Document:

Exhibit 4.55

 

EXECUTION COPY

OCEAN RIG UDW INC.

7.25% SENIOR NOTES DUE 2019

INDENTURE

Dated as of March 26, 2014

Deutsche Bank Trust Company Americas, as Trustee

	
TABLE OF CONTENTS

	 	
Page

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

	
SECTION 1.01.                                        Definitions

	
1

	
SECTION 1.02.                                        Other Definitions

	
37

	
SECTION 1.03.                                        Rules of Construction

	
38

ARTICLE II

THE NOTES

	
SECTION 2.01.                                        Form and Dating

	
39

	
SECTION 2.02.                                        Execution and Authentication; Additional Notes

	
40

	
SECTION 2.03.                                        Registrar, Transfer Agent and Paying Agent

	
41

	
SECTION 2.04.                                        Paying Agent to Hold Money in Trust

	
41

	
SECTION 2.05.                                        Holder Lists

	
41

	
SECTION 2.06.                                        Transfer and Exchange

	
42

	
SECTION 2.07.                                        Replacement Notes

	
55

	
SECTION 2.08.                                        Outstanding Notes

	
55

	
SECTION 2.09.                                        Treasury Notes

	
55

	
SECTION 2.10.                                        Temporary Notes

	
56

	
SECTION 2.11.                                        Cancelation

	
56

	
SECTION 2.12.                                        Default Interest

	
56

	
SECTION 2.13.                                        Persons Deemed Owners

	
57

	
SECTION 2.14.                                        Interest Payment Date; Record Date

	
57

ARTICLE III

REDEMPTION AND PURCHASE

	
SECTION 3.01.                                        Notices to Trustee

	
57

	
SECTION 3.02.                                        Selection of Notes to Be Redeemed or Purchased

	
57

	
SECTION 3.03.                                        Notice of Redemption

	
58

	
SECTION 3.04.                                        Effect of Notice of Redemption

	
59

	
SECTION 3.05.                                        Deposit of Redemption or Purchase Price

	
59

	
SECTION 3.06.                                        Notes Redeemed or Purchased in Part

	
60

	
SECTION 3.07.                                        Optional Redemption

	
60

	
SECTION 3.08.                                        Optional Redemption for Changes in Withholding Taxes

	
61

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ARTICLE IV

COVENANTS

	
SECTION 4.01.                                        Payment of Notes

	
62

	
SECTION 4.02.                                        Maintenance of Office or Agency

	
62

	
SECTION 4.03.                                        Corporate Existence

	
63

	
SECTION 4.04.                                        Compliance Certificate

	
63

	
SECTION 4.05.                                        Taxes

	
64

	
SECTION 4.06.                                        Stay, Extension and Usury Laws

	
64

	
SECTION 4.07.                                        Restricted Payments

	
64

	
SECTION 4.08.                                        Incurrence of Indebtedness and Issuance of Preferred Stock

	
69

	
SECTION 4.09.                                        Liens

	
73

	
SECTION 4.10.                                        Dividend and Other Payment Restrictions Affecting Subsidiaries

	
73

	
SECTION 4.11.                                        Transactions with Affiliates

	
75

	
SECTION 4.12.                                        Business Activities

	
78

	
SECTION 4.13.                                        Future Note Guarantees

	
78

	
SECTION 4.14.                                        Designation of Restricted and Unrestricted Subsidiaries

	
78

	
SECTION 4.15.                                        Payments for Consent

	
79

	
SECTION 4.16.                                        Reports

	
79

	
SECTION 4.17.                                        Suspension of Covenants

	
81

	
SECTION 4.18.                                        Offer To Repurchase Upon Change of Control

	
82

	
SECTION 4.19.                                        Asset Sales

	
84

	
SECTION 4.20.                                        Additional Amounts

	
88

ARTICLE V

SUCCESSORS

	
SECTION 5.01.                                        Merger, Consolidation or Sale of Assets

	
91

ARTICLE VI

DEFAULTS AND REMEDIES

	
SECTION 6.01.                                        Events of Default

	
93

	
SECTION 6.02.                                        Acceleration

	
95

	
SECTION 6.03.                                        Other Remedies

	
95

	
SECTION 6.04.                                        Waiver of Past Defaults

	
96

	
SECTION 6.05.                                        Control by Majority

	
96

	
SECTION 6.06.                                        Limitation on Suits

	
96

	
SECTION 6.07.                                        Rights of Holders To Receive Payment

	
97

	
SECTION 6.08.                                        Collection Suit by Trustee

	
97

	
SECTION 6.09.                                        Trustee May File Proofs of Claim

	
97

	
SECTION 6.10.                                        Priorities

	
98

	
SECTION 6.11.                                        Undertaking for Costs

	
98

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ARTICLE VII

TRUSTEE

	
SECTION 7.01.                                        Duties of Trustee

	
99

	
SECTION 7.02.                                        Rights of Trustee

	
100

	
SECTION 7.03.                                        Individual Rights of Trustee

	
101

	
SECTION 7.04.                                        Trustee's Disclaimer

	
101

	
SECTION 7.05.                                        Notice of Defaults

	
101

	
SECTION 7.06.                                        Reserved

	
101

	
SECTION 7.07.                                        Compensation and Indemnity

	
101

	
SECTION 7.08.                                        Replacement of Trustee

	
102

	
SECTION 7.09.                                        Successor Trustee by Merger, Etc

	
104

	
SECTION 7.10.                                        Eligibility; Disqualification

	
104

	
SECTION 7.11.                                        Trustee in Other Capacities; Paying Agent

	
104

ARTICLE VIII

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

 

	
SECTION 8.01.                                        Option to Effect Legal Defeasance or Covenant Defeasance

	
105

	
SECTION 8.02.                                        Legal Defeasance and Discharge

	
105

	
SECTION 8.03.                                        Covenant Defeasance

	
106

	
SECTION 8.04.                                        Conditions to Legal or Covenant Defeasance

	
106

	
SECTION 8.05.                                        Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions

	
108

	
SECTION 8.06.                                        Repayment to the Issuer

	
108

	
SECTION 8.07.                                        Reinstatement

	
109

 

ARTICLE IX

AMENDMENT, SUPPLEMENT AND WAIVER

	
SECTION 9.01.                                        Without Consent of Holders

	
109

	
SECTION 9.02.                                        With Consent of Holders

	
110

	
SECTION 9.03.                                        Revocation and Effect of Consents

	
112

	
SECTION 9.04.                                        Notation on or Exchange of Notes

	
112

	
SECTION 9.05.                                        Trustee to Sign Amendments, Etc

	
112

ARTICLE X

SATISFACTION AND DISCHARGE

	
SECTION 10.01.                                        Satisfaction and Discharge

	
113

	
SECTION 10.02.                                        Application of Trust Money

	
114

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ARTICLE XI

NOTE GUARANTEES

	
SECTION 11.01.                                        Note Guarantees

	
114

	
SECTION 11.02.                                        Limitation on Guarantor Liability

	
116

	
SECTION 11.03.                                        Releases

	
116

ARTICLE XII

MISCELLANEOUS

	
SECTION 12.01.                                        Notices

	
117

	
SECTION 12.02.                                        Certificate and Opinion as to Conditions Precedent

	
118

	
SECTION 12.03.                                        Statements Required in Certificate or Opinion

	
119

	
SECTION 12.04.                                        Rules by Trustee and Agents

	
119

	
SECTION 12.05.                                        No Personal Liability of Directors, Officers, Employees and Stockholders

	
119

	
SECTION 12.06.                                        Governing Law

	
119

	
SECTION 12.07.                                        No Adverse Interpretation of Other Agreements

	
120

	
SECTION 12.08.                                        Successors

	
120

	
SECTION 12.09.                                        Severability

	
120

	
SECTION 12.10.                                        Counterpart Originals

	
120

	
SECTION 12.11.                                        Table of Contents, Headings, Etc

	
120

	
SECTION 12.12.                                        Prescription

	
120

	
SECTION 12.13.                                        Patriot Act

	
120

	
SECTION 12.14.                                        Force Majeure

	
121

EXHIBITS

	
Exhibit A FORM OF NOTE

	
A-1

	
Exhibit B FORM OF CERTIFICATE OF TRANSFER

	
B-1

	
Exhibit C FORM OF CERTIFICATE OF EXCHANGE

	
C-1

	
Exhibit D FORM OF SUPPLEMENTAL INDENTURE

	
D-1

		NOTE:	This Table of Contents shall not, for any purpose, be deemed to be part of this Indenture.

iv

INDENTURE, dated as of March 26, 2014, between OCEAN RIG UDW INC., a Marshall Islands corporation (the "Issuer"), and DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation, as trustee (together with its successors and assigns, in such capacity, the "Trustee").

The Issuer and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined herein) of the Notes:

ARTICLE I

Definitions and Incorporation by Reference

SECTION 1.01.                                        Definitions.

 

"Acquired Debt" means, with respect to any specified Person:

(1)              Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person (regardless of the form of the applicable transaction by which such Person became a Restricted Subsidiary) or expressly assumed in connection with the acquisition of assets from any other such Person, whether or not such Indebtedness is Incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person or of such Indebtedness being Incurred in connection with the acquisition of assets; and

(2)              Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

Acquired Debt will be deemed to be incurred on the date the acquired Person becomes a Restricted Subsidiary or the later of the date such Indebtedness is incurred or the date of the related acquisition of assets from such Person.

"Additional Drilling Unit" means a drilling rig or drillship or other Vessel that is used or useful in the Permitted Business.

"Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings.

"Agent" means any Registrar, Paying Agent, Transfer Agent or Authentication Agent.

"Applicable Premium" means, with respect to any Note on any Redemption Date, the greater of:

(1)            1.0% of the principal amount of the Note; and

(2)            the excess of:

(A)            the present value at such Redemption Date of (i) the redemption price of the Note at April 1, 2017 (such redemption price being set forth in the table appearing in Section 3.07(b) ("Optional Redemption")), plus (ii) all required interest payments due on the Note through April 1, 2017 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over

(B)            the principal amount of the Note.

"Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

"Asset Sale" means:

(1)            any sale, lease, conveyance or other disposition, whether in a single transaction or a series of related transactions, of property or assets of the Issuer or any of the Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction;

(2)            the issuance or sale of Equity Interests in any of the Restricted Subsidiaries, other than statutory or directors qualifying shares, whether in a single transaction or a series of related transactions; and

(3)            an Involuntary Transfer.

Notwithstanding the preceding, none of the following items shall be deemed to be an Asset Sale:

(1)            any single transaction or series of related transactions that involves assets having a Fair Market Value or that results in generating Net Proceeds, in either case, of less than $30.0 million;

(2)            a transfer of Equity Interests or other assets between or among the Issuer and the Restricted Subsidiaries;

(3)            an issuance of Equity Interests by a Restricted Subsidiary to the Issuer or to another Restricted Subsidiary;

2

(4)            the sale, lease or other disposition of products, services or accounts receivable in the ordinary course of business and any sale or conveyance or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business;

(5)            the sale or other disposition of cash or Cash Equivalents, hedging contracts or other financial instruments;

(6)            licenses and sublicenses by the Issuer or any of the Restricted Subsidiaries of software or intellectual property in the ordinary course of business;

(7)            a Restricted Payment that does not violate Section 4.07 ("Restricted Payments") or a Permitted Investment;

(8)            the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer and the Restricted Subsidiaries taken as a whole in a manner governed by Section 5.01 ("Merger, Consolidation or Sale of Assets") or any disposition that constitutes a Change of Control;

(9)            the creation or perfection of any Lien permitted under this Indenture, and any disposition of assets resulting from foreclosure under any such Lien;

(10)            any surrender or waiver of contract rights or the settlement, release, recovery on or surrender of contract, tort or other claims; and

(11)            a Qualified MLP Asset Transfer.

"Attributable Indebtedness" in respect of a Sale and Lease-Back Transaction means, at the time of determination, the present value (discounted according to GAAP at the cost of indebtedness implied in the lease; provided that if such discount rate cannot be determined in accordance with GAAP, the present value shall be discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Lease-Back Transaction (including any period for which such lease has been extended); provided, however, that if such Sale and Lease-Back Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby shall be determined in accordance with the definition of "Capital Lease Obligations."

"Bankruptcy Law" means Title 11, U.S. Code, as may be amended from time to time, or any similar Federal, state or foreign law for the relief of debtors.

"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial ownership of all

3

securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time.

"Board of Directors" means:

(1)            with respect to a corporation, the board of directors of such corporation or any committee thereof duly authorized to act on behalf of such board of directors;

(2)            with respect to a partnership, the board of directors of the partnership or the general partner of such partnership, as the case may be;

(3)            with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof or the manager or any committee of managers; and

(4)            with respect to any other Person, the board or committee of such Person serving a similar function.

"Business Day" means a day other than a Saturday, Sunday or any other day on which banking institutions in New York, Norway, the Republic of the Marshall Islands, Greece, the United Kingdom or the place of any payment required to be made hereunder are authorized or required by law to close.

"Capital Lease Obligations" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

"Capital Stock" means:

(1)            in the case of a corporation, corporate stock;

(2)            in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3)            in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

(4)            any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

4

"Cash Equivalents" means:

(1)            United States dollars;

(2)            securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than six months from the date of acquisition;

(3)            certificates of deposit and Eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any commercial bank organized under, or authorized to operate as a bank under, the laws of any country that is a member of the Organization for Economic Cooperation and Development or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, the United States or any state thereof and, in each case, having capital, surplus and undivided profits in excess of $200.0 million and which have a long-term debt rating of "P-2" or higher by Moody's or "A-2" or higher by S&P;

(4)            repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

(5)            commercial paper having one of the two highest ratings obtainable from Moody's or S&P and, in each case, maturing within six months of the original issue thereof; and

(6)            money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition.

"Certificated Note" means a definitive Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 ("Transfer and Exchange"), substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto.

"Change of Control" means the occurrence of any of the following:

(1)            the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of amalgamation, merger or consolidation and other than operating leases arising as a result of a drilling contract or vessel employment contract entered into in the ordinary course of business), in one or a series of related transactions, of all or substantially all of the properties or assets

5

of the Issuer and the Restricted Subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d) of the Exchange Act), other than a Permitted Holder;

(2)            the Issuer is liquidated or dissolved or adopts a plan relating to the liquidation or dissolution of the Issuer; or

(3)            the consummation of any transaction or any series of transactions (including, without limitation, any merger, consolidation or other business combination), the result of which is that any "person" (as defined above), other than a Permitted Holder, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Issuer, measured by voting power rather than number of shares.

"Clearstream" means Clearstream Banking, S.A.

"Completed Drilling Equipment Value" means, at any time, the Fair Market Value of all completed and delivered Drilling Equipment owned by the Issuer and its Restricted Subsidiaries at such time.

"Consolidated Cash Flow" means, with respect to any period, Consolidated Net Income of the Issuer for such period plus, without duplication:

(1)            provision for taxes based on income or profits of the Issuer and the Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

(2)            the Consolidated Interest Expense of the Issuer and the Restricted Subsidiaries to the extent that such Consolidated Interest Expenses were deducted in computing such Consolidated Net Income; plus

(3)            depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period, but including, for the avoidance of doubt, any write-off or write-down of capitalized debt issuance costs) of the Issuer and the Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus

(4)            non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with GAAP.

6

"Consolidated Interest Coverage Ratio" means, for any period, the ratio of the Consolidated Cash Flow of the Issuer for such period to the Consolidated Interest Expense of the Issuer for such period; provided, however, that:

(1)            if the Issuer or any of the Restricted Subsidiaries has Incurred any Indebtedness since the beginning of such period that remains outstanding on the date a determination of the Consolidated Interest Coverage Ratio is to be made, or if the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Incurrence of Indebtedness, or both, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period;

(2)            if the Issuer or any of the Restricted Subsidiaries has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period, or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such repayment, repurchase, defeasance or discharge had occurred on the first day of such period;

(3)            if, since the beginning of such period, the Issuer or any Restricted Subsidiary shall have made any Asset Sale or Qualified MLP Asset Transfer, Consolidated Cash Flow for such period shall be reduced by an amount equal to the Consolidated Cash Flow (if positive) directly attributable to the assets which are the subject of such disposition for such period, or increased by an amount equal to the Consolidated Cash Flow (if negative) directly attributable thereto for such period, and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Issuer or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Issuer and the continuing Restricted Subsidiaries in connection with such disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Issuer and the continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);

(4)            if, since the beginning of such period, any Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period shall have made any Asset Sale or Qualified MLP Asset Transfer or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) above or (7) or (8) below if made by the Issuer or a Restricted Subsidiary during such period, Consolidated Cash Flow and Consolidated Interest Expense for such period shall

7

be calculated after giving pro forma effect thereto as if such Asset Sale, Qualified MLP Asset Transfer, Investment or acquisition had occurred on the first day of such period;

(5)            if, since the beginning of such period, any Person was designated as an Unrestricted Subsidiary or redesignated as or otherwise became a Restricted Subsidiary, Consolidated Cash Flow and Consolidated Interest Expense shall be calculated as if such event had occurred on the first day of such period;

(6)            Consolidated Cash Flow and Consolidated Interest Expense of discontinued operations recorded on or after the date such operations are classified as discontinued in accordance with GAAP shall be excluded but, with respect to Consolidated Interest Expense, only to the extent that the obligations giving rise to such Consolidated Interest Expense shall not be obligations of the Issuer or any of the Restricted Subsidiaries following such classification;

(7)            if, since the beginning of such period, the Issuer or any Restricted Subsidiary shall have (i) by merger or otherwise, made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary), or (ii) acquired assets constituting all or substantially all of an operating unit of a business or an Additional Drilling Unit, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including, without limitation, the Incurrence of any Indebtedness) as if such Investment or acquisition had occurred on the first day of such period; and

(8)            if the Issuer or any Restricted Subsidiary shall have entered into an agreement to build or acquire an Additional Drilling Unit that at the time of calculation is being constructed on behalf of the Issuer or such Restricted Subsidiary, is scheduled for delivery no later than one year from the time of calculation and either (x) is subject to a Qualified Services Contract or (y) is reasonably expected to realize revenues within 12 months from the beginning of such period as determined in good faith by a Financial Officer as set forth in an Officers' Certificate, then Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if the Additional Drilling Unit subject to such committed construction contract had been acquired by the Issuer or such Restricted Subsidiary on the first day of such period.

8

Any pro forma calculations giving effect to the acquisition of an Additional Drilling Unit or to a committed construction contract with respect to an Additional Drilling Unit, in each case that is subject to a Qualified Services Contract or is reasonably expected to realize revenues within 12 months from the beginning of such period as determined in good faith by a Financial Officer as set forth in an Officers' Certificate, shall be made as follows:

(a)            the amount of Consolidated Cash Flow attributable to such Additional Drilling Unit shall be calculated in good faith by a Financial Officer as set forth in an Officers' Certificate;

(b)            in the case of earned revenues under a Qualified Services Contract, the Consolidated Cash Flow shall be based on revenues actually earned pursuant to the Qualified Services Contract relating to such Additional Drilling Unit or Additional Drilling Units, taking into account, where applicable, only actual expenses Incurred without duplication in any measurement period;

(c)            the amount of Consolidated Cash Flow shall be the lesser of the Consolidated Cash Flow derived on a pro forma basis from revenues for (i) the first full year of the Qualified Services Contract and (ii) the average of the Consolidated Cash Flow of each year of such Qualified Services Contract for the term of the Qualified Services Contract;

(d)            in the case of an Additional Drilling Unit not subject to a Qualified Services Contract, the Consolidated Cash Flow shall be based upon the average of the historical earnings of comparable Vessels in the Issuer's and its Subsidiaries' fleet over the most recently completed four fiscal quarters, as determined in good faith by a Financial Officer as set forth in an Officers' Certificate;

(e)            in determining the estimated expenses attributable to such Additional Drilling Unit, the calculation shall give effect to the interest expense attributable to the Incurrence, assumption or guarantee of any Indebtedness (including Indebtedness that is anticipated to be Incurred following the time of calculation in order to consummate the construction, acquisition and/or delivery of the Additional Drilling Unit) relating to the construction, delivery and/or acquisition of such Additional Drilling Unit;

(f)            with respect to any expenses attributable to an Additional Drilling Unit, if the actual expenses differ from the estimate, the actual amount shall be used in such calculation;

(g)            if a Qualified Services Contract is terminated, or is amended, supplemented or modified, following the date of calculation, and after giving effect to the termination or the terms of such Qualified Services Contract as so amended, supplemented or modified and revenues reasonably expected to be realized within 12 months of such termination, amendment, supplement or modification, the Issuer and the Restricted Subsidiaries would not have been able

9

to but did Incur additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in Section 4.08(a) ("Incurrence of Indebtedness and Issuance of Preferred Stock"), the Issuer shall, at the time of any such event, be required to either: (i) repay, or cause the repayment of, all or any part of any such Indebtedness that would not have been permitted to be Incurred had the termination of the Qualified Services Contract or such amendments, supplements or modifications thereto been in effect at the time such Indebtedness was originally Incurred, or (ii) enter into a replacement Qualified Services Contract, the terms of which would have permitted the Incurrence of such Indebtedness had such replacement contract been in effect at the time such Indebtedness was Incurred; and

(h)            notwithstanding the foregoing, the pro forma inclusion of Consolidated Cash Flow attributable to any such Additional Drilling Unit for the four-quarter reference period shall be reduced by the actual Consolidated Cash Flow from such new Additional Drilling Unit previously earned and accounted for in the actual results for the four-quarter reference period, which actual Consolidated Cash Flow may be included in the foregoing clause (7).

"Consolidated Interest Expense" means, with respect to any Person for any period, the sum, without duplication, of:

(1)            the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges Incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations, but excluding:

(a)            amortization of debt issuance costs; and

(b)            any nonrecurring charges relating to any premium or penalty paid, write-off of deferred finance costs or original issue discount or other charges in connection with redeeming or otherwise retiring any Indebtedness prior to its Stated Maturity, to the extent that any of such nonrecurring charges constitute interest expense;

(2)            the consolidated interest expense of such Person and any of its Restricted Subsidiaries that was capitalized during such period; and

(3)            dividends paid in cash or Disqualified Stock in respect of all Preferred Stock of Restricted Subsidiaries and all Disqualified Stock of such Person or any of its Restricted Subsidiaries in each case held by Persons other than such Person or any of its Restricted Subsidiaries.

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"Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that:

(1)            the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary during such period;

(2)            solely for the purpose of determining the amount available for Restricted Payments under Section 4.07(a)(iii)(A) ("Restricted Payments") the Net Income (but not loss) of any Restricted Subsidiary of such Person (other than a Restricted Subsidiary that is a Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders (in each case other than as a result of restrictions contained in this Indenture, Notes and Existing Indebtedness (including the Ventures Facilities Agreement), in each case as in effect on the date hereof); provided that Consolidated Net Income of the referenced Person shall be increased by the amount of dividends or other distributions or other payments paid in cash to the referenced Person or a Restricted Subsidiary thereof during such period, to the extent not already included therein;

(3)            the cumulative effect of a change in accounting principles shall be excluded;

(4)            non-cash gains and losses due solely to fluctuations in currency values will be excluded;

(5)            in the case of a successor to the referenced Person by consolidation or merger or as a transferee of the referenced Person's assets, any earnings (or losses) of the successor corporation prior to such consolidation, merger or transfer of assets will be excluded;

(6)            the effects resulting from the application of purchase accounting in relation to any acquisition that is consummated after the Issue Date shall be excluded;

(7)            any unrealized gain (or loss) in respect of Hedging Obligations will be excluded;

(8)            non-cash charges or expenses with respect to the grant of stock options, restricted stock or other equity compensation awards will be excluded;

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(9)            goodwill write downs or other non-cash impairments of assets, or restructuring charges or severance costs associated with acquisitions or dispositions will be excluded;

(10)            drydock, shipyard stay and special survey expenses (other than Drydock, Shipyard Stay and Special Survey Amortization Expense for the applicable period) will be excluded; and

(11)            non-cash or non-recurring charges shall be excluded.

"Consolidated Net Leverage Ratio" means, with respect to the Issuer, as of any date of determination, the ratio of (1) (a) Consolidated Total Indebtedness of the Issuer minus (b) the amount of Unrestricted Cash of the Issuer and its Restricted Subsidiaries, in each case as of the date of determination to (2) Consolidated Cash Flow of the Issuer for the most recently ended four full fiscal quarters, in each case with such pro forma adjustments to Consolidated Total Indebtedness and Consolidated Cash Flow as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Consolidated Interest Coverage Ratio; provided, however, that in calculating the Consolidated Cash Flow of the Issuer for purposes of this Consolidated Net Leverage Ratio, the Issuer shall be permitted to include or add back (without duplication) the Consolidated Cash Flow for each of the four full fiscal quarters (and, when applicable, partial fiscal quarter) ended immediately prior to the date of determination that is attributable to the assets transferred during the applicable period to MLP Entities and that would otherwise be excluded from Consolidated Cash Flow as a result of such MLP Asset Transfers (or as a result of the applicable MLP Entities being Unrestricted Subsidiaries); provided, further, however, that (i) the percentage of such Consolidated Cash Flow included or added back pursuant to the foregoing proviso shall not exceed the percentage of economic interest in such transferred assets held directly or indirectly by the Issuer and its Restricted Subsidiaries after giving effect to such MLP Asset Transfer (and related transactions) and (ii) such Consolidated Cash Flow included or added back pursuant to the foregoing proviso shall only be included or added back if the applicable MLP Entities meet the requirements of clause (4) in the definition of "Qualified MLP Asset Transfer."

"Consolidated Total Indebtedness" means, with respect to any Person as of any date of determination, the sum, without duplication, of:

(1)            the total amount of Indebtedness (other than Hedging Obligations) of such Person and its Restricted Subsidiaries; plus

(2)            the aggregate liquidation value of all Disqualified Stock of such Person and all Preferred Stock of the Restricted Subsidiaries of such Person, in each case, determined on a consolidated basis in accordance with GAAP.

For the avoidance of doubt, Consolidated Total Indebtedness shall be calculated on a pro forma basis to exclude any Indebtedness which is redeemable pursuant to its terms and which has been unconditionally called for redemption

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(or otherwise defeased or satisfied and discharged pursuant to its terms) with a scheduled redemption date within 180 days of the date of determination.

"Consolidated Total Leverage Ratio" means, with respect to any Person, as of any date of determination, the ratio of (1) Consolidated Total Indebtedness of such Person as of the date of determination to (2) Consolidated Cash Flow of such Person for the most recently ended four full fiscal quarters, in each case with such pro forma adjustments to Consolidated Total Indebtedness and Consolidated Cash Flow as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Consolidated Interest Coverage Ratio.

"Contracted Drilling Equipment Value" means the aggregate contract price for the acquisition of all uncompleted Drilling Equipment (with the contract price of each uncompleted Drilling Equipment as determined on the date on which the agreement for construction of such Drilling Equipment was entered into by the Issuer or the applicable Restricted Subsidiary), plus any Ready for Sea Cost of such Drilling Equipment.

"Contracted Vessel" means a Vessel for which the Issuer or a Restricted Subsidiary has entered into a contract for the construction or acquisition of such Vessel but which has not yet been delivered or acquired and which Vessel will constitute a Qualified Vessel upon completion and delivery, as determined in good faith by a Financial Officer.

"Corporate Trust Office of the Trustee" will be at the address of the Trustee specified in Section 12.01 ("Notices") or such other address as to which the Trustee may give notice to the Issuer.

"Credit Facilities" means one or more debt facilities or agreements (including loan agreements and indentures) or commercial paper facilities of the Issuer or any Restricted Subsidiary with banks, other institutional lenders, commercial finance companies or other lenders or investors providing for revolving credit loans, Capital Lease Obligations, term loans, bonds, debentures or letters of credit, pursuant to agreements or indentures, in each case, as amended, restated, modified, renewed, refunded, replaced, increased or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time (and without limitation as to amount, terms, conditions, covenants and other provisions, including increasing the amount of available borrowings thereunder, changing or replacing agent banks and lenders thereunder or adding, removing or reclassifying Subsidiaries of the Issuer as borrowers, issuers or guarantors thereunder).

"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law.

"Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

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"Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 ("Registrar, Transfer Agent and Paying Agent") as the Depositary with respect to the Notes, and any and all successors thereto appointed as Depositary hereunder and having become such pursuant to the applicable provision of this Indenture.

"Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of such Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable (in each case, other than in exchange for or conversion into Capital Stock that is not Disqualified Stock) at the option of the holder of such Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of such Capital Stock have the right to require the Issuer to repurchase or redeem such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Issuer may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 ("Restricted Payments"). The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Indenture will be the maximum amount that the Issuer and the Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock.

"Dollar Equivalent" means, with respect to any monetary amount in a currency other than U.S. Dollars, at any time of determination thereof, the amount of U.S. Dollars obtained by converting such other currency involved in such computation into U.S. Dollars at the spot rate for the purchase of U.S. Dollars with such other currency as published in the Financial Times in the section entitled "Currencies, Bonds & Interest Rates" (or, if the Financial Times is no longer published, or if such information is no longer available in the Financial Times, such source as may be selected in good faith by the Issuer) on the date of such determination. Except as expressly provided otherwise, whenever it is necessary to determine whether the Issuer or any of the Restricted Subsidiaries has complied with any covenant or other provision herein or if there has occurred an Event of Default and an amount is expressed in a currency other than U.S. Dollars, such amount will be treated as the Dollar Equivalent determined as of the date such amount is initially determined in such non-dollar currency.

"DRH Existing Notes" means the 6.5% Senior Secured Notes due 2017 issued by Drill Rigs Holdings Inc. under the DRH Existing Notes Indenture.

"DRH Existing Notes Indenture" means the Indenture dated as of September 20, 2012, among Drill Rigs Holdings Inc., the Issuer, each of the other guarantors party thereto, U.S. Bank National Association, as trustee and Deutsche Bank Trust Company Americas, as noteholder collateral agent, registrar and paying agent.

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"DRH Existing Notes Issuer" means the "Issuer" (as defined in the DRH Existing Notes Indenture) of the DRH Existing Notes, as the same may be amended from time to time.

"DRH Issuer Subsidiary" means, during such time as the DRH Existing Notes are outstanding, any "Subsidiary" (as defined in the DRH Existing Notes Indenture) of the DRH Existing Notes Issuer.

"DRH Unrestricted Subsidiary" means a DRH Issuer Subsidiary that has been properly designated as an "Unrestricted Subsidiary" (as defined in the DRH Existing Notes Indenture) under the DRH Existing Notes Indenture.

"Drilling Equipment" means one or more drilling rigs or drillships or other Vessels, together with all related spares, equipment and any additions or improvements.

"Drillships Financing" means Drillships Financing Holdings Inc., a Marshall Islands corporation and, as of the date of the Offering Memorandum, a wholly-owned Subsidiary of the Issuer.

"Drillships Financing MLP" means a limited liability company or other business entity to be formed in connection with the Drillships Financing MLP Formation Transactions.

"Drillships Financing MLP Formation Transactions" means the MLP Formation Transactions in connection with the initial creation and capitalization of Drillships Financing MLP prior to and in connection with a Qualified MLP IPO with respect thereto and the subsequent contribution of assets in connection with such formation.

"Drillships Financing Term Loan Agreement" means that certain Credit Agreement dated as of July 12, 2013, among Drillships Financing, Drillships Projects Inc., the Issuer, the lenders from time to time party thereto and Deutsche Bank AG New York Branch, in its capacity as the administrative agent and the collateral agent, as amended, restated, modified, renewed, refunded, replaced or refinanced, from time to time (including on February 7, 2014), including to increase the amount permitted to be borrowed thereunder or to add or change agents or lenders.

"Drillships Ocean Ventures Inc." means Drillships Ocean Ventures Inc., a Marshall Islands corporation and, as of the date of the Offering Memorandum, a wholly-owned Subsidiary of the Issuer.

"Drydock, Shipyard Stay and Special Survey Amortization Expense" means, for any period, the amortized amount of all drydock, shipyard stay and special survey expenses in respect of Vessels of the Issuer and the Restricted Subsidiaries for such period. Drydock, Shipyard Stay and Special Survey Amortization Expense with respect to any Vessel of the Issuer or any Restricted Subsidiary will be amortized over a period commencing with the fiscal quarter in which any such expense is incurred and

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ending with the fiscal quarter in which the next drydock, shipyard stay or special survey, as applicable, with respect to such Vessel is scheduled to occur.

"Earnings" means (i) all freight, hire and passage moneys payable to the Issuer or any of its Subsidiaries as a consequence of the operation of a Vessel owned by the Issuer or any of its Subsidiaries, including, without limitation, payments of any nature under any charterparty, pool agreement, drilling contract or other contract for use of such Vessel, (ii) any claim under any guarantee in respect of any charterparty, pool agreement, drilling contract or other contract for use of a Vessel owned by the Issuer or any of its Subsidiaries or otherwise related to freight, hire or passage moneys payable to the Issuer or any of its Subsidiaries as a consequence of the operation of any of the Vessels owned by the Issuer or any of its Subsidiaries; (iii) compensation payable to the Issuer or any of its Subsidiaries in the event of any requisition of any of the Vessels owned by the Issuer or any of its Subsidiaries; (iv) remuneration for salvage, towage and other services performed by any of the Vessels owned by the Issuer or any of its Subsidiaries and payable to the Issuer or any of its Subsidiaries; (v) demurrage and retention money receivable by the Issuer or any of its Subsidiaries in relation to any of the Vessels owned by the Issuer or any of its Subsidiaries; (vi) all moneys which are at any time payable under the insurances in respect of loss of Earnings; (vii) if and whenever any Vessel owned by the Issuer or any of its Subsidiaries is employed on terms whereby any moneys falling within clauses (i) through (vi) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the relevant Vessel; and (viii) other money whatsoever due or to become due to any of the Issuer or any of its Subsidiaries in relation to any of the Vessels owned by the Issuer or any of its Subsidiaries.

"Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security or loan that is convertible into, or exchangeable for, Capital Stock).

"Equity Offering" means a public or private offering of Capital Stock (other than Disqualified Stock) of the Issuer, other than (1) public offerings with respect to the Issuer's common stock registered on Form S-8 and (2) issuances to any Subsidiary of the Issuer.

"Euroclear" means the Euroclear system or any successor securities clearing agency.

"Excess Specified Vessel Proceeds" means the lesser of (A) (1) 25% multiplied by (2) the excess of the Net Proceeds from a Specified Vessel Sale over the amount, if any, of such Net Proceeds included in the Issuer's Consolidated Net Income and (B) (1) any Net Proceeds from a Specified Vessel Sale less (2) the amount of such Net Proceeds included in the Issuer's Consolidated Net Income less (3) Indebtedness that is purchased, repaid or prepaid as set forth in clauses (y)(i) and (y)(ii) of the proviso to Section 4.19(c) ("Asset Sales").

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"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder.

"Existing 9.5% Notes" means the 9.5% Senior Unsecured Notes due 2016 issued by the Issuer under the Bond Agreement between the Issuer and Norsk Tillitsmann ASA, as the bond trustee, dated April 14, 2011.

"Existing Indebtedness" means Indebtedness of the Issuer and its Restricted Subsidiaries in existence on the Issue Date (other than Indebtedness under the Notes and any Note Guarantees), after giving effect to the use of proceeds of the offering of the Notes and the repayment in full of the Existing 9.5% Notes on (or substantially concurrently with) the Issue Date. As used in this Indenture, "Existing Indebtedness" includes, without limitation, Indebtedness on the date hereof in respect of the DRH Existing Notes, the Drillships Financing Term Loan Agreement and the Ventures Facilities Agreement (and shall include the amount of borrowings under the Ventures Facilities Agreements that is available but undrawn as of the Issue Date).

"Fair Market Value" means the value that would be paid by an informed and willing buyer to an unaffiliated, informed and willing seller in a transaction not involving distress or necessity of either party, as determined in good faith by the Board of Directors of the Issuer (unless otherwise provided in this Indenture).

"Financial Officer" means the chief executive officer, chief financial officer, chief accounting officer, executive vice president or treasurer of the Issuer.

"GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession in the United States, which are in effect on the date hereof in the United States.

"Global Note Legend" means the legend set forth in Section 2.06(f)(2) ("Transfer and Exchange"), which is required to be placed on all Global Notes issued under this Indenture.

"Global Notes" means, individually and collectively, each of the Restricted Global Notes deposited with or on behalf of and registered in the name of the Depositary or its nominee, substantially in the form of Exhibit A hereto and that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, issued in accordance with Sections 2.01 ("Form and Dating") and Section 2.06(b)(3) ("Transfer and Exchange").

"Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States of America pledges its full faith and credit.

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"guarantee" means a guarantee other than by endorsement of negotiable instrument for collection in the ordinary course of business, direct or indirect, in any manner, including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement obligations in respect thereof, of all or any part of any Indebtedness.

"Guarantors" means each existing or future Subsidiary of the Issuer, if any, that executes a Note Guarantee in accordance with the provisions of this Indenture, together with their respective successors and assigns until the Note Guarantee of such Person has been released in accordance with the provisions of this Indenture.

"Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under:

(1)            interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

(2)            other agreements or arrangements designed to manage interest rates or interest rate risk; and

(3)            other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices (including prices of bunkers or lubricants) or freight rates.

"Holder" means a Person in whose name a Note is registered.

"Indebtedness" means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether recourse is to all or a portion of the assets of such Person and whether or not contingent,

(1)            in respect of borrowed money;

(2)            evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

(3)            in respect of all reimbursement obligations of such Person in respect of letters of credit, bankers' acceptances or other similar instruments, other than such reimbursement obligations that relate to trade payables or other obligations that are not themselves Indebtedness, in each case, that were entered into in the ordinary course of business of such Person to the extent such reimbursement obligations are satisfied within 10 Business Days following payment on the letter of credit, bankers' acceptance or similar instrument;

(4)            representing Capital Lease Obligations of such Person;

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(5)            representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed;

(6)            representing any Hedging Obligations of such Person; or

(7)            representing Attributable Indebtedness,

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by the specified Person of any Indebtedness of any other Person.

"Indenture" means this indenture pursuant to which the Notes will be issued by and between the Issuer and the Trustee, as amended, supplemented or modified.

"Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant.

"Investment Grade Rating" means ratings equal or higher than both Baa3 (or equivalent) by Moody's and BBB- (or equivalent) by S&P.

"Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Issuer or any of the Restricted Subsidiaries sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, the Issuer will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Issuer's Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in Section 4.07(c) ("Restricted Payments"). The acquisition by the Issuer or any of the Restricted Subsidiaries of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Issuer or such Restricted Subsidiary in such third Person that is not a Subsidiary of such Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in Section 4.07(c) ("Restricted Payments"). Except as otherwise provided in this Indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value.

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"Involuntary Transfer" means, with respect to any property or asset of the Issuer or any Restricted Subsidiary, (1) any damage to such asset that results in an insurance settlement with respect thereto on the basis of a total loss or a constructive or compromised total loss, (2) the confiscation, condemnation, requisition, appropriation or similar taking regarding such asset by any government or instrumentality or agency thereof, including by deed in lieu of condemnation, or (3) foreclosure or other enforcement of a Lien or the exercise by a holder of a Lien of any rights with respect to it.

"Issue Date" means the first date on which the Notes are issued under this Indenture.

"Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in such asset and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

"Local Content Subsidiary" means any Subsidiary of the Issuer that is a party to a Vessel contract or otherwise holds the right to receive Earnings attributable to a Vessel or any Related Assets with respect to such Vessel for the purpose of satisfying any local content law, regulation or requirement or similar law, regulation or requirement.

"MLP" means a limited partnership, limited liability company or other business entity formed as part of MLP Formation Transactions in order to undertake a Qualified MLP IPO intended to acquire, from time to time, directly or indirectly, Equity Interests of, or assets of, any Person, including a Restricted Subsidiary (or a successor thereto), as part of MLP Formation Transactions.

"MLP Asset Transfer" means the initial transfer of assets by the Issuer or any Restricted Subsidiary (which may include Equity Interests) to an MLP or other MLP Entities in connection with MLP Formation Transactions and any subsequent transfer of assets (which may include Equity Interests) to such MLP or other MLP Entities.

"MLP Entities" means the MLP and its direct and indirect Subsidiaries and other Persons, which may include Subsidiaries of the Issuer (including Unrestricted Subsidiaries), reasonably related to the formation, operation or governance of the MLP.

"MLP Formation Transactions" means the transactions in connection with the initial creation and capitalization of an MLP prior to and in connection with a Qualified MLP IPO, including (i) the legal formation of the MLP, the MLP's general partner or managing member, the MLP's direct and indirect Subsidiaries and other MLP Entities and Persons reasonably related to the formation, operation or governance of the MLP, (ii) the acquisition, from time to time, directly or indirectly, by the MLP or MLP Entities, whether through a sale, conveyance or other disposition, including any

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conveyance by means of a transfer, merger, consolidation or similar transaction, of Equity Interests of, or assets of, any Person, including a Restricted Subsidiary (or a successor thereto), or the conversion of any Person, including a Restricted Subsidiary (or a successor thereto), into a limited partnership, limited liability company or other non-corporate Person in accordance with applicable law, (iii) any distributions, payments or other transfers to the Issuer or any of its Subsidiaries of any portion of the actual or anticipated gross proceeds of a Qualified MLP IPO, (iv) any transactions or other arrangements (including tax sharing arrangements) directly related to the Qualified MLP IPO and customary for such transactions (including, for the avoidance of doubt, the exercise of the underwriter's over-allotment option to purchase Equity Interests and transactions related thereto) and (v) any transaction, from time to time, reasonably related thereto that has been determined in good faith by the Board of Directors of the Issuer not to have a material adverse effect on the Holders. Each of the ORP (Ventures) Formation Transactions and the Drillships Financing MLP Formation Transactions shall constitute MLP Formation Transactions.

"Moody's" means Moody's Investors Service, Inc., or any successor to the rating agency business thereof.

"Net Income" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

(1)            any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale or other asset dispositions (other than in the ordinary course of business) or (b) the disposition of any securities by such Person, the Issuer or any of the Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

(2)            any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss.

"Net Proceeds" means the aggregate cash proceeds and Cash Equivalents received by the Issuer or any of the Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (1) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, sales commissions, relocation expenses Incurred as a result of such Asset Sale, and taxes paid or payable as a result of such Asset Sale after taking into account any available tax credits or deductions and any tax sharing arrangements; and (2) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP.

"Net Tangible Assets" means, as of any date, total assets, less goodwill and other intangible assets and liabilities, in each case as shown on the most recent consolidated balance sheet of the Issuer and its Restricted Subsidiaries prepared in

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accordance with GAAP for which internal financial statements are available immediately preceding the date on which any calculation of Net Tangible Assets is being made.

"Non-Recourse Debt" means Indebtedness:

(1)            as to which neither the Issuer nor any of the Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable as a guarantor or otherwise;

(2)            no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Issuer or any of the Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and

(3)            as to which the lenders have been notified in writing, or the governing documentation provides that the lenders will not have any recourse to the stock or assets of the Issuer or any of the Restricted Subsidiaries.

"Non-U.S. Person" means a Person who is not a U.S. Person as defined under Regulation S of the Securities Act.

"Note Guarantee" means the guarantee by each Guarantor, if any, of the Issuer's obligations under this Indenture and the Notes, executed pursuant to the provisions of this Indenture.

"Notes" means, collectively, the Issuer's 7.25% Senior Notes due 2019 issued in accordance with Section 2.02 ("Execution and Authentication; Additional Notes") (whether issued on the Issue Date or issued as Additional Notes or otherwise issued after the Issue Date) treated as a single class of securities under this Indenture, as amended or supplemented from time to time in accordance with the terms of this Indenture. Unless the context requires otherwise, all references to Notes shall include the Notes issued on the Issue Date and any Additional Notes.

"Notes Custodian" means the Registrar, as custodian with respect to the Notes in global form, or any successor entity thereto.

"Notes Obligations" means all advances to, and debts, liabilities, obligations, covenants and duties of, the Issuer or any Guarantor arising under this Indenture, the Notes and any Note Guarantees (including all principal, premium, interest, penalties, fees, charges, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees, and other liabilities or amounts payable or arising thereunder), whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Issuer or any Guarantor of an insolvency or liquidation proceeding naming such Person as the debtor in such

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proceeding, regardless of whether such interest and fees are allowed claims in such insolvency or liquidation proceeding.

"Obligations" means any principal, interest, penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

"Ocean Rig Operating LP" means a limited partnership or other business entity to be formed in connection with the ORP (Ventures) Formation Transactions.

"Offering Memorandum" means the Confidential Offering Memorandum dated March 20, 2014, of the Issuer relating to the Notes.

"Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice President of such Person.

"Officers' Certificate" means a certificate signed on behalf of any Person by two Officers, one of whom must be the Chief Executive Officer or the Chief Financial Officer of such Person, that meets the requirements of Section 12.03 ("Statements Required in Certificate or Opinion").

"Opinion of Counsel" means an opinion from legal counsel which is reasonably acceptable to the Trustee, that meets the requirements of Section 12.03 ("Statements Required in Certificate or Opinion"). The counsel may be an employee of or counsel to the Issuer or any Subsidiary of the Issuer.

"ORP (Ventures)" means a limited liability company or other business entity to be formed in connection with the ORP (Ventures) Formation Transactions.

"ORP (Ventures) Formation Transactions" means the MLP Formation Transactions in connection with the initial creation and capitalization of ORP (Ventures) prior to and in connection with an ORP (Ventures) IPO and the subsequent contribution, sale or other transfer of assets, which may include, among other assets, the Ocean Rig Mylos, the Ocean Rig Skyros, the Ocean Rig Athena and Related Assets.

"ORP (Ventures) IPO" means the initial offer and sale of common units of ORP (Ventures) in an underwritten public offering for cash pursuant to a registration statement that has been declared effective by the SEC pursuant to the Securities Act (other than a registration statement on Form F-4, S-4 or Form S-8 or otherwise relating to Equity Interests of ORP (Ventures) issuable under any employee benefit plan).

"ORP (Ventures) Subsidiary" means a Subsidiary of ORP (Ventures) or a subsidiary of the Issuer a portion of the Capital Stock of which is owned by ORP (Ventures).

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"Participant" means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream).

"Permitted Business" means a business in which the Issuer or any of its Restricted Subsidiaries were engaged on the date of this Indenture, as described in the Offering Memorandum, and any business reasonably related or complimentary thereto.

"Permitted Holder" means DryShips Inc., a Marshall Islands corporation, Mr. George Economou, Mr. Anthony Kandylidis, or any spouse, former spouse or member of their respective immediate families, any of his or their Affiliates, or any Person that is controlled, directly or indirectly, by any such Permitted Holder.

"Permitted Investments" means:

(1)            any Investment in the Issuer or in any Restricted Subsidiary;

(2)            any Investment in Cash Equivalents;

(3)            any Investment by the Issuer or any Restricted Subsidiary in a Person, if as a result of such Investment:

(a)            such Person becomes a Restricted Subsidiary; or

(b)            such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all its assets to, or is liquidated into, the Issuer or a Restricted Subsidiary;

(4)            any Investment made as a result of the receipt of non-cash consideration from (a) an Asset Sale that was made pursuant to and in compliance with Section 4.19 ("Asset Sales") or (b) a Qualified MLP Asset Transfer or an other disposition of properties or assets that does not constitute an Asset Sale;

(5)            any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Issuer;

(6)            any Investments received in compromise or resolution of obligations of trade creditors or customers that were Incurred in the ordinary course of business of the Issuer or any of the Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer and any Investments obtained in exchange for any such Investments;

(7)            Investments represented by Hedging Obligations permitted by Section 4.08(b)(5) ("Incurrence of Indebtedness and Issuance of Preferred Stock");

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(8)            any guarantee of Indebtedness or other obligations of the Issuer or any Restricted Subsidiary permitted to be incurred under this Indenture;

(9)            Investments that are in existence on the Issue Date, and any extension, modification or renewal thereof, but only to the extent not involving additional advances, contributions or other Investments of cash or other assets or other increases thereof (other than as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities, in each case, pursuant to the terms of such Investment as in effect on the Issue Date);

(10)            Investments acquired after the Issue Date as a result of the acquisition by the Issuer or any Restricted Subsidiary of another Person, including by way of a merger, amalgamation or consolidation, to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;

(11)            loans or advances referred to in Section 4.11(c)(6) ("Transactions with Affiliates");

(12)            Investments in any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers' compensation, performance and other similar deposits made in the ordinary course of business by the Issuer or any of its Restricted Subsidiaries;

(13)            other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (13) that are at the time outstanding, not to exceed the greater of (x) $125.0 million and (y) 4.0% of Net Tangible Assets;

(14)            loans by the Issuer to ORP (Ventures) (or one or more ORP (Ventures) Subsidiaries) pursuant to one or more revolving credit facilities in an aggregate principal amount not to exceed $100.0 million; and

(15)            any MLP Formation Transactions or MLP Asset Transfer consummated in compliance with Section 4.19 ("Asset Sales") or that otherwise constitutes a Qualified MLP Asset Transfer.

"Permitted Jurisdiction" means any of the Republic of the Marshall Islands, the United States of America, any State of the United States or the District of Columbia, the Commonwealth of the Bahamas, the Republic of Liberia, the Republic of Panama, the Commonwealth of Bermuda, the British Virgin Islands, the Cayman Islands, the Isle of Man, Cyprus, Norway, Greece, Hong Kong, the United Kingdom, Malta, any Member State of the European Union and any other jurisdiction generally acceptable to institutional lenders in the shipping and offshore drilling industries, as determined in good faith by the Board of Directors of the Issuer.

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"Permitted Liens" means:

(1)            Liens in favor of the Issuer or any Restricted Subsidiary;

(2)            Liens on property of a Person existing at the time such Person is merged with or into or amalgamated or consolidated with the Issuer or any Restricted Subsidiary; provided that such Liens were in existence prior to the contemplation of such merger, amalgamation or consolidation, were not Incurred in contemplation thereof and do not extend to any assets other than those of the Person merged into or amalgamated or consolidated with the Issuer or such Restricted Subsidiary;

(3)            Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Issuer or any Restricted Subsidiary; provided that such Liens were in existence prior to, and not Incurred in contemplation of, such acquisition;

(4)            Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature Incurred in the ordinary course of business;

(5)            Liens existing on the Issue Date, after giving effect to the use of proceeds of the offering of the Notes on the Issue Date (and the related release of any Liens securing any Indebtedness so repaid), including Liens to secure Existing Indebtedness and additional Liens that may be granted in the future to secure Existing Indebtedness pursuant to the agreements governing such Existing Indebtedness;

(6)            Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

(7)            Liens imposed by law, such as necessaries suppliers', carriers', warehousemen's, landlords' and mechanics' Liens, in each case, Incurred in the ordinary course of business, for amounts not more than 30 days past due or which are being contested in good faith;

(8)            survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not Incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(9)            Liens to secure any Indebtedness permitted to be Incurred under this Indenture to refinance any Indebtedness secured by Liens Incurred or

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permitted to exist pursuant to clauses (2), (3) and (5) or this clause (9) of this definition; provided, however, that:

(a)            the new Lien is limited to all or part of the same property and assets that secured the original Indebtedness (plus improvements and accessions to such property, or proceeds or distributions thereof) or any related after-acquired property that, pursuant to any after-acquired property clauses in written agreements pursuant to which the original Lien arose, is required to be pledged to secure the original Indebtedness (plus improvements and accessions to such property, or proceeds or distributions thereof); and

(b)            the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (i) the outstanding principal amount, or, if greater, committed amount, of the original Indebtedness and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;

(10)            Liens arising by reason of any judgment, attachment, decree or order of any court or other governmental authority not giving rise to an Event of Default that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made thereof;

(11)            Liens securing cash management obligations and rights of setoff in favor of a bank imposed by law and incurred in the ordinary course of business on deposit accounts maintained with such bank and cash and Cash Equivalents in such accounts;

(12)            Liens Incurred in the ordinary course of business on the assets of the Issuer in respect of Indebtedness permitted to be Incurred pursuant to Section 4.08 ("Incurrence of Indebtedness and Issuance of Preferred Stock") not exceeding $50.0 million;

(13)            Liens to secure Hedging Obligations permitted by Section 4.08 ("Incurrence of Indebtedness and Issuance of Preferred Stock");

(14)            Liens arising from precautionary Uniform Commercial Code financing statements filings or other applicable similar filings regarding operating leases and vessel charters entered into by the Issuer or a Restricted Subsidiary in the ordinary course of business;

(15)            Liens Incurred in the ordinary course of business of the Issuer or a Restricted Subsidiary arising from Vessel operating, chartering, drydocking, maintenance, repair, refurbishment or replacement, the furnishing of supplies and bunkers to Vessels and related assets, repairs and improvements to Vessels and

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related assets, masters', officers' or crews' wages and maritime Liens, in the case of each of the foregoing, which were not Incurred or created to secure the payment of Indebtedness and which in the aggregate do not materially adversely affect the value of the properties subject to such Lien or materially impair the use for the purposes of which such properties are held by the Issuer and its Restricted Subsidiaries;

(16)            Liens on assets constituting fixed or capital assets acquired or constructed by the Issuer or a Restricted Subsidiary and securing Indebtedness Incurred in the ordinary course of business for the purpose of financing or refinancing such acquisition or construction; provided that (a) each such Lien does not extend to or cover any other asset of the Issuer or a Restricted Subsidiary other than such acquired or constructed assets and additions, improvements or other assets affixed or appurtenant thereto, (b) the Incurrence of such Indebtedness is permitted by Section 4.08 ("Incurrence of Indebtedness and Issuance of Preferred Stock"), (c) the Indebtedness secured by each such Lien does not exceed the cost of acquiring or constructing the applicable fixed or capital asset and (d) the aggregate Indebtedness at any time outstanding secured by all Liens Incurred pursuant to this clause (16) shall not exceed $25.0 million;

(17)            Liens arising under a contract over goods, documents of title to goods and related documents and insurances and their proceeds, in each case in respect of documentary credit transactions entered into with customers of the Issuer and its Restricted Subsidiaries in the ordinary course of business;

(18)            Liens arising under any retention of title, hire, purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied in the ordinary course of business;

(19)            Liens representing the interest in title of a lessor;

(20)            Liens on cash, Cash Equivalents or other property arising in connection with the defeasance, discharge or redemption of Indebtedness (so long as such defeasance, discharge or redemption is permitted pursuant to Section 4.07 ("Restricted Payments")) or Liens arising under this Indenture in favor of the Trustee for its own benefit and similar Liens in favor of other trustees, agents and representatives arising under instruments governing Indebtedness permitted to be incurred under this Indenture, provided that such Liens are solely for the benefit of the trustees, agents or representatives in their capacities as such and not for the benefit of the holders of such Indebtedness;

(21)            Liens for crew's wages remaining unpaid in accordance with reasonable commercial practices or for collision or salvage, or other similar Liens arising in the ordinary course of business, for amounts not more than 30 days past due (unless any such Lien is being contested in good faith and by appropriate proceedings or other acts and the owner of the applicable Vessel shall have set

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aside on its books adequate reserves with respect to such amounts and so long as such deferment in payment shall not subject such Vessel to forfeiture or loss);

(22)            Liens for loss, damage or expense which are fully covered by insurance or in respect of which a bond or other security has been posted by or on behalf of the owner of the applicable Vessel with the appropriate court or other tribunal to prevent the arrest or secure the release of such Vessel from arrest; and

(23)            Liens to secure Indebtedness so long as, after giving effect to such Indebtedness and the application of proceeds therefrom, the aggregate amount of Consolidated Total Indebtedness secured by Permitted Liens, without duplication, does not exceed the greater of (x) $550.0 million multiplied by the number of Vessels that are either Qualified Vessels or Contracted Vessels and (y) the sum of (i) 75% of the Completed Drilling Equipment Value at such time and (ii) 75% of the Contracted Drilling Equipment Value at such time.

"Permitted Refinancing Indebtedness" means any Indebtedness of the Issuer or any of the Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge, in whole or in part, other Indebtedness of the Issuer or any of the Restricted Subsidiaries (other than intercompany Indebtedness) (the "Refinanced Indebtedness"); provided that:

(1)            the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Refinanced Indebtedness (plus all accrued interest on the Refinanced Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith);

(2)            such Permitted Refinancing Indebtedness has a final maturity date that is either (a) no earlier than the final maturity date of the Refinanced Indebtedness or (b) more than 90 days after the final maturity date of the Notes, and has a Weighted Average Life to Maturity that is (i) equal to or greater than the Weighted Average Life to Maturity of, the Refinanced Indebtedness or (ii) more than 90 days after the final maturity date of the Notes; and

(3)            if the Refinanced Indebtedness is (a) subordinated in right of payment to the Notes or a Note Guarantee, then such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes or such Note Guarantee, as the case may be or (b) pari passu in right of payment to the Notes or a Note Guarantee, then such Permitted Refinancing Indebtedness is subordinated or pari passu in right of payment to the Notes or such Note Guarantee, as the case may be, in the case of each of (a) and (b), on terms at least as favorable to Holders as those contained in the documentation governing the Refinanced Indebtedness.

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"Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

"Preferred Stock," as applied to the Capital Stock of any Person, means Capital Stock of such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person.

"Priority Indebtedness" means, without duplication, (i) all Indebtedness for money borrowed of any Restricted Subsidiary (other than any Guarantor), (ii) all Indebtedness for money borrowed of the Issuer or any Restricted Subsidiary secured by any Lien on any asset of the Issuer or any Restricted Subsidiary (other than a Lien that secures the Notes or applicable Note Guarantee on an equal and ratable (or priority) basis), (iii) all Capital Lease Obligations of the Issuer or any Restricted Subsidiary that constitute Indebtedness, and (iv) all Indebtedness of Persons other than the Issuer or any Restricted Subsidiary secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by the Issuer or any Restricted Subsidiary, whether or not the Indebtedness secured thereby has been assumed by the Issuer or such Restricted Subsidiary.

"Priority Indebtedness Amount" means a dollar amount equal to the greater of (x) $600.0 million multiplied by the number of Vessels that are either Qualified Vessels or Contracted Vessels and (y) the sum of (i) 75% of the Completed Drilling Equipment Value at such time and (ii) 75% of the Contracted Drilling Equipment Value at such time.

"Private Placement Legend" means the legend set forth in Section 2.06(f)(1) ("Transfer and Exchange") to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.

"QIB" means a "qualified institutional buyer" as defined in Rule 144A.

"Qualified MLP Asset Transfer" means an MLP Asset Transfer that satisfies each of the following five conditions:

(1)            the Issuer or the Restricted Subsidiary, as the case may be, receives consideration at the time of the MLP Asset Transfer at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of;

(2)            after giving effect to the MLP Asset Transfer, including the application of proceeds therefrom, the Consolidated Net Leverage Ratio of the Issuer shall not exceed 5.5 to 1.0;

(3)            immediately after giving effect to the MLP Asset Transfer, the Issuer shall, directly or indirectly, control the general partner, managing member

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or similar controlling Person of the MLP that directly or indirectly receives the assets or Equity Interests issued or sold or otherwise disposed of in respect of the MLP Asset Transfer;

(4)            the MLP and other MLP Entities (that receive, directly or indirectly, the assets or Equity Interests issued, sold or otherwise disposed of in the MLP Asset Transfer) shall have been structured to provide for reasonably customary MLP-related distributions to the Issuer or a Restricted Subsidiary to the extent of and pursuant to the terms of their Equity Interests in such MLP Entities (or if such distributions will be made initially to an Unrestricted Subsidiary, such Unrestricted Subsidiary shall be subject to a contractual or other arrangement that requires such Unrestricted Subsidiary to make reasonably regular distributions of such amounts to the Issuer or a Restricted Subsidiary), in either case, without duplication, in proportion to the economic ownership of the Issuer in such MLP Entities and in all cases subject to and in accordance with (including any subordination on the right to receive distributions and other limitations in) the organizational or other relevant governing documents of such relevant MLP Entities; and

(5)            immediately before and after giving effect to the MLP Asset Transfer, no Default or Event of Default under any instrument governing Indebtedness of the Issuer or any of its Restricted Subsidiaries shall have occurred or be continuing.

"Qualified MLP IPO" means, (i) in connection with an MLP Formation Transaction, an initial offer and sale of common units of the MLP in an underwritten public offering for cash pursuant to a registration statement that has been declared effective by the SEC pursuant to the Securities Act (other than a registration statement on Form S-4 or Form S-8 or otherwise relating to Equity Interests of the MLP issuable under any employee benefit plan); or (ii) following an ORP (Ventures) IPO, the transfer of Equity Interests of Drillships Financing to ORP (Ventures) (or an ORP (Ventures) Subsidiary).

"Qualified Services Contract" means, with respect to any Additional Drilling Unit acquired by, or committed to be delivered to, the Issuer or any of its Restricted Subsidiaries, a bona fide contract or series of contracts, together with any amendments, supplements or modifications thereto, that the Board of Directors of the Issuer, acting in good faith, designates as a "Qualified Services Contract" pursuant to a resolution of the Board of Directors of the Issuer, which contract or contracts:

(1)            are between the Issuer or one of its Restricted Subsidiaries, on the one hand, and a Person that is not an Affiliate of the Issuer and (a) such Person has a rating (or a Person whose parent has such a rating) of either BBB- or higher from S&P or Baa3 or higher from Moody's, or if such ratings are not available, then a similar investment grade rating from another nationally recognized statistical rating agency, (b) such contract is supported by letters of credit, performance bonds or guarantees from such Person or its parent that has an

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investment grade rating as described in the preceding subclause (a) of this clause (1), or (c) such contract provides for a lockbox or similar arrangements or direct payment to the Issuer or its Restricted Subsidiary, as the case may be, for the full amount of the contracted payments due over the four-quarter reference period considered in calculating Consolidated Cash Flow;

(2)            provide for services to be performed by the Issuer or one or more of its Restricted Subsidiaries involving the use of such Additional Drilling Unit by the Issuer or one or more of its Restricted Subsidiaries, in either case for a minimum aggregate period of at least one year;

(3)            provide for a fixed or minimum day rate or fixed rate for such Additional Drilling Unit covering all the period in (2) above; and

(4)            for purposes of Section 4.08 ("Incurrence of Indebtedness and Issuance of Preferred Stock"), provide that revenues from such Qualified Services Contract are to be received by the Issuer or any of its Restricted Subsidiaries within one year of (a) delivery of the related Additional Drilling Unit and (b) the Incurrence of any Indebtedness pursuant to Section 4.08 ("Incurrence of Indebtedness and Issuance of Preferred Stock").

"Qualified Vessels" means, at any time, the completed and delivered Vessels owned by the Issuer and its Restricted Subsidiaries at such time that are of substantially comparable (or better) quality and value as (or than) the quality and value at such time of the Vessels owned on the Issue Date by the Issuer and its Restricted Subsidiaries, as determined in good faith by a Financial Officer.

"Ready for Sea Cost" means with respect to a Vessel to be acquired or leased by the Issuer or any Restricted Subsidiary, the aggregate amount of all expenditures Incurred to acquire or construct and bring such Vessel to the condition and location necessary for its intended use, including any and all inspections, appraisals, repairs, modifications, additions, permits and licenses in connection with such acquisition or lease.

"Redemption Date" means the date of redemption established by the Issuer or this Indenture as set forth under Article III.

"Regulation S" means Regulation S promulgated under the Securities Act.

"Regulation S Global Note" means a permanent Global Note in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 903 of Regulation S.

"Related Assets" means, with respect to any Vessel and its owner, (i) any insurance policies and contracts from time to time in force with respect to such Vessel, (ii) any requisition compensation payable in respect of any compulsory acquisition of

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such Vessel, (iii) any Earnings (other than Earnings payable to a Local Content Subsidiary) derived from the use or operation of such Vessel and/or any account to which such Earnings are deposited, (iv) any charters, operating leases, Vessel purchase options and related agreements with respect to such Vessel entered into and any security or guarantee in respect of the charterer's or lessee's obligations under such charter, lease, Vessel purchase option or agreement, (v) any cash collateral account established with respect to such Vessel pursuant to the financing arrangement with respect thereto, (vi) any building, conversion or repair contracts relating to such Vessel and any security or guarantee in respect of the builder's obligations under such contract and (vii) any security interest in, or agreement or assignment relating to, any of the foregoing or any mortgage in respect of such Vessel and any asset reasonably related, ancillary or complementary thereto.

"Responsible Officer" when used with respect to the Trustee, means any officer within the Corporate Trust Office of the Trustee (or any successor group of the Trustee), including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee customarily performing functions similar to those performed by any of the above-designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject and who, in each case, shall have direct responsibility for the administration of this Indenture.

"Restricted Certificated Note" means a Certificated Note bearing the Private Placement Legend.

"Restricted Global Note" means a Global Note bearing the Private Placement Legend.

"Restricted Investment" means any Investment other than a Permitted Investment.

"Restricted Period" means the 40-day distribution compliance period as defined in Regulation S.

"Restricted Subsidiary" means any Subsidiary of the Issuer that is not then an Unrestricted Subsidiary; provided, however, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of "Restricted Subsidiary".

"Rule 144" means Rule 144 promulgated under the Securities Act. "Rule 144A" means Rule 144A promulgated under the Securities Act.

"Rule 144A Global Note" means a Global Note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its

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nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to QIBs.

"Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated under the Securities Act.

"S&P" means Standard & Poor's Rating Services or any successor to the rating agency business thereof.

"Sale and Lease-Back Transaction" means any arrangement with any Person providing for the leasing by the Issuer or any of the Restricted Subsidiaries of any real or tangible personal property, which property has been or is to be sold or transferred by the Issuer or such Restricted Subsidiary to such Person in contemplation of such leasing.

"SEC" means the U.S. Securities and Exchange Commission.

"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder.

"Significant Subsidiary" means, at the date of determination, any Restricted Subsidiary that together with its Subsidiaries that are Restricted Subsidiaries (i) for the most recent fiscal year, accounted for more than 10% of the Issuer's consolidated revenues or (ii) as of the end of the most recent fiscal quarter, was the owner of more than 10% of the Issuer's consolidated assets.

"Stated Maturity" means, with respect to any installment of interest or principal on any item or series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the date of this Indenture or, if such item or series is Incurred after the date of this Indenture, the date such item or series is Incurred.

"Subsidiary" means, with respect to any specified Person:

(1)            any corporation, limited liability company, association or other business entity (other than a partnership) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, limited liability company, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2)            any partnership of which (a) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly,

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by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof), whether in the form of general, special or limited partnership interests or otherwise, or (b) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

"Transactions" means, (i) the issuance of the Notes on the Issue Date, (ii) the repurchase or redemption of the Existing 9.5% Notes and (iii) the payment of fees and expenses related to the foregoing.

"Treasury Rate" means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the redemption date (or, if such statistical release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to April 1, 2017; provided, however, that if the period from the redemption date to April 1, 2017 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

"Trustee" means the party named as such in this Indenture until a successor replaces it and, thereafter, means such successor.

"Uniform Commercial Code" means the Uniform Commercial Code as in effect in any applicable jurisdiction from time to time.

"Unrestricted Cash" means, as of any date of determination, all cash and Cash Equivalents of the Issuer and its Restricted Subsidiaries (without regard to any cash or Cash Equivalents of any Persons other than the Issuer and its Restricted Subsidiaries) that would be reflected as cash or Cash Equivalents on a consolidated balance sheet of the Issuer and its Restricted Subsidiaries prepared on such date in accordance with GAAP (less any portion of such cash and Cash Equivalents that would be reflected as "restricted cash" on such balance sheet).

"Unrestricted Certificated Note" means a Certificated Note that does not bear and is not required to bear the Private Placement Legend.

"Unrestricted Global Note" means a Global Note that does not bear and is not required to bear the Private Placement Legend.

"Unrestricted Subsidiary" means:

(1)            any Subsidiary of the Issuer which at the time of determination is an Unrestricted Subsidiary (as designated by the Issuer, as provided below);

(2)            any Subsidiary of an Unrestricted Subsidiary; and

(3)            unless the Issuer elects to maintain such Subsidiary as a Restricted Subsidiary, any MLP Entity.

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The Issuer may designate any Subsidiary of the Issuer as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors of the Issuer unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Issuer or any Restricted Subsidiary (other than (x) Equity Interests or property of a Restricted Subsidiary as a result of an MLP Asset Transfer and (y) any Subsidiary of the Subsidiary to be so designated); provided that the Subsidiary to be so designated and each Subsidiary of such Subsidiary:

(1)            has no Indebtedness other than Non-Recourse Debt;

(2)            except as permitted by Section 4.11 ("Transactions with Affiliates"), is not party to any agreement, contract, arrangement or understanding with the Issuer or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Issuer or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Issuer;

(3)            is a Person with respect to which neither the Issuer nor any of the Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results;

(4)            has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Issuer or any of the Restricted Subsidiaries; and

(5)            is not a DRH Issuer Subsidiary or, if any such Subsidiary is a DRH Issuer Subsidiary, it is also a DRH Unrestricted Subsidiary at all times that it is an Unrestricted Subsidiary under this Indenture.

"U.S. Person" means a U.S. Person as defined in Rule 902(k) promulgated under the Securities Act.

"Ventures Facilities Agreement" means the facilities agreement, dated as of February 28, 2013, by and among Drillships Ocean Ventures Inc., as borrower, and Ocean Rig UDW Inc., as parent and guarantor, the other guarantors party thereto and the banks and financial institutions named therein, as mandated lead arrangers, with the banks and financial institutions named therein, as lenders under the commercial facilities, Eksportkreditt Norge AS, as lender under the Eksportkreditt/GEIK Facilities, The Export-Import Bank of Korea, as lender under the Kexim Facilities, and DNB Bank ASA, as facility agent and security agent.

"Vessel" means one or more shipping or drilling vessels or drilling rigs, whose primary purpose is the maritime transportation of cargo or the exploration and production drilling for crude oil or hydrocarbons, or which are otherwise engaged, used or useful in a Permitted Business, in each case together with all related spares, equipment

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and any additions or improvements; provided that for the purposes of any provision related to the acquisition or disposition of a Vessel, such acquisition or disposition may be conducted through the transfer of all of the Capital Stock of any special purpose entity that owns a Vessel as described above.

"Voting Stock" of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors (or persons performing similar functions) of such Person; provided that with respect to a limited partnership or other entity which does not have directly a board of directors, Voting Stock means such Capital Stock of the general partner of such limited partnership or other business entity with the ultimate authority to manage the business and operations of such Person.

"Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1)            the sum of the products obtained by multiplying (a) the amount of

 each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(2)            the then outstanding principal amount of such Indebtedness.

SECTION 1.02.                                        Other Definitions.

 

	
Term

	
Defined in Section

	 	 
	
"Additional Amounts"

	
4.20(a)

	
"Additional Notes"

	
2.02

	
"Affiliate Transaction"

	
4.11(a)

	
"Asset Sale Offer"

	
4.19(e)

	
"Asset Sale Offer Period"

	
4.19(i)

	
"Asset Sale Offer Settlement Date"

	
4.19(i)

	
"Asset Sale Offer Termination Date"

	
4.19(j)(i)

	
"Authentication Order"

	
2.02

	
"Authentication Agent"

	
2.02

	
"Change of Control Offer"

	
4.18(a)

	
"Change of Control Payment"

	
4.18(a)

	
"Change of Control Payment Date"

	
4.18(a)(2)

	
"Covenant Defeasance"

	
8.03

	
"Default Interest"

	
2.12

	
"DTC"

	
2.03

	
"Event of Default"

	
6.01

	
"Excess Proceeds"

	
4.19(e)

	
"Incur"

	
4.08(a)

	
"Indemnified Party"

	
7.07(a)

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Term

	
Defined in Section

	 	 
	
"Initial Notes"

	
2.02

	
"interest"

	
1.03

	
"Interest Payment Date"

	
2.14

	
"Issuer"

	
Preamble

	
"Legal Defeasance"

	
8.02

	
"MD&A"

	
4.16(I)(a)(1)

	
"Paying Agent"

	
2.03

	
"Payment Default"

	
6.01(5)(A)

	
"Permitted Debt"

	
4.08(b)

	
"Record Date"

	
2.14

	
"Registrar"

	
2.03

	
"Relevant Date"

	
12.12

	
"Restricted Payments"

	
4.07(a)

	
"Resale Restriction Termination Date"

	
2.06(f)(1)

	
"Reversion Date"

	
4.17(a)

	
"Special Interest Payment Date"

	
2.12

	
"Special Record Date"

	
2.12

	
"Specified Tax Jurisdiction"

	
4.20(a)

	
"Specified Vessel Sale"

	
4.19(c)

	
"Successor"

	
5.01(a)(1)

	
"Suspended Covenants"

	
4.17(a)

	
"Suspension Event"

	
4.17(a)

	
"Taxes"

	
4.20(a)

	
"Transfer Agent"

	
2.03

	 	 

SECTION 1.03.                                        Rules of Construction. Unless the context otherwise requires:

 

(1)            a term has the meaning assigned to it;

(2)            an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3)            "or" is not exclusive;

(4)            words in the singular include the plural, and in the plural include the singular;

(5)            "will" shall be interpreted to express a command;

(6)            provisions apply to successive events and transactions;

(7)            references to sections of or rules under the Securities Act will be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time;

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(8)            "including" means including without limitation; and

(9)            references to any person "acting reasonably" and correlative expressions shall be construed to mean "acting reasonably in the interests of the Holders and having due regard to the duties of the Trustee to the Holders".

All references to "Notes" or "principal amount of Notes" shall mean the outstanding principal amount of Notes after giving effect to any redemptions and any other purchases, whether pursuant to this Indenture or otherwise, and after giving effect to any accretion of the principal amount due to the Notes having been issued at a discount to their face amount.

All references to "interest" shall mean the initial interest rate borne by the Notes plus (if applicable) any Default Interest. If there has been no demand that the Issuer pay Default Interest, the Issuer shall pay Default Interest in the same manner as other interest, and on the same dates as set forth in the Notes and in this Indenture.

ARTICLE II

The Notes

SECTION 2.01.                                        Form and Dating. (a)  General. The Notes and the Trustee's certificate of authentication will be substantially in the form of Exhibit A hereto. The Notes may have other notations, legends or endorsements required by law, stock exchange rule or usage. The Notes will initially be represented by the Global Notes. Each Note shall be dated the date of its authentication. The Notes shall be issued in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Issuer and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

(b)            Global Notes. Notes issued in global form will be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in certificated form will be substantially in the form of Exhibit A hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note will represent such of the outstanding Notes as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby will be made by the

39

Trustee or the Notes Custodian therefor, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 ("Transfer and Exchange").

(c)            Euroclear and Clearstream Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream Banking" and "Customer Handbook" of Clearstream will be applicable to transfers of beneficial interests in the Regulation S Global Note that are held by Participants through Euroclear or Clearstream.

 

SECTION 2.02.                                        Execution and Authentication; Additional Notes.  At least one Officer of the Issuer shall sign the Notes by manual or facsimile signature.

If the Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless. A Note will not be valid until an authorized signatory of the Trustee manually authenticates the Note. The signature of the Trustee on a Note shall be conclusive evidence that such Note has been duly and validly authenticated and issued under this Indenture.

The Trustee will, upon receipt of a written order of the Issuer signed by one Officer of the Issuer (an "Authentication Order"), authenticate (i) Notes for original issue in the aggregate principal amount not to exceed $500,000,000 (the "Initial Notes") on the Issue Date and (ii) additional Notes (the "Additional Notes") having identical terms and conditions to the Initial Notes, except for issue date, issue price, transfer restrictions (if any), first interest payment date and the amount of interest paid on the first date after such issue date, in up to an unlimited amount (so long as not otherwise prohibited by the terms of this Indenture, including, without limitation, Section 4.08 ("Incurrence of Indebtedness and Issuance of Preferred Stock")). The aggregate principal amount of Notes outstanding at any time may not exceed the aggregate principal amount of Notes authorized for issuance by the Issuer pursuant to one or more Authentication Orders, except as provided in Section 2.07 ("Replacement Notes").

All Notes issued under this Indenture shall be treated as a single class for all purposes under this Indenture; provided that if the Additional Notes are not fungible with the Notes for U.S. Federal income tax purposes, the Additional Notes will have a separate CUSIP number, if applicable. The Additional Notes shall bear any legend required by applicable law.

The Trustee may appoint an authenticating agent (the "Authentication  Agent") reasonably acceptable to the Issuer to authenticate the Notes. Unless limited by the terms of such appointment, any such Authentication Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by any such agent. An Authentication Agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

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SECTION 2.03.                                        Registrar, Transfer Agent and Paying Agent. The Issuer shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Notes may be presented for payment (the "Paying Agent"). The Issuer will also maintain a transfer agent (the "Transfer Agent") in connection with the Notes. The Issuer shall cause each of the Registrar and the Paying Agent to maintain an office or agency in the Borough of Manhattan, the City of New York. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuer may appoint one or more co-Registrars and one or more additional Paying Agents. The term "Registrar" includes any co-Registrar and the term "Paying Agent" includes any additional Paying Agent. The Issuer may change any Paying Agent or Registrar without notice to any Holder. Other than for the purposes of effecting a redemption or an offer to purchase in accordance with Article III or in connection with a Legal Defeasance, Covenant Defeasance or the satisfaction and discharge of this Indenture pursuant to Section 10.01 ("Satisfaction and Discharge"), the Issuer or any of its Subsidiaries may act as Paying Agent or Registrar. The Issuer shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Issuer shall notify the Trustee in writing of the name and address of any Registrar and Paying Agent not a party to this Indenture. If the Issuer fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such.

The Issuer initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes.

The Issuer initially appoints Deutsche Bank Trust Company Americas to act as the Registrar, Transfer Agent and Paying Agent and to act as Notes Custodian with respect to the Global Notes.

SECTION 2.04.                                        Paying Agent to Hold Money in Trust. The Issuer shall require each Paying Agent other than Deutsche Bank Trust Company Americas to agree in writing that such Paying Agent shall hold, in trust for the benefit of the Holders or the Trustee, all money held by such Paying Agent for the payment of principal of, premium and Additional Amounts, if any, or interest on, the Notes and shall notify the Trustee in writing of any default by the Issuer in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by the Paying Agent to the Trustee. The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Issuer or any of its Subsidiaries) shall have no further liability for the money. If the Issuer or any of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy, reorganization or similar proceedings relating to the Issuer, the Trustee shall serve as Paying Agent for the Notes.

 

SECTION 2.05.                                        Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable, the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Issuer, on its own

41

behalf and on behalf of any Guarantors, shall furnish to the Trustee, in writing, at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders.

SECTION 2.06.                                        Transfer and Exchange.  (a)  Transfer and Exchange of Global Notes. A Global Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes shall be exchangeable by the Issuer for Certificated Notes if:

 

(1)            the Depositary notifies the Issuer that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, the Issuer fails to appoint a successor Depositary;

(2)            the Issuer, at its option, notifies the Trustee in writing that it elects to cause the issuance of Certificated Notes; or

(3)            there has occurred and is continuing a Default or Event of Default with respect to the Notes and the Depositary requests such an exchange.

Upon the occurrence of any of the preceding events in (1), (2) or (3) above, Certificated Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 ("Replacement Notes") and 2.10 ("Temporary Notes"). Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06(a) or Section 2.07 ("Replacement Notes") or 2.10 ("Temporary Notes"), shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); provided, however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) ("Transfer and Exchange").

(b)            Transfer and Exchange of Beneficial Interests in the Global Notes.  The transfer and exchange of beneficial interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act or applicable law. Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

 

(1)            Transfer of Beneficial Interests in the Same Global Note.  Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same

 

 

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Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this subparagraph (1).

(2)            All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) ("Transfer and Exchange") above, the transferor of such beneficial interest must deliver to the Registrar either:

(A)            both:

(1)            a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged; and

(2)            instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or

(B)            both:

(1)            a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Certificated Note in an amount equal to the beneficial interest to be transferred or exchanged; and

(2)            instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Certificated Note shall be registered to effect the transfer or exchange referred to in clause (1) immediately above.

Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g).

 

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(3)            Transfer of Beneficial Interests to Another Restricted Global Note.  A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(2) ("Transfer and Exchange") above and the Registrar receives the following:

(A)            If the transferee will take delivery in the form of a beneficial interest in the Rule 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and

(B)            if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.

(4)            Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any Holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(2) ("Transfer and Exchange") above and the Registrar receives the following:

(A)            if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; or

(B)            if the Holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof,

and, in each such case, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act and that the Private Placement Legend may be removed from the Note.

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If any such transfer is effected pursuant to this subparagraph (4) at a time when an Unrestricted Global Note has not yet been issued, the Issuer shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 ("Execution and Authentication; Additional Notes"), the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to this subparagraph (4). Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

(c)            Transfer or Exchange of Beneficial Interests for Certificated Notes.

 

(1)            Beneficial Interests in Restricted Global Notes to Restricted Certificated Notes. If in accordance with Section 2.06(a) ("Transfer and Exchange") a beneficial interest in a Restricted Global Note is to be exchanged for a Restricted Certificated Note or transferred to a Person who takes delivery thereof in the form of a Restricted Certificated Note, then, upon receipt by the Registrar of the following documentation:

(A)            if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Certificated Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof;

(B)            if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C)            if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D)            if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E)            if such beneficial interest is being transferred to the Issuer or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(F)            if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

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the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Issuer shall execute and the Trustee shall, upon receipt of an Authentication Order, authenticate and deliver to the Person designated in the instructions a Certificated Note in the appropriate principal amount. Any Certificated Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the Holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Certificated Notes to the Persons in whose names such Notes are so registered. Any Certificated Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

(2)            Beneficial Interests in Restricted Global Notes to Unrestricted Certificated Notes. A Holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Certificated Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Certificated Note after the applicable Resale Restriction Termination Date only if the Registrar receives the following:

(A)            if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Certificated Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; or

(B)            if the Holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Certificated Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act and that the Private Placement Legend may be removed from the Note, and such other documents as the Registrar may reasonably request.

(3)            Beneficial Interests in Unrestricted Global Notes to Unrestricted Certificated Notes. If any Holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Certificated Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Certificated Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(2), the Trustee will cause the aggregate principal amount of the

46

applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Issuer will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a Certificated Note in the appropriate principal amount. Any Certificated Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will be registered in such name or names and in such authorized denomination or denominations as the Holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee will deliver such Certificated Notes to the Persons in whose names such Notes are so registered. Any Certificated Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(3) will not bear the Private Placement Legend.

(d)            Transfer and Exchange of Certificated Notes for Beneficial Interests.

 

(1)            Restricted Certificated Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Certificated Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Certificated Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

(A)            if the Holder of such Restricted Certificated Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof;

(B)            if such Restricted Certificated Note is being transferred to a QIB in accordance with Rule 144A a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C)            if such Restricted Certificated Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D)            if such Restricted Certificated Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E)            if such Restricted Certificated Note is being transferred to the Issuer or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(F)            if such Restricted Certificated Note is being transferred pursuant to an effective registration statement under the Securities Act, a

47

certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cancel the Restricted Certificated Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the Rule 144A Global Note and, in the case of clause (C) above, the Regulation S Global Note.

(2)            Restricted Certificated Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Certificated Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Certificated Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note after the applicable Resale Restriction Termination Date only if the Registrar receives the following:

(A)            if the Holder of such Certificated Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(c) thereof; or

(B)            if the Holder of such Certificated Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case, if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act and that the Private Placement Legend may be removed from the Note, and such other documents as the Registrar may reasonably request.

Upon satisfaction of the conditions in this Section 2.06(d)(2), the Trustee will cancel the Certificated Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(3)            Unrestricted Certificated Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Certificated Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Certificated Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the

48

applicable Unrestricted Certificated Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from a Certificated Note to a beneficial interest is effected pursuant to subparagraphs (2) or (3) of this Section 2.06(d) at a time when an Unrestricted Global Note has not yet been issued, the Issuer will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 ("Execution and Authentication; Additional Notes"), the Trustee will authenticate, one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Certificated Notes so transferred.

(e)            Transfer and Exchange of Certificated Notes for Certificated Notes. Upon request by a Holder of Certificated Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Certificated Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Certificated Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar and duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).

 

(1)            Restricted Certificated Notes to Restricted Certificated Notes. Any Restricted Certificated Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Certificated Note if the Registrar receives the following:

(A)            If the transfer will be made pursuant to Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B)            if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C)            if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act (other than those listed in subparagraphs (A) and (B) of this clause (1)), then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

(2)            Restricted Certificated Notes to Unrestricted Certificated Notes.  Any Restricted Certificated Note may be exchanged by the Holder thereof for an Unrestricted Certificated Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Certificated Note after the

49

applicable Resale Restriction Termination Date only if the Registrar receives the following:

(A)            if the Holder of such Restricted Certificated Notes proposes to exchange such Notes for an Unrestricted Certificated Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(d) thereof; or

(B)            if the Holder of such Restricted Certificated Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Certificated Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case, if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act and that the Private Placement Legend may be removed from the Note, and such other documents as the Registrar may reasonably request.

(3)            Unrestricted Certificated Notes to Unrestricted Certificated Notes.  A Holder of Unrestricted Certificated Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Certificated Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Certificated Notes pursuant to the instructions from the Holder thereof.

(f)            Legends. The following legends will appear on the face of all Global Notes and Certificated Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.

 

(1)            Private Placement Legend.

(A)            Except as permitted by subparagraph (B) of this Section 2.06(f), each Global Note and each Certificated Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR

50

UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS, IN THE CASE OF RULE 144A NOTES: ONE YEAR AND IN THE CASE OF REGULATION S NOTES: 40 DAYS, AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.

(B)            Notwithstanding the foregoing, any Global Note or Certificated Note issued pursuant to subparagraphs (b)(4), (c)(2), (c)(3), (d)(2), (d)(3), (e)(2) or (e)(3) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) will not bear the Private Placement Legend.

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(2)            Global Note Legend. Each Global Note will bear a legend in substantially the following form:

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO

SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO

SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE ISSUER.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

(g)            Cancelation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Certificated Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.11 ("Cancelation"). At any time prior to such cancelation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Certificated Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on such

52

Global Note by the Trustee or by the Notes Custodian at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note will be increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Notes Custodian at the direction of the Trustee to reflect such increase.

(h)            General Provisions Relating to Transfers and Exchanges of Notes.

 

(1)            To permit registrations of transfers and exchanges, the Issuer shall, subject to the other terms and conditions of this Article II, execute and the Trustee shall authenticate Global Notes and Certificated Notes upon receipt of an Authentication Order in accordance with Section 2.02 ("Execution and Authentication; Additional Notes") or at the Registrar's request.

(2)            No service charge will be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Certificated Note for any registration of transfer or exchange, but the Issuer may require payment of a sum sufficient to cover any transfer tax, assessments or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charges payable upon exchange or transfer pursuant to Sections 2.10 ("Temporary Notes"), 3.06 ("Notes Redeemed or Purchased in Part"), 4.18 ("Offer to Repurchase Upon Change of Control"), 4.19 ("Asset Sales"), and 9.04 ("Notation on or Exchange of Notes")).

(3)            The Registrar will not be required to register the transfer or exchange of any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

(4)            All Global Notes and Certificated Notes issued upon any registration of transfer or exchange of Global Notes or Certificated Notes will be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Certificated Notes surrendered upon such registration of transfer or exchange.

(5)            None of the Registrar, the Trustee or the Issuer will be required:

(A)            to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 ("Selection of Notes to be Redeemed or Purchased") and ending at the close of business on the day of selection;

(B)            to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or

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(C)            to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.

(6)            Prior to due presentment for the registration of a transfer of any Note, the Trustee, the Paying Agent, the Registrar or the Issuer may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of, premium, if any, and interest on such Notes and for all other purposes whatsoever, whether or not such Notes are overdue, and none of the Issuer, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.

(7)            The Trustee shall authenticate Global Notes and Certificated Notes in accordance with the provisions of Section 2.02 ("Execution and Authentication; Additional Notes").

(8)            All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.

(9)            Neither the Trustee nor any agent of the Trustee shall have any responsibility for any actions taken or not taken by the Depositary.

(10)            Neither the Trustee nor the Registrar shall have any responsibility or obligation to any Participant or Indirect Participant or any other Person with respect to the accuracy of the books or records, or the acts or omissions, of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any Participant or Indirect Participant or other Person (other than the Depositary or any registered Holder) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Notes, by or through the Depositary. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the customary procedures of the Depositary. The Trustee and the Registrar may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its Participants or Indirect Participants.

(11)            Neither the Trustee nor the Registrar shall have any obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Participants or Indirect Participants in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this

54

Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

SECTION 2.07.                                        Replacement Notes. If any mutilated Note is surrendered to the Trustee or the Issuer and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuer shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. An indemnity bond must be supplied by the Holder that is sufficient in the judgment of (i) the Trustee to protect the Trustee and (ii) the Issuer to protect the Issuer, the Trustee and any Agent from any loss that any of them may suffer if a Note is replaced. The Issuer may charge for their expenses in replacing a Note, including reasonable fees and expenses of counsel and the Trustee's reasonable fees and expenses. In the event of any such mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due and payable, the Issuer in its discretion may pay such Note instead of issuing a new Note in replacement thereof.

 

Every replacement Note is an obligation of the Issuer and shall be entitled to all the benefits of this Indenture equally and proportionately with all other Notes duly issued under this Indenture.

SECTION 2.08.                                        Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancelation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions of this Indenture, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 ("Treasury Notes"), a Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note; provided, however, that Notes held by the Issuer or a Subsidiary of the Issuer shall not be deemed to be outstanding for purposes of Section 3.07(c) ("Optional Redemption").

 

If a Note is replaced pursuant to Section 2.07 ("Replacement Notes"), it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser in whose hands such Note is a legal, valid and binding obligation of the Issuer.

If the entire principal amount and premium, if any, of any Note is considered paid under Section 4.01 ("Payment of Notes"), it ceases to be outstanding and interest on it ceases to accrue.

If the Paying Agent (other than the Issuer, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest.

SECTION 2.09.                                        Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer, or by any Person directly or indirectly

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controlling or controlled by or under direct or indirect common control with the Issuer, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in conclusively relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned will be so disregarded. Upon request of the Trustee, the Issuer shall furnish to the Trustee promptly an Officers' Certificate listing and identifying all Notes, if any, known by the Issuer to be owned or held by or for the account of any of the above described Persons, and the Trustee shall be entitled to accept and rely upon such Officers' Certificate as conclusive evidence of the facts therein set forth and of the fact that all Notes not listed therein are outstanding for the purpose of any determination.

SECTION 2.10.                                        Temporary Notes. Until certificates representing Notes are ready for delivery, the Issuer may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes will be substantially in the form of certificated Notes, but may have variations that the Issuer considers appropriate for temporary Notes and as may be reasonably acceptable to the Trustee. Without unreasonable delay, the Issuer shall prepare and the Trustee shall, upon receipt of an Authentication Order, authenticate definitive Notes in exchange for temporary Notes.

 

Holders of temporary Notes will be entitled to all of the benefits of this Indenture.

SECTION 2.11.                                        Cancelation. The Issuer at any time may deliver Notes to the Registrar for cancelation. The Trustee and Paying Agent shall forward to the Registrar any Notes surrendered to them for registration of transfer, exchange or payment. The Registrar and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancelation and will dispose of canceled Notes (subject to the record retention requirement of the Exchange Act and the Trustee) in accordance with its customary procedure. Evidence of the destruction or cancelation of all canceled Notes shall be delivered to the Issuer upon written request. The Issuer may not issue new Notes to replace Notes that it has paid or that have been delivered to the Registrar for cancelation.

 

SECTION 2.12.                                        Default Interest. The Issuer shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal, premium, if any, and interest (without regard to any applicable grace period) from time to time on demand at the rate equal to 2% per annum in excess of the then applicable interest rate on the Notes to the extent lawful to the Persons who are Holders on a subsequent Special Record Date (as defined below), in each case at the rate provided in the Notes and consistent with Section 4.01 ("Payment of Notes") ("Default  Interest"). The Issuer shall notify the Trustee in writing of the amount of Default Interest proposed to be paid on each Note and the date of the proposed payment (the "Special  Interest Payment Date"). The Issuer shall fix or cause to be fixed a record date (the "Special Record Date") for the payment of such Default Interest; provided that no such Special Record Date may be less than 10 days prior to the related Special Interest Payment Date. At least 15 days before the Special Record Date, the Issuer (or, upon the

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written request of the Issuer, the Trustee in the name and at the expense of the Issuer) shall mail or cause to be sent to Holders a notice that states the Special Record Date, the related Special Interest Payment Date and the amount of such interest to be paid. The Trustee shall not at any time be under any duty or responsibility to any Holder to determine the Default Interest, or with respect to the nature, extent or calculation of the amount of Default Interest owed.

SECTION 2.13.                                        Persons Deemed Owners. The Holder of a Note may be treated as its owner for all purposes. Only Holders have rights under this Indenture and the Notes.

 

SECTION 2.14.                                        Interest Payment Date; Record Date. Interest on outstanding Notes will accrue at the rate of 7.25% per year and will be payable semi­annually in arrears on April 1 and October 1 of each year, commencing on October 1, 2014 (each, an "Interest Payment Date"). The Issuer shall make each interest payment to the Holders of record on the immediately preceding March 15 and September 15 (each, a "Record Date"). Interest on the Notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. If a payment date is not a Business Day at a place of payment, payment may be made at that place on the next succeeding Business Day, and no interest shall accrue on such payment for the intervening period.

 

ARTICLE III

Redemption and Purchase

SECTION 3.01.                                        Notices to Trustee. If the Issuer elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 ("Optional Redemption") or Section 3.08 ("Optional Redemption for Changes in Withholding Taxes"), it must furnish to the Trustee, at least 35 days (unless the Trustee permits a shorter period) but not more than 60 days before a Redemption Date, an Officers' Certificate setting forth:

 

(1)            the clause of this Indenture pursuant to which the redemption shall occur;

(2)            the Record Date, if any, for the redemption and the applicable Redemption Date;

(3)            the principal amount of Notes to be redeemed; and

(4)            the redemption price.

SECTION 3.02.                                        Selection of Notes to Be Redeemed or Purchased.  If less than all the Notes are to be redeemed or purchased in an offer to purchase at any time, the Registrar will select Notes for redemption or purchase on a pro rata basis, by lot to the extent practicable or by such other method in accordance with the applicable

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procedures of the Depositary, unless otherwise required by law or applicable stock exchange or Depositary requirements.

In the event of partial redemption or purchase by lot, the particular Notes to be redeemed or purchased will be selected, unless otherwise provided herein, not less than 30 (unless the Registrar permits a shorter period) nor more than 60 days prior to the Redemption Date or purchase date by the Registrar from the outstanding Notes not previously called for redemption or purchase.

The Registrar shall promptly notify the Issuer in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in minimum amounts of $2,000 and integral multiples of $1,000 in excess thereof; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase.

SECTION 3.03.                                        Notice of Redemption. At least 30 days but not more than 60 days before a Redemption Date, the Issuer shall mail, or cause to be mailed by first class mail, a notice of redemption (or such notice shall otherwise be given in accordance with the procedures of the Depositary) to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a Redemption Date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Articles VIII or X hereof. For Notes which are represented by global certificates held on behalf of Euroclear or Clearstream, notices may be given by delivery of the relevant notices to Euroclear or Clearstream for communication to entitled account holders in substitution for the aforesaid mailing.

 

The notice shall identify the Notes (including the CUSIP numbers) to be redeemed and shall state:

(1)            the Record Date, if any, and the Redemption Date for such redemption;

(2)            the redemption price or, if the redemption price is not then determinable, the manner in which it is to be determined;

(3)            if the Notes are being redeemed in part:

(A)            If less than all the Notes are to be redeemed at any time, the Registrar shall select Notes for redemption on a pro rata basis, by lot to the extent practicable or by such other method in accordance with the applicable procedures of the Depositary, unless otherwise required by law or applicable stock exchange or Depositary requirements, and in any case,

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in minimum amounts of $2,000 and integral multiples of $1,000 in excess thereof; and

(B)            the portion of the principal amount of such Notes to be redeemed and that, after the Redemption Date upon surrender of such Notes, a new Note or Notes in principal amount equal to the unredeemed portion will be issued upon cancelation of the original Note;

(4)            the name and address of the Paying Agent;

(5)            that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(6)            that, unless the Issuer defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;

(7)            the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed;

(8)            a description of any conditions to the Issuer's obligations to complete the redemption; and

(9)            that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.

At the Issuer's request, the Registrar shall give the notice of redemption in the Issuer's name and at its expense; provided, however, that the Issuer has delivered to the Registrar, at least five Business Days prior to the date such notice is to be delivered to the Holders, an Officers' Certificate requesting that the Registrar give such notice and setting forth the information to be stated in such notice as provided in this Section 3.03 above and attaching a final form of such notice to be delivered to the Holders.

SECTION 3.04.                                        Effect of Notice of Redemption. Once notice of redemption is sent in accordance with Section 3.03 ("Notice of Redemption"), Notes called for redemption become irrevocably due and payable on the applicable Redemption Date at the applicable redemption price, subject to any conditions specified in the notice of redemption. On and after a redemption date, interest shall cease to accrue on such Notes or portion of them called for redemption. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.

 

SECTION 3.05.                                        Deposit of Redemption or Purchase Price. No later than 10:00 a.m. New York City time on the Redemption Date or purchase date, the Issuer shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued and unpaid interest and Additional Amounts, if any, on all Notes to be redeemed or purchased on that date other than Notes or portions of Notes called for redemption that have been delivered by the Issuer to the Registrar for cancelation. The Trustee or the Paying Agent shall promptly return to the

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Issuer any money deposited with the Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to pay the redemption or purchase price of, and accrued and unpaid interest, if any, and Additional Amounts, if any, on all Notes to be redeemed or purchased. The Trustee or Paying Agent shall inform the Issuer of the existence of such amounts as reasonably practicable after such excess amounts are deposited with the Trustee or Paying Agent.

If the Issuer complies with the provisions of the preceding paragraph, on and after the Redemption Date or purchase date, interest will cease to accrue on the Notes or the portions of Notes called for redemption or purchase. If a Note is redeemed or purchased on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date. If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Issuer to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the Redemption Date or purchase date until such principal is paid, and to the extent lawful, on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 ("Payment of Notes").

SECTION 3.06.                                        Notes Redeemed or Purchased in Part. Upon surrender of a Note that is redeemed or purchased in part, the Issuer shall issue and, upon receipt of an Authentication Order, the Trustee shall authenticate for the Holder at the expense of the Issuer a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered. In the case of a Global Note, an appropriate notation will be made on such Note to decrease the principal amount thereof to an amount equal to the unredeemed portion thereof.

 

SECTION 3.07.                                        Optional Redemption. (a)  Except as set forth in clauses (b), (c) and (d) of this Section 3.07 or as provided in Section 3.08, the Notes shall not be redeemable at the option of the Issuer.

 

(b)            On or after April 1, 2017, the Issuer may redeem the Notes, in whole or in part, at one time or from time to time, upon not less than 30 nor more than 60 days' prior notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Additional Amounts, if any, on the Notes redeemed, to the applicable Redemption Date (subject to the right of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the periods indicated below:

 

	
For the Period Below

	
Percentage

	
From April 1, 2017 to March 31, 2018

	
105.438%

	
From April 1, 2018 to September 30, 2018

	
102.719%

	
October 1, 2018 and thereafter

	
100.000%

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Unless the Issuer defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable Redemption Date.

(c)            At any time prior to April 1, 2017, the Issuer may, at its option, redeem up to 35% of the aggregate original principal amount of Notes issued under this Indenture (including Additional Notes), at one time or from time to time, at a redemption price equal to 107.25% of the principal amount thereof, plus accrued and unpaid interest and Additional Amounts, if any, to the applicable Redemption Date (subject to the right of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date), in an amount not greater than the net cash proceeds received by the Issuer from one or more Equity Offerings; provided that (i) at least 65% of the aggregate original principal amount of Notes issued under this Indenture (including Additional Notes, but excluding Notes held by the Issuer and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and (ii) the redemption occurs within 180 days of the date of the closing of such Equity Offering.

 

(d)            In addition, at any time prior to April 1, 2017, the Issuer may, at its option, redeem the Notes, in whole or in part, at one time or from time to time, upon not less than 30 nor more than 60 days' prior notice, at a redemption price equal to 100% of the outstanding principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Additional Amounts, if any, to the applicable Redemption Date (subject to the right of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

 

(e)            Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 ("Notices to Trustee") through 3.06 ("Notes Redeemed or Purchased in Part").

 

SECTION 3.08.                                        Optional Redemption for Changes in Withholding  Taxes. (a)  The Issuer may redeem the Notes, at its option, at any time in whole, but not in part, upon not less than 30 nor more than 60 days' notice to the Holders, at a redemption price equal to 100% of the outstanding principal amount of Notes, plus accrued and unpaid interest (if any) to the applicable Redemption Date (subject to the right of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date), in the event that the Issuer determines in good faith that the Issuer or any Guarantor (if any) has become or would become obligated to pay, on the next date on which any amount would be payable with respect to the Notes, or the Note Guarantees, Additional Amounts and such obligation cannot be avoided by taking reasonable measures available to the Issuer or the relevant Guarantor (if any), as applicable (including making payment through a Paying Agent located in another jurisdiction), as a result of (i) a change in or an amendment to the laws or treaties (including any regulations or rulings promulgated thereunder) of any Specified Tax Jurisdiction affecting taxation, which change or amendment is announced or becomes effective on or after the date of this Indenture or (ii) any change in or amendment to any official position of a taxing authority in any Specified Tax Jurisdiction regarding the application, administration or interpretation of such laws, treaties, regulations or rulings

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(including a holding, judgment or order by a court of competent jurisdiction), which change or amendment is announced or becomes effective on or after the date of this Indenture.

(b)            Notwithstanding the foregoing, no such notice of redemption may be given earlier than 60 days prior to the earliest date on which the Issuer or the relevant Guarantor (if any), as applicable, would be obligated to pay Additional Amounts if a payment in respect of the Notes or any applicable Note Guarantees were then due. Before the Issuer publishes, mails or delivers a notice of redemption of the Notes as described above, the Issuer shall deliver to the Trustee and Paying Agent (i) an Officers' Certificate stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer to so redeem have occurred and (ii) an opinion of independent legal counsel of recognized standing satisfactory to the Trustee and the Paying Agent that the Issuer or any Guarantor has or will become obligated to pay Additional Amounts as a result of the circumstances referred to in Section 3.08(a)(i) or Section 3.08(a)(ii).

 

(c)            The Trustee and Paying Agent shall accept and shall be entitled to conclusively rely upon the Officers' Certificate and Opinion of Counsel as sufficient evidence of the satisfaction of the conditions precedent described above, in which case they shall be conclusive and binding on the Holders.

 

(d)            Any redemption pursuant to this Section 3.08 shall be made pursuant to the provisions of Sections 3.01 ("Notices to Trustee") through 3.06 ("Notes Redeemed or Purchased in Part").

 

ARTICLE IV

Covenants

SECTION 4.01.                                        Payment of Notes. The Issuer shall pay or cause to be paid the principal of, premium, if any, and interest and Additional Amounts, if any, on, the Notes on the dates and in the manner provided in this Indenture and the Notes. Principal, premium, if any, and interest and Additional Amounts, if any, will be considered paid on the date due if the Paying Agent, if other than the Issuer or a Subsidiary thereof, holds, as of 10:00 a.m. New York City time on the due date, money deposited by the Issuer in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest and Additional Amounts, if any, then due.

 

SECTION 4.02.                                        Maintenance of Office or Agency. The Issuer shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-Registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer fails to maintain any such required office or agency or

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fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

The Issuer hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Issuer in accordance with Section 2.03 ("Registrar, Transfer Agent and Paying Agent").

SECTION 4.03.                                        Corporate Existence. Except as otherwise permitted by Article V, the Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect:

 

(1)            its corporate existence and the corporate, partnership or other existence of each of its Restricted Subsidiaries in accordance with the respective organizational documents (as the same may be amended from time to time) of the Issuer or any such Restricted Subsidiary; and

(2)            the material rights (charter or statutory), licenses and franchises of the Issuer and each Restricted Subsidiary;

provided, however, that the Issuer shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any Restricted Subsidiary, if the Board of Directors of the Issuer shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Issuer and its Restricted Subsidiaries, taken as a whole.

SECTION 4.04.                                        Compliance Certificate. (a)  The Issuer shall deliver to the Trustee, within 120 days after the end of each fiscal year, which, as of the date of this Indenture, occurs on December 31, an Officers' Certificate signed by the principal financial officer, the principal accounting officer or the principal executive officer stating that a review of the activities of the Issuer and its Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Issuer has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her actual knowledge the Issuer has kept, observed, performed and fulfilled each and every covenant contained in this Indenture applicable to the Issuer and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Issuer is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of, or interest, if any,

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on, the Notes is prohibited or if such event has occurred, a description of the event and what action the Issuer is taking or proposes to take with respect thereto.

(b)            So long as any of the Notes are outstanding, the Issuer shall deliver to the Trustee, forthwith upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Issuer is taking or proposes to take with respect thereto.

 

SECTION 4.05.                                        Taxes. The Issuer shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies, except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders.

 

SECTION 4.06.                                        Stay, Extension and Usury Laws. The Issuer and each of the Guarantors (if any) covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer and each of the Guarantors (if any) (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.

 

SECTION 4.07.                                        Restricted Payments. (a) The Issuer shall not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly:

 

(1)            declare or pay any dividend or make any other payment or distribution on account of Equity Interests of the Issuer or any Restricted Subsidiary (including, without limitation, any payment in connection with any merger, consolidation or amalgamation involving the Issuer or any of the Restricted Subsidiaries) or to the direct or indirect holders of the Issuer's or any of the Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Issuer and other than dividends or distributions payable to the Issuer or any Restricted Subsidiary);

(2)            purchase, repurchase, redeem, retire or otherwise acquire for value (including, without limitation, in connection with any merger, consolidation or amalgamation involving) any Equity Interests of the Issuer or any direct or indirect parent of the Issuer held by any Person (other than Equity Interests held by the Issuer or any Restricted Subsidiary) or any Equity Interests of any Restricted Subsidiary held by an affiliate of the Issuer (other than Equity Interests held by the Issuer or any Restricted Subsidiary) (in each case other than in exchange for Equity Interests of the Issuer that is not Disqualified Stock);

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(3)            make any principal payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Issuer or any Guarantor that is contractually subordinated to the Notes or to any Note Guarantee (excluding any intercompany Indebtedness between or among the Issuer and any of the Restricted Subsidiaries), except the purchase, repurchase, redemption, defeasance or other acquisition of such Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year after the date of purchase, repurchase, redemption, defeasance or acquisition, and the payment of principal of such Indebtedness at the Stated Maturity thereof; or

(4)            make any Restricted Investment,

(all such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment:

(i)            no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;

(ii)            the Issuer could Incur, at the time of such Restricted Payment and after giving pro forma effect thereto, at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in

Section 4.08(a) ("Incurrence of Indebtedness and Issuance of Preferred Stock"); and

(iii)            such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Issuer and the Restricted Subsidiaries since the Issue Date (excluding Restricted Payments permitted by clauses (2) through (5) and (7) through (15) of Section 4.07(b)), is less than the sum, without duplication, of:

(A)            50% of the Issuer's Consolidated Net Income on a consolidated basis for the period (taken as one accounting period) from the first day of the fiscal quarter during which the Issue Date occurs and ending on the last day of the Issuer's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

(B)            100% of the aggregate net cash proceeds or the Fair Market Value of assets other than cash, in each case, received by the Issuer or any Restricted Subsidiary from any Person other than the Issuer or any of its Subsidiaries since the Issue Date as a contribution to its common equity capital or from the issue or sale of the Issuer's Equity Interests (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt

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securities of the Issuer, in each case that have been converted into or exchanged for Equity Interests (other than Disqualified Stock) of the Issuer (other than Equity Interests, Disqualified Stock or debt securities sold to a Restricted Subsidiary of the Issuer); plus

(C)            to the extent that any Restricted Investment that was made after the Issue Date is sold or disposed of for cash or Cash Equivalents or otherwise cancelled, liquidated or repaid for cash or Cash Equivalents, the lesser of (i) the return of capital received in cash or Cash Equivalents with respect to such Restricted Investment (less the cost of disposition, if any) and (ii) the initial amount of such Restricted Investment; plus

(D)            to the extent that any Unrestricted Subsidiary designated as such after the Issue Date is redesignated as a Restricted Subsidiary after the Issue Date, the lesser of (i) the Fair Market Value of the Restricted Investment made by the Issuer or any of the Restricted Subsidiaries in such Subsidiary as of the date of such redesignation and (ii) such Fair Market Value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary after the Issue Date; plus

(E)            $50.0 million.

(b)            Section 4.07(a) will not prohibit:

 

(1)            the payment of any dividend or distribution or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or distribution or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend, distribution or redemption payment would have complied with the provisions of this Indenture;

(2)            the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Issuer) of, Equity Interests of the Issuer (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to the Issuer; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded from clause (iii)(B) of Section 4.07(a);

(3)            the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Issuer or any Restricted Subsidiary that is contractually subordinated to the Notes or to any Note Guarantee with the net cash proceeds from a substantially concurrent Incurrence of Permitted Refinancing Indebtedness;

(4)            the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary that is not a wholly owned Subsidiary of the Issuer to holders of minority interests in

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its Equity Interests on a pro rata basis or on a basis more favorable to the Issuer or its Restricted Subsidiaries;

(5)            so long as no Event of Default has occurred and is continuing, the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Issuer or Disqualified Stock or Preferred Stock of any Restricted Subsidiary issued after the Issue Date in accordance with the Consolidated Interest Coverage Ratio test set forth in Section 4.08(a) ("Incurrence of Indebtedness and Issuance of Preferred Stock");

(6)            so long as the aggregate principal amount of the Consolidated Total Indebtedness of the Issuer and the Restricted Subsidiaries does not exceed 75% of the sum of the Completed Drilling Equipment Value and the Contracted Drilling Equipment Value at such time and no Default or Event of Default has occurred or is continuing, the making of any Restricted Payment in an aggregate amount, together with all other Restricted Payments made under this clause (6), not exceeding the aggregate amount of Excess Specified Vessel Proceeds;

(7)            cash payments in lieu of the issuance of fractional shares, or payments to dissenting stockholders (a) pursuant to applicable law or (b) in connection with the settlement or other satisfaction of legal claims made pursuant to or in connection with a consolidation, merger or transfer of assets in connection with a transaction that is not prohibited by this Indenture;

(8)            so long as no Event of Default has occurred and is continuing, the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Issuer or any Restricted Subsidiary held by any current or former officer, director or employee of the Issuer or any Restricted Subsidiary pursuant to any equity subscription agreement, employee stock ownership plan or similar trust, shareholders' agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $5.0 million in any calendar year (with any portion of such $5.0 million amount that is unused in any calendar year to be carried forward to successive calendar years and added to such amount);

(9)            the purchase, redemption or other acquisition or retirement for value of Equity Interests deemed to occur upon the exercise or conversion of stock options, warrants, rights to acquire Equity Interests or other convertible securities, to the extent such Equity Interests represent a portion of the exercise or conversion price thereof or the purchase, redemption or other acquisition or retirement for value of Equity Interests of the Issuer or any Restricted Subsidiary held by any current or former officers, directors or employees of the Issuer or any Restricted Subsidiary in connection with the exercise or vesting of any equity compensation (including, without limitation, stock options, restricted stock and phantom stock) in order to satisfy any tax withholding obligation with respect to such exercise or vesting;

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(10)            any purchase, redemption, defeasance or other acquisition or retirement of any Indebtedness subordinated to the Notes or any applicable Note Guarantees from proceeds of an Asset Sale or in the event of a Change of Control, in each case only if prior to or simultaneously with such purchase, redemption, defeasance or other acquisition or retirement, the Issuer or any Restricted Subsidiary has made an Asset Sale Offer or Change of Control Offer, as applicable, as provided in this Indenture and has completed the repurchase or redemption of all Notes validly tendered for payment in connection with such Asset Sale Offer or Change of Control Offer in accordance with the requirements of this Indenture;

(11)            any Restricted Payment (other than a Restricted Payment made in cash or Cash Equivalents) deemed to be made in connection with or as a result of completing an MLP Formation Transaction consummated in compliance with Section 4.19 ("Asset Sales") or that otherwise constitutes a Qualified MLP Asset Transfer;

(12)            so long as no Event of Default has occurred and is continuing or would result therefrom, any other Restricted Payment so long as, after giving effect thereto, including the use of proceeds therefrom, the Consolidated Total Leverage Ratio of the Issuer shall not exceed 3.0 to 1.0;

(13)            so long as no Event of Default has occurred and is continuing, any other Restricted Payment in an aggregate amount, together with all other Restricted Payments made under this clause (13), that does not exceed the greater of (x) $150.0 million and (y) 5.0% of Net Tangible Assets at such time;

(14)            any Restricted Payment to ORP (Ventures) or any of the ORP (Ventures) Subsidiaries in an amount not to exceed the amount of net proceeds of an ORP (Ventures) IPO on the date of an ORP (Ventures) IPO or the net proceeds of the sale of common units of ORP (Ventures) in a bona fide public offering for cash, in each case received by the Issuer or a Restricted Subsidiary; provided that the proceeds of any such Restricted Payment are used by Ocean Rig Operating LP (or an ORP (Ventures) Subsidiary thereof) to prepay outstanding Indebtedness; and

(15)            the payment of any dividend or distribution by a Restricted Subsidiary to an MLP or MLP Entity in respect of Equity Interests of such Restricted Subsidiary that are held by such MLP or MLP Entity in an aggregate amount, together with all other dividends or distributions made under this clause (15), that does not exceed $25.0 million.

(c)            The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this Section 4.07 will be determined by the

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Board of Directors of the Issuer whose resolution with respect thereto will be delivered to the Trustee. For purposes of determining compliance with this Section 4.07 in the event that a Restricted Payment meets the criteria of more than one of the applicable categories of Restricted Payments in Sections 4.07(a) or clauses (1) through (15) of Section 4.07(b) or as a Permitted Investment, the Issuer will be permitted to divide or classify (or later divide, classify or reclassify in whole or in part in its sole discretion) such Restricted Payment in any manner that complies with this Section 4.07.

SECTION 4.08.                                        Incurrence of Indebtedness and Issuance of Preferred Stock. (a)  The Issuer shall not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "Incur," "Incurrence," "Incurred" and "Incurring" shall have meanings correlative to the foregoing), any Indebtedness (including Acquired Debt) or issue any Disqualified Stock, and the Issuer will not permit any of the Restricted Subsidiaries to issue any shares of Preferred Stock; provided, however, that the Issuer or any Restricted Subsidiary may Incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and any Restricted Subsidiary may issue Preferred Stock, if, immediately after giving pro forma effect to the Incurrence of such Indebtedness or the issuance of such Disqualified Stock or Preferred Stock and the receipt and application of the net proceeds thereof, the Consolidated Interest Coverage Ratio of the Issuer for its most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is Incurred or such Disqualified Stock or Preferred Stock is issued would have been at least 2.0 to 1.0.

 

(b)            Section 4.08(a) will not prohibit the Incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"):

 

(1)            the Incurrence by the Issuer or any Restricted Subsidiary of Indebtedness under one or more Credit Facilities Incurred (a) in connection with the financing of the business and operations of the Issuer and its Restricted Subsidiaries, including all or any part of the purchase price, lease expense, charter expense, rental payments or cost of design, construction, installation or improvement of Drilling Equipment used in the Permitted Business, whether through the charter of, leasing of or the direct purchase of, or of the Capital Stock of any Person owning, such Drilling Equipment (including any Indebtedness deemed to be Incurred in connection with such purchase) (it being understood that any such Indebtedness may be Incurred after the acquisition, purchase, charter or leasing or the construction, installation or the making of any improvement with respect to any such Drilling Equipment) or (b) to refinance Indebtedness otherwise Incurred pursuant to this clause (1); provided that, after giving pro forma effect to the Incurrence of such Indebtedness and the application of the proceeds thereof (including any related purchase of Drilling Equipment), the aggregate principal amount of the Consolidated Total Indebtedness of the Issuer and its Restricted Subsidiaries shall not exceed the greater of (x) $550.0 million multiplied by the number of Vessels that are either Qualified Vessels or Contracted Vessels and (y) the sum of (i) 75% of the Completed Drilling

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Equipment Value at such time and (ii) 75% of the Contracted Drilling Equipment Value at such time;

(2)            the Incurrence by (a) the Issuer and any Guarantor of Indebtedness represented by the Notes (other than Additional Notes) and any related Note Guarantees and (b) the Issuer or any Restricted Subsidiary of Existing Indebtedness;

(3)            the Incurrence by the Issuer or any Restricted Subsidiary of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge, any Indebtedness (other than intercompany Indebtedness) that was permitted to be Incurred under Section 4.08(a) or clause (2), this clause (3) or clause (10) of this Section 4.08(b);

(4)            the Incurrence by the Issuer or any Restricted Subsidiary of intercompany Indebtedness between or among the Issuer and the Restricted Subsidiaries; provided, however, that:

(A)            if the Issuer or any Guarantor is the obligor on such Indebtedness and the payee is not the Issuer or any Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes or the relevant Note Guarantee, as applicable; and

(B)            upon any (i) subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Issuer or a Restricted Subsidiary, or (ii) sale or other transfer of any such Indebtedness to a Person that is not the Issuer or a Restricted Subsidiary, the exception provided by this clause (4) shall no longer be applicable to such Indebtedness and such Indebtedness will be deemed to have been Incurred at the time of any such issuance or transfer;

(5)            the Incurrence by the Issuer or any Restricted Subsidiary of Hedging Obligations in the ordinary course of business and not for speculative purposes;

(6)            the guarantee by the Issuer or any Restricted Subsidiary of Indebtedness of the Issuer or a Restricted Subsidiary that was permitted to be Incurred by another provision of this Section 4.08; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes or a Note Guarantee, then the guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;

(7)            the Incurrence by the Issuer or any Restricted Subsidiary of Indebtedness in respect of workers' compensation claims, self-insurance obligations, bankers' acceptances, and performance and surety bonds or other Indebtedness of a like nature, in each case in the ordinary course of business;

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(8)            the Incurrence by the Issuer or any Restricted Subsidiary of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;

(9)            the Incurrence by the Issuer or any Restricted Subsidiary of Indebtedness arising from agreements providing for indemnification, earn-outs, adjustment of purchase price or similar obligations, or guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Issuer or any Restricted Subsidiary pursuant to such agreements, in each case, Incurred in connection with the acquisition or disposition of any business, assets or the Capital Stock of a Subsidiary, other than guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or the Capital Stock of a Subsidiary for the purpose of financing such acquisition; provided, however, that, in the case of a disposition, the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds (including non-cash proceeds (the Fair Market Value of such non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value)) actually received by the Issuer and the Restricted Subsidiaries in connection with such disposition;

(10)            Indebtedness of any Person Incurred and outstanding on the date on which such Person becomes a Restricted Subsidiary or is merged, consolidated, amalgamated or otherwise combined with (including pursuant to any acquisition of assets and assumption of related liabilities) the Issuer or any Restricted Subsidiary (other than Indebtedness Incurred (a) to provide all or any portion of the funds used to consummate the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was otherwise acquired by the Issuer or a Restricted Subsidiary or (b) otherwise in connection with or contemplation of such acquisition); provided, however, with respect to this clause (10), that at the time of such acquisition or other transaction pursuant to which such Indebtedness is deemed to be Incurred, (x) the Issuer could Incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in Section 4.08(a), after giving pro forma effect to such acquisition or other transaction or (y) the Consolidated Interest Coverage Ratio would not be less than it was immediately prior to giving effect to such acquisition or other transaction;

(11)            the Incurrence by the Issuer or any Restricted Subsidiary of Indebtedness through the provision of bonds, guarantees, letters of credit or similar instruments required by the United States Federal Maritime Commission or any other governmental or regulatory agencies, foreign or domestic, including, without limitation, customs authorities; in each case, for Vessels owned, operated or chartered by, or in the ordinary course of business of, the Issuer or any of its Restricted Subsidiaries;

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(12)            the Incurrence by the Issuer or any Restricted Subsidiary of Indebtedness in the form of customer deposits and advance payments received in the ordinary course of business from customers for services purchased in the ordinary course of business; and

(13)            the Incurrence by the Issuer or any Restricted Subsidiary of Indebtedness not otherwise permitted pursuant to clauses (1) through (12) above that, together with any other Indebtedness Incurred pursuant to this clause (13) and then outstanding, has an aggregate principal amount (or accreted value, as applicable) not to exceed the greater of (x) $100.0 million and (y) 3.50% of Net Tangible Assets at such time.

(c)            For purposes of determining compliance with this Section 4.08, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (13) of Section 4.08(b), or is entitled to be Incurred pursuant to Section 4.08(a), the Issuer or the applicable Restricted Subsidiary will be permitted to classify such item of Indebtedness (or any portion thereof) on the date of its Incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.08. The accrual of interest or Preferred Stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of Preferred Stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Preferred Stock or Disqualified Stock in the form of additional shares of the same class of Preferred Stock or Disqualified Stock will not be deemed to be an Incurrence of Indebtedness or an issuance of Preferred Stock or Disqualified Stock for purposes of this Section 4.08. Further, the reclassification of any lease or other liability of the Issuer or any Restricted Subsidiary as Indebtedness due to a change of accounting principles after the Issue Date will not be deemed an incurrence of Indebtedness for purposes of this Section 4.08.

 

(d)            For purposes of determining compliance with this Section 4.08, the amount of any Indebtedness outstanding as of any date will be:

 

(1)            the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(2)            the principal amount of the Indebtedness, in the case of any other Indebtedness; and

(3)            in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

(A)            the Fair Market Value of such assets at the date of determination; and

(B)            the amount of the Indebtedness of the other Person.

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(e)            For purposes of determining compliance with any dollar-denominated restriction on the Incurrence of Indebtedness, the Dollar Equivalent of the principal amount of Indebtedness denominated in another currency will be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of Indebtedness Incurred under a revolving credit facility; provided that (1) if such Indebtedness is Incurred to refinance other Indebtedness denominated in a currency other than dollars, and such refinancing would cause the applicable dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such dollar-denominated restriction will be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced and (2) the Dollar Equivalent of the principal amount of any such Indebtedness outstanding on the Issue Date will be calculated based on the relevant currency exchange rate in effect on the Issue Date.

 

(f)            Notwithstanding any other provision of this Section 4.08, the maximum amount of Indebtedness that the Issuer or the applicable Restricted Subsidiary may Incur pursuant to this Section 4.08 shall be deemed not to be exceeded solely as a result of fluctuations in exchange rates or currency values.

 

SECTION 4.09.                                        Liens. The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, Incur or assume any Lien (other than Permitted Liens) of any kind against any assets of the Issuer or any Restricted Subsidiary, which Lien secures Indebtedness, unless the Notes are equally and ratably secured with (or prior to) such Indebtedness secured by such Lien for so long as such Indebtedness is so secured.

 

SECTION 4.10.                                        Dividend and Other Payment Restrictions Affecting Subsidiaries. (a)  The Issuer shall not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly, create or permit to become effective any consensual encumbrance or restriction on the ability of any of the Restricted Subsidiaries to:

 

(1)            pay dividends or make any other distributions on its Capital Stock to the Issuer or any of the Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Issuer or any of the Restricted Subsidiaries;

(2)            make loans or advances to the Issuer or any of the Restricted Subsidiaries; or

(3)            sell, lease or transfer any of its properties or assets to the Issuer or any of the Restricted Subsidiaries.

(b)            Section 4.10(a) will not apply to encumbrances or restrictions existing under or by reason of:

 

(1)            agreements governing Indebtedness as in effect on the Issue Date;

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(2)            restrictions contained in, or in respect of, Hedging Obligations permitted to be Incurred by this Indenture;

(3)            this Indenture and the Notes;

(4)            applicable law, rule, regulation or order;

(5)            any instrument governing Indebtedness or Capital Stock of a Person acquired by the Issuer or any of the Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was Incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be Incurred;

(6)            customary non-assignment provisions in contracts and licenses entered into in the ordinary course of business;

(7)            purchase money obligations for property acquired in the ordinary course of business, mortgage financings and Capital Lease Obligations that impose restrictions on the property purchased or mortgaged or leased of the nature described in Section 4.10(a)(3);

(8)            any agreement for the sale or other disposition of the Capital Stock or all or substantially all of the assets of any Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition;

(9)            Liens permitted to be Incurred under Section 4.09 ("Liens") that limit the right of the debtor to dispose of the assets subject to such Liens;

(10)            provisions limiting the disposition or distribution of assets or property in joint venture agreements, partnership agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements, which limitation is applicable only to the assets that are the subject of such agreements;

(11)            restrictions on cash or other deposits or net worth imposed by customers or suppliers or required by insurance, surety or bonding companies, in each case, under contracts entered into in the ordinary course of business;

(12)            any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1), (3), (5) and (7) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Issuer, not materially more restrictive with respect to such encumbrance and other restrictions taken as a whole than those prior to such

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amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing;

(13)            any encumbrance or restriction contained in the terms of any Indebtedness that is permitted to be Incurred subsequent to the Issue Date pursuant to Section 4.08 ("Incurrence of Indebtedness and Issuance of Preferred Stock") or any agreement pursuant to which such Indebtedness was issued; provided that, at the time such Indebtedness is Incurred, either (a) such encumbrance or restriction is customary for financings of the same type, and such restrictions would not reasonably be expected to materially impair the Issuer's ability to make scheduled payments of interest and principal on the Notes when due, as determined in good faith by a Financial Officer or (b) restrictions therein are not materially more restrictive, taken as a whole, than those contained in (i) this Indenture, the Notes or any applicable Note Guarantees or (ii) the agreements governing Existing Indebtedness as in effect on the Issue Date, as determined in good faith by a Financial Officer; and

(14)            encumbrances or restrictions of the nature described in Section 4.10(a)(3) with respect to property under a charter, lease or other agreement that has been entered into in the ordinary course for the employment, charter or other hire of such property.

SECTION 4.11.                                        Transactions with Affiliates. (a)  The Issuer shall not, and shall not permit any of the Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer and any Restricted Subsidiary (each, an "Affiliate Transaction") involving, with respect to any such transaction or series of related transactions, payments or consideration in excess of $1.0 million, unless:

 

(1)            the Affiliate Transaction is on terms that are either (a) no less favorable to the Issuer or the relevant Restricted Subsidiary than those that could have been obtained in a comparable arm's-length transaction by the Issuer or such Restricted Subsidiary with a Person that is not an Affiliate of the Issuer and any Restricted Subsidiary or (b) if in the good faith judgment of a Financial Officer, no comparable transaction is available with which to compare such Affiliate Transaction, such Affiliate Transaction is otherwise fair to the Issuer or the relevant Restricted Subsidiary from a financial point of view; and

(2)            the Issuer obtains:

(A)            with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, a resolution of the Board of Directors of the Issuer set forth in an Officers' Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this Section 4.11 and

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that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the disinterested members of the Board of Directors of the Issuer; and

(B)            with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $50.0 million, an opinion issued to the Board of Directors of the Issuer by an accounting, appraisal or investment banking firm of international standing or generally recognized in the shipping or offshore drilling industries as qualified to perform the tasks for which such firm has been engaged as to the fairness to the Issuer or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view or that the terms of such Affiliate Transaction are no less favorable to the Issuer or the relevant Restricted Subsidiary than those that could have been obtained in a comparable arm's-length transaction by the Issuer or such Restricted Subsidiary with a Person that is not an Affiliate of the Issuer and any Restricted Subsidiary.

(b)            For the avoidance of doubt, with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration of $25.0 million or less, the determination that such Affiliate Transaction or series of Affiliate Transactions complies with this Section 4.11 may be made by a Financial Officer.

 

(c)            The following items will not be deemed to be Affiliate Transactions, as applicable, and, therefore, will not be subject to Section 4.11(a):

 

(1)            any management agreement for the provision of vessel management services in the ordinary course of business and in line with industry standards and any payments thereunder that shall have been approved by a majority of the disinterested members of the Board of Directors of the Issuer or, following the consummation of a Qualified MLP IPO, such arrangements are consistent with those that are customarily entered into with Affiliates by companies that have undertaken a transaction similar to a Qualified MLP IPO, as determined in good faith by the majority of the disinterested members of the Board of Directors of the Issuer;

(2)            any employment agreement, employee benefit plan, compensation plan or arrangement, officer or director indemnification agreement or any similar arrangement entered into by the Issuer or any of its Restricted Subsidiaries in the ordinary course of business and payments pursuant thereto;

(3)            payment of reasonable directors' fees to directors of the Issuer or any Restricted Subsidiary;

(4)            transactions solely between or among the Issuer and/or any of its Restricted Subsidiaries;

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(5)            the issuance or sale of Equity Interests (other than Disqualified Stock) of the Issuer to, or receipt of capital contributions from, Affiliates of the Issuer;

(6)            loans or advances to employees of the Issuer (including of any Restricted Subsidiary) in the ordinary course of business not to exceed $7.5 million in the aggregate at any one time outstanding;

(7)            transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliate of the Issuer solely because the Issuer owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;

(8)            Restricted Payments (including as Permitted Investments) that do not violate Section 4.07 ("Restricted Payments");

(9)            transactions between the Issuer or any of its Restricted Subsidiaries and any Person that would not otherwise constitute an Affiliate Transaction except for the fact that a director of such other Person is also a director of the Issuer or such Restricted Subsidiary, as applicable; provided that such director abstains from voting as a director of the Issuer or such Restricted Subsidiary, as applicable, on any matter involving such other Person;

(10)            any agreement as in effect on the Issue Date or any amendments, renewals or extensions of any such agreement (so long as such amendments, renewals or extensions are not, taken as a whole, less favorable in any material respect to the Holders);

(11)            the Transactions and all fees and expenses paid or payable in connection therewith;

(12)            the granting and performance of registration rights for the Issuer's securities;

(13)            transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture that are fair to the Issuer or the Restricted Subsidiaries or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated Person, in each case, as determined in good faith by the Issuer's Board of Directors or a member of the Issuer's senior management;

(14)            a Qualified MLP IPO and transactions related thereto and MLP Formation Transactions and transactions related thereto, so long as the MLP Asset Transfers related to the foregoing are consummated in compliance with Section 4.19 ("Asset Sales") or otherwise constitute a Qualified MLP Asset Transfer; and

(15)            transactions in the ordinary course of business solely between the Issuer or a Restricted Subsidiary and a Local Content Subsidiary.

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SECTION 4.12.                                         Business Activities. The Issuer shall not, and shall not permit any of the Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Issuer and the Restricted Subsidiaries taken as a whole.

 

SECTION 4.13.                                        Future Note Guarantees. If, after the Issue Date, in connection with the incurrence of any Indebtedness by the Issuer or any Restricted Subsidiary (after giving effect to such incurrence and the application of the proceeds therefrom), any Restricted Subsidiary of the Issuer has outstanding Priority Indebtedness (other than Priority Indebtedness that is secured by Permitted Liens) and the amount of aggregate consolidated Priority Indebtedness of the Issuer and its Restricted Subsidiaries exceeds the Priority Indebtedness Amount, then the Issuer shall, within 180 days of such incurrence, either (a) cause each Restricted Subsidiary that has outstanding Priority Indebtedness (other than Priority Indebtedness that is secured by Permitted Liens) to execute a supplemental indenture, substantially in the form of Exhibit D hereto, pursuant to which such Restricted Subsidiary will become a Guarantor or (b) cause one or more of its Restricted Subsidiaries to execute a supplemental indenture pursuant to which such Restricted Subsidiary or Restricted Subsidiaries will become a Guarantor, such that after giving effect to the Note Guarantees in this clause (b) the amount of consolidated Priority Indebtedness of the Issuer and its Restricted Subsidiaries shall no longer exceed the Priority Indebtedness Amount; provided, however, that a Restricted Subsidiary shall not be required to become a Guarantor pursuant to clause (a) or (b) above if such Restricted Subsidiary has outstanding Priority Indebtedness (other than Priority Indebtedness that is secured by Permitted Liens) of less than $10.0 million in the aggregate.

 

SECTION 4.14.                                        Designation of Restricted and Unrestricted Subsidiaries. (a)  The Board of Directors of the Issuer may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if:

 

(1)            the Issuer could make the Restricted Payment (including as a Permitted Investment) which is deemed to occur upon such designation under Section 4.07 ("Restricted Payments") equal to the Fair Market Value of all outstanding Investments owned by the Issuer and the Restricted Subsidiaries in such Subsidiary at the time of such designation;

(2)            such Restricted Subsidiary meets the definition of an "Unrestricted Subsidiary";

(3)            the designation would not constitute or cause (with or without the passage of time) a Default or Event of Default and no Default or Event of Default would be in existence following such designation; and

(4)            the Issuer delivers to the Trustee a certified copy of a resolution of the Board of Directors of the Issuer giving effect to such designation and an Officers' Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 4.07 ("Restricted Payments").

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(b)            If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Issuer and the Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 4.07 ("Restricted Payments") or under one or more clauses of the definition of Permitted Investments, as determined by the Issuer.

 

(c)            If, at any time, any Unrestricted Subsidiary designated as such would fail to meet the preceding requirements as an Unrestricted Subsidiary or any other Unrestricted Subsidiary would fail to meet the definition of an "Unrestricted Subsidiary," then such Subsidiary will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary as of such date.

 

(d)            (The Board of Directors of the Issuer may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary if:

 

(1)            the Issuer and the Restricted Subsidiaries could Incur the Indebtedness which is deemed to be Incurred upon such designation under Section 4.08 ("Incurrence of Indebtedness and Issuance of Preferred Stock"), equal to the total Indebtedness of such Subsidiary calculated on a pro forma basis as if such designation had occurred on the first day of the four-quarter reference period;

(2)            the designation would not constitute or cause a Default or Event of Default; and

(3)            the Issuer delivers to the Trustee a certified copy of a resolution of the Board of Directors of the Issuer giving effect to such designation and an Officers' Certificate certifying that such designation complied with the preceding conditions, including the Incurrence of Indebtedness under Section 4.08 ("Incurrence of Indebtedness and Issuance of Preferred Stock").

SECTION 4.15.                                        Payments for Consent. The Issuer shall not, and shall not permit any of the Restricted Subsidiaries or any of their respective Affiliates to, directly or indirectly, pay or cause to be paid any cash consideration to or for the benefit of any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or amendment.

 

SECTION 4.16.                                        Reports. (a)  (1) Whether or not the Issuer is then subject to Section 13(a) or 15(d) of the Exchange Act, the Issuer shall furnish to the Trustee and the Holders, so long as any Notes are outstanding:

 

(i)            within 75 days after the end of each of the first three fiscal quarters in each fiscal year, quarterly reports on Form 6-K (or any successor form)

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containing the Issuer's unaudited quarterly financial statements on a combined or consolidated basis, as the case may be, and as otherwise consistent with GAAP (including a balance sheet and statement of income, changes in stockholders' equity and cash flow) and a Management's Discussion and Analysis of Financial Condition and Results of Operations (the "MD&A") (or equivalent disclosure) for and as of the end of such fiscal quarter (with comparable financial statements for the corresponding fiscal quarter of the immediately preceding fiscal year);

(ii)            within 135 days after the end of each fiscal year, an annual report on Form 20-F (or any successor form) containing the information required to be contained therein (including the Issuer's audited financial statements on a combined or consolidated basis, as the case may be, and as otherwise consistent with GAAP, a report thereon by the Issuer's certified independent accountants and an MD&A) for such fiscal year; and

(iii)            at or prior to such times as would be required to be filed or furnished to the SEC if the Issuer was then a "foreign private issuer" subject to Section 13(a) or 15(d) of the Exchange Act (whether or not the Issuer is then subject to such requirements), all such other reports and information that the Issuer would have been required to file or furnish pursuant thereto.

(b)            All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports. The quarterly and annual reports shall include information regarding the adjustments, if any, to the calculation of Consolidated Net Income in connection with drydock, shipyard stay and special survey expenses, as applicable. In addition, the Issuer shall electronically file or furnish, as the case may be, a copy of all such information and reports referred to in clauses (i) through (iii) of Section 4.16(a) with the SEC for public availability within the time periods specified therein at any time the Issuer is then subject to Section 13(a) or 15(d) of the Exchange Act and make such information available to Holders, or if the Notes are represented by one or more Global Notes, the beneficial owners of the Notes and prospective investors upon request. The Issuer shall be deemed to have furnished such reports referred to above to the Trustee and the Holders if the Issuer has filed such reports with the SEC via the EDGAR filing system and such reports are publicly available. If, notwithstanding the foregoing, the SEC will not accept the Issuer's filings for any reason, the Issuer will post the reports referred to in Section 4.16(a) on its website within the time periods that would apply to non-accelerated filers if the Issuer were required to file those reports with the SEC. The Trustee shall have no responsibility to determine if such filings have been posted on EDGAR or the Issuer's website. The Issuer agrees that, for so long as any Notes remain outstanding, it will hold and participate in quarterly conference calls with Holders and securities analysts relating to the financial condition and results of operations of the Issuer and the Restricted Subsidiaries. In addition, the Issuer agrees that, for so long as any Notes remain outstanding, the Issuer shall furnish to the Holders and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

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(c)            If the Board of Directors of the Issuer has designated any of the Restricted Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraphs will include a reasonably detailed presentation, either in the MD&A or otherwise, of the financial condition and results of operations of the Unrestricted Subsidiaries separate from the financial condition and results of operations of the Issuer and the Restricted Subsidiaries.

 

SECTION 4.17.                                        Suspension of Covenants. (a)  During any period of time that the Notes have an Investment Grade Rating and no Default or Event of Default has occurred and is continuing (a "Suspension Event"), then, beginning on that day, the Issuer and the Restricted Subsidiaries will not be subject to the following covenants (collectively, the "Suspended Covenants"): Section 4.07 ("Restricted Payments"), Section 4.08 ("Incurrence of Indebtedness and Issuance of Preferred Stock"), Section 4.10 ("Dividend and Other Payment Restrictions Affecting Subsidiaries"), Section 4.11 ("Transactions with Affiliates"), and Section 4.19 ("Asset Sales"); provided, however, that if the Issuer and the Restricted Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of the preceding sentence, and on any subsequent date (the "Reversion Date") Moody's or S&P withdraws its ratings or downgrades the ratings assigned to the Notes so that the Notes do not have an Investment Grade Rating, or an Event of Default (other than with respect to the Suspended Covenants) occurs and is continuing, the Suspension Event shall cease to be in effect and the Suspended Covenants will come back into effect, subject to the terms, conditions and obligations set forth in this Indenture.

 

(b)            During any period that the Suspended Covenants are not in effect, the Board of Directors of the Issuer shall not designate any of the Restricted Subsidiaries as Unrestricted Subsidiaries pursuant to Section 4.14 ("Designation of Restricted and Unrestricted Subsidiaries"). Upon the occurrence of a Suspension Event, the amount of Excess Specified Vessel Proceeds shall be reset at zero.

 

(c)            The Suspended Covenants will be reinstituted and apply according to their terms as of and from the first day on which a Suspension Event ceases to be in effect. The Suspended Covenants will not, however, be of any effect with regards to actions properly taken in compliance with the provisions of this Indenture during the continuance of such Suspension Event, and following reinstatement, the calculations under Section 4.07 ("Restricted Payments") will be made as if such covenant had been in effect since the date hereof except that no Default or Event of Default will be deemed to have occurred solely by reason of a Restricted Payment made while that covenant was suspended. All Indebtedness Incurred during the continuance of the suspension period will be classified as having been incurred pursuant to Section 4.08(b)(2)(b) ("Incurrence of Indebtedness and Issuance of Preferred Stock").

 

(d)            The Issuer shall provide written notice to the Trustee of the occurrence of any Suspension Event or Reversion Date and file with the Trustee an Officers' Certificate certifying that such suspension or reversion complied with the foregoing provisions; provided that the failure to provide such notice shall not affect the

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operation of this Section 4.17 or the Issuer's rights hereunder. In the case of a Suspension Event, such notice shall list the Suspended Covenants.

SECTION 4.18.                                        Offer To Repurchase Upon Change of Control.  (a)  If a Change of Control occurs, subject to the terms hereof, each Holder shall have the right to require the Issuer to repurchase all or any part (equal to a minimum amount of $2,000 and integral multiples of $1,000 in excess thereof) of that Holder's Notes pursuant to a change of control offer (a "Change of Control Offer") on the terms set forth in this Indenture. In the Change of Control Offer, the Issuer will offer a payment (the "Change  of Control Payment") in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Additional Amounts, if any, on the Notes repurchased to the date of purchase, subject to the rights of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date. No later than 30 Business Days following any Change of Control, the Issuer will mail a notice to the Trustee and Paying Agent and each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date specified in the notice. The notice shall also state:

 

(1)            that the Change of Control Offer is being made pursuant to this Section 4.18 and that all Notes properly tendered and not withdrawn will be accepted for payment;

(2)            the offer price (as set forth above) and the purchase date, which shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date");

(3)            that any Note not properly tendered will continue to accrue interest;

(4)            that, unless the Issuer defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date;

(5)            that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" attached to the Notes completed, or transfer by book-entry transfer, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(6)            that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a facsimile transmission, email with PDF or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing its election to have the Notes purchased; and

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(7)            that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $2,000 in principal amount and integral multiples of $1,000.

The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations to the extent those requirements, laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities or other laws or regulations conflict with the Change of Control provisions of this Indenture, the Issuer will comply with the applicable securities or other laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of this Indenture by virtue of such compliance.

(b)            On or before the Change of Control Payment Date, the Issuer shall, to the extent lawful:

 

(1)            accept for payment all Notes or portions of Notes properly tendered and not withdrawn pursuant to the Change of Control Offer;

(2)            by 10:00 a.m. New York City time on the Change of Control Payment Date, deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered and not withdrawn; and

(3)            deliver or cause to be delivered to the Trustee and the Paying Agent the Notes properly accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer.

The Paying Agent will promptly mail to each Holder of Notes properly tendered and not withdrawn the Change of Control Payment for such Notes (or if all Notes are then in global form, make such payment through the facilities of DTC), and the Trustee will, upon receipt of an Authentication Order, promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note will be in a principal amount of $2,000 or in integral multiples of $1,000 in excess thereof. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The provisions described above that require the Issuer to make a Change of Control Offer following a Change of Control will be applicable whether or not any other provisions of this Indenture are applicable.

The Issuer will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Issuer and purchases all Notes

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properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption has been given pursuant to this Indenture as described in Article III unless and until there is a default in payment of the applicable redemption price.

Notwithstanding anything to the contrary contained herein, a Change of Control Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer is made.

SECTION 4.19.                                        Asset Sales. (a)  The Issuer shall not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly, consummate any Asset Sale (other than an Involuntary Transfer) unless:

 

(1)            the Issuer or the Restricted Subsidiary, as the case may be, receives consideration at the time of the Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and

(2)            at least 75% (or, in the case of an MLP Asset Transfer that is not a Qualified MLP Asset Transfer, at least 50%) of the consideration received in such Asset Sale by the Issuer or such Restricted Subsidiary is in the form of cash or Cash Equivalents.

(b)            For purposes of this Section 4.19, each of the following will be deemed to be cash:

 

(1)            any Indebtedness or other liabilities, as shown on the Issuer's most recent consolidated balance sheet, of the Issuer or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Note Guarantee) that are assumed, repaid or retired by the transferee of any such assets so long as the Issuer or such Restricted Subsidiary is released from further liability;

(2)            any securities, Notes or other obligations received by the Issuer or any such Restricted Subsidiary from such transferee that are, subject to ordinary settlement periods, converted by the Issuer or such Restricted Subsidiary into cash or Cash Equivalents within one year following the closing of such Asset Sale, to the extent of the cash or Cash Equivalents received in that conversion; and

(3)            any stock or assets of the kind referred to in Section 4.19(c)(2) or (4).

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(c)            Within 365 days after the receipt of any Net Proceeds from an Asset Sale (including, without limitation, an Involuntary Transfer), the Issuer or the applicable Restricted Subsidiary, as the case may be, may apply such Net Proceeds at its option to any combination of the following:

 

(1)            to purchase, repay or prepay any Indebtedness (other than Indebtedness that is subordinated in right of payment to the Notes or any applicable Note Guarantees), whether or not secured (including, without limitation, redemptions or other purchases of Notes) of the Issuer or any Restricted Subsidiary (and, in the case of revolving obligations, to correspondingly reduce commitments with respect thereto);

(2)            to acquire all or substantially all of the assets of, or any Capital Stock of, any Person primarily engaged in a Permitted Business, if, after giving effect to any such acquisition of Capital Stock, such Person is or becomes a Restricted Subsidiary;

(3)            to make a capital expenditure for the Issuer or any of its Restricted Subsidiaries; or

(4)            to acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business (including, without limitation, Vessels, related assets and any related Ready for Sea Costs) for the Issuer or any of the Restricted Subsidiaries or make any deposit, installment or progress payment in respect of such assets or payment of any related Ready for Sea Costs;

provided that (x) a binding commitment made within the 365 day period described above by the Issuer or the applicable Restricted Subsidiary to apply Net Proceeds from an Asset Sale in accordance with clauses (2) through (4) above shall toll the 365-day period in respect of such Net Proceeds for a period not to exceed 180 days from the expiration of the aforementioned 365-day period; provided that such Net Proceeds are actually used within the later of 365 days from their receipt from such Asset Sale or 180 days from the date of such binding commitment; provided further that:

(A)            a binding commitment to apply Net Proceeds from an Asset Sale to the purchase or acquisition of an Additional Drilling Unit shall instead toll the 365-day period in respect of such Net Proceeds for a period not to exceed 365 days from the expiration of the aforementioned 365-day period so long as such Net Proceeds are actually used within the later of 365 days from their receipt from such Asset Sale or 365 days from the date of such binding commitment; and

(B)            a binding commitment to apply Net Proceeds from an Asset Sale to the construction of an Additional Drilling Unit shall instead toll the 365-day period in respect of such Net Proceeds until the later of 365 days from the expiration of the aforementioned 365-day period and the date on

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which the Issuer or the applicable Restricted Subsidiary is required to complete its payment obligations under the applicable construction contract so long as such Net Proceeds are actually used by the latest of such final contracted payment date (giving effect to modifications, extensions and amendments to the related construction contract or delivery and payment schedule), 365 days from their receipt from such Asset Sale or 365 days from the date of such binding commitment; and

(y) if the assets sold or transferred in such Asset Sale include a Vessel, then the Issuer or the applicable Restricted Subsidiary, as the case may be, may with respect to the Net Proceeds of up to two Vessels elect to, in lieu of the application or investment provided in clauses (1) through (4) above, apply such Net Proceeds within 30 days following the receipt of proceeds from such Asset Sale to (i) repay all Indebtedness secured by such assets and (ii) purchase, repay or prepay any other Indebtedness of the Issuer or any of the Restricted Subsidiaries so that the aggregate principal amount of the Consolidated Total Indebtedness of the Issuer and its Restricted Subsidiaries does not exceed 75% of the sum of the Completed Drilling Equipment Value and the Contracted Drilling Equipment Value at such time (an Asset Sale of a Vessel whose Net Proceeds are applied pursuant to this clause (y), a "Specified Vessel Sale").

(d)            Pending the final application of any Net Proceeds, the Issuer or the applicable Restricted Subsidiary may apply the Net Proceeds to temporarily reduce outstanding revolving credit Indebtedness of the Issuer or any of the Restricted Subsidiaries, respectively, or otherwise invest the Net Proceeds in any manner that is not prohibited hereby.

 

(e)            Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 4.19(c) will constitute "Excess Proceeds." For the avoidance of doubt, the application of Net Proceeds relating to a Vessel in accordance with clause (y) of the proviso to Section 4.19(c) will be deemed to have fully satisfied the application of all Net Proceeds from the applicable Asset Sale of such Vessel. When the aggregate amount of Excess Proceeds exceeds $50 million, the Issuer will, or will cause the applicable Restricted Subsidiary to, within 10 Business Days thereof, make an offer (the "Asset Sale Offer") to all Holders and all holders of unsubordinated Indebtedness of the Issuer or any Restricted Subsidiary containing provisions similar to those set forth herein with respect to offers to repay, purchase or redeem such Indebtedness with the proceeds of sales of assets to repay, purchase or redeem the maximum principal amount of Notes and such unsubordinated Indebtedness that may be repaid, purchased or redeemed out of the Excess Proceeds; provided, that to the extent such Excess Proceeds were received in respect of the sale or transfer of assets that secured other unsubordinated Indebtedness, such Asset Sale Offer may be made, to the extent required by the terms thereof, first or instead to holders of such other secured unsubordinated Indebtedness to the extent of those Excess Proceeds, in accordance with the terms of such Indebtedness.

 

(f)            The offer price in any Asset Sale Offer will be equal to 100% of the principal amount plus accrued and unpaid interest and Additional Amounts, if any, to

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the date of purchase, subject to the rights of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date, and will be payable in cash.

(g)            If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuer and the Restricted Subsidiaries may use those Excess Proceeds for any purpose not otherwise prohibited by this Indenture.

 

(h)            If the aggregate principal amount of Notes or other Indebtedness tendered in, or required to be repaid pursuant to, such Asset Sale Offer exceeds the amount of Excess Proceeds, the Registrar will select the Notes for purchase on a pro rata basis, by lot to the extent practicable or by such other method in accordance with the applicable procedures of the depositary and, if applicable, the Issuer shall select such other Indebtedness for purchase based on amounts tendered or required to be prepaid. For the purposes of calculating the principal amount of any such Indebtedness not denominated in dollars, such Indebtedness shall be calculated by converting any such principal amounts into their Dollar Equivalent determined as of the Business Day immediately prior to the date on which the Asset Sale Offer is announced. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.

 

(i)            In the event that, pursuant to this Section 4.19, the Issuer is required to commence an Asset Sale Offer, each such Asset Sale Offer shall remain open for a period of at least 20 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the "Asset Sale Offer Period"). No later than ten Business Days after the termination of the Asset Sale Offer Period (the "Asset Sale Offer Settlement Date"), the Issuer shall apply all Excess Proceeds as set forth above.

 

(j)            Upon the commencement of an Asset Sale Offer, the Issuer shall deliver a notice to the Trustee and shall cause such notice to be delivered to the Holders (at the Issuer's request and in accordance with the same procedures described in the last paragraph of Section 3.03 ("Notice of Redemption"), the Registrar shall give the notice to the Holders in the Issuer's name and at its expense). The notice shall state:

 

(i)            that the Asset Sale Offer is being made pursuant to this Section 4.19 and the length of time the Asset Sale Offer shall remain open, including the time and date the Asset Sale Offer will terminate (the "Asset Sale Offer Termination Date");

(ii)            the amount of Excess Proceeds, the offer price (as set forth above) and the Asset Sale Offer Settlement Date;

(iii)            that Holders electing to have any Notes purchased pursuant to any Asset Sale Offer shall be required to surrender such Notes, with the form entitled "Option of Holder to Elect Purchase" attached to the Notes, completed, or transfer by book-entry transfer, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day prior to the Asset Sale Offer Termination Date to collect the offer price;

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(iv)            the name and address of the Paying Agent;

(v)            that Holders shall be entitled to withdraw their election if the Paying Agent, receives, not later than the close of business on the second Business Day prior to the Asset Sale Offer Termination Date, an email with PDF, facsimile transmission or letter setting forth the name of the Holder, a statement that such Holder is withdrawing its election to have its Notes purchased and the principal amount of the Notes with respect to which such Holder is withdrawing its election; and

(vi)            that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased part must be equal to $2,000 in principal amount and integral multiples of $1,000.

(k)            The Issuer will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those requirements, laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sale provisions of this Indenture, the Issuer shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the Asset Sale provisions of this Indenture by virtue of such compliance.

 

SECTION 4.20.                                        Additional Amounts.  (a)  All payments made by or on behalf of the Issuer or any Guarantor (if any) under or with respect to the Notes or the Note Guarantees (if any) will be made free and clear of and without withholding or deduction for, or on account of, any present or future tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and other liabilities related thereto) (hereinafter "Taxes") unless the withholding or deduction of such Taxes is then required by law. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of the government of the Republic of Marshall Islands or any political subdivision or any authority or agency therein or thereof having power to tax, or any other jurisdiction in which the Issuer or any Guarantor (including any successor entity) is organized or is otherwise resident for tax purposes, or any jurisdiction from or through which payment is made (including, without limitation, the jurisdiction of each Paying Agent) (each a "Specified Tax Jurisdiction"), will at any time be required to be made from any payments made under or with respect to the Notes or any Note Guarantees, the Issuer, the relevant Guarantor (if any) or other payor, as applicable, will pay such additional amounts (the "Additional Amounts") as may be necessary so that the net amount received in respect of such payments by a Holder (including Additional Amounts) after such withholding or deduction will not be less than the amount such Holder would have received if such Taxes had not been withheld or deducted; provided, however, that the foregoing obligation to pay Additional Amounts does not apply to:

 

(1)            any Taxes that would not have been so imposed but for the Holder (or beneficial owner of the Notes) having any present or former connection with

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the Specified Tax Jurisdiction (other than the mere acquisition, ownership, holding, enforcement or receipt of payment in respect of the Notes or any applicable Note Guarantees);

(2)            any estate, inheritance, gift, sales, excise, transfer, personal property tax or similar tax, assessment or governmental charge;

(3)            any Taxes payable other than by deduction or withholding from payments under, or with respect to, the Notes or any applicable Note Guarantees;

(4)            any Taxes imposed as a result of the failure of the Holder (or beneficial owner of the Notes) to complete, execute and deliver to the Issuer or the relevant Guarantor (if any), as applicable, any form or document to the extent applicable to such Holder or beneficial owner that may be required by law or by reason of administration of such law and which is reasonably requested in writing to be delivered to the Issuer or the relevant Guarantor (if any) in order to enable the Issuer or the relevant Guarantor (if any) to make payments on the Notes without deduction or withholding for Taxes, or with deduction or withholding of a lesser amount, which form or document will be delivered within 60 days of a written request therefor by the Issuer or the relevant Guarantor (if any);

(5)            any Taxes that would not have been so imposed but for the beneficiary of the payment having presented a Note for payment (in cases in which presentation is required) more than 30 days after the date on which such payment or such Note became due and payable or the date on which payment thereof is duly provided for, whichever is later (except to the extent that the Holder would have been entitled to Additional Amounts had the Note been presented on the last day of such 30-day period);

(6)            any Taxes imposed on or with respect to any payment by the Issuer or any Guarantor to the Holder if such Holder is a fiduciary or partnership or person other than the sole beneficial owner of such payment, to the extent that a beneficiary or settlor with respect to such fiduciary, a member of such partnership or the beneficial owner of such payment would not have been entitled to Additional Amounts had such beneficiary, settlor, member or beneficial owner been the actual Holder of such Note;

(7)            any Taxes to the extent such Taxes are required to be deducted or withheld on a payment pursuant to (a) European Council Directive 2003/48/EC (as amended or replaced from time to time) or (b) any agreement or legislation implementing, or introduced to conform to, such directive;

(8)            any Taxes imposed on a Note presented for payment by or on behalf of a holder or beneficial owner who would have been able to avoid such Tax by presenting the relevant Note to another Paying Agent in a member state of the European Union; or

(9)            any combination of items (1) through (8) above.

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(b)            If the Issuer or any Guarantor, as applicable, becomes aware that it will be obligated to pay Additional Amounts with respect to any payment under or with respect to the Notes or any applicable Note Guarantees, then the Issuer or the relevant Guarantor (if any), as applicable, will deliver to the Trustee and Paying Agent at least 30 days prior to the date of that payment (unless the obligation to pay Additional Amounts arises after the 30th day prior to that payment date, in which case the Issuer or the relevant Guarantor (if any), as applicable, will notify the Trustee and Paying Agent promptly thereafter but in no event later than two Business Days prior to the date of payment) an Officers' Certificate stating the fact that Additional Amounts will be payable and the amount so payable. The Officers' Certificate must also set forth any other information necessary to enable the Paying Agent to pay Additional Amounts to Holders on the relevant payment date. The Trustee and Paying Agent will be entitled to rely solely on such Officers' Certificate as conclusive proof that such payments are necessary. The Issuer or the relevant Guarantor (if any), as applicable, will provide the Trustee and Paying Agent with documentation reasonably satisfactory to the Trustee and Paying Agent evidencing the payment of Additional Amounts.

 

(c)            The Issuer or the relevant Guarantor (if any), as applicable, will make all withholdings and deductions required by law and will remit the full amount deducted or withheld to the relevant governmental authority on a timely basis in accordance with applicable law. As soon as practicable, the Issuer will provide the Trustee and Paying Agent with an official receipt or, if official receipts are not obtainable, other documentation reasonably satisfactory to the Trustee and Paying Agent evidencing the payment of the Taxes so withheld or deducted. Upon request, copies of those receipts or other documentation, as the case may be, will be made available by the Trustee and Paying Agent to Holders.

 

(d)            Whenever in this Indenture or the Notes there is referenced, in any context, the payment of amounts based upon the principal amount of the Notes or of principal, interest or any other amount payable under, or with respect to, the Notes or any applicable Note Guarantees, such reference will be deemed to include payment of Additional Amounts as described in this Section 4.20 to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

 

(e)            The Issuer or the relevant Guarantor (if any), as applicable, will indemnify a Holder, within 10 Business Days after written demand therefor, for the full amount of any Taxes paid by such Holder to a governmental authority of a Specified Tax Jurisdiction, on or with respect to any payment by on or account of any obligation of the Issuer or any Guarantor, as applicable, to withhold or deduct an amount on account of Taxes for which the Issuer or the relevant Guarantor (if any), as applicable, would have been obliged to pay Additional Amounts hereunder and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant governmental authority. A certificate as to the amount of such payment or liability delivered to the Issuer or the relevant Guarantor (if any) by a Holder will be conclusive absent manifest error

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(f)            The Issuer or the relevant Guarantor (if any), as applicable, will pay any present or future stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies that arise in any Specified Tax Jurisdiction from the execution, delivery, enforcement or registration of the Notes, any applicable Note Guarantees, this Indenture or any other document or instrument in relation thereof, or the receipt of any payments with respect to the Notes or any applicable Note Guarantees, and the Issuer or the relevant Guarantor (if any), as applicable, will indemnify the Holders for any such taxes paid by such Holders.

 

(g)            The obligations under this Section 4.20 will survive any termination, defeasance or discharge of this Indenture and will apply mutatis mutandis to any jurisdiction in which any successor person to the Issuer or any Guarantor is organized or any political subdivision or authority or agency thereof or therein.

 

ARTICLE V

Successors

SECTION 5.01.                                        Merger, Consolidation or Sale of Assets.

 

(a)            The Issuer shall not, directly or indirectly: (i) amalgamate, consolidate or merge with or into another Person (whether or not the Issuer is the Person formed by or surviving any such amalgamation, consolidation or merger); or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Issuer and the Restricted Subsidiaries, taken as a whole, in each case, in one transaction or a series of related transactions, including by way of liquidation or dissolution, to another Person, unless:

 

(1)            the Person formed by or surviving any such amalgamation, consolidation or merger or to which such sale, assignment, transfer, conveyance or other disposition has been made (the "Successor") is (if other than the Issuer) a Person organized or existing under the laws of a Permitted Jurisdiction;

(2)            the Successor (if other than the Issuer) assumes all the obligations of the Issuer under this Indenture and agrees to be bound by all the provisions of this Indenture pursuant to a supplemental indenture or other documents and instruments, as applicable, in form and substance reasonably satisfactory to the Trustee;

(3)            immediately before and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

(4)            except with respect to a transaction solely between or among the Issuer and any of the Restricted Subsidiaries, immediately after giving pro forma effect to such transaction, any related financing transactions and the use of proceeds therefrom and treating any Indebtedness that becomes an obligation of the Issuer or any of the Restricted Subsidiaries as a result of such transaction as having been Incurred by the Issuer or such Restricted Subsidiary, as the case may

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be, at the time of the transaction, either (a) the Issuer or the Successor (if other than the Issuer) would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in Section 4.08(a) ("Incurrence of Indebtedness and Issuance of Preferred Stock") or (b) the Issuer or the Successor (if other than the Issuer) would have a Consolidated Interest Coverage Ratio for the applicable four quarter period not lower than such ratio prior to giving effect to such transaction;

(5)            in the event that the Successor is organized in a jurisdiction that is different from the jurisdiction in which the Issuer was organized immediately before giving effect to such transaction, the Successor has delivered to the Trustee an Opinion of Counsel reasonably satisfactory to the Trustee stating that the obligations of the Successor under this Indenture are enforceable under the laws of such Permitted Jurisdiction, subject to customary exceptions; and

(6)            the Issuer or the Successor (if other than the Issuer) delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, in each case, stating that such amalgamation, consolidation, merger or transfer and such supplemental indenture, documents and instruments comply with this covenant and are authorized or permitted under this Indenture.

(b)            Upon any amalgamation, consolidation or merger, or any sale, assignment, transfer, conveyance or other disposition of all or substantially all of the properties or assets of the Issuer, in accordance with the paragraphs above in which the Issuer is not the surviving entity, the Successor shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if the Successor had been named as the Issuer in this Indenture, and thereafter, the Issuer will be relieved of all obligations and covenants under this Indenture and the Notes.

 

(c)            The Issuer will not permit any Guarantor to sell or otherwise dispose of all or substantially all its assets to, or amalgamate, consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person other than the Issuer or another Guarantor, unless:

 

(i)            immediately after giving effect to such transaction or series of related transactions, no Default or Event of Default exists; and

(ii)            either:

(1)            (x) such Guarantor is the surviving Person or (y) the Person formed by or surviving any such amalgamation, consolidation or merger or to which such sale or disposition has been made is a Person organized or existing under the laws of a Permitted Jurisdiction and such Person expressly assumes all the obligations of such Guarantor under this Indenture and its Note Guarantee pursuant to a supplemental indenture or other documents or instruments in form and substance reasonably satisfactory to the Trustee; or

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(2)            such amalgamation, consolidation, merger or disposition does not violate the provisions in Section 4.19 ("Asset Sales"); and

(iii)            the Issuer delivers to the Trustee an Officers' Certificate and an opinion of counsel, in each case stating that such amalgamation, consolidation, merger or transfer and such supplemental indenture and such other documents or instruments comply with this Section 5.01.

(d)            Subject to the provisions set forth in this Indenture governing the release of a Guarantor from its Note Guarantee in certain circumstances, upon any amalgamation, consolidation or merger, or any sale, assignment, transfer, conveyance or other disposition of all or substantially all of the properties or assets of a Guarantor, in accordance with the paragraphs above in which such Guarantor is not the surviving entity, the successor Guarantor shall succeed to, and be substituted for, and may exercise every right and power of, such Guarantor under this Indenture with the same effect as if the successor Guarantor had been named as such Guarantor in this Indenture, and thereafter, such original Guarantor will be relieved of all obligations and covenants under this Indenture and the Notes.

 

(e)            For purposes of the foregoing, the entry into one or more charters, pool agreements or drilling contracts with respect to any Vessels will be deemed not to be a sale, assignment, transfer, conveyance or other disposition subject to this Section 5.01.

 

ARTICLE VI

Defaults and Remedies

SECTION 6.01.                                        Events of Default. Each of the following is an event of default (an "Event of Default"):

 

(1)            default in any payment of interest or any Additional Amounts with respect to the Notes when due, which default continues for 30 days;

(2)            default in the payment when due (at maturity, upon redemption or required repurchase, upon declaration of acceleration or otherwise) of the principal of, or premium, if any, on, the Notes;

(3)            failure by the Issuer or any Guarantor to comply with Section 5.01 ("Merger, Consolidation or Sale of Assets");

(4)            failure by the Issuer or any of the Restricted Subsidiaries for 60 days after notice to the Issuer by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding voting as a single class to comply with any covenant or agreement (other than a default referred to in clauses (1), (2) and (3) above) contained in this Indenture or the Notes (provided that, in the case of Section 4.16 ("Reports"), such period of continuance to such default or breach shall be 120 days after written notice described in this clause (4) has been given);

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(5)            default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Issuer or any of the Restricted Subsidiaries (or the payment of which is guaranteed by the Issuer or any of the Restricted Subsidiaries), whether such Indebtedness or guarantee now exists or is created after the date hereof, if that default:

(A)            is caused by a failure to pay principal of, or interest or premium, if any, on, such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or

(B)            results in the acceleration of such Indebtedness prior to its Stated Maturity,

and, in either case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $25.0 million or more; provided, however, that if any such default is cured or waived or any such acceleration rescinded, or such Indebtedness is repaid, within a period of 60 days from the continuation of such default beyond the applicable grace period or the occurrence of such acceleration, as the case may be, such Event of Default and any consequential acceleration of the Notes shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree;

(6)            failure by the Issuer, any of the Restricted Subsidiaries or any Guarantor to pay final judgments entered by a court or courts of competent jurisdiction aggregating in excess of $25.0 million, which judgments are not paid, discharged or stayed for a period of 60 days after the due date thereof;

(7)            except as permitted by this Indenture or any Note Guarantee, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or any Guarantor, or any Person duly acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee; and

(8)            the Issuer or any Restricted Subsidiary that is a Significant Subsidiary, or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, takes any of the following actions, pursuant to or within the meaning of any Bankruptcy Law:

(A)            commences a voluntary case,

(B)            consents in writing to the entry of an order for relief against it in an involuntary case,

(C)            consents in writing to the appointment of a Custodian of it or for all or substantially all of its property,

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(D)            makes a general assignment for the benefit of its creditors, or

(E)            admits in writing it generally is not paying its debts as they become due; or

(9)            a court of competent jurisdiction enters an order or decree under any Bankruptcy Law, which order or decree remains unstayed and in effect for 60 consecutive days, that:

(A)            is for relief against the Issuer, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, in an involuntary case;

(B)            appoints a Custodian (1) of the Issuer, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, or (2) for all or substantially all of the property of the Issuer, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or

(C)            orders the liquidation of the Issuer, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary.

SECTION 6.02.                                        Acceleration. In the case of an Event of Default described in Section 6.01(8) or (9) ("Events of Default"), with respect to the Issuer or any Restricted Subsidiary that is a Guarantor, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may (and the Trustee will, if directed by Holders of at least 25% in aggregate principal amount of the then outstanding Notes) declare all the Notes to be due and payable immediately.

 

SECTION 6.03.                                        Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

 

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All remedies are cumulative to the extent permitted by law.

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SECTION 6.04.                                         Waiver of Past Defaults. Holders of a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may, on behalf of the Holders of all of the Notes, rescind an acceleration or waive any existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, and Additional Amounts or interest on, the Notes (including in connection with a redemption or an offer to purchase right of Holders pursuant to Article III).

SECTION 6.05.                                        Control by Majority. Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders or that may involve the Trustee in personal liability. The Trustee may also withhold from Holders notice of any continuing Default or Event of Default if it determines that withholding notice is in their interest, except a Default or Event of Default relating to the payment of principal, interest or Additional Amounts or premium, if any.

 

SECTION 6.06.                                        Limitation on Suits. In case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of any Holders unless such Holders have offered to the Trustee, and the Trustee has received, indemnity or security (or both) satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest or Additional Amounts, if any, when due, no Holder may pursue any remedy with respect to this Indenture or the Notes unless:

 

(1)            such Holder has previously given the Trustee notice that an Event of Default is continuing;

(2)            Holders of at least 25% in aggregate principal amount of the then outstanding Notes have made a written request to the Trustee to pursue the remedy;

(3)            such Holders have offered the Trustee, and the Trustee has received (if required), security or indemnity (or both) satisfactory to it against any loss, liability or expense;

(4)            the Trustee has not complied with such request within 60 days after its receipt of the request and the offer of security or indemnity (or both) satisfactory to it; and

(5)            Holders of a majority in aggregate principal amount of the then outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

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A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note (it being understood that the Trustee does not have an affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders).

SECTION 6.07.                                        Rights of Holders To Receive Payment.  Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of, premium, if any, and Additional Amounts or interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder; provided that a Holder shall not have the right to institute any such suit for the enforcement of payment if and to the extent that the institution or prosecution thereof or the entry of judgment therein would, under applicable law, result in the surrender, impairment, waiver or loss of the Lien of this Indenture upon any property subject to such Lien.

 

SECTION 6.08.                                        Collection Suit by Trustee. If an Event of Default specified in Section 6.01(1) or (2) ("Events of Default"), occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount of principal of, premium, if any, and interest remaining unpaid on, the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel.

 

If the Issuer fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding in its own name for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Issuer or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Issuer or any other obligor upon the Notes, wherever situated.

SECTION 6.09.                                        Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Issuer (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian or trustee in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the compensation, expenses, disbursements and advances of the Trustee and its agents and counsel, and any other amounts due the Trustee under Section 7.07 ("Compensation and Indemnity"). 

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To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 ("Compensation and Indemnity") out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

SECTION 6.10.                                        Priorities. If the Trustee collects any money or property pursuant to this Article VI, it shall pay out the money or property in the following order:

 

First: to the Trustee, its counsel and the Agents for amounts due under this Indenture (including Section 7.07 ("Compensation and Indemnity")), including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee or an Agent, as the case may be, and the costs and expenses of collection;

Second: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any and interest, respectively; and

Third: to the Issuer or to such party as a court of competent jurisdiction shall direct.

The Trustee may fix a Record Date and Interest Payment Date for any payment to Holders pursuant to this Section 6.10. At least 30 days before such Record Date, the Issuer shall mail to each Holder and the Trustee a notice that states the Record Date, the applicable payment date and the amount to be paid.

SECTION 6.11.                                        Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 ("Rights of Holders to Receive Payment"), or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.

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ARTICLE VII

Trustee

SECTION 7.01.                                        Duties of Trustee. (a)  If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs.

 

(b)            Except during the continuance of an Event of Default:

 

 

(1)            the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(2)            in the absence of bad faith on its part, the Trustee may conclusively rely upon, as to the truth of the statements and the correctness of the opinions expressed therein, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture or the Notes, as applicable. However, in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture or the Notes, as the case may be (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c)            The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that:

(1)            this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

(2)            the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts;

(3)            the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 ("Control by Majority"); and

(4)            no provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no obligation to exercise any of its rights and powers under this Indenture at the request of any Holders, unless such Holder has offered to the Trustee, and the Trustee has received, security or indemnity (or both) satisfactory to it against any loss, liability or expense.

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(d)            Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01.

 

(e)            The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

SECTION 7.02.                                        Rights of Trustee. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.

 

(b)            Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(c)            The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

 

(d)            The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture; provided, however, that the Trustee's conduct does not constitute willful misconduct or negligence.

 

(e)            Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer will be sufficient if signed by an Officer of the Issuer.

 

(f)            The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security reasonably satisfactory to it against the losses, liabilities and expenses that might be incurred by it in compliance with such request or direction.

 

(g)            In no event shall the Trustee be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

(h)            The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default, except failure of the Issuer to cause to be made any of the payments required to be made to the Trustee, unless a Responsible Officer shall be

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specifically notified by a writing of such default delivered to the Corporate Trust Office of the Trustee.

(i)            The permissive rights of the Trustee enumerated herein shall not be construed as duties.

 

(j)            The Trustee may request that the Issuer deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

 

(k)            The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

 

SECTION 7.03.                                        Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days or resign. The Trustee is also subject to Section 7.10 ("Eligibility; Disqualification").

 

SECTION 7.04.                                        Trustee's Disclaimer. The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes or any Note Guarantees, it shall not be accountable for the Issuer's use of the proceeds from the Notes or any money paid to the Issuer or upon the Issuer's direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

 

SECTION 7.05.                                        Notice of Defaults. If a Default or Event of Default occurs and is continuing and is actually known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders, a notice of the Default or Event of Default within 90 days after it occurs or if discovered later than 90 days, promptly after such discovery. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as it in good faith determines that withholding the notice is in the interests of Holders.

 

SECTION 7.06.                                        Reserved. 

 

SECTION 7.07.                                        Compensation and Indemnity. (a)  he Issuer will pay to the Trustee, Paying Agent and Registrar (each, an "Indemnified Party") from time to time such compensation for its acceptance of this Indenture and services hereunder as mutually agreed in writing. The Trustee's compensation will not be limited by any law on compensation of a Trustee of an express trust. The Issuer will reimburse each Indemnified Party promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such

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expenses will include the reasonable compensation, disbursements and expenses of the Indemnified Party's agents and counsel.

(b)            The Issuer and each Guarantor (if any), jointly and severally, shall indemnify the Indemnified Party against any and all losses, liabilities (including, without limitation, any environmental liability) or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the reasonable costs and expenses of enforcing this Indenture against the Issuer and any Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Issuer, any Guarantor, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence, willful misconduct or bad faith. The Indemnified Party will notify the Issuer promptly of any claim for which it may seek indemnity. Failure by the Indemnified Party to so notify the Issuer will not relieve the Issuer or any Guarantor of their obligations hereunder. The Issuer or such Guarantor (if any) will defend the claim and the Indemnified Party will cooperate in the defense. Each Indemnified Party may have separate counsel and the Issuer will pay the reasonable fees and expenses of such counsel if (i) the Issuer shall have failed to assume the defense thereof or employed counsel reasonably satisfactory to the Trustee, or (ii) the Trustee has been advised by such counsel that there may be one or more defenses available to it that are different from or in addition to those available to the Issuer. Neither the Issuer nor any Guarantor need pay for any settlement made without its consent, which consent will not be unreasonably withheld.

 

(c)            The obligations of the Issuer and any Guarantor under this Section 7.07 will survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of such Indemnified Party.

 

(d)            To secure the Issuer's and any Guarantor's payment obligations in this Section 7.07, each Indemnified Party will have a Lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal, premium, if any, and interest on particular Notes pursuant to Article VIII. Such Lien will survive the satisfaction and discharge of this Indenture.

 

(e)            When an Indemnified Party incurs expenses or renders services after an Event of Default specified in Section 6.01(8) or (9) ("Events of Default") occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

 

SECTION 7.08.                                        Replacement of Trustee. (a) A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08.

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(b)            The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuer. The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuer in writing and may appoint a successor Trustee. The Issuer may remove the Trustee if:

 

(1)            the Trustee fails to comply with Section 7.10 ("Eligibility; Disqualification");

(2)            the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

(3)            a custodian or public officer takes charge of the Trustee or its property;

(4)            the Trustee becomes incapable of acting; or

(5)            the Trustee has or acquires a conflict of interest that is not eliminated.

(c)            If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer will promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.

 

(d)            A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of any succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided that all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 ("Compensation and Indemnity").

 

(e)            The Issuer covenants that, in the event of the Trustee giving reasonable notice pursuant to this Section 7.08, it shall use its best efforts to procure a successor Trustee to be appointed. If a successor Trustee is not appointed and does not take office within 30 days after the retiring Trustee resigns or is removed, the Issuer may appoint a successor Trustee at any time prior to the date on which a successor Trustee takes office. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the Holders of at least 25% in outstanding principal amount of the Notes may petition any court of competent jurisdiction at the expense of the Issuer for the appointment of a successor Trustee.

 

(f)            If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10 ("Eligibility;

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Disqualification"), such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(g)            A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee will mail a notice of its succession to Holders. The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 ("Compensation and Indemnity"). Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuer's obligations under Section 7.07 ("Compensation and Indemnity") will continue for the benefit of the retiring Trustee. The retiring Trustee shall have no responsibility whatsoever for the actions or inactions of the successor Trustee.

 

SECTION 7.09.                                        Successor Trustee by Merger, Etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Trustee. As soon as practicable, the successor Trustee shall mail a notice of its succession to the Issuer and the Holders. Any such successor must nevertheless be eligible and qualified under the provisions of Section 7.10 ("Eligibility; Disqualification").

 

SECTION 7.10.                                        Eligibility; Disqualification. There will at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate Trustee power, that is subject to supervision or examination by Federal or state authorities and which is generally recognized as a corporation which customarily performs such corporate trustee roles and provides such corporate trustee services in transactions similar in nature to the offering of the Notes as described in the Offering Memorandum and that has a combined capital and surplus of at least $50.0 million as set forth in its most recent published annual report of condition.

 

SECTION 7.11.                                        Trustee in Other Capacities; Paying Agent.  References to the Trustee in Sections 7.01(b) and (e) ("Duties of Trustee"), 7.02 ("Rights of Trustee"), 7.03 ("Individual Rights of Trustee"), 7.04 ("Trustee's Disclaimer"), 7.07 ("Compensation and Indemnity"), and 7.08 ("Replacement of Trustee") shall be understood to include the Trustee when acting in its other capacities under this Indenture, including, without limitation, as Paying Agent. The privileges, rights, indemnities, immunities and exculpatory provisions contained in this Indenture, including its right to be indemnified, shall apply to the Trustee and shall be enforceable by the Trustee in each of its capacities in which it may serve, and to each Agent, custodian and other person employed to act hereunder.

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ARTICLE VIII

Legal Defeasance and Covenant Defeasance

SECTION 8.01.                                        Option to Effect Legal Defeasance or Covenant Defeasance. The Issuer may at any time, elect to have either Section 8.02 ("Legal Defeasance and Discharge") or 8.03 ("Covenant Defeasance") be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article VIII.

 

SECTION 8.02.                                        Legal Defeasance and Discharge. Upon the Issuer's exercise under Section 8.01 ("Option to Effect Legal Defeasance or Covenant Defeasance") of the option applicable to this Section 8.02, the Issuer and its Restricted Subsidiaries, including any Guarantors, shall, subject to the satisfaction of the conditions set forth in Section 8.04 ("Conditions to Legal or Covenant Defeasance"), be deemed to have been discharged from their obligations with respect to all outstanding Notes (including any Note Guarantees), on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, "Legal Defeasance" means that the Issuer and any Guarantors shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including any Note Guarantees), which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 ("Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions") and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all their other obligations under such Notes, any Note Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:

 

(1)            the rights of Holders of outstanding Notes to receive payments in respect of the principal of, or interest, Additional Amounts or premium, if any, on, such Notes (including in connection with any redemption or purchase of Notes pursuant to Article III) when such payments are due from the trust referred to in Section 8.05 ("Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions");

(2)            the Issuer's obligations with respect to the Notes under Article II and Section 4.02 ("Maintenance of Office or Agency") concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;

(3)            the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer's obligations in connection therewith; and

(4)            Section 8.02 ("Legal Defeasance and Discharge").

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Subject to compliance with this Article VIII, the Issuer may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 ("Covenant Defeasance").

SECTION 8.03.                                        Covenant Defeasance. Upon the Issuer's exercise under Section 8.01 ("Option to Effect Legal Defeasance or Covenant Defeasance") of the option applicable to this Section 8.03, the Issuer and its Restricted Subsidiaries, including any Guarantors, shall, subject to the satisfaction of the conditions set forth in Section 8.04 ("Conditions to Legal or Covenant Defeasance"), be released from each of their obligations under the covenants contained in Sections 4.07 ("Restricted Payments"), 4.08 ("Incurrence of Indebtedness and Issuance of Preferred Stock"), 4.09 ("Liens"), 4.10 ("Dividend and Other Payment Restrictions Affecting Subsidiaries"), 4.11 ("Transactions with Affiliates"), 4.12 ("Business Activities"), 4.13 ("Future Note Guarantees"), 4.16 ("Reports"), 4.18 ("Offer to Repurchase Upon Change of Control"), and 4.19 ("Asset Sales") and clause (4) of Section 5.01(a) ("Merger, Consolidation or Sale of Assets") hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 ("Conditions to Legal or Covenant Defeasance") are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder. For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and any Note Guarantees, the Issuer and its Restricted Subsidiaries, including any Guarantors, may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01 ("Events of Default"), but, except as specified above, the remainder of this Indenture and such Notes and any Note Guarantees will be unaffected thereby. In addition, upon the Issuer's exercise under Section 8.01 ("Option to Effect Legal Defeasance or Covenant Defeasance") of the option applicable to this Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04 ("Conditions to Legal or Covenant Defeasance"), Sections 6.01(3) through 6.01(9) ("Events of Default") will not constitute Events of Default.

 

SECTION 8.04.                                        Conditions to Legal or Covenant Defeasance. In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 ("Legal Defeasance and Discharge") or 8.03 ("Covenant Defeasance"):

 

(1)            the Issuer must irrevocably deposit with the Paying Agent, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, as affirmed in a writing delivered to the Trustee by a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, interest, Additional Amounts and premium, if any, on, the outstanding Notes on the stated date for

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payment thereof or on the applicable Redemption Date, as the case may be, and the Issuer must specify whether the Notes are being defeased to such stated date for payment or to a particular Redemption Date;

(2)            in the case of Legal Defeasance, the Issuer must deliver to the Trustee, Registrar and Paying Agent an opinion of United States counsel reasonably acceptable to the Trustee confirming that (a) the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the date of this Indenture, there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such Legal Defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3)            in the case of Covenant Defeasance, the Issuer must deliver to the Trustee, Registrar and Paying Agent an opinion of United States counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such Covenant Defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4)            no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from, or otherwise in connection with, the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound;

(5)            such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Issuer or any of its

Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound;

(6)            the Issuer must deliver to the Trustee, Registrar and Paying Agent an Officers' Certificate stating that the deposit was not made by the Issuer with the intent of preferring the Holders over the other creditors of the Issuer or any Guarantor with the intent of defeating, hindering, delaying or defrauding any creditors of the Issuer any Guarantor or others; and

(7)            the Issuer must deliver to the Trustee, Registrar and Paying Agent an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

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SECTION 8.05.                                         Deposited Money and Government Securities to be  Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.06 ("Repayment to the Issuer"), all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying Trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 ("Conditions to Legal or Covenant Defeasance") in respect of the outstanding Notes will be (i) held in trust, (ii) at the written direction of the Issuer, such money may be invested, prior to maturity of the Notes, in Government Securities, and (iii) applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

 

The Issuer will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 ("Conditions to Legal or Covenant Defeasance") or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.

Notwithstanding anything in this Article VIII to the contrary, the Trustee will deliver or pay to the Issuer from time to time upon the request of the Issuer any money or non-callable Government Securities held by it as provided in Section 8.04 ("Conditions to Legal or Covenant Defeasance") which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under

Section 8.04(1) ("Conditions to Legal or Covenant Defeasance")), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

SECTION 8.06.                                        Repayment to the Issuer. Subject to any unclaimed property law, any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of the principal of, premium, if any, or interest on, any Note and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Issuer on its request or (if then held by the Issuer) will be discharged from such trust; and the Holder of such Note will thereafter be permitted to look only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money or Government Securities, and all liability of the Issuer as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer cause to be published once, in the New York Times or The Wall Street Journal, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Issuer.

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SECTION 8.07.                                         Reinstatement. If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable Government Securities in accordance with Sections 8.02 ("Legal Defeasance and Discharge") or 8.03 ("Covenant Defeasance"), as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuer's and its Restricted Subsidiaries', including any Guarantors', obligations under this Indenture and the Notes and any Note Guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 ("Legal Defeasance and Discharge") or 8.03 ("Covenant Defeasance") until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 ("Legal Defeasance and Discharge") or 8.03 ("Covenant Defeasance"), as the case may be; provided, however, that, if the Issuer makes any payment of principal of, premium, if any, or interest on, any Note following the reinstatement of its obligations, the Issuer will be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

 

ARTICLE IX

AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.01.                                        Without Consent of Holders. (a) Notwithstanding Section 9.02 ("With Consent of Holders"), without the consent of any Holder, the Issuer, the Guarantors (if any) and the Trustee may amend or supplement this Indenture, the Notes, and any Note Guarantees:

 

(1)            to cure any ambiguity, defect or inconsistency;

(2)            to provide for uncertificated Notes in addition to or in place of certificated Notes;

(3)            to provide for the assumption of the Issuer's or a Guarantor's obligations to Holders and any Note Guarantees (and the addition of one or more corporate co-issuers) in the case of a merger or consolidation or sale of all or substantially all of the Issuer's or such Guarantor's assets, as applicable;

(4)            to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under this Indenture of any such Holder in any material respect;

(5)            to conform the text of this Indenture, the Notes or any Note Guarantees to any provision of the "Description of Notes" as described in the Offering Memorandum to the extent that such provision in the Description of Notes was intended to set forth, verbatim or in substance, a provision of this Indenture, the Notes or any Note Guarantees, which intent shall be evidenced by an Officers' Certificate to that effect;

(6)            to evidence and provide for the acceptance of the appointment under this Indenture of a successor Trustee;

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(7)            to make any other provisions with respect to matters or questions arising under this Indenture, the Notes and any applicable Note Guarantees; provided that the actions pursuant to this clause (7) will not adversely affect the interests of the Holders in any material respect, as determined in good faith by the Issuer;

(8)            to add Note Guarantees with respect to the Notes or to secure the Notes and any Note Guarantees;

(9)            to release any Note Guarantee when permitted or required by this Indenture;

(10)            to allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee with respect to the Notes, including to add such Guarantor as an additional Guarantor;

(11)            to comply with the requirements of the Trust Indenture Act of 1939, as amended, if applicable, or any securities exchange on which the Notes are listed for trading or quotation;

(12)            to provide for the issuance of Additional Notes in accordance with the terms of this Indenture; or

(13)            to effect a Qualified MLP IPO and transactions related thereto, including MLP Asset Transfers and transactions related thereto, to the extent consistent with the intent of this Indenture and to the extent such amendment does not adversely affect the interests of the Holders in any material respect, as determined in good faith by the Issuer.

(b)            Upon the request of the Issuer accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Section 7.02(b) ("Rights of Trustee"), the Trustee will join with the Issuer and any Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise.

 

SECTION 9.02.                                        With Consent of Holders.  (a) Except as provided in Section 9.01 ("Without Consent of Holders") and in this Section 9.02, this Indenture, the Notes and any Note Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing Default or Event of Default or compliance with any provision of this Indenture, the Notes or any Note Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including, without limitation,

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consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes). Section 2.08 ("Outstanding Notes") and Section 2.09 ("Treasury Notes") shall determine which Notes are considered to be "outstanding" for purposes of this Section 9.02.

(b)            Without the consent of each Holder affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting Holder):

 

(1)            reduce the percentage of principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

(2)            reduce the principal of or change the fixed maturity of any Note or alter the provisions with respect to the purchase or redemption of the Notes (other than with respect to minimum notice required for redemption or provisions relating to the covenants in Sections 3.07 ("Optional Redemption"), 3.08 ("Optional Redemption for Changes in Withholding Taxes"), 4.18 ("Offer to Repurchase Upon Change of Control") and 4.19 ("Asset Sales") that are not related to the principal or premium payable upon such purchase or redemption or the time at which any Note may or shall be redeemed or repurchased);

(3)            reduce the rate of or change the time for payment of interest on any Note;

(4)            impair the right of any Holder to institute suit for the enforcement of any payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date);

(5)            waive a Default or Event of Default in the payment of principal of, or interest, Additional Amounts or premium, if any, on, the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the Payment Default that resulted from such acceleration);

(6)            make any Note payable in money other than that stated in the Notes;

(7)            make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of, or interest, Additional Amounts or premium, if any, on, the Notes;

(8)            waive a redemption payment with respect to any Note (other than a payment required by one of the covenants in Sections 3.07 ("Optional Redemption"), 3.08 ("Optional Redemption for Changes in Withholding Taxes"), 4.18 ("Offer to Repurchase Upon Change of Control") and 4.19 ("Asset Sales") to the extent the conditions requiring such redemption or repayment in effect prior to such waiver have not yet been triggered or satisfied);

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(9)            release any Guarantor from any of its obligations under any Note Guarantee or this Indenture, except in accordance with the terms of this Indenture; or

(10)            make any change in the preceding amendment, supplement and waiver provisions.

(c)            The consent of Holders is not necessary under this Indenture to approve the particular form of any proposed amendment, supplement or waiver; provided that such consent approves the substance of any such proposed amendment, supplement or waiver.

 

(d)            The Trustee will be entitled to rely on Officers' Certificates and Opinions of Counsel that any such amendment, supplement or waiver is in compliance with the terms of this Indenture.

 

SECTION 9.03.                                        Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

 

The Issuer may, but shall not be obligated to, fix a Record Date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver. If a Record Date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders as of such Record Date (or their duly designated proxies), and only those Persons, shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such Record Date.

SECTION 9.04.                                        Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuer, in exchange for all Notes, may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.

Failure to make the appropriate notation or issue a new Note will not affect the validity and effect of such amendment, supplement or waiver.

SECTION 9.04.                                        Trustee to Sign Amendments, Etc. The Trustee shall sign any amended or supplemental indenture authorized pursuant to this Article IX if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Issuer may not sign an amended or supplemental indenture until the Board of Directors of the Issuer approves it. In executing any

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amended or supplemental indenture, the Trustee shall receive and (subject to Section 7.01 ("Duties of Trustee")) shall be fully protected in conclusively relying upon, in addition to the documents required by Section 12.02 ("Certificate and Opinion as to Conditions Precedent"), an Officers' Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Issuer and any Guarantor party thereto, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof.

ARTICLE X

Satisfaction and Discharge

SECTION 10.01.                                        Satisfaction and Discharge. (a) This Indenture will be discharged and will cease to be of further effect as to all Notes and Note Guarantees issued thereunder when:

 

(1)            either:

(A)            all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Issuer, have been delivered to the Registrar for cancelation; or

(B)            all Notes that have not been delivered to the Registrar for cancelation have become due and payable or will become due and payable within one year by reason of the mailing of a notice of redemption or otherwise and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Paying Agent as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination of cash in U.S. dollars and non-callable Government Securities, in amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Registrar for cancelation of principal, premium and Additional Amounts, if any, and accrued interest, if any, on the Notes to the date of maturity or redemption;

(2)            in respect of Section 10.01(a)(1)(B), the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound (other than with respect to the borrowing of funds to be applied concurrently to make the deposit required to effect such satisfaction and discharge and any similar concurrent deposit relating to other Indebtedness, and in each case the granting of Liens to secure such borrowings);

(3)            the Issuer or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture; and

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(4)            the Issuer has delivered irrevocable instructions to the Trustee, Registrar and Paying Agent under this Indenture to apply the deposited money toward the payment of the Notes at maturity or on the Redemption Date, as the case may be.

(b)            In addition, the Issuer must deliver an Officers' Certificate and an Opinion of Counsel to the Trustee, Registrar and Paying Agent stating that all conditions precedent to satisfaction and discharge have been satisfied.

 

(c)            Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to Section 10.01(a)(1)(B), the provisions of Sections 10.02 ("Application of Trust Money") and 8.06 ("Repayment to the Issuer") will survive. In addition, nothing in this Section 10.01 will be deemed to discharge those provisions of Section 7.07 ("Compensation and Indemnity") that, by their terms, survive the satisfaction and discharge of this Indenture.

 

SECTION 10.02.                                        Application of Trust Money. Subject to the provisions of Section 8.05 ("Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions"), all money deposited with the Trustee pursuant to Section 10.01 ("Satisfaction and Discharge") shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

 

If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 10.01 ("Satisfaction and Discharge") by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer's and any Guarantor's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 10.01 ("Satisfaction and Discharge"); provided that if the Issuer has made any payment of principal of, premium, if any, or interest on, any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

ARTICLE XI

Note Guarantees

SECTION 11.01.                                        Note Guarantees. (a) Subject to this Article XI, each Guarantor that becomes a party hereto shall, jointly and severally, irrevocably and unconditionally guarantee to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and their respective successors and assigns, irrespective of the

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validity and enforceability of this Indenture, the Notes, or the obligations of the Issuer hereunder or thereunder, that:

(1)            the principal of, premium, if any, and interest on, the Notes shall be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder shall be promptly paid in full or performed, all in accordance with the terms hereof; and

(2)            in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise.

Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, each Guarantor that becomes a party hereto shall be jointly and severally obligated to pay the same immediately. This shall be a guarantee of payment and not a guarantee of collection.

(b)            The obligations of each Guarantor that becomes a party hereto shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Any diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever shall be waived by each Guarantor that becomes a party hereto and this Note Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture.

 

(c)            If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Issuer or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.

 

(d)            Each Guarantor that becomes a party hereto shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. The maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI hereof for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby. In the event of any declaration of acceleration of such obligations as provided in Article VI hereof, such obligations (whether or not due and payable) shall

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forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. Each Guarantor that becomes a party hereto shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantee.

SECTION 11.02.                                        Limitation on Guarantor Liability. It is the intention of the parties hereto, including each Guarantor that becomes a party hereto, that the Note Guarantee of such Guarantor shall not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the obligations of such Guarantor shall be limited to the maximum amount that shall, after giving effect to such maximum amount and all other contingent and fixed liabilities of each such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article XI, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance.

 

SECTION 11.03.                                        Releases. The Note Guarantee of a Guarantor (if any) will be automatically and unconditionally released:

 

(1)            in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger, consolidation or amalgamation) to a Person that is not (either immediately before or after giving effect to such transaction) the Issuer or a Restricted Subsidiary, if the sale or other disposition is conducted in accordance with Section 4.19 ("Asset Sales") and Section 5.01 ("Merger, Consolidation or Sale of Assets");

(2)            in connection with any sale or other disposition of Capital Stock of that Guarantor following which such Guarantor is no longer a Restricted Subsidiary, if the sale or other disposition is conducted in accordance with

Section 4.19 ("Asset Sales") and Section 5.01 ("Merger, Consolidation or Sale of Assets");

(3)            if any Restricted Subsidiary that is a Guarantor becomes or is properly designated as an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture;

(4)            upon Legal Defeasance, Covenant Defeasance or satisfaction and discharge of this Indenture as provided under Sections 8.02 ("Legal Defeasance and Discharge"), 8.03 ("Covenant Defeasance") and 10.01 ("Satisfaction and Discharge");

(5)            unless the Issuer elects to maintain such Note Guarantee, upon the contemporaneous release or discharge of all Indebtedness of such Guarantor that would have required such Guarantor to guarantee the Notes, or at such time as

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such Guarantor would otherwise no longer be required to be a Guarantor, in each case pursuant to Section 4.13 ("Future Note Guarantees"); or

(6)            unless an Event of Default has occurred and is continuing, upon the dissolution or liquidation of the Guarantor in compliance with Section 5.01 ("Merger, Consolidation or Sale of Assets").

Any Guarantor not released from its obligations under its Note Guarantee as provided in this Section 11.03 will remain liable for the full amount of principal of, and interest and premium, if any, on, the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article XI.

ARTICLE XII

Miscellaneous

SECTION 12.01.                                        Notices. Any notice or communication by the Issuer, any Guarantor or the Trustee to the others is duly given if in English, in writing and delivered in Person or by first class mail (registered or certified, return receipt requested), facsimile transmission or overnight air courier guaranteeing next day delivery, to the others' address:

 

If to the Issuer or any Guarantor:

	 	
Ocean Rig UDW Inc.

 Tribune House

10 Skopa Street

Nicosia, Cyprus

Attention: Mr. Savvas Georghiades

Facsimile:  +357 2276 1542

                   +357 2276 0128

 

With a copy to:

Seward & Kissel LLP

One Battery Park Plaza

New York, New York 10004

United States of America

Facsimile: +1 (212) 480-8421

 Attention: Gary J. Wolfe, Esq.

Robert Lustrin, Esq.

 

If to the Trustee:

 

Deutsche Bank Trust Company Americas

60 Wall Street – 16th floor

MSNYC60-1630

New York, New York 10005

Attn: Trust and Agency Service

    Client Services Manager – Ocean Rig UDW Inc.

	 	

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The Issuer, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

All notices and communications (other than those sent to Holders) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Notwithstanding the foregoing, any notices and communications sent to the Trustee will be deemed to have been duly given upon the Trustee's receipt thereof, which receipt shall be deemed to have occurred the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery or at the time delivered by hand, if personally delivered.

Any notice or communication to a Holder will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery or by electronic means to its address shown on the register kept by the Registrar. Failure to mail a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders.

If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

If the Issuer mails a notice or communication to Holders, it will mail a copy to the Trustee and each Agent at the same time.

Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event (including any notice of redemption) to a Holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary for such Note (or its designee), pursuant to the customary procedures of such Depositary.

Any Holder may obtain a copy of this Indenture without charge by writing to the Issuer at: Ocean Rig UDW Inc., 10 Skopa Street, Tribune House, 2nd Floor, Office 202, CY 1075, Nicosia, Cyprus; Attention: Savvas Georghiades.

SECTION 12.02.                                        Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the Issuer to the Trustee to take any action under this Indenture, the Issuer shall furnish to the Trustee:

 

(1)            an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.03 ("Statements Required in Certificate or Opinion")) stating that, in the opinion of the signers, all conditions precedent and covenants, if any,

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provided for in this Indenture relating to the proposed action have been satisfied; and

(2)            an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.03 ("Statements Required in Certificate or Opinion")) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.

SECTION 12.03.                                        Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

 

(1)            a statement that the Person making such certificate or opinion has read such covenant or condition;

(2)            a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3)            a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and

(4)            a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.

SECTION 12.04.                                        Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

 

SECTION 12.05.                                        No Personal Liability of Directors, Officers,  Employees and Stockholders. No present, past or future director, officer, employee, incorporator or stockholder of the Issuer or any Restricted Subsidiary, as such, will have any liability for any obligations of the Issuer or any Restricted Subsidiary under the Notes, this Indenture or any Note Guarantees, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under applicable securities laws.

 

SECTION 12.06.                                        Governing Law. THIS INDENTURE, THE NOTES AND ANY NOTE GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

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The Issuer and any Guarantors irrevocably appoint Seward & Kissel LLP, which currently maintains a New York City office at One Battery Park Plaza, New York, New York 10004, United States of America, Attention: Gary Wolfe, as its agent to receive service of process or other legal summons for purposes of any such suit, action or proceeding that may be instituted in any state or Federal court in the Borough of Manhattan in the City of New York.

SECTION 12.07.                                        No Adverse Interpretation of Other Agreements.  This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuer or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

 

SECTION 12.08.                                        Successors. All agreements of the Issuer in this Indenture and the Notes will bind its successors. All agreements of the Trustee in this Indenture will bind its successors. All agreements of any Guarantor in this Indenture will bind its successors, except as otherwise provided in Section 11.03 ("Releases").

 

SECTION 12.09.                                        Severability. In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.

 

SECTION 12.10.                                        Counterpart Originals. The parties may sign any number of copies of this Indenture. Each signed copy will be an original, but all of them together represent the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture and signature pages for all purposes.

 

SECTION 12.11.                                        Table of Contents, Headings, Etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.

 

SECTION 12.12.                                        Prescription. Claims against the Issuer in respect of the Notes shall become void unless presented for payment within a period of six years from the relevant date (the "Relevant Date") in respect thereof. The Relevant Date is the date on which a payment in respect thereof first becomes due.

 

SECTION 12.13.                                        Patriot Act. The parties hereto acknowledge that in order to help the United States government fight the funding of terrorism and money laundering activities, pursuant to Federal regulations that became effective on October 1, 2003, Section 326 of the USA PATRIOT Act requires all financial institutions to obtain, verify, record and update information that identifies each person establishing a relationship or opening an account. The Issuer and each Guarantor (if any) agrees that it will provide to the Trustee and the Agents such information as they may reasonably request, from time to time, in order for the Trustee and the Agents to satisfy the

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requirements of the USA PATRIOT Act, including but not limited to the name, address, tax identification number and other information that will allow it to identify the individual or entity who is establishing the relationship or opening the account and may also ask for formation documents such as articles of incorporation or other identifying documents to be provided.

SECTION 12.14.                                        Force Majeure. Neither the Trustee nor any Agent shall incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of the Trustee or such Agent (including but not limited to any act or provision of any present or future law or regulation or governmental authority, any act of God or war, civil unrest, local or national disturbance or disaster, any act of terrorism, or the unavailability of the Federal Reserve Bank wire or facsimile or other wire or communication facility).

 

[Signatures on following page]

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IN WITNESS WHEREOF, the parties have executed this Indenture as of the date first written above.

	 	
OCEAN RIG UDW INC.

	 	 

	 	
by

	
/s/ Anthony Kandylidis

	 	 	
Name:              Mr. Anthony Kandylidis

Title:              Executive Vice-President

	 	
DEUTSCHE BANK TRUST COMPANY

AMERICAS, as Trustee

 

	 	
by:

	
Deutsche Bank National Trust Company

	 	 	 
	 	 	 
	 	
by

	
/s/ Wanda Camacho

	 	 	
Name:            Wanda Camacho

Title:            Vice President

	 	 	 
	 	 	 
	 	 	 
	 	
by

	
/s/ Annie Jaghatspanyan

	 	 	
Name:            Annie Jaghatspanyan

Title:            Vice President

EXHIBIT A

	
[Face of Rule 144A/Reg. S Note]

[Insert the Global Note Legend, if applicable pursuant to the provisions of this Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions of this Indenture]

	 	
CUSIP:

	 
	 	
ISIN:

	 

7.25% Senior Notes due 2019

	
No. ________

	
$

	 

Ocean Rig UDW Inc.

promises to pay to Cede & Co. or registered assigns, the principal sum of ________________

DOLLARS on April 1, 2019.

Interest Payment Dates: April 1 and October 1.

Record Dates: March 15 and September 15.

Dated:_____________________

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OCEAN RIG UDW INC.

	 	 

	 	
by

	 
	 	 	
Name:

Title:

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This is one of the Notes referred to

 in the within-mentioned Indenture:

Dated as of:

	
DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Authentication Agent

 

	 
	 	 	 
	
By:

	
Deutsche Bank National Trust Company

	 
	 	 	 
	 	 	 
	
By:

	 	 
	 	
Name:

	 
	 	
Title:

	 
	 	 	 
	 	 	 
	
By:

	 	 
	 	
Name:

	 
	 	
Title:

	 

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[Back of Note]

7.25% Senior Notes due 2019

Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

1.            Interest. Ocean Rig UDW Inc., a Marshall Islands corporation (the "Issuer"), promises to pay interest on the principal amount of this Note at a rate of 7.25% per annum, from____________ until maturity. The Issuer will pay interest semi­annually in arrears on April 1 and October 1 of each year or if any such day is not a Business Day the next succeeding Business Day. Interest on the Notes will accrue from the most recent Interest Payment Date or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a Record Date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further that the first Interest Payment Date shall be _______________. The Issuer will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal, premium, if any, and interest (without regard to any applicable grace period), from time to time on demand at a rate equal to 2% per annum in excess of the then applicable interest rate on the Notes to the extent lawful ("Default Interest"). Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. The Issuer will notify the Trustee in writing of the amount of interest proposed to be paid on each Note and the date of the proposed payment. At least 30 days (or, in the case of the payment of Default Interest, 15 days) before the Record Date, the Issuer (or, upon the written request of the Issuer, the Paying Agent in the name and at the expense of the Issuer) will mail or cause to be mailed to Holders a notice that states the Record Date, the related Interest Payment Date and the amount of such interest to be paid. All references to "interest" shall mean the initial interest rate borne by the Notes plus any Default Interest. If there has been no demand that the Issuer pay Default Interest, the Issuer shall pay Default Interest in the same manner as other interest, and on the same dates as set forth in the Notes and in the Indenture dated as of March 26, 2014 (the "Indenture") between the Issuer and the Trustee. In certain cases, the Issuer shall be required to pay Additional Amounts.

2.            Method of Payment. The Issuer will pay interest on the Notes to the Persons who are registered Holders at the close of business on March 15 or September 15 immediately preceding the next Interest Payment Date, even if such Notes are canceled after such Record Date and on or before such Interest Payment Date. The Notes will be payable as to principal, premium and Additional Amounts, if any, and interest at the office or agency of the Paying Agent maintained for such purpose, or, at the option of the Paying Agent, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that (1) payment by wire transfer of immediately available funds will be required with respect to principal of, interest, premium and Additional Amounts, if any, on all Global Notes and all other Notes the Holders of which will have provided wire transfer instructions to the Paying Agent and (2) such payment by check may only be paid so long as no event of default under the Indenture is continuing. Such payment will be in such coin or currency of the United

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States of America as at the time of payment is legal tender for payment of public and private debts. The principal of the Notes shall be payable only upon surrender of any Note at the specified offices of the Paying Agent. If the due date for payment of the principal in respect of any Note is not a Business Day at the place in which it is presented for payment, the Holder thereof shall not be entitled to payment of the amount due until the next succeeding Business Day at such place; provided that no additional interest will accrue for the intervening period in respect of such payment date.

3.            Registrar, Transfer Agent, and Paying Agent. Initially, Deutsche Bank Trust Company Americas will act as Paying Agent, Registrar and Transfer Agent. The Issuer may change any Paying Agent, Registrar or Transfer Agent without notice to any Holder. The Issuer or any of its Subsidiaries may act in any such capacity other than for the purposes of effecting a redemption or an offer to purchase in accordance with Article III of the Indenture or in connection with a Legal Defeasance, Covenant Defeasance or the satisfaction and discharge of the Indenture pursuant to Section 8.02 ("Legal Defeasance and Discharge"), Section 8.03 ("Covenant Defeasance"), and Section 10.01 ("Satisfaction and Discharge") thereof; provided no Event of Default is continuing.

4.            Indenture. The terms of the Notes include those stated in the Indenture. The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of such terms. To the extent any provision of this Note conflicts with the Indenture, the Indenture shall govern and be controlling. The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder.

5.            Ranking. This Note shall constitute a senior obligation of the Issuer and the Obligation of the Issuer under the Indenture and this Note shall be unsecured.

6.            Optional Redemption. (a) At any time prior to April 1, 2017, the Issuer may, at its option, redeem up to 35% of the aggregate original principal amount of Notes issued under the Indenture (including Additional Notes), at one time or from time to time, at a redemption price equal to 107.25% of the principal amount thereof, plus accrued and unpaid interest and Additional Amounts, if any, to the applicable Redemption Date (subject to the right of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date), in an amount not greater than the net cash proceeds received by the Issuer from one or more Equity Offerings; provided that (i) at least 65% of the aggregate original principal amount of Notes issued under the Indenture (including Additional Notes, but excluding Notes held by the Issuer and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and (ii) the redemption occurs within 180 days of the date of the closing of such Equity Offering.

(b)            In addition, at any time prior to April 1, 2017, the Issuer may, at its option, redeem the Notes, in whole or in part, at one time or from time to time, upon not less than 30 nor more than 60 days' prior notice, at a redemption price equal to 100% of the outstanding principal amount of Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Additional Amounts, if any, to the applicable

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Redemption Date (subject to the right of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

(c)            On or after April 1, 2017, the Issuer may redeem the Notes, in whole or in part, at one time or from time to time, upon not less than 30 nor more than 60 days' prior notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Additional Amounts, if any, on the Notes redeemed, to the applicable Redemption Date (subject to the right of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the periods indicated below:

	
For the Period Below

	
Percentage

	
From April 1, 2017 to March 31, 2018

	
105.438%

	
From April 1, 2018 to September 30, 2018

	
102.719%

	
October 1, 2018 and thereafter

	
100.000%

	 	 

(d)            Unless the Issuer defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable Redemption Date.

7.            Optional Redemption for Changes in Withholding Taxes. Pursuant to Section 3.08 ("Optional Redemption for Changes in Withholding Taxes") of the Indenture, the Issuer may make an optional redemption in the case that a change in withholding taxes adversely affects the Holders.

8.            Mandatory Redemption. The Issuer will not be required to make any mandatory redemption of the Notes.

9.            Repurchase at the Option of Holder. (a) If there is a Change of Control, the Issuer will be required to make a Change of Control Offer to each Holder to repurchase all or any part (equal to minimum amounts of $2,000 and integral multiples of $1,000) of each Holder's Notes at a purchase price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Additional Amounts, if any, thereon to the date of purchase (subject to the rights of Holders on the relevant Record Date to receive interest due on the relevant Interest Payment Date). No later than 30 days following any Change of Control, the Issuer will mail a notice to the Trustee and Paying Agent and each Holder setting forth the procedures governing the Change of Control Offer as required by the Indenture.

(b)            If the Issuer or any Restricted Subsidiary consummates an Asset Sale pursuant to Section 4.19 ("Asset Sales") of the Indenture, the Issuer, in circumstances specified therein, may be required to commence an Asset Sale Offer to all Holders pursuant to such section to purchase the Notes at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to the date of purchase, in accordance with the procedures set forth therein. Holders that are the subject of an offer to purchase will receive an Asset Sale Offer from the Issuer prior to any related purchase date and may elect to have such Notes purchased

A-6

by completing the form entitled "Option of Holder to Elect Purchase" attached to the Notes.

10.            Notice of Redemption. Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be mailed more than 60 days prior to a Redemption Date if the notice is issued in connection with a defeasance of the Notes or a satisfaction or discharge of the Indenture. Notes in denominations larger than $2,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed.

11.            Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided under the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted herein. The Registrar need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Registrar need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a Record Date and the corresponding Interest Payment Date.

12.            Persons Deemed Owners. The registered Holder of a Note may be treated as its owner for all purposes. Only Holders have rights under the Indenture and this Note.

13.            Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture, the Notes, and any Note Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes), and any existing Default or Event of Default or compliance with the Indenture, the Notes or any Note Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, the Notes). Without the consent of any Holder of a Note, the Indenture, the Notes, or any Note Guarantees may be amended or supplemented with respect to certain matters specified in the Indenture.

14.            Defaults and Remedies. Defaults and Remedies are set forth in Article VI of the Indenture.

15.            Trustee Dealings with the Issuer. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuer or its Affiliates, and may otherwise deal with the Issuer or its Affiliates, as if it were not the Trustee.

A-7

16.            No Recourse Against Others. No past, present or future director, officer, employee, incorporator or stockholder of the Issuer, any Restricted Subsidiary or any Guarantor, as such, will have any liability for any obligations of the Issuer, any Restricted Subsidiary or any Guarantors under the Notes, the Indenture, or any Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder, by accepting a Note, waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

17.            Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

18.            Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).

19.            CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption, and reliance may be placed only on the other identification numbers placed thereon.

20.            GOVERNING LAW. THE INDENTURE, THE NOTES AND ANY NOTE GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

The Issuer will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:

Ocean Rig UDW Inc., 10 Skopa Street, Tribune House, 2nd Floor, Office 202, CY 1075, Nicosia, Cyprus; Attention: Mr. Savvas Georghiades.

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

	
(I) or (we) assign and transfer this Note to:

	 
	 	
(Insert assignee's legal name)

	 	 
	 
	
(Insert assignee's soc. sec. or tax I.D. no.)

	 	 
	 
	 
	
 

	 
	
 

	
(Print or type assignee's name, address and zip code)

	 	 

	
and irrevocably appoint

	 
	
transfer this Note on the books of the Issuer. The agent may substitute another to act for him.

	 	 

	
Date:

	
_________________

	 	 
	 	 

	
Your Signature:

	 
	 	
(Sign exactly as your name appears on the face of this Note)

Signature Guarantee*: _______________________________________

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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Option of Holder to Elect Purchase

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.18 ("Offer to Repurchase Upon Change of Control") or Section 4.19 ("Asset Sales") of the Indenture, check the appropriate box below:

	
☐

	
Section 4.18 ("Offer to Repurchase Upon

	 	
☐

	
Section 4.19 ("Asset Sales")

If you want to elect to have only part of the Note purchased by the Issuer pursuant to Section 4.18 ("Offer to Repurchase Upon Change of Control") or Section 4.19 ("Asset Sales") of the Indenture, state the amount you elect to have purchased:

$______________

Date:___________

	 	
Your Signature:

	 
	 	
               (Sign exactly as your name appears on the face of this Note)

 

 

	 	
Tax Identification No.:

	 

 

  

	
Signature Guarantee*:

	 	

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Certificated Note, or exchanges of a part of another Global Note or Certificated Note for an interest in this Global Note, have been made:

	
Date of Exchange

	
Amount of

decrease in

Principal

Amount of this

Global Note

	
Amount of

increase in

 Principal

Amount of this

Global Note

	
Principal

Amount of this

Global Note

following such

decrease (or

increase)

	
Signature of authorized signatory of Trustee or Custodian

	 	 	 	 	 

__________________

*            This schedule should be included only if the Note is issued in global form.

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EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

Ocean Rig UDW Inc.

Tribune House

10 Skopa Street

Nicosia, Cyprus

Attention: Mr. Savvas Georghiades

Facsimile: +357 2276 1542

                  +357 2276 0128

With a copy to:

Seward & Kissel LLP

One Battery Park Plaza

New York, New York 10004

United States of America

Facsimile: +1 (212) 480-8421

 Attention: Gary J. Wolfe, Esq.

                   Robert Lustrin, Esq.

If to the Trustee:

DB Services Americas, Inc.

 5022 Gate Parkway

Jacksonville, Florida 32256

Attn: Transfer Department

 Fax: 904-271-2854

With a copy to:

Deutsche Bank Trust Company Americas

60 Wall Street – 16th floor

MSNYC60-1630

New York, New York 10005

Attn: Trust and Agency Service

Client Services Manager – Ocean Rig UDW Inc.

Re:            7.25% Senior Notes due 2019

Reference is hereby made to the Indenture, dated as of March 26, 2014 (the "Indenture"), between Ocean Rig UDW Inc., as issuer (the "Issuer"), and Deutsche Bank Trust Company Americas, as trustee (the "Trustee"). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

B-1

__________, (the "Transferor") owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $__________ in such Note[s] or interests (the "Transfer"), to __________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1.      ☐   Check if Transferee will take delivery of a beneficial interest in the  Rule 144A Global Note or a Restricted Certificated Note pursuant to Rule 144A.  The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Certificated Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Certificated Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transfer enumerated in the Private Placement Legend printed on the Rule 144A Global Note and/or the Restricted Certificated Note and in the Indenture and the Securities Act.

2.      ☐   Check if Transferee will take delivery of a beneficial interest in the  Regulation S Global Note or a Restricted Certificated Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Certificated Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Restricted Certificated Note and in the Indenture and the Securities Act.

3.      ☐   Check if Transferee will take delivery of a beneficial interest in the  relevant Certificated Note pursuant to any provision of the Securities Act other than

B-2

Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Certificated Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

(a)             ☐  such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

or

(b)            ☐   such Transfer is being effected to the Issuer or a subsidiary thereof; or

(c)            ☐   such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act.

4. ☐   Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Certificated Note.

(a)            ☐   Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Certificated Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Certificated Notes and in the Indenture.

(b)            ☐   Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Certificated Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Certificated Notes and in the Indenture.

(c)            ☐   Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable

B-3

blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Certificated Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Certificated Notes and in the Indenture.

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.

	 	 	 
	 	 	
[Insert Name of Transferor]

	 	 	 	 
	 	
by

	 
	 	 	
Name:

	 
	 	 	
Title:

	 

Dated:______________________________

B-4

ANNEX A TO CERTIFICATE OF TRANSFER

1.            The Transferor owns and proposes to transfer a beneficial interest in the:

[CHECK ONE]

	 	
(i)

	
☐

	
Rule 144A Global Note (CUSIP      ____________________________), or

	 	
(ii)

	
☐

	
Regulation S Global Note (CUSIP    ____________________________), or

	 	 	 	 
	 	 	 	 

2.            After the Transfer, the Transferee will hold a beneficial interest in the:

[CHECK ONE]

	 	
(i)

	
☐

	
Rule 144A Global Note (CUSIP ________________________________), or

	 	
(ii)

	
☐

	
Regulation S Global Note (CUSIP   _____________________________ ), or

	 	
 

In accordance with the terms of the Indenture.

 
	  	  

B-5

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Ocean Rig UDW Inc.

Tribune House

10 Skopa Street

Nicosia, Cyprus

Attention: Mr. Savvas Georghiades

Facsimile: +357 2276 1542

                  +357 2276 0128

With a copy to:

Seward & Kissel LLP

One Battery Park Plaza

New York, New York 10004

United States of America

Facsimile: +1 (212) 480-8421

 Attention: Gary J. Wolfe, Esq.

                    Robert Lustrin, Esq.

If to the Trustee:

DB Services Americas, Inc.

 5022 Gate Parkway

Jacksonville, Florida 32256

Attn: Transfer Department

 Fax: 904-271-2854

With a copy to:

Deutsche Bank Trust Company Americas

60 Wall Street – 16th floor

MSNYC60-1630

New York, New York 10005

Attn: Trust and Agency Service

Client Services Manager – Ocean Rig UDW Inc.

Re:            7.25% Senior Notes due 2019

Reference is hereby made to the Indenture, dated as of March 26, 2014 (the "Indenture"), between Ocean Rig UDW Inc., as issuer (the "Issuer") and Deutsche Bank Trust Company Americas, as trustee (the "Trustee"). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

C-1

__________, (the "Owner") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $_____in such Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that:

1. Exchange of Restricted Certificated Notes or Beneficial Interests in  Restricted Global Notes for Restricted Certificated Notes or Beneficial Interests in Restricted Global Notes

(a)            ☐  Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Certificated Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Certificated Note with an equal principal amount, the Owner hereby certifies that the Restricted Certificated Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Certificated Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Certificated Note and in the Indenture and the Securities Act of 1933, as amended (the "Securities Act").

(b)            ☐  Check if Exchange is from Restricted Certificated Note to beneficial interest in a Restricted Global Note. In connection with the Exchange of the Owner's Restricted Certificated Note for a beneficial interest in the [CHECK ONE] ☐ Rule 144A Global Note, ☐ Regulation S Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restriction applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

2. Exchange of Restricted Certificated Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Certificated Notes or Beneficial Interests in an  Unrestricted Global Note

(a)            ☐  Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv)the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

C-2

(b)            ☐ Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Certificated Note. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Certificated Note, the Owner hereby certifies (i) the Certificated Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Certificated Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(c)            ☐ Check if Exchange is from Restricted Certificated Note to beneficial interest in an Unrestricted Global Note. In connection with the Owner's Exchange of a Restricted Certificated Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Certificated Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(d)            ☐ Check if Exchange is from Restricted Certificated Note to Unrestricted Certificated Note. In connection with the Owner's Exchange of a Restricted Certificated Note for an Unrestricted Certificated Note, the Owner hereby certifies (i) the Unrestricted Certificated Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Certificated Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Certificated Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

C-3

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuer.

	 	 	 
	 	 	
[Insert Name of Transferor]

	 	 	 	 
	 	
by

	 
	 	 	
Name:

	 
	 	 	
Title:

	 

Dated:______________________________

C-4

EXHIBIT D

FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS

SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of __________, 20__ , among ________________________ (the "Guaranteeing Subsidiary"), a subsidiary of Ocean Rig UDW Inc. (or its permitted successor), a Marshall Islands corporation (the "Issuer"), and Deutsche Bank Trust Company Americas, a New York banking corporation, as Trustee under the Indenture referred to below (the "Trustee").

W I T N E S S E T H

WHEREAS, the Issuer has heretofore executed and delivered to the Trustee an indenture (the "Indenture"), dated as of March 26, 2014 providing for the issuance of 7.25% Senior Notes due 2019 (the "Notes");

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer's Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the "Note Guarantee"); and

WHEREAS, pursuant to Section 9.01 ("Without Consent of Holders") of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1.        Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2.        Agreement To Guarantee. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Note Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture, including but not limited to Article XI thereof, and subject to the limitations therein. By execution of this Supplemental Indenture, the Guaranteeing Subsidiary hereby agrees that it has become a Guarantor under the Indenture and is providing a Note Guarantee in accordance with Article XI of the Indenture.

3.        No Recourse Against Others. No director, officer, employee, incorporator or stockholder of the Issuer or any Guarantor, as such, will have any liability for any obligations of the Issuer or the Guarantors under the Notes, the Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability.

D-1

The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under applicable securities laws.

4.        New York Law To Govern. THIS SUPPLEMENTAL INDENTURE AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

5.        Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy will be an original, but all of them together represent the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture and signature pages for all purposes.

6.        Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

7.        The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Issuer.

D-2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

Dated:                                            , 20__

	 	
[NEW GUARANTOR]

	 	 

	 	
by

	 
	 	 	
Name:

Title:

	 	
OCEAN RIG UDW INC.

 

	 	
by

	 
	 	 	
Name:

Title:

	 	
DEUTSCHE BANK TRUST COMPANY

AMERICAS, as Trustee

 

	 	
by:

	
Deutsche Bank National Trust Company

	 	 	 
	 	 	 
	 	
by

	 
	 	 	
Name:

	 	 	
Title:

	 	 	 
	 	 	 
	 	
by

	 
	 	 	
Name:

	 	 	
Title:

SK 26497 0001 6394292

D-3Exhibit 4.56

 

 

EXECUTION VERSION

	 

CREDIT AGREEMENT

 among

DRILLSHIPS VENTURES PROJECTS INC.,

as Finco,

DRILLSHIPS OCEAN VENTURES INC.,

 as Borrower,

OCEAN RIG UDW INC.,

 as Parent,

VARIOUS LENDERS

and

DEUTSCHE BANK AG NEW YORK BRANCH,

 as Administrative Agent and Pari Passu Collateral Agent

________________________________

DEUTSCHE BANK SECURITIES INC.

and

CREDIT SUISSE SECURITIES (USA) LLC,

as Joint Global Coordinators,

 Joint Lead Arrangers and Joint Bookrunners

ABN AMRO Capital USA LLC,

as Joint Lead Arranger and Joint Bookrunner

and

NORDEA BANK FINLAND PLC, LONDON BRANCH,

as Co-Manager

________________________________

Dated as of July 25, 2014

 _______________________________

	 

TABLE OF CONTENTS

	 	 	
Page

	
SECTION 1.

	
Definitions and Accounting Terms

	
1

	
1.01.

	
Defined Terms

	
1

	
1.02.

	
Modification to Parties Upon a Qualified DOV MLP IPO.

	
60

	
1.03.

	
Terms Generally; Accounting Terms; GAAP

	
60

	 	 	 
	
SECTION 2.

	
Amount and Terms of Loans

	
61

	 	 	 
	
2.01.

	
The Loans.

	
61

	
2.02.

	
Notice of Borrowing

	
62

	
2.03.

	
Disbursement of Funds

	
63

	
2.04.

	
Notes

	
64

	
2.05.

	
Pro Rata Borrowings

	
64

	
2.06.

	
Interest

	
65

	
2.07.

	
Conversion of Loans

	
66

	
2.08.

	
Increased Costs, Illegality, Market Disruption, etc

	
66

	
2.09.

	
Compensation

	
68

	
2.10.

	
Change of Lending Office; Limitation on Additional Amounts

	
69

	
2.11.

	
Replacement of Lenders

	
69

	
2.12.

	
Incremental Commitments

	
70

	
2.13.

	
Loan Repurchases

	
73

	
2.14.

	
Extension Offers

	
74

	
2.15.

	
Term Loan Refinancing Protection

	
77

	
2.16.

	
Defaulting Lenders.

	
78

	 	 	 
	
SECTION 3.

	
Fees

	
79

	 	 	 
	
3.01.

	
Commitment Fee

	
79

	
3.02.

	
Other Fees

	
79

	
3.03.

	
General

	
79

	 	 	 
	
SECTION 4.

	
Prepayments; Payments; Taxes

	
80

	 	 	 
	
4.01.

	
Voluntary Prepayments

	
80

	
4.02.

	
Event of Loss

	
80

	
4.03.

	
Change of Control

	
82

	
4.04.

	
Prepayment of Revolving Loans

	
84

	
4.05.

	
Termination and Reduction of Commitments

	
84

	
4.06.

	
Repayment of the Loans

	
85

	
4.07.

	
Method and Place of Payment

	
86

	
4.08.

	
Net Payments; Taxes.

	
86

	
4.09.

	
Application of Proceeds

	
90

	
4.10.

	
Priority of Revolving Loans.

	
90

i

	
SECTION 5.

	
Conditions Precedent

	
91

	 	 	 
	
5.01.

	
Conditions Precedent to Effective Date

	
91

	
5.02.

	
Each Borrowing

	
95

	 	 	 
	
SECTION 6.

	
Representations, Warranties and Agreements

	
96

	 	 	 
	
6.01.

	
Corporate/Limited Liability Company/Limited Partnership Status

	
96

	
6.02.

	
Corporate Power and Authority

	
96

	
6.03.

	
No Violation

	
96

	
6.04.

	
Governmental Approvals

	
97

	
6.05.

	
Financial Statements; Financial Condition; Undisclosed Liabilities; etc

	
97

	
6.06.

	
True and Complete Disclosure

	
98

	
6.07.

	
Use of Proceeds; Margin Regulations

	
99

	
6.08.

	
Tax Returns; Payments; Tax Treatment

	
99

	
6.09.

	
Compliance with ERISA.

	
99

	
6.10.

	
Collateral; the Security Agreements

	
100

	
6.11.

	
Capitalization

	
102

	
6.12.

	
Subsidiaries

	
102

	
6.13.

	
Compliance with Statutes, etc

	
102

	
6.14.

	
Investment Company Act

	
102

	
6.15.

	
Legal Names; Type of Organization (and Whether a Registered Organization); Jurisdiction of Organization; etc

	
102

	
6.16.

	
Environmental Matters

	
102

	
6.17.

	
No Default

	
103

	
6.18.

	
Patents, Licenses, Franchises and Formulas

	
103

	
6.19.

	
Anti-Corruption Laws

	
104

	
6.20.

	
Insurance

	
104

	
6.21.

	
Collateral Vessels.

	
104

	
6.22.

	
Properties

	
105

	
6.23.

	
Anti-Terrorism

	
105

	
6.24.

	
Form of Documentation

	
106

	
6.25.

	
Place of Business

	
106

	
6.26.

	
No Immunity

	
106

	
6.27.

	
Labor Matters

	
106

	
6.28.

	
Existence

	
106

	
6.29.

	
Litigation

	
106

	 	 	 
	
SECTION 7.

	
Covenants

	
107

	 	 	 
	
7.01.

	
Maintenance of Property; Insurance

	
107

	
7.02.

	
Existence; Conduct of Business

	
109

	
7.03.

	
Operation of Collateral Vessels

	
110

	
7.04.

	
Payment of Obligations.

	
110

	
7.05.

	
Reports

	
110

	
7.06.

	
Notices of Material Events

	
113

	
7.07.

	
Filings; Additional Guarantors; Further Assurances

	
113

ii

	
7.08.

	
Compliance Certificate

	
115

	
7.09.

	
Books and Records; Inspection and Audit Rights

	
116

	
7.10.

	
Compliance with Laws

	
116

	
7.11.

	
Rated Credit Facilities

	
116

	
7.12.

	
Transactions with Affiliates

	
116

	
7.13.

	
Limitations on Liens

	
119

	
7.14.

	
Limitations on Merger, Consolidation or Sale of Assets

	
119

	
7.15.

	
Limitations on Restricted Payments

	
124

	
7.16.

	
Limitations on Indebtedness and Issuance of Preferred Stock

	
130

	
7.17.

	
Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries

	
134

	
7.18.

	
Consolidated Net Leverage Ratio

	
136

	
7.19.

	
Designation of Restricted and Unrestricted Subsidiaries

	
137

	
7.20.

	
Business Activities

	
138

	
7.21.

	
Rights to Earnings from Collateral Vessels and Ownership of Collateral Vessels

	
138

	
7.22.

	
Limitation on Asset Sales

	
139

	
7.23.

	
Suspension of Covenants

	
143

	
7.24.

	
Activities of Finco.

	
144

	
7.25.

	
[Reserved.]

	
144

	
7.26.

	
Use of Proceeds.

	
144

	 	 	 
	
SECTION 8.

	
Events of Default and Remedies

	
144

	 	 	 
	
8.02.

	
Application of Funds.

	
147

	
8.03.

	
Replacement of Revolving Lenders under Certain Circumstances

	
149

	 	 	 
	
SECTION 9.

	
The Administrative Agent

	
150

	 	 	 
	
9.01.

	
Appointment

	
150

	
9.02.

	
Nature of Duties

	
151

	
9.03.

	
Lack of Reliance on the Administrative Agent

	
152

	
9.04.

	
Certain Rights of the Administrative Agent

	
152

	
9.05.

	
Reliance.

	
152

	
9.06.

	
Indemnification

	
153

	
9.07.

	
The Administrative Agent in its Individual Capacity

	
153

	
9.08.

	
Holders

	
153

	
9.09.

	
Resignation by the Administrative Agent

	
153

	
9.10.

	
Co-Collateral Agent; Separate Collateral Agent

	
154

	
9.11.

	
Other Agents

	
155

	
9.12.

	
Security Trustee

	
155

	 	 	 
	
SECTION 10.

	
Miscellaneous.

	
155

	 	 	 
	
10.01.

	
Payment of Expenses, etc

	
155

	
10.02.

	
Right of Setoff.

	
157

	
10.03.

	
Notices

	
158

iii

	
10.04.

	
Benefit of Agreement; Assignments; Participations

	
159

	
10.05.

	
No Waiver; Remedies Cumulative

	
163

	
10.06.

	
Payments Pro Rata

	
163

	
10.07.

	
Calculations; Computations

	
164

	
10.08.

	
GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL

	
164

	
10.9.

	
Counterparts

	
165

	
10.10.

	
Effectiveness

	
166

	
10.11.

	
Headings Descriptive

	
166

	
10.12.

	
Amendment or Waiver; etc

	
166

	
10.13.

	
Survival

	
169

	
10.14.

	
Domicile of Loans.

	
169

	
10.15.

	
Register

	
169

	
10.16.

	
Confidentiality

	
169

	
10.17.

	
Intercreditor Agreement

	
170

	
10.18.

	
Currency Conversion Shortfall

	
171

	
10.19.

	
Releases

	
171

	
10.20.

	
Release of Guarantees

	
171

	
10.21.

	
Keepwell

	
172

	
10.22.

	
Parallel Debt.

	
173

	
10.23.

	
Relative Rights of Secured Parties

	
173

	
10.24.

	
Revolving Obligations Payment Priority

	
176

 

	
ANNEX I

	
Commitments

	 	
	
SCHEDULE B

	
Borrower Subsidiary Guarantors

	
SCHEDULE 6.10

	
UCC-1 Filing Offices

	
SCHEDULE 6.11

	
Capital Stock of Borrowers and Borrower Subsidiary Guarantors

	
SCHEDULE 6.12

	
Subsidiaries of the Parent

	
SCHEDULE 6.15

	
Legal Name, Type of Organization (and Whether a Registered Organization), Jurisdiction of each Loan Party

	
SCHEDULE 6.21

	
Collateral Vessels

	
SCHEDULE 6.22

	
Properties

	 	 
	
EXHIBIT A

	
Form of Assignment and Assumption Agreement

	
EXHIBIT B

	
Form of Guarantee Agreement

	
EXHIBIT C

	
Form of Security Agreement

	
EXHIBIT D

	
Form of Insurance Assignment

	
EXHIBIT E

	
Form of Earnings Assignment

	
EXHIBIT F

	
Form of Perfection Certificate

	
EXHIBIT G

	
Form of Notice of Borrowing

	
EXHIBIT H-1 and H-2

	
Forms of Note

	
EXHIBIT I

	
[Reserved]

	
EXHIBIT J

	
Auction Procedures

	
EXHIBIT K

	
[Reserved]

	
EXHIBIT L

	
Form of Intercreditor Agreement

iv

	
EXHIBITS M-1 to M-4

	
Form of Tax Compliance Certificates

	
EXHIBIT N

	
Form of Ship Mortgage

 

v

CREDIT AGREEMENT, dated as of July 25, 2014, among DRILLSHIPS OCEAN VENTURES INC., a Marshall Islands corporation, Drillships Ventures Projects Inc., a Delaware corporation and a wholly-owned subsidiary of the Borrower, OCEAN RIG UDW INC., a Marshall Islands corporation ("ParentUDW"), the Lenders party hereto from time to time, Deutsche Bank AG New York Branch, as administrative agent (in such capacity, the "Administrative Agent"), as collateral agent (in such capacity, the "Pari Passu Collateral Agent") and as security trustee (in such capacity, the "Security Trustee"). All capitalized terms used herein and defined in Section 1 are used herein as therein defined.

