SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1996
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______________ to ________________
Commission File Number 0-22078
Dual Holding Company (formerly DUAL DRILLING COMPANY)
(Exact name of registrant as specified in its charter)
DELAWARE 51-0327704
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2700 Fountain Place
1445 Ross Avenue, Dallas Texas 75202 - 2792
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 922-1500
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. YES [ X ] NO [ ]
There were 1,000 shares of Common Stock, $.10 par value, of the registrant
outstanding as of August 12, 1996.<PAGE>
DUAL HOLDING COMPANY
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996
PAGE
------
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet
June 30, 1996 and December 31, 1995 3
Consolidated Statement of Operations
April 1, 1996 - June 12, 1996, June 13, 1996 - June 30,
1996 and the three months ended June 30, 1995 4
Consolidated Statement of Operations
January 1, 1996 - June 12, 1996, June 13, 1996 - June 30,
1996 and the six months ended June 30, 1995 5
Consolidated Statement of Cash Flows
January 1, 1996 - June 12, 1996, June 13, 1996 - June 30,
1996 and the six months ended June 30, 1995 6
Notes to Consolidated Financial Statements 7 - 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10 - 13
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
SIGNATURES 16
Separate financial statements of the subsidiaries of Dual Holding
Company (the "Company") that guarantee the Company's Senior Subordinated
Notes due 2004 (the "Notes") are not included herein. Such subsidiary
guarantors are jointly and severally liable with respect to the Company's
obligations pursuant to such Notes, and the aggregate total assets, equity
and net income of such subsidiary guarantors are substantially equivalent
to the total assets, equity and net income of the Company on a consolidated
basis. The total assets, equity and net income of subsidiaries of the
Company not guaranteeing the Notes on a combined basis are not significant
compared to the respective amounts reported in the Consolidated Financial
Statements of the Company and its subsidiaries. <PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DUAL HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands, except shares)
SUCCESSOR | PREDECESSOR
------------ | ------------
JUNE 30, | DECEMBER 31,
1996 | 1995
------------- | ------------
(UNAUDITED) |
<S> <C> | <C>
ASSETS |
CURRENT ASSETS |
Cash and cash equivalents.......................... $ 15,513 | $ 42,830
Accounts and notes receivable, net................. 18,825 | 18,993
Prepaid expenses and other......................... 10,684 | 15,422
Total current assets......................... 45,022 | 77,245
|
PROPERTY AND EQUIPMENT, AT COST...................... 279,067 | 282,310
Less accumulated depreciation...................... 932 | 85,881
Property and equipment, net.................. 278,135 | 196,429
|
OTHER ASSETS |
Goodwill........................................... 90,040 | 25,032
Other.............................................. 4,043 | 5,056
Total other assets........................... 94,083 | 30,088
$417,240 | $303,762
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
CURRENT LIABILITIES |
Accounts payable................................... $ 1,394 | $ 5,069
Accrued liabilities................................ 23,029 | 10,026
Current maturities of long-term debt............... - | 6,538
Total current liabilities.................... 24,423 | 21,633
|
LONG-TERM DEBT....................................... 149,973 | 138,163
|
DEFERRED INCOME TAXES................................ 16,200 | 1,796
|
OTHER LIABILITIES.................................... 8,032 | 2,024
|
STOCKHOLDERS' EQUITY |
Common stock ($.10 par value, 10,000 shares |
authorized and 1,000 shares issued at June 30, |
1996) ($.01 par value, 50.0 million shares |
authorized and 15.8 million shares issued at |
December 31, 1995)............................... - | 158
Additional paid-in capital......................... 218,431 | 173,793
Retained earnings (deficit)........................ 181 | (33,386)
Treasury stock at cost............................. - | (419)
Total stockholders' equity .................. 218,612 | 140,146
$417,240 | $303,762
The accompanying notes are an integral part of these financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
DUAL HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
SUCCESSOR | PREDECESSOR
--------- | -----------------------
JUNE 13, | APRIL 1, THREE MONTHS
1996 THRU | 1996 THRU ENDED
JUNE 30, | JUNE 12, JUNE 30,
1996 | 1996 1995
--------- | --------- ------------
<S> <C> | <C> <C>
OPERATING REVENUES....................... $ 3,634 | $ 24,081 $ 20,806
|
|
OPERATING EXPENSES |
Operating costs........................ 1,534 | 18,757 15,763
Depreciation and amortization.......... 1,032 | 3,955 4,824
Change in control...................... - | 22,005 -
General and administrative............. 168 | 1,717 2,016
2,734 | 46,434 22,603
|
|
OPERATING INCOME (LOSS).................. 900 | (22,353) (1,797)
|
|
OTHER INCOME (EXPENSE) |
Interest income........................ 24 | 319 577
Interest expense....................... (652) | (2,850) (3,711)
Gain on sale of assets, net............ - | - 6,413
Other, net............................. (8) | 176 (82)
(636) | (2,355) 3,197
|
|
INCOME (LOSS) FROM CONTINUING OPERATIONS |
BEFORE INCOME TAXES.................... 264 | (24,708) 1,400
|
|
PROVISION FOR INCOME TAXES............... 83 | 598 423
|
|
NET INCOME (LOSS)........................ $ 181 | $(25,306) $ 977
|
|
EARNINGS (LOSS) PER SHARE................ $ 181.00 | $ (1.59) $ .06
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING...... 1 | 15,866 15,765
The accompanying notes are an integral part of these financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
DUAL HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
SUCCESSOR | PREDECESSOR
--------- | ----------------------
JUNE 13, | JANUARY 1, SIX MONTHS
1996 THRU | 1996 THRU ENDED
JUNE 30, | JUNE 12, JUNE 30,
1996 | 1996 1995
--------- | ---------- ----------
<S> <C> | <C> <C>
OPERATING REVENUES....................... $ 3,634 | $ 53,542 $ 39,664
|
OPERATING EXPENSES |
Operating costs........................ 1,534 | 37,346 30,368
Depreciation and amortization.......... 1,032 | 8,768 9,982
Change in control...................... - | 22,005 -
General and administrative............. 168 | 3,757 3,930
2,734 | 71,876 44,280
|
OPERATING INCOME (LOSS).................. 900 | (18,334) (4,616)
|
OTHER INCOME (EXPENSE) |
Interest income........................ 24 | 846 1,079
Interest expense....................... (652) | (6,484) (7,329)
Gain on sale of assets, net............ - | - 6,434
Other, net............................. (8) | 268 (135)
(636) | (5,370) 49
|
|
INCOME (LOSS) FROM CONTINUING OPERATIONS |
BEFORE INCOME TAXES.................... 264 | (23,704) (4,567)
|
PROVISION FOR INCOME TAXES............... 83 | 628 479
|
NET INCOME (LOSS)........................ $ 181 | $(24,332) $ (5,046)
|
EARNINGS (LOSS) PER SHARE................ $ 181.00 | $ (1.54) $ (.32)
|
WEIGHTED AVERAGE SHARES OUTSTANDING...... 1 | 15,810 15,765
The accompanying notes are an integral part of these financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
DUAL HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(in thousands)
SUCCESSOR | PREDECESSOR
--------- | -----------------------
JUNE 13, | JANUARY 1, SIX MONTHS
1996 THRU | 1996 THRU ENDED
JUNE 30, | JUNE 12, JUNE 30,
1996 | 1996 1995
--------- | ---------- ----------
<S> <C> | <C> <C>
OPERATING ACTIVITIES |
Net income (loss)....................... $ 181 | $(24,332) $ (5,046)
Adjustments to reconcile net income |
(loss) to net cash provided (used) by |
operating activities: |
Depreciation and amortization....... 1,032 | 8,768 9,982
Deferred income tax benefit......... - | (426) (336)
Gain on disposition of assets....... - | - (6,434)
Provision for cashless exercise |
of stock options.................. - | 9,667 -
Other............................... (13) | (1,912) (1,256)
Changes in operating assets and |
liabilities: |
(Increase) decrease in accounts |
receivable..................... 3,351 | (3,985) 1,983
(Increase) decrease in prepaid |
expenses and other.............. 216 | 5,584 (2,506)
Increase (decrease) in accounts |
payable......................... 52 | (4,777) (485)
Increase (decrease) in accrued |
liabilities..................... (1,074) | 11,770 (688)
Net cash provided (used) by |
operating activities........ 3,745 | 357 (4,786)
|
INVESTING ACTIVITIES |
Additions to property and equipment..... (7) | (23,149) (25,184)
Cash restricted for rig purchases....... - | - 22,000
Proceeds from sale of assets............ - | 208 32,664
Other................................... - | (1,688) (397)
Net cash provided (used) by |
investing activities................ (7) | (24,629) 29,083
|
FINANCING ACTIVITIES |
Proceeds from long-term borrowings...... 45,000 | - -
Reduction of long-term borrowings....... (41,754) | (2,586) (1,350)
Other................................... - | (7,443) (43)
Net cash provided (used) by |
financing activities................ 3,246 | (10,029) (1,393)
|
INCREASE (DECREASE) IN CASH AND |<PAGE>
CASH EQUIVALENTS........................ 6,984 | (34,301) 22,904
|
CASH AND CASH EQUIVALENTS, BEGINNING OF |
PERIOD.................................. 8,529 | 42,830 19,925
|
CASH AND CASH EQUIVALENTS, END OF PERIOD.. $ 15,513 | $ 8,529 $ 42,829
The accompanying notes are an integral part of these financial statements.
/TABLE
<PAGE>
DUAL HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - UNAUDITED FINANCIAL STATEMENTS
The consolidated financial statements included herein have been prepared by
Dual Holding Company (the "Company"), without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission and in accordance
with generally accepted accounting principles and, in the opinion of
management, reflect all adjustments (which consist of normal recurring
adjustments) which are necessary for a fair statement of the results of
operations for the interim periods presented.
In addition, the consolidated financial statements included herein present
the results of the Company during the period prior to its acquisition
("Predecessor" entity) by ENSCO International Incorporated ("ENSCO") as
well as the period subsequent to its acquisition ("Successor" entity). See
"Note 2 - Merger" below. The financial statements of the Predecessor and
Successor are not comparative in certain respects because of differences
between the cost basis of the assets held by the Predecessor compared to
that of the Successor as well as the effect on the Successor's operations
for adjustments to depreciation, amortization, interest income, interest
expense and income taxes.
It is recommended that these statements be read in conjunction with the
Company's consolidated financial statements and notes thereto for the year
ended December 31, 1995 included in the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K.
NOTE 2 - MERGER
On June 12, 1996, a special meeting of the stockholders of the Company was
held to approve the Agreement and Plan of Merger among ENSCO, DDC
Acquisition Company (a wholly-owned subsidiary of ENSCO) and the Company
(the "Merger Agreement") dated March 21, 1996, as amended. The holders of
the Company's common stock approved the Merger Agreement and the Company
was merged into ENSCO on June 12, 1996 (the "Merger"). Under the terms of
the Merger Agreement, each share of the Company's common stock was
converted into the right to receive 0.625 shares of ENSCO common stock.
The Company's stockholders of record as of June 12, 1996 received, in the
aggregate, approximately 10.1 million shares of ENSCO common stock in
connection with the Merger.
Prior to the Merger, the Company expensed $22.0 million for certain items
directly related to the merger process. The primary items composing the
$22.0 million expensed were as follows (in thousands):
Cashless exercise of stock options $ 9,667
Severance and related payments
to employees 8,773
Fee paid to investment advisor 3,000
Other 565
-------
Total $22,005
=======<PAGE>
In conjunction with the Merger, the Company used the purchase method to
record the acquisition of the Company by ENSCO. In a purchase method
combination, the purchase price is allocated to the assets acquired and
liabilities assumed based on their fair values at the date of acquisition.
As a result, the assets and liabilities of the Company were revalued to
their fair market values to reflect the $218.4 million purchase price paid
by ENSCO to acquire the Company. Goodwill arising from the Merger is
amortized on the straight-line basis over 40 years. The purchase price
allocation has been based on preliminary estimates of fair value and is
subject to adjustment as additional information becomes available and is
evaluated. The primary areas subject to further purchase price adjustment
are reserves associated with insurance related matters and taxes.
The following unaudited pro forma information shows the consolidated
results of operations for the six months ended June 30, 1996 and 1995 based
upon adjustments to the historical financial statements of the Company to
give effect to the Merger as if such Merger had occurred on January 1, 1995
(in thousands, except per share data):
1996 1995
-------- --------
Operating revenues $57,176 $46,098
Operating income (loss) 3,975 (1,416)
Net loss (1,317) (6,857)
Loss per share (1,317) (6,857)
The pro forma consolidated results of operations are not necessarily
indicative of the actual results that would have occurred had the
acquisition occurred on January 1, 1995, or of results that may occur in
the future.
In connection with the Merger, the name of the Company was changed from
DUAL DRILLING COMPANY to Dual Holding Company and the capital structure of
the Company was changed. Prior to the Merger, the Company was authorized
to issue 50.0 million shares of its $.01 par value common stock, of which
16.1 million shares were outstanding as of June 12, 1996, and 10.0 million
shares of its preferred stock, of which none were outstanding as of June
12, 1996. Under the terms of the Company's restated certificate of
incorporation filed June 12, 1996, the Company is only authorized to issue
10,000 shares of its $.10 par value common stock. As of June 30, 1996, the
Company had issued 1,000 shares of its $.10 par value common stock, all of
which were held by ENSCO.
NOTE 3 - RIG ACQUISITION
In May 1996 the Company purchased a jackup rig located in the Gulf of
Mexico, which the Company previously operated under a charter agreement,
for $21.3 million by exercising its purchase option under the charter
agreement. Proceeds from certain assets sales in 1995 that were previously
disclosed as restricted for purchase of replacement assets or repurchase of
indebtedness were used to purchase the rig.
NOTE 4 - DEBT
The Company's bank debt outstanding prior to the Merger was refinanced on
June 13, 1996. The Company borrowed $45.0 million in accordance with the<PAGE>
terms of a sub-facility established under the terms of ENSCO's amended and
restated $150.0 million revolving credit facility with a group of
international banks (the "facility"). Substantially all of the proceeds
from the $45.0 million of borrowings were used to refinance $28.8 million
of borrowings under the Company's credit facility with a group of banks led
by Citibank, N.A. and to refinance $13.0 million of borrowings under the
Company's term loan with Christiania Bank of Kreditkasse. The Company had
$5.0 million undrawn under the facility at June 30, 1996 and could increase
the undrawn portion of the facility by an additional $15.0 million subject
to certain conditions. Certain of the Company's jackup rigs are
collateralized under the facility. As of June 30, 1996, the interest rate
on the $45.0 million of borrowings under the facility was 6.9%.
As of June 30, 1996, ENSCO had purchased $17.3 million (face amount) of the
Company's $100.0 million (face amount) 9-7/8% senior subordinated notes ("9
7/8% Notes"). The full $100.0 million (face amount) of the Company's 9-
7/8% Notes is shown as outstanding in the Company's consolidated balance
sheet as of June 30, 1996. In July and August 1996, ENSCO purchased an
additional $5.9 million (face amount) of the 9 7/8% Notes on the open
market. Additionally, in July 1996, $5.0 million (face amount) of the 9
7/8% Notes were redeemed pursuant to an offer made by the Company to
purchase the 9 7/8% Notes following the Merger.
NOTE 5 - AFFILIATE AGREEMENTS
Effective June 13, 1996, each of the Company's domestic rigs, consisting of
three jackup rigs and nine platform rigs, were bareboat chartered to ENSCO
Offshore Company ("ENSCO Offshore"), a wholly owned subsidiary of ENSCO to
achieve certain operating efficiencies. The terms of the bareboat charter
agreements with ENSCO Offshore provide for fixed daily rates to be paid to
the Company, which the Company believes are reasonable and representative
of the environment in which the rigs operate. The fixed daily rate would
be reduced to 50% of the normal rate if the rig were idle for more than 30
consecutive days. The initial term of the bareboat charter agreements is
one year, with automatic one year extensions, unless either party gives at
least one month's prior notice of termination.
On June 13, 1996, the Company entered into a Master Services Agreement with
ENSCO. Under the terms of the Master Services Agreement, ENSCO will
provide certain shorebase and corporate support services for the Company's
domestic and foreign operations. The Company will pay ENSCO a monthly fee
for these services under the Master Services Agreement, which the Company
believes is reasonable for the services provided. <PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Dual Holding Company (the "Company") contracts its offshore drilling
equipment for use in the Gulf of Mexico and Asia. Industry activity levels
for offshore drilling rigs have increased in the first half of 1996 over
the already improved levels prevalent in the second half of 1995. The
increased activity levels in 1996 have resulted in demand sufficient to
absorb almost all of the rigs that are in working condition and being
actively marketed in the major offshore oil and gas markets throughout the
world.
On June 12, 1996, the Company was acquired by ENSCO International
Incorporated ("ENSCO") in a purchase acquisition. The following
comparisons to the prior year periods present the results of the Company
during the period prior to its acquisition by ENSCO ("Predecessor" entity)
as well as the period subsequent to its acquisition ("Successor" entity).
The financial statements of the Predecessor and Successor are not
comparable in certain respects because of differences between the cost
basis of the assets held by the Predecessor compared to that of the
Successor as well as the effect on the Successor's operations for
adjustments to depreciation, amortization, interest income, interest
expense and income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow and Capital Expenditures
- ----------------------------------
The Company's cash provided by (used in) operations and capital
expenditures for the six months ended June 30, 1996 and 1995 were as
follows (in thousands):
1996 1995
-------- --------
Cash provided by (used in) operations $ 4,102 $ (4,786)
Capital expenditures $ 23,156 $ 25,184
Cash flow from operations increased by $8.9 million for the six months
ended June 30, 1996 as compared to the prior year period. The increase in
cash flow from operations is primarily a result of increased operating
margins in the first six months of 1996 as compared to the prior year
period and an increase in cash flow from the net change in various working
capital accounts offset, partially, by change of control expenses. See
"Note 2 - Merger" to the Company's Consolidated Financial Statements.
The capital expenditures through June 30, 1996 primarily relate to $21.3
million for the purchase of a jackup rig located in the Gulf of Mexico.
Management anticipates that capital expenditures in 1996 will be
approximately $35.0 million, including approximately $8.7 million for
existing operations, approximately $5.0 million for modifications and
enhancements of rigs and $21.3 million related to the purchase of a jackup
rig in the Gulf of Mexico in May 1996.<PAGE>
Financing and Capital Resources
- -------------------------------
The Company's long-term debt, total capital and debt to capital ratios at
June 30, 1996 and December 31, 1995 are summarized below (in thousands,
except percentages):
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
Long-term debt $149,973 $138,163
Total capital 368,585 278,309
Long-term debt to total capital 41% 50%
Long-term debt increased due primarily to a $9.7 million net increase
associated with $45.0 million of additional borrowings, substantially all
of which was used to retire existing indebtedness, and also due to a $5.0
million premium assigned to the Company's 9 7/8% senior subordinated notes
("9 7/8% Notes") in connection with the acquisition of the Company by ENSCO
and the application of purchase accounting. See "Note 2 - Merger" to the
Company's Consolidated Financial Statements. The above increases in long-
term debt were offset by scheduled principal reductions. Total capital
increased due primarily to the recapitali-zation of the Company in
connection with the acquisition of the Company by ENSCO in which the $218.4
million purchase price was attributed to the net stockholder's equity of
the Company. See "Note 2 - Merger" to the Company's Consolidated Financial
Statements. The total capital of the Company also increased due to the net
increase in long-term debt as discussed above.
The Company had $5.0 million undrawn under a revolving line of credit at
June 30, 1996 and could increase the undrawn portion of the facility by an
additional $15.0 million subject to certain conditions. Availability under
the revolving line of credit is reduced semi-annually commencing in October
1996, with the remaining line expiring in October 2001. See "Note 4 -
Debt" to the Company's Consolidated Financial Statements.
The Company's liquidity position at June 30, 1996 and December 31, 1995 is
summarized in the table below (in thousands, except ratios):
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
Cash $15,513 $42,830
Working capital 20,599 55,612
Current ratio 1.8 3.6
Based on current energy industry conditions, management believes cash flow
from operations, the Company's existing credit facility and the Company's
working capital should be sufficient to fund the Company's short and long-
term liquidity needs. <PAGE>
RESULTS OF OPERATIONS
Revenues and Operating Margins
- ------------------------------
The Company's revenues and operating margins (defined as revenues less
operating expenses, exclusive of depreciation, change of control and
general and administrative expenses) for the three months ended June 30,
1996 were up 33% and 47%, respectively, and for the six months ended June
30, 1996 were up 44% and 97%, respectively, compared to the prior year
periods. The significantly improved 1996 results were primarily due to a
tightening between supply and demand for rigs in the Gulf of Mexico and
Asia, with resulting increases in utilization and average day rates for the
Company's rigs. Additionally, the 1996 results were also favorably
impacted by the purchase of a Gulf of Mexico jackup rig in May 1996 which
the Company previously operated under a charter agreement.
Revenues and operating margins of the Company in 1996 were negatively
affected by the sale, in August 1995, of a platform rig off the coast of
China that operated the entire first half of 1995. The rig, which has not
operated in 1996, is now operated by the Company under a management
contract that provides for a competitive day rate during periods that the
rig is operating and a reduced day rate when the rig is idle.
Effective June 13, 1996, each of the Company's domestic rigs, consisting of
three jackup rigs and nine platform rigs, were bareboat chartered to ENSCO
Offshore Company ("ENSCO Offshore"), a wholly owned subsidiary of ENSCO to
achieve certain operating efficiencies. The terms of the bareboat charter
agreements with ENSCO Offshore provide for fixed daily rates to be paid to
the Company, which the Company believes are reasonable and representative
of the environment in which the rigs operate. The fixed daily rate would
be reduced to 50% of the normal rate if the rig were idle for more than 30
consecutive days. The initial term of the bareboat charter agreements is
one year, with automatic one year extensions, unless either party gives at
least one month's prior notice of termination.
Change in Control Expenses
- --------------------------
The change in control expenses of $22.0 million recorded in the Predecessor
entity's Consolidated Statements of Operations relate to non-recurring
charges incurred by the Company directly related to the acquisition of the
Company by ENSCO. See "Note 2 - Merger" to the Company's Consolidated
Financial Statements.
Other Income (Expense)
- ----------------------
The change in the caption "Other income (expense)" in the Company's
Consolidated Statements of Operations for the three and six months ended
June 30, 1996 and 1995 as compared to the prior year periods is due
primarily to the second quarter of 1995 including gains of $6.4 million
related to the sale of assets. In the second quarter of 1995 the Company
sold a jackup rig located in the Gulf of Mexico and also sold a 51%
interest in a jackup rig located is Asia. <PAGE>
OTHER MATTERS
In July and August 1996, ENSCO purchased an additional $5.9 million (face
amount) of the Company's 9 7/8% Notes on the open market. Additionally, in
July 1996 $5.0 million (face amount) of the 9 7/8% Notes were redeemed
pursuant to an offer made by the Company to purchase the 9 7/8% Notes
following a change in control.
PRIVATE LITIGATION SECURITIES REFORM ACT OF 1995
This report contains forward-looking statements based on current
expectations that involve a number of risks and uncertainties. The
forward-looking statements are made pursuant to safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. The factors that
could cause actual results to differ materially include the following:
industry conditions and competition, cyclical nature of the industry,
worldwide expenditures for oil and gas drilling, operational risks and
insurance, risks associated with operating in foreign jurisdictions, and
the risks described from time to time in the Company's reports to the
Securities and Exchange Commission, which include the Company's Annual
Report on Form 10-K for the year ended December 31, 1995. <PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
At the time of the merger of the Company into ENSCO International
Incorporated ("ENSCO"), the Company was authorized to issue 50.0 million
shares of its $.01 par value common stock, of which 16.1 million shares
were outstanding as of June 12, 1996, and 10.0 million shares of its
preferred stock, of which none were outstanding as of June 12, 1996. Based
upon the terms of the Agreement and Plan of Merger among ENSCO, DDC
Acquisition Company and the Company, each share of the Company's common
stock outstanding as of June 12, 1996 was converted into the right to
receive 0.625 shares of ENSCO's common stock and the Company became a
wholly-owned subsidiary of ENSCO. In connection with the merger of the
Company into ENSCO, the name of the Company was changed from DUAL DRILLING
COMPANY to Dual Holding Company and the capital structure of the Company
was changed. Under the terms of the Company's restated certificate
of incorporation filed June 12, 1996, the Company is only authorized to
issue 10,000 shares of its $.10 par value common stock. As of June 30,
1996, the Company had issued 1,000 shares of its $.10 par value common
stock, all of which were held by ENSCO.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 12, 1996, the Company held a special meeting of stockholders to
consider the following proposals: "Proposal 1" - To approve and adopt an
Agreement and Plan of Merger dated as of March 21, 1996 among ENSCO
International Incorporated ("ENSCO"), DDC Acquisition Company and the
Company pursuant to which the Company would become a wholly-owned
subsidiary of ENSCO; and "Proposal 2" - To approve the Dual Special
Performance Unit Plan. A description of the foregoing matters is contained
in the Company's proxy statement, dated May 14, 1996, related to the 1996
special meeting of stockholders.
There were 15,765,713 shares of the Company's common stock entitled to vote
at the special meeting based on the May 1, 1996 record date. The Company
solicited proxies pursuant to Regulation 14 of the Securities Exchange Act
of 1934.
With respect to Proposals 1 and 2 listed above, the voting was as follows:
VOTES FOR VOTES AGAINST ABSTENTIONS
----------- ------------- -----------
Proposal 1 12,706,367 800 7,300
Proposal 2 12,711,342 4,675 3,600
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits and Exhibit Index
EXHIBIT NO.
-----------
3 Certificate of Merger of DDC Acquisition Company
merging into DUAL DRILLING COMPANY<PAGE>
3.1 Certificate of Incorporation of DDC Acquisition
Company, as amended
10 Amendment No. 1 dated as of June 13, 1996 to the
Amended and Restated Credit Facility Agreement
dated as of September 27, 1995 by and among ENSCO
Offshore Company and ENSCO Offshore U.K. Limited,
as borrowers, and Christiana Bank OG Kreditkasse,
New York Branch, and den Norske Bank AS, New York
Branch, as the Banks (incorporated by reference to
exhibit No. 10.25 to the ENSCO International
Incorporated (File No. 1-8097) Form 10-Q for the
quarterly period ended June 30, 1996)
10.1 First Preferred Fleet Mortgage dated June 13, 1996
by ENSCO Offshore Company II and Bankers Trust
Company, as trustee for the benefit of Christiana
Bank OG Kreditkasse, New York Branch, and den
Norske Bank AS, New York Branch (incorporated by
reference to exhibit No. 10.27 to the ENSCO
International Incorporated (File No. 1-8097) Form
10-Q for the quarterly period ended June 30, 1996)
10.2 Form of Standard Bareboat Charter between ENSCO
Offshore Company and the Company
10.3 Form of Standard Platform Charter between ENSCO
Offshore Company and the Company
10.4 Master Services Agreement between ENSCO
International Incorporated and the Company
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K dated June 12,
1996, with respect to the merger of the Company into DDC
Acquisition Company, a wholly-owned subsidiary of ENSCO
International Incorporated ("ENSCO") pursuant to an Agreement
and Plan of Merger between the Company, DDC Acquisition Company
and ENSCO, as amended.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dual Holding Company (formerly
DUAL DRILLING COMPANY)
Date: August 12, 1996 /s/ C. Christopher Gaut
------------------- ------------------------------
C. Christopher Gaut
President
/s/ H. E. Malone
------------------------------
H. E. Malone
Secretary and Chief Accounting
Officer<PAGE>
<PAGE>
EXHIBIT NO. 3
State of Delaware
OFFICE OF THE SECRETARY OF STATE
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF MERGER, WHICH MERGES:
"DDC ACQUISITION COMPANY", A DELAWARE CORPORATION,
WITH AND INTO "DUAL DRILLING COMPANY" UNDER THE NAME OF "DDC
ACQUISITION COMPANY", A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS
OF THE STATE OF DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE ON THE
TWELFTH DAY OF JUNE, A.D. 1996, AT 12:15 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[ S E A L ]
/S/ EDWARD J. FREEL, SECRETARY OF STATE
---------------------------------------
Edward J. Freel, Secretary of State
2230051 8100M AUTHENTICATION: 7982763
960170964 DATE: 06-12-96<PAGE>
CERTIFICATE OF MERGER OF DOMESTIC CORPORATIONS
OF
DDC ACQUISITION COMPANY
MERGING INTO
DUAL DRILLING COMPANY
Pursuant to Section 251 of the General Corporation Law of the State of
Delaware, DUAL DRILLING COMPANY adopts the following Certificate of Merger
(the "Certificate") for the purpose of merging DDC Acquisition Company, a
Delaware corporation, with and into DUAL DRILLING COMPANY (collectively,
the "the Constituent Corporations").
1. The names of the Constituent Corporations and the states under
the laws of which they are incorporated are:
Name of Corporation State
------------------- -----
DDC Acquisition Company Delaware
DUAL DRILLING COMPANY Delaware
2. An Agreement and Plan of Merger (the "Plan") has been approved,
adopted, certified, and acknowledged by DDC Acquisition Company, DUAL
DRILLING COMPANY and ENSCO International Incorporated (DDC Acquisition
Company's parent) in the manner prescribed by the General Corporation Law
of the State of Delaware.
3. The name of the surviving corporation is DUAL DRILLING COMPANY
(the "Surviving Corporation"). The Surviving Corporation will be governed
by the laws of the State of Delaware and the Certificate of Incorporation
of the Surviving Corporation, as amended and restated as provided in
Exhibit "A" attached hereto. The name of the Surviving Corporation shall
be changed to DDC Acquisition Company.
4. The executed Plan is on file at the principal place of business
of the Surviving Corporation, which is 5956 Sherry Lane, Suite 1500,
Dallas, Texas 75225 and a copy of the Plan will be furnished by the
Surviving Corporation on request and without cost to any stockholder of any
of the Constituent Corporations.
IN WITNESS WHEREOF, this certificate was executed for and on behalf
and in the name of the undersigned corporation by its President and Chief
Executive Officer on June 12, 1996.
DUAL DRILLING COMPANY
By: /S/ L. H. DICK ROBERTSON
-----------------------------
L. H. Dick Robertson, President
and Chief Executive Officer<PAGE>
EXHIBIT A
----------
RESTATED
CERTIFICATE OF INCORPORATION
OF
DDC ACQUISITION COMPANY
ARTICLE I
---------
The name of the corporation is DDC Acquisition Company (the
"Corporation").
ARTICLE II
----------
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New
Castle County, Delaware 19801. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
-----------
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE IV
----------
The total number of shares of stock which the Corporation shall have
the authority to issue is Ten Thousand (10,000) shares of Common Stock, par
value $0.10 per share.
ARTICLE V
---------
The name and address of the incorporator is as follows:
Name Mailing Address
---- ---------------
Incorporating Services, Ltd. 15 East North Street
Dover, Delaware 19901
A-1<PAGE>
ARTICLE VI
----------
The powers of the incorporator are to terminate upon the filing of
this certificate of incorporation, and the name and mailing address of the
persons who are to serve as the board of directors until the first annual
meeting of the stockholders or until their successors are elected and
qualified are as follows:
Names of Directors Mailing Address
------------------ ---------------
William S. Chadwick, Jr. 2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
C. Christopher Gaut 2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
H. E. Malone 2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
ARTICLE VII
-----------
Election of directors need not be by written ballot unless the bylaws
of the Corporation shall so provide.
ARTICLE VIII
------------
The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal bylaws of the Corporation, but the stockholders may
make additional bylaws and may alter or repeal any bylaw whether adopted by
them or otherwise.
ARTICLE IX
----------
No contract or transaction between the Corporation and one or more of
its directors, officers, or stockholders or between the Corporation and any
persons (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its
directors, officers, or stockholders are directors, officers, or
stockholders, or have a financial interest, shall be void or voidable
solely for this reason, or solely because the director or officer is
A-2<PAGE>
present at or participates in the meeting of the board or committee which
authorized the contract or transaction, or solely because his, her, or
their votes are counted for such purpose, if: (i) the material facts as to
his or her relationship or interest and as to the contract or transaction
are disclosed or are known to the board of directors or the committee, and
the board of directors or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum;
or (ii) the material facts as to his or her relationship or interest and as
to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii)
the contract or transaction is fair as to the Corporation as of the time it
is authorized, approved, or ratified by the board of directors, a committee
thereof, or the stockholders. common or interested directors may be
counted in determining the presence of a quorum at a meeting of the board
of directors or of a committee which authorizes the contract or
transaction.
ARTICLE X
---------
The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by
reason of the fact that he or she (i) is or was a director or officer of
the Corporation or (ii) while a director or officer of the Corporation, is
or was serving at the request of the Corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, to the fullest extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. Such
right shall be a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of director or
officer of the Corporation or elects to continue to serve as a director or
officer of the Corporation while this Article X is in effect. Any repeal
or amendment of this Article X shall be prospective only and shall not
limit the rights of any such director or officer or the obligations of the
Corporation with respect to any claim arising from or related to the
services of such director or officer in any of the foregoing capacities
prior to any such repeal or amendment to this Article X. Such right shall
include the right to be paid by the Corporation expenses incurred in
defending any such proceeding in advance of its final disposition to the
maximum extent permitted under the Delaware General Corporation Law, as the
same exists or may hereafter by amended. If a claim for indemnification or
advancement of expenses hereunder is not paid in full by the Corporation
within sixty (60) days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
whole or in part, the claimant shall also be entitled to be paid the
expenses of prosecuting such claim. It shall be a defense to any such
action that such indemnification or advancement of costs of defense are not
permitted under the Delaware General Corporation Law, but the burden of
A-3<PAGE>
proving such defense shall be on the Corporation. Neither the failure of
the Corporation (including its board of directors or any committee thereof,
independent legal counsel, or stockholders) to have made this determination
prior to the commencement of such action that indemnification of, or
advancement of costs of defense to, the claimant is permissible to the
circumstances nor an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible
shall be a defense to the action or create a presumption that such
indemnification or advancement is not permissible. In the event of the
death of any person having a right of indemnification under the foregoing
provisions, such right shall inure to the benefit of his or her heirs,
executors, administrators, and personal representatives. The rights
conferred above shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, bylaw, resolution of
stockholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any employee or agent of
the Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal in such action,
suit, or proceeding, and any inquiry or investigation that could lead to
such an action, suit, or proceeding.
ARTICLE XI
----------
Whensoever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and it stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of this Corporation or of any creditor or stockholder
thereof or on the application of any receiver or receivers appointed for
this Corporation under the provisions of Section 291 of the General
Corporation Law of the State of Delaware or on the application of trustees
in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of Section 279 of the General Corporation
Law of the State of Delaware, order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said
court directs. If a majority in number representing three-fourths in value
of the creditors or class of creditors, and/or of the stockholders or class
of stockholders of this Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this Corporation as
consequence of such compromise or arrangement, the said compromise or
arrangement and the said reorganization shall, if sanctioned by the court
to which the said application has been made, be binding on all of the
creditors or class of creditors, and/or on all of the stockholders or class
of stockholders, of this Corporation, as the case may be, and also on this
Corporation.
A-4<PAGE>
ARTICLE XII
-----------
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware, as the same exists or
hereafter may be amended, or (iv) for any transaction from which the
director derived an improper personal benefit. If the General Corporation
Law of the State of Delaware is amended after the date of filing of this
certificate of incorporation to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation, in addition to the limitation
on personal liability provided herein, shall be limited to the fullest
extent permitted by the amended General Corporation Law of the State of
Delaware. Any repeal or modification of this Article XII by the
stockholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a director of
the Corporation existing at the time of such repeal or modification.
A-5<PAGE>
<PAGE>
EXHIBIT NO. 3.1
State of Delaware
OFFICE OF THE SECRETARY OF STATE
________________________________
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE
OF AMENDMENT OF "DDC ACQUISITION COMPANY", CHANGING ITS NAME FROM "DDC
ACQUISITION COMPANY" TO "DUAL HOLDING COMPANY", FILED IN THIS OFFICE ON THE
TWELFTH DAY OF JUNE, A.D. 1996, AT 12:16 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[ S E A L ]
/S/ EDWARD J. FREEL, SECRETARY OF STATE
---------------------------------------
Edward J. Freel, Secretary of State
2230051 8100 AUTHENTICATION: 7982768
960170968 DATE: 06-12-96
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DDC ACQUISITION COMPANY
DDC Acquisition Company, a corporation duly organized and existing
under the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that:
I. The amendment to the Corporation's Certificate of Incorporation
set forth below was duly adopted in accordance with the provisions of
Section 242 and has been consented to in writing by the sole stockholder in
accordance with Section 228 of the General Corporation Law of the State of
Delaware.
II. Article I of the Corporation's Certificate of Incorporation is
amended to read in its entirety as follows:
"The name of the corporation is Dual Holding Company
(the "Corporation")."
IN WITNESS WHEREOF, DDC Acquisition Company has caused this
Certificate to be executed by C. Christopher Gaut, its authorized officer,
on this 12th day of June, 1996.
DDC ACQUISITION COMPANY
By: /S/ C. CHRISTOPHER GAUT
-----------------------------
C. Christopher Gaut
President<PAGE>
<PAGE>
EXHIBIT NO. 10.2
PART II
"[RIG NAME]"
STANDARD BAREBOAT CHARTER
1. Definitions
In this Charter, the following terms shall have the meanings hereby
assigned to them:
"The Owners" shall mean the person or company registered as Owners of
the Vessel and identified in Box 3.
"The Charterers" shall mean the Bareboat charterers identified in Box
4 and shall not be construed to mean a time charterer or a voyage
charterer.
All references herein to a Box shall mean the Boxes set forth in Part
I of this Charter.
2. Delivery
The Vessel shall be delivered and taken over by the Charterers at the
place indicated in Box 13, effective as of the "Time for delivery"
shown in Box 14.
The delivery to the Charterers of the Vessel and the taking over of
the Vessel by the Charterers shall constitute a full performance by
the Owners of all the Owners' obligations under this Clause 2. The
Vessel shall be deemed delivered to and taken over by Charterer's "AS
IS, WHERE IS" without any representation or warranty as to condition
or suitability for intended purpose. Further, there shall not be any
representation or warranty, express or implied, as to physical
condition, equipment, seaworthiness or fitness for any purpose which,
for purposes of this Charter, shall survive the sale and purchase of
the Vessel.
Charterer acknowledges and affirms that it has had the opportunity to
inspect the Vessel, its appurtenances, equipment, accessories, spares
and inventories, maintenance records and manuals, survey and
inspection reports and recommendations, drawings and other technical
information to its satisfaction. Charterer further acknowledges and
affirms that it has made its own independent inspection of the Vessel
and its own independent investigation and analysis of the Vessel and
the Vessel's equipment and property and its decision to charter the
Vessel is based solely upon this independent investigation, analysis
and verification.
CHARTERER ACCEPTS THE VESSEL AND ITS EQUIPMENT "AS IS" IN THE
CONDITION IN WHICH IT EXISTS AT THE TIME OF DELIVERY, AND ITS
ACCEPTANCE IS WITH THE EXPRESS AGREEMENT THAT SAID CHARTERING SHALL BE
WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, AND ADDITIONALLY
THERE IS NO WARRANTY OF MERCHANTABILITY AND/OR FITNESS FOR ANY
PARTICULAR PURPOSE PERTAINING TO THE VESSEL, ITS APPURTENANCES,
ACCESSORIES, EQUIPMENT, SPARES OR INVENTORIES, AND FURTHER THERE IS NO<PAGE>
WARRANTY THAT THE VESSEL AND ITS EQUIPMENT ARE FREE FROM LATENT
DEFECTS OR THAT THEY ARE SUITABLE FOR THEIR INTENDED PURPOSE, OR THAT
THERE WILL BE NO FURTHER EXCEPTIONS OR OUTSTANDING DISCREPANCIES TO
CLASS BEYOND THOSE MAINTAINED BY ABS AT THE TIME OF DELIVERY, OR THAT
THE VESSEL IS INSURABLE OR IN CONDITION TO HAVE ANY PREVIOUS
CLASSIFICATION REINSTATED OR TO BE CLASSED BY CLASSIFICATION SOCIETY.
3. Time for Delivery
The Vessel to be delivered as per the date indicated in Box 14 unless
with the Charterers' consent.
4. Effectiveness of Charter
This Charter shall become effective upon the date and time of delivery
of the Vessel.
5. Trading Limits
The Vessel shall be employed within the Vessel's specified capacities,
certifications and class.
The Charterers undertake not to employ the Vessel or suffer the Vessel
to be employed otherwise than in conformity with the terms of this
Charter.
The Charterers also undertake not to employ the Vessel or suffer her
employment in any trade or business which is forbidden by the law of
any country to which the Vessel may sail or is otherwise illicit or in
carrying illicit or prohibited goods or in any manner whatsoever which
may render her liable to condemnation, destruction, seizure or
confiscation.
6. Surveys
Survey on Delivery and Redelivery - The Owners and Charterers mutually
agree to jointly appoint an independent surveyor for the purpose of
documenting and recording the condition of the Vessel at the time of
delivery and redelivery hereunder. The Owners shall bear all expenses
of the On-Survey including loss of time, if any, and the Charterers
shall bear all expenses of the Off-Survey including loss of time, if
any, at the rate of hire per day or pro rata. The Surveys at the time
of delivery and redelivery shall take place on location as provided in
Boxes 13 and 16, respectively.
7. Inspection
Inspection - The Owners shall have the right at any time to inspect or
survey the Vessel or instruct a duly authorized surveyor to carry out
such survey on their behalf to ascertain the condition of the Vessel
and satisfy themselves that the Vessel is being properly repaired and
maintained. Such inspection or survey shall not unreasonably
interfere with the operations of the Vessel. The Owners shall have
the right to require the Vessel to undergo an underwater inspection if
the Charterers are not conducting surveys and inspections in<PAGE>
accordance with ABS rules. The fees for such inspection or survey
shall, in the event of the Vessel being found to be in the condition
provided in Clause 9 of this Charter, be payable by the Owners and
shall be paid by the Charterers only in the event of the Vessel being
found to require repairs or maintenance in order to achieve the
condition so provided. All time taken in respect of inspection,
survey or repairs shall count as time on hire and shall form part of
the Charter period.
The Charterers shall also permit the Owner to inspect the Vessel's log
books whenever requested. Furthermore, Charterers shall furnish
Owners with full information regarding any casualties or other
accidents or damage to the Vessel. For the purpose of this Clause, the
Charterers shall keep the Owners advised from time to time as Owners
may request, as to the current status of operations involving the
Vessel, provided the Charterer shall be under no obligation to violate
a confidentiality agreement with its customer.
8. Inventories and Consumable Stores
A complete inventory of the Vessel's entire equipment, outfit,
appliances and of all consumable stores on board the Vessel shall be
made by the Charterers in conjunction with the Owners on delivery and
again on redelivery of the Vessel. Any difference in the quantities
of water and unbroached provisions, paints, oils, ropes and other
consumable stores on the Vessel reflected between the inventory
performed when the Vessel was delivered to Charterer and the inventory
conducted upon the Vessel's redelivery to Owner shall be paid by the
Owner in the case of any excess upon redelivery and by Charterers in
the case of a shortfall. Payment shall be based upon current market
prices for such commodities at a place mutually agreeable to both
Owner and Charterers.
In the case of bunkers and unused lubricating oils on board the Vessel
on redelivery to Owners, Owners shall purchase all such bunkers and
unused lubricating oils at Charterer's cost or the current market
price for such commodities at the port nearest the redelivery
location, whichever is less.
9. Maintenance and Operation
(a) The Vessel shall during the Charter period be in the full
possession and at the absolute disposal for all purposes of the
Charterers and under their complete control in every respect
including, without limitation, its operation and navigation. The
Charterers shall maintain the Vessel, her machinery, boilers,
appurtenances and spare parts, in a good state of repair and
efficient operating condition and in accordance with good
commercial maintenance practice and they shall keep the Vessel
with unexpired classification of the class indicated in Box 10
and with other required certificates in force at all times. The
Charterers shall take immediate steps to have the necessary
repairs done within a reasonable time failing which the Owners
shall have the right of withdrawing the Vessel from the service
of the Charterers without notice of any protest and without<PAGE>
prejudice to any claim the Owners may otherwise have against the
Charterers under the Charter.
Unless otherwise agreed, in the event of any improvement,
structural change or new equipment becomes necessary for the
continued operation of the Vessel by reason of new class
requirements, or by compulsory legislation or regulation then the
cost of compliance shall be shared between the parties concerned
in order to achieve a reasonable distribution thereof as between
the Owners and the Charterers, having regard, inter alia, to the
length of the period remaining under the Charter. In the absence
of agreement, the matter shall be referred to arbitration
according to Clause 26.
The Charterers are required to establish and maintain financial
security or responsibility in respect of oil or other pollution
damage as required by any government, including Federal, state or
municipal or other division or authority thereof, to enable the
Vessel, without penalty or charge, lawfully to enter, remain at,
or leave any port, place, territorial or contiguous waters of any
country, state or municipality in performance of this Charter
without any delay. This obligation shall apply whether or not
such requirements have been lawfully imposed by such government
or division or authority thereof. The Charterers shall make and
maintain all arrangements by bond or otherwise as may be
necessary to satisfy such requirements at the Charterers' sole
expense and the Charterers shall indemnify the Owners against all
consequences whatsoever (including loss of time) for any failure
or inability to do so.
(b) The Charterers shall at their own expense and by their own
procurement man, victual, navigate, operate, supply, fuel and
repair the Vessel whenever required during the Charter period and
they shall pay all charges and expenses of every kind and nature
whatsoever incidental to their use and operation of the Vessel
under this Charter, including any foreign general municipality
and/or state taxes. The Master, officers and crew of the Vessel
shall be the servants of the Charterers for all purposes
whatsoever.
Charterers shall comply with the regulations regarding officers
and crew in force in the country of the Vessel's flag or any
other applicable jurisdiction including, without limitation, the
laws of the jurisdiction where the Vessel is operating.
(c) During the currency of this Charter, the Owner shall have the
right to change the Vessel's name and flag. Charterers, as part
of their obligation to maintain the Vessel, shall keep the Vessel
painted and free of rust in accordance with Charterer's standard
maintenance practices.
(d) The Charterers shall make no structural changes in the Vessel,
including, without limitation, changes in the machinery, cranes,
pumps, generators, appurtenances or spare parts thereof, without
in each instance first securing the Owner's prior written<PAGE>
approval thereof, such approval not to be unreasonably withheld.
All such structural changes shall become the property of Owners
upon redelivery of the Vessel.
(e) The Charterers shall have the use of all outfit, equipment and
appliances on board the Vessel at the time of delivery, provided
the same or their substantial equivalent shall be returned to the
Owners on redelivery in the same good order and condition as when
received, ordinary wear and tear excepted. The Charterers shall
from time to time during the Charter period replace such items of
equipment as shall be so damaged or worn as to be unfit for use.
The Charterers are to ensure that all repairs to or replacement
of any damaged, worn or lost parts or equipment be effected in
such manner (both as regards workmanship and quality of
materials) as not to diminish the value of the Vessel. Subject to
Clause 9(d) above, the Charterers have the right to fit
additional equipment at their expense and risk but such equipment
shall become the property of Owners at the end of the Charter
unless otherwise agreed in writing by the Owners and Charterers.
Any equipment, including radio equipment on hire on the Vessel at
time of delivery, shall be kept and maintained by the Charterers
and the Charterers shall during the Charter period be responsible
for any lease contracts in connection therewith and shall pay for
all expenses incurred in connection therewith, also for any new
equipment required in order to comply with radio regulations.
(f) The Charterers shall conduct underwater surveys of the Vessel and
clean and paint her underwater parts whenever the same may be
necessary, and in accordance with good maintenance practices and
ABS rules.
10. Hire
(a) Commencing on the date and hour of delivery of the Vessel to
Charterers as shown in Box 14, Charterers shall pay to the Owners
for the hire of the Vessel a rate (the "Hire") of USD __________,
which rate shall remain in effect through 31 December, 1996.
Thereafter, on January 1, 1997 and each succeeding anniversary of
this Charter, the Hire shall be adjusted by a percentage equal to
the United States Consumer Price Index (the applicable CPI to one
which Owners and Charterers may mutually agree); however, in no
event shall the Hire be less than USD ___________. Hire shall
continue until the date and hour when the Vessel is redelivered
by the Charterers to her Owners. In the event the Vessel is idle
for more than thirty (30) consecutive days, the Hire shall be
reduced by fifty percent (50%) for so long as the Vessel is
continuously idle subsequent to such thirty (30) day period.
(b) Payment of Hire shall be made in cash, without discount,
commencing no later than the thirtieth (30th) day of the month
following the month of delivery as referred to in Box 14 and
thereafter no later than the same day (i.e., the 30th day) of
each succeeding month in the currency and in the manner indicated
in Box 23 and at the place mentioned in Box 24.<PAGE>
(c) Payment of Hire for the delivery date and redelivery date of the
Vessel if less than a full day shall be calculated proportionally
according to the number of hours (rounded to the nearest quarter
hour) in the particular day.
(d) Should the Vessel be lost or missing, Hire to cease from the date
and time when she was lost, or last heard of. Any Hire paid in
advance to be adjusted accordingly.
(e) Time shall be of the essence in relation to payment of Hire. Any
default of payment extending beyond a period of five (5) business
days from the date of Charterers receipt of notice from Owners
concerning such default shall entitle the Owners to withdraw the
Vessel from the service of the Charterers without notice of any
protest and without interference by any court or any other
formality whatsoever, and shall, without prejudice to any other
claim the Owners may otherwise have against the Charterers under
the Charter, entitle Owners to damages in respect of all costs
and losses incurred as a result of the Charterers' default and
the ensuing withdrawal of the Vessel including, without
limitation, legal fees incurred in the collection of such
damages.
(f) Any delay in payment of Hire shall entitle the Owners to interest
at the rate per annum as agreed in Box 22.
11. Mortgage
As of the date hereof, Owners has no arrangements to mortgage the
Vessel, except as described on Appendix A attached hereto. However,
Owners shall have the right at any time during the term of this
Charter, in their sole discretion, to effect a mortgage upon the
Vessel. In the event Owner effects such a mortgage, notice of such
mortgage shall be given to Charterer and if requested by Owner,
displayed in a prominent location on the Vessel. Furthermore, it
shall be a condition of any such mortgage, that the mortgagee issue a
written covenant to the Charterers, in a form and substance reasonably
acceptable to the Charterers, giving reasonable assurance to the
Charterers that the Charter will continue undisturbed so long as the
Charterers meet all of their obligations hereunder.
12. Insurance and Repairs
(a) During the Charter period the Vessel shall be kept insured.
Insurances maintained shall include:
(1) Workmen's Compensation and Employer's Liability Insurance,
or the equivalent thereof, if required, in accordance with
applicable Federal, state, maritime and other laws governing
the Vessel or its crew subject to a limit of liability as
required by applicable law.
(2) Comprehensive General Liability Insurance with limits of
liability of not less than the following:<PAGE>
(a) Bodily Injury - Any One Occurrence
USD 1,000,000
(b) Property Damage - Combined Single Limit
USD 5,000,000
Such Comprehensive General Liability Insurance to include:
(i) Contractors' Protective Liability covering any work
subcontracted by Charterer;
(ii) Contractual Liability, insuring Owner in respect to all
obligations set forth under the Charter;
(iii) Coverage for property damage due to blowout, fire and
explosion;
(iv) An "in rem" endorsement stating that an action "in rem"
shall be treated as a claim against the insured "in
personam;"
(v) Deletion of any watercraft exclusion; and
(vi) "Extended Reporting Provision" if policy is written on
a claims-made basis and is non-renewed or cancelled.
(vii) Completed Operations Liability coverage.
(3) Comprehensive Automobile Liability Insurance covering all
owned, non-owned and hired automotive equipment; policy
limits to be in accordance with applicable laws.
(4) Hull and Machinery Insurance covering the Vessel, including
its equipment, spares and appurtenances, chartered by
Charterer, the amount of such insurance to be no less than
USD 35,000,000. The insurance shall cover the Vessel in the
event it is towed or accepts towage contracts. Furthermore,
any language in the Hull and Machinery policy which limits
coverage to an insured who is not an owner shall be deleted.
(5) War Risk Coverage, if required, as determined by Owner,
covering the Vessel, its equipment, spares and
appurtenances, during the term of the Charter in the minimum
amount of USD 35,000,000;
(6) Standard Protection & Indemnity Insurance at least equal to
USD 1,000,000. Such Insurance shall include Marine Vessel
Liability coverage for all chartered or hired vessels or
other marine equipment, voluntary "Removal of Wreck"
coverage and Pollution Insurance. Any language and any
Protection and Indemnity Insurance policy which limits
coverage to an insured who is not an owner shall be deleted.
(7) Unless carried by the air carrier as required by law or
regulation, Owned or Chartered Aircraft Liability Insurance<PAGE>
with a combined single limit of Bodily Injury (including
passenger) and Property Damage of USD 10,000,000 per
occurrence.
(8) Excess Liability or Umbrella Insurance, excess of the
scheduled underlying liability insurance is including
Comprehensive General Liability, Automobile Liability and
Protection & Indemnity, in the amount of USD 150,000,000.
The foregoing Insurances to be maintained throughout the Charter
period shall be the responsibility of Charterers; provided,
however, that Charterers may request Owners to provide such
Insurances through Owners' underwriters in which event Owners
will secure such coverages in accordance with the provisions of
this Clause 12 and thereafter invoice Charterers for the cost of
all premiums associated therewith. Any invoice for such premiums
shall be paid by Charterers within sixty (60) days after receipt.
All insurance policies required hereunder as provided above shall
be in a form and with underwriters as approved by Owners, such
approval not to be unreasonably withheld. Furthermore, Owners
shall be listed as a named insured and joint loss payee on the
Hull and Machinery and War Risk policies for amounts in excess of
USD 250,000 without liability for any premiums or club calls,
however, Charterers agree to cause their underwriters to endorse
the Hull and Machinery Policy and War Risk Policy required
hereunder so that in the event of a total loss of the Vessel
(actual, constructive, compromised, or agreed), all proceeds of
such insurance, up to USD 35,000,000, shall be paid to Owners, as
the sole loss payee. The policies shall also provide that Owner
will be given at least thirty (30) days' notice of cancellation
or material alteration. Notwithstanding any provision herein to
the contrary, any deductibles, sue and labor, and salvage charges
shall be for the account of Charterers.
