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Exhibit 10.2
PLATFORM CONSTRUCTION AGREEMENT
BY AND BETWEEN
AMFELS, INC.
AND
CHILES OFFSHORE LLC
April 6, 2000
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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
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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
(a) Upon completion of the construction of the Platform and the
tests and trials as provided in the Specifications, and after
having obtained all required approvals and certifications from
ABS and the Regulatory Bodies, Builder shall tender delivery
of the Platform to Owner. Prior to tendering delivery, Builder
shall have remedied at Builder's sole cost and expense any
defects discovered by Owner, Builder or ABS in Builder's
workmanship or materials including installation of Owner
Furnished Equipment or any other non-conformity of the
Platform with the requirements of the Specifications and this
Agreement and shall have performed any re-tests necessary to
ensure that such items have been fully corrected. Owner shall
accept such tender of delivery, and Owner
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shall not have the right to refuse to accept delivery of the
Platform provided the same is substantially completed, except
for minor items acceptable to Owner to be completed as
mutually agreed between Owner and Builder, and capable of
being utilized by Owner. Any remaining items shall be
completed by Builder following delivery and prior to departure
of the Platform from Builder's yard, or Owner and Builder may
mutually agree on a appropriate reduction of the Contract
Price for such remaining items.
(b) To evidence acceptance of the Platform by Owner, Builder and
Owner shall execute and deliver a Protocol of Acceptance and
Delivery acknowledging delivery of the Platform. Builder shall
further deliver to Owner a Bill of Sale confirming the
conveyance of title to the Platform to the Owner, which Bill
of Sale shall (i) generally describe the Platform as a mobile,
self-contained and elevating platform, (ii) contain a general
warranty of title and freedom from liens (except as to matters
arising by, through, or under Owner) in favor of the Owner,
and (iii) be deemed to contain the additional warranties and
covenants set forth in Section 11 of this Agreement without
the necessity of making any reference to such warranties in
the Bill of Sale. Builder shall also deliver to Owner the
remaining delivery documents set forth in the Specifications.
(c) Builder shall deliver the Platform along side Builder's dock
at Builder's Yard. Following delivery and acceptance, Owner
shall have the right to dock the Platform at Builders Yard for
a period not to exceed thirty (30) days, after which time the
Platform must depart from Builder's Yard. During such
post-delivery docking period, Owner shall pay to Builder its
standard charges for shore power, potable water, and security
guard service. All such charges must be paid by Owner to
Builder prior to departure of the Platform from Builder's
Yard.
11. WARRANTY
Builder hereby warrants to Owner that (i) Builder's workmanship and
materials shall be free from material defects, and (ii) that the
systems designed, supplied, and installed by Builder are in compliance
with this Agreement and the Specifications (any failure to meet the
requirements of (i) or (ii) being herein a "Warranty Deficiency"). The
warranty set forth in the preceding sentence (the "Warranty") shall
commence on the date of delivery of the Platform and expire twelve (12)
months thereafter (provided, however, that if any of the equipment of
the Platform, including without limitation any cranes or winches, is
put into service by Builder prior to said delivery, (i) Builder shall
at its own cost and expense restore such equipment to like new
condition, ordinary wear and tear excepted and (ii) the twelve (12)
months warranty period shall commence with delivery of the Platform )
and shall be subject to the following provisions:
(a) The Warranty shall not apply to any part of the Platform which
(i) has been misused or structurally repaired or altered after
acceptance of the Platform by Owner by anyone other than
Builder or its duly authorized representative, or (ii) has
been damaged because of it's use, or the use of any other
materials or equipment, after Owner (or any other person or
firm operating the Platform or
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its equipment) has knowledge of such defect. Equipment or
other components of the Platform sold to Owner pursuant to
this Agreement but not manufactured by Builder are not
warranted to any extent, but Builder shall assign (to the
extent same are assignable by Builder) to Owner, without
recourse, any warranties furnished to Builder by the vendors
of such equipment or other components. If any such warranties
are not assignable, Builder shall permit Owner to seek
performance or damages in Builder's name. Owner shall seek
performance or damages under such warranties only from such
vendors and not from Builder. Builder shall use reasonable
efforts to secure the best available warranties available from
such vendors and shall cooperate with Owner in any resulting
dispute Owner may have with such vendors.
(b) The extent of Builder's liability for any breach of the
Warranty shall be limited to (i) repairing or replacing, as
elected by Builder, any defective materials, workmanship or
components to correct such Warranty Deficiency at Builder's
Yard or at any other shipyard of Builder or its affiliates
(hereinafter collectively referred to as a "Keppel FELS
Yard"), with the Platform to be brought to a Keppel FELS Yard
at Owner's sole risk and expense, or (ii) reimbursing Owner
for the cost of such correction in accordance with the
provisions of subparagraph (c) hereinbelow.
(c) Owner, at its discretion, may elect to cause the necessary
repairs or replacements to be made at a non-Keppel FELS Yard.
In such event, Builder's sole obligation shall be to reimburse
Owner for the cost of such repairs or replacements, provided,
however, that in no event shall the sum to be paid to Owner by
Builder exceed the cost that Builder would have borne, based
on Builder's normal rates, if the repairs or replacements had
been made at the Builder's Yard. If Owner elects to proceed
under the provisions of this subparagraph (c), Owner shall, as
soon as possible after such election (but in any event prior
to the commencement of such repairs or replacements), notify
Builder of the time, place, and estimated cost of such repairs
and replacements. Builder shall have the right to verify, at
its sole cost and expense, by its own representative, the
nature and extent of the defects complained of. Except in the
case of emergency repairs needed to protect life or property
or in the event Builder's representative shall not have
arrived to perform such inspection within seventy-two (72)
hours of Owner's notice to Builder if reasonably possible and
the repairs are necessary to meet operating commitments of
Owner, such inspection shall be prior to the time that the
repairs or replacements are made and if in fact no breach of
the Warranty made by Builder herein has occurred, Owner shall
pay to Builder a per diem equal to Builder's then current
labor rate schedule and the reasonable expenses incurred by
such representative.
(d) The REMEDIES provided in subparagraphs (b) and (c) hereinabove
are EXCLUSIVE. Such Warranty shall not include transportation,
towage, insurance, or other incidental expenses. In no event
shall the obligation of Builder to repair or replace (or to
reimburse Owner pursuant to paragraph (c) hereinabove for the
cost of repairing or replacing) defective workmanship or
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materials be construed to require Builder to repair or replace
more than the actual workmanship or material that is found to
be defective.
(e) The Warranty shall not be effective unless Builder receives
from Owner a written notice of the Warranty Deficiency (i)
within thirty (30) days after the date of discovery of such
defect or failure and (ii) within thirty (30) days after the
expiration of the prescribed Warranty period.
(f) Any work performed or materials furnished by Builder pursuant
to the Warranty shall be warranted for the remaining term of
the original Warranty, and nothing in subparagraph (b) or (c)
shall extend the Warranty period beyond the Warranty period
specified in this Section 11.
(g) THE WARRANTY AS DEFINED HEREINABOVE IS IN LIEU OF ALL OTHER
WARRANTIES (EXCEPT OF TITLE), EXPRESS OR IMPLIED, STATUTORY OR
AT COMMON LAW, AND ALL OTHER LIABILITIES (AT COMMON LAW OR IN
CONTRACT, TORT, OR OTHERWISE, RELATING IN ANY WAY TO THE
PLATFORM OR COMPONENTS THEREOF OR SERVICES TO BE PROVIDED
UNDER THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, STRICT
LIABILITY AND NEGLIGENCE). WITHOUT LIMITATION OF THE
GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, BUILDER
EXPRESSLY DISCLAIMS AND NEGATES (i) ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY, (ii) ANY IMPLIED OR EXPRESS
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (iii) ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES
(iv) ANY IMPLIED OR EXPRESS WARRANTY OF DILIGENCE, (v) ANY
IMPLIED OR EXPRESS WARRANTY OF WORKMANLIKE SERVICE, (vi) ANY
IMPLIED OR EXPRESS WARRANTY OF SEAWORTHINESS, AND (vii) ALL
OTHER LIABILITY, AT COMMON LAW OR IN CONTRACT OR TORT OR
OTHERWISE, INCLUDING, WITHOUT LIMITATION, STRICT LIABILITY
(WHETHER FOUNDED IN SECTION 402(A) OF THE RESTATEMENT OF TORTS
OR OTHERWISE) AND NEGLIGENCE, WHETHER OCCASIONED BY ACTS OR
OMISSIONS OF SOLE OR CONCURRENT NEGLIGENCE OF BUILDER, ITS
AFFILIATES AND/OR OTHERS. BUILDER DISCLAIMS LIABILITY FOR, AND
IN NO EVENT WHATEVER SHALL BE LIABLE FOR, ANY LOSS OF PROFITS
OF OWNER OR OTHERS OR ANY OTHER INCIDENTAL, CONSEQUENTIAL,
PUNITIVE OR SPECIAL DAMAGES.
(h) Builder's warranty with respect to the Owner Furnished
Equipment shall extend only to installation thereof in
accordance with the certified equipment drawings furnished by
Owner in those instances where such Equipment is actually
installed by Builder. In all other instances (including,
without limitation, those instances in which Owner does not
furnish certified equipment drawings to Builder), the sole
risk and responsibility for the proper installation of the
Owner Furnished Equipment shall, as between Builder and Owner,
be borne by Owner. The sole risk and responsibility for the
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operability of the Owner Furnished Equipment shall, as between
Builder and Owner, be borne by Owner, provided Builder shall
have installed the equipment in accordance with the certified
equipment drawings furnished by Owner.
(i) No employee or representative of Builder is authorized to
change the Warranty in any way or to grant any other warranty.
(j) Owner understands and agrees that any modification to the
design, construction, or components of the Platform made by
the Owner are the responsibility of Owner and not the
responsibility of the Builder for any purpose whatsoever,
including claims for damages or other liability asserted by
Owner, its customers or any third party. In the event such
modifications require ABS or Regulatory Body approval, Owner
shall be responsible for obtaining such approval unless
Builder accepts the responsibility by executing a change order
to perform the work under this Agreement.
(k) Except as expressly provided in Section 28 hereinbelow, Owner
understands and agrees that the information contained in this
Agreement and the Specifications relating to the Platform does
not guarantee a fixed or variable weight of the Platform or
designate the use of equipment or other components other than
the equipment or other components to be provided by Builder
under this Agreement and the Specifications. The fixed and
variable weight of the Platform and the selection of equipment
or other components other than those to be provided by Builder
under this Agreement and the Specifications are decisions of
the Owner, including outfitting and fabrication decisions. The
weight information provided by Builder is for information only
and reflects historical information or estimated and
approximate data. Builder is unable to predict actual weights
for the Platform to be constructed by Builder. Builder does
not warrant or represent that Builder's sale or construction
of the Platform will meet the historical or approximate data
supplied to Owner.
12. INDEMNIFICATION PROVISIONS
A. BUILDER INDEMNITIES
(A) BUILDER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS
OWNER, ITS CUSTOMERS, AND THEIR RESPECTIVE PARENT, HOLDING AND
AFFILIATED COMPANIES, AND THEIR EMPLOYEES, OFFICERS,
DIRECTORS, AND AGENTS (COLLECTIVELY THE "OWNER INDEMNITEES"),
FROM AND AGAINST ALL LIABILITIES, LOSSES, CLAIMS, DEMANDS OR
CAUSES OF ACTION (COLLECTIVELY "CLAIMS"), BY BUILDER OR ITS
SUBCONTRACTORS OF ANY TIER OR THEIR RESPECTIVE EMPLOYEES,
OFFICERS AND AGENTS, BASED ON ILLNESS, INJURY OR DEATH OR
DAMAGE OR DESTRUCTION OR LOSS OF USE OF PROPERTY THEREOF
INCLUDING WITHOUT LIMITATION THE YARD, OCCURRING PRIOR TO THE
DELIVERY TO AND ACCEPTANCE BY OWNER OF THE PLATFORM, INCIDENT
TO OR
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CONNECTED WITH OR ARISING OUT OF OR IN ANY WAY RELATED
DIRECTLY OR INDIRECTLY TO THE PERFORMANCE OF THIS AGREEMENT OR
BREACH HEREOF, REGARDLESS OF CAUSE, INCLUDING THE SOLE OR
CONCURRENT NEGLIGENCE OR FAULT OF ANY OF BUILDER OR THE OWNER
INDEMNITEES OR THEIR OFFICERS, AGENTS, EMPLOYEES, OR
SUBCONTRACTORS OF ANY TIER OR THEIR EMPLOYEES OR AGENTS,
UNSEAWORTHINESS, STRICT LIABILITY, OR ANY OTHER EVENT OR
CONDITION WHETHER OR NOT ANTICIPATED BY ANY PERSON OR PARTY,
REGARDLESS OF WHETHER PREEXISTING THE EXECUTION OF THIS
AGREEMENT.
(B) BUILDER SHALL BE LIABLE FOR ALL COSTS, EXPENSES, AND
REASONABLE ATTORNEYS FEES INCURRED BY OWNER INDEMNITEES IN
DEFENDING ANY COVERED CLAIMS AND IN ASSERTING THE INDEMNITIES
AS SET FORTH HEREIN AGAINST BUILDER. BUILDER SHALL BE
OBLIGATED TO BEAR THE EXPENSE OF THE INVESTIGATIONS AND
EXPENSES OF ALL CLAIMS ARISING THEREFROM AND TO PAY THE FULL
AMOUNT OF ANY JUDGMENT OR SETTLEMENT RENDERED AGAINST THE
OWNER INDEMNITEES, IT BEING STIPULATED THAT ALL OBLIGATIONS OF
INDEMNITY ASSUMED HEREIN SHALL SURVIVE THE TERMINATION OF THIS
AGREEMENT, REGARDLESS OF HOW SUCH TERMINATION IS EFFECTED. THE
OWNER INDEMNITEES SHALL PROVIDE REASONABLE ASSISTANCE TO
BUILDER IN RELATION TO THE DEFENSE OF CLAIMS WHICH ARE SUBJECT
TO INDEMNITY HEREUNDER
B. OWNER INDEMNITIES
(A) OWNER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD HARMLESS
BUILDER AND ITS PARENTS, HOLDING AND AFFILIATED COMPANIES, AND
THEIR RESPECTIVE EMPLOYEES, OFFICERS, DIRECTORS, AND AGENTS
AND THE SUBCONTRACTORS OF BUILDER AND THEIR SERVANTS
(COLLECTIVELY THE "BUILDER INDEMNITEES"), FROM AND AGAINST ALL
LIABILITIES, LOSSES, CLAIMS, DEMANDS, COSTS, OR CAUSES OF
ACTION (COLLECTIVELY "CLAIMS"), BY OWNER OR ITS CONTRACTORS
AND SUBCONTRACTORS OF ANY TIER OTHER THAN BUILDER OR ITS
SUBCONTRACTORS OR THEIR RESPECTIVE EMPLOYEES, OFFICERS AND
AGENTS, BASED ON ILLNESS, INJURY OR DEATH OR DAMAGE OR
DESTRUCTION OR LOSS OF USE OF PROPERTY OTHER THAN THE
PLATFORM, OCCURRING PRIOR TO THE DELIVERY TO AND ACCEPTANCE BY
OWNER OF THE PLATFORM, INCIDENT TO OR CONNECTED WITH OR
ARISING OUT OF OR IN ANY WAY RELATED DIRECTLY OR INDIRECTLY TO
THE PERFORMANCE OF THIS AGREEMENT OR BREACH HEREOF, REGARDLESS
OF CAUSE, INCLUDING THE SOLE OR CONCURRENT NEGLIGENCE OR FAULT
OF ANY OF OWNER OR
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THE BUILDER INDEMNITEES OR THEIR OFFICERS, AGENTS, EMPLOYEES,
OR SUBCONTRACTORS OF ANY TIER OR THEIR EMPLOYEES OR AGENTS,
UNSEAWORTHINESS, STRICT LIABILITY OR ANY OTHER EVENT OR
CONDITION WHETHER OR NOT ANTICIPATED BY ANY PERSON OR PARTY,
REGARDLESS OF WHETHER PREEXISTING THE EXECUTION OF THIS
AGREEMENT.
