EXHIBIT 10.21(D)
SIDE LETTER NO 4. 9TH APRIL 1998
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Petrodrill Construction Inc
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PO Box N 8188
Nassau
Bahamas
TDI-Halter L.P.
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Gentlemen,
Hull No 1829
We refer to the contract executed between us today in respect of the above hull.
It is agreed between the parties hereto that in lieu of the Warranty in Section
17 of the Contract the Purchaser, at its option, may elect to purchase from the
Builder a more extensive warranty than that which is currently in the contract,
for the price of $500,000 per vessel, or alternatively, again at its option to
enter into an Escrow/Warranty Reserve Agreement. Under the terms of the Warranty
Reserve agreement, the Purchaser would pay the additional $500,000 into an
Escrow Account to be drawn down upon by direct warranty costs. Funds remaining
in the account at the end of the warranty period would be split evenly between
the parties, any funds used, over and above the $500,000 would be for the
Purchaser's account.
Attached hereto is the agreed language for the more extensive warranty which
would replace the existing Clause 17 and which defines the scope of work
supplied, should the Purchaser elect to purchase this warranty for an additional
$500,000.
Yours faithfully
/s/ ▇▇▇▇▇ ▇▇▇▇▇
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Attorney-in-Fact
WE HEREBY ACKNOWLEDGE OUR UNDERSTANDING AND ACCEPTANCE OF THIS LETTER:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ JNR.
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ Jnr.
TDI-Halter Inc.
9th April 9, 1998
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OPTION WARRANTY
17. DEFECTS AND BUILDER'S GUARANTEE
GUARANTEE PERIOD
17.1. The Builder guarantees the Vessel for a period of twelve months from
Delivery or, in respect of individual items as provided for in the
Specification, for such greater period as may be agreed, against all defects
whether attributable to Materials, workmanship, construction or detailed
engineering, caused to the Vessel thereby. The aforesaid period of twelve months
from Delivery shall be known herein as the "Guarantee Period".
17.2. This guarantee shall not extend to Owner Furnished Equipment or to any
damage caused by any defect therein not attributable to the Builder, but it
shall extend to defects in Materials, workmanship, installation engineering and
to physical damage caused therein resulting from the Builder's installation of
the Owner Furnished Equipment.
17.3. The Builder guarantees repairs or replacements to the Vessel made under
the guarantee in sub-clause (1) above for a further period of twelve months from
the date of completion of such repair or replacement subject to a maximum of 24
months.
REMEDY OF DEFECTS
17.4. The Purchaser shall notify the Builder in writing within thirty days
after discovery of any defect falling within the provisions of this Clause 17.
The Purchaser's notice shall include such particulars as can reasonably be given
as to the nature of such defect, the date of discovery and the place at which
the Vessel can be made available for earliest inspection by or on behalf of the
Builder. The Purchaser shall furnish to the Builder as soon as practicable
copies of any relevant survey or inspection reports.
17.5. The Purchaser may require the Builder to make good any defect or physical
damage for which the Builder is liable under this Clause 17 by giving notice of
such requirement to the Builder. Any parts replaced shall on their removal
become the property of and shall be at the risk of the Builder whilst the
replacement parts fitted to the Vessel shall upon fitting become the property of
the Purchaser.
17.6. The Builder shall execute the necessary work including the carrying out
of any essential dismantling and reassembling with the utmost despatch in
accordance with the quality standards which are applicable hereunder to the
Vessel's original construction.
17.7. In the event that the Builder is unable to make good any defect at the
Shipyard, it shall forthwith nominate a yard suitable for such purpose for the
Purchaser's approval, and should the Purchaser consider such yard acceptable the
Builder shall arrange for the making good of the defect and the carrying out of
any essential dismantling and reassembling at its own expense.
17.8. Should the Purchaser consider the yard nominated by the Builder
unacceptable, or should the Purchaser elect to have the work referred to above
carried out elsewhere than at the Shipyard, the Purchaser shall nominate a yard
acceptable to it. In such case the Builder shall pay to the Purchaser for
repairs and/or replacements such sum as would equate to the costs of effecting
such repairs at a first-class US Gulf Coast Commercial shipyard. The Builder
may, at its own expense, have its representative in attendance during execution
of the work. The Purchaser shall ensure that any parts replaced under this
sub-clause are returned to the Builder (if required by the Builder) at the
Builder's expenses, and in such case those parts returned shall on their
replacement become the property of and shall be at the risk of the Builder.
17.9. In the event of defects arising which fall within the provision of this
Clause 17, whether or not such defects require the Vessel to be drydocked, the
Builder shall pay for any costs incurred by the Purchaser in making the Vessel
available to the Builder or to any other yard for the making good of any such
defect as aforesaid. Such additional costs shall exclude however the costs of
transportation, port charges and the cost
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of fuels, lubricants and consumable stores consumed in excess of those which
would have been consumed had the Vessel not deviated to allow the Builder to
make good any such defects as aforesaid.
17.10. In the event that the Vessel is idle for more than 15 days in total
accumulated time due to defects under this Clause 17 the Guarantee Period shall
be extended by the number of all days during which the Vessel is idle commencing
with the sixteenth day, whether or not other work is undertaken simultaneously
with the guarantee work.
17.11. Nothing contained herein shall obligate Builder at any time to repair or
replace the Vessel, or any component part therof, where such repair and/or
replacement is caused, in whole or in part, by normal wear or unusual handling,
by the negligent operation or maintenance of the Vessel, or its equipment or by
abuse, rough weather, accident, fire, by Purchaser or Purchaser's agents,
employees or representatives.
17.12. With respect to paint, Builder warrants that it will purchase paint of
good marine quality and that it will apply the paint in accordance with the
manufacturer's specifications, recommendations, and inspection, and Builder
makes no warranty, express or implied, with respect to the fitness of the paint
or the manufacturer's specifications and recommendations. The Builder will
purchase paint insurance for the Purchaser.
17.13. For any claim for damages to or loss of the Vessel, and/or damages to
persons and/or property (including, but not limited to claims, demands, or
actions for bodily injury, illness, disease, death, loss of service, loss of
society, maintenance and cure, wages or property) made as a result of any defect
in the Vessel, or any component parts thereof, after the said Warranty Period,
Purchaser shall have no claim or actions whatsoever against Builder, regardless
of any negligence, tort, fault, strict liability or otherwise of Builder, its
employees or subcontractors, and Purchaser hereby waives and releases Builder
and its employees and subcontractors from and against any and all liability and
any and all damages resulting therefrom, including, but not limited to, for
personal injury, death, property damage, damage to and/or loss of the Vessel,
delay, demurrage, loss of profits, loss of use, or any other consequential or
punitive damages of any kind, whether such claim is based in contract,
redhibition, negligence, strict liability, or otherwise, arising out of any
defect and/or negligent design, the selection or choice of specifications and/or
materials and/or component parts, manufacture, construction, fabrication,
workmanship, labor and/or installation of equipment, materials and/or components
or from any unseaworthy condition or any other defective condition of the
Vessel, it being specifically understood and agreed that any such defects
reported and/or occurring after the Warranty Period and all damages, loss of
profits, demurrages, delay, losses of use or other consequential or puntive
damages of any kind whatsoever resulting therefrom, shall not be the
responsibility of Builder, but shall be borne exclusively by Purchaser.
"THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR THAT THE VESSELS, MATERIAL OR
SERVICES ARE FIT FOR ANY PARTICULAR PURPOSE OR USE, AND SPECIFICALLY IN LIEU OF
ALL INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES".
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ASSIGNMENT OF SUBCONTRACTOR'S GUARANTEES
17.13. The Builder agrees upon the expiry of the Guarantee Period to assign (to
the extent to which it may validly do so) to the Purchaser, or as the Purchaser
may direct, all the right, title and interest of the Builder in and to all
guarantees or warranties given by the Subcontractors save insofar as the same
relate to existing claims by the Purchaser against the Builder.
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