EXHIBIT 10.18
Dated 30 January 2003
SOGELEASE B.V.
as Sub-Lessor
- and -
GLOBALSANTAFE DRILLING COMPANY (NORTH SEA) LIMITED
as Sub-Lessee
------------------------------
SUB-LEASE AGREEMENT
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in respect of a xxxx-up drilling unit known as "BRITANNIA"
XXXXXX, XXXXXX & XXXXXXXX
LONDON
INDEX
SECTION PAGE
1 DEFINITIONS 1
2 LEASING OF THE RIG 11
3 COMMENCEMENT OF SUB-LEASE PERIOD 12
4 RENTALS 12
5 PAYMENTS 12
6 WITHHOLDING 14
7 LOCATION, USE AND MAINTENANCE OF RIG 15
8 PROTECTION OF THE SUB-LESSOR'S INTERESTS 18
9 EXCLUSION OF LIABILITY 20
10 INSURANCE 21
11 LOSS, DAMAGE AND REQUISITION 23
12 RETURN AND SALE OF THE RIG 25
13 TERMINATION 26
14 GENERAL INDEMNITY 30
15 COSTS, EXPENSES AND FEES 34
16 TAX INDEMNITY 34
17 INCREASED COSTS 36
18 RELEASE FROM ARREST 37
19 RIGHTS AND WAIVERS 38
20 NOTICES 39
21 LAW AND JURISDICTION 40
22 ASSIGNMENT 40
23 GENERAL 41
SCHEDULE 1 THE RIG 43
SCHEDULE 2 CERTIFICATE OF ACCEPTANCE 44
SCHEDULE 3 FINANCIAL SCHEDULE 45
EXECUTION PAGE 48
THIS SUB-LEASE AGREEMENT is dated 30 January 2003
BETWEEN:
(1) SOGELEASE B.V., a company incorporated in The Netherlands having its main
office at Xxxxxxxxx Xxxxx, Xxxxxxxxxxx 0, 0000 XX, Xxxxxxxxx, Xxx
Xxxxxxxxxxx (the "SUB-LESSOR", which expression includes its successors,
permitted assignees and permitted transferees); and
(2) GLOBALSANTAFE DRILLING COMPANY (NORTH SEA) LIMITED, a company incorporated
in England and Wales (with company number 00782373) having its registered
office at Lothing Depot, Xxxxx Xxxx, Xxxxxxxxxx Xxxx, Xxxxxxxxx XX00 0XX
(the "SUB-LESSEE" which expression includes its successors, permitted
assignees and permitted transferees).
WHEREAS:
The Sub-Lessor is the lessee of the Rig under the terms of the Head-Lease. The
Sub-Lessee wishes to take the rig on sub-lease and the Sub-Lessor agrees to
sub-let the Rig to the Sub-Lessee upon the terms and conditions contained
herein.
IT IS HEREBY AGREED as follows:
1 DEFINITIONS
1.1 In this Sub-Lease, the following terms shall have the meanings given below:
"ACCELERATION DATE" means either (i) the date on which a Termination
Notice is served by the Sub-Lessor pursuant to Clause 13.1 (Termination
Events) or (ii) the date on which a Voluntary Termination Notice expires;
"AFFILIATE" means, in relation to a party, any other entity in which it
possesses directly or indirectly the power to direct or cause the
direction of the management and policies of the other person, whether
through ownership of voting shares, by contract or otherwise, or which is
under direct or indirect common control with, that party from time to
time;
"BUSINESS DAY" means any day (other than a Saturday or a Sunday) on which
banks generally are open for business in London, New York and the
Netherlands;
"CERTIFICATE OF ACCEPTANCE" means a certificate in the form attached as
Schedule 2 (Certificate of Acceptance) executed or to be executed by the
Sub-Lessor and the Sub-Lessee;
"CHANGE OF LAW" means, in each case after the date of this Sub-Lease:
(a) the implementation, introduction, abolition, withdrawal or variation
of any applicable law, regulation, practice or concession or
official directive, ruling, request, notice, guideline, statement of
policy or practice statement by the European Union or any central
bank or tax, fiscal, revenue, monetary, governmental, local,
international, national or other competent authority or agency
(whether or not having the force of law but in respect of which
compliance by banks or other financial institutions or institutions
of a similar nature to the Sub-Lessor in the relevant jurisdiction
is generally customary); or
(b) any change in any interpretation, or the introduction or making of
any new or further interpretation, or any new or different
interpretation of any applicable law, regulation, practice or
concession or official directive, ruling, request, notice,
guideline, statement of policy or practice statement by any court,
tribunal, governmental, local, international, national or other
competent authority or agency or the European Union or any central
bank or tax, fiscal, revenue or monetary authority or agency
(whether or not having the force of law but in respect of which
compliance by banks or other financial institutions or institutions
of a similar nature to the Sub-Lessor in the relevant jurisdiction
is generally customary); or
(c) compliance with any new or different request or direction from the
European Union or any central bank, tax, fiscal, regulatory
monetary, revenue, governmental, local, international, national or
other competent authority or agency (whether or not having the force
of law but in respect of which compliance by banks or other
financial institutions or institutions of a similar nature to the
Sub-Lessor in the relevant jurisdiction is generally customary),
and for the avoidance of doubt, any decision of a court which discloses a
state of law such that any practice, concession, official direction or
other statement of policy or interpretation lawfully made by any
authority, organisation or agency referred to above ceases to be
applicable or correct shall be deemed to be a withdrawal or abolition
thereof;
"CHARTER" means the bareboat charter dated 1 November 2002 and entered
into between the Sub-Lessor and the Charterer in respect of the Rig as
that bareboat charter may be amended from time to time or, as the case may
be, any other bareboat charter which the Sub-Lessor or the Charterer may
enter into from time to time in substitution therefor in accordance with
the terms of the Sub-Lease;
"CHARTERER" means GlobalSantaFe Drilling U.K. Limited, a company
incorporated in Scotland with company number SC131375 having its
registered office at Xxxxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxxxxx XX00 0XX or,
as the case may be, any other person to whom the Sub-Lessee charters the
Rig pursuant to a Charter;
"COMPULSORY ACQUISITION" means requisition for title or other compulsory
acquisition, requisition, appropriation, expropriation, deprivation,
forfeiture or confiscation for any reason of the Rig by any Governmental
Entity or other competent authority, whether de jure or de facto, but
shall exclude requisition for use or hire not involving requisition for
title;
"DEFAULT RATE" means 2% per annum over LIBOR from time to time;
"DOLLARS" and "US$" means the lawful currency for the time being of the
United States of America;
"ENCUMBRANCE" means any mortgage, charge, assignment by way of security,
pledge, hypothecation, lien, right of set-off, retention of title
provision, trust or flawed asset arrangement (for the purpose of, or which
has the effect of, granting security) or any other security interest of
any kind whatsoever, or any agreement, whether conditional or otherwise,
to create, or which has the effect of creating, any of the same, or any
agreement to sell or otherwise dispose of any asset;
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"ENVIRONMENT" means:
(a) any land including, without limitation, surface land and sub-surface
strata, sea bed or river bed under any water (as defined below) and
any natural or man-made structures;
(b) water including, without limitation, coastal and inland waters,
surface waters, ground waters and water in drains and sewers; and
(c) air, including air within buildings and other natural and man-made
structures above and below ground;
"ENVIRONMENT CLAIM" means any written or oral notice from any person
alleging any breach, contravention or violation of any Environmental Law
or the existence of any liability or potential liability arising from any
such breach, contravention or violation including, without limitation,
liability to conduct, pay for or for damages in respect of, any
investigation or audit, clean-up, redemption, administrative costs or
charge or expense, damage to the Environment or any natural resource,
property loss or damage, personal injury or any penalty, attaching or
relating to the presence, emission, release or leak of any Hazardous
Material in or to the Environment;
"ENVIRONMENTAL LAW" means any or all applicable law (whether civil,
criminal or administrative), common law, statute, statutory instrument,
treaty, convention, regulation, directive, by-law, demand, decree,
injunction, resolution, order or judgment (in each case having the force
of law) and codes of practice or conduct circulars and guidance notes
having legal or judicial import or effect, in each case of any
Governmental Entity (whether now existing or hereafter promulgated) in any
applicable jurisdiction relating to or concerning:
(a) pollution or contamination of the Environment;
(b) harm, whether actual or potential, to mankind and human sense, other
living organisms and ecological systems;
(c) the generation, manufacture, processing, distribution, use
(including abuse), treatment, storage, disposal, transport or
handling of Hazardous Materials; and
(d) the emission, leak, release, spill or discharge into the Environment
of noise, vibration, dust, fumes, gas, odours, smoke, steam,
effluvia, heat, light, radiation (of any kind), infection,
electricity or any Hazardous Material and any matter or thing
capable of constituting a nuisance or any actionable tort or breach
of statutory duty of any kind in respect of such matters;
"ENVIRONMENTAL PERMITS" means, in relation to any person, all or any
permits, licences, consents, approvals, ruling, variance, exemption,
certificates, registrations and other authorisations and the filing of all
notifications, reports and assessments required under any Environmental
Law in connection with the conduct of such person's business and the
ownership, use, exploitation or occupation of all of its property and
assets;
"FINANCIAL INDEBTEDNESS" means any indebtedness in respect of:-
(a) moneys borrowed;
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(b) any debenture, bond, note, loan stock or other security;
(c) any acceptance or documentary credit;
(d) receivables sold or discounted (otherwise than on a limited recourse
basis);
(e) the acquisition cost of any asset to the extent payable before or
after the time of acquisition or possession by the party liable
where the advance or deferred payment is arranged primarily as a
method of raising finance or financing the acquisition of that
asset;
(f) a capital lease under FAS 13;
(g) any currency swap or interest swap, cap or collar arrangement or any
other derivative instrument provided that for the purposes of Clause
13.1(e) only the net amount payable shall be taken into account;
(h) any amount raised under any other transaction having the commercial
effect of a borrowing or raising of money; or
(i) any guarantee, indemnity or similar assurance in respect of any of
(a) to (h) above.
"FINANCIAL SCHEDULE" means Schedule 3;
"FIXTURE" means fixed to any land so as to become in law part of that land
and including, without limitation, the Rig being treated as a fixture
under English law (including without limitation the Capital Allowances Act
2001);
"GOVERNMENTAL ENTITY" means and includes (whether having a distinct legal
personality or not) (i) any national government, political sub-division
thereof or local jurisdiction therein, (ii) any board, commission,
department, division, organ, instrumentality, court or agency of any
entity referred to in (i) above, however constituted and (iii) any
association, organisation or institution (international or otherwise) of
which any entity mentioned in (i) or (ii) above is a member or to whose
jurisdiction any of the foregoing is subject or in whose activities any of
the foregoing is a participant;
"GUARANTEE" means a guarantee and indemnity dated on or about the date
hereof from the Guarantor in favour of the Sub-Lessor in respect of the
obligations of the Sub-Lessee under this Sub-Lease and the other Lease
Documents;
"GUARANTOR" means GlobalSantaFe Corporation, a company incorporated under
the laws of the Cayman Islands with its registered office c/o M&C
Corporate Services Limited, XX Xxx 000 XX, Xxxxxx House, South Church
Street, Xxxxxx Town, Grand Cayman, Cayman Islands and having an office at
00000 Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx
00000-0000, XXX;
"GUARANTOR'S GROUP" means the Guarantor and any of its Affiliates;
"GSF STANDARD" means the standards of operation, management and
maintenance which the members of the Guarantor's Group adhere to from time
to time in respect of drilling units comparable to the Rig which standards
are at all times comparable to the standards of a reasonably prudent
operator of oil rigs of the same type, age and condition as the Rig;
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"HEAD-LEASE" means the Head-Lease Agreement dated the same date as this
Sub-Lease between the Head-Lessor (as lessor) and the Sub-Lessor (as
lessee) in respect of the Rig;
"HEAD-LESSOR" means the Sub-Lessee in its capacity as lessor under the
Head-Lease or any Transferee (as defined in Clause 22.2 (Sub-Lessee));
"INDEMNIFIED PERSONS" means the Sub-Lessor, any member of the sub-Lessor
Group and their respective officers, directors, agents and employees;
"ISM CODE" means the International Safety Management Code (including the
guidelines on its implementation), adopted by the International Maritime
Organization Assembly as Resolutions A.741(18) and A.788.19, as the same
may be amended and supplemented from time to time;
"LEASE DOCUMENTS" means this Lease, the Certificate of Acceptance, the
Sub-Lease, the Certificate of Acceptance (as defined in this Sub-Lease),
the Support Letter, the Guarantee, the Lessor Payment Letter, the Lessee
Payment Letter and all other documents agreed in writing by the Lessor and
the Lessee to be Lease Documents;
"LEASING TERMINATION DATE" means the date on which the sub-leasing of the
Rig terminates in accordance with Clause 12.2(b);
"LOSS" or "LOSSES" means any liability, loss (including, without
limitation, financial loss or liability), charge, claim, proceeding,
damage, judgment, enforcement penalty, fine (including, without
limitation, any penalty or fine arising under Environmental Law), fee,
cost (including, without limitation, legal costs), lien, salvage, average
and expense of whatsoever nature (but excluding any Tax or VAT, interest,
penalty or fine in connection therewith) suffered or incurred by or
imposed on any Indemnified Person from time to time in connection with
this Sub-Lease or the other Lease Documents or the Rig or the transactions
contemplated in this Sub-Lease or any other Lease Document;
"NET SALE PROCEEDS" means the Sale Proceeds minus:
(a) the costs and expenses of the sale of the Rig in accordance with
clause 12 of the Head-Lease (Return of the Rig); and
(b) VAT Irrecoverable on Sale;
"OPERATOR" means any Affiliate of the Guarantor which has the day to day
operational control of the Rig from time to time;
"PAYMENT ACCOUNT DETAILS" means in relation to any payment to be made
under or pursuant to this Sub-Lease or any Lease Document, the name,
account number, sort code, account location (being an account in the
United Kingdom) and other details specified by the payee and necessary to
effect payment (by electronic means of transfer) to the payee;
"PERMITTED ENCUMBRANCE" means:
(a) any Sub-Lessor Encumbrance;
(b) Encumbrances for Taxes for which the Head-Lessor or the Sub-Lessee
is liable either not yet assessed or, if assessed, not yet due and
payable or being contested in good faith by appropriate proceedings
(and for the payment of which adequate
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reserves have been provided) so long as any such proceedings do not
involve any reasonable likelihood of the sale, forfeiture or loss
of, or of any interest in, the Rig (or any part thereof);
(c) Encumbrances (other than Encumbrances for Taxes) arising out of
claims, judgments or awards against the Head-Lessor or the
Sub-Lessee with respect to which at the time an appeal or proceeding
for review is being prosecuted in good faith (and for the payment of
which adequate reserves have been made or, when required in order to
pursue such proceeding, an adequate bond has been provided) and for
which there shall have been secured a stay of execution pending such
appeal or proceeding for review so long as any such judgment, award
or proceeding does not involve any reasonable likelihood of the
sale, forfeiture or loss of, or of any interest in, the Rig (or any
part thereof);
(d) any lien for salvage and any ship repairer's or outfitter's
possessory lien or any lien for general average or for officers' or
crew's wages not more than ten (10) Business Days outstanding
arising in the ordinary course of trading or any other Encumbrance
or contractual right of set-off arising by operation of law in the
ordinary course of trading and in respect of obligations which are
not overdue which in each case is not yet due and payable or is
being contested in good faith by appropriate proceedings (and for
the payment of which adequate reserves or an adequate bond have been
provided) so long as any such proceedings or the continued existence
of such Encumbrance do not involve any reasonable likelihood of the
sale, forfeiture or the loss of, or of any interest in, the Rig (or
any part thereof);
(e) the Lease Documents, the Charter and the Service Contract;
(f) any Encumbrance, the creation of which has been expressly permitted
in writing by the Sub-Lessor;
(g) any Encumbrance in respect of claims which the Sub-Lessee
demonstrates to the Sub-Lessor's satisfaction are then covered by
insurance so long as the same do not create a reasonable likelihood
of the sale or forfeiture or loss of, or of any interest in, the Rig
(or any part thereof).
"PREMIUM" means the amount of thirty seven million Dollars
(US$37,000,000);
"RELEASE" means an emission, spill, release or discharge into or upon the
air, surface water, groundwater, or soils of any Hazardous Materials for
which the relevant person has any liability under Environmental Law,
except in accordance with a valid Environmental Permit;
"RENTAL" means each amount of rent payable in relation to the Sub-Lease
Period pursuant to Clause 4 (Rentals), as determined in accordance with
the Financial Schedule as adjusted from time to time;
"RENTAL PAYMENT DATE" means:
(a) in respect of the first Rental due under this Sub-Lease, 3rd
February, 2003;
(b) in respect of the second Rental due under this Sub-Lease, 3rd
February, 2004;
(c) in respect of the third Rental due under this Sub-Lease, 3rd
February, 2005;
(d) in respect of the fourth Rental due under this Sub-Lease, 3rd
February, 2006; and
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(e) in respect of the fifth Rental due under this Sub-Lease, 5th
February, 2007;
"RENTAL PERIOD" means each period commencing on a Rental Payment Date and
ending on the day before the next following Rental Payment Date or, in the
case of the last such period, ending on the last day of the Sub-Lease
Period;
"REQUIRED INSURANCES" means the protection and indemnity insurance in
respect of the Rig required to be maintained by the Sub-Lessee in
accordance with Clause 10.1 (a);
"REQUISITION COMPENSATION" means all sums of money or other compensation
from time to time payable in respect of the Compulsory Acquisition of the
Rig;
"RIG" means the xxxx-up drilling unit known as "Britannia" and at the date
of this Sub-Lease working over the Skiff Platform in the Southern North
Sea of the United Kingdom continental shelf more fully described in
Schedule 1, together with all equipment, furniture, and all other
appurtenances owned by the Sub-Lessee in relation thereto (whether at the
date of this Sub-Lease or later) but excluding consumable stores and
provisions, rented equipment and equipment owned or rented by
subcontractors and all replacements, renewals, improvements and
substitutions (whether pursuant to the terms of this Sub-Lease or
otherwise) and all additions and accessories thereto;
"SHELL" means Shell UK Limited (trading as "Shell UK Exploration and
Production");
"SERVICE CONTRACT" means the service contract originally entered into
between Shell and the Head-Lessor with a commencement date of 1 October
2001 (and novated from the Head-Lessor to the Charterer by a novation
agreement dated 1 November 2002) in respect of the operation and
employment of the Rig as that contract has been and may further be amended
from time to time or any other service contract which the Sub-Lessee or
the Charterer may enter into from time to time in substitution therefor in
accordance with the terms of this Sub-Lease;
"START DATE" means the date of execution of the Certificate of Acceptance
(as that term is defined in the Head-Lease) by both the Head Lessor and
the Sub-Lessor (in its capacity as lessee under the Head-Lease);
"STAMP DUTY" means all stamp duties as levied in the United Kingdom at the
date hereof and imposed by the Xxxxx Xxx 0000 including any interest,
penalty, surcharge or fine payable in respect thereof;
"SUB-LEASE" means this Sub-Lease Agreement and the words "herein",
"hereunder" and similar words and expressions shall be construed
accordingly;
"SUB-LEASE PERIOD" means a period of five (5) years commencing on the
Start Date (or such shorter period as may be determined in accordance with
the terms of this Sub-Lease;
"SUB-LESSOR ENCUMBRANCES" means any Encumbrance on the Rig to the extent
that it is solely attributable to or arises as a result of:
(a) claims against or affecting the Sub-Lessor (including any claim in
relation to any other rig or vessel of which the Sub-Lessor is the
owner or the lessee or demise charterer) and leased or chartered by
it otherwise than to the Sub-Lessee or any other member of the
Guarantor's Group) to the extent that it is not related to, or does
not arise directly or indirectly as a result of the transactions
contemplated by this Sub-Lease or any of the other Lease Documents
but excluding any such claim to the extent that it is solely
attributable to or arises as a result of any actions,
7
omission, failure or breach, negligent or otherwise, of the
Sub-Lessee or any other member of the Guarantor's Group; or
(b) acts or omissions of the Sub-Lessor to the extent not contemplated,
required or permitted directly or indirectly as a result of the
transactions contemplated by this Sub-Lease or any of the other
Lease Documents but excluding any such act or omission to the extent
that it is solely attributable or arises as a result of any action,
omission, failure or breach, negligent or otherwise of the
Sub-Lessee or any other member of the Guarantor's Group; or
(c) the non-payment of Taxes imposed upon the Sub-Lessor, other than
those Taxes the subject of any indemnity in favour of the Sub-Lessor
under the Lease Documents or where the liability to pay, or the
amount of such Taxes is being disputed by the Sub-Lessee in good
faith or those which are solely attributable to or arise as a result
of any actions, omission, failure or breach, negligent or otherwise
of the Sub-Lessee or any other member of the Guarantor's Group; or
(d) any act or omission of the Sub-Lessor constituting a breach by the
Sub-Lessor of its obligations under this Sub-Lease or the other
Lease Documents to the extent that it is not solely attributable to
or does not relate to or arise directly or indirectly as a result of
any action, omission, failure or breach, negligent or otherwise, of
the Sub-Lessee or any member of the Guarantor's Group; or
(e) any act or omission of the Sub-Lessor which constitutes the wilful
misconduct or recklessness with knowledge of the probable
consequences,
but excluding in any such case any Encumbrance which the Sub-Lessor is
contesting in good faith by appropriate proceedings so long as such
proceedings or the continued existence of the Encumbrance do not give rise
to any reasonable likelihood of the sale, forfeiture or loss of, or of any
interest in, the Rig (or any part thereof);
"SUB-LESSOR GROUP" means the Sub-Lessor Parent and its Affiliates from
time to time;
"SUB-LESSOR PARENT" means Societe Generale, a French banking institution;
"SUB-LESSOR'S DISPOSAL PROCEEDS" means following a sale of the Rig, the
amount of Net Sale Proceeds to which the Sub-Lessor is entitled under the
Head-Lease in respect of the disposal by any means of its interest in the
Rig and its rights under the Head-Lease;
"SUPPORT LETTER" means the support letter issued or to be issued by the
Sub-Lessor Parent in favour of the Sub-Lessee in form and substance
satisfactory to the Sub-Lessee;
"TAXES" means all present and future taxes, levies, imposts, duties, fees
or charges of any kind whatsoever including, without limitation,
corporation, capital gains, income, gross receipt, franchise, transfer,
sales, use, business, occupation, transaction, purchase, excise, personal
property, real property, stamp, documentary, national insurance or other
taxes) or any amount payable on account of or instalment payments in
respect of or as security for any of the foregoing payable at the instance
of or imposed by any governmental, taxing or fiscal authority whatsoever
whether in the United Kingdom or elsewhere together with any penalties,
additions, fines or interest relating to any of them and "TAX" and
"TAXATION" and cognate expressions shall be construed accordingly;
"TAX LIABILITY" means in respect of any person:
(a) any liability or any increase in the liability of that person to
make any payment or payments of or in respect of Tax;
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(b) the loss or setting off against income, profits or gains or against
any liability to make a payment or payments of or in respect of Tax
of any relief, allowance, deduction or credit (a "RELIEF") which
would otherwise have been available to that person; and
(c) the loss or setting off against any liability to make a payment or
payments of or in respect of Tax of a right to repayment of Tax
which would otherwise have been available to that person.
and in any case falling within (b) or (c) above the amount that is to be
treated as a Tax Liability shall be determined as follows:-
(i) in a case which falls within (b) above and where the Relief that was
the subject of the loss or setting off was or would have been a
deduction from or offset against Tax, the Tax Liability shall be the
amount of that Relief;
(ii) in a case which falls within (b) above and which involves the loss
of a Relief which would otherwise have been available as a deduction
from or offset against gross income, profits or gains the Tax
Liability shall be the amount of Tax which would (on the basis of
the Tax rates current at the date of the loss and assuming that the
person has sufficient gross income, profits or gains to utilise the
Relief) have been saved but for the loss of the Relief;
(iii) in a case which falls within (b) above and which involves the
setting off of a Relief which would otherwise have been available as
a deduction from or offset against gross income, profits or gains,
the Tax Liability shall be the amount of Tax which has been or will
be saved in consequence of the setting off;
(iv) in a case which falls within (c) above, the Tax Liability shall be
the amount of the repayment that would have been obtained but for
the loss or setting off.
For the purposes of this definition, any question of whether or not any
right to repayment of Tax has been lost or set-off, and if so, the date on
which that loss or set-off took place or would otherwise have taken place,
shall be determined by the Sub-Lessor in its absolute discretion.
"TERMINATION EVENT" means any of the events so specified in Clause 13.1
(Termination Events);
"TERMINATION NOTICE" has the meaning given to it in Clause
13.1(Termination Events);
"TERMINATION PAYMENT DATE" means:
(a) following the issue of a Voluntary Termination Notice, the date on
which the Voluntary Termination Notice expires; or
(b) where a Termination Notice has been given by the Sub-Lessor to the
Sub-Lessee pursuant to Clause 13.1(Termination Payment), the date
falling five (5) Business Days after the date of receipt by the
Sub-Lessee of the Termination Notice;
"TERMINATION SUM" means, with respect to any date, or amount calculated
for such date in accordance with paragraph 2 (Termination Payment) of the
Financial Schedule;
"TOTAL LOSS" means:
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(a) actual or constructive or compromised or arranged or agreed total
loss of the Rig; or
(b) the destruction or damage beyond economic repair of the Rig, or the
Rig being otherwise rendered or declared permanently unfit for
normal use for any reason whatsoever; or
(c) the Compulsory Acquisition or the requisition for hire (other than a
requisition for hire for a temporary period not exceeding ninety
(90) days) of the Rig; or
(d) the hijacking, theft, seizure, detention or disappearance of the Rig
resulting in loss of possession by the person authorised to have
possession of it for a period of ninety (90) days or longer;
"TOTAL LOSS DATE" means the date upon which the Rig is deemed to have
become a Total Loss pursuant to Clause 11.2 (c);
"TOTAL LOSS PAYMENT DATE" means the earliest of any of the following dates
next occurring after the Total Loss Date:
(a) the date falling one hundred and eighty (180) days after the Total
Loss Date (or such later day as the Sub-Lessor may agree from time
to time); or
(b) the first Business Day after the day on which the Head-Lessor, the
Sub-Lessee or any other person receives the Total Loss Proceeds or
Requisition Compensation;
"TOTAL LOSS PROCEEDS" means the proceeds of any policy or contract of
insurance arising in respect of a Total Loss;
"UKCS" means the United Kingdom Continental Shelf, being the area so
described in the Continental Shelf (Designation of Areas) (Consolidation)
Order 2000 and the Continental Shelf (Designation of Areas) Order 2001;
"VAT IRRECOVERABLE ON SALE" means VAT incurred by the Lessor in connection
with its sale of its interest as owner of the Rig and the Lessee's
Interest which is irrecoverable owing in whole or in part to the nature of
the service supplied by the Lessor in disposing of the Lessee's Interest;
"VOLUNTARY TERMINATION" means termination of this Sub-Lease by the
Sub-Lessee in accordance with Clause 13.5(Voluntary Termination);
"VOLUNTARY TERMINATION NOTICE" has the meaning ascribed to it in Clause
13.5.
1.2 CONSTRUCTION OF TERMS. CONSTRUCTION OF TERMS. In this Sub-Lease, unless
the contrary intention appears, a reference to:
(a) (i) an "AMENDMENT" includes any supplement, novation or re-enactment
and "amended" is to be construed accordingly;
"ASSETS" includes present and future properties, revenues and rights
of every description;
"ASSIGNEE" or "ASSIGNS" of a person shall include any person who has
assumed all or some of the rights and/or obligations of the relevant
person, whether by assignment, novation or otherwise;
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"AUTHORISATION" includes any authorisation, consent, approval,
resolution, licence, permit, exemption, filing and registration;
"INCLUDING" and "IN PARTICULAR" shall be construed as being by way
of illustration or emphasis only and shall not be construed as, nor
shall they take effect as, limiting the generality of the foregoing
words;
"OTHER" and "OTHERWISE" shall not be construed ejusdem generis with
any foregoing words where a wider construction is possible;
a "PERSON" includes any individual, company, corporation, firm,
association, trust, unincorporated organisation or body of persons
(including a partnership, joint venture or consortium), government
(including any agency, department or political sub-divisions
thereof), state, agency, international organisation, European Union
institution, committee, department or authority or other entity
whether having distinct legal personality or not or any association
or partnership of two or more of the foregoing and its successors
(whether of the same name or another name) and permitted assignees;
a "REGULATION" includes any regulation, rule, official directive,
request or guideline (whether or not having the force of law) of any
governmental, inter-governmental or supranational body, agency,
department or regulatory, self-regulatory or other authority or
organisation;
"WINDING-UP" of a person also includes the amalgamation,
reconstruction, re-organisation, administration, dissolution,
liquidation, merger or consolidation of that person, and any
equivalent or analogous procedure under the law of any jurisdiction
in which that person is incorporated, domiciled or resident or
carries on its business or has assets;
(ii) in this Sub-Lease, unless the contrary intention appears, a
provision of law is a reference to that provision as amended or
re-enacted;
(iii) in this Sub-Lease reference to a Clause, a paragraph, a
sub-paragraph, or a Schedule is, unless specified a reference to a
clause, a paragraph, a sub-paragraph of or a schedule to this
Sub-Lease as from time to time amended in accordance with the
provisions of this Sub-Lease;
(iv) a Lease Document or another document is a reference to that Lease
Document or other document as amended or substituted from time to
time;
(b) the index to and headings in this Sub-Lease are for convenience only and
are to be ignored in construing this Sub-Lease; and
(c) in this Sub-Lease words importing the singular shall include the plural
and vice versa.
1.3 If the Sub-Lessor considers that an amount paid by the Sub-Lessee under a
Lease Document is capable of being avoided or otherwise set aside on the
liquidation or administration of the Sub-Lessee, then that amount shall
not be considered to have been irrevocably paid for the purposes of the
Lease Documents.
2 LEASING OF THE RIG
2.1 QUIET ENJOYMENT. Subject to and in accordance with the terms of this
Sub-Lease and subject to the due performance by the Sub-Lessee of its
obligations under this Sub-Lease and the other Lease Documents to which it
is a party, the Sub-Lessor irrevocably warrants and undertakes that
provided that:
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(a) the Sub-Lessor has no right to terminate the leasing of the Rig under this
Sub-Lease; and
(b) the Head-Lessor continues to make the Rig available to the Sub-Lessor in
accordance with the Head-Lease,
the Sub-Lessee will, throughout the Sub-Lease Period, be entitled
peaceably to hold and use the Rig without interference from the Sub-Lessor
or any person acting through the Sub-Lessor subject to the rights of the
Charterer under the Charter and the rights of the Operator.
2.2 AGREEMENT TO LEASE. Subject to and in accordance with the terms of this
Sub-Lease, the Sub-Lessor agrees to let the Rig to the Sub-Lessee and the
Sub-Lessee agrees to take the Rig on lease from the Sub-Lessor for the
Sub-Lease Period. The sub-lease of the Rig is subject to the Charter and
to the Service Contract and to the rights of the Charterer and the
Operator.
3 COMMENCEMENT OF SUB-LEASE PERIOD
3.1 COMMENCEMENT OF SUB-LEASE PERIOD. The Sub-Lease Period shall commence
immediately following the commencement of the Lease Period under the
Head-Lease.
3.2 DELIVERY. Delivery of the Rig by the Sub-Lessor to the Sub-Lessee under
this Sub-Lease and acceptance thereof by the Sub-Lessee shall, without any
action on the part of the Sub-Lessor, be deemed to take place immediately
upon commencement of the Sub-Lease Period.
3.3 CERTIFICATE OF ACCEPTANCE. Immediately following the commencement of the
Sub-Lease Period, the Sub-Lessor and the Sub-Lessee will both execute the
Certificate of Acceptance. Execution of the Certificate of Acceptance by
the Sub-Lessor and the Sub-Lessee shall without further act be irrevocable
evidence that the Sub-Lessee:
(a) has found the Rig to be complete, in good order and condition, of
satisfactory quality, fit for any purpose for which it is intended or
required and in every way satisfactory; and
(b) has accepted delivery of and has irrevocably and unconditionally accepted
the Rig.
4 RENTALS
4.1 The Sub-Lessee shall throughout the Sub-Lease Period, without demand, pay
to the Sub-Lessor the five instalments of Rental on the appropriate Rental
Payment Date.