(B) OWNER SHALL BE LIABLE FOR ALL COSTS, EXPENSES, AND REASONABLE
ATTORNEYS FEES INCURRED BY BUILDER INDEMNITEES IN DEFENDING
ANY COVERED CLAIMS AND IN ASSERTING THE INDEMNITIES AS SET
FORTH IN PARAGRAPH (A) HEREINABOVE AGAINST OWNER. OWNER SHALL
BE OBLIGATED TO BEAR THE EXPENSE OF THE INVESTIGATIONS AND
EXPENSES OF ALL CLAIMS ARISING THEREFROM AND TO PAY THE FULL
AMOUNT OF ANY JUDGMENT OR SETTLEMENT RENDERED AGAINST THE
BUILDER INDEMNITEES, IT BEING STIPULATED THAT ALL OBLIGATIONS
OF INDEMNITY ASSUMED HEREIN SHALL SURVIVE THE TERMINATION OF
THIS AGREEMENT, REGARDLESS OF HOW SUCH TERMINATION IS
EFFECTED. THE BUILDER INDEMNITEES SHALL PROVIDE REASONABLE
ASSISTANCE TO OWNER IN RELATION TO THE DEFENSE OF CLAIMS,
WHICH ARE SUBJECT TO INDEMNITY HEREUNDER.
C. AS USED HEREIN "AFFILIATES" OR "AFFILIATED COMPANIES" SHALL
MEAN AN ENTITY WHICH, DIRECTLY OR INDIRECTLY, THROUGH ONE OR
MORE INTERMEDIARIES, CONTROLS, IS CONTROLLED BY, OR IS UNDER
COMMON CONTROL WITH, THE PARTY IN QUESTION.
13. PATENT INDEMNITY
(a) Builder hereby agrees to defend any claim or suit and to
indemnify and save Owner harmless from and against any damages
(including the costs of the suit and reasonable attorney's
fees) awarded against Owner in a suit arising out of any
infringement of any U.S. or Singapore letters patent by reason
of the incorporation into the Platform in accordance with this
Agreement, the Specifications or the Platform Design of any
items manufactured or designed by Builder; provided that
(i) the indemnity contained in this Section 13 shall not
apply to any claim or suit arising out of the
construction or use of processes, devices, apparatus,
or equipment specified or furnished by Owner or
anyone else other than Builder, for which Owner shall
indemnify and defend Builder, and mounted upon or
used in connection with the Platform, and
(ii) Owner shall give Builder prompt written notice of any
such claim or suit and shall permit Builder to
control settlement negotiations and any litigation in
connection therewith;
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provided, however, no settlement which purports to
acknowledge, on Owner's behalf the validity of the
patent involved shall be entered into by Builder
without Owner's consent. As to any Equipment
components purchased by Builder, Builder shall assign
(to the extent same is assignable) to Owner, without
recourse, any patent indemnity coverage granted to
Builder by any vendor thereof. Owner shall seek
performance or damages under such Patent indemnities
only from such vendors and not from Builder. Builder
shall cooperate with Owner in any resulting dispute
Owner may have with such vendors, including
permitting Owner to assert such indemnities in
Builder's name when any such indemnities are not
assignable. It is understood and agreed that the
Platform Design and the Specifications were developed
by Builder, and the inclusion in the Platform Design
or the Specifications of any process, method of
construction, construction equipment, device, or
apparatus (other than Owner Furnished Equipment) are
the sole and exclusive responsibility of Builder and
that any claims of patent infringement arising
therefrom are within the terms of Builder's patent
indemnity.
(b) Owner agrees to defend any claim, suit, or proceeding brought
against Builder alleging that the construction or use by
Builder, pursuant to this Agreement, of any process, method of
construction, construction equipment, device, or apparatus
(including, without limitation, Owner Furnished Equipment)
specified or furnished by Owner or mounted upon or used in
connection with the Platform constitutes infringement of any
letters patent, and Owner agrees to indemnify and save Builder
harmless from and against any judgment rendered against
Builder as a result of such claim, suit, or proceeding.
Builder shall promptly notify Owner in writing of any such
claim, suit, or proceeding and shall permit Owner to control
the conduct and settlement of such claim, suit, or proceeding,
provided, however, no settlement shall be entered into without
Builder's consent which purports to acknowledge on Builder's
behalf the validity of any patent. Builder shall provide
information and assistance to Owner, at Builder's expense, as
may be reasonably necessary to aid in the conduct and
settlement of the claim, suit, or proceeding. Builder shall be
entitled to participate, at its own expense, in the conduct
and settlement of such claim, suit, or proceeding through its
selected representatives and attorneys.
14. FORCE MAJEURE
(a) For purposes of this Agreement, events of "Force Majeure"
shall be defined to mean all causes beyond the reasonable
control of the party asserting the benefit of this Article,
and shall include but not be limited to fire, explosion,
breakdown of machinery or equipment, shortage or
unavailability of materials or equipment (provided the
responsible party shall have taken reasonable measures to
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overcome such shortage or unavailability), delay in
transportation (provided the responsible party shall have
taken reasonable measures to overcome such delay), government
order, edict, or other governmental action, storms, abnormal
weather that prevents blasting or painting, strikes or other
labor disturbances, destruction or damage to Builder's Yard or
equipment or any Owner Furnished Equipment or the Platform or
any part thereof from any cause; acts of Owner or regulatory
bodies having or purporting to have jurisdiction; late
delivery of Owner Furnished Equipment or failure to furnish in
a timely manner necessary information concerning the Owner
Furnished Equipment or the installation thereof; delays caused
by the Secretary (as defined in Section 30 hereof) or his
representatives; and any other causes or accidents of the same
or similar nature which are beyond the control of the Builder
or Owner or any or their respective subcontractors or
suppliers provided, however, that any increased costs to
Builder caused by ABS shall not be an event of Force Majeure.
In case either party shall be unable, wholly or in part,
because of any such event of Force Majeure to carry out its
obligations under this Agreement, the time for performance,
other than the obligation to make payments, shall be extended
by the period of such actual delay due to Force Majeure for
which notices are given as provided hereinbelow. Performance
of any obligations suspended while any Force Majeure is
operative shall be resumed as soon as possible after such
Force Majeure ceases. The party seeking benefit of this
paragraph shall notify the other of the occurrence of each
event of Force Majeure within seven (7) days after
commencement of such event. Any increased costs to Builder
resulting from any event of Force Majeure shall be compensated
by Owner to Builder to the extent (a) Builder maintains the
Builder's Risk insurance required by Section 8 hereof, and (b)
not compensated to Builder under such Builder's Risk
insurance. After ninety (90) continuous days of delay in the
construction of the Platform due to Force Majeure, Builder and
Owner shall each have the right to terminate this Agreement
without further liability of either party to the other except
that (1) Builder shall retain all progress payments pursuant
to Paragraph 2(b) hereinabove 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 process (including profit on all to Builder), and (2)
Builder shall (a) permit the Platform, work in process and
Owner Furnished Equipment to remain in Builder's yard for a
period of ninety (90) days following such termination to
permit the Owner time to dispose of such, and (b) on a time
and materials basis at Builder's customary rates, perform such
work on the Platform, work in process or Owner Furnished
Equipment as Owner reasonably requires to facilitate such
disposition. Owner shall pay to Builder its standard charges
for shore power, potable water, and security guard service.
15. INDEPENDENT CONTRACTOR
(a) Throughout the entire term of this Agreement, Builder shall be
an independent contractor with full power and authority to
select the means, methods and manner of performing its work
hereunder.
(b) All operations shall be conducted in Builder's own name and as
an independent contractor and not in the name of, or as an
agent for, Owner. In
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the event Builder shall sublet or subcontract any of the
construction of the Platform provided for herein, Builder
nevertheless shall remain primarily responsible for compliance
with all of the provisions hereof and for the construction of
the Platform, including the portion of the construction of the
Platform performed by the party to whom the work is sublet or
subcontracted, and Builder shall require each such
subcontractor and each such subcontractor's employees, agents
and representatives to comply with all the agreements,
covenants, terms, conditions, and provisions on the part of
Builder to be performed hereunder, insofar as applicable to
the work to be performed by each such subcontractor.
16. DEFAULT
(a) Builder's Default
Builder shall be in default of its obligations under this
Agreement if any of the following events occur:
(i) The failure of the Builder to perform or breach of
any of the material covenants, agreements, or
undertakings on its part to be performed under this
Agreement, provided that the Owner shall give notice
to the Builder as to such failure and the Builder
shall not, within thirty (30) days after being so
notified, commence and diligently prosecute remedial
action to cure such failure to perform or breach
which shall in any event be cured within one hundred
twenty (120) days of the date of such notice from
Owner;
(ii) Builder goes into liquidation, whether voluntary or
compulsory, or enters into a scheme of arrangement,
or makes a general assignment of its assets for the
benefit of its creditors, or a receiver or receivers
of any kind whatsoever, whether temporary or
permanent, is appointed for the property of Builder,
or Builder institutes proceedings for its
reorganization or the institution of such proceedings
by creditors and approval thereof by the court,
whether proposed by a creditor, a stockholder or any
other person whomsoever, or Builder suffers any
execution against a major portion of its assets which
is not satisfied within seven (7) days, or Builder
fails generally, or admits in writing its inability,
to pay its debts generally as they become due.
(b) If any default by Builder occurs as defined in Subparagraph
(a) of this Section 16, Owner, at its election, may upon
prompt notice to Builder terminate this Agreement without
prejudice and exercise all rights and remedies available to
Owner at law, in admiralty, or in equity. Prior to exercise of
any remedy involving or which includes any attempt to take
control or possession of the Platform or any components
thereof or work in progress, if Builder disputes that it is in
default, Owner shall first be required to post with Builder a
corporate surety bond from a first class U.S. surety
acceptable to Builder in a form reasonably satisfactory to
Builder. Such bond
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shall be in an amount equal to 150% of any sum claimed by
Builder under this Agreement.
(c) Owner's Default
Owner shall be in default of its obligations under this
Agreement if any of the following events occurs:
(i) In the event of failure by Owner to pay to Builder
any installments which are properly payable pursuant
to Section 3, Paragraph 2(b) of this Agreement or the
failure of the Owner to perform or breach of any of
the other material covenants, agreements, or
undertakings on its part to be performed under this
Agreement, provided that the Builder shall give
notice to the Owner as to such failure and the Owner
shall not, within seven (7) days in the case of
failure to pay or to take delivery of the Platform
when completed under the terms of this Agreement and
thirty (30) days in the case of other defaults after
being so notified, cure such failure to perform or
breach;
(ii) Owner goes into liquidation, whether voluntary or
compulsory, or enters into a scheme of arrangement,
or makes a general assignment of its assets for the
benefit of its creditors, or a receiver or receivers
of any kind whatsoever, whether temporary or
permanent, is appointed for the property of Owner, or
Owner institutes proceedings for its reorganization
or the institution of such proceedings by creditors
and approval thereof by the court, whether proposed
by a creditor, a stockholder or any other person
whomsoever, or Owner suffers any execution against a
major portion of its assets which is not satisfied
within seven (7) days, or Owner fails generally, or
admits in writing its inability, to pay its debts
generally as they become due.
(d) If any default by Owner occurs as defined in subparagraph (c)
of this Section 16, Builder, at its election, may upon prompt
notice to Owner suspend its performance under this Agreement
and at any time thereafter may terminate this Agreement
without prejudice to all rights and remedies available to
Builder at law, in admiralty, or in equity.
17. LITIGATION
(a) Owner and Builder agree that any and all disputes arising from
or in connection with this Agreement shall be determined by,
and any legal suit, action, or proceeding arising out of or
relating to this Agreement may be instituted only in, a state
or federal court in Harris County, Texas, United States of
America to whose jurisdiction the parties hereby irrevocably
submit.
(b) Owner hereby designates and appoints CT Corporations Systems,
Inc., 811Dallas, Ave., Houston, Texas 77002 ("CT") as Owner's
authorized agent and acknowledges on its behalf service of any
and all process and, if through reasonable efforts, service on
CT has been unsuccessful, Owner hereby designates
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and appoints the Secretary of State, State of Texas as Owner's
authorized agent to accept and acknowledge on it's behalf
service of any and all process which may be served in any such
suit, action, or proceeding in any such state or federal court
in the State of Texas and agrees that service of process upon
said agent or the Assistant Secretary of State or any clerk
having charge of the corporation department of the office of
said Secretary of State at his office in Austin, Texas, and
written notice of said service to Owner, mailed or delivered
to Owner at the address specified for Owner in Article 18 of
this Agreement, shall be deemed in every respect effective
service of process upon Owner in any suit, action or
proceeding and shall be taken and held to be valid personal
service upon Owner, whether or not Owner shall then be doing,
or at any time shall have done, business within the State of
Texas, and that any such service of process shall be of the
same force and validity as if service were made upon it
according to the laws governing the validity and requirements
of such service in the State of Texas, and waives all claims
of error by reason of such service.
(c) Builder hereby designates and appoints Frank Puglisi, AMFELS,
Inc., Highway 48, Port of Brownsville, Brownsville, TX 78523,
as Builder's authorized agent and acknowledges on its behalf
service of any and all process and, if through reasonable
efforts, service on Frank Puglisi has been unsuccessful,
Builder hereby designates and appoints the Secretary of State,
State of Texas as Builder's authorized agent to accept and
acknowledge on it's behalf service of any and all process
which may be served in any such suit, action, or proceeding in
any such state or federal court in the State of Texas and
agrees that service of process upon said agent or the
Assistant Secretary of State or any clerk having charge of the
corporation department of the office of said Secretary of
State, at his office in Austin, Texas, and written notice of
said service to Builder, mailed or delivered to Builder at the
address specified for Builder in Article 18 of this Agreement,
shall be deemed in every respect effective service of process
upon Builder in any suit, action or proceeding and shall be
taken and held to be valid personal service upon Builder,
whether or not Builder shall then be doing, or at any time
shall have done, business within the State of Texas, and that
any such service of process shall be of the same force and
validity as if service were made upon it according to the laws
governing the validity and requirements of such service in the
State of Texas, and waives all claims of error by reason of
such service.
18. NOTICE
Any notice provided for under this Agreement must be given in writing,
but may be served by depositing same in the mail, addressed to the
party to be notified, postage paid, and registered or certified with
return receipt requested, or by delivering same in person to such other
party, or by pre-paid telegram, telex, facsimile confirmed by mail, or
cable. For purposes of notice, the addresses of the parties shall be:
If to Owner: Chiles Offshore LLC
11200 Richmond Ave.
Suite 490
Houston, TX 77082
Telephone: 713-339-3997
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Facsimile: 713-339-3888
Attention: William E. Chiles
President
If to Builder: AMFELS, Inc.
20,000 Highway 48
Port of Brownsville
Brownsville, Texas 78563
Telephone: 956-831-8200
Facsimile: 956-831-6220
Attention: Y.Y. Chow
President
Provided, however, that each party shall have the continuing right to
change its address of notice at any time or times by the giving of 10
days notice in the manner hereinabove described. Notices shall be
deemed given only upon receipt or by facsimile confirmation.
19. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of, and shall be binding
upon, the parties hereto, and their respective successors and assigns.
It is expressly understood and agreed that neither party shall assign
any of its rights, title and interest in this Agreement without the
prior written consent of the other party, except Builder hereby
consents to an assignment of this Agreement by Owner to a wholly-owned
subsidiary of Owner, provided that Owner shall remain primarily liable
for the full and timely performance by such assignee of the obligations
of such assignee under this Agreement.
