EXHIBIT 10.1
Execution Copy
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CONSTRUCTION SUPERVISORY AGREEMENT
dated as of August 12, 1999
among
RBF EXPLORATION CO.,
as Owner
and
RBF EXPLORATION II INC.,
as Construction Supervisor
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CONSTRUCTION SUPERVISORY AGREEMENT
This CONSTRUCTION SUPERVISORY AGREEMENT, dated as of August 12,
1999 (as amended, supplemented or otherwise modified from time to
time, this "Agreement") among RBF EXPLORATION CO., a Nevada
corporation, as owner ("Owner"), and RBF EXPLORATION II INC., a Nevada
corporation, as construction supervisor ("Construction Supervisor").
PRELIMINARY STATEMENT
A. Owner is a party to that certain Contract for the
Construction and Sale of Vessel (Hull No. HRBS6) with Hyundai Heavy
Industries Co., Ltd. and Hyundai Corporation (each, a "Builder"),
dated November 14, 1997 (as amended, supplemented or otherwise
modified from time to time with the consent of Construction
Supervisor, Indenture Trustee and the Surety, the Construction
Contract ) with respect to the construction of a semi-submersible
drilling vessel as described in the specifications to the Construction
Contract (the Drilling Rig ).
B. Owner and Shell Deepwater Development, Inc. ("SDDI"), have
entered into that certain Offshore Daywork Drilling Contract, with an
effective date of August 12, 1998 (as amended, supplemented or otherwise
modified from time to time with the consent of Construction Supervisor,
Indenture Trustee and the Surety, the "SDDI Contract").
C. Subject to the terms and conditions hereof, Owner desires
to appoint Construction Supervisor as Owner's sole and exclusive agent
to supervise the design and construction of the Drilling Rig in
accordance with the Construction Contract, the acquisition and
assembly of the equipment to be used thereon, and the delivery of the
Drilling Rig to SDDI in accordance with the SDDI Contract, and
Construction Supervisor desires to accept such appointment.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto covenant and agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. Capitalized terms used but not
otherwise defined in this Agreement have the meanings set forth below:
"Advance Payment Refund Amount" - at any time, the aggregate of
all payments, advances or reimbursements theretofore made by Owner or
Indenture Trustee on account of the Cost of the Project to the
Builders, any vendor of Owner s Supplies or any other equipment,
Construction Supervisor or any other person, under the Construction
Contract or any other contract or agreement with respect to the
provision of any goods or services or for other purposes relating to
the Project, including, without limitation, amounts advanced or
incurred pursuant to Section 6.3 hereof, as set forth in a certificate
of Owner (or the Indenture Trustee as Owner s assignee), which
certificate shall be conclusive and binding upon Construction
Supervisor.
"Anticipated Delivery Date" - May 1, 2000.
"Business Day" - has the meaning set forth in the Trust
Indenture.
"Certificate of Requisition" - as defined in Section 3.2.
"Commencement Date" - the date and hour that the last of the
following conditions has been satisfied: (i) Owner s full crew is
aboard, (ii) the Drilling Rig has cleared customs and other
formalities as contemplated by the SDDI Contract, (iii) SDDI has
inspected and accepted the Drilling Rig and Owner s personnel to
perform the Work, (iv) the Drilling Rig and Owner s full crew are in
all respects ready to commence and sustain continued drilling
operations at the rated specifications of Appendix A to the SDDI
Contract during the term of the SDDI Contract, and (v) the Drilling
Rig has departed a mutually agreed (by Owner and SDDI) U.S. Gulf of
Mexico port or location after loading SDDI s drilling equipment and
materials and is en route to SDDI s first drilling or well location
under the SDDI Contract (or would have departed in the event of SDDI s
failure to designate such location in a timely manner).
Notwithstanding the foregoing, however, SDDI may require or allow the
Drilling Rig to commence work at an earlier date in which case such
earlier date shall be the Commencement Date and any of the above
requirements for the Commencement Date which have not been met shall
be deemed waived.
"Complete" or "Completion" - with respect the Project, means that
(i) the Drilling Rig (a) has been completed and delivered to Owner
under the Construction Contract substantially in accordance with the
Specifications, (b) has been completed and equipped in all material
respects in accordance with the requirements of SDDI Contract and the
specifications set forth therein and is fully capable of performing
the Work in accordance with the requirements and specifications of the
SDDI Contract, (c) has been delivered to and unconditionally accepted
by SDDI under the SDDI Contract without waiver of any material
requirement of the SDDI Contract without the consent of Indenture
Trustee, and (d) is free and clear of liens except as permitted by the
Project Documents, and (ii) the Commencement Date has occurred.
"Cost of the Project" - the total cost of design, construction,
equipping, testing and delivering the Drilling Rig including all
costs of any nature whatsoever relating thereto and causing acceptance
of the Drilling Rig by SDDI under and in accordance with the SDDI
Contract.
"Default" - any event or circumstance which with the giving of
notice, passage of time or both would constitute an Event of Default.
"Environmental Laws" - any and all Governmental Requirements
pertaining to health, safety or the environment or the regulation of
hazardous substances or pollutants in effect in any and all
jurisdictions in which Owner is conducting or at any time has
conducted business, or where any Property of Owner is located,
including without limitation, the Oil Pollution Act of 1990 ("OPA"),
the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation , and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act of 1970, as amended, the Resource
Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe
Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and
any other international, federal, local or state environmental
conservation or protection laws. The terms "oil" and "discharge"
shall have the meanings specified in OPA, the terms "hazardous
substance" and "release" (or "threatened release") have the meanings
specified in CERCLA, except that "hazardous substance" shall also
include petroleum and any fraction thereof, and the terms "solid
waste" and "disposal" (or "disposed") have the meanings specified in
RCRA; provided, however, that (i) in the event either OPA, CERCLA or
RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective
date of such amendment and (ii) to the extent the laws of the state
in which any Property of the Issuer is located establish a meaning for
"oil," "discharge," "hazardous substance," "release," "solid waste" or
"disposal" which is broader than that specified in either OPA, CERCLA
or RCRA, such broader meaning shall apply.
"Event of Default" - as defined in Section 6.1.
