau, Bahamas.
WITNESSETH THAT THE PARTIES HAVE AGREED AS FOLLOWS:-
DEFINITIONS
In this Contract the following expressions shall have the meanings hereby
assigned to them:-
"Basic Design" means the design drawings provided by the Purchaser listed
Section 99000 in Appendix VIII;
"Banking Day" means any day on which banks in each of London, New York and
Houston are open for the transaction of normal banking business;
"Classification Society" means Lloyds Register of Shipping;
"Classification Surveyor" shall mean any surveyor appointed by the
Classification Society to supervise the Vessel's construction;
"Contract Price" means the price stated in Clause 3.1;
"Contractual Delivery Date" means the date referred to in Clause 14.1 as
the same may from time to time be extended in accordance with the
provisions of this Contract;
"Contract Documents" means the Specifications, the Principal Drawings and
the other documents listed in Appendix I;
"Delivery" means the delivery by the Builder, and acceptance by the
Purchaser, of the Vessel pursuant to Clause 14.2;
"LIBOR" means the interest rate per annum which Citibank, London is
offering to prime banks in the London Interbank market for deposits in
United States Dollars for a three month period, determined at 11.00 a.m.
London time, as quoted on the date from which
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interest is accrued under this Contract. All interest hereunder shall be
calculated on the basis of a 360 day year and compounded quarterly and
shall be paid on the date when payment is made of the sum on which
interest is accrued:
"Makers' List" means the list of contractors approved by the Purchaser and
set out in Appendix X hereto;
"Mandatory Regulations" has the meaning assigned to it in Clause 2.7;
"Materials" means all materials and supplies, including, without
limitation, all machinery, equipment, outfittings and spare parts (but
excluding the Owner Furnished Equipment), intended for the Vessel's
construction to the extent that the same have been appropriated to, or
incorporated in, the Vessel;
"Planned Programme" means the programme for performance of this Contract
by the Builder detailed in Appendix II hereto:
"Plans" means those drawings, documents and specifications which are
required under this Contract and the Specification (Section 99010) to be
submitted to the Purchaser for approval;
"Specifications" means:-
(a) Specification no 95019 initialled by or on behalf of the
Purchaser and the Builder on April 1st, 1998; and
(b) any additions or amendments thereto hereafter agreed between
the parties;
"Stage Certificate" means a certificate in the form set out in Appendix V;
"Statutory Modifications" means modifications applicable to the Vessel as
a result of changes to any of (i) the rules, regulations and requirements
of the Classification Society or (ii) the Mandatory Regulations;
"Working Day" means any day (other than Saturdays or Sundays) on which
work is normally carried out at the Shipyard.
Further terms used in this Contract are defined hereinafter.
1. PURPOSE OF THIS CONTRACT
1.1. Upon the terms and conditions set out in this Contract, the Builder, as an
independent contractor, undertakes to engineer, construct, build, launch, equip,
complete, and test at various of its shipyards at located on the U.S. Gulf
Coast, exact locations to be determined later (hereinafter called the
"Shipyard") and deliver to Purchaser or the Purchaser's nominee, as defined in
Clause 23 below, for the Contract Price referred to in Clause 2 below, one (1)
fully operational and complete self-propelled Dynamic Positioned
Semi-Submersible Drilling Vessel
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(hereinafter called the "Vessel") more fully described in Clause 2 below.
Subject to the performance of the Builder's obligations hereunder, the Purchaser
expressly agrees to take delivery of the Vessel when duly completed and to pay
Builder all amounts due Builder.
1.2. References herein to the Vessel shall, except where otherwise expressly
provided, be deemed to include all Materials.
2. DESIGN: PRINCIPAL DIMENSIONS AND CHARACTERISTICS: CLASSIFICATION:
MANDATORY REGULATIONS: REGISTRATION
2.1. The Vessel, which is to be assigned the Builder's Hull No 1828, shall be
constructed and completed in all respects in accordance with the Specifications.
To the extent not defined in the Specifications, the Vessel's construction is to
meet good offshore construction standards and practices. At the time of Delivery
hereunder, the Vessel, which shall conform strictly with the terms and
conditions of this Contract and the Specification and shall be delivered safely
afloat.
DESIGN
2.2. The basic elements of the Vessel's design (the "Basic Design") will be
delivered by the Purchaser to the Builder. It is expressly understood that the
Purchaser shall be solely responsible for the suitability of the vessel design
supplied by it and for any errors, omissions and inconsistencies in the Basic
Design. If the Purchaser shall require the Builder to modify the Basic Design,
the work required to do so shall constitute an Purchaser's Modification for the
purposes of Clause 7 of this Contract.
2.3. The Builder shall develop all required detailed engineering from the
delivered Basic Design. The Builder shall accept responsibility for its own work
of developing the detailed working drawings from the Basic Design and all other
engineering it shall perform in connection with this Contract. If the Builder
considers during such detailed engineering that any aspect of the Basic Design
might prevent the Vessel when constructed from complying with the requirements
of Clause 2, it will inform the Purchaser accordingly and the Purchaser may
either procure the modification of the Basic Design to remedy this deficiency or
may require the Builder to modify the Basic Design to remedy this deficiency.
PRINCIPAL DIMENSIONS AND CHARACTERISTICS
2.4. The Vessel shall have the dimensions and characteristics stated in the
Specifications.
CLASSIFICATION
2.5. The Vessel shall be constructed according to the rules and regulations of
the Classification Society current at the date of execution of this Contract,
incorporating all additions and amendments thereof applicable to the Vessel in
force or published, so as to achieve on Delivery the following notation:-
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Unrestricted Service OU +100A1, +LMC, UMS, DP(AAA), PC, DRILL, IWS
with the description notation
semi-submersible, self propelled drilling vessel
Provided that the Purchaser shall not be entitled to refuse delivery where such
recommendations etc. are of such a minor nature as not to adversely affect the
operation of the Vessel. In any event, such recommendations etc. shall be
remedied by the Builder within 90 days of Delivery or such other period as the
parties may mutually agree and Purchaser shall be entitled to retain $250,000
pending such rectification.
2.6. Decisions of the Classification Society as to whether or not the Vessel
complies with its rules, regulations and requirements shall be final and shall
bind both parties to this Contract.
MANDATORY REGULATIONS
2.7. The Vessel shall also comply with (i) all requirements of the regulatory
bodies listed in the Specifications and (ii) the following rules, regulations
and requirements, in each case current at the date of execution of this Contract
(i) and (ii) being known herein jointly as the "Mandatory Regulations"):-
a. IMO, Resolution A 649 (16) adopted on 19 October 1989, Code for the
Construction and Equipment of Mobile Offshore Drilling Units.
b. International Convention for the Safety of Life at Sea SOLAS 1974,
protocols of 1978, 198 1, 1983 and all Amendments in force.
c. International Convention of Load Lines, 1966 with resolutions A 231 (VII)
and A 320 (IX).
d. International Telecommunication Convention and Radio Regulation 1973, 1976
and 1982 and latest GMDSS Rules for radio communications.
e. International Convention for Tonnage Measurement 1967/1969.
f. Suez Canal Tonnage Regulations.
g. International Convention for the Prevention of Pollution from Ships
(MARPOL) 1974/1978, Consolidation Edition, IMO, 1991, including 1992
amendments to Annex 1.
h. International Regulations for Preventing Collision at Sea, 1972 including
amendments.
i. International Labour Organisation (ILO) Convention No. 92 and No. 133 for
crew accommodation.
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j. International Electronical Commission (IEC), Electrical Installation in
Ship Publication No. 92 or IEEE 45 Subject to the Purchaser's prior
approval, such approval not to be unreasonably withheld.
k. API specifications as applicable.
REGISTRATION
2.8. The Vessel shall upon Delivery fly the Netherland Antilles flag and be
registered in the Netherland Antilles Register of Shipping. Registration of the
Vessel as aforesaid shall be effected by the Purchaser and all costs and
expenses thereof shall be for the Purchaser's account.
3. CONTRACT PRICE
3.1. In consideration of the performance by the Builder of all its obligations
under this Contract the Purchaser shall pay to the Builder the price of
Eighty-four Million United State Dollars (US $ 84,000,000), (the "Contract
Price"), which shall include the cost of installation of the Owner Furnished
Equipment.
3.2. The Contract Price, which is exclusive of the cost of the Owner Furnished
Equipment, shall be a fixed price subject to upward or downward adjustment only
in accordance with the provisions of Clause 7 hereof. It includes:-
a. the cost of the Vessel completed in accordance with the requirements of
this Contract and the Specifications;
b. the cost of all tests and trials of the Vessel to be performed by the
Builder;
c. the cost of procuring the classification of the Vessel and of obtaining
all certificates and documents (save for those in respect of the Owner
Furnished Equipment), which are required to be delivered pursuant to this
Contract and the Specifications; and
d. all other costs and expenses of the Builder as provided for herein or
otherwise incurred by the Builder unless expressly provided herein as
being for the Purchaser's account.
4. PAYMENT SCHEDULE
4.1. The Purchaser shall pay the Contract Price to the Builder in ten (10)
instalments as follows:-
FIRST INSTALMENT:
Ten per cent ( 10 %) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) shall be paid within three Banking Days
of the Execution Date.
SECOND INSTALMENT:
Ten per cent (10 %) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) shall be paid within three Banking Days
from receipt by the Purchaser
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<PAGE>
of a telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor), certifying
that Builder has placed the orders for the major equipment, herein defined as
the Main Engines, the Thrusters, and the Electrical Integration Subcontract.
THIRD INSTALMENT:
Ten per cent (10 %) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) shall be paid within three Banking Days
from receipt by the Purchaser of a telefax notice from the Builder attaching a
Stage Certificate in the form of the draft attached as Appendix V, countersigned
by an Authorised Representative (or, in default thereof, the Classification
Surveyor), certifying that Start of Fabrication has taken place.
FOURTH INSTALMENT:
Fifteen per cent ( 15 %) of the Contract Price, being Twelve Million Six Hundred
Thousand U.S. Dollars, (US$ 12,600,000) shall be paid within three Banking Days
from receipt by the Purchaser of a telefax notice from the Builder attaching a
Stage Certificate in the form of the draft attached as Appendix V, countersigned
by an Authorised Representative (or, in default thereof, the Classification
Surveyor), certifying that the keel laying for the pontoons has taken place.
FIFTH INSTALMENT:
Ten per cent ( 10 %) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) within three Banking Days from receipt by
the Purchaser of a telefax notice from the Builder attaching a Stage Certificate
in the form of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor), certifying
that the Pontoons of the Vessel have successfully been launched.
SIXTH INSTALMENT:
Five per cent (5 %) of the Contract Price, being Four Million Two Hundred
Thousand U.S. Dollars, (US$ 4,200,000) within three Banking Days from receipt
by the Purchaser of a telefax notice from the Builder attaching a Stage
Certificate in the form of the draft attached as Appendix V, countersigned by an
Authorised Representative (or, in default thereof, the Classification Surveyor),
certifying that the Substructure has successfully been erected on the Deck Box.
SEVENTH INSTALMENT:
Five per cent ( 5 %) of the Contract Price, being Four Million Two Hundred
Thousand U.S. Dollars, (US$ 4,200,000) within three Banking Days from receipt by
the Purchaser of a telefax notice from the Builder attaching a Stage Certificate
in the form of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor), certifying
that the Pontoons have successfully been joined.
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EIGHTH INSTALMENT:
Ten per cent ( 10 %) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) within three Banking Days from receipt by
the Purchaser of a telefax notice from the Builder attaching a Stage Certificate
in the form of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor), certifying
that the Deck Box has been launched and successfully mated with the Pontoons and
Columns.
NINTH INSTALMENT:
Ten per cent ( 10 %) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) within three Banking Days from receipt by
the Purchaser of a telefax notice from the Builder attaching a Stage Certificate
in the form of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor), certifying
that the Main Engines have been started.
TENTH INSTALMENT:
Fifteen per cent (15 %) of the Contract Price, being Twelve Million Six Hundred
Thousand U.S. Dollars, (US$ 12,600,000) together with any increase or any
decrease of the Contract Price arising from the provisions of Clauses 6, and 16
below, shall be paid upon Delivery.
4.2. The Builder shall notify the Purchaser in writing ten Banking Days in
advance of the estimated dates of occurrence of each of the events before
Delivery referred to above, excluding the First Instalment. Not withstanding
anything to the contrary contained herein, or in Appendix V hereto, if Purchaser
fails to execute any Stage Certificate and such Stage Certificate has been
executed by the Classification Surveyor, then Purchaser shall be obligated to
pay such Instalment within three banking days of execution by the Classification
Surveyor. In addition, in no event shall the Second or Third Instalments be paid
prior to a date ninety (90) days from the Execution Date.
PERFORMANCE BOND/PARENT GUARANTEE
4.3. The Builder shall at its own expense supply to the Purchaser concurrently
with payment of the First Instalment of the Contract Price a Performance Bond,
for an amount equal to 100% of the Contract Price, in the form specified in
Appendix IV and given by.Fireman's Fund Insurance Company, California, USA. The
Builder shall also, at the same time, provide a form of Parent Guarantee from
its ultimate parent company substantially similar to that contained in Appendix
IX hereto.
PAYMENT FOR MODIFICATIONS AND OTHER ITEMS
4.4. Any sums due to either party under Clause 7 as a result of Purchaser's
Modifications and/or Statutory Modifications shall be payable upon builder
achieving certain milestones and in conjunction with the above payment schedule,
and shall be payable on or before the Delivery Date.
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PAYMENT FOR FUELS ETC AND LIQUIDATED DAMAGES
4.5. All amounts due to the Purchaser (i) under Clause 13.2 hereof and (ii) by
way of liquidated damages in respect of delay in Delivery under Clause 16 shall
be calculated and determined before Delivery and shall be paid on, and as a
condition of, Delivery.
PAYMENT PROCEDURES
4.6. Payment of sums due to the Builder in accordance with the provisions of
this Contract shall be made, by telex transfer to the Builder's account with
Hibernia National Bank, New Orleans, Louisiana, free of all transfer charges.
4.7. If the date on which any payment is due in accordance with the provisions
of this Contract does not fall on a Banking Day, payment shall be made on the
immediately succeeding Banking Day.
5. APPROVAL OF PLANS: SUBCONTRACTING
APPROVAL OF PLANS
5.1. In respect of all Plans required for the completion of the works envisaged
by this Contract, the same shall be submitted to the Purchaser in four copies as
soon as possible following their production. The Purchaser shall, within ten
(10) Working Days after receipt thereof, return to the Builder one copy of such
Plans with the Purchaser's approval or the Purchaser's remarks and amendments
(if any) written thereon.
5.2. Should the Builder elect to enter into a subcontract to purchase the detail
engineering with a Shipyard also contracted with the Purchaser who is
constructing a vessel of the same design and in the event that Purchaser elects
to remark or comment previously approved drawings, such remarks or amendments
shall be dealt with under the modification procedure within the meaning of
clause 7 hereof.
5.3. In the event that the Purchaser shall fail to return the Plans to the
Builder within the time limit as hereinabove provided, such Plans shall be
deemed to have been approved without comment.
5.4. The Builder shall take due note of the Purchaser's remarks and amendments
(if any) on Plans submitted pursuant to this Clause and, if such remarks or
amendments are not of such a nature or extent as to constitute a modification
within the meaning of Clause 7 hereof, then the Builder shall commence or
continue construction of the Vessel in accordance with the corrected or amended
Plans. If such remarks or amendments are not clearly specified or detailed, the
Builder shall in all cases seek clarification of the same from the Purchaser
before implementing the same.
5.5. Copies of all correspondence to and from the Classification Society and the
regulatory authorities referred to in the Specifications, together with all
Plans approved by the
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Classification Society, shall be furnished to the Purchaser by the Builder as
soon as practicable upon dispatch and receipt.
SUBCONTRACTING
5.6. Save as regards those works delegated to those Subcontractors defined in
the Makers' List, the Builder shall not, without the Purchaser's prior approval
in writing , which shall not be unreasonably with held, subcontract any part of
the works contemplated by this Contract which exceed in value US $ 100,000 or
its equivalent in local currency. Where such approval has been given, the
Builder shall nevertheless remain fully responsible for the performance of the
same as if it had personally undertaken such works.
MAKER'S LIST
5.7. The Builder shall select for the supply of each of the Materials listed in
the Makers' List the Vendor named therein in relation to the same. Where the
Makers' List provides for more than one Vendor to supply any element of the
Materials, the Builder shall with reasonable notice provide the Purchaser with a
copy of the Purchase Order to be issued to its intended choice of Subcontractor
before any subcontract is awarded. Such purchase order shall contain full
technical and commercial details. If thereafter, the Purchaser shall request the
Builder to order that element of the Materials from another Subcontractor named
in the Makers' List in relation thereto, then the Builder will take all
reasonable steps to comply with such request and the Purchaser shall reimburse
to the Builder any difference in price between that quoted by the Builder's
chosen Subcontractor and the Subcontractor chosen by the Purchaser.
NOMINATED SUBCONTRACTORS
5.8. ASSIGNMENT OF EXISTING SUBCONTRACTS
In relation to the following "long lead" items of Materials, (the cost of which
is included in the Contract Price) it is understood that the Purchaser has had
advanced negotiations with the following suppliers and the Builder will enter
into subcontracts for the following based on the references below:
- - --------------------------------------------------------------------------------
SUPPLIER NAME SUPPLIED ITEM REFERENCE
- - --------------------------------------------------------------------------------
Caterpillar Engine Generator Sets Fax transmission between
Caterpillar and Petrodrill on
the 11th and 29th January plus
6th February
- - --------------------------------------------------------------------------------
GEC Alsthom Electrical Integrator Offer No. P354-A0I
- - --------------------------------------------------------------------------------
5.9. The Purchaser has also entered into an agreement with LIPS Thrusters BV for
the supply of thrusters Ref Petrodrill PO No. 1.900l/Lips order No. T07387/94
for Dutch Guilders 6.2 Million per set delivered Europe.
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Concurrently with the receipt of the First Instalment, the benefit together with
the burden of all such existing contracts are to be assigned by the Purchaser to
the Builder, to the extent that it relates to only one shipset of equipment,
where upon the Materials to which they relate are to be treated as Builder's
supply. The Builder shall, upon assignment of each sub-contract, reimburse to
the Purchaser all of the instalments of the contract price paid by the latter in
respect thereof. It being understood that the cost of said thrusters is included
in the Contract Price.
OBLIGATIONS UNAFFECTED
Nothing in this Clause shall affect the other obligations of the Builder under
this Contract nor diminish the responsibility of the Builder in respect of the
Materials, detailed engineering or workmanship required hereunder.
6. LIGHTSHIP WEIGHT
6.1. The Builder shall meet the target figures set out for Lightship Weight and
Centre of Gravity as specified in section 12000 page 3 of the Addendum to Rev 3
P-95019 of the Specification.
6.2. The lightship weight and centre of gravity of the Vessel shall be verified
by an Inclining Experiment prior to Delivery.
6.3. The results of the Inclining Experiment referred to in Clause 6.2 shall be
used to demonstrate a Lightship Weight in the conditions referred to in the
Specifications.
6.4. The Builder shall have no liability for the Owner Furnished Equipment
lightweight and centre of gravity as specified in section 12000 page 3 of the
Addendum to Rev 3 P-95019 of the specification. If the remaining lightship
weight so demonstrated is more than 9075 metric tons the Builder shall pay to
the Purchaser on Delivery as liquidated damages US$ 12,500 per full metric tons
of the increase above 9075 metric tonnes up to a maximum of 2.5 million U.S.
Dollars, (U.S$ 2,500,000).
6.5. The Purchaser shall have no obligation to accept delivery of the Vessel if
the ship lightweight as defined on page 3 of the addendum to the specification
is more than 9,275 metric tons. The Builder shall, however, in such context be
entitled to make modifications to the Vessel in order to either reduce the
weight or ensure that the Operational VLC is restored to its original level
provided that the same (i) are approved in advance by the Classification Society
and (ii) do not significantly affect the motion characteristics or operational
performance of the Vessel.
6.6. In the event that the lightship weight demonstrated as a result of Clause
6.2 is less than 8,875 tonnes the Purchaser shall pay the Builder $12,500 per
tonne for each complete tonne that the weight is below 8,875 tonnes up to a
maximum of 3.0 million U.S. Dollars, (U.S. $3,000,000).
6.7. The Builders shall also have the option of exercising its rights as per
clause 6.5 in the event that the liquidated damages due is in excess of $1.0
million. In this case the level of liquidated damages that is finally paid will
be reduced from the calculated level by the same
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percentage that the Builder is able to recover the VDL that has been lost as a
result of the changes in the lightship weight.
6.8. The parties hereto agree that the above liquidated damages shall ( subject
always to the provisions of clause 16.2 and 16.3 below ) be the sole and
exclusive remedy for damages being due as a result of increases in lightship
weight as set forth in this section.
6.9. The weights described in this Section 6 shall be adjusted for any
Modifications pursuant to Section 7.
7. MODIFICATIONS
PURCHASER'S MODIFICATIONS
7.1. The Purchaser may at any time after the date hereof submit a request in
writing to the Builder for changes (the "Purchaser's Modifications") to be made
to the Specifications and shall supply with such request sufficient particulars,
documentation and details to describe the change requested.
If the change so requested (the "Requested Change") can be reasonably undertaken
having regard to the stage of construction of the Vessel and the Planned
Programme, then the Builder shall be obliged to effect the same but shall be
entitled to any increase (and shall concede any decrease) in construction cost
or adjustment of the Contractual Delivery Date or any other provisions of this
Contract or the Specifications which the Requested Change reasonably
necessitates and which is agreed in writing by the Builder and the Purchaser.
The Builder shall notify the Purchaser in writing no later than ten (10) Working
Days after receipt of the written request for the Requested Change, of any such
adjustments which it will require.
On the basis of such notification the Purchaser shall no later than seven (7)
Working Days thereafter elect in writing to:
a. agree to the adjustments notified, in which case the Builder shall
construct the Vessel in accordance with the Requested Change;
b. contest the reasonableness of the adjustment notified, in which case
subclause 7.5 below shall apply; or
c. withdraw the Requested Change, in which case the Vessel shall be built
without reference to the same.
7.2. If within seven (7) Working Days after such notification the Purchaser has
made no election as aforesaid, then the adjustments notified by the Builder
shall be deemed to have been withdrawn by the Purchaser.
7.3. If, however, the Purchaser notifies the Builder in writing that the
Purchaser wishes to implement the Requested Change but disputes the
reasonableness of the adjustments, the matters shall be determined by an expert,
acting as such and not as an arbitrator, to be appointed
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by agreement between the parties. In the event that the parties are unable to
agree as to any appointment within thirty days of the Purchaser's written
notice, the appointment shall be made, upon the written application of either
party, by Det Norske Veritas . The decision of the said expert shall be final
and binding upon the parties and the costs of such expert in reaching his
decision shall be shared by the parties . Pending the decision of the aforesaid
expert, the Builder shall continue construction of the Vessel in accordance with
the Requested Change.
7.4. The agreed extra cost of any Requested Change or that decided by the expert
shall be paid by the Purchaser and any cost savings by the Builder as a result
of any Requested Change shall be paid to the Purchaser in accordance with Clause
4.4.
STATUTORY MODIFICATIONS
7.5. In the event of any Statutory Modifications arising the Builder shall
within seven Working Days of its becoming aware of the same, give notice to the
Purchaser of:-
a. the change required to be made to the Specifications (the "Required
Change");
b. any estimated extra or reduced cost of construction of the Vessel in
accordance with the Required Change together with any documentation
substantiating such cost which the Purchaser reasonably requires; and
c. the effect of the Required Change on any other provisions of this Contract
or the Specifications (including without limitation any change to the
Contractual Delivery Date).
7.6. The Purchaser may apply for a formal waiver of compliance with the Required
Change from the body having power to grant such waiver if the Purchaser
considers that the operation of the Vessel in its intended service would permit
such waiver, and shall notify the Builder as soon as possible after receiving
the decision of such body. In applying for any waiver, the Purchaser may call
upon the Builder for assistance and the Builder will provide reasonable
co-operation to the Purchaser in this respect.
7.7. If no waiver has been obtained and notified by the Purchaser to the Builder
within thirty Working Days of the receipt by the Purchaser of the notice
referred to above, the Builder shall build the Vessel in accordance with the
Required Change and the reasonable extra cost thereof, if any, shall be paid by
the Purchaser. Before the expiry of such time the Builder shall continue with
the construction of the Vessel in accordance with the Required Change but it
shall, in so doing, use its best endeavours to minimise any costs and loss of
time which might arise if a waiver were obtained.
7.8. If the Purchaser notifies the Builder in writing that the Purchaser
disputes the reasonableness of the extension or variation notified, the issue of
what is a reasonable extension or variation may be put, by the Purchaser or the
Builder, to an expert, acting as such and not as arbitrator, to be appointed by
agreement between the parties. In the event that the parties are unable to agree
as to an appointment within thirty days of the Purchaser's written notice as
aforesaid the appointment shall be made, upon the written application of either
party, by Det
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Norske Veritas. The decision of the expert shall be final and binding upon the
parties and the costs of such expert in reaching his decision shall be shared by
the parties. Pending the decision of the said expert, the Builder shall continue
construction of the Vessel in accordance with the Required Change.
PRICING OF MODIFICATIONS
7.9. In relation both to Purchaser's Modifications and Statutory Modifications
as aforesaid, the Builder's quotations in respect of any increase or decrease in
the Contract Price relating thereto shall, if requested in writing by the
Purchaser, be calculated both on "lump sum" and a "time and materials" basis. In
relation to quotations effected on a "time and materials" basis, the Builder
shall apply the following parameters:-
a. labour costs shall be charged at the agreed hourly rates set out in
Appendix VI;
b. the cost of all materials and equipment shall not exceed one hundred and
fifteen per cent (115%) of the cost to the Builder of the same (inclusive
of the costs of delivery of those materials and equipment to the
Shipyard); provided, however, that the Builder shall in all cases
endeavour to obtain the best price terms and trade discounts from
suppliers and subcontractors for the benefit of the Purchaser.
SUBSTITUTION OF MATERIALS
7.10. If at any time during the construction of the Vessel, any Materials are
not available (other than as the result of any neglect or omission on the part
of the Builder) then, subject to the prior approval in writing of the Purchaser
and, where necessary, of the Classification Society, the Builder may use or
install other Materials provided that such other Materials used or installed in
substitution for those specified are equivalent in quality to, or better than,
those specified, and which meet the requirements of the Classification Society
and the other requirements of this Contract.
8. INSPECTION
AUTHORISED REPRESENTATIVES
8.1. The Purchaser shall have the right to retain up to fifteen supervisors
("Authorised Representatives"), whose names and scope of authority shall be
notified in writing to the Builder, permanently at the Shipyard during all times
until Delivery. The Builder shall provide suitable office accommodation
(including adequate parking spaces), photocopying and canteen facilities where
available and the installation of telephones and telefax machines with
reasonable and safe access to work areas for, and permit and afford every
facility to, the Authorised Representatives from time to time and at all times
whilst work is proceeding to examine and inspect the work being done under this
Contract and every part thereof, together with the materials being used or about
to be used thereon, and to call for and witness such tests as may be required.
The costs of telecommunication facilities outside the local area in which the
Shipyard is located and the use of the canteen shall be for the Purchaser's
account. Purchaser shall designate one Representative authorised to make
contractual decisions and/or commitments on behalf of the
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Purchaser and likewise Builder shall designate one Representative authorised to
make contractual decisions and/or commitments on behalf of the Builder. Builder
and Purchaser shall notify each other of the name of their respective designated
Representative within thirty (30) days of the Execution Date. To the extent that
Builder or Purchaser elects to change its designated Representative, it shall
notify of such change, in writing, within five (5) Working Days of such change.
8.2. In addition to the Authorised Representatives, the Purchaser may from time
to time employ further personnel and contractors on site.
8.3. The Authorised Representatives shall have the right to attend all tests,
trials and inspections of the Vessel, her machinery and equipment, which shall
in each case be conducted within the Shipyard's normal working hours. The
Builder shall give notice to the Authorised Representatives in advance of the
date and place of such tests, trials and inspections in accordance with the
provisions of the Specifications. Failure of the Purchaser or its Authorised
Representatives to be present at such tests, trials and inspections after due
notice as above provided shall be deemed to be a waiver of the Purchaser's right
to be present. The Builder shall obtain for the Purchaser and the Authorised
representatives rights of access to the Subcontractors' premises, within normal
working hours, for the purpose of inspection of workmanship and Materials.
8.4. The Builder shall carry out in strict compliance with the Specifications
all the tests and trials of the Vessel and commissioning of the Materials which
are detailed therein so as to demonstrate that the same are in accordance with
the requirements of the Specifications and that all of her systems function in
their intended manner. Any Materials or workmanship found to be faulty or
inadequate shall be replaced or made good by the Builder prior to Delivery, at
its expense and without additional expense to the Purchaser, by suitable and
sound Materials and workmanship.
8.5. Nothing done or omitted to be done by or on behalf of the Purchaser under
this Clause shall be deemed to be a waiver of any objection to, or an acceptance
of, faulty or inadequate Materials or workmanship, or an admission that any
Materials or workmanship are of the standard required for due performance of
this Contract.
8.6. The Authorised Representatives shall be deemed to be employees of the
Purchaser and not the Builder. The Builder shall be under no liability to the
Authorised Representatives for death, personal injury or damage to their
property during the time when they are engaged in the duties contemplated under
this Contract either on the Vessel or within the premises of the Builder or its
Subcontractors.
QUALITY ASSURANCE SYSTEM AUDITS
8.7. Quality Assurance System Audits may be carried out by the Purchaser, and/or
regulatory authorities to verify compliance with the quality requirements
stipulated in this Contract and with regulatory requirements. Such requirements
shall include but not necessarily be limited to quality records, personnel and
procedure qualifications, material traceability
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records, inspection plans etc. The Builder is required to provide to the
Purchaser any documentation and administrative systems necessary to verify
compliance. Inspection and testing and Quality Assurance System Audits by the
Purchaser as described in this Clause or otherwise shall not imply any
diminution of the Builder's responsibilities and obligations under this
Contract.
INDEPENDENT CONTRACTOR, INDEMNITY AND LIABILITY PROVISIONS
8.8. It is understood that Builder is an independent contractor as to all Work
performed hereunder and that the detailed manner and method of doing the Work
and the areas of the Vessel where the Work is being performed shall be under the
exclusive control of the Builder. Purchaser shall have the right to supervise
the performance of the Work as to the results to be achieved and the compliance
of the Contractor with the terms of this Contract and the specifications.
a. Indemnification
a.1. Builder Indemnification
a.1.a. Builder Personnel and Property
Builder shall release, defend, indemnify, and hold Purchaser, its
parent or affiliated companies, and their respective officers, directors,
employees, contractors, subcontractors, invitees, licensees and agents, except
any of the foregoing which are part of the Builder Group (hereinafter called the
Purchaser Group) harmless from and against all liability, claims, losses,
damages, punitive damages, costs, expenses, attorney's fees, demands, suits and
causes of action of every kind and character (the "claims"), arising in favor of
any officer, director, or employee of the Builder or its sublessees, contractors
and subcontractors, their respective parent and affiliated companies, and their
respective officers, directors, employees, vendors, invitees, licensees and
agents (hereinafter collectively called the "Builder Group") on account of
personal injury or death or damage to property owned by any member of the
Builder Group, or, prior to Delivery, the Vessel and/or Owner Furnished
Equipment in Builder's care, custody and control, in any way incident to or in
connection with or arising out of or under this Contract, regardless of the
sole, joint or concurrent negligence, negligence per se, gross negligence,
statutory fault, or strict liability of any member of the Purchaser Group or the
unseaworthiness of the Vessel or any vessel owned operated or chartered by any
member of the Purchaser Group that may have caused or contributed to the claims,
to the extent such indemnity obligations are not prohibited by applicable law.
a.1.b. Third Parties
Prior to the Delivery of the Vessel, Builder shall release, defend,
indemnify, and hold the Purchaser Group harmless from and against all liability,
claims, losses, damages, punitive damages, costs, expenses, attorney's fees,
demands, suits and causes of action of every kind and character (the "claims"),
arising in favor of any Third Party on account of personal injury or death
and/or damage to Third Party property in any way incident to or in connection
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with or arising out of or under this Contract, resulting from the joint or
concurrent negligence, negligence per se, gross negligence, (collectively
"negligence") statutory fault, or strict liability of any member of the Builder
Group or the unseaworthiness of the Vessel or any vessel owned operated or
chartered by any member of the Builder Group, to the extent such claims were
caused by the negligence or other legal liability of any member of the Builder
Group. As used herein, a Third Party is any person of entity not included in
either the Purchaser Group or the Builder Group.
a.1.c. Pollution
Notwithstanding anything to the contrary herein, Builder shall
release, defend, indemnify, and hold the Purchaser Group harmless from and
against all, claims, demands, suits, causes of action, damages, natural resource
damage assessments, response, clean up, containment or disposal expenses and
other liabilities, including but not limited to attorney's fees and the costs of
litigation or administrative proceedings but excluding any claim covered by a.
1. or a.2. above (the "Purchaser pollution claims"), arising from any spill,
discharge, escape, release of or exposure to any waste, rubbish, petroleum,
chemical or hazardous substance, whether solid, liquid or gas, originating from
any equipment, facility or property of the Builder Group and, prior to Delivery,
from the Vessel, or from handling, removal, transportation or disposal thereof,
except to the extent such claims may have resulted from the negligence of a
member of the Purchaser Group.
a.2. Purchaser Indemnification
a.2.a. Purchaser Personnel and Property
Purchaser shall release, defend, indemnify, and hold the Builder Group harmless
from and against all liability, claims, losses, damages, punitive damages,
costs, expenses, attorney's fees, demands, suits and causes of action of every
kind and character (the "claims"), arising in favor of any officer, director, or
employee of the Purchaser Group on account of personal injury or death or damage
to property owned by any member of the Purchaser Group except, prior to
Delivery, the Vessel and/or Owner Furnished Equipment in Builders care, custody
and control, in any way incident to or in connection with or arising out of or
under this Contract, regardless of the sole, joint or concurrent negligence,
negligence per se, gross negligence, (collectively "negligence") statutory
fault, or strict liability of any member of the Builder Group or the
unseaworthiness of the Vessel or any vessel owned operated or chartered by any
member of the Builder Group that may have caused or contributed to the claims,
to the extent such indemnity obligations are not prohibited by applicable law.
a.2.b. Third Parties
Purchaser shall release, defend, indemnify, and hold the Builder
Group harmless from and against all liability, claims, losses, damages, punitive
damages, costs, expenses, attorney's fees, demands, suits and causes of action
of every kind and character (the "claims"), arising in favor of any Third Party
on account of personal injury or death and/or damage to Third Party property in
any way incident to or in connection with or arising out of or under this
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Contract, resulting from the joint or concurrent negligence, negligence per se,
gross negligence, statutory fault, or strict liability of any member of the
Purchaser Group or the unseaworthiness of the Vessel or any vessel owned
operated or chartered by any member of the Purchaser Group, to the extent such
claims were caused by the negligence or other legal liability of any member of
the Purchaser Group. As used herein, a Third Party is any person of entity not
included in either the Purchaser Group or the Builder Group.
a.2.c. Pollution
Notwithstanding anything to the contrary herein, Purchaser shall release,
defend, indemnify, and hold the Builder Group harmless from and against all,
claims, demands, suits, causes of action, damages, natural resource damage
assessments, response, clean up, containment or disposal expenses and other
liabilities, including but not limited to attorney's fees and the costs of
litigation or administrative proceedings but excluding any claim covered by
a.2.a. or a.2.b. above (the "Builder pollution claims"), arising from any spill,
discharge, escape, release of or exposure to any waste, rubbish, petroleum,
chemical or hazardous substance, whether solid, liquid or gas, originating from
any equipment, facility or property of the Purchaser Group including, after
Delivery, from the Vessel or from handling, removal, transportation or disposal
thereof, except to the extent such claims may have resulted from the negligence
of a member of the Builder Group.
b. Builder shall indemnify Purchaser for loss of or damage to Purchaser's
property intended to be incorporated into or used in the Vessel to be
performed while in Builder's care, custody or control prior to
installation aboard the Vessel provided such loss or damage does not
result from the negligence of any member of the Purchaser Group.
c. Risk of loss of the Vessel shall rest with the Builder at all times prior
to acceptance of the Vessel by Purchaser.
d. In no event, except for the liquidated damages as provided in Sections 6
and 16 shall any member of the Purchaser Group, or the Builder Group be
liable to each other for any incidental, consequential or special damages
incurred by the other, including but not limited to, loss of profits, loss
of business opportunities, loss of earnings or downtime, arising directly
or indirectly out of or relating in any way to this Contract or any
activities or omissions or delays in connection herewith, whether arising
out of the negligence (in whole or in part), gross negligence or strict
liability of either Party or the unseaworthiness of the Vessel or
otherwise. The Purchaser Group and Builder Group hereby mutually release
each other from all such losses.
9. PLANNED PROGRAMME, PROGRESS CONTROL AND REPORTING
PLANNED PROGRAMME
9.1. The Vessel shall be constructed by the Builder in accordance with the
Planned Programme set out in Appendix II hereof. A detailed copy of this plan,
including sub level planning identifying critical paths, shall be made available
to the Purchaser and updated on a regular basis. The plan will define certain
stages of the construction process ("Milestones")
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which must be completed by the dates specified therein. The Planned Programme
will include a comprehensive statement of the dates on which the Owner Furnished
Equipment are required to be delivered to the Shipyard.
PROGRESS CONTROL AND REPORTING
9.2. At the commencement of the contract a "kick off " meeting shall be held
during which the major parameters by which performance of the Builder will be
measured are to be mutually agreed. These shall include but not necessarily be
limited to a detailed weight budget, a steel procurement and processing
schedule, an engineering schedule, outfitting targets, manning schedules etc .
Unless mutually agreed otherwise such meeting shall be held within 30 days of
contract signature.
9.3. During the course of the performance of this Contract the Builder shall
submit to the Purchaser on a fortnightly basis, commencing on the date falling
fourteen days after the kick off meeting and thereafter fortnightly
a. a status report on the Vessel's construction as compared with the Planned
Programme, including the critical path;
b. a report setting out the actual progress in performance of this Contract
during the previous month as compared with the Planned Programme. Such
report to identify progress against the agreed performance parameters
c. a report setting out the forecast lightship weight, identifying any
variances from the agreed weight budget and in the case of negative
variations including proposals for reducing the variance to within
acceptable levels
d. a list of Purchaser's Modifications and Statutory Modifications (if any)
agreed or resolved by an expert during the previous month, as the case may
be, including adjustments, if any, agreed or resolved by an expert, to the
Contract;
e. a report on the delivery of sub-contracted Materials during the previous
month (the precise nature of which report shall be agreed, from time to
time, between the Purchaser and the Builder).
9.4. Without prejudice to the Builder's obligations under this Contract, if the
construction of the Vessel should for any reason whatsoever be delayed beyond
the time-frame envisaged in the Planned Programme, the Builder shall immediately
notify the Purchaser and shall within seven Working Days thereof provide to the
Purchaser a schedule indicating, in so far as the delay which has occurred is
not Permissible Delay, the steps (including any appropriate increase in manpower
and material resources) the Builder intends to take to recover the time so lost.
The Builder and the Purchaser shall thereafter meet at the earliest opportunity
to discuss the schedule and the Builder's detailed plans for implementation of
the same.
9.5. The Builder shall take monthly progress photographs illustrating the
progress of the Vessel's construction up to and including trials and delivery.
The Builder shall also supply the
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Purchaser with sufficient number of photographs (size: approximately 18 x 24
cms) depicting the final stage of the Vessel as delivered: this set will be at
least 25 percent colour prints. One set of standard transparencies will be
supplied, free of charge to the Purchaser. Additional copies of photographs and
transparencies will be made available by Builder, at the Purchaser's request and
expense.
10. TITLE
10.1. To the extent Builder has been paid by the Purchaser, therefore the Vessel
and all Materials from time to time purchased by Builder for use in connection
with this Contract, whether unfinished or partly or wholly finished and whether
at the Shipyard or at the premises of the Builder's subcontractors shall become
and remain the absolute property of the Purchaser. The Purchaser shall be
entitled to mortgage the Vessel to the extent title to the Vessel has passed to
Purchaser as aforesaid in connection with the financing of its purchase of the
Vessel and the Builder will execute any reasonable and necessary documentation
required by the Purchaser to effect such mortgage. The Builder shall have no
authority or entitlement to create any lien, encumbrance or charge over the
Vessel, the Material or the Owner Furnished Equipment at any time except to the
extent said lien or encumbrance is created by applicable law.
10.2. In furtherance of the provisions of Clause 10. 1 above the Builder shall
(i) use all reasonable endeavours to procure that all subcontracts placed with
all suppliers and manufacturers of Materials contain provisions similar to the
above and (ii) ensure that all substantial items of Materials and Owner
Furnished Equipment shall be clearly marked with the notation "Hull 1828"
immediately upon their appropriation for use in connection with this Contract
and in no circumstances more than twenty-four hours following their delivery to
the Shipyard.
Title to the Owner Furnished Equipment shall at all times from the date hereof
vest in the Purchaser absolutely.
11. RISK AND INSURANCE
RISK
11.1. The Vessel and all Materials (including, from the time of their delivery
to the Shipyard, the Owner Furnished Equipment) shall remain at the risk of the
Builder until Delivery.
INSURANCE
11.2. The Builder under-takes to keep the Vessel and all Materials (including
the Owner Furnished Equipment) in its or its Subcontractors' custody fully
insured at all times and until Delivery at its own cost with first class
insurers approved by the Purchaser, such approval not to be unreasonably
withheld, in the amount of the higher of (1) the value of the Vessel as from
time to time constructed or (i) the instalments of the Contract Price for the
time being paid by the Purchaser to the Builder, (ii) the value of the Owner
Furnished Equipment delivered to the Shipyard or built into or installed in or
upon the Vessel.
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11.3. The policy or policies (the "Stipulated Insurances"), which shall be
subject to English law and jurisdiction, shall incorporate the following
clauses:-
a. the Institute of London Underwriters ("ILU") Clauses for Builder's Risks:
b. the ILU Strikes Clauses - Builder's Risks; and
c. (from the date of the Vessel's launching) the ILU War Clauses - Builder's
Risks.
11.4. The policies shall name the Purchaser and the Builder as joint loss payees
as their interest may appear but on terms that the Builder alone shall be
responsible for all premiums payable thereunder. The Builder shall furnish the
Purchaser promptly with certificates evidencing coverage and upon request copies
of the policies. The originals shall be made available to the Purchaser, its
employees or agents for inspection at Builder's corporate offices in Gulfport,
Mississippi at all reasonable times.
11.5. The policies taken out shall contain a provision to the effect that, in
the event of an actual, constructive, arranged or compromised total loss, such
insurance proceeds as the Purchaser is entitled to hereunder shall be payable to
the Purchaser as its interest may appear and such policies shall be so endorsed
as to enable the Purchaser by its brokers or agents or personally to collect
such proceeds pursuant to the provisions of this Clause. In addition, all such
policies shall include provision that they shall not be capable of cancellation
by the insurers without not less than thirty (30) days' prior written notice
being given to the Purchaser and that not less than ten (10) days' prior written
notice of non-renewal or lapse shall be given by the insurers to the Purchaser
before the same shall take effect.
12. LOSS OR DAMAGE TO THE VESSEL
12.1. Should the Vessel or any items insured pursuant to the provisions of
Clause 11 sustain loss or damage prior to Delivery and should such loss or
damage not make the Vessel a total loss, actual, constructive, arranged or
compromised, the Builder shall, at its own expense and with all due despatch,
make good such damage to the satisfaction of the Purchaser and (if applicable)
the Classification Surveyor, and any monies payable in respect of any insurance
effected under Clause 11 shall be payable to the Builder.
12.2. Should the Vessel sustain loss or damage prior to Delivery hereunder such
that it is either conceded by the insurers liable therefor, or determined by a
court of competent jurisdiction, that the Vessel has become a total loss,
actual, constructive, arranged or compromised, then the Builder shall not be
liable to repair the damage or replace the Vessel and insurance proceeds shall
be payable to Purchaser and Builder as their interest may appear. but, to the
extent that the Purchaser has not made recovery of such sums under the
Stipulated Insurances within sixty (60) Working Days of the total loss, the
Builder shall:-
a. refund promptly to the Purchaser in full the aggregate amount of
instalments of the Contract Price already paid by the Purchaser: and
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b. return to the Purchaser all Owner Furnished Equipment or refund to the
Purchaser a sum equivalent to the value of any of same which have been
lost or which cannot be removed in a sound condition from the Vessel.
12.3. When the conditions set out in sub-clause (2) above have been satisfied by
the Builder, the Purchaser shall instruct the insurers to pay to the Builder all
sums due and payable under the Stipulated Insurances in respect of the total
loss. Save as elsewhere herein specifically provided to the contrary, the
parties' obligations under this Contract shall thereupon cease and terminate.
13. TRIALS: TECHNICAL ACCEPTANCE
13.1. At least 120 days before the scheduled commencement of the same the
Builder shall submit to the Purchaser for approval comprehensive testing and
trials programmes covering the Full Scale Test and Trials (collectively the
"Trials") described in Chapter 03000 of the Specifications, including (i)
Workshop Tests, (ii) Quayside Trials (including the Inclining Test), and (iii)
Sea Trials (including trial runs and all other tests at sea).
13.2. The Trials shall be conducted at the risk and expense of the Builder
which shall provide and pay for the personnel necessary for the safe management
and navigation of the Vessel during the same. The Builder shall also provide and
pay for all necessary ballast and fresh water and shall meet all other costs
associated with the Trials. The fuels, lubricants and consumable stores required
for the Trials shall be specified, supplied and paid for by the Purchaser, who
shall upon Delivery be entitled to reimbursement from the Builder of the costs
of such fuels, lubricants and consumable stores as are consumed during the
Trials.
13.3. The Builder shall give the Purchaser not less than seven Working Days'
notice of the date and place of commencement of each of the Trials and
representatives of the Purchaser shall be afforded every opportunity to observe
and determine the performance of the Vessel during the same. Failure by the
Purchaser to attend any Trial following due notice shall be deemed to be a
waiver by the Purchaser of its rights of attendance in respect of such Trial.
SEA TRIALS
13.4. The Sea Trials shall be carried out following satisfactory conclusion of
all other Trials and after the Vessel's construction has been completed with
only minor items of work outstanding which are agreed by the Authorised
Representatives as suitable for completion after the Sea Trials but before
Delivery.
13.5. The Sea Trials shall have the objective of permitting the Builder to
demonstrate fulfilment of the quality and performance requirements for the
Vessel as set forth in the Specifications. The course to be followed during the
Sea Trials shall be determined by the Builder, but shall be in open waters off
the Gulf Coast of the United States. The Purchaser shall be allowed to maintain
a shadow crew and other necessary personnel on board the Vessel during the sea
trials to familiarise themselves with the Vessel and its operation.
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13.6. The safe management and navigation of the Vessel in transit to, during and
from the Sea Trials shall remain the sole responsibility of the Builder.
13.7. Should the weather conditions at the time scheduled for the Sea Trials be
such that they cannot be carried out properly, the Builder shall postpone them
or such part of them as necessary to the earliest possible time when suitable
weather conditions occur to ensure that all readings and results are obtained in
a manner satisfactory to the Purchaser. Any delay to the Sea Trials caused by
such unfavourable weather conditions, if the delay exceeds a total of seven (7)
days, shall operate to postpone the Contractual Delivery Date by the period of
delay involved and such delay shall be deemed to be Permissible Delay.
13.8. If during the Sea Trials any breakdown occurs which entails interruption
or irregular performance and the breakdown can be repaired by the normal means
available on board, this shall be done as soon as possible and the trial shall
be continued after repairs are completed. However, if the Vessel must return to
a port to enable the breakdown to be remedied, a further complete trial shall be
undertaken at the earliest opportunity.
13.9. On completion of the Sea Trials to the satisfaction of the agreed Trial
Procedure the Vessel shall be brought back to a berth in the Shipyard, or
elsewhere as may be agreed, for the inspection of the machinery required in the
Specifications, and during this period all defects or omissions found in the
Vessel shall be remedied and made good by the Builder to the reasonable
satisfaction of the Purchaser, and the machinery closed up by the Builder ready
for sea at its expense and without expense to the Purchaser.
TECHNICAL ACCEPTANCE
13.10. Within three (3) Working Days of completion of the Trials and the closing
up of machinery referred to in sub-clause 9 above, the Builder shall notify the
Purchaser in writing of the results of the Trials and shall, where the same is
appropriate, confirm to the Purchaser that the Vessel conforms with the
requirements of the Contract and Specifications. If the Purchaser is in
agreement with the Builder, the Purchaser shall, within three (3) Working Days
of receipt of the Builder's notice as aforesaid, advise the Builder in writing
of its Technical Acceptance of the Vessel.
13.11. If, however, in the view of the Purchaser the Vessel or any part thereof
does not conform to the requirements of this Contract and/or the Specifications,
the Purchaser shall so advise the Builder (again within seven (7) Working Days
of the receipt of the Builder's notice as aforesaid) and shall specify the
respects in which the Vessel fails to conform with the requirements of this
Contract and Specifications. The Builder shall thereupon take the necessary
steps to correct such non-conformities and, upon completion of such works, the
Builder shall advise the Purchaser who shall, in the reasonable exercise of its
discretion, be entitled to require the Builder to undertake further trials of
the Vessel; in such event the Builder shall give the Purchaser three Working
Days' notice of such further trials.
13.12. Upon satisfactory completion of such remedial works and/or trials, the
Purchaser shall, within four (4) Working Days after receipt of a further notice
from the Builder that the
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Vessel conforms with the requirements of the Contract and Specifications, notify
the Builder of its Technical Acceptance of the Vessel or the respects in which
the Vessel still fails to conform with the requirements of this Contract and the
Specifications. This process shall be repeated until the earlier of (a) the
Purchaser's Technical Acceptance of the Vessel or (b) the valid and proper
termination or rescission of this Contract by either the Purchaser or the
Builder.
13.13. If the Purchaser fails to notify the Builder in writing of its Technical
Acceptance or otherwise of the Vessel within the periods as provided above the
Purchaser shall be deemed to have accepted the Vessel.
13.14. The Purchaser's Technical Acceptance of the Vessel as above provided
shall preclude the Purchaser from refusing Delivery of the Vessel as hereinafter
provided, if the Builder complies with the procedural requirements for Delivery
of the Vessel as provided in Clause 14 hereof.
14. DELIVERY OF THE VESSEL
DELIVERY
14.1. The Vessel shall be delivered by the Builder to the Purchaser at the
Shipyard (or other place as may be agreed with unrestricted access to the open
sea) on 9th December, 1999 except that, in the event of Permissible Delay as
defined in Clause 15.4 hereof, the aforementioned date shall be postponed
accordingly. The aforementioned date, or such later date to which requirement to
deliver may be postponed, is herein called the "Contractual Delivery Date".
14.2. Delivery shall take place on a Working/Banking Day to be nominated by the
Builder following Technical Acceptance of the Vessel by the Purchaser and with
not less than five (5) Working Days' advance notice to the Purchaser. Delivery
shall be effected by the execution by the Parties of a Protocol of Delivery and
Acceptance in the form set out in Appendix II, acknowledging delivery by the
Builder and acceptance thereof by the Purchaser. The Builder shall give the
Purchaser at least sixty (60 ) days' (plus or minus seven (7) days) calendar
notice of the estimated date of Delivery.
14.3. The Builder guarantees that at the time of Delivery title to the Vessel
(to the extent not already transferred to Purchaser) and every part thereof
shall pass to the Purchaser free and clear of any and all liens, except liens
created by Purchaser, claims, mortgages or other encumbrances upon it and in
particular, but without limitation, that she shall be free of all burdens in the
nature of imposts, taxes or charges imposed by any liabilities arising from the
construction of the Vessel or from its operation on Trials or otherwise.
DOCUMENTS TO BE PROVIDED TO THE PURCHASER
14.4. The Builder shall provide to the Purchaser the following documents prior
to Delivery failing which the Purchaser may refuse to accept Delivery;-
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a. Records of inventory of the Vessel's equipment including spare gear and
the like as detailed in the Specifications;
b. Records of any and all fuels, lubricants, consumable stores and fresh
water supplied pursuant to this Contract by either the Builder or the
Purchaser together with such quantities of the same as remain on board at
Delivery;
c. All certificates (including Class and other regulatory certificates)
required to be furnished prior to or upon Delivery of the Vessel pursuant
to the Specifications; such certificates save as noted in clause 2.5 are
to be clean and free of all qualifications, reservations and
recommendations whatsoever.
d. Declaration of Warranty of the Builder in accordance with Clause 14.3
above;
e. The following technical documentation:-
e.1. Four (4) copies and one reproducible of all the "As Built" drawings
of the Vessel required for its operation and maintenance in
accordance with its design and purpose.
e.2. Four (4) complete documentation and instructions (Operation and
Maintenance) books covering builder supplied equipment
e.3. Four (4) sets of Operating Manuals and Instruction Books according
to MODU CODE 1989 with all the necessary data including sea
preparation
e.4. Four (4) copies of a complete maintenance guide including all
drawings.
e.5 One (1) copy of all the test and commissioning trials and results
which have been done prior to delivery.
e.6. Lightship weight, variable load and centre of gravity of lightship
weight calculations.
f. The certificates listed in Appendix VII, together with (i) Builder's
Certificate or (at the Purchaser's option) Bill of Sale in favour of the
Purchaser notarised and legalised to permit registration of the Vessel on
the Netherland Antilles Register of Shipping and (ii) any other document
relating to the condition and/or performance of the Vessel which the
Purchaser may reasonably require provided the same is requested no later
than seven Working Days prior to Delivery.
14.5. The documents listed in sub-clauses 14.4.e. 1-6 above are also to the
extent that is practical to be supplied as a diskette in a format to be agreed
between the Parties.
REMOVAL OF THE VESSEL
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14.6. Following Delivery of the Vessel, the Purchaser shall in seven (7) Working
Days remove her from the Shipyard. If the Purchaser fails to remove the Vessel
within this period, it shall pay to the Builder reasonable mooring charges
thereafter until removal.
15. EXTENSION OF TIME FOR DELIVERY: PERMISSIBLE DELAY
CAUSES OF DELAY
15.1. If at any time before the Contractual Delivery Date the construction of
the Vessel is delayed due to Acts of God, acts of princes or rulers, war or
other hostilities or preparations therefor, blockade, civil commotion or riots,
epidemics, floods, hurricanes, earthquakes, tidal waves, landslides, fires,
lightning, explosions, unusually severe inclement weather which stops production
at the yard and can be shown to be in excess of the a five year statistical
average, collisions or strandings, shortage of materials or equipment (other
than resulting from any act, omission or improvidence of the Builder or its
Subcontractors / Suppliers ), prolonged failure, shortage or restriction of
electric current, oil or gas or destruction of or damage to the Shipyard or
works of the Builder or its Subcontractors / Suppliers by any causes herein
described, the Contractual Delivery Date and any Milestones not then achieved
shall be postponed for the period of time during which construction of the
Vessel is directly and unavoidably delayed by the same.
15.2. Any periods of time by which the Contractual Delivery Date of the Vessel
and any Milestones not then achieved is properly and justifiably claimed by the
Builder to be extended by reason of matters falling within (a) subclause 1 above
or (b) Clauses 7.1-7.12, 13.7, 18.2 or 21.2 hereof shall be defined herein as
"Permissible Delay".
15.3. The Builder's entitlement to a postponement of the Contractual Delivery
Date and any Milestones not then achieved shall, however, be subject to:-
a. the delay in respect of which the Builder is claiming relief not being
within its reasonable control or contemplation at the date of signing of
this Contract nor caused or contributed to by its error, neglect, act or
omission or that of its agents, employees, suppliers or Subcontractors.
Provided, however that in respect of suppliers / subcontractors for i) the
"long lead" items identified in clause 5.12 above, together with ii) the
Builders requirement for minimum tolerance steel as identified in the
Specification and if applicable, iii) the detailed engineering
sub-contractor referred to in clause 5.2 above where the Builder can show
it exercised all due diligence in the placing and prosecuting of the
orders and the management of these suppliers / subcontractors, errors,
neglect, act or omission of such suppliers / subcontractors shall not
preclude the Builders entitlement to a Permissible Delay
b. the delay affecting the "critical path" of the Vessel's construction as at
the time of commencement of the event;
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c. since the occurrence of the event in respect of which relief is claimed,
the Builder having taken all reasonable steps open to it to mitigate the
effect of the event upon the Contractual Delivery Date and any Milestones
not then achieved; and
d. the Builder having duly given all the notices required under sub-clause
(3) below within the time-limits therein laid down.
NOTICES
15.4. Upon the occurrence of any of the events listed in sub-clause (1) above,
the Builder shall:-
a. within seven (7) Working Days of the date on which it became aware of the
event, give the Purchaser notice in writing of the occurrence of the
event;
b. as soon as possible thereafter, and in any event not more than seven (7)
Working Days after the giving of the said notice, submit to the Purchaser
a statement in writing, specifying as far as possible, with full
particulars, the nature and the cause of the event, the effect on the item
involved, the likely overall effect computed from the Planned Programme
upon the Contractual Delivery Date and any Milestones not then achieved
and the steps which are being taken by it to mitigate any delay which may
result from the event;
c. within seven (7) Working Days after the date on which it becomes aware
that the event is at an end, give the Purchaser notice in writing of the
date when the event ended;
d. within seven (7) Working Days of the date of the Builder's notice under
sub-paragraph (c), notify the Purchaser of the period of time by which it
claims the Contractual Delivery Date of the Vessel and any Milestones not
then achieved should be extended by reason of the event.
16. DELAY IN DELIVERY
LIQUIDATED DAMAGES
16.1. In the event that Delivery should be delayed beyond midnight local time on
the Contractual Delivery Date, and any permitted extension thereof, the Builder
shall, subject to the provisions of sub-clauses 4 and 5 of this Clause 15, pay
to the Purchaser by way of liquidated damages for loss of use of the Vessel the
amounts set out below:-
16.2. If the delivery of the Vessel is delayed, then, in such event, beginning
at twelve o'clock midnight on the Delivery Date, the Builder shall pay to the
Purchaser as agreed liquidated damages and not by way of penalty, the following
amounts:-
a. I - 30 days of delay US$ 10,000 per day
b. 31 - to actual delivery US$ 20,000 per day
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It being understood that in no event shall the Builder's obligation for such
liquidated damages exceed $1,000,000.-.
In this connection, the parties acknowledge that if the Vessel is not delivered
by the Delivery Date, as allowed for extension, Purchaser will suffer damages
from such later delivery and that Purchaser should be compensated for such
damages. The parties further acknowledge, however, that it is not possible to
accurately calculate such damages at this time and that therefore the parties
agree that the liquidated damages are a fair and reasonable forecast of
anticipated actual damages under the circumstances and will provide just
compensation for the harm that is caused to Purchaser as a result of any late
delivery. In the event of any such delays in delivery the said liquidated
damages shall be deducted from the amounts otherwise due to Builder at the time
of execution of the Protocol of Acceptance and Delivery. Parties hereto agree
that the above shall be the sole and exclusive remedy for damages due to the
late delivery save as set forth in section 16.3
TERMINATION FOR DELAY IN DELIVERY
16.3. Furthermore, if Delivery should not have occurred prior to the expiry of
one hundred thirty five (135) days from the Contractual Delivery Date (as
extended by Permissible Delays) the Builder shall be in default, in which case
Clause 19.2 shall apply.
17. DEFECTS AND BUILDER'S GUARANTEE
WARRANTY:
17.1. From the date of this Contract until the expiration of the Warranty Period
(subject to Purchaser's right to report any defect, claim or loss within 30 days
of the expiration of the Warranty Period pursuant to the terms of the following
paragraph), Builder warrants that all labor furnished by Builder hereunder shall
have been performed in a good and workmanlike manner. The provisions set forth
herein as to the liabilities of the Builder are to apply also to all labor and
workmanship furnished by any sub-contractor in Builder's performance of this
Contract.
Builder shall have no responsibility whatsoever with respect to any defect,
claim, or loss of the Vessel not reported in writing to Builder within three
hundred and sixty-five (365) days from the Delivery Date (as specifically
defined in Sections 14 and 15) (such 365 day period being hereinafter referred
to as the "Warranty Period"); provided, however, Purchaser may report to Builder
warranty claims arising during the final thirty (30) days of the Warranty Period
within thirty (30) days of the expiration of the Warranty Period.
The Warranty granted to Purchaser by Builder shall extend only to those claims
reported in writing to Builder within such Warranty Period or within thirty (30)
days thereafter (as set forth above). For purposes solely for this Section 17,
"Delivery Date" shall be defined as the earlier of the following: (1) fourteen
(14) days after date of the final invoice from Builder upon completion of the
Vessel, or (2) the date of actual delivery and acceptance of the Vessel. In the
event Purchaser notifies Builder of any claim covered under this Warranty,
Builder will make repairs and/or replacement at its option, at one of Builder's
yards without expense to Builder for
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transporting the Vessel, or any component thereof, to or from that yard;
provided, however, that if it is not practical to have the Vessel proceed to
such yard, Purchaser may, with prior written consent of Builder, have such
repairs and/or replacement made elsewhere, and, in such event, Builder shall
reimburse Purchaser a sum equivalent to (i) the amount Builder would have
expended, at its own yard at Builder's then prevailing rates, or (ii) the amount
actually expended by Purchaser, whichever is less. In no event shall Builder be
responsible for any sum in excess of the cost of the repairs and/or replacement
as specified herein, and Builder shall in no event be responsible for any claims
to property, persons, and/or punitive or consequential damages, including, but
not limited to claims for bodily injury, illness, disease, death, loss of
service, loss of society, maintenance, cure wages, and any other consequential
or punitive damages arising out of any breach of this Contract or faulty or
negligent performance thereof.
As to the installation of all third-party supplied components, materials or
equipment, if the manufacturer or supplier has a representative at the job site
during such installation, and if the installation is completed to the
satisfaction of such representative, with all requirements of such
representative having been satisfied by Builder, it shall be conclusively
presumed that such installation has been completed by Builder in accordance with
the manufacturer's recommendations, in a proper and satisfactory manner.
Builder does not warrant that any equipment or materials purchased by it from a
supplier or manufacturer for installation in the Vessel is free from
manufacturers' defects and deficiencies and Purchaser specifically releases
Builder from any such implied warranty of fitness or workmanship or freedom from
defects relating thereto. To the extent available, Builder agrees to transfer
and assign to Purchaser, without warranty of Builder with respect thereto, any
warranties relative to material, equipment and/or labor furnished by others
which warranties shall not be adversely affected by any limitation period set
forth herein. Builder agrees that Manufacturer's Warranty on major components,
including, but not limited to, main engines, gears, jacks, winches, generators,
pumps, etc., shall be a minimum of six (6) months after the Delivery Date of the
Vessel. Should Purchaser be required to enforce any such warranty, Builder will
cooperate with Purchaser's efforts, short of instituting legal action on
Purchaser's behalf and/or incurring other legal fees.
Nothing contained herein shall obligate Builder at any time to repair or replace
the Vessel, or any component part thereof, where such repair and/or replacement
is caused, in whole or in part, by normal wear or unusual handling, by the
negligent operation or maintenance of the Vessel, or its equipment or by abuse,
rough weather, accident, fire, by Purchaser or Purchaser's agents, employees or
representatives.
With respect to paint, Builder warrants that it will purchase paint of good
marine quality and that it will apply the paint in accordance with the
manufacturer's specifications, recommendations, and inspection, and Builder
makes no warranty, express or implied, with respect to the fitness of the paint
or the manufacturer's specifications and recommendations.
For any claim for damages to or loss of the Vessel, and/or damages to persons
and/or property (including, but not limited to claims, demands, or actions for
bodily injury, illness, disease, death, loss of service, loss of society,
maintenance and cure, wages or property) made as a result of any
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defect in the Vessel, or any component parts thereof, after the said Warranty
Period, Purchaser shall have no claim or actions whatsoever against Builder,
regardless of any negligence, tort, fault, strict liability or otherwise of
Builder, its employees or sub-contractors, and Purchaser hereby waives and
releases Builder and its employees and sub-contractors from and against any and
all liability and any and all damages resulting therefrom, including, but not
limited to, for personal injury, death, property damage, damage to and/or loss
of the Vessel, delay, demurrage, loss of profits, loss of use, or any other
consequential or punitive damages of any kind, whether such claim is based in
contract, redhibition, negligence, strict liability, or otherwise, arising out
of any defect and/or negligent design, the selection or choice of specifications
and/or materials and/or component parts, manufacture, construction, fabrication,
workmanship, labor and/or installation of equipment, materials and/or components
or from any unseaworthy condition or any other defective condition of the
Vessel, it being specifically understood and agreed that any such defects
reported and/or occurring after the Warranty Period and all damages, loss of
profits, demurrages, delay, losses of use or other consequential or punitive
damages of any kind whatsoever resulting therefrom, shall not be the
responsibility of Builder, but shall be borne exclusively by Purchaser.
"THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR THAT THE VESSELS,
MATERIAL OR SERVICES ARE FIT FOR ANY PARTICULAR PURPOSE OR USE, AND
SPECIFICALLY IN LIEU OF ALL INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL
DAMAGES".
17.2. This guarantee shall not extend to Owner Furnished Equipment or to any
damage caused by any defect therein not attributable to the Builder.
GUARANTEE ENGINEER
17.3. Where so requested by the Purchaser, the Builder shall appoint a suitably
qualified English-speaking Guarantee Engineer to serve on the Vessel as the
representative of the Builder for such portion of the Guarantee Period as the
Purchaser shall require; the Purchaser and its employees shall give the
Guarantee Engineer full co-operation in carrying out his duties as the
representative of the Builder on board the Vessel. In particular, the Purchaser
shall accord the Guarantee Engineer treatment and subsistence on board the
Vessel comparable to the Vessel's Chief Engineer (except that the Purchaser
shall provide him accommodation in a standard passenger cabin) at no cost to the
Builder.
17.4. The Purchaser shall pay the expenses of the Guarantee Engineer's
repatriation by air to the point of origin upon termination of his services on
the Vessel together with a daily rate of US$ 700 per day worked.. However, save
as aforesaid, the Purchaser shall be responsible for no other expenses in
connection with the Guarantee Engineer, who shall at all times be conclusively
deemed an employee of the Builder. The Builder shall indemnify and hold harmless
the Purchaser from and against personal injury, including death, of, or loss of
or damage to property of the Guarantee Engineer unless the same shall been
caused by the gross negligence of the Purchaser or any of its employees, agents
or sub-contractors. If the Purchaser has reason to be
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dissatisfied with the conduct or competence of the Guarantee Engineer, the
Builder, on receiving particulars of the complaint, shall promptly investigate
the matter and, if the complaint is found to be justified, make a change in the
appointment.
ASSIGNMENT OF BUILDER'S GUARANTEE
17.5. It is expressly agreed and understood that the benefit of this Guarantee
shall be capable of transfer by the Purchaser to any Assignee. The Builder shall
in such circumstances enter into any documentation reasonably requested by
either the Purchaser or the Assignee to evidence such transfer and the vesting
in the Assignee pursuant to such assignment of all rights in respect of this
Guarantee.
18. DEFAULT BY THE PURCHASER
EVENTS OF PURCHASER'S DEFAULT
18.1. The Purchaser shall be deemed to be in default of performance of its
obligations under this Contract in the following cases:
a. if the Purchaser fails to pay the amount of any of the Instalments of the
Contract Price due to the Builder in the period prior to Delivery on the
due date for payment thereof;
b. if the Purchaser fails without legal justification to take delivery of
the Vessel in accordance with Clause 14 and to pay the instalment of the
Contract Price due thereon;
c. if an order or an effective resolution is passed for the winding up of the
Purchaser (otherwise than for the purposes of a reconstruction or
amalgamation previously approved by the Builder) or if a receiver is
appointed over the whole or any part of the undertaking or property of the
Purchaser or if the Purchaser becomes insolvent or suspends payment
generally of its debts or ceases to carry on its business or makes any
special arrangement or composition with its creditors.
18.2. If the Purchaser is in default as to the payment of any instalment as
provided in (a) or (b) of sub-clause (1) above, then without prejudice to any
other rights of the Builder or of the Purchaser, the Purchaser shall be liable
to pay interest at 2% per cent above LIBOR on the unpaid amount from the day
from which the same became due to the Builder up until the date of actual
payment thereof. The Builder shall further be entitled to claim as Permissible
Delay within the meaning of Clause 14.4 any period of time during which the
construction or completion of the Vessel has been delayed in consequence of the
Purchaser's default as aforesaid.
TERMINATION BY THE BUILDER
18.3. If default on the part of the Purchaser continues for a period of thirty
days, the Builder shall have the right at its sole discretion to rescind this
Contract by giving written notice to the Purchaser. The Builder shall in such
event hold all of the instalments received from the Purchaser in trust both for
itself and the Purchaser until disposal of the Vessel whereupon the
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same shall either be retained by the Builder to compensate it for any shortfall
between the Contract Price and the actual price obtained for the Vessel on
disposal together.
18.4. In the event of rescission of this Contract in accordance with this Clause
the Builder shall have the right and power either to complete or not to complete
the Vessel as it deems fit but in any event shall sell the Vessel (either in its
complete or incomplete form) at the best available price at a public or private
sale on such reasonable terms and conditions. If the Builder sells the Vessel in
an incomplete form then the Builder shall give credit to the Purchaser for any
and all savings which arise from not having to complete the construction of the
Vessel.
18.5. In the event of the sale of the Vessel in its completed state the proceeds
of sale received by the Builder shall be applied to payment of all expenses
attending such sale and otherwise incurred by the Builder as a result of the
Purchaser's default and then to payment of all unpaid instalments of the
Contract Price and interest on such instalments at the rate of 2 per cent above
LIBOR from the respective due dates thereof to the date of application.
18.6. In the event of sale of the Vessel in its incomplete state the proceeds of
sale received by the Builder shall be applied first to all expenses attending
such sale incurred by the Builder as result of the Purchaser's default and then
to payment of all costs of part-construction of the Vessel less the instalments
retained by the Builder and compensation to the Builder for damages suffered by
the Builder as a result of such default.
18.7. In either of the above events of sale, if the proceeds of sale exceed the
sums to which such proceeds are to be applied as aforesaid the Builder shall
promptly pay any such excess to the Purchaser without interest thereon and shall
at the same time either permit the Purchaser to remove the Owner Furnished
Equipment from the Shipyard or pay to the Purchaser the full value thereof.
18.8. If the proceeds of sale of the Vessel are insufficient to pay such total
amounts payable as aforesaid the Purchaser shall be liable to pay to the Builder
upon demand the amount of such deficiency.
19. DEFAULT BY THE BUILDER
EVENTS OF BUILDER'S DEFAULT
19.1. In the event that any of the following events should occur:-
a. the Builder shall without legal justification fail to proceed with
construction of the Vessel with all reasonable despatch so that it fails
to meet two consecutive Milestones within one hundred and thirty five days
of the respective dates agreed for the same as extended by permissible
delays;
b. the Builder shall commit any material breach of this Contract and shall
fail to remedy the same within five Working Days of receipt by the Builder
of written notice from the Purchaser;
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c. the making of any order or the passing of an effective resolution for the
winding-up of the Builder (other than for the purposes of reconstruction
or amalgamation which has been previously approved in writing by the
Purchaser), or the appointment of a receiver of the undertaking or
property of the Builder, or the insolvency of or a suspension of payment
by the Builder, or the cessation of the carrying on of business by the
Builder, or the making by the Builder of any special arrangement or
composition with creditors of the Builder, and failure by the Builder
The Purchaser may by notice in writing to the Builder elect to rescind this
Contract.
RESCISSION BY THE PURCHASER
19.2. In the event that the Purchaser shall exercise its option to rescind this
Contract, the Purchaser shall give notice in writing to the Builder. The Builder
shall thereupon immediately comply with either the provisions of clause 19.3 or
clause 19.6 below as may be elected by Purchased in said notice:-
19.3. The Builder shall:
a. secure the immediate discharge of all liens (including its own), claims,
mortgages or other encumbrances upon the Vessel other than in favour of
the Purchaser and/or its financiers;
b. complete all works required as a minimum to permit the Vessel to depart
from the Shipyard in a safe and seaworthy condition, remove its employees,
agents and contractors, together with their equipment, from the Vessel and
render all necessary assistance to the Vessel in leaving the Shipyard at
the earliest moment convenient to the Purchaser;
c. execute and deliver to the Purchaser an original of the Protocol of
Delivery and Acceptance together with any and all documentation (including
but not limited to a bill of sale or builder's certificate) in such form
and such manner as the Purchaser shall in its absolute discretion
determine shall be required for the purposes of registration of the Vessel
in a shipbuilding or shipowning register other than the Newbuilding
registry; and
d. execute and deliver to the Purchaser all of the documentation listed in
Clause 14.4 hereof to the extent that the same is at that time capable of
production by the Builder.
19.4. All risk of loss of or damage to the Vessel shall where Purchaser elects
to proceed per clause transfer to the Purchaser upon execution by the Purchaser
of the Protocol of Delivery and Acceptance following receipt of all of the
documentation received above. The Purchaser may, however, elect to execute the
Protocol of Delivery and Acceptance notwithstanding the Builder's failure to
deliver all or part of the other documentation required to be delivered by the
Builder pursuant to subclauses 19.3.c and d above,
19.5. In the event that the Purchaser elects to proceed per clause 19.3 the
Builder shall remain liable:-
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a. to pay all liquidated damages to which the Purchaser may have become
entitled to prior to the election to rescind;
b. To indemnify the purchaser for any infringement for which the Builder
would have been liable for pursuant to Clause 20 hereof but excluding
liability for work done or Materials supplied other than by the Builder or
its subcontractors pursuant to this Contract; and
c. pursuant to its guarantee contained in Clause 17 hereof excluding
liability for work done or Materials supplied other than by the Builder or
its subcontractors pursuant to this Contract.
d. if the reasonable expense of completion of the Work plus any reasonable
expense incurred as a result of the Event of Default of Builder exceeds
the balance of the Contract Price remaining unpaid, then such excess shall
be immediately due and payable by Builder to Purchaser. The rights and
remedies available to Purchaser under this Section shall not be exclusive,
but shall be in addition to any and all rights and remedies available to
Purchaser under this Contract or applicable law or equity practice.
Furthermore, the designation of specific events of default of Builder and
certain rights and remedies therefor shall not preclude Purchaser from
exercising any rights or remedies available to it under this Contract for
any breach of this Contract by Builder not constituting an Event of
Default of Builder.
19.6. As an alternative to clause 19.3 if Purchaser so elects per clause 19.2
Builder shall promptly ( but no later than seven days of such receipt of such
notice ) repay to the Purchaser the amount of all monies paid by the Purchaser
in respect of the Contract Price together with interest thereon at a rate of 2 %
over LIBOR from the date when such monies were paid by the Purchaser to the
Builder up to the date of the repayment therefore. Upon receipt of such
repayment, Purchaser shall execute all documentation required to vest title in
the Vessel in its then condition to Builder.
19.7. In the event that Purchaser elects to proceed per clause 19.6, the Builder
shall additionally purchase from the Purchaser and/or alternatively accept
assignment / novation of purchase orders of such of the Owner Furnished
Equipment as the Purchaser shall evidence it has either purchased or has a
binding commitment to purchaser. The price payable for such OFE shall be
evidenced by the Purchaser as what the Purchaser has expended plus interest from
the date of such expenditure at two percent over LIBOR. Payment shall be made by
the Builder within seven days of such evidence by the Purchaser. Upon such
payment, Purchaser shall execute all documentation required to transfer title in
such OFE to the Builder.
20. PATENT INDEMNITY
PATENT NUMBERS AND TRADEMARKS
20.1. Machinery and equipment of the Vessel may bear the patent numbers,
trademarks or trade names of the manufacturer. Nothing contained herein shall be
construed as transferring any patent or trademark rights or copyrights in
equipment covered by this Agreement, and all
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such rights are hereby expressly reserved to the true and lawful Purchaser
thereof.
HOLD HARMLESS, THE PURCHASER
20.2. The Purchaser shall defend the Builder and hold it harmless in respect of
infringement of any patent rights, copy rights or other intellectual property on
account of the Purchaser Furnished Equipment or the Basic Design.
HOLD HARMLESS, THE BUILDER
20.3. The Builder shall defend the Purchaser and hold it harmless in respect of
infringement of any patent rights, copy rights or other intellectual property of
the Vessel or construction components or equipment for the Vessel furnished by
the Builder, except to the extent the Specifications require Builder to use the
infringing method of work or construction of components or equipment.
DESIGNS AND PROPERTY OF THE PURCHASER
20.4. The Builder agrees that the designs, drawings, specifications and ideas
submitted by the Purchaser to the Builder are the property of the Purchaser,
some of which are protected by U.S. or other, foreign patents and the remainder
of which constitutes the trade secrets and know-how of the Purchaser. These
designs, drawings, specifications and ideas shall not be copied or used in whole
or in part by the Builder or divulged by the Builder to others for any purpose
other than the proper performance of this Agreement. The Builder further agrees
to notify its employees and subcontractors of the confidential nature of this
property and the limitations upon its use.
The parties expressly agree that the obligations of the builder under this
Section 20 shall survive and remain effective notwithstanding the cancellation
or termination of this Agreement for any reason whatsoever.
21. OWNER FURNISHED EQUIPMENT
DELIVERY OF OWNER FURNISHED EQUIPMENT
21.1. The Purchaser shall, at its own expense, supply all articles specifically
listed in Appendix II as ("Owner Furnished Equipment") to the Builder at the
Shipyard in a condition ready for installation and by the date listed in
Appendix IIa
21.2. Should the Purchaser fail to deliver to the Builder any item of Owner
Furnished Equipment by the date so notified, any delay in the construction or
completion of the Vessel thereby resulting shall be deemed Permissible Delay
within the meaning of Clause 15.4.
21.3. In order to facilitate the installation of Owner Furnished Equipment by
the Builder, the Purchaser shall at its own expense furnish the Builder with
Vendor Information which shall generally consist of , necessary plans,
instruction books, test reports and certificates required by applicable rules or
regulations, and if necessary and if requested by the Builder, shall use all
reasonable endeavours, at its own expense, to cause the manufacturers of Owner
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Furnished Equipment to assist the Builder in the installation thereof or to make
any necessary adjustment thereto at the Shipyard. In the event that any
manufacturers representatives incur unnecessary standby time while attending at
the Builders request such standby time shall be at the Builders expense.
21.4. The Purchaser shall be liable for the cost incurred by the Builder in the
repair of Owner Furnished Equipment occasioned by their defective material or
poor workmanship or failure to perform, or by damage caused to them during
transportation to the Shipyard.
21.5. Any Owner Furnished Equipment found to be faulty or defective which
require replacement or retesting shall be for the Purchaser's account.
Furthermore, delays or damage resulting from faulty or defective equipment shall
be considered Permissible Delays under the terms of Section 15 of this Contract.
RESPONSIBILITY OF THE BUILDER
21.6. The Builder shall be responsible for storing and handing Owner Furnished
equipment after their delivery to the Shipyard and shall install them on board
the Vessel at the Builder's expense. The Owner Furnished Equipment shall be at
the Builder's risk from the time of their delivery to the Shipyard until the
time of their redelivery to the Purchaser either as part of the Vessel or
otherwise.
21.7. Upon delivery of the Owner Furnished Equipment the Builder shall check by
external inspection that the items appear to be in accordance with the relevant
order and undamaged and if any item is not delivered with a weight certificate
issued by a reputable body the Builder shall weigh the same in order to
incorporate the actual weight and the actual weight control procedure. The
Builder shall promptly inform the Purchaser if any item of the Owner Furnished
Equipment does not conform to the relevant purchase order to enable the
Purchaser to take corrective action. If the Builder fails to comply with this
requirement, any additional cost shall be for the Builder's account and any
delay shall not count as Permissible Delay hereunder.
21.8. In the event of termination or rescission of this Contract by the
Purchaser and election by the Purchaser under clause 19.3 above, the Builder
shall, at his own expense return to the Purchaser all Owner Furnished Equipment.
22. TAXES AND DUTIES
22.1. The Builder shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed by any state of the United States in
connection with its performance of its obligations under this Contract,
excluding any taxes, duties, fees and stamp duties imposed in by any state of
the United States upon the Owner Furnished Equipment.
22.2. The Purchaser shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed outside [ the United States in
connection with the execution and performance of this Contract, except for
taxes, duties, fees and stamp duties imposed upon those items and services to be
procured by the Builder and further excluding any taxes measured by he net
income of the Builder.
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23. ASSIGNMENT
23.1. The Purchaser may transfer, by assignment or novation, to any third party
or parties (herein "Assignee(s)") any of its rights and/or obligations under
this Contract. Provided, however, that, to the extent that any such assignment
or novation transfers to an Assignee the obligations of this Contract, the
Purchaser shall guarantee in a form acceptable to the Builder the performance by
such Assignee of any of its obligations.
23.2. The Builder may, with the prior written approval of the Purchaser, assign
the benefit of this Contract.
24. PRIORITY OF DOCUMENTS
24.1. The Appendices hereto shall form an integral part of this Contract as if
the same were expressly set out herein.
24.2. If there is any discrepancy between the following documents priority
between them shall be as follows:-
a. between the terms of this Contract (excluding the Specifications) and the
terms of the Specifications, the terms of the former shall prevail;
b. between the Principal Drawings and the Specifications, the Specifications
shall prevail;
c. between the Principal Drawings, in the order of precedence contained in
Appendix 1;
d. between one approved Plan and another approved Plan, the later in date
shall prevail;
25. NOTICES
25.1. Every notice, consent or approval (individually and collectively called
"Communications" for the purposes of this Clause 25) given or required, whether
expressly or impliedly, under this Contract shall be in writing.
25.2. Communications shall be given by the Builder to the Purchaser as follows:
Address:
Suite 205, Saffrey Square
P.O. Box N8188
Nassau, Bahamas
Attn: Company Secretary
Facsimile: To be provided
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25.3. Communications shall be given by the Purchaser to the Builder as follows:
Address:
13085 Industrial Seaway Rd.
Gulfport, Mississippi
39503
Attn: Mr. Daniel J. Mortimer
Facsimile: 228-897-4803
with copy to:
1601 S. Childers Rd.
Orange, Texas
77631
Attn: Mr. Don 0. Covington
Facsimile: 409-882-9010
26. RECORDS AND AUDITS
26.1. The Builder shall maintain true and complete records in connection with
the construction of the Vessel and all transactions related thereto, and shall
retain all such records for not less than twenty-four (24) months following
Delivery.
26.2. No director, employee or agent of the Builder shall give or receive any
commission, fee, rebate, gift or entertainment of significant cost or value in
connection with the work under this Contract, or enter into any business
arrangement with any director, employee or agent of the Purchaser.
26.3. If any violation of sub-clause (2) above is found to have occurred prior
to the date of signing this Contact and such violation is determined to have
resulted directly or indirectly in the Purchaser's consent to enter into this
Contract with the Builder the Purchaser may terminate this Contract in which
case the provisions of Clause 19.2 shall apply.
26.4. The Builder shall use its best endeavours to procure that all
Subcontractors:
a. maintain records in accordance with sub-clause (1) above;
b. enter into obligations with the Builder, to the like intent and effect as
those which bind the Builder as above. 'he Builder shall promptly notify
the Purchaser of any violation of such obligations involving
Subcontractors which comes to the Builder's notice.
27. LAW
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27.1. The construction, validity and performance of this Contract shall be
governed by English Law.
28. DISPUTES
28.1. Any claim, difference or dispute which may arise out of this Contract
shall be decided by the Commercial Court of the Queen's Bench Division of the
High Court of England and Wales to whose exclusive jurisdiction the parties
hereby agree.
28.2. For the purposes of any proceedings pursuant to sub-clause (1) above, the
parties hereby irrevocably appoint the following as their agents for the service
of process:-
THE BUILDER:
Hewett Battersby of St. Michael's Rectory
Cornhill, London EC3V 9DS
United Kingdom
THE PURCHASER:
Ince & Co., Solicitors
Knollys House
#11 Byward Street
London EOR 5EN
United Kingdom
28.3. Without prejudice to the generality of sub-clause (1) above and without
prejudice to any express provision contained herein for referral of any matter
to an expert, any dispute or difference of opinion between the parties relating
to conformity of the construction of the Vessel, Materials or workmanship with
this Contract, the Specifications and the other Contract Documents may, by
agreement between the Parties, be referred to an expert, acting as an expert and
not an arbitrator, to be appointed by agreement between them and whose opinion
on the matter shall be final and binding upon the parties hereto.
28.4. If the parties shall fail to agree either (i) to submit the dispute to a
technical expert or (ii) upon the identity of a mutually acceptable technical
expert as aforesaid, such dispute shall be settled in the manner as defined in
sub-clause 1 above.
29. MISCELLANEOUS
29.1. The terms of this Contract are to remain confidential to the parties and
no disclosure of the same may be made to any third party other than for the
purposes of permitting or ensuring its due performance by either party hereto or
financial reporting as may be required under the applicable laws and regulations
governing said financial reports. This obligation shall survive termination of
this Contract for any reason whatsoever. The parties agree that within
twenty-four hours of the execution of this Contract that the parties will use
their reasonable endeavours to agree upon language of a press release to be
jointly published.
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30. SPARE PARTS
30.1. The Builder shall furnish spare parts and maintenance tools of the kind
and in at least the specified quantities in accordance with the Specifications,
Classification Society requirements, and the maker's standards, for items
furnished by the Builder. The cost of these spare parts is included in the
Contract Price.
30.2. In addition, the Builder shall supply to the Purchaser a list of the
maker's recommended spare parts for two.(2) years of continuous operations
covering items supplied by Builder, at least six months prior to the Vessel's
completion.
30.3. The spare parts furnished by the Builder shall be properly protected
against physical decay, corrosion and mechanical damage and shall be properly
listed so that replacements may be readily ordered.
30.4. The Builder shall complete the storage spaces installation in time to
enable to positioning, labelling and listing of all spare parts (the Builder and
Purchaser supplied) prior to Delivery. The Builder at his own cost shall be
responsible for handling, bringing on board and storage on the Vessel of all
spare parts, tools and supplies under instruction and supervision of Purchaser's
Representative.
31. SAFETY AND HEALTH STANDARDS
31.1. The Purchaser's Representative will have authority to monitor the
performance of the work done by the Builder to ensure safe and workmanlike
performance.
31.2. It is the Purchaser's policy not only to comply with the safety and health
measures required by law but to act positively to prevent injury, ill health,
damages and loss arising from its operations. The Purchaser requires the Builder
and his sub-contractors to apply health, safety and local environmental
standards in order to achieve high levels of performance. It is essential that
the Builder and his sub-contractors undertaking work consistently show a high
level of safety awareness and demonstrate that they are capable of conducting
themselves in a safe and competent manner in their area of activity.
31.3. The Builder acknowledges the Purchaser's strong commitment to safety and
affirms that he has a written safety policy which has been signed and is
actively supported and endorsed by Builder's management. The Builder further
affirms that his safety policy is widely disseminated, understood and
implemented by and among Builder's and Builder's sub-contractors' employees.
This policy shall be in English and such other language(s) as required. A copy
of Builder's Safety Policy shall be furnished to the Purchaser prior to start of
the work.
31.4. It is essential that good housekeeping is maintained by the Builder's
employees throughout the term of this Contract. The working areas shall be kept
tidy at all times, access ways kept clear and surplus/scrap material removed
daily. Cleaning up at end of the job is not considered sufficient. Spillage of
oil or chemicals shall be cleared up immediately to avoid fire hazards, slippery
surfaces, contact with toxic substance and other hazards. Appropriate safety
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<PAGE>
precautions shall be taken during cleaning up. No oil grade with flash points
lower than 55 degrees C shall be used for cleaning purposes.
31.5. Asbestos containing products are not to be applied on board the Vessel.
Substitutes therefor shall be applied only after authorisation by the Purchaser.
31.6. The Builder shall report immediately to the Purchaser all accidents
occurring during the term of this Contract and related to work thereunder, that
result in injury to or death of any person and/or damage to or loss of property.
Accidents are defined as "Unintentional or unplanned events that may or may not
result in personal injury or equipment, plant, or property damage, or any
combination of these". Purchaser and Builder agree to cooperate to reach
mutually agreeable resolutions and immediate rectification of any perceived
unsafe practices.
31.7. The Purchaser may require the Builder to permanently remove and replace
any of Builder's or Builder's sub-contractors' employees who violate safety
regulations and any equipment which is obviously unsafe.
31.8. The Builder shall, at his own expense, supply his personnel and his
sub-contractors' personnel with adequate protective personal clothing, safety
helmets, safety shoes, and other protective equipment required for the type of
work to be carried out.
32. EFFECTIVENESS
32.1. This Contract is subject to, and shall become effective and legally
binding on the parties at the date of execution.
32.2. The date upon which the above conditions shall all have been satisfied
shall be known hereunder as the "Execution Date".
IN WITNESS WHEREOF the parties hereto have caused this Contract to be duly
executed the day and year first above written.
THE PURCHASER: THE BUILDER:
BY: Derek Leach BY: Richard M. Currence, Jr.
Title: Attorney-in-Fact Title
/s/ Illegible /s/ Illegible
_____________________________ _______________________________
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<PAGE>
EXHIBIT 10.25(A)
SIDE LETTER NO 1. 9TH APRIL 1998
- - --------------------------------------------------------------------------------
Petrodrill Construction Inc
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
TDI-Halter L.P.
1800 West Loop South
Houston
Texas 77027
Gentlemen,
Hull No 1828
We refer to the contract executed between us today in respect of the above hull.
With respect to the target figures referred to in clause 6 of the contract it is
agreed that these shall be amended to reflect those ultimately agreed between
the Purchaser and Davie Industries in respect of Amethyst 2 & 3.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
WE HEREBY ACKNOWLEDGE OUR UNDERSTANDING AND ACCEPTANCE OF THIS LETTER:
/s/ RICHARD M. CURRENCE JNR.
RICHARD M CURRENCE JNR.
TDI-HALTER INC.
9TH APRIL 9, 1998
EXHIBIT 10.25(B)
SIDE LETTER NO 2. 9TH APRIL 1998
- - --------------------------------------------------------------------------------
Petrodrill Construction Inc
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
TDI-Halter L.P.
1800 West Loop South
Houston
Texas 77027
Gentlemen,
Hull No 1828
We refer to the contract executed between us today in respect of the above hull.
This letter serves to confirm the agreement between us that we shall have the
option by way of Purchasers Modification, to delete the provision of Builders
All Risk Insurance per clause 11.2 from your workscope and provide same
ourselves.
In this event you confirm that you will provide us with a credit against the
Contract Price which will reflect the higher of your evidenced quoted cost for
the same or USD 400,000.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
WE HEREBY ACKNOWLEDGE OUR UNDERSTANDING AND ACCEPTANCE OF THIS LETTER:
/s/ RICHARD M. CURRENCE JNR.
RICHARD M CURRENCE JNR.
TDI-HALTER INC.
9TH APRIL 9, 1998
EXHIBIT 10.25(C)
SIDE LETTER NO 3. 9TH APRIL 1998
- - --------------------------------------------------------------------------------
Petrodrill Construction Inc
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
TDI-Halter L.P.
1800 West Loop South
Houston
Texas 77027
Gentlemen,
Hull No 1828
We refer to the contract executed between us today in respect of the above hull.
It is hereby recognised by the Purchaser that the contract between the Builder
and Purchaser for the supply of the Amethyst drilling units includes a budget of
$8.6 million in respect to the electrical integrators package defined in clause
5.8 of the main contract.
The package is related to GEC Alsthom offer No P354-A01 as discussed with the
Builder on the 28th March in Rotterdam and modified in the meeting notes dated
March 28th.
The Purchaser and Builder will jointly finalise the technical and commercial
requirements included in the offer and in the event that the final price of the
package, delivered to the Builders yard, is less than $8.6 million the Purchaser
will receive a credit from the Builder to the extent of 80% of any such
variance.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
WE HEREBY ACKNOWLEDGE OUR UNDERSTANDING AND ACCEPTANCE OF THIS LETTER:
/s/ RICHARD M. CURRENCE JNR.
RICHARD M CURRENCE JNR.
TDI-HALTER INC.
9TH APRIL 9, 1998
EXHIBIT 10.25(D)
SIDE LETTER NO. 4. 9TH APRIL 1998
- - --------------------------------------------------------------------------------
Petrodrill Construction Inc
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
TDI-Halter L.P.
1800 West Loop South
Houston
Texas 77027
Gentlemen,
Hull No 1828
We refer to the contract executed between us today in respect of the above hull.
It is agreed between the parties hereto that in lieu of the Warranty in Section
17 of the Contract the Purchaser, at its option, may elect to purchase from the
Builder a more extensive warranty than that which is currently in the contract,
for the price of $500,000 per vessel, or alternatively, again at its option to
enter into an Escrow/Warranty Reserve Agreement. Under the terms of the Warranty
Reserve Agreement, the Purchaser would pay the additional $500,000 into an
Escrow Account to be drawn down upon by direct warranty costs. Funds remaining
in the account at the end of the warranty period would be split evenly between
the parties, any funds used, over and above the $500,000 would be for the
Purchaser's account.
Attached hereto is the agreed language for the more extensive warranty which
would replace the existing Clause 17 and which defines the scope of work
supplied, should the Purchaser elect to purchase this warranty for an additional
$500,000.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
WE HEREBY ACKNOWLEDGE OUR UNDERSTANDING AND ACCEPTANCE OF THIS LETTER:
/s/ RICHARD M. CURRENCE JNR.
RICHARD M CURRENCE JNR.
TDI-HALTER INC.
9TH APRIL 9, 1998
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Side Letter No 4 Page 1 of 4
<PAGE>
OPTION WARRANTY
17. DEFECTS AND BUILDER'S GUARANTEE
GUARANTEE PERIOD
17.1. The Builder guarantees the Vessel for a period of twelve months from
Delivery or, in respect of individual items as provided for in the
Specification, for such greater period as may be agreed, against all defects
whether attributable to Materials, workmanship, construction or detailed
engineering, caused to the Vessel thereby. The aforesaid period of twelve months
from Delivery shall be known herein as the "Guarantee Period".
17.2. This guarantee shall not extend to Owner Furnished Equipment or to any
damage caused by any defect therein not attributable to the Builder, but it
shall extend to defects in Materials, workmanship, installation engineering and
to physical damage caused therein resulting from the Builder's installation of
the Owner Furnished Equipment.
17.3. The Builder guarantees repairs or replacements to the Vessel made under
the guarantee in sub-clause (1) above for a further period of twelve months from
the date of completion of such repair or replacement subject to a maximum of 24
months.
REMEDY OF DEFECTS
17.4. The Purchaser shall notify the Builder in writing within thirty days
after discovery of any defect falling within the provisions of this Clause 17.
The Purchaser's notice shall include such particulars as can reasonably be given
as to the nature of such defect, the date of discovery and the place at which
the Vessel can be made available for earliest inspection by or on behalf of the
Builder. The Purchaser shall furnish to the Builder as soon as practicable
copies of any relevant survey or inspection reports.
17.5. The Purchaser may require the Builder to make good any defect or physical
damage for which the Builder is liable under this Clause 17 by giving notice of
such requirement to the Builder. Any parts replaced shall on their removal
become the property of and shall be at the risk of the Builder whilst the
replacement parts fitted to the Vessel shall upon fitting become the property of
the Purchaser.
17.6. The Builder shall execute the necessary work including the carrying out
of any essential dismantling and reassembling with the utmost despatch in
accordance with the quality standards which are applicable hereunder to the
Vessel's original construction.
17.7. In the event that the Builder is unable to make good any defect at the
Shipyard, it shall forthwith nominate a yard suitable for such purpose for the
Purchaser's approval, and should the Purchaser consider such yard acceptable the
Builder shall arrange for the making good of the defect and the carrying out of
any essential dismantling and reassembling at its own expense.
17.8. Should the Purchaser consider the yard nominated by the Builder
unacceptable, or should the Purchaser elect to have the work referred to above
carried out elsewhere than at the Shipyard, the Purchaser shall nominate a yard
acceptable to it. In such case the Builder shall pay to the Purchaser for
repairs and/or replacements such sum as would equate to the costs of effecting
such repairs at a first-class US Gulf Coast Commercial shipyard. The Builder
may, at its own expense, have its representative in attendance during execution
of the work. The Purchaser shall ensure that any parts replaced under this
sub-clause are returned to the Builder (if required by the Builder) at the
Builder's expenses,
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Side Letter No 4 Page 2 of 4
<PAGE>
and in such case those parts returned shall on their replacement become the
property of and shall be at the risk of the Builder.
17.9. In the event of defects arising which fall within the provisions of this
Clause 17, whether or not such defects require the Vessel to be drydocked, the
Builder shall pay for any costs incurred by
the Purchaser in making the Vessel available to the Builder or to any other yard
for the making good of any such defect as aforesaid. Such additional costs shall
exclude however the costs of transportation, port charges and the cost of fuels,
lubricants and consumable stores consumed in excess of those which would have
been consumed had the Vessel not deviated to allow the Builder to make good any
such defects as aforesaid.
17.10. In the event that the Vessel is idle for more than 15 days in total
accumulated time due to the defects under this Clause 17 the Guarantee Period
shall be extended by the number of all days during which the Vessel is idle
commencing with the sixteenth day, whether or not other work is undertaken
simultaneously with the guarantee work.
17.11. Nothing contained herein shall obligate Builder at any time to repair or
replace the Vessel, or any component part thereof, where such repair and/or
replacement is caused, in whole or in part, by normal wear or unusual handling,
by the negligent operation or maintenance of the Vessel, or its equipment or by
abuse, rough weather, accident, fire, by Purchaser or Purchaser's agents,
employees or representatives.
17.12. With respect to paint, Builder warrants that it will purchase paint of
good marine quality and that it will apply the paint in accordance with the
manufacturer's specifications, recommendations, and inspection, and Builder
makes no warranty, express or implied, with respect to the fitness of the paint
or the manufacturer's specifications and recommendations. The Builder will
purchase paint insurance for the Purchaser.
17.13. For any claim for damages to or loss of the Vessel, and/or damages to
persons and/or property (including, but not limited to claims, demands, or
actions for bodily injury, illness, disease, death, loss of service, loss of
society, maintenance and cure, wages or property) made as a result of any defect
in the Vessel, or any component parts thereof, after the said Warranty Period,
Purchaser shall have no claim or actions whatsoever against Builder, regardless
of any negligence, tort, fault, strict liability or otherwise of Builder, its
employees or subcontractors, and Purchaser hereby waives and releases Builder
and its employees and subcontractors from and against any and all liability and
any and all damages resulting therefrom, including, but not limited to, for
personal injury, death, property damage, damage to and/or loss of the Vessel,
delay, demurrage, loss of profits, loss of use, or any other consequential or
punitive damages of any kind, whether such claim is based in contract,
redhibition, negligence, strict liability, or otherwise, arising out of any
defect and/or negligent design, the selection or choice of specifications and/or
materials and/or component parts, manufacture, construction, fabrication,
workmanship, labor and/or installation of equipment, materials and/or components
or from any unseaworthy condition or any other defective condition of the
Vessel, it being specifically understood and agreed that any such defects
reported and/or occurring after the Warranty Period and all damages, loss of
profits, demurrages, delay, losses of use or other consequential or punitive
damages of any kind whatsoever resulting therefrom, shall not be the
responsibility of Builder, but shall be borne exclusively by Purchaser.
"THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR THAT THE VESSELS, MATERIAL OR
SERVICES ARE FIT FOR ANY PARTICULAR PURPOSE OR USE, AND SPECIFICALLY IN LIEU OF
ALL INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES".
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Side Letter No 4 Page 3 of 4
<PAGE>
ASSIGNMENT OF SUBCONTRACTORS' GUARANTEES
17.14. The Builder agrees upon the expiry of the Guarantee Period to assign (to
the extent to which it may validly do so) to the Purchaser, or as the Purchaser
may direct, all the right, title and interest of the Builder in and to all
guarantees or warranties given by the Subcontractors save insofar as the same
relate to existing claims by the Purchaser against the Builder.
- - --------------------------------------------------------------------------------
Side Letter No 4 Page 4 of 4
EXHIBIT 10.25(E)
SIDE LETTER NO. 5. 9TH APRIL 1998
Petrodrill Construction Inc
Suite 205
Saffrey Square
PO Box N 8188
Nassau
Bahamas
TDI-Halter L.P.
1800 West Loop South
Houston
Texas 77027
Gentlemen,
Hull No 1828
We refer to the contract executed between us today in respect of the above hull.
This letter serves to confirm your undertaking to us that you will procure that
without prejudice to the provisions of clause 17 of the Contract you will, at
your own cost, procure a paint warranty insurance policy in amounts and on terms
that we shall reasonably agree and you shall further procure that we shall have
full benefit of and access to such insurance.
Yours faithfully
/s/ DEREK LEACH
Derek Leach
Attorney-in-Fact
WE HEREBY ACKNOWLEDGE OUR UNDERSTANDING AND ACCEPTANCE OF THIS LETTER:
/s/ RICHARD M CURRENCE JNR.
RICHARD M CURRENCE JNR.
TDI-HALTER INC.
9TH APRIL 9, 1998
EXHIBIT 10.25(F)
NOVATION AGREEMENT
THIS DEED (THE "NOVATION AGREEMENT") is made the 9th day of December, 1998
between:
(1) TDI-HALTER, LIMITED PARTNERSHIP, a Louisiana limited partnership (the
"Builder"), whose principal office is at 1601 South Childers Road, Orange,
Texas 77631;
(2) PETRODRILL OFFSHORE, INC. (formerly PETRODRILL CONSTRUCTION INC.) (the
"PURCHASER"), a corporation organised under the laws of Bahamas, whose
principal office is at Suite 205, Saffrey Square, P.O. Box N8188, Nassau,
Bahamas; and
(3) PETRODRILL FOUR LIMITED (the "NEW PURCHASER") a limited company organised
under the laws of British Virgin Islands, whose registered office is at
Arias Fabrega & Fabrega, Omar Hodge Building, 2nd Floor, Wickams City,
Tortola, British Virgin Islands.
(together referred to as the PARTIES)
Whereas
(A) Builder and the Purchaser are parties to an agreement relating to
the construction and sale of a dynamic positioned semi-submersible
drilling vessel with Builder's Hull No. 1828 dated 9 April 1998
(including any amendments included in the associated memorandum,
meeting minutes and/or side letters made from time to time thereto
(herein called the "AGREEMENT") which expression shall mean the said
Agreement as transferred by this Novation Agreement.
(B) The parties hereto have agreed that in consideration for entering
into this Novation Agreement the Purchaser may transfer to the New
Purchaser its rights and obligations under the Agreement upon the
terms and subject to the conditions set out herein.
Now it is agreed as follows:
(1) Terms and expressions defined in the Agreement shall, unless the context
otherwise requires, have the same meanings when used in this Novation
Agreement.
(2) Upon and with effect from the date of this Novation Agreement and subject
to clause 6 of this Novation Agreement, Purchase does hereby transfer to
the New Purchaser all of its obligations, liabilities, rights, title and
interest in and to the Agreement. Upon and with effect from the date of
this Novation Agreement, the Purchaser releases and discharges and agrees
to release and discharge the Builder from the various covenants,
undertakings, warranties and other obligations contained in the Agreement
which are enjoyed by the Purchaser, and from all claims and demands
whatsoever arising out of or in respect of the Agreement whether prior to,
on or subsequent to the date of this Novation Agreement.
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<PAGE>
(3) Upon and with effect from the date of this Novation Agreement and subject
to clause 6 of this Novation Agreement, the New Purchaser accepts and
agrees to accept the transfer of all liabilities and obligations of the
Purchaser under the Agreement (whether now existing or hereafter arising)
and agrees to perform all the duties and to discharge all the liabilities
and obligations of the Purchaser under the Agreement (whether now existing
or hereafter arising).
(4) Upon and with effect from the date of this Novation Agreement, the Builder
agrees to perform all its duties and to discharge all of its obligations
under the Agreement and to be bound by all the terms and conditions of the
Agreement in every way as if the New Purchaser were named in the
Agreement as a party ab initio in place of the Purchaser. Without limiting
the generality of the foregoing, the Builder acknowledges and agrees that
the New Purchaser shall have the right to enforce the Agreement and pursue
all claims and demands (future or existing) whatsoever arising out of or
in respect of the Agreement. The New Purchaser agrees and acknowledges
that Builder's satisfactory performance of any obligation under the
Agreement for the benefit of the Purchaser shall be deemed to satisfy the
Builder's obligations to perform the obligations for the New Purchaser.
(5) The New Purchaser confirms that it has received a copy of the Agreement
and that it is familiar with the terms thereof.
(6) Notwithstanding the above clauses it shall be a condition precedent to
this Novation Agreement that the Purchaser shall provide to the Builder a
Guarantee in the form attached in the schedule hereto, and this Novation
Agreement shall not become effective until the Guarantee is provided by
the Purchaser to the Builder in the form that appears in the schedule.
(7) Each Party shall take all steps, execute all documents and do everything
reasonably required by any other Party to give effect to the transactions
contemplated by this Novation Agreement provided that the Purchaser and
the New Purchaser shall jointly and severally reimburse the Builder on a
full indemnity basis for all reasonable costs and expenses (including
legal fees) incurred by the Builder pursuant to this Clause 7 or otherwise
howsoever in connection with the negotiation and execution of this
Novation Agreement.
(8) The construction, validity and performance of this Novation Agreement
shall be governed by English Law. Any claim, difference or dispute which
may arise out of this Novation Agreement shall be decided by the
commercial Court of the Queen's Bench Division of the High Court of
England and Wales to whose exclusive jurisdiction the parties whereto
agree.
Nothing contained in this Novation Agreement shall waive any rights or
remedies of the Builder under the Agreement including without limitation
any rights or remedies related to any default under the Agreement or any
event, act or omission which with the passing of time or the giving of
notice would constitute a default under the Agreement.
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<PAGE>
SIGNED by TDI-HALTER LIMITED PARTNERSHIP
on behalf of the BUILDER in the presence of: /s/ Illegible
SIGNED by PETRODRILL OFFSHORE, INC.
on behalf of the PURCHASER in the presence of: /s/ Illegible
SIGNED by PETRODRILL FOUR LIMITED
on behalf of the NEW PURCHASER in the presence of: /s/ Illegible
-3-
EXHIBIT 10.25(G)
EXHIBIT 6 TO SECURITY AGREEMENT DOCUMENT 18
AMENDMENT NO. 1 TO
SEMI-SUBMERSIBLE DRILLING VESSEL CONSTRUCTION CONTRACT
BETWEEN
TDI-HALTER, LIMITED PARTNERSHIP
AND
PETRODRILL FOUR LIMITED
DATED APRIL 9, 1999
This Amendment No. 1 is entered into this 9th day of April, 1999,
between TDI-HALTER, LIMITED PARTNERSHIP ("Builder"), and PETRODRILL FOUR LIMITED
("Purchaser") to that Semi-Submersible Drilling Vessel Construction Contract
dated April 9, 1998 (Hull No. 1828) (the "Original Contract").
WHEREAS, the Original Contract was novated by PETRODRILL
OFFSHORE, INC. (formerly Petrodrill Construction Inc.) to Purchaser by
Novation Agreement dated as of December 9, 1998;
WHEREAS, on the Closing Date the Purchaser will issue its United
States Government Guaranteed Export Ship Financing Obligations, AMETHYST 4
Series (the "Obligations"), in order to finance the construction of the Vessel
which is the subject of the Original Contract;
WHEREAS, the United States of America, represented by the Secretary
of Transportation, acting by and through the Maritime Administrator, is
guaranteeing the payment of the outstanding principal of and interest on the
Obligations pursuant to Title XI of the Merchant Marine Act, 1936, as amended;
WHEREAS, the proceeds of the Obligations will be used for payment to
the Builder in accordance with the terms of this Contract; and
WHEREAS, the Purchaser and the Builder in order to induce the
Secretary to guarantee the Obligations, wish to amend the Original Contract as
detailed herein;
NOW THEREFORE, in consideration of these premises, the mutual
benefit set forth herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Purchaser and Builder
agree as follows:
<PAGE>
1. INSPECTION BY THE SECRETARY'S REPRESENTATIVES. The Builder shall
permit inspection by, supply information to, and cooperate with representatives
of the Secretary at its yard where the assembly of the Vessel is now taking
place and at such other yards of the Builder, its affiliates and subcontractors
where parts of the Construction Contract or subcontracts may be performed.
Builder acknowledges that such cooperation may include, but is not limited, to
providing the Secretary 1) reasonable access to the Vessel and areas of the
Builder where work related to the Vessel is being performed by the Builder, its
contractors and subcontractors, at all reasonable times during normal working
hours to inspect performance of the Work and to observe trials and other tests,
2) copies of detailed production schedules for the Vessel along with changes to
such schedules as they occur, 3) reasonable access to contract plans and
specifications for the Vessel, 4) reasonable access to Builder's production
manager or supervisor, 5) information on the origination and source of
materials, and 6) reasonable access to progress payment and construction
milestone information for the purpose of verifying (i) completion in accordance
with the representations made to the Secretary, including, but not limited to,
representations concerning the Vessel's Actual Cost, as defined in the Security
Agreement, and (ii) compliance of the construction with the plans and
specifications and the other terms of the Construction Contract. In conjunction
with any such inspections by the Secretary, the Builder will furnish, on a
temporary basis, reasonable space at its yard for the Secretary representatives
and communication, copying and other facilities as appropriate. The Secretary's
access to the Vessel shall be at the Secretary's and Purchaser's sole risk. The
Builder assumes no responsibility save for its own gross negligence or
intentional acts, and Purchaser assumes full liability for any injury that the
Secretary or its representatives, agent or contractor may sustain on the Vessel
during its construction and the Purchaser hereby fully releases and discharges
the Builder from any liability with respect thereto.
2. CHANGES IN CONSTRUCTION CONTRACT. Notwithstanding anything to the
contrary contained in the Construction Contract, the Construction Contract shall
not be amended, modified or terminated after April 9, 1999, except in writing
duly signed by the Builder and Purchaser with the prior written consent of the
Secretary, provided that the Secretary's prior written consent shall not be
necessary, but written notice to the Secretary shall be given, for (a) any
mandatory change to the Construction Contract as a result of any requirements of
any governmental agency, or (b) any non-mandatory changes that Builder and
Purchaser desire to make which do not exceed, with respect to any item of the
Vessel's construction, one (1%) percent of the Vessel's Contract Price and which
do not, in the aggregate, cause the Vessel's Contract Price to be increased more
than five (5%) percent or the delivery and completion date of the Vessel to be
extended more than ten (10) days. Notwithstanding the foregoing, no change shall
be made in the general dimensions and/or characteristics of the Vessel which
would diminish the capacity of the Vessel to perform as originally intended by
the Construction Contract, without the prior written consent of the Secretary.
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<PAGE>
3. INSURANCE.
a. Until each Vessel has been completed, physically delivered at the
place of delivery and accepted by Purchaser, Purchaser shall cause such Vessel
and all materials, outfitting, equipment and appliances to be installed in the
Vessel including all materials, outfitting, equipment and appliances provided by
the Builder or Purchaser and delivered to Builder for the construction of the
Vessel or in the construction thereof, to be insured under a full form Builder's
Risk Policy under the latest American Institute Builder's Risk Form in force and
effect at the time that the construction of the Vessel is commenced when the
Vessel's keel is laid, all at Purchaser's expense. Such policy(ies) shall name
the Builder, the Purchaser and the United States of America as assureds. The
policy(ies) shall provide that there shall be no recourse against the Builder
and the United States of America for payment of any premiums; provided, however,
the United States of America and Builder shall be subject to cancellation upon
30 days prior written notice as set forth below. The policy(ies) shall also
provide a 30 day prior written notice of cancellation or material change in the
policy to the Builder and the United States of America (U.S. Department of
Transportation, Maritime Administration 400 Seventh St. S.W., Washington D.C.
20590 Attention, Chief, Division of Marine Insurance). The amounts, terms and
conditions, deductibles and underwriters of the Builder's Risk Policy(ies) shall
at all times be satisfactory to the Builder and the Secretary.
b. The Builder's Risk policy(ies) shall provide that all losses in
excess of $500,000 shall be paid to the Secretary for distribution by him to
himself, the Builder and the Purchaser in accordance with the Security Agreement
between the Purchaser and the Secretary, MA-13505, dated April 9, 1999,
involving the Vessel and the Construction Contract.
c. Builder shall also purchase and maintain, at its expense, during
the life of the Construction Contract, Worker's Compensation Insurance at
statutory amounts, with Longshoreman & Harbor Workers Compensation Act coverage
endorsements and Employer's Liability Insurance in the amount of at least Two
Million Dollars ($2,000,000).
d. A satisfactory confirmation of insurance outlining the pertinent
terms and conditions of the Builder's Risk Policy(ies) referred to above shall
be provided to the Builder and the Secretary. The Purchaser shall be furnished a
certificate of insurance for all other policies required hereunder. The original
of the said Builder's Risk Policy shall be available in the Purchaser's office.
All of the policies of insurance and certificates referred to herein shall
contain a provision requiring the insurer at risk to give Purchaser, Builder and
the Secretary thirty (30) days' notice, in writing prior to cancellation of any
such insurance.
4. PROGRESS PAYMENTS. The Construction Contract shall contain
provisions for making periodic payments for the work performed based performance
milestones related to the construction of the Vessel, after such milestones are
certified by the Purchaser and the Builder, or as otherwise provided in Clauses
4.1 and 4.2 of the Construction Contract.
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<PAGE>
5. CERTIFICATE OF NO LIENS. At the time of Closing, now scheduled for
April 9, 1999, and at the time of delivery of the Vessel and from time to time
as payments will be requested from amounts held in escrow by the Secretary or
from drawdowns from the Credit Facility established by the Credit Agreement, the
Builder agrees, on behalf of itself, or any party claiming through the Builder,
to execute certificates of no liens, in form and substance satisfactory to the
Secretary to the extent that the Builder has been paid for such items but with
exception for any liens, claims, security interests and encumbrances which may
have been placed thereon by Purchaser in favor of a third party other than the
Builder or its employees, and liens for non-delinquent payments arising in the
ordinary course of Builder's business which liens Builder hereby warrants will
be discharged by Builder when due, with respect to the applicable Vessel, hull
or component parts for which payment is requested and with respect to all work
that has previously been accomplished.
6. SUBORDINATION. The Builder agrees to, and does hereby fully
subordinate to the rights of the Secretary all liens and security rights and
remedies to enforce such rights which the Builder has or may have with respect
to (i) all work, materials and components, incorporated in, or to be
incorporated in the hull and the Vessel ("the Equipment") to which title has
passed to Purchaser, and (ii) the Equipment that has not been paid for by the
Purchaser only to the extent that such unpaid for Equipment has actually been
incorporated into other Equipment, part of which has actually been paid for by
Purchaser. Prior to the Closing Date, the Builder shall provide to the Secretary
either (1) the release or subordination of any claim to a security interest or
other encumbrance relating to the Equipment, and the remedies to enforce such
rights, held or claimed by any of the Builder's lenders (which release or
subordination shall be in form and substance satisfactory to the Secretary), or
(2) an officer's certificate that the Builder has no lenders with any claim to a
security interest or other encumbrance relating to the Equipment.
7. EQUIPMENT PROCEEDS.
a. In the event that prior to delivery of the Vessel, following the
occurrence or during the continuance of any default by Purchaser under any
agreements with the Secretary, including but not limited to the Security
Agreement (the "Secretary's Documents") or by the Builder under the Construction
Contract, the Secretary shall have the sole right to sell the Equipment,
provided that the Secretary complies with Section 7(c) of this Amendment. Any
proceeds the Secretary receives from the sale of the Equipment, after deducting
any fees or costs it incurs in connection with the enforcement of its rights
under the Secretary's Documents, shall be distributed promptly between the
Builder and the Secretary on a Pro Rata Basis (as defined below) based on the
"Amount Due" (as defined below) to the Builder and the Secretary.
b. For the purposes of this section, the "Amount Due" to the Builder
shall include all payments then due to the Builder for materials purchased or
work performed, provided, however, if the Builder is in material default under
the Construction Contract as amended, such "Amount Due" to the Builder shall be
zero. For the purposes of this section, the "Amounts Due" to the Secretary shall
include all amounts secured by the Secretary's Documents related to the
Equipment. For the purposes of this section, the share to be distributed to a
party under the Pro Rata Basis shall be the net amount realized from the sale of
the Equipment times a fraction equal to the Amount Due that party divided by the
sum of the Amount Due both parties.
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<PAGE>
c. In the event of a Purchaser default and an enforcement of the
Secretary's Documents, the Secretary shall use reasonable efforts to expedite
the enforcement and foreclosure process for the enforcement of the Secretary's
Documents.
8. CONSENT OF BUILDER. The Builder will separately enter into a Consent
of Shipyard to the assignment by Purchaser to the Secretary, for purposes of
security, of all of Purchaser's right, title and interest in the Construction
Contract, and the proceeds thereof, if any such exist, or shall exist in the
future. Such proceeds include any amounts that may be due to be refunded to
Purchaser by the Builder or by any subcontractor or supplier to the Builder
arising out of the Construction Contract, as amended, and any subcontracts or
supply contracts into which the Builder has entered into or may enter into as a
part of construction process. In the event of a default of the Builder under the
Construction Contract, the Secretary may enforce Purchaser's rights hereunder.
In the event of any discrepancy between a position of the Secretary and a
position of the Purchaser, the Secretary's decision shall be binding on the
Purchaser.
9. DISTINCT OBLIGATIONS. Builder hereby agrees and acknowledges that
the obligations of Purchaser under the Construction Contract with regard to the
Vessel are separate, distinct and independent of any other obligation or
agreement of Purchaser and that a default by Purchaser under such other
obligation or agreement shall not in any way affect the obligations of Builder
under the Construction Contract with regard to the Vessel or permit Builder to
exercise any right of set-off or other remedy (all of which Builder expressly
waives and agrees not to assert) which could materially adversely affect the
Construction Contract, the Vessel or the construction thereof.
10. RIGHT TO CURE. Notwithstanding anything to the contrary contained in
the Construction Contract, Builder agrees to give the Secretary written notice,
concurrent with any notice given to the Purchaser under the Construction
Contract of any default by Purchaser and hereby grants the Secretary thirty (30)
days from the receipt of any such notice to cure any default under the
Construction Contract, and Builder agrees to take no action to enforce its
rights pursuant to the Construction Contract until the elapse of said thirty
(30) days.
11. SHIPYARD PLANS. Upon the delivery of the Vessel, or earlier if
feasible, upon the Secretary's request, Builder and Purchaser agree (at
Purchaser's expense) to submit to the Secretary one set of Builder plans, in
form and substance satisfactory to the Secretary, for the Vessel as built. The
Secretary shall not release the Plans to any third party unless required to do
so by court order; provided that the Secretary shall give notice to the
Purchaser and Builder of any request for such an order. Purchaser shall use its
best efforts to include a provision setting forth the terms of this Paragraph 11
in the Security Agreement between the Secretary and the Purchaser.
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<PAGE>
12. NOTICES. Any, notice or other communication required or permitted to
the Secretary under shall be sent by (i) certified mail, postage prepaid, (ii)
by nationally recognized overnight courier service, (iii) or by facsimile
transmission, confirmed by certified mail postage prepaid or by nationally
recognized overnight courier service, addressed as follows:
United States Maritime Administration
400 Seventh Street, S.W.
Washington, D.C. 20590
Attention: Office of Ship Finance
13. FURTHER AMENDMENTS TO CONTRACT. The Contract is further amended as
follows:
(a) REGISTRATION. The first sentence of Clause 2.8 is revised to
read as follows:
The Vessel shall upon delivery fly the flag of the
Commonwealth of The Bahamas and be registered in the Register of
Shipping in the Commonwealth of The Bahamas, all in accordance with
Purchaser's Modification Request number 1828-0001. The price for
this change order shall be determined in accordance with Clause 7 of
the Contract.
(b) PAYMENT SCHEDULE. The provisions relating to the Third through
Tenth Installments in Clause 4.1 are revised to read as follows:
THIRD INSTALLMENT:
Ten percent (10%) of the Contract Price, being Eight Million Four
Hundred Thousand U.S. Dollars (US$ 8,400,000), shall be paid within
three Banking Days from receipt by the Purchaser of a telefax notice
from the Builder attaching a Stage Certificate in the form of the
draft attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that Start of Fabrication has taken place,
which is defined as the welding together of the first two plates on
the basis that it is the start of a continuous production program.
FOURTH INSTALLMENT:
Fifteen percent (15%) of the Contract Price, being Twelve Million
Six Hundred Thousand U.S. Dollars (US $12,600,000), shall be paid
within three Banking Days from receipt by the Purchaser of a telefax
notice from the Builder attaching a Stage Certificate in the form of
the draft attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
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<PAGE>
Surveyor), certifying that the keel laying for the pontoons has
taken place, which is defined as 200 tons of steel having been
erected which can either be in one or two pontoons.
FIFTH INSTALLMENT:
Ten percent (10%) of the Contract Price, being Eight Million Four
Hundred Thousand U.S. Dollars (US $8,400,000), within three Banking
Days from receipt by the Purchaser of a telefax notice from the
Builder attaching a Stage Certificate in the form of the draft
attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that 60% of the total 2400 tons for the
pontoons (or 1440 tons) of steel have been erected.
SIXTH INSTALLMENT:
Five percent (5%) of the Contract Price, being Four Million Two
Hundred Thousand U.S. Dollars (US $4,200,000), within three Banking
Days from receipt by the Purchaser of a telefax notice from the
Builder attaching a Stage Certificate in the form of the draft
attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that the Pontoons of the Vessel have
successfully been launched, which is defined as the pontoons being
afloat without any global structural damage having been incurred.
For the sake of clarification, localized structural damage shall not
constitute a reason for non-payment of the milestone.
SEVENTH INSTALLMENT:
Five percent (5%) of the Contract Price, being Four Million Two
Hundred Thousand U.S. Dollars (US $4,200,000), within three Banking
Days from receipt by the Purchaser of a telefax notice from the
Builder attaching a Stage Certificate in the form of the draft
attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that the main engines have been started, which
is defined as all engines having been started and run for a period
of at least 4 hours.
EIGHTH INSTALLMENT:
Ten percent (10%) of the Contract Price, being Eight Million Four
Hundred Thousand U.S. Dollars (US $8,400,000), within three Banking
Days from receipt by the Purchaser of a telefax notice from the
Builder attaching a Stage Certificate in the form of the draft
attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that
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<PAGE>
the substructure and drillfloor has been installed on the deckbox,
which is defined as the drillfloor having been fitted upon its
supports, tacked in place and being ready for permanent welding.
NINTH INSTALLMENT:
Ten percent (10%) of the Contract Price, being Eight Million Four
Hundred Thousand U.S. Dollars (US $8,400,000), within three Banking
Days from receipt by the Purchaser of a telefax notice from the
Builder attaching a Stage Certificate in the form of the draft
attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that the deckbox has been launched and
successfully mated with the Pontoons and Columns, which is defined
as the deckbox having been fitted up, tacked in place and the rig
safely returned to the quayside with all barges removed and being
ready to start permanent welding of the deck box connections.
TENTH INSTALLMENT:
Seven and a half percent (7.5%) of the Contract Price, being Six
Million Three Hundred Thousand U.S. Dollars (US $6,300,000), within
three Banking Days from receipt by the Purchaser of a telefax notice
from the Builder attaching a Stage Certificate in the form of the
draft attached as Appendix V, countersigned by an Authorized
Representative (or, in default thereof, the Classification
Surveyor), certifying that Seatrials have commenced, which is
defined as the Vessel having left the quayside to commence trials at
sea.
ELEVENTH INSTALLMENT:
Seven and a half percent (7.5%) of the Contract Price, being Six
Million Three Hundred Thousand U.S. Dollars (US $6,300,000),
together with any increase or any decrease of the Contract Price
arising from the provisions of Clauses 4.8, 6, and 16 below, shall
be paid upon delivery.
(c) BONUS SCHEDULE. A new Clause 4.8 is added to read as
follows:
If the Vessel is delivered prior to the Contractual Delivery
Date (as amended by this Amendment No. 1 and as extended by
Permissible Delays), the Purchaser shall pay to Builder Sixty
Thousand U.S. Dollars ($60,000) for each day that the Vessel is
delivered before the Contractual Delivery Date (as amended by this
Amendment No. 1 and as extended by Permissible Delays).
(d) FOURTH INSTALLMENT. Not withstanding any other provision of the
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<PAGE>
Contract, the parties agree that the Fourth Installment shall be due April
11, 1999 and that the Builder will not exercise its right to rescind the
Contract under Clause 18.3, prior to April 11, 1999.
(e) LIGHTSHIP WEIGHT. With respect to Clause 6, the Purchaser will
at its own cost and expense engineer the detailed design of blisters as a
contingency measure. The size of each blister will be as large as possible
with the existing constraints of the Vessel such that it does not
significantly effect the Vessel's motion characteristics or operational
performance. In the event that such blisters are required to be installed,
Purchaser will not exercise its rights to rescind the Contract by reason
of delay for the fabrication, installation or testing of the blisters
under Clause 16.3 for an additional period of ninety (90) days, beyond the
date that Builder is in default under Clause 16.3 of the Contract provided
that Builder has otherwise completed its scope of work for the Vessel
except for the fabrication, installation or testing of the blisters, and
except as a result of any scope of work that cannot be completed as a
result of the need to install the blisters, such as sea trials.
(f) DELIVERY. The first sentence of Clause 14.1 of the contract is
revised to read as follows:
The Vessel shall be delivered by the Builder to the Purchaser
at the Shipyard (or other place as may be agreed with unrestricted
access to the open sea) on 9th June, 2000, except that, in the event
of Permissible Delay as defined in Clause 15.4 hereof, the
aforementioned date shall be postponed accordingly.
(g) LIQUIDATED DAMAGES. The first two sentences of Clause 16.2 are
revised to read as follows:
If the delivery of the Vessel is delayed, then, in such event,
beginning at twelve o'clock midnight on the Contractual Delivery
Date, the Builder shall pay to the Purchaser as agreed liquidated
damages and not by way of penalty, the following amounts:
a. 1- 30 days of delay USD $20,000 per day
b. 31-to actual delivery USD $40,000 per day
It being understood that in no event shall the Builder's obligations
for such liquidated damages exceed USD $2,000,000.
(h) ENGINEERING. The Purchaser shall use its best efforts to assist
the Builder in the completion of Builder's engineering, and to advise
Builder of preferred solutions, all in order to expedite the engineering
process in as efficient a manner as possible.
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<PAGE>
Builder and Purchaser agree to address these issues in a separate Teaming
Agreement.
14. DEFINITIONS. As used in this Amendment No. 1:
"Secretary" means the Secretary of Transportation or any
official or official body from time to time duly authorized to
perform the duties and functions of the Secretary of Transportation
under Title XI of the Act (including the Maritime Administration,
the Acting Maritime Administrator, and to the extent so authorized,
the Deputy Maritime Administrator and other officials of the
Maritime Administration).
"Security Agreement" means the security agreement, Contract No.
MA-13505, with respect to the Vessel, executed by the Purchaser and
the Secretary.
Capitalized terms not otherwise defined herein shall have the
meaning set forth in the Security Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
No. 1 as of the date set forth above.
WITNESS: TDI-HALTER, LIMITED PARTNERSHIP
Builder
BY: MARITIME HOLDINGS, INC.,
ITS GENERAL PARTNER
/s/ CHRISTINE B. ZUCKMAN By: /s/ CHUCK DECUIR
- - ------------------------------ -----------------------------
Vice President
WITNESS: PETRODRILL FOUR LIMITED
Purchaser
/s/ ROBERT W. RANDALL By: /s/ EARL W. MCNIEL
- - ------------------------------ -----------------------------
Secretary Treasurer
AGREED AND APPROVED:
Secretary of Transportation
Maritime Administrator
By: /s/ JOEL C. RICHARD
- - ------------------------------
Secretary
Maritime Administration
-11-
EXHIBIT 10.26
Bond No. SC 111 3329 7116
PERFORMANCE BOND
KNOW ALL MEN BY THESE PRESENTS: That we, TDI-Halter, L.P. (hereinafter called
"Principal") as Principal, and Fireman's Fund Insurance Company, a corporation
organized and existing under the laws of the State of California, and authorized
to transact business in the State of Mississippi (hereinafter called "Surety"),
as Surety, are held firmly bound unto Petrodrill Construction, Inc. (hereinafter
called "Obligee"), as Obligee, in the penal sum of Eighty Four Million and
no/100 US Dollars ($84,000,000.00), good and lawful money of the United States
of America, for the payment of which, well and truly to be made, we bind
ourselves, our heirs, administrators, executors, successors, and assigns,
jointly and severally, firmly by these presents.
Signed, Sealed and Dated this 13th day of April, 1998.
Whereas, the above bounden Principal has entered into a certain written contract
with the above-named Obligee, dated the 9th day of April, 1998 for One (1) fully
operational and complete self-propelled Dynamic Positioned Semi-Submersible
Drilling Vessel - Hull Number 1828 which contract is hereby referred to and made
a part hereof as fully and to the same extent as if copied at length herein.
NOW, THEREFORE, THE CONDITION OF THE ABOVE OBLIGATION IS SUCH, That if the above
bounden Principal shall well and truly keep, do and perform, each and every, all
and singular, the matters and things in said contract set forth and specified to
be by the said Principal kept, done and performed at the time and in the manner
in said contract specified, and shall pay over, make good and reimburse to the
above-named Obligee, all loss and damage which said Obligee may sustain by
reason of failure or default on the part of said Principal, then this obligation
shall be void; otherwise to be and remain in full force and effect.
TDI-HALTER, L.P.
________________________________
Principal
/s/ Illegible
FIREMAN'S FUND INSURANCE COMPANY
________________________________
Surety
By /s/ Illegible
________________________________
Tomi J. Braun, Attorney-in-Fact
<PAGE>
GENERAL
POWER OF
ATTORNEY FIREMAN'S FUND INSURANCE COMPANY
KNOW ALL MEN BY THESE PRESENTS: That FIREMAN'S FUND INSURANCE COMPANY, a
Corporation duly organized and existing under the laws of the State of
California, and having its principal office in the County of Marin, State of
California, has made, constituted and appointed, and does by these presents
make, constitute and appoint JERRY P. ROSE, TOMI J. BRAUN, DON E. CORNELL, L.
RAY PITTS, JR., ROBBI MORALES, jointly or severally, Dallas, TX its true and
lawful Attorney(s)-in-Fact, with full power and authority hereby conferred in
its name, place and stead, to execute, seal, acknowledge and deliver any and all
bonds, undertaking, recognizances or other written obligations in the nature
thereof and to bind the Corporation thereby as fully and to the same extent as
if such bonds were signed by the President, sealed with the corporate seal of
the Corporation and duly attested by its ecretary, hereby ratifying and
confirming all that the said Attorney(s)-in-Fact may do in the premises.
This power of attorney is granted pursuant to Article VII, Sections 45 and 46 of
By-laws of FIREMAN'S FUND INSURANCE COMPANY now in full force and effect.
"Article VII. APPOINTMENT AND AUTHORITY OF RESIDENT SECRETARIES,
ATTORNEY-IN-FACT AND AGENTS TO ACCEPT LEGAL PROCESS AND MAKE APPEARANCES.
Section 45. APPOINTMENT. The Chairman of the Board of Directors, the
President, any Vice-President or any other person authorized by the Board of
Directors, the Chairman of the Board of Directors, the President or any
Vice-President may, from time to time, appoint Resident Assistant Secretaries
and Attorneys-in-Fact to represent and act for and on behalf of the Corporation
and Agents to accept legal process and make appearances for and on behalf of its
Corporation.
Section 46. AUTHORITY. The authority of such Resident Assistant
Secretaries, Attorneys-in-Fact and Agents shall be as prescribed in the
instrument evidencing their appointment. Any such appointment and all authority
granted thereby may be revoked at any time by the Board of Directors or by any
person empowered to make such appointment."
This power of attorney is signed and sealed under and by the authority of the
following Resolution adopted by the Board of Directors of FIREMAN'S FUND
INSURANCE COMPANY at a meeting duly called and held on the 7th day of August,
1984, and said Resolution has not been amended or repealed:
"RESOLVED, that the signature of any Vice-President, Assistant Secretary,
and Resident Assistant Secretary of this Corporation, and the seal of this
Corporation may be affixed or printed on any power of attorney, on any
revocation of any power of attorney, or on any certificate relating thereto, by
facsimile, and any power of attorney, and revocation of any power of attorney,
or certificate bearing such facsimile signature or facsimile seal shall be valid
and binding upon the Corporation."
<PAGE>
IN WITNESS WHEREOF, FIREMAN'S FUND INSURANCE COMPANY has caused these presents
to be signed by its Vice-President, and its corporate seal to be hereunto
affixed this 23rd day of September, 1997.
FIREMAN'S FUND INSURANCE COMPANY
By /s/ Illegible
____________________________________
Vice-President
STATE OF CALIFORNIA ss.
ss.
COUNTY OF MARIN ss.
On this 23rd day of September, 1997, before me personally came M.A. Mallonee, to
me known, who, being by me duly sworn, did depose and say: that he is
Vice-Ptesident of FIREMAN'S FUND INSURANCE COMPANY, the Corporation described in
and which executed the above instrument; that he knows the seal of said
Corporation; that the seal affixed to the said instrument is such corporate
seal; that it was so affixed by order of the Board of Directors of said
Corporation and that he signed his name thereto by like order.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal,
the day and year herein first above written.
/s/ Illegible
____________________________________
Notary Public
<PAGE>
CERTIFICATE
STATE OF CALIFORNIA ss.
ss.
COUNTY OF MARIN ss.
I, the undersigned, Resident Assistant Secretary of FIREMAN'S FUND INSURANCE
COMPANY, a CALIFORNIA Corporation, DO HEREBY CERTIFY that the foregoing and
attached POWER OF ATTORNEY remains in full force and has not been revoked; and
furthermore that Article VII, Sections 45 and 46 of the By-laws of the
Corporation, and the Resolution of the Board of Directors; set forth in the
Power of Attorney, are now in force.
Signed and sealed at the County of Marin. Dated the 13th day of April, 1998.
/s/ ILLEGIBLE
____________________________________
Resident Assistant Secretary
EXHIBIT 10.27
LABOR & MATERIAL PAYMENT BOND
THIS BOND IS ISSUED SIMULTANEOUSLY WITH PERFORMANCE BOND IN FAVOR OF THE OWNER
CONDITIONED ON THE FULL AND FAITHFUL PERFORMANCE OF THE CONTRACT
KNOW ALL MEN BY THESE PRESENTS:
That TDI-Halter, L.P., 1601 South Childers Road, Orange Texas 77631 as
Principal, hereinafter called Principal, and Fireman's Fund Insurance Company,
777 San Marin Dr., Novato, CA 94998, as Surety, hereinafter called Surety, are
held and firmly bound unto Petrodrill Construction, Inc., Suite 205, Saffrey
Square, P.O. Box N8188, Nassau, Bahamas as Obligee, hereinafter called Owner,
for the use and benefit of claimants as hereinbelow defined, in the amount of
Eighty Four Million and no/100 US Dollars ($84,000,000.00), for the payment
whereof Principal and Surety bind themselves, their heirs, executors,
administrators, successors and assigns, jointly and severally, firmly by these
presents.
WHEREAS, Principal has by written agreement dated April 9, 1998 entered into a
contract with Owner for One (1) fully operational and complete self-propelled
Dynamic Positioned Semi-Submersible Drilling Vessel - Hull Number 1828 in
accordance with drawings and specifications prepared by Petrodrill Construction,
Inc. which contract is by reference made a part hereof, and is hereinafter
referred to as the Contract.
NOW THEREFORE, THE CONDITION OF THIS OBLIGATION is such that, if Principal shall
promptly make payment to all claimants as hereinafter defined, for all labor and
material used or reasonably required for use in the performance of the Contract,
then this obligation shall be void; otherwise it shall remain in full force and
effect, subject, however, to the following conditions:
1. A claimant is defined as one having a direct contract with the Principal or
with a Subcontractor of the Principal for labor, material, or both, used or
reasonably required for use in the performance of the Contract, labor and
material being construed to include that part of water, gas, power, light, heat,
oil, gasoline, telephone service or rental of equipment directly applicable to
the Contract.
2. The above named Principal and Surety hereby jointly and severally agree with
the Owner that every claimant as herein defined, who has not been paid in full
before the expiration of a period of ninety (90) days after the date on which
the last of such claimant's work or labor was done or performed, or materials
were furnished by such claimant, may sue on this bond for the use of such
claimant, prosecute the suit to final judgment for such sum or sums as may be
justly due claimant, and have execution thereon. The Owner shall not be liable
for the payment of any costs or expenses of any such suit.
3. No suit or action shall be commenced hereunder by any claimant:
1
<PAGE>
(a) Unless claimant, other than one having a direct contract with the Principal,
shall have given written notice to any two of the following: The Principal, the
Owner, or the Surety above named, within ninety (90) days after such claimant
did or performed the last of the work or labor, or furnished the last of the
materials for which said claim is made, stating with substantial accuracy the
amount claimed and the name of the party to whom the materials were furnished,
or for whom the work or labor was done or performed. Such notice shall be served
by mailing the same by registered mail or certified mail, postage prepaid, in an
envelope addressed to the Principal Owner or Surety, at any place where an
office is regularly maintained for the transaction of business, or served in any
manner in which legal process may be served in the state in which the aforesaid
project is located, save that such service need not be made by a public officer.
(b) After the expiration of one (1) year following the date on which Principal
ceased Work on said Contract, it being understood, however, that if any
limitation embodied in this bond is prohibited by any law controlling the
construction hereof such limitation shall be deemed to be amended so as to be
equal to the minimum period of limitation permitted by such law.
(c) Other than in a state court of competent jurisdiction in and for the county
or other political subdivision of the state in which the Project, or any part
thereof, is situated, or in the United States District Court for the district in
which the Project, or any part thereof, is situated, and not elsewhere.
4. The amount of this bond shall be reduced by and to the extent of any payment
or payments made in good faith hereunder, inclusive of the payment by Surety of
mechanics' liens which may be filed of record against said improvement, whether
or not claim for the amount of such lien be presented under and against this
bond.
Signed and sealed this 13th day of April A.D. 1998.
/s/ illegible
_____________________________ TDI-Halter, L.P.
(Principal) (Seal)
By: /s/ Illegible
________________________________________
Title
/s/ Illegible
_____________________________ Fireman's Fund Insurance Company
(Surety) (Seal)
By /s/ Illegible
_________________________________________
Tomi J. Braun Attorney-in-Fact
2
<PAGE>
GENERAL
POWER OF
ATTORNEY
FIREMAN'S FUND INSURANCE COMPANY
KNOW ALL MEN BY THESE PRESENTS: That the FIREMAN'S FUND INSURANCE COMPANY, a
Corporation duly organized and existing under the laws of the State of
California, and having its principal office in the County of Marin, State of
California, has made, constituted and appointed, and does by these presents,
make, constitute and appoint JERRY P. ROSE, TOMI J. BRAUN, DON E. CORNELL, L.
RAY PITTS, JR., ROBBI MORALES, jointly or severally, DALLAS, TEXAS its true and
lawful Attorney(s)-in-Fact, with full power and authority hereby conferred in
its name, place and stead, to execute, seal, acknowledge and deliver any and all
bonds, undertaking, recognizances or other written obligations in the nature
thereof and to bind the Corporation thereby as fully and to the same extent as
if such bonds were signed by the President, sealed with the corporate seal of
the Corporation and duly attested by its Secretary, hereby ratifying and
confirming all that the said Attorney(s)-in-Fact may do in the premises.
This power of attorney is granted pursuant to Article VII, Sections 45 and 46 of
By-laws of FIREMAN'S FUND INSURANCE COMPANY now in full force and effect.
"Article VII. Appointment and Authority of Resident Secretaries,
Attorney-in-Fact and Agents to accept Legal Process and Make Appearances.
Section 45. Appointment. The Chairman of the Board of Directors, the
President any Vice-President or any other person authorized by the Board of
Directors, the Chairman of the Board of Directors, the President or any
Vice-President may, from time to time, appoint Resident Assistant Secretaries
and Attorneys-in-Fact to represent and act for an on behalf of the Corporation
and Agents to accept legal process and make appearances for and on behalf of the
Corporation.
Section 46. Authority. The authority of such Resident Assistant
Secretaries, Attorneys-in-Fact and Agents shall be as prescribed in the
instrument evidencing their appointment. Any such appointment and all authority
granted thereby may be revoked at any time by the Board of Directors or by any
person empowered to make such appointment."
This power of attorney is signed and sealed under and by the authority of the
following Resolution adopted by the Board of Directors of FIREMAN'S FUND
INSURANCE COMPANY at a meeting duly called and held on the 7th day of August,
1984, and said Resolution has not been amended or repealed:
"RESOLVED, that the signature of any Vice-President, Assistant Secretary,
and Resident Assistant Secretary of this Corporation, and the seal of this
Corporation may be affixed or printed on any power of attorney, on any
revocation of any power of attorney, or on any certificate relating thereto, by
facsimile, and any power of attorney, any revocation of any power
3
<PAGE>
of attorney, or certificate bearing such facsimile signature or facsimile seal
shall be valid and binding upon the Corporation."
IN WITNESS WHEREOF, FIREMAN'S FUND INSURANCE COMPANY has caused these presents
to be signed by its Vice-President, and its corporate seal to be hereunto
affixed this 23rd day of September, 1997.
FIREMAN'S FUND INSURANCE COMPANY
By /s/ Illegible
_____________________________________________
Vice President
STATE OF CALIFORNIA ss.
ss.
COUNTY OF MARIN ss.
On this 23rd day of September, 1997, before me personally came M.A. Mallonee to
me known, who, being by me duly sworn, did depose and say: that he is
Vice-President of FIREMAN'S FUND COMPANY, the Corporation described in and which
executed the above instrument; that he knows the seal of said Corporation; that
the seal affixed to the said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said Corporation and that he
signed his name thereto by like order.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed by official seal,
the day and year herein first above written.
/s/ Illegible
(SEAL) _____________________________________________
Notary Public
CERTIFICATE
STATE OF CALIFORNIA ss.
ss.
COUNTY OF MARIN ss.
I, the undersigned, Resident Assistant Secretary of FIREMAN'S FUND INSURANCE
COMPANY, a CALIFORNIA Corporation, DO HEREBY CERTIFY that the foregoing and
attached POWER OF ATTORNEY remains in full force and has not been revoked; and
furthermore that Article VII, Sections 45 and 46 of the By-laws of the
Corporation, and the Resolution of the Board of Directors; set forth in the
Power of Attorney, are now in force.
4
<PAGE>
Signed and sealed at the County of Marin. Dated the 13th day of April, 1998.
/s/ Illegible
____________________________________________
Resident Assistant Secretary
5
EXHIBIT 10.28
PETRODRILL CONSTRUCTION, INC.
HULL 1828
PARENT GUARANTEE
In order to induce PETRODRILL, CONSTRUCTION, INC. (Purchaser) and/or any
affiliate or sister company of Petrodrill Construction, Inc. to enter into
that/those certain Vessel Construction Contract(s) (the "Contract") between
Purchaser and TDI-HALTER, L.P. ("Builder"), dated on or about April 9, 1998,
Halter Marine Group, Inc. a Delaware corporation ("Guarantor") represented
herein by its duly authorized Chief Operating Officer (COO), Daniel J. Mortimer,
does hereby unconditionally and irrevocably guarantee to Purchaser prompt and
faithful performance of, and compliance with, all obligations, covenants, terms,
conditions and undertakings of Builder contained in the Contract in accordance
with the respective terms thereof. Such guarantee is an absolute, unconditional,
present and continuing guarantee of performance and compliance.
IN WITNESS WHEREOF, Guarantor has executed this Parent Guarantee as of this
15th day of April, 1998.
HALTER MARINE GROUP, INC.
By: /s/ DANIEL J. MORTIMER
Daniel J. Mortimer
Chief Operating Officer
EXHIBIT 10.29
PETRODRILL SEVEN LIMITED
- AND -
PETRODRILL ENGINEERING N.V.
------------------------------------------------
AMETHYST 7 CONSTRUCTION MANAGEMENT AGREEMENT
------------------------------------------------
<PAGE>
THIS AGREEMENT is made the 5th day of November 1998,
BETWEEN:
1. PETRODRILL SEVEN LIMITED., a company incorporated in the British Virgin
Islands with its registered office at Arias, Fabrega & Fabrega, P.O. Box
985, Omar Hodge Building, Wickhams Cay, Road Town, Tortola, British
Virgin Islands (such company or its assignee pursuant to a Construction
Contract Assignment hereinafter referred to as the Owner ); and
2. PETRODRILL ENGINEERING N.V., a company incorporated in the Netherlands
Antilles under registration number 77521 with its registered office at
Anthony Veder Building, Kaya Jacob Posner, Willemstad, Curacao,
Netherlands Antilles (hereinafter referred to as the Construction
Manager ).
The Owner and the Construction Manager are also hereinafter referred to
individually as Party and collectively as Parties .
WHEREAS:
A. The Owner has entered into a contract, (the SHIPBUILDING CONTRACT ) with
Daewoo Heavy Industries (the BUILDER ), for the construction and sale of
a dynamically positioning semi-submersible drilling unit (a VESSEL ).
B. The Owner appoints the Construction Manager and the Construction Manager
accepts the appointment in relation to the Vessels under the terms and
conditions set forth in this Agreement.
NOW IT IS AGREED as follows :
1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the
same meanings assigned to such terms in the Amethyst Financial Company
Ltd. s Shareholders Agreement among Drillpetro Inc., Techdrill Inc.
and Westville Management Corporation.
DELIVERY means in relation to the Vessel the date of the Protocol of
Delivery and Acceptance signed by the Builder and the Owner, pursuant to
the Shipbuilding Contract.
MANAGEMENT SERVICES means the construction supervision, managing,
accounting and budgeting, facilities and related services more
particularly described in this Agreement.
OWNER S PROJECT MANAGERS means the person appointed in writing by the
Owner to represent Owner in all dealings between the Owner and the
Construction Manager.
2
<PAGE>
2. APPOINTMENT
2.1 With effect from the date hereof and continuing until terminated in
accordance with the provisions of this Agreement, the Owner hereby
appoints the Construction Manager and the Construction Manager hereby
accepts appointment in accordance with the provisions hereof.
2.2 The Construction Manager undertakes to provide the Management Services
specified in Clause 2.3 below with respect to the Rig on behalf of the
Owner in an efficient manner and to protect and promote the interests of
the Owner in all matters relating to the construction of the Vessel.
2.3 Prior to the commencement of construction of the Vessel under the
Shipbuilding Contract, the Construction Manager undertakes to perform the
following (non-exclusive) functions with respect to the Vessel:
2.3.1 informing itself of the provisions of the Shipbuilding Contract, a
copy of which has been provided to it;
2.3.2 liasing with the appointed design consultants (if any) in respect of
the Vessel s drawings and the basic design of the Vessel s
substructure in consultation with the Owner and the Owner s Project
Manager and the other contractors of the Owner, as instructed by the
Project Manager;
2.3.3 obtaining all necessary permissions, consents and authorisations in
respect of the Vessel s drawings from the relevant, Classification
Society and other relevant agencies;
2.3.4 submitting of documentation, information and drawings to the
Builder as provided in the Shipbuilding Contract;
2.3.5 liasing with the Builder during the entire period of the
construction of the Vessel in relation to any requests for
information/classification which he may have; and
2.3.6 making all necessary arrangements, in liaison with the Builder and
the Owner s Project Manager for effective performance of the
Shipbuilding Contract.
2.4 During the construction of the Vessel under the Shipbuilding Contract, the
Construction Manager will appoint, with respect to the Vessel, the Owner s
Representative (as referred to in the Shipbuilding Contract) and
undertakes to perform, with respect to the Vessel, the following
(non-exclusive) functions:
2.4.1 to notify the Builder without delay of any materials or workmanship
which do not conform to the requirements of the Shipbuilding
Contract and to oversee the satisfactory rectification by the
Builder of all defective materials or workmanship.
3
<PAGE>
The Owner s Project Manager shall be kept promptly and fully
informed of all defects identified by the Construction Manager,
including details of the rectification thereof. The initial Owner s
representative will be Mr J.P. Durand.
Where the Construction Manager is required by the provisions of this
Agreement to notify or inform the Owner s Project Manager of any
matter, such notification shall be made in writing;
2.4.2 the Construction Manager shall promptly inform the Owner s Project
Manager of any change in existing laws, rules, regulations or
governmental requirements or Classification Society s requirements
which may require any alteration to the specifications or drawings
attached to the Vessel to ensure its compliance with such
requirements;
2.4.3 in the event of any alteration or modification which is necessary
under Clause 2.4.2 being accepted by the Owner s Project Manager,
the Construction Manager will advise him on any consequential
alterations in the Contract price and change in the Construction
schedule and/or Delivery of the Vessel;
2.4.4 to allow any reasonable substitution of materials which the Builder
wishes to make in accordance with the Shipbuilding Contract,
provided these are acceptable to the Classification Society or by
normal standards of marine construction practice. The Construction
Manager before making any such decision must inform the Owner s
Project Manager of proposed substitution and obtain his written
consent thereto;
2.4.5 in the event of the Vessel (including her machinery, engines or
materials appropriated to her) sustaining damages before Delivery,
to advise the Owner s Project Manager on the steps which in the
Construction Manager s opinion (subject to the approval of the
Classification Society Surveyors) need to be taken to make good such
damage with an estimate of the likely cost and any other
implications;
2.4.6 to advise the Owner s Project Manager of any amount to be paid to
the Builder in respect of any fuel, lubricating oils and consumable
stores remaining onboard the Vessel after Delivery by the Builder;
2.4.7 to advise the Owner s Project Manager and make recommendations as to
whether the Vessel has been completed in accordance with the
Specification, is fully commissioned and is ready for Delivery;
2.4.8 to procure as agent for and on behalf of the Owner the Owner
Furnished Equipment on terms previously agreed with the Owner. The
Construction Manager shall procure that any Owner Furnished
Equipment shall be marked as the Owner s property;
2.4.9 to check and verify with the Builder that the Owner Furnished
Equipment has been received in good condition, complete and
undamaged and in accordance with related purchase orders. Where
applicable, to immediately inform the Owner s Project Manager of any
damage to or deficiency in such equipment or any deviation from the
relevant purchase order;
4
<PAGE>
2.4.10to prepare a cash requirement schedule for submission to the
Owner s Project Manager to obtain the necessary approval and
financing so that sufficient funds are available for procurement;
2.4.11to open and operate a disbursement account in the name of the Owner
for payment of Owner Furnished Equipment and other agreed
disbursements.
2.4.12the Construction Manager shall provide to the Owner s Project
Manager, as soon as possible a critical path analysis setting out
all tasks to be performed in connection with the construction of the
Vessel and the procurement of Owner Furnished Equipment;
2.4.13to procure any necessary equipment which is not budgeted for by the
Owner and to approve any change order without first referring to the
Owner s Project Manager PROVIDED THAT the cost of such
equipment/change order is below US$10,000.00 and/or the aggregate in
any one month is below US$100,000;
2.4.14in the event of delay in the Construction Schedule due to late
delivery of Owner Furnished Equipment, the Construction Manager
shall advise the Owner s Project Manager of any claim made by the
Builder for an extension of the Delivery;
2.4.15to immediately advise the Owner s Project Manager and copy to him
any notice which may be given by the Builder under the Shipbuilding
Contract;
2.4.16to submit to the Owner s Project Manager every fourteen days a
detailed construction-in-progress report covering all aspects of the
Vessel s construction and equipment. These reports must bring to the
attention of the Owner s Project Manager any problems or delay or
anticipated delay of which the Construction Manager is aware;
2.4.17to ensure that the Builder delivers to the Owner s Project Manager
all required certificates, upon Delivery, as specified in the
Shipbuilding Contract and Specification thereto;
2.4.18to observe all relevant tests and trials conducted by the Shipyard
on all Shipyard Furnished Equipment and report to the Owner s
Project Manager accordingly; and
2.4.19to sub-contract if so instructed by the Owner s Project Manager,
all functioning, commissioning and trial s to Formaritima N.V., the
Owner s Manager at least two months prior to anticipated date of
Delivery.
5
<PAGE>
3. PAYMENT FOR SERVICES AND EXPENSES
The Owner shall pay to the Construction Manager for its services under
this Agreement only the actual expenses incurred by the Construction
Manager in rendering those services. Reasonable requests for cash advances
to ensure that aforesaid expenses are not required to be carried/financed
by the Construction Manager, shall be complied with by the Owner and upon
signature hereof the Owner will pay to the Construction Manager the sum of
US$100,000 (one hundred thousand US Dollars) for the Vessel, to be
accounted for by the Construction Manager on an IMPREST basis.
4. DUTIES OF THE CONSTRUCTION MANAGER
4.1 PERSONNEL
4.1.1 The Construction Manager shall procure and use sufficient qualified
personnel, in order to ensure that the construction supervision of
the Vessel is at all times undertaken effectively and safely and in
compliance with the instructions of the Owner s Project Manager(s),
and in accordance with any regulations from relevant regulatory
bodies, authorities or Classification Societies and the provisions
of the Shipbuilding Contract.
4.1.2 The Construction Manager shall:
(a) use all reasonable endeavours to protect the Owner s interests
with respect to claims by or against third parties, including
the personnel employed in connection with the Services to be
provided hereunder; and
(b) keep the Owner fully informed regarding incidents which give
rise to claims by or against third parties.
4.1.3 The Construction Manager shall ensure that it is entered as having a
noted interest in the Owner s insurance and shall procure that it
and Owner shall be so noted on the Builders policies.
4.1.4 Each Owner s Project Manager shall be entitled, upon serving notice
in writing on the Construction Manager, to require the Construction
Manager to remove any individual from his role within the
Construction Manager s supervision team if the relevant Owner s
Project Manager is of the opinion that such individual is
incompetent or unsuited to his assigned role.
4.2 INSURANCE
4.2.1 The Construction Manager in consultation with the Owner shall ensure
that, at all times during its construction, the Vessel is kept
adequately and appropriately insured with reputable underwriters.
6
<PAGE>
4.2.2 The Construction Manager shall ensure that the insurance, where
appropriate and subject to the provisions of the Shipbuilding
Contracts, shall be maintained in the name of the Owner. However,
the Construction Manager, the Owner and the Builders shall be
listed as co-insured in all insurance policies. The Construction
Manager shall ensure that Builders insurance brokers, hull
underwriters and Protection and Indemnity representatives (if
applicable) shall provide full co-operation to the Owner s appointed
insurance brokers in connection with relevant insurance.
4.2.3 The Construction Manager shall arrange such additional insurance as
may from time to time instructed by any of the Owner s Project
Manager. The arrangement and maintenance of such additional
insurance shall not prejudice the arrangement or maintenance of any
insurance referred to in Clause 4.2.1.
4.2.4 The Construction Manager shall report as soon as practicable,
accidents or damage involving the Vessel and/or sickness or accident
of a serious nature, to any Owner s Project Manager and shall not
authorise or negotiate for repair or settle any claims in excess of
US$50,000 resulting from the same, without his written consent.
4.2.5 All insurance policies placed by the Owner or the Construction
Manager with respect to the Vessel shall provide for a waiver of
subrogation against the Construction Manager and the Owner.
5. BUDGETS
The Construction Manager shall prepare a budget for the Vessel on a
monthly basis and, not later than 7 days prior to the beginning of each
month, shall submit a draft budget for that month to the Owner s Project
Managers for approval.
6. CONSTRUCTION MANAGER S RIGHT TO SUB-CONTRACT
The Construction Manager shall not sub-contract any of its obligations
hereunder to a third party without the prior written consent of the
relevant Owner s Project Manager (such consent not to be unreasonably
withheld or delayed).
7. GENERAL ADMINISTRATION
7.1 The Construction Manager shall handle and settle all claims arising out of
the Management Services hereunder and keep each Owner s Project Manager
informed regarding any incident of which the Construction Manager becomes
aware which gives or may give rise to claims or disputes involving third
parties.
7.2 The Construction Manager shall, as instructed by the relevant Owner s
Project Manager, bring or defend actions, suits or proceedings in
connection with matters entrusted to the Construction Manager according to
this Agreement.
7.3 The Construction Manager shall be entitled to obtain legal, technical or
other expert advice in relation to the handling and settlement of claims
and disputes or all other matters affecting the interests of the Owner in
respect of the construction of the Vessels Provided that in circumstances
where the claim or dispute is more than US$10,000 the Manager shall first
obtain the relevant Owner s Project Manager s written consent.
7
<PAGE>
7.4 Any costs properly incurred by the Construction Manager in carrying out
its obligations under this Clause 7 shall be reimbursed by the Owner.
7.5 The Owner shall be entitled at all times during the period of this
Agreement to have audited the Construction Manager s accounts in respect
of all purchases of Owner Furnished Equipment and all disbursements
incurred with regard to this Agreement.
8. RATIFICATION OF ACTS OF CONSTRUCTION MANAGER AND INDEMNITIES
8.1 The Owner hereby ratifies, confirms and undertakes at all times to ratify
and confirm whatever may be done or caused to be done lawfully and
properly by the Construction Manager in the course of or in the provision
of the services hereby undertaken to be performed.
8.2 The Owner shall indemnify and hold harmless and the Construction Manager
shall indemnify and hold harmless its sub-contractors and their personnel
from and against all actions, proceedings, claims, demands or liabilities
whatsoever that may be brought against or incurred by its sub-contractors
or their personnel in relation to any matters arising out of such
sub-contracts unless the same has arisen from the gross negligence or
wilful misconduct of its sub-contractors or their personnel, in which
event the liability of such sub-contractor shall be limited to the
aggregate amount of the management fee received by such sub-contractor(s)
in the preceding 12 months.
8.3 LIABILITIES BETWEEN THE PARTIES
8.3.1 The Construction Manager shall hold harmless and indemnify the Owner
from and against all claims, costs expenses or liabilities arising
from or connected with the performance of this Agreement in respect
of:
(i) death of or personal injury to any of the personnel of the
Construction Manager s Group;
(ii) loss of or damage to the property of the Construction
Manager s Group;
(iii) any consequential or economic loss or damage suffered by the
Construction Manager s Group;
howsoever arising and irrespective of negligence or other breach of
legal duty by the Owner s Group.
8.3.2 The Owner shall hold harmless and indemnify the Construction Manager
from and against all claims, costs, expenses or liabilities arising
from or connected with the performance of this Agreement in respect
of:
(i) death of or personal injury to any of personnel of the
Owner s Group;
(ii) loss of or damage to the property of the Owner s Group; and
8
<PAGE>
(iii)any consequential or economic loss or damage suffered by
the Owner s Group;
howsoever arising and irrespective of negligence or other breach of
legal duty by the Construction Manager s Group.
8.3.3 For the purposes of this Clause, the Owner s Group means the
Owner, its associated companies, its other sub-contractors and
suppliers, Petrobras, and the officers, employees and agents of any
of them.
8.3.4 For the purposes of this Clause the Construction Manager s Group
means the Construction Manager, its associated companies, its
sub-contractors and suppliers and the officers, employees and agents
of any of them.
8.3.5 For the express purposes of this Clause 8.3, Liabilities Between the
Parties, of this Agreement only, the Owner 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 within
the Owner s Group and all such persons shall to this extent be
deemed to be parties to this Agreement.
8.3.6 For the express purposes of this Clause 8.3, Liabilities Between the
Parties, of this Agreement only, the Construction Manager 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
within the Construction Manager s Group and all such persons shall
to this extent be deemed to be parties to this Agreement.
9. COMPLIANCE WITH LAW AND REGULATIONS
The Construction Manager will not do or permit anything to be done which
might cause any breach or infringement of the laws and regulations of any
relevant jurisdiction.
10. DURATION OF THE AGREEMENT
10.1 Save as provided below, this Agreement shall come into effect with respect
to the Vessel on the date hereof and shall continue for one year after the
Delivery of the Vessel. Thereafter, it shall continue until terminated by
either party giving to the other notice of termination, in which event the
Agreement shall terminate upon the expiration of a period of three months
from the date upon which such notice is given.
10.2 Notwithstanding Clause 10.1 above, this Agreement may be terminated by a
Party if the other Party commits a material breach of its obligations
under this Agreement.
9
<PAGE>
10.3 In the event of termination of this Agreement with respect to the Vessel,
the Owner shall pay to the Construction Manager such amounts (if any) as
the Construction Manager (notwithstanding its best efforts to minimise the
effects of any such termination) may become legally liable to pay under
any contract of employment or by reason of any regulation or legislation
for employee protection to personnel who may have been employed by the
Construction Manager to perform any part of the services to be provided
under this Agreement and who shall become redundant as a result of such
termination.
10.4 If this Agreement is terminated for any reason whatsoever with respect to
any Vessel the Construction Manager hereby undertakes as follows:-
(a) to return to the relevant Owner s Project Manager all budgets,
forecasts and other documents relating to the construction of each
Vessel which it acquired during its appointment as Construction
Manager hereunder; and
(b) not to disclose to any person any confidential information regarding
the construction of each Vessel or concerning the Owner.
11. NOTICES
11.1 Any notice, demand or other communication to be made or delivered by the
amu Project Manager to the Construction Manager pursuant to this Agreement
shall (unless the Construction Manager has by 15 days written notice to
it specified another address) be made or delivered to the Construction
Manager at its registered office for the time being which is at present at
Petrodrill Engineering N.V. Anthony Veder Building, Kaya Jacob Posner,
Willemstad, Curacao, Netherlands Antilles (Fax 599 9461 6491) - marked for
the attention of the Managing Director.
11.2 Any notice, demand or other communication to be made or delivered by the
Construction Manager to the Owner s Project Manager pursuant to this
Agreement shall be made or delivered to the Owner at Petrodrill Seven
Limited c/o Arias, Fabrega & Fabrega, P.O. Box 985, Omar Hodge Building,
Wickham s Cay, Road Town, Tortola, British Virgin Islands, marked for the
attention of the Technical Director.
11.3 All notices shall be sent by telefax and a copy of each shall be sent to
the addressee by prepaid express registered airmail. Change of address
shall be notified at least five calendar days in advance.
12. ASSIGNMENT
The rights and obligations of the Parties hereunder may not be assigned
without the prior written consent of the other Party.
13. FORCE MAJEURE
A Party shall not be liable to the other for any failure to perform any or
all of its obligations under this Agreement (other than an obligation to
make payment) resulting directly or indirectly from a cause beyond the
reasonable control (force majeure) of that Party. In the event of any of
the foregoing the Party seeking to rely on the same shall use all
reasonable endeavours to find a mutually acceptable solution to the cause
of such event of force majeure with a view to resuming performance of its
obligations hereunder as soon as possible.
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14. LAW AND ARBITRATION
14.1 This Agreement shall in all respects be governed, construed and
interpreted in accordance with English law.
14.2 Any dispute or difference arising in connection with this Agreement shall
if possible be settled by mutual amicable agreement.
14.3 Any dispute between the Parties shall be settled by arbitration in London
in accordance with the provisions of the Arbitration Acts 1950-1996 and
any statutory modifications or re-enactments thereof for the time being in
force and shall be referred to a single arbitrator (an Arbitrator ) to be
appointed by the Parties hereto. If the Parties cannot agree upon the
appointment of the single Arbitrator the dispute shall be settled by three
Arbitrators, each Party appointing one arbitrator, the third being
appointed by the Chairman for the time being of the London Maritime
Arbitrators Association.
14.4 If either of the appointed Arbitrators refuses or is incapable of acting,
the Party who appointed him shall appoint a new Arbitrator in his place.
14.5 If one of the Parties fails to appoint an Arbitrator, either originally or
by way of substitution, for two weeks after the other party having
appointed his Arbitrator has sent the party making default notice by mail
or facsimile to make the appointment, the Party appointing the third
Arbitrator shall, after application from the Party having appointed his
Arbitrator, also appoint an Arbitrator on behalf of the Party making
default.