All policies of insurance provided by Charterers as required
hereunder shall contain a waiver of subrogation endorsement
whereby underwriters waive their right to subrogation (whether by
loan receipts, equitable assignment or otherwise) against Owners,
their subsidiaries, affiliated companies, employees, officers,
directors or otherwise. Furthermore, all coverages required
hereunder shall be primary in relation to any policies of
insurance carried by Owners themselves.
The Charterers shall, subject to the approval of the Owners and
the Underwriters and unless otherwise agreed, effect all insured
repairs and shall undertake settlement of all costs in connection
with such repairs as well as insured charges, expenses and
liabilities (reimbursement to be secured by the Charterers from
the Underwriters) to the extent of coverage under the insurances
herein provided for.
Unless otherwise agreed between Owners and Charterers, the
Charterers shall remain responsible for and to effect repairs and
settlement of costs and expenses incurred thereby in respect of<PAGE>
all other repairs not covered by the insurances and/or not
exceeding any possible franchise(s) or deductibles provided for
in the insurances.
All time used for repairs under the provisions of this sub-clause
(a) of this Clause including any deviation shall count as time on
Hire and shall form part of the Charter period.
(c) Should the Vessel become an actual, constructive, compromised or
agreed total loss under the insurances required under sub-clause
(a) of this Clause 12, Owners shall receive from the insurance
proceeds an amount equal to the Vessel's agreed upon value of the
Hull and Machinery Insurance which shall be USD 35,000,000,
excess of any deductible; provided, however, that the Owners'
receipt of insurance proceeds under such Hull and Machinery
Insurance shall not vitiate Charterer's obligation to Owner to
pay any accrued or unpaid Hire, including any Hire payable on the
date of such loss, and (ii) all other sums that may be due and
payable on the date of such loss pursuant to the terms of this
Charter.
(d) If the Vessel becomes an actual, constructive, compromised or
agreed total loss under the insurances arranged by the Charterers
in accordance with sub-clause (a) of this Clause, this Charter
shall terminate as of the date of such loss.
(e) The Owners shall upon the request of the Charterers, promptly
execute such documents as may be required to enable the
Charterers to abandon the Vessel to insurers and claim a
constructive total loss. However, Charterers shall not have the
right to compromise or agree that the Vessel is a constructive
total loss without first obtaining Owner's prior written consent.
(f) For the purpose of insurance coverage against marine and war
risks under the provisions of sub-clause (a) of this Clause 12,
the value of the Vessel is the sum indicated in Box 27.
13. Insurance, Repairs and Classification
NOT APPLICABLE.
14. Redelivery
The Charterers shall at the expiration of the Charter period redeliver
the Vessel at a safe place as indicated in Box 16 or as may otherwise
be mutually agreed by the parties hereto. The Charterers shall use
their best efforts to give the Owners not less than thirty (30) days
prior written notice of the date of redelivery; however,
notwithstanding the notice of redelivery required hereby, Charterers
shall remain liable to Owners for the payment of Charter Hire for the
"Charter period" referred to in Box 20.
Should the Vessel be involved in operations upon a well location which
would preclude its release without jeopardizing the safety and
integrity of such well and/or operations, and such causes Charterers<PAGE>
to hold over the Vessel's redelivery beyond the date given in the
notice, Charterers shall continue to be obligated to Owners per the
terms of this Charter. Charterers to keep Owners well posted on the
anticipated date for redelivery.
The Vessel shall be redelivered to the Owners in the same or as good
structure, state, condition and class as that in which she was
delivered, fair wear and tear not affecting class excepted. In all
instances the Vessel shall be equipped, including spare parts,
equipment and appurtenances, as it was upon the date it was delivered
to Charterer. There shall be the same quantity and grade of drilling
tubulars with the Vessel (onshore or onboard) upon redelivery as there
were at delivery under the Charter. In the event Owners or Charterers
have any disagreements with the On- or Off-Survey provided for in
Clause 16, they shall notify the other party of such disagreements or
objections in writing within 15 days of receipt of the survey report,
otherwise such survey will be deemed to be accepted. In the event of
a disagreement the parties shall make a good faith effort to resolve
the disagreement. Upon resolution of the disagreement the parties
shall make any monetary payment required within seven (7) business
days of such resolution.
The Vessel upon redelivery shall have her survey cycles up to date and
class certificates valid and free of class recommendations.
Charterers shall use their best efforts to notify any third party, if
requested by Owner, on or before the termination date of the Charter
that equipment owned by such third party shall be removed from the
Vessel and that any contracts relating to such equipment onboard the
Vessel shall be terminated.
15. Non-Lien and Indemnity
The Charterers will not suffer, nor permit to be continued, nor shall
they have any right, power or authority to create, incur or permit to
be imposed upon the Vessel any liens or encumbrances whatsoever, other
than liens which may exist by right of law in the ordinary and normal
course of business. Further, Charterer covenants and agrees that
Charterer shall not assert any lien, claim, charge or encumbrance
against the Vessel arising out of or connected with the performance of
this Charter.
The Charterers further agree to fasten to the Vessel in a conspicuous
place and to keep so fastened during the Charter period a notice
reading as follows:
"THIS VESSEL IS THE PROPERTY OF ENSCO OFFSHORE COMPANY II. IT IS UNDER
CHARTER TO ENSCO OFFSHORE COMPANY AND BY THE TERMS OF THE CHARTER
PARTY NEITHER THE CHARTERERS NOR THE MASTER HAVE ANY RIGHT, POWER OR
AUTHORITY TO CREATE, INCUR OR PERMIT TO BE IMPOSED ON THE VESSEL ANY
LIEN WHATSOEVER."
The Charterers shall indemnify and hold the Owners harmless against
any lien of whatsoever nature arising upon the Vessel during the
Charter period while she is under the control of the Charterers, and<PAGE>
against any claims against the Owners arising out of or in relation to
the operation of the Vessel by the Charterers. Should the Vessel be
arrested by reason of claims or liens arising out of her operation
hereunder by the Charterers, the Charterers shall at their own expense
take all reasonable steps to secure that within a reasonable time the
Vessel is released and at their own expense put up bail to secure
release of the Vessel. Furthermore, Charterers agree to reimburse
Owners for any loss, cost or charge suffered or incurred by the Owners
in challenging, defending, settling or discharging any such lien,
claim, charge or encumbrance and any other losses or cause suffered or
incurred by the Owners in any way in connection with such lien, claim,
charge or encumbrance arising therefrom.
Charterers hereby agree to protect, indemnify and save harmless Owners
from and against any all claims and costs (including reasonable
attorneys' fees and expenses), demands and causes of action on account
of any property damage or loss, or personal injury or death suffered
by Charterer, any party under contract to Charterer and their
respective employees, subcontractors and invitees.
The indemnity obligations and/or liabilities assumed by Charterers
under the terms of this Charter shall be without limit and without
regard to the cause or causes thereof, the unseaworthiness of the
Vessel, strict liability or the negligence of any party or parties,
whether such negligence be sole, joint or concurrent, active or
passive. Furthermore, Charterer's indemnity of Owners shall be
without regard to and without any right to contribution from any
insurance maintained by Owners under this Charter.
16. Lien
NOT APPLICABLE.
17. Towage
NOT APPLICABLE.
18. Wreck Removal
In the event of the Vessel becoming a wreck or obstruction to
navigation the Charterers shall indemnify the Owners against any sums
whatsoever which the Owners shall become liable to pay and shall pay
in consequence of the Vessel becoming a wreck or obstruction to
navigation.
19. Taxes
Charterers and Owners shall each be responsible for and shall pay any
income taxes or similar charges levied against the revenue received by
each party pursuant to this Charter. Provided, however, except as
otherwise provided herein, Charterer shall be responsible for any
local taxes or similar charges arising during the Charter period
levied against the Vessel by any federal, state or local governments
unless otherwise mutually agreed and shall also be responsible for and
pay any employment, payroll and other related taxes for which it is<PAGE>
liable by law. Charterer shall also be responsible for any duties,
taxes or fees resulting from chartering or moving the rig to other
jurisdictions. Owners shall be responsible for any taxes or similar
charges levied by the United States or the country in which the Vessel
is registered. Any taxes resulting from ownership of the rig from
other jurisdictions shall be Owners' responsibility.
20. Assignment and Sub-Demise
The Charterers shall not assign this Charter nor sub-demise the Vessel
to a party, except with the prior consent in writing of the Owners.
21. Bills of Lading
The Charterers agree to indemnify the Owners against all consequences
or liabilities arising from the Master, officers or agents signing
Bills of Lading or other documents.
22. War
(a) The Vessel, unless the consent of the Owners be first obtained,
is not to be ordered nor continue to any place or any voyage nor
be used on any service which will bring her within a zone which
is dangerous as the result of any actual or threatened act of
war, war, hostilities, warlike operations, acts of piracy or of
hostility or malicious damage against this or any other vessel or
its cargo by any person, body or state whatsoever, revolution,
civil war, civil commotion or the operation of international law,
nor be exposed in any way to any risks or penalties whatsoever
consequent upon the imposition of sanctions, nor carry any goods
that may in any way expose her to any risks of seizure, capture,
penalties or any other interference of any kind whatsoever by the
belligerent or fighting powers or parties or by any Government or
Ruler.
(b) The Vessel to have liberty to comply with any orders or
directions as to departure, arrival, routes, ports of call,
stoppages, destination, delivery or in any otherwise whatsoever
given by the Government of the nation under whose flag the Vessel
sails or any other Government or any person (or body) acting or
purporting to act with the authority of such Government or by any
committee or person having under the terms of the war risks
insurance on the Vessel the right to give any such orders or
directions.
(c) In the event of outbreak of war (whether there be a declaration
of war or not) between any two or more of the countries as stated
in Box 31, both the Owners and the Charterers shall have the
right to cancel this Charter, whereupon the Charterers shall
redeliver the Vessel to the Owners in accordance with Clause 14,
if she has cargo on board after discharge thereof at destination,
or if debarred under this Clause from reaching or entering it at
a near open and safe port as directed by the Owners, or if she
has no cargo on board, at the port at which she then is or if at
sea at a near open and safe port as directed by the Owners, in<PAGE>
all cases Hire shall continue to be paid in accordance with
Clause 10 and except as aforesaid all other provisions of this
Charter shall apply until redelivery.
23. Movement Across Borders
Charterer must advise Owner if Charterer is bidding the Vessel,
submitting a proposal, or negotiating for work in another jurisdiction
within the Trading Limits. Charterer to keep Owner informed of status
of such work possibilities and to promptly advise Owner of any plans
to move the Vessel across international borders.
24. Law and Arbitration
If any dispute should arise in connection with the interpretation and
fulfillment of this Charter, the same shall be decided by arbitration
in the city of Dallas, Texas, U.S.A. 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 American Arbitration
Association.
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.
If one of the parties fails to appoint an Arbitrator, either
originally or by way of substitution, for two (2) weeks after the
other party having appointed his Arbitrator has sent the party making
default notice by mail, cable or telex 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.
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 any
other competent authority in the same manner as a judgment in the
Court of Justice.
This Charter shall be governed by and subject to the General Maritime
Laws of the United States.<PAGE>
25. Capital Expenditures
Subject to the approval of the Owners, to the extent required under
Clause 9(d), Charterers may, at Charterer's expense, modify, enhance,
refurbish, add equipment or fixtures to or otherwise improve the
value, structure or marketability of the Vessel. To the extent that
expenses incurred by Charterers with respect to any of the foregoing,
constitute capital expenditures under generally accepted accounting
principles, consistently applied, then Owners shall reimburse
Charterers for the actual cost of such capital expenditure within
thirty (30) days following the last day of the month during which such
expenses were incurred. The Hire payable pursuant to Clause 10(a)
shall be increased at the end of any calendar quarter during which a
capital expenditure reimbursement is paid by an amount calculated to
provide Owners with a fifteen percent (15%) pre-tax return on the
capital expenditure over the remaining depreciable life of the Vessel,
all as calculated in accordance with generally accepted accounting
principles, consistently applied.
IN WITNESS WHEREOF, this Agreement has been executed to be effective
as of 00:00 Central European Time on the ______ day of _______________,
1996.
Witness: ENSCO Offshore Company II
"Owners"
_____________________________ By:_________________________
_____________________
Vice President
Witness: ENSCO Offshore Company
"Charterers"
_____________________________ By:___________________________
_________________
Vice President <PAGE>
<PAGE>
EXHIBIT NO. 10.3
"[RIG NAME]"
STANDARD PLATFORM CHARTER
1. Definitions
In this Charter, the following terms shall have the meanings hereby
assigned to them:
"Charter Period" shall mean a term of one year commencing on the Time
for Delivery and expiring 365 calendar days thereafter, provided that
this Charter shall be automatically renewed for additional successive
terms of one year each following the expiration of the initial one
year term unless either Charterers or Owners deliver written notice of
an election not to renew the Charter within thirty (30) days prior to
the expiration of the initial one (1) year term or any subsequent
renewal.
"Charterers" shall mean [___________] and shall not be construed to
mean a time charterer or a voyage charterer.
"Owners" shall mean ENSCO Platform Company [or ENSCO Platform AS].
"Place of Delivery" shall mean _________________________.
"Place of Redelivery" shall mean _________________________.
"Rig" shall mean the platform rig identified as _______ and chartered
pursuant to this Agreement.
"Time for Delivery" shall mean ______________, 199_____, at
_____________________________.
2. Delivery
The Rig shall be delivered and taken over by the Charterers at the
Place of Delivery, effective as of the Time for Delivery.