5 PAYMENTS
5.1 PAYMENTS. Wherever in this Sub-Lease provision is made for the payment by
one party to another, such payment will be effected by crediting the
account specified in the Payment Account Details of the party entitled to
payment in immediately available cleared funds on or before the due date
for payment. All payments shall be made without any set-off, counterclaim
deduction or withholding (subject to the provisions of Clause 6
(Withholding)). All payments by the Sub-Lessee to the Sub-Lessor in
accordance with this Agreement shall be made from an account in the United
Kingdom.
5.2 INTEREST ON OVERDUE AMOUNTS. If any payment due from the Sub-Lessee to the
Sub-Lessor under this Sub-Lease is not paid on the due date, or if the
Sub-Lessor makes any payment under the powers conferred on it, the
Sub-Lessee shall, without prejudice to the Sub-Lessor's other rights and
remedies, pay on demand interest thereon at the Default
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Rate (as well after as before judgment) from and including such due date,
or the date of payment by the Sub-Lessor, to, but excluding, the date of
actual payment. Such interest shall accrue on a daily basis, assuming a
year of three hundred and sixty (360) days, and be compounded monthly.
5.3 BUSINESS DAYS. If a payment under this Sub-Lease is due on a day which is
not a Business Day, the due date for that payment shall instead be the
next Business Day in the same calendar month (if there is one) or the
preceding Business Day (if there is not).
5.4 VAT. All payments due to the Sub-Lessor under this Sub-Lease are
calculated without regard to VAT which, if applicable, will be added at
the appropriate rate. If any VAT is due, the Sub-Lessee shall pay to the
Sub-Lessor such VAT together with any interest and penalties thereon on
demand by the Sub-Lessor, such demand to be made no earlier than such date
as shall be reasonably necessary to enable the VAT to be paid on the last
date for the payment of such VAT to avoid incurring interest and
penalties. The Sub-Lessor shall promptly provide the Sub-Lessee with a
valid VAT invoice in respect of each supply made under this Sub-Lease by
the Sub-Lessor and such invoice shall comply with all relevant laws and
regulations relating to VAT (including, in particular, Part III of the
Value Added Tax Regulations 1995 (as amended)).
5.5 INCORRECT VAT. If the Sub-Lessee pays the Sub-Lessor an amount in respect
of VAT under Clause 5.4 (VAT) and HM Customs and Excise ("CUSTOMS") rules
that all or part of it was not properly chargeable (an "INCORRECT VAT
CHARGE") the party receiving the ruling shall immediately notify the other
of it and, the Sub-Lessor shall pay to the Sub-Lessee no later than five
(5) Business Days after such notification an amount equal to that
incorrect VAT charge together with any interest paid by Customs in respect
of such Incorrect VAT Charge.
5.6 AMOUNTS PAYABLE BY SUB-LESSEE. All amounts payable by the Sub-Lessee under
this Lease by way of indemnity or reimbursement of any Losses, Taxes and
the like incurred or suffered by any Indemnified Person are payable in the
currency in which the Loss, Tax or other like amount was incurred or
suffered.
5.7 CURRENCY. All other amounts payable under this Lease are, except as
otherwise provided in this Lease, payable in Dollars and shall be made for
value on the due date.
5.8 TIME OF THE ESSENCE. Punctual payment of amounts due from the Sub-Lessee
and timely performance by the Sub-Lessee of each of its obligations under
this Sub-Lease shall, subject to any time periods specified in paragraph
(a) or (c) of Clause 13.1 (Termination Events) be of the essence and are
conditions of this Sub-Lease.
5.9 PAYMENTS UNCONDITIONAL. The Sub-Lessee's obligation to pay Rentals and
make other payments, and perform any obligations owed to the Sub-Lessor
pursuant to or in connection with this Sub-Lease shall be absolute and
unconditional and shall not be affected by and shall be irrespective of
any contingency whatsoever including (but not limited to):
(a) any right of set-off, counterclaim, recoupment, defence, deduction or
other right;
(b) any unavailability of the Rig for any reason, including, but not limited
to, requisition thereof, or any prohibition or interruption of or other
restriction against the Sub-Lessor's, the Sub-Lessee's, the Charterer's or
any other person's use, operation or possession of the Rig, any
interference with such use, operation or possession or failure to deliver
any part of the Rig or any lack or invalidity of title or any other defect
in the title, suitability, seaworthiness, satisfactory quality,
merchantability, fitness for any purpose, condition, appearance, safety,
design, or operation of any kind or nature of the Rig, or the
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ineligibility of the Rig for any particular use or trade, or for want of
registration or the absence or withdrawal of any permit, licence,
authorisation or other documentation required under the applicable law of
any relevant jurisdiction for the ownership, leasing, use, operation or
location of the Rig, or (subject to Clause 11.3 (Confirmation of Sub-Lease
Period)) the Total Loss of, or any damage to, the Rig or any part thereof;
(c) any insolvency, bankruptcy, winding-up, administration, reorganisation,
reconstruction, arrangement, readjustment or rescheduling of debt,
dissolution, liquidation or similar proceedings by or against the
Sub-Lessor, the Sub-Lessee, the Guarantor, the Sub-Lessor Parent or any
other person (whether a party to any Lease Document or not);
(d) any validity or unenforceability or lack of due authorisation of, or other
defect in, this Sub-Lease or any of the other Lease Documents or any
particular provision hereof or thereof;
(e) any failure or delay on the part of any party, whether with or without
fault on its part, duly to perform or comply with its obligations under
this Sub-Lease or any of the other Lease Documents; and
(f) any other case which but for this provision would or might have the effect
of terminating or in any way affecting any obligation of the Sub-Lessee
hereunder,
(but without prejudice to the rights of the Sub-Lessee to damages or
specific performance or any other injunctive relief in respect of this
Sub-Lease or any of the other Lease Documents).
6 WITHHOLDING
6.1 PAYMENTS. All sums payable to the Sub-Lessor pursuant to or in connection
with this Sub-Lease and any other Lease Document or any other document
contemplated by or entered into pursuant to either the Sub-Lease or any
other Lease Document as appropriate shall be paid free and clear of all
deductions or withholdings whatsoever in respect of Taxes unless required
by applicable law.
6.2 GROSS-UP. If the Sub-Lessee is required by applicable law to make a
deduction or withholding in respect of Taxes from any amount due under
this Sub-Lease the Sub-Lessee shall:
(a) ensure or procure that the deduction or withholding is made and that
it does not exceed the minimum legal requirement therefor;
(b) pay, or procure the payment of the full amount deducted or withheld
to the relevant Taxation or other authority in accordance with the
applicable law;
(c) and such deduction or withholding arises as a result of (x) a Change
of law, or (y) the Rig being or becoming a Fixture, increase the
payment in respect of which the deduction or withholding is required
so that the net amount received by the Sub-Lessor after the
deduction or withholding (and after taking account of any further
deduction or withholding which is required to be made which arises
as a consequence of the increase) shall be equal to the amount which
the Sub-Lessor would have been entitled to receive in the absence of
any requirement to make a deduction or withholding; and
(d) promptly deliver or procure the delivery to the Sub-Lessor of appropriate
receipts evidencing the deduction or withholding which has been made;
PROVIDED THAT if the Sub-Lessor determines, in its absolute discretion,
that it has received, realised, utilised and retained a Tax benefit by
reason of any deduction or withholding in
14
respect of which the Sub-Lessee has made an increased payment under this
Clause 6.2, the Sub-Lessor shall, provided it has received all amounts
which are then due and payable by the Sub-Lessee under any of the
provisions of this Sub-Lease, pay to the Sub-Lessee (to the extent that
Sub-Lessor can do so without prejudicing the amount of that benefit and
the right of the Sub-Lessor to obtain any other benefit, relief or
allowance which may be available to it) such amount, if any, as the
Sub-Lessor in its absolute discretion, shall determine will leave the
Sub-Lessor in no better and no worse position than the Sub-Lessor would
have been in if the deduction or withholding had not been required;
PROVIDED FURTHER THAT:
(i) the Sub-Lessor shall have an absolute discretion as to the time at
which and the order and manner in which it realises or utilises any
Tax benefit;
(ii) the Sub-Lessor shall not be obliged to disclose any information
regarding its business, Tax affairs or Tax computations or those of
any member of the Sub-Lessor Group;
(iii) if the Sub-Lessor has made a payment to the Sub-Lessee pursuant to
this Clause 6.2 on account of any Tax benefit and it subsequently
transpires that the Sub-Lessor did not receive that Tax benefit, or
received a lesser Tax benefit, the Sub-Lessee shall pay on demand to
the Sub-Lessor such sum as the Sub-Lessor may, in its absolute
discretion, determine is necessary to restore the after-Tax position
of the Sub-Lessor to that which it would have been had no adjustment
under this proviso (iii) been necessary;
(iv) the Sub-Lessor shall not be obliged to make any payment under this
Clause 6.2 if, by doing so, it would contravene the terms of any
applicable law or any notice, direction or requirement of any
governmental or regulatory authority (whether or not having the
force of law),
6.3 TREATY RELIEF. If the Sub-Lessee requests the Sub-Lessor, in writing, to
make an appropriate application in writing to an appropriate Tax authority
pursuant to the provisions of a double tax treaty for relief (whether in
whole or in part) in respect of any deduction or withholding on account of
Taxes required by law, the Sub-Lessor shall, PROVIDED THAT the Sub-Lessor
is indemnified to its satisfaction in respect of any costs, expenses,
damages or claims it may incur or suffer in connection therewith, take
such action as the Sub-Lessee shall reasonably request to make such
application to an applicable Tax authority. The Sub-Lessor shall be under
no obligation to appeal, contest or dispute any decision, ruling or
determination by that Tax authority that the provisions of the double tax
treaty in respect of which the application referred to in this Clause is
made do not apply to the deduction or withholding on account of Taxes in
respect of which that application is made. If the Sub-Lessor subsequently
obtains a repayment (whether in whole or in part) of such deduction or
withholding from that Tax authority in circumstances where Sub-Lessee has
made an increased payment under Clause 6.2 the Sub-Lessor shall, provided
that the Sub-Lessor has received all amounts which are then due and
payable by the Sub-Lessee under any of the provision of this Sub-Lease pay
to the Sub-Lessee such amount of the repayment as the Sub-Lessor
considers, in its absolute discretion, will leave the Sub-Lessor in no
worse position than the Sub-Lessor would have been in if the deduction or
withholding had not been required.
7 LOCATION, USE AND MAINTENANCE OF RIG
7.1 LOCATION AND MOVEMENT OF THE RIG.
(a) The Sub-Lessee will not move the Rig outside the UKCS (except as may be
required for repair and maintenance) without the prior written consent of
the Sub-Lessor, such consent
15
not to be unreasonably withheld in the case of re-deployment of the Rig to
another sector of the North Sea which (in respect of operational,
environmental and pollution liabilities) the Sub-Lessor considers, acting
reasonably, creates no materially greater risk of potential liability for
the Sub-Lessor than that of the UKCS at the time of such proposed
re-deployment.
(b) Subject to Clause 7.1(a), the Sub-Lessee shall notify the Sub-Lessor at
least thirty (30) days before moving the Rig from the territorial waters
of UKCS (or from any other location to which the Rig may be moved
following a notification to the Sub-Lessor pursuant to this Clause
7.1(b)), such notification to specify the place to which the Rig is to be
moved and the jurisdictions through which the Rig will pass in its
proposed voyage.
(c) On reasonable request from time to time, the Sub-Lessee shall provide
written confirmation to the Sub-Lessor of the current location of the Rig.
7.2 MAINTENANCE. The Sub-Lessee shall throughout the Sub-Lease Period maintain
the Rig in good working order and fit for the purpose for which it is
employed and shall carry out all necessary maintenance and repair in
accordance with the GSF Standard.
7.3 SAFETY AND OPERATION. The Sub-Lessee shall take such steps as are
reasonably practicable to ensure that the Rig and all constituent parts
thereof will be safe and without risk to health when in use and that the
Rig is not operated beyond its specified or recommended limits or
capacity. To this end and without prejudice to the generality of the
foregoing, the Sub-Lessee shall ensure that any defects in the Rig which
could be or cause a danger to safety and a risk to health are repaired and
made good in accordance with the GSF Standard. For this purpose the
Sub-Lessee shall cause the Rig to be inspected regularly and its various
systems tested PROVIDED THAT such inspection and testing will only be
carried out in accordance with and at the interval specified in the
Sub-Lessee's maintenance schedule for the Rig and otherwise in accordance
with the GSF Standard. The Sub-Lessee shall also take all steps to ensure
that appropriate safety measures are adopted and all provisions of all
applicable laws, codes and regulations relating to the Rig are complied
with.
7.4 AUTHORISATIONS. The Sub-Lessee shall obtain and keep in full force and
effect throughout the Sub-Lease Period, at no cost to the Sub-Lessor, all
permissions, licences and other authorisations which may from time to time
be required in connection with the ownership, possession, use or operation
of the Rig.
7.5 COSTS AND EXPENSES. the Sub-Lessee will ensure that throughout the
Sub-Lease Period and subject to Clause 8.4 (Notification), all debts,
costs, expenses, losses, liabilities, premiums, calls, contributions,
penalties, charges, fines, recourses, duties, Taxes, rents, rates, and
registration charges and other outgoings which during the Sub-Lease Period
give or may give rise to any Encumbrance (other than any Permitted
Encumbrances) are promptly paid in full in relation to the Rig.
7.6 MANAGEMENT OF THE RIG. The Rig will at all times be managed in accordance
with the GSF Standard.
7.7 ENVIRONMENTAL LAWS. The Sub-Lessee will and will procure that the Operator
will:
(a) comply with all Environmental Laws which are applicable to the Rig,
(including, without limitation, obtaining, complying with and maintaining
in full force and effect all Environmental Permits required from time to
time and all requirements relating to xxxxxxx, submission of oil spill
response plans and designation of qualified individuals) which might
reasonably be expected to, or failure to comply with or maintain might,
have a material adverse effect on the rights or interests of the
Sub-Lessor (it being acknowledged that without prejudice to the generality
of the foregoing, if the same would
16
involve the Sub-Lessor in any material civil liability or any criminal
liability, then the same shall be deemed to materially and adversely
affect the rights and interests of the Sub-Lessor) or on the ability of
the Sub-Lessee to fulfil its obligations under the Lease Documents;
(b) conduct and complete all reasonably necessary investigations, studies,
sampling, audits and testings required in connection with any known (or
threatened) material Release of Hazardous Materials; and
(c) promptly upon the occurrence of any of the following events, provide to
the Sub-Lessor a certificate specifying in detail the nature of the event
concerned:
(i) the receipt of any Environmental Claim (made or threatened) against
the Rig, the Sub-Lessor, the Sub-Lessee or the Operator or which is
in relation to or is caused by or is in connection with the Rig and
which the Lessee is obliged under any applicable law to report to
any Governmental Entity; and
(ii) any revocation, suspension, amendment, variation, withdrawal or
refusal to grant any Environmental Permit or any requirement
relating to xxxxxxx, submission of oil response plans and
designation of qualified individuals; or
(iii) any (or any threatened) material release of Hazardous Materials,
which might reasonably be expected to have a material adverse effect of
the nature referred to in paragraph (a) above.
7.8 OBSTRUCTION. The Sub-Lessee shall pay all charges and expenses of every
kind and nature whatsoever incidental to the use and operation of the Rig
and, if the Rig or any part thereof becomes a wreck or an obstruction to
navigation, any costs and expenses arising which may be incurred by or
made or asserted against the Sub-Lessor in connection with or as a
consequence of the removal or destruction of the wreck or obstruction. The
Sub-Lessee shall be entitled to take action to contest or avoid any
charges or expenses subject to and in accordance with Clause 14.4 (Defence
of Claims), mutatis mutandis.
7.9 PERFORMANCE. For as long as the Rig is subject to the Charter or
thereafter sub-chartered to any member of the Guarantor's Group, the
Sub-Lessee will procure that the Charterer or any future sub-charterer, as
the case may be, will perform the obligations of the Sub-Lessee under this
Sub-Lease which relates to operational, maintenance and management issues.
Such performance will constitute pro tanto satisfaction of the
Sub-Lessee's obligations under this Sub-Lease. For the avoidance of doubt,
this Clause 7.9 shall not operate to waive or impair any obligation of the
Sub-Lessee under this Sub-Lease, which shall continue in full force and
effect.
7.10 COMPLIANCE WITH LAWS. The Sub-Lessee will:
(a) ensure that the Rig is used solely in the conduct of its or the Operator's
business in compliance with all applicable laws, treaties or conventions
(and all rules and regulations issued thereunder), including but not
limited to the ISM Code to the extent applicable and all Environmental
Laws ("APPLICABLE LAWS") and will ensure that the Rig complies with all
Applicable Laws; and
(b) not cause or permit the Rig to be:
(i) operated in any manner contrary to any Applicable Law; or
(ii) employed in any trade or business which is unlawful under any
Applicable Law.
7.11 ACCOUNTS AND FINANCIAL INFORMATION. The Sub-Lessee shall provide to the
Sub-Lessor:
17
(a) a copy of its annual audited accounts for each of its financial years; and
(b) (or, as the case may be, shall procure that there is provided to the
Sub-Lessor) such reasonably available financial information relating to
the Sub-Lessee as the Sub-Lessor may reasonably request from time to time.
7.12 SUB-CHARTERING.
(a) The Sub-Lessee shall be entitled to sub-lease or sub-charter the Rig to
any person or otherwise employ the Rig without the prior consent of the
Sub-Lessor.
(b) The sub-leasing, sub-chartering or other employment of the Rig by the
Sub-Lessee to any person will not in any way release the Sub-Lessee from
its obligations under this Agreement or the other Lease Documents.
8 PROTECTION OF THE SUB-LESSOR'S INTERESTS
8.1 NO AUTHORITY TO CREATE ENCUMBRANCES. The Sub-Lessee will not and will
procure that each of the Charterer and any other Operator will not:
(a) pledge the credit of the Sub-Lessor or any member of the Sub-Lessor Group
for the repair of the Rig or otherwise;
(b) create, purport to create or, subject to Clause 8.2 (Arrest or Detention),
permit to subsist any Encumbrance on, over or with respect to the Rig
(other than Permitted Encumbrances);
(c) sell, attempt to sell or, otherwise dispose of, the Rig or any interest
therein, or purport so to do without the previous written consent of the
Sub-Lessor or unless the requirements of Clause 22.2 are satisfied; or
(d) part with possession of the Rig other than in accordance with Clause 7.12
(Sub-chartering) and except as may be required for repair and maintenance.
8.2 ARREST AND DETENTION. If the Rig is at any time during the Sub-Lease
Period:
(a) arrested, seized, taken into custody or otherwise detained by any person
or by any court or other tribunal or by any Governmental Entity (other
than by a Compulsory Acquisition or any requisition for hire or by reason
of a Sub-Lessor's Encumbrance); or
(b) subjected to distress or other legal proceedings by reason of any process,
claim, the exercise of any rights conferred by an Encumbrance or by any
other action whatsoever (other than by reason of a Sub-Lessor's
Encumbrance),
the Sub-Lessee shall procure the release of the Rig from such arrest,
seizure or detention within twenty-one (21) days of receiving notice
thereof by providing bail or otherwise as the circumstances may require.
The Sub-Lessor acknowledges and accepts that the Sub-Lessee shall, unless
and until a Termination Event shall have occurred which is continuing,
have the sole right to contest any litigation, arbitration or
administrative proceedings in respect of the foregoing subject to and in
accordance with Clause 14.4 (Defence of Claims), mutatis mutandis.
8.3 INFORMATION CONCERNING THE RIG. The Sub-Lessee undertakes with the
Sub-Lessor that, from the Start Date and throughout the Sub-Lease Period
it will promptly furnish the Sub-Lessor with all such information as the
Sub-Lessor may from time to time reasonably request in writing regarding
the Rig, its insurance, condition, maintenance, position and employment.
18
8.4 NOTIFICATION. The Sub-Lessee shall notify the Sub-Lessor in writing
promptly at the Sub-Lessee's cost and expense of:
(a) any occurrence in consequence whereof the Rig has become or is, in the
reasonable opinion of the Sub-Lessee, likely to become a Total Loss;
(b) any material assistance which has been given to the Rig which has resulted
or may result in a lien for salvage being acquired over the Rig;
(c) the requisition for hire, requisition for title, sequestration,
forfeiture, any Compulsory Acquisition whatsoever, hijacking, theft,
seizure or detention at any time of the Rig; and
(d) any event which occurs in connection with the Rig which, in the reasonable
opinion of the Sub-Lessee, affects or might affect the rights of the
Sub-Lessor in the Rig or involves or might involve any material loss or
liability to or of the Sub-Lessor.
8.5 NOTICE OF LEASE. The Sub-Lessee shall place and keep or procure that there
is placed and kept prominently displayed in the control room of the Rig
throughout the Sub-Lease Period a framed printed notice in plain type in
English of such size that the paragraph of reading matter shall cover a
space of not less than six (6) inches wide by nine (9) inches high,
reading substantially as follows:
"NOTICE OF LEASE"
"This Rig is the property of GlobalSantaFe Drilling Company (North Sea)
Limited (in such capacity, the "LESSOR") and is subject to a head lease
granted by the Lessor to Sogelease B.V. (the "LESSEE"). This Rig is
subject to a sub-lease granted by the Lessee to GlobalSantaFe Drilling
Company (North Sea) Limited (in such capacity, the "SUB-LESSEE").
Neither the Lessor, the Sub-Lessee, nor any manager, nor any servant or
agent of them has any authority whatsoever to contract on behalf of the
Lessee or to pledge the credit of the Lessee or the involvement of the
Lessee in any liability whatsoever.
Under the terms of the Head-Lease and the Sub-Lease the Lessee has no
operational responsibility for the Rig."
The Sub-Lessee undertakes not to remove or cover up that notice.
8.6 PRIORITY. The Sub-Lessee hereby covenants that it will procure that its
obligations under the Lease Documents will rank at least pari passu with
its other present and future unsecured and unsubordinated obligations,
except for those obligations which are mandatorily preferred by law in
England.
8.7 NOTIFICATION OF TERMINATION EVENT. The Sub-Lessee undertakes with the
Sub-Lessor that, from the date of this Sub-Lease and throughout the
Sub-Lease Period, to promptly notify the Sub-Lessor of the occurrence of
any Termination Event or any event which would with the lapse of time or
giving of any notice result in a Termination Event promptly upon becoming
aware thereof.
8.8 SUB-LESSOR'S ENCUMBRANCES. The Sub-Lessor will not create or, subject to
Clause 8.9 (Arrest following a Sub-Lessor's Encumbrance) purport to create
or permit to subsist any Sub-Lessor's Encumbrances on, or over or with
respect to the Rig.
8.9 ARREST FOLLOWING A SUB-LESSOR'S ENCUMBRANCE. If the Rig is at any time
during the Sub-Lease Period:
19
(a) arrested, seized, taken into custody or otherwise detained by any person
or by any court or other tribunal or by any Governmental Entity by reason
of a Sub-Lessor's Encumbrance; or
(b) subjected to distress or other legal proceedings by reason of any process,
claim, the exercise of any rights conferred by a Sub-Lessor's Encumbrance,
the Sub-Lessor shall procure the release of the Rig from such arrest,
seizure or detention within twenty-one (21) days of receiving notice
thereof by providing bail or otherwise as the circumstances may required.
9 EXCLUSION OF LIABILITY
9.1 NO REPRESENTATION IN RESPECT OF THE RIG. It is expressly agreed and
acknowledged that no term, condition, warranty or representation of any
kind whatsoever (express or implied) is or has been given by or on behalf
of the Sub-Lessor in respect of the Rig (or any part thereof). All terms,
conditions, warranties and representations (express or implied and whether
statutory, collateral hereto or otherwise) relating to the Rig, its title
specification, age, quality, description, seaworthiness, satisfactory
quality or as to its fitness for any purpose are, to the extent permitted
by applicable law, hereby expressly excluded and the Sub-Lessee
acknowledges that it is sub-leasing the Rig on an "as is where is" basis
and the Sub-Lessee has been solely responsible for selecting the Rig and
agreeing the specification of the Rig with the manufacturer or supplier
relying on its own skill and judgment.
9.2 NO AGENCY. The Sub-Lessee acknowledges that no person not actually in the
employ of the Sub-Lessor is or is deemed to be the agent or entitled to
act on behalf of, or make any representation or warranty binding on, the
Sub-Lessor.
9.3 NO LIABILITY FOR LOSS. The Sub-Lessor shall not be liable (in contract,
tort or otherwise) for any claim, damage, liability, or loss (including
consequential loss) or expense of any kind arising directly or indirectly
in connection with the Rig (or any part thereof) or from any delay in
delivery of or failure to deliver the Rig, any defect or deficiency in, or
inadequacy or unsuitability of, the Rig (or any part thereof) or its use,
performance, servicing or repair; PROVIDED THAT nothing contained herein
shall exclude any liability of the Sub-Lessor:
(a) in respect of any claim, damage, liability or loss arising solely as a
result of the negligence or wilful misconduct of the Sub-Lessor; or
(b) for death or personal injury caused by the Sub-Lessor's negligence to the
extent that such exclusion is prohibited by statute.
9.4 NO OBLIGATION TO REPLACE. The Sub-Lessor shall have no obligation to
supply to the Sub-Lessee any replacement for the Rig (or any part thereof)
if the same is, either on delivery or thereafter defective, lost, damaged,
unusable or unavailable for any reason and the Sub-Lessee shall not (other
than by the express terms of this Sub-Lease) be entitled to any remission
of, or be released from any obligation to pay, Rentals or any other
payments hereunder by reason thereof.
9.5 REASONABLENESS OF TERMS. The Sub-Lessor and the Sub-Lessee acknowledge
that they have each carefully considered this Clause 9 (Exclusion of
Liability) and the exclusions and limitations contained within it and the
Sub-Lessee agrees that the limitations on liability and exclusions of
liability set out in this Clause 9 (Exclusion of Liability) are
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reasonable having regard to the terms and conditions of this Sub-Lease
generally and the transactions contemplated by the Lease Documents as a
whole.
10 INSURANCE
10.1 INSURANCES IN RESPECT OF THE RIG. The Sub-Lessee will throughout the
Sub-Lease Period:
(a) insure and keep the Rig insured free of cost and expense to the Sub-Lessor
against protection and indemnity risks (including oil pollution liability)
on terms and conditions taking into account customary insurance market
practice taken out for offshore rigs of the same type, size and age as the
Rig and otherwise in accordance with the practice from time to time of
prudent owners of similar types of offshore rigs as the Rig for an
aggregate limit of cover of not less than two hundred million Dollars
(US$200,000,000) per occurrence;
(b) effect the Required Insurances with reputable insurance companies or
underwriters or mutual insurance associations or clubs as the Sub-Lessor
shall from time to time approve in writing such approval not to be
unreasonably withheld or delayed;
(c) each policy or entry maintained by the Sub-Lessee in accordance with the
provisions of Clause 10.1(a) shall:
(i) contain an endorsement reflecting the interest of the Sub-Lessor in
the Rig or otherwise cover the Sub-Lessor in respect of claims which
may be forthcoming thereunder; and
(ii) be in the name of the Sub-Lessee and shall further name the
Sub-Lessor as additional assured save that it shall provide that the
Sub-Lessor shall not be liable for any premiums, calls,
contributions or other sums payable in respect of each such policy;
(d) punctually pay all premiums, calls, contributions or other sums payable in
respect of the Required Insurances;
(e) notify the Sub-Lessor at least fourteen days before the relevant policies,
contracts or entries expire and confirm in writing to the Sub-Lessor as
and when renewals of insurances complying with Clause 10.1(a) have been
effected;
(f) arrange for the execution and delivery of such guarantees or indemnities
as may from time to time be required by any protection and indemnity
association;
(g) procure that any insurance company, mutual insurance association or club
with whom the Required Insurances are placed shall furnish the Sub-Lessor
with a copy of the certificate of entry and a letter or letters of
undertaking in such form as shall from time to time be reasonably required
by the Sub-Lessor having regard to current market practice at the time of
issue of any such letter of undertaking;
(h) provide the Sub-Lessor, promptly upon request by the Sub-Lessor of the
same, with copies of all certificates of insurances or entries issued by
the relevant insurers evidencing that the insurances have been effected by
the Sub-Lessee in compliance with this Clause 10;
(i) advise the Sub-Lessor promptly of any material alterations to any Required
Insurances that would or might affect the Sub-Lessor or any Indemnified
Person and any act, omission or event of which the Sub-Lessee has
knowledge which would or might render invalid or unenforceable any of the
Required Insurances in whole or in part (including, without any
limitation, any cancellation of any Required Insurances);
21
(j) take all necessary action and comply with all requirements which may from
time to time be applicable to the Required Insurances (including, without
limitation, the making of all requisite declarations within any prescribed
time limits and the payment of any additional premiums or calls) so as to
ensure that the Required Insurances are not made subject to any exclusions
or qualifications to which the Sub-Lessor has not given its prior written
consent and are otherwise maintained on terms and conditions from time to
time approved in writing by the Sub-Lessor (acting reasonably);
(k) comply with the terms and conditions of the Required Insurances, not do,
consent to or permit any act or omission which might invalidate or render
unenforceable the whole or any part of the Required Insurances and not
(without first obtaining the consent of the insurers to such employment
and complying with such requirements as to extra premium or otherwise as
the insurers may prescribe) employ the Rig or permit the Rig to be
employed otherwise than in conformity with the terms of the insurances;
(l) where it is a requirement of any applicable law or of the Required
Insurances that any declarations are made or any certificates, returns or
forms filed with any Governmental Entity or any of the insurers for the
Rig from time to time in connection with the location or operation of the
Rig in the territorial waters of, any country or state, promptly (and
within any applicable time limits) complete and submit to the relevant
Governmental Entity or, as the case may be, the relevant insurers all such
declarations, certificates, returns and forms;
(m) supply to the Sub-Lessor all necessary assistance which may be required by
the Sub-Lessor in connection with making any claim under the Required
Insurances; and
(n) procure that the Required Insurances do not have an excess or deductible
exceeding an amount which would be unacceptable to a reasonably prudent
operator of rigs similar to the Rig, having regard to the insurance market
conditions from time to time and any insurer will provide an annual
certificate that in their opinion the level of deductible on the Required
Insurances is consistent with that which is being obtained by
owners/operators of other rigs similar to the Rig (having regard to the
insurance market conditions at the time of the relevant certificate; and
(o) not, without the prior written consent of the Sub-Lessor, take out
additional insurances for the Sub-Lessee's sole benefit, or permit the
Sub-Lessee or the Sub-Lessor to be named insured in insurances with
respect to the Rig, other than as required under this Sub-Lease, where
such additional insurances will or may prejudice the Required Insurances
or recovery thereunder or will exceed the amount permitted by the
warranties or other conditions of the Required Insurances (unless the
insurers under the Required Insurances have consented thereto).
10.2 THIRD PARTY CLAIMS. Any insurance moneys paid under the Required
Insurances shall be paid to the person to whom the liability (or alleged
liability) covered by such insurances or entry was incurred or, if the
liability (or alleged liability) to such person has previously been
discharged by the Sub-Lessee such moneys shall be paid to the Sub-Lessee
in reimbursement of the moneys so expended by it in satisfaction of such
liability or alleged liability and, in such case, the Sub-Lessor shall pay
any insurance moneys received by it in respect of such liability or
alleged liability to the Sub-Lessee upon the Sub-Lessee furnishing
evidence to the Sub-Lessor that such liability or alleged liability has
previously been discharged.
10.3 APPLICATION OF OTHER INSURANCE PROCEEDS. Insurance payments which arise
from any policy of insurance carried by the Sub-Lessee or any requisition
or other compensation in place of such insurance payments, other than the
Required Insurances, shall be paid to the Sub-Lessee; the Sub-Lessor shall
have no right or interest in or in respect of such insurance policies or
the proceeds thereof.
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11 LOSS, DAMAGE AND REQUISITION
11.1 RISK. The Rig shall throughout the Sub-Lease Period be in every respect at
the risk of the Sub-Lessee who shall bear all risks howsoever arising
whether of navigation, operation and maintenance of the Rig or otherwise
and, subject to Clause 2.1 (Quiet Enjoyment), of any other occurrence of
whatever kind which shall deprive the Sub-Lessee of the use, possession or
enjoyment thereof.
11.2 TOTAL LOSS.
(a) In the event of a Total Loss of the Rig, the Sub-Lease Period and the
Sub-Lessee's obligation to pay future Rentals under this Sub-Lease, save
as otherwise provided in this Sub-Lease shall cease on the Total Loss
Payment Date (without prejudice to the obligations of the Sub-Lessee to
pay to the Sub-Lessor all sums which are then due and unpaid or which may
become due or be ascertained under any paragraph of the Financial
Schedule) and the Sub-Lessee shall on the Total Loss Payment Date pay to
the Sub-Lessor an amount as rental which is the aggregate of the
Termination Sum for the Total Loss Payment Date and all other moneys due
and payable by the Sub-Lessee under the terms of this Sub-Lease.
(b) The foregoing obligations of the Sub-Lessee shall apply even if moneys are
not payable or have not been received under the insurances, even if the
said compensation is not payable or have not been received and regardless
of the cause of the Total Loss.
(c) For the purposes of this Sub-Lease, a Total Loss shall be deemed to have
occurred:
(i) in the case of an actual total loss of the Rig, at noon (London
time) on the actual date and at the time the Rig was lost or, if
such date is not known, on the day on which the Rig was last
reported;
(ii) in the case of a constructive total loss of the Rig, upon the date
and at the time notice of abandonment of the Rig is given to the
insurers of the Rig for the time being (provided a claim for such
constructive total loss is admitted by the insurers) or, if the
insurers do not admit such a claim, at the date and at the time at
which a constructive total loss is subsequently adjudged by a
competent court of law to have occurred;
(iii) in the case of a compromised or arranged total loss, on the date
upon which a binding agreement as to such compromised or arranged
total loss has been entered into by the insurers of the Rig;
(iv) in the case of Compulsory Acquisition, on the date upon which the
relevant requisition of title or other compulsory acquisition
occurs; and
(v) in the case of hijacking, theft, condemnation, confiscation,
capture, detention, seizure of the Rig (other than where the same
amounts to Compulsory Acquisition of the Rig) by any Governmental
Entity, or by persons purporting to act on behalf of any
Governmental Entity, which deprives the Sub-Lessee of the use of the
Rig for more than one hundred and eighty (180) days, upon the expiry
of the period of one hundred and eighty (180) days after the date
upon which the relevant hijacking, theft, condemnation,
confiscation, capture, detention or seizure occurred.
11.3 CONTINUATION OF SUB-LEASE PERIOD. The Sub-Lessee shall continue to pay
Rental on the days and in the amounts required under this Lease
notwithstanding that the Rig shall become a Total Loss, or if for any
reason the Sub-Lessee shall be permanently deprived of her use prior to
the end of the Sub-Lease Period, PROVIDED ALWAYS THAT no further
instalments of Rental shall become due and payable after the date on which
all sums due
23
under Clause 11.2(a) shall have been paid in full and the Sub-Lease Period
shall terminate on the date of such final payment.
11.4 APPLICATION OF REQUISITION COMPENSATION. In the event of the Compulsory
Acquisition of the Rig, any Requisition Compensation received by the
Sub-Lessor shall be paid to the Sub-Lessee.
11.5 NOTICE OF ABANDONMENT.
(a) The Sub-Lessee shall have the sole right to determine whether or not a
case has arisen for the giving of notice of abandonment to abandon the Rig
to the insurers and/or claim a constructive total loss and the Sub-Lessee
is hereby irrevocably authorised by the Sub-Lessor to give the same if it
so determines.
(b) The Sub-Lessor shall upon the request of the Sub-Lessee promptly execute
such documents as may be required to enable the Sub-Lessee to abandon the
Rig to the insurers and/or claim a constructive total loss and the
Sub-Lessor shall give the Sub-Lessee all reasonable assistance within its
power in pursuing the said claim. The Sub-Lessee shall indemnify and hold
harmless the Sub-Lessor in respect of all Losses, costs and expenses
incurred by the Sub-Lessor pursuant to this Clause 11.5 (b).
11.6 REQUISITION FOR HIRE
(a) If the Rig is requisitioned for hire by any Governmental Entity during the
Sub-Lease Period then, unless and until the Rig becomes a Total Loss
following such requisition and the Sub-Lessee shall have made payment of
all sums due pursuant to Clause 11.2 (Total Loss), the lease of the Rig to
the Sub-Lessee under this Sub-Lease shall continue in full force and
effect (subject always to the provisions of Clauses 11.2 (Total Loss) and
13 (Termination)) for the remainder of the Lease Period and the Sub-Lessee
shall remain fully responsible for the due compliance with all its
obligations under this Sub-Lease other than such obligations which the
Sub-Lessee is unable to comply with solely by virtue of such requisition.
(b) The Sub-Lessee shall during the Sub-Lease Period be entitled to all
requisition hire paid to the Sub-Lessor or the Sub-Lessee on account of
such requisition and the Sub-Lessor shall account to the Sub-Lessee for
any such requisition hire paid to it.
(c) The Sub-Lessee shall, as soon as practicable after the end of any
requisition for hire, which terminates before the expiry of the Sub-Lease
Period, cause the Rig to be put into the condition required by this
Sub-Lease, and where that requisition shall end after the expiry or
termination of the Sub-Lease Period the Sub-Lessee shall, as soon as
practicable, cause the Rig to be put into the re-delivery condition
required by Clause 13.1(b), allowance being made for fair wear and tear in
respect of the period from the expiry or termination of the Sub-Lease
Period.
(d) Should the Rig be under requisition for hire at the end of the Sub-Lease
Period:
(i) the lease of the Rig under this Sub-Lease shall (unless otherwise
agreed between the parties hereto) nevertheless be terminated at
such end but without prejudice to the accrued rights of the parties
and PROVIDED THAT no Termination Event shall have occurred and be
continuing in which case the Sub-Lessor shall be entitled to retain
the requisition hire to the extent of any payments that are then due
and payable by the Sub-Lessee to the Sub-Lessor under this Sub-Lease
and the Sub-Lessee's obligations to make such payments shall be pro
tanto reduced by the amount of such retention and any remaining
requisition hire shall be paid to the Sub-Lessee by way of rebate of
Rental, the Sub-Lessee shall be entitled to receive and retain any
requisition hire payable in respect of the period from the expiry of
the Sub-Lease Period; and.
24
(ii) the Sub-Lessee shall, if and for so long as it is prevented by
reason of the requisition hire from re-delivering the Rig under
Clause 13.1 (Termination Events) be excused from its obligation to
do so.
(e) If the Rig is requisitioned for hire the Sub-Lessee hereby agrees to
indemnify the Sub-Lessor against any Losses, costs and expenses incurred
by the Sub-Lessor in connection with such requisition for hire.
12 RETURN AND SALE OF THE RIG
12.1 RE-DELIVERY OF THE RIG
(a) On expiry or termination of the Sub-Lease Period (other than by reason of
Total Loss) the Sub-Lessee shall redeliver the Rig to the Head-Lessor
which redelivery shall be deemed to constitute redelivery to the
Sub-Lessor under this Sub-Lease and the Sub-Lessor shall be deemed to have
accepted such redelivery without further action on the part of either
party.
(b) The Rig when so re-delivered shall be:
(i) unless otherwise agreed by the Sub-Lessor in writing, in such state
of repair and operating condition as it is required to be maintained
in accordance with the provisions of this Sub-Lease, fair wear and
tear and changes and alterations properly made by the Sub-Lessee as
permitted under this Sub-Lease;
(ii) with all equipment, fittings, spare and replacement parts installed
in or on, or which are attached to, or which are part of the Rig in
accordance with this Sub-Lease which was entitled to be removed
prior to re-delivery in accordance with Clause 14;
(iii) with all required operating, safety and other certificates in full
force and effect; and
(iv) free of all Encumbrances (other than Permitted Encumbrances).
12.2 SALE OF THE RIG
(a) Where the Sub-Lease Period is to terminate in accordance with the
provisions of this Sub-Lease on the Leasing Termination Date by reason of
the service of a Termination Notice or a Voluntary Termination Notice the
Sub-Lessor and the Sub-Lessee agree that they shall each offer for sale
their respective interests in the Rig in accordance with this Clause 12.2.
(b) Notwithstanding anything to the contrary contained elsewhere in this
Sub-Lease the leasing of the Rig under this Sub-Lease shall continue until
the earlier of (i) completion of a sale referred to in Clause 12.2(a),
(ii) the date falling sixty (60) days after the Acceleration Date, (iii)
the expiry of the Sub-Lease Period by effluxion of time, and (iv) the
occurrence of a Total Loss Payment Date whereupon it shall terminate.
(c) The Sub-Lessee shall be responsible for all costs and expenses incurred in
connection with a sale of the respective interests of the Head-Lessor and
the Sub-Lessor in the Rig.
12.3 SUB-LESSOR'S DISPOSAL PROCEEDS
(a) The amount of the Sub-Lessor's Disposal Proceeds to which the Sub-Lessor
is entitled under the terms of the Head-Lease following a sale of the Rig
in accordance with the terms of the Head-Lease shall be applied as
follows:
25
(i) first,to the extent than any payments are then due and payable by
the Sub-Lessee to the Sub-Lessor under this Sub-Lease, to be
retained (for the purpose of being applied in settlement of the
Termination Sum or any other amounts so due and owing) by the
Sub-Lessor to that extent and the Sub-Lessee's obligation to make
such payments shall be pro tanto reduced by the amount of such
retention; and
(ii) secondly, in retention by the Sub-Lessor of an amount equal to 0.1
per cent. of the Net Sale Proceeds; and
(iii) thirdly, the balance shall be paid (A) to the Sub-Lessee by way of
rebate of Rentals or any other payments, including Termination Sum
or any part thereof, paid by the Sub-Lessee to the Sub-Lessor under
this Sub-Lease and (B) to the extent that such balance exceeds the
aggregate of the Rentals and other payments referred to in (A)
above, to the Sub-Lessee by way of sales agency commission.
The Sub-Lessor irrevocably authorises and instructs the Sub-Lessee to set
off and apply any amounts payable by the Sub-Lessee (in its capacity as
Head-Lessor) to the Sub-Lessor (in its capacity as Lessee under the
Head-Lease) pursuant to Clause 14.2(b) of the Head-Lease in satisfaction
of the Sub-Lessee's right to receive the amount referred to at "thirdly"
of Clause 12.3(a).
13 TERMINATION
13.1 TERMINATION EVENTS. The following events are Termination Events and shall
entitle the Sub-Lessor to accelerate the Sub-Lessee's obligations under
this Sub-Lease upon serving a notice (a "TERMINATION NOTICE") (which
shall, in accordance with Clause 12.2(b) (Sale of the Rig), result in the
termination of the sub-leasing), namely:
(a) the Sub-Lessee or the Guarantor fails to pay any sum (including Rental)
due under this Sub-Lease or any other Lease Document in full within 3
Business Days of demand from the Sub-Lessor served on or after the due
date or, in the case of sums payable on demand, within five (5) Business
Days of demand;
(b) the Sub-Lessee fails to obtain and/or maintain or procure that there are
obtained and maintained the Required Insurances in accordance with Clause
10 (Insurance) or if any insurer in respect of any of the Required
Insurances cancels any of the Required Insurances or disclaims liability
by reason, in either case, of mis-statement in any proposal for any of the
Required Insurances or for any other failure or default on the part of any
person (other than the Sub-Lessor);
(c) the Sub-Lessee moving or permitting movement of the Rig outside the UKCS
without obtaining consent in accordance with Clause 7.1 (Location and
Movement of Rig);
(d) the Sub-Lessee or the Guarantor shall commit or cause to be committed any
material breach of any other term or condition of any Lease Document
(other than those referred to in other paragraphs of this Clause 13.1) and
the Sub-Lessee or the Guarantor as the case may be fails to remedy such
breach within 30 days of demand so to do from the Sub-Lessor;
(e) the Sub-Lessee ceases to be an Affiliate of the Guarantor;
(f) any Financial Indebtedness of the Sub-Lessee or the Guarantor in an
aggregate amount of at least twenty-five million Dollars (US$25,000,000)
(or its equivalent in another currency) becomes or is declared due and
payable before its stated maturity;
26
(g) any representation or warranty made by the Sub-Lessee or the Guarantor in
any Lease Document or, in each case, in any certificate, opinion or
statement delivered or made by the Sub-Lessee or the Guarantor (or any
officer of such person in each case) pursuant thereto proves to have been
incorrect or inaccurate in a material respect when made or when deemed to
be repeated on the Start Date pursuant to the terms of the relevant Lease
Document;
(h) any licence, authorisation, permit, consent or approval of, or
registration with or declaration to, governmental or public bodies or
authorities or courts required in connection with the use and operation of
the Rig or to authorise the Sub-Lessee or the Guarantor to enter into any
of the Lease Documents or required in connection with the validity,
enforceability or admissibility in evidence of any of the Lease Documents
is modified, not granted, revoked, suspended, terminated or expires or is
not renewed or otherwise ceases to be in full force and effect in each
case the effect of which would be to have a material adverse effect on the
ability of the Sub-Lessee or the Guarantor to perform, or to continue to
perform, any of their respective obligations under the Lease Documents;
(i) the Sub-Lessee (other than as the Sub-Lessor's sales agent within the
scope of its authority under clause 13.1(b) of the Head-Lease or in
accordance with Clause 22.2 (Sub-Lessee)) shall sell, mortgage or execute
a xxxx of sale affecting the Rig or any interest therein or any part
thereof;
(j) either the Sub-Lessee or the Guarantor:
(i) convene any meeting of creditors generally or make a deed of
assignment or arrangement for the benefit of, or compound with, its
creditors generally;
(ii) convene a meeting to consider a resolution for winding up other than
in the course of an amalgamation or reconstruction the terms of
which shall first have been approved in writing by the Sub-Lessor;
(iii) have a voluntary arrangement proposed under Section 1 of the
Insolvency Xxx 0000 in respect of it;
(iv) have a petition for winding up, dissolution or bankruptcy presented
or any other proceeding shall be commenced and it is not dismissed
within twenty (20) days or it shall take any step seeking the
appointment of an administrator, trustee, receiver, administrative
receiver, liquidator or other similar officer;
(v) have an encumbrancer take possession of or a receiver or an
administrative receiver appointed over the whole or any substantial
part of its undertaking or assets or of a substantial part of its
assets or the Rig;
(vi) suffer a distress, execution, sequestration or other process being
levied or enforced upon or sued out against the whole or any
substantial part of the assets, rights or revenues of the Sub-Lessee
or the Guarantor;
(vii) admit its inability to pay its debts as they mature or be unable to
pay its debts within the meaning of Section 123 of the Insolvency
Xxx 0000;
(viii) have any adjudication, order or, as the case may be, appointment
made under or in relation to any of the proceedings referred to in
Clause 13.1(j)(iv) or (vii); or
27
(ix) if an event analogous to any event referred to at sub-paragraphs (i)
to (viii) inclusive above occurs in relation to the Sub-Lessee or
the Guarantor under any other law applicable to the Sub-Lessee or
the Guarantor, as the case may be;
(k) the Guarantor denies in writing its liability under the Guarantee;
(l) the sub-Lessee fails to comply with its obligations to issue a Voluntary
Termination Notice in accordance with Clause 13.4(c) or Clause 13.7
(Mandatory Prepayment).
13.2 NATURE OF TERMINATION EVENTS. The occurrence of a Termination Event,
comprising a failure by the Sub-Lessee to comply with any of the
provisions of a Lease Document, shall go to the root of this Sub-Lease and
accordingly shall constitute a breach of condition which the Sub-Lessor
may treat as a repudiation by the Sub-Lessee of this Sub-Lease. Otherwise
a Termination Event shall constitute an agreed event giving rise to the
Sub-Lessor's right to terminate.
13.3 CONSEQUENCES OF SERVICE OF A TERMINATION NOTICE
(a) If by reason of the occurrence of a Termination Event the Sub-Lessor shall
have served a Termination Notice on the Sub-Lessee, then both the
Sub-Lessor's consent to the Sub-Lessee's possession of the Rig and the
leasing of the Rig under this Sub-Lease shall terminate on the Leasing
Termination Date and the provisions of Clause 12.1 shall apply.
(b) The remedies set forth in this Clause 13.3 are not exclusive, and the
Sub-Lessor shall be entitled to any other remedy available to the
Sub-Lessor at law or in equity, and the Sub-Lessee shall be liable for all
legal fees and other costs and expenses incurred by reason of the
occurrence of any Termination Event or the exercise of the Sub-Lessor's
remedies with respect thereto.
13.4 ILLEGALITY
(a) If a Change of Law shall render unenforceable any of the obligations of
any party to this Sub-Lease or any other Lease Document or makes it
unlawful (i) for any party to any Lease Document to perform their
respective obligations or (ii) for any such party substantially to give
effect to their respective rights under this Sub-Lease or any other Lease
Document entered into by it, the Sub-Lessee and the Sub-Lessor shall
notify the other party thereof as soon as practicable after becoming aware
thereof.
(b) Following such notification by one party to the other, the Sub-Lessor and
the Sub-Lessee shall discuss in good faith as to how the effects of any
such Change of Law might be avoided so as to render the relevant
obligations enforceable or permit the parties thereto to perform their
obligations hereunder or thereunder or, as the case may be, to permit such
parties substantially to give effect to their respective obligations under
this Sub-Lease or any other Lease Document in a manner which is not
unlawful.
(c) If such discussions are entered into but, within thirty (30) days of
notice being given by the affected party, or such shorter period as may be
permitted by such law, order, regulation or official directive, or such
change in the interpretation, administration or application thereof, the
Sub-Lessor and the Sub-Lessee have not completed such arrangements as may
be required to avoid the effect of any such Change of Law, then the
Sub-Lessor shall be entitled by notice to the Sub-Lessee to require the
Sub-Lessee to terminate the Sub-Lease Period under Clause 13.5 and the
Sub-Lessee shall, forthwith upon receipt of such notice, issue a Voluntary
Termination Notice having as its expiry date the date of issue of such
Voluntary Termination Notice.
13.5 VOLUNTARY TERMINATION
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(a) The Sub-Lessee shall, subject as provided below, be entitled at any time
to give and, in the circumstances referred to in Clause 13.4 (a), the
Sub-Lessee shall be required to give, in each case to the Sub-Lessor an
irrevocable written notice (the "VOLUNTARY TERMINATION NOTICE")
terminating the leasing of the Rig under this Sub-Lease with effect from
the Leasing Termination Date. Any voluntary Termination Notice which is
given by the Sub-Lessee shall expire (the date of such expiry being the
Leasing Termination Date) not less than ten (10) days after receipt of the
same by the Sub-Lessor or, in either such case, on such earlier date as
may be required by Clause 13.4 (c) and shall not be valid if, when issued
by the Sub-Lessee in exercise of its entitlement so to do (rather than
where required so to do) a Termination Event shall have occurred and be
continuing on the date of the Voluntary Termination Notice.
(b) If the Sub-Lessee gives a Voluntary Termination Notice, the leasing of the
Rig shall terminate on the Leasing Termination Date and the provisions of
Clause 12 (Return and sale of the Rig) shall apply.
(c) No sale pursuant to the provisions of the Head-Lease following a
termination pursuant to this Clause 13.5 shall be completed (and no
contract for sale shall be executed) unless either the Sub-Lessor has
received all amounts due and payable under this Sub-Lease or the
Sub-Lessor is satisfied that, upon completion of the sale, the Sub-Lessor
shall receive all amounts due and owing from the Sub-Lessee to the
Sub-Lessor upon the termination of the leasing of the Rig in accordance
with the provisons of this Sub-Lease (including the Financial Schedule).
13.6 PAYMENTS ON TERMINATION. Where the Sub-Lease Period is to terminate in
accordance with the provisions of this Sub-Lease on the Leasing
Termination Date by reason of the service of a Termination Notice or a
Voluntary Termination Notice, the obligation of the Sub-Lessee to pay
Rental under Clause 4 (Rentals) which would fall due after the Termination
Payment Date shall cease (notwithstanding the continuation of the
sub-leasing of the Rig until the Leasing Termination Date) and the
Sub-Lessee shall (without prejudice to the obligations of the Sub-Lessee
pursuant to any other provision hereof or of any other Lease Document to
pay to the Sub-Lessor all sums which are due at the date of termination of
the leasing of the Rig or may become due to the Sub-Lessor or be
ascertained after such date) pay to the Sub-Lessor on the Termination
Payment Date a sum equal to the Termination Sum together with all other
sums then due to the Sub-Lessor hereunder PROVIDED THAT if but for the
preceding provisions of this Clause 13.6, there would have occurred in the
period from and including the date of service of a Termination Notice or,
as the case may be, a Voluntary Termination Notice to and including the
Termination Payment Date, a date which would have been a date for the
payment of Rental under this Sub-Lease the Sub-Lessee shall on such date
pay to the Sub-Lessor as rental (as part of the Sub-Lessor's compensation
for early termination) an amount equal to the Rental which, but for the
preceding provisions of this Clause 13.6, would have been payable on such
date. Any amount so paid shall be in addition to any amounts payable by
the Sub-Lessee to the Sub-Lessor on the Termination Payment Date pursuant
to paragraph 2 (Termination Payment) of the Financial Schedule.
13.7 MANDATORY VOLUNTARY TERMINATION. Upon the Sub-Lessor notifying the
Sub-Lessee in writing that:
(a) a Total Loss has occurred in respect of the Rig;
(b) an Environmental Claim, which is not frivolous or vexatious in the
reasonable opinion of the Sub-Lessor, has been made in respect of the Rig
in excess of fifty million Dollars (US$50,000,000);
(c) an Environmental Claim, which is not frivolous or vexatious in the
reasonable opinion of the Sub-Lessor, has been made in respect of the Rig
against the Sub-Lessor or any other member of the Sub-Lessor's Group,
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the Sub-Lessee shall, forthwith upon receipt of such notice, issue a Voluntary
Termination Notice having as its expiry date the date of issue of such Voluntary
Termination Notice.
14 GENERAL INDEMNITY
14.1 GENERAL INDEMNITY
(a) The Sub-Lessee hereby agrees at all times to pay promptly or, as the case
may be, indemnify and hold the Sub-Lessor and each other Indemnified
Person harmless on a full indemnity basis from and against each and every
Loss:
(i) arising directly or indirectly out of or in any way connected with
the ownership, possession, performance, transportation, management,
sale, import to or export from any jurisdiction, control, use or
operation, registration, navigation, certification, classification,
management, xxxxxxx, provisioning, the provision of bunkers and
lubricating oils, testing, design, condition, delivery to or by the
Lessor, acceptance, leasing, sub-leasing, chartering, insurance,
maintenance, repair, service, modification, refurbishment,
drydocking, survey, conversion, overhaul, replacement, removal,
repossession, return, redelivery, storage, sale, disposal the
complete or partial removal, decommissioning, making safe,
destruction, abandonment or loss by the Lessee or any other person
of the Rig or caused by the Rig becoming a wreck or an obstruction
to navigation, whether or not such Liability may be attributable to
any defect in the Rig or to the design, construction or use thereof
or from any maintenance, service, repair, drydocking, overhaul,
inspection or to any other reason whatsoever (whether similar to any
of the foregoing or not), and regardless of when the same shall
arise (whether prior to, during or after termination of the leasing
of the Rig under this Sub-Lease) and whether or not the Rig (or any
part thereof) is in the possession or control of the Sub-Lessee, the
Charterer, the Operator or any other person and whether or not the
same is in the United Kingdom waters or abroad;
(ii) arising directly or indirectly out of or in any way connected with
any Release or the threatened Release of a Hazardous Material, any
Environmental Claim, or any breach of an Environmental Law or the
terms and conditions of an Environmental Permit;
(iii) as a consequence of any claim that any design, article or material
in the Rig or any part thereof or relating thereto or the operation
or use thereof constitutes an infringement of patent, copyright,
design or other proprietary right;
(iv) in preventing or attempting to prevent the arrest, seizure, taking
in execution, requisition, impounding, forfeiture or detention of
the Rig or in securing or attempting to secure the release of the
Rig in each case following the breach by the Lessee of its
obligations under Clause 8.2 (Arrest and Detention);
(v) as a consequence (direct or indirect) of the breach by any person
(other than the Sub-Lessor) of any of their respective obligations
under any of the Lease Documents or of any of the warranties and
representations on the part of any person (other than the
Sub-Lessor) made in this Sub-Lease or in any of the other Lease
Documents being untrue or inaccurate in any respect whatsoever (even
if not a Termination Event) when made;
(vi) as a consequence of the occurrence of a Termination Event and/or the
operation of Clause 13.3 (Consequence of service of a Termination
Notice);
(vii) any costs and expenses reasonably incurred by the Sub-Lessor or any
other Indemnified Person or, following the occurrence of a
Termination Event, any costs and expenses incurred by the Sub-Lessor
or any other Indemnified Person,
30
in each case in connection with the sale or Total Loss of the Rig
(including, without limitation, broker's commissions, redelivery
costs (if any), marketing expenses, legal costs, storage, insurance,
registration fees and any other expenses of the Sub-Lessor or any
other Indemnified Person incurred pending the sale or disposal of
the Rig or otherwise in connection with the sale or disposal of the
Rig;
(viii) any premiums, calls, supplementary calls and contributions in
relation to any of the Required Insurances,
other than any amount in respect of which the Indemnified Person is
entitled to be indemnified pursuant to Clause 16.1 (Tax Indemnity) or
would, but for an exception contained in Clause 16.4 (Exclusions), be so
indemnified (each of the above being referred to as a "LIABILITY").
(b) Without prejudice to the generality of the provisions of Clause 14.1(a),
Clause 14.1(a) shall extend to claims of persons (including Governmental
Entities or other bodies whether corporate or otherwise) who have incurred
expenditure in taking preventative measures against loss or damage or have
suffered or allege that they have suffered loss, damage or injury in
connection with anything done or omitted to be done by any person in
relation to, in respect of, or in connection with, the Rig, including in
connection with any Hazardous Material emanating or threatening to emanate
from the Rig or any Environmental Claim.
(c) The indemnities contained in Clause 14.1(a) shall extend to include:
(i) the Dollar cost (including fees and commissions) to the Indemnified
Person in acquiring any currency (other than Dollars) with Dollars
in order to satisfy or discharge in a currency other than Dollars
any Liability;
(ii) all costs and interest, fees and other amounts whatsoever suffered
or incurred by any Indemnified Person in order to fund the
satisfaction or discharge of any Liability; and
(iii) each Loss suffered or incurred by the Sub-Lessor in satisfying or
discharging, or indemnifying any Indemnified Person (other than
itself) against, any Liability, or any matter referred to in
sub-paragraphs of clause 14.1(c)(i) or (ii) above, whether or not
such Liability is suffered or incurred by the Sub-Lessor under any
formal or informal arrangement, and whether or not any such formal
or informal arrangement existed at the time the Liability was
suffered or incurred by such Indemnified Person.
14.2 EXCLUSIONS FROM GENERAL INDEMNITY. The indemnities contained in Clause
14.1 (General Indemnity) shall not extend to any Liability:
(a) to the extent that such Liability is caused by any act of an Indemnified
Person which constitutes the wilful misconduct or reckless disregard with
knowledge of the probable consequences;
(b) to the extent that such Liability is caused by any failure on the part of
the Sub-Lessor to comply with any of its express and specific obligations
under any of the Lease Documents to which the Sub-Lessor is party;
(c) to the extent that such Liability constitutes any amounts in respect of
Premium or Rentals payable by the Sub-Lessor under the Head-Lease;
(d) to the extent that such Liability constitutes a cost which is expressly to
be borne by the Sub-Lessor under any other provision of this Sub-Lease or
the other Lease Documents and which the Sub-Lessee establishes was not
intended to be within the scope of the
31
indemnities granted in favour of the Sub-Lessor or any other Indemnified
Person in any Lease Document;
(e) in respect of which the Sub-Lessor is expressly and specifically
indemnified under any other provision of this Sub-Lease.
14.3 NOTIFICATION OF INDEMNITY CLAIMS. Without prejudice to the provisions of
this Clause 14 and without limiting in any way whatsoever, or being a
condition precedent or subsequent to, the indemnities in favour of any
Indemnified Person hereunder or prompt payment thereunder, the Sub-Lessor
shall:
(a) notify the Sub-Lessee in writing as soon as practicable after receipt by
the Sub-Lessor of notice of a Liability (provided such notice is in
writing). Such notification to the Sub-Lessee from the Sub-Lessor shall
give such details as the Sub-Lessor then has and which are in all the
circumstances reasonable having regard to the contents of the notice of a
Liability received by the Sub-Lessor; and
(b) subject to Clause 14.4 (Defence of Claims), notify the Sub-Lessee of the
Sub-Lessor's intention to pay or procure the payment of any moneys in
respect of any such Liability before any such payment is made.
14.4 DEFENCE OF CLAIMS. Without prejudice to the provisions of this Clause 14,
the Sub-Lessee shall (subject to having first obtained the consent of the
relevant insurers, if any, and complying in all respects with its
obligations under this Sub-Lease and provided no Termination Event has
occurred and is continuing) be entitled to take (at its own cost) such
actions as the Sub-Lessee reasonably considers necessary to defend or
avoid any liability arising in respect of a Liability including legal
proceedings against any third party in respect of a Liability, but subject
always to the Sub-Lessor first being indemnified to its satisfaction by
the Sub-Lessee and/or the Guarantor against all potential losses, costs,
damages and expenses which may be incurred or suffered by the Sub-Lessor
in connection with any such action, provided always that the Sub-Lessee
shall not be entitled to take any such action and shall cease taking such
action and shall settle any Liability if the Sub-Lessor considers (in its
reasonable opinion) that taking or continuing such action would be likely
to (i) require the Sub-Lessor to disclose any information or documentation
which the Sub-Lessor considers, in its reasonable opinion, to be
confidential (ii) be harmful to the Sub-Lessor's reputation as a financial
institution, (iii) involve it in any unlawful act or activity or any act
or activity that is contrary to any law applicable to the Sub-Lessor or
(iv) cause the Sub-Lessor to breach any other obligation to which it is
subject whether under the Lease Documents or otherwise.
Notwithstanding the foregoing provisions of this Clause 14.4, the
Sub-Lessee shall not be entitled to take or continue any action in the
name of the Sub-Lessor which it may otherwise be entitled to take under
this Clause 14.4 without the prior written consent of the Sub-Lessor, such
consent not to be unreasonably withheld or withdrawn, provided always that
it shall be reasonable for the Sub-Lessor to withhold its consent or
withdraw its consent once given if the Sub-Lessor determines that the use
of its name in connection with such action would be likely to (a) be
harmful to the Sub-Lessor Parent's reputation as a financial institution
(such determination to be made in the Sub-Lessor's absolute discretion) or
(b) (i) otherwise have a material adverse effect on the business of the
Sub-Lessor or (ii) involve the Sub-Lessor in any unlawful act or activity
or any act or activity that is contrary to any law applicable to the
Sub-Lessor or (iii) cause the Sub-Lessor to breach any other obligation to
which it is subject whether under the Lease Documents or otherwise (any
such determination to be made in the reasonable opinion of the
Sub-Lessor)).
The Sub-Lessor and the Sub-Lessee will co-operate and consult in good
faith in relation to the matters referred to in this Clause 14.4. In
particular, but without limitation, the Sub-Lessee will keep the
Sub-Lessor fully informed in respect of any proceedings which the
32
Sub-Lessee is conducting in the name of the Sub-Lessor and will provide
the Sub-Lessor with copies of any and all documentation connected with any
such proceedings.
14.5 CURRENCY INDEMNITY
(a) If the Sub-Lessor or any other Indemnified Person receives an amount in
respect of the liability of the Sub-Lessee under this Sub-Lease or any
other Lease Document or if that liability is converted into a claim,
proof, judgment or order in a currency other than the currency (the
"CONTRACTUAL CURRENCY") in which the amount is expressed to be payable
under this Sub-Lease or the relevant other Lease Document:
(i) the Sub-Lessee shall indemnify the Sub-Lessor or the relevant
Indemnified Person as an independent obligation against any loss or
liability arising out of or as a result of the conversion;
(ii) if the amount received by the Sub-Lessor or the relevant Indemnified
Person, when converted into the contractual currency at the
Sub-Lessor Parent's spot rate of exchange on the relevant date, is
less than the amount owed in the contractual currency, the
Sub-Lessee shall forthwith on demand pay to the Sub-Lessor or the
relevant Indemnified Person an amount in the contractual currency
equal to the deficit; and
(iii) the Sub-Lessee shall pay to the Sub-Lessor or the relevant
Indemnified Person concerned on demand any exchange costs and taxes
payable in connection with any such conversion.
(b) The Sub-Lessee waives any right it may have in any jurisdiction to pay any
amount under this Sub-Lease or any other Lease Document in a currency
other than that in which it is expressed to be payable.
14.6 RECOVERIES FROM THIRD PARTIES. If any Indemnified Person shall recover
from or be paid by, any person (other than the Sub-Lessee, the Guarantor
or any other member of the Guarantor's Group) any amount in respect of any
payments paid or discharged by the Sub-Lessee in accordance with this
Clause 14, then PROVIDED THAT the Sub-Lessor has received payment of such
amount and is satisfied, in its absolute discretion, that such amount is
unconditionally available for retention by the Sub-Lessor, the Sub-Lessor
shall pay to the Sub-Lessee a sum equal to the value of such recovered or
paid amount together with any interest actually earned on such recovered
or paid amount (less the amount of any tax payable thereon).
14.7 PASS THROUGH OF INDEMNITY BENEFITS. Where in this Clause 14 an indemnity
is expressed to be for the benefit of any person who is not a party to
this Sub-Lease the Sub-Lessor shall be entitled to indemnify such person
on the same terms (and subject in particular to Clause 14.4 (Defence of
Claims)) mutatis mutandis as the indemnities expressed to be for the
benefit of such person in this Clause 14 and the Sub-Lessee shall
indemnify the Sub-Lessor and hold the Sub-Lessor harmless on a full
indemnity basis from and against each amount paid or payable by the
Sub-Lessor to such person under any such indemnity.
14.8 PRESERVATION OF INDEMNITIES
(a) Without prejudice to any right to damages or other claim which any party
may, at any time, have against another under this Sub-Lease or under any
of the Lease Documents it is hereby agreed and declared that the
indemnities in favour of the Sub-Lessor and the other Indemnified Persons
by the Sub-Lessee contained in this Sub-Lease or any of the Lease
Documents shall continue in full force and effect subject to and in
accordance with their terms notwithstanding the termination of the leasing
of the Rig under this Sub-Lease, any sale or other disposition of the Rig,
Total Loss or any breach of the terms hereof or thereof by the Sub-Lessee
(including fundamental breach) or the lawful
33
repudiation by the Sub-Lessor of this Sub-Lease or any of the Lease
Documents or any other circumstances whatsoever.
(b) If any payment received by the Sub-Lessor or an Indemnified Person in
respect of moneys owing or due and payable by the Sub-Lessee hereunder
shall on the subsequent liquidation or other insolvency of the Sub-Lessee
be avoided under any laws relating to insolvency or liquidation, such
payment shall not be considered as discharging or diminishing the
liability of the Sub-Lessee under this Sub-Lease and the other Lease
Documents and this Sub-Lease and the other Lease Documents shall continue
to apply as if such payment had at all times remained owing by the
Sub-Lessee.
15 COSTS, EXPENSES AND FEES
15.1 COSTS AND EXPENSES. The Sub-Lessee shall pay, on demand, the amount of all
costs and expenses:
(a) subject to the separately agreed cap, reasonably incurred by the
Sub-Lessor in connection with the preparation, negotiation and execution
of the Lease Documents;
(b) reasonably incurred by the Sub-Lessor, in connection with any amendments,
waivers or consents under or in respect of this Sub-Lease or the other
Lease Documents instigated by the Sub-Lessee (whether or not such
amendment, waiver or consent becomes effective) (including but not limited
to reasonable legal fees); and
(c) incurred by the Sub-Lessor in enforcing or defending or attempting to
enforce or defend (or determining whether or how to enforce or defend) any
rights under this Sub-Lease or any other Lease Document.
16 TAX INDEMNITY
16.1 INDEMNITY. Subject to Clause 16.4 (Exclusions), the Sub-Lessee shall on
demand indemnify the Sub-Lessor and keep the Sub-Lessor fully indemnified
against any Tax Liability imposed on or payable by the Sub-Lessor or any
Indemnified Person which arises or becomes payable at any time in respect
of, by reference to or arising out of:
(a) the operation of the Rig; and
(b) the Rig being or becoming a Fixture.
16.2 MOVEMENT OF RIG. The Sub-Lessee hereby indemnifies the Sub-Lessor and
shall keep the Sub-Lessor fully indemnified against any Tax Liability
imposed on or payable by the Sub-Lessor or any Indemnified Person which
arises or becomes payable at any time in respect of, by reference to or
arising out of:
(a) the movement or location of the Rig;
(b) the existence of the Rig outside the UKCS; or
(c) the residence, domicile or activities of the Sub-Lessee or any member of
the Guarantor's Group;
which arise as a result of or by reference to the Sub-Lessee moving the
Rig outside the UKCS with or (without prejudice to the provisions of
Clause 7.1 (Location and Movement of the Rig) and the Sub-Lessor's
remedies for any breach of that Clause) without the prior written consent
of the Sub-Lessor.
34
16.3 INCREMENTAL TAX LIABILITY. Any Tax Liability referred to in clauses 16.1
(Indemnity) and 16.2 (Movement of the Rig) shall be an "INCREMENTAL TAX
LIABILITY" for the purposes of this Sub-Lease.
16.4 EXCLUSIONS. Subject to Clause 16.8 (Indemnity payments), the Sub-Lessee
shall not, for the avoidance of doubt, be obliged to indemnify the
Sub-Lessor pursuant to Clause 16.1 (Indemnity) and 16.2 (Movement of the
Rig):
(a) against any incremental Tax Liability in any relevant jurisdiction
attributable to the Rentals or Termination Sum actually receivable
hereunder or to any other amounts payable to the Sub-Lessor under the
Lease Documents;
(b) against any incremental Tax Liability to the extent it arises owing to the
Sub-Lessor knowingly failing to file Tax returns or the Sub-Lessor
knowingly failing to make a payment of Taxes which are due and payable
assessed on the Sub-Lessor which knowing failure has not been consented to
in writing, or requested in writing by the Sub-Lessee except where such
knowing failure by the Sub-Lessor arises from a failure by the Sub-Lessee
promptly to provide the Sub-Lessor with correct, suitable and adequate
information to the extent that the Sub-Lessee is (or, but for any
fraudulent or negligent defaults on its part, would have been) in a
position to provide such information following receipt by the Sub-Lessee
of a written request from the Sub-Lessor setting out full details of such
information to enable the Sub-Lessor to file the relevant Tax return or
pay such Taxes.
16.5 STAMP DUTIES. All stamp, documentary, registration or other like duties or
Taxes, including any penalties, additions, fines, surcharges or interest
relating thereto, which are imposed on or chargeable on or in connection
with this Sub-Lease or any of the other Lease Documents shall be paid by
the Sub-Lessee (whether or not the primary responsibility of the
Sub-Lessee) PROVIDED THAT the Sub-Lessor shall be entitled but not obliged
to pay any such duties or Taxes, whether or not they are its primary
responsibility, whereupon the Sub-Lessee shall on demand indemnify the
Sub-Lessor against those duties or Taxes. The Sub-Lessor agrees that if it
decides to pay any such duties or Taxes, it shall give the Sub-Lessee not
less than fifteen (15) Business Days' notice before making such payment
(unless a Termination Event has occurred and is continuing or the
Sub-Lessor is legally required to make payment earlier).
16.6 PAYMENTS. Any payment to be made under Clause 16.1 (Indemnity) shall be
made:
(a) in the case of a Tax Liability within paragraph (a) of the Tax Liability
definition or, in the case of the set-off of a right to repayment within
paragraph (c) of the Tax Liability definition, no later than two Business
Days prior to the last date on which the payment of Tax can be made
without incurring interest or penalties, and
(b) in the case of a Tax Liability within paragraph (b) of the Tax Liability
definition, no later than the last date on which a payment of Tax which
would not have been due but for the loss or use of the Relief as referred
to in that paragraph (b) can be made without incurring interest or
penalties,
and in any other case, or, if later, five (5) Business Days after the date
on which notice of the incremental Tax Liability is given to the
Sub-Lessee.
16.7 NOTICE. If the Sub-Lessor receives notice of an incremental Tax Liability
it shall promptly give written notice to the Sub-Lessee and shall provide
the Sub-Lessee with reasonable details of the nature and quantum of the
incremental Tax Liability.
35
16.8 INDEMNITY PAYMENTS. If and to the extent that any sums payable by the
Sub-Lessee under this Sub-Lease by way of indemnity or reimbursement prove
to be insufficient, by reason of Taxes suffered thereon, for the
Sub-Lessor or an Indemnified Person to discharge its relevant liability or
to reimburse the Sub-Lessor or an Indemnified Person for the cost incurred
by it in discharging such liability, the Sub-Lessee will on demand pay to
the Sub-Lessor, or the Sub-Lessor for the benefit of such Indemnified
Person, such additional sum as (after taking into account any Taxes
suffered by the Sub-Lessor and/or the Indemnified Person thereon) is
required to indemnify on an after-Tax basis the Sub-Lessor or, as the case
may be, the Indemnified Person in respect of such insufficiency.
16.9 MITIGATION. In the event of a Change of Law or in the event of any Tax
Liability arising which was not contemplated by the parties on entry into
this Agreement, any of the other Lease Documents or any transaction or
document contemplated herein or therein, the Sub-Lessor and the Sub-Lessee
hereby agree to co-operate in good faith to seek to mitigate or eliminate
any adverse consequences of such Change of Law or such Tax Liability,
including without limitation by way of amendment or revision to this
Sub-Lease, any of the other Lease Documents or any transaction or document
contemplated herein or therein or otherwise restructuring the transaction
contemplated by the Lease Documents.
17 INCREASED COSTS
17.1 INCREASED COSTS. This Clause 17 applies if at any time the Sub-Lessor
notifies the Sub-Lessee that it considers that as a result of:
(a) any Change of Law; or
(b) the effect of complying with any regulation (including any which relates
to capital adequacy or liquidity controls or which affects the manner in
which the Sub-Lessor is obliged to allocate capital resources) which is
introduced, or altered, or the interpretation or application of which is
altered, after the date of this Sub-Lease,
the Sub-Lessor or any member of the Sub-lessor's Group has incurred or
will incur an "INCREASED COST".
17.2 MEANING OF "INCREASED COST". In this Clause 17, "INCREASED COST" means, in
relation to the Sub-Lessor or any member of the Sub-lessor's Group:
(a) an additional or increased cost incurred directly as a result of, or in
connection with, the Sub-Lessor having entered into, or being a party to,
the Lease Documents or funding, maintaining or performing its obligations
under the Lease Documents; or a reduction in the amount of any payment to
the Sub-Lessor under any of the Lease Documents or in the effective return
which such a payment represents to the Sub-Lessor or on its capital; or
(b) an additional or increased cost of funding all or maintaining all or any
of the Sub-Lessor's liabilities under the Head-Lease; or
(c) a liability to make a payment, or a return foregone, which is calculated
by reference to any amounts received or receivable by the Sub-Lessor under
this Sub-Lease or any of the other Lease Documents;
but not an item directly covered by the current capital adequacy
regulations in force on the date of this Sub-Lease which include (but are
not limited to) the matters set out in the initial statement of the Basle
Committee on Banking Regulations and Supervisory
36
Practices dated July 1988 and entitled "International Convergence of
Capital Measurement and Capital Standards" (the "BASLE ACCORD").
For the avoidance of doubt, any item arising from matters set out in the
new Basle Accord (expected in 2007) in the form finally implemented by the
applicable authorities ("BASLE II") shall count as increased costs for the
purpose of this Clause to the extent and according to the timetable
provided for. Without prejudice to the Sub-Lessor's right to use this
Clause to claim an increased cost the Sub-Lessor will consult with the
Sub-Lessee in good faith and in a timely manner in relation to the
implementation and effect of Basle II insofar as the same relates to
Increased Costs within this Clause 17.
17.3 PAYMENT OF INCREASED COSTS. The Sub-Lessee shall pay to the Sub-Lessor the
amounts which the Sub-Lessor from time to time notifies the Sub-Lessee
that it has determined is necessary to compensate it for the increased
cost. The Sub-Lessor shall provide the Sub-Lessee with reasonable detail
of the basis on which it seeks to recover any amount in respect of an
increased cost.
17.4 MITIGATION. If circumstances arise which would result in notification
under Clause 17.1(Increased Costs) then, without limiting the rights of
the Sub-Lessor under Clause 17.3 (Payment of Increased Costs), the
Sub-Lessor shall use its reasonable endeavours to take such reasonable
steps as may be open to it to mitigate or remove those circumstances
PROVIDED THAT the Sub-Lessor shall be under no obligation to take any such
steps which shall or might be considered likely in the Sub-Lessor's
opinion to:
(a) have an adverse effect in the Sub-Lessor's business operations, financial
condition or reputation;
(b) involve the Sub-Lessor in any activity which is unlawful or prohibited or
any activity which is contrary to, or inconsistent with, any regulation;
or
(c) involve it in any expense (unless indemnified to its satisfaction) or Tax
disadvantage.
18 RELEASE FROM ARREST
18.1 RELEASE FROM ARREST: SUB-LESSOR'S VESSELS. If any vessel which is for the
time being owned (in whole or in part) by or leased to the Sub-Lessor
shall at any time have a writ or libel filed against it or be arrested,
attached or levied upon pursuant to any legal process or purported legal
process or is detained in exercise or purported exercise of any
Encumbrance or claim of whatsoever nature, arising out of the use or
operation of the Rig or out of the use or operation of any other rig
vessel owned by or leased or chartered to the Sub-Lessee or any other
member of the Guarantor's Group, except where that Encumbrance or claim
arises as a result of any act or omission of the Sub-Lessor (but excluding
for this purpose any act or omission relating to the operation of the Rig
for which the Sub-Lessee is responsible pursuant to this Sub-Lease or any
act or omission consequent upon an act or omission of the Sub-Lessee or
any other member of the Guarantor's Group):
(a) the Sub-Lessee forthwith upon receiving notice thereof at its expense
shall procure the release of such vessel from such arrest, detention,
attachment or levy or, as the case may be, the discharge of the writ or
libel by providing bail or procuring the provision of security or
otherwise as the circumstances may require; and
37
(b) the Sub-Lessee shall be responsible for discharging each and every
liability in connection with any such process, claim, Encumbrance or other
action.
Without prejudice to the generality of the other indemnities contained in
this Sub-Lease, should any such other vessel owned by or leased to the
Sub-Lessor be arrested, detained, attached or levied upon or be the
subject of a writ or libel in such circumstances, the Sub-Lessee shall
indemnify the Sub-Lessor against all claims made on the Sub-Lessor by the
charterers of such other vessel or any other party in connection with such
arrest, detention, attachment, levy, writ or libel.
18.2 RELEASE FROM ARREST: SUB-LESSEE'S VESSELS. If:
(a) the Rig or any other rig or vessel owned or operated by any member of the
Guarantor's Group, at any time has a writ or libel filed against it or is
arrested, attached or levied upon pursuant to any legal process or
purported legal process or is detained in exercise or purported exercise
of any Encumbrance or claim of whatsoever nature arising out of the use or
operation of any other rig or vessel for the time being owned by or leased
to the Sub-Lessor or any other member of the Sub-Lessor Group and leased
or chartered by it otherwise than to the Sub-Lessee or to any member of
the Guarantor's Group; and
(b) the charterers of such other vessel (being in that situation under
obligations to the Sub-Lessor equivalent to those assumed by the
Sub-Lessee under Clause 8.3 (Arrest and Detention)) fail to fulfil those
obligations,
PROVIDED THAT the Sub-Lessee shall first have given prior notice thereof
to the Sub-Lessor and, to the extent practicable, consulted with the
Sub-Lessor as far in advance as is reasonable in all the circumstances,
the Sub-Lessee shall:
(i) be entitled to act as agent for the Sub-Lessor or the relevant
member of the Sub-Lessor Group (as the case may be) to procure
release of the Rig or such other rig or vessel (as the case may
require) from such arrest, detention, attachment or levy or, as the
case may be, the discharge of the writ or libel and the discharge of
all liabilities in connection with such process, claim, lien or
other action subject to and in accordance with Clause 14.4 (Defence
of claims), mutatis mutandis; and
(ii) be entitled to be indemnified by the Sub-Lessor against claims made
on the Sub-Lessee by the charterers of such other vessel in
connection with such arrest, detention, attachment, levy, writ or
libel and all losses and expenses reasonably and properly incurred
in connection therewith.
19 RIGHTS AND WAIVERS
19.1 RIGHTS CUMULATIVE. No right or remedy conferred upon the Sub-Lessor or the
Sub-Lessee by this Sub-Lease shall be exclusive of any right or remedy
provided by law, and all rights and remedies conferred upon the Sub-Lessor
or the Sub-Lessee by this Sub-Lease shall be cumulative with, and in
addition to, its rights under general law and, in particular, shall be
without prejudice to the Sub-Lessor's or the Sub-Lessee's rights to claim
damages.
19.2 NO WAIVER. The exercise of any power or remedy or the enforcement of any
right by the Sub-Lessor or Sub-Lessee shall not be construed as a waiver
of the right to exercise any other power or remedy or to enforce any other
right. Any forbearance or indulgence granted by the Sub-Lessor or
Sub-Lessee shall not constitute a waiver of the right or remedy of the
Sub-Lessor or Sub-Lessee respectively in respect of which such
38
forbearance or indulgence is granted and the Sub-Lessor or Sub-Lessee
respectively shall be entitled to exercise such right or remedy at any
time thereafter.
20 NOTICES
20.1 METHOD. Any demand, notice or other communication to be given under or in
connection with this Sub-Lease shall be given in writing in English and,
unless otherwise provided, shall be made by fax or letter in writing and
sent by first class prepaid letter post, by fax or delivered by hand to
the addressee at its address set out below.
20.2 REQUIRED ADDRESS. Any notice or other communication to be given by one
party to another under this Lease shall (unless one party has by fifteen
(15) days' notice to the other party specified another address) be given
to that other party at the respective addresses given below.
20.3 DETAILS. The addresses and fax numbers of the Sub-Lessor and the
Sub-Lessee are:
Sub-Lessor:
Sogelease B.V.
Xxxxxxxx Xxxxx
Xxxxxxxxxxx 0
0000 XX
Xxxxxxxxx
Xxx Xxxxxxxxxxx
Fax: + 00 00 000 0000
Attention: Head of Lease Administration
Sub-Lessee:
GlobalSantaFe Drilling Company (North Sea) Limited
Xxxxxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxxxx XX00 0XX
Xxxxxxxx
Fax: + 00 0000 000000
Attention: Legal Department
with a copy to:
GlobalSantaFe Corporation
00000 Xxxxxxxx Xxxxx
Xxxxxxx
Xxxxx 00000
XXX
Fax: + 000 000 0000
Attention: Legal Department
20.4 DEEMED RECEIPT. Any notice or other communication given by one party to
the other shall be deemed to have been received:
39
(a) if sent by fax, with a confirmed receipt of transmission from the
receiving machine, on the day on which transmitted;
(b) in the case of a written notice given by hand, on the day of actual
delivery to the addressee; and
(c) if posted, on the second Business Day following the day on which it was
despatched by first class mail postage prepaid or,
PROVIDED THAT a notice given in accordance with the above but received on
a day which is not a Business Day or after normal business hours in the
place of receipt shall only be deemed to have been received on the next
Business Day.
21 LAW AND JURISDICTION
21.1 ENGLISH LAW. This Sub-Lease is governed by and shall be construed in
accordance with English law.
The parties agree that the courts of England shall have exclusive
jurisdiction to settle any disputes which may arise in connection with
this Sub-Lease. By its execution and delivery of this Sub-Lease, the
Sub-Lessor:
(a) hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts;
(b) waives any objections on the grounds of venue or forum non conveniens or
any similar grounds and agrees that legal proceedings in any one or more
jurisdictions shall not preclude legal proceedings in any other
jurisdiction; and
(c) agrees that final judgment against it in any action or proceedings shall
be conclusive and may be enforced in any other jurisdiction within or
outside England by suit on the judgment, a certified copy of which shall
be conclusive evidence of the fact and of the amount of its indebtedness.
21.2 APPOINTMENT OF PROCESS AGENT. The Sub-Lessor hereby appoints the London
office for the time being of Societe Generale to receive, for and on
behalf of itself, service of process in England in any legal proceedings
with respect to this Sub-Lease. Should Societe Generale cease to have an
office in London during the period of this Sub-Lease, the Sub-Lessor
shall, in a timely manner, appoint another agent for service of process
for England and confirm the same to the Sub-Lessor.
22 ASSIGNMENT
22.1 SUB-LESSOR. The Sub-Lessor may, at its own expense, assign or otherwise
transfer by way of sale its rights to Rentals, Termination Sums and other
amounts payable under this Sub-Lease to any party without the prior
written consent of the Sub-Lessee. The liabilities of the Sub-Lessee shall
not be increased, following any such assignment or transfer from what they
would otherwise have been but for such assignment or transfer. In the
event that the Sub-Lessee suffers any increased cost as a result of such
assignment or transfer, the Sub-Lessor shall indemnify the Sub-Lessee
against any such increased cost. Any other assignment or transfer of the
rights or obligations of the Sub-Lessor under this Sub-Lease shall require
the prior written consent of the Sub-Lessee.
22.2 SUB-LESSEE. The Sub-Lessee may assign or otherwise transfer all (but not
part only) of its rights and obligations under this Sub-Lease to another
Affiliate of the Guarantor which
40
is incorporated in either England and Wales or Scotland (the "TRANSFEREE")
PROVIDED THAT in connection with and as a condition to such transfer:
(i) the Transferee also acquires ownership of the Rig and (by novation
or otherwise documented to the satisfaction of the Sub-Lessor,
acting reasonably) all the rights and obligations of the Head-Lessor
under the Head-Lease;
(ii) the obligations of the Transferee are guaranteed by the Guarantor on
the terms by the Guarantee, mutatis mutandis;
(iii) the Sub-Lessor receives such evidence of due corporate authorisation
by the Sub-Lessee, the Transferee and the Guarantor in relation to
the matters outlined above and such favourable legal opinions as it
shall require, in each case acting reasonably.
Any assignment or transfers of all or any part of the Sub-Lessee's rights
or obligations under this Sub-Lease, otherwise than in accordance with the
foregoing provisions of this Clause 22.2, shall require the prior written
consent of the Sub-Lessor.
23 GENERAL
23.1 CERTIFICATE. A certificate by a duly authorised officer of the Sub-Lessor
as to any amount owing under this Sub-Lease shall be prime facia evidence
of the amount owing.
23.2 ILLEGALITY. If any provision of this Sub-Lease is or becomes illegal,
invalid or unenforceable in any respect in any jurisdiction, neither the
legality, validity or enforceability of:
(a) such provision in any other jurisdiction; or
(b) any other provision hereof in such or any other jurisdiction,
shall in any way be affected or impaired.
23.3 SET-OFF. Notwithstanding any other provisions hereof, the Sub-Lessor shall
be entitled to set-off or withhold from any amounts expressed in this
Sub-Lease and in the Head-Lease to be payable to the Sub-Lessee (whether
as lessee under this Sub-Lease or as lessor under the Head-Lease) by the
Sub-Lessor (whether as lessor under this Sub-Lease or as lessee under the
Head-Lease) any amounts due and payable from the Sub-Lessee (whether as
lessee under this Sub-Lease or as lessor under the Head-Lease) to the
Sub-Lessor (whether as lessor under this Sub-Lease or as lessee under the
Head-Lease) under the Sub-Lease or any of the other Lease Documents.
23.4 CONFIDENTIALITY. Each of the parties hereto undertakes to the other party
not to disclose (without the other party's prior written consent) to any
third party any information relating to the transactions effected by the
Lease Documents, PROVIDED THAT the restrictions contained in this Clause
23.4 shall not apply to:
(a) any information which has become part of public knowledge or literature
(except through a breach of this Clause 23.4);
(b) any disclosure to any of its Affiliates or to any of its or its
Affiliates' agents or advisers; or
41
(c) any disclosure to any actual or potential or assignee, PROVIDED THAT no
such disclosure may be made without the disclosing party first obtaining
from the other party concerned suitable undertakings as to
confidentiality; or
(d) to the extent required by law or applicable regulation (including
regulations of the US Securities Exchange Commission) or in connection
with any proceedings for enforcement of rights or benefits, or protection
of rights or benefits, under any Lease Document, or required by any
governmental, regulatory or taxing authority.
23.5 NO THIRD PARTY RIGHTS. No term of this Sub-Lease is enforceable under the
Contracts (Rights of Third Parties) Xxx 0000 by a person who is not a
party to this Sub-Lease.
23.6 COUNTERPARTS. The Sub-Lease may be executed in any number of counterparts
and this will have the same effect as if the signatures on the
counterparts were on a single copy of this Sub-Lease.
AS WITNESS the hands of duly authorised representatives of the parties hereto
the day and year first above written.
42
SCHEDULE 1
THE RIG
Type: Xxxx-Up Drilling Unit
Overall Dimensions: 224 by 200 by 25 feet
Legs (4): 324 ft. long triangular
Design: Xxxxx Engineering
Year of Build: 1968
Class: ABS
43
SCHEDULE 2
CERTIFICATE OF ACCEPTANCE
Certificate of Acceptance dated [-] January 2003 pursuant to a Sub-Lease
Agreement dated [-] January 2003 (the "SUB-LEASE") between (1) Sogelease BV as
Sub-Lessor and (2) GlobalSantaFe Driling Company (North Sea) Limited as
Sub-Lessee.
Terms used in this Certificate of Acceptance shall have the meaning given to
such terms in the Sub-Lease in accordance with the terms thereof.
The Sub-Lessor and the Sub-Lessee hereby confirm that the Rig has been delivered
by the Sub-Lessor to the Sub-Lessee and accepted by the Sub-Lessee from the
Sub-Lessor under the Sub-Lease subject to the provisions of Clause 2.1 (Quiet
Enjoyment) of the Sub-Lease.
This Certificate of Acceptance is a Lease Document.
SIGNED
by
for and on behalf of
SOGELEASE B.V.
SIGNED
by
for and on behalf of
GLOBALSANTAFE DRILLING COMPANY (NORTH SEA) LIMITED
44
SCHEDULE 3
FINANCIAL SCHEDULE
1 RENTALS
(a) During the Sub-Lease Period Rentals shall be payable in advance on each
Rental Payment Date. The amount of Rental payable on each such Rental
Payment Date shall be US$8,000,000 (excluding VAT and except the Start
Date) plus or minus any Additional Rental.
(b) The "ACTUAL BALANCE" on any date is as follows:
(i) if the previous Adjustment Date was a Rental Payment Date, the sum
of (x) the Notional Balance at the previous Adjustment Date and (y)
interest at the Actual Rate for the number of days since the
previous Adjustment Date applied to the Notional Balance; or
(ii) if the previous Adjustment Date was not a Rental Payment Date, the
sum of (x) the Actual Balance on the previous Adjustment Date and
(y) interest at the Actual Rate for the number of days since the
previous Adjustment Date applied to such Actual Balance.
Such calculations to be made on the basis of a year of three hundred and
sixty (360) days.
ADJUSTMENT DATES NOTIONAL BALANCE
Start Date $30,478,500.00
06/05/2003 $30,478,500.00
04/08/2003 $30,478,500.00
03/11/2003 $30,478,500.00
03/02/2004 $23,080,375.78
04/05/2004 $23,080,375.78
03/08/2004 $23,080,375.78
03/11/2004 $23,080,375.78
03/02/2005 $15,537,414.68
03/05/2005 $15,537,414.68
03/08/2005 $15,537,414.68
03/11/2005 $15,537,414.68
03/02/2006 $7,844,240.50
03/05/2006 $7,844,240.50
03/08/2006 $7,844,240.50
03/11/2006 $7,844,240.50
05/02/2007 $(0.00)
03/05/2007 $(0.00)
45
03/08/2007 $(0.00)
05/11/2007 $(0.00)
2 TERMINATION PAYMENT
(a) The Termination Sum shall be payable on the Termination Payment Date or,
as the case may be, the Total Loss Payment Date and shall be calculated by
reference to such date and shall be the aggregate of the Actual Balance on
that date and Broken Funding Costs and any other amounts then payable to
the Sub-Lessor under the Sub-Lease and other Lease Documents.
(b) Payments pursuant to this paragraph 2 shall bear interest from the
Termination Payment Date or, as the case may be, the Total Loss Payment
Date to the date of actual payment in accordance with Clause 5.2.
(c) The Sub-Lessee undertakes and agrees to indemnify the Sub-Lessor on demand
against any cost or detriment (including, without limitation, any damages,
penalties or premiums incurred by the Sub-Lessor) as reasonably determined
by the Sub-Lessor and certified to the Sub-Lessee by the Sub-Lessor,
arising to the Sub-Lessor as a result of the Sub-Lessor repaying prior to
its specified maturity any funding assumed to be obtained by the
Sub-Lessor in respect of the Sub-Lessor's obligations in consequence of
any termination of the Sub-Lease Period ("BROKEN FUNDING Costs"). If in
consequence of such a repayment having been unconditionally received in
full a benefit (as reasonably determined by the Sub-Lessor and certified
to the Sub-Lessee by the Sub-Lessor) accrues to the Sub-Lessor in
connection with any early repayment of such funding ("BROKEN FUNDING
BENEFITS"), the Sub-Lessor undertakes to pay the Sub-Lessee promptly an
amount equal to such benefit. If the Sub-Lessor is unable to repay such
funding actually entered into by the Sub-Lessor, it shall notify the
Sub-Lessee of the Sub-Lessor's best estimate in good faith (but which in
the absence of manifest error shall be final and binding upon the
Sub-Lessee).
For the purpose of this paragraph 2(c) it shall be assumed that the
Sub-Lessor has obtained funding under which interest is paid in advance on
each Rental Payment Date and is calculated at LIBOR prevailing at the
commencement of each Rental Period and which does not impose any penalty
or additional cost other than by reference to the interest differential
applying in respect of the balance of the current Rental Period in which
prepayment occurs.
3. DEFINITIONS
"ACTUAL RATE" means the aggregate of LIBOR and 0.625 per cent.;
"ADDITIONAL RENTAL" means the Actual Balance less the Notional Balance
less the Rental due on that date on each Rental Payment Date;
"ADJUSTMENT DATE" means each of the dates specified as such in paragraph 1
(b) above.
"ADJUSTMENT PERIOD" means each successive quarterly period ending on an
Adjustment Date, the first commencing on the Start Date and the last
ending on the last day of the Sub-Lease Period;
"BANK" means Societe Generale, London Branch;
"LIBOR" means in relation to any Adjustment Period, or other relevant
period for which LIBOR is to be determined, as appropriate:
46
(a) the rate for Dollar deposits for the number of months (rounded to the
nearest whole number) comprised in the relevant Adjustment Period or other
relevant period designated as the British Bankers Association's Interest
Settlement Rate as quoted on the Dow Xxxxx/Telerate Monitor as Telerate
Page No. 3750 as at or about 11.00 a.m. (London time) two (2) London
Business Days before the date on which the relevant Adjustment Period or
other relevant period commences;
(b) if such rate is not determinable, the arithmetic mean rounded up to five
decimal places of the equivalent rates quoted to the Bank by each of the
Reference Banks as their offered rate for such deposits for such periods;
(c) if neither (a) or (b) above is determinable, then the equivalent rate
determined by the Bank to the rate of interest offered to it by prime
banks in the London Interbank Market for such deposits for such periods;
"NOTIONAL BALANCE" means those amounts specified as such in paragraph 1 (b); and
"REFERENCE BANKS" means Lloyds TSB plc, Barclays Bank plc and The Royal Bank of
Scotland plc.
47
EXECUTION PAGE
SIGNED for and on behalf of )
SOGELEASE B.V. ) /s/ Xxxx Xxxxxxx
by Xxxx Xxxxxxx )
Witness to the above signature:
Xxxxx Xxxxxxxxx
...............................
SIGNED for and on behalf of )
GLOBALSANTAFE DRILLING )
COMPANY (NORTH SEA) ) /s/ Xxxxxx Xxxxxx Xxxxx
LIMITED )
by Xxxxxx Xxxxxx Xxxxx )
Witness to the above signature:
X. Xxxxx
...............................
48