"Excess Costs" - the full amount of the Cost of the Project in
excess of $315,000,000.
"Governmental Authority" - the country, the state, county, city
and political subdivisions in which any Person or such Person's
Property is located or which exercises jurisdiction over any such
Person or such Person's Property, and any court, agency department,
commission, board, body, bureau of instrumentality of any of them
including monetary authorities which exercises jurisdiction over any
such Person or such Person's Property. Unless otherwise specified,
all references to Governmental Authority herein shall mean a
Governmental Authority having jurisdiction over Owner or any of its
Property.
"Governmental Requirements" - any law, statute, code, ordinance,
order, determination, rule, regulation, publication, judgment, decree,
injunction, franchise, permit, registration, consent, approval,
certificate, license, authorization or other directive or requirement
(whether or not having the force of law), including, without
limitation, Environmental Laws, energy regulations and occupational,
safety and health standards or controls, of any Governmental
Authority.
"Indemnified Parties" - Owner, Indenture Trustee and any other
holder of any mortgage or security interest in the Drilling Rig, any
party providing financing to Owner in connection with the Project
(including, without limitation, all Credit Support Parties, as defined
in the Trust Indenture), the Surety and their respective directors,
officers, shareholders, partners, employees, attorneys, agents and
licensees and the successors and assigns of any of the foregoing.
"Indenture Trustee" - the trustee under the Trust Indenture.
"Initial Acceptance" - with respect to the Drilling Rig, means
that (i) the Drilling Rig has been completed in accordance with the
Specifications and tendered to Owner under the Construction Contract,
(ii) all trials contemplated by the Construction Contract have been
completed, and (iii) Owner has accepted the Drilling Rig under the
Construction Contract.
"Initial Acceptance Date" - June 28, 2000.
"Liquidated Damages" - liquidated damages in the amount of
$65,767,852, which amount shall be payable in addition to, and not to
the exclusion of, the Advance Payment Refund Amount as set forth in
this Agreement.
"Note Holder" - has the meaning set forth in the Trust Indenture.
"Outside Date" - September 30, 2000 (unless the Indenture Trustee
is deemed to have consented to an extension of the Outside Date as
provided in the penultimate Provided, However paragraph of the
Performance Bond in which event the Outside Date shall be extended
accordingly).
"Owner s Supplies" - all of the items to be furnished by Owner
for the Drilling Rig as specified in the Specifications.
"Performance Bond" - as defined in Section 2.6.
"Person" - an individual, partnership, corporation, limited
liability company, trust, unincorporated association or organization,
government, governmental agency or governmental subdivision.
"Project" - the design, construction, equipping and testing of
the Drilling Rig and causing its delivery to and acceptance by SDDI,
all as contemplated by and in accordance with this Agreement, the
Construction Contract and the SDDI Contract.
"Property" - any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Project Documents" - has the meaning set forth in the Trust
Indenture.
"Specifications" - the specifications and other information set
forth in Exhibits 1 through 4, inclusive, of the Construction
Contract, as the same may be modified from time to time in accordance
with the terms of the Construction Contract and with the consent of
Construction Supervisor, Indenture Trustee and the Surety.
"Surety" - collectively, the providers of the Performance
Bond.
"Termination Date" - as defined in Section 4.2.
"Trust Indenture" - the Trust Indenture and Security Agreement
dated as of August 12, 1999, between RBF Exploration Co. and Chase
Bank of Texas, National Association, as from time to time amended,
supplemented or modified.
"Work" - the drilling, deepening, sidetracking, workover,
testing, completing and/or plugging and abandonment operations
required by SDDI on SDDI s well(s) or xxxxx for others as designated
by SDDI, together with ancillary services such as soil survey boring,
environmental data collection, fishing and retrieval (both down-hole
and on the sea floor), other services and subsea activities required
by SDDI for which the Drilling Rig is fit, and the moving of the
Drilling Rig between locations.
ARTICLE II
AGENCY
SECTION 2.1. Appointment of Construction Supervisor. (a)
Pursuant to and subject to the terms and conditions set forth herein,
Owner hereby irrevocably designates and appoints Construction
Supervisor as its exclusive agent to design, construct, acquire, equip
and test the Drilling Rig in accordance with the terms, conditions and
requirements of the Construction Contract and the SDDI Contract and
to deliver the Drilling Rig to, and cause acceptance of the Drilling
Rig by, SDDI in accordance with the requirements of the SDDI Contract.
In connection with the foregoing, Owner expressly authorizes
Construction Supervisor, or any agent or contractor of Construction
Supervisor, and the Construction Supervisor agrees, to take all action
necessary or desirable for the performance and satisfaction of all of
Construction Supervisor's obligations hereunder.
(b) Subject to the terms and conditions of this Agreement,
Construction Supervisor shall have sole management and control over
the construction means, methods, sequences and procedures with respect
to the construction and equipping of the Drilling Rig.
(c) Construction Supervisor shall undertake to perform the
Project in accordance with the provisions of this Agreement including,
without limitation, the provisions of Section 2.5, and, subject to the
provisions hereof, shall pay for the Cost of the Project.
Construction Supervisor shall make all commercially reasonable efforts
to cause the Project to be Complete on or before the Anticipated
Delivery Date and shall, in any event, cause the Project to be
Complete on or before the Outside Date. Construction Supervisor shall
pay for the Cost of the Project using (i) the proceeds of advances
under Article III hereof and (ii) its own funds to the extent of all
Excess Costs. Construction Supervisor shall be solely responsible for
payment of all Excess Costs. If, for any reason, the proceeds of
advances under Article III hereof are insufficient to pay the entire
Cost of the Project, Construction Supervisor shall, nonetheless, be
bound and required to fulfill its obligations hereunder and pay the
entire Cost of the Project, and, under no circumstances, shall the
insufficiency of the funds available to Construction Supervisor
reduce or release Construction Supervisor from any of its obligations
hereunder.
SECTION 2.2. Acceptance. Construction Supervisor hereby
unconditionally and irrevocably accepts the designation and
appointment as Owner's agent in accordance with the terms hereof.
SECTION 2.3. Termination of Authority. Construction
Supervisor s authority under this Agreement shall terminate on the
earlier to occur of (i) Completion of the Project in accordance with
the terms and conditions of this Agreement and satisfaction of the
other terms and provisions hereof, or (ii) termination by Owner
pursuant to Article VI hereof.
