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¨
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of Each Class
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Name of Each Exchange on which Registered
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Common units representing limited liability company interests
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New York Stock Exchange
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Large accelerated filer
o
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Accelerated filer
ý
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Non-accelerated filer
o
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Emerging growth company
o
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U.S. GAAP
ý
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International Financial Reporting Standards as Issued
by the International Accounting Standards Board
¨
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Other
¨
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PART I
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Item 1.
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Item 2.
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Item 3.
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||
A.
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B.
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||
C.
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||
D.
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Item 4.
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||
A.
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B.
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||
C.
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D.
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Item 4A.
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Item 5.
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||
A.
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||
B.
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||
C.
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||
D.
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||
E.
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||
F.
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||
G.
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Item 6.
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||
A.
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||
B.
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||
C.
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||
D.
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||
E.
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Item 7.
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||
A.
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||
B.
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||
C.
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Item 8.
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||
A.
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||
B.
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||
Item 9.
|
||
A.
|
||
B.
|
||
C.
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||
D.
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||
E.
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||
F.
|
||
Item 10.
|
||
A.
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||
B.
|
||
C.
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||
D.
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E.
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||
F.
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||
G.
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||
H.
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||
I.
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||
Item 11.
|
||
Item 12.
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PART II
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Item 13.
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||
Item 14.
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||
Item 15.
|
||
Item 16A.
|
||
Item 16B.
|
||
Item 16C.
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||
Item 16D.
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||
Item 16E.
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Item 16F.
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||
Item 16G.
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Item 16H.
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PART III
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Item 17.
|
||
Item 18.
|
||
Item 19.
|
•
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offshore drilling market conditions, including supply and demand;
|
•
|
the Company's distribution policy and the Company's ability to make cash distributions on the Company's units or any increases or decreases in distributions and the amount of such increases or decreases;
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•
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the future financial condition, liquidity or results of operations of the Company or Seadrill;
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•
|
the repayment of debt;
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•
|
the ability of the Company and OPCO to comply with financing agreements and the effect of restrictive covenants in such agreements;
|
•
|
the ability of the Company's drilling units to perform satisfactorily or to the Company's expectations;
|
•
|
the financial condition of Seadrill, its comprehensive restructuring efforts and its ability to provide services to the Company under certain management, administrative and technical support agreements. This dependence on Seadrill has given rise to substantial doubt over the Company’s ability to continue as a going concern;
|
•
|
fluctuations in the price of oil;
|
•
|
discoveries of new sources of oil that do not require deepwater drilling units;
|
•
|
the development of alternative sources of fuel and energy;
|
•
|
technological advances, including in production, refining and energy efficiency;
|
•
|
weather events and natural disasters;
|
•
|
the Company's ability to meet any future capital expenditure requirements;
|
•
|
the Company's ability to maintain operating expenses at adequate and profitable levels;
|
•
|
expected costs of maintenance or other work performed on the Company's drilling units and any estimates of downtime;
|
•
|
the Company's ability to leverage Seadrill’s relationship and reputation in the offshore drilling industry;
|
•
|
the Company's ability to purchase drilling units in the future, including from Seadrill;
|
•
|
increasing the Company's ownership interest in OPCO;
|
•
|
customer contracts, including contract backlog, contract terminations and contract revenues;
|
•
|
delay in payments by, or disputes with the Company’s customers under its drilling contracts;
|
•
|
termination of the Company's drilling contracts due to force majeure or other events;
|
•
|
the financial condition of the Company’s customers and their ability and willingness to fund oil exploration, development and production activity;
|
•
|
the Company’s ability to comply with, maintain, renew or extend its existing drilling contracts;
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•
|
the Company’s ability to re-deploy its drilling units upon termination of its existing drilling contracts at profitable dayrates;
|
•
|
the Company's ability to respond to new technological requirements in the areas in which the Company operates;
|
•
|
the occurrence of any accident involving the Company’s drilling units or other drilling units in the industry;
|
•
|
changes in governmental regulations that affect the Company and the interpretations of those regulations, particularly those that relate to environmental matters, export or import and economic sanctions or trade embargo matters, regulations applicable to the oil industry and tax and royalty legislation;
|
•
|
competition in the offshore drilling industry and other actions of competitors, including decisions to deploy or scrap drilling units in the areas in which the Company currently operates;
|
•
|
the availability on a timely basis of drilling units, supplies, personnel and oil field services in the areas in which the Company operates;
|
•
|
general economic, political and business conditions globally;
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•
|
military operations, terrorist acts, wars or embargoes;
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•
|
potential disruption of operations due to accidents, political events, piracy or acts by terrorists;
|
•
|
the Company's ability to obtain financing in sufficient amounts and on adequate terms;
|
•
|
workplace safety regulation and employee claims;
|
•
|
the cost and availability of adequate insurance coverage;
|
•
|
the Company's fees and expenses payable under the advisory, technical and administrative services agreements and the management and administrative services agreements;
|
•
|
the taxation of the Company and distributions to the Company's unitholders;
|
•
|
future sales of the Company's common units in the public market;
|
•
|
acquisitions and divestitures of assets and businesses by Seadrill; and
|
•
|
the Company's business strategy and other plans and objectives for future operations.
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|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
(in millions, except per unit data)
|
||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total operating revenues
(1)
|
|
$
|
1,128.4
|
|
|
$
|
1,600.3
|
|
|
$
|
1,741.6
|
|
|
$
|
1,342.6
|
|
|
$
|
1,064.3
|
|
Total other operating income
|
|
90.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses
|
|
(755.6
|
)
|
|
(782.2
|
)
|
|
(897.9
|
)
|
|
(727.8
|
)
|
|
(576.6
|
)
|
|||||
Net operating income
|
|
463.5
|
|
|
818.1
|
|
|
843.7
|
|
|
614.8
|
|
|
487.7
|
|
|||||
Total financial items
|
|
(187.9
|
)
|
|
(185.9
|
)
|
|
(254.7
|
)
|
|
(265.4
|
)
|
|
(39.1
|
)
|
|||||
Income before income taxes
|
|
275.6
|
|
|
632.2
|
|
|
589.0
|
|
|
349.4
|
|
|
448.6
|
|
|||||
Income tax expense
|
|
(40.3
|
)
|
|
(86.5
|
)
|
|
(100.6
|
)
|
|
(34.8
|
)
|
|
(33.2
|
)
|
|||||
Net income
|
|
$
|
235.3
|
|
|
$
|
545.7
|
|
|
$
|
488.4
|
|
|
$
|
314.6
|
|
|
$
|
415.4
|
|
Earnings per unit (basic and diluted)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common unitholders
|
|
$
|
1.88
|
|
|
$
|
3.20
|
|
|
$
|
2.45
|
|
|
$
|
1.75
|
|
|
$
|
2.15
|
|
Subordinated unitholders
|
|
$
|
—
|
|
|
$
|
2.28
|
|
|
$
|
2.45
|
|
|
$
|
1.75
|
|
|
$
|
1.83
|
|
|
|
As of December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
(in millions)
|
||||||||||||||||||
Balance Sheet Data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
848.6
|
|
|
$
|
767.6
|
|
|
$
|
319.0
|
|
|
$
|
242.7
|
|
|
$
|
89.7
|
|
Drilling units
|
|
5,170.9
|
|
|
5,340.9
|
|
|
5,547.3
|
|
|
5,141.1
|
|
|
3,448.3
|
|
|||||
Total assets
|
|
6,530.8
|
|
|
6,780.7
|
|
|
6,841.1
|
|
|
6,268.1
|
|
|
4,062.6
|
|
|||||
Total interest bearing debt
|
|
3,367.8
|
|
|
3,600.6
|
|
|
3,840.2
|
|
|
3,572.0
|
|
|
2,350.5
|
|
|||||
Total equity
|
|
2,701.8
|
|
|
2,535.8
|
|
|
2,097.4
|
|
|
2,044.3
|
|
|
1,254.6
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
(in millions, except fleet and unit data)
|
||||||||||||||||||
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
|
$
|
476.2
|
|
|
$
|
873.8
|
|
|
$
|
859.8
|
|
|
$
|
608.7
|
|
|
$
|
564.0
|
|
Net cash (used in)/provided by investing activities
|
|
(11.1
|
)
|
|
97.6
|
|
|
(376.3
|
)
|
|
(1,542.8
|
)
|
|
(159.3
|
)
|
|||||
Net cash (used in)/provided by financing activities
|
|
(384.9
|
)
|
|
(522.1
|
)
|
|
(407.6
|
)
|
|
1,087.1
|
|
|
(336.2
|
)
|
|||||
Net increase in cash and cash equivalents
|
|
81.0
|
|
|
448.6
|
|
|
76.3
|
|
|
153.0
|
|
|
68.5
|
|
|||||
Fleet Data
(1)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Number of drilling units at end of period
|
|
11
|
|
|
11
|
|
|
11
|
|
|
10
|
|
|
8
|
|
|||||
Average age of drilling units at end of period (years)
|
|
6.7
|
|
|
5.7
|
|
|
4.7
|
|
|
3.6
|
|
|
3.1
|
|
|||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
(2)
|
|
$
|
121.6
|
|
|
$
|
61.1
|
|
|
$
|
68.4
|
|
|
$
|
70.7
|
|
|
$
|
185.8
|
|
Distributions declared per unit
(3)
|
|
0.4000
|
|
|
0.5500
|
|
|
1.9525
|
|
|
2.1700
|
|
|
1.6775
|
|
|||||
Members Capital (at end of period):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total members capital (excluding non-controlling interest)
|
|
1,303.7
|
|
|
1,192.6
|
|
|
964.3
|
|
|
928.2
|
|
|
299.0
|
|
|||||
Common Unitholders—units
|
|
75,278,250
|
|
|
75,278,250
|
|
|
75,278,250
|
|
|
75,278,250
|
|
|
44,400,563
|
|
|||||
Subordinated Unitholders—units
|
|
16,543,350
|
|
|
16,543,350
|
|
|
16,543,350
|
|
|
16,543,350
|
|
|
16,543,350
|
|
(1)
|
During the year ended December 31, 2013, the Company acquired from Seadrill two tender rigs, the
T-15
and the
T-16,
which the Company holds through a 100% limited liability company interest in Seadrill Partners Operating LLC, the semi-submersible drilling rig, the
West Sirius
, which the Company holds through its 51% interest in Seadrill Capricorn Holdings LLC, and the semi-submersible drilling rig, the
West Leo,
which the Company currently holds through its 58% interest in Seadrill Operating LP. These transactions were deemed to be a reorganization of entities under common control and therefore the fleet data has been retroactively adjusted as if the Company had acquired the interests in these units when they began operations under the ownership of Seadrill. As of January 2, 2014, the date of the Company’s first annual general meeting, Seadrill ceased to control the Company as defined by generally accepted accounting principles in the United States ("GAAP") and, therefore, Seadrill Partners and Seadrill are no longer deemed to be entities under common control. As such, acquisitions by the Company from Seadrill subsequent to this date are no longer accounted for under this method.
|
(2)
|
Capital expenditures include long term maintenance.
|
(3)
|
Distributions attributable to the year. Distributions were declared only with respect to the common units in 2017 and 2016.
|
•
|
renew existing drilling contracts upon their expiration;
|
•
|
obtain new drilling contracts;
|
•
|
efficiently and productively carry out our drilling activities;
|
•
|
successfully interact with shipyards;
|
•
|
obtain financing and maintain insurance on commercially acceptable terms; or
|
•
|
maintain satisfactory relationships with suppliers and other third parties.
|
•
|
worldwide production and demand for oil and gas and geographical dislocations in supply and demand;
|
•
|
the cost of exploring for, developing, producing and delivering oil and gas;
|
•
|
expectations of future energy prices and production;
|
•
|
advances in exploration, development and production technology;
|
•
|
the ability of the Organization of Petroleum Exporting Countries ("OPEC"), to set and maintain levels and pricing;
|
•
|
the level of production in non-OPEC countries;
|
•
|
international sanctions on oil-producing countries, or the lifting of such sanctions;
|
•
|
government regulations, including restrictions on offshore transportation of oil and natural gas;
|
•
|
local and international political, economic and weather conditions;
|
•
|
domestic and foreign tax policies;
|
•
|
the development and exploitation of alternative fuels and unconventional hydrocarbon production, including shale;
|
•
|
worldwide economic and financial conditions and the corresponding impact on the demand for oil and gas and, consequently, our services;
|
•
|
the policies of various governments regarding exploration and development of their oil and gas reserves, accidents, severe weather, natural disasters and other similar incidents relating to the oil and gas industry; and
|
•
|
the worldwide political environment, including uncertainty or instability resulting from an escalation or additional outbreak of armed hostilities or other crises in the Middle East, eastern Europe or other geographic areas or further acts of terrorism in the United States, Europe or elsewhere.
|
•
|
the availability and quality of competing offshore drilling units;
|
•
|
the availability of financing on reasonable terms;
|
•
|
the level of costs for associated offshore oilfield and construction services;
|
•
|
oil and gas transportation costs;
|
•
|
the level of rig operating costs, including crew and maintenance;
|
•
|
the discovery of new oil and gas reserves;
|
•
|
the political environment of oil and gas reserve jurisdictions; and
|
•
|
regulatory restrictions on offshore drilling.
|
•
|
executing other financing arrangements;
|
•
|
incurring additional indebtedness;
|
•
|
creating or permitting liens on our assets;
|
•
|
selling our drilling units or the shares of our subsidiaries;
|
•
|
making investments;
|
•
|
changing the general nature of our business;
|
•
|
paying distributions to our unitholders;
|
•
|
changing the management and/or ownership of the drilling units; and
|
•
|
making capital expenditures.
|
•
|
the general economic and market conditions affecting the offshore drilling industry, including competition from other offshore contract drilling companies;
|
•
|
the types, sizes and ages of drilling units;
|
•
|
the supply and demand for drilling units;
|
•
|
the costs of newbuild drilling units;
|
•
|
the prevailing level of drilling services contract dayrates;
|
•
|
governmental or other regulations; and
|
•
|
technological advances.
|
•
|
terrorist acts, armed hostilities, war and civil disturbances;
|
•
|
acts of piracy, which have historically affected ocean-going vessels;
|
•
|
significant governmental influence over many aspects of local economies;
|
•
|
the seizure, nationalization or expropriation of property or equipment;
|
•
|
uncertainty of outcome in foreign court proceedings;
|
•
|
the repudiation, nullification, modification or renegotiation of contracts;
|
•
|
limitations on insurance coverage, such as war risk coverage, in certain areas;
|
•
|
political unrest;
|
•
|
foreign and U.S. monetary policy and foreign currency fluctuations and devaluations;
|
•
|
the inability to repatriate income or capital;
|
•
|
complications associated with repairing and replacing equipment in remote locations;
|
•
|
import-export quotas, wage and price controls, and the imposition of trade barriers;
|
•
|
U.S. and foreign sanctions or trade embargoes;
|
•
|
compliance with various jurisdictional regulatory or financial requirements;
|
•
|
compliance with and changes in taxation;
|
•
|
other forms of government regulation and economic conditions that are beyond our control; and
|
•
|
governmental corruption.
|
•
|
the equipping and operation of drilling units;
|
•
|
exchange rates or exchange controls;
|
•
|
the repatriation of foreign earnings;
|
•
|
oil and gas exploration and development;
|
•
|
the taxation of offshore earnings and the earnings of expatriate personnel; and
|
•
|
the use and compensation of local employees and suppliers by foreign contractors.
|
•
|
interest expense and principal payments on any indebtedness we may incur;
|
•
|
restrictions on distributions contained in any of our current or future debt agreements;
|
•
|
fees and expenses of us, the Seadrill Member, its affiliates or third parties we are required to reimburse or pay; and
|
•
|
reserves the Board believes are prudent for us to maintain for the proper conduct of our business or to provide for future distributions.
|
•
|
neither our operating agreement nor any other agreement requires the Seadrill Member or Seadrill or its affiliates to pursue a business strategy that favors us or utilizes our assets, and Seadrill’s officers and directors have a fiduciary duty to make decisions in the best interests of the shareholders of Seadrill, which may be contrary to our interests;
|
•
|
our operating agreement provides that the Seadrill Member may make determinations to take or decline to take actions without regard to the interests of us or our unitholders. Specifically, the Seadrill Member may exercise its call right, pre-emptive rights, registration rights or right to make a determination to receive common units in exchange for resetting the target distribution levels related to the incentive distribution rights, consent or withhold consent to any merger or consolidation of us, appoint any directors or vote for the election of any director, vote or refrain from voting on amendments to our operating agreement that require a vote of the outstanding units, voluntarily withdraw from us, transfer (to the extent permitted under our operating agreement) or refrain from transferring its units, the Seadrill Member interest or incentive distribution rights or vote upon our dissolution;
|
•
|
the Seadrill Member and our directors and officers have limited their liabilities and any fiduciary duties they may have under the laws of the Marshall Islands, while also restricting the remedies available to our unitholders, and, as a result of purchasing common units, unitholders are treated as having agreed to the modified standard of fiduciary duties and to certain actions that may be taken by the Seadrill Member and our directors and officers, all as set forth in the operating agreement;
|
•
|
the Seadrill Member is entitled to reimbursement of all costs incurred by it and its affiliates for our benefit;
|
•
|
our operating agreement does not restrict us from paying the Seadrill Member or its affiliates for any services rendered to us on terms that are fair and reasonable or entering into additional contractual arrangements with any of these entities;
|
•
|
the Seadrill Member may exercise its right to call and purchase our common units if it and its affiliates own more than 80% of our common units; and
|
•
|
the Seadrill Member is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon the exercise of its limited call right.
|
•
|
the allocation of shared overhead expenses between us and OPCO;
|
•
|
the interpretation and enforcement of contractual obligations between us and our affiliates, on the one hand, and OPCO or its subsidiaries, on the other hand;
|
•
|
the determination and timing of the amount of cash to be distributed to OPCO’s owners and the amount of cash to be reserved for the future conduct of OPCO’s business;
|
•
|
the decision as to whether OPCO should make asset or business acquisitions or dispositions, and on what terms;
|
•
|
the determination of the amount and timing of OPCO’s capital expenditures;
|
•
|
the determination of whether OPCO should use cash on hand, borrow or issue equity to raise cash to finance maintenance or expansion capital projects, repay indebtedness, meet working capital needs or otherwise; and
|
•
|
any decision we make to engage in business activities independent of, or in competition with, OPCO.
|
•
|
The unitholders are unable to remove the Seadrill Member without its consent because the Seadrill Member and its affiliates own sufficient units to be able to prevent its removal. The vote of the holders of at least 66 2/3% of all outstanding common and subordinated units voting together as a single class is required to remove the Seadrill Member. As of
March 31, 2018
, Seadrill owned 46.6% of the outstanding common and subordinated units.
|
•
|
If the Seadrill Member is removed without “cause” during the subordination period and units held by the Seadrill Member and Seadrill are not voted in favor of that removal, all remaining subordinated units will automatically convert into common units, any existing arrearages on the common units will be extinguished, and the Seadrill Member will have the right to convert its incentive distribution rights into common units or to receive cash in exchange for those interests based on the fair market value of those interests at the time. A removal of the Seadrill Member under these circumstances would adversely affect the common units by prematurely eliminating their distribution and liquidation preference over the subordinated units, which would otherwise have continued until we have met certain distribution and performance tests. Any conversion of the Seadrill Member interest or incentive distribution rights would be dilutive to existing unitholders. Furthermore, any cash payment in lieu of such conversion could be prohibitively expensive. “Cause” is narrowly defined to mean that with respect to a director or officer, a court of competent jurisdiction has entered a final, non-appealable judgment finding such director or officer liable for actual fraud or willful misconduct, and with respect to the Seadrill Member, the Seadrill Member is in breach of the operating agreement or a court of competent jurisdiction has entered a final, non-appealable judgment finding the Seadrill Member liable for actual fraud or willful misconduct against us or our members, in their capacity as such. Cause does not include most cases of charges of poor business decisions, such as charges of poor management of our business by the directors appointed by the Seadrill Member, so the removal of the Seadrill Member because of the unitholders’ dissatisfaction with the Seadrill Member’s decisions in this regard would most likely result in the termination of the subordination period.
|
•
|
Common unitholders are entitled to elect up to four of the members of the Board. The Seadrill Member in its sole discretion appoints the remaining three directors.
|
•
|
Election of the four directors elected by unitholders is staggered, meaning that the members of only one of three classes of our elected directors are selected each year. In addition, the directors appointed by the Seadrill Member serve for terms determined by the Seadrill Member.
|
•
|
Our operating agreement contains provisions limiting the ability of unitholders to call meetings of unitholders, to nominate directors and to acquire information about our operations as well as other provisions limiting the unitholders’ ability to influence the manner or direction of management.
|
•
|
Unitholders’ voting rights are further restricted by the operating agreement provision providing that if any person or group owns beneficially more than 5% of any class of units then outstanding, any such units owned by that person or group in excess of 5% may not be voted on any matter and will not be considered to be outstanding when sending notices of a meeting of unitholders, calculating required votes (except for purposes of nominating a person for election to the Board), determining the presence of a quorum or for other similar purposes, unless required by law. The voting rights of any such unitholders in excess of 5% will effectively be redistributed pro rata among the other common unitholders holding less than 5% of the voting power of all classes of units entitled to vote. The Seadrill Member, its affiliates and persons who acquired common units with the prior approval of the Board are not subject to this 5% limitation except with respect to voting their common units in the election of the elected directors.
|
•
|
There are no restrictions in our operating agreement on our ability to issue additional equity securities.
|
•
|
provides that the Seadrill Member may make determinations or take or decline to take actions without regard to the interests of us or our unitholders. The Seadrill Member may consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting us, our affiliates or our unitholders. Decisions made by the Seadrill Member are made by its sole owner, Seadrill. Specifically, the Seadrill Member may decide to exercise its right to make a determination to receive common units in exchange for resetting the target distribution levels related to the incentive distribution rights, call right, pre-emptive rights or registration rights, consent or withhold consent to any merger or consolidation, appoint any directors or vote for the election of any director, vote or refrain from voting on amendments to our operating agreement that require a vote of the outstanding units, voluntarily withdraw from us, transfer (to the extent permitted under our operating agreement) or refrain from transferring its units, the Seadrill Member interest or incentive distribution rights or vote upon our dissolution;
|
•
|
provides that the Board and officers are entitled to make other decisions in "good faith," meaning they believe that the decision is in our best interests;
|
•
|
generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts committee of the Board and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be "fair and reasonable" to us and that, in determining whether a transaction or resolution is "fair and reasonable," the Board may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us; and
|
•
|
provides that neither the Seadrill Member nor our officers or directors will be liable for monetary damages to us, our members or assignees for any acts or omissions unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that the Seadrill Member, our directors or officers or those other persons engaged in actual fraud or willful misconduct.
|
•
|
our unitholders’ proportionate ownership interest will decrease;
|
•
|
the amount of cash available for distribution on each unit may decrease;
|
•
|
because a lower percentage of total outstanding units will be subordinated units, the risk that a shortfall in the payment of the minimum quarterly distribution will be borne by our common unitholders will increase;
|
•
|
the relative voting strength of each previously outstanding unit may be diminished; and
|
•
|
the market price of the common units may decline.
|
Rig
|
Built
|
Status at December 31, 2017
|
Customer
|
Contractual operating rate per day ($'000)
|
Contracted until
|
Semi-submersible
|
|
|
|
||
West Sirius
|
2008
|
Stacked
|
-
|
-
|
-
|
West Aquarius
|
2009
|
Future contract
|
BP
|
$260.0
|
Jul 2018
|
West Capricorn
|
2011
|
Contracted
|
BP
|
$525.0
|
Jul 2019
|
West Leo
|
2012
|
Stacked
|
-
|
-
|
-
|
|
|
|
|
|
|
Drillship
|
|
|
|
|
|
West Capella
|
2008
|
Future contract
|
Repsol
|
Not disclosed
|
Jul 2018
|
West Polaris
|
2008
|
Stacked
|
-
|
-
|
-
|
West Auriga
|
2013
|
Contracted
|
BP
|
$562.0
|
Oct 2020
|
West Vela
|
2013
|
Contracted
|
BP
|
$564.0
|
Nov 2020
|
|
|
|
|
|
|
Tender Rig
|
|
|
|
|
|
West Vencedor
|
2009
|
Stacked
|
-
|
-
|
-
|
T-15
|
2013
|
Contracted
|
Chevron
|
$110.0
|
Jul 2019
|
T-16
|
2013
|
Contracted
|
Chevron
|
$110.0
|
Aug 2019
|
Rig
|
Seadrill Partners Ownership Interest
(2)
|
Year Built
|
Water
Depth (feet) |
Drilling
Depth (feet) |
||
Semi-submersible
|
|
|
|
|
||
West Sirius
|
51%
|
2008
|
10,000
|
|
35,000
|
|
West Aquarius
|
58%
|
2009
|
10,000
|
|
35,000
|
|
West Capricorn
|
51%
|
2011
|
10,000
|
|
35,000
|
|
West Leo
|
58%
|
2012
|
10,000
|
|
35,000
|
|
|
|
|
|
|
||
Drillship
|
|
|
|
|
||
West Capella
(1)
|
33%
|
2008
|
10,000
|
|
35,000
|
|
West Polaris
|
58%
|
2008
|
10,000
|
|
35,000
|
|
West Auriga
|
51%
|
2013
|
12,000
|
|
40,000
|
|
West Vela
|
51%
|
2013
|
12,000
|
|
40,000
|
|
|
|
|
|
|
||
Tender Rig
|
|
|
|
|
||
West Vencedor
|
58%
|
2009
|
6,500
|
|
30,000
|
|
T-15
|
100%
|
2013
|
6,500
|
|
30,000
|
|
T-16
|
100%
|
2013
|
6,500
|
|
30,000
|
|
Rig
|
Contracted
Location |
Customer
|
Contractual
Dayrate (US $) |
Contract
Backlog (1) (US $ millions) |
Contract
Start |
Contract End
|
Semi-submersible
|
|
|
|
|
|
|
West Sirius
|
Stacked
|
-
|
-
|
-
|
-
|
-
|
West Aquarius
|
Canada
|
BP
|
$260,000
|
$31.2
|
Apr 2018
|
Jul 2018
|
West Capricorn
|
USA
|
BP
|
$525,000
|
$251.5
|
Jul 2017
|
Jul 2019
|
West Leo
(2)
|
Stacked
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Drillship
|
|
|
|
|
|
|
West Capella
|
Aruba
|
Repsol
|
Not disclosed
|
Not disclosed
|
Jun 2018
|
Jul 2018
|
West Polaris
|
Stacked
|
-
|
-
|
-
|
-
|
-
|
West Auriga
|
USA
|
BP
|
$562,000
|
$529.4
|
Oct 2013
|
Oct 2020
|
West Vela
|
USA
|
BP
|
$564,000
|
$510.4
|
Nov 2013
|
Nov 2020
|
|
|
|
|
|
|
|
Tender Rig
|
|
|
|
|
|
|
West Vencedor
|
Stacked
|
-
|
-
|
-
|
-
|
-
|
T-15
|
Thailand
|
Chevron
|
$110,000
|
$50.9
|
Jul 2013
|
Jul 2019
|
T-16
|
Thailand
|
Chevron
|
$110,000
|
$54.8
|
Aug 2013
|
Aug 2019
|
•
|
Our ability to successfully employ our drilling units at economically attractive dayrates as contracts expire or are otherwise terminated.
|
•
|
Our ability to maintain good relationships with our existing customers and to increase the number of customer relationships.
|
•
|
The number and availability of drilling units in our fleet, including our ability to exercise any options to purchase additional drilling units that may arise under the Omnibus Agreement or otherwise.
|
•
|
Changes in Seadrill Partners LLC's ownership of OPCO.
|
•
|
Fluctuations in the price of oil and gas, which influence the demand for offshore drilling services.
|
•
|
The effective and efficient technical management of our drilling units.
|
•
|
Our ability to obtain and maintain major oil and gas company approvals and to satisfy their quality, technical, health, safety and compliance standards.
|
•
|
Economic, regulatory, political and governmental conditions that affect the offshore drilling industry.
|
•
|
Accidents, natural disasters, adverse weather, equipment failure or other events outside of our control that may result in downtime.
|
•
|
The financial condition of Seadrill, its restructuring and its ability to provide services to the Company under certain management, administrative and technical support agreements;
|
•
|
Our ability to comply with financing agreements and the effect of the restrictive covenants in such agreements.
|
•
|
Changes in the fair value of our interest rate swaps.
|
•
|
Foreign currency exchange gains and losses.
|
•
|
Our access to capital required to acquire additional drilling units or equity interests in OPCO and/or to implement our business strategy.
|
•
|
Increases in crewing and insurance costs and other operating costs.
|
•
|
The level of debt and interest expense and amortization of deferred loan fees.
|
•
|
The level of any distribution on Seadrill Partners LLC's common units.
|
•
|
Revaluation of contingent consideration relates to changes in the estimated fair value of deferred consideration liabilities. These estimates may increase or decrease as new market information becomes available.
|
•
|
Gains on sale of assets occur where proceeds received from the transaction are in excess of the carrying value of the asset.
|
•
|
Vessel and rig operating expenses are costs associated with operating a drilling unit that is either in operation or stacked. This includes the personnel costs of offshore crews, running costs of the rigs, expenditures for repairs and maintenance activities and costs for onshore personnel that provide operational support to the rigs.
|
•
|
Amortization of favorable contracts is amortization expense for acquired drilling contracts with above market rates. Where we acquire an in-progress drilling contract at above market rates through a business combination we record an intangible asset equal to its fair value on the date of acquisition. The asset is then amortized on a straight-line basis over its estimated remaining contract term.
|
•
|
General and administrative expenses include management charges from Seadrill, legal and professional fees and other general administration expenses.
|
•
|
Depreciation and amortization costs are based on the historical cost of our drilling units. Drilling units are recorded at historical cost less accumulated depreciation. The cost of these assets less estimated residual value is depreciated on a straight-line basis over their estimated remaining economic useful lives. The estimated economic useful life of our rigs, when new, is 30 years. Costs related to periodic surveys and other major maintenance projects are capitalized as part of drilling units and amortized over the anticipated period covered by the survey or maintenance project, which is up to
five years
. These costs are primarily shipyard costs and the cost of employees directly involved in the work. Amortization costs for periodic surveys and other major maintenance projects are included in depreciation and amortization expense.
|
•
|
Interest income relates to the amortization of mobilization revenue, interest on cash deposits and interest on insurance receivables.
|
•
|
Interest expense depends on the overall level of debt, and may significantly increase if we
incur additional debt, for instance to acquire additional drilling units or additional equity interests in the Company. Interest expense may also change with prevailing interest rates, although interest rate swaps or other derivative instruments may reduce the effect of these changes.
|
•
|
Gains and losses recognized on derivative financial instruments reflect various mark-to-market and counter party credit risk adjustments to the value of our interest rate swap agreements, and the net settlement amount paid or received on swap agreements.
|
•
|
Foreign exchange gains/loss recognized generally relate to transactions and revaluation of balances carried in currencies other than the U.S. dollar.
|
|
Year Ended December 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
(US$ in millions)
|
|
|
|
|
|
|||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|||||||
Contract revenues
|
$
|
1,007.7
|
|
|
$
|
1,356.4
|
|
|
$
|
(348.7
|
)
|
|
(25.7
|
)%
|
Reimbursable revenues
|
17.7
|
|
|
32.8
|
|
|
(15.1
|
)
|
|
(46.0
|
)%
|
|||
Other revenues
|
103.0
|
|
|
211.1
|
|
|
(108.1
|
)
|
|
(51.2
|
)%
|
|||
Total operating revenues
|
1,128.4
|
|
|
1,600.3
|
|
|
(471.9
|
)
|
|
(29.5
|
)%
|
|||
|
|
|
|
|
|
|
|
|||||||
Other operating income:
|
|
|
|
|
|
|
|
|||||||
Revaluation of contingent consideration
|
89.9
|
|
|
—
|
|
|
89.9
|
|
|
—
|
%
|
|||
Gain on sale of assets
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|
—
|
%
|
|||
Total other operating income
|
90.7
|
|
|
—
|
|
|
90.7
|
|
|
—
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Vessel and rig operating expenses
|
(345.4
|
)
|
|
(373.9
|
)
|
|
28.5
|
|
|
7.6
|
%
|
|||
Amortization of favorable contracts
|
(74.4
|
)
|
|
(70.6
|
)
|
|
(3.8
|
)
|
|
(5.4
|
)%
|
|||
Reimbursable expenses
|
(16.1
|
)
|
|
(30.2
|
)
|
|
14.1
|
|
|
46.7
|
%
|
|||
Depreciation and amortization
|
(274.9
|
)
|
|
(266.3
|
)
|
|
(8.6
|
)
|
|
(3.2
|
)%
|
|||
General and administrative expenses
|
(44.8
|
)
|
|
(41.2
|
)
|
|
(3.6
|
)
|
|
(8.7
|
)%
|
|||
Total operating expenses
|
(755.6
|
)
|
|
(782.2
|
)
|
|
26.6
|
|
|
3.4
|
%
|
|||
Operating income
|
$
|
463.5
|
|
|
$
|
818.1
|
|
|
$
|
(354.6
|
)
|
|
(43.3
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Financial items:
|
|
|
|
|
|
|
|
|||||||
Interest income
|
15.7
|
|
|
11.5
|
|
|
4.2
|
|
|
36.5
|
%
|
|||
Interest expense
|
(179.1
|
)
|
|
(180.0
|
)
|
|
0.9
|
|
|
0.5
|
%
|
|||
Loss on derivative financial instruments
|
(13.9
|
)
|
|
(18.0
|
)
|
|
4.1
|
|
|
22.8
|
%
|
|||
Currency exchange gain
|
0.9
|
|
|
0.6
|
|
|
0.3
|
|
|
50.0
|
%
|
|||
Other financial items
|
(11.5
|
)
|
|
—
|
|
|
(11.5
|
)
|
|
—
|
%
|
|||
Total financial items
|
(187.9
|
)
|
|
(185.9
|
)
|
|
(2.0
|
)
|
|
(1.1
|
)%
|
|||
Income before income taxes
|
275.6
|
|
|
632.2
|
|
|
(356.6
|
)
|
|
(56.4
|
)%
|
|||
Income taxes
|
(40.3
|
)
|
|
(86.5
|
)
|
|
46.2
|
|
|
53.4
|
%
|
|||
Net Income
|
$
|
235.3
|
|
|
$
|
545.7
|
|
|
$
|
(310.4
|
)
|
|
(56.9
|
)%
|
Net income attributable to the non-controlling interest
|
$
|
(94.1
|
)
|
|
$
|
(264.7
|
)
|
|
$
|
(170.6
|
)
|
|
(64.5
|
)%
|
Net income attributable to Seadrill Partners LLC
|
$
|
141.2
|
|
|
$
|
281.0
|
|
|
$
|
(139.8
|
)
|
|
(49.8
|
)%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||
|
Number of rigs/ships
|
|
Average
Daily Revenues (1) |
|
Economic
Utilization
(2)
|
|
Number of rigs/ships
|
|
Average
Daily Revenues (1) |
|
Economic
Utilization
(2)
|
||||||
Semi-submersible rigs
(3)
|
2
|
|
$
|
459,164
|
|
|
97.3
|
%
|
|
3
|
|
$
|
555,193
|
|
|
99.3
|
%
|
Drillship
|
4
|
|
$
|
521,487
|
|
|
98.6
|
%
|
|
4
|
|
$
|
531,620
|
|
|
94.5
|
%
|
Tender rigs
|
3
|
|
$
|
122,054
|
|
|
98.2
|
%
|
|
3
|
|
$
|
116,634
|
|
|
98.6
|
%
|
(1)
|
Average daily revenues are the average revenues for each type of unit, based on the actual days available, while on contract.
|
(2)
|
Economic utilization is calculated as the total revenue, excluding bonuses received, divided by the full operating dayrate multiplied by the number of days in the period for rigs on contract.
|
(3)
|
Average daily revenue excludes the termination payments received as part of the termination of the drilling contract by BP for the
West Sirius
and ExxonMobil for the
West Capella.
|
|
Year Ended December 31,
|
||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||
|
Number of rigs/ships
|
|
Average
Daily Revenues (1) |
|
Economic
Utilization
(2)
|
|
Number of rigs/ships
|
|
Average
Daily Revenues (1) |
|
Economic
Utilization
(2)
|
||||||
Semi-submersible rigs
(3)
|
3
|
|
$
|
555,193
|
|
|
99.3
|
%
|
|
4
|
|
$
|
551,590
|
|
|
93.0
|
%
|
Drillship
|
4
|
|
$
|
531,620
|
|
|
94.5
|
%
|
|
4
|
|
$
|
608,444
|
|
|
98.7
|
%
|
Tender rigs
|
3
|
|
$
|
116,634
|
|
|
98.6
|
%
|
|
3
|
|
$
|
148,634
|
|
|
98.5
|
%
|
(1)
|
Average daily revenues are the average revenues for each type of unit, based on the actual days available, while on contract.
|
(2)
|
Economic utilization is calculated as the total revenue, excluding bonuses, received divided by the full operating dayrate multiplied by the number of days in the period for rigs on contract.
|
(3)
|
Average daily revenue excludes the termination payments received as part of the termination of the drilling contract by BP for the
West Sirius
.
|
•
|
Liquidity requirements
|
•
|
Estimated maintenance and replacement capital expenditures
|
•
|
Analysis of cash flows for the years ending
December 31, 2017
,
2016
and
2015
|
•
|
Borrowing activities
|
•
|
Restrictive covenants
|
•
|
Derivative instruments and hedging activities.
|
($ in millions)
|
Year Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash provided by operating activities
|
$
|
476.2
|
|
|
$
|
873.8
|
|
|
$
|
859.8
|
|
Net cash (used in) provided by investing activities
|
(11.1
|
)
|
|
97.6
|
|
|
(376.3
|
)
|
|||
Net cash used in financing activities
|
(384.9
|
)
|
|
(522.1
|
)
|
|
(407.6
|
)
|
|||
Effect of exchange rate changes on cash
|
0.8
|
|
|
(0.7
|
)
|
|
0.4
|
|
|||
Net increase in cash and cash equivalents
|
81.0
|
|
|
448.6
|
|
|
76.3
|
|
|||
Cash and cash equivalents at beginning of period
|
767.6
|
|
|
319.0
|
|
|
242.7
|
|
|||
Cash and cash equivalents at end of period
|
848.6
|
|
|
767.6
|
|
|
319.0
|
|
Facility
|
Collateral Vessels
|
Maturity
|
Principal outstanding at Dec 31, 2017
($millions)
|
|
Principal outstanding at Dec 31, 2016
($millions)
|
|
Debt repayments in 2017 (
$millions)
|
|
Debt repayments in 2016
($millions)
|
|
External facilities
|
|
|
|
|
||||||
Term loan B
|
See below
(1)
|
Feb-2021
|
2,786.9
|
|
2,815.9
|
|
29.0
|
|
29.1
|
|
$100m RCF
|
See below
(1)
|
Feb-2019
|
50.0
|
|
50.0
|
|
—
|
|
—
|
|
West Vela facility
(2)
|
West Vela
|
Oct-2020
|
255.3
|
|
342.2
|
|
86.9
|
|
40.2
|
|
West Polaris
(2)
|
West Polaris
|
Jul-2020
|
205.6
|
|
279.0
|
|
73.4
|
|
36.0
|
|
Tender Rig facility
(2)
|
T-15 & T-16
|
Jun-2020
|
83.3
|
|
—
|
|
25.7
|
|
—
|
|
|
|
|
3,381.1
|
|
3,487.1
|
|
215.0
|
|
105.3
|
|
Related party debt
|
|
|
|
|
|
|
||||
Tender Rig facility
(2)
|
T-15 & T-16
|
Jun-2020
|
—
|
|
119.1
|
|
10.1
|
|
19.9
|
|
West Vencedor facility
|
West Vencedor
|
Jun-2018
|
24.7
|
|
41.2
|
|
16.5
|
|
16.5
|
|
West Sirius loan
(3)
|
None
|
Apr-2017
|
—
|
|
39.4
|
|
39.4
|
|
103.6
|
|
Vendor financing loan
|
None
|
May-2016
|
—
|
|
—
|
|
—
|
|
109.5
|
|
|
|
|
24.7
|
|
199.7
|
|
66.0
|
|
249.5
|
|
|
|
|
|
|
|
|
||||
Total
|
|
|
3,405.8
|
|
3,686.8
|
|
281.0
|
|
354.8
|
|
1.
|
The secured credit facility relating to both the
West Vela
drillship (owned by Seadrill Partners) and the
West Tellus
drillship (owned by Seadrill), was split into two separate facilities, the “West Vela facility” and the “West Tellus facility”. Recourse of the West Vela facility is now only to Seadrill Partners consolidated entities and recourse of the West Tellus facility is now only to Seadrill consolidated entities. The maturity date of the West Vela facility was extended until October 2020.
|
2.
|
Seadrill resigned as a guarantor to the West Polaris facility. Recourse of the West Polaris facility is now only to Seadrill Partners consolidated entities. The maturity date of the West Polaris facility was extended until July 2020.
|
3.
|
The secured credit facility relating to the
T-15
&
T-16
tender rigs (owned by Seadrill Partners) and the
West Telesto
jack-up (owned by Seadrill) was split into two separate facilities, the “Tender Rig facility” and the “West Telesto facility”. Recourse of the Tender rig facility is now only to Seadrill Partners consolidated entities and recourse of the West Telesto facility is now only to Seadrill consolidated entities. The maturity date of the Tender Rig facility was extended until June 2020.
|
(In US$ millions)
|
December 31, 2017
|
|
|
2018
|
$
|
199.8
|
|
2019
|
175.1
|
|
|
2020
|
331.1
|
|
|
2021
|
2,699.8
|
|
|
Total external and related party debt
|
$
|
3,405.8
|
|
|
|
Outstanding debt as of December 31, 2017
|
||||||||
(In $ millions)
|
|
Principal outstanding
|
|
Debt Issuance Costs
|
|
Total Debt
|
|
|||
Current portion of long-term external debt
|
|
$
|
175.1
|
|
$
|
(12.2
|
)
|
$
|
162.9
|
|
Long-term external debt
|
|
3,206.0
|
|
(25.8
|
)
|
3,180.2
|
|
|||
Total external debt
|
|
$
|
3,381.1
|
|
$
|
(38.0
|
)
|
$
|
3,343.1
|
|
Current portion of long term related party debt
|
|
$
|
24.7
|
|
$
|
—
|
|
$
|
24.7
|
|
Total interest bearing debt
|
|
$
|
3,405.8
|
|
$
|
(38.0
|
)
|
$
|
3,367.8
|
|
|
|
Outstanding debt as of December 31, 2016
|
||||||||
(In $ millions)
|
|
Principal outstanding
|
|
Debt Issuance Costs
|
|
Total Debt
|
|
|||
Current portion of long-term external debt
|
|
$
|
105.3
|
|
$
|
(11.5
|
)
|
$
|
93.8
|
|
Long-term external debt
|
|
3,381.8
|
|
(35.3
|
)
|
3,346.5
|
|
|||
Total external debt
|
|
$
|
3,487.1
|
|
$
|
(46.8
|
)
|
$
|
3,440.3
|
|
Current portion of long term related party debt
|
|
$
|
135.6
|
|
$
|
—
|
|
$
|
135.6
|
|
Long term related party debt
|
|
$
|
24.7
|
|
$
|
—
|
|
$
|
24.7
|
|
West Sirius loan - included within line item "related party payable"
|
|
$
|
39.4
|
|
$
|
—
|
|
$
|
39.4
|
|
Total interest bearing debt
|
|
$
|
3,686.8
|
|
$
|
(46.8
|
)
|
$
|
3,640.0
|
|
|
2013
|
2014
|
2015
|
2016
|
2017
|
Average Brent oil price
|
$108.70
|
$99.49
|
$53.60
|
$45.13
|
$54.74
|
|
Mar-2014
|
|
Mar-2015
|
|
Mar-2016
|
Mar-2017
|
|
Mar-2018
|
|
Contracted floating rigs
|
260
|
|
237
|
|
170
|
135
|
|
125
|
|
Contracted tender rigs
|
25
|
|
24
|
|
21
|
15
|
|
12
|
|
|
Payments Due by Period
|
||||||||||||||||||
($ in millions)
|
Total
|
|
Less than
1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
More than
5 Years
|
||||||||||
Long-term debt obligations
|
$
|
3,381.1
|
|
|
$
|
175.1
|
|
|
$
|
506.2
|
|
|
$
|
2,699.8
|
|
|
$
|
—
|
|
Related Party debt obligations
|
24.7
|
|
|
24.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest expense commitments on long-term debt obligations
(1)
|
785.9
|
|
|
243.4
|
|
|
484.3
|
|
|
58.2
|
|
|
—
|
|
|||||
Deferred consideration payable
(2)
|
84.7
|
|
|
29.8
|
|
|
54.9
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
4,276.4
|
|
|
$
|
473.0
|
|
|
$
|
1,045.4
|
|
|
$
|
2,758.0
|
|
|
$
|
—
|
|
(1)
|
Our interest commitment on long-term debt is calculated based on the applicable interest rates contained in our loan agreements as of
December 31, 2017
, the associated interest rate swap rates and the 3% increase in margin due on the TLB following the amendment in February 2018.
|
(2)
|
We recognized deferred consideration payable as a result of the purchase from Seadrill of the entities that own and operate the
West Vela
on November 4, 2014. The payment of these amounts is contingent on the amount of contract revenues and mobilization revenues received from the customer. For further information on the nature of these payments please see
Note 13
"Related Party Transactions" to the Consolidated Financial Statements included in this annual report.
|
(3)
|
In addition to the above, we have recognized liabilities for uncertain tax positions at December 31, 2017 of $
43.7 million
.
|
Name
|
Age
|
Position
|
Graham Robjohns
|
53
|
Director
|
Bert Bekker
|
79
|
Director and Audit Committee Member
|
Kate Blankenship
|
53
|
Director and Audit Committee Member
|
Harald Thorstein
|
38
|
Director and Chairman
|
Andrew Cumming
|
63
|
Director and Conflicts Committee Member
|
Keith MacDonald
|
60
|
Director, Audit Committee Member and Conflicts Committee Member
|
Name
|
Age
|
Position
|
Mark Morris
|
54
|
Chief Executive Officer
|
John T. Roche
|
38
|
Chief Financial Officer
|
Name of Beneficial Owner
|
Common Units
Beneficially Owned
|
|
Subordinated Units
Beneficially Owned
|
|
Percentage of Total Common and Subordinated Units Beneficially Owned
|
|||||||||
|
Number
|
|
Percent
|
|
Number
|
|
Percent
|
|
|
|||||
Seadrill Limited
(1)
|
26,275,750
|
|
|
34.9
|
%
|
|
16,543,350
|
|
|
100.0
|
%
|
|
46.6
|
%
|
Mark Morris (Chief Executive Officer)
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
John Roche (Chief Financial Officer)
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
Graham Robjohns (Director)
|
*
|
|
|
*
|
|
|
—
|
|
|
—
|
%
|
|
*
|
|
Bert Bekker (Director)
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
Kate Blankenship (Director)
|
*
|
|
|
*
|
|
|
—
|
|
|
—
|
%
|
|
*
|
|
Harald Thorstein (Director)
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
Andrew Cumming (Director)
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
Keith MacDonald (Director)
|
*
|
|
|
*
|
|
|
—
|
|
|
—
|
%
|
|
*
|
|
All directors and executive officers as a group (8 persons)
|
*
|
|
|
*
|
|
|
—
|
|
|
—
|
%
|
|
*
|
|
(1)
|
Seadrill’s principal shareholder is Hemen Holdings Limited. Hemen Holding Limited, a Cyprus Holding Company, and other related companies which are collectively referred to herein as Hemen, the shares of which are held in trusts established by Mr. John Fredriksen for the benefit of his immediate family. Mr. Fredriksen disclaims beneficial ownership of the
119,097,583
shares, or
23.6%
, of the common stock of Seadrill, except to the extent of his voting and dispositive interest in such shares of common stock. Mr. Fredriksen has no pecuniary interest in the shares held by Hemen.
|
i.
|
Omnibus agreement
|
ii.
|
Acquisitions
|
iii.
|
Management and administrative services agreements
|
iv.
|
Advisory, technical and administrative services agreements
|
v.
|
Operating agreements for Seadrill Operating LP and Seadrill Capricorn Holdings LLC
|
vi.
|
Loans and financing agreements
|
vii.
|
Derivative interest rate swap agreements
|
viii.
|
Bareboat charter agreements
|
(1)
|
acquiring, owning, operating or contracting for Non-Five-Year Drilling Rigs;
|
(2)
|
acquiring one or more Five-Year Drilling Rigs if Seadrill promptly offers to sell the drilling rig to us for the acquisition price plus any administrative costs (including reasonable legal costs) associated with the transfer to us at the time of the acquisition;
|
(3)
|
putting a Non-Five-Year Drilling Rig under contract for five or more years if Seadrill offers to sell the drilling rig to us for fair market value (x) promptly after the time it becomes a Five-Year Drilling Rig and (y) at each renewal or extension of that contract for five or more years;
|
(4)
|
acquiring one or more Five-Year Drilling Rigs as part of the acquisition of a controlling interest in a business or package of assets and owning, operating or contracting for those drilling rigs; provided, however, that:
|
a.
|
if less than a majority of the value of the business or assets acquired is attributable to Five-Year Drilling Rigs, as determined in good faith by Seadrill’s board of directors, Seadrill must offer to sell such drilling rigs to us for their fair market value plus any additional tax or other similar costs that Seadrill incurs in connection with the acquisition and the transfer of such drilling rigs to us separate from the acquired business; and
|
b.
|
if a majority or more of the value of the business or assets acquired is attributable to Five-Year Drilling Rigs, as determined in good faith by Seadrill’s board of directors, Seadrill must notify us of the proposed acquisition in advance. Not later than 10 days following receipt of such notice, the Company will notify Seadrill if the Company wishes to acquire such drilling rigs in cooperation and simultaneously with Seadrill acquiring the Non-Five-Year Drilling Rigs. If the Company does not notify Seadrill of its intent to pursue the acquisition within 10 days, Seadrill may proceed with the acquisition and then offer to sell such drilling rigs to us as provided in (a) above;
|
(5)
|
acquiring a non-controlling interest in any company, business or pool of assets;
|
(6)
|
acquiring, owning, operating or contracting for any Five-Year Drilling Rig if the Company does not fulfill its obligation to purchase such drilling rig in accordance with the terms of any existing or future agreement;
|
(7)
|
acquiring, owning, operating or contracting for a Five-Year Drilling Rig subject to the offers to us described in paragraphs (2), (3) and (4) above pending the Company's determination whether to accept such offers and pending the closing of any offers the Company accepts;
|
(8)
|
providing drilling rig management services relating to any drilling rig;
|
(9)
|
owning or operating a Five-Year Drilling Rig that Seadrill owned and operated as of October 24, 2012, and that was not included in the Company’s initial fleet; or
|
(10)
|
acquiring, owning, operating or contracting for a Five-Year Drilling Rig if the Company has previously advised Seadrill that the Company consents to such acquisition, operation or contract.
|
•
|
certain defects in title to Seadrill’s assets contributed or sold to OPCO and any failure to obtain, prior to the time they were contributed, certain consents and permits necessary to conduct, own and operate such assets, which liabilities arise on or before October 24, 2015 (or, in the case of the
T-15
or the
T-16
, within three years after its purchase of the
T-15
or the
T-16
); and
|
•
|
tax liabilities attributable to the operation of the assets contributed or sold to OPCO prior to the time they were contributed or sold.
|
•
|
Operations Services
: assistance and support for the development of technical standards, supervision of third-party contractors, development of maintenance practices and strategies, development of operating policies, improvement of efficiency, minimizing environmental and safety incidents, periodic auditing of operations and purchasing and logistics;
|
•
|
Technical Supervision Services
: assistance and advice on maintaining vessel classification and compliance with local regulatory requirements, compliance with contractual technical requirements for the drilling units, ensuring that technical operations are professional and satisfactory in every respect;
|
•
|
Accidents-Contingency Plans
: assistance in handling all accidents in the course of operations, and development of a crisis management procedure, and other advice and assistance in connection with crisis response, including crisis communications assistance; and
|
•
|
General Administrative Services
: any general administrative services as needed.
|
•
|
effecting any merger or consolidation involving Seadrill Operating LP or Seadrill Capricorn Holdings LLC;
|
•
|
effecting any sale or exchange of all or substantially all of Seadrill Operating LP or Seadrill Capricorn Holdings LLC's assets;
|
•
|
dissolving or liquidating Seadrill Operating LP or Seadrill Capricorn Holdings LLC;
|
•
|
creating or causing to exist any consensual restriction on the ability of Seadrill Operating LP or Seadrill Capricorn Holdings LLC to make distributions, pay any indebtedness, make loans or advances or transfer assets to us or its subsidiaries;
|
•
|
settling or compromising any claim, dispute or litigation directly against, or otherwise relating to indemnification by Seadrill Operating LP or Seadrill Capricorn Holdings LLC of, any of the directors or officers of Seadrill Operating GP LLC or Seadrill Capricorn Holdings LLC; or
|
•
|
issuing additional interests in Seadrill Operating LP or Seadrill Capricorn Holdings LLC.
|
•
|
The Company's unitholders have no contractual or other legal right to receive distributions other than the obligation under the Company's operating agreement to distribute available cash on a quarterly basis, which is subject to the broad discretion of the Board to establish reserves and other limitations.
|
•
|
The board of directors of Seadrill Operating LP’s general partner, Seadrill Operating GP LLC (subject to approval by the Company's Board), has authority to establish reserves for the prudent conduct of its business. In addition, the Company's Board controls Seadrill Capricorn Holdings LLC and Seadrill Partners Operating LLC, and has the authority to establish reserves for the prudent conduct of their respective businesses. The establishment of these reserves could result in a reduction in cash distributions to the Company's unitholders from levels the Company currently anticipates pursuant to the Company's stated cash distribution policy.
|
•
|
The Company's ability to make cash distributions will be limited by restrictions on distributions under its financing agreements. The Company’s financing agreements contain material financial tests and covenants that must be satisfied in order to pay distributions. If the Company is unable to satisfy the restrictions included in any of its financing agreements or is otherwise in default under any of those agreements, it could have a material adverse effect on the Company's ability to make cash distributions to its unitholders, notwithstanding the Company's stated cash distribution policy. These financial tests and covenants are described in this annual report in Item 5 "Operating and Financial Review and Prospects—Liquidity and Capital Resources—Borrowing Activities".
|
•
|
The Company will be required to make substantial capital expenditures to maintain and replace its fleet. These expenditures may fluctuate significantly over time, particularly as drilling units near the end of their useful lives. In order to minimize these
|
•
|
Although the Company's operating agreement requires the Company to distribute all of the Company's available cash, the Company's operating agreement, including provisions requiring the Company to make cash distributions, may be amended. During the subordination period, with certain exceptions, the Company's operating agreement may not be amended without the approval of a majority of the units held by non-affiliated common unitholders. After the subordination period has ended, the Company's operating agreement can be amended with the approval of a majority of the outstanding common units, including those held by Seadrill. As of
March 31, 2018
, Seadrill owns approximately
34.9%
of the Company's common units and all of the Company's subordinated units.
|
•
|
Even if the Company's cash distribution policy is not modified or revoked, the amount of distributions the Company pays under the Company's cash distribution policy and the decision to make any distribution is determined by the Board, taking into consideration the terms of the Company's operating agreement.
|
•
|
Under Section 40 of the Marshall Islands Act, the Company may not make a distribution to the Company's unitholders if, after giving effect to the distribution, all liabilities of the Company, other than liabilities to members on account of their limited liability company interests and liabilities for which the recourse of creditors is limited to specified property of the Company, exceed the fair value of the assets of the Company, except that the fair value of property that is subject to a liability for which the recourse of creditors is limited shall be included in the assets of the Company only to the extent that the fair value of that property exceeds that liability. Identical restrictions exist on the payment of distributions by OPCO to its equity holders.
|
•
|
The Company may lack sufficient cash to pay distributions to the Company's unitholders due to, among other things, changes in the Company's business, including decreases in total operating revenues, decreases in dayrates, the loss of a drilling unit, increases in operating or general and administrative expenses, principal and interest payments on outstanding debt, taxes, working capital requirements, maintenance and replacement capital expenditures or anticipated cash needs. Please read Item 3 “Key Information—Risk Factors” for a discussion of these factors.
|
•
|
distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equaled or exceeded the minimum quarterly distribution for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date;
|
•
|
the "adjusted operating surplus" (as defined in the partnership agreement) generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated units during those periods on a fully diluted weighted average basis during those periods; and
|
•
|
there are no outstanding arrearages in payment of the minimum quarterly distribution on the common units.
|
|
|
|
Marginal Percentage Interest in
Distributions
|
||||
|
Total Quarterly Distribution
Target Amount
|
|
Unitholders
|
|
Holders of IDRs
|
||
Minimum Quarterly Distribution
|
$0.3875
|
|
100
|
%
|
|
—
|
%
|
First Target Distribution
|
up to $0.4456
|
|
100
|
%
|
|
—
|
%
|
Second Target Distribution
|
above $0.4456 up to $0.4844
|
|
85
|
%
|
|
15
|
%
|
Third Target Distribution
|
above $0.4844 up to $0.5813
|
|
75
|
%
|
|
25
|
%
|
Thereafter
|
above $0.5813
|
|
50
|
%
|
|
50
|
%
|
Year Ended
|
High
|
|
Low
|
||||
December 31, 2017
|
$
|
5.33
|
|
|
$
|
2.61
|
|
December 31, 2016
|
6.45
|
|
|
1.70
|
|
||
December 31, 2015
|
17.33
|
|
|
2.92
|
|
||
December 31, 2014
|
35.10
|
|
|
14.57
|
|
||
December 31, 2013
|
33.68
|
|
|
25.65
|
|
Quarter Ended
|
High
|
|
Low
|
||||
March 31, 2018
|
$
|
4.08
|
|
|
$
|
2.70
|
|
December 31, 2017
|
4.20
|
|
|
3.21
|
|
||
September 30, 2017
|
3.95
|
|
|
2.61
|
|
||
June 30, 2017
|
3.73
|
|
|
2.70
|
|
||
March 31, 2017
|
5.33
|
|
|
2.85
|
|
||
December 31, 2016
|
5.07
|
|
|
3.00
|
|
||
September 30, 2016
|
6.45
|
|
|
3.00
|
|
||
June 30, 2016
|
6.24
|
|
|
3.02
|
|
||
March 31, 2016
|
4.74
|
|
|
1.70
|
|
Month Ended
|
High
|
|
Low
|
||||
April 11, 2018
(1)
|
$
|
2.89
|
|
|
$
|
2.60
|
|
March 31, 2018
|
3.42
|
|
|
2.74
|
|
||
February 28, 2018
|
3.60
|
|
|
2.97
|
|
||
January 31, 2018
|
4.08
|
|
|
3.38
|
|
||
December 31, 2017
|
3.80
|
|
|
3.21
|
|
||
November 30, 2017
|
4.20
|
|
|
3.50
|
|
||
October 31, 2017
|
3.94
|
|
|
3.43
|
|
1.
|
Contribution and Sale Agreement among Seadrill Partners LLC, Seadrill Member LLC, Seadrill Operating GP LLC, Seadrill Operating LP, Seadrill Capricorn Holdings LLC, Seadrill Opco Sub LLC, Seadrill Americas Inc., Seadrill Offshore AS, and Seadrill UK Ltd., dated as of October 22, 2012, as amended by Amendment No 1, dated June 30, 2013. This agreement effected the transfer of the ownership interests in OPCO to the Company, and the use of the net proceeds of the IPO.
|
2.
|
Omnibus Agreement among Seadrill Limited, Seadrill Partners LLC, Seadrill Member LLC, Seadrill Operating LP, Seadrill Operating GP LLC, and Seadrill Capricorn, dated as of October 24, 2012. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Omnibus Agreement."
|
3.
|
Amended and Restated Management and Administrative Services Agreement with Seadrill Management Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
4.
|
Advisory, Technical and Administrative Services Agreement with Seadrill Americas, Inc. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements."
|
5.
|
Advisory, Technical and Administrative Services Agreement between Seadrill Management AME Ltd and Seadrill Vencedor Ltd. dated January 1, 2012. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements."
|
6.
|
Advisory, Technical and Administrative Services Agreement between Seadrill Management AME Ltd and Seadrill Deepwater Drillship Ltd. dated January 1, 2012. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements."
|
7.
|
Administrative, Technical and Advisory Agreement, effective as of January 1, 2012 by and among Seadrill Management AME Ltd. and Seadrill Ghana Operations Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements."
|
8.
|
Administrative, Technical and Advisory Agreement, effective as of January 1, 2012 by and among Seadrill Management AME Ltd. and Seadrill Ghana Operations Ltd., effective as of December 13, 2013, by and among Seadrill Americas Inc. and Seadrill Gulf Operations Sirius LLC. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements."
|
9.
|
Administrative, Technical and Advisory Agreement, effective as of March 21, 2014, by and among Seadrill Americas Inc. and Seadrill Gulf Operations Auriga LLC. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements."
|
10.
|
Administrative, Technical and Advisory Agreement, effective as of February 15, 2013, between Seadrill Americas Inc. and Seadrill Gulf Operations Vela LLC. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements."
|
11.
|
Administrative Support Contract, dated July 1, 2014, between Seadrill Mobile Units Nigeria Limited and Seadrill Nigeria Operations Limited. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements."
|
12.
|
Administrative Support Contract, dated July 1, 2014, between Seadrill Mobile Units Nigeria Limited and Seadrill Offshore Nigeria Limited. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements."
|
13.
|
Advisory, Technical and Administrative Services Agreement, dated June 19, 2015, between Seadrill Management AME Ltd. and Seadrill Polaris Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Advisory, Technical and Administrative Services Agreements."
|
14.
|
Amended and Restated Revolving Loan Agreement, dated August 31, 2013 among Seadrill Operating LP, Seadrill Capricorn Holdings LLC, and Seadrill Partners Operating LLC as borrowers, and Seadrill Limited, as lender, as amended by the Second Amendment to Revolving Loan Agreement, dated March 1, 2014. See Note 11"Debt" and Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
15.
|
Loan Agreement dated September 28, 2012 between Seadrill Limited and Seadrill Vencedor Ltd, as amended by Amendment No. 1, dated August 28, 2014, and Amendment No. 2, dated April 14, 2015. See Note 11 "Debt" and Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
16.
|
US$440,000,000 Secured Credit Facility Agreement dated December 4, 2012 between Seadrill Limited, as borrower, the subsidiaries of Seadrill Limited named therein as guarantors, and the banks and financial institutions named therein as lenders, as amended by the letter agreement, dated June 18, 2015, the waiver approval letter, dated April 28, 2016, and the consent request and waiver approval letter dated March 28, 2017. See Note 11 "Debt" and Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
17.
|
Loan Agreement, dated May 16, 2013, between Seadrill Limited, Seadrill T-15 Ltd., Seadrill Partners Operating LLC and Seadrill International Limited. This is an intercompany loan agreement with Seadrill pursuant to which Seadrill T-15 Ltd. makes payments of principal and interest to the lenders of the $440 Million Rig Financing Agreement on Seadrill’s behalf. See Note 11 "Debt" and Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
18.
|
Intercompany Loan Agreement, dated May 16, 2013, between Seadrill Limited, as lender and Seadrill Partners Operating LLC, as borrower. Pursuant to this agreement, Seadrill Partners Operating borrowed $109.5 million to fund the acquisition of the entities that own and operate the T-15. See Note 11 "Debt" and Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
19.
|
Loan Agreement, dated October 11, 2013, by and among Seadrill Limited, Seadrill T-16 Ltd. and Seadrill Partners Operating LLC. Pursuant to this agreement, Seadrill T-16 makes payments of principal and interest directly to the lenders under the $440 Million Rig Financing Agreement on Seadrill's behalf. See Note 11 "Debt" and Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
20.
|
Amended and Restated Credit Agreement dated as of June 26, 2014, among Seadrill Operating LP, Seadrill Partners Finco LLC, Seadrill Capricorn Holdings LLC, various lenders and Deutsche Bank AG New York Branch, as Administrative Agent and Collateral Agent. See Note 11 "Debt" to the Consolidated Financial Statements included in this annual report.
|
21.
|
Second Amended and Restated $1,450 million Senior Secured Credit Facility Agreement, dated as of November 4, 2014, among Seadrill Tellus Ltd. and Seadrill Vela Hungary Kft., as Borrowers, Seadrill Limited, as Parent, the guarantors party thereto, ING Bank N.V., as Agent, the lenders party thereto and the other parties thereto, as amended by the letter agreement, dated May 28, 2015 and the waiver approval letter dated April 28, 2016, and the consent request and waiver approval letter, dated March 29, 2017. See Note 11 "Debt" to the Consolidated Financial Statements included in this annual report.
|
22.
|
On Demand and Guarantee and Indemnity, dated November 4, 2014, between Seadrill Partners LLC and ING Bank N.V. Pursuant to this agreement, Seadrill Partners LLC has guaranteed the obligations of Seadrill Vela Hungary Kft. under the $1,450 million Senior Secured Credit Facility Agreement, dated as of November 4, 2014, among Seadrill Tellus Ltd. and Seadrill Vela Hungary Kft., as Borrowers, Seadrill Limited, as Parent, the guarantors party thereto, ING Bank N.V., as Agent, the lenders party thereto and the other parties thereto, in an amount up to $497.5 million plus interest and costs.
|
23.
|
Amendment and Restatement Agreement, dated June 19, 2015, between Seadrill Polaris Ltd. as borrower, Seadrill Limited as parent, Ship Finance International Limited as retiring guarantor and the other companies listed therein as guarantors, the banks and financial institutions listed therein as lenders, DNB Bank ASA and Nordea Bank AB, London Branch as bookrunners, the banks and financial institutions named therein as mandated lead arrangers and DNB Bank ASA, as agent, relating to the US$420,000,000 Term Loan and Revolving Credit Facilities Agreement, originally dated December 28, 2012, as previously amended and as amended by the waiver approval letter dated April 28, 2016, and the consent request and waiver approval letter, dated March 28, 2017. See Note 11 "Debt" to the Consolidated Financial Statements included in this annual report.
|
24.
|
Loan Agreement, dated April 28, 2016, but effective as of December 17, 2015, between Seadrill Hungary Kft and Seadrill Limited. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Loans and Financing Agreements-$143 Million Loan Agreement."
|
25.
|
Loan Agreement, dated April 28, 2016, but effective as of December 17, 2015, between Seadrill Neptune Hungary Kft and Seadrill Gulf Operations Sirius LLC. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Loans and Financing Agreements-$143 Million Loan Agreement."
|
26.
|
Bareboat Charter Agreement between Seadrill Offshore AS and Seadrill Canada Ltd. dated October 5, 2012. See Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
27.
|
Bareboat Charter Agreements between Seadrill China Operations Ltd. and Seadrill Offshore AS dated October 5, 2012. See Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
28.
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill T-15 Ltd. and Seadrill UK Ltd. See Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
29.
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill T-16 Ltd. and Seadrill UK Ltd. See Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
30.
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill International Ltd. and Seadrill UK Ltd., relating to the T-15. See Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
31.
|
Rig Rental Agreement, effective as of December 10, 2012, by and among Seadrill International Ltd. and Seadrill UK Ltd., relating to the T-16. See Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
32.
|
Contribution, Purchase and Sale Agreement, dated March 11, 2014. Pursuant to this agreement, Seadrill Capricorn Holdings LLC acquired the entities that own and operate the
West Auriga
. See Note 3 "Business acquisitions" to the Consolidated Financial Statements included in this annual report.
|
33.
|
Limited Partner Interest Purchase Agreement, dated as of July 17, 2014, between Seadrill Limited and Seadrill Partners LLC. Pursuant to this agreement, the Company purchased an additional 28% limited partner interest in Seadrill Operating LP. See Note 13 "Related party transactions" to the Consolidated Financial Statements included in this annual report.
|
34.
|
Contribution, Purchase and Sale Agreement, dated November 4, 2014, by and among Seadrill Limited, Seadrill Partners LLC, Seadrill Capricorn Holdings LLC and Seadrill Americas Inc. Pursuant to this agreement, Seadrill Capricorn Holdings LLC acquired the entities that own and operate the
West Vela
. See Note 3 "Business acquisitions" to the Consolidated Financial Statements included in this annual report.
|
35.
|
Purchase and Sale Agreement, dated as of June 16, 2015, by and among Seadrill Limited, Seadrill Operating LP, Seadrill Polaris Ltd. Pursuant to this agreement, Seadrill Operating LP acquired the entity that owns and operates the
West Polaris.
See Note 3 "Business Acquisitions" to the Consolidated Financial Statements included in this annual report.
|
36.
|
Promissory Note, dated as of June 19, 2015, between Seadrill Operating LP and Seadrill Limited. See Note 3 "Business acquisitions" to the Consolidated Financial Statements included in this annual report.
|
37.
|
Guaranty, dated as of June 19, 2015, between Seadrill Partners LLC as the guarantor and Seadrill Limited as the holder. See Note 3 "Business acquisitions" to the Consolidated Financial Statements included in this annual report.
|
38.
|
Fifth Amendment and Restated Agreement, dated 16 August 2017, relating to the USD 420,000,000 Term Loan and Revolving Credit Facilities Agreement of Seadrill Polaris Ltd, as borrower. See Note 11 "Debt" to the Consolidated Financial Statements included in this annual report.
|
39.
|
Third Amendment and Restated Agreement, dated 16 August 2017, relating to, among other things, the USD 483,333,333.34 Third Amended and Restated Senior Secured Credit Facility Agreement for Seadrill Vela Hungary Kft., as borrower. See Note 11 "Debt" to the Consolidated Financial Statements included in this annual report.
|
40.
|
China ECA Facility Framework Agreement, dated 16 August 2017, relating to, among other things, a new USD 119,100,000 Secured Credit Facility Agreement of Seadrill T-15 Ltd. and Seadrill T-16 Ltd., each as borrowers. See Note 11 "Debt" to the Consolidated Financial Statements included in this annual report.
|
41.
|
Consent & Amendment No. 1, dated as of February 12, 2018, relating to the Term Loan B Credit Agreement. See Note 11 "Debt" to the Consolidated Financial Statements included in this annual report.
|
42.
|
Amended and Restated Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Partners LLC. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
43.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Sebras Rig Holdco Kft. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
44.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Auriga Hungary Kft. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
45.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Canada Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
46.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill China Operations Ltd S.à .r.l. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
47.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Deepwater Drillship Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
48.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Far East Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
49.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Ghana Operations Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
50.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Gulf Operations Auriga LLC Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
51.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Gulf Operations Vela LLC. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
52.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Hungary Kft. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
53.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill International Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
54.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Leo Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
55.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Polaris Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
56.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and T-15 Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
57.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and T-16 Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
58.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill US Gulf LLC. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
59.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Vela Hungary Kft. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
60.
|
Management and Administrative Services Agreement between Seadrill Management Ltd and Seadrill Vencedor Ltd. See Item 7 "Major Unitholders and Related Party Transactions-Related Party Transactions-Management and Administrative Services Agreements."
|
•
|
an individual U.S. citizen or resident (as determined for U.S. federal income tax purposes),
|
•
|
a corporation (or other entity that is classified as a corporation for U.S. federal income tax purposes) organized under the laws of the United States or any of its political subdivisions,
|
•
|
an estate the income of which is subject to U.S. federal income taxation regardless of its source, or
|
•
|
a trust if (i) a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) the trust has a valid election in effect to be treated as a U.S. person for U.S. federal income tax purposes.
|
•
|
at least
75%
of the Company's gross income (including the gross income of the Company's drilling unit owning subsidiaries) for such taxable year consists of passive income (e.g., dividends, interest, capital gains from the sale or exchange of investment property and rents derived other than in the active conduct of a rental business); or
|
•
|
at least
50%
of the average value of the assets held by the Company (including the assets of the Company's drilling unit owning subsidiaries) during such taxable year produce, or are held for the production of, passive income.
|
•
|
the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for the common units;
|
•
|
the amount allocated to the current taxable year and any taxable year prior to the taxable year the Company was first treated as a PFIC with respect to the Non-Electing Holder would be taxed as ordinary income; and
|
•
|
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayers for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
|
•
|
fails to provide an accurate taxpayer identification number;
|
•
|
is notified by the IRS that it has failed to report all interest or corporate distributions required to be reported on its U.S. federal income tax returns; or
|
•
|
in certain circumstances, fails to comply with applicable certification requirements.
|
•
|
such holders do not use or hold and are not deemed or considered to use or hold their common units in the course of carrying on a trade, profession or vocation in the United Kingdom; and
|
•
|
such holders do not have a branch or agency or permanent establishment in the United Kingdom through which such common units are used, held or acquired.
|
•
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with generally accepted accounting principles, and that the Company's receipts and expenditures are being made only in accordance with authorizations of Company's management and directors; and
|
•
|
Provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
|
•
|
We re-designed the fair value measurement process in respect of derivative financial instruments to include counterparty credit risk;
|
•
|
We performed a review of our accounting policy guidance, including a third party review of all accounting policies; and
|
•
|
We enhanced the documentation of policies, procedures and responsibilities throughout the financial reporting process.
|
|
2017
|
|
2016
|
||||
Audit Fees
|
$
|
1,062,836
|
|
|
$
|
904,151
|
|
Audit-Related Fees
|
—
|
|
|
—
|
|
||
Tax Fees
|
—
|
|
|
—
|
|
||
All other fees
|
—
|
|
|
—
|
|
||
|
$
|
1,062,836
|
|
|
$
|
904,151
|
|
Exhibit
Number
|
Description
|
1.1
|
|
1.2
|
|
1.2.1
|
|
1.3
|
|
1.4
|
|
1.5
|
|
4.1.
|
|
4.1.1
|
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5
|
|
4.6
|
|
4.7
|
|
4.8
|
|
4.9
|
|
4.10
|
|
4.11
|
|
4.12
|
|
4.13
|
|
4.14
|
|
4.14.1
|
|
4.15
|
|
4.15.1
|
Exhibit
Number
|
Description
|
4.15.2
|
|
4.16
|
|
4.16.1
|
|
4.16.2
|
|
4.16.3
|
|
4.17
|
|
4.18
|
|
4.19
|
|
4.20
|
|
4.20.1
|
|
4.20.2
|
|
4.20.3
|
|
4.21
|
|
4.22
|
|
4.22.1
|
|
4.22.2
|
|
4.23
|
|
4.24
|
|
4.25
|
|
4.26
|
|
4.27
|
|
4.28
|
|
4.29
|
|
4.30
|
|
4.31
|
|
4.32
|
|
4.33
|
|
4.34
|
|
Note
|
|
2017
|
|
2016
|
|
2015
|
||||||
Operating revenues
|
|
|
|
|
|
|
|
||||||
Contract revenues
|
|
|
$
|
1,007.7
|
|
|
$
|
1,356.4
|
|
|
$
|
1,603.6
|
|
Reimbursable revenues
|
|
|
17.7
|
|
|
32.8
|
|
|
49.9
|
|
|||
Other revenues
|
6
|
*
|
103.0
|
|
|
211.1
|
|
|
88.1
|
|
|||
Total operating revenues
|
|
|
1,128.4
|
|
|
1,600.3
|
|
|
1,741.6
|
|
|||
|
|
|
|
|
|
|
|
||||||
Other operating income
|
|
|
|
|
|
|
|
||||||
Revaluation of contingent consideration
|
|
|
89.9
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of assets
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|||
Total other operating income
|
7
|
|
90.7
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
||||||
Vessel and rig operating expenses
|
|
*
|
(345.4
|
)
|
|
(373.9
|
)
|
|
(495.5
|
)
|
|||
Amortization of favorable contracts
|
9
|
|
(74.4
|
)
|
|
(70.6
|
)
|
|
(66.9
|
)
|
|||
Reimbursable expenses
|
|
|
(16.1
|
)
|
|
(30.2
|
)
|
|
(45.7
|
)
|
|||
Depreciation and amortization
|
10
|
|
(274.9
|
)
|
|
(266.3
|
)
|
|
(237.5
|
)
|
|||
General and administrative expenses
|
|
*
|
(44.8
|
)
|
|
(41.2
|
)
|
|
(52.3
|
)
|
|||
Total operating expenses
|
|
|
(755.6
|
)
|
|
(782.2
|
)
|
|
(897.9
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
Operating income
|
|
|
463.5
|
|
|
818.1
|
|
|
843.7
|
|
|||
|
|
|
|
|
|
|
|
||||||
Financial items
|
|
|
|
|
|
|
|
||||||
Interest income
|
|
|
15.7
|
|
|
11.5
|
|
|
9.8
|
|
|||
Interest expense
|
|
*
|
(179.1
|
)
|
|
(180.0
|
)
|
|
(192.5
|
)
|
|||
Loss on derivative financial instruments
|
14
|
*
|
(13.9
|
)
|
|
(18.0
|
)
|
|
(82.9
|
)
|
|||
Currency exchange gain
|
|
|
0.9
|
|
|
0.6
|
|
|
1.6
|
|
|||
Gain on bargain purchase
|
|
*
|
—
|
|
|
—
|
|
|
9.3
|
|
|||
Other financial expenses
|
|
|
(11.5
|
)
|
|
—
|
|
|
—
|
|
|||
Total financial items
|
|
|
(187.9
|
)
|
|
(185.9
|
)
|
|
(254.7
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
Income before income taxes
|
|
|
275.6
|
|
|
632.2
|
|
|
589.0
|
|
|||
Income tax expense
|
5
|
|
(40.3
|
)
|
|
(86.5
|
)
|
|
(100.6
|
)
|
|||
Net income
|
|
|
235.3
|
|
|
545.7
|
|
|
488.4
|
|
|||
Net income attributable to the non-controlling interest
|
|
|
(94.1
|
)
|
|
(264.7
|
)
|
|
(231.2
|
)
|
|||
Net income attributable to Seadrill Partners LLC owners
|
|
|
141.2
|
|
|
281.0
|
|
|
257.2
|
|
|||
|
|
|
|
|
|
|
|
||||||
Earnings per unit (basic and diluted)
|
|
|
|
|
|
|
|
||||||
Common unitholders
|
|
|
$
|
1.88
|
|
|
$
|
3.20
|
|
|
$
|
2.45
|
|
Subordinated unitholders
|
|
|
$
|
—
|
|
|
$
|
2.28
|
|
|
$
|
2.45
|
|
|
Note
|
2017
|
|
2016
|
|||||
ASSETS
|
|
|
|
|
|||||
Current assets:
|
|
|
|
|
|||||
Cash and cash equivalents
|
|
$
|
848.6
|
|
|
$
|
767.6
|
|
|
Accounts receivables, net
|
8
|
|
254.1
|
|
|
249.0
|
|
||
Amount due from related party
|
13
|
|
24.2
|
|
|
80.6
|
|
||
Other current assets
|
9
|
|
86.8
|
|
|
117.0
|
|
||
Total current assets
|
|
1,213.7
|
|
|
1,214.2
|
|
|||
Non-current assets:
|
|
|
|
|
|||||
Drilling units
|
10
|
|
5,170.9
|
|
|
5,340.9
|
|
||
Goodwill
|
3
|
|
3.2
|
|
|
3.2
|
|
||
Deferred tax assets
|
5
|
|
9.5
|
|
|
14.1
|
|
||
Other non-current assets
|
9
|
|
133.5
|
|
|
208.3
|
|
||
Total non-current assets
|
|
5,317.1
|
|
|
5,566.5
|
|
|||
Total assets
|
|
$
|
6,530.8
|
|
|
$
|
6,780.7
|
|
|
|
|
|
|
|
|||||
LIABILITIES AND MEMBERS’ CAPITAL
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|||||
Current portion of long-term debt
|
11
|
|
$
|
162.9
|
|
|
$
|
93.8
|
|
Current portion of long-term related party debt
|
13
|
|
24.7
|
|
|
135.6
|
|
||
Trade accounts payable and accruals
|
|
37.4
|
|
|
31.9
|
|
|||
Current portion of deferred and contingent consideration to related party
|
13
|
|
41.7
|
|
|
45.6
|
|
||
Related party payable
|
13
|
|
157.0
|
|
|
189.6
|
|
||
Other current liabilities
|
12
|
|
121.8
|
|
|
168.9
|
|
||
Total current liabilities
|
|
545.5
|
|
|
665.4
|
|
|||
Non-current liabilities:
|
|
|
|
|
|||||
Long-term debt
|
11
|
|
3,180.2
|
|
|
3,346.5
|
|
||
Long-term related party debt
|
13
|
|
—
|
|
|
24.7
|
|
||
Deferred and contingent consideration to related party
|
13
|
|
46.0
|
|
|
157.6
|
|
||
Deferred tax liability
|
5
|
|
1.5
|
|
|
1.5
|
|
||
Other non-current liabilities
|
12
|
|
55.8
|
|
|
49.2
|
|
||
Total non-current liabilities
|
|
3,283.5
|
|
|
3,579.5
|
|
|||
|
|
|
|
|
|||||
Commitments and contingencies (see Note 15)
|
|
|
|
|
|
|
|||
Equity
|
|
|
|
|
|||||
Members’ Capital:
|
|
|
|
|
|
|
|||
Common unitholders (issued 75,278,250 units)
|
|
1,208.9
|
|
|
1,123.2
|
|
|||
Subordinated unitholders (issued 16,543,350 units)
|
|
94.8
|
|
|
69.4
|
|
|||
Seadrill member interest
|
|
—
|
|
|
—
|
|
|||
Total members’ capital
|
|
1,303.7
|
|
|
1,192.6
|
|
|||
Non-controlling interest
|
|
1,398.1
|
|
|
1,343.2
|
|
|||
Total equity
|
|
2,701.8
|
|
|
2,535.8
|
|
|||
Total liabilities and equity
|
|
$
|
6,530.8
|
|
|
$
|
6,780.7
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash Flows from Operating Activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
235.3
|
|
|
$
|
545.7
|
|
|
$
|
488.4
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
274.9
|
|
|
266.3
|
|
|
237.5
|
|
|||
Amortization of deferred loan charges
|
|
12.6
|
|
|
11.4
|
|
|
20.2
|
|
|||
Amortization of favorable contracts
|
|
74.4
|
|
|
70.6
|
|
|
66.9
|
|
|||
Gain on disposal of PPE
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on bargain purchase
|
|
—
|
|
|
—
|
|
|
(9.3
|
)
|
|||
Unrealized (gain) / loss related to derivative financial instruments
|
|
(25.8
|
)
|
|
(32.2
|
)
|
|
31.8
|
|
|||
Unrealized foreign exchange gain
|
|
(3.5
|
)
|
|
(9.4
|
)
|
|
(1.7
|
)
|
|||
Payment for long term maintenance
|
|
(54.9
|
)
|
|
(48.0
|
)
|
|
(49.8
|
)
|
|||
Gain on revaluation of contingent consideration
|
|
(89.9
|
)
|
|
—
|
|
|
—
|
|
|||
Net movement in taxes
|
|
4.6
|
|
|
19.2
|
|
|
27.9
|
|
|||
Accretion of discount on deferred consideration
|
|
13.2
|
|
|
17.3
|
|
|
13.3
|
|
|||
|
|
|
|
|
|
|
||||||
Changes in operating assets and liabilities, net of effect of acquisitions
|
|
|
|
|
|
|
||||||
Trade accounts receivable
|
|
(1.6
|
)
|
|
38.7
|
|
|
49.8
|
|
|||
Prepaid expenses and accrued income
|
|
(4.0
|
)
|
|
8.6
|
|
|
(1.9
|
)
|
|||
Trade accounts payable
|
|
5.4
|
|
|
7.8
|
|
|
15.3
|
|
|||
Related party balances
|
|
16.1
|
|
|
(64.3
|
)
|
|
(29.0
|
)
|
|||
Other assets
|
|
34.4
|
|
|
70.0
|
|
|
57.9
|
|
|||
Other liabilities
|
|
(4.9
|
)
|
|
(12.1
|
)
|
|
(45.0
|
)
|
|||
Changes in deferred revenue
|
|
(9.7
|
)
|
|
(17.0
|
)
|
|
(12.0
|
)
|
|||
Other, net
|
|
0.4
|
|
|
1.2
|
|
|
(0.5
|
)
|
|||
Net cash provided by operating activities
|
|
$
|
476.2
|
|
|
$
|
873.8
|
|
|
$
|
859.8
|
|
|
|
|
|
|
|
|
||||||
Cash Flows from Investing Activities
|
|
|
|
|
|
|
||||||
Additions to drilling units
|
|
(66.7
|
)
|
|
(13.1
|
)
|
|
(18.6
|
)
|
|||
Proceeds from sale of assets
|
|
16.2
|
|
|
—
|
|
|
—
|
|
|||
Acquisition of subsidiaries, net of cash acquired
|
|
—
|
|
|
—
|
|
|
(214.7
|
)
|
|||
Loan granted to related parties
|
|
—
|
|
|
—
|
|
|
(143.0
|
)
|
|||
Payment received from loans granted to related parties
|
|
39.4
|
|
|
103.6
|
|
|
—
|
|
|||
Insurance refund
|
|
—
|
|
|
7.1
|
|
|
—
|
|
|||
Net cash (used in) / provided by investing activities
|
|
$
|
(11.1
|
)
|
|
$
|
97.6
|
|
|
$
|
(376.3
|
)
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash Flows from Financing Activities
|
|
|
|
|
|
|
||||||
Repayments of long term debt
|
|
(215.0
|
)
|
|
(105.3
|
)
|
|
(97.6
|
)
|
|||
Debt fees paid
|
|
(3.8
|
)
|
|
(0.3
|
)
|
|
(0.8
|
)
|
|||
Net proceeds from related party debt
|
|
—
|
|
|
—
|
|
|
143.0
|
|
|||
Repayments of related party debt
|
|
(66.0
|
)
|
|
(249.5
|
)
|
|
(40.3
|
)
|
|||
Proceeds from revolving credit facility
|
|
—
|
|
|
—
|
|
|
50.0
|
|
|||
Contingent consideration paid
|
|
(40.0
|
)
|
|
(59.7
|
)
|
|
(26.6
|
)
|
|||
Cash distributions
|
|
(60.1
|
)
|
|
(107.3
|
)
|
|
(435.3
|
)
|
|||
Net cash (used in) / provided by financing activities
|
|
$
|
(384.9
|
)
|
|
$
|
(522.1
|
)
|
|
$
|
(407.6
|
)
|
|
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash
|
|
0.8
|
|
|
(0.7
|
)
|
|
0.4
|
|
|||
|
|
|
|
|
|
|
||||||
Net increase in cash and cash equivalents
|
|
81.0
|
|
|
448.6
|
|
|
76.3
|
|
|||
Cash and cash equivalents at beginning of the year
|
|
767.6
|
|
|
319.0
|
|
|
242.7
|
|
|||
Cash and cash equivalents at the end of year
|
|
$
|
848.6
|
|
|
$
|
767.6
|
|
|
$
|
319.0
|
|
|
|
|
|
|
|
|
||||||
Supplementary disclosure of cash flow information
|
|
|
|
|
|
|
||||||
Interest and other financial items paid
|
|
$
|
200.3
|
|
|
$
|
196.4
|
|
|
$
|
228.6
|
|
Taxes paid
|
|
42.9
|
|
|
49.0
|
|
|
57.0
|
|
|
|
Members’ Capital
|
|
|
|
|
|
|
||||||||||||||||
|
|
Common
Units
|
|
Subordinated
Units
|
|
Seadrill
Member
|
|
Total Before
Non-
Controlling
interest
|
|
Non-
controlling
Interest
|
|
Total
Equity
|
||||||||||||
Consolidated Balance at December 31, 2014
|
|
$
|
913.3
|
|
|
$
|
11.7
|
|
|
$
|
3.2
|
|
|
$
|
928.2
|
|
|
$
|
1,116.1
|
|
|
$
|
2,044.3
|
|
Net income
|
|
203.0
|
|
|
44.7
|
|
|
9.5
|
|
|
257.2
|
|
|
231.2
|
|
|
488.4
|
|
||||||
Cash Distributions
|
|
(170.8
|
)
|
|
(37.6
|
)
|
|
(12.7
|
)
|
|
(221.1
|
)
|
|
(214.2
|
)
|
|
(435.3
|
)
|
||||||
Consolidated balance at December 31, 2015
|
|
$
|
945.5
|
|
|
$
|
18.8
|
|
|
$
|
—
|
|
|
$
|
964.3
|
|
|
$
|
1,133.1
|
|
|
$
|
2,097.4
|
|
Net income
|
|
230.4
|
|
|
50.6
|
|
|
—
|
|
|
281.0
|
|
|
264.7
|
|
|
545.7
|
|
||||||
Cash Distributions
|
|
(52.7
|
)
|
|
—
|
|
|
—
|
|
|
(52.7
|
)
|
|
(54.6
|
)
|
|
(107.3
|
)
|
||||||
Consolidated balance at December 31, 2016
|
|
$
|
1,123.2
|
|
|
$
|
69.4
|
|
|
$
|
—
|
|
|
$
|
1,192.6
|
|
|
$
|
1,343.2
|
|
|
$
|
2,535.8
|
|
Net income
|
|
115.8
|
|
|
25.4
|
|
|
—
|
|
|
141.2
|
|
|
94.1
|
|
|
235.3
|
|
||||||
Cash Distributions
|
|
(30.1
|
)
|
|
—
|
|
|
—
|
|
|
(30.1
|
)
|
|
(30.0
|
)
|
|
(60.1
|
)
|
||||||
Other Distributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9.2
|
)
|
|
(9.2
|
)
|
||||||
Consolidated balance at December 31, 2017
|
|
$
|
1,208.9
|
|
|
$
|
94.8
|
|
|
$
|
—
|
|
|
$
|
1,303.7
|
|
|
$
|
1,398.1
|
|
|
$
|
2,701.8
|
|
•
|
ASU 2016-05 - Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the Emerging Issues Task Force)
|
•
|
ASU 2016-06 - Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the Emerging Issues Task Force)
|
•
|
ASU 2016-07 - Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting
|
•
|
ASU 2016-09 - Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
|
•
|
ASU 2016-17 - Consolidation (Topic 810): Interests Held through Related Parties that are under Common Control
|
•
|
ASU 2016-19 - Technical Corrections and Improvements
|
•
|
ASU 2014-09 - Revenue from Contracts with Customers (also 2016-8, 2016-10, 2016-11, 2016-12, 2016-20, 2017-13, 2017-14)
|
•
|
ASU 2016-01 - Financial Instruments — Recognition and Measurement of Financial Assets and Financial Liabilities
|
•
|
ASU 2016-02 - Leases
|
•
|
ASU 2016-13 - Financial Instruments — Measurement of Credit Losses on Financial Instruments
|
•
|
ASU 2016-15 - Statement of Cash Flows — Classification of Certain Cash Receipts and Cash Payments
|
•
|
ASU 2016-16 - Income taxes — Intra-Entity Transfers of Assets other than Inventory
|
•
|
ASU 2016-18 - Statement of Cash Flows — Restricted Cash
|
•
|
ASU 2017-01 - Business Combinations — Clarifying the Definition of a Business
|
•
|
ASU 2017-04 - Intangibles — Simplifying the Test for Goodwill Impairment
|
•
|
ASU 2017-05 - Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets
|
•
|
Under ASC 605 we recognized contingent demobilization fees as the demobilization was performed at the end of the contract. Under ASC 606 we will estimate the amount of contingent demobilization fee each reporting period and recognize the estimated fee over the expected contract term, subject to the constraint that it must be probable that this will not result in a subsequent reversal of revenue in future periods ("reversal constraint").
|
•
|
Under ASC 605 we recognized disputed dayrates when the revenue became fixed or determinable. Under ASC 606 we will estimate the amount of disputed dayrate billings and recognize the estimated amount as revenue in the period the disputed dayrates related to, subject to the reversal constraint.
|
•
|
Under ASC 605 we recognized contingent early termination fees on daily basis over the termination period. Under ASC 606 we will estimate the amount of early termination fees for any contract that have been early terminated. We will recognize this amount as revenue at the point the contract is early terminated, subject to the reversal constraint.
|
•
|
Under ASC 605 we did not allocate revenue to customer options. Under ASC 606 we will assess whether a customer option provides a material right to the customer. Where a contract includes a customer option that provides a material right we will allocate a proportion of contract revenue to the material right and recognize this either at the point the option expires or when the additional services are provided.
|
•
|
Under ASC 605 we applied the terms of contract modifications or extensions from the point they became effective. Where a contract was extended we changed the period over which unamortized mobilization revenue was taken to income. Under ASC 606 we will account for contract modifications either as separate contracts, a single combined contract or under the cumulative catch up method, depending on the terms of the modification.
|
(In US$ millions)
|
June 19, 2015
|
|
|
Consideration
|
|
||
Cash
|
$
|
204.0
|
|
Contingent consideration
|
95.3
|
|
|
Seller's Credit
|
44.6
|
|
|
Plus: Working capital adjustment
|
30.7
|
|
|
Fair value of total consideration transferred
|
$
|
374.6
|
|
|
|
||
Recognized amounts of identifiable assets acquired and liabilities assumed at estimated fair value
|
|
||
Cash
|
$
|
20.0
|
|
Current assets
|
52.1
|
|
|
Intangible asset - favorable drilling contract
|
124.3
|
|
|
Drilling unit
|
575.3
|
|
|
Long term interest bearing debt
|
(336.0
|
)
|
|
Current liabilities
|
(20.2
|
)
|
|
Non-current liabilities
|
(1.3
|
)
|
|
Total identifiable net assets at acquisition
|
$
|
414.2
|
|
|
|
||
Measurement period adjustment
|
$
|
(30.3
|
)
|
Gain on bargain purchase
|
(9.3
|
)
|
|
Total
|
$
|
374.6
|
|
|
Year ended December 31,
|
||||||||||||||
(In US$ millions)
|
2015
|
|
2014
|
||||||||||||
|
Seadrill Partners LLC as reported
|
|
Supplemental pro forma combined entity
|
|
Seadrill Partners LLC as reported
|
|
Supplemental pro forma combined entity
|
||||||||
Total Revenue
|
$
|
1,741.6
|
|
|
$
|
1,851.3
|
|
|
$
|
1,342.6
|
|
|
$
|
1,564.1
|
|
Net Income
|
488.4
|
|
|
535.7
|
|
|
314.6
|
|
|
388.9
|
|
||||
Net income attributable to Seadrill Partners LLC members
|
257.2
|
|
|
284.6
|
|
|
138.2
|
|
|
181.3
|
|
|
2017
|
|
2016
|
|
2015
|
|||
BP
|
56.8
|
%
|
|
42.0
|
%
|
|
44.8
|
%
|
ExxonMobil
|
22.2
|
%
|
|
22.0
|
%
|
|
29.5
|
%
|
Chevron
|
7.9
|
%
|
|
5.4
|
%
|
|
8.5
|
%
|
Hibernia
|
6.4
|
%
|
|
15.1
|
%
|
|
2.6
|
%
|
Tullow
|
—
|
%
|
|
13.0
|
%
|
|
13.5
|
%
|
Other
|
6.7
|
%
|
|
2.5
|
%
|
|
1.1
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
(In US$ millions)
|
2017
|
|
2016
|
|
2015
|
||||||
United States
|
$
|
638.0
|
|
|
$
|
672.2
|
|
|
$
|
781.1
|
|
Angola
|
152.5
|
|
|
175.9
|
|
|
179.4
|
|
|||
Thailand
|
89.2
|
|
|
86.3
|
|
|
99.8
|
|
|||
Canada
|
87.1
|
|
|
241.5
|
|
|
190.9
|
|
|||
Equatorial Guinea
|
48.1
|
|
|
—
|
|
|
—
|
|
|||
Nigeria
|
39.5
|
|
|
185.2
|
|
|
250.1
|
|
|||
Indonesia
|
37.3
|
|
|
—
|
|
|
—
|
|
|||
Ghana
|
—
|
|
|
208.1
|
|
|
234.7
|
|
|||
Other
|
36.7
|
|
|
31.1
|
|
|
5.6
|
|
|||
Total
|
$
|
1,128.4
|
|
|
$
|
1,600.3
|
|
|
$
|
1,741.6
|
|
(In US$ millions)
|
2017
|
|
2016
|
||||
United States
|
$
|
2,729.6
|
|
|
$
|
2,815.5
|
|
Spain
|
1,075.9
|
|
|
496.2
|
|
||
Canada
|
460.9
|
|
|
488.0
|
|
||
Thailand
|
234.6
|
|
|
241.0
|
|
||
Gabon
|
507.4
|
|
|
—
|
|
||
Indonesia
|
162.5
|
|
|
—
|
|
||
Ghana
|
—
|
|
|
575.0
|
|
||
Angola
|
—
|
|
|
554.0
|
|
||
Singapore
|
—
|
|
|
171.2
|
|
||
Total
|
$
|
5,170.9
|
|
|
$
|
5,340.9
|
|
(1)
|
The fixed assets referred to in the table above include the
eleven
drilling units at
December 31, 2017
and
December 31, 2016
. Asset locations at the end of a period are not necessarily indicative of the geographic distribution of the revenues or operating profits generated by such assets during such period.
|
|
Year Ended December 31,
|
||||||||||
(In US$ millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Current tax expense:
|
|
|
|
|
|
||||||
United Kingdom
|
$
|
(4.5
|
)
|
|
$
|
(1.6
|
)
|
|
$
|
—
|
|
Foreign
|
40.4
|
|
|
110.2
|
|
|
72.6
|
|
|||
Total current tax expense
|
35.9
|
|
|
108.6
|
|
|
72.6
|
|
|||
Deferred tax (benefit) expense:
|
|
|
|
|
|
||||||
United Kingdom
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign
|
4.4
|
|
|
(22.1
|
)
|
|
28.0
|
|
|||
Total income tax expense
|
$
|
40.3
|
|
|
$
|
86.5
|
|
|
$
|
100.6
|
|
|
2017
|
|
2016
|
|
2015
|
|||
U.K. statutory income tax rate
|
19.3
|
%
|
|
20.0
|
%
|
|
20.3
|
%
|
Non-U.K. taxes
|
(4.7
|
)%
|
|
(6.3
|
)%
|
|
(3.2
|
)%
|
Effective income tax rate
|
14.6
|
%
|
|
13.7
|
%
|
|
17.1
|
%
|
(In US$ millions)
|
2017
|
|
2016
|
||||
Provisions
|
$
|
0.5
|
|
|
$
|
7.6
|
|
Net operating losses carry forward
|
33.3
|
|
|
23.3
|
|
||
Other
|
5.0
|
|
|
6.4
|
|
||
Gross deferred tax assets
|
38.8
|
|
|
37.3
|
|
||
Valuation allowance related to NOL
|
(28.9
|
)
|
|
(22.6
|
)
|
||
Deferred tax asset, net of valuation allowance
|
$
|
9.9
|
|
|
$
|
14.7
|
|
(In US$ millions)
|
2017
|
|
2016
|
||||
Property, plant and equipment
|
$
|
0.4
|
|
|
$
|
0.6
|
|
Unremitted earnings of subsidiaries
|
1.5
|
|
|
1.5
|
|
||
Gross deferred tax liabilities
|
1.9
|
|
|
2.1
|
|
||
|
|
|
|
||||
Net deferred tax asset / (liability)
|
8.0
|
|
|
12.6
|
|
(In US$ millions)
|
2017
|
|
2016
|
||||
Balance beginning of year
|
$
|
40.0
|
|
|
$
|
9.0
|
|
Increases as a result of positions taken in prior years
|
—
|
|
|
42.0
|
|
||
Increases as a result of positions taken during the current year
|
3.7
|
|
|
31.9
|
|
||
Decreases as a result of positions taken in prior years
|
—
|
|
|
(34.2
|
)
|
||
Decreases as a result of positions taken in the current year
|
—
|
|
|
(8.7
|
)
|
||
Uncertain tax position
|
$
|
43.7
|
|
|
$
|
40.0
|
|
|
Year Ended December 31,
|
||||||||||
(In US$ millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Termination payments revenue
|
$
|
95.9
|
|
|
$
|
198.8
|
|
|
$
|
74.7
|
|
Related party other revenues
|
7.1
|
|
|
12.3
|
|
|
13.4
|
|
|||
Total
|
$
|
103.0
|
|
|
$
|
211.1
|
|
|
$
|
88.1
|
|
|
Year Ended December 31,
|
||||||||||
(In US$ millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Revaluation of contingent consideration
|
$
|
89.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Gain on sale of assets
|
0.8
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
90.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(In US$ millions)
|
December 31,
2017 |
|
December 31,
2016 |
||||
Reimbursable amounts due from customers
|
$
|
3.6
|
|
|
$
|
5.9
|
|
Mobilization revenue receivables
|
73.8
|
|
|
108.5
|
|
||
Intangible asset- Favorable contracts to be amortized
|
130.6
|
|
|
205.0
|
|
||
Prepaid expenses
|
8.5
|
|
|
4.5
|
|
||
Other
|
3.8
|
|
|
1.4
|
|
||
Total other assets
|
$
|
220.3
|
|
|
$
|
325.3
|
|
(In US$ millions)
|
December 31,
2017 |
|
December 31,
2016 |
||||
Other current assets
|
86.8
|
|
|
117.0
|
|
||
Other non-current assets
|
133.5
|
|
|
208.3
|
|
||
Total other assets
|
$
|
220.3
|
|
|
$
|
325.3
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
(In US$ millions)
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
|
Gross carrying amount
|
|
Accumulated amortization
|
|
Net carrying amount
|
||||||||||||
Intangible assets- Favorable contracts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of period
|
$
|
357.3
|
|
|
$
|
(152.3
|
)
|
|
$
|
205.0
|
|
|
$
|
357.3
|
|
|
$
|
(81.7
|
)
|
|
$
|
275.6
|
|
Amortization of favorable contracts
|
—
|
|
|
(74.4
|
)
|
|
(74.4
|
)
|
|
—
|
|
|
(70.6
|
)
|
|
(70.6
|
)
|
||||||
Balance at end of period
|
$
|
357.3
|
|
|
$
|
(226.7
|
)
|
|
$
|
130.6
|
|
|
$
|
357.3
|
|
|
$
|
(152.3
|
)
|
|
$
|
205.0
|
|
|
Year ended December 31
|
||||||||||||||||||||||
(In US$ millions)
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
Total
|
|
||||||
Amortization of favorable contracts
|
$
|
45.2
|
|
|
$
|
45.1
|
|
|
$
|
40.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
130.6
|
|
(In US$ millions)
|
December 31,
2017 |
|
December 31,
2016 |
||||
Cost
|
$
|
6,599.0
|
|
|
$
|
6,494.1
|
|
Accumulated depreciation
|
(1,428.1
|
)
|
|
(1,153.2
|
)
|
||
Net book value
|
$
|
5,170.9
|
|
|
$
|
5,340.9
|
|
(In US$ millions)
|
December 31, 2017
|
|
|
December 31, 2016
|
|
||
External debt agreements
|
|
|
|
||||
Term Loan B
|
$
|
2,836.9
|
|
|
$
|
2,865.7
|
|
West Vela Facility
|
255.3
|
|
|
342.4
|
|
||
West Polaris Facility
|
205.6
|
|
|
279.0
|
|
||
Tender Rig Facility
|
83.3
|
|
|
—
|
|
||
Sub-total external debt
|
3,381.1
|
|
|
3,487.1
|
|
||
|
|
|
|
||||
Related party debt agreements
|
|
|
|
||||
West Vencedor Facility
|
24.7
|
|
|
41.2
|
|
||
Tender Rig Facility
|
—
|
|
|
119.1
|
|
||
Sub-total related party debt
|
24.7
|
|
|
160.3
|
|
||
|
|
|
|
||||
Total external and related party debt
|
$
|
3,405.8
|
|
|
$
|
3,647.4
|
|
(In US$ millions)
|
As of December 31, 2017
|
||
2018
|
$
|
199.8
|
|
2019
|
175.1
|
|
|
2020
|
331.1
|
|
|
2021
|
2,699.8
|
|
|
2022
|
—
|
|
|
2023 and thereafter
|
—
|
|
|
Total external and related party debt
|
$
|
3,405.8
|
|
|
|
Outstanding debt as of December 31, 2017
|
||||||||
(In $ millions)
|
|
Principal outstanding
|
|
Debt Issuance Costs
|
|
Total Debt
|
|
|||
Current portion of long-term external debt
|
|
$
|
175.1
|
|
$
|
(12.2
|
)
|
$
|
162.9
|
|
Long-term external debt
|
|
3,206.0
|
|
(25.8
|
)
|
3,180.2
|
|
|||
Total external debt
|
|
$
|
3,381.1
|
|
$
|
(38.0
|
)
|
$
|
3,343.1
|
|
Current portion of long term related party debt
|
|
$
|
24.7
|
|
$
|
—
|
|
$
|
24.7
|
|
Total interest bearing debt
|
|
$
|
3,405.8
|
|
$
|
(38.0
|
)
|
$
|
3,367.8
|
|
|
|
Outstanding debt as of December 31, 2016
|
||||||||
(In $ millions)
|
|
Principal outstanding
|
|
Debt Issuance Costs
|
|
Total Debt
|
|
|||
Current portion of long-term external debt
|
|
$
|
105.3
|
|
$
|
(11.5
|
)
|
$
|
93.8
|
|
Long-term external debt
|
|
3,381.8
|
|
(35.3
|
)
|
3,346.5
|
|
|||
Total external debt
|
|
$
|
3,487.1
|
|
$
|
(46.8
|
)
|
$
|
3,440.3
|
|
Current portion of long term related party debt
|
|
$
|
135.6
|
|
$
|
—
|
|
$
|
135.6
|
|
Long term related party debt
|
|
$
|
24.7
|
|
$
|
—
|
|
$
|
24.7
|
|
Total interest bearing debt
|
|
$
|
3,647.4
|
|
$
|
(46.8
|
)
|
$
|
3,600.6
|
|
(In US$ millions)
|
December 31, 2017
|
|
|
December 31, 2016
|
|
||
Uncertain tax position
|
$
|
51.7
|
|
|
$
|
41.9
|
|
Taxes payable
|
36.5
|
|
|
47.7
|
|
||
Accrued expenses
|
35.4
|
|
|
29.3
|
|
||
Unrealized loss on derivative financial instruments
|
29.0
|
|
|
55.2
|
|
||
Deferred mobilization/demobilization revenues
|
9.4
|
|
|
19.6
|
|
||
Employee and business withheld taxes, social security and vacation payment
|
8.7
|
|
|
12.3
|
|
||
VAT payable
|
6.5
|
|
|
10.9
|
|
||
Other liabilities
|
0.4
|
|
|
1.2
|
|
||
Total other liabilities
|
$
|
177.6
|
|
|
$
|
218.1
|
|
(In US$ millions)
|
December 31,
2017 |
|
December 31,
2016 |
||||
Other current liabilities
|
121.8
|
|
|
168.9
|
|
||
Other non-current liabilities
|
55.8
|
|
|
49.2
|
|
||
Total other liabilities
|
$
|
177.6
|
|
|
$
|
218.1
|
|
(In US$ millions)
|
|
Year ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Related party operating expenses
|
|
|
|
|
|
|
||||||
Management and technical support fees (a) and (b)
|
|
$
|
74.5
|
|
|
$
|
62.8
|
|
|
$
|
75.3
|
|
Rig operating costs (c)
|
|
22.9
|
|
|
24.9
|
|
|
29.3
|
|
|||
Insurance premiums (d)
|
|
10.5
|
|
|
16.0
|
|
|
20.2
|
|
|||
Bareboat charters (e)
|
|
2.8
|
|
|
9.5
|
|
|
(1.6
|
)
|
|||
Related party inventory purchases (f)
|
|
1.0
|
|
|
2.0
|
|
|
—
|
|
|||
|
|
111.7
|
|
|
115.2
|
|
|
123.2
|
|
|||
Related party financing expenses
|
|
|
|
|
|
|
||||||
Related party interest expense (g)
|
|
4.7
|
|
|
10.1
|
|
|
13.7
|
|
|||
Losses on related party derivatives (h)
|
|
1.3
|
|
|
4.1
|
|
|
10.2
|
|
|||
Related party commitment fee (i)
|
|
1.3
|
|
|
2.0
|
|
|
2.0
|
|
|||
|
|
7.3
|
|
|
16.2
|
|
|
25.9
|
|
|||
Less: related party revenues
|
|
|
|
|
|
|
||||||
Operation support fees (j)
|
|
(4.9
|
)
|
|
(10.9
|
)
|
|
(13.4
|
)
|
|||
Related party inventory sales (f)
|
|
(2.2
|
)
|
|
(1.4
|
)
|
|
—
|
|
|||
|
|
(7.1
|
)
|
|
(12.3
|
)
|
|
(13.4
|
)
|
|||
|
|
|
|
|
|
|
||||||
Total
|
|
$
|
111.9
|
|
|
$
|
119.1
|
|
|
$
|
135.7
|
|
(In US$ millions)
|
|
December 31, 2017
|
|
|
December 31, 2016
|
|
||
Trading balances due from Seadrill and subsidiaries (k)
|
|
$
|
24.2
|
|
|
$
|
80.6
|
|
Trading balances due to Seadrill and subsidiaries (k)
|
|
(157.0
|
)
|
|
(192.0
|
)
|
||
Tender Rig Facility Seadrill (T-15 and T-16) (l)
|
|
—
|
|
|
(119.1
|
)
|
||
West Vencedor Loan Agreement with Seadrill (l)
|
|
(24.7
|
)
|
|
(41.2
|
)
|
||
Derivatives with Seadrill - interest rate swaps (m)
|
|
—
|
|
|
2.4
|
|
||
Deferred and contingent consideration to related party - short term portion (n)
|
|
(41.7
|
)
|
|
(45.6
|
)
|
||
Deferred and contingent consideration to related party - long term portion (n)
|
|
(46.0
|
)
|
|
(157.6
|
)
|
||
Total
|
|
(245.2
|
)
|
|
(472.5
|
)
|
(In US$ millions)
|
|
December 31, 2017
|
|
|
December 31, 2016
|
|
West Vela
|
|
|
|
|
||
Mobilization due to Seadrill
|
|
44.2
|
|
|
56.1
|
|
Seadrill share of dayrate from BP contract
|
|
38.6
|
|
|
49.0
|
|
|
|
82.8
|
|
|
105.1
|
|
West Polaris
|
|
|
|
|
||
Seadrill share of dayrate from ExxonMobil contract ("Earnout 1")
|
|
4.2
|
|
|
9.2
|
|
Seadrill share of dayrate from subsequent contracts ("Earnout 2")
|
|
0.7
|
|
|
38.1
|
|
Seller's credit
|
|
—
|
|
|
50.8
|
|
|
|
4.9
|
|
|
98.1
|
|
|
|
|
|
|
||
Total
|
|
87.7
|
|
|
203.2
|
|
Maturity date
|
Outstanding principal as of December 31, 2017
|
Receive rate
|
Pay rate
|
|
||
|
(In US$ millions)
|
|
|
|
||
February 21, 2021
|
2,793.9
|
|
3 month LIBOR
|
2.45% to 2.52%
|
(1) (2)
|
|
Total outstanding principal
|
$
|
2,793.9
|
|
|
|
|
•
|
the measurement of monetary assets and liabilities denominated in foreign currencies converted to US Dollars, with the resulting gain or loss recorded as "Foreign exchange gain/(loss)"; and
|
•
|
the impact of fluctuations in exchange rates on the reported amounts of the Company's revenues and expenses which are denominated in foreign currencies.
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||
(In US$ millions)
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||||||
Cash and cash equivalents
|
$
|
848.6
|
|
|
$
|
848.6
|
|
|
$
|
767.6
|
|
|
$
|
767.6
|
|
Term Loan B
|
2,249.8
|
|
|
2,802.3
|
|
|
1,925.2
|
|
|
2,865.7
|
|
||||
Other external debt facilities
|
514.7
|
|
|
540.8
|
|
|
581.8
|
|
|
621.4
|
|
||||
Long-term debt to related party
|
23.8
|
|
|
24.7
|
|
|
153.3
|
|
|
160.3
|
|
|
|
Fair value measurements
at reporting date using
|
|||||||
|
Total fair value as of December 31, 2017
|
Quoted Prices
in Active
Markets for
Identical Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
|||||
(In US$ millions)
|
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||
Current liabilities:
|
|
|
|
|
|||||
Derivative instruments - Interest rate swap contracts
|
(29.0
|
)
|
—
|
|
(29.0
|
)
|
—
|
|
|
Related party deferred and contingent consideration
|
(87.7
|
)
|
—
|
|
(87.7
|
)
|
—
|
|
|
Total liabilities
|
$
|
(116.7
|
)
|
—
|
|
(116.7
|
)
|
—
|
|
|
|
Fair value measurements
at reporting date using
|
|||||||
|
Total fair value as of December 31, 2016
|
Quoted Prices
in Active
Markets for
Identical Assets
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
|||||
(In US$ millions)
|
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||
Current assets:
|
|
|
|
|
|||||
Derivative instruments - Interest rate swap contracts (related party)
|
$
|
2.4
|
|
—
|
|
2.4
|
|
—
|
|
Total assets
|
2.4
|
|
—
|
|
2.4
|
|
—
|
|
|
|
|
|
|
|
|||||
Current liabilities:
|
|
|
|
|
|||||
Derivative instruments - Interest rate swap contracts (related party)
|
(55.2
|
)
|
—
|
|
(55.2
|
)
|
—
|
|
|
Related party deferred and contingent consideration
|
(203.2
|
)
|
—
|
|
(203.2
|
)
|
—
|
|
|
Total liabilities
|
$
|
(258.4
|
)
|
—
|
|
(258.4
|
)
|
—
|
|
|
Year ended December 31,
|
||||||||||
(in US $ millions, except per unit data)
|
2017
|
|
2016
|
|
2015
|
||||||
Net income attributable to:
|
|
|
|
|
|
||||||
Common unitholders
|
$
|
141.2
|
|
|
$
|
240.7
|
|
|
$
|
184.1
|
|
Subordinated unitholders
|
—
|
|
|
37.8
|
|
|
40.5
|
|
|||
Seadrill member interest
|
—
|
|
|
2.5
|
|
|
32.6
|
|
|||
Net income attributable to Seadrill Partners LLC owners
|
$
|
141.2
|
|
|
$
|
281.0
|
|
|
$
|
257.2
|
|
|
|
|
|
|
|
||||||
Weighted average units outstanding (basic and diluted) (in thousands):
|
|
|
|
|
|
||||||
Common unitholders
|
75,278
|
|
|
75,278
|
|
|
75,278
|
|
|||
Subordinated unitholders
|
16,543
|
|
|
16,543
|
|
|
16,543
|
|
|||
|
|
|
|
|
|
||||||
Earnings per unit (basic and diluted):
|
|
|
|
|
|
||||||
Common unitholders
|
$
|
1.88
|
|
|
$
|
3.20
|
|
|
$
|
2.45
|
|
Subordinated unitholders
|
$
|
—
|
|
|
$
|
2.28
|
|
|
$
|
2.45
|
|
|
|
|
|
|
|
||||||
Cash distributions declared and paid in the period per unit
(1) (2)
|
$
|
0.4000
|
|
|
$
|
0.7000
|
|
|
$
|
1.7025
|
|
|
|
|
|
|
|
||||||
Subsequent event: Cash distributions declared and paid relating to the period per unit
(2) (3)
:
|
$
|
0.1000
|
|
|
$
|
0.1000
|
|
|
$
|
0.2500
|
|
•
|
First, to the common unitholders, pro-rata, until the Company distributes for each outstanding common unit an amount equal to the minimum quarterly distribution for that quarter;
|
•
|
Second, to the common unitholders, pro-rata, until the Company distributes for each outstanding common an amount equal to any arrearages in payment of the minimum quarterly distribution on the common units for prior quarters during the subordination period; and
|
•
|
Third, to the subordinated units, pro-rata, the Company distributes for each subordinated unit an amount equal to the minimum quarterly distribution for that quarter.
|
•
|
The Company has distributed available cash from operating surplus to the common and subordinated unitholders in an amount equal to the minimum quarterly distribution; and
|
•
|
The Company has distributed available cash from operating surplus on outstanding common units in an amount necessary to eliminate any cumulative arrearages in payment of the minimum quarterly distribution.
|
•
|
first,
100.0%
to all unitholders, until each unitholder receives a total of
$0.4456
per unit for that quarter (the “first target distribution”);
|
•
|
second,
85%
to all unitholders, pro rata, and
15.0%
to the holders of the incentive distribution rights, pro rata, until each unitholder receives a total of
$0.4844
per unit for that quarter (the “second target distribution”);
|
•
|
third,
75.0%
to all unitholders, pro rata, and
25.0%
to the holders of the incentive distribution rights, pro rata, until each unitholder receives a total of
$0.5813
per unit for that quarter (the “third target distribution”); and
|
•
|
thereafter,
50.0%
to all unitholders, and
50.0%
to the holders of the incentive distribution rights, pro rata.
|
•
|
distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equaled or exceeded the minimum quarterly distribution for each of the
three
consecutive, non-overlapping four-quarter periods immediately preceding that date;
|
•
|
the “adjusted operating surplus” (as defined in the partnership agreement) generated during each of the
three
consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated units during those periods on a fully diluted weighted average basis during those periods; and
|
•
|
there are no outstanding arrearages in payment of the minimum quarterly distribution on the common units.
|
|
Year ended December 31,
|
|||||||
(in US $ millions)
|
2017
|
|
2016
|
|
2015
|
|||
Distributions paid to incentive distribution rights holders
|
—
|
|
|
—
|
|
|
9.5
|
|
(In US$ millions)
|
2017
|
|
2016
|
|
2015
|
|||
Purchase of the
West Polaris
, deferred consideration payable to related party (1)(2)
|
—
|
|
|
—
|
|
|
65.0
|
|
Purchase of the
West Polaris
, seller's credit payable to related party (1) (2)
|
—
|
|
|
—
|
|
|
44.6
|
|
Other distributions (3)
|
9.2
|
|
|
—
|
|
|
—
|
|
|
|
SEADRILL PARTNERS LLC
(Registrant)
|
|
|
|
|
|
Date: April 12, 2018
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Mark Morris
|
|
|
Name:
|
Mark Morris
|
|
|
Title:
|
Chief Executive Officer of Seadrill Partners LLC
(Principal Executive Officer of Seadrill Partners LLC)
|
Name of the Company
|
Jurisdiction of
Incorporation
|
Principal Activities
|
Seabras Rig Holdco Kft
|
Hungary
|
Rig owner
|
Seadrill Auriga Hungary Kft
|
Hungary
|
Rig owner
|
Seadrill Canada Ltd
|
Canada
|
Operating company
|
Seadrill Capricorn Holdings LLC
|
Marshall Islands
|
Holding company
|
Seadrill China Operations Ltd
|
Luxembourg
|
Rig owner
|
Seadrill Deepwater Drillship Ltd
|
Cayman Islands
|
Rig owner
|
Seadrill Ghana Operations Ltd
|
Bermuda
|
Operating company
|
Seadrill Gulf Operations Auriga LLC
|
U.S.A.
|
Operating company
|
Seadrill Gulf Operations Sirius LLC
|
U.S.A.
|
Operating company
|
Seadrill Gulf Operations Vela LLC
|
U.S.A.
|
Operating company
|
Seadrill Hungary Kft
|
Hungary
|
Rig owner
|
Seadrill International Ltd
|
Hong Kong
|
Operating company
|
Seadrill Leo Ltd
|
Bermuda
|
Rig owner
|
Seadrill Mobile Units Ltd
|
Nigeria
|
Service company
|
Seadrill Operating LP
|
Marshall Islands
|
Holding company
|
Seadrill Operating GP LLC
|
Marshall Islands
|
Holding company
|
Seadrill Operating LLC
|
Marshall Islands
|
Holding company
|
Seadrill Partners Operating LLC
|
Marshall Islands
|
Holding company
|
Seadrill Polaris Ltd.
|
Bermuda
|
Rig Owner
|
Seadrill T15 Ltd
|
Bermuda
|
Rig owner
|
Seadrill T16 Ltd
|
Bermuda
|
Rig owner
|
Seadrill US Gulf LLC
|
U.S.A.
|
Operating company
|
Seadrill Vela Hungary Kft
|
Hungary
|
Rig owner
|
Seadrill Vencedor Ltd
|
Bermuda
|
Rig owner
|
1.
|
appointment and effective date
2
|
2.
|
board of directors
2
|
3.
|
management services services
2
|
4.
|
general conditions
3
|
5.
|
compensation
4
|
6.
|
indemnity
4
|
7.
|
no consequential damages
5
|
8.
|
confidentiality
5
|
9.
|
termination
6
|
10.
|
default
7
|
11.
|
force majeure
7
|
12.
|
notices
7
|
13.
|
miscellaneous
8
|
14.
|
governing law
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill Partners LLC,
a Marshall Islands limited liability company with its registered office at Trust Company Complex, Ajeltake Island, Ajeltake Road, Majuro, Marshall Islands MH 96960, (the
“
Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the general assistance and management services specified in this Agreement (the “
Management Services
”) to the Company, subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the date of execution of this Agreement.
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's operations, assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide the services set forth on
Schedule 1
and such other services as the Company from time to time may specify.
|
2.
|
The Manager may, at its discretion, sub-contract any of the Management Services to be provided by the Manager hereunder to other companies within the Seadrill Group and/or other reputable companies as may be permitted hereunder from time to time,
provided,
that such company shall be sufficiently resourceful, experienced and qualified to fulfill the Manager’s duties and obligations hereunder, and,
further, provided,
that the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary thereof, except the Company and its subsidiaries.
|
3.
|
The Parties acknowledge that, at the request of the Company, certain affiliates of Manager will provide designated subsidiaries of the Company with technical, administrative and management support services pursuant to such terms and conditions acceptable to the parties thereunder and Manager shall use reasonable efforts to facilitate the provision of such services to the extent such services are within the scope of the Management Services hereunder.
|
4.
|
The Parties acknowledge that from time to time, one Party or its affiliates may provide services to the other Party or its affiliates pursuant to an Affiliate Agreement, a list of which shall be attached hereto as
Schedule 3
. Notwithstanding anything to the contrary herein, either Party may update
Schedule 3
to reflect the termination of Affiliate Agreements, new Affiliate Agreements or existing but omitted Affiliate Agreements without the consent of the other Party hereto by providing the other Party with written notice and an updated
Schedule 3
.
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of the Management Services hereunder shall be disclosed and credited to the Company.
|
5.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
6.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation
|
1.
|
The Company shall reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with its provision of the Management Services hereunder (“
Reimbursable Costs
”).
|
2.
|
The Company shall pay the Manager a fee equal to 5% of the Reimbursable Costs for each Management Service provided hereunder, except to the extent a different fee is otherwise specified with respect to such service in
Schedule 2
(“
Service Fee
”).
|
3.
|
The Manager shall invoice the Company within 30 days of the end of each calendar quarter for the Reimbursable Costs and Service Fee due to the Manager in connection with the performance of the Management Services during such calendar quarter. The Company shall pay the Manager all undisputed charges within 30 days of receipt of the Manager’s invoice.
|
4.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
5.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred in preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Company agrees to indemnify and keep the Manager and its officers, employees, agents and sub-contractors, indemnified against any and all liabilities, costs, claims, demands, proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud, gross negligence or willful misconduct on the part of the Manager or any of its officers, employees, agents or sub-contractors) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
2.
|
The Manager shall not be required to take any legal action on behalf of the Company unless the Manager is being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
3.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
4.
|
To the extent the Manager is entitled to claim any indemnity in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
5.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
no consequential damages
|
1.
|
Neither the Manager nor any of its affiliates shall be liable for indirect, incidental or consequential damages suffered by the Company, or for punitive damages, with respect to any term or the subject matter of this Agreement, even if informed of the possibility thereof in advance. This limitation applies to all causes of action, including, without limitation, breach of contract, breach of warranty, negligence, strict liability, fraud, misrepresentation and other torts.
|
8.
|
confidentiality
|
1.
|
All Confidential Information furnished to, or developed by, the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager, both during and after the term of this Agreement.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company as well as all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause shall not apply to Confidential Information which:
|
(i)
|
is required to be disclosed by law or court order; or
|
(ii)
|
has become public knowledge otherwise than as a result of the conduct of the Manager.
|
(c)
|
The Company shall be entitled to any equitable remedy available at law or equity, including specific performance, against a breach by the Manager of this obligation. The Manager shall not resist such application for relief on the basis that the Company has an adequate remedy at law, and the Manager shall waive any requirement for the securing or posting of any bond in connection with such remedy
|
2.
|
All information furnished to, or developed by, the Manager or any of its employees, directors or sub-contractors other than pursuant to its performance under this Agreement shall be the property of the Manager, and shall be kept confidential by the Company to the extent the Company has knowledge of any such information.
|
(a)
|
The provisions of this Clause 8.2 shall not apply to information which:
|
(i)
|
is required to be disclosed by law or court order; or
|
(ii)
|
has become public knowledge otherwise than as a result of the conduct of the Company.
|
(b)
|
The Manager shall be entitled to any equitable remedy available at law or equity, including specific performance, against a breach by the Company of this obligation.
|
9.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 10.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Officers (as defined in
Schedule 1
) may be terminated at any time with respect to any or all of such Manager’s Officers by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Officers shall not constitute a termination of the other provisions of this Agreement.
|
10.
|
default
|
1.
|
If the Manager shall, by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of 14 days after written notice thereof has been given by the Company to the Manager, the Company shall have the right to terminate this Agreement with immediate effect by notice to the Manager.
|
11.
|
force majeure
|
12.
|
notices
|
13.
|
miscellaneous
|
1.
|
The Manager shall not be entitled to assign its rights and/or obligations under this Agreement unless the prior written consent of the Company has been obtained. The Manager may freely subcontract or sub-license this Agreement in compliance with Clause 3.2, so long as the Manager remains liable for performance of the Management Services and its obligations under this Agreement.
|
2.
|
The relationship between the Parties hereto is that of an independent contractor. Nothing in this Agreement shall be deemed to constitute a partnership between the Parties.
|
3.
|
Upon termination of this Agreement, the Manager shall surrender to the Company any and all books, records, documents and other property in the possession or control of the Manager relating to this Agreement and to the business, finance, technology, trademark or affairs of the Company and its subsidiaries, and except as required by law, shall not retain any copies of the same.
|
4.
|
No term of this Agreement is enforceable by a person who is not a Party to it.
|
5.
|
This Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
6.
|
The failure of either Party to enforce any term of this Agreement shall not act as a waiver. Any waiver must be specifically stated as such in writing.
|
7.
|
If any provision herein is held to be void or unenforceable, the validity and enforceability of the remaining provisions herein shall remain unaffected and enforceable.
|
8.
|
This Agreement may be executed in one or more signed counterparts, facsimile or otherwise, which shall together form one instrument.
|
9.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written, including the Management Agreement, as amended by the Novation Agreement.
|
14.
|
governing law
|
1.
|
This Agreement shall be governed and construed in accordance with English law and each Party hereby irrevocably agrees that the courts of England shall have exclusive jurisdiction in relation to any claim, dispute or difference arising hereunder.
|
OpCo MSAs
|
None
|
Technical Services Agreement
|
Advisory, Technical, and Administrative Services Agreement, by and between Seadrill Management AME Ltd. and Seadrill Polaris Ltd., dated as of January 1, 2012
|
Advisory, Technical, and Administrative Services Agreement, by and between Seadrill Management AME Ltd. and Seadrill Ghana Operations Ltd., dated as of January 1, 2012
|
Advisory, Technical, and Administrative Services Agreement, by and between Seadrill Management AME Ltd. and Seadrill Vencedor Ltd., dated as of January 1, 2012
|
Advisory, Technical, and Administrative Services Agreement, by and between Seadrill Management AME Ltd. and Seadrill Deepwater Drillship Ltd., dated as of January 1, 2012
|
Advisory, Technical, and Administrative Services Agreement, by and between Seadrill Americas Inc. and Seadrill Canada Ltd., dated as of October 24, 2012
|
Advisory, Technical, and Administrative Services Agreement, by and between Seadrill Americas Inc. and Seadrill Gulf Operations Sirius LLC, dated as of December 13, 2013
|
Advisory, Technical, and Administrative Services Agreement, by and between Seadrill Americas Inc. and Seadrill US Gulf LLC, dated as of October 24, 2012
|
Advisory, Technical, and Administrative Services Agreement, by and between Seadrill Americas Inc. and Seadrill Gulf Operations Auriga LLC, dated as of March 21, 2014
|
Advisory, Technical, and Administrative Services Agreement, by and between Seadrill Americas Inc. and Seadrill Gulf Operations Vela LLC, dated as of February 15, 2013
|
Subcontracting Technical Services Agreements
|
Technical Service Agreement, by and between Seadrill Mobile Units (Nigeria) Limited and Seadrill Deepwater Drillship Ltd., dated as of February 10, 2009
|
Administrative Support Agreement
|
Administrative Support Contract, by and between Seadrill Mobile Units (Nigeria) Limited and Seadrill Nigeria Operations Limited, dated as of July 1, 2014
|
Administrative Support Contract, by and between Seadrill Mobile Units (Nigeria) Limited and Seadrill Offshore Nigeria Limited, dated as of July 1, 2014
|
Rig Management Agreement
|
Management Agreement, regarding T-15 drilling unit, by and between Seadrill Far East Limited and Seadrill International Limited, dated as of April 30, 2013
|
Management Agreement, regarding T-16 drilling unit, by and between Seadrill Far East Limited and Seadrill International Limited, dated as of April 30, 2013
|
SSCE Pooling Agreement
|
Letter Agreement, by and between Seadrill Partners LLC, Seadrill Hungary Kft, Seadrill Limited and Seadrill Global Services Limited, dated as of May 4, 2017
|
Pooling Interface Agreement
|
None
|
Other Service Agreements
|
None
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England (the “
Manager
”),
|
(2)
|
Seabras Rig Holdco Kft.,
a company organized under the laws of Hungary with its registered office at 2724 Ujlengyel, Petofi Sandor, utca 40. (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation AND BASIS OF ALLOCATION OF cOSTS
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that the courts of England shall have exclusive jurisdiction over any claim or matter arising under or in connection with this Agreement.
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England (the “
Manager
”),
|
(2)
|
Seadrill Auriga Hungary Kft.,
a company organized under the laws of Hungary with its registered office at 2724 Ujlengyel, Petofi Sandor, utca 40. (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that the courts of England shall have exclusive jurisdiction over any claim or matter arising under or in connection with this Agreement.
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill Canada Ltd.,
a company organized under the laws of Canada with its registered office at Stewart McKelvey, PO Box 5038, Suite 1100 Cabot Place, 100 New Gower Street, St. John's NL A1C 6K3 (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England (the “
Manager
”),
|
(2)
|
Seadrill China Operations Ltd S.à r.l.,
a company organized under the laws of Luxembourg with its registered office at 16, avenue Pasteur, L-2310 Luxembourg, Grand Duchy of Luxembourg (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that the courts of England shall have exclusive jurisdiction over any claim or matter arising under or in connection with this Agreement.
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill Deepwater Drillship Ltd.,
a company organized under the laws of the Cayman Islands with its registered office at Maples Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that the courts of England shall have exclusive jurisdiction over any claim or matter arising under or in connection with this Agreement.
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill Far East Ltd.,
a company organized under the laws of Hong Kong with its registered office at Level 54, Hopewell Center, 183 Queen's Road East, Hong Kong (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
managment services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that the courts of England shall have exclusive jurisdiction over any claim or matter arising under or in connection with this Agreement.
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill Ghana Operations Ltd,
a company organized under the laws of Bermuda with its registered office at Par-la-Ville Place, 4th Floor 14 Par-la-Ville Road, Hamilton HM08, Bermuda (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill Gulf Operations Auriga LLC,
, a company organized under the laws of Delaware, with its registered office at
c/o
The Corporation Trust Company,
1209 Orange Street - Corporation Trust Center, New Castle County, Wilmington, Delaware 19801 (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill Gulf Operations Vela LLC,
a company organized under the laws of Delaware, with its registered office at
c/o
The Corporation Trust Company,
1209 Orange Street - Corporation Trust Center, New Castle County, Wilmington, Delaware 19801 (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England (the “
Manager
”),
|
(2)
|
Seadrill Hungary Kft.,
a company organized under the laws of Hungary with its registered office at 2724 Ujlengyel, Petofi Sandor, utca 40. (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that the courts of England shall have exclusive jurisdiction over any claim or matter arising under or in connection with this Agreement.
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill International Limited,
a company organized under the laws of Hong Kong with its registered office at Level 54, Hopewell Center, 183 Queen's Road East, Hong Kong (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that the courts of England shall have exclusive jurisdiction over any claim or matter arising under or in connection with this Agreement.
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill Leo Ltd..,
a company organized under the laws of Bermuda with its registered office at Par-la-Ville Place, 4th Floor 14 Par-la-Ville Road, Hamilton HM08, Bermuda (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill Polaris Ltd.,
a company organized under the laws of Bermuda with its registered office at Par-la-Ville Place, 4th Floor 14 Par-la-Ville Road, Hamilton HM08, Bermuda (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill T-15 Ltd.,
a company organized under the laws of Bermuda with its registered office at Par-la-Ville Place, 4th Floor 14 Par-la-Ville Road, Hamilton HM08, Bermuda (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of costs of allocation
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing laW
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill T-16 Ltd.,
a company organized under the laws of Bermuda with its registered office at Par-la-Ville Place, 4th Floor 14 Par-la-Ville Road, Hamilton HM08, Bermuda (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date 1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill US Gulf LLC,
a company organized under the laws of Delaware, with its registered office at
c/o
The Corporation Trust Company,
1209 Orange Street - Corporation Trust Center, New Castle County, Wilmington, Delaware 19801 (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England (the “
Manager
”),
|
(2)
|
Seabras Rig Holdco Kft.,
a company organized under the laws of Hungary with its registered office at 2724 Ujlengyel, Petofi Sandor, utca 40. (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that the courts of England shall have exclusive jurisdiction over any claim or matter arising under or in connection with this Agreement.
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|
1.
|
appointment and effective date
1
|
2.
|
board of directors
1
|
3.
|
management services
2
|
4.
|
general conditions
6
|
5.
|
compensation and basis of allocation of costs
7
|
6.
|
indemnity
7
|
7.
|
confidentiality
8
|
8.
|
termination
9
|
9.
|
default
10
|
10.
|
force majeure
10
|
11.
|
notices
10
|
12.
|
miscellaneous
11
|
13.
|
governing law
11
|
(1)
|
Seadrill Management Ltd.
,
a company organized under the Law of England and Wales, with its registered office at 2
nd
Floor, Building 11, Chiswick Business Park, Chiswick High Road, London W4 5YS, England, (the “
Manager
”),
|
(2)
|
Seadrill Vencedor Ltd.,
a company organized under the laws of Bermuda with its registered office at Par-la-Ville Place, 4th Floor 14 Par-la-Ville Road, Hamilton HM08, Bermuda (the
“Company
”);
|
1.
|
appointment and effective date
|
1.
|
The Company hereby confirms the appointment of the Manager to provide the management and administrative services specified in this Agreement (the “
Management Services
”) to the Company subject to the terms and conditions set forth in this Agreement, and the Manager accepts such appointment.
|
2.
|
The effective date of this Agreement shall be the later of (a) 1 January 2013; or (b)
the date on which the Management Services were initially provided by the Manager to the Company (the “
Effective Date
”).
|
2.
|
board of directors
|
1.
|
The Manager shall always act in accordance with the direction of the Board of Directors of the Company (the “
Board
”) in providing the Management Services under this Agreement.
|
2.
|
The Board may revoke any authorization granted to the Manager at any time in its sole discretion.
|
3.
|
For clarity, no authority of the Board is delegated to the Manager by this Agreement. Ultimate responsibility for the management of the Company's assets, liabilities and activities lies with the Board.
|
3.
|
management services
|
1.
|
The Manager shall, throughout the term of this Agreement, provide such Management Services as the Company may from time to time request.
|
2.
|
The Manager may, at its discretion, sub‑contract any of the Management Services to other companies within the Seadrill Group and/or other reputable third party companies, from time to time,
provided
that (a) such company shall be sufficiently resourceful, experienced and qualified to fulfil the Manager’s duties and obligations hereunder, and (b) the Manager shall remain in all respects responsible for the due and proper performance by any such subcontractor. The “
Seadrill Group
” means Seadrill Limited or any subsidiary, affiliate or associated company thereof, except the Company.
|
3.
|
Without prejudice to the generality of the foregoing, the Manager shall provide services to the Company including, but not limited to, those set out below:
|
1.
|
Corporate Governance Services
|
2.
|
Company Records
|
(a)
|
The Manager shall be responsible for the safekeeping and professional filing of original corporate documents of the Company when so requested by the Company.
|
(b)
|
The Manager shall establish and maintain an adequate and accessible archive either (or both) in electronic form or physical form of all documents relevant to the Company’s business.
|
3.
|
Financial Administration Services
|
(a)
|
The Manager shall be authorised to operate the Company's bank accounts in accordance with the principles approved by the Board from time to time. The Manager shall, when authorised to do so by the Board, enter into banking agreements including, but not limited to agreements relating to opening bank accounts in the Company's name and ongoing management of bank accounts.
|
(b)
|
The Manager shall be authorized to collect all amounts due from third parties to the Company on the Company’s behalf and shall be responsible for the establishment and follow-up of efficient procedures for the purpose of collecting any overdue amounts.
|
(c)
|
The Manager shall arrange for the Company to settle its debts and accounts payable to third parties as such fall due, while pursuing a satisfactory solution of any dispute in relation thereto on the Company’s behalf.
|
(d)
|
The Manager shall settle all inter‑company accounts between the Company and other companies in the Seadrill Group in accordance with such agreements and other documentation for payments as shall be in existence from time to time.
|
4.
|
Financing
|
5.
|
Operations Services
|
(a)
|
The Manager shall develop standards for the technical operation of the vessels owned or operated by the Company, as applicable (the “
Vessels
”) and a policy in this respect.
|
(b)
|
The Manager shall assist in the supervision of the activities of third party contractors employed by the Company in respect of certain elements of the technical management of the Vessels and, in particular:
|
(i)
|
look for similarities between the services utilized by other vessel owning companies in the Seadrill Group and potential for improvements or savings in this respect;
|
(ii)
|
propose, and support implementation of, strategies for the long term maintenance of the Vessels;
|
(iii)
|
supervise and co‑ordinate the policies in relation to emergency events;
|
(iv)
|
promote the most economical ways of operating the Vessels without compromising the safety of any Vessel or its crew;
|
(v)
|
minimize the environmental impact of the operation of the Vessels without compromising the safety of the Vessel or its crew; and
|
(vi)
|
ensure compliance with industry-based best practice “norms.”
|
(c)
|
The Manager shall, on a regular basis, provide audits of contractors of technical services and equipment and crewing services, such audits to include physical inspections.
|
(d)
|
The Manager shall provide assistance in purchasing materials and supplies for the Vessels and endeavour to achieve competitive terms from adequate suppliers.
|
(e)
|
The Manager shall provide assistance as may be necessary to enable the Company to do everything required for the proper manning of the Vessels including (but not limited to) making arrangements for the selection, appointment, employment, dismissal, welfare, training, administration and remuneration of the crew and the fixing of the crew's number and their conditions of service in accordance with all relevant laws, regulations, union agreements, client’s requirements and otherwise pursuant to Manager's usual practices.
|
(f)
|
In order to minimise down time, the Seadrill Group maintains a pool of capital equipment for Vessels that are available to be deployed to the Vessels at short notice in the event that the item of capital equipment operated by the Vessel requires repair (“Capital Spares Pool”). The Manager shall facilitate access by the Company, where relevant, to the Capital Spares Pool.
|
6.
|
Technical Supervision
|
(a)
|
The Manager shall follow up with regard to the requirements of classification societies and any relevant national authorities and provide assistance to the Company in ensuring that the Vessels comply with all recognized safety standards at any time.
|
(b)
|
The Manager shall maintain good relations with shipping registries where the Vessels are or are intended to be registered.
|
(c)
|
The Manager shall assist the Company in ensuring that the Vessels comply with contractual, technical and other commitments.
|
(d)
|
The Manager shall regularly visit the Vessels and ensure that the standard of maintenance is kept at an acceptable level, that the crewing is adequate and that the operation is professional and satisfactory in every respect.
|
7.
|
Human Resources
|
8.
|
Insurance
|
9.
|
Sale and Purchase of Assets
|
(a)
|
The Manager shall, in accordance with instructions from the Board, supervise the sale and purchase of assets on the Company’s behalf including the completion of such transactions.
|
(b)
|
In respect of any sale or purchase of an asset, the Manager shall provide assistance which shall include, but not be limited to, arranging the financing in the case of a purchase and, if necessary, renegotiating existing financing, and in the case of a sale or purchase, arranging other contractual agreements required by the transaction and the general completion of the specific transaction.
|
(c)
|
The Manager shall assist the Board in reviewing the market for sale and purchase of assets and providing the Company with recommendations in this respect. Any contracts related to a sale or purchase of an asset shall always be subject to the final approval of the Board.
|
10.
|
New Rig Construction
|
(a)
|
The Manager shall, in accordance with instructions by the Board of the Company, assist the Company in negotiating contracts for the construction of new rigs. Any such contracts shall always be subject to the approval of the Board of the Company.
|
(b)
|
The Manager shall follow up and supervise all ongoing new rig construction projects of the Company.
|
11.
|
Accidents-Contingency Plans
|
12.
|
Disputes
|
13.
|
Marketing Services
|
14.
|
General Administrative Services
|
4.
|
general conditions
|
1.
|
The Manager shall, in performing its duties hereunder, serve the Company in good faith. In exercising the powers and authorities hereby conferred on it, the Manager shall:
|
(a)
|
subject to Clause 4.3, use its best endeavours to protect and promote the Company’s interests;
|
(b)
|
observe all applicable laws and regulations relevant to the Company’s activities; and
|
(c)
|
always act in accordance with good and professional management practice.
|
2.
|
The Manager shall be entitled to provide management services to other companies or entities.
|
3.
|
The Manager shall not afford preference to any vessel or company under its management but shall, so far as practicable, ensure a fair distribution of service to all such Vessels and companies from time to time under its management.
|
4.
|
All discounts, commissions and other benefits received by the Manager or any of its employees from third parties as a consequence of the provision of services hereunder shall be disclosed and credited to the Company such that it reflects the benefit obtained for the Company.
|
5.
|
The Manger and the Company shall agree whether foreign exchange credits or charges incurred by the Manager should be credited or charged respectively to the Company.
|
6.
|
The Company shall, at any time upon request, be provided with any information from the accounts and records of the Manager which is relevant and reasonably required for the performance of its obligations vis‑à‑vis the Company hereunder.
|
7.
|
The Manager shall, upon request, provide the Company with copies of all documents relevant to the Company in its possession and otherwise compile such facts and records on the basis of such documents as shall, from time to time, be requested by the Company.
|
5.
|
compensation and basis of allocation of costs
|
1.
|
The Company agrees to reimburse the Manager for all direct and indirect costs and expenses reasonably incurred by the Manager in connection with the provision of the Management Services (the “
Costs and Expenses
”); provided that only those costs and expenses which are wholly and exclusively or otherwise properly attributable to the provision and coordination of provision of the Management Services and beneficial to the Company shall be included in such Costs and Expenses.
|
2.
|
The Company shall pay to the Manager a management fee equal to eight percent (8%), or such other amount to be agreed between the Company and the Manager, of the Costs and Expenses less services that the Manager procures from third parties or members of the Seadrill Group which may be passed onto the Company without a management fee where the Manager does not add value (the
“Management Fee”
).
|
3.
|
The basis of the allocation of costs to the Company shall be undertaken as set out in Schedule 1.
|
4.
|
The Management Fee shall be invoiced by the Company monthly or quarterly in arrears. Within thirty (30) days following the end of each month or calendar quarter, as applicable, the Manager shall prepare a statement of Costs and Expenses incurred in providing the Management Services, setting forth the basis for calculation, in such detail as is reasonably required. The Manager shall then deliver an invoice to the Company for such costs together with the corresponding management fee. The Company shall pay the charges within thirty (30) days of receipt of the Manager’s invoice.
|
5.
|
All sums payable under this Agreement are exclusive of VAT and any other duty or tax, which shall (if and to the extent applicable) be payable by the Company at the rate and in the manner from time to time prescribed by law, subject to receipt by the Company of a valid VAT invoice.
|
6.
|
Except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Parties, each Party shall be responsible for its own costs incurred preparing and performing its obligations under this Agreement.
|
6.
|
indemnity
|
1.
|
The Manager shall be under no responsibility or liability for any loss or damage, whether loss of profits or otherwise, to the Company arising out of any act or omission involving any error of judgment or any negligence on the part of the Manager or any of its officers or employees in connection with providing the Management Services or the performance of its duties under this Agreement, unless the acts or omissions leading to a loss or damage are caused by gross negligence or wilful misconduct on the part of the Manager, its officers or employees.
|
2.
|
The Company agrees to indemnify and keep the Manager and its officers and employees indemnified against any and all liabilities, costs, claims, demands. proceedings, charges, actions, suits or expenses of whatsoever kind or character that may be incurred or suffered by any of them howsoever arising (other than by reason of fraud or dishonesty on their part) in connection with the provisions of the Management Services or the performance of its duties hereunder.
|
3.
|
The Manager shall not be required to take any legal action on behalf of the Company unless being fully indemnified (to its reasonable satisfaction) for all costs and liabilities likely to be incurred or suffered by it as a consequence thereof.
|
4.
|
The indemnities provided by the Company hereunder shall cover all reasonable costs and expenses payable or incurred by the Manager in connection with any claims.
|
5.
|
To the extent the Manager is entitled to claim indemnities in respect of amounts paid or discharged by the Manager pursuant to this Agreement, these indemnities shall take effect as an obligation of the Company to reimburse the Manager for making such payment or effecting such discharge.
|
6.
|
The indemnification provided by this Clause shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any statute, agreement, the organizational documents of the Company or otherwise, and shall continue after the termination of this Agreement.
|
7.
|
To the extent the Company elects to purchase Director's & Officer's insurance, the Company undertakes to ensure that the Manager is included as co-assured in all such insurance policies.
|
7.
|
confidentiality
|
1.
|
All Confidential Information furnished to the Manager or any of its employees, directors or subcontractors pursuant to this Agreement shall be the property of the Company and shall be kept confidential by the Manager.
|
(a)
|
For the purpose of this Clause "
Confidential Information
" shall mean information relating to the business of the Company, all know-how of which the Manager becomes aware or generates in the course of or in connection with the performance of its obligations hereunder.
|
(b)
|
The provisions of this Clause 7.1 shall not apply to Confidential Information which is:
|
(a)
|
required to be disclosed by law or court order; or
|
(b)
|
public knowledge otherwise than as a result of the conduct of the Manager.
|
8.
|
termination
|
1.
|
This Agreement shall remain in effect from and after the date hereof for a period of five years and shall automatically be extended for 12 months at the end of such period and each period thereafter unless terminated by either Party with 90 days’ written notice prior to the end of any such period or otherwise terminated as follows:
|
(a)
|
by the Company:
|
(i)
|
pursuant to Clause 9.1 hereof;
|
(ii)
|
if the Manager makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation; or
|
(iii)
|
otherwise upon 90 days’ written notice for any reason in its sole discretion; or
|
(b)
|
by the Manager upon 90 days’ written notice if:
|
(i)
|
there is a change of control of the Company or Seadrill Member LLC;
|
(ii)
|
a receiver is appointed for all or substantially all of the property of the Company;
|
(iii)
|
an order is made to wind up the Company;
|
(iv)
|
a final judgment, order or decree which materially and adversely affects the ability of the Company to perform under this Agreement shall have been obtained or entered against the Company, and such judgment, order or decree shall not have been vacated, discharged or stayed; or
|
(v)
|
the Company makes a general assignment for the benefit of its creditors, files a voluntary petition for bankruptcy or liquidation (including a voluntary petition for relief under chapter 11 of title 11 of the United States Code), is adjudged insolvent or bankrupt (including by entry against it of an order for relief under chapter 11 of the title 11 of the United States Code), commences any proceeding for a reorganization or arrangement of debts, dissolution or liquidation.
|
2.
|
Notwithstanding the foregoing, the arrangement with respect to the provision of the Management Services by any or all of the Manager’s Employees may be terminated at any time with respect to any or all of such Manager’s Employees by the Board in its sole discretion. Such Management Services shall terminate immediately upon delivery by the Board of written notice to the Manager. The termination of the Management Services with respect to any or all of the Manager’s Employees shall not constitute a termination of the other provisions of this Agreement.
|
9.
|
default
|
1.
|
If the Manager or the Company, as the case may be, shall by any act or omission, be in breach of any material obligation under this Agreement and such breach shall continue for a period of fourteen (14)
|
2.
|
Either Party may forthwith by notice in writing terminate this Agreement if an order be made or a resolution be passed for the winding up of the other Party or if a receiver be appointed of the business or property of the other Party or if the other Party shall cease to carry on business or make special arrangement or composition with its creditors or if any event analogous with any of the foregoing occurs under any applicable law.
|
10.
|
force majeure
|
11.
|
notices
|
12.
|
miscellaneous
|
1.
|
The Manager shall be entitled to assign this Agreement to another company within the Seadrill Group on written notice to the Company. The Company shall not be entitled to assign this Agreement to any party without the prior written consent of the Manager.
|
2.
|
Nothing in this Agreement shall be deemed to constitute a partnership between the Parties. No term of this Agreement is enforceable by a person who is not a party to it.
|
3.
|
Subject to Clause 12.1 this Agreement shall not be amended, supplemented or modified save by written agreement signed by or on behalf of the Parties.
|
4.
|
This Agreement (together with the attachments hereto) constitutes the entire agreement of the Parties with respect to the subject matter hereto and supersedes all prior contracts or agreements with respect thereto, whether oral or written.
|
13.
|
governing law
|
1.
|
This Agreement, including any contractual and non-contractual obligations, shall be exclusively governed by and interpreted in accordance with English law and the Parties irrevocably agree that
|
–
|
Costs and expenses incurred under the Management & Administrative Services Agreement dated 25 April 2017 between Seadrill Limited and the Manager (the “
Shareholder Management Agreement
”) incurred in relation to administration and management of Seadrill Limited in the performance of its role as shareholder (the “
Shareholder Costs
”); or
|
–
|
Costs and expenses incurred in supporting affiliates of Seadrill Limited operational activities, including, but not limited to, costs relating to operational excellence and operational management, payable in accordance with the terms and conditions of this Agreement (the “
Company Operational Costs
”).
|
Status of the Vessel
|
Percentage of Weighted Cost Payable
|
Cold Stacked
|
40 %
|
Under Construction
|
66⅔ %
|