The delivery to the Charterers of the Rig and the taking over of the
Rig by the Charterers shall constitute a full performance by the
Owners of all the Owners' obligations under this Clause 2. The Rig
shall be deemed delivered to and taken over by Charterer's "AS IS,
WHERE IS" without any representation or warranty as to condition or
suitability for intended purpose. Further, there shall not be any
representation or warranty, express or implied, as to physical
condition, equipment, seaworthiness or fitness for any purpose which,
for purposes of this Charter, shall survive the sale and purchase of
the Rig.
Charterer acknowledges and affirms that it has had the opportunity to
inspect the Rig, its appurtenances, equipment, accessories, spares and
inventories, maintenance records and manuals, survey and inspection
reports and recommendations, drawings and other technical information
to its satisfaction. Charterer further acknowledges and affirms that
it has made its own independent inspection of the Rig and the Rig's
equipment and property and its decision to charter the Rig is based
solely upon this independent investigation, analysis and verification.<PAGE>
CHARTERER ACCEPTS THE RIG AND ITS EQUIPMENT "AS IS" IN THE CONDITION
IN WHICH IT EXISTS AT THE TIME OF DELIVERY, AND ITS ACCEPTANCE IS WITH
THE EXPRESS AGREEMENT THAT SAID CHARTERING SHALL BE WITHOUT WARRANTY
OF ANY KIND, EXPRESS OR IMPLIED, AND ADDITIONALLY THERE IS NO WARRANTY
OF MERCHANTABILITY AND/OR FITNESS FOR ANY PARTICULAR PURPOSE
PERTAINING TO THE RIG, ITS APPURTENANCES, ACCESSORIES, EQUIPMENT,
SPARES OR INVENTORIES, AND FURTHER THERE IS NO WARRANTY THAT THE RIG
AND ITS EQUIPMENT ARE FREE FROM LATENT DEFECTS OR THAT THEY ARE
SUITABLE FOR THEIR INTENDED PURPOSE, OR THAT THE RIG IS INSURABLE.
3. Time for Delivery
The Rig shall be delivered at the Time for Delivery unless the time is
extended with the Charterers' prior written consent.
4. Effectiveness of Charter
This Charter shall become effective upon the Time of Delivery of the
Rig.
5. Trading Limits
The Rig shall be employed within the Rig's specified capacities and
certifications. The Rig shall be employed in the Gulf of Mexico or
offshore California unless otherwise approved by Owners; such approval
not to be unreasonably withheld.
The Charterers undertake not to employ the Rig or suffer the Rig to be
employed otherwise than in conformity with the terms of this Charter.
The Charterers also undertake not to employ the Rig or suffer her
employment in any trade or business which is forbidden by the law of
any country to which the Rig may sail or is otherwise illicit or in
carrying illicit or prohibited goods or in any manner whatsoever which
may render her liable to condemnation, destruction, seizure or
confiscation.
6. Surveys
The Owners and Charterers mutually agree to jointly appoint an
independent surveyor for the purpose of documenting and recording the
condition of the Rig at the time of delivery and redelivery hereunder.
The Owners shall bear all expenses of the On-Survey including loss of
time, if any, and the Charterers shall bear all expenses of the Off-
Survey including loss of time, if any, at the rate of hire per day or
pro rata. The Surveys at the time of delivery and redelivery shall
take place on location at the Place of Delivery and Place of
Redelivery, respectively.
7. Inspection
The Owners shall have the right at any time to inspect or survey the
Rig or instruct a duly authorized surveyor to carry out such survey on
their behalf to ascertain the condition of the Rig and satisfy
themselves that the Rig is being properly repaired and maintained.
Such inspection or survey shall not unreasonably interfere with the
operations of the Rig. The Owners shall have the right to require the<PAGE>
Rig to undergo an underwater inspection if the Charterers are not
conducting surveys and inspections in accordance with applicable rules
and regulations. The fees for such inspection or survey shall, in the
event of the Rig being found to be in the condition provided in Clause
9 of this Charter, be payable by the Owners and shall be paid by the
Charterers only in the event of the Rig being found to require repairs
or maintenance in order to achieve the condition so provided. All
time taken in respect of inspection, survey or repairs shall count as
time on hire and shall form part of the Charter period.
The Charterers shall also permit the Owner to inspect the Rig's books
and records whenever requested. Furthermore, Charterers shall furnish
Owners with full information regarding any casualties or other
accidents or damage to the Rig. For the purpose of this Clause, the
Charterers shall keep the Owners advised from time to time as Owners
may request, as to the current status of operations involving the Rig,
provided the Charterers shall be under no obligation to violate a
confidentiality agreement with its customer.
8. Inventories and Consumable Stores
A complete inventory of the Rig's entire equipment, outfit, appliances
and of all consumable stores on board the Rig shall be made by the
Charterers in conjunction with the Owners on delivery and again on
redelivery of the Rig. Any difference in the quantities of water and
unbroached provisions, paints, oils, ropes and other consumable stores
on the Rig reflected between the inventory performed when the Rig was
delivered to Charterer and the inventory conducted upon the Rig's
redelivery to Owner shall be paid by the Owner in the case of any
excess upon redelivery and by Charterers in the case of a shortfall.
Payment shall be based upon current market prices for such commodities
at a place mutually agreeable to both Owner and Charterers.
In the case of bunkers and unused lubricating oils on board the Rig on
redelivery to Owners, Owners shall purchase all such bunkers and
unused lubricating oils at Charterer's cost or the current market
price for such commodities at the port nearest the redelivery
location, whichever is less.
9. Maintenance and Operation
(a) The Rig shall during the Charter period be in the full possession
and at the absolute disposal for all purposes of the Charterers
and under their complete control in every respect including,
without limitation, its operation and navigation. The Charterers
shall maintain the Rig, its machinery, boilers, appurtenances and
spare parts, in a good state of repair and efficient operating
condition and in accordance with good commercial maintenance
practice and they shall keep the Rig with required certificates
in force at all times. The Charterers shall take immediate steps
to have the necessary repairs done within a reasonable time
failing which the Owners shall have the right of withdrawing the
Rig from the service of the Charterers without notice of any
protest and without prejudice to any claim the Owners may
otherwise have against the Charterers under the Charter.<PAGE>
Unless otherwise agreed, in the event of any improvement,
structural change or new equipment becomes necessary for the
continued operation of the Rig by reason of new class
requirements, or by compulsory legislation or regulation then the
cost of compliance shall be shared between the parties concerned
in order to achieve a reasonable distribution thereof as between
the Owners and the Charterers, having regard, inter alia, to the
length of the period remaining under the Charter. In the absence
of agreement, the matter shall be referred to arbitration
according to Clause 26.
The Charterers are required to establish and maintain financial
security or responsibility in respect of oil or other pollution
damage as required by any government, including Federal, state or
municipal or other division or authority thereof, to enable the
Rig, without penalty or charge, lawfully to enter, remain at, or
leave any port, place, territorial or contiguous waters of any
country, state or municipality in performance of this Charter
without any delay. This obligation shall apply whether or not
such requirements have been lawfully imposed by such government
or division or authority thereof. The Charterers shall make and
maintain all arrangements by bond or otherwise as may be
necessary to satisfy such requirements at the Charterers' sole
expense and the Charterers shall indemnify the Owners against all
consequences whatsoever (including loss of time) for any failure
or inability to do so.
(b) The Charterers shall at their own expense and by their own
procurement man, operate, supply, fuel and repair the Rig
whenever required during the Charter period and they shall pay
all charges and expenses of every kind and nature whatsoever
incidental to their use and operation of the Rig under this
Charter, including any foreign general municipality and/or state
taxes. The Master, officers and crew of the Rig shall be the
servants of the Charterers for all purposes whatsoever.
Charterers shall comply with the regulations regarding officers
and crew in force in accordance with any applicable law
including, without limitation, the laws of the jurisdiction where
the Rig is operating.
(c) During the currency of this Charter, the Owner shall have the
right to change the Rig's name and flag. Charterers, as part of
their obligation to maintain the Rig, shall keep the Rig painted
and free of rust in accordance with Charterer's standard
maintenance practices.
(d) The Charterers shall make no structural changes in the Rig,
including, without limitation, changes in the machinery, cranes,
pumps, generators, appurtenances or spare parts thereof, without
in each instance first securing the Owner's prior written
approval thereof, such approval not to be unreasonably withheld.
All such structural changes shall become the property of Owners
upon redelivery of the Rig.
(e) The Charterers shall have the use of all outfit, equipment and
appliances on board the Rig at the time of delivery, provided the<PAGE>
same or their substantial equivalent shall be returned to the
Owners on redelivery in the same good order and condition as when
received, ordinary wear and tear excepted. The Charterers shall
from time to time during the Charter period replace such items of
equipment as shall be so damaged or worn as to be unfit for use.
The Charterers are to ensure that all repairs to or replacement
of any damaged, worn or lost parts or equipment be effected in
such manner (both as regards workmanship and quality of
materials) as not to diminish the value of the Rig. Subject to
Clause 9(d) above, the Charterers have the right to fit
additional equipment at their expense and risk but such equipment
shall become the property of Owners at the end of the Charter
unless otherwise agreed in writing by the Owners and Charterers.
Any equipment, including radio equipment on hire on the Rig at
time of delivery, shall be kept and maintained by the Charterers
and the Charterers shall during the Charter period be responsible
for any lease contracts in connection therewith and shall pay for
all expenses incurred in connection therewith, also for any new
equipment required in order to comply with radio regulations.
(f) The Charterers shall conduct underwater surveys of the Rig and
clean and paint her underwater parts whenever the same may be
necessary, and in accordance with good maintenance practices.
10. Hire
(a) Commencing on the Time for Delivery of the Rig to Charterers,
Charterers shall pay to the Owners for the hire of the Rig a rate
(the "Hire") of USD __________, which rate shall remain in effect
through 31 December, 1996. Thereafter, on January 1, 1997 and
each succeeding anniversary of this Charter, the Hire shall be
adjusted by a percentage equal to the United States Consumer
Price Index (the applicable CPI to one which Owners and
Charterers may mutually agree); however, in no event shall the
Hire be less than USD ___________. Hire shall continue until the
date and hour when the Rig is redelivered by the Charterers to
her Owners. In the event the Rig is idle for more than thirty
(30) consecutive days, the Hire shall be reduced by fifty percent
(50%) for so long as the Rig is continuously idle subsequent to
such thirty (30) day period.
(b) Payment of Hire shall be made in cash, without discount,
commencing no later than the thirtieth (30th) day of the month
following the month during which the Time for Delivery occurred
and thereafter no later than the same day (i.e., the 30th day) of
each succeeding month in the currency and in United States
dollars at the place designated by Owners.
(c) Payment of Hire for the delivery date and redelivery date of the
Rig if less than a full day shall be calculated proportionally
according to the number of hours (rounded to the nearest quarter
hour) in the particular day.
(d) Should the Rig be lost or missing, Hire to cease from the date
and time when the Rig was lost, or last heard of; any Hire paid
in advance to be adjusted accordingly.<PAGE>
(e) Time shall be of the essence in relation to payment of Hire. Any
default of payment extending beyond a period of five (5) business
days from the date of Charterers receipt of notice from Owners
concerning such default shall entitle the Owners to withdraw the
Rig from the service of the Charterers without notice of any
protest and without interference by any court or any other
formality whatsoever, and shall, without prejudice to any other
claim the Owners may otherwise have against the Charterers under
the Charter, entitle Owners to damages in respect of all costs
and losses incurred as a result of the Charterers' default and
the ensuing withdrawal of the Rig including, without limitation,
legal fees incurred in the collection of such damages.
(f) Any delay in payment of Hire shall entitle the Owners to interest
at the rate per annum of ______%.
11. Mortgage or Lien
As of the date hereof, Owners has no arrangements to mortgage or
create a lien against the Rig, except as described on Appendix A
attached hereto. However, Owners shall have the right at any time
during the term of this Charter, in their sole discretion, to effect a
mortgage or place a lien upon the Rig. In the event Owner effects
such a mortgage or lien, notice of such mortgage or lien shall be
given to Charterer and if requested by Owner, displayed in a prominent
location on the Rig. Furthermore, it shall be a condition of any such
mortgage or lien, that the mortgagee or lienholder, as the case may
be, issue a written covenant to the Charterers, in a form and
substance reasonably acceptable to the Charterers, giving reasonable
assurance to the Charterers that the Charter will continue undisturbed
so long as the Charterers meet all of their obligations hereunder.
12. Insurance and Repairs
(a) During the Charter period the Rig shall be kept insured.
Insurances maintained shall include:
(1) Workmen's Compensation and Employer's Liability Insurance,
or the equivalent thereof, if required, in accordance with
applicable Federal, state, maritime and other laws governing
the Rig or its crew subject to a limit of liability as
required by applicable law.
(2) Comprehensive General Liability Insurance with limits of
liability of not less than the following:
(a) Bodily Injury - Any One Occurrence
USD 1,000,000
(b) Property Damage - Combined Single Limit
USD 5,000,000
Such Comprehensive General Liability Insurance to include:
(i) Contractors' Protective Liability covering any work
subcontracted by Charterer;<PAGE>
(ii) Contractual Liability, insuring Owner in respect to all
obligations set forth under the Charter;
(iii) Coverage for property damage due to blowout, fire and
explosion;
(iv) An "in rem" endorsement stating that an action "in rem"
shall be treated as a claim against the insured "in
personam;"
(v) Deletion of any watercraft exclusion; and
(vi) "Extended Reporting Provision" if policy is written on
a claims-made basis and is non-renewed or cancelled.
(vii) Completed Operations Liability coverage.
(3) Comprehensive Automobile Liability Insurance covering all
owned, non-owned and hired automotive equipment; policy
limits to be in accordance with applicable laws.
(4) Hull and Machinery Insurance covering the Rig, including its
equipment, spares and appurtenances, chartered by Charterer,
the amount of such insurance to be no less than USD
35,000,000. The insurance shall cover the Rig in the event
it is towed or accepts towage contracts. Furthermore, any
language in the Hull and Machinery policy which limits
coverage to an insured who is not an owner shall be deleted.
(5) War Risk Coverage, if required, as determined by Owner,
covering the Rig, its equipment, spares and appurtenances,
during the term of the Charter in the minimum amount of USD
35,000,000;
(6) Standard Protection & Indemnity Insurance at least equal to
USD 1,000,000. Such Insurance shall include Marine Rig
Liability coverage for all chartered or hired Rigs or other
marine equipment, voluntary "Removal of Wreck" coverage and
Pollution Insurance. Any language and any Protection and
Indemnity Insurance policy which limits coverage to an
insured who is not an owner shall be deleted.
(7) Unless carried by the air carrier as required by law or
regulation, Owned or Chartered Aircraft Liability Insurance
with a combined single limit of Bodily Injury (including
passenger) and Property Damage of USD 10,000,000 per
occurrence.
(8) Excess Liability or Umbrella Insurance, excess of the
scheduled underlying liability insurance is including
Comprehensive General Liability, Automobile Liability and
Protection & Indemnity, in the amount of USD 150,000,000.
The foregoing Insurances to be maintained throughout the Charter
period shall be the responsibility of Charterers; provided,
however, that Charterers may request Owners to provide such
Insurances through Owners' underwriters in which event Owners<PAGE>
will secure such coverages in accordance with the provisions of
this Clause 12 and thereafter invoice Charterers for the cost of
all premiums associated therewith. Any invoice for such premiums
shall be paid by Charterers within sixty (60) days after receipt.
All insurance policies required hereunder as provided above shall
be in a form and with underwriters as approved by Owners, such
approval not to be unreasonably withheld. Furthermore, Owners
shall be listed as a named insured and joint loss payee on the
Hull and Machinery and War Risk policies for amounts in excess of
USD 250,000 without liability for any premiums or club calls,
however, Charterers agree to cause their underwriters to endorse
the Hull and Machinery Policy and War Risk Policy required
hereunder so that in the event of a total loss of the Rig
(actual, constructive, compromised, or agreed), all proceeds of
such insurance, up to USD 35,000,000, shall be paid to Owners, as
the sole loss payee. The policies shall also provide that Owner
will be given at least thirty (30) days' notice of cancellation
or material alteration. Notwithstanding any provision herein to
the contrary, any deductibles, sue and labor, and salvage charges
shall be for the account of Charterers.
All policies of insurance provided by Charterers as required
hereunder shall contain a waiver of subrogation endorsement
whereby underwriters waive their right to subrogation (whether by
loan receipts, equitable assignment or otherwise) against Owners,
their subsidiaries, affiliated companies, employees, officers,
directors or otherwise. Furthermore, all coverages required
hereunder shall be primary in relation to any policies of
insurance carried by Owners themselves.
The Charterers shall, subject to the approval of the Owners and
the Underwriters and unless otherwise agreed, effect all insured
repairs and shall undertake settlement of all costs in connection
with such repairs as well as insured charges, expenses and
liabilities (reimbursement to be secured by the Charterers from
the Underwriters) to the extent of coverage under the insurances
herein provided for.
Unless otherwise agreed between Owners and Charterers, the
Charterers shall remain responsible for and to effect repairs and
settlement of costs and expenses incurred thereby in respect of
all other repairs not covered by the insurances and/or not
exceeding any possible franchise(s) or deductibles provided for
in the insurances.
All time used for repairs under the provisions of this sub-clause
(a) of this Clause including any deviation shall count as time on
Hire and shall form part of the Charter period.
(c) Should the Rig become an actual, constructive, compromised or
agreed total loss under the insurances required under sub-clause
(a) of this Clause 12, Owners shall receive from the insurance
proceeds an amount equal to the Rig's agreed upon value of the
Hull and Machinery Insurance which shall be USD 35,000,000,
excess of any deductible; provided, however, that the Owners'
receipt of insurance proceeds under such Hull and Machinery<PAGE>
Insurance shall not vitiate Charterer's obligation to Owner to
pay any accrued or unpaid Hire, including any Hire payable on the
date of such loss, and (ii) all other sums that may be due and
payable on the date of such loss pursuant to the terms of this
Charter.
(d) If the Rig becomes an actual, constructive, compromised or agreed
total loss under the insurances arranged by the Charterers in
accordance with sub-clause (a) of this Clause, this Charter shall
terminate as of the date of such loss.
(e) The Owners shall upon the request of the Charterers, promptly
execute such documents as may be required to enable the
Charterers to abandon the Rig to insurers and claim a
constructive total loss. However, Charterers shall not have the
right to compromise or agree that the Rig is a constructive total
loss without first obtaining Owner's prior written consent.
(f) For the purpose of insurance coverage against marine and war
risks under the provisions of sub-clause (a) of this Clause 12,
the value of the Rig is ______________.
13. Insurance, Repairs and Classification
NOT APPLICABLE.
14. Redelivery
The Charterers shall at the expiration of the Charter period redeliver
the Rig at a safe place at the Place of Redelivery or as may otherwise
be mutually agreed by the parties hereto. The Charterers shall use
their best efforts to give the Owners not less than thirty (30) days
prior written notice of the date of redelivery; however,
notwithstanding the notice of redelivery required hereby, Charterers
shall remain liable to Owners for the payment of Charter Hire for the
Charter Period.
Should the Rig be involved in operations upon a well location which
would preclude its release without jeopardizing the safety and
integrity of such well and/or operations, and such causes Charterers
to hold over the Rig's redelivery beyond the date given in the notice,
Charterers shall continue to be obligated to Owners per the terms of
this Charter. Charterers to keep Owners well posted on the
anticipated date for redelivery.
The Rig shall be redelivered to the Owners in the same or as good
structure, state, condition and class as that in which she was
delivered, fair wear and tear not affecting class excepted. In all
instances the Rig shall be equipped, including spare parts, equipment
and appurtenances, as it was upon the date it was delivered to
Charterer. There shall be the same quantity and grade of drilling
tubulars with the Rig (onshore or onboard) upon redelivery as there
were at delivery under the Charter. In the event Owners or Charterers
have any disagreements with the On- or Off-Survey provided for in
Clause 16, they shall notify the other party of such disagreements or
objections in writing within 15 days of receipt of the survey report,
otherwise such survey will be deemed to be accepted. In the event of<PAGE>
a disagreement the parties shall make a good faith effort to resolve
the disagreement. Upon resolution of the disagreement the parties
shall make any monetary payment required within seven (7) business
days of such resolution.
Charterers shall use their best efforts to notify any third party, if
requested by Owner, on or before the termination date of the Charter
that equipment owned by such third party shall be removed from the Rig
and that any contracts relating to such equipment onboard the Rig
shall be terminated.
15. Non-Lien and Indemnity
The Charterers will not suffer, nor permit to be continued, nor shall
they have any right, power or authority to create, incur or permit to
be imposed upon the Rig any liens or encumbrances whatsoever, other
than liens which may exist by right of law in the ordinary and normal
course of business. Further, Charterer covenants and agrees that
Charterer shall not assert any lien, claim, charge or encumbrance
against the Rig arising out of or connected with the performance of
this Charter.
The Charterers further agree to fasten to the Rig in a conspicuous
place and to keep so fastened during the Charter period a notice
reading as follows:
"THIS RIG IS THE PROPERTY OF ENSCO PLATFORM COMPANY. IT IS UNDER
CHARTER TO ENSCO OFFSHORE COMPANY AND BY THE TERMS OF THE CHARTER
PARTY NEITHER THE CHARTERERS NOR THE MASTER HAVE ANY RIGHT, POWER OR
AUTHORITY TO CREATE, INCUR OR PERMIT TO BE IMPOSED ON THE RIG ANY LIEN
WHATSOEVER."
The Charterers shall indemnify and hold the Owners harmless against
any lien of whatsoever nature arising upon the Rig during the Charter
period while she is under the control of the Charterers, and against
any claims against the Owners arising out of or in relation to the
operation of the Rig by the Charterers. Should the Rig be arrested by
reason of claims or liens arising out of her operation hereunder by
the Charterers, the Charterers shall at their own expense take all
reasonable steps to secure that within a reasonable time the Rig is
released and at their own expense put up bail to secure release of the
Rig. Furthermore, Charterers agree to reimburse Owners for any loss,
cost or charge suffered or incurred by the Owners in challenging,
defending, settling or discharging any such lien, claim, charge or
encumbrance and any other losses or cause suffered or incurred by the
Owners in any way in connection with such lien, claim, charge or
encumbrance arising therefrom.
Charterers hereby agree to protect, indemnify and save harmless Owners
from and against any all claims and costs (including reasonable
attorneys' fees and expenses), demands and causes of action on account
of any property damage or loss, or personal injury or death suffered
by Charterer, any party under contract to Charterer and their
respective employees, subcontractors and invitees.
The indemnity obligations and/or liabilities assumed by Charterers
under the terms of this Charter shall be without limit and without<PAGE>
regard to the cause or causes thereof, the unseaworthiness of the Rig,
strict liability or the negligence of any party or parties, whether
such negligence be sole, joint or concurrent, active or passive.
Furthermore, Charterer's indemnity of Owners shall be without regard
to and without any right to contribution from any insurance maintained
by Owners under this Charter.
16. Lien
NOT APPLICABLE.
17. Towage
NOT APPLICABLE.
18. Wreck Removal
In the event of the Rig becoming a wreck or obstruction to navigation
the Charterers shall indemnify the Owners against any sums whatsoever
which the Owners shall become liable to pay and shall pay in
consequence of the Rig becoming a wreck or obstruction to navigation.
19. Taxes
Charterers and Owners shall each be responsible for and shall pay any
income taxes or similar charges levied against the revenue received by
each party pursuant to this Charter. Provided, however, except as
otherwise provided herein, Charterer shall be responsible for any
local taxes or similar charges arising during the Charter period
levied against the Rig by any federal, state or local governments
unless otherwise mutually agreed and shall also be responsible for and
pay any employment, payroll and other related taxes for which it is
liable by law. Charterer shall also be responsible for any duties,
taxes or fees resulting from chartering or moving the rig to other
jurisdictions. Owners shall be responsible for any taxes or similar
charges levied by the United States or the country in which the Rig is
registered. Any taxes resulting from ownership of the rig from other
jurisdictions shall be Owners' responsibility.
20. Assignment and Sub-Demise
The Charterers shall not assign this Charter nor sub-demise the Rig to
a party, except with the prior consent in writing of the Owners.
21. Bills of Lading
The Charterers agree to indemnify the Owners against all consequences
or liabilities arising from the Master, officers or agents signing
Bills of Lading or other documents.
22. War
(a) The Rig, unless the consent of the Owners be first obtained, is
not to be ordered nor continue to any place nor be used on any
service which will bring it within a zone which is dangerous as
the result of any actual or threatened act of war, war,
hostilities, warlike operations, acts of piracy or of hostility<PAGE>
or malicious damage against this or any other Rig or its cargo by
any person, body or state whatsoever, revolution, civil war,
civil commotion or the operation of international law, nor be
exposed in any way to any risks or penalties whatsoever
consequent upon the imposition of sanctions, nor carry any goods
that may in any way expose her to any risks of seizure, capture,
penalties or any other interference of any kind whatsoever by the
belligerent or fighting powers or parties or by any Government or
Ruler.
(b) The Rig to have liberty to comply with any orders or directions
as to departure, arrival, routes, ports of call, stoppages,
destination, delivery or in any otherwise whatsoever given by any
Government or any person (or body) acting or purporting to act
with the authority of such Government or by any committee or
person having under the terms of the war risks insurance on the
Rig the right to give any such orders or directions.
(c) In the event of outbreak of war (whether there be a declaration
of war or not) between any two or more of the countries having
jurisdiction over the Rig, both the Owners and the Charterers
shall have the right to cancel this Charter, whereupon the
Charterers shall redeliver the Rig to the Owners in accordance
with Clause 14, if she has cargo on board after discharge thereof
at destination, or if debarred under this Clause from reaching or
entering it at a near open and safe port as directed by the
Owners, or if it has no cargo on board, at the port at which it
then is or if at sea at a near open and safe port as directed by
the Owners, in all cases Hire shall continue to be paid in
accordance with Clause 10 and except as aforesaid all other
provisions of this Charter shall apply until redelivery.
23. Movement Across Borders
Charterer must advise Owner if Charterer is bidding the Rig,
submitting a proposal, or negotiating for work in another jurisdiction
within the Trading Limits specified in Clause 5. Charterer to keep
Owner informed of status of such work possibilities and to promptly
advise Owner of any plans to move the Rig across international
borders.
24. Law and Arbitration
If any dispute should arise in connection with the interpretation and
fulfillment of this Charter, the same shall be decided by arbitration
in the city of Dallas, Texas, U.S.A. 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 American Arbitration
Association.
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.
If one of the parties fails to appoint an Arbitrator, either<PAGE>
originally or by way of substitution, for two (2) weeks after the
other party having appointed his Arbitrator has sent the party making
default notice by mail, cable or telex 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.
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 any
other competent authority in the same manner as a judgment in the
Court of Justice.
This Charter shall be governed by and subject to the General Maritime
Laws of the United States.
25. Capital Expenditures
Subject to the approval of the Owners, to the extent required under
Clause 9(d), Charterers may, at Charterer's expense, modify, enhance,
refurbish, add equipment or fixtures to or otherwise improve the
value, structure or marketability of the Rig. To the extent that
expenses incurred by Charterers with respect to any of the foregoing,
constitute capital expenditures under generally accepted accounting
principles, consistently applied, then Owners shall reimburse
Charterers for the actual cost of such capital expenditure within
thirty (30) days following the last day of the month during which such
expenses were incurred. The Hire payable pursuant to Clause 10(a)
shall be increased at the end of any calendar quarter during which a
capital expenditure reimbursement is paid by an amount calculated to
provide Owners with a fifteen percent (15%) pre-tax return on the
capital expenditure over the remaining depreciable life of the Rig,
all as calculated in accordance with generally accepted accounting
principles, consistently applied.
IN WITNESS WHEREOF, this Agreement has been executed to be effective
as of 00:00 Central European Time on the ______ day of _______________,
1996.
Witness: ENSCO Platform Company
"Owners"
_____________________________ By:_________________________
_____________________
Vice President
Witness: ENSCO Offshore Company
"Charterers"
_____________________________ By:___________________________
_________________
Vice President <PAGE>
<PAGE>
EXHIBIT NO. 10.4
MASTER SERVICE AGREEMENT
This Agreement is made and entered into as of the ______ of June,
1996, by and between ENSCO International Incorporated, a Delaware corpora-
tion ("ENSCO") and Dual Holding Company, a Delaware corporation ("Dual").
WHEREAS, Dual, through its subsidiaries, owns and/or operates offshore
jackup and platform drilling rigs and, from time to time, has need of
certain goods, services and/or facilities in support of and in furtherance
of its operations, both onshore and offshore; and
WHEREAS, ENSCO is an international offshore drilling contract company
which is in the business of furnishing certain goods, services and/or
facilities related to the oil and gas industry which Dual may have need to
use, purchase or hire, from time to time; and
WHEREAS, this Agreement is intended to be a blanket agreement which
shall govern all relations between Dual and ENSCO with respect to the
subject matter specified herein and, in anticipation of requests for and
furnishing of goods, services and/or facilities, ENSCO and Dual have agreed
that the specific terms and conditions regarding the delivery, price,
quantity and quality of such goods, services and/or facilities shall be as
set forth in this Agreement or, with respect to additional goods, services
and/or facilities not contemplated by the terms hereof, in a specific "work
order" or "purchase order" in the forms attached hereto at Appendix "A".
In consideration of the premises and mutual covenants and agreements
set forth herein, ENSCO and Dual agree as follows:
1. DESCRIPTION OF GOODS, SERVICES AND/OR FACILITIES AVAILABLE
ENSCO, directly or through its subsidiaries, shall furnish or make
available for the benefit of Dual and its subsidiaries the following
goods, services and/or facilities:
A. Accounting Services including, without limitation, maintenance of
journals, general bookkeeping, preparation of financial reports
for internal circulation and delivery to third parties, prepara-
tion of financial statements and liaison with outside accoun-
tants.
B. Engineering Services including, without limitation, analysis of
rigs, analysis of engineering requirements with respect to
tenders, bids and contracts and analysis of repairs and capital
expenditure requirements.
C. Human Resource Services including, without limitation, adminis-
tration of personnel, coordination of hiring and termination of
employees and administration of employee benefits.
D. Insurance Administration Services including, without limitation,
analysis and processing of claims, preparation of recommendations
to contest claims, liaison with third party insurers and liaison
with insurance defense legal counsel.
E. Legal Services including, without limitation, review of con-<PAGE>
tracts, liaison with outside counsel, litigation support and
analysis of employee claims.
F. Management Information System Services including, without limita-
tion, preparation and delivery of such reports as may be agreed
to by Dual and ENSCO.
G. Purchasing Services including, without limitation, solicitation
of bids or quotes for goods, services and/or facilities from
third party vendors and/or suppliers, logistical support for the
delivery of such goods, services or facilities and coordination
of warranty claims.
H. Safety Related Services including, without limitation, analysis
of current safety practices, provision of educational materials
and seminars relating to safety practices and assistance with
training exercises.
I. Treasury Services including, without limitation, management of
funds, coordination and tracking of receipts and disbursements,
maintenance and monitoring of bank accounts, tracking and recon-
ciliation of wire and cash transactions and administration of
Dual's financial obligations.
2. TERM
The term shall commence as of the date first written above and shall,
unless the term is otherwise extended in writing executed by Dual and
ENSCO or earlier terminated as provided herein, expire on June _____,
1997.
3. MONTHLY FEE
For and in consideration for the furnishing by ENSCO of the goods,
services and/or facilities described in paragraph 1 above, Dual shall
pay to ENSCO a monthly fee calculated as set forth on Appendix "B",
each such monthly fee due and payable in full within thirty (30) days
after the last day of the month during which goods, services and/or
facilities were furnished and subject to no credit, offset or deduc-
tion except as specifically provided in that certain Contractor Labor
Agreement dated of even date herewith.
4. PROCEDURE FOR REQUESTING ADDITIONAL GOODS, SERVICES AND/OR FACILITIES
In addition to the goods, services and/or facilities to be provided
pursuant to Section 1 above, Dual may request that ENSCO deliver
additional goods, services and/or facilities. Dual shall submit
written requests for such additional goods, services and/or facilities
in writing in the form set forth in the work order or purchase order
in the forms attached at Appendix "A". Each such order shall be
executed by both parties.
Each work order and purchase order shall set forth with specificity
the following, as applicable:
A. Identification of the goods required;
B. Identification of the services required;<PAGE>
C. Identification of the facilities required;
D. The quantity of goods, services and/or facilities required;
E. The unit prices, if applicable of the goods, services and/or
facilities required;
F. The payment terms agreed to with respect to the goods, services
and/or facilities;
G. Modifications, amendments or changes to the specific terms of
this Agreement; and
H. Such other information as is necessary or desirable to clearly
identify the terms and conditions with respect to each work order
or purchase order.
5. PAYMENT FOR ADDITIONAL GOODS, SERVICES AND/OR FACILITIES
Payment for additional goods, services and facilities provided by
ENSCO to Dual shall be in accordance with the agreed terms of the
applicable work order or purchase order or, in the absence of such
terms, payment shall be made within thirty (30) days after receipt of
the invoice submitted by ENSCO to Dual.
6. REPORTING; RECORDKEEPING
ENSCO may periodically request from Dual various reports concerning or
relating to the goods, services and/or facilities provided hereunder
and Dual shall use its reasonable efforts to timely furnish such
reports.
Dual shall keep and maintain all records relating to the delivery of
goods, services and/or facilities pursuant to this Agreement and its
order submissions at its main location for not less than six (6) years
following completion of each work order or purchase order.
Dual agrees to permit any duly authorized employee, agent or represen-
tative of ENSCO to inspect its books and records. Dual further agrees
to permit any duly authorized employee, agent or representative of
ENSCO to copy and make extracts or compilations from or, at ENSCO's
request to send to ENSCO, free of charge, copies of all books and
records pertaining to the subject matter of this Agreement.
7. INDEMNFICATION
Dual agrees to indemnify and hold ENSCO, its subsidiaries, affiliates,
directors, officers, agents and employees (the "Indemnified Parties")
harmless from and against any and all loss, liability, damages (in-
cluding punitive and/or exemplary damages), costs and expenses of
every kind (including, but not limited to, counsel fees and expenses)
which may be incurred by or threatened against the Indemnified Parties
or any of them by reason of any demand, claim, action or suit arising
out of or by reason of any action or omission of Dual, its representa-
tives, agents, servants and employees, in connection with Dual's
business, including, without limitation, worker's compensation claims,
product liability claims, environmental claims, breach of contract
claims, and tort claims. Dual shall assume the defense of any action
or suit brought against the Indemnified Parties or any one of them by
reason of any of the acts or omissions set forth in the preceding
sentence, with counsel acceptable to ENSCO; and Dual shall pay any
damages assessed against, or that are payable by, the Indemnified<PAGE>
Parties or any one of them with respect to any act or omission for
which indemnification is sought pursuant to this Agreement. ENSCO
reserves the right for itself and all other Indemnified Parties to be
represented by its own counsel, at its own expense, in the defense of
any such suit, action or proceeding.
8. CONFIDENTIALITY
Dual acknowledges that it may, from time to time, receive price lists,
quotations, sales information, product information, projections,
diagrams, models, previews, software, reproductions and other informa-
tion ("Confidential Information") pursuant to the terms hereof. Dual
acknowledges that such Confidential Information is the proprietary
property of ENSCO and that disclosure by Dual would cause irreparable
harm and injury to ENSCO. Therefore, Dual agrees to protect and
safeguard the Confidential Information, and disclose same only to
those of its employees who have a need to know such Confidential
Information. Dual understands and agrees that a breach or threatened
breach of this section may be enjoined or restrained without bond or
proof of actual damages in any court having jurisdiction. Upon
expiration or termination of this Agreement, Dual shall return to
ENSCO all Confidential Information and all copies thereof.
9. TERMINATION
This Agreement may be terminated at any time, without cause, by (1)
mutual written agreement of the parties, (2) ENSCO upon its delivery
of its notice of termination to Dual and the expiration of thirty (30)
days following the delivery of such notice or (3) Dual upon its giving
written notice of termination to ENSCO and the expiration of thirty
(30) days following the delivery of such notice.
This Agreement may be terminated without notice at any time upon the
occurrence of any one or more of the following: (1) the default by
either party of any material term or condition hereof and the failure
to cure such breach within thirty (30) days after receipt of written
notice of such breach, or (2) if either party becomes bankrupt or
insolvent or files or has filed against it a petition in bankruptcy or
makes a general assignment for the benefit of its creditors or a
receiver or trustee is appointed for all or a substantial part of its
business or properties.
Upon the expiration or earlier termination of this Agreement, Dual
shall promptly return to ENSCO all documents, catalogs, literature,
materials and tangible property supplied by ENSCO to Dual and all
Confidential Information.
10. MISCELLANEOUS
No Assignment - Neither this Agreement nor any of the rights or
obligations of either party hereunder may be assigned, delegated,
subcontracted, transferred or conveyed by operation of law or other-
wise without the prior written consent of the other party in each
instance, nor shall this Agreement or any rights of either party
hereto inure to the benefit of any trustee in bankruptcy, receiver,
creditor, trustee of, or successor to, the other parties business or
its property, whether by operation of law or otherwise nor to a<PAGE>
purchaser, legatee or devisee of all, or any part, of the capital
stock or equity interest of either party.
Compliance with Applicable Laws - Dual shall comply with any and all
applicable federal, state or local statutes and laws, and all rules
and regulations promulgated thereunder, related to its performance
pursuant to this Agreement. Each party shall obtain, and shall insure
that its employees obtain, at their respective expense, all necessary
certificates, registrations, licenses and permits required by applica-
ble law, rule or regulation to operate in accordance with the terms of
this Agreement.
No Waiver - No delay on the part of either party in exercising any of
their respective rights hereunder, nor the failure to exercise the
same, nor the acquiescence in or waiver of a breach of any term,
provision or condition of this Agreement shall be deemed or construed
to operate as a waiver of such rights or acquiescent thereto except in
the specific instance for which given.
Amendments - None of the terms, provisions or conditions of this
Agreement shall be deemed to have been waived, amended, modified or
altered by any act, course of conduct or knowledge of either party,
its respective agents, servants or employees, and the terms, provi-
sions and conditions of this Agreement may not be changed, waived,
varied or modified except by a statement in writing signed by duly
authorized representatives of both parties.
Notices - Any notice or process shall be in writing and be deemed to
have been duly given to a party if the same is delivered personally or
sent by registered or certified mail, return receipt requested, to the
location set forth hereafter:
ENSCO International Incorporated
2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
Attn: Chief Financial Officer
Dual Holding Company
2700 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
Attn: Chief Financial Officer
Entire Agreement - This Agreement supersedes any and all prior agree-
ments or understandings, oral or written, express or implied, and
encompasses the entire understanding between the parties with respect
to its subject matter. There are no inducements, representations,
warranties, covenants, agreements or collateral understandings, oral
or otherwise, express or implied, affecting this agreement not ex-
pressly set forth herein. Except as specifically set forth in such
work order or purchase order, the general rights, duties and obliga-
tions as between Dual and ENSCO shall, in all cases (unless supple-
mented, modified or amended as specifically permitted herein) be
governed by the terms and conditions set forth hereinafter.
Third Parties - This Agreement and rights and obligations hereunder do<PAGE>
not, and shall not confer any rights to any third parties and no third
parties shall have any rights under this Agreement.
Severability - If any provision of this Agreement shall to any extent
be finally held to be prohibited, invalid or unenforceable in any
jurisdiction, the remaining provisions of this Agreement shall remain
in full force and effect, and any such prohibition, invalidation or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Governing Law - This Agreement and performance hereunder shall in all
respects be exclusively governed by the laws of the State of Texas
applicable to contracts made and to be fully performed in such state,
regardless of the choice of law rules and conflict of law principals
applied by the courts and jurisdictions affected by this Agreement.
EXECUTED to be effective as of the date set forth above.
ENSCO International Incorporated
By:_____________________________
Name:___________________________
Title:__________________________
Dual Holding Company
(f/k/a DUAL DRILLING COMPANY)
By:_____________________________
Name:___________________________
Title:__________________________<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the June 30, 1996 financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> $ 15,513
<SECURITIES> 0
<RECEIVABLES> 18,825
<ALLOWANCES> 0
<INVENTORY> 2,185
<CURRENT-ASSETS> 45,022
<PP&E> 279,067
<DEPRECIATION> 932
<TOTAL-ASSETS> 417,240
<CURRENT-LIABILITIES> 24,423
<BONDS> 149,973
<COMMON> 0
0
0
<OTHER-SE> 218,612
<TOTAL-LIABILITY-AND-EQUITY> 417,240
<SALES> 0
<TOTAL-REVENUES> 3,634
<CGS> 0
<TOTAL-COSTS> 1,534
<OTHER-EXPENSES> 1,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 652
<INCOME-PRETAX> 264
<INCOME-TAX> 83
<INCOME-CONTINUING> 181
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 181
<EPS-PRIMARY> 181.00
<EPS-DILUTED> 181.00<PAGE>
</TABLE>
