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Chiles Offshore - Platform Construction Agreement
Exhibit 10.2
PLATFORM CONSTRUCTION AGREEMENT
BY AND BETWEEN
AMFELS, INC.
AND
CHILES OFFSHORE LLC
April 6, 2000
CONTENTS
SECTION
1. EFFECTIVE DATE 2. COMMENCEMENT AND PROSECUTION OF THE WORK 3. CONTRACT PRICE 4. REPRESENTATIVES AND PROGRESS OF PLATFORM 5. CHANGES AND ADDITIONAL WORK 6. OWNER FURNISHED EQUIPMENT 7. LIENS 8. INSURANCE 9. TITLE AND RISK OF LOSS 10. DELIVERY 11. WARRANTY 12. INDEMNIFICATION PROVISIONS 13. PATENT INDEMNITY 14. FORCE MAJEURE 15. INDEPENDENT CONTRACTOR 16. DEFAULT 17. LITIGATION 18. NOTICE 19. SUCCESSORS AND ASSIGNS 20. GOVERNING LAW 21. MODIFICATION OR WAIVER 22. RELIANCE 23. COMPUTATION OF TIME 24. GENERAL LIMITATION OF LIABILITY 25. WAIVER OF CONSUMER RIGHTS AND REPRESENTATIONS OF OWNER 26. SEVERABILITY 27. CONSTRUCTION 28. VARIABLE LOAD 29. TAXES AND DUTIES 30. TITLE XI AMENDMENT 31. CONFIDENTIALITY AND GRANT OF LICENSE
EXHIBIT A
PAYMENT SCHEDULE
EXHIBIT B
SPECIFICATIONS AND DESIGN DRAWINGS
EXHIBIT C
TITLE XI PROVISIONS
PLATFORM CONSTRUCTION AGREEMENT
This Agreement including Exhibits A through C attached hereto which are incorporated by reference herein and made a part hereof ("Agreement"), entered into on the 6th day of April, 2000, by and between Chiles Offshore LLC a company organized under the laws of the State of Delaware ("Owner") and AMFELS, Inc, a corporation organized under the laws of the State of Texas (hereinafter referred to as "Builder") for the construction by Builder and purchase by Owner of one mobile, self-contained and self-elevating 475' leg length Keppel FELS MOD V-B class platform (the "Platform").
1. EFFECTIVE DATE
The effective date ("Effective Date") of this Agreement shall
be the date upon which the last of the following conditions shall have
been met:
(i) Owner shall have raised equity for its investment in
the Platform on terms satisfactory to the Owner and
in an amount sufficient to satisfy the requirements
of the United States Secretary of Transportation
acting by and through the Maritime Administrator (the
"Secretary") for the issuance of a letter commitment
to guarantee obligations for the financing of the
construction of the Platform under Title XI of the
Merchant Marine Act, 1936 (such letter commitment the
"Commitment") and shall have notified Builder thereof
in writing; and
(ii) The Secretary shall have issued the Commitment on
terms satisfactory to Owner, which Commitment may be
conditioned upon additional requirements of the
Secretary, provided such requirements are
satisfactory to Owner, and Owner shall have notified
Builder thereof in writing.
In the event that the Effective Date shall not have occurred by
October 6, 2000, unless the parties shall otherwise agree, this
Agreement shall terminate and shall be null and void and of no effect
and neither party shall have any obligation to the other hereunder.
2. COMMENCEMENT AND PROSECUTION OF THE WORK
(a) Builder hereby agrees with Owner to commence the construction
of the Platform at Builder's Shipyard at Brownsville, Texas
("Builder's Yard"), to prosecute in accordance with good
shipyard practice to completion, and to deliver the Platform
to Owner twenty-two (22) months after the Effective Date (such
delivery date as the same may be extended under the terms of
this Agreement is referred to herein as the "Delivery Date"),
at Builder's Yard, a mobile, self contained and elevating
platform (the "Platform"), in accordance with (i) the
specifications for a 475' leg length platform developed by
Keppel FELS Limited ("Keppel") for that certain contract
between Keppel and Owner dated April 6, 2000 (said
specifications the "Specifications" and said contract
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the "First Contract") (the said Specifications having been (or
shall be, in instances where specifications, drawings, plans,
and data are hereafter prepared) initialed by Builder and
Owner as evidence of the parties' agreement thereto and being
(and to be) hereby incorporated by reference as part of this
Agreement), (ii) the certain rules of the American Bureau of
Shipping (hereinafter referred to as the "ABS"), Rules for
Building and Classing Mobile Offshore Drilling Units, 1997,
with all amendments thereto issued to the date of Builder's
request for class (provided, however, any amendments thereto
issued subsequent to Keppel FELS Limited's request for class
under the First Contract shall be changes subject to the
provisions of Section 5 hereof) and the ABS Guide for
Shipbuilding & Repair Quality Standard for Hull Structures
During Construction with table 5.9 therein applicable in full
without reservation, and (iii) the requirements of any other
regulatory body ("Regulatory Body" or Regulatory Bodies")
having jurisdiction in the premises as listed in the
Specifications. Owner hereby agrees with Builder to purchase
the Platform from Builder, and to pay Builder for same, all in
accordance with the provisions of this Agreement.
(b) If any conflict or inconsistency shall arise between this
Agreement and the Specifications, this Agreement shall
prevail. Similarly, if any conflict or inconsistency shall
arise between the written Specifications and the Specification
drawings, the written Specifications shall prevail. In the
event of a dispute as to conformity with ABS classification
requirements, the decision of the ABS shall be final.
(c) In the event that any of the equipment or materials required
to be furnished by Builder in the performance of the work
under this Agreement cannot be timely procured or are in short
supply, Builder may supply other functionally equivalent
materials or equipment complying with the performance
requirements of this Agreement and the Specifications.
3. CONTRACT PRICE
(a) As consideration for Builder's construction of the Platform in
accordance with the terms of this Agreement, Owner agrees to
pay Builder the sum of U.S. Dollars Seventy-Five Million
($75,000,000) subject to adjustment as provided in this
Agreement (hereinafter referred to as the "Contract Price") to
Builder's account as provided herein or at such other place as
Builder may from time to time designate in writing to Owner.
(b) The Contract Price shall be paid by Owner to Builder in
installments as provided in Exhibit "A" attached to and made a
part of this Agreement. Wire transfers shall be made to
Builder's account at Citibank N.A. as follows:
Chase Bank of Texas, NA
1034 East Levee St.
Brownsville, Texas 78520
ACCOUNT NUMBER :06700278275
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ROUTING NUMBER: 113000609
Attention: Irv Downing
(c) Builder shall submit to Owner invoices at least seven (7)
working days prior to the date any payment is due under this
Agreement.
(d) Any agreed lump sum change order price shall be paid 50% of
the change order price upon agreement thereto and the balance
of 50% of the agreed change order price shall be paid upon
delivery of the Platform. For change orders performed on time
and material basis, payments shall be made monthly, in
arrears, within ten (10) days of Owner's receipt of Builder's
invoice therefor and in any event upon delivery of the
Platform.
(e) All costs for ABS and any other Regulatory Body approvals for
the Platform are for the Builder's account with the exception
of Owner Furnished Equipment and materials as provided in
Section 6 hereof.
(f) Prior to delivery of the Platform, the Builder shall furnish
evidence satisfactory to the Owner showing that no liens,
claims, security interests or rights in rem of any kind have
been or can be acquired against the Platform by, through, or
under Builder.
(g) Except as provided in the next sentence of this paragraph (g),
all remaining payments, including progress payments, payments
for change orders, and other sums owing by Owner to Builder
under this Agreement must be paid in full at the time of
delivery of the Platform under this Agreement and in any event
prior to departure of the Platform from Builder's Yard. If
Owner disputes in good faith any sums claimed by Builder under
or in connection with this Agreement, Owner shall provide to
Builder a corporate surety bond from a first class U.S. surety
acceptable to Builder in a form reasonably satisfactory to
Builder. Such bond shall be in an amount equal to 150% of the
disputed sum. The bond must be executed and delivered to
Builder at the time of delivery of the Platform under this
Agreement and in any event prior to departure of the Platform
from Builder's Yard.
(h) All amounts owing to Builder by Owner hereunder shall bear
interest at the lesser of the highest lawful rate or the rate
of fifteen percent (15%) per annum from thirty (30) days after
the date notice of failure to pay is received by Owner until
paid in full.
4. REPRESENTATIVES AND PROGRESS OF PLATFORM
(a) Builder will furnish office space and parking facilities at
the Yard for Owner's authorized representatives (the
"Representatives"), who will have complete and unrestricted
access to the Yard of Builder, or its subcontractors, where
the Platform, or any portions thereof, or materials or
equipment therefor are being stored, manufactured or
constructed pursuant to this Agreement. The office provided to
Owner will be complete with furniture and will have telephone,
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telefax, and duplicating facilities. Costs for long distance
telephone calls, telefaxes, and duplicating supplies will be
for Owner's account. Such Representatives shall have the right
to make inspection of workmanship, material, equipment and
supplies as the construction of the Platform progresses and
shall notify Builder in writing of any deficiencies noted
therein, and Builder will then take such steps as are
necessary to correct such deficiencies. Builder shall give
notice to Owner and its Representatives at least forty-eight
(48) hours in advance of the date and place of all tests,
trials, and inspections. Inspections shall be made so as not
to impede the progress of the construction of the Platform and
if defective or non-conforming workmanship or material is
rejected, rejection shall be made promptly in order that
Builder may minimize the expense and disruption of
construction. In the event Owner's Representatives shall fail
to be present at any properly notified test, trial, or
inspection, the results thereof shall be binding on Owner.
Owner shall ensure that its Representatives shall not in
performing their inspections obstruct the construction
schedule for the Platform. Builder's obligation to construct
and deliver the Platform in accordance with this Agreement and
the Specifications, and Builder's warranty under this
Agreement, shall not, except as otherwise provided herein, be
affected by any inspection or failure to inspect by Owner's
Representatives or by their failure to detect any
deficiencies. If Owner's Representatives fail to promptly
notify Builder of any non-conforming work discovered by
Owner's Representatives, Owner shall be deemed to have
approved such item and Owner shall be precluded from making
demand for correction of such item, refusing to accept tender
of delivery of the Platform, or claiming such item as a
warranty defect under Builder's warranty set forth in Section
11 hereinbelow.
(b) In all working hours during the construction of the Platform
until delivery thereof, the Representatives and all assistants
shall be given free and ready access to the Platform and to
any other place where construction of the Platform is being
done or materials are being processed or stored in connection
with the construction of the Platform, including the yards,
workshops, stores and offices of Builder, and the premises of
subcontractors of Builder who are doing work for the Platform
or storing materials at such premises in connection with the
Platform's construction.
(c) Builder shall designate a single project manager in writing to
Owner, with full authority to act for Builder under this
Agreement. Owner shall designate a single project manager in
writing to Builder, with full authority to act for Owner under
this Agreement. Builder and Owner may from time to time
designate substitute project managers in writing with such
authority.
(d) If any difference in opinion between parties hereto shall
arise during the construction of the Platform concerning
technical matters in respect of the materials and workmanship
covered by the ABS rules or the guide referred to in Section
2, paragraph (a) of this Agreement, such difference in opinion
shall be referred to ABS whose opinion thereon shall be final
and binding upon both parties.
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(e) Within thirty (30) days of the Effective Date of this
Agreement the Builder shall deliver to the Owner a key event
production schedule (the "Production Schedule") showing
planned construction progress of the Platform. The Production
Schedule shall be reasonably acceptable to the Owner and the
Builder shall develop an overall Platform erection plan that
integrates material delivery and assembly actions needed to
schedule work flow during all phases of construction. This
plan shall encompass sufficient planning data to assure that
all phases of construction can be adequately accomplished so
as to deliver the Platform on or before the Delivery Date. The
Platform erection/construction plan shall be furnished to
Owner within sixty (60) days after the Effective Date of this
Agreement and shall, upon acceptance by Owner, become by
reference an integral part of the Production Schedule. The
Delivery Date shall be extended by any delay caused by act or
omission of Owner, failure to timely deliver to Builder any
Owner Furnished Equipment (as defined in Section 6 hereof),
delays caused by ABS or any governmental agency, delays caused
by the Secretary (as defined in Section 30 hereof) or his
representatives, changes as provided in Section 5 hereof and
events of Force Majeure as provided in Section 14 hereof.
(f) Included in the Specifications is a list of tests and trials
to be performed by Builder in connection with the completion
of the Platform. Owner's Representatives shall be given the
number of days of prior notice for each applicable test or
trial as set forth in the Specifications.
5. CHANGES AND ADDITIONAL WORK
Owner shall have the right, at any time or times, to request that
reasonable change or changes be made in any of the Specifications, and
Owner shall issue to Builder a written change order to be executed by
Owner and Builder; provided, however, if such requested change or
changes in the aggregate would materially increase the overall scope of
work so as to adversely impact Builder's other work or commitments or
if Builder and Owner cannot reach agreement as to a lump sum price or
credit or change in the Scheduled Delivery Date or other terms and
conditions of this Agreement or the Specifications, Builder shall have
no obligation to Owner to perform same. If any change necessitates an
increase or decrease in the quantity or quality of the materials or the
nature of the labor to be furnished by Builder for the Platform, then
the Contract Price shall be increased or decreased on a lump sum basis
in accordance with the mutual agreement of the parties. If any change
will prolong the time for completion of the Platform, the Delivery Date
shall be extended accordingly. Builder shall be entitled to make minor
changes to the Specifications, if found necessary, for the introduction
of improved production methods or otherwise, subject to Owner's
approval, which is not to be unreasonably withheld.
6. OWNER FURNISHED EQUIPMENT
(a) Within forty-five (45) days of the Effective Date of this
Agreement, Builder and Owner shall agree upon a schedule of
in-yard delivery dates of those items of material, equipment,
engineering data and information ("Owner Furnished
Equipment"), as are set forth in the Specifications to be
provided by Owner.
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The time for delivery of the Owner Furnished Equipment as
detailed on such delivery schedule shall be such so as to not
cause Builder to be delayed in the timely prosecution of the
work in accordance with the Production Schedule.
(b) Builder shall at its own cost install the Owner Furnished
Equipment and obtain ABS approval of such installation.
Builder's scope of work includes all necessary foundations and
supplies, such as, but not limited to, electric,
instrumentation, controls and hydraulic power, air, fuel,
steam, etc., in each case including all necessary connections
such as electric wiring and piping. All Owner Furnished
Equipment shall be delivered by Owner to Builder at Builder's
Yard in their assembled form to the extent reasonably
feasible, tested and in proper condition, ready for
installation in or on the Platform, in accordance with the
Production Schedule. Builder will unload all Owner Furnished
Equipment. Suitable storage will be provided by Builder for
all Owner Furnished Equipment. The cost of such storage is
included in the Contract Price. The Owner Furnished Equipment
shall be at Builder's risk from the time of their delivery to
the shipyard until the time of their redelivery to Owner
either as part of the Platform or otherwise. Upon delivery of
each item of Owner Furnished Equipment, unless such item is
accompanied by a weight certificate issued by a reputable
body, Builder shall weigh at Owner's expense such item in
order to incorporate the actual weight in the Lightship Weight
calculations.
(c) In order to facilitate installation by Builder of the Owner
Furnished Equipment on the Platform, Owner shall furnish the
Builder with all reasonably necessary information including
specifications, plans, drawings, instruction books, manuals,
test reports and certificates. Owner, if so requested by
Builder, shall without any charge to Builder cause specialist
engineers and representatives of the manufacturers of the
Owner Furnished Equipment to provide technical assistance to
Builder in installation thereof in or on the Platform or to
make necessary adjustments thereof at the Yard. Builder's
scope of work under this Agreement excludes any adjustment,
repair or modification of any Owner Furnished Equipment.
Builder's scope of work under this Agreement includes any
testing of installed Owner Furnished Equipment required by the
Specifications, any Regulatory Body or ABS.
(d) In the event of a delay in delivery of any Owner Furnished
Equipment, then Owner and Builder shall mutually agree on a
new installation date of the delayed Owner Furnished
Equipment. If no agreement is reached between both parties
within twenty (20) days, and the absence of the delayed Owner
Furnished Equipment is impacting the critical path to
completion of the Platform, then Builder shall have the right
to proceed with the construction of the Platform without
installation of the delayed Owner Furnished Equipment on the
Platform, without prejudice to Builder's other rights as
hereinabove provided, and Owner shall accept and take delivery
of the Platform as so constructed.
(e) On delivery of each consignment of Owner Furnished Equipment,
Builder shall assist Owner in the inspection of the
consignment delivered. Any and all
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of the Owner Furnished Equipment shall be subject to Builder's
reasonable right of rejection as and if they are found to be
unsatisfactory or in improper condition for installation. In
such instances, Builder shall first give adequate notice to
Owner and a reasonable opportunity for correction by Owner
before being entitled to reject the Owner Furnished Equipment.
(f) Should Owner fail to timely deliver the Owner Furnished
Equipment as provided in this Agreement and such delay results
in increased costs to Builder, Owner and Builder shall agree
upon the appropriate increase in the Contract Price and Owner
shall reimburse Builder for such increased cost. If Owner and
Builder are unable to agree upon the appropriate increase in
the Contract Price for such delay, then Owner shall prior to
delivery of the Platform post a bond pursuant to the
requirements of Section 3, paragraph (g) hereof.
7. LIENS
Provided Builder is paid all amounts owing to Builder by Owner under
this Agreement as and when due, Builder shall not place or create or
permit to be placed or created, any liens, charges, or encumbrances on,
or security interests as to, or pledges of, the Platform, and any lien,
charge, encumbrance or security interest so placed or created by or
through Builder, its subcontractors and suppliers, or any of them,
shall be forthwith released by the Builder. The Builder shall release
and cause to be discharged any such lien, charge, encumbrance or
security interest. In the event Builder fails to secure the discharge
or release of any such lien, charge, encumbrance or security interest,
after notice to Builder the Owner may secure the removal of same, in
which event the Builder shall reimburse the Owner for its costs of
securing such discharge or release (which cost shall include any
expenses, including, without limiting the generality of the foregoing,
attorneys' fees incurred in connection therewith) or at Owner's sole
option by deducting such sum from any payments due or to become due the
Builder under this Agreement. In the event such cost is in excess of
the amount of any such reimbursement by deductions, the Builder further
agrees to pay the amount of such excess to the Owner upon demand.
8. INSURANCE
Builder shall obtain and maintain during all times hereunder the
following insurance in form reasonably acceptable to Owner and Owner's
underwriters:
(a) Broad Form Comprehensive General Liability Insurance covering
all of the operations of Builder, including Contractual
Liability and Contractor's Protective Liability with a
combined single limit of not less than U.S. $1,000,000 per
occurrence for bodily injury and/or property damage, including
products and completed operations coverage, with excess
liability limits of not less than U.S. $1,000,000 per
occurrence.
(b) Each of the foregoing insurance policies shall, either on the
face thereof or by appropriate endorsement name (except for
the policies specified in subparagraph (a) above) Owner as an
additional assured with respect to the
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indemnities of Builder assumed under this Agreement, provide
that the insurance policy shall not be cancelled or coverage
reduced except upon 30 days prior written notice to Owner,
contain waivers of subrogation pursuant to which the insurer
waives all express or implied rights of subrogation against
Owner, provide that Owner shall not be liable for premiums or
calls, and be retained in full force and effect by Builder
until the completion of the Platform hereunder as provided
below. Builder shall be responsible for all deductibles and
self insured retentions, to the extent the loss or claim would
otherwise be covered by Builder's indemnities contained in
this Agreement. Concurrently with the execution of this
Agreement, Builder shall furnish to Owner certificates or
other evidence satisfactory to the other of the insurance
required hereunder.
(c) Until final delivery of the Platform, Builder shall its own
cost and expense, keep the Platform and all materials either
delivered to the Yard or being handled by Builder for the
Platform or built into, or installed in or upon the Platform
fully insured under coverage and with underwriters
satisfactory to the Owner and not more restrictive than the
current form of London or American Institute Clauses for
Builder's Risks or equivalent form, including tests and trials
clauses. The Builder's Risks insurance shall include
supplemental coverage for war risks, strikes, lockouts, labor
disturbances, riot or civil commotion, earthquakes, and
protection and indemnity risks. The amount of such insurance
coverage shall be in an amount at least equal to the Contract
Price and shall be increased from time to time to cover the
cost of all changes, alterations, or modifications.
(d) The Builder's Risks policy shall be taken out in the joint
names of Builder and Owner and all losses under such policy
shall be payable to the Builder and Owner in accordance with
their respective interests. The policies shall provide that
there shall be no recourse against the Owner for the payment
of premiums or other charges and shall further provide that at
least thirty (30) days' prior written notice of any material
alteration, cancellation, or cancellation for the non-payment
of premiums or other charges shall be given to the Owner by
the insurance underwriters. Any deductible under this
insurance policy shall be for the account of Builder.
9. TITLE AND RISK OF LOSS
(a) Title to the Platform, to the extent completed and all
materials destined for incorporation therein, whether located
at Builder's Yard or elsewhere, shall immediately vest in
Owner when the same is paid for by Owner, whether prior to or
after incorporation into the Platform. The vesting of title
shall not relieve Builder of its obligation to replace damaged
or defective materials at Builder's expense and to complete
and deliver the Platform in accordance with the provisions of
this Agreement. Risk of loss of the Platform shall pass to
Owner upon delivery and acceptance thereof in accordance with
this Agreement.
(b) To the extent that title to any part of the Platform or the
materials destined for incorporation in the Platform has
passed from Builder to Owner or Owner
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otherwise obtains any rights therein, whether now owned or
hereafter acquired, Owner as debtor hereby grants to Builder
as a secured party a security interest and lien upon same and
all right, title, and interest of Owner thereto and the
proceeds and products thereof, to secure the performance of
Owner under this Agreement and the payment to Builder of all
payments required to be paid by Owner to Builder under this
Agreement; provided, however, the security interest granted to
the Builder by this Section 9(b) shall be subordinate to any
liens or security interests granted by Owner to its lenders on
Owner's interest in this contract and the Platform. In
connection herewith, Builder shall upon Owner's default under
this Agreement have all rights and remedies of a secured party
under the law of the State of Texas. The security interest and
lien granted to Builder hereunder and the rights and remedies
of Builder herein shall be deemed cumulative and in addition
to the rights and remedies otherwise available to Builder at
law or in equity or in contract, which shall not be
subordinate to any liens or security interests granted by
Owner to its lenders.
(c) If the Platform or any Owner Furnished Equipment shall be
damaged by any insured cause whatsoever prior to acceptance
thereof by Owner and such damage does not constitute an actual
or a constructive total loss of the Platform, Builder and/or
Owner shall apply the amount recovered under the insurance
policy referred to in Paragraph 8(d) of this Agreement to the
repair of such damage and Owner shall accept the Platform
under this Agreement if completed in accordance with this
Agreement and the Specifications. The Production Schedule
including the Delivery Date shall be deemed extended by the
time necessary to repair such damage. In the event of an
actual or constructive total loss of the Platform prior to
delivery, this Agreement shall automatically be deemed
terminated, and Builder shall retain all installment payments
made pursuant to Section 3, Paragraph 2(b) of this Agreement
and shall be paid by Owner for the price for that portion of
the Platform then constructed for which progress payments have
not yet been made and all work in progress (including profit
on all to Builder). In the event that the actual or
constructive total loss of the Platform results from the
operation of an insurable risk covered by insurance as
required under Paragraph 8(d) of this Agreement, all of the
proceeds of such insurance payable as a result of such loss
shall be paid to the Owner and the Builder as their interests
may appear.
10. DELIVERY
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