SECTION 2.4. Sub-Contracts and Delegation. Construction
Supervisor may execute any of its duties under this Agreement by or
through agents, contractors, employees or attorneys-in-fact, and
Construction Supervisor shall enter into such agreements in addition
to the Construction Contract that Construction Supervisor deems
necessary or desirable in connection with the Project and performance
of all of its other duties hereunder. No such delegation shall limit
or reduce in any way Construction Supervisor's duties and obligations
under this Agreement, and Construction Supervisor shall be and remain
fully liable and responsible therefor.
SECTION 2.5 Covenants of the Construction Supervisor. In
addition to, and without limitation of, the Construction Supervisor s
covenants elsewhere herein, the Construction Supervisor hereby
covenants and agrees that it will:
(a) monitor, supervise and approve in all respects the design,
construction, equipping and testing of the Drilling Rig and the
procurement, delivery and installation of all parts, materials,
equipment and supplies to be installed and/or otherwise used thereon,
including, without limitation, all Owner's Supplies (as defined in the
Construction Contract), all in accordance with the provisions of the
Construction Contract and the SDDI Contract and in connection
therewith to exercise all rights and perform all obligations of Owner
under the Construction Contract and the SDDI Contract in such manner
to ensure that the Drilling Rig will be so constructed, completed,
delivered and accepted;
(b) approve or disapprove in a timely manner all plans and
drawings as Construction Supervisor shall deem to be in the best
interests of Owner and to comply with the SDDI Contract;
(c) attend tests and trials of the Drilling Rig and all major
items of Owner's Supplies;
(d) comply with all obligations of the Owner under the
Construction Contract in order to maintain the Construction Contract
in full force and effect so as to preserve fully the rights of the
Owner thereunder;
(e) agree to any amendment, modification or change in the
Construction Contract, the Specifications, Owner's Supplies and the
plans and specifications, as Construction Supervisor deems in its sole
discretion to be necessary for the completion of the Drilling Rig as
necessary for complete performance of the Project; provided, that (i)
no such amendment or modification shall result in a delay of
Completion beyond the Outside Date and (ii) the aggregate effect of
any amendment or modification, when taken together with any previous
or contemporaneous amendments or modifications, will not have a
material adverse effect on the soundness, structural integrity,
classification, value, utility, operation or useful life of the
Drilling Rig;
(f) appoint in the name of Owner any and all arbitrators
required or permitted to be appointed by Owner under the Construction
Contract and conduct any and all arbitrations required or permitted
to be conducted under or pursuant to the Construction Contract in
connection with any disputes arising thereunder;
(g) take all such other actions with respect to the Drilling
Rig or Construction Contract as Construction Supervisor shall deem to
be in the best interests of Owner;
(h) identify and assist with the acquisition of Owner's
Supplies in accordance with the terms and conditions of the
Construction Contract and the SDDI Contract;
(i) perform all engineering work and all design and
supervisory functions relating to the Project;
(j) negotiate and enter into all contracts or arrangements to
procure Owner's Supplies and services necessary to construct the
Drilling Rig on such terms and conditions as are customary and
reasonable in light of local standards and practices and prudent
industry practices;
(k) obtain all necessary licenses, permits, authorizations and
other rights (including, without limitation, the issuance of a
certificate of classification of the Drilling Rig by the American
Bureau of Shipping as A1 M, Column Stabilized Drilling Unit ,
CDS, P, PAS, and accompanied by a statement of fact from ABS for
UK/Den/HSE compliance and Drilling System Compliance) required under
all applicable laws, rules and regulations from all governmental
authorities in connection with the development and construction of the
Drilling Rig in accordance with the Construction Contract and the
transportation thereof to the appropriate port in the U.S. Gulf of
Mexico;
(l) maintain all books and records with respect to the
construction, transportation and delivery of the Drilling Rig;
(m) move the Drilling Rig to the appropriate port or other
location in the U.S. Gulf of Mexico and to cause the Drilling Rig to
be delivered to and accepted by SDDI and the Commencement Date to
occur under the SDDI Contract;
(n) cause construction of the Drilling Rig to be pursued
diligently and without undue interruption in accordance with the
Construction Contract and in compliance with all Governmental
Requirements;
(o) make all commercially reasonable efforts to cause the
Project to be Complete on or before the Anticipated Delivery Date and
shall, in any event, cause the Project to be Complete no later than
the Outside Date;
(p) enforce all of the obligations of Builders under the
Construction Contract;
(q) (i) until delivery of the Drilling Rig to Owner under the
Construction Contract, maintain insurance on Owner's Supplies in
accordance with the requirements of the Construction Contract and the
Trust Indenture, and (ii) from and after delivery of the Drilling Rig
to Owner under the Construction Contract and through the date of
Completion, maintain or cause to be maintained insurance on the
Drilling Rig at all times in accordance with the requirements set
forth on Schedule A hereto;
(r) immediately upon acceptance of the Drilling Rig by Owner
under the Construction Contract, cause the Drilling Rig to be (i)
documented and registered in the name of Owner under the laws of the
United States of America with no other filing, recordation or
registration of any other document or instrument necessary in order
to establish Owner's good and valid title thereto and (ii) covered by
a mortgage in favor of the Indenture Trustee which shall have been
duly filed with the U.S. Coast Guard National Vessel Documentation
Center and be a first preferred ship mortgage under United States law
effective as against creditors of and purchasers from Owner;
(s) provide all personnel required in order to perform
Construction Supervisor's obligations hereunder, including, without
limitation, those personnel necessary to move the Drilling Rig to a
port in the U.S. Gulf of Mexico, deliver the Drilling Rig to SDDI and
cause acceptance of the Drilling Rig by SDDI in accordance with the
SDDI Contract, such personnel to have the qualifications necessary to
comply with Construction Supervisor's obligations hereunder and any
qualifications imposed by applicable law, rules and regulations, and
such personnel to be made available at such locations and in such
numbers as may be required in order to comply with the foregoing;
(t) provide such administrative, engineering and other
technical support services as may be needed by the personnel provided
pursuant to the foregoing item (s) in order for Construction
Supervisor to perform its obligations hereunder, including, without
limitation, accounting, data processing, legal, tax, project
management, contract administration, transportation, communications,
payroll, purchasing, shipping and personnel administration services;
and
(u) provide such equipment, materials, spare parts, supplies
and related property as the personnel provided pursuant to the
foregoing item (s) and the personnel providing the services described
in the foregoing item (t) may require in order for Construction
Supervisor to perform its obligations hereunder, such equipment,
materials, spare parts, supplies and related property to be provided
as such locations and in such quantities as may be required to such
performance.
SECTION 2.6. Performance Bond. Construction Supervisor shall
obtain and maintain at its sole cost and expense in full force and
effect at all times a performance bond in the form attached hereto as
Exhibit A, naming Owner and Indenture Trustee as dual obligees (such
bond, the "Performance Bond").
SECTION 2.7. Casualty and Construction Period Event of Loss.
If at any time before Completion of the Project there occurs any loss
or damage to the Drilling Rig from fire or other casualty,
Construction Supervisor shall promptly cause such loss or damage to
be repaired and the Project to be completed in accordance with the
terms hereof and all appropriate insurance claims to be made in
respect thereof, so as to cause the Commencement Date to occur on or
before the Outside Date. Construction Supervisor shall notify Owner
of any such loss or damage that Construction Supervisor reasonably
believes will cost more than $1,000,000 to repair or which gives rise
to a claim of more than $1,000,000 under the insurance policies then
in effect with respect to the Drilling Rig.
ARTICLE III
FUNDING OF CONSTRUCTION COSTS
SECTION 3.1. Funding of Construction Costs. Subject to the
terms and conditions of this Agreement, Owner agrees to pay or
reimburse Construction Supervisor for the Cost of the Project up to
a maximum of $315,000,000.
SECTION 3.2. Requisitions and Payments. (a) Subject to the
terms and conditions hereof and so long as there is no Default or
Event of Default continuing hereunder, Owner shall make or cause to
be made payments to Construction Supervisor or its order upon
Construction Supervisor s written request from time to time no more
frequently than monthly on account of the Cost of the Project. Each
such payment shall be made upon Construction Supervisor s delivery of
a requisition in the form attached to the Trust Indenture as Annex H
("Certificate of Requisition"), copies of which shall be provided to
Indenture Trustee and the Surety upon submission to Owner. All
payments will be made directly to Builders, other vendors of Owner s
Supplies or other equipment or to any other party on account of the
Cost of the Project or as reimbursement to Construction Supervisor
only upon receipt of proper evidence that Construction Supervisor has
paid any such amount to Builders, such other vendor or such other
party.
(b) The aggregate of all payments by Owner made under this
Agreement on account of the Cost of the Project shall not exceed
$315,000,000, and Construction Supervisor shall be solely responsible
for all Excess Costs.
(c) Nothing in this Article III or elsewhere in this Agreement
shall have the effect of limiting Construction Supervisor's
obligations hereunder or making such obligations conditional on the
availability of funds from Owner. Construction Supervisor s
obligations hereunder with respect to the performance of the Project
and the payment therefor are absolute and unconditional, and
Construction Supervisor shall pay and perform its obligations
hereunder notwithstanding any breach or default by Owner hereunder or
any other circumstance whatsoever.
ARTICLE IV
EXTRAORDINARY PAYMENTS; CONDITIONAL DEMAND
SECTION 4.1. Certain Periodic Payments. In the event that
Completion of the Project does not occur on or before the Anticipated
Delivery Date, then Construction Supervisor shall thereafter make
periodic payments to Owner in the amount of $150,000 for each day from
and after the Anticipated Delivery Date through the date specified in
the following sentence to compensate Owner for losses incurred in
connection with such late delivery. Construction Supervisor shall
make such payments through the earliest to occur of (i) the date of
Completion, (ii) the Termination Date (as defined in Section 4.2 if
the rescission or termination contemplated by Section 4.2 has
occurred), and (iii) the date of payment in full of the amounts
required by Section 6.1 following a demand therefor by reason of an
Event of Default. Such payments shall be made from time to time on
demand by Owner and in any event all such accrued and unpaid payments
shall be made not less than monthly on the last day of each month (or
the next succeeding Business Day, if such day is not a Business Day).
SECTION 4.2. Lump Sum Payment. In the event that (i) Owner
(or Construction Supervisor on behalf of Owner) rescinds the
Construction Contract pursuant to Article X thereof, or (ii) SDDI
terminates the SDDI Contract pursuant to section 2.2.1.2 thereof, then
in either case Construction Supervisor shall on the earliest to occur
of (a) the Outside Date, (b) within six months following the effective
date of the earlier to occur of such rescission or termination (the
earlier to occur of the date of such rescission or termination, the
"Termination Date"), or (c) if the conditional demand contemplated by
Section 4.3(a) has been made, the date on which payment would be due
pursuant to such demand, pay to Owner the Advance Payment Refund
Amount together with the Liquidated Damages, for losses incurred by
Owner as a result of such rescission or termination. Construction
Supervisor shall also make periodic payments to Owner on demand in the
amount of $150,000 for each day from and after the Termination Date
through the date of payment by Construction Supervisor of the Advance
Payment Refund Amount plus Liquidated Damages, to compensate Owner for
losses incurred in connection with delay in such payment. Such
payments shall be made from time to time on demand by Owner and in any
event all such accrued and unpaid payments shall be made not less than
monthly on the last Business Day of each month.
SECTION 4.3. Conditional Demands. (a) In the event that
Initial Acceptance of the Drilling Rig does not occur on or before the
Anticipated Delivery Date and the rescission or termination
contemplated by Section 4.2 has not occurred, then Owner may make
demand on Construction Supervisor for payment of the amount required
by Section 6.1. Such demand shall be upon the condition that if
Initial Acceptance of the Drilling Rig does occur on or before the
Initial Acceptance Date, then such demand is void. If Initial
Acceptance of the Drilling Rig does not occur on or before the Initial
Acceptance Date, then Construction Supervisor shall pay in full the
amounts required by Section 6.1 on or before the date specified in
such demand which date shall be no earlier than the later to occur of
(i) Initial Acceptance Date, or (ii) 50 days after the making of the
demand contemplated by this Section 4.3(a). The Owner may provide a
copy of the notice of such demand to the Surety.
(b) In the event that Completion of the Project does not occur
on or before July 31, 2000 and the rescission or termination
contemplated by Section 4.2 has not occurred, then Owner may make
demand on Construction Supervisor for payment of the amount required
by Section 6.1. Such demand shall be upon the condition that if
Completion of the Project does occur on or before the Outside Date,
then such demand is void. If the Completion of the Project does not
occur on or before the Outside Date, then Construction Supervisor
shall pay in full the amounts required by Section 6.1 on or before the
date specified in such demand which date shall be no earlier than the
later to occur of (i) the Outside Date, or (ii) 50 days after the
making of the demand contemplated by this Section 4.3(b). The Owner
may provide a copy of the notice of such demand to the Surety.
ARTICLE V
REPRESENTATION AND WARRANTIES
Construction Supervisor represents and warrants to Owner as
follows:
SECTION 5.1 Organization and Power. Construction Supervisor (i)
is a corporation duly formed, validly existing and in good standing
under the laws of the State of Nevada and is duly qualified as a
foreign corporation and in good standing in all jurisdictions in which
such qualification is required in order for Construction Supervisor
to carry on its business as now conducted; and (ii) has the full
corporate power, authority and legal right to carry on its business
as now conducted and to execute, deliver and perform this Agreement.
SECTION 5.2 No Violation. Neither the execution, delivery or
performance by Construction Supervisor of this Agreement nor
compliance herewith (i) conflicts or will conflict with or results or
will result in a breach of or constitutes or will constitute a default
under (A) any law in effect as of the date hereof binding upon
Construction Supervisor or the Drilling Rig or (B) any order, writ,
injunction or decree of any court or other governmental authority
binding upon Construction Supervisor or the Drilling Rig, or (ii)
results or will result in the creation or imposition of any lien,
charge or encumbrance upon its property pursuant to such agreement or
instrument. Neither the execution, delivery or performance by the
Construction Supervisor of this Agreement nor compliance by
Construction Supervisor herewith conflicts or will conflict with or
results or will result in a breach of or constitutes or will
constitute a default under (i) the certificate of incorporation or by-
laws of Construction Supervisor or (ii) any agreement or instrument
to which Construction Supervisor is a party or by which it is bound.
SECTION 5.3 Agreement is Legal and Authorized. This Agreement
has been duly authorized by Construction Supervisor by all necessary
corporate action (including any necessary action by its shareholders)
and duly executed and delivered by it, and, assuming the due
authorization, execution and delivery thereof by Owner, is a legal,
valid and binding obligation of Construction Supervisor enforceable
against it in accordance with its terms, except as certain rights and
remedies as set forth herein may be limited by (a) bankruptcy,
reorganization and similar laws of general application relating to or
affecting the enforcement of creditors' rights and (b) general
principles of equity.
SECTION 5.4 Consents. No consent, license, approval or
authorization of, or filing, registration or declaration with, or
exemption or other action by, any governmental or public body,
authority, bureau or agency (including courts) under the laws of the
United States of America, the State of Delaware or of any other state
is required in connection with the execution and delivery or
performance by Construction Supervisor of this Agreement.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1 Events of Default. If any one or more of the
following events (each an "Event of Default") shall occur:
(a) Construction Supervisor shall fail to make any payment
required by the terms of this Agreement, including, without
limitation, any payment required on account of Excess Costs or any
payment required pursuant to Article IV hereof and such failure shall
continue for two (2) Business Days;
(b) the Performance Bond shall be rescinded, terminated or
cease to be in full force and effect or either Surety shall assert,
claim or take the position that the Performance Bond is rescinded,
terminated or not in full force and effect or otherwise take any steps
to rescind or terminate the Performance Bond or cause it not to be in
full force and effect;
(c) Construction Supervisor shall fail to observe or perform
any term, covenant or condition (other than any covenant or condition
as to which provision is otherwise made in this Section 6.1) of this
Agreement and such failure shall remain uncured for a period of 30
days after the earlier of actual knowledge thereof by Construction
Supervisor or the giving of written notice thereof by Owner; provided,
however, no Event of Default shall be deemed to occur if such failure
or breach remains capable of cure and Construction Supervisor shall
have promptly commenced the cure of such failure or breach and
continues to act with diligence to cure such failure or breach and
such failure or breach is in fact cured no later than Completion of
the Project;
(d) any representation or warranty made by Construction
Supervisor in this Agreement (or in any certificate or instrument
executed in connection therewith) shall be untrue, inaccurate or
misleading in any material respect;
(e) Construction Supervisor shall generally fail to pay, or
admit in writing its inability to pay, its debts as they become due,
or shall voluntarily commence any case or proceeding or file any
petition under any bankruptcy, insolvency or similar law or seeking
dissolution, liquidation or reorganization or the appointment of a
receiver, agent, custodian, liquidator or similar person for itself
or a substantial portion of its property, assets or business or to
effect a plan or other arrangement with its creditors, or shall file
any answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition filed against it in any
bankruptcy, insolvency or similar case or proceeding, or shall be
adjudicated bankrupt, or shall make a general assignment for the
benefit of creditors, or shall consent to, or acquiesce in the
appointment of, a receiver, agent, custodian, liquidator or similar
person for itself or a substantial portion of its property, assets or
business, or action shall be taken by Construction Supervisor for the
purpose of effectuating, authorizing or furthering any of the
foregoing;
(f) involuntary proceedings or an involuntary petition shall
be commenced or filed against Construction Supervisor under any
bankruptcy, insolvency or similar law or seeking the dissolution,
liquidation or reorganization of such person or the appointment of a
receiver, agent, custodian, liquidator or similar person for
Construction Supervisor or of a substantial part of its property,
assets or business, or any writ, judgment, warrant of attachment,
execution or similar process shall be issued or levied against a
substantial part of its property, assets or business, and such
proceedings or petition shall not be dismissed or stayed, or such
writ, judgment, warrant of attachment, execution or similar process
shall not be released, vacated or fully bonded, within 60 days after
commencement, filing or levy, as the case may be;
(g) any of the events set forth in the foregoing clauses (e)
and (f) shall occur with respect to either of Builders and such event
shall, in the reasonable judgement of Owner, materially and adversely
affect the ability of either Builder to perform its obligations under
the Construction Contract;
(h) a material default by Builder occurs and is continuing
under the Construction Contract and Construction Supervisor is not
diligently pursuing the cure thereof or the Owner determines in its
reasonable discretion that such default is of a nature that it cannot
be cured for Completion on or before the Outside Date;
(i) Initial Acceptance of the Drilling Rig has not occurred
on or before June 28, 2000; or
(j) Completion of the Project has not occurred on or before
the Outside Date;
then in any such event, Owner may, in addition to the other rights and
remedies provided for in this Article immediately terminate the rights
of the Construction Supervisor under this Agreement by giving
Construction Supervisor written notice of such termination, and upon
the giving of such notice, this Agreement shall terminate as to the
rights of Construction Supervisor. The Owner may provide a copy of
such notice to the Surety. If the Owner has not made either of the
conditional demands contemplated by Section 4.3, the Owner may demand
in such notice that Construction Supervisor pay to Owner, within
thirty (30) days after the date of receipt of such notice, all accrued
and unpaid amounts due pursuant to Section 4.1 and the second sentence
of Section 4.2 and, to the extent not paid pursuant to Section 4.2,
an amount equal to the Advance Payment Refund Amount together with the
Liquidated Damages. In the event that Owner has made either of the
conditional demands contemplated by Section 4.3, Construction
Supervisor shall pay the amounts described in the preceding sentence
on the date specified in such demand consistent with Section 4.3.
SECTION 6.2 Additional Remedies. (a) If an Event of Default
shall have occurred and be continuing, Owner shall have all rights and
remedies available at law, equity or otherwise.
(b) No failure to exercise and no delay in exercising any
right, remedy, power or privilege under this Agreement shall operate
as a waiver thereof; nor shall any single or partial exercise of any
right, remedy or power or privilege under this Agreement preclude any
other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and
privileges provided in this Agreement are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
SECTION 6.3 Owner s Right to Cure Event of Default. Owner,
without waiving or releasing any obligation owed to it or any Event
of Default may (but shall be under no obligation to) remedy any Event
of Default for the account of and at the sole cost and expense of
Construction Supervisor. All funds advanced or out-of-pocket costs
and expenses incurred in connection with such remedy, together with
interest thereon at an annual rate of 12% from the date on which such
sums or expenses are paid by Owner, shall be paid by Construction
Supervisor to the Owner on demand.
ARTICLE VII
INDEMNIFICATION
Construction Supervisor hereby assumes all liability for its
services to be performed hereunder and the Project including payment
of all fees for permits, studies and variances, whether performed by
Construction Supervisor, by any contractor or subcontractor or any
other entity performing the Project directly or indirectly for or
under Construction Supervisor or any contractor or subcontractor, and
shall protect, defend and indemnify the Indemnified Parties and hold
harmless the Indemnified Parties (a) from any and all claims arising
out of Construction Supervisor s actions or omissions on behalf of
Owner whether with or without authority hereunder and (b) from any and
all liabilities, losses, damages, costs, expenses (including
reasonable attorneys' fees and expenses), fines, penalties, suits and
causes of action, including, without limitation, court costs and any
other out-of-pocket costs of litigation related thereto or to this
Agreement (the foregoing collectively, "Losses"), arising out of this
Agreement, the performance of the Project or ownership or operation
of the Drilling Rig except, with respect to an Indemnified Party, to
the extent such Losses are the result of such Indemnified Party s
gross negligence or willful misconduct. In any and all claims against
any Indemnified Party by any employee of Construction Supervisor, any
contractor, any subcontractor, anyone directly or indirectly employed
by any of them or anyone for whose acts any of them may be liable, the
indemnification obligation under this Article VII shall not be limited
in any way by any limitation on the amount or type of damages,
compensation or benefits payable by or for Construction Supervisor or
any subcontractor under workers' compensation acts, disability benefit
acts or other employee benefit acts. Construction Supervisor shall
promptly remedy damage or loss to any property referred to herein
caused in whole or in part by Construction Supervisor, any contractor,
any subcontractor or anyone directly or indirectly employed by any of
them, or by anyone for whose acts any of them is liable and for which
Construction Supervisor is responsible hereunder.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. All notices, consents, directions,
approvals, instructions, requests, demands and other communications
required or permitted by the terms hereof to be given to any person
(collectively Notices ) shall be given in writing in and any such
Notice shall be deemed given (i) when personally delivered, or (ii)
three days after the date deposited in the United States mails, with
proper postage prepaid, for first class certified mail, return receipt
requested, or (iii) when signed for by the recipient, if delivered by
overnight courier or express mail service, addressed as follows:
if to Owner:
RBF Exploration Co.
000 Xxxxxxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: President
if to Construction Supervisor
RBF Exploration II Inc.
000 Xxxxxxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: President
and in any case with a copy to the Surety at its address specified in
the Performance Bond, or at such other address as either party hereto
may from time to time designate by Notice duly given in accordance
with the provisions of this Section 8.1 to the other party. No Notice
shall be deemed effective until given to the Surety.
SECTION 8.2 Successors and Assign; Third Party Beneficiaries.
(a) This Agreement shall be binding upon and inure to the benefit of
Owner, Construction Supervisor and their respective legal
representatives, successors and permitted assigns. The Owner may
assign its rights hereunder to the Indenture Trustee pursuant to the
Trust Indenture, and the Indenture Trustee may assign such rights to
the Surety in the circumstances contemplated by the Performance Bond.
Except in connection with the exercise by the Surety of its rights to
perform on behalf of Construction Supervisor pursuant to the
Performance Bond, Construction Supervisor shall not assign its rights
or obligations hereunder without the prior written consent of Owner,
Indenture Trustee and the Surety.
(b) Indenture Trustee, each party providing financing to Owner
in connection with the Project (including, without limitation, each
Note Holder and Credit Support Party, as such terms are defined in the
Trust Indenture) and Surety is an intended third party beneficiary of
this Agreement. Indenture Trustee shall have the right, but not the
obligation, in its sole judgment and discretion, from time to time,
but subject to the terms of this Agreement, to make demand for
performance and to proceed against Construction Supervisor for the
performance of any of its obligations hereunder, and/or to proceed
from time to time against Owner for the performance of any such
obligations, as Indenture Trustee, in its sole discretion, may
determine.
SECTION 8.3 GOVERNING LAW. (a) THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT (INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE) SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW, BUT EXCLUDING (TO THE MAXIMUM EXTENT
PERMITTED BY LAW) ALL OTHER RULES RELATING TO CHOICE OF LAW, CHOICE
OF FORUM OR CONFLICT OF LAWS).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN NEW
YORK COUNTY, OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
OF OWNER AND CONSTRUCTION SUPERVISOR HEREBY ACCEPTS FOR ITSELF AND (TO
THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF
OWNER AND CONSTRUCTION SUPERVISOR HEREBY IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING, WITHOUT LIMITATION ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING
IN SUCH RESPECTIVE JURISDICTIONS. THE SUBMISSION TO JURISDICTION IS
NON-EXCLUSIVE AND DOES NOT PRECLUDE ANY PERSON FROM OBTAINING
JURISDICTION OVER OTHER PARTIES IN ANY COURT OTHERWISE HAVING
JURISDICTION.
(c) EACH OF OWNER AND CONSTRUCTION SUPERVISOR HEREBY IRREVOCABLY
DESIGNATES CAPITOL SERVICES, INC. LOCATED AT 00 XXXXXX XXXXXX, XXXXX
000, XXXXXX, XXX XXXX 00000, AS ITS DESIGNEE, APPOINTEE AND AGENT TO
RECEIVE, FOR AND ON ITS BEHALF, SERVICE OF PROCESS IN SUCH
JURISDICTION IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON
SUCH AGENT WILL BE PROMPTLY FORWARDED BY OVERNIGHT COURIER TO OWNER
AND CONSTRUCTION SUPERVISOR AT ITS ADDRESS SET FORTH HEREIN, BUT THE
FAILURE OF TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS. EACH OF OWNER AND CONSTRUCTION SUPERVISOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO CONSTRUCTION SUPERVISOR AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME
EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.
(d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF OWNER OR INDENTURE
TRUSTEE OR ANY OTHER PERSON TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST CONSTRUCTION SUPERVISOR IN ANY OTHER JURISDICTION.
(e) OWNER AND CONSTRUCTION SUPERVISOR EACH HEREBY (I) IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN; (II) IRREVOCABLY WAIVES,
TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; (III) CERTIFIES THAT NO PARTY HERETO NOR
ANY REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS, AND (IV) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT, AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY
BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED IN
THIS SECTION.
SECTION 8.4 No Waiver; Amendments. No failure on the part of
Owner or Indenture Trustee or any of their respective agents to
exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by Owner or
Indenture Trustee or any of their respective agents of any right,
power, or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power, or remedy. This
Agreement may not be amended, modified or any material terms hereof
waived without the express written consent of the Indenture Trustee
and the Surety.
SECTION 8.5 Counterparts. This Agreement may be executed in any
number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same agreement.
SECTION 8.6 Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
SECTION 8.7 Headings and Table of Contents. The headings and
table of contents contained in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
SECTION 8.8 Non-Petition Covenant. Construction Supervisor
hereby agrees that until the 368th day following payment in full of
any and all Notes (as defined in the Trust Indenture), Construction
Supervisor will not institute, and will not join with others in
instituting, any involuntary bankruptcy or analogous proceeding
against Owner under any bankruptcy, reorganization, receivership or
similar law, domestic or foreign, as now or hereafter in effect.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
RBF EXPLORATION CO.
By:_________________________
Name:
Title:
RBF EXPLORATION II INC.
By:_________________________
Name:
Title:
SCHEDULE A
Insurance Requirements
(a) All Risk Property Insurance. Upon delivery to Owner
of the Drilling Rig under the Construction Contract, Construction
Supervisor shall, on behalf of Owner, keep the Drilling Rig insured,
in lawful money of the United States, against all such risks
(including without limitation, hull and machinery/increased value,
protection and indemnity risk, pollution liability, war risks (when
available) and, when laid up, port risk insurance, as well as such
excess policies over and above protection and indemnity and general
liability coverage which shall represent collective limits of not less
than $400,000,000), in such form and with such insurance companies or
underwriters as required under paragraph (c) as shall be at least as
protective as insurance maintained by prudent owners of vessels and
equipment similar to the Drilling Rig, engaged in international
contract offshore oil and gas operations, and in any event all as
reasonably acceptable to Indenture Trustee and, so long as the
Performance Bond is outstanding or amounts are due to the Surety as
a result of payments made by it thereunder, the Surety and in
compliance with the SDDI Contract. Without limiting the generality
of the foregoing, with respect to hull and machinery/increased value
insurance, including war risk (when available), the Construction
Supervisor shall insure the Drilling Rig for an amount which is at
least equal to the actual value of the Drilling Rig, but in no event
less than $275,000,000. Such insurance shall cover marine and war
risk perils, on hull and machinery, with per occurrence deductibles
not in excess of $1,000,000 and shall be maintained in the broadest
forms reasonably available in the American and British insurance
markets. The Construction Supervisor shall on behalf of Owner
maintain protection and indemnity (or its equivalent) insurance,
including war risk protection and indemnity (or its equivalent)
coverage and coverage against pollution liability in an amount not
less than $400,000,000 (or such greater amount as may be required from
time to time under Oil Pollution Act of 1990 or other environmental
laws). All of the foregoing insurance shall have a per occurrence
deductible not to exceed $1,000,000 and be placed through such
underwriters or associations as specified in clause (d) below. The
Drilling Rig shall not operate in or proceed into any area then
excluded by trading warranties under its marine or war risk policies
(including protection indemnity or its equivalent) without satisfying
the conditions of the relevant policies, evidence of which shall be
furnished to Indenture Trustee and, so long as the Performance Bond
is outstanding or amounts are due to the Surety as a result of
payments made by it thereunder, the Surety.
(b) Liability; Workers' Compensation. Construction
Supervisor on behalf of Owner shall maintain at all times such
worker's compensation, employer's liability, and longshoreman and
harbor worker's insurance as shall be required by applicable law.
Such policies shall provide that any loss under such insurance may be
paid directly to the entity to whom any liability covered by such
policies has been incurred.
(c) Payment Provisions. All payments made under policies
of insurance maintained under this Section shall be applied as set
forth in Section 5.2 of the Trust Indenture.
(d) Insurers. All insurance required under this Schedule
A shall be placed and kept with such insurance companies, Xxxxx s
Syndicates, underwriters' associations, protection and indemnity clubs
or underwriting funds as are reputable, generally recognized within
the industry, and (i) in the case of hull and machinery insurance,
rated by either Standard & Poors Rating Services, a division of the
McGraw Hill Companies, Inc. ("S&P"), Xxxxx'x Investors Services, Inc.
("Xxxxx'x) or Duff & Xxxxxx Credit Rating Co. ("Duff") with at least
the equivalent to an S&P rating of BBB (and with at least 75% of the
companies, determined by dollar amount of policy coverage, rated by
S&P, Duff or Xxxxx'x with at least the equivalent to an S&P rating of
A) or, if not rated by S&P, Duff or Xxxxx'x then rated "excellent" or
better by A.M. Best, and (ii) in the case of protection and indemnity
risk insurance, rated by either S&P, Duff or Xxxxx'x with at least the
equivalent to an S&P rating of BBB.
(e) Taking by United States. During the continuance of
a taking, requisition or charter of the use of the Drilling Rig by any
governmental body of the United States of America, the provisions of
this Schedule A shall be deemed to have been complied with in all
respects as to the Drilling Rig if the United States Government or any
such governmental body shall have agreed (i) to reimburse Owner and
Indenture Trustee for loss or damage resulting from the risks
indicated in paragraphs (a) and (b) of this Schedule A, or (ii) that
Owner and Indenture Trustee shall be entitled to just compensation
therefor. In the event of any taking, requisition, charter or loss
of the Drilling Rig contemplated by this paragraph (e), Construction
Supervisor shall promptly furnish to Indenture Trustee a sworn
certificate of an officer of Construction Supervisor stating that such
taking, requisition, charter or loss has occurred and, if there shall
have been a taking, requisition or charter of the Drilling Rig, that
the United States Government or governmental body has agreed (i) to
reimburse Owner for loss or damage resulting from the risks indicated
in the above-mentioned paragraphs (a) and (b) or (ii) that Indenture
Trustee or Owner, as the case may be, is entitled to just compensation
therefor.
(f) Mortgage Provisions. All insurance required under this
Schedule A shall be taken out in the name of Owner or on its behalf
by an Affiliate of Construction Supervisor the Indenture Trustee and
each Note Holder and the Sureties shall be named as an additional
insured under all liability policies (other than workers' compensation
and similar insurance), and the Indenture Trustee and, so long as the
Performance Bond is outstanding or amounts are due to the Surety as
a result of payments made by it thereunder, the Surety shall be named
as the loss payees, as their interests may appear, under all physical
damage policies with respect to the Drilling Rig for any loss in
excess of $5,000,000 or, after the occurrence and during the
continuation of any Event of Default, any loss. All policies for such
insurance shall also provide that (i) there shall be no recourse
against Owner (or its assignee), the Indenture Trustee or any Note
Holder or any loss payee or additional insured for the payment of
premiums or commissions, (ii) if such policies provide for the payment
of club calls, assessments or advances, there shall be no recourse
against Owner (or its assignee), the Indenture Trustee or any Note
Holder or any loss payee or additional insured for the payment
thereof. All policies shall provide that the insurers shall provide
to Owner (or its assignee), the Indenture Trustee and each Note Holder
and any loss payee and additional insured, as the case may be, 30 days
prior notice of any material change in the coverage of such insurance
as well as ten (10) days prior written notice of any cancellation of
such insurance in the event of non-payment of premiums and seven (7)
days prior written notice of any cancellation of such insurance for
war risk.
(g) Compliance. Construction Supervisor shall not do
any act, nor permit any act to be done, whereby any insurance
required by this Schedule A shall or may be suspended, impaired or
defeated, or permit the Drilling Rig to engage in any voyage, to
engage in any activity or to carry any cargo not permitted under
the policies of insurance then in effect without first procuring
comparable insurance for such voyage, activity or the carriage of
such cargo.
(h) Policies. Construction Supervisor, upon execution
of this Agreement, shall deliver to Owner, Indenture Trustee and
Surety certificates of insurance, evidencing the insurance
maintained under this Schedule A. Construction Supervisor, upon
the request of Owner or the Indenture Trustee, will promptly
deliver to Owner or the Indenture Trustee true copies of such
policies.
(i) Opinion and Certificates. On the date hereof, and on
each anniversary and each material change in coverage, Construction
Supervisor shall promptly furnish or cause to be furnished to
Indenture Trustee and, at all time on and after the date hereof when
the Performance Bond is outstanding or amounts are due to the Surety
as a result of payments made by it thereunder, the Surety, a detailed
certificate or opinion (signed by a reputable insurance broker) as to
the insurance maintained by Construction Supervisor pursuant to this
Schedule A, specifying the respective policies of insurance covering
the same and attaching certificates of confirmation evidencing the
same and stating with regard to the insurance maintained by
Construction Supervisor pursuant to this Schedule A the amounts,
deductibles, and the risks against which such insurance is issued.
(j) Obligation to Collect. Construction Supervisor shall,
at no cost or expense to Owner, have the duty and responsibility to
make all proofs of loss and take any and all other steps necessary
as a prudent owner or as reasonably directed by Owner to effect
collections from underwriters for any loss under any insurance on or
in respect of the Drilling Rig or the operation thereof.
(k) Mortgage. The rights and obligations of Construction
Supervisor and Owner with respect to insurance shall be subject to
such other terms and conditions as shall be contained in the mortgage
described in Section 2.5(r)(ii) hereof, and in the event of any
inconsistency between the terms of this Exhibit A and the terms of
such mortgage, the terms of such mortgage shall take precedence.
EXHIBIT A
Form of Performance Bond
