EXHIBIT 10.8
Execution Copy
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R&B FALCON GUARANTY
from
R&B FALCON CORPORATION
Dated as of August 31, 1999
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R&B FALCON GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of August 31, 1999, made by R&B
FALCON CORPORATION (the "Guarantor") in favor of the Beneficiaries named
below;
W I T N E S S E T H:
WHEREAS, pursuant to the terms of (i) a Participation Agreement, dated
as of the date hereof (the Participation Agreement ), among Deepwater
Drilling II L.L.C., a Delaware limited liability company, Wilmington Trust
FSB, a federal savings bank, not in its individual capacity except as
expressly provided therein, but solely as trustee under the Investment
Trust Agreement, Deepwater Investment Trust 1999-A, a Delaware business
trust, Wilmington Trust Company, a Delaware banking corporation, not in its
individual capacity except as expressly provided therein, but solely as
Charter Trustee under the Charter Trust Agreement), BA Leasing & Capital
Corporation, a California corporation, as Documentation Agent, each of the
financial institutions listed on the signature pages thereto, or that may
become a party thereto, as a Certificate Purchaser, solely with respect to
Sections 2.15, 6.9, 9.4(a) and 12.13(b), R&B Falcon Corporation and Conoco
Inc., and solely with respect to Sections 5.2 and 6.4, RBF Deepwater
Exploration II Inc., a Nevada corporation, and Conoco Development II Inc., a
Delaware corporation, and (ii) a Master Charter (together with the Charter
Supplements), dated as of the date hereof, between the Charter Trustee and
Deepwater, the Charter Trustee has agreed to charter to Deepwater and
Deepwater agreed to charter from the Charter Trustee all of the Charter
Trustee s interest in the Drillship;
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Participation Agreement and other
Transaction Documents that Guarantor execute and deliver this Guaranty and
that Conoco execute and deliver the Conoco Guaranty; and
WHEREAS, this Guaranty is offered by Guarantor, and the Conoco Guaranty
is offered by Conoco, as an inducement to the Participants to consummate
the transactions contemplated in the Participation Agreement, which
transactions, if consummated, will be of benefit to Guarantor and Conoco;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged by
Guarantor, Guarantor hereby agrees as follows:
SECTION 1. Defined Terms. Capitalized terms used but not otherwise
defined in this Guaranty shall have the respective meanings specified in
Appendix 1 to the Participation Agreement. The obligations guaranteed
under Section 2(a) below are collectively referred to as the Guaranteed
Obligations and individually referred to as a Guaranteed Obligation .
Each of the Investment Trust, the Investment Trustee, the Charter Trustee,
the Documentation Agent, the Certificate Purchasers, the Hedging Agreement
Counterparties, if any, and the other Indemnified Parties is referred to
as a Beneficiary and are collectively referred to as the Beneficiaries .
SECTION 2. Guaranteed Obligations.
(a) Subject to the terms hereof, the Guarantor does hereby irrevocably
and unconditionally guarantee to the Beneficiaries entitled thereto, as a
primary obligor and not as a surety, until such time as final and
indefeasible payment thereof has been made, the due and punctual payment
by Deepwater, when due, whether by acceleration or otherwise, of
(i) an amount equal to (x), with respect to any payments of Purchase
Option Price due by Deepwater under Section 20.1 of the Master Charter
(whether such Purchase Option is exercised at Deepwater s option or at
the Charter Trustee s option pursuant to an exercise of remedies under
either Charter Supplement), (A) the Guarantor's Percentage of that
portion of the Purchase Option Price representing the Certificate
Purchaser Balance and any accrued and unpaid Certificate Return plus (B)
60% of that portion of the Purchase Option Price representing accrued
and unpaid Supplemental Hire and (y), with respect to payments due with
respect to an exercise of the remedy set forth in Section 4.2(a) of
Charter Supplement No. 1, (A) the Guarantor's Percentage of Termination
Value plus (B) the Applicable Percentage of any Supplemental Hire due
under such Section 4.2(a) and all other amounts payable pursuant to such
Section 4.2(a); provided, however, that for purposes of this clause
(a)(i)(y) the Guarantor's Percentage shall be calculated using the
Applicable Percentage calculated in accordance with Section 4.2(a) of
Charter Supplement No. 1; provided, further, that for the purposes of
this Guaranty, the "Termination Value" hereunder shall not exceed the
Termination Value as of the Scheduled Charter Expiration Date;
(ii) with respect to any payments of the Residual Guaranty Amount due by
Deepwater under Section 20.3 of the Master Charter,
(A) where the Residual Guaranty Amount is less than the Maximum
Residual Guaranty Amount, (1) the Guarantor's Percentage of that
amount listed in clause (i)(A) of the definition of Residual
Guaranty Amount plus (2) 60% of that amount listed in clause (i)(B)
of the definition of Residual Guaranty Amount, or
(B) where the Residual Guaranty Amount is equal to the Maximum
Residual Guaranty Amount, (1) the Guarantor s Percentage of that
amount listed in clause (i) of the definition of Maximum Residual
Guaranty Amount plus (2) 60% of that amount listed in clause (ii)
of the definition of Maximum Residual Guaranty Amount;
(iii) 60% of the amount of any premium payable under any policy of
insurance required to be maintained by Deepwater under Section 14.1 of
the Master Charter;
(iv) 60% of any Claims and Tax Claims due by Deepwater pursuant to
Section 10 of the Participation Agreement;
(v) the Applicable Percentage of the amount due by Deepwater to the
Charter Trustee under the Deepwater Hedging Agreements (if any) upon the
occurrence of an Early Termination Date (as defined in the Deepwater
Hedging Agreements) in connection with an Event of Loss during the
Charter Term; and
(vi) all installments of Basic Hire due by Deepwater under the R&B
Falcon Charter during the period after the Scheduled Charter Expiration
Date (or, if the Charter Term has been extended pursuant to Section 19.1
of the Master Charter, after the end of such extension period) until the
earlier of (A) the transfer of the risk of loss with respect to the
Drillship to a purchaser under an agreement for sale of the Drillship
and (B) the redelivery of the Drillship in accordance with Section 18.1
of the Master Charter;
provided, however, that the Guarantor shall be liable under this Guaranty
for the maximum amount of such liability that can be hereby incurred
without rendering this Guaranty, as it relates to the Guarantor, voidable
under Applicable Law relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount.
(b) Subject to the terms hereof, the Guarantor does hereby irrevocably
and unconditionally guarantee as a primary obligor and not as a surety to
each of the Beneficiaries entitled thereto, until such time as final and
indefeasible payment thereof has been made, the due and punctual payment
by RBF Deepwater Exploration II Inc. when due, whether by acceleration or
otherwise, of all damages payable by RBF Deepwater Exploration II Inc. as
a result of a breach of its covenant set forth in Section 6.4(a) of the
Participation Agreement at any time when RBF Deepwater Exploration II Inc.
is not a Subsidiary of the Guarantor.
(c) The Guarantor hereby indemnifies and holds harmless each of the
Beneficiaries for any and all costs and expenses (including reasonable
attorney s fees and expenses) incurred by such Beneficiary in enforcing any
rights under this Guaranty.
SECTION 3. Nature of Obligations. This Guaranty shall constitute a
guaranty of prompt payment and not of collection, and the Guarantor
specifically agrees that it shall not be necessary, and that the Guarantor
shall not be entitled to require, before or as a condition of enforcing the
liability of the Guarantor under this Guaranty or requiring payment or
performance of the Guaranteed Obligations by the Guarantor as provided
herein, or at any time thereafter, that any Person: (a) file suit or
proceed to obtain or assert a claim for personal judgment against Deepwater
or any other Person that may be liable for any Guaranteed Obligation; (b)
make any other effort to obtain payment or performance of any Guaranteed
Obligation from Deepwater or any other Person that may be liable for such
Guaranteed Obligation; (c) foreclose against or seek to realize upon any
security now or hereafter existing for such Guaranteed Obligation; (d)
exercise or assert any other right or remedy to which any Beneficiary is
or may be entitled in connection with any Guaranteed Obligations or any
security or other guaranty therefor (including any Letter of Credit or
Qualified Letter of Credit); or (e) assert or file any claim against the
assets of Deepwater or any other Person liable for any Guaranteed
Obligation. Notwithstanding the foregoing, the provisions of this Section
3 shall not be construed to avoid any notices or demands or the lapse of
any time periods available to Deepwater under the Transaction Documents.
SECTION 4. Continuing Guaranty. This Guaranty shall in all respects be
a continuing, primary, absolute and unconditional guaranty of prompt and
complete payment and shall remain in full force and effect until the full
and final payment and performance of the Guaranteed Obligations and
Guarantor s obligations hereunder. The Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms
of the Participation Agreement and each other Transaction Document under
which they arise, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Beneficiaries with respect thereto. The liability of the
Guarantor under this Guaranty shall be absolute, unconditional and
irrevocable, irrespective of:
(1) any lack of validity, legality or enforceability of the
Participation Agreement, any Certificate or any other Transaction
Document;
(2) the failure of any Beneficiary
(a) to assert any claim or demand or to enforce any right or
remedy against Deepwater or any other Person (including any
guarantor (including the Guarantor)) under the provisions of
the Participation Agreement, any Certificate, any other
Transaction Document or otherwise, or
(b) to exercise any right or remedy against any guarantor
(including the Guarantor) of, or collateral securing, any
obligations of Deepwater or any other Person;
(3) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or the
obligations of any guarantor (including the Guarantor), or any
other extension, compromise or renewal of any Guaranteed Obligation
or the obligations of any guarantor (including the Guarantor);
(4) any reduction, limitation, impairment or termination of any
Guaranteed Obligations or the obligations of any guarantor
(including the Guarantor) for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not
be subject to (and the Guarantor hereby waives any right to or
claim of) any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or
any other event or occurrence affecting, any Guaranteed Obligations
or the obligations of any guarantor (including the Guarantor) or
otherwise, other than the payment in full in cash or satisfaction
or discharge in full of such Guaranteed Obligation;
(5) any amendment to, rescission, waiver, or other modification of, or
any consent to departure from, any of the terms of the
Participation Agreement, any Certificate or any other Transaction
Document;
(6) any addition, exchange, release, surrender or non-perfection of any
collateral, or any amendment to or waiver or release or addition
of, or consent to departure from, any other guaranty held by any
Beneficiary securing any of the Guaranteed Obligations or the
obligations of any guarantor (including the Guarantor);
(7) any other circumstance which might otherwise constitute a defense
available to, or a legal or equitable discharge of, Deepwater, any
surety or any guarantor; or
(8) the condition, design, operation, fitness for use or seaworthiness
of the Drillship or the failure of the Drillship to be constructed
in accordance with the Construction Contract.
SECTION 5. Reinstatement. If at any time all or any part of any
payment theretofore applied to any of the Guaranteed Obligations is
rescinded or returned for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization of Deepwater),
such Guaranteed Obligations shall, for the purposes of this Guaranty, to
the extent that such payment is or must be rescinded or returned, be deemed
to have continued in existence, notwithstanding such application, and this
Guaranty shall continue to be effective or be reinstated, as the case may
be, as to such Guaranteed Obligations, all as though such application had
not been made.
SECTION 6. Amendments to Transaction Documents; Demands. Guarantor
shall remain obligated under this Guaranty notwithstanding that, without
any reservation of rights against Guarantor and without notice to or
further consent by Guarantor, the obligations or the liability of any other
party, upon or for any part of the obligations under the Transaction
Documents, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, waived, surrendered or released by the
Beneficiaries (or anyone acting through or on behalf of the Beneficiaries)
and any of the other Transaction Documents may be amended, modified,
supplemented or terminated, in whole or in part; provided, however, that
notwithstanding anything contained in this Section 6 to the contrary, to
the extent that the obligations of Deepwater constituting the Guaranteed
Obligations are expressly released or waived in writing, such release or
waiver shall be deemed to extend to Guarantor. For the purposes of this
Guaranty, any reference to the Transaction Documents shall mean such
documents as they now exist and as they may be modified, amended,
supplemented, renewed or extended from time to time. When making any
demand against Deepwater, a Beneficiary (or anyone acting through or on
behalf of such Beneficiary) may, but shall be under no obligation to, make
a similar demand on Guarantor and any failure by a Beneficiary (or anyone
acting through or on behalf of such Beneficiary) to make any such demand
or to collect any payments from Deepwater shall not relieve Guarantor of
any of its liabilities under this Guaranty and shall not impair or affect
the rights and remedies of the Beneficiaries (or anyone acting through or
on behalf of the Beneficiaries) against Guarantor.
SECTION 7. Payments; No Subrogation. Guarantor hereby agrees that
payments under this Guaranty will be paid to the Beneficiary entitled
thereto in immediately available funds in accordance with the terms of the
applicable Transaction Documents. Until all of the Guaranteed Obligations
are indefeasibly paid in full, Guarantor hereby agrees that no payment made
by or for the account of Guarantor pursuant to this Guaranty shall entitle
Guarantor by subrogation, indemnification, exoneration, contribution,
reimbursement or otherwise to any payment by Deepwater or from or out of
any property of Deepwater in respect of payments made hereunder, and
Guarantor hereby expressly waives, to the fullest extent possible, and
shall not exercise, any right or remedy against Deepwater or any property
of Deepwater by reason of any performance by Guarantor of this Guaranty
unless and until all of the Guaranteed Obligations are fully and finally
performed, indefeasibly paid or discharged.
SECTION 8. Waiver. Guarantor hereby expressly waives: (a) notice of
the acceptance of this Guaranty; (b) notice of the existence or creation
or non-payment of all or any of the Guaranteed Obligations; (c)
presentment, demand, notice of dishonor, protest, and, to the fullest
extent permitted by Applicable Law, any notice not required herein, and all
other notices whatsoever; and (d) any right to require marshaling of its
assets in connection with the satisfaction of the Guaranteed Obligations.
When making any demand hereunder against Guarantor, a Beneficiary may, but
shall be under no obligation to, make a similar demand on Deepwater and any
failure by a Beneficiary to make any such demand or to collect any payments
from Deepwater shall not relieve Guarantor of its obligations or
liabilities hereunder, and shall not impair or affect the rights and
remedies, express or implied, or as a matter of law, of the Beneficiaries
against Guarantor.
SECTION 9. Assignment. This Guaranty shall be binding upon Guarantor
and upon Guarantor s successors and permitted assigns and shall inure to
the benefit of the Beneficiaries and their respective successors and
permitted assigns. The Guarantor may not delegate any of its obligations
hereunder without the prior written consent of the Certificate Purchasers
except as provided in the definition of "Prepayment Change of Control
Trigger Event" or "Pricing Change of Control Trigger Event". The Guarantor
hereby consents and agrees to the Charter Trustee s assignment of its
rights under this Guaranty to the Investment Trust pursuant to the Charter
Trustee Assignment.
SECTION 10. Guarantor's Liabilities Not Affected. The duties and
obligations of Guarantor under this Guaranty shall remain in full force and
effect, without the necessity of any reservation of rights against
Guarantor or further assent by Guarantor, and without regard to, and shall
not be impaired or affected by:
(a) any limitation of the remedies of the Beneficiary under any of
the Transaction Documents or the rejection or disaffirmance thereof
which may now or hereafter be imposed by any Applicable Law or the
occurrence of any Event of Default;
(b) any merger or consolidation of Deepwater or Guarantor into or
with any other Person, or any sale, lease or transfer of any or all of
the capital stock or assets of Deepwater or Guarantor to any other
Person;
(c) any claim, counterclaim, set-off, deduction or defense (other
than payment in full) that Guarantor or Deepwater may have against any
Beneficiary, whether hereunder or under any Transaction Document or
independent of or unrelated to the transactions contemplated by the
Transaction Documents; or
(d) any extension of the Charter Term.
SECTION 11. Bankruptcy of Deepwater. Guarantor agrees that, so long as
there are any Guaranteed Obligations outstanding, it shall not (i) commence
any case, proceeding or other action under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, arrangement, winding-up, liquidation, dissolution,
composition or other relief with respect to Deepwater or its debts; (ii)
seek appointment of a receiver, trustee, custodian or other similar
official for Deepwater or for all or any substantial part of its property;
(iii) cause, or permit RBF Deepwater Exploration II Inc., as a Member of
Deepwater, to vote to permit Deepwater to file a voluntary petition in
bankruptcy or under insolvency or similar laws or an answer admitting the
material obligations of a petition filed against Deepwater in any such
proceeding; or (iv) if Deepwater becomes a debtor-in-possession under
applicable bankruptcy laws, cause, or permit RBF Deepwater Exploration II
Inc., as a Member of Deepwater, to vote to permit Deepwater to reject
either of the Drilling Contracts.
SECTION 12. No Material Adverse Change. Guarantor represents and
warrants to the Beneficiaries that as of the date hereof, there has been
no material adverse change in the consolidated assets, liabilities,
operations, business or financial condition of the Guarantor from that set
forth in its financial statements for the fiscal quarter ended June 30,
1999 included in its report on Form 10-Q filed with the Securities and
Exchange Commission with respect to such period.
SECTION 13. Financial Statements. The Guarantor shall deliver to the
Charter Trustee, with sufficient copies for each Certificate Purchaser,
copies of its annual and quarterly reports on Form 10-K and Form 10-Q,
respectively, filed with the Securities and Exchange Commission promptly
after such filings have been made.
SECTION 14. Miscellaneous. No delay in the exercise of any right or
remedy shall operate as a waiver thereof, and no single or partial exercise
of any right or remedy shall preclude other or further exercise thereof or
the exercise of any other right or remedy. No modification or waiver of
any of the provisions of this Guaranty shall be binding upon the
Beneficiaries or Guarantor unless such modification or waiver is by an
instrument in writing and signed by Guarantor and the Beneficiaries. No
action permitted hereunder shall in any way affect or impair the rights of
any Beneficiary or Guarantor's obligations under this Guaranty. This
Guaranty is effective upon delivery.
This Guaranty is a Transaction Document which is being executed pursuant
to the Participation Agreement and in connection with the transactions
contemplated therein.
Wherever possible each provision of this Guaranty shall be interpreted
in such manner as to be effective and valid under Applicable Law, but if
any provision of this Guaranty shall be prohibited by or invalid
thereunder, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
All notices, demands, declarations, consents, directions, approvals,
instructions, requests and other communications required or permitted by
this Guaranty shall be in writing and shall be deemed to have been duly
given when addressed to the appropriate Person and delivered (in the case
of the Beneficiaries) in the manner specified in Section 12.3 of the
Participation Agreement and (in the case of the Guarantor) when delivered
in the manner specified in Section 12.3 of the Participation Agreement and
addressed as set forth below:
R&B Falcon Corporation
000 Xxxxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Attn: Chief Executive Officer
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
GUARANTY (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 APPLICABLE LAW, ALL OTHER CHOICE OF LAW RULES). THIS GUARANTY
HAS BEEN DELIVERED IN THE STATE OF NEW YORK.
All judicial actions, suits or proceedings brought against Guarantor
with respect to its obligations, liabilities or any other matter under or
arising out of or in connection with this Guaranty or any transaction
contemplated or for recognition or enforcement of any judgment rendered in
any such proceedings may be brought in any state or federal court of
competent jurisdiction in The City of New York. By execution and delivery
of this Guaranty, Guarantor accepts, generally and unconditionally, the
nonexclusive jurisdiction of such courts and irrevocably agrees to be bound
by any final judgment rendered in connection with this Guaranty or any
transaction contemplated hereby from which no appeal has been taken or is
available. Guarantor irrevocably agrees that all process in any proceeding
or any court arising out of or in connection with this Guaranty may be
effected by mailing a copy by registered or certified mail or any
substantially similar form of mail, postage prepaid, to Guarantor at its
address as designated in this Guaranty. Guarantor irrevocably waives trial
by jury and any objections which it now or subsequently may have to the
bringing of any such action or proceeding in any such
jurisdiction.
Upon request of any Beneficiary, Guarantor shall execute and deliver
such further assurances as such Beneficiary may determine in its reasonable
judgment to be necessary or desirable to confirm the obligations of
Guarantor under this Guaranty.
The section headings used in this Guaranty are for convenience of
reference only and are not to affect the construction of the terms of this
Guaranty.
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IN WITNESS WHEREOF, Guarantor has caused this R&B GUARANTY to be
executed and delivered under seal by its duly authorized officer as of the
date first above written.
R&B FALCON CORPORATION
By:
Name:
Title: