Waiver Letter, dated October 22, 2009



 Exhibit 4.38 

 

 

  

			
	Commerzbank AG, Postfach, 20349 Hamburg	  	Global Banking  |  Asset Finance
		  	Maritime Transportation & Logistics
		
	 Dalian Star Owners Inc.
 c/o
Cardiff Marine Inc.
	  	Jan H. Meyer
	 Mr. Aris Ioannidis and Mr. Dimitrios Glynos
 80, Kifissias Avenue
  
 15125
Amaroussion
 Greece
	  	 Postanschrift:
 Postfach,
20349 Hamburg
 Geschäftsräume:
 Jungfernsueg 22. 20354 Hamburg
 Telefon +49 (0)40 3501-3178
 Fax    +49 (0)40 3501-2287
 jan.meyer@commerzbank.com


 22. October 2009 
 Loan Agreement dd. 05.05.2009 for the vessel MYSTIC 
 Waiver Terms 
 Dear Mr. Ioannidis, dear Mr. Glynos, 
 Referring to the Loan Agreement dated 05.05.2009 to finance the Capesize vessel MYSTIC, the intensive discussions we had with each other during the past months and the indicative waiver terms signed by Dalian Star Owners Inc. and DryShips
Inc. dated 24.09.2009, we are glad to inform you that the Lenders, both WestLB and Commerzbank, have received their formal credit approvals for the Waiver Terms as outlined below: 
  

	1.	Waiver Period 

 From February 12,
2009 to and including September 30, 2010 or earlier if all original covenants of the Loan Agreement and the Guarantee are fully back in compliance. 
  

	2.	Increase of Margin 

 Starting on October 1st, 2009, until the end
of the Waiver Period the Margin shall be increased to 1.85% p.a. 
  

	3.	Restructuring Fee 

 For the restructuring
of the Loan, a Restructuring Fee will be charged amounting to USD 100,000, payable upon signing of the Waiver Terms. 
  

					
	Vorsitzender des Aufsichtsrats: Klaus-Peter Müller	 		  	Commerzbank Aktlengesellschaft, Frankfurt am Main
	Vorstand: Martin Blessing (Vorsitzender),	 		  	Handelsregister: Amtsgericht Frankfurt am Main, HRB 32000
	Frank Annuscheit, Markus Beumer, Achim Kassow, Jochen Klösges,	  	USi-ldNr.: DE114 103 514
	Michael Reuther, Stefan Schmittmann, Ulrich Sleber, Eric Strutz	  	










 

 




			
	  
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	4.	Waiver 

 Clauses 4.a until 4.d shall be in
place until the end of the Waiver Period: 
  

	 	(a)	Financial Covenants (Clause 11.16) 

  

	 	(i)	Market Adjusted Equity Ratio 

 From December 22, 2008 to and including June 30, 2009 the Market Adjusted Equity Ratio shall be not less than zero per cent (0%). From July 1, 2009 until the end of the Waiver Period the Market Adjusted Equity Ratio shall not
be less than 0.15:1. Temporary fluctuations may lead to a Market Adjusted Equity Ratio not less than 0.05:1. 
 For the duration
of the Waiver Period new interest bearing liabilities to be used only to (i) prepay secured debt and/or (ii) finance New Investments and Permitted Investments, provided that the resulting equity portion of New Investments and Permitted
Investments shall not be lower than thirty-two point five (32.5) percent. 
  

	 	(ii)	Interest Coverage Ratio 

 For
the duration of the Waiver Period the Interest Coverage Ratio shall not be less than 2:1. 
  

	 	(iii)	Market Value Adjusted Net Worth 

 From February 12, 2009 to and including June 30, 2009 the Market Adjusted Net Worth shall be not less than zero (0). From July 1, 2009 until the end of the Waiver Period the Market Value Adjusted Net Worth of the Group shall
not be less than 
  

	 	•	 	 $ 100,000,000 for the period July 1, 2009 until December 31, 2009; and thereafter 


  

	 	•	 	 $ 150,000,000 plus 100% of the net quarterly profits of DryShips Inc. in the financial year 2010, until September 30, 2010.



  

	 	(b)	Disposal of assets/spin-off of the offshore business of the Guarantor 

 The Guarantor shall only be allowed to dispose any of its assets on an arm’s-length basis. The Guarantor will not spin-off of or otherwise dispose of the offshore business of the Group (“the
Spin-Off”) unless that the following conditions are met: 
  

	 	(i)	DryShips to maintain $ 80,000,000 cash (including any amount standing to the credit of the Applicable Amount Account) after the Spin-Off; and 










 

 




			
	  
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	 	(ii)	DryShips Inc. will be released from all obligations relating to the offshore business of the Group including the $ 800,000,000 acquisition financing of Ocean Rig
ASA but except DryShips Inc.’s credit support guarantee for the pre- and post-delivery financing of the drill ship newbuildings hull nos. 1865 and 1866 arranged by Deutsche Bank AG. 

  

	 	(iii)	DryShips Inc. to secure latest six months prior to delivery a cash break-even employment contract (i.e. operating expenses and debt service fully covered) for at least
two (2) years for the drill ship newbuildings hull nos. 1865 and 1866 (please note: this is a condition subsequent to the Waiver i.e. such condition does not need to be fulfilled upon the effective date of the Waiver). 


 

	 	(iv)	DryShips Inc. must use its best endeavours to be released from its guarantee obligations for newbuildings hull nos. 1865 and 1866 for the pre- and post-delivery
facility period. 

  

	 	(c)	No cash dividend payments (Clause 11.15) or any other return of capital to shareholders including stock buyback or any other form of distribution effective from the
date of the amendment to the end of the Waiver Period. In relation to the spin-off of the offshore business of the Group the conditions under above mentioned waiver clause 4 (b) apply. 

  

	 	(d)	No further investments or capital expenditure by the Borrower or Guarantor allowed during the Waiver Period (other than that used for the maintenance of vessels in the
normal course of business) without the consent of the Lenders, unless the equity used for such investments or expenditure has been raised from the proceeds of equity offerings. 

  

	 	(e)	Minimum security cover (Clause 15.1; Market Value divided by Loan and Swap Exposure; taking into account any cash held at the Retention Account) shall not be less than


  

											
		 	 (i)
	  	From now on until 31.12.2010	  	80%	  		  	
 




	 	 (ii)
	  	On 01.01.2011 and thereafter until 30.06.2011	  	111%	  		  
	 	 (iii)
	  	On 01.07.2011 and thereafter:	  	125%	  	(according to the	  
	 		  		  		  	Loan Agreement)	  

  

	 	(f)	The Borrower and the Guarantor will provide monthly updated cash flow statements 

 Commerzbank AG 

 

 










 

 




			
	  
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	5.	Retention Account and Excess Cash Flow Clause 

  

	 	(a)	The Borrower must ensure that all charter earnings remain at a Retention Account set up with the Agent until the payment of the next instalment due on 29.12.2009.


  

	 	(b)	Following the next repayment instalment, amounting to USD 10,000,000, due on 29.12.2009, the Borrower shall only dispose of an amount exceeding USD 3,000,000 to be held
at the Retention Account (Excess Cash Flow Clause), 

  

	6.	Notice of Assignment 

 The Borrower to
sign the “Notice of Assignment to Charterer” (the draft has already been provided to the Borrower). The Lenders agree not to send the “Notice of Assignment to Charterer” unless (i) an Event of Default occurs or (ii) the
Borrower is not in compliance with the Retention Account and/or the Excess Cash Flow Clause. 
  

	7.	Pari Passu Ranking 

 The Guarantor shall
procure that its liabilities under the Guarantee do and will rank at least pari passu with all its other present and future liabilities, except for liabilities which are mandatorily preferred by law. 
 Please note that these Waiver Terms are only binding until 30.10.2009. We kindly ask you to revert the signed copy of the Waiver Terms by e-mail and by
fax message so that we can instruct the law firm Watson, Farley & Williams to conduct the documentation work. 
  

					
	Kind regards	  		  	
	Commerzbank AG	  		  	
			
	/s/ Holger Ferber	  	/s/ Jan H. Meyer	  	
	Holger Ferber	  	Jan H. Meyer	  	

  

											
	We agree with the Waiver Terms.	 		 		 		 	
			
	 /s/ Illegible
	 		 	 /s/ Illegible

	Dalian Star Owners Inc. as Borrower	 		 	DryShips Inc. as Guarantor
						
	Date / City:	 	  
	 		 	Date / City: