Platform Construction Agreement

Exhibit 10.2


PLATFORM CONSTRUCTION AGREEMENT


BY AND BETWEEN


KEPPEL FELS LIMITED


And


CHILES OFFSHORE LLC


APRIL 6, 2000


Contents


Section


1. DESIGN APPROVAL AND 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


EXHIBIT A
PAYMENT SCHEDULE


EXHIBIT B
SPECIFICATIONS AND DESIGN DRAWINGS


PLATFORM CONSTRUCTION AGREEMENT
-------------------------------


This Agreement including Exhibits A through B 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 Keppel FELS Limited, a corporation organized under the laws of the Republic of Singapore (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 platform (the "Platform").


1. Design Approval and Effective Date


(a) In recognition (1) that Builder is the developer of the design
for the mobile, self-contained and elevating 475' leg length
platform embodied in Builder's Specification for the
Construction and Outfit of a Mobile Offshore Self-Elevating
Drilling Unit, Keppel FELS Class B, dated 5th April 2000
including the basic design drawings listed on Exhibit B, which
specification has been initialed by the parties hereto as
evidence of their agreement thereto (said specification, as
now existing and as further developed by Builder, and all
related drawings, plans and data, whether now or hereafter
prepared by Builder, herein the "Specifications" and said
design, as now existing and hereafter developed, the "Platform
Design"), , and (2) that no platforms have been constructed in
accordance with the Platform Design, Builder hereby
undertakes, at its own risk and expense, to obtain American
Bureau of Shipping ("ABS") approval of the Platform Design as
embodied in the Specifications, including the development of
any additional drawings, calculations or other design work
required by ABS for such approval.


(b) The effective date ("Effective Date") of this Agreement shall
be the date hereof.


Builder has heretofore provided to Owner the ABS approval of the base rig design with 475 foot leg length and shall provide concurrently with the execution hereof the calculations (which calculations shall be non-contractual and are for information and comparison only without representation or warranty of any kind) for conditions with 517 foot and 545 foot leg lengths.


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 Jurong, Singapore,
being Builder's Yard No. B ("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, in accordance with (i)
the Specifications (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)


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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, which request shall be made not later than April 15,
2000, 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-Two Million Eight
Hundred Thousand ($72,800,000) 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:


CITIBANK N.A.
3 TEMASEK AVENUE
#14-00 CENTENNIAL TOWER
SINGAPORE 039190
SWIFT CODE: CITISGSG
US$ A/C O-010547-O24
FAVORING KEPPEL FELS LIMITED


(c) Builder shall submit to Owner invoices at least seven (7)
working days prior to


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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,
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


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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.


(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


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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, 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. 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


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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 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.


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(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 ...