14.6 The award rendered by the Arbitration Court shall be final and binding
upon the Parties and may if necessary be enforced by the Court or other
competent authority in the same manner as a judgment in the Court of
Justice.
14.7 Performance under this Agreement shall, if reasonably possible, continue
during the Arbitration proceedings.
15. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the Parties hereto
and supersedes all prior negotiations, representations or agreements
relating to the subject matter of this Agreement whether written or oral.
No changes, alterations or modifications to this Agreement shall be
affected unless in writing and signed by the Parties hereto.
16. COUNTERPARTS
This Agreement may be executed simultaneously in any number of
counterparts each of which, when so executed, shall be deemed to be an
original and all of which taken together shall constitute one and the same
Agreement.
IN WITNESS WHEREOF the Parties have executed this Agreement the day and year
first above written.
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SIGNED by )/s/ Illegible
for and on behalf of )German Efromovich
PETRODRILL SEVEN LIMITED )/s/ Illegible
in the presence of: )Illegible
SIGNED by )/s/ Illegible
for and on behalf of )Illegible
PETRODRILL ENGINEERING N.V. )/s/ Frida A. Martinez
in the presence of: )Frida A. Martinez
12
EXHIBIT 10.33
PETRODRILL ENGINEERING N.V.
- and -
PRIDE-FORAMER S.A.
-------------------------------------
AMETHYST 7 SUPPLY AGREEMENT
------------------------------------
<PAGE>
THIS AGREEMENT is made the 5th day of November 1998.
BETWEEN:
1. PETRODRILL ENGINEERING N.V. a company incorporated in the Netherlands
Antilles under registration number 77521 and having its registered office
at Anthony Veder Building, Kaya Jacob Posner, Willemstad, Curacao,
Netherlands Antilles (hereinafter referred to as the Construction
Manager); and
2. PRIDE-FORAMER S.A. a company incorporated in France with its registered
office at 16 bis, rue Grange Dame Rose, 78143 Velizy-Villacoublay
(hereinafter referred to as Foramer).
The Construction Manager and Foramer are also hereinafter referred
to collectively as Parties and individually as Party.
WHEREAS:
A. The Construction Manager has entered into an agreement with Petrodrill
Seven Limited. (such company or its assignee pursuant to a Construction
Contract Agreement, the Owner) of even date herewith (the Construction
Management Agreement) whereby the Construction Manager has been appointed
by the Owner to oversee the construction of the Owner of a dynamically
positioned semisubmersible drilling or workover unit (the Vessels).
B. The Construction Manager is desirous that Foramer should provide to the
Construction Manager personnel in accordance with the terms and conditions
of this Agreement to assist the Construction Manager with various of the
technical services required by the Owner to be provided during the period
of the construction of the Vessel by the relevant shipyards (the
Builder) pursuant to the shipbuilding contract (the Shipbuilding
Contract).
NOW, THEREFORE in consideration of the mutual covenants and obligations
hereafter set forth, it is hereby agreed between the Parties as follows:
1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Amethyst Financial Company Ltd.s
Shareholders Agreement of even date herewith among Drillpetro Inc.,
Westville Management Corporation and Techdrill Inc.
2. OBJECT
The object of this Agreement is the supply by Foramer to the Construction
Manager of personnel such as, but not limited to, specified in Clause 4 of
this Agreement.
3. TERM
The term of this Agreement is for the period of the construction of the
Vessel by the Builder until delivery of the Vessel by the Builder to the
Owner. However, the Agreement may be terminated by the Construction
Manager at any time, for whatever cause, by written notice to Foramer of
not less than (90) days counted from the date following the receipt of
such written notice of termination.
2
<PAGE>
4. SCOPE OF SERVICES PROVIDED BY FORAMER
Foramer shall provide to the Construction Manager such personnel (the
Technical Personnel) as are requested by the Construction Manager to
assist the Construction Manager in relation to the construction of the
Vessel as a drilling or workover unit and the fulfilment of the
Construction Managers obligations to the Owner as set out in the
Construction Management Agreement. The provision of the Technical
Personnel shall be on the following basis:
4.1 the Technical Personnel provided by Foramer shall be suitably qualified to
advise and assist in connection with matters relating to the construction
of the Vessel as a drilling or workover unit;
4.2 at no time shall the Technical Personnel be deemed to be employees, either
temporarily or permanent, of the Construction Manager and shall at all
times be deemed to be employees of Foramer;
4.3 Foramer shall have the sole responsibility for the preparation of payroll
and the payment of the Technical Personnel wages, compensation,
remittance, allowance, insurance and indemnities of whatever kind and in
complying with all applicable labour and local taxation regulations.
4.4 Both Parties agree to refrain from any and all actions, direct or
indirect, that may lead to employment by such Party of an employee of the
other Party, unless such Party obtains the prior written approval of the
other Party, which approval shall not unreasonably be withheld.
4.5 Foramer shall be entitled to invoice the Construction Manager for the
travel, accommodation and repatriation of the Technical Personnel during
the period of construction of the Vessel.
4.6 The Technical Personnel shall assist the Construction Manager in the
fulfilment of its obligations as set out in Clause 4 of the Construction
Management Agreement.
4.7 The Construction Manager may, if it is reasonably dissatisfied with any of
the Technical Personnel, make a request in writing to Foramer that such
Technical Personnel be replaced with another suitably qualified person and
Foramer shall provide the same forthwith PROVIDED ALWAYS that Foramer
shall only do so if in its reasonable opinion the request of the
Construction Manager is justified.
4.8 In the event that the Construction Manager requires such Technical
Personnel to undertake tasks not included within the scope of the services
to be provided as set out in Clause 4 of the Construction Management
Agreement and agreed hereunder then the Construction Manager shall seek
the prior written consent of Foramer which consent shall not be
unreasonably withheld and Foramer shall instruct the Technical Personnel
concerned to comply with such request of the Construction Manager.
4.9 Foramer shall only be required to provide to the Construction Manager such
Technical Personnel as are available at the time that the Construction
Manager requires them and the choice/identity of such Technical Personnel
shall be decided upon by Foramer in its absolute discretion and PROVIDED
ALWAYS that the provision of such
3
<PAGE>
Technical Personnel from time to time shall not materially disrupt or
adversely affect Foramers own business in which case Foramer shall be
entitled to postpone the supply of such Technical Personnel until such
time as it is more able to comply with the requirements of the
Construction Manager.
5. COMPENSATION/REMUNERATION
5.1 All Technical Personnel are to be provided by Foramer to the Construction
Manager on an open book, at cost basis, duly justified by direct
reference to industry standards.
For the supply of the Technical Personnel forming the object of this
Agreement, the Construction Manager will pay Foramer the rates stipulated
in Appendix A herein increased on an annual basis by 3% unless otherwise
agreed.
5.2 In the case of disputed invoice, the Construction Manager will inform
Foramer of the item under dispute specifying the complaint within fifteen
(15) days of receipt of such invoice but will pay the undisputed part. The
disputed item will be paid as may be mutually agreed.
5.3 Payments shall be made to a bank account nominated on each invoice.
6. TAXES
Any taxes or charges incurred by Foramer in connection with its duties and
obligations hereunder whilst supplying the Technical Services shall be for
the account of Foramer.
7. LIABILITIES
7.1 COMPLIANCE WITH LAW AND REGULATION
Foramer represents that the provision by it of the Technical Personnel
under this Agreement will comply with all applicable laws and regulations
in France and the jurisdictions in which the Technical Personnel are
required to operate.
7.2 LIABILITIES BETWEEN THE PARTIES
7.2.1 Foramer shall hold harmless and indemnify the Construction Manager
from and against all claims, costs expenses or liabilities arising
from or connected with the performance of this Agreement in respect
of:
(i) death of or personal injury to any of the personnel of the
Foramer Group;
(ii) loss of or damage to the property of the Foramer Group;
(iii) any consequential or economic loss or damage suffered by the
Foramer Group;
howsoever arising and irrespective of negligence or other breach of
legal duty by the Construction Manager Group.
4
<PAGE>
7.2.2 The Construction Manager shall hold harmless and indemnify Foramer
from and against all claims, costs, expenses or liabilities arising
from or connected with the performance of this Agreement in respect
of:
(i) death of or personal injury to any of personnel of the
Construction Manager Group;
(ii) loss of or damage to the property of the Construction Manager
Group; and
(iii) any consequential or economic loss or damage suffered by the
Construction Manager Group;
howsoever arising and irrespective of negligence or other breach of
legal duty by the Foramer Group.
7.2.3 For the purposes of this Clause 7.2, the Construction Manager
Group means the Construction Manager, its associated companies, its
other sub-contractors and suppliers, the Owner, Petrobras, and the
officers, employees and agents of any of them.
7.2.4 For the purposes of this Clause 7.2 the Foramer Group means
Foramer, its associated companies, its sub-contractors and suppliers
and the officers, employees and agents of any of them.
7.2.5 For the express purposes of Clause 7 of this Agreement only, the
Construction Manager 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 within the Construction Manager
Group (as defined in Clause 7.2.3) and all such persons shall to
this extent be deemed to be parties to this Agreement.
7.2.6 For the express purposes of Clause 7 of this Agreement only, Foramer
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 within the Foramer Group (as defined in Clause 7.2.4)
and all such persons shall to this extent be deemed to be parties to
this Agreement.
7.3 INDEMNITY FOR OPERATIONS
Save as is provided in Article 7.2. above, the Construction Manager shall
indemnify and hold harmless and shall procure that Owner shall indemnify
and hold harmless Foramer from and against all actions, proceedings,
claims, demands or liabilities whatsoever that may be brought by any other
person against, or incurred by Foramer in relation to or in connection
with its performance of this Agreement unless same has arisen from the
gross negligence or wilful misconduct of Foramer, in which event the
liability of Foramer shall be limited to the aggregate of the management
fee received by Foramer in the preceding 12 months.
8. CONFIDENTIAL INFORMATION
5
<PAGE>
All information related to this Agreement regardless or whether such
information concerns the Construction Manager, its clients, its associated
companies or its contractors shall be treated as confidential and shall
not be divulged by Foramer or the Technical Personnel to any third party
without the prior written consent of the Construction Manager. The
hereabove obligations shall survive the termination of the Agreement and
shall remain in force for so long as the information covered by
confidentiality has not otherwise become public knowledge.
9. INSURANCE
9.1 FORAMERS INSURANCES
Foramer undertakes that it will take out all insurance policies to cover
its liabilities and those of the Technical Personnel as set forth in
Article 7 of this Agreement, such insurances shall include but not be
limited to the following:
9.1.1 Workmens Compensation insurance and Employers Liability insurance
for damage suffered by its personnel in amounts not less than those
required by applicable laws in France and the jurisdiction in which
the Technical Personnel are required to operate.
9.1.2 Comprehensive general liability insurance for its responsibility to
third parties.
9.1.3 All insurance policies as required to cover its equipment and/or
materials and those belonging to any service companies and for which
Foramer is responsible.
9.2 CONSTRUCTION MANAGER INSURANCE
The Construction Manager will take out insurance policies to cover the
Construction Managers responsibilities including but not limited to those
responsibilities set out in Clause 5.2 of the Construction Management
Agreement.
9.3 GENERAL PROVISIONS
For all insurance policies taken out:
9.3.1 Foramer shall comply with the relevant insurance regulations in
force.
9.3.2 The Construction Manager shall bear the costs of the premiums,
deductibles, fees and expenses relative to all policies effected
pursuant to the provisions of this Agreement.
9.3.3 Each Party shall procure that the other Party shall be named as
co-assured to the extent permitted so as to give effect to the
provisions of Article 7 of this Agreement.
9.3.4 All of the insurance policies taken out shall state the
underwriters waiver of subrogation to give effect to the provisions
of Article 7 of this Agreement.
6
<PAGE>
10. AUDIT
Foramer shall keep and cause its Technical Personnel, its contractor(s)
and subcontractor(s) to keep the books, payrolls, receipts, vouchers,
financial records, personnel records and any document related to the work
thereunder and required for administration purposes for the term of the
Agreement and for a limited period of two (2) years after termination
hereof. The Construction Manager, through its duly authorised
representatives, shall have free access with 15 days notice with no
restriction, to such information, whenever required by the Construction
Manager, and it shall also have the right, at any time subject to previous
notification to Foramer, to perform the audits it deems necessary of the
aforementioned books, payrolls, receipts, vouchers, records and files in
general.
The Construction Manager reserves the right to audit the activities of
Foramer and/or the Technical Personnel as deemed necessary and/or
appropriate by the Construction Manager, in order to check the contents
and compliance with the terms herein.
Notwithstanding the foregoing, in no event shall the Construction
Managers right of audit be construed as a release or waiver of any of
Foramers obligations under this Agreement.
11. MISCELLANEOUS
11.1 FORCE MAJEURE
11.1.1 Each Party to this Agreement shall be relieved from complying with
any term of this Agreement to the extent that, and only so long as,
such compliance is prevented or delayed by force majeure, which is
defined as civil or labour disturbances, riots, strikes (other than
a strike limited to the employees of either Party), wars (declared
or undeclared), military actions, insurrections, rebellion, acts of
any governmental or military agency and actual or assumed
authority, action of elements, floods, storm or other acts of God
or any cause beyond the control of either Party, whether or not
similar to the matters herein specifically enumerated and provided
that the event shall not have been caused by the action or
negligence of that Party. That Party and/or the Parties affected
shall do its, or their, utmost to remedy the above circumstances.
11.1.2 Any Party claiming force majeure shall promptly notify the other
Party, with the evidence of the occurrence of such event.
11.1.3 If either Party hereto is prevented from or delayed in performing
all or any of its obligations thereunder as a direct result of
force majeure, such non-performance shall not be considered as a
breach of this Agreement and that Party shall be relieved from such
obligation which shall suspend payment by the other Party for the
duration of such force majeure.
7
<PAGE>
11.2 BANKRUPTCY OR ABANDONMENT OF OPERATIONS
Should Foramer become insolvent or enter into any arrangement with or for
the benefit of its creditors or become unable or refuse or neglect to
perform its obligations hereunder or if Foramers equipment is seized or
taken in execution, the Construction Manager may, by notice in writing to
Foramer, terminate this Agreement without thereby affecting in other
respects the obligations or liabilities of Foramer.
11.3 ASSIGNMENT OF AGREEMENT
Neither Party may assign this Agreement, either wholly or in part, except
with the prior written authorisation of the other Party, which
authorisation may not be unreasonably withheld.
12. NOTICE
All notices, invoices and other communications required pursuant to this
Agreement shall be in writing and deemed to have been sufficiently given
or made if delivered by hand or send by fax to the addressee at the
address set out below;
in the case of the Construction Manager to:
PETRODRILL ENGINEERING N.V.
c/o Winkel, Sliana & Grul
Attn: Thoma Aardenburg
Pietermaai 23 Postbus 113
Curacao
Netherlands Antilles
Fax: 011 599 9 465 2890
in the case of Foramer to:
PRIDE-FORAMER
16 BIS, RUE Grange Dame Rose - BP 100
78143 Velizy-Villacoublay
France
Fax: 011 33 1 39 46 39 25
with copies to:
WESTVILLE MANAGEMENT CORPORATION
Attn: Jonathan Talbot
5847 San Felipe, Suite 3300
Houston, Texas 77057
Fax: 713 914 9796
or to such other address as the relevant Party may from time to time
notify to the other.
8
<PAGE>
13. GOVERNING LAW AND ARBITRATION
13.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England.
13.2 Any dispute or difference arising in connection with this Agreement shall
if possible be settled by mutual amicable agreement.
13.3 If any dispute should arise in connection with the interpretation and
fulfilment of this Agreement the same shall be decided by arbitration in
the city of London and shall be referred to a single arbitrator (an
Arbitrator) to be appointed by the Parties hereto. If the Parties cannot
agree upon the appointment of the single Arbitrator the dispute shall be
settled by three Arbitrators, each Party appointing one Arbitrator, the
third being appointed by the Chairman for the time being of the London
Maritime Arbitrators Association.
13.4 If either of the appointed Arbitrators refuses or is incapable of acting,
the Party who appointed him shall appoint a new Arbitrator in his place.
13.5 If one of the Parties fails to appoint an Arbitrator, either originally or
by way of substitution, for two weeks after the other Party having
appointed his Arbitrator has sent the Party making default notice by mail
or facsimile to make the appointment, the Party appointing the third
Arbitrator shall, after application from the Party having appointed his
Arbitrator, also appoint an Arbitrator on behalf of the Party making
default.
13.6 The award rendered by the Arbitration Court shall be final and binding
upon the Parties and may if necessary be enforced by the Court or other
competent authority in the same manner as a judgment in the Court of
Justice.
13.7 Work under this Agreement shall, if reasonably possible, continue during
the arbitration proceedings.
IN WITNESS WHEREOF this Agreement has been executed in two duplicate originals
by or on behalf of the Parties hereto the day and year first above written.
SIGNED by )/s/ Illegible
for and on behalf of )Illegible
PETRODRILL ENGINEERING N.V. )/s/ Frida A. Martinez
in the presence of:- )Frida A. Martinez
9
<PAGE>
SIGNED by )/s/ Illegible
for and on behalf of )Illegible
PRIDE-FORAMER S.A. )/s/ )FRIDA A. MARTINEZ
in the presence of:- )Frida A. Martinez
10
<PAGE>
APPENDIX A
SCHEDULE OF RATES
POSITION COST PER WORKING DAY
US$/DAY
Construction Manager 595
Engineering Manager 595
Procurement Manager 375
Drilling Engineer 350
Cost Controller/Accountant 465
Mechanical Engineer 485
Drilling Co-ordinator 485
Engineering Co-ordinator 465
NOTES
All prices above are inclusive of salaries, social security costs, insurance,
provision for holidays and travel days.
All prices are exclusive of direct flight and travel charges, accommodation.
The prices shown are valid for 12 months commencing 1st January 1998 and are
subject to annual revision of 3% unless otherwise agreed.
11
EXHIBIT 10.37
PETRODRILL ENGINEERING N.V.
- AND -
MARITIMA PETROLEO E ENGENHARIA LTDA
---------------------------------
AMETHYST 7 SUPPLY AGREEMENT
---------------------------------
<PAGE>
THIS AGREEMENT is made the 5th day of November 1998.
BETWEEN:
1. PETRODRILL ENGINEERING N.V. a company incorporated in the Netherlands
Antilles under registration number 77521 and having its registered office
at Anthony Veder Building, Kaya Jacob Posner, Willemstad, Curacao,
Netherlands Antilles (hereinafter referred to as the Construction
Manager ); and
2. MARITIMA PETROLEO E ENGENHARIA LTDA a company incorporated in Brazil with
its registered office at Avenida Almirante Barroso 52, 3400 GR, 20031-000
Centro, Rio de Janeiro, Brazil (hereinafter referred to as Maritima ).
The Construction Manager and Maritima are also hereinafter referred
to collectively as PARTIES and individually as PARTY .
WHEREAS:
A. The Construction Manager has entered into an agreement with Petrodrill
Seven Limited ( the Owner ) of even date herewith ( the Construction
Management Agreement ) whereby the Construction Manager has been appointed
by the Owner to oversee the construction of the Owner's dynamically
positioned semisubmersible drilling or workover units ( the Vessel ).
B. The Construction Manager is desirous that Maritima should provide to the
Construction Manager personnel in accordance with the terms and conditions
of this Agreement to assist the Construction Manager with various of the
technical services required by the Owner to be provided during the period
of the construction of the Vessel by the relevant shipyard ( the Builder )
pursuant to the shipbuilding contract ( the Shipbuilding Contract ).
NOW, THEREFORE in consideration of the mutual covenants and obligations
hereafter set forth, it is hereby agreed between the Parties as follows:
1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Amethyst Financial Company Ltd.s
Shareholders Agreement of even date herewith among Drillpetro Inc.,
Westville Management Corporation and Techdrill Inc.
2. OBJECT
The object of this Agreement is the supply by Maritima to the Construction
Manager of personnel such as, but not limited to, specified in Clause 4 of
this Agreement.
3. TERM
The term of this Agreement is for the period of the construction of the
Vessel by the Builder until delivery of the Vessel by the Builder to the
Owner. However, the Agreement may be terminated by the Construction
Manager at any time, for whatever cause, by written notice to Maritima of
not less than ninety (90) days counted from the date following the receipt
of such written notice of termination.
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<PAGE>
4. SCOPE OF SERVICES PROVIDED BY MARITIMA
Maritima shall provide to the Construction Manager such personnel (the
Technical Personnel ) as are requested by the Construction Manager to
assist the Construction Manager in relation to the construction of the
Vessel and the fulfilment of the Construction Manager's obligations to the
Owner as set out in the Construction Management Agreement. The provision
of the Technical Personnel shall be on the following basis:
4.1 The Technical Personnel provided by Maritima shall be suitably qualified
to advise and assist in connection with matters relating to the
construction and proposed operation of the Vessels as drilling or workover
units;
4.2 At no time shall the Technical Personnel be deemed to be employees, either
temporarily or permanent, of the Construction Manager and shall at all
times be deemed to be employees of Maritima;
4.3 Maritima shall have the sole responsibility for the preparation of payroll
and the payment of the Technical Personnel wages, compensation,
remittance, allowance, insurance and indemnities of whatever kind and in
complying with all applicable labour and local taxation regulations.
4.4 Both Parties agree to refrain from any and all actions, direct or
indirect, that may lead to employment by such Party of an employee of the
other Party, unless such Party obtains the prior written approval of the
other Party, which approval shall not unreasonably be withheld.
4.5 Maritima shall be entitled to invoice the Construction Manager for the
travel, accommodation and repatriation of the Technical Personnel during
the period of construction of the Vessel.
4.6 The Technical Personnel shall assist the Construction Manager in the
fulfilment of its obligations as set out in Clause 4 of the Construction
Management Agreement.
4.7 The Construction Manager may, if it is reasonably dissatisfied with any of
the Technical Personnel, make a request in writing to Maritima that such
Technical Personnel be replaced with another suitably qualified person and
Maritima shall provide the same forthwith PROVIDED ALWAYS that Maritima
shall only do so if in its reasonable opinion the request of the
Construction Manager is justified.
4.8 In the event that the Construction Manager requires such Technical
Personnel to undertake tasks not included within the scope of the services
to be provided as set out in Clause 3 of the Construction Management
Agreement and agreed hereunder then the Construction Manager shall seek
the prior written consent of Maritima which consent shall not be
unreasonably withheld and Maritima shall instruct the Technical Personnel
concerned to comply with such request of the Construction Manager.
4.9 Maritima shall only be required to provide to the Construction Manager
such Technical Personnel as are available at the time that the
Construction Manager requires them and the choice/identity of such
Technical Personnel shall be decided upon by Maritima in its absolute
discretion and PROVIDED ALWAYS that the provision of such Technical
Personnel from time to time shall not materially disrupt or adversely
affect Maritimas own business in which case Maritima shall be entitled to
postpone the supply of such Technical Personnel until such time as it is
more able to comply with the requirements of the Construction Manager.
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5. COMPENSATION / REMUNERATION
5.1 All Technical Personnel are to be provided by Maritima to the Construction
Manager on an open book, at cost basis, duly justified by direct
reference to industry standards.
For the supply of the Technical Personnel forming the object of this
Agreement, the Construction Manager will pay Maritima the rates stipulated
in Appendix A herein increased on an annual basis by 3% unless otherwise
agreed.
5.2 In the case of disputed invoice, the Construction Manager will inform
Maritima of the item under dispute specifying the complaint within fifteen
(15) days of receipt of such invoice but will pay the undisputed part. The
disputed item will be paid as may be mutually agreed.
5.3 Payments shall be made to a bank account nominated on each invoice.
6. TAXES
Any taxes or charges incurred by Maritima in connection with its duties
and obligations hereunder whilst supplying the Technical Services shall be
for the account of Maritima.
7. LIABILITIES
7.1 COMPLIANCE WITH LAW AND REGULATION
Maritima represents that the provision by it of the Technical Personnel
under this Agreement will comply with all applicable laws and regulations
in France and the jurisdictions in which the Technical Personnel are
required to operate.
7.2 LIABILITIES BETWEEN THE PARTIES
Maritima shall hold harmless and indemnify the Construction Manager from
and against all claims, costs expenses or liabilities arising from or
connected with the performance of this Agreement in respect of:
(i) death of or personal injury to any of the personnel of the
Maritima Group;
(ii) loss of or damage to the property of the Maritima Group;
(iii) any consequential or economic loss or damage suffered by the
Maritima Group;
howsoever arising and irrespective of negligence or other breach of legal
duty by the Construction Manager Group.
7.2.2 The Construction Manager shall hold harmless and indemnify Maritima from
and against all claims, costs, expenses or liabilities arising from or
connected with the performance of this Agreement in respect of:
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(i) death of or personal injury to any of personnel of the
Construction Manager Group;
(ii) loss of or damage to the property of the Construction Manager Group;
and
(iii) any consequential or economic loss or damage suffered by the
Construction Manager Group;
howsoever arising and irrespective of negligence or other breach of legal
duty bY the Maritima Group.
7.2.3 For the purposes of this Clause 7.2, the Construction Manager Group
means the Construction Manager, its associated companies, its other
sub-contractors and suppliers, the Owner, Petrobras, and the officers,
employees and agents of any of them.
7.2.4 For the purposes of this Clause 7.2 the Maritima Group means Maritima,
its associated companies, its sub-contractors and suppliers and the
officers, employees and agents of any of them.
7.2.5 For the express purposes of Clause 7 of this Agreement only, the
Construction Manager 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 within the Construction Manager Group (as defined in
Clause 7.2.3) and all such persons shall to this extent be deemed to be
parties to this Agreement.
7.2.6 For the express purposes of Clause 7 of this Agreement only, Maritima
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
within the Maritima Group (as defined in Clause 7.2.4) and all such
persons shall to this extent be deemed to be parties to this Agreement.
7.3 INDEMNITY FOR OPERATIONS
Save as is provided in Article 7.2. above, the Construction Manager shall
indemnify and hold harmless and shall procure that Owner shall indemnify
and hold harmless Maritima from and against all actions, proceedings,
claims, demands or liabilities whatsoever that may be brought by any other
person against, or incurred by Maritima in relation to or in connection
with its performance of this Agreement unless same has arisen from the
gross negligence or wilful misconduct of Maritima, in which event the
liability of Maritima shall be limited to the aggregate of the management
fee received by Maritima in the preceding 12 months.
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8. CONFIDENTIAL INFORMATION
All information related to this Agreement regardless or whether such
information concerns the Construction Manager, its clients, its associated
companies or its contractors shall be treated as confidential and shall
not be divulged by Maritima or the Technical Personnel to any third party
without the prior written consent of the Construction Manager. The here
above obligations shall survive the termination of the Agreement and shall
remain in force for so long as the information covered by confidentiality
has not otherwise become public knowledge.
9. INSURANCE
9.1 MARITIMAS INSURANCES
Maritima undertakes that it will take out all insurance policies to cover
its liabilities and those of the Technical Personnel as set forth in
Article 7 of this Agreement, such insurances shall include but not be
limited to the following:
9.1.1 Workmens Compensation insurance and Employers Liability insurance
for damage suffered by its personnel in amounts not less than those
required by applicable laws in Brazil and the jurisdiction in which the
Technical Personnel are required to operate.
9.1.2 Comprehensive general liability insurance for its responsibility to
third parties.
9.1.3 All insurance policies as required to cover its equipment and/or
materials and those belonging to any service companies and for which
Maritima is responsible.
9.2 CONSTRUCTION MANAGER INSURANCE
The Construction Manager will take out insurance policies to cover the
Construction Managers responsibilities including but not limited to those
responsibilities set out in Clause 5.2 of the Construction Management
Agreement.
9.3 GENERAL PROVISIONS
For all insurance policies taken out:
9.3.1 Maritima shall comply with the relevant insurance regulations in
force.
9.3.2 The Construction Manager shall bear the costs of the premiums,
deductibles, fees and expenses relative to all policies effected
pursuant to the provisions of this Agreement.
9.3.3 Each Party shall procure that the other Party shall be named as
co-assured to the extent permitted so as to give effect to the
provisions of Article 7 of this Agreement.
9.3.4 All of the insurance policies taken out shall state the
underwriters waiver of subrogation to give effect to the provisions
of Article 7 of this Agreement.
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10. AUDIT
Maritima shall keep and cause its Technical Personnel, its contractor(s)
and subcontractor(s) to keep the books, payrolls, receipts, vouchers,
financial records, personnel records and any document related to the work
thereunder and required for administration purposes for the term of the
Agreement and for a limited period of two (2) years after termination
hereof. The Construction Manager, through its duly authorised
representatives, shall have free access with 15 days notice with no
restriction, to such information, whenever required by the Construction
Manager, and it shall also have the right, at any time subject to previous
notification to Maritima, to perform the audits it deems necessary of the
aforementioned books, payrolls, receipts, vouchers, records and files in
general.
The Construction Manager reserves the right to audit the activities of
Maritima and/or the Technical Personnel as deemed necessary and/or
appropriate by the Construction Manager, in order to check the contents
and compliance with the terms herein.
Notwithstanding the foregoing, in no event shall the Construction
Managers right of audit be construed as a release or waiver of any of
Maritimas obligations under this Agreement.
11. MISCELLANEOUS
11.1 FORCE MAJEURE
11.1.1 Each Party to this Agreement shall be relieved from complying with
any term of this Agreement to the extent that, and only so long as,
such compliance is prevented or delayed by force majeure, which is
defined as civil or labour disturbances, riots, strikes (other than
a strike limited to the employees of either Party), wars (declared
or undeclared), military actions, insurrections, rebellion, acts of
any governmental or military agency and actual or assumed
authority, action of elements, floods, storm or other acts of God
or any cause beyond the control of either Party, whether or not
similar to the matters herein specifically enumerated and provided
that the event shall not have been caused by the action or
negligence of that Party. That Party and/or the Parties affected
shall do its, or their, utmost to remedy the above circumstances.
11.1.2 Any Party claiming force majeure shall promptly notify the other
Party, with the evidence of the occurrence of such event.
11.1.3 If either Party hereto is prevented from or delayed in performing
all or any of its obligations thereunder as a direct result of
force majeure, such non-performance shall not be considered as a
breach of this Agreement and that Party shall be relieved from such
obligation which shall suspend payment by the other Party for the
duration of such force majeure.
11.2 BANKRUPTCY OR ABANDONMENT OF OPERATIONS
Should Maritima become insolvent or enter into any arrangement with or for
the benefit of its creditors or become unable or refuse or neglect to
perform its obligations hereunder or if Maritimas equipment is seized or
taken in execution, the Construction Manager may, by notice in writing to
Maritima, terminate this Agreement without thereby affecting in other
respects the obligations or liabilities of Maritima.
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11.3 ASSIGNMENT OF AGREEMENT
Neither Party may assign this Agreement, either wholly or in part, except
with the prior written authorisation of the other Party, which
authorisation may not be unreasonably withheld.
12. NOTICE
All notices, invoices and other communications required pursuant to this
Agreement shall be in writing and deemed to have been sufficiently given
or made if delivered by hand or send by fax to the addressee at the
address set out below;
in the case of the Construction Manager to:
PETRODRILL ENGINEERING N.V.
c/o Winkel, Sliana & Grul
Attn: Thoma Aardenburg
Pietermaai 23 Postbus 113
Curacao
Netherlands Antilles
Fax: 011 599 9 465 2890
in the case of Maritima to:
MARITIMA
Avenida Almirante Barroso 52
3400 GR
20031-000 Centro
Rio de Janeiro
Brazil
Fax: 011 55 21 220 6566
with copies to:
WESTVILLE MANAGEMENT CORPORATION
Attn: Jonathan Talbot
5847 San Felipe, Suite 3300
Houston, Texas 77057
Fax: 713 914 9796
or to such other address as the relevant Party may from time to time
notify to the other.
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13. GOVERNING LAW AND ARBITRATION
13.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England.
13.2 Any dispute or difference arising in connection with this Agreement shall
if possible be settled by mutual amicable agreement.
13.3 If any dispute should arise in connection with the interpretation and
fulfilment of this Agreement the same shall be decided by arbitration in
the city of London and shall be referred to a single Arbitrator to be
appointed by the Parties hereto. If the Parties cannot agree upon the
appointment of the single arbitrator (an Arbitrator ) the dispute shall
be settled by three Arbitrators, each Party appointing one Arbitrator, the
third being appointed by the Chairman for the time being of the London
Maritime Arbitrators Association.
13.4 If either of the appointed Arbitrators refuses or is incapable of acting,
the Party who appointed him shall appoint a new Arbitrator in his place.
13.5 If one of the Parties fails to appoint an Arbitrator, either originally or
by way of substitution, for two weeks after the other Party having
appointed his Arbitrator has sent the Party making default notice by mail
or facsimile to make the appointment, the Party appointing the third
Arbitrator shall, after application from the Party having appointed his
Arbitrator, also appoint an Arbitrator on behalf of the Party making
default.
13.6 The award rendered by the Arbitration Court shall be final and binding
upon the Parties and may if necessary be enforced by the Court or other
competent authority in the same manner as a judgment in the Court of
Justice.
13.7 Work under this Agreement shall, if reasonably possible, continue during
the Arbitration proceedings.
IN WITNESS WHEREOF this Agreement has been executed in two duplicate originals
by or on behalf of the Parties hereto the day and year first above written.
SIGNED by )/s/ Illegible
for and on behalf of )Illegible
PETRODRILL ENGINEERING N.V. )/s/ FRIDA A. MARTINEZ
in the presence of:- )Frida A. Martinez
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<PAGE>
SIGNED by )/s/ GERMAN EFROMOVICH
for and on behalf of )German Efromovich
MARITIMA PETROLEO E ENGENHARIA LTDA )/s/ Illegible
in the presence of:- )Illegible
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<PAGE>
APPENDIX A
RATES FOR TECHNICAL PERSONNEL
11
EXHIBIT 10.41
PETRODRILL ENGINEERING N.V.
- AND -
WORKSHIPS CONTRACTORS B.V.
-----------------------------------
SUPPLY AGREEMENT
-----------------------------------
<PAGE>
THIS AGREEMENT is made the 5th day of November 1998,
BETWEEN:
1. PETRODRILL ENGINEERING N.V. a company incorporated in the Netherlands
Antilles under registration number 77521 and having its registered office
at Anthony Veder Building, Kaya Jacob Posner, Willemstad, Curacao,
Netherlands Antilles (hereinafter referred to as the Construction
Manager); and
2. WORKSHIPS CONTRACTORS B.V. a corporation incorporated in the Netherlands
of KP Van Der Mandeleaan 34, 3062 MD Rotterdam (Brainpark), The
Netherlands (Workships). The Construction Manager and Workships are also
hereinafter referred to collectively as PARTIES and individually as
PARTY.
WHEREAS:
A. The Construction Manager has entered into an agreement with Petrodrill
Seven Limited (such company as its assignee pursuant to a Construction
Contract Assignment, the Owner) of even date herewith (the Construction
Management Agreement) whereby the Construction Manager has been appointed
by the Owner to oversee the construction of the Owner's dynamically
positioned semisubmersible drilling unit (the Vessel).
B. The Construction Manager is desirous that Workships should provide to the
Construction Manager personnel in accordance with the terms and conditions
of this Agreement to assist the Construction Manager with various of the
technical services required by the Owner to be provided during the period
of the construction of the Vessel by the shipyard (the Builder) pursuant
to a different shipbuilding contract (the Shipbuilding Contract).
NOW, THEREFORE in consideration of the mutual covenants and obligations
hereafter set forth, it is hereby agreed between the Parties as follows:
1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Amethyst Financial Company Ltd.'s
Shareholders' Agreement of every date herewith among Drillpetro Inc.,
Westville Management Corporation and Techdrill Inc.
2. OBJECT
The object of this Agreement is the supply by Workships to the
Construction Manager of personnel such as, but not limited to, specified
in Clause 4 of this Agreement.
3. TERM
The term of this Agreement is for the period of the construction of the
Vessel by the Builder.
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<PAGE>
4. SCOPE OF SERVICES PROVIDED BY WORKSHIPS
Workships shall provide to the Construction Manager such personnel (the
Technical Personnel) as are requested by the Construction Manager to
assist the Construction Manager in relation to the marine construction of
the Vessel and the fulfilment of the Construction Manager's obligations to
the Owner as set out in the Construction Management Agreement. The
provision of the Technical Personnel shall be on the following basis:
4.1 the Technical Personnel provided by Workships shall be suitably qualified
to advise and assist in connection with matters relating to the
construction of the Vessel as a drilling or workover unit;
4.2 at no time shall the Technical Personnel be deemed to be employees, either
temporarily or permanent, of the Construction Manager and shall at all
times be deemed to be employees of Workships;
4.3 Workships shall have the sole responsibility for the preparation of
payroll and the payment of the Technical Personnel wages, compensation,
remittance, allowance, insurance and indemnities of whatever kind and in
complying with all applicable labour and local taxation regulations.
4.4 Both Parties agree to refrain from any and all actions, direct or
indirect, that may lead to employment by such Party of an employee of the
other Party, unless such Party obtains the prior written approval of the
other Party, which approval shall not unreasonably be withheld.
4.5 Workships shall be entitled to invoice the Construction Manager for the
travel, accommodation and repatriation of the Technical Personnel during
the period of construction of the Vessel.
4.6 The Technical Personnel shall assist the Construction Manager in the
fulfilment of its obligations as set out in Clause 4 of the Construction
Management Agreement.
4.7 The Construction Manager may, if it is reasonably dissatisfied with any of
the Technical Personnel, make a request in writing to Workships that such
Technical Personnel be replaced with another suitably qualified person and
Workships shall provide the same forthwith PROVIDED ALWAYS that Workships
shall only do so if in its reasonable opinion the request of the
Construction Manager is justified.
4.8 In the event that the Construction Manager requires such Technical
Personnel to undertake tasks not included within the scope of the services
to be provided as set out in Clause 4 of the Construction Management
Agreement and agreed hereunder then the Construction Manager shall seek
the prior written consent of Workships which consent shall not be
unreasonably withheld and Workships shall instruct the Technical Personnel
concerned to comply with such request of the Construction Manager.
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<PAGE>
4.9 Workships shall only be required to provide to the Construction Manager
such Technical Personnel as are available at the time that the
Construction Manager requires them and the choice/identity of such
Technical Personnel shall be decided upon by Workships in its absolute
discretion and PROVIDED ALWAYS that the provision of such Technical
Personnel from time to time shall not materially disrupt or adversely
affect Workships's own business in which case Workships shall be entitled
to postpone the supply of such Technical Personnel until such time as it
is more able to comply with the requirements of the Construction Manager.
5. COMPENSATION / REMUNERATION
5.1 All Technical Personnel are to be provided by Workships to the
Construction Manager on an open book, at cost basis, duly justified by
direct reference to industry standards.
For the supply of the Technical Personnel forming the object of this
Agreement, the Construction Manager will pay Workships the rates
stipulated in Appendix A herein increased on an annual basis by 3% unless
otherwise agreed.
5.2 Workships shall receive compensation from the Construction Manager in the
amount of US $2,083.33 per month as from May 1, 1998 for services
provided hereunder. This amount is due at the end of each month.
5.3 In the case of disputed invoice, the Construction Manager will inform
Workships of the item under dispute specifying the complaint within
fifteen (15) days of receipt of such invoice but will pay the undisputed
part. The disputed item will be paid as may be mutually agreed. This
amount is due at the end of each month.
5.4 Payments shall be made to a bank account nominated on each invoice.
5.5 In case of sale of the Vessels Clause 5.2 of the contract shall remain in
place for the total period of 24 months. Any outstanding amount shall be
discounted at the rate of ten percent (10%).
6. TAXES
Any taxes or charges incurred by Workships in connection with its duties
and obligations hereunder whilst supplying the Technical Services shall be
for the account of Workships.
7. LIABILITIES
7.1 COMPLIANCE WITH LAW AND REGULATION
Workships represents that the provision by it of the Technical Personnel
under this Agreement will comply with all applicable laws and regulations
in France, the Netherlands, Brazil and the jurisdictions in which the
Technical Personnel are required to operate.
7.2 LIABILITIES BETWEEN THE PARTIES
7.2.1 Workships shall hold harmless and indemnify the Construction Manager
from and against all claims, costs expenses or liabilities arising
from or connected with the performance of this Agreement in respect
of:
(i) death of or personal injury to any of the personnel of
the Workships Group;
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(ii) loss of or damage to the property of the Workships Group;
(iii) any consequential or economic loss or damage suffered by the
Workships Group;
howsoever arising and irrespective of negligence or other breach of legal
duty by the Construction Manager Group.
7.2.2 The Construction Manager shall hold harmless and indemnify Workships
from and against all claims, costs, expenses or liabilities arising
from or connected with the performance of this Agreement in respect
of:
(i) death of or personal injury to any of personnel of the
Construction Manager Group;
(ii) loss of or damage to the property of the Construction Manager
Group; and
(iii) any consequential or economic loss or damage suffered by the
Construction Manager Group;
howsoever arising and irrespective of negligence or other breach of
legal duty bY the Workships Group.
7.2.3 For the purposes of this Clause 7.2, the Construction Manager
Group means the Construction Manager, its associated companies, its
other sub-contractors and suppliers, the Owner, Petrobras, and the
officers, employees and agents of any of them.
7.2.4 For the purposes of this Clause 7.2 the Workships Group means
Workships, its associated companies, its sub-contractors and
suppliers and the officers, employees and agents of any of them.
7.2.5 For the express purposes of Clause 7 of this Agreement only, the
Construction Manager 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 within the Construction Manager
Group (as defined in Clause 7.2.3) and all such persons shall to
this extent be deemed to be parties to this Agreement.
7.2.6 For the express purposes of Clause 7 of this Agreement only,
Workships 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 within the Workships Group (as defined in
Clause 7.2.4) and all such persons shall to this extent be deemed to
be parties to this Agreement.
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<PAGE>
7.3 INDEMNITY FOR OPERATIONS
Save as is provided in Article 7.2. above, the Construction Manager shall
indemnify and hold harmless and shall procure that Owner shall indemnify
and hold harmless Workships from and against all actions, proceedings,
claims, demands or liabilities whatsoever that may be brought by any other
person against, or incurred by Workships in relation to or in connection
with its performance of this Agreement unless same has arisen from the
gross negligence or wilful misconduct of Workships, in which event the
liability of Workships shall be limited to the aggregate of the management
fee received by Workships in the preceding 12 months.
8. CONFIDENTIAL INFORMATION
All information related to this Agreement regardless or whether such
information concerns the Construction Manager, its clients, its associated
companies or its contractors shall be treated as confidential and shall
not be divulged by Workships or the Technical Personnel to any third party
without the prior written consent of the Construction Manager. The
hereabove obligations shall survive the termination of the Agreement and
shall remain in force for so long as the information covered by
confidentiality has not otherwise become public knowledge.
9. INSURANCE
9.1 WORKSHIPS'S INSURANCES
Workships undertakes that it will take out all insurance policies to cover
its liabilities and those of the Technical Personnel as set forth in
Article 7 of this Agreement, such insurances shall include but not be
limited to the following:
9.1.1 Workmen's Compensation insurance and Employer's Liability insurance
for damage suffered by its personnel in amounts not less than
those required by applicable laws in The Netherlands and the
jurisdiction in which the Technical Personnel are required to
operate.
9.1.2 Comprehensive general liability insurance for its responsibility to
third parties.
9.1.3 All insurance policies as required to cover its equipment and/or
materials and those belonging to any service companies and for which
Workships is responsible.
9.2 CONSTRUCTION MANAGER INSURANCE
The Construction Manager will take out insurance policies to cover the
Construction Manager's responsibilities including but not limited to those
responsibilities set out in Clause 5.2 of the Construction Management
Agreement.
9.3 GENERAL PROVISIONS
For all insurance policies taken out:
9.3.1 Workships shall comply with the relevant insurance regulations in
force.
9.3.2 Construction Manager shall bear the costs of the premiums,
deductibles, fees and expenses relative to all policies effected
pursuant to the provisions of this Agreement.
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<PAGE>
9.3.3 Each Party shall procure that the other Party shall be named as
co-assured to the extent permitted so as to give effect to the
provisions of Article 6 of this Agreement.
9.3.4 All of the insurance policies taken out shall state the
underwriter's waiver of subrogation to give effect to the provisions
of Article 6 of this Agreement.
10. AUDIT
Workships shall keep and cause its Technical Personnel, its contractor(s)
and subcontractor(s) to keep the books, payrolls, receipts, vouchers,
financial records, personnel records and any document related to the work
thereunder and required for administration purposes for the term of the
Agreement and for a limited period of two (2) years after termination
hereof. The Construction Manager, through its duly authorised
representatives, shall have free access with 15 days notice with no
restriction, to such information, whenever required by the Construction
Manager, and it shall also have the right, at any time subject to previous
notification to Workships, to perform the audits it deems necessary of the
aforementioned books, payrolls, receipts, vouchers, records and files in
general.
The Construction Manager reserves the right to audit the activities of
Workships and/or the Technical Personnel as deemed necessary and/or
appropriate by the Construction Manager, in order to check the contents
and compliance with the terms herein.
Notwithstanding the foregoing, in no event shall the Construction
Manager's right of audit be construed as a release or waiver of any of
Workships's obligations under this Agreement.
11. MISCELLANEOUS
11.1 FORCE MAJEURE
11.1.1 Each Party to this Agreement shall be relieved from complying with
any term of this Agreement to the extent that, and only so long as,
such compliance is prevented or delayed by force majeure, which is
defined as civil or labour disturbances, riots, strikes (other than
a strike limited to the employees of either Party), wars (declared
or undeclared), military actions, insurrections, rebellion, acts of
any governmental or military agency and actual or assumed
authority, action of elements, floods, storm or other acts of God
or any cause beyond the control of either Party, whether or not
similar to the matters herein specifically enumerated and provided
that the event shall not have been caused by the action or
negligence of that Party. That Party and/or the Parties affected
shall do its, or their, utmost to remedy the above circumstances.
11.1.2 Any Party claiming force majeure shall promptly notify the other
Party, with the evidence of the occurrence of such event.
11.1.3 If either Party hereto is prevented from or delayed in performing
all or any of its obligations thereunder as a direct result of
force majeure, such non-performance shall not be considered as a
breach of this Agreement and that Party shall be relieved from such
obligation which shall suspend payment by the other Party for the
duration of such force majeure.
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<PAGE>
11.2 BANKRUPTCY OR ABANDONMENT OF OPERATIONS
Should Workships become insolvent or enter into any arrangement with or
for the benefit of its creditors or become unable or refuse or neglect to
perform its obligations hereunder or if Workships's equipment is seized or
taken in execution, the Construction Manager may, by notice in writing to
Workships, terminate this Agreement without thereby affecting in other
respects the obligations or liabilities of Workships.
11.3 ASSIGNMENT OF AGREEMENT
Neither Party may assign this Agreement, either wholly or in part, except
with the prior written authorisation of the other Party, which
authorisation may not be unreasonably withheld.
12. NOTICE
All notices, invoices and other communications required pursuant to this
Agreement shall be in writing and deemed to have been sufficiently given
or made if delivered by hand or send by fax to the addressee at the
address set out below;
in the case of the Construction Manager to:
PETRODRILL ENGINEERING N.V.
c/o Winkel, Sliana & Grul
Attn: Thoma Aardenburg
Pietermaai 23 Postbus 113
Curacao
Netherlands Antilles
Fax: 011 599 9 465 2890
with copies to:
WESTVILLE MANAGEMENT CORPORATION
Attn: John C.G. O'Leary
5847 San Felipe, Suite 3300
Houston, Texas 77057
Fax: 713 914 9796
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<PAGE>
in the case of Workships to:
WORKSHIPS CONTRACTORS B.V.
KP Van Der Mandeleaan 34
3062 MD Rotterdam (Brainpark)
The Netherlands
Fax: 011 31 10 452 8176
or to such other address as the relevant Party may from time to time notify to
the other.
13. GOVERNING LAW AND ARBITRATION
13.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England.
13.2 Any dispute or difference arising in connection with this Agreement shall
if possible be settled by mutual amicable agreement.
13.3 If any dispute should arise in connection with the interpretation and
fulfilment of this Agreement the same shall be decided by arbitration in
the city of London and shall be referred to a single arbitrator (an
Arbitrator) to be appointed by the Parties hereto. If the Parties cannot
agree upon the appointment of the single Arbitrator the dispute shall be
settled by three Arbitrators, each Party appointing one Arbitrator, the
third being appointed by the Chairman for the time being of the London
Maritime Arbitrators' Association.
13.4 If either of the appointed Arbitrators refuses or is incapable of acting,
the Party who appointed him shall appoint a new Arbitrator in his place.
13.5 If one of the Parties fails to appoint an Arbitrator, either originally or
by way of substitution, for two weeks after the other Party having
appointed his Arbitrator has sent the Party making default notice by mail
or facsimile to make the appointment, the Party appointing the third
Arbitrator shall, after application from the Party having appointed his
Arbitrator, also appoint an Arbitrator on behalf of the Party making
default.
13.6 The award rendered by the Arbitration Court shall be final and binding
upon the Parties and may if necessary be enforced by the Court or other
competent authority in the same manner as a judgment in the Court of
Justice.
13.7 Work under this Agreement shall, if reasonably possible, continue during
the arbitration proceedings.
IN WITNESS WHEREOF this Agreement has been executed in two duplicate originals
by or on behalf of the Parties hereto the day and year first above written.
-9-
<PAGE>
SIGNED by )/s/ Illegible
for and on behalf of )
PETRODRILL ENGINEERING N.V. )
in the presence of: )/s/ Illegible
SIGNED by )/s/ Illegible
for and on behalf of )
WORKSHIPS CONTRACTORS B.V. )
in the presence of: )/s/ Illegible
-10-
<PAGE>
APPENDIX 1
SCHEDULE OF RATES
- - --------------------------------------------------------------------------------
NAME COST PER WORKING DAY
US$/DAY
- - --------------------------------------------------------------------------------
Grob B.H.M. 500
- - --------------------------------------------------------------------------------
Minnes R.A. 569
- - --------------------------------------------------------------------------------
Charalampopoulos M. 111
- - --------------------------------------------------------------------------------
Jolles W. 519
- - --------------------------------------------------------------------------------
Nijs J. de 469
- - --------------------------------------------------------------------------------
Hogg T. 474
- - --------------------------------------------------------------------------------
Bugel A. 582
- - --------------------------------------------------------------------------------
Notes:
All prices above are inclusive of salaries, social security costs, insurance,
provision for holidays and travel days.
All prices are exclusive of direct flight and travel charges, accomodations.
The prices shown are valid for 12 months commencing 1st January 1998 and are
subject to annual revision of 3% (three percent) unless otherwise agreed.
-12-
EXHIBIT 10.45
PETRODRILL SEVEN LIMITED
- AND -
FORMARITIMA LTD.
-----------------------------------------------
AMETHYST 7 MANAGEMENT AGREEMENT
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<PAGE>
THIS AGREEMENT is made as of the 5th day of November 1998,
BETWEEN:
1. PETRODRILL SEVEN LIMITED, a company incorporated in the British Virgin
Islands with its registered office located at Arias, Fabrega & Fabrega,
P.O. Box 985, Omar Hodge Building, Wickham s Cay, Road Town, Tortola,
British Virgin Islands.
hereafter referred to as Petrodrill ; and
2. FORMARITIMA LTD. a company incorporated in the British Virgin slands and
having its principal office at c/o Arias, Fabrega & Fabrega Trust Co.,
Omar Hodge Building, Wickham s Cay, Road Town, Tortola, British Virgin
Islands
hereafter referred to as Manager .
Petrodrill and Manager are hereinafter also referred to individually as
Party and collectively as Parties .
WHEREAS:
A. Petrodrill will be the legal owner of a dynamically positioned
semi-submersible drilling vessel (hereinafter called the Vessel ) and
intends to carry out worldwide offshore drilling and workover operations
using the Vessel, subsequent to its delivery to appropriate Project
Companies pursuant to a contract for construction and sale between
Petrodrill and Daewoo Heavy Industries as amended from time to time ( the
Construction Contract ).
B. The Manager possesses the know-how and skilled personnel to enable it to
manage the operation and maintenance of the Vessel and to market the
Vessel world-wide.
C. The Manager will support and render services relevant to the mobilization
of the Vessel to Brazil and operations pursuant to a certain charter
agreement between Petroleo Brasileiro S.A. (hereinafter referred to as
PETROBRAS ) and Maritima Navegaco e Engenharia Ltda as novated and
assigned to Petrodrill (the CHARTER AGREEMENT ) and thereafter worldwide.
D. Manager has been provided with a copy of the aforesaid Charter Agreement
and Construction Contracts.
Petrodrill is desirous of contracting with the Manager for the provision
of the services in accordance with the terms and conditions set out
herein.
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NOW IT IS HEREBY AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. DEFINITIONS
Capitalized terms used herein but not otherwise defined shall have
the meanings assigned to such terms in Petrodrill s Shareholders
Agreement among Drillpetro Inc., Techdrill Inc. and Westville
Management Corporation.
2. TERM OF AGREEMENT
This Agreement shall take effect from the date hereof and shall continue
unless terminated pursuant to the provisions of Clause 7.
3. COMMENCEMENT AND PERFORMANCE
3.1 PRESENT CONDITION OF VESSEL: The parties acknowledge as at the date of
signing of this Agreement that the Vessel is to be constructed. Petrodrill
undertakes to provide the Manager with copies of all relevant
documentation in respect of the Vessel in the English language, including
detailed drilling equipment lists.
3.2 DELIVERY: This Agreement shall commence with respect to the Vessel prior
to commencement of sea trials under the relevant Construction Contract.
The Manager will furnish the relevant personnel and services to assist
during the sea trials.
3.3 PERFORMANCE BY MANAGER: The Manager shall at all times maintain proper and
adequate office and technical facilities and a competent and sufficient
staff for the performance of its duties, and shall, on behalf of
Petrodrill and at Petrodrill s risk and expense, manage and maintain the
Vessel in accordance with good oil industry practice, efficiently and
economically, to the best of its professional ability in regard to
performance, safety and shipshape appearance, and will arrange, at all
times, technical supervision to ensure that the Vessel is kept in a
seaworthy condition and with valid certificates.
Notwithstanding the foregoing, Petrodrill has, subject only to the
provisions of Clause 6, ultimate and complete responsibility for the
Vessel and shall indemnify the Manager in accordance with Clause 6.
4. OPERATIONAL DUTIES AND RESPONSIBILITIES OF THE MANAGER
4.1 MANAGER S PERSONNEL AND SERVICES TO BE RENDERED BY OTHER CONTRACTORS OF
PETRODRILL
4.1.1 The Manager shall provide a sufficient number of relevantly
qualified personnel in order to ensure that the operations of the
Vessel is at all times undertaken safely and in accordance with good
oil industry practice and in compliance with the lawful and proper
instructions of any client contracting for use of the services of
the Vessel and in accordance with the contract with such client and
any regulations from relevant regulatory bodies, authorities or
classification societies.
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4.1.2 The Manager shall ensure at all times that it has an adequate pool
of qualified personnel available to cover vacancies due to leave
requirements, sickness, injury, replacement of personnel as
contemplated by the provisions of Clause 4.1.3 or for any other
reason whatsoever.
4.1.3 Should Petrodrill be dissatisfied with the performance of any of the
personnel provided by the Manager, Petrodrill shall notify the
Manager thereof, stating the reasons for its dissatisfaction. Should
the cause of Petrodrill s dissatisfaction remain unremedied for a
period of twenty days from the giving of Petrodrill s said notice,
Petrodrill shall have the right to request the replacement of the
personnel concerned and in such event the Manager shall, as soon as
practicable thereafter replace the personnel concerned.
4.1.4 The Manager shall:
(a) keep Petrodrill fully informed regarding incidents which give
or could give rise to claims by or against third parties
including damage to the Vessel or serious sickness of
personnel; and
(b) use all reasonable endeavours to protect Petrodrill s
interests with respect to claims by or against third parties,
including personnel employed aboard the Vessel.
4.2 MARKETING AND CONTRACT NEGOTIATIONS
To the extent required by Petrodrill;
4.2.1 The Manager shall, and as may be appropriate, conduct and ensure the
best possible world wide marketing of the Vessel and shall keep
Petrodrill regularly and fully informed as to all available suitable
work.
4.2.2 (a) Manager s responsibility to market the Vessel under
this Agreement shall include making commercial proposals
to all potential clients with the view to being awarded
contracts for the employment of the Vessel after release
from employment under their respective Charter
Agreements, all obligations to Petrobras having been
duly performed.
(b) The Manager shall, prior to making any commercial
proposal to a potential client, notify Petrodrill of the
terms and conditions of such commercial proposal. These
shall include a budget setting out an estimate of the
expenditure, whether of a capital or income nature, to
be incurred in connection with the performance of any
contract of employment of the Vessel that may result
from such commercial proposal, the revenue (including
mobilisation/demobilisation and day rates) expected to
arise therefrom and also any projected profit.
Petrodrill shall, within 5 working days (that is days,
other than Saturdays, Sundays and public holidays in
either Rio de Janeiro or Paris) ( Working Days ) from
the date of the giving of the notice concerned by the
Manager notify the Manager whether or not it
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<PAGE>
agrees such proposal. If Petrodrill so notifies the
Manager that it agrees such proposal, it shall be
forthwith made to the potential client but if it so
notifies the Manager that it does not agree such
proposal, it shall not be made to the potential client.
If Petrodrill shall fail so to notify the Manager
whether or not it agrees the proposal within the period
aforesaid Petrodrill shall be deemed to have agreed the
proposal and the Manager shall thereupon make the same
to the potential client.
4.2.3 When seeking employment for the Vessel, the Manager shall not
give preferential treatment to other rigs under its
management. If the Manager shall wish to submit a competing
commercial proposal in respect of any other drilling unit
owned or managed by the Manager, it shall be entitled to do so
but shall notify Petrodrill of such intention immediately such
intention is formed. In the event that the Manager shall
intend to submit a competing commercial proposal in respect of
such a unit, Petrodrill shall be entitled itself to submit its
commercial proposal in respect of the Vessel to the potential
client and to conduct all negotiations in connection therewith
to the exclusion of the Manager, and without being under any
obligation to disclose to the Manager the details of the
commercial proposal or any variations thereof.
4.3 OPERATIONS EQUIPMENT MAINTENANCE
4.3.1 The Manager shall arrange for the operation of the Vessel and
all equipment used on or from the Vessel.
4.3.2 The Manager shall carry out all the functions which, in
accordance with good oil industry practice, would be performed
by persons conducting the operations of the Vessel.
4.3.3 The Manager is authorised to act, on behalf of Petrodrill, in
respect of all matters that may pertain to the everyday
operation of the drilling and workover services.
Notwithstanding the foregoing, where in connection with such
operation, the Manager will or is likely to incur expenditure
not contemplated by or greater than the amount specified in
respect thereof in any budget as is referred to in Clause
4.5.2 and where any such expenditure will or is likely to
exceed US$50,000 or, in any calendar month, sums which, in the
aggregate, are in excess of US$50,000. the Manager shall,
prior to incurring such expenditure, obtain the consent of
Petrodrill so to do. Nevertheless the Manager shall, in any
case where, in its reasonable opinion, it is necessary to take
immediate action to avert danger to life or health or loss or
damage to the Vessel or other property of Petrodrill, be
entitled and obligated to take such action without the prior
consent of Petrodrill but, in every such case, the Manager
shall promptly notify Petrodrill of the action so taken by it
and of the amount of expenditure incurred by it in so doing.
5
<PAGE>
4.3.4 Subject to Clauses 4.3.3 and 4.5.2 the Manager shall procure
the supply of all equipment and materials required in
connection with the operation and maintenance of the Vessel
including an adequate supply of spare parts, stock for stores
and catering, and generally so as to ensure that the Manager
will at all times be able to fulfil its obligations hereunder.
The Manager will use its best endeavours to ensure, that
materials and equipment procured by it are purchased on the
most economical terms available, as to price and payment, and
having regard to the quality and availability of the materials
and equipment concerned.
4.3.5 The Manager shall provide for technical supervision, repairs,
classification, customary maintenance and, in all other
respects, use its best endeavours so that, at all times and
subject to the provisions of clauses 4.6.2 and 4.6.3, the
Vessel is kept duly operational and seaworthy, and maintain
their certificates and permissions for maritime and drilling
and workover operations all in accordance with good oil
industry practice. Minimum personnel will be maintained during
periods of lay up in order to minimise cost to Petrodrill.
4.3.6 Petrodrill s representatives shall be entitled to board the
Vessel for the purpose of examining the Vessel and its
operations subject, at all times, to the consent of the client
where applicable.
4.3.7 The Manager will provide, if required by any client or
relevant authority, an internal control system (Quality
Assurance and Quality Control), which is approved by relevant
certifying authorities and regulating bodies.
4.3.8 The Manager will not by act or omission of Manager cause
Petrodrill to be in breach of any provision of the mortgage
registered over the Vessel and has been provided with a copy
of said mortgage and will provide such confirmation as may be
reasonably required by the Vessel s lenders.
4.4 INSURANCE
4.4.1 The Manager, on behalf of Petrodrill, shall ensure and provide
that the Vessel and all consumable, materials and equipment
thereof and the Manager's and Petrodrill's employees are at
all times adequately insured with reputable underwriters on
the best possible terms. Manager shall ensure that such
insurance shall be fully in compliance with the requirements
of the holder of the mortgage on the Vessel. Subject to the
foregoing, the following minimum insurance coverage will be
maintained by the Manager on behalf of Petrodrill at all
times:
(a) All Risks Hull and Machinery Insurance (including
underwater and in-hole equipment) against marine and war
risks, to the full market value of the Vessel; and
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<PAGE>
(b) Full Protection and Indemnity Insurance, or equivalent,
in respect of liabilities of Petrodrill and/or the
Manager to third parties including but not limited to
pollution or contamination, removal of wreck and
recovery of equipment lost overboard.
4.4.2 Insurances in respect of the personnel (such as workmens'
compensation and employers liability) whether employed on board the
Vessel or not will be the responsibility of the employers of such
personnel.
4.4.3 The Manager, on behalf of Petrodrill, shall use its best endeavours
to arrange additional or alternative insurance coverage to those
specified in Clause 4.4.1 as may from time to time be required for
the fulfilment of any contract of employment entered into for the
employment of the Vessel.
The arrangement and maintenance of such additional or alternative
insurance coverage shall not prejudice the arrangement and
maintenance of any insurance referred to in Clause 4.4.1.
4.4.4 It is agreed that all deductibles paid under such insurances shall
be considered as Operating Costs.
4.4.5 It is further agreed and the Manager shall arrange that the
insurances effected on behalf of Petrodrill shall be endorsed with a
statement that the Manager is co-assured and that the underwriters
waive their rights of subrogation and/or recourse, whether express
or implied, against the Manager and/or its subcontractors and its
affiliated companies and against any party designated in writing by
the Manager with whom the Manager has entered into a hold harmless
agreement or otherwise in respect to the Vessel and operations
involving the Vessel. This Agreement shall be copied by Manager to
the relevant underwriters and their written approval that the
indemnities herein contained are acceptable as being normal in the
oil industry shall be obtained by the Manager.
4.4.6 Manager shall provide Petrodrill with copies of the relevant
policy(ies) of insurance and with evidence of the payment of the
relevant insurance premiums.
4.4.7 (a) In the event of an accident or incident which will or may
give rise to a claim the Manager shall immediately notify
Petrodrill and the relevant insurance underwriters.
(b) The Manager, on behalf of Petrodrill, shall liaise with
Petrodrill s insurers, underwriters, agents, surveyors, loss
adjusters and/or as may be required and prepare all
documentation necessary in connection therewith.
(c) The responsibility of making a claim shall be that of the
Manager on behalf of Petrodrill.
(d) The Manager shall not authorise repairs or settle any claims
without first obtaining Petrodrill s consent.
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<PAGE>
Petrodrill and the Manager agree to cooperate to the fullest possible
extent in order to speed up insurance claims processing.
4.4.8 The Manager shall take out and maintain all statutory employer s
liability insurance to cover the Manager s employees in compliance
with applicable laws. To ensure that the actions of such personnel
are insured at all times while working on or in relation to the
Vessel, Petrodrill, if possible, shall be entered as co-assured in
the Manager s insurances.
4.4.9 The premiums payable by Manager in respect of all insurance effected
shall be for the account of Petrodrill.
4.5 ADMINISTRATION AND ACCOUNTS
4.5.1 The Manager will prepare and submit to Petrodrill at least sixty
days prior to the Vessel being delivered to the Manager a budget of
operating income and expenditure for the period of twelve calendar
months following that delivery. At least sixty days prior to each
anniversary of the date of aforesaid delivery, the Manager shall
prepare and submit to Petrodrill a budget of operating income and
expenditure and any contemplated capital expenditure, for the
following twelve months.
Each budget shall contain sufficient detail of likely expenditure as
will enable Petrodrill to check actual costs when they are incurred
against estimates. All assumptions shall be clearly stated. The
budgets shall be subject to Petrodrill s approval but when approved,
Petrodrill shall promptly notify the Manager thereof. Petrodrill
will provide details of costs in respect of personnel and any other
services to be provided by Petrodrill.
In addition to the aforesaid budgets the Manager will prepare and
submit to Petrodrill budgets referred to in Clause 4.2.2.
4.5.2 Quarterly reports and accounts shall be presented to Petrodrill as
soon as reasonably possible after the end of each three month period
following the delivery referred to in 4.5.1. but no later than 40
calendar days after the end of such period.
The quarterly report shall contain the following:
Brief marketing status and work prospects
Major repairs/capital investments
The accounts/financial reports shall contain the following in a
format to be mutually acceptable to both parties, Petrodrill from
time to time to provide the Manager with a copy of its preferred
format:
Quarterly actual and year to date results compared with the
budget
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Description/analysis of variances actual/budget
Cash flow/fund requirements
Estimates for the year
In addition, the Manager shall provide Petrodrill with a copy of the
monthly report from the Vessel containing a brief summary on safety,
client relationship, invoices and revenue.
4.5.3 Subject to the provisions of Clause 4.3.3. the Manager shall utilise
funds credited to or standing in the Disbursement Account (defined
in 4.5.4) to meet the following expenses and disbursements inter
alia, hereinafter referred to as the Operating Costs:
Cost of Manager provided personnel;
Travel costs for Petrodrill and Manager provided personnel;
Purchases of materials, supplies, equipment, parts and storage,
transport and assembling thereof, and cost of subcontractors in
connection with specific assignments;
Expenses incurred for keeping the Vessel in line with certification
and classification requirements (This will apply for Annual surveys
only. Expenses for Special Periodic survey are not included in
Operating Costs but will be shown in each relevant budget submitted
under the provisions of this Agreement);
Professional services for all analysis or technical assistance
required to the extent that such services qualitatively cannot be
performed by the Manager or the Manager s own employees;
Direct Internal Quality and Safety audit costs when carried
out on board the Vessel;
Shore base expenses including payroll and payroll related expenses
to shore base staff, storage, transportation, office and warehouse
upkeep at shore base site including mobilization and demobilization
of the same;
Expenses for catering;
Customs duties, corporate taxes, withholding taxes, and other taxes
of whatsoever nature levied on Petrodrill of an Operating Company
and arising solely from contracts entered into in respect of the
Vessel and levied in jurisdictions where the Vessel is located from
time to time and/or in connection with this Agreement;
Budget approved brokerage, commission and agency fees to third
parties, if any;
All other reasonable expenses and costs of similar nature which are
budgeted and such other reasonable costs and expenses that the
Manager in its discretion
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considers to be necessary to ensure the safety of the personnel on
the Vessel or the Vessel itself as well as mitigation of non-
performance under the Charter Agreements subject to a limitation of
US$250,000; and
Insurance costs including deductibles.
4.5.4 The Manager shall be required, pursuant to its duties under this
Agreement, to open and keep a separate bank account in the name of
Petrodrill ( the Disbursement Account ) and books, records and
accounts relating to the management of the operation and maintenance
of the Vessel in accordance with internationally accepted applicable
accounting principles and in the English language. All such books,
records, accounts and other related documents mentioned above shall
be available to Petrodrill or its appointees for inspection at all
reasonable times. In addition to the reports referred to in Clause
4.5.3. the Manager shall furnish to Petrodrill all information
(financial or otherwise) reasonably required throughout the year by
Petrodrill for its own accounts or audits and any assistance
required to be given to its auditors.
4.6 BANK ACCOUNTS AND FLOW OF FUNDS
Subject always to such other instructions as Petrodrill may give to the
Manager pursuant to arrangement with the holder of the mortgage over the
Vessel, or otherwise:
4.6.1 Petrodrill undertakes to transfer a sum of US$1,000,000 (the
minimum working capital ) into the Disbursement Account within 30
days prior to commencement of the services by Manager under this
Agreement.
The Manager undertakes to procure that income (and other revenue
items) payable to Petrodrill in connection with the Vessel is
credited without set-offs or deduction, other than those set-offs
and deductions compulsorily imposed on amounts received by the
Manager according to applicable laws in the country where the Vessel
is employed, to the Disbursement Account.
4.6.2 The Manager will provide Petrodrill not less than seven working days
prior to the end of each month with a statement of its working
capital requirements in respect of the Vessel and the Manager s
obligations hereunder for the next month.
If the funds received from the Vessel s operations are insufficient
at any time to meet the Manager s costs, as listed under 4.5.4. and
5 or any other expenditure rightfully incurred, the Manager shall
notify Petrodrill of its cash requirements by giving at least ten
Working Days notice.
Petrodrill is obliged, at all times, to ensure that the Manager s
request for adequate working capital is met within the said notice
period of 10 Working Days and to maintain that the minimum working
capital balance is maintained in the Disbursement Account.
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4.6.3 Any funds credited to the Disbursement Account in excess of
necessary working capital to meet expenses listed under Clauses
4.5.3. and 5. shall be promptly paid over to such account as
Petrodrill may specify from to time unless. Petrodrill requests the
Manager to temporarily administer such spare funds in consultation
with Petrodrill.
4.6.4 The Manager will provide Petrodrill on a monthly basis with copies
of all Disbursement Account statements.
4.6.5 Any interest earned/or payable in respect of the Disbursement
Account shall be for the credit of the Disbursement Account.
4.6.6 Under no circumstances shall the Manager, without the prior written
approval of Petrodrill (which approval may be withheld at
Petrodrill s sole discretion), be entitled to borrow funds or enter
into any agreement to borrow funds in such a manner as to bind
Petrodrill PROVIDED ALWAYS that a requirement for funds to meet a
safety obligation shall supersede this provision.
5. MANAGEMENT FEE
5.1 With effect from start of pre-delivery sea trials of the Vessel, the
Manager shall be paid a fee (the Fee ) of US$1,250 per day for the
duration of this Agreement. The Fee shall be paid against invoice to
Petrodrill such invoice to be rendered by the tenth day of the month
following the month in which the Fee was earned.
5.2 In the event of a sale of theVessel and termination of this
Agreement with respect to the Vessel pursuant to Clause 7.6 and the
purchaser not accepting an assignment of the rights and obligations
of Petrodrill under this Agreement, the Fee shall be deemed earned
by the Manager and shall be paid as compensation to the Manager in
respect of the aggregate number of days of management fee lost with
respect to the Vessel each day between date of sale and the final
day of the firm term of the relevant Charter Agreement discounted at
ten per cent (10%) per annum.
5.3 In the case of a disputed invoice, Petrodrill will advise the
Manager of the item under dispute specifying the complaint within
fifteen (15) days of receipt of such invoice but will pay the
undisputed part. The disputed item will be paid as may be mutually
agreed.
6. INDEMNITIES
6.1 Except to the extent that the Manager would be liable under Clause
6.2, Petrodrill hereby undertakes to keep the Manager indemnified
and to hold the Manager harmless against all actions, proceedings,
claims, demands or liabilities whatsoever which may be brought
against or incurred by the Manager in relation to any act or thing
done or caused to be done as aforesaid, and against all costs,
damages and expenses which the Manager may suffer or incur in
defending or settling the same.
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6.2 Subject to Clause 6.4. below, Petrodrill indemnifies and holds
harmless the Manager against all liability whatsoever, whether in
law, tort or in contract or otherwise, and Petrodrill shall be
solely liable for any damage, loss or claim of whatsoever nature and
howsoever arising, whether relating to the Vessel, its hirers and
users (including, without prejudice to the generality of the
foregoing, for damage to or loss of property, including the Vessel,
and all direct and consequential loss) unless the same is proved to
have resulted solely from the gross negligence or wilful default of
the Manager, its employees, agents or subcontractors in which case
the Manager s liability during any one year of the term of this
Agreement shall not exceed the aggregate of the Fee received by the
Manager in the preceding twelve months with respect to the Vessel.
6.3 The Manager shall be under no liability whatsoever in respect of any
consequential loss (including without prejudice to the generality of
the foregoing liability due to detention of or delay of theVessel or
otherwise) arising out of or in connection with the management
and/or operation of the Vessel.
6.4 LIABILITIES BETWEEN THE PARTIES
6.4.1 The Manager shall hold harmless and indemnify Petrodrill from and
against all claims, costs expenses or liabilities arising from or
connected with the performance of this Agreement in respect of:
(i) death of or personal injury to any of the personnel of
the Manager s Group;
(ii) loss of or damage to the property of the Manager s Group;
(iii) any consequential or economic loss or damage suffered by the
Manager s Group;
howsoever arising and irrespective of negligence or other breach of
legal duty by Petrodrill s Group.
6.4.2 Petrodrill shall hold harmless and indemnify the Manager from and against
all claims, costs, expenses or liabilities arising from or connected with
the performance of this Agreement in respect of:
(i) death of or personal injury to any of personnel of
Petrodrill s Group;
(ii) loss of or damage to the property of Petrodrill s Group; and
(iii) any consequential or economic loss or damage suffered by
Petrodrill s Group;
howsoever arising and irrespective of negligence or other breach of
legal duty bY the Manager s Group.
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6.4.3 For the purposes of this Clause 6.4, Liabilities Between the
Parties, Petrodrill s Group means Petrodrill, its associated
companies, its other sub-contractors and suppliers, Petrobras, and
the officers, employees and agents of any of them.
6.4.4 For the purposes of this Clause 6.4, Liabilities Between the
parties, the Manager s Group means the Manager, its associated
companies, its sub-contractors and suppliers and the officers,
employees and agents of any of them.
6.4.5 For the express purposes of Clause 6.4, Liabilities Between the
Parties, of this Agreement only, Petrodrill 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 within
Petrodrill s Group and all such persons shall to this extent be
deemed to be parties to this Agreement.
6.4.6 For the express purposes of Clause 6.4, Liabilities Between the
Parties, of this Agreement only, the Manager 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 within
the Manager s Group and all such persons shall to this extent be
deemed to be parties to this Agreement.
6.5 INDEMNITY FOR OPERATIONS
Save as is provided in Article 5.4 above, Petrodrill shall
indemnify and hold harmless the Manager from and against all
actions, proceedings, claims, demands or liabilities whatsoever
that may be brought by any other person against, or incurred by the
Manager in relation to or in connection with its performance of
this Agreement with respect to each Rig unless same has arisen from
the gross negligence or wilful misconduct of the Manager, in which
event the liability of the Manager shall be limited to the
aggregate of the management fee received by the Manager in the
preceding 12 months with respect to each Rig.
7. TERMINATION
7.1 Petrodrill may terminate this Agreement at any time if:
7.1.1 Petrodrill is dissatisfied, with sound reasons, with the
performance of Manager on account of incompetence of the
Manager or unsatisfactory performance of its duties and
obligations hereunder as a result of causes reasonably within
the Manager s control, and the Manager, after having been
given, by Petrodrill, written notice in which Petrodrill
shall have specified in detail the grounds for its
dissatisfaction, shall fail to take effective steps to remedy
the matters complained of within thirty days after the giving
of the said written notice. Petrodrill shall, if its right to
terminate shall arise as aforesaid, have the right to
terminate this Agreement effective ninety (90) days after a
date specified by Petrodrill without any further compensation
to the Manager other than any money due and owing at date
this Agreement is to terminate.
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<PAGE>
7.1.2 The Manager shall go into liquidation (otherwise than
voluntarily for the purpose of reorganization or
reconstruction), make an assignment for the benefit of
creditors, make an arrangement, composition or compromise
with its creditors or have a receiver or administrator
appointed in respect of the whole or any part of its assets
or shall otherwise be unable to pay its debts as and when
they become due.
7.1.3 The Manager ceases or threatens to cease to carry on its
business.
7.2 This Agreement shall be terminated with respect to the Vessel in
the event of the actual or constructive or compromised or arranged
total loss or requisition for title of the Vessel on the date four
months after such total loss occurs or is agreed with insurance
underwriters (as the case may be, or such other date as may be
agreed).
7.3 (a) In the event of the termination of this Agreement
pursuant to Clause 6.1 or 6.2 of this Agreement,
Petrodrill shall pay to the Manager all such amounts to which
the Manager may be entitled pursuant to the provisions of
Clause 5.1 as and when such amounts fall due for payment;
(b) In addition, Petrodrill shall pay such amounts (if any)
as the Manager (notwithstanding the Manager s best efforts to
minimize the effects to any such termination) may become
legally liable to pay under any contract of employment or by
reason of any regulation or legislation for employee
protection to personnel who may have been employed by the
Manager or its group companies on the Vessel to perform any
part of the services to be provided under this Agreement and
who shall become redundant as a result of such termination.
Petrodrill s exposure under this Clause 7.4 is limited to a
maximum of three months salary per employee in the employ of
the Manager at the time of receipt of notice of termination.
Petrodrill is only responsible for any redundancy payments or
equivalent for the period of time the Manager s personnel have
been employed on the Vessel from the date of this Agreement
and provided timely notice is issued to all affected
personnel, Manager shall make its best efforts to assist and
support Petrodrill or Petrodrill s nominee in procuring the
services of such employees or sub-contractors as Petrodrill
may wish to employ.
7.4 If the Vessel is sold, Petrodrill shall be entitled to terminate
this Agreement with respect to the Vessel by giving notice to the
Manager, such notice to expire on such date as Petrodrill may
specify.
7.5 If Petrodrill fails to pay the remuneration payable to the
Manager within thirty days of the due date, the Manager may at any
time thereafter terminate this Agreement by thirty calendar days
prior written notice to Petrodrill.
In the event that Petrodrill fails to make payment on due date to
the Manager of any moneys owing to the Manager under this
Agreement, Petrodrill agrees that the amount unpaid for the time
being shall bear interest at a rate of two percentage point units
above the three months LIBOR rate as quoted in the Financial Times
on the due date.
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<PAGE>
7.6 Termination of this Agreement under any circumstances shall be
without prejudice to any outstanding claims hereunder which either
Petrodrill or the Manager may have against the other.
7.7 Upon any termination of this Agreement with respect to the Vessel,
the Manager shall use its best endeavours to assist in a smooth
transfer of the Vessel to any new manager and/or Petrodrill.
8. ASSIGNMENT AND SUBCONTRACTING
8.1 The rights and obligations of a party hereunder may not be
assigned without the prior written consent of the other party (such
consent not to be unreasonably withheld).
8.2 Either party may however assign such rights to any subsidiary,
affiliate or other group company designated by it PROVIDED THAT
such Party effecting the assignment shall remain responsible for
the proper performance of this Agreement.
8.3 The Manager may, wherever necessary, engage subcontractors on an
arms length basis for the performance of specific assignments,
without thereby in any way being relieved of its responsibility for
the performance, administration and direction of these services.
The indemnity as contained in 6 above shall, as between Petrodrill
and the Manager, apply in respect of actions or omissions of
aforesaid sub-contractors and may be passed on to the
sub-contractor in the discretion of the Manager.
9. FORCE MAJEURE
9.1 Each Party to this Agreement shall be relieved from complying with
any term of this Agreement to the extent that, and only so long as,
such compliance is prevented or delayed by force majeure, which is
defined as civil or labour disturbances, riots, strikes (other than
a strike limited to the employees of either Party), wars (declared
or undeclared), military actions, insurrections, rebellion, acts of
any governmental or military agency under actual or assumed
authority, action of elements, floods, storm or other acts of God
or any cause beyond the control of either Party, whether or not
similar to the matters herein specifically enumerated and provided
that the event shall not have been caused by the action or
negligence of either of the Parties, and that the Party and/or the
Parties affected shall do its, or their, utmost to remedy the above
circumstances.
9.2 Any Party claiming force majeure shall promptly notify the other
Party, with the evidence of the occurrence of such event.
9.3 If either Party hereto is prevented from or delayed in performing
all or any of its obligations thereunder as a direct result of
force majeure, such non
15
<PAGE>
performance shall not be considered as a breach of this Agreement
and that Party shall be relieved from such obligation which shall
suspend payment by the other Party for the duration of such force
majeure.
9.4 Notwithstanding the foregoing to the extent that the event
claimed as force majeure impacts upon or would impact upon the
performance of any Charter Agreement, such event must be
recognised as a force majeure event in terms of such Charter
Agreement before it can qualify as a force majeure event
hereunder.
10. LAW AND ARBITRATION
10.1 This Agreement shall be governed by and construed in all respects
in accordance with the laws of England.
10.2 Any dispute or difference arising in connection with this Agreement
shall if possible be settled by mutual amicable agreement.
10.3 If any dispute should arise in connection with the interpretation
and fulfilment of this Agreement the same shall be decided by
arbitration in the city of London and shall be referred to a single
arbitrator (an Arbitrator ) to be appointed by the Parties hereto.
If the Parties cannot agree upon the appointment of the single
Arbitrator the dispute shall be settled by three Arbitrators, each
Party appointing one Arbitrator, the third being appointed by the
Chairman for the time being of the London Maritime Arbitrators
Association.
10.4 If either of the appointed Arbitrators refuses or is incapable of
acting, the Party who appointed him shall appoint a new Arbitrator
in his place.
10.5 If one of the Parties fails to appoint an Arbitrator, either
originally or by way of substitution, for two weeks after the other
Party having appointed his Arbitrator has sent the Party making
default notice by mail or facsimile to make the appointment, the
Party appointing the third Arbitrator shall, after application from
the Party having appointed his Arbitrator, also appoint an
Arbitrator on behalf of the Party making default.
10.6 The award rendered by the Arbitration Court shall be final and
binding upon the Parties and may if necessary be enforced by the
Court or other competent authority in the same manner as a judgment
in the Court of Justice.
10.7 Performance under this Agreement shall, if reasonably possible,
continue during the Arbitration proceedings.
11. NOTICES
11.1 All communications and notices in relation to this Agreement and
obligations to be performed hereunder shall be in writing and
delivered by fax or by hand and if given to Petrodrill addressed
to:
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<PAGE>
PETRODRILL SEVEN LIMITED
C/O ARIAS, FABREGA & FABREGA
OMAR HODGE BUILDING
WICKHAM S CAY
ROAD TOWN, TORTOLA
BRITISH VIRGIN ISLANDS
Fax: 1 809 494 4980
with a copy to:
PRIDE INTERNATIONAL, INC. MARITIMA
ATTENTION: PRESIDENT ATTN: GERMAN EFROMOVICH
5847 SAN FELIPE, SUITE 3300 AVENIDA ALMTE BARROSO
HOUSTON, TEXAS 77057 52 GR 3400
U.S.A. CENTRO RJ, BRAZIL
Fax: 1 713 914 9796 Fax: 55 21 544 4044
and if given to the Manager addressed to:
FORMARITIMA LTD.
c/o Arias, Fabrega & Fabrega
Omar Hodge Building
Wickham s Cay
Road Town, Tortola
British Virgin Islands
Fax: 1 809 494 4980
11.2 Either party may give reasonable notice to the other parties of any
change of address at any time.
11.3 A notice by fax shall be deemed to have been received at the time
of dispatch provided that if the day of dispatch is not a Working
Day in the country of the addressee or if the time of dispatch is
after close of business in the country of the addressee, it shall
be deemed to have been received at the opening of business on the
next such Working Day.
12. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes all prior negotiations, representations or
agreements relating directly to the subject matter of this
Agreement whether written or oral. No changes, alterations or
modifications to this Agreement shall be affected unless in writing
and signed by the Parties hereto.
IN WITNESS whereof the parties have executed this Agreement the day and year
first above written.
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<PAGE>
SIGNED by )/s/ GERMAN EFROMOVICH
for and on behalf of )German Efromovich
PETRODRILL SEVEN LIMITED )/s/ MARCELO VIOLLAND
in the presence of: )Marcelo Violland
SIGNED by )/s/ JOHN O'LEARY
for and on behalf of )
FORMARITIMA LTD. )/s/ FRIDA A. MARTINEZ
in the presence of: )
18
EXHIBIT 10.49
FORMARITIMA LTD.
- and -
PRIDE-FORAMER S.A.
-------------------------------------
AMETHYST 7 TECHNICAL SERVICES AGREEMENT
------------------------------------
<PAGE>
THIS AGREEMENT is made the 5th day of November 1998,
BETWEEN:
1. FORMARITIMA LTD., a company incorporated in the the British Virgin Islands
having its principal office at Arias Fabrega & Fabrega Trust Co. BVI
Limited, P.O. Box 985, Wickham's Cay, Road Town, Tortola, British Virgin
Islands, (hereafter referred to as "Formaritima"), being represented by
Mr. German Efromovich, duly entitled.
2. PRIDE-FORAMER S.A., a company incorporated in France with its registered
office at 16 bis, rue Grange Dame Rose 78143 Velizy-Villacoublay
(hereafter referred to as "Foramer"), being represented by Mr. Gerard
Godde, duly entitled.
FORMARITIMA and PRIDE-FORAMER are hereinafter referred to collectively as
"PARTIES" and individually as "PARTY".
WHEREAS:
A. Formaritima is a 50/50 joint venture company set up by Foramer of France
and Maritima Petroleo e Engenharia Ltda of Brazil (hereinafter referred
to as "Maritima") for the provision of services to operate drilling and
workover rigs.
B. Maritima has been awarded a charter contract (hereinafter referred to as
the "Charter") by Petroleo Brasileiro S.A. (hereinafter referred to as
"PETROBRAS") eachfor the provision of a dynamically positioned
semi-submersible drilling or workover rig (hereinafter referred to as a
"RIG") pursuant to an invitation to bid. The obligations and rights under
the Charter have been or will be assigned to Petrodrill Seven Limited
(hereinafter referred to as an "OWNER").
C. The Owner has entered into a management agreement (hereinafter the
"Management Agreement") with Formaritima for the management of the Rigs
and the provision of certain technical services in order to assist the
Owners to perform their obligations pursuant to the Charter.
NOW, THEREFORE in consideration of the mutual covenants and obligations
hereafter set forth, it is hereby agreed between the Parties as follows:
1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Amethyst Financial Company Ltd.s
Shareholders Agreement of even date herewith among Drillpetro Inc.,
Westville Management Corporation and Techdrill Inc.
2. OBJECT
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<PAGE>
The Object of the Agreement is the supply by Foramer to Formaritima of
services such as, but not limited to, the services specified in Clause 4
of this Agreement.
3. TERM
3.1 The term of the Agreement shall be the same as the Management Agreement.
However:
3.1.1 This Agreement shall be terminated with respect to the Rig in the event
of the actual or constructive or compromised or arranged total loss or
requisition for title of the Rig on the date four months after such total
loss occurs or is agreed with Lenders (as the case may be, or such other
date as may be agreed).
3.1.2 The Agreement may by terminated by Formaritima at any time, upon a notice
period of seven (7) days, if Formaritima is not satisfied for sound
reasons with Foramer s performance, having given Foramer notice of its
deficiencies and the opportunity to correct these within a period of 15
days. In such case, no payment shall become due by Formaritima to Foramer
for unperformed services.
3.1.3 It is agreed by the Parties that the effective performance of the
Agreement shall include, without limitation, sea trials and mobilization
of the Rig to Brazil prior to the commencement of the Charter, the
assistance to demobilize upon termination of the Charter and the
resolution of any outstanding unresolved contractual issues at the end of
the Charter.
3.2 NOT USED
4. SCOPE OF SERVICES PROVIDED BY FORAMER
The scope of services (the "Technical Services") to be provided by
Foramer for each Rig is set out in Appendix 1.
5. COMPENSATION/REMUNERATION
5.1 All services are to be provided by Foramer to Formaritima on an open
book, "at cost" basis, duly justified by direct reference to industry
standards. Formaritima will pay Foramer for the Technical Services the
rates stipulated in Appendix 4 herein.
5.2 Formaritima will pay Foramer a management fee amounting to US$1,250 per
day for the Rig, commencing at the start of pre-delivery sea trials and
ending on the last day of drilling or workover operations under each
Charter or upon demobilization of the Rig thereunder, whichever is later,
or upon any prior termination of the Agreement.
5.3 Foramer will be responsible for the provision of budgets associated with
the Technical Services. The first operating budget concerning costs
associated with sea trials and mobilization will be presented by Foramer
to Formaritima six months in advance of the anticipated date of arrival
of the Rig at Macae, Brazil or such other
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<PAGE>
place as which may be notified by Petrobras. The Parties will meet on a
quarterly basis and Foramer will present to Formaritima the provisional
monthly budgets.
Formaritima will review the budget and, if in agreement, will approve the
budget. The approval of said budget for each quarterly period will be
given by Formaritima prior to 31st December, 31st March, 30th June and
30th September of each year, respectively, provided always that the said
budget is presented by Foramer to Formaritima prior to the 30th of
November, 28th of February, 31st of May and 31st of August, respectively.
5.4 In the case of a disputed invoice, Formaritima will advise Foramer of the
item under dispute specifying the complaint within fifteen (15) days of
receipt of such invoice but will pay the undisputed part. The disputed
item will be paid as may be mutually agreed.
5.5 Payments shall be made to a bank account nominated on each invoice.
6. TAXES
Any taxes or charges applied by local authorities in France to Foramer
shall be for Foramer's account.
7. LIABILITIES
7.1 COMPLIANCE WITH LAW AND REGULATION
Foramer undertakes that in performance of its obligations under this
Agreement it will comply with all applicable laws and regulations in
Brazil and France of any Governmental Authority.
7.2 LIABILITIES BETWEEN THE PARTIES
7.2.1 Foramer shall hold harmless and indemnify Formaritima from and against
all claims, costs expenses or liabilities arising from or connected with
the performance of this Agreement in respect of:
(i) death of or personal injury to any of the personnel of the Foramer
Group;
(ii) loss of or damage to the property of the Foramer Group; and
(ii) any consequential or economic loss or damage suffered by the Foramer
Group;
howsoever arising and irrespective of negligence or other breach of legal
duty by the Formaritima Group.
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<PAGE>
7.2.2 Formaritima shall hold harmless and indemnify Foramer from and against
all claims, costs, expenses or liabilities arising from or connected with
the performance of this Agreement in respect of:
(i) death of or personal injury to any of personnel of the Formaritima
Group;
(ii) loss of or damage to the property of the Formaritima Group; and
(iii) any consequential or economic loss or damage suffered by the
Formaritima Group;
howsoever arising and irrespective of negligence or other breach of legal
duty by the Foramer Group.
7.2.3 For the purposes of this Clause 7.2, the Formaritima Group means
Formaritima, its associated companies, its other sub-contractors and
suppliers, the Owner, Petrobras, and the officers, employees and agents
of any of them.
7.2.4 For the purposes of this Clause 7.2 the Foramer Group means Foramer,
its associated companies, its sub-contractors and suppliers and the
officers, employees and agents of any of them.
7.2.5 For the express purposes of Clause 7 of this Agreement only, Formaritima
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 within the Formaritima Group (as defined in Clause 7.2.3) and all
such persons shall to this extent be deemed to be parties to this
Agreement.
7.2.6 For the express purposes of Clause 7 of this Agreement only, Foramer
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 within the Foramer Group (as defined in Clause 7.2.4) and all such
persons shall to this extent be deemed to be parties to this Agreement.
7.3 INDEMNITY FOR OPERATIONS
Save as is provided in Article 7.2. above, Formaritima shall indemnify
and hold harmless and shall procure that Owners shall indemnify and hold
harmless Foramer from and against all actions, proceedings, claims,
demands or liabilities whatsoever that may be brought by any other person
against, or incurred by Foramer in relation to or in connection with its
performance of this Agreement with has arisen from the gross negligence
or willful misconduct of Foramer, in which event the liability of Foramer
shall be limited to the aggregate of the management fee received by
Foramer in the preceding 12 months for the Rig.
8. CONFIDENTIAL INFORMATION
5
<PAGE>
All information related to this Agreement, regardless of whether such
information concerns Formaritima, its clients, its associated companies,
or its contractors, shall be treated as confidential and shall not be
divulged by Foramer to any third party without the prior written consent
of Formaritima. The hereabove obligations shall survive termination of
the Agreement and shall remain in force for so long as the information
covered by confidentiality has not otherwise become public knowledge.
9. EMPLOYMENT OF PERSONNEL
No Foramer personnel shall be deemed to be employees, either temporary or
permanent of Formaritima and shall at all times be deemed employed by
Foramer.
Foramer shall have the sole responsibility for the preparation of payroll
and the payment of Foramer personnel, wages, compensation, remittance,
allowance, insurance and indemnities of whatever kind and in complying
with all applicable labour and local taxation regulations.
In particular and depending of the regulation for employing the French
personnel or any of Foramer personnel, extra charge may be imposed when
changing of zone of operations or lay off charges may have to be paid
when changing of zone of operations or when a Charter terminates. Foramer
shall be liable for and agrees to protect, defend and hold Formaritima
harmless from and against any loss suit or claim of any kind whatsoever
which may arise as a consequence of or related to the payment of these
charges.
10. INSURANCE
10.1 FORAMERS INSURANCES
Foramer undertakes that it will take out all insurance policies to cover
its liabilities as set forth in Article 7 of this Agreement and as
required of Owners under the terms of the Charters, such insurances shall
include but not be limited to the following:
(a) Workmen's Compensation insurance and Employer s Liability insurance for
damage suffered by its personnel in amounts not less than those required
by applicable laws in France.
(b) Comprehensive general liability insurance for its responsibility to third
parties in amount not less than those required for any one occurrence by
the Charters.
(c) All insurance policies as required to cover its equipment and/or materials
and those belonging to any service companies and for which Foramer is
responsible.
10.2 NOT USED
10.3 GENERAL PROVISIONS
6
<PAGE>
For all insurance policies taken out:
(a) Foramer shall comply with the insurance regulations in force in
Brazil and France.
(b) Formaritima shall bear the costs of the premiums, deductibles, fees
and expenses relative to all policies effected pursuant to the
provisions of this Agreement.
(c) Each Party shall procure that the other Party shall be named as
co-assured to the extent permitted so as to give effect to the
provisions of Article 7 of this Agreement.
(d) All of the insurance policies taken out shall state the
underwriter's waiver of subrogation to give effect to the provisions
of Clause 7 of this Agreement.
(e) Foramer shall, on request by Formaritima, furnish copies of the
insurance policies it is bound to take out pursuant to Clause 10 of
this Agreement.
11. AUDIT
Foramer shall keep and cause its contractor(s) and subcontractor(s) to
keep the books, payrolls, receipt, vouchers, financial records, personnel
records and any document related to the work thereunder and required for
administration purposes for the term of the Agreement and for a limited
period of two (2) years after termination hereof. Formaritima, through
its duly authorized representatives, shall have free access with 15 days
notice with no restriction, to such information, whenever required by
Formaritima, and it shall also have the right, at any time subject to
previous notification to Foramer, to perform the audits it deems
necessary of the aforementioned books, payrolls, receipts, vouchers,
records and files in general.
Formaritima reserves the right to audit Foramer's activities as deemed
necessary and/or appropriate by Formaritima, in order to check the
contents and compliance with the terms herein.
Notwithstanding the foregoing, in no event shall Formaritimas right of
audit be construed as a release or waiver of any of Foramers obligations
under the Agreement.
12. MISCELLANEOUS
12.1.1 Each party to this Agreement shall be relieved from complying with any
term of this Agreement to the extent that, and only so long as, such
compliance is prevented or delayed by force majeure, which is defined as
civil or labour disturbances, riots, strikes (other than a strike limited
to the employees of either Party), wars (declared or undeclared),
military actions, insurrections, rebellion, acts of any governmental or
military agency under actual or assumed authority, action of elements,
floods, storm or other acts of God or any cause beyond the control of
either Party, whether or not
7
<PAGE>
similar to the matters herein specifically enumerated and provided that
the event shall not have been caused by the action or negligence of that
Party and/or the Parties affected shall do its, or their, utmost to
remedy the above circumstances.
12.1.2 Any Party claiming force majeure shall promptly notify the other Party,
with the evidence of the occurrence of such event.
12.1.3 If either Party hereto is prevented from or delayed in performing all or
any of its obligations thereunder as a direct result of force majeure,
such non performance shall not be considered as a breach of this
Agreement and that Party shall be relieved from such obligation which
shall suspend payment by the other Party for the duration of such force
majeure.
12.1.4 Notwithstanding the foregoing to the extent that the event claimed as
force majeure impacts upon or would impact upon the performance of any
Charter, such event must be recognized as a force majeure event in terms
of the relevantCharter before it can qualify as a force majeure event
hereunder.
12.2 BANKRUPTCY OR ABANDONMENT OF OPERATIONS
Should Foramer become insolvent or enter into any arrangement with or for
the benefit of its creditors or become unable or refuse or neglect to
perform its obligations hereunder or if Foramer s equipment is seized or
taken in execution, Formaritima may, by notice in writing to Foramer,
terminate this Agreement without thereby affecting in other respects the
obligations or liabilities of Foramer.
12.3 ASSIGNMENT OF AGREEMENT
Neither Party may assign the Agreement, either wholly or in part, except
with the prior written authorization of the other Party, which
authorization may not be unreasonably withheld.
13. NOTICE
All notices, invoices and other communications required pursuant to this
Agreement shall be in writing and deemed to have been sufficiently given
or made if delivered by hand or send by fax to the addressee at the
address set out below;
in the case of Formaritima to: with a copy to:
8
<PAGE>
FORMARITIMA LTD. PRIDE INTERNATIONAL, INC.
Arias Fabrega & Fabrega c/o John O Leary
Trust Co. BVI Limited, 5847 San Felipe
P. O. Box 985 Suite 3300
Wickham s Cay, Road Town Houston, TX 77057-3011
Tortola, British Virgin Island Tel: (713)789-1400
Tel: (284)494-4977 Fax: (713)784-3702
Fax: (284)494-4980
in the case of Foramer to:
PRIDE-FORAMER S.A
16 bis, rue Grange Dame Rose - B.P. 100
78143 Velizy-Villacoublay, France
Tel: 011 33 1 30 70 58 58
Fax: 011 33 1 39 46 39 25
or to such other address as the relevant Party may from time to time
notify to the other.
14. GOVERNING LAW AND ARBITRATION
14.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England.
14.2 Any dispute or difference arising in connection with this Agreement,
shall if possible, be settled by mutual amicable agreement.
14.3 If any dispute should arise in connection with the interpretation and
fulfilment of this Agreement the same shall be decided by arbitration in
the city of London and shall be referred to a single arbitrator (an
Arbitrator) to be appointed by the Parties hereto. If the Parties
cannot agree upon the appointment of the single a Arbitrator the dispute
shall be settled by three Arbitrators, each Party appointing one
Arbitrator, the third being appointed by the Chairman for the time being
of the London Maritime Arbitrators Association.
14.4 If either of the appointed Arbitrators refuses or is incapable of acting,
the Party who appointed him shall appoint a new Arbitrator in his place.
14.5 If one of the Parties fails to appoint an Arbitrator, either originally
or by way of substitution, for two weeks after the other Party having
appointed his Arbitrator has sent the Party making default notice by mail
or facsimile to make the appointment, the Party appointing the third
Arbitrator shall, after application from the Party having appointed his
Arbitrator, also appoint an Arbitrator on behalf of the Party making
default.
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14.6 The award rendered by the Arbitration Court shall be final and binding
upon the Parties and may, if necessary, be enforced by the Court or other
competent authority in the same manner as a judgment in the Court of
Justice.
14.7 Performance under this Agreement shall, if reasonably possible, continue
during the Arbitration proceedings.
IN WITNESS WHEREOF this Agreement has been executed by or on behalf of the
Parties hereto the day and year first above written.
Signed in two duplicate originals in
SIGNED by /s/ Illegible
)
for and on behalf of )
FORMARITIMA LTD. )
in the presence of:/S/ FRIDA A. MARTINEZ
)
SIGNED by /s/ Illegible
)
for and on behalf of )
PRIDE-FORAMER S.A. )
in the presence of:/S/ FRIDA A. MARTINEZ
)
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<PAGE>
APPENDIX 1
SCOPE OF SERVICES PROVIDED BY FORAMER
1. Contractor shall supply the PERSONNEL to perform the services specified in
Appendix 2.
The PERSONNEL shall perform the services required hereunder on the Rig or
such other place needed under the Charter in accordance with the Work
Schedule as set out in Appendix 3.
Foramer shall carry out the assistance according to its own methods in so
far as they shall comply with the terms of the Charter, without prejudice to
Foramer s right to inspect, supervise and give instruction.
2. All services shall be provided with personnel of a standard approved by
Formaritima, Foramer shall remove and replace within the shortest possible
time any member of the PERSONNEL, after having been requested to do so by
Formaritima if, in the opinion of Formaritima, such member is negligent,
incompetent or unable to work or is working and/or behaving in an
unacceptable manner at the work-site. Consecutive replacement extra cost
will be for Foramer's account.
Foramer will furnish other services to Formaritima such as but not limited
to:
(a) Support in provision of non-local insurance and settling of non-local
insurance disputes.
(b) International freight forwarding.
(c) Marketing advice and services.
(d) International procurement services.
(e) Head office technical assistance and support in France to the operation of
the Rig.
(f) Provision of monthly budgets on a semi-annual basis. Reconciliation of
actual US/FF monthly costs against monthly budgets proposed in a format
required by Formaritima General Manager.
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APPENDIX 2
POSITIONS OF PERSONNEL
ONSHORE: Manager
Rig Manager
OFFSHORE Site Manager
Toolpusher
Nightpusher
Driller
Asst. Driller
Chief Engineer
Chief Electrician
Asst. Chief Electrician
Chief Mechanic
BOP Engineer
Electronician
Bosun
Materials Man
___________
12
<PAGE>
APPENDIX 3
WORK SCHEDULE OF PERSONNEL
ONSHORE: 10 months work / 2 months leave or
5 months work / 1 month leave
Offshore: 4 weeks on / 4 weeks off.
12 hour shifts.
13
<PAGE>
APPENDIX 4
PRICE OF PERSONNEL SUPPLIED BY FORAMER TO FORMARITIMA
ONSHORE US$/DAY
General Manager 650.00
Rig Manager 536.00
OFFSHORE US$/DAY ONLY
Site Manager 756.00
Tool Pusher 678.00
Night Pusher 539.00
Driller 409.00
Assistant Driller 361.00
Chief Engineer 688.00
Chief Mechanic 518.00
Chief Electrician 514.00
BOP Engineer 518.00
Electronic Technician 620.00
Hydraulic Technician 375.00
Materials Man 432.00
Bosun 452.00
Captain 600.00
DP Operator 462.00
14
<PAGE>
Prices include salaries all overhead and allowances, French social charges,
medical cares, training, travel allowances.
Prices are exclusive of travel and accommodation related costs between the point
of origin and rig-site.
Prices are exclusive of any taxes in Brazil.
Prices are of an indicative nature only based on rates at 01/01/98 and shall be
revised annually based on actual market costs of personnel.
15
EXHIBIT 10.53
FORMARITIMA LTD.
- AND -
MARITIMA PETROLEO E ENGENHARIA LTDA
-------------------------------------
AMETHYST 7 LOCAL SERVICES AGREEMENT
-------------------------------------
<PAGE>
THIS AGREEMENT is made the day 5th of November,1998
BETWEEN:
1. FORMARITIMA LTD. a company incorporated in the British Virgin
Islands under and having its principal office at Arias Fabrega &
Fabrega Trust Co. BVI Limited, Omar Hodge Building, P.O. Box 985;
Wickham s Cay, Road Town, Tortola, British Virgin Islands,
(hereafter referred to as FORMARITIMA ), and
2. MARITIMA PETROLEO E ENGENHARIA LTDA, (formerly Maritima Navegaceo e
Engenharia Ltda., company incorporated in Brazil with its registered
office at Avenida Almirante Barroso 52, 3400 GR, 20031-000, Centro, Rio de
Janeiro, Brazil (hereafter referred to as MARITIMA ).
FORMARITIMA and MARITIMA are also hereinafter referred to collectively as
PARTIES and individually as PARTY .
WHEREAS:
A. Formaritima is a 50 / 50 joint venture company set up by Pride-Foramer
S.A. of France and Maritima Petroleo e Engenharia Ltda of Brazil for the
provision of services to operate drilling and workover rigs.
B. Maritima has been awarded a charter contract (hereinafter referred to as
the Charter ) by Petroleo Brasileiro S.A. (hereinafter referred to as
PETROBRAS ), each for the provision of a dynamically positioned
semi-submersible drilling rig (hereinafter referred to as the RIG )
pursuant to an invitation to bid. The obligations and rights under the
Charter have been assigned to Petrodrill Seven Limited (hereinafter
referred to as OWNER ).
C. The Owner has entered into a management agreement (hereinafter referred to
as the MANAGEMENT AGREEMENT ) with Formaritima for the management of the
Rig and the provision of certain technical services in order to assist the
Owner to perform its obligations pursuant to the Charter.
D. Maritima has been awarded by Petrobras a contract for supply of services,
pursuant to an invitation to bid (hereinafter referred to as the
CONTRACT ), for the supply of local services with respect to a Rig for
the duration of the Contract and will perform those services independently
of its obligations under the present agreement (hereinafter referred to as
the AGREEMENT ).
E. The Parties have decided that local services shall be provided by Maritima
to Formaritima as per the terms and conditions of the AGREEMENT.
2
<PAGE>
NOW THEREFORE in consideration of the mutual covenant and obligations hereafter
set forth, it is hereby agreed between the Parties as follows :
1. DEFINITIONS
Capitalized terms used herein but not otherwise defined shall have
the same meanings assigned to such terms in the Shareholders
Agreement for the Amethyst Financial Company Ltd. date of even date
herewith between Drillpetro Inc., Techdrill Inc. and Westville
Management Corporation.
2. OBJECT
The object of the Agreement is the supply by Maritima to Formaritima of
services such as, but not limited to, the services specified in Clause 4
of the Agreement.
3. TERM
3.1 The term of the Agreement shall be the same as the Management
Agreement. However:
3.1.1 This Agreement shall be terminated with respect to the Rig in the
event of the actual or constructive or compromised or arranged total
loss or requisition for title of such Rig on the date four months
after such total loss occurs or is agreed with Lenders (as the case
may be, or such other date as may be agreed).
3.1.2 The Agreement may by terminated by Formaritima at any time, (x) upon
a notice period of seven (7) days, if Formaritima is not satisfied
for sound reasons, with Maritima s performance, having given
Maritima notice of its deficiencies and the opportunity to correct
these within a period of 15 days or (y) immediately with respect to
the Rig upon termination or assignment of the Rig s Contract. In
such case, no payment shall become due by Formaritima to Maritima
for unperformed services.
3.1.3 It is agreed by the Parties that the effective performance of the
Agreement shall include, without limitation, sea trials and
mobilization of the Rigs to Brazil prior to the commencement of the
Contract, assistance to demobilize upon termination of the Contract
and the resolution of any outstanding unresolved contractual issues
at the end of the Contract.
3.2 NOT USED.
4. SCOPE OF SERVICES PROVIDED BY MARITIMA
The scope of services (the Local Services ) to be provided by Maritima
for the Rig is as set out in Appendix 1. Maritima covenants and agrees to
perform and comply with all of its obligations under each Contract.
3
<PAGE>
5. COMPENSATION / REMUNERATION
5.1 All services are to be provided by Maritima to Formaritima on an open
book, at cost basis, duly justified by direct reference to industry
standards. For the supply of services forming the object of this
Agreement, Formaritima will pay Maritima the rates set out in Appendix 2.
All amounts received by Maritima pursuant to the Contracts shall only be
used to pay costs and expenses for providing the services described
herein. Any excess amounts shall be treated in accordance with Clause
5.2.2.
5.2 Formaritima will pay Maritima a management fee amounting to US$1,250 per
day for the Rig, commencing at the start of pre-delivery sea trials and
ending on the last day of drilling operations for the relevant Rig under
the Management Agreement or, subject to Clause 3.2, upon any prior
termination of the Agreement.
5.2.1 If Maritima s monthly income arising from the Contract is less than
the provisional monthly budgeted costs and the management fee,
calculated on a monthly basis, agreed in advance by Formaritima,
Formaritima will pay Maritima the documented shortfall within 30
days of receipt of written notice from Maritima.
5.2.2 If Maritima s monthly income arising from the Contract is greater
than the actual monthly costs plus the management fee, calculated on
a monthly basis, Maritima will pay Formaritima the difference
outstanding within 30 days of receipt from Petrobras of monies
arising from the Contract.
5.3 Maritima will be responsible for the provision of budgets associated with
the Local Services. The first operating budget concerning costs associated
with sea mob and mobilisation will be presented by Maritima to Formaritima
six months in advance of the anticipated date of arrival of each Rig at
Macae, Brazil or such other place as which may be notified by Petrobras.
The Parties will meet on a quarterly basis and Maritima will present to
Formaritima the provisional monthly budgets.
Formaritima will review the budgets and, if in agreement, will approve the
budgets. The said approval of the budgets for each quarterly period will
be given by Formaritima prior to 31st December, 31st March, 30th June and
30th September of each year, respectively, provided always that the said
budgets are presented by Maritima to Formaritima prior to 30th November,
28th February, 31st May and 31st August, respectively.