20. GOVERNING LAW
This Agreement shall be deemed to have been made under, shall be
construed and interpreted in accordance with the laws of the State of
Texas, excluding any conflicts of law rule or law which might refer
such construction and interpretation to the laws of another state,
republic or country; provided, however, that all matters relating to
the interpretation of any patent or patent application will be decided
in accordance with the laws of the country which issued the patent to
be interpreted or in which the patent applications to be interpreted
have been filed.
21. MODIFICATION OR WAIVER.
This Agreement, which incorporates all prior negotiations and
understandings relating to the subject matter thereof, sets forth the
entire agreement of the parties hereto and shall not be modified except
by a written instrument executed by the duly authorized representatives
of Builder and Owner. The failure of either party to insist upon strict
performance of any provision hereof shall not constitute a waiver of or
estoppel against asserting the right to require such performance in the
future, nor shall a waiver or estoppel in any one instance, constitute
a waiver or estoppel with respect to a later breach of a similar nature
or otherwise.
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22. RELIANCE
AS MORE FULLY SET FORTH IN OTHER PROVISIONS OF THIS AGREEMENT, BUILDER
AND OWNER HAVE REACHED EXPRESS AGREEMENT WITH RESPECT TO THE LIMITATION
OF THEIR RESPECTIVE LIABILITIES IN CONNECTION WITH THIS AGREEMENT.
BUILDER AND OWNER EXPRESSLY RECOGNIZE THAT (A) THE PRICE FOR WHICH
BUILDER HAS AGREED TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT HAS
BEEN PREDICATED ON THE AFORESAID LIMITATION OF LIABILITY AND WAIVER (IT
BEING ACKNOWLEDGED THAT OWNER COULD HAVE NEGOTIATED WITH BUILDER FOR
MODIFICATIONS TO THE LIMITATION OF BUILDER'S LIABILITY BUT THAT THE
PRICE OF THE PLATFORM WOULD HAVE BEEN INCREASED TO REFLECT SUCH
MODIFICATIONS), (B) BUILDER, IN DETERMINING TO PROCEED WITH THE
PERFORMANCE OF ITS OBLIGATIONS PURSUANT TO THIS AGREEMENT, HAS
EXPRESSLY RELIED ON SUCH LIMITATION OF LIABILITY AND WAIVER AND WOULD
NOT HAVE EXECUTED THIS AGREEMENT BUT FOR SUCH LIMITATION OF LIABILITY,
AND (C) OWNER, IN ACCEPTING THE PRICE FOR THE PLATFORM (IT BEING
ACKNOWLEDGED THAT BUILDER COULD HAVE NEGOTIATED FOR MODIFICATIONS TO
THE LIMITATION OF OWNER'S LIABILITIES BUT THAT THE PRICE OWNER WOULD
HAVE BEEN WILLING TO PAY FOR THE PLATFORM WOULD HAVE BEEN DECREASED DUE
TO SUCH MODIFICATIONS), AND IN DETERMINING TO UNDERTAKE THE OWNER'S
OBLIGATIONS UNDER THIS AGREEMENT, RELIED UPON SUCH LIMITATION OF
LIABILITY.
23. COMPUTATION OF TIME
All periods of time shall be computed by including Saturdays, Sundays
and holidays except that if such period terminates on a Saturday,
Sunday or holiday it shall be deemed extended to the business day next
succeeding. All references in this Agreement to days shall mean
calendar days.
24. GENERAL LIMITATION OF LIABILITY
IN NO EVENT SHALL BUILDER OR ITS AFFILIATES OR THE AGENTS, OFFICERS,
EMPLOYEES, INVITEES, REPRESENTATIVES OR SUBCONTRACTORS OF BUILDER OR
THEIR SERVANTS BE LIABLE TO OWNER OR ITS AFFILIATES OR THE AGENTS,
OFFICERS, EMPLOYEES, INVITEES, REPRESENTATIVES, CONTRACTORS, OR
SUBCONTRACTORS OF ANY TIER, EXCLUDING BUILDER AND ITS SUBCONTRACTORS,
OR TO ANY THIRD PARTIES FOR PHYSICAL HARM, INCIDENTAL, CONSEQUENTIAL,
PUNITIVE OR SPECIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF
PROFITS AND LOSS OF BUSINESS OPPORTUNITIES), ARISING OUT OF, RESULTING
FROM OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY ACTIVITIES OR
OMISSIONS OR DELAYS IN CONNECTION
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<PAGE>
HEREWITH OR THEREWITH INCLUDING, WITHOUT LIMITATION, THE PERFORMANCE
(WHETHER TIMELY OR NOT) OR THE NON-PERFORMANCE OF THIS AGREEMENT,
BREACH OF ANY WARRANTY OR THE LOSS OF OR LOSS OF USE OF THE PLATFORM OR
ANY PART THEREOF OR ANY OTHER EQUIPMENT, MATERIALS, OR PROPERTY,
REGARDLESS OF CAUSE AND REGARDLESS OF WHETHER BUILDER OR ITS
AFFILIATES, AND/OR THEIR RESPECTIVE OFFICERS, EMPLOYEES, AGENTS,
REPRESENTATIVES, SUBCONTRACORS, OR THEIR SERVANTS AND/OR OTHERS MAY BE
WHOLY, PARTIALLY, OR SOLELY NEGLIGENT OR OTHERWISE AT FAULT,
UNSEAWORTHINESS, STRICT LIABILITY, OR ANY DEFECT IN PREMISES, EQUIPMENT
OR MATERIALS, OR ANY OTHER EVENT OR CONDITION WHETHER OR NOT
ANTICITPATED BY ANY PERSON OR PARTY, REGARDLESS OF WHETHER PREEXISTING
THE EXECUTION OF THIS AGREEMENT.
25. WAIVER OF CONSUMER RIGHTS AND REPRESENTATIONS OF OWNER
OWNER HEREBY WAIVES ITS RIGHTS UNDER THE TEXAS DECEPTIVE TRADE
PRACTICE-CONSUMER PROTECTION ACT, CHAPTER 17, SUBCHAPTER E, SECTIONS
17.41, ET SEQ, VERNON'S TEXAS CODES ANNOTATED, BUSINESS AND COMMERCE
CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER
CONSULTATION WITH AN ATTORNEY OF IT OWN SELECTION, OWNER VOLUNTARILY
CONSENTS TO THIS WAIVER. TO EVIDENCE ITS ABILITY TO GRANT SUCH WAIVER,
OWNER HEREBY REPRESENTS AND WARRANTS TO BUILDER THAT OWNER (a) IS IN
THE BUSINESS OF SEEKING OR ACQUIRING, BY PURCHASE OR LEASE, GOODS OR
SERVICES FOR COMMERCIAL OR BUSINESS USE AND IS ACQUIRING THE GOODS AND
SERVICES COVERED BY THIS AGREEMENT FOR COMMERCIAL OR BUSINESS USE AND
IS ACQUIRING THE GOODS AND SERVICES COVERED BY THIS AGREEMENT FOR
COMMERCIAL USE, (b) HAS ASSETS OF $25,000,000 OR MORE, OR IS OWNED BY A
CORPORATION OR OTHER ENTITY WHICH HAS ASSETS OF $25,000,000 OR MORE,
ACCORDING TO ITS MOST RECENT FINANCIAL STATEMENT PREPARED IN ACCORDANCE
WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPALS, (c) HAS KNOWLEDGE AND
EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO EVALUATE
THE MERITS AND RISKS OF THE TRANSACTIONS CONTEMPLATED HEREBY, (d) IS
NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION, AND (e) IS
REPRESENTED BY LEGAL COUNSEL IN THIS TRANSACTION WHICH WAS NOT DIRECTLY
OR INDIRECTLY IDENTIFIED, SUGGESTED OR SELECTED BY BUILDER. OWNER'S
REPRESENTATIONS AND WARRNTIES SHALL SURVIVE THE PERFORMANCE OF ALL WORK
IN CONNECTION WITH THIS AGREEMENT AND SHALL REMAIN EFFECTIVE REGARDLESS
OF ANY INVESTIGATION AT ANY TIME MADE BY OR ON BEHALF OF BUILDER OR ANY
INFORMATION BUILDER MAY HAVE WITH RESPECT THERETO. OWNER HEREBY AGREES
TO PROTECT, INDEMNIFY AND HOLD BUILDER AND ITS AFFILIATES HARMLESS FROM
AND AGAINST ANY AND ALL
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<PAGE>
LOSSES, COSTS (INCLUDING, WITHOUT LIMITATION, THE COST OF THE SUIT AND
REASONABLE ATTORNEYS' FEES), CLAIMS, CAUSES OF ACTION, AND LIABILITIES
ARISING OUT OF OR RESULTING FROM, OR RELATING IN ANY WAY TO THE BREACH
OF THE AFORESAID REPRESENTATIONS AND WARRANTIES.
CHILES OFFSHORE LLC
By: /s/ William E. Chiles
-------------------------
26. SEVERABILITY
If any of the terms and conditions of this Agreement are held by any
court of competent jurisdiction to contravene or to be invalid under
the laws of any political body having jurisdiction over the subject
matter hereof, such contravention or invalidity shall not invalidate
the entire Agreement, but, instead, this Agreement shall be construed
as if not containing the particular provision or provisions held to be
invalid and the rights and obligations of the parties shall be
construed and enforced accordingly and this Agreement shall thereupon
and thereafter remain in full force and effect.
27. CONSTRUCTION
The parties to this Agreement having been represented by legal counsel
of their own choosing in connection with the negotiation and drafting
of this Agreement, this Agreement shall be construed and interpreted
for all purposes without regard to the author of any specific language
appearing herein. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
28. VARIABLE LOADS
(a) Builder shall endeavor, without guarantee or warranty, to meet
the target figures set out for variable loads in Section 1 of
the Specifications; provided, however, Builder shall guarantee
no less than the following variable loads (as approved by ABS)
for the 475' leg length Platform:
Variable Load Elevated Storm: 3,600 kips
These values are based on the weight of Owner Furnished Equipment that
will be permanently affixed to the Platform not to exceed 1800 kips.
Prior to delivery of the Platform, the variable loads shall be
determined by an inclining experiment.
(b) In the event that the Variable Load Elevated Storm calculated
at the 475' leg length is less than 3,600 kips, and Builder
shall not have corrected such deficiency pursuant to paragraph
(e) hereof, Builder shall pay to Owner as liquidated damages
and not as a penalty the following cumulative amounts for such
deficiency up to a maximum of $3,000,000:
<TABLE>
<S> <C>
(i) If less than 3,600 kips but more than 3,400 kips-
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<PAGE>
<S> <C>
for each full 10 kips reduction within such range- $30,000
(ii) If less than 3,400 kips but more than 3,200 kips- for
each full 10 kips reduction within such range- $50,000
(iii) If less than 3,200 kips but more than 3,000 kips- for
each full 10 kips reduction within such range- $70,000
</TABLE>
(c) In the event the Variable Load Elevated Storm calculated at
the 475' leg length is less than 3,000 kips, and Builder shall
not have corrected such deficiency pursuant to paragraph (e)
hereof, Owner shall have the right to reject the Platform, in
which event (i) Builder shall not be liable to Owner for
liquidated damages, and (ii) Owner's sole and exclusive remedy
shall be to terminate this Agreement and receive a refund of
all progress payments theretofore made to Builder under this
Agreement with interest thereon at the rate of eight percent
(8%) per annum on such sums commencing from the date of
payment of such progress payments until the same are refunded
to Owner plus the delivered invoice cost of all Owner
Furnished Equipment which has been incorporated in the
Platform. Upon payment of all sums due Owner under this
provision, all right, title, and interest in the Platform
shall be conveyed to Builder "As Is, Where Is" and free and
clear of all liens, claims and encumbrances created by,
through or under Owner.
(d) In the event the Variable Load Elevated Storm calculated at
the 475' leg length is in excess of 4,000 kips, Owner shall
pay to Builder as a bonus the following cumulative amounts for
such excess up to a maximum of $3,000,000:
<TABLE>
<S> <C>
(i) If greater than 4,000 kips but less than 4,200 Kips-
for each full 10 kips increase within such range- $30,000
(ii) If greater than 4,200 kips but less than 4,400 kips
for each full 10 kips increase within such range- $50,000
(iii) If greater than 4,400 kips
for each full 10 kips increase within such range- $70,000
</TABLE>
(e) In the event the Variable Load Elevated Storm calculated at
the 475' leg length is less than 3,000 kips, Builder shall
have the option to make modifications to the Platform in order
to increase the Variable Load Elevated Storm, provided that
such modifications (i) are approved in advance by ABS, (ii) do
not materially affect the motion characteristics or
operational performance of the Platform, and (iii) are
accomplished within one hundred twenty (120) days of the
Delivery Date. In the event such modifications increase the
Variable Load Elevated Storm, the liquidated damages provided
in paragraph (c) hereof and the bonus provided in paragraph
(d) hereof shall be calculated on the basis of such increased
Variable Load Elevated Storm.
29. TAXES AND DUTIES
Builder shall pay or cause to be paid all United States and State of
Texas taxes, duties, fees and stamp duties of whatsoever nature imposed
by any governmental entity in connection with Builder's performance of
its obligations under this Agreement, including any tax on the sale and
delivery of the Platform to Owner, excluding any such taxes, duties,
fees and stamp duties imposed by any governmental entity on the
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Owner Furnished Equipment.
30. TITLE XI AMENDMENT
In the event Buyer obtains a letter commitment from the United States
Secretary of Transportation, acting by and through the Maritime
Administrator (the "Secretary"), to guarantee the financing (such
commitment the "Letter Commitment" and such guarantee the "Guarantee")
for the Platform under Title XI of the Merchant Marine Act, 1936,
Builder and Owner agree to amend this Agreement as required by the
Secretary as a condition to such Guarantee, including, without limiting
the generality of the foregoing, if so required by the Secretary,
elimination of the reservations to Builder in the final two sentences
of paragraph (b) of Section 9 hereof. It is expected that such
amendment of this Agreement will be substantially in the form of
Exhibit C hereto.
31. CONFIDENTIALITY AND GRANT OF LICENSE
(a) Owner recognizes and agrees that confidential information of
Builder has or will be provided to Owner in connection with
the design and construction of the Platform. Builder shall
mark any such confidential information as "Confidential" (any
such information as so marked, herein "Confidential
Information") Owner agrees to maintain in confidence and not
to exhibit, sell, lease, or otherwise commercialize, disclose,
or use such Confidential Information, in whatever form
provided including without limitation descriptions, drawings,
specifications, and calculations, except as is reasonably
necessary in connection with the ownership, operation, repair,
and maintenance of the Platform. Such obligation of
confidentiality shall extend to and cover information which is
discovered as a result of inspection or reverse engineering.
In connection therewith, if disclosure of Confidential
Information must be made to vendors, suppliers, contractors,
or subcontractors, Owner shall disclose only such portion of
such Confidential Information as is reasonably necessary to
enable such parties to perform the needed work on the
Platform. Further, Owner shall first obtain an obligation of
confidentiality from such parties with regard to such
Confidential Information on substantially the same terms and
conditions as set forth herein, which obligation of
confidentiality shall expressly be enforceable by and in the
name of Builder. Such obligation of confidentiality by such
parties shall further provide that all such Confidential
Information in whatever form and all copies thereof shall be
immediately returned by such parties upon the request of Owner
or Builder.
(b) All documents of any kind embodying any substantive part of
such Confidential Information shall be conspicuously marked
with a stamp or legend with a proprietary notice reading as
follows:
"NOTICE
THIS DOCUMENT AND THE INFORMATION CONTAINED HEREIN
ARE THE PROPERTY OF AMFELS, INC., A COPRORATION
ORGANIZED UNDER THE LAWS OF THE STATE OF TEXAS , AND
ARE MAINTAINED IN CONFIDENCE
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<PAGE>
THEREBY, AND RECEIPT OF THIS DOCUMENT AND THE
INFORMATION CONTAINED HEREIN CONSTITUTES THE
AGREEMENT OF THE PERSON OR ENTITY RECEIVING SAME TO
MAINTAIN THIS DOCUMENT AND THE INFORMATION CONTAINED
HEREIN IN CONFIDENCE. RECEIPT OR POSSESSION OF THIS
DOCUMENT DOES NOT CONVEY ANY RIGHTS TO REPRODUCE THIS
DOCUMENT OR TO DISCLOSE ITS CONTENTS, OR TO
MANUFACTURE, USE OR SELL ANYTHING SHOWN OR DESCRIBED
IN THIS DOCUMENT. REPRODUCTION, DISCLOSURE, OR USE OF
THIS DOCUMENT OR ANY INFORMATION CONTAINED HEREIN
WITHOUT SPECIFIC WRITTEN AUTHORIZATION OF AMFELS,
INC. IS STRICTLY FORBIDDEN."
(c) The obligation of confidentiality provided in this Section 30
shall not apply to such portion of the Confidential
Information which now or hereafter is described in an issued
Singapore or foreign letters patent or is now or hereafter
published in a printed publication generally available in the
industry (except where published in violation of this
Agreement).
(d) The design of the Platform and the descriptions, drawings,
specifications, and calculations prepared by Builder in
connection with the design and construction of the Platform
are and shall remain the property of Builder. Owner shall have
no right to use, sell, license, or otherwise commercialize
such design or any such descriptions, drawings,
specifications, and calculations except in connection with the
ownership and operation of the Platform. Builder hereby grants
to Owner upon delivery of the Platform an irrevocable,
non-exclusive, royalty free, perpetual license to use, lease,
sell, or otherwise dispose of (but not to duplicate or
manufacture) all or any of Builder's interest in the Platform
or the design thereof which has heretofore been patented by
Builder, or for which patents may be pending by Builder, or
for which patent applications may hereafter be filed by
Builder. Owner shall have the right to transfer the license
referred to hereinabove along with the Platform whenever Owner
sells the Platform, provided Owner obtains from the purchaser
an agreement in writing (an executed original of which shall
be promptly delivered to Builder) providing that such party
undertakes the same obligations as Owner has pursuant to this
Section 30.
(e) The license herein granted shall apply only to the one
Platform to be constructed pursuant to this Agreement. If at
any time Owner is in default of any of its obligations under
this Section 30, Builder may cancel and terminated the
licenses granted by Builder herein, by giving Owner ten (10)
days prior written notice of the intention to terminate;
provided, however, termination shall not relieve Owner of its
obligations set forth in this Section 30, and the same shall
continue in full force and effect. Owner shall promptly notify
Builder in the event Owner knows or learns of any unauthorized
use of the descriptions, drawings, specifications, and
calculations prepared by Builder in connection with the design
and construction of the Platform by any person or party or if
Owner learns of any infringement of any patent held by Builder
in connection with the design or construction of the Platform.
Nevertheless, without the prior written consent of Builder,
Owner shall
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<PAGE>
initiate no notices of unlawful use of or infringement to the
party or person using the descriptions, drawings,
specifications, and calculations prepared by Builder in
connection with the design and construction of the Platform or
the applicable letters patent, and shall engage in no positive
or overt acts toward such party or person which would create a
justiciable controversy between such party or person and
Builder with respect thereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on their behalf by their respective duly authorized representatives on
the date first shown above.
AMFELS, INC.
By: /s/ C. H. Tong
--------------
Name: C. H. Tong
Title: Director
CHILES OFFSHORE LLC
By: /s/ William E. Chiles
----------------------
Name: William E. Chiles
Title: President
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<PAGE>
EXHIBIT A
TO PLATFORM CONSTRUCTION AGREEMENT
PAYMENT SCHEDULE
Buyer shall make payment to Builder as follows:
<TABLE>
<CAPTION>
EVENT PERCENTAGE OF CONTRACT PRICE
<S> <C>
Contract Signing 15%
Start of Fabrication 15%
Keel Laying 20%
Install 3rd Spud Can 20%
Launching 20%
Delivery 10%
</TABLE>
29
<PAGE>
EXHIBIT B
TO PLATFORM CONSTRUCTION AGREEMENT
SPECIFICATIONS AND DESIGN DRAWINGS
Specification for the Construction and Outfit of a Mobile
Offshore Self-elevating Drilling Unit, Keppel FELS Class B
dated 5th April 2000
General Arrangement Drawings:
- General Arrangement, Outboard Profile D001
- General Arrangement, Inner Bottom Tank Arrangement D002
- General Arrangement, Machinery Deck (5 ft level) D003
- General Arrangement, Machinery Deck. (16 ft level) D004
- General Arrangement, Main Deck 25ft level D005-01
- General Arrangement, Main Deck 30ft level D005-02
- General Arrangement, Main Deck 40ft level D005-03
- General Arrangement, Main Deck 50ft level D006-04
- General Arrangement, Main Deck 60ft level D006-05
- General Arrangement, Main Deck 70ft level D006-06
Schematic Drawings:
- A.C. One Line Diagram E02
- D.C. One Line Diagram E03
- Preload Fill & Dump System P101
- Salt Water System P104
- Drill Water System P106
- H.P. & L.P. Air Systems P113
- Low Pressure Mud Systems P115
- High Pressure Mud and Cement P117
- Fuel Oil System P110
- Bilge System P102
- Drain System P112
- Fire Fighting System P105
- Heliport Foam System P119
- Exhaust System P121
- Engine Cooling System P108
- Leg Jetting System P103
30
<PAGE>
EXHIBIT C
TITLE XI PROVISIONS
1. INSPECTION BY THE SECRETARY'S REPRESENTATIVES. The Shipyard
shall permit inspection by, supply information to, and
cooperate with representatives of the Secretary of
Transportation acting by and through the Maritime
Administrator (the "Secretary") at its yard where the assembly
of the Vessel is now taking place and at such other yards of
the Shipyard, its affiliates and subcontractors where parts of
the Construction Contract or subcontracts may be performed.
Shipyard acknowledges that such cooperation may include, but
is not limited, to providing the Secretary: 1) access to the
Vessel and areas of the Shipyard where work related to the
Vessel is being performed by the Shipyard, its contractors and
subcontractors, at all reasonable times during normal working
hours to inspect performance of the Work, and to observe
trials and other tests; 2) copies of detailed production and
construction schedules for the Vessel along with changes to
such documents as they occur; 3) access to contract plans and
specifications for the Vessel; 4) reasonable access to
Shipyard's production manager or supervisor; 5) information on
the origination and source of materials; and 6) access to
progress payment and construction milestone information. In
conjunction with any such inspections by the Secretary, the
Shipyard will furnish, on a temporary basis, reasonable space
at its yard for the Secretary's representatives and
communication, copying and other facilities as appropriate.
The Secretary's access to the Vessel shall be at the
Secretary's and Shipowner's sole risk. The Shipyard assumes no
responsibility for its own negligence, and Shipowner assumes
full liability for any injury that the Secretary or its
representatives, agents or contractors may sustain on the
Vessel during its construction and the Shipowner hereby fully
releases and discharges and shall defend and indemnify the
Shipyard from any liability with respect thereto.
2. CHANGES IN CONSTRUCTION CONTRACT. Notwithstanding anything to
the contrary contained in the Construction Contract, the
Construction Contract shall not be amended, modified or
terminated except in writing duly signed by the Shipyard and
Shipowner with the Secretary's prior written consent, PROVIDED
THAT the Secretary's prior written consent shall not be
necessary, but prior written notice to the Secretary shall be
given, for (a) any mandatory changes to the Construction
Contract as a result of any requirements of the classification
society or any governmental agency, or (b) any non-mandatory
changes that Shipyard and Shipowner desire to make which do
not exceed, with respect to any item of the Vessel's
construction, one (1%) percent of the Vessel's Contract Price
and which do not, in the aggregate, cause the Vessel's
Contract Price to be increased more than five (5%) percent or
the delivery and completion date of the Vessel to be extended
more than ten (10) days. Notwithstanding the foregoing, no
change shall be made in the general dimensions and/or
characteristics of the Vessel which would diminish the
capacity of the Vessel to perform as originally intended by
the Construction Contract, without the Secretary's prior
written consent.
3. INSURANCE. A. Until each Vessel has been completed, physically
delivered at the place of delivery and accepted by Shipowner,
Shipyard shall cause such Vessel and all materials,
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<PAGE>
outfitting, equipment and appliances to be installed in the
Vessel including all materials, outfitting, equipment and
appliances provided by the Shipowner and delivered to Shipyard
for the construction of the Vessel or in the construction
thereof, to be insured under a full form Builder's Risk Policy
under the latest American Institute Builder's Risk Form in
force and effect at the time that the construction of the
Vessel is Commenced when the Vessel's keel is laid, all at
Shipyard's expense. Such policy(ies) shall name the Shipyard,
the Shipowner and the United States of America as assureds.
The policy(ies) shall provide that there shall be no recourse
against the Shipowner and the United States of America for
payment of any premiums. The policy(ies) shall also provide a
30 day prior written notice of cancellation or material change
in the policy to the Shipowner and the United States of
America (U.S. Department of Transportation, Maritime
Administration 400 Seventh St. S.W., Washington D.C. 20590
Attention, Chief, Division of Marine Insurance). The amounts,
terms and conditions, deductibles and underwriters of the
Builder's Risk Policy(ies) shall at all times be satisfactory
to the Shipowner and the Secretary.
B. The Builder's Risk policy(ies) shall provide that all losses
in excess of $100,000 shall be paid to the Secretary for
distribution by him to himself, the Shipyard and the Shipowner
in accordance with the Security Agreement between the
Shipowner and the Secretary, MA- _________, dated __________,
involving the Vessel.
c. Shipyard shall also purchase and maintain, at its
expense, during the life of the Construction
Contract, Worker's Compensation Insurance at
statutory amounts, with Longshoreman & Harbor Workers
Compensation Act coverage endorsements, Employer's
Liability Insurance in the amount of at least
$10,000,000 and Public Liability Insurance against
property damage, death and bodily injury in the
amount of not less than $10,000,000.
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<PAGE>
d. A satisfactory confirmation of insurance outlining
the pertinent terms and conditions of the Builder's
Risk Policy(ies) referred to above shall be provided
to the Shipowner and the Secretary. The Shipowner
shall be furnished a certificate of insurance for all
other policies required hereunder. The original of
the said Builder's Risk Policy shall be available in
the Shipyard's office. All of the policies of
insurance and certificates referred to herein shall
contain a provision requiring the insurer at risk to
give Shipowner and the Secretary thirty (30) days'
notice, in writing prior to cancellation of any such
insurance.
4. PROGRESS PAYMENTS. Notwithstanding any provisions in the
Construction Contract to the contrary. the Construction
Contract and related contracts shall contain provisions for
making periodic payments for the work performed based on the
percentage of physical completion of the Vessel, after such
percentage and satisfactory performance are certified by the
Shipowner, the Shipyard and a representative of the Secretary
as to each payment
5. CERTIFICATE OF NO LIENS. At the time of any Closing and at the
time of delivery of the Vessel and from time to time as
payments will be requested from amounts held in escrow by the
Secretary, the Shipyard agrees, on behalf of itself, or any
party claiming through the Shipyard, to execute certificates
of no liens, in form and substance reasonably satisfactory to
the Secretary, with respect to the applicable Vessel, hull or
component parts for which payment is requested and with
respect to all work that has previously been accomplished.
6. TITLE. Notwithstanding anything to the contrary contained in
the Construction Contract, title to all work, materials and
components, incorporated in, or to be incorporated in the
bulls and in each Vessel (the "Equipment") shall vest in
Shipowner on the earliest of, a) when Shipowner pays Shipyard
for the Equipment, or b) when (i) such work is performed on
the hull of each Vessel, (ii) such materials are installed in
the hull of each Vessel, or
33
<PAGE>
(iii) such components are fabricated and installed in the hull
of each Vessel.
7. SUBORDINATION. The Shipyard agrees to, and does hereby fully
subordinate to the rights of the Secretary all liens and
security rights and remedies to enforce such rights which the
Shipyard has or may have with respect to the Equipment to
which title has passed to Shipowner, and to the Equipment that
has not been paid for by the Shipowner to the extent that such
Equipment has actually been incorporated into the Equipment
for which title has passed to the Shipowner. Prior to
commencement of any work under this Construction Contract, the
Shipyard shall provide to the Secretary the release or
subordination of any claim to a security interest or other
encumbrance, and the remedies to enforce such rights, held or
claimed by any of the Shipyard's lenders. Said release or
subordination shall be in form and substance satisfactory to
the Secretary.
8. EQUIPMENT PROCEEDS. In the event that prior to delivery of the
Vessel and (i) following the occurrence or during the
continuance of any default by Shipowner under the Security
Agreement executed in favor of the Secretary by the Shipowner
in connection with the financing of the construction of the
Vessel under the Construction Contract or (ii) the occurrence
or during the continuation of any material default by the
Shipyard under the Construction Contract which would permit
the Shipowner to cancel the Construction Contract,, the
Secretary shall have the sole right to sell the Equipment. Any
proceeds the Secretary receives from the sale of the
Equipment, after deducting any fees or costs it incurs in
connection with the enforcement of its rights under the
Security Agreement, shall be distributed promptly to the
Secretary for payment of the all amounts secured by the
Security Agreement.
9. CONSENT OF SHIPYARD. The Shipyard will separately enter into a
Consent of Shipyard allowing the assignment by Shipowner to
the Secretary, for purposes of security, of all of Shipowner's
right, title and interest in the Construction Contract, and
the proceeds thereof,
34
<PAGE>
if any such exists or shall exist in the future. Such proceeds
include any amounts that may be due to be refunded to
Shipowner by the Shipyard or by any subcontractor or supplier
to the Shipyard arising out of the Construction Contract, as
amended, and any subcontracts or supply contracts into which
the Shipyard has entered into or may enter into as a part of
construction process. In the event of a default of the
Shipyard under the Construction Contract, the Secretary may
enforce Shipowner's rights hereunder. In the event of any
discrepancy between a position of the Secretary and a position
of the Shipowner, the Secretary's decision shall be binding on
the Shipowner.
10. DISTINCT OBLIGATIONS. Shipyard hereby agrees and acknowledges
that the obligations of Shipowner under the Construction
Contract with regard to the Vessel are separate, distinct and
independent of any other obligation or agreement of Shipowner
and that a default by Shipowner under such other obligation or
agreement shall not in any way affect the obligations of
Shipyard under the Construction Contract with regard to the
Vessel or permit Shipyard to exercise any right of set-off or
other remedy (all of which Shipyard expressly waives and
agrees not to assert) which could materially adversely affect
the Construction Contract, the Vessel or the construction
thereof.
11. RIGHT TO CURE. Notwithstanding anything to the contrary
contained in the Construction Contract, Shipyard agrees to
give the Secretary written notice, concurrent with any notice
given to the Shipowner under the Construction Contract of any
default by Shipowner and hereby grants the Secretary thirty
(30) days from the receipt of any such notice to cure any
default under the Construction Contract, and Shipyard agrees
to take no action to enforce its rights Pursuant to the
Construction Contract until the lapse of said thirty (30)
days.
12. SHIPYARD PLANS. Upon the delivery of the Vessel, or earlier if
feasible, upon the Secretary's request, Shipyard and Shipowner
agree to submit to the Secretary one set of
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<PAGE>
Shipyard plans, in form and substance satisfactory to the
Secretary, for the Vessel as built.
13. NOTICES. Any notice or other communication required or
permitted to the Secretary hereunder shall be sent by (i)
certified mail, postage prepaid, (ii) by nationally recognized
overnight courier service, (iii) or by facsimile transmission,
confirmed by certified mail, postage prepaid, or by nationally
recognized overnight courier service, addressed as follows:
United States Maritime Administration
400 Seventh Street, S.W.
Washington, D.C. 20590
Attention: Office of Ship Finance