5.4 Maritima shall endeavour to maximise the payments of costs and expenses in
Reais and notably to substitute expenditures in Reais for expenditures in
US$ to the maximum extent possible.
5.5 In the case of a disputed invoice, Formaritima will advise Maritima of the
item under dispute specifying the complaint within fifteen (15) days of
receipt of such invoice but will pay the undisputed part. The disputed
item will be paid as may be mutually agreed.
4
<PAGE>
5.6 Payments shall be made to a bank account nominated on each invoice.
6. TAXES
Any taxes or charges applied by local authorities in Brazil which are due
under the Contract with Petrobras shall be for Maritima s account.
7. LIABILITIES
7.1 COMPLIANCE WITH LAW AND REGULATION
Maritima undertakes that in performance of its obligations under this
Agreement it will comply with all applicable laws and regulations in
Brazil and all governmental authority.
7.2 LIABILITIES BETWEEN THE PARTIES
7.2.1 Maritima shall hold harmless and indemnify Formaritima from and
against all claims, costs expenses or liabilities arising from or
connected with the performance of this Agreement in respect of:
death of or personal injury to any of the personnel of the Maritima
Group defined in Clause 7.2.4; loss of or damage to the property of
the Maritima Group; any consequential or economic loss or damage
suffered by the Maritima Group; howsoever arising and irrespective
of negligence or other breach of legal duty by the Formaritima
Group.
7.2.2 Formaritima shall hold harmless and indemnify Maritima from and
against all claims, costs, expenses or liabilities arising from or
connected with the performance of this Agreement in respect of:
death of or personal injury to any of personnel of the Formaritima
Group defined in Clause 7.2.3; loss of or damage to the property of
the Formaritima Group; and any consequential or economic loss or
damage suffered by the Formaritima Group; howsoever arising and
irrespective of negligence or other breach of legal duty by the
Maritima Group.
7.2.3 For the purposes of this Clause 7.2, the Formaritima Group means
Formaritima, its associated companies, its other sub-contractors and
suppliers, the Owner, Petrobras, and the officers, employees and
agents of any of them working under this Agreement.
7.2.4 For the purposes of this Clause 7.2 the Maritima Group means
Maritima, its associated companies, its other sub-contractors and
suppliers, and the officers, employees and agents of any of them
working under this Agreement.
72.5 For the express purposes of Clause 7 of this Agreement only,
Formaritima 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 within the Formaritima Group (as defined in
Clause 7.2.3) and all such persons shall to this extent be deemed to
be parties to this Agreement.
5
<PAGE>
7.2.6 For the express purposes of Clause 7 of this Agreement only,
Maritima 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 within the Maritima Group (as defined in
Clause 7.2.4) and all such persons shall to this extent be deemed to
be parties to this Agreement.
7.3 INDEMNITY FOR OPERATIONS
Save as is provided in Clause 7.2. above, Formaritima shall indemnify and
hold harmless and shall procure that Owner shall indemnify and hold
harmless Maritima from and against all actions, proceedings, claims,
demands or liabilities whatsoever that may be brought by any other person
against, or incurred by Maritima in relation to or in connection with its
performance of this Agreement with respect to the Rig unless same has
arisen from the gross negligence or wilful misconduct of Maritima, in
which event the liability of Maritima shall be limited to the aggregate of
the management fee received by Maritima in the preceding 12 months for the
Rig
8. CONFIDENTIAL INFORMATION
All information related to this Agreement, regardless of whether such
information concerns Formaritima, its clients, its associated companies,
or its contractors, shall be treated as confidential and shall not be
divulged by Maritima to any third party without the prior written consent
of Formaritima. The hereabove obligations shall survive termination of the
Agreement and shall remain in force for so long as the information covered
by confidentiality has not otherwise become public knowledge.
9. EMPLOYMENT OF PERSONNEL
No Maritima personnel shall be deemed to be employees, either temporary or
permanent of Formaritima and shall at all time be deemed employed by
Maritima.
Maritima shall have the sole responsibility for the preparation of payroll
and the payment of Maritima personnel, wages, compensation, remittance,
allowance, insurance and indemnities of whatever kind and in complying
with all applicable labor and local taxation regulations.
Both Parties agree to refrain from any and all actions, direct or
indirect, that may lead to employment by such Party of an employee of the
other Party, unless such party obtains the prior written approval of the
other Party, which approval shall not unreasonably be withheld.
10. INSURANCE
10.1 MARITIMA S INSURANCES
Maritima undertakes that it will take out all insurance policies to cover
its liabilities as set forth in Article 7 of this Agreement and as
required under the terms of the Contract, such insurances shall include
but not be limited to the following:
6
<PAGE>
Workman Compensation insurance and Employer s Liability insurance for
damage suffered by its personnel in amount not less than those required by
applicable laws in Brazil.
Comprehensive general liability insurance for its responsibility to third
parties in amount not less than those required for any one occurrence by
article 3.12.1 of the Contract.
All insurance policies as required to cover its equipment and/or materials
and those belonging to any service companies and for which Maritima is
responsible.
10.2 FORMARITIMA/OWNER INSURANCE
In addition, Formaritima will procure that insurance policies are taken
out to cover Formaritima s responsibilities including but not limited to
the responsibilities set out in Article 3.4.1. of the Management Agreement
between Formaritima and the Owner.
10.3 GENERAL PROVISIONS
For all insurance policies taken out :
Maritima shall comply with the insurance regulations in force in Brazil.
Formaritima shall bear the costs of the premiums, deductibles, fees and
expenses relative to all policies effected pursuant to the provisions of
this Agreement.
Each Party shall procure that the other party shall be named as co-assured
to the extent permitted so as to give effect to the provisions of Article
6 of this Agreement.
All of the insurance policies taken out shall state the underwriter s
waiver of subrogation to give effect to the provisions of Article 7 of
this Agreement.
Maritima shall on request by Formaritima, furnish copies of the insurance
policies it is bound to take out pursuant to Article 10 of this Agreement.
11. ASSIGNMENT OF CONTRACT
The Parties agree that, if requested by Formaritima, Maritima will
procure that the Contract will be assigned to Formaritima or its nominee.
12. AUDIT
Maritima shall keep and cause its contractor(s) and sub-contractor(s) to
keep the books, payrolls, receipts, vouchers, financial records,
personnel records and any document related to the work thereunder and
required for administration purposes for the term of the Agreement and
for a limited period of two (2) years after termination hereof.
Formaritima, through its duly authorised representatives, shall have free
access with 15 days notice with no restriction, to such information,
whenever required by Formaritima, and it shall also have the right, at
any time subject to previous notification to Maritima, to perform the
audits it deems necessary of the aforementioned books, payrolls,
receipts, vouchers, records and files in general.
7
<PAGE>
Formaritima reserves the right to audit Maritima s activities as deemed
necessary and/or appropriate by Formaritima, in order to check the
contents and compliance with the terms herein.
Notwithstanding the foregoing, in no event shall Formaritima s right of
audit be construed as a release or waiver of any of Maritima s
obligations under the Agreement.
13. MISCELLANEOUS
13.1 FORCE MAJEURE
13.1.1 Each Party to this Agreement shall be relieved from complying with
any term of this Agreement to the extent that, and only so long as,
such compliance is prevented or delayed by force majeure, which is
defined as civil or labor disturbances, riots, strikes (other than
a strike limited to the employees of either Party), wars (declared
or undeclared), military actions, insurrections, rebellion, acts of
any governmental or military agency under actual or assumed
authority, action of elements, floods, storm or other acts of God
or any cause beyond the control of either Party, whether or not
similar to the matters herein specifically enumerated and provided
that the event shall not have been caused by the action or
negligence of either of the Parties, and that the Party and/or the
Parties affected shall do its, or their, utmost to remedy the above
circumstances.
13.1.2 Any Party claiming force majeure shall promptly notify the other
Party, with the evidence of the occurrence of such event.
13.1.3 If either Party hereto is prevented from or delayed in performing
all or any of its obligations thereunder as a direct result of
force majeure, such non performance shall not be considered as a
breach of this Agreement and that Party shall be relieved from such
obligation which shall suspend payment by the other Party for the
duration of such force majeure.
13.1.4 Notwithstanding the foregoing to the extent that the event claimed
as force majeure impacts upon or would impact upon the performance
of the Contract, such event must be recognised as a force majeure
event in terms of the Contract before it can qualify as a force
majeure event hereunder.
13.2 BANKRUPTCY OR ABANDONMENT OF OPERATIONS
Should Maritima become insolvent or enter into any arrangement with or for
the benefit of its creditors or become unable or refuse or neglect to
perform its obligations hereunder or if Maritima s equipment is seized or
taken in execution, Formaritima may, by notice in writing to Maritima,
terminate this Agreement without thereby affecting in other respects the
obligations or liabilities of Maritima.
13.3 ASSIGNMENT OF AGREEMENT
Neither Party may assign the Agreement, either wholly or in part, except
with the prior written authorisation of the other Party, which
authorisation may not be unreasonably withheld.
8
<PAGE>
14. NOTICE
All notices, invoices and other communications required pursuant to this
Agreement shall be in writing and deemed to have been sufficiently given
or made if delivered by hand of send by fax to the addressee at the
address set out below;
in the case of Formaritima to: and with a copy to:
FORMARITIMA LTD. John O Leary
Arias Fabrega & Fabrega Pride International, Inc.
Trust Co. BVI Limited 5847 San Felipe,
P.O. Box 985 Suite 3300
Wickham s Cay, Road Town Houston, TX 77057-3011
Tortola, British Virgin Islands Tel: (713)789-1400
Tel: (284) 494-4977 Fax: (713)784-3702
Fax: (284) 494-4980
in the case of Maritima to:
MARITIMA PETROLEO E ENGENHARIA LTDA,
Avenida Almirante Barroso 52
3400 GR
20031-000 Centro
RIO DE JANEIRO
BRAZIL
Tel: 011-55-21-262-5055
Fax: 011-55 21 220 6566
or to such other address as the relevant Party may from time to time
notify to the other.
15. GOVERNING LAW AND ARBITRATION
15.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England.
15.2 Any dispute or difference arising in connection with this Agreement shall
if possible be settled by mutual amicable agreement.
15.3 If any dispute should arise in connection with the interpretation and
fulfilment of this Agreement the same shall be decided by arbitration in
the city of London and shall be referred to a single Arbitrator to be
appointed by the Parties hereto. If the Parties cannot agree upon the
appointment of the single Arbitrator the dispute shall be settled by three
Arbitrators, each party appointing one Arbitrator, the third being
appointed by the Chairman for the time being of the London Maritime
Arbitrators Association.
15.4 If either of the appointed Arbitrators refuses or is incapable of acting,
the Party who appointed him shall appoint a new Arbitrator in his place.
9
<PAGE>
15.5 If one of the Parties fails to appoint an Arbitrator, either originally or
by way of substitution, for two weeks after the other Party having
appointed his Arbitrator has sent the Party making default notice by mail
or facsimile to make the appointment, the Party appointing the third
Arbitrator shall, after application from the Party having appointed his
Arbitrator, also appoint an Arbitrator on behalf of the Party making
default.
15.6 The award rendered by the Arbitration Court shall be final and binding
upon the Parties and may if necessary be enforced by the Court or other
competent authority in the same manner as a judgment in the Court of
Justice.
15.7 Performance under this Agreement shall, if reasonably possible, continue
during the arbitration proceedings.
IN WITNESS WHEREOF this Agreement has been executed by or on behalf of the
Parties hereto the day and year first above written.
Signed in two duplicate originals in
SIGNED by )/s/ JOHN O'LEARY
for and on behalf of )
FORMARITIMA LTD. )
in the presence of: ) /s/ FRIDA A. MARTINEZ
SIGNED by )/s/ GERMAN EFROMOVICH
for and on behalf of )German Efromovich
MARITIMA PETROLEO ENGENHARIA LTDA )/s/ MARCELO VIOLLAND
in the presence of: )Marcelo Violland
10
<PAGE>
APPENDIX 1
SCOPE OF SERVICES PROVIDED BY MARITIMA
Maritima will procure services in Brazil (hereinafter referred to as the LOCAL
SERVICES )to Formaritima. The Local Services to include but not be limited to
the provision of:
Logistics
Local rig personnel (as per the personnel and payment schedule attached in
Appendix 2).
Local base personnel (as per the personnel and payment schedule as attached in
Appendix 3).
Local base and yard space and services required for such spaces.
Commercial services.
Offices.
Customs clearance for rig, equipment and spare parts.
Accounting and cost control with presentation of accounts by Maritima to
Formaritima in a US GAAP format or other format to be agreed with Formaritima.
Provision of monthly budgets on a semi-annual basis. Reconciliation of actual
local monthly costs against monthly budgets proposed, in a format required by
Formaritima Area Manager.
Provision of local insurance. Settling of local insurance disputes.
Assistance with administration of the Contract and the Central Bank of Brazil
administration.
Local freight forwarding.
Local purchase of parts, services and supplies.
Administration of invoicing for the Contract.
Consularisation and assistance to complying with Brazilian laws and procedures.
Marketing advice and service.
If required by Formaritima, the provision of a bank account in Maritima s name
to be used and operated exclusively by Formaritima s Area Manager who will have
the joint signatory powers concerning the said bank account with his deputy.
Visas, work permits application and formalities.
Legal assistance concerning rig and base operational health, safety and
environmental issues.
Assistance and advice to minimise the impact of customs duties and import taxes.
FORMARITIMA WILL HAVE THE RIGHT TO REFUSE SUB-CONTRACTORS PROPOSED BY MARITIMA
AND TO NOMINATE OTHER SUB-CONTRACTORS IN THEIR PLACE.
11
<PAGE>
APPENDIX 2
MARITIMA NAVEGACAO E ENGENHARIA LTDA
WAGES REF. OCT 97
OPERATION OF DP SEMISUBMERSIBLE
TOTAL US$/
FUNCTION MAN ON BOARD
STOREKEEPER/MATERIALSMAN 238,00
SAFETY MAN 353,00
NURSE 183,00
RADIO OPERATOR 202,00
BARGE ENGINEER 499,00
BCO/BOSUN 454,00
TOOL PUSHER/DRILL ENGINEER 827,00
TOOL PUSHER/DRILL ENGINEER 547,00
DRILLER 521,00
ASS. DRILLER 315,00
DERRICKMAN 199,00
FLOORMAN 152,00
ROUSTABOUT 95,00
CRANE OPERATOR 222,00
DECK FOREMAN/AUX TECH./ENGINEER JR 261,00
ELECTRICIAN/MECHANIC 274,00
CHIEF MECHANIC/ELECTRICIAN 479,00
WELDER 202,00
CHIEF PAINTER 105,00
PAINTER 95,00
12
<PAGE>
Prices include salaries, all overheads and allowances, and Brazilian social
charges but exclude travel/accommodation from point of origin to the rig. The
salary component is indicative only based upon 1997 rates and shall be revised
annually based upon actual market costs of personnel.
13
<PAGE>
APPENDIX 3
LOCAL BASE PERSONNEL
14
EXHIBIT 10.57
FORMARITIMA LTD
- AND -
WORKSHIPS CONTRACTORS B.V.
--------------------------------------------------
AMETHYST 7 MARINE AND NAUTICAL SERVICES AGREEMENT
--------------------------------------------------
<PAGE>
THIS AGREEMENT is made as of the 5th day of November 1998,
BETWEEN:
1. FORMARITIMA LTD, a company incorporated in the British Virgin Islands and
having its principal office at c/o Arias, Fabrega & Fabrega Trust Co., Omar
Hodge Building, Wickham s Cay, Road Town, Tortola, British Virgin Islands
(hereinafter referred to as "Formaritima"); and
2. WORKSHIPS CONTRACTORS B.V., a company incorporated in the Netherlands having
its principal office at K.P. van der Mandelelaan 34, 3062 MB Rotterdam
(hereinafter referred to as "the Manager").
Formaritima and the Manager are hereinafter also referred to individually as
"Party" and collectively as "Parties".
WHEREAS:
A. Formaritima will be the direct or indirect legal owner of a dynamically
positioned semi-submersible drilling vessel (each hereinafter called "the
Vessel") and intends to carry out worldwide offshore drilling operations
using the Vessel, subsequent to its Delivery to Formaritima.
B. The Manager possesses the know-how and skilled personnel to enable it to
manage the Marine and Nautical operation and maintenance of the Vessel.
C. The Manager will support and render services relevant to the mobilization of
the Vessel to Brazil and operations pursuant to assigned charter agreement
between Petroleo Brasileiro S.A. (hereinafter referred to as "Petrobras")
and Maritima as novated and assigned to Formaritima (together the "Charter
Agreements").
D. Manager has been provided with a copy of the aforesaid Charter Agreements.
E. Formaritima is desirous of contracting with the Manager for the provision of
the services in accordance with the terms and conditions set out herein.
IT IS HEREBY AGREED BETWEEN THE PARTIES AS FOLLOWS:
1. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Amethyst Financial Company Ltd. s
Shareholders Agreement of even date herewith among Drillpetro Inc.,
Westville Management Corporation and Techdrill Inc.
<PAGE>
2. TERMS OF AGREEMENT
2.1 This Agreement shall take effect from the date hereof and shall continue
unless terminated pursuant to the provisions of Clause 7.
2.2 The effective performance of this Agreement shall include without limitation
the preparations in Brazil prior to the commencement of the Charters and the
assistance to demobilize upon termination of the Charters and the resolution
of any outstanding unresolved contractual issues at the end of the Charters.
3. COMMENCEMENT AND PERFORMANCE
3.1 The Parties acknowledge as at the date of signing of this Agreement that the
Vessel is to be constructed. Formaritima undertakes to provide the Manager
with copies of all relevant documentation in respect of the Vessel in the
English language, including detailed drilling equipment lists.
3.2 This Agreement shall commence with respect to the Vessel prior to
commencement of the sea trials under the relevant Construction and Sale
Contracts.
3.3 The Manager will furnish the relevant personnel and services to assist
during the sea trials.
3.4 The Manager shall at all times maintain proper and adequate office and
technical facilities and a competent and sufficient staff for the
performance of its duties, and shall, on behalf of Formaritima and at
Formaritima s risk and expense, manage and maintain the Vessel in accordance
with good marine practice, efficiently and economically, to the best of its
professional ability in regard to performance, safety and shipshape
appearance, and will arrange, at all times, technical supervision to ensure
that the Vessel is kept in a seaworthy condition and with valid
certificates.
3.5 Notwithstanding the foregoing, Formaritima has, subject only to the
provisions of Clause 6, ultimate and complete responsibility for the Vessel
and shall indemnify the Manager in accordance with Clause 6.
4. OPERATIONAL DUTIES AND RESPONSIBILITIES OF THE MANAGER
The object of this Agreement is the supply of by the Manager to Formaritima of
services with respect to the Rig including, but not limited to, those specified
in Appendix 1 to this Agreement.
4.1 MANAGER S PERSONNEL
4.1.1 The Manager shall provide a sufficient number of relevantly qualified
personnel in order to ensure that the marine operations of the Vessel
is at all times undertaken safely and in accordance with good industry
practice and in compliance with the lawful and proper instructions of
any client contracting for use of the services of the Vessel and in
accordance with the contract with such client and any regulations from
relevant regulatory bodies, authorities or Classification Societies
and in particular compliance with ISM code.
3
<PAGE>
4.1.2 The Manager shall ensure at all times that it has an adequate pool of
qualified personnel available to cover vacancies due to leave
requirements, sickness, injury, replacement of personnel as
contemplated by the provisions of Clause 4.1.3 or for any other reason
whatsoever.
4.1.3 Should Formaritima be dissatisfied with the performance of any of the
personnel provided by the Manager, Formaritima shall notify the
Manager thereof, stating the reasons for its dissatisfaction. Should
the cause of Formaritima s dissatisfaction remain unremedied for a
period of twenty days from the giving of Formaritima s said notice,
Formaritima shall have the right to request the replacement of the
personnel concerned and in such event the Manager shall, as soon as
practicable thereafter, replace the personnel concerned.
4.1.4 The Manager shall:
(a) keep Formaritima fully informed regarding incidents which give
or could give rise to claims by or against third parties
including damage to the Vessel or serious sickness of personnel;
and
(b) use all reasonable endeavours to protect Formaritima s interests
with respect to marine claims by or against third parties,
including personnel employed aboard the Vessel.
4.1.5 Formaritima has entered into a contract with Formaritima Ltd. for the
provision of Technical Management Services to the Vessel.
4.1.6 No personnel of the Manager shall be deemed to be employees, either
temporary or permanent, of Formaritima and shall at all times be
deemed employed by the Manager.
The Manager shall have the sole responsibility for the preparation of
payroll and the payment of Manager personnel, wages, compensation,
remittance, allowance, insurance and indemnities of whatever kind and
in complying with all applicable labour and local taxation
regulations.
In particular and depending upon the regulations for employing Dutch
personnel or any of Manager personnel, an extra charge may be imposed
when changing of zone of operations or lay off charges may have to be
paid when changing of zone of operations or when each Charter
terminates. The Manager shall be liable for and agrees to protect,
defend and hold Formaritima harmless from and against any lawsuit or
claim of any kind whatsoever which may arise as a consequence of or
related to the payment of these charges.
Both Parties agree to refrain from any and all actions, direct or
indirect, that may lead to employment by such Party of an employee of
the other Party, unless such Party obtains the prior written approval
of the other Party, which approval shall not unreasonably be withheld.
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4.2 MARINE EQUIPMENT MAINTENANCE
4.2.1 The Manager shall arrange for the marine operation of the Vessel and
all marine equipment used on or from the Vessel.
4.2.2 The Manager is authorised to act, on behalf of Formaritima , in
respect of all matters that may pertain to the everyday operation of
the marine services. Notwithstanding the foregoing, where in
connection with such operation, the Manager will or is likely to incur
expenditure not contemplated by or greater than the amount specified
in respect thereof in any budget as is referred to in Clause 4.5.2 and
where any such expenditure will or is likely to exceed US$50,000 or,
in any calendar month, sums which, in the aggregate, are in excess of
US$50,000, the Manager shall, prior to incurring such expenditure,
obtain the consent of Formaritima so to do. Nevertheless the Manager
shall, in any case where, in its reasonable opinion, it is necessary
to take immediate action to avert danger to life or health or loss or
damage to any Vessel or other property of Formaritima , be entitled
and obligated to take such action without the prior consent of
Formaritima but, in every such case, the Manager shall promptly notify
Formaritima of the action so taken by it and of the amount of
expenditure incurred by it in so doing.
4.2.3 Subject to Clauses 4.2.2 and 4.4.3 the Manager shall procure the
supply of all equipment and materials required in connection with the
marine operation and maintenance of the Vessel including an adequate
supply of spare parts, stock for stores, and generally so as to ensure
that the Manager will at all times be able to fulfil its obligations
hereunder.
The Manager will use its best endeavours to ensure that materials and
equipment procured by it are purchased on the most economical terms
available, as to price and payment, and having regard to the quality
and availability of the materials and equipment concerned.
4.2.4 The Manager shall provide for technical supervision, repairs,
classification, customary maintenance and, in all other respects, use
its best endeavours so that, at all times and subject to the
provisions of Clauses 4.5.2 and 4.5.3, the Vessel is kept duly
seaworthy, and maintain its certificates and permissions for maritime
operations all in accordance with good oil industry practice. Minimum
personnel will be maintained during periods of lay up in order to
minimise cost to Formaritima.
4.2.5 Formaritima s representatives shall be entitled to board the Vessel
for the purpose of examining the Vessel and its operations subject, at
all times, to the consent of the client where applicable.
4.2.6 The Manager will not by act or omission of the Manager cause
Formaritima to be in breach of any provision of the mortgage
registered over the Vessel and has been provided with a copy of said
mortgage, and will provide such confirmation as may be reasonably
required by the Lenders.
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4.3 INSURANCE
4.3.1 Formaritima shall ensure and provide that the Vessel and all
consumable materials and equipment thereof and the Manager s and
Formaritima s employees are at all times adequately insured with
reputable underwriters on the best possible terms. Formaritima shall
ensure that such insurance shall be fully in compliance with the
requirements of the holder of any mortgage on the Vessel. Subject to
the foregoing, the following minimum insurance coverage will be
maintained by Formaritima at all times:
(a) All Risks Hull and Machinery Insurance (including underwater and
in-hole equipment) against marine and war risks, to the full
market value of each Vessel; and
(b) Full Protection and Indemnity Insurance, or equivalent, in
respect of liabilities of Formaritima and/or the Manager to
third parties including but not limited to pollution or
contamination, removal of wreck and recovery of equipment lost
overboard.
4.3.2 The insurance effected on behalf of Formaritima and Manager shall be
endorsed with a statement that each is co-assured and that the
underwriters waive their rights of subrogation and/or recourse,
whether express or implied, against the other party and/or its
subcontractor and against any party designated in writing by such
party with whom the such party has entered into a hold harmless
agreement or otherwise in respect of a Vessel and operations involving
such Vessel. This Agreement shall be copied by such party to the
relevant underwriters and their written approval that the indemnities
herein contained are acceptable as being normal in the oil industry
shall be obtained by each party.
4.3.3 The Manager undertakes that it will take out and maintain all
insurance policies to cover its liabilities as set forth in Clause 6
of this Agreement and as required of Formaritima under the terms of
the Charter, such insurances shall include but not be limited to the
following:
(a) Workmen s Compensation insurance and Employer s Liability
insurance for damage suffered by its personnel in amounts not
less than those required by applicable laws in Brazil.
(b) Comprehensive general liability insurance for its responsibility
to third parties in amount not less than those required for any
one occurrence by the Charters.
(c) All insurance policies as required to cover its equipment and/or
materials and those belonging to any service companies and for
which Manager is responsible.
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4.3.4 GENERAL PROVISIONS
For all insurance policies taken out:
(a) Manager shall comply with the insurance regulations in force in
Brazil.
(b) Formaritima shall bear the costs of the premiums, deductibles,
fees and expenses relative to all policies effected pursuant to
the provisions of this Agreement.
(c) Each Party shall procure that the other Party shall be named as
co-assured to the extent permitted so as to give effect to the
provisions of Clause 8 of this Agreement.
(d) All of the insurance policies taken out shall state the
underwriter s waiver of subrogation to give effect to the
provisions of Clause 8 of this Agreement.
(e) Manager shall, on request by Formaritima , furnish copies of
the insurance policies it is bound to take out
4.4 ADMINISTRATION AND ACCOUNTS
4.4.1 The Manager will prepare and submit to Formaritima at least sixty
days prior to the commencement of marine operations a budget of marine
related expenditures for the period of twelve calendar months
following that commencement. At least sixty days prior to each
anniversary of the date of aforesaid commencement, the Manager shall
prepare and submit to Formaritima a budget of operating income and
expenditure and any contemplated capital expenditure, for the
following twelve months.
Each budget shall contain sufficient detail of likely expenditure as
will enable Formaritima to check actual costs when they are incurred
against estimates. All assumptions shall be clearly stated. The
budgets shall be subject to Formaritima s approval but when approved,
Formaritima shall promptly notify the Manager thereof. Formaritima
will provide details of costs in respect of personnel and any other
services to be provided by Formaritima.
4.4.2 Quarterly reports and accounts shall be presented to Formaritima as
soon as reasonably possible after the end of each three month period
following the commence of operations but no later than 40 calendar
days after the end of such period.
The quarterly report shall contain the following:
Major repairs/capital investments. The accounts/financial reports
shall contain the following in a format to be mutually acceptable to
both Parties, Formaritima from time to time to provide the Manager
with a copy of its preferred format:
Quarterly actual and year to date costs compared with the
budget;
Description/analysis of variances actual/budget;
Cash flow/fund requirements;
Estimates for the year.
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4.4.3 Subject to the provisions of Clause 4.2.2 the Manager shall utilize
funds credited to or standing in the Disbursement Account (defined in
Clause 4.4.4 to meet the following expenses and disbursements, inter
alia, the Operating Costs:
- Cost of Manager provided personnel;
- Travel costs for Manager provided personnel;
- Purchases of materials, supplies, equipment, parts and storage,
transport and assembling thereof, and cost of subcontractors in
connection with specific marine related assignments;
- Expenses incurred for keeping the Vessel in compliance with
certification and classification requirements. This will apply
for annual surveys only. Expenses for Special Periodic surveys
are not included in Operating Costs but will be shown in each
relevant budget submitted under the provisions of this
Agreement;
- Professional services for all analysis or technical assistance
required to the extent that such services qualitatively cannot
be performed by the Manager or the Manager s own employees;
- Direct Internal Quality and Safety audit costs when
carried out on board the Vessel;
- Customs duties, corporate taxes, withholding taxes, and other
taxes of whatsoever nature arising solely from contracts entered
into in respect of the Vessel and levied in jurisdictions where
the Vessel are located from time to time and/or in connection
with this Agreement;
- All other reasonable expenses and costs of similar nature which
are budgeted and such other reasonable costs and expenses that
the Manager in its discretion considers to be necessary to
ensure the safety of the personnel on the Vessel itself, as well
as mitigation of non-performance under the Charter subject to a
limitation of US$250,000; and
- Insurance costs including deductibles.
4.4.4 The Manager shall be required, pursuant to its duties under this
Agreement, to open and keep a separate bank account in the name of
Formaritima (the "Disbursement Account") and books, records and
accounts relating to the marine management of the operation and marine
maintenance of the Vessel in accordance with internationally accepted
applicable accounting principles and in the English language. All such
books, records, accounts and other related documents mentioned above
shall be available to Formaritima or its appointees for inspection at
all reasonable times. In addition to the reports referred to in Clause
2.4.3 the Manager shall furnish to Formaritima all information
(financial or otherwise) reasonably required throughout the year by
Formaritima for its own accounts or audits and any assistance required
to be given to its auditors.
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4.5 BANK ACCOUNTS AND FLOW OF FUNDS
Subject always to such other instructions as Formaritima may give to the
Manager pursuant to arrangement with the holder of the mortgage over the
Vessel, or otherwise:
4.5.1 Formaritima undertakes to transfer a sum of US$500,000 for the Vessel
(the "minimum working capital") into the Disbursement Account within
30 days prior to commencement of the services by the Manager under
this Agreement with respect to the Vessel.
4.5.2 The Manager will provide Formaritima not less than seven working days
prior to the end of each month with a statement of its working capital
requirements in respect of the Vessel and the Manager s obligations
hereunder for the next month.
If the funds received from the Vessel s operations are insufficient at
any time to meet the Manager s costs, as listed under 4.4.4 and 5 or
any other expenditure rightfully incurred, the Manager shall notify
Formaritima of its cash requirements by giving at least ten (10)
working days notice.
Formaritima is obliged, at all times, to ensure that the Managers
request for adequate working capital is met within the said notice
period of ten (10) working days and to maintain that the minimum
working capital balance is maintained in the Disbursement Account.
4.5.3 Any funds credited to the Disbursement Account in excess of necessary
working capital to meet expenses listed under Clauses 2.4.3 and 3
shall be promptly paid over to such account as Formaritima may specify
from to time unless Formaritima requests the Manager to temporarily
administer such spare funds in consultation with Formaritima .
4.5.4 The Manager will provide Formaritima on a monthly basis with copies of
all Disbursement Account statements.
4.5.5 Any interest earned/or payable in respect of the Disbursement Account
shall be for the credit of the Disbursement Account.
4.5.6 Under no circumstances shall the Manager, without the prior written
approval of Formaritima (which approval may be withheld at
Formaritima s sole discretion), be entitled to borrow funds or enter
into any agreement to borrow funds in such a manner as to bind
Formaritima PROVIDED ALWAYS that a requirement for funds to meet a
safety obligation shall supersede this provision.
5. MANAGEMENT FEE
5.1 With effect from start of pre-delivery sea trials of the Vessel the Manager
shall be paid a fee (the "Fee") of US$1,250 per day for the Vessel for the
duration of this Agreement. The Fee shall be paid against invoice to
Formaritima such invoice to be rendered by the tenth day of the month
following the month in which the Fee was earned.
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5.2 In the event of a sale of the Vessel and termination of this Agreement
pursuant to Clause 7.4 and the purchaser not accepting an assignment of the
rights and obligations of Formaritima under this Agreement, the Fee shall be
deemed earned by the Manager and shall be paid as compensation to the
Manager in respect of the aggregate number of days of management fee lost in
respect of the Vessel each day between date of sale and the final day of the
firm term of the Charter Agreement discounted at ten per cent (10%) per
annum.
5.3 In the case of a disputed invoice, Formaritima will advise the Manager of
the item under dispute specifying the complaint within fifteen (15) days of
receipt of such invoice but will pay the undisputed part. The disputed item
will be paid as may be mutually agreed.
5.4 Payments shall be made to a Bank account nominated on each invoice.
6. INDEMNITIES
6.1 Except to the extent that the Manager would be liable under Clause 5.2,
Formaritima hereby undertakes to keep the Manager indemnified and to hold
the Manager harmless against all actions, proceedings, claims, demands or
liabilities whatsoever which may be brought against or incurred by the
Manager in relation to any act or thing done or caused to be done as
aforesaid, and against all costs, damages and expenses which the Manager may
suffer or incur in defending or settling the same.
6.2 Subject to Clause 6.4 below, Formaritima indemnifies and holds harmless the
Manager against all liability whatsoever, whether in law, tort or in
contract or otherwise, and Formaritima shall be solely liable for any
damage, loss or claim of whatsoever nature and howsoever arising, whether
relating to the Vessel, their hirers and users (including, without prejudice
to the generality of the foregoing, for damage to or loss of property,
including the Vessel, and all direct and consequential loss) unless the same
is proved to have resulted solely from the gross negligence or wilful
default of the Manager, its employees, agents or subcontractors in which
case the Manager s liability during any one year of the term of this
Agreement shall not exceed the aggregate of the Fee received by the Manager
in the preceding twelve months.
6.3 The Manager shall be under no liability whatsoever in respect of any
consequential loss (including without prejudice to the generality of the
foregoing liability due to detention of or delay of the Vessel or otherwise)
arising out of or in connection with the management and/or operation of the
Vessel.
6.4 Liabilities Between the Parties
6.4.1 The Manager shall hold harmless and indemnify Formaritima from and
against all claims, costs expenses or liabilities arising from or
connected with the performance of this Agreement in respect of:
(i) death of or personal injury to any of the personnel of the
Manager s Group;
(ii) loss of or damage to the property of the Manager s Group;
(iii) any consequential or economic loss or damage suffered by the
Manager s Group;
howsoever arising and irrespective of negligence or other breach of
legal duty by Formaritima s Group.
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6.4.2 Formaritima shall hold harmless and indemnify the Manager from and
against all claims, costs, expenses or liabilities arising from or
connected with the performance of this Agreement in respect of:
(i) death of or personal injury to any of personnel of
Formaritima s Group;
(ii) loss of or damage to the property of Formaritima s Group; and
(iii) any consequential or economic loss or damage suffered by
Formaritima s Group;
howsoever arising and irrespective of negligence or other breach of
legal duty by the Manager s Group.
6.4.3 For the purposes of this Clause 6.4, Liabilities Between the Parties,
"Formaritima s Group" means Formaritima, its associated companies,
its other subcontractors and suppliers, Petrobras, and the officers,
employees and agents of any of them.
6.4.4 For the purposes of this Clause 6.4, Liabilities Between the Parties,
"the Manager s Group" means the Manager, its associated companies, its
subcontractors and suppliers and the officers, employees and agents of
any of them.
6.4.5 For the express purposes of Clause 6.4, Liabilities Between the
Parties, of this Agreement only, Formaritima 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 within
Formaritima s Group and all such persons shall to this extent be
deemed to be parties to this Agreement.
6.4.6 For the express purposes of Clause 6.4, Liabilities Between the
Parties, of this Agreement only, The Manager 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 within the
Manager s Group and all such persons shall to this extent be deemed to
be parties to this Agreement.
6.5 INDEMNITY FOR OPERATIONS
Save as is provided in Article 6.4 above, Liabilities Between the Parties,
Formaritima shall indemnify and hold harmless the Manager from and against
all actions, proceedings, claims, demands or liabilities whatsoever that may
be brought by any other person against, or incurred by the Manager in
relation to or in connection with its performance of this Agreement unless
same has arisen from the gross negligence or wilful misconduct of the
Manager, in which event the liability of the Manager shall be limited to the
aggregate of the management fee received by the Manager in the preceding 12
months.
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7. TERMINATION
7.1 Formaritima may terminate this Agreement at any time if:
7.1.1 Formaritima is dissatisfied, with sound reasons, with the performance
of the Manager because of incompetence of the Manager or
unsatisfactory performance of its duties and obligations hereunder the
Manager s control, and the Manager, after having been given, by
Formaritima , written notice in which Formaritima shall have specified
in detail the grounds for its dissatisfaction, shall fail to take
effective steps to remedy the matters complained of within thirty days
after the giving of the said written notice, Formaritima shall have
the right to terminate this Agreement effective thirty (30) days after
a date specified by Formaritima without any further compensation to
the Manager other than any money due and owing at the date this
Agreement is to terminate.
7.1.2 The Manager shall go into liquidation (otherwise than voluntarily for
the purpose of reorganisation or reconstruction), make an assignment
for the benefit of creditors, make an arrangement, composition or
compromise with its creditors or have a receiver or administrator
appointed in respect of the whole or any part of its assets or shall
otherwise be unable to pay its debts as and when they become due.
7.1.3 The Manager ceases to carry on its business.
7.2 This Agreement shall be terminated with respect to the Vessel in the event
of the actual or constructive or compromised or arranged total loss or
requisition for title of the Vessel on the date four months after such total
loss occurs or is agreed with insurance underwriters (as the case may be, or
such other date as may be agreed).
7.3 (a) In the event of the termination of this Agreement pursuant to Clause 7.1
or Clause 7.2, Formaritima shall pay to the Manager all such amounts to
which the Manager may be entitled pursuant to the provisions of Clause 5.1
as and when such amounts fall due for payment;
(b) In addition, Formaritima shall pay such amounts (if any) as the Manager
(notwithstanding the Manager s best efforts to minimise the effects to any
such termination) may become legally liable to pay under any contract of
employment or by reason of any regulation or legislation for employee
protection to personnel who may have been employed by the Manager or its
group companies on the Vessel to perform any part of the services to be
provided under this Agreement and who shall become redundant as a result of
such termination. Formaritima s exposure under this Clause 7.2.2 is limited
to a maximum of three months salary per employee in the employ of the
Manager at the time of receipt of notice of termination. Formaritima is only
responsible for any redundancy payments or equivalent for the period of time
the Manager s personnel have been employed on the Vessel from the date of
this Agreement and provided timely notice is issued to all affected
personnel, Manager shall make its best efforts to assist and support
Formaritima or Formaritima s nominee in procuring the services of such
employees or sub-contractors as Formaritima may wish to employ.
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7.4 If the Vessel is sold, Formaritima shall be entitled to terminate this
Agreement by giving notice to the Manager, such notice to expire on such date as
Formaritima may specify.
7.5 If Formaritima fails to pay the remuneration payable to the Manager within
thirty (30) days of the due date, the Manager may at any time thereafter
terminate this Agreement by thirty calendar days prior written notice to
Formaritima.
In the event that Formaritima fails to make payment on due date to the Manager
of any moneys owing to the Manager under this Agreement, Formaritima agrees that
the amount unpaid for the time being shall bear interest at a rate of two
percentage point units above the three months LIBOR rate as quoted in the
Financial Times on the due date.
7.6 Termination of this Agreement under any circumstances shall be without
prejudice to any outstanding claims hereunder which either Formaritima or the
Manager may have against the other.
7.7 Upon any termination of this Agreement with respect to the Vessel, the
Manager shall use its best endeavours to assist in a smooth transfer of the
Vessel to any new manager and/or Formaritima .
8. ASSIGNMENT AND SUBCONTRACTING
8.1 The rights and obligations of a Party hereunder may not be assigned without
the prior written consent of the other Party (such consent not to be
unreasonably withheld).
8.2 Either Party may however assign such rights to any subsidiary, affiliate or
other group company designated by it PROVIDED THAT such Party effecting the
assignment shall remain responsible for the proper performance of this
Agreement.
8.3 The Manager may with the approval of Formaritima , wherever necessary,
engage subcontractors on an arms length basis for the performance of specific
assignments, without thereby in any way being relieved of its responsibility for
the performance, administration and direction of these services. The indemnity
as contained in 6 above shall, as between Formaritima and the Manager, apply in
respect of actions or omissions of aforesaid sub-contractors and may be passed
on to the sub-contractor in the discretion of the Manager.
9. TAXES
Any taxes or charges applied by local authorities in the Netherlands or the
Netherlands Antilles shall be for the Manager s account.
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10. FORCE MAJEURE
10.1 Each Party to this Agreement shall be relieved from complying with any term
of this Agreement to the extent that, and only so long as, such compliance
is prevented or delayed by force majeure, which is defined as civil or
labour disturbances, riots, strikes (other than a strike limited to the
employees of either Party), wars (declared or undeclared), military
actions, insurrections, rebellion, acts of any governmental or military
agency under actual or assumed authority, action of elements, floods, storm
or other acts of God or any cause beyond the control of either Party,
whether or not similar to the matters herein specifically enumerated and
provided that the event shall not have been caused by the action or
negligence of either of the Parties, and that the Party and/or the Parties
affected shall do its, or their, utmost to remedy the above circumstances.
10.2 Any Party claiming force majeure shall promptly notify the other Party,
with the evidence of the occurrence of such event.
10.3 If either Party hereto is prevented from or delayed in performing all or
any of its obligations thereunder as a direct result of force majeure, such
non performance shall not be considered as a breach of this Agreement and
that Party shall be relieved from such obligation which shall suspend
payment by the other Party for the duration of such force majeure.
10.4 Notwithstanding the foregoing to the extent that the event claimed as force
majeure impacts upon or would impact upon the performance of any Charter
Agreement, such event must be recognised as a force majeure event in terms
of such Charter Agreement before it can qualify as a force majeure event
hereunder.
11. LAW AND ARBITRATION
11.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England.
11.2 Any dispute or difference arising in connection with this Agreement shall
if possible be settled by mutual amicable agreement.
11.3 If any dispute should arise in connection with the interpretation and
fulfilment of this Agreement the same shall be decided by arbitration in
the city of London and shall be referred to a single arbitrator (an
"Arbitrator") to be appointed by the Parties hereto. If the Parties cannot
agree upon the appointment of the single Arbitrator the dispute shall be
settled by three Arbitrators, each Party appointing one Arbitrator, the
third being appointed by the Chairman of the London Maritime Arbitrators
Association.
11.4 If either of the appointed Arbitrators refuses or is incapable of acting,
the Party who appointed him shall appoint a new Arbitrator in his place.
11.5 If one of the Parties fails to appoint an Arbitrator, either originally or
by way of substitution, for two weeks after the other Party having
appointed his Arbitrator has sent the Party making default notice by mail
or facsimile to make the appointment, the Party appointing the third
Arbitrator shall, after application from the Party having appointed his
Arbitrator, also appoint an Arbitrator on behalf of the Party making
default.
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11.6 The award rendered by the Arbitration Court shall be final and binding upon
the Parties and may if necessary be enforced by the Court or other
competent authority in the same manner as a judgment in the Court of
Justice.
11.7 Performance under this Agreement shall, if reasonably possible, continue
during the Arbitration proceedings.
12. CONFIDENTIAL INFORMATION
All information related to this Agreement, regardless of whether such
information concerns Formaritima, its clients, its associated companies, or its
contractors, shall be treated as confidential and shall not be divulged by the
Manager to any third party without the prior written consent of Formaritima .
The hereinabove obligations shall survive termination of this Agreement and
shall remain in force for so long as the information covered by confidentiality
has not otherwise become public knowledge.
13. NOTICES
13.1 All communications and notices in relation to this Agreement and
obligations to be performed hereunder shall be in writing and delivered by
fax or by hand and if given to Formaritima addressed to:
with a copy to:
FORMARITIMA LTD WESTVILLE MANAGEMENT
c/o Arias, Fabrega & Fabrega CORPORATION
Omar Hodge Building President
Wickham's Cay 5847 San Felipe, Suite 3300
Road Town, Tortola Houston, Texas 77057
British Virgin Islands
Fax: (284) 494 4980 Fax: (713) 914-9796
and if given to the Manager addressed to:
WORKSHIPS CONTRACTORS B.V.
K.P. van der Mandelelaan 34
3062 MB Rotterdam (Brainpark)
The Netherlands
Fax: 31 10 452 81 76
13.2 Either Party may give reasonable notice to the other Parties of any change
of address at any time.
13.3 A notice by fax shall be deemed to have been received at the time of
dispatch provided that if the day of dispatch is not a Working Day in the
country of the addressee or if the time of dispatch is after close of
business in the country of the addressee, it shall be deemed to have been
received at the opening of business on the next such Working Day.
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14. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties hereto and
supersedes all prior negotiations, representations or agreements relating
directly to the subject matter of this Agreement whether written or oral. No
changes, alterations or modifications to this Agreement shall be affected unless
in writing and signed by the Parties hereto.
IN WITNESS WHEREOF the Parties have signed this Agreement the day and year first
above written.
SIGNED by ) /s/ GERMAN EFROMOVICH
for and on behalf of )
FORMARITIMA LTD )
in the presence of: ) /s/ MARCELO VIOLLAND
SIGNED by ) /s/ Illegible
for and on behalf of )
WORKSHIPS CONTRACTORS B.V. )
in the presence of: ) /s/ Illegible
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APPENDIX 1
SCOPE OF SERVICES PROVIDED BY THE MANAGER
- - - Marine Operations and Technical Support
- - - Logistics
- - - Marine and Technical Personnel (as per the personnel and payment schedule
attached as Appendix 2).
- - - Local base personnel for Marine Operations and Technical Support at
industry standard dayrates
- - - Liaison with Marine subcontractors and suppliers
- - - Purchase of parts, services and supplies.
- - - Procurement of Visas, work permit applications and formalities.
- - - Assistance and advice to minimise the impact of customs duties and
import taxes.
- - - Assistance in providing Vessel insurances and settling claims
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APPENDIX 2
PERSONNEL AND RATES
FUNCTIONS TO BE
TECHNICAL CREW US$ PER DAY SUPPLIED ON BOARD (*)
- - -------------- ----------- ---------------------
Chief Engineer 605 1
2nd Engineer 503 1
3rd Engineer 455 2
4th Engineer 412 2
Electrical Supervision 465 1
Assistant or Rig Electrician 267 1
Electronic Engineer 329 1
Rig Mechanic 467 1
MARINE CREW
- - -----------
Captain 615 1
Chief Mate 545 1
DP Operator 435 2
Warehouse Man 431 1
Crane Operator 375 1
The above dayrates are payable for each day worked on the vessel, based on a
28/28 rata.
Dayrates are inclusive of salaries, overheads and allowances, costs related to
social security and medical care.
Dayrates are exclusive of travel and accommodation related costs between the
point of origin and rig site, visa costs and personnel taxes which are or may
become applicable in Brazil. In case of delays in Brazil, all related costs
including dayrate are for Formaritima s account.
Dayrates are exclusive of any taxes in Brazil.
Dayrates are at cost and of an indicative nature only based on rates at 01/01/98
and shall be revised annually based on actual market costs of personnel.
o The positions on board could be changed at the request of Formaritima at its
discretion, with at least three months notice for replacement of the same.
This should not result in an unreasonable crewing functions mixture.
18
EXHIBIT 10.61
BIGEM HOLDINGS N.V.
- and -
PETRODRILL SEVEN LIMITED
----------------------------
LICENSING AGREEMENT
----------------------------
<PAGE>
THIS LICENCING AGREEMENT, is entered into this 5th of November 1998,
BETWEEN:
(1) BIGEM HOLDINGS N.V. a Corporation incorporated in accordance with\
the laws of the Netherlands Antilles and having its registered office at
Anthony Veder Building, Kaya Richard Posner, Willemstad, Curacao,
Netherlands Antilles (the Licensor ) and
(2) PETRODRILL SEVEN LIMITED a Company incorporated in accordance with the
laws of the British Virgin Islands c/o Arias, Fabrega & Fabrega, P.O. Box
985, Omar Hodge Building, Wickham s Cay, Road Town, Tortola, B.V.I. (the
Licencee ).
WHEREAS:
A. Scheepswerf de Hoop Lobith B.V. ( the Designer ) has designed and
built a semi-submersible drilling platform AMETHYST 1 and has
developed the AMETHYST 1 design into a revised design for the
AMETHYST 2 .
B. Pursuant to an agreement dated 31st October 1997 the Designer assigned to
the Licensor the whole right title and interest in and to the above
mentioned design.
C. The Licencee desires to construct a platform in accordance with the
Licensor s design data.
D. The Licensor is willing to grant to the Licencee a licence to use the said
design data on the terms and conditions set out in this Agreement.
IN CONSIDERATION of the mutual covenants and obligations hereinafter set forth,
it is hereby agreed between the Licensor and Licencee as follows:-
1. GRANT OF LICENCE
1.1 For the consideration hereinafter mentioned, the Licensor agrees to
and does hereby grant to the Licencee, and the Licencee accepts, an
irrevocable, non exclusive, perpetual licence to construct or
procure the construction by a shipyard ( the Contractor ) of a
dynamically positioned semi-submersible drilling or workover unit,
( the Unit ) in accordance with a design developed by the Designer
for the construction of the Amethyst 1 and revised in the
construction of the Amethyst 2 (hereinafter referred to as the
Design ). The Licensor shall provide to the Licencee for use by the
Licencee and the Contractor the design documentation, documentation
and specifications listed in Annex A attached hereto ( the Design
Documentation ).
1.2 The Licensor agrees to supply the Licencee with any additional
documentation pertaining to the design of the Unit where such
documentation is necessary to supplement the Design Documentation in
order to enable the Contractor to build the Unit or give guidance to
the Licencee in its construction program. Such documentation may
include but shall not be limited to, detailed engineering
documentation, bills of material, purchase specifications and
orders, planning, quality assurance and production information as
used by the Designer in the construction of the Amethyst 1.
2
<PAGE>
1.3 The Licensor agrees to carry out to the extent agreed any additional
design tasks, including modification of the Design Documentation, if
so requested by the Licencee, in accordance with Clause 3.4
hereunder.
2. TIME SCHEDULED FOR PROVISION OF DESIGN DOCUMENTATION
The Licensor shall provide the Design Documentation for transfer to the
Licencee in accordance with the following provisions:-
2.1 All Design Documentation shall be delivered to the Licencee within
seven (7) working days of the execution of this Agreement.
2.2 Any additional documentation referred to in Clause 1.2 will stay at
the premises of the Designer and the Licensor will procure that it
is at any time accessible to the Licencee. The Design Documentation
shall at all times remain the property of the Licensor who shall
keep the same fully confidential.
2.3 Information or assistance requested in accordance with Clause 1.3 of
this Agreement shall be given to the Licencee promptly by the
Licensor on a best efforts basis.
2.4 The Design Documentation shall be forwarded to the Licencee at the
Licensor s expense, by which ever method is the preference of the
Licencee.
3. FEES
In consideration for granting the licence and the provision of services
described in this Agreement the Licencee shall pay to the Licensor a fee
of total US$1,583,333 for the Unit ( the Fee ) payable as follows:-
3.1 US$166,667 within five (5) banking days of each construction
contract for a Unit (a Construction Contract ) becoming effective.
3.2 US$1,250,000 within thirty (30) banking days of each Construction
Contract becoming effective.
3.3 The balance of the Fee shall be payable in four (4) equal
semi-annual instalments commencing on delivery of each Unit in
accordance with the Construction Contract.
3.4 Additional design tasks or contract design modifications as may be
requested by the Licencee in accordance with Clause 1.3 of this
Agreement shall be paid for by the Licencee according to an agreed
number of man hours charged at the rates given in Annex B.
3.5 Technical support and assistance shall be charged according to the
level of effort agreed based on the rates and expenses given in
Annex B.
3
<PAGE>
4. CONDITIONS FOR DESIGN
4.1 All documentation to be submitted by the Licensor to the
Licencee under this agreement shall be presented in a clear,
legible manner and according to best international offshore
practice. All the Design Documentation shall be in the
English language. Where this is not possible the Licensor
shall assist the Licencee by procuring from the Designer
suitable translations.
4.2 The Licensor agrees to keep the Licencee informed of any design
developments or modifications to design features or details carried
out by the Designer as soon as such become available.
4.3 The Licensor hereby warrants that the Design Documentation shall be
free of errors and omissions and that provided that the Design
Documentation is adhered to by the Contractor, the Unit shall meet
the performance requirements of the outlined specifications.
4.4 The Licensor agrees that it will correct promptly, at its own
expense, any errors or omissions and return correct documentation to
the Licencee as soon as possible after such error or omission has
been rectified.
5. CONDITIONS
5.1 The Licensor shall take all necessary steps to enforce the terms and
conditions contained in an assignment dated 31st October 1997
between the Designer and the Licensor ( the Assignment ).
6. LAW AND JURISDICTION
6.1 This Agreement shall in all respects be construed and interpreted in
accordance with English law.
67.2 Any dispute arising under or by virtue of this Agreement and/or the
Design Documentation, or any difference in opinion between the
Parties hereto concerning their rights and obligations under this
Agreement and/or the Design Documentation shall be settled in the
first place by mutual amicable agreement.
6.3 Should the settling of matters under dispute not be possible by
amicable agreement, any dispute or difference shall be settled by
arbitration in London in accordance with provisions of the
Arbitration Act 1996 or any statutory modifications or re-enactment
thereof for the time being in force and shall be referred to a
single arbitrator (an Arbitrator ) to be appointed by the Parties
hereto. If the Parties cannot agree upon the appointment of a single
Arbitrator the dispute shall be settled by three Arbitrators, each
Party appointing one arbitrator, the third being appointed by the
Chairman for the time being of the London Maritime Arbitrators
Association.
6.4 If either of the appointed Arbitrators refuses or is incapable of
acting, the Party who appointed him shall appoint a new Arbitrator
in his place.
4
<PAGE>
6.5 If one of the Parties fails to appoint an Arbitrator, either
originally or by way of substitution, for two weeks after the other
Party having appointed his Arbitrator has sent the Party making
default notice by mail or facsimile to make the appointment, the
Party appointing the third Arbitrator shall, after application from
the Party having appointed his Arbitrator, also appoint an
Arbitrator on behalf of the Party making default.
6.6 The award rendered by the Arbitration Court shall be final and
binding upon the Parties and may if necessary be enforced by the
Court or other competent authority in the same manner as a judgment
in the Court of Justice.
6.7 Work under this Agreement shall, if reasonably possible, continue
during the arbitration proceedings.
7. MISCELLANEOUS
This Agreement which incorporates all prior negotiations and
understandings related to the subject matter hereof, sets forth the entire
agreement of the parties hereto and shall not be modified except by
written instrument executed by duly authorised representatives of the
Parties. The failure of either Party to insist upon strict performance of
any provision hereof shall not constitute a waiver of, or estoppel against
asserting, the right to require such performance in the future, nor shall
a waiver or estoppel in any one instance constitute a waiver or estoppel
with respect to a latter breach of a similar nature or otherwise.
8. NOTICES
All notices, invoices and other communications required pursuant to this
Agreement shall be in writing and deemed to have been sufficiently given
or made if delivered by hand or sent by fax to the addressee at the
address set out below;
in the case of the Licensor: with a copy to:
The Managing Director President
BiGem Holdings N.V. Pride International, Inc.
Anthony Veder Building 5847 San Felipe, Suite 3300
Kaya Richard Posner Houston, Texas 77057
Willemstad
Curacao Fax: 713 914 9796
Netherlands Antilles
Fax: 599 9461 6491
in the case of the Licencee:
5
<PAGE>
The Managing Director
Petrodrill Offshore, Inc.
Saffrey Square, Suite 205
Bank Lane, P. O. Box N8188
Nassau, Bahamas
Fax: 011 44 1481 710254
or to such other address as the relevant Party may from time to time
notify to the other.
9. CONFIDENTIALITY
All information related to this Agreement regardless of whether such
information concerns the Licensor, its clients, its associated companies
or its contractors shall be treated as confidential and shall not be
divulged by the Licencee to any third party without the prior written
consent of the Licensor. The hereabove obligations shall survive the
termination of the Agreement and shall remain in force for so long as the
information covered by confidentiality has not otherwise become public
knowledge.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement the day and
year first above written.
SIGNED by /s/ GERMAN EFROMOVICH )
for and on behalf of German Efromovich )
BIGEM HOLDINGS N.V. )
in the presence of:- /s/ Illegible )
SIGNED by /s/ GERMAN EFROMOVICH )
for and on behalf of German Efromovich )
PETRODRILL OFFSHORE INC. )
in the presence of:- /s/ Illegible )
6
<PAGE>
ANNEX A
DESIGN DOCUMENTATION
The Design documentation package delivered by the Licensor will consist of:
Outline specification
General Arrangement (Version p95019 A-N)
Intact stability with principal loading conditions
Preliminary Damage Stability
Weight Distribution
Main scantling drawings pontoons, columns and deckbox approved by LR
Preliminary Electrical Balance
Principal schematics of pipe systems
Ballast system
Bilge system
Drain system
Compressed air system
Fuel System
Lube oil transfer system
Salt water cooling system
Low temperature freshwater cooling system
High temperature freshwater cooling system
Fire and deckwash system
Baryte/Bentonite system
Dry bulk cement system
Brine transfer system
Fire system, deluge system and sprinkler system
Technical freshwater/drillwater transfer system
Sanitary system
Hydrostatics
Lines plan
REFERENCE DOCUMENTATION
This concerns all information available on AMETHYST 1 . This information is
available at the premises of [the Licensor/the Designer] and copies will be made
available to representatives of the Licencee upon request.
7
<PAGE>
ANNEX B
REMUNERATION
The work performed in accordance with this Agreement in Clauses 3.3 and 3.4
shall be remunerated as follows:-
Each working day of 8 hours US$850
Excluded Tax, VAT if any
Excluded are costs for proper travelling and accommodation.
Maximum continuous period outside [Holland] 21 days.
Costs to be paid within 30 days after receipt of invoice.
EXHIBIT 10.65
DRILLPETRO INC.
- AND -
TECHDRILL INC.
- AND -
WESTVILLE MANAGEMENT CORPORATION
________________________________________________________________________________
AMETHYST FINANCIAL COMPANY LTD.'S SHAREHOLDERS'
AGREEMENT
________________________________________________________________________________
1
<PAGE>
THIS AGREEMENT is made the 5th day of November 1998,
BETWEEN:
(1) DRILLPETRO INC.
A company incorporated in the Bahamas of
Saffrey Square
Suite 205
Bank Lane
P.O. Box N 8188
Nassau
("DRILLPETRO")
(2) TECHDRILL INC.
A company incorporated in the Bahamas of
Saffrey Square
Suite 205
Bank Lane
P.O. Box N 8188
Nassau
("TECHDRILL")
(3) WESTVILLE MANAGEMENT CORPORATION
A corporation incorporated in the British Virgin Islands of
c/o Arias Fabrega & Fabrega Trust Co
of Omar Hodge Building
Wickhams Cay - Road Town Tortola
British Virgin Islands
("WESTVILLE")
DRILLPETRO, TECHDRILL and WESTVILLE shall hereinafter collectively be
known as "Shareholders" or "Parties" and individually as "Shareholder" or
"Party."
WHEREAS:
(A) The Parties have agreed to co-operate in the construction, ownership and
operation of six dynamically positioned semi-submersible drilling units
named or to be named "Amethyst II" through "Amethyst VII" (the "Vessels")
through the medium of Amethyst Financial Company Ltd., a corporation
registered in the British Virgin Islands (the "Holding Company") and its
six wholly owned subsidiaries (the "Operating Companies").
2
<PAGE>
(B) The Parties have agreed to enter into this Agreement for the purposes of
recording the terms and conditions of their joint venture and of
regulating their relationship with each other and certain aspects of the
affairs of and their dealings with the Holding Company.
NOW THEREFORE IN CONSIDERATION OF THE MUTUAL COVENANTS HEREIN, THE SHAREHOLDERS
AGREE TO THE RECITALS ABOVE AND AS FOLLOWS:
1. DEFINITIONS
"AFFILIATE" of a Party means a company which owns, or is owned by, or
which is owned by an entity which owns that Party; owns and owned mean in
this definition the ownership directly or indirectly of at least 30% of
the voting shares.
"AMETHYST II DESIGN" means the design purchased by BiGem from De Hoop that
will be used to construct the Vessels.
"BUILDER(S)" means the relevant shipyard which has been selected or will
be selected to construct each Vessel.
"CONSTRUCTION AND SALE CONTRACT" means the contract between the Holding
Company and each Builder for the construction and sale of the Vessel.
"CONSTRUCTION CONTRACT ASSIGNMENT" means, where applicable, the assignment
by the Holding Company to an Operating Company of all of the Holding
Company's rights under the Construction and Sale Contract, including title
to the Vessel.
"DAY" means a calendar day.
"EQUITY" means any and all risk bearing capital provided to the Holding
Company by its shareholders in the form of share capital, subordinated
loans or otherwise.
"FORAMER" means Pride-Foramer S.A.
"FORMARITIMA" means Formaritima Ltd., a company to be incorporated in the
British Virgin Islands, to be a 50/50 joint venture company to be formed
by Pride and Maritima for the provision of services to operate drilling
and workover rigs.
"HOLDING COMPANY" means Amethyst Financial Company Ltd., a company
incorporated in the British Virgin Islands, Arias, Fabrega & Fabrega,
P.O. Box 985, Omar Hodge Building, Wickhams Cay, Road Town, Tortola,
B.V.I.
"LENDERS" means the financial institutions or bond purchasers which may
finance up to 90% of the construction, equipping and mobilization cost of
each of the Vessels and includes their respective successors in title and
transferees.
3
<PAGE>
"LOAN AGREEMENT" means the pre-delivery and post-delivery loan contracts
and indentures between the Holding Company and the Lenders and any related
offering documents and prospectuses in respect of, inter alia, the
financing of the construction, equipping and mobilization of the Vessels.
"MARITIMA" means Maritima Petroleo e Engenharia Ltda., a company
incorporated under Brazilian Laws; of Avenida Almirante Barroso, 52, 3400
GR, 20031-000 Centro, Rio de Janeiro, Brazil.
"OPERATING COMPANIES" means Petrodrill Two Limited, Petrodrill Three
Limited, Petrodrill Four Limited, Petrodrill Five Limited, Petrodrill Six
Limited and Petrodrill Seven Limited, each a corporation registered in the
British Virgin Islands and each a wholly owned subsidiary of the
Holding Company.
"THE PETROBRAS CHARTER" means the relevant Charter Agreement between
Maritima and Petroleo Brasileiro S.A. (hereinafter referred to as
Petrobras ) for the provision of each Vessel, as assigned or to be
assigned in respect of the rights and obligations to the relevant
Operating Company.
"PETRODRILL ENGINEERING" means Petrodrill Engineering N.V., a company
incorporated in the Netherlands Antilles under registration number 77521
with its registered office at Anthony Veder Building, Kaya Jacob Posner,
Willemstad, Curacao, acting as construction manager on behalf of the
relevant Project Company during the period of construction of the Vessels.
"PROJECT" means all arrangements, including all financing arrangements
with the Lenders, by the Parties to have the Vessels constructed and
delivered to the Operating Companies for the purpose of performing the
Petrobras Charters.
"PROJECT COMPANIES" means the Holding Company and the Operating Companies.
"PROJECT GROUP" means the Holding Company, BiGem and Petrodrill
Engineering.
"RELATED AGREEMENTS" means all the following agreements with regard to
each Vessel:-
(i) Local Services Agreement between Maritima and Formaritima.
(ii) Management Agreement between Formaritima and the Holding Company
(the "Formaritima Management Agreement").
(iii) Technical Services Agreement between Foramer and Formaritima N.V.
(iv) Agreement between Scheepswerf De Hoop Lobith B.V. ("DeHoop") and
BiGem Holdings N.V. ("BiGem").
4
<PAGE>
(v) Construction Management Agreement between the Holding Company and
Petrodrill Engineering B.V.
(vi) Shareholders Agreement for BiGem among Westville, Drillpetro and
Techdrill.
(vii) Marine and Nautical Services Agreement between the Holding Company
and a third party.
(viii) Supply Agreement between Petrodrill Engineering and Foramer.
(ix) Supply Agreement between Petrodrill Engineering and Maritima.
(x) Supply Agreement between Petrodrill Engineering and a third party.
(xi) Licencing Agreement between BiGem and the Holding Company together
with
(i) Shareholders Agreement for Petrodrill Engineering among Westville,
Drillpetro and Techdrill.
(ii) Shareholder s Agreement for Formaritima between Westville and
Maritima.
(iii) Matters Relating to the Petrobras Amethyst Contracts.
(iv) Agency Agreement between the Holding Company and Barrier Enterprise
and Rapisardi Investments Ltd.
"VESSEL(S)" means semi-submersible dynamically positioned drilling or
workover units to be owned by the Operating Companies for the purpose of
the Project and built using the DeHoop Amethyst II Design licensed to the
Holding Company by BiGem.
2. EFFECTIVENESS
This Agreement shall be effective as at the date hereof
3. SCOPE AND PURPOSE
The Shareholders hereby enter into this Agreement for the purpose of
managing and operating their joint venture through the Holding Company,
the main objects being to ensure that the Holding Company purchases, owns
and operates the Vessels, directly or through the Operating Companies, for
not only the initial purpose of making them available for performance
under the Petrobras Charters, but also thereafter, always in the best
interests of the Holding Company.
5
<PAGE>
4. CAPITAL OF THE HOLDING COMPANY
4.1 Upon effectiveness the authorised share capital of the Holding Company
will be US$1,000 with US$1,000 paid up and divided into 1,000 ordinary
shares of US$1 each.
On Completion the Shareholders shall acquire, subscribe and pay up in full
for cash at par for shares in the Holding Company so that their respective
legal and beneficial ownership of ordinary shares shall be:
DRILLPETRO: a Fifty-five per cent (55%) interest in the Holding Company;
TECHDRILL: a Fifteen per cent (15%) interest in the Holding Company; and
WESTVILLE: a Thirty per cent (30%) interest in the Holding Company.
The appropriate share certificates shall be issued by the Holding Company
in favour of each of the Shareholders.
4.2 Any increase or decrease in the authorised or issued share capital of the
Holding Company shall be decided by the unanimous consent of the
Shareholders. Increases shall be contributed to by the Shareholders in
full and in cash, in the same proportions as they are required to
contribute to the initial issued capital of the Holding Company pursuant
to Clause 4.1 above, unless the Shareholders unanimously agree otherwise
in writing.
4.3 No capital as aforesaid shall carry interest for the Shareholders, nor
shall it be withdrawn by the Shareholders once deposited, except with the
unanimous written consent of the Shareholders and the approval by any
appropriate regulatory authority.
FINANCING OF THE HOLDING COMPANY
5.1 Each Shareholder shall contribute to the capital/operating budget of the
Holding Company, in proportion to its respective shareholding, those
amounts stipulated in Appendix 1 through Appendix 6 hereto. The
Shareholders undertake to advance such amounts on the dates/times
stipulated in the said Appendix, and in any event within ten (10) Days of
such date/time.
5.2 Each Shareholder shall also contribute to any overruns in the
capital/operating budget of the Holding Company as and when the same shall
become necessary, in the same manner as for the capital/operating budget
referred to in Clause 5.1 above, save that such contributions shall be
made within ten (10) Days of notice having been given by the Board of
Directors of the Holding Company of the amount required. In the event of a
failure of the Board of Directors to give such notice, the General
Assembly acting by simple majority, may issue the said notice.
6
<PAGE>
5.3 If each of the Parties complies with their obligations under Clauses 5.1
and 5.2 hereof on the dates and at the times specified therein then the
amounts advanced by each of the Parties shall be treated as subordinated
loans repayable only following amortisation of any outstanding amounts
owing to any applicable financing institutions PROVIDED ALWAYS THAT if one
or more of the Parties fails to comply with its obligations under Clause
5.1 or Clause 5.2 then any contributions made by the performing Parties
pursuant to the provisions of Clause 5.1 and Clause 5.2 above shall be
made in return for the issue of further shares in the Holding Company and
shall not be interest bearing.
5.4 In the event that one or more Parties fails to advance the amounts
required on the dates and at the times on which such contributions are
required to be made (or within the grace period referred to in Clause 5.1
or 5.2 hereof) then the Parties performing their obligations under this
Clause 5 shall be entitled within a further period of ten (10) Days to
contribute towards the outstanding amount in proportion to their
respective shareholding whereupon the number of shares which would have
been issued to the Party concerned shall be allocated to those Parties
performing their obligations under this Clause 5 in proportion to their
existing shareholding.
5.5 All amounts required by the Holding Company in respect of its capital and
operational needs, as approved from time to time by the Board of Directors
of the Holding Company shall be incorporated in the Budget.
6. PROFITS AND LOSSES
The profits or loss for each financial year of the Holding Company shall
be determined by audited financial statements drawn up in accordance with
US Generally Accepted Accounting Principles and practices (US GAAP) and
shall be submitted for approval by the Shareholders in Annual General
Meeting.
7. ACCOUNTS
7.1 Proper books of accounts of the Holding Company shall be maintained in
accordance with US GAAP approved by its auditors for the time being. All
such books of account shall be made available for inspection at all
reasonable times by a Shareholder or its authorised representative.
7.2 The financial year of the Holding Company shall run from January 1st
through to December 31st. The first financial year, however, shall
commence upon the date of incorporation of the Holding Company.
Financial statements (balance sheet and profit/loss account) shall be
prepared within three months of the end of each financial year. Forthwith
thereafter such statements shall be audited by the auditors for the
Holding Company and upon approval of the same by the Board of Directors
shall be submitted to the Shareholders in Annual General Assembly and upon
approval by the Shareholders become binding on the Shareholders (except
that
7
<PAGE>
a Shareholder shall be entitled to require the rectification of any
manifest error discovered therein within three months of the date on which
such accounts were certified by the auditors and submitted by the Board of
Directors to the Shareholders in Annual General Meeting).
Ninety percent (90%) of the profits shown in an audited profit and loss
account and available for distribution shall unless otherwise required by
loan covenants of the Holding Company be distributed to the Shareholders
following approval by the Holding Company's auditors of the relevant
audited accounts and 10% shall not be distributed. The Shareholders
recognise that until the Lenders have been repaid under the Loan
Agreements no distribution shall be made to the Shareholders.
7.3 BANK ACCOUNTS
Bank accounts shall be opened in London and elsewhere as decided by the
Management Committee and pursuant to a Resolution of the Board of
Directors and maintained in the name of the Holding Company in which shall
be placed all sums received by the Holding Company and from which all
disbursements on behalf of the Holding Company shall be made.
The signatories to the accounts shall be appointed by the Board of
Directors and all financial transactions above such amount as may from
time to time be specified by the Board of Directors will require 3
authorised signatories, one to be appointed by each of the Shareholders.
Closing of bank accounts shall take place exclusively pursuant to a
decision to that effect by the Management Committee and a Resolution of
the Board of Directors.
8. AUDITORS
The auditors of the Holding Company shall be a firm of accountants of
international standing decided upon by the Management Committee and
appointed by the Board of Directors.
9. GENERAL ASSEMBLY
Any Shareholder holding a 5% or greater interest in the Holding Company
may require a Shareholders Meeting at any time to be held by providing 7
days prior written notice of same. A unanimous written resolution of the
Shareholders shall be as effective as a resolution adopted at a meeting of
the Shareholders. No business shall be transacted at any General Assembly
Meeting of the Shareholders nor shall any resolutions be passed there
unless one representative of each of the Shareholders is present PROVIDED
ALWAYS that if the absence of one or more representatives of each
shareholder prevents the passing of any resolution, then those
representatives present may reconvene the meeting in question at the same
location and on a date falling not earlier than 10 days nor
8
<PAGE>
later than 30 days after the date of the failed meeting and shall give
notice of such reconvened meeting to all the shareholders and of the
agenda, proposed therefor, including all resolutions proposed for adoption
at such meeting which shall be the same as the resolutions proposed for
passing at the failed meeting. At such reconvened meeting the members
present shall be entitled to deal with all items of business on the agenda
and pass the resolutions proposed for such reconvened meeting provided
that the members representing the majority of the issued shares in the
Holding Company vote in favour of such resolution.
10. OVERALL SUPERVISION AND CONTROL
10.1 Subject as herein otherwise provided, the Shareholders shall delegate to
the Board of Directors the overall supervision and control of the Holding
Company and all the powers requisite and necessary to enable the said
Board of Directors to carry out its duties in that regard. The Board shall
meet at least once every two months during the construction of the Vessel
and at least once every three months thereafter.
Subject to Clause 10.2 decisions in respect of the supervision and control
of the Holding Company shall be shall be taken by way of a simple majority
of the shares held in the Holding Company as voted by the holding
shareholder.
In the event of a disagreement concerning a matter proposed by one or more
shareholder(s) constituting a majority of the shares in the Holding
Company and provided that the matter does not require unanimity of the
Board of Directors per Clause 10.2 below, then the matter will be resolved
in the following order:
1. The Parties will further discuss and use their best efforts to reach
a consensus the matter within 5 business days; or
2. Failing agreement under 1 above, the Party or Parties proposing the
matter for decision will withdraw the proposal and/or modify it to
the satisfaction of the disagreeing Party; or
3. Failing resolution after 2 above within a period of 5 business
days, any disagreeing Party will, at its option, either accept
the proposed matter or have the right to exercise a put option
over its interest in the Holding Company to the Party or Parties
proposing the matter whereupon the Party or Parties proposing the
matter will be obliged to purchase the disagreeing Party's or
Parties' interest. The put option price will be the aggregate of
(a) the amount paid by the disagreeing party for its shares in
the Holding Company and (b) the principal amount outstanding
under any shareholders loan of the disagreeing Party to the
Holding Company and (c) 12% interest per annum accrued on (a) and
(b).
For the avoidance of doubt, any dispute regarding the financing of the
construction of the Vessel shall be dealt with under this Clause 10.1.
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<PAGE>
10.2 The Shareholders shall exercise all voting rights and other powers of
control available to them in relation to the Holding Company so as to
procure (insofar as they are able by the exercise of such rights and
powers) that the Holding Company shall not, without the unanimous consent
of the Board of Directors:
(a) enter into or agree to any variation, amendments, cancellation or
termination to the Related Agreements or any of them or the
Petrobras Charters;
(b) create any fixed or floating charge or debenture, lien (other than a
lien arising by operation of law) or other encumbrance over the
whole or any part of the undertaking, property or assets of the
Holding Company except for the purpose of securing the indebtedness
of the Company to its bankers/lenders for sums borrowed in the
ordinary course of business or in connection with the initial
financing of the construction of the Vessels;
(c) borrow any sum (except from the Holding Company's bankers in the
ordinary and proper course of business or in connection with the
initial finance of the construction of the Vessels) in excess of a
maximum aggregate sum outstanding at any time of US$500,000;
(d) give any guarantee or indemnity to secure the liabilities or
obligations of any person other than in the ordinary course of
business;
(e) sell, transfer, lease, assign or otherwise dispose of a material
part of the undertaking, property and/or assets of the Holding
Company or contract so to do;
(f) engage any new employees at remuneration which could exceed the rate
of US$125,000 per annum;
(g) alter any rights attaching to any class of share in the capital of
the Holding Company;
(h) consolidate, sub-divide or convert any of the Holding Company's
share capital or in any way alter the rights attaching thereto;
(i) issue renounceable allotment letters or permit any person entitled
to receive an allotment of shares to nominate another person to
receive such allotment except on terms that no such renunciation or
nomination shall be registered unless the renounces or person
nominated is approved by the Board of Directors; or
(j) create, acquire or dispose of any subsidiary or of any shares in
any subsidiary;
(k) enter into any partnership or profit sharing agreement with any
person;
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(l) do or permit to be done any act or thing whereby the Holding Company
may be wound up (whether voluntarily or compulsorily) save as
otherwise expressly provided for in this Agreement;
(m) issue any securities convertible into shares or debentures or any
share warrants or any options in respect of shares;
(n) acquire, purchase or subscribe for any shares, debentures, mortgages
or securities (or any interest therein) in any company, trust or
other body;
(o) appoint or dismiss any Director but without prejudice to the rights
conferred on each of the Shareholders pursuant to Clause 10.3 to
appoint and remove Directors;
(p) create any contract or obligation to pay money or money's worth to
any Shareholder or to any Affiliate of such Shareholder or to any
other subsidiary of such Affiliate or to any person as a nominee or
associate of any such Shareholder (including any renewal thereof or
any variation in the terms of any existing contract or obligation);
(q) issue any shares, options, warrants, rights of pre-emption or any
similar rights otherwise than pursuant to the provisions of Clause
5;
(r) carry on any business or activity other than the construction,
ownership, chartering and operation of the Vessel;
(s) make any loans; or
(t) pass any resolutions altering the Holding Company's Statutes.
10.3 COMPOSITION
Unless and until the Shareholders shall otherwise unanimously agree to the
contrary, the Board of Directors shall consist of four (4) persons of whom
two shall be appointed by Drillpetro and one each shall be appointed by
and represent Techdrill and Westville. Each Shareholder may at any time
and from time to time by notice in writing to the others revoke the
appointment of the Director(s) appointed by it and appoint another person
in his place, and the Shareholders agree to use all their votes in General
Meeting to procure such appointment or revocation in accordance herewith.
10.4 MEMBERS AND OFFICERS
The first members of the Board of Directors of the Holding Company under
this joint venture shall be appointed by the Shareholders within 15 days
of the signing hereof
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10.5 ALTERNATES
Each of the Shareholders may appoint any person (including a person who is
already a Director) to be the alternate of a Director appointed by it.
An alternate who is also a Director in his own right shall be entitled
when acting as an alternate to a separate vote on behalf of the Director
whom he represents in addition to his own vote. A Shareholder may at any
time revoke the appointment of an alternate appointed by it and appoint
another person in his place. An alternate shall cease to be an alternate
upon the revocation of the appointment of the Director for whom he acts as
alternate.
10.6 APPOINTMENT AND REVOCATION
All appointments and revocations of appointment of Directors and their
alternates shall be notified in writing by the Shareholder(s) making or
revoking the same to the other Shareholders.
10.7 MEETINGS
The Board of Directors shall meet at least once in every financial year.
The Board shall be convened by the President (or his alternate) either on
his own initiative or at the request of any other member of the Board of
Directors or a Shareholder on 7 days written notice to all Directors.
Meetings shall be held at the principal place of business of the Holding
Company or at such other place or places as the Board of Directors shall
decide. The meeting of the Board of Directors shall be chaired by a
Director nominated by Drillpetro. The Board shall keep and maintain in
writing minutes of its meetings and a record of all decisions taken
thereat, which, minutes shall be signed by the President and those
Directors or their alternates who attended the meeting.
The language used in the meeting of the Board of Directors shall be
English and all minutes and covering letters shall be written in English.
The Directors/Officers of the Holding Company shall, unless otherwise
agreed in writing, be entitled to no remuneration or fees and shall not be
entitled to charge the Holding Company with any travelling, accommodation
and other expenses incurred by them in connection with the meetings of the
Holding Company.
10.8 QUORUM
Every Director for the time being shall be entitled to receive 7 days
written notice of and to attend any meeting of the Board of Directors
unless notice is waived in writing by all the Directors entitled to attend
and vote. No such meeting shall be validly held unless attended by all
four Directors or their alternates.
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10.9 VOTES
A decision of the Board of Directors shall be by resolution of the
Directors passed (unless the provisions of Clause 10.10 shall apply) at a
duly constituted Board Meeting. A meeting for which the 7 days notice
period has not been observed (whether waived in writing in accordance with
Clause 10.8 or not) but at which all Directors either personally or
through their alternates are present may pass valid resolutions. However,
a Director, or an alternate thereof, shall not be eligible to vote at a
meeting of the Board of Directors until and unless the Shareholder whom he
represents has contributed in full that amount of other capital
contribution from time to time required to be deposited by such
Shareholder pursuant to the provisions of this Agreement.
Subject to the provisions of Clause 10.2 above, a resolution of the Board
of Directors shall be valid if the majority of the votes validly cast on
such resolution at the meeting are in favour thereof after following the
procedures set forth in Clause 10. 1.
10.10 WRITTEN RESOLUTION
Without the Directors meeting as provided in Clause 10.9 above, an
unanimous resolution confirmed in writing by all the Directors or their
alternates shall be as effective as a resolution adopted at a meeting of
the Board of Directors.
11. MANAGEMENT COMMITTEE
11.1 The Shareholders may form a management committee (the "Management
Committee") to supervise the operations in connection with the
construction of the Vessel and subsequent operations. Each Party will
appoint one representative to the Management Committee and each
representative will have one vote. The Management Committee will meet at
least once every two months during the construction of the Vessel and once
every six months during the duration of the Petrobras Charter and
subsequent drilling contracts. All decisions of the Management Committee
shall be unanimous. In the event of deadlock in the Management Committee
the matter will be referred to the board of the Holding Company for
determination.
12. COVENANTS AND UNDERTAKINGS OF THE SHAREHOLDERS
12.1 Each Shareholder warrants its power and authority to enter into this
Agreement and agrees and undertakes with the other Shareholders that:
12.1.1Save as may otherwise be agreed in writing between the Shareholders
or specifically provided in this Agreement, it will not without the
prior written approval of the other Shareholders, sell, mortgage,
charge, assign, transfer or otherwise dispose of its interests in
this Agreement or in the Holding Company.
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12.1.2Notwithstanding the provisions of Clause 12.1.1 hereof, a
Shareholder may transfer to an Affiliate all of its rights duties
and obligations under and pursuant to this Agreement provided that
the assigning Shareholder shall throughout the duration of this
Agreement remain primarily liable for proper performance by its
Affiliate.
12.2 The Shareholders shall keep strictly secret and confidential and shall not
disclose or communicate to any third party whatsoever any technical,
economic, financial, commercial or other information whether or not
acquired in an official manner from the other Shareholders or from the
Holding Company except if the disclosure of such information is expressly
permitted by this Agreement or required by law.
The Shareholders also undertake not to use for themselves or for other
activities the information obtained from the other Shareholder(s) or from
the Holding Company without the prior written approval of the Party from
whom the information was obtained and each of the Shareholders undertakes
to obtain from their employees having access to such information any
undertaking to respect the same secrecy obligation.
The secrecy obligations arising from this Clause 12.2 do not apply to
information which is or which may become public or which was already known
to the Shareholder(s) when the information was transmitted or which has
been received by a third party having power to disclose it.
The secrecy obligations provided hereinabove will apply after the expiry
or the termination of this Agreement for any reason whatsoever during the
period of 5 years under the same conditions as those applying during the
term of this Agreement.
12.3 The Shareholders shall use their best endeavours to develop the activities
of the Holding Company and to further its goodwill within the framework of
the laws and regulations applicable to the Holding Company and in the
spirit of co-operation which forms the basis of this Agreement.
12.4 CROSS UNDERTAKINGS BY SHAREHOLDERS
Each shareholder (the "Non Performing Shareholder") agrees to indemnify
the other Shareholder or Shareholders ("the Performing Shareholder(s)") in
the event of nonperformance or partial performance by the Non Performing
Shareholder of any obligation undertaken towards the Lenders under any
guarantee if the other shareholder or shareholders voluntarily or by
virtue of any counter indemnity or counter guarantee given by it or them
to the Lenders performs the obligation on behalf of the Non Performing
Shareholder.
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13. EXIT MECHANISM
13.1 The Parties agree that one or a combination of the following exit
mechanisms could apply for the realisation of their investments in the
Holding Company:
(a) the sale of any Vessel and/or all the shares in the Holding Company
to a third party.
(b) the purchase by Westville or its nominee of the interests of
Drillpetro and Techdrill in any Vessel or in the Holding Company,
(c) the flotation of the Holding Company on a public market; and/or
(d) the exchange of the interests held in the Holding Company by
Drillpetro and Techdrill for shares in Pride International at terms
to be agreed and based on industry practice.
The exit mechanisms to come into effect as and from September 2001. In the
event, of a difference of opinion as to the optimum exit strategy, the
Parties agree to appoint Jefferies and Company, Inc., investment bankers,
to provide advice on the various alternatives in order to maximise each of
the Shareholders short term return on investment giving priority to
liquidity. Except as otherwise provided herein and unless otherwise
advised by Jefferies and Company, Inc., disposition or reduction by a
Shareholder of its interest in the Holding Company shall not affect the
rights and obligations of any party to the Formaritima Management
Agreement.
13.2 Notwithstanding anything contained herein to the contrary, Foramer and
Maritima shall at all times each have preemption purchase rights to
purchase the others or the others Affiliates direct or indirect
interests or beneficial interests in the Project Companies and the Joint
Venture in accordance with the procedure in Clause 14.
14. TRANSFER OF SHARES PROCEDURE
14.1 Save where the transfer of shares and quasi equity (the Interest is not
authorized pursuant to Clause 12 for a given period as defined therein,
any Shareholder may be authorized to seek to dispose of all its Interest -
and not only part of it - to a non Affiliate, by the remaining
Shareholders under the following conditions and procedure.
FIRST, the Shareholder wishing to dispose of all its Interest must have
received from a bona fide non Affiliate an offer to buy all of its
Interest in the Holding Company together with an acceptance to be bound by
all the terms and conditions of this Agreement including where relevant
the performance of any guarantee or other outstanding obligation, which is
due by the Shareholder wishing to sell by way of substitution of guarantee
or Counter Guarantee Indemnity (if approved by the Lenders).
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SECOND, upon receipt of such offer the Shareholder wishing to sell shall
inform forthwith the Holding Company and each Shareholder in writing
("Transfer Notice") of its intention to dispose of all its Interest in the
Holding Company together with the sale price and conditions of sale, the
name and particulars of the non Affiliate ready to purchase and request
authorisation to do so.
THIRD, the other Shareholders shall have a period of 21 days to consider
the proposed sale of Interest. At the expiry of the said 21 days period,
each of the other Shareholders shall notify to the Shareholder wishing to
sell their decision either approving the sale, in which case the sale
shall proceed subject to the non Affiliate entering into a Deed of
Adherence in the agreed form given in Appendix 2, or disapproving the sale
to the non Affiliate.
FOURTH, in the case where all of the other Shareholders disapprove of the
sale, these other Shareholders shall be obliged to purchase all of the
Interest of the disposing Shareholder at the conditions specified in the
offer of the non Affiliate - the sale to the remaining shareholders shall
be done prorata with their existing Interest in the Holding Company.
Should not all of the other Shareholders accept to purchase the offered
Interest, it shall be sold to the accepting Shareholder in exchange for
payment of the sale price in full.
However, should the accepting Shareholder not be prepared to take all of
the offered Interest, the offering Shareholder will be permitted to sell
all of its Interest only to the non Affiliate who made the original bona
fide offer.
FIFTH, the sale to the incoming Shareholder shall only be registered in
the Register of Shareholders of the Holding Company when payment has been
made in full and the Deed of Adherence entered into and the documentation
relating to outstanding obligations of the disposing Shareholder have been
transferred to the acquiring Shareholder and have been completed and are
in force.
14.2 Provided always that where the Loan Agreements restricts in any way and
whatever form such transfer of Interest, the Shareholders shall not (i)
transfer their Interest without prior written approval from the Lenders
and (ii) do anything which may cause an Event of Default under the Loan
Agreement.
15. TERMINATION FOR BANKRUPTCY, RECEIVERSHIP, ADMINISTRATION OR LIQUIDATION
If at any time any Shareholder shall become bankrupt or go into
receivership, administration or liquidation whether compulsory or
voluntary or enter into any scheme of arrangement or composition with its
creditors (except for the purpose of a bona fide reconstruction or
amalgamation) then its interest in the Holding Company shall be disposed
of in accordance with the procedure set out in Clause 14 unless that
procedure cannot, in law, be followed.
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16. DEADLOCK
16.1 This Clause shall apply in any case where a matter relating to the affairs
of the Holding Company has been considered by the Board of Directors but
the Board of Directors is unable to reach a unanimous decision where
required by Clause 10.2, on the matter or in the event that a meeting of
the Board of Directors has been convened in accordance with 10.7 herein
and no quorum in accordance with 10.8 has been achieved at said meeting or
subsequent reconvened meeting called within the next 10 Days. Any such
case is hereinafter referred to as a "deadlock". For purposes of this
Clause 16, Drillpetro and Techdrill shall be deemed to be one Shareholder
for as long as they are under common control.
16.2 In any case of deadlock, each of the Shareholders shall within seven (7)
Days of such deadlock having arisen or become apparent, cause its
appointees on the Board of Directors to prepare and circulate to the other
Shareholders and other Directors a memorandum or other form of statement
setting out its position on the matter in dispute and its reasons for
adopting such position. Each such memorandum or statement shall be
considered by the Managing Director (or equivalent officer) of each
Shareholder then holding office who shall respectively use their
reasonable endeavours to resolve such dispute. If they agree upon a
resolution or disposition of the matter they shall jointly execute a
statement setting forth the terms of such resolution or disposition and
the Shareholders shall exercise the voting rights and other powers of
control available to them in relation to the Holding Company to procure
that such resolution or disposition is fully and promptly carried into
effect.
16.3 If the dispute has not been resolved in accordance with the provisions set
out above within fifteen (15) Days after delivery of the memorandum or
statement mentioned herein or such longer period as the Shareholders may
agree in writing then any Shareholder (the "Offeror") may serve a notice
in writing (the "Offer Notice") on both of the other Shareholders (the
"Offerees") of its desire to resolve the position by offering to sell its
Shares (the "Offerors Shares") to the Offerees pro-rata to each of the
Offerees participation in the Holding Company or, failing which, to
purchase one or both of the Offerees, Shares at the same price.
16.4 The Offer Notice shall be expressed to:
(i) constitute an offer, open for acceptance by each Offeree for 90 Days
from the date of service of the Offer Notice ("Offeree Purchase
Period") by the Offeror to sell at a specified price (the "Sale
Price") (but on no other conditions) all (but not some only) of the
Offeror's Shares to each of the Offerees pro-rata to the Offerees
participation in the Holding Company;
(ii) constitute an Offer by the Offeror to purchase all (but not some
only) of each of the Offeree's Shares at the Sale Price in
accordance with the provisions of this paragraph on the business day
(as defined in Clause 20.3) falling 30 Days after the
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end of the Offeree Purchase Period provided that such Offeree has
not exercised its right to purchase the Offerors Shares before the
end of the Offeree Purchase Period; and
(iii) be irrevocable without the written consent of all Shareholders.
16.5 Each Offeree may at any time before the expiry of the Offeree Purchase
Period serve notice in writing upon the Offeror of its desire to purchase
all (but not some only) of the Offeror's Shares offered to it at the Sale
Price (the "Offeree Purchase Notice") which may not be expressed to be
subject to the fulfillment of any conditions whatsoever. Upon service of
an Offeree Purchase Notice on the Offeror, the Offeror shall be bound to
sell, and the Offeree shall be bound to purchase, all the Offerors Shares
offered to it at the Sale Price, which the Offeror shall transfer free
from all claims, equities, liens and encumbrances together with all rights
attached thereto,
16.6 If either Offeree does not serve an Offeree Purchase Notice before the
expiry of the Offeree Purchase Period, it shall be deemed to have declined
the offer constituted by the Offer Notice to sell the Offeror Shares to
the Offeree and such Offeree shall be bound to sell, and the Offeror shall
be bound to purchase, all such Offeree's Shares at the Sale Price and
which such Offeree shall transfer free from all claims, equities, liens,
charges and encumbrances together with all rights attached thereto.
16.7 Completion of any sales and purchases contemplated by this Clause 16 shall
take place within fourteen Days of such sale and purchase obligation
becoming binding as above written and the selling party(ies) shall deliver
to the purchasing party(ies) executed transfer(s) and documents of title
in exchange for a banker's draft drawn on a first class U.S. bank for an
amount equal to the relevant Sale Price. Each of the Shareholders appoints
the other Shareholders irrevocably and by way of security for the
performance of their respective obligations under this Clause 16 its
attorney to execute any necessary document required to be executed by it
under the provision of this Clause 16.
16.8 In the event that more than one Offer Notice is served, the notice first
served shall prevail. In the event that more than one Offer Notice is
served simultaneously, then the Offer Notice with the higher Sale Price
shall prevail.
16.9 In the event that, at the time of any failure to find a resolution or
disposition in accordance with sub-clause 16.3 above, there are only two
Shareholders, the provisions of this Clause 16 shall apply mutatis
mutandis.
16.10 In the event that a Party, pursuant to the provisions of this Clause 16 or
those of Clause 14 (Transfer of Shares), has disposed or is disposing of
the whole of its interest in the Holding Company (the "Disposing Party"),
then if the Disposing Party has during the course of its participation in
the joint venture been required to provide to any Lender or Lenders
guarantee(s) of the performance by the Holding Company of any of its
obligations under any loan or security documentation executed in favour of
such
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Lender(s) or any counter indemnities in favour of any third party(ies) and
such guarantee(s) or counter indemnities is/are still outstanding and in
full force and effect at the time of the disposition by the Disposing
Party of its interest in the Holding Company, then at the option of the
Disposing Party and having regard to the requirements of any Lender(s),
either:-
(i) the acquirer of such interest from the Disposing Party or the
remaining Shareholder(s) shall issue replacement
guarantee(s)/counter indemnities in favour of and satisfactory to
such Lender(s)/third party(ies) on the same terms as those
guarantee(s)/counter indemnities originally provided to such
Lender(s)/third party(ies) by the Disposing Party whose
guarantee(s)/counter indemnities shall then be deemed terminated;
or
(ii) the acquirer of such interest or the remaining Shareholder(s) shall
be obliged to procure the issue of an indemnity in favour of the
Disposing Party and its Affiliate(s) in respect of such
guarantee(s)/counter indemnities by a company of substance or
reputable bank or lending institution acceptable to the Disposing
Party and in a form reasonably satisfactory to the Disposing Party.
16.11 In the event that a Party, has pursuant to the provisions of this Clause
16 or those of Clause 14, disposed of the whole of its Interest in the
Holding Company, that Party shall be entitled to receive for the benefit
of its relevant Affiliate from the acquirer or acquirers of aforesaid
interest an early termination fee for termination of management (if that
occurs) equal to the aggregate of the number of Days of management fee
lost between date of transfer of sale of shares and the final date of the
firm term of the Charter discounted at ten per cent (10%) per annum.
17. DISSOLUTION OF THE HOLDING COMPANY
17.1 Upon the dissolution of the Holding Company pursuant to this Agreement the
Shareholders shall each forthwith account to the Holding Company for any
unpaid capital or other indebtedness owing by them to the Holding Company
and the assets of the Holding Company shall be applied and distributed in
the following manner and order of distribution:
17.1.1 To the payment of all debts and liabilities (if any) of the
Holding Company exclusive of capital contributions of the
Shareholders.
17.1.2 To the repayment to the Shareholders rateably of the net amount
of capital contributed by the Shareholders and which has not
already been withdrawn; and
17.1.3 The surplus, if any, of the assets then remaining shall be
divided between the Shareholders in accordance with the
proportions in which they contributed to the capital at the time
immediately prior to liquidation.
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17.1.4 All accounting decisions and accounting of termination shall be
in accordance with US GAAP approved or adopted by the auditors
for the time being of the Holding Company.
17.1.5 Nothing in this Clause 17 shall be deemed a satisfaction, waiver
or discharge of any claims or causes of action by one Shareholder
against the others except to the extent that the same may have
been agreed as having been taken into account in any computation
or adjustment made pursuant to this Clause.
18. FREEDOM OF ACTION
Nothing contained in this Agreement shall be construed as constituting the
Shareholders the partners of each other, nor as restricting the
Shareholders (or any of them) in the conduct of their separate businesses.
19. FEES AND EXPENSES
19.1 The Shareholders shall each bear all legal fees and other expenses
incurred by them in negotiating this Agreement.
19.2 During the construction of the Vessel each Shareholder shall invoice the
Holding Company at an agreed rate of US$150,000 per annum (pro rated for
partial years) in respect of its internal administration costs etc in
relation to its support to the Holding Company.
20. NOTICE
Any notice or communication required pursuant to this Agreement shall be
in writing and shall be deemed to have been sufficiently given or made:
20.1 On the next business day after the same shall have been delivered by hand
to the relevant Shareholder(s) against receipt at the addresses specified
below or immediately if sent by fax:
The addresses for service shall be as follows:
(a) in the case of DRILLPETRO
Saffrey Square
Suite 205
Bank Lane
P O Box N8188
Nassau Bahamas
Fax: 44 1481 710254
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(b) in the case of TECHDRILL
Saffrey Square
Suite 205
Bank Lane
P O Box N8188
Nassau Bahamas
Fax: 44 1481 710254
(c) in the case of WESTVILLE WITH A COPY TO:
c/o Arias Fabrega & Fabrega Trust Co Pride International, Inc.
Omar Hodge Building President
Wickhams Cay 5847 San Felipe, Suite 3300
Road Town Houston, Texas 77057
Tortola Fax: 1 713 914 9796
British Virgin Islands
Fax: 1809 494 4980
20.2 A Shareholder may from time to time notify to the others within five Days
prior notice of a change of address and/or fax. Any notice sent by fax
shall also be promptly confirmed by prepaid registered mail.
20.3 For the purpose of Clause 20.1 "business day" shall be a day on which
Banks and similar financial institutions are open for business in the
United States of America, England, France and Brazil.
21. MISCELLANEOUS
21.1 The Shareholders may waive specifically but only in writing, any breaches
of this Agreement, but no such waiver shall be deemed to constitute a
waiver of similar, subsequent or other breaches.
21.2 No alterations to the provisions of this Agreement shall be effected
unless made in writing duly executed by or on behalf of each of the
Shareholders.
21.3 Each Shareholder shall at all times execute such further documents and
carry out such further actions as may be requisite for giving full effect
to the provisions of this Agreement.
21.4 The clause and other headings contained in this Agreement are for
reference only and shall not affect its interpretation.
21.5 The provisions of this Agreement shall prevail over any provision of the
constitution of the Holding Company and each Shareholder undertakes to do
whatever is required to give effect to that intention.
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22. LAW AND ARBITRATION
22.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of England,
22.2 Subject to the provisions of Clause 5 and Clause 16 hereof any dispute or
difference arising in connection with this Agreement shall if possible be
settled by mutual amicable agreement.
22.3 Should such settlement not be possible the dispute or difference shall be
referred to Arbitration in London in accordance with the provisions of the
Arbitration Act 1996 and any statutory modifications or re-enactments
thereof for the time being in force and shall be referred to a single
arbitrator (an "Arbitrator") to be appointed by the Parties hereto. If the
Parties cannot agree upon the appointment of the single Arbitrator the
dispute shall be settled by three Arbitrators, with Drillpetro appointing
one Arbitrator and Westville appointing one Arbitrator and the third being
appointed by the Chairman of the London Maritime Arbitrators Association.
22.4 If any of the appointed Arbitrators refuses or is incapable of acting, the
Party who appointed him shall appoint a new Arbitrator in his place.
22.5 If a Party or parties fails to appoint an Arbitrator, either originally or
by way of substitution, for two weeks after the other party or parties
having appointed its/their Arbitrators have sent the party(ies) making
default notice by mail or facsimile to make the appointment, the non
defaulting Party(ies) may apply to the Chairman for the time being of the
London Maritime Arbitrators Association to appoint an Arbitrator on behalf
of the Party(ies) making default.
22.6 The award rendered by the Arbitration Court shall be final and binding
upon the Parties and may if necessary be enforced by the Court or other
competent authority in the same manner as a judgment in the Court of
Justice.
22.7 Performance under this Agreement shall, as far as is reasonably possible,
continue during the Arbitration proceedings.
23. PREVAILING AGREEMENT
If there is a conflict between any of the terms of this Agreement, and the
terms of the Articles of Incorporation and By-Laws of the Holding Company,
the terms of this Agreement shall prevail as between the Shareholders, and
the Shareholders shall take all such action as shall be necessary for the
purpose of this Clause to ensure that the terms of this Agreement prevail.
Notwithstanding the foregoing or anything else contained herein or in any
other Related Agreement, the Shareholders acknowledge that they and their
respective Affiliates will jointly participate with representatives of the
Lenders in the negotiation and preparation of the Loan Agreement. If and
to the extent there are any
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discrepancies or conflicts between the terms of this Agreement or other
Related Agreements and Statements made in the Loan Agreement, then the
Loan Agreement will control.
24. ANNOUNCEMENTS
No public announcement or communication (other than to the extent required
by law or by any other regulation) concerning the transactions referred to
in this Agreement shall be made or issued by any Party to this Agreement
without the prior written consent of all the Parties but such approval
shall not be unreasonably withheld or delayed.
25. INVALIDITY
If at any time any one or more of the provisions of this Agreement is or
becomes invalid, illegal or unenforceable in any respect under any law or
regulation, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not as a result be in any way affected
or impaired.
26. CONDITION PRECEDENT
It is a condition precedent to the coming into effect of this Agreement
and the Related Documents that Drillpetro shall have procured the
assignment to the Holding Company of the Petrobras Agreement.
27. FCPA
The Parties recognize that Westville and Foramer are both subsidiaries of
the U.S. Holding Company, Pride International, Inc. All parties are
familiar with the U.S. Foreign Corrupt Practices Act ("FCPA") and its
purposes. In particular, all parties are familiar with FCPA's prohibition
of the payment of or the giving of anything of value, either directly or
indirectly, by a United States Company or any of its subsidiaries to an
official of a foreign government for the purpose of influencing an act or
decision in his official capacity, or inducing him to use his influence
with a foreign government to assist a company in obtaining or retaining
business for or with or directing business to any person.
If there is reason to believe that any monies being paid by or on behalf
of the Joint Venture are being used for improper purposes, including, but
not limited to, direct or indirect payments to a government official, any
member of a ruling family, political party, government official or
employee or agent of a government controlled oil company for the purposes
of influencing any act which may result in any of the Project Companies or
the Project Group obtaining or retaining business, the non-offending
Parties shall have the right to sell or otherwise dispose of all or a part
of their interest in the Project Company and/or any of the Project Group
to the offending Party or Parties or any third party, subject to the
pre-emption provisions in the Related Agreements, and any cost or expenses
created by a forced sale or the early sale of such interest in order to
avoid any
23
<PAGE>
claim for violation of the FCPA shall be for the account of the offending
Party or Parties or any third party transferee.
IN WITNESS WHEREOF this Agreement has been executed by or on behalf of the
Parties hereto the day and year first above.
SIGNED by /s/ GERMAN EFROMOVICH )
for and on behalf of )
DRILLPETRO INC. /s/ Illegible )
in the presence of: )
SIGNED by /s/ GERMAN EFROMOVICH )
for and on behalf of German Efromovich )
TECHDRILL INC. /s/ Illegible )
in the presence of: )
SIGNED by /s/ Illegible )
for and on behalf of )
WESTVILLE MANAGEMENT CORPORATION )
in the presence of: /s/ FRIDA MARTINEZ )
24
<PAGE>
APPENDIX 1
PETRODRILL SEVEN LIMITED
I. BUDGET PROJECTION:
(Amounts
SOURCES OF FUNDS in Thousands)
Net Proceeds from Issuance of the Notes
Equity Contribution
Investment Earnings
Mobilization Fees
TOTAL SOURCES OF FUNDS
USES OF FUNDS
Completion and Delivery Costs(1)
Shipyard Costs
Owner-Furnished Equipment
Basic Design Engineering
Insurance
Mobilization Costs
Total Interest Expense During Completion and Delivery(2)
Spare Parts, Manuals and Training
Contingency
Total Completion and Delivery Costs
Development Costs and Fees
Debt Service Reserve
TOTAL USES OF FUNDS
II. SHAREHOLDER CONTRIBUTIONS:
DRILLPETRO (55%)
TECHDRILL (15%)
WESTVILLE (30%)
TOTAL CONTRIBUTION
________
1 Assumes no late delivery penalties will be payable on delivery of the Rigs to
Petrobras, either against the mobilization or otherwise. 2 Assumes a weighted
average interest rate of 10.15% per annum.
25
<PAGE>
III. OVERRUNS:
Notwithstanding Clause 5.2 of the Agreement, the Shareholders agree
that in the event of any overruns in the capital/operating budget, each
Shareholder shall immediately contribute their pro-rata share of any such
overrun amount up to US$50,000,000 without any further action by the Board
of Directors or General Assembly, subject only to the other conditions of
Clause 5 of the Agreement.
26
EXHIBIT 10.66
AGENCY AND BROKERAGE AGREEMENT
THIS AGREEMENT IS MADE BY AND BETWEEN:
PETRODRILL SEVEN LIMITED, a company incorporated in the British Virgin Islands
with its registered office at c/o Arias Fabrega & Fabrega Trust Co. BVI Limited,
325 Waterfront Drive, Omar Hodge Building, 2nd floor, Wickhams Cay, Road Town,
Tortola, British Virgin Islands, according to its statutes and registered
bylaws, hereinafter designated as PETRODRILL SEVEN.
U.K. GUARANTY & BONDING CORP. LIMITED, a company incorporated in the Bahamas
with its registered office at Providence House, East Hill Street, P.O. Box
N-3944, Nassau, Bahamas, according to its statutes and registered bylaws,
hereinafter designated AGENT ONE and
RAPISARDI INVESTMENT LIMITED, a company incorporated in the British Virgin
Islands, with headquarters in Akara Building, 24 De Castro Street, Wickhams Cay
1, Road Town, Tortola, British Virgin Islands, according with its statutes and
registered by laws, hereinafter designated AGENT TWO.
WHEREAS
1. MARITIMA PETROLEO E ENGENHARIS LTDA, a company incorporated in Brazil with
headquarters at Av. Almirante Barroso, 52/34(0) floor, Centro, Rio de
Janeiro, 20031-000, Brazil, was successful in being awarded a contract by
PETROBRAS the Brazilian Oil Company, contract n(0) 101.2.155.97-9, for the
provision of a semi-submersible drilling unit as a result of an
international tender ("THE CONTRACT").
2. PETRODRILL SEVEN is a company that, will own a semisubmersible drilling or
workover unit identified as AMETHYST 7, hereinafter designated as the RIG.
3. AGENTS have long worked in close relationship with PETROBRAS and also have
extensive knowledge and experience regarding the Brazilian offshore
drilling market.
4. The AGENTS have provided MARITIMA during the course of the tender process
with help and counseling which contributed to MARITIMA's success in being
awarded the PETROBRAS CONTRACT.
5. MARITIMA had previously agreed with the AGENTS to pay the sum afterwritten
in consideration for such help and counseling and for such other on-going
services.
6. MARITIMA has subsequently assigned all of its rights and obligations in
terms of the CONTRACT to PETRODRILL SEVEN and PETRODRILL SEVEN has agreed
in part consideration of such assignment to pay the AGENTS the sums
afterwritten in settlement of MARITIMA's firm commitment
-1-
<PAGE>
NOW THEREFORE THE PARTIES HAVE MUTUALLY AGREED THAT
7. PETRODRILL SEVEN hereby assumes the obligation to pay (in accordance with
item 8 below) as agency fee and/or commission for the services rendered
with respect to such CONTRACT, to AGENT ONE the amount in US$ equivalent
of 2.0% (two percent) of the total RIG dayrate value of such CONTRACT and
to AGENT TWO the amount in US$ equivalent of 3.0% (three percent) of the
total RIG dayrate value of such CONTRACT.
8. PETRODRILL SEVEN will pay to the two AGENTS, IN US$, according with
item 7, above, a total percentage of 5.0% (five percent) of the total
RIG dayrate agreed with PETROBRAS (i.e., excluding bonus increase or
reductions due to poor performance/downtime) with respect to the
CONTRACT in consideration for the execution of such CONTRACT, such
payment to be made every month by PETRODRILL SEVEN, within 2 (two)
business days of receiving the monthly installment from PETROBRAS with
respect to the relevant CONTRACT through wire deposit to the bank
accounts indicated by AGENTS.
9. These fees will continue to be paid monthly to AGENTS throughout the firm
period of the CONTRACT within 2 (two) days of the receipt by PETRODRILL
SEVEN of the monthly installments made by PETROBRAS relating to such
CONTRACT. In case of contract extension or re-negotiation by PETRODRILL
SEVEN, the aforesaid agency fees and/or commissions will apply based on
the same percentage of the then applicable RIG dayrates.
10. The obligation to pay the agency fees and/or commissions mentioned in this
contract will start, with respect to the CONTRACT, on the first day after
PETRODRILL SEVEN receives the monthly installment from PETROBRAS mentioned
in items 8 & 9 and will be in effect for the period that the RIG is
chartered under such CONTRACT, including any extensions thereto.
11. Each of the AGENTS may invoice the above-mentioned agency fees and/or
commissions on a monthly basis to PETRODRILL SEVEN, which will pay the
invoices within 2 (two) business days after the respective monthly
payments from PETROBRAS to PETRODRILL SEVEN and/or its affiliated firms,
are received.
12. Each AGENT will present to PETRODRILL SEVEN, by enclosed letter, co-signed
by PETRODRILL SEVEN, the bank account where the payments must be made. The
AGENTS have the right to change these bank accounts, informing PETRODRILL
SEVEN in writing, of the new address 10 days before a payment must be
made.
13. This agreement is a binding and valid contract between the parties, of
mandatory execution; and obliges and binds also heirs' successors, subject
to the condition precedent to effectiveness with respect to the CONTRACT
that such CONTRACT be confirmed
-2-
<PAGE>
between PETRODRILL SEVEN and PETROBRAS. This CONTRACT is made in three
originals, all signed by the parties and replaces any previous agreement
of the same scope.
14. AGENT ONE and AGENT TWO each represents and warrants to PETRODRILL SEVEN
that AGENT ONE and AGENT TWO have full power and authority to enter into
this agreement and all transactions contemplated by this agreement and are
to be bound by all obligations and liabilities on their part contained in
this agreement and that the performance of the obligations of AGENT ONE
and AGENT TWO, arising under this agreement and each of the transactions
contemplated by this agreement will not at the time of the performance
constitute a breach of any existing law binding upon or regulation, bylaw
or provision of the constitution of AGENT ONE and AGENT TWO. In addition,
AGENT ONE and AGENT TWO each represents and warrants to PETRODRILL SEVEN
that their performance of the obligations under this agreement will not
involve the payment or giving of anything of value, either directly or
indirectly, to an official of a non-U.S. government for the purpose of
influencing an act or decision in his official capacity or inducing him to
use his influence with a non-U.S. government to assist PETRODRILL SEVEN,
any AGENT or any other company in obtaining or retaining business for or
with any person or directing business to themselves or any other person.
AGENT ONE and AGENT TWO acknowledge that PETRODRILL SEVEN is entering into
an agreement in reliance upon such representations and warranties. The
above-mentioned representations and warranties are also back to back from
PETRODRILL SEVEN to AGENTS.
15. TERMINATION
15.1) By either party with respect to the RIG, forthwith and without any
prior notice in the event of the institution of any action or
proceeding, to be admitted by a competent court, against the other
party under any bankruptcy or insolvency law or any law for the
relief creditors, or in the event of the appointment of a receiver
or trustee for the benefit of creditors of such party; in each case,
to the extent such action, proceeding or appointment would cause the
termination of such RIG'S CONTRACT.
15.2) With respect to the RIG, forthwith and without prior notice in case
of a constructive, arranged or total loss of the RIG, provided that
such RIG will not be replaced by PETRODRILL SEVEN in order to
continue the relevant CONTRACT;
15.3) With respect to a RIG, forthwith and without notice in the event of
termination of such RIG'S CONTRACT;
15.4) By the non-offending party, forthwith and without prior notice in
the event that the performance of either party under this Agreement
would result in a violation by any party or any of its affiliates of
the U.S. Foreign Corrupt Practices Act, with
-3-
<PAGE>
which all parties hereto are familiar, or in the event of breach of
any warranties and representation made in item 16 above, which
representations survive for the tem of this Agreement.
16. LAW AND ARBITRATION
This Agreement shall be governed by English Law and any dispute arising
out of this Agreement shall be referred to arbitration in London, England.
Signed this 30th day of April 1998.
/s/ GERMAN EFROMOVICH /s/ G. WILLIAMS
------------------------------ ---------------------------
By: PETRODRILL SEVEN By: AGENT ONE
Name: German Efromovich Name: Standard Nominees Limited
Title: Director Title: Director
By: Gary Williams
/s/ PAULO VILLAS BOAS
-------------------------------
By: AGENT TWO
Name: Paulo Calmon Villas Boas
Title: Lawful Attorney-in-fact
-4-
EXHIBIT 10.70
MINUTES OF AGREEMENT RELATING TO THE PETROBRAS AMETHYST CONTRACTS
This Agreement is made the 2nd day of July 1998
BETWEEN:
(1) DRILLPETRO INC. ("Drillpetro")
(2) TECHDRILL INC. ("Techdrill") and
(3) WESTVILLE MANAGEMENT CORPORATION ("Westville")
The parties agree to procure that Petrodrill Offshore Inc. and/or any of the
Operating Companies owned by it (the relevant company, "Petrodrill"), as
appropriate, give effect to the following provisions, namely:
1) The parties agree that Drillpetro will be paid a lump sum fee of $5,000,000
as a non-accountable reimbursement of costs and expenses (including its legal
and travel costs) it incurred to date in connection with development of the
Amethyst project, the development of conceptual and design engineering,
related shipyard negotiations and technical negotiations with the client. The
lump sum fee will be allocated and paid in five installments as set out in
column 2 of schedule A hereunder within three days of receipt of the
corresponding mobilization payments under the relevant Petrobras contracts
or, in the event of no mobilization fee, within 45 days of delivery to and
acceptance of the rig by Petrobras.
2) In consideration for the assignment of the Petrobras contracts for the
Amethysts 2 and 3 (as amended for the rigs to be upgraded to 1,500m water
depth) and the Petrobras contracts for Amethysts 4, 5, 6 and 7 to the joint
venture or its nominee(s), and, further, in consideration for the increased
duties, obligations and related expenses to be undertaken by Drillpetro
throughout the firm contract periods, the parties agree to procure that
Petrodrill pay to Drillpetro the consultancy and management fees outlined in
columns 3 and 4 of Schedule A hereunder.
SCHEDULE A
LUMP SUM FEE % OF DAY RATE DAILY FEE
excluding bonuses when operating
Amethyst No. 2 $1,000,000 0 $4,000
Amethyst No. 3 $1,500,000 0 $4,000
Amethyst No. 4 $0 1.00% $2,000
Amethyst No. 5 $500,000 0 $2,000
Amethyst No. 6 $1,000,000 2.00% $4,000
Amethyst No. 7 $1,000,000 2.00% $4,000
The parties agree that the improved economic returns to be achieved from the
increased day rates, extended contractual commencement dates, and extended
firm periods are integral to the parties' agreement to procure that
Petrodrill pay to Drillpetro the amounts set out in Schedule A.
Consequently, the said consultancy and management fees and lump sum fees
<PAGE>
are contingent upon Drillpetro achieving the rates, fees and contractual
durations as set out in Schedule B hereunder and further achieving the
contractual commencement dates for the rigs under the Petrobras contracts
that are compatible with the shipyard delivery dates, thereby alleviating
potential penalties for late delivery. The latter point is also of vital
importance for the successful raising of the bond financing.
SCHEDULE B
RIG MOB FEE DAY RATE BONUS TERM
YEARS
Amethyst No. 2 $4,000,000 $123,888 20% 7
Amethyst No. 3 $4,000,000 $123,888 20% 7
Amethyst No. 4 $0 $127,333 10% 6
Amethyst No. 5 $6,500,000 $108,000 0% 8
Amethyst No. 6 $0 $133,333 10% 7
Amethyst No. 7 $0 $143,333 10% 7
----------------------------------------------------------------------------
All of the above fees, except the lump sum reimbursable fees which will be
governed by 1 above, will be payable to Drillpetro within three days of
receipt of corresponding amounts under the Petrobras contracts. No fees will
be due or payable on amounts not received by the joint venture from
Petrobras.
3) Notwithstanding anything contained herein to the contrary but subject to the
immediately following sentence, all payments hereunder shall be waived and
not paid unless and until such time as the Petrobras contracts for the
Amethyst No. 2 and the Amethyst No. 3 have been amended to increase the
dayrates from US$93,000 and US$97,000, respectively, to the amounts set forth
with respect to such contracts in Schedule B. In the event that the
contractual dayrates achieved in respect of the Amethyst No. 2 and Amethyst
No. 3 are less than the amount indicated in Schedule B, payments shall be
made hereunder with respect to each rig based on the achieved dayrates as
from such date in the amount of the product of (a) a fraction having a
denominator of 57,776 and a numerator equal to the difference between (i) the
sum of the dayrates achieved with respect to the Amethyst No. 2 and the
Amethyst No. 3 and (ii) 190,000 and (b) the amounts set forth in Schedule A
for each of the management and consultancy fees and lump sum fees.
Notwithstanding the fact that dayrates higher than those set forth in
Schedule B may be achieved for the Amethyst No. 2 and Amethyst No. 3, in no
event shall the management and consultancy fees and lump sum fees payable
hereunder exceed the amounts set forth for those fees in Schedule A.
4) This Agreement shall be governed by English law and any dispute arising
hereunder shall be referred to arbitration in London, England.
5) This Agreement constitutes the entire agreement among the parties in
connection with its subject matter and wholly supersedes and cancels all
previous negotiations, commitments or agreements in such respects.
6) Each party represents and warrants to the other parties that its performance
of the obligations under this agreement will not involve the payment or
giving of anything of value, either
<PAGE>
directly or indirectly, to an official of a non-U.S. government for the purpose
of influencing an act or decision in his official capacity or inducing him to
use his influence with a non-U.S. government to assist any party, its affiliates
or any other company in obtaining or retaining business for or with any person
or directing business to themselves or any other person. Each party acknowledges
that the other parties are entering into an agreement in reliance upon such
representation and warranty, which representation survives for the term of this
Agreement. This agreement may be terminated by the non-offending party,
forthwith and without prior notice, in the event that the performance of either
party under this Agreement would result in a violation by any party or any of
its affiliates of the U.S. Foreign Corrupt Practices Act.
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
/s/ Illegible
__________________________________
For Drillpetro
/s/ Illegible
__________________________________
For Techdrill
/s/ Illegible
__________________________________
For Westville
EXHIBIT 15
AWARENESS LETTER OF INDEPENDENT ACCOUNTANTS
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Pride International, Inc.
Quarterly Reports on Form 10-Q
We are aware that our reports dated May 14, 1999, August 13, 1999 and
November 12, 1999 on our reviews of interim financial information of Pride
International, Inc. for the three-month periods ended March 31, 1999 and 1998,
six-month periods ended June 30, 1999 and 1998 and nine-month periods ended
September 30, 1999 and 1998, respectively, and included in Pride International,
Inc.'s quarterly report on Forms 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999 are incorporated by reference in its
Registration Statement on Form S-4 filed on December 8, 1999.
Very truly yours,
PricewaterhouseCoopers LLP
Houston, Texas
December 8, 1999
EXHIBIT 21
LIST OF SUBSIDIARIES
As of November 30, 1999, Amethyst Financial Company Ltd. has the following
subsidiaries, each of which is an international business company incorporated
under the laws of the British Virgin Islands:
Petrodrill Four Limited
Petrodrill Five Limited
Petrodrill Six Limited
Petrodrill Seven Limited
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form F-4 of
Amethyst Financial Company Ltd. and Form S-4 of Pride International, Inc. of our
report (which contains an explanatory paragraph relating to the Company's
ability to continue as a going concern as described in Notes 1 and 5 to the
financial statements) dated October 15, 1999 relating to the financial
statements of Amethyst Financial Company Ltd., which appears in this
Registration Statement. We also consent to the references to us under the
headings "Experts" and "Independent Public Accountants" in this Registration
Statement.
PRICEWATERHOUSECOOPERS N.V.
Rotterdam, The Netherlands
December 8, 1999
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form F-4 of Amethyst Financial Company Ltd. and Form S-4 of Pride
International, Inc. of our report dated March 30, 1999 relating to the financial
statements of Pride International, Inc., which appears in Pride International,
Inc.'s 1998 Annual Report to Shareholders, which is incorporated by reference in
its Annual Report on Form 10-K for the year ended December 31, 1998. We also
consent to the reference to us as contained in Appendix A to the prospectus
contained in this Registration Statement.
PRICEWATERHOUSECOOPERS LLP
Houston, Texas
December 8, 1999
EXHIBIT 23.4
CONSENT OF PEDRO CALMON FILHO & ASSOCIADOS
We hereby consent to the references to our firm under the captions
"Prospectus Summary--Threatened Cancellation of Our Charters," "Risk
Factors--Risk Factors Relating to Our Business," "Business--Threatened
Cancellation of Our Charters" and "Business--The Petrobras Contracts--Overview"
and in Note 5 of the Notes to the Consolidated Financial Statements of Amethyst
Financial Company Ltd. in the prospectus included in this Registration Statement
on Forms F-4 and S-4 of Amethyst Financial Company Ltd. and Pride International,
Inc.
PEDRO CALMON FILHO & ASSOCIADOS
Rio de Janeiro, Brazil
December 8, 1999
EXHIBIT 23.7
CONSENT OF HIGGS & JOHNSON
We hereby consent to the references to our firm under the captions
"Risk Factors--Risk Factors Relating to Our Business" and "Description of New
Notes--Enforceability of Judgments" in the prospectus included in this
Registration Statement on Forms F-4 and S-4 of Amethyst Financial Company
Ltd. and Pride International, Inc.
HIGGS & JOHNSON
Nassau, The Bahamas
December 8, 1999
EXHIBIT 23.8
CONSENT OF INDEPENDENT ENGINEERS
We hereby consent to the references to us and to our report under the
captions "Business--Report of Independent Engineers" and "Independent Engineers"
in the prospectus included in this Registration Statement on Forms F-4 and S-4
of Amethyst Financial Company Ltd. and Pride International, Inc.
BENNETT & ASSOCIATES, L.L.C.
New Orleans, Louisiana
December 8, 1999
EXHIBIT 99.1
AMETHYST FINANCIAL COMPANY LTD.
LETTER TO CLIENTS
FOR
TENDER OF ALL OUTSTANDING
- - --------------------------------------------------------------------------------
11 3/4% SENIOR SECURED NOTES DUE 2001
IN EXCHANGE FOR
REGISTERED
11 3/4% SENIOR SECURED NOTES DUE 2001
- - --------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ________,
2000, UNLESS EXTENDED (THE "EXPIRATION DATE"). OUTSTANDING NOTES TENDERED IN THE
EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE FOR THE EXCHANGE OFFER.
- - -------------------------------------------------------------------------------
To Our Clients:
We are enclosing with this letter a prospectus dated _______, 2000 of
Amethyst Financial Company Ltd. (the "Company") and the related letter of
transmittal. These two documents together constitute the Company's offer to
exchange its 11 3/4% Senior Secured Notes due 2001 (the "New Notes"), the
issuance of which has been registered under the Securities Act of 1933, as
amended (the "Securities Act"), for a like principal amount of its issued and 11
3/4% Senior Secured Notes due 2001 (the "Old Notes"), (the "Exchange Offer").
We are the holder of record of Old Notes held by us for your own account.
A tender of such Old Notes can be made only by us as the record holder and
pursuant to your instructions. The letter of transmittal is furnished to you for
your information only and cannot be used by you to tender Old Notes held by us
for your account.
We request instructions as to whether you wish to tender any or all of the
Old Notes held by us for your account pursuant to the terms and conditions of
the Exchange Offer. We also request that you confirm that we may on your behalf
make the representations contained in the letter of transmittal.
Pursuant to the letter of transmittal, each holder of Old Notes will
represent to the Company that (i) any New Notes received are being acquired in
the ordinary course of business of the person receiving such New Notes, (ii)
such person does not have an arrangement or understanding with any person to
participate in the distribution of the Old Notes or the New Notes within the
meaning of the Securities Act and (iii) such person is not an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company or, if it is such
an affiliate, it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable. In addition, each
holder of Old Notes will represent to the Company that (i) if such person is not
a broker-dealer, it is not engaged in, and does not intend to engage in, a
distribution of New Notes and (ii) if such person is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities, it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, it will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
Very truly yours,
<PAGE>
PLEASE RETURN YOUR INSTRUCTIONS TO US IN THE ENCLOSED ENVELOPE WITHIN
AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE
APPLICABLE EXPIRATION DATE.
INSTRUCTION TO
BOOK-ENTRY TRANSFER PARTICIPANT
To Participant of the DTC:
The undersigned hereby acknowledges receipt and review of the prospectus
dated _______, 2000 of Amethyst Financial Company Ltd. ( the "Company") and the
related letter of transmittal. These two documents together constitute the
Company's offer to exchange its 11 3/4% Senior Secured Notes due 2001 (the "New
Notes"), the issuance of which has been registered under the Securities Act of
1933, as amended (the "Securities Act"), for a like principal amount of its
issued and outstanding 11 3/4% Senior Secured Notes due 2001 (the "Old Notes"),
(the "Exchange Offer").
This will instruct you, the registered holder and DTC participant, as to
the action to be taken by you relating to the Exchange Offer for the Old Notes
held by you for the account of the undersigned.
The aggregate principal amount of the Old Notes held by you for the
account of the undersigned is (FILL IN AMOUNT):
Title of Series Principal Amount
-------------------------------- ---------------------------------
11 3/4% Senior Secured Notes due
2001
-------------------------------- ---------------------------------
WITH RESPECT TO THE EXCHANGE OFFER, THE UNDERSIGNED HEREBY INSTRUCTS YOU
(CHECK APPROPRIATE BOX):
[ ] TO TENDER ALL OLD NOTES HELD BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED.
[ ] TO TENDER THE FOLLOWING AMOUNT OF OLD NOTES HELD BY YOU FOR THE ACCOUNT OF
THE UNDERSIGNED:
Title of Series Principal Amount Tendered
-------------------------------- ---------------------------------
11 3/4% Senior Secured Notes due
2001
-------------------------------- ---------------------------------
[ ] NOT TO TENDER ANY OLD NOTES HELD BY YOU FOR THE ACCOUNT OF THE
UNDERSIGNED.
2
<PAGE>
IF NO BOX IS CHECKED, A SIGNED AND RETURNED INSTRUCTION TO BOOK-ENTRY
TRANSFER PARTICIPANT WILL BE DEEMED TO INSTRUCT YOU TO TENDER ALL OLD NOTES HELD
BY YOU FOR THE ACCOUNT OF THE UNDERSIGNED.
If the undersigned instructs you to tender the Old Notes held by you for
the account of the undersigned, it is understood that you are authorized to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations contained in the letter of transmittal
that are to be made with respect to the undersigned as a beneficial owner,
including, but not limited to, the representations that (i) any New Notes
received are being acquired in the ordinary course of business of the
undersigned; (ii) the undersigned does not have an arrangement or understanding
with any person to participate in the distribution of the Old Notes or the New
Notes within the meaning of the Securities Act; (iii) the undersigned is not an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company or,
if it is such an affiliate, it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable; (iv) if
the undersigned is not a broker-dealer, it is not engaged in, and does not
intend to engage in, a distribution of New Notes and (v) if the undersigned is a
broker-dealer that will receive New Notes for its own account in exchange for
Old Notes that were acquired as a result of market-making activities or other
trading activities, it will deliver a prospectus in connection with any resale
of such New Notes; however, by so acknowledging and by delivering a prospectus,
the undersigned will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
SIGN HERE
Name of beneficial owner(s):__________________________________________________
Signature(s):_________________________________________________________________
Name(s) (please print):_______________________________________________________
Address:______________________________________________________________________
Telephone Number:_____________________________________________________________
Taxpayer Identification or Social Security Number:____________________________
Date:_________________________________________________________________________
3
EXHIBIT 99.2
AMETHYST FINANCIAL COMPANY LTD.
DEPOSITORY TRUST COMPANY PARTICIPANTS
FOR
TENDER OF ALL OUTSTANDING
- - --------------------------------------------------------------------------------
11 3/4% SENIOR SECURED NOTES DUE 2001
IN EXCHANGE FOR
REGISTERED
11 3/4% SENIOR SECURED NOTES DUE 2001
- - --------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ________,
2000, UNLESS EXTENDED (THE "EXPIRATION DATE"). OUTSTANDING NOTES TENDERED IN THE
EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE FOR THE EXCHANGE OFFER.
- - -------------------------------------------------------------------------------
To Depository Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer
by Amethyst Financial Company Ltd. (the "Company") to exchange its 11 3/4%
Senior Secured Notes due 2001 (the "New Notes"), the issuance of which has been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
for a like principal amount of its issued and outstanding 11 3/4% Senior Secured
Notes due 2001 (the "Old Notes"), (the "Exchange Offer"), upon the terms and
subject to the conditions set forth in the Company's prospectus dated ________,
2000 and the related letter of transmittal.
We are enclosing copies of the following documents:
1. Prospectus dated ______, 2000
2. Letter of transmittal (together with accompanying Substitute Form
W-9 Guidelines)
3. Notice of guaranteed delivery
4. Letter that may be sent to your clients for whose account you
hold Old Notes in your name or in the name of your nominee, with space
provided for obtaining such client's instruction with regard to the
Exchange Offer.
We urge you to contact your clients promptly. Please note that the
Exchange Offer will expire at 5:00 p.m., New York City time, _______ , 2000,
unless extended.
<PAGE>
Pursuant to the letter of transmittal, each holder of Old Notes will
represent to the Company that (i) any New Notes received are being acquired in
the ordinary course of business of the person receiving such New Notes, (ii)
such person does not have an arrangement or understanding with any person to
participate in the distribution of the Old Notes or the New Notes within the
meaning of the Securities Act and (iii) such person is not an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company or, if it is such
an affiliate, it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable. In addition, each
holder of Old Notes will represent to the Company that (i) if such person is not
a broker-dealer, it is not engaged in, and does not intend to engage in, a
distribution of New Notes and (ii) if such person is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities, it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, it will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
The enclosed Letter to Clients contains an authorization by the beneficial
owners of the Old Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or
to any other person (other than the Exchange Agent) in connection with the
solicitation of tenders of Old Notes pursuant to the Exchange Offer. The Company
will pay or cause to be paid any transfer taxes payable on the transfer of Old
Notes to it, except as otherwise provided in Instruction 7 of the enclosed
Letter of Transmittal.
Additional copies of the enclosed material may be obtained from us.
Very truly yours,
Wilmington Trust Company
2
EXHIBIT 99.3
AMETHYST FINANCIAL COMPANY LTD.
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF ALL OUTSTANDING
- - --------------------------------------------------------------------------------
11 3/4% SENIOR SECURED NOTES DUE 2001
IN EXCHANGE FOR
REGISTERED
11 3/4% SENIOR SECURED NOTES DUE 2001
- - --------------------------------------------------------------------------------
This form, or one substantially equivalent hereto, must be used by a
holder to accept the Exchange Offer of Amethyst Financial Company Ltd. (the
"Company") and to tender 11 3/4% Senior Secured Notes due 2001 (the "Old Notes")
to the Exchange Agent pursuant to the guaranteed delivery procedures described
in "The Exchange Offer -- Guaranteed Delivery Procedures" of the Company's
prospectus dated _______, 2000 and in Instruction 2 to the related letter of
transmittal. Any holder who wishes to tender Old Notes pursuant to such
guaranteed delivery procedures must ensure that Wilmington Trust Company, as
exchange agent (the "Exchange Agent"), receives this notice of guaranteed
delivery, properly completed and duly executed, prior to the Expiration Date (as
defined below) of the Exchange Offer. Capitalized terms used but not defined
herein have the meanings ascribed to them in the letter of transmittal.
- - -------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ________,
2000, UNLESS EXTENDED (THE "EXPIRATION DATE"). OUTSTANDING NOTES TENDERED IN THE
EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE FOR THE EXCHANGE OFFER.
- - -------------------------------------------------------------------------------
DELIVER TO THE EXCHANGE AGENT:
WILMINGTON TRUST COMPANY
(301) 651-1562
BY HAND, COURIER OR MAIL
(IF BY MAIL, REGISTERED
OR CERTIFIED MAIL
RECOMMENDED):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware
19890-0001
Attn: Corporate Trust Operations
BY FACSIMILE TRANSMISSION (ELIGIBLE INSTITUTIONS ONLY):
(302) 651-1079
Attention: Corporate Trust Department
CONFIRM BY TELEPHONE:
(302) 651-1562
-------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
NOTICE OF GUARANTEED DELIVERY SHOULD BE READ CAREFULLY BEFORE THE NOTICE OF
GUARANTEED DELIVERY IS COMPLETED.
This notice of guaranteed delivery is not to be used to guarantee
signatures. If a signature on a letter of transmittal is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space in the box provided on
the letter of transmittal for guarantee of signatures.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, in accordance with the
Company's offer, upon the terms and subject to the conditions set forth in the
prospectus and the related letter of transmittal, receipt of which is hereby
acknowledged, the principal amount of Old Notes set forth below pursuant to the
guaranteed delivery procedures set forth in the prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures" and in Instruction 2 of
the letter of transmittal.
The undersigned hereby tenders the Old Notes listed below:
CERTIFICATE
NUMBER(S) (IF
KNOWN) OF OLD NOTES AGGREGATE
TITLE OF OR ACCOUNT NUMBER AGGREGATE PRINCIPAL PRINCIPAL
SERIES AT THE DTC AMOUNT REPRESENTED AMOUNT TENDERED
- - --------------- ------------------- ------------------- ---------------
11 3/4% Senior
Secured Notes
due 2001
- - -------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
Names of Record Holder(s):__________________ Signature(s):___________________
Address:_____________________________
Area Code and Telephone Number(s):___________ Dated:______, 2000
- - -------------------------------------------------------------------------------
---------------------
THIS NOTICE OF GUARANTEED DELIVERY MUST BE SIGNED BY THE REGISTERED
HOLDER(S) OF OLD NOTES EXACTLY AS THE NAME(S) OF SUCH PERSON(S) APPEAR(S) ON
CERTIFICATES FOR OLD NOTES OR ON A SECURITY POSITION LISTING AS THE OWNER OF OLD
NOTES, OR BY PERSON(S) AUTHORIZED TO BECOME HOLDER(S) BY ENDORSEMENTS AND
DOCUMENTS TRANSMITTED WITH THIS NOTICE OF GUARANTEED DELIVERY. IF SIGNATURE IS
BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OR
OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, SUCH PERSON MUST
PROVIDE THE FOLLOWING INFORMATION:
2
<PAGE>
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Capacity:
_______________________________________________________________________________
Address(es):
_______________________________________________________________________________
_______________________________________________________________________________
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or a trust company having an office or correspondent in the
United States, or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, hereby guarantees deposit
with the Exchange Agent of the letter of transmittal (or facsimile thereof or
agent's message in lieu thereof), together with the Old Notes tendered hereby in
proper form for transfer (or confirmation of the book-entry transfer of such Old
Notes into the Exchange Agent's account at the DTC described in the prospectus
under the caption "The Exchange Offer C Book-Entry Transfer" and in the letter
of transmittal) and any other required documents, all by 5:00 p.m., New York
City time, within three New York Stock Exchange trading days following the
Expiration Date.
Name of Firm:__________________________ ________________________________
(AUTHORIZED SIGNATURE)
Address:____________________________
(INCLUDE ZIP CODE) Name:___________________________
Area Code and Tel. Number: Title:__________________________
(PLEASE TYPE OR PRINT)
Date:_____________________, 2000
DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST
BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND DULY
EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
3
<PAGE>
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY. A properly completed
and duly executed copy of this notice of guaranteed delivery (or facsimile
hereof or an agent's message and notice of guaranteed delivery in lieu hereof)
and any other documents required by this notice of guaranteed delivery with
respect to the Old Notes must be received by the Exchange Agent at its address
set forth herein prior to the Expiration Date of the Exchange Offer. Delivery of
such notice of guaranteed delivery may be made by facsimile transmission, mail
or hand delivery. THE METHOD OF DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY
AND ANY OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND
SOLE RISK OF THE HOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE EXCHANGE AGENT. If delivery is by mail, registered mail with
return receipt requested, properly insured, is recommended. As an alternative to
delivery by mail, the holders may wish to consider using an overnight or hand
delivery service. In all cases, sufficient time should be allowed to assure
timely delivery. For a description of the guaranteed delivery procedures, see
Instruction 2 of the letter of transmittal.
2. SIGNATURES ON THIS NOTICE OF GUARANTEED DELIVERY. If this notice of
guaranteed delivery (or facsimile hereof) is signed by the registered holder(s)
of the Old Notes referred to herein, the signature(s) must correspond exactly
with the name(s) as written on the face of the Old Notes without alteration,
enlargement or any change whatsoever. If this notice of guaranteed delivery (or
facsimile hereof) is signed by a participant in the DTC whose name appears on a
security position listing as the owner of the Old Notes, the signature must
correspond with the name as it appears on the security position listing as the
owner of the Old Notes.
If this notice of guaranteed delivery (or facsimile hereof) is signed by a
person other than the registered holder(s) of any Old Notes listed or a
participant of the DTC, this notice of guaranteed delivery must be accompanied
by appropriate bond powers, signed as the name(s) of the registered holder(s)
appear(s) on the Old Notes or signed as the name(s) of the participant appears
on the DTC's security position listing.
If this notice of guaranteed delivery (or facsimile hereof) is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing and submit herewith evidence
satisfactory to the Exchange Agent of such person's authority to so act.
3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the prospectus and this
notice of guaranteed delivery may be directed to the Exchange Agent at the
address set forth on the cover page hereof. Holders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Exchange Offer.
4
AMETHYST FINANCIAL COMPANY LTD.
LETTER OF TRANSMITTAL
FOR
TENDER OF ALL OUTSTANDING
11 3/4% SENIOR SECURED NOTES DUE 2001
IN EXCHANGE FOR
REGISTERED
11 3/4% SENIOR SECURED NOTES DUE 2001
- - -------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ________,
2000, UNLESS EXTENDED (THE "EXPIRATION DATE"). OUTSTANDING NOTES TENDERED IN
THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE FOR THE EXCHANGE OFFER.
- - -------------------------------------------------------------------------------
DELIVER TO THE EXCHANGE AGENT:
WILMINGTON TRUST COMPANY
(301) 651-1562
BY HAND, COURIER OR MAIL
(IF BY MAIL, REGISTERED
OR CERTIFIED MAIL
RECOMMENDED):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware
19890-0001
Attn: Corporate Trust
Operations
BY FACSIMILE TRANSMISSION (ELIGIBLE INSTITUTIONS ONLY):
(302) 651-1079
Attention: Corporate Trust Department
CONFIRM BY TELEPHONE:
(302) 651-1562
-------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THE LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned hereby acknowledges receipt and review of the prospectus
dated _______, 2000 of Amethyst Financial Company Ltd. ( the "Company") and this
letter of transmittal. These two documents together constitute the Company's
offer to exchange its 11 3/4% Senior Secured Notes due 2001 (collectively, the
"New Notes"), the issuance of which has been registered under the Securities Act
of 1933, as amended (the "Securities Act"), for a like principal amount of its
issued and outstanding 11 3/4% Senior Secured Notes due 2001 (collectively, the
"Old Notes"), respectively, which offer consists of separate, independent offers
to exchange the New Notes for Old Notes (the "Exchange Offer").
<PAGE>
The Company reserves the right, at any time or from time to time, to
extend the period of time during which the Exchange Offer for the Old Notes is
open, at its discretion, in which event the term "Expiration Date" shall mean
the latest date to which the Exchange Offer is extended. The Company shall
notify Wilmington Trust Company (the "Exchange Agent") of any extension by oral
or written notice and shall make a public announcement thereof no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date.
This letter of transmittal is to be used by a holder of Old Notes (i) if
certificates of Old Notes are to be forwarded herewith or (ii) if delivery of
Old Notes is to be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company (the "DTC") pursuant to the
procedures set forth in the prospectus under the caption "The Exchange Offer --
Book-Entry Transfer" and an "agent's message" is not delivered as described in
the prospectus under the caption "The Exchange Offer -- Procedures for Tendering
- - -- Tendering Though DTC's Automated Tender Offer Program." Tenders by book-entry
transfer may also be made by delivering an agent's message in lieu of this
letter of transmittal. Holders of Old Notes whose Old Notes are not immediately
available, or who are unable to deliver their Old Notes, this letter of
transmittal and all other documents required hereby to the Exchange Agent on or
prior to the Expiration Date for the Exchange Offer, or who are unable to
complete the procedure for book-entry transfer on a timely basis, must tender
their Old Notes according to the guaranteed delivery procedures set forth in the
prospectus under the caption "The Exchange Offer -- Guaranteed Delivery
Procedures." See Instruction 2. DELIVERY OF DOCUMENTS TO THE DTC DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "holder" with respect to the Exchange Offer for Old Notes means
any person in whose name such Old Notes are registered on the books of the
Company, any person who holds such Old Notes and has obtained a properly
completed bond power from the registered holder or any participant in the DTC
system whose name appears on a security position listing as the holder of such
Old Notes and who desires to deliver such Old Notes by book-entry transfer at
DTC. The undersigned has completed, executed and delivered this letter of
transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this letter of transmittal in its entirety (unless such Old Notes are to be
tendered by book-entry transfer and an agent's message is delivered in lieu
hereof).
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE
FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE
PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the Old Notes to which this letter of transmittal relates. If
the space below is inadequate, list the registered numbers and principal amounts
on a separate signed schedule and affix the list to this letter of transmittal.
DESCRIPTION OF OLD NOTES TENDERED
- - --------------------------------------------------------------------------------
OLD NOTES TENDERED
-------------------------------------------------
NAME(S) AND ADDRESS(ES) OF
HOLDER(S) EXACTLY AS NAME(S)
REGISTERED APPEAR(S) ON OLD AGGREGATE PRINCIPAL PRINCIPAL
NOTES (PLEASE FILL IN, IF REGISTERED AMOUNT REPRESENTED AMOUNT
BLANK) NUMBER(S)* BY NOTE(S) TENDERED**
- - ---------------------------- ---------- ------------------- ----------
---------- ------------------- ----------
---------- ------------------- ----------
---------- ------------------- ----------
---------- ------------------- ----------
TOTAL
- - ---------------------------- ---------- ------------------- ----------
* Need not be completed by book-entry holders.
** Unless otherwise indicated, any tendering holder of Old Notes will be
deemed to have tendered the entire aggregate principal amount represented
by such Old Notes. All tenders must be in integral multiples of $1,000.
2
<PAGE>
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OLD NOTES ARE BEING
DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE
EXCHANGE AGENT WITH THE DTC (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name of Tendering
Institution:__________________________________________________________________
DTC Account
Number(s):____________________________________________________________________
Transaction Code
Number(s):____________________________________________________________________
[ ] CHECK HERE AND COMPLETE THE FOLLOWING IF TENDERED OLD NOTES ARE BEING
DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY EITHER ENCLOSED
HEREWITH OR PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT (COPY ATTACHED)
(FOR USE BY ELIGIBLE INSTITUTIONS ONLY):
Name(s) of Registered holder(s)
of Old Notes:_________________________________________________________________
Date of Execution of Notice of
Guaranteed Delivery:__________________________________________________________
Window Ticket Number
(if available):_______________________________________________________________
Name of Eligible Institution that
Guaranteed Delivery:__________________________________________________________
DTC Account Number(s) (if delivered by
book-entry transfer):_________________________________________________________
Transaction Code Number(s) (if delivered by
book-entry transfer):_________________________________________________________
Name of Tendering Institution (if delivered by
book-entry transfer):_________________________________________________________
[ ] CHECK HERE AND COMPLETE THE FOLLOWING IF YOU ARE A BROKER-DEALER AND WISH
TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO:
Name:_________________________________________________________________________
Address:______________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
3
<PAGE>
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company for exchange the principal amount of Old Notes
indicated above. Subject to and effective upon the acceptance for exchange of
the principal amount of Old Notes tendered in accordance with this letter of
transmittal, the undersigned hereby exchanges, assigns and transfers to, or upon
the order of, the Company all right, title and interest in and to such Old Notes
tendered for exchange hereby. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent the true and lawful agent and attorney-in-fact for
the undersigned (with full knowledge that said Exchange Agent also acts as the
agent for the Company in connection with the Exchange Offer) with respect to the
tendered Old Notes with full power of substitution to (i) deliver such Old
Notes, or transfer ownership of such Old Notes on the account books maintained
by the DTC, to the Company and deliver all accompanying evidences of transfer
and authenticity, and (ii) present such Old Notes for transfer on the books of
the Company and receive all benefits and otherwise exercise all rights of
beneficial ownership of such Old Notes, all in accordance with the terms of the
Exchange Offer. The power of attorney granted in this paragraph shall be deemed
to be irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby and to acquire the New Notes issuable upon the exchange of such
tendered Old Notes, and that the Company will acquire good and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim, when the same are accepted
for exchange by the Company.
The undersigned acknowledges that the Exchange Offer is being made in
reliance upon interpretations set forth in no-action letters issued to third
parties by the staff of the Securities and Exchange Commission (the "SEC"),
including Exxon Capital Holdings Corporation (available May 13, 1988), Morgan
Stanley & Co. Incorporated (available June 5, 1991), Mary Kay Cosmetics, Inc.
(available June 5, 1991) and similar no-action letters (the "Prior No-Action
Letters"), that the New Notes issued in exchange for the Old Notes pursuant to
the Exchange Offer may be offered for resale, resold and otherwise transferred
by holders thereof (other than any such holder that is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act), without
compliance with the registration and prospectus delivery provisions of the
Securities Act, PROVIDED that such New Notes are acquired in the ordinary course
of such holders business and such holders are not engaging in, do not intend to
engage in and have no arrangement or understanding with any person to
participate in a distribution of such New Notes. The SEC has not, however,
considered the Exchange Offer in the context of a no-action letter, and there
can be no assurance that the staff of the SEC would make a similar determination
with respect to the Exchange Offer as in other circumstances.
The undersigned hereby further represents to the Company that (i) any New
Notes received are being acquired in the ordinary course of business of the
person receiving such New Notes, whether or not the undersigned, (ii) neither
the undersigned nor any such other person has an arrangement or understanding
with any person to participate in the distribution of the Old Notes or the New
Notes within the meaning of the Securities Act and (iii) neither the holder nor
any such other person is an "affiliate," as defined in Rule 405 under the
Securities Act, of the Company or, if it is such an affiliate, it will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable.
4
<PAGE>
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of New
Notes. If the undersigned is a broker-dealer that will receive New Notes for its
own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. The undersigned acknowledges that if the undersigned is
tendering Old Notes in the Exchange Offer with the intention of participating in
any manner in a distribution of the New Notes (i) the undersigned cannot rely on
the position of the staff of the SEC set forth in the Prior No-Action Letters
and, in the absence of an exemption therefrom, must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the New Notes, in which case the registration
statement must contain the selling security holder information required by Item
507 or Item 508, as applicable, of Regulation S-K of the SEC, and (ii) failure
to comply with such requirements in such instance could result in the
undersigned incurring liability under the Securities Act for which the
undersigned is not indemnified by the Company.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Notes
tendered hereby, including the transfer of such Old Notes on the account books
maintained by the DTC.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted for exchange validly tendered Old Notes when, as and if the Company
gives oral or written notice thereof to the Exchange Agent. Any tendered Old
Notes that are not accepted for exchange pursuant to the Exchange Offer for any
reason will be returned, without expense, to the undersigned as promptly as
practicable after the Expiration Date for the Exchange Offer.
All authority conferred or agreed to be conferred by this letter of
transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this letter of
transmittal shall be binding upon the undersigned's successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives.
The undersigned acknowledges that the Company's acceptance of properly
tendered Old Notes pursuant to the procedures described under the caption "The
Exchange Offer -- Procedures for Tendering" in the prospectus and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.
The Exchange Offer is subject to certain conditions set forth in the
prospectus under the caption "The Exchange Offer -- Conditions to the Exchange
Offer." The undersigned recognizes that as a result of these conditions (which
may be waived, in whole or in part, by the Company), the Company may not be
required to exchange any of the Old Notes tendered hereby.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the New Notes issued in exchange for the Old Notes accepted for exchange,
and return any Old Notes not tendered or not exchanged, in the name(s) of the
undersigned (or, in the case of a book-entry delivery of Old Notes, please
credit the account indicated above maintained at the DTC). Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail or
deliver the New Notes issued in exchange for the Old Notes accepted for exchange
and any Old Notes not tendered or not exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Issuance Instructions" and
"Special Delivery Instructions" are completed, please issue the New Notes issued
in exchange for the Old Notes accepted for exchange in the name(s) of, and
return any Old Notes not tendered or not exchanged to, the person(s) (or
account(s)) so indicated. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the registered
holder(s) thereof if the Company does not accept for exchange any of the Old
Notes so tendered for exchange.
5
<PAGE>
--------------------------------------- --------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 6) (SEE INSTRUCTIONS 5 AND 6)
To be completed ONLY (i) if Old Notes To be completed ONLY if Old Notes in
in a principal amount not tendered, a principal amount not tendered, or
or New Notes issued in exchange for New Notes issued in exchange for Old
Old Notes accepted for exchange, are Notes accepted for exchange, are to
to be issued in the name of someone be mailed or delivered to someone
other than the undersigned, or (ii) other than the undersigned, or to
if Old Notes tendered by book-entry the undersigned at an address other
transfer which are not exchanged are than that shown below the
to be returned by credit to an undersigned's signature. Mail or
account maintained at the DTC other deliver New Notes and/or Old Notes
than the DTC Account Number set forth to:
above. Issue New Notes and/or Old
Notes to:
Name:_________________________________ Name:_________________________________
Address:______________________________ Address:______________________________
______________________________________ ______________________________________
(INCLUDE ZIP CODE) (INCLUDE ZIP CODE)
______________________________________ ______________________________________
(Tax Identification or Social (Tax Identification or Social Security
Security Number) Number)
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
--------------------------------------- --------------------------------------
[ ] Credit unexchanged Old Notes delivered by book-entry transfer to the DTC
set forth below:
DTC Account Number:___________________________________________________________
6
<PAGE>
IMPORTANT
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
(Complete Accompanying Substitute Form W-9 Below)
=>_____________________________________________________________________________
=>_____________________________________________________________________________
(Signature(s) of Registered Holder(s) of Old Notes)
Dated____________________, 2000
(The above lines must be signed by the registered holder(s) of Old Notes as your
name(s) appear(s) on the Old Notes or on a security position listing, or by
person(s) authorized to become registered holder(s) by a properly completed bond
power from the registered holder(s), a copy of which must be transmitted with
this letter of transmittal. If Old Notes to which this letter of transmittal
relate are held of record by two or more joint holders, then all such holders
must sign this letter of transmittal. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, then such person must
(i) set forth his or her full title below and (ii) unless waived by the Company,
submit evidence satisfactory to the Company of such person's authority so to
act. See Instruction 5 regarding the completion of this letter of transmittal,
printed below.)
Name(s):_______________________________________________________________________
(Please Type or Print)
Capacity:______________________________________________________________________
Address:_______________________________________________________________________
_______________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number:________________________________________________
Taxpayer Identification or Social Security Number:_____________________________
_______________________________________________________________________________
MEDALLION SIGNATURE GUARANTEE
(If Required by Instruction 5)
Certain signatures must be guaranteed by an Eligible Institution.
Signature(s) Guaranteed by an
Eligible Institution:__________________________________________________________
(Authorized Signature)
_______________________________________________________________________________
(Title)
_______________________________________________________________________________
(Name of Firm)
_______________________________________________________________________________
(Address, Include Zip Code)
_______________________________________________________________________________
(Area Code and Telephone Number)
Dated __________________________ , 2000
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES OR AGENT'S MESSAGE
AND BOOK-ENTRY CONFIRMATIONS. All physically delivered Old Notes or any
confirmation of a book-entry transfer to the Exchange Agent's account at the DTC
of Old Notes tendered by book-entry transfer (a "Book-Entry Confirmation"), as
well as a properly completed and duly executed copy of this letter of
transmittal or facsimile hereof (or an agent's message in lieu hereof), and any
other documents required by this letter of transmittal, must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date for the Exchange Offer, or the tendering holder
must comply with the guaranteed delivery procedures set forth below. THE METHOD
OF DELIVERY OF THE TENDERED OLD NOTES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF
DELIVERY BY MAIL, IT IS RECOMMENDED THAT THE HOLDER USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF
TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Old
Notes and (a) whose Old Notes are not immediately available, (b) who cannot
deliver their Old Notes, this letter of transmittal or any other documents
required hereby to the Exchange Agent prior to the applicable Expiration Date or
(c) who are unable to comply with the applicable procedures under the DTC's
Automated Tender Offer Program on a timely basis, must tender their Old Notes
according to the guaranteed delivery procedures set forth in the prospectus.
Pursuant to such procedures: (i) such tender must be made by or through a firm
which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial bank or a trust
company having an office or correspondent in the United States or an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act
(an "Eligible Institution"); (ii) prior to the applicable Expiration Date, the
Exchange Agent must have received from the Eligible Institution a properly
completed and duly executed notice of guaranteed delivery (by facsimile
transmission, mail or hand delivery) or a properly transmitted agent's message
and notice of guaranteed delivery setting forth the name and address of the
holder of the Old Notes, the registration number(s) of such Old Notes and the
total principal amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that, within three New York Stock Exchange trading
days after such Expiration Date, this letter of transmittal (or facsimile hereof
or an agent's message in lieu hereof) together with the Old Notes in proper form
for transfer (or a Book-Entry Confirmation) and any other documents required
hereby, will be deposited by the Eligible Institution with the Exchange Agent;
and (iii) this letter of transmittal (or facsimile hereof or an agent's message
in lieu hereof) together with the certificates for all physically tendered Old
Notes in proper form for transfer (or Book-Entry Confirmation, as the case may
be) and all other documents required hereby are received by the Exchange Agent
within three New York Stock Exchange trading days after such Expiration Date.
Any holder of Old Notes who wishes to tender Old Notes pursuant to the
guaranteed delivery procedures described above must ensure that the Exchange
Agent receives the notice of guaranteed delivery prior to 5:00 p.m., New York
City time, on the applicable Expiration Date. Upon request of the Exchange
Agent, a notice of guaranteed delivery will be sent to holders who wish to
tender their Old Notes according to the guaranteed delivery procedures set forth
above.
See "The Exchange Offer -- Guaranteed Delivery Procedures" section of the
prospectus.
3. TENDER BY HOLDER. Only a holder of Old Notes may tender such Old Notes
in the Exchange Offer. Any beneficial holder of Old Notes who is not the
registered holder and who wishes to tender should arrange with the registered
holder to execute and deliver this letter of transmittal on his behalf or must,
prior to completing and executing this letter of transmittal and delivering his
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in such holder's name or obtain a properly completed bond power from the
registered holder.
8
<PAGE>
4. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If less than the entire principal amount of any Old Notes
is tendered, the tendering holder should fill in the principal amount tendered
in the fifth column of the box entitled "Description of Old Notes Tendered"
above. The entire principal amount of Old Notes delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of all Old Notes is not tendered, then Old Notes for the
principal amount of Old Notes not tendered and New Notes issued in exchange for
any Old Notes accepted will be returned to the holder as promptly as practicable
after the Old Notes are accepted for exchange.
5. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
MEDALLION GUARANTEE OF SIGNATURES. If this letter of transmittal (or facsimile
hereof) is signed by the record holder(s) of the Old Notes tendered hereby, the
signature(s) must correspond exactly with the name(s) as written on the face of
the Old Notes without alteration, enlargement or any change whatsoever. If this
letter of transmittal (or facsimile hereof) is signed by a participant in the
DTC, the signature must correspond with the name as it appears on the security
position listing as the holder of the Old Notes.
If this letter of transmittal (or facsimile hereof) is signed by the
registered holder(s) of Old Notes listed and tendered hereby and the New Notes
issued in exchange therefor are to be issued (or any untendered principal amount
of Old Notes is to be reissued) to the registered holder(s), the said holder(s)
need not and should not endorse any tendered Old Notes, nor provide a separate
bond power. In any other case, such holder(s) must either properly endorse the
Old Notes tendered or transmit a properly completed separate bond power with
this letter of transmittal, with the signatures on the endorsement or bond power
guaranteed by an Eligible Institution.
If this letter of transmittal (or facsimile hereof) or any Old Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, evidence satisfactory to the Company of their
authority to act must be submitted with this letter of transmittal.
NO SIGNATURE GUARANTEE IS REQUIRED IF (I) THIS LETTER OF TRANSMITTAL (OR
FACSIMILE HEREOF) IS SIGNED BY THE REGISTERED HOLDER(S) OF THE OLD NOTES
TENDERED HEREIN (OR BY A PARTICIPANT IN THE DTC WHOSE NAME APPEARS ON A SECURITY
POSITION LISTING AS THE OWNER OF THE TENDERED OLD NOTES) AND THE NEW NOTES ARE
TO BE ISSUED DIRECTLY TO SUCH REGISTERED HOLDER(S) (OR, IF SIGNED BY A
PARTICIPANT IN THE DTC, DEPOSITED TO SUCH PARTICIPANT'S ACCOUNT AT THE DTC) AND
NEITHER THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" NOR THE BOX ENTITLED
"SPECIAL REGISTRATION INSTRUCTIONS" HAS BEEN COMPLETED, OR (II) SUCH OLD NOTES
ARE TENDERED FOR THE ACCOUNT OF AN ELIGIBLE INSTITUTION. IN ALL OTHER CASES, ALL
SIGNATURES ON THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF) MUST BE
GUARANTEED BY AN ELIGIBLE INSTITUTION.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate, in the applicable box or boxes, the name and address to which New
Notes or substitute Old Notes for principal amounts not tendered or not accepted
for exchange are to be issued or sent, if different from the name and address of
the person signing this letter of transmittal. In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated. Holders tendering Old Notes by book-entry
transfer may request that Old Notes not exchanged be credited to such account
maintained at the DTC as such noteholder may designate hereon. If no such
instructions are given, such Old Notes not exchanged will be returned to the
name and address (or account number) of the person signing this letter of
transmittal.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, New Notes or Old Notes for principal amounts not tendered or accepted
for exchange are to be delivered to, or are to be registered or issued in the
name of, any person other than the registered holder of the Old Notes tendered
hereby, or if tendered Old Notes are registered in the name of any person other
than the person signing this letter of transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with this letter of transmittal, the amount of such transfer
taxes will be billed directly to such tendering holder and the Exchange Agent
will retain possession of an amount of New Notes with a face amount at least
equal to the amount of such transfer taxes due by such tendering holder pending
receipt by the Exchange Agent of the amount of such taxes.
9
<PAGE>
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a
holder of any Old Notes or New Notes must provide the Company (as payor) with
its correct taxpayer identification number ("TIN"), which, in the case of a
holder who is an individual is his or her social security number. If the Company
is not provided with the correct TIN, the holder may be subject to a $50 penalty
imposed by the Internal Revenue Service and backup withholding of 31% on
interest payments on the New Notes.
To prevent backup withholding, each tendering holder must provide such
holder=s correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report all interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
If the New Notes will be registered in more than one name or will not be in the
name of the actual owner, consult the instructions on Internal Revenue Service
Form W-9, which may be obtained from the Exchange Agent, for information on
which TIN to report.
Certain foreign individuals and entities will not be subject to backup
withholding or information reporting if they submit a Form W-8, signed under
penalties of perjury, attesting to their foreign status. A Form W-8 can be
obtained from the Exchange Agent.
If such holder does not have a TIN, such holder should consult the
instructions on Form W-9 concerning applying for a TIN, check the box in Part 3
of the Substitute Form W-9, write "applied for" in lieu of its TIN and sign and
date the form and the Certificate of Awaiting Taxpayer Identification Number.
Checking this box, writing "applied for" on the form and signing such
certificate means that such holder has already applied for a TIN or that such
holder intends to apply for one in the near future. If such holder does not
provide its TIN to the Company within 60 days, backup withholding will begin and
continue until such holder furnishes its TIN to the Company.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligations regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility, time of receipt, acceptance and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which might, in the opinion of the Company's counsel, be unlawful.
The Company also reserves the absolute right to waive any conditions of the
Exchange Offer or defects or irregularities of tenders as to particular Old
Notes. The Company's interpretation of the terms and conditions of the Exchange
Offer (including this letter of transmittal and the instructions hereto) shall
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes must be cured within such
time as the Company shall determine. Neither the Company, the Exchange Agent nor
any other person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Old Notes nor shall any of them incur
any liability for failure to give such notification.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
waive, in whole or part, any of the conditions to the Exchange Offer set forth
in the prospectus.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular or
contingent tender of Old Notes will be accepted.
12. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions. This letter of
transmittal and related documents cannot be processed until the procedures for
replacing lost, stolen or destroyed Old Notes have been followed.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
or for additional copies of the prospectus or this letter of transmittal may be
directed to the Exchange Agent at the address or telephone number set forth on
the cover page of this letter of transmittal. Holders may also contact their
broker, dealer, commercial bank, trust company or other nominee for assistance
concerning the Exchange Offer.
14. WITHDRAWAL. Tenders may be withdrawn only pursuant to the
limited withdrawal rights set forth in the prospectus under the caption "The
Exchange Offer -- Withdrawal of Tenders."
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE HEREOF OR
AN AGENT'S MESSAGE IN LIEU HEREOF (TOGETHER WITH THE OLD NOTES DELIVERED BY
BOOK-ENTRY TRANSFER OR IN ORIGINAL HARD COPY FORM) MUST BE RECEIVED BY THE
EXCHANGE AGENT, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
EXCHANGE AGENT, PRIOR TO THE EXPIRATION DATE.
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
- - ----------------------------------------------------------------------------------------------------------------
PART 1 -- PLEASE PROVIDE YOUR TIN ______________________________
SUBSTITUTE IN THE BOX AT RIGHT AND CERTIFY SOCIAL SECURITY NUMBER
FORM W-9 BY SIGNING AND DATING BELOW
OR
______________________________
EMPLOYER IDENTIFICATION NUMBER
PART 2 -- CERTIFICATION -- UNDER PART 3 --
PENALTIES OF PERJURY, I CERTIFY
THAT:
(1) THE NUMBER SHOWN ON THIS FORM AWAITING TIN [ ]
IS MY CORRECT TAXPAYER
IDENTIFICATION NUMBER (OR I
HAVE CHECKED THE BOX IN PART 3
AND EXECUTED THE CERTIFICATE
OF AWAITING TAXPAYER
IDENTIFICATION NUMBER BELOW)
AND
______________________________ (2) I AM NOT SUBJECT TO BACK PLEASE COMPLETE THE CERTIFICATE OF
NAME WITHHOLDING EITHER BECAUSE I AWAITING TAXPAYER IDENTIFICATION
HAVE NOT BEEN NOTIFIED BY THE NUMBER BELOW.
______________________________ INTERNAL REVENUE SERVICE
ADDRESS (NUMBER AND STREET) ("IRS") THAT I AMSUBJECT TO
BACKUP WITHHOLDING AS A RESULT
______________________________ OF FAILURE TO REPORT ALL
CITY, STATE AND ZIP CODE INTEREST OR DIVIDENDS,OR
BECAUSE THE IRS HAS NOTIFIED
ME THAT I AM NO LONGER SUBJECT
TO BACKUP WITHHOLDINGS.
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
PAYOR'S REQUEST FOR CERTIFICATE INSTRUCTIONS -- YOU MUST CROSS OUT ITEM(2) IN PART 2 ABOVE IF
TAXPAYER IDENTIFICATION YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP
NUMBER (TIN) WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX
RETURN. HOWEVER, IF AFTER BEING NOTIFIED BY THE IRS THAT YOU ARE SUBJECT
TO BACKUP WITHHOLDING YOU RECEIVED ANOTHER NOTIFICATION FROM THE IRS
STATING THAT YOU ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING, DO NOT CROSS
OUT ITEM (2).
SIGNATURE_________________________________ DATE_________________________,2000
- - ----------------------------------------------------------------------------------------------------------------
</TABLE>
FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO THE
NEW NOTES.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF THE SUBSTITUTE FORM W-9
- - --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER
HAS NOT BEEN ISSUED TO ME, AND EITHER (A) I HAVE MAILED OR DELIVERED AN
APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE
INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE
OR (B) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I
UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER TO
THE PAYOR WITHIN 60 DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME
THEREAFTER WILL BE WITHHELD UNTIL I PROVIDE A NUMBER.
SIGNATURE_________________________________ DATE________________________, 2000
- - --------------------------------------------------------------------------------
11