W I T N E S S E T H:

WHEREAS, the Borrowers have requested that the Term Lenders extend credit to the Borrowers in the form of Term Loans on the Effective Date in an aggregate principal amount equal to $1,300,000,000; and

WHEREAS, subject to and upon the terms and conditions herein set forth, the Lenders are willing to make available to the Borrowers the term loan and revolving credit facilities provided for herein.

NOW, THEREFORE, IT IS AGREED:

SECTION 1.       Definitions and Accounting Terms.

1.01            Defined Terms.  As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

"2014 Refinancing" shall mean the refinancing or repayment in full on the Effective Date of all existing Indebtedness outstanding as of the Effective Date under the Ventures Facilities Agreement with the proceeds of the Term Loans, and the release and termination of all guarantees and security interests under the Ventures Facilities Agreement.

 

"Acquired Debt" shall mean, with respect to any specified Person:

(1)            Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person (regardless of the form of the applicable transaction by which such Person became a Restricted Subsidiary) or expressly assumed in connection with the acquisition of assets from any other such Person, whether or not such Indebtedness is Incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person or of such Indebtedness being Incurred in connection with the acquisition of assets; and

(2)            Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

Acquired Debt will be deemed to be Incurred on the date the acquired Person becomes a Restricted Subsidiary or the later of the date such Indebtedness is Incurred or the date of the related acquisition of assets from such Person.

 

"Additional Drilling Unit" shall mean a drilling rig or drillship or other Vessel that is used or useful in the Permitted Business.

"Administrative Agent" shall have the meaning provided in the first paragraph of this Agreement, and shall include any successor thereto.

"Affiliate" of any specified Person shall mean, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings.

"Affiliate Transaction" shall have the meaning provided in Section 7.12(a).

"Agents" shall mean, collectively, the Administrative Agent and the Other Agents.

"Aggregate Revolving Commitment" shall mean, at any time, the sum of the Revolving Commitments of all the Revolving Lenders at such time.

"Aggregate Revolving Exposure" shall mean, at any time, the sum of the Revolving Exposures of all the Revolving Lenders at such time.

"Agreement" shall mean this Credit Agreement, as modified, supplemented, amended, restated, extended or renewed from time to time.

"Angolan and Brazilian Local Content Subsidiaries" shall mean Olympia Rig Angola Limitada, an Angolan company, and Ocean Rig Do Brazil Servicos de Petroleo Ltda., a Brazilian company, and any other existing or future Local Content Subsidiary organized, formed or existing under the laws of Angola or Brazil.

"Applicable Margin" shall mean (a) in the case of Term Loans, (x) 3.50% per annum for Base Rate Loans and (y) 4.50% per annum for Eurodollar Rate Loans and (b) in the case of Revolving Loans, such amounts per annum as may be specified in an Incremental Revolving Credit Amendment.

"Arrangers" shall mean Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC and ABN AMRO Capital USA LLC and their respective successors.

"Asset Sale" shall mean:

(1)            any sale, lease, conveyance or other disposition, whether in a single transaction or a series of related transactions, of property or assets of the Parent or any of the Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction;

2

(2)            the issuance or sale of Equity Interests in any of the Restricted Subsidiaries, other than statutory or directors qualifying shares, whether in a single transaction or a series of related transactions; and

(3)            an Involuntary Transfer.

Notwithstanding the preceding, none of the following items shall be deemed to be an Asset Sale:

(1)            any single transaction or series of related transactions that involves assets having a Fair Market Value or that results in generating Net Proceeds, in either case, of less than $30,000,000;

(2)            a transfer of Equity Interests or other assets between or among the Parent and the Restricted Subsidiaries;

(3)            an issuance of Equity Interests by a Restricted Subsidiary to the Parent or to another Restricted Subsidiary (which must be the Borrower or a Borrower Subsidiary Guarantor if the Equity Interests are of a Borrower Subsidiary Guarantor);

(4)            the sale, lease or other disposition of products, services or accounts receivable in the ordinary course of business and any sale or conveyance or other disposition of damaged, worn-out or obsolete assets in the ordinary course of business;

(5)            the sale or other disposition of cash or Cash Equivalents, hedging contracts or other financial instruments;

(6)            licenses and sublicenses by the Parent or any of the Restricted Subsidiaries of software or intellectual property in the ordinary course of business;

(7)            a Restricted Payment that does not violate Section 7.15 or a Permitted Investment;

(8)            the sale, lease, conveyance or other disposition of all or substantially all of the assets of ParentUDW and the Restricted Subsidiaries taken as a whole or of the Borrower and the Borrower Subsidiary Guarantors taken as a whole in a manner governed by Section 7.14 or any disposition that constitutes a Change of Control;

(9)            the creation or perfection of any Lien permitted pursuant to this Agreement, and any disposition of assets constituting Collateral resulting from foreclosure under any such Lien by the Pari Passu Collateral Agent, or any disposition of assets not constituting Collateral resulting from foreclosure under any such Lien;

(10)            any surrender or waiver of contract rights or the settlement, release, recovery on or surrender of contract, tort or other claims;

(11)            a Qualified DOV MLP IPO and transactions related thereto, and the DOV MLP Formation Transactions and transactions related thereto; and

3

(12)            prior to the consummation of a Qualified DOV MLP IPO, a Non-DOV Qualified MLP Asset Transfer.

"Asset Sale Offer" shall have the meaning provided in Section 7.22(V).

"Asset Sale Offer Period" shall have the meaning provided in Section 7.22(VII).

"Asset Sale Offer Settlement Date" shall have the meaning provided in Section 7.22(VII).

"Asset Sale Offer Termination Date" shall have the meaning provided in Section 7.22(VIII)(1).

"Assignment and Assumption Agreement" shall mean the Assignment and Assumption Agreement substantially in the form of Exhibit A (appropriately completed).

"Assignments" shall mean, collectively, each Insurance Assignment and each Earnings Assignment.

"Attributable Indebtedness" in respect of a Sale and Lease-Back Transaction shall mean, at the time of determination, the present value (discounted according to GAAP at the cost of indebtedness implied in the lease; provided that if such discount rate cannot be determined in accordance with GAAP, the present value shall be discounted at the interest rate agreed to between the Administrative Agent and the Borrowers, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale and Lease-Back Transaction (including any period for which such lease has been extended); provided, however, that if such Sale and Lease-Back Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby shall be determined in accordance with the definition of "Capital Lease Obligations."

"Auction Manager" shall have the meaning provided in Section 2.13(a).

"Auction Notice" shall mean an auction notice given by the Borrowers in accordance with the Auction Procedures with respect to a Purchase Offer.

"Auction Procedures" shall mean the auction procedures with respect to Purchase Offers set forth in Exhibit J hereto.

"Authorized Representative" shall mean, with respect to (a) delivering notices on behalf of the Borrowers, any Person or Persons that has or have been authorized by the Board of Directors of each Borrower to deliver such notices pursuant to this Agreement and that has or have appropriate signature cards on file with the Administrative Agent, (b) delivering financial information and officer's certificates relating to financial matters on behalf of any specified Person pursuant to this Agreement, the chief executive officer, the chief financial officer, the treasurer or controller of such specified Person or, if there is no chief financial officer, treasurer or controller of such specified Person, any other senior executive officer of such specified Person designated by the president or the Board of Directors of such specified Person or such specified Person's general partner as being a financial officer authorized to deliver and certify financial

4

  

information on behalf of such specified Person under this Agreement and (c) any other matter on behalf of any specified Person in connection with this Agreement or any other Loan Document, any officer (or a Person or Persons so designated by any two officers) of such specified Person or of such specified Person's general partner, if applicable.

"Available Cash" shall mean, with respect to any period following the consummation of a Qualified DOV MLP IPO:

(1)            the sum of (a) all cash and Cash Equivalents of the Borrower and its Subsidiaries on hand at the end of such period and (b) if the Board of Directors of the Borrower so determines, all or any portion of any additional cash and Cash Equivalents of the Borrower and its Subsidiaries on hand on the date the Borrower makes Restricted Payments with respect to such period (including as a result of any borrowings made subsequent to the end of such period); minus

(2)            the amount of any cash reserves established by the Board of Directors of the Borrower to (a) provide for the proper conduct of the business of the Borrower and its Subsidiaries (including reserves for future capital expenditures and for anticipated future credit needs) subsequent to such period, (b) comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or other agreement or obligation to which the Borrower or any of its subsidiaries is a party or by which it is bound or its assets are subject or (c) provide funds for Restricted Payments in respect of future periods.

"Bankruptcy Law" shall mean Title 11 of the United States Code, as may be amended from time to time, or any similar federal, state or foreign law for the relief of debtors.

"Base Rate" shall mean, for any day, a rate of interest per annum equal to the highest of (a) the Administrative Agent's Prime Rate for such day, (b) the sum of the Federal Funds Rate for such day plus 1/2 of 1%, (c) 1% per annum above the Eurodollar Rate for a one-month Interest Period beginning on such date (or if such day is not a Business Day, the immediately preceding Business Day), and (d) solely in the case of Term Loans, 2.00%.

"Base Rate Loan" shall mean a Loan that bears interest as provided in Section 2.06(a)(i).

"Beneficial Owner" shall have the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The term "Beneficially Owned" has a corresponding meaning.

"Board of Directors" shall mean:

(1)            with respect to a corporation, the board of directors of such corporation or any committee thereof duly authorized to act on behalf of such board of directors;

5

(2)            with respect to a partnership, the board of directors of the partnership or the general partner of such partnership, as the case may be;

(3)            with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof or the manager or any committee of managers; and

(4)            with respect to any other Person, the board or committee of such Person serving a similar function.

"Borrower" shall mean Drillships Ocean Ventures Inc., a Marshall Islands corporation; provided that, in connection with the consummation of a Qualified DOV MLP IPO in which there is a Successor Borrower as provided in Section 7.14, references to "Borrower" shall mean such Successor Borrower. In connection with the consummation of a Qualified DOV MLP IPO and the related DOV MLP Formation Transactions, the Borrower (or Successor Borrower) may be a limited partnership, limited liability company or similar business entity to the extent otherwise permitted pursuant to this Agreement.

"Borrower Subsidiary Guarantor" shall mean a Guarantor that is a Subsidiary of the Borrower.

"Borrowers" shall mean, collectively, the Borrower and Finco.

"Borrowing" shall mean a simultaneous borrowing of Loans of the same Class and Type, and with respect to Eurodollar Rate Loans, with the same Interest Period, from all the Lenders having Commitments or Loans of such Class (other than any Lender which has not funded its share of a Borrowing in accordance with this Agreement).

"Business Day" shall mean (a) for all purposes other than as covered by the following clause (b), any day except Saturday, Sunday and any day which shall be in New York, Norway, Marshall Islands, Greece, or the United Kingdom a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurodollar Rate Loans, any day which is a Business Day described in clause (a) above and which is also a day for trading by and between banks in U.S. dollar deposits in the London interbank Eurodollar market.

"Capital Lease Obligations" shall mean, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

"Capital Stock" shall mean (1) in the case of a corporation, corporate stock, (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership

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interests and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

"Cash Equivalents" shall mean (1) United States dollars; (2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than six months from the date of acquisition; (3) certificates of deposit and Eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any commercial bank organized under, or authorized to operate as a bank under, the laws of any country that is a member of the Organization for Economic Cooperation and Development or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, the United States or any state thereof and, in each case, having capital, surplus and undivided profits in excess of $200,000,000 and which have a long term debt rating of "P-2" or higher by Moody's or "A-2" or higher by S&P; (4) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; (5) commercial paper having one of the two highest ratings obtainable from Moody's or S&P and, in each case, maturing within six months of the original issue thereof; and (6) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition.

"CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same has been amended and may hereafter be amended from time to time, 42 U.S.C. § 9601 et seq.

"Change of Control" shall mean:

(I)            Prior to the consummation of a Qualified DOV MLP IPO, the occurrence of any of the following:

(1)          the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of amalgamation, merger or consolidation and other than operating leases arising as a result of a drilling contract or vessel employment contract entered into in the ordinary course of business), in one or a series of related transactions, of all or substantially all of the properties or assets of ParentUDW and the Restricted Subsidiaries taken as a whole or of the Borrower and the Borrower Subsidiary Guarantors taken as a whole, in either case, to any "person" (as that term is used in Section 13(d) of the Exchange Act), other than to a Permitted Holder;

(2)          ParentUDW or the Borrower is liquidated or dissolved or adopts a plan relating to the liquidation or dissolution of ParentUDW or the Borrower;

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(3)            the consummation of any transaction or any series of transactions (including, without limitation, any merger, consolidation or other business combination), the result of which is that any "person" (as defined above), other than a Permitted Holder, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of ParentUDW, measured by voting power rather than number of shares; or

(4)            other than as a result of the DOV MLP Formation Transactions (including, for the avoidance of doubt, a Permitted DOV Equity Sale Transaction) or a Qualified DOV MLP IPO (including, for the avoidance of doubt, a Qualified DOV MLP IPO that is deemed to occur as a result of a Permitted DOV Equity Sale Transaction), the first day on which ParentUDW ceases to own, directly or indirectly, 100% of the outstanding Equity Interests of the Borrower.

(II)            Following the consummation of a Qualified DOV MLP IPO, the occurrence of any of the following:

(1)            the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of amalgamation, merger or consolidation and other than operating leases arising as a result of a drilling contract or vessel employment contract entered into in the ordinary course of business), in one or a series of related transactions, of all or substantially all of the properties or assets of the Borrower and the Borrower Subsidiary Guarantors taken as a whole to any "person" (as that term is used in Section 13(d) of the Exchange Act), other than to one or more Qualifying Holders;

(2)            the Borrower is liquidated or dissolved or adopts a plan relating to the liquidation or dissolution of the Borrower; or

(3)            the consummation of any transaction or any series of transactions (including, without limitation, any merger, consolidation or other business combination), the result of which is that any "person" (as defined above), other than one or more Qualifying Holders, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Borrower, measured by voting power rather than number of shares, units or other equity securities.

(III)            Notwithstanding anything herein to the contrary, a conversion of the Borrower or any of its Subsidiaries from a limited partnership, corporation, limited liability company or other form of entity to a limited liability company, corporation, limited partnership or other form of entity, an exchange of all of the outstanding Equity Interests in one form of entity for Equity Interests in another form of entity or a transaction in which the Borrower becomes a Subsidiary of another Person shall not constitute a Change of Control, so long as immediately following such conversion or exchange either (a) the "persons" (as defined above) who Beneficially Owned the Capital Stock of the Borrower immediately prior to such transactions continue to Beneficially Own in the aggregate more than 50% of the Voting Stock of such entity, or continue to Beneficially Own sufficient Equity Interests in such entity to elect a majority of its directors, managers, trustees or other persons serving in a similar capacity for 

 

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such entity or its general partner, as applicable, or (b) no "person," other than one or more Permitted Holders or Qualifying Holders, Beneficially Owns more than 50% of the Voting Stock of such entity or its general partner, as applicable, in each case with Beneficial Ownership being measured by voting power. In addition, a Change of Control shall not occur as a result of a Qualified DOV MLP IPO (including, for the avoidance of doubt, a Qualified DOV MLP IPO that is deemed to occur as a result of a Permitted DOV Equity Sale Transaction) and transactions related thereto, or the DOV MLP Formation Transactions (including, for the avoidance of doubt, a Permitted DOV Equity Sale Transaction) and transactions related thereto, including the transfer or contribution of Equity Interests or assets of the Borrower or Borrower Subsidiary Guarantors to the DOV MLP Entities.

"Change of Control Notice" shall have the meaning provided in Section 4.03(b).

"Change of Control Offer" shall have the meaning provided in Section 4.03(a).

"Change of Control Payment Date" shall have the meaning provided in Section 4.03(b)(iii).

"Class", when used in reference to (a) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Term Loans, Other Term Loans or Revolving Loans, (b) any Commitment, refers to whether such Commitment is a Revolving Commitment, an Incremental Commitment or any other commitment hereunder and (c) any Lender, refers to whether such Lender has a Loan or Commitment with respect to a particular Class.

"Co-managers" shall mean Nordea Bank Finland plc, London Branch and its respective successors.

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Collateral" shall mean all rights, assets and property, whether now owned or hereafter acquired, upon which a Lien or Mortgage securing the Secured Obligations is granted or purported to be granted under any Collateral Agreement. Collateral shall not include Excluded Property. Notwithstanding the foregoing, no Collateral of the Borrower or any Guarantor (other than ParentUDW) shall secure the Secured Obligations of ParentUDW.

"Collateral Agreements" shall mean, collectively, the Security Agreement, the Intercreditor Agreement, each Mortgage, each Assignment and each other instrument, including any security document or pledge agreement, creating Liens in favor of the Pari Passu Collateral Agent as required by the Loan Documents, in each case, as the same may be in force from time to time.

"Collateral and Guarantee Requirement" shall mean, at any time, the requirement that:

(a) (i)            each Subsidiary of the Borrower that (x) holds any Collateral Vessel, (y) holds any Related Assets with respect to any Collateral Vessel (other than, subject to the limitations provided in Section 7.21, a Local Content Subsidiary) or (z) is party to a Collateral Vessel Contract (other than, subject to the limitations provided in Section 7.21, a Local Content Subsidiary), (ii) prior to the consummation of a Qualified DOV MLP IPO, (x) ParentUDW and

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each Subsidiary of ParentUDW that directly or indirectly owns or holds any Equity Interests of the Borrower or any Borrower Subsidiary Guarantor and (y) each Subsidiary of ParentUDW that guarantees any other Pari Passu Obligations and (iii) following the consummation of a Qualified DOV MLP IPO, (x) each Subsidiary of the Borrower that directly or indirectly owns or holds any Equity Interests of any Borrower Subsidiary Guarantor and (y) each Subsidiary of the Borrower that guarantees any other Pari Passu Obligations, shall have duly authorized, executed and delivered to the Administrative Agent the Guarantee Agreement or a supplement thereto, substantially in the form attached thereto, as applicable (pursuant to which such Subsidiary becomes subject to the obligations of a Guarantor), and the Guarantee Agreement shall be in full force and effect;

(b)            the Borrower, Finco, each Borrower Subsidiary Guarantor and, prior to the consummation of a Qualified DOV MLP IPO, ParentUDW, shall have (i) duly authorized, executed and delivered the Security Agreement or a supplement thereto, substantially in the form attached thereto, pursuant to which, among other things, all the Capital Stock of (x) Finco and any Borrower Subsidiary Guarantors owned by the Borrower or the Borrower Subsidiary Guarantors and (y) prior to the consummation of a Qualified DOV MLP IPO, the Borrower, shall have been pledged to secure the Secured Obligations, and the Borrower, the applicable Borrower Subsidiary Guarantors and, prior to the consummation of a Qualified DOV MLP IPO, ParentUDW shall have (1) delivered to the Pari Passu Collateral Agent, as pledgee, all the Pledged Securities, together with executed and undated stock powers and (2) otherwise complied with all of the requirements set forth in the Security Agreement and (ii) duly authorized, executed and delivered any other related documentation necessary or advisable as reasonably determined by the Administrative Agent to perfect the Lien on the Collateral referred to in the Security Agreement in the respective jurisdictions of formation or of the chief executive office, as the case may be, of ParentUDW, the Borrower or the Borrower Subsidiary Guarantors, or as other jurisdictions as provided by applicable law, and the Security Agreement shall be in full force and effect, and the Pari Passu Collateral Agent shall have received evidence that all other actions necessary or, in the reasonable opinion of the Pari Passu Collateral Agent desirable, to perfect (to the extent such security interests may be perfected) and protect the security interests purported to be created by such Security Agreement have been taken;

(c)            the Pari Passu Collateral Agent shall have received duly authorized, executed and delivered, (i) Insurance Assignments from the Borrower and each applicable Guarantor substantially in the form of Exhibit D covering all such Loan Party's present and future interest in insurance in respect of the Collateral Vessels and other Collateral, and each Insurance Assignment shall be in full force and effect, (ii) Earnings Assignments from each applicable Guarantor substantially in the form of Exhibit E, covering all Earnings derived from or related to a Collateral Vessel Contract (other than any such Earnings payable to a Local Content Subsidiary), and each Earnings Assignment shall be in full force and effect and (iii) a control agreement (or comparable arrangement under U.K. law or other applicable laws that are acceptable to the Pari Passu Collateral Agent) with respect to each Earnings Account, and such control agreements (or comparable arrangements) shall be in full force and effect;

(d)            all UCC financing statements required by applicable law or reasonably requested by the Pari Passu Collateral Agent to be filed, registered or recorded to perfect the Liens intended to be perfected pursuant to the terms of the Collateral Agreements with the

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priority required by, the Collateral Agreements, shall have been filed, registered or recorded or delivered to the Pari Passu Collateral Agent for filing, registration or recording;

(e)            the Pari Passu Collateral Agent shall have received counterparts of Ship Mortgages with respect to each Collateral Vessel and each Substitute Vessel, as applicable, duly authorized, executed and delivered by each Loan Party that holds an interest in each such Collateral Vessel or Substitute Vessel, as applicable and each such Ship Mortgage shall be effective upon filing to create in favor of the Pari Passu Collateral Agent (acting as security trustee for the Lender Creditors and holders of other Pari Passu Obligations if required under the laws of the flag state of any Collateral Vessel or Substitute Vessel), for the benefit of the Lender Creditors, a legal, valid and enforceable first-priority ship mortgage on, and Lien upon, such Collateral Vessel or Substitute Vessel, as applicable, subject only to Permitted Collateral Liens, and each Ship Mortgage shall be in full force and effect; and

(f)            all filings, deliveries of instruments, legal opinions and other actions necessary or desirable in the reasonable opinion of the Administrative Agent to perfect and preserve the first-priority security interests (subject to Permitted Collateral Liens) described in clauses (a) through (e) above shall have been duly effected or delivered, as the case may be, and the Pari Passu Collateral Agent shall have received evidence thereof in form and substance reasonably satisfactory to the Administrative Agent.

Notwithstanding the foregoing provisions of this definition or anything in this Agreement or any other Loan Document to the contrary, (a) the foregoing definition shall not require the assignment of any Collateral Vessel Contracts or the creation or perfection of pledges of or security interests in, or the obtaining of legal opinions or other deliverables with respect to, any Excluded Property and (b) Liens required to be granted from time to time pursuant to the "Collateral and Guarantee Requirement" shall be subject to exceptions and limitations expressly set forth in this Agreement and the Collateral Agreements. The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of legal opinions or other deliverables with respect to particular assets or the provision of any Loan Guarantee by any Subsidiary (including extensions beyond the Effective Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Effective Date) where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Collateral Agreements.

"Collateral Vessel Contract" shall mean any charterparty, pool agreement or drilling contract in respect of any Collateral Vessel or other contract for use of any Collateral Vessel.

"Collateral Vessels" shall mean the three seventh generation drillships, the Ocean Rig Mylos, the Ocean Rig Skyros, and the Ocean Rig Athena listed on Schedule 6.21. Each such vessel is a Collateral Vessel.

"Commitment" shall mean, with respect to each Lender, such Lender's Revolving Commitment and/or such Lender's Incremental Commitment, as applicable.

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 "Commitment Fee" shall have the meaning provided in Section 3.01. "Communications" shall have the meaning provided in Section 10.03(d)(ii).

"Completed Drilling Equipment Value" shall mean, at any time, the Fair Market Value of all completed and delivered Drilling Equipment owned by the Parent and its Restricted Subsidiaries at such time.

"Consolidated Cash Flow" shall mean, with respect to any period, Consolidated Net Income of the Parent for such period plus, without duplication:

(1)            provision for taxes based on income or profits of the Parent and the Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus 

(2)            the Consolidated Interest Expense of the Parent and the Restricted Subsidiaries to the extent that such Consolidated Interest Expenses were deducted in computing such Consolidated Net Income; plus 

(3)            depreciation, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period, but including, for the avoidance of doubt, any write-off or write-down of capitalized debt issuance costs) of the Parent and the Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus

(4)            non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business, in each case, on a consolidated basis and determined in accordance with GAAP.

In calculating Consolidated Cash Flow, the portion of Consolidated Cash Flow attributable to the Collateral Vessels shall be calculated, for the fiscal quarters ending on or prior to March 31, 2015, using historical operations for all Collateral Vessels in service during any fiscal quarter ended on or after June 30, 2014 plus a pro forma amount in respect of all other relevant fiscal quarters ending on or prior to March 31, 2015 based upon the expected Consolidated Cash Flow resulting from Qualified Services Contracts relating to such Vessels; provided, however, that, for the fiscal quarter ending June 30, 2014, with respect to the Ocean Rig Athena, such calculation shall be made, as if the Vessel was in operation from the beginning of such quarter, using the expected Consolidated Cash Flow of such Vessel based upon its related Qualified Services Contract. In addition to the calculation of Consolidated Cash Flow set forth in this paragraph with respect to such Collateral Vessels, such calculation shall include such other pro forma adjustments (without duplication) applicable to Consolidated Interest Coverage Ratio, Consolidated Net Leverage Ratio and Consolidated Total Leverage Ratio.

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Notwithstanding the foregoing, the calculation of Consolidated Cash Flow for any period during which a Qualified DOV MLP IPO is consummated shall be calculated solely with respect to the Borrower and its Restricted Subsidiaries and shall be calculated on a pro forma basis after giving effect to such Qualified DOV MLP IPO as if it had occurred on the first day of such period.

"Consolidated Interest Coverage Ratio" shall mean, for any period, the ratio of the Consolidated Cash Flow of the Parent for such period to the Consolidated Interest Expense of the Parent for such period; provided, however, that:

(1)        if the Parent or any of the Restricted Subsidiaries has Incurred any Indebtedness since the beginning of such period that remains outstanding on the date a determination of the Consolidated Interest Coverage Ratio is to be made, or if the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Incurrence of Indebtedness, or both, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period;

(2)            if the Parent or any of the Restricted Subsidiaries has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period, or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such repayment, repurchase, defeasance or discharge had occurred on the first day of such period;

(3)            if, since the beginning of such period, the Parent or any Restricted Subsidiary shall have made any Asset Sale or Non-DOV Qualified MLP Asset Transfer, Consolidated Cash Flow for such period shall be reduced by an amount equal to the Consolidated Cash Flow (if positive) directly attributable to the assets which are the subject of such disposition for such period, or increased by an amount equal to the Consolidated Cash Flow (if negative) directly attributable thereto for such period, and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Parent or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Parent and the continuing Restricted Subsidiaries in connection with such disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Parent and the continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);

(4)            if, since the beginning of such period, any Person that subsequently became a Restricted Subsidiary or was merged with or into the Parent or any Restricted Subsidiary since the beginning of such period shall have made any Asset Sale, Non-DOV Qualified MLP Asset Transfer or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) above or (7) or (8) below if made by the Parent or a Restricted Subsidiary during such period, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Sale, Non-DOV Qualified MLP Asset Transfer, Investment or acquisition had occurred on the first day of such period;

 

 

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(5)            if, since the beginning of such period, any Person was designated as an Unrestricted Subsidiary or redesignated as or otherwise became a Restricted Subsidiary, Consolidated Cash Flow and Consolidated Interest Expense shall be calculated as if such event had occurred on the first day of such period;

(6)            Consolidated Cash Flow and Consolidated Interest Expense of discontinued operations recorded on or after the date such operations are classified as discontinued in accordance with GAAP shall be excluded but, with respect to Consolidated Interest Expense, only to the extent that the obligations giving rise to such Consolidated Interest Expense shall not be obligations of the Parent or any of the Restricted Subsidiaries following such classification;

(7)            if, since the beginning of such period, the Parent or any Restricted Subsidiary shall have (i) by merger or otherwise, made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary), or (ii) acquired assets constituting all or substantially all of an operating unit of a business or an Additional Drilling Unit, subject to the penultimate paragraph under the definition of Consolidated Cash Flow, Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including, without limitation, the Incurrence of any Indebtedness) as if such Investment or acquisition had occurred on the first day of such period; and

(8)            if the Parent or any Restricted Subsidiary shall have entered into an agreement to build or acquire an Additional Drilling Unit that at the time of calculation is being constructed on behalf of the Parent or such Restricted Subsidiary, is scheduled for delivery no later than one year from the time of calculation and either (x) is subject to a Qualified Services Contract or (y) is reasonably expected to realize revenues within 12 months from the beginning of such period as determined in good faith by a Financial Officer as set forth in an Officer's Certificate, then Consolidated Cash Flow and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if the Additional Drilling Unit subject to such committed construction contract had been acquired by the Parent or such Restricted Subsidiary on the first day of such period.

Subject to the penultimate paragraph under the definition of Consolidated Cash Flow, any pro forma calculations giving effect to the acquisition of an Additional Drilling Unit or to a committed construction contract with respect to an Additional Drilling Unit, in each case that is subject to a Qualified Services Contract or is reasonably expected to realize revenues within 12 months from the beginning of such period as determined in good faith by a Financial Officer as set forth in an Officer's Certificate, shall be made as follows:

(a)          the amount of Consolidated Cash Flow attributable to such Additional Drilling Unit shall be calculated in good faith by a Financial Officer as set forth in an Officer's Certificate;

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(b)          in the case of earned revenues under a Qualified Services Contract, the Consolidated Cash Flow shall be based on revenues actually earned pursuant to the Qualified Services Contract relating to such Additional Drilling Unit or Additional Drilling Units, taking into account, where applicable, only actual expenses Incurred without duplication in any measurement period;

(c)          the amount of Consolidated Cash Flow shall be the lesser of the Consolidated Cash Flow derived on a pro forma basis from revenues for (i) the first full year of the Qualified Services Contract and (ii) the average of the Consolidated Cash Flow of each year of such Qualified Services Contract for the term of the Qualified Services Contract;

(d)          in the case of an Additional Drilling Unit not subject to a Qualified Services Contract, the Consolidated Cash Flow shall be based upon the average of the historical earnings of comparable Vessels in ParentUDW's and its Subsidiaries' fleet over the most recently completed four fiscal quarters, as determined in good faith by a Financial Officer as set forth in an Officer's Certificate;

(e)          in determining the estimated expenses attributable to such Additional Drilling Unit, the calculation shall give effect to the interest expense attributable to the Incurrence, assumption or guarantee of any Indebtedness (including Indebtedness that is anticipated to be Incurred following the time of calculation in order to consummate the construction, acquisition and/or delivery of the Additional Drilling Unit) relating to the construction, delivery and/or acquisition of such Additional Drilling Unit;

(f)          with respect to any expenses attributable to an Additional Drilling Unit, if the actual expenses differ from the estimate, the actual amount shall be used in such calculation;

(g)          if a Qualified Services Contract is terminated, or is amended, supplemented or modified, following the date of calculation, and after giving effect to the termination or the terms of such Qualified Services Contract as so amended, supplemented or modified and revenues reasonably expected to be realized within 12 months of such termination, amendment, supplement or modification, the Parent and the Restricted Subsidiaries would not have been able to but did Incur additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in Section 7.16(a), the Parent will, at the time of any such event, be required to either: (i) repay, or cause the repayment of, all or any part of any such Indebtedness that would not have been permitted to be Incurred had the termination of the Qualified Services Contract or such amendments, supplements or modifications thereto been in effect at the time such Indebtedness was originally Incurred, or (ii) enter into a replacement Qualified Services Contract, the terms of which would have permitted the Incurrence of such Indebtedness had such replacement contract been in effect at the time such Indebtedness was Incurred; and

(h)          notwithstanding the foregoing, the pro forma inclusion of Consolidated Cash Flow attributable to any such Additional Drilling Unit for the four-quarter reference period shall be reduced by the actual Consolidated Cash Flow from such new Additional Drilling Unit previously earned and accounted for in the actual results for the four-quarter

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reference period, which actual Consolidated Cash Flow may be included in the foregoing clause (7).

"Consolidated Interest Expense" shall mean, with respect to any Person for any period, the sum, without duplication, of:

(1)            the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges Incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations, but excluding:

(a)            amortization of debt issuance costs; and

(b)            any nonrecurring charges relating to any premium or penalty paid, write-off of deferred finance costs or original issue discount or other charges in connection with redeeming or otherwise retiring any Indebtedness prior to its Stated Maturity, to the extent that any of such nonrecurring charges constitute interest expense;

(2)            the consolidated interest expense of such Person and any of its Restricted Subsidiaries that was capitalized during such period; and

(3)            dividends paid in cash or Disqualified Stock in respect of all Preferred Stock of Restricted Subsidiaries and all Disqualified Stock of such Person or any of its Restricted Subsidiaries in each case held by persons other than such Person or any of its Restricted Subsidiaries.

Notwithstanding the foregoing, the calculation of Consolidated Interest Expense for any period during which a Qualified DOV MLP IPO is consummated shall be calculated solely with respect to the Borrower and its Restricted Subsidiaries and shall be calculated on a pro forma basis after giving effect to such Qualified DOV MLP IPO as if it had occurred on the first day of such period.

"Consolidated Net Income" shall mean, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that:

(1)            the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary during such period;

(2)            solely for the purpose of determining the amount available for Restricted Payments in Section 7.15(I)(D)(3)(a), the Net Income (but not loss) of any Restricted Subsidiary of such Person (other than a Restricted Subsidiary that is a Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted

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Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders (in each case other than as a result of restrictions contained in this Agreement, the other Pari Passu Documents or Existing Indebtedness, in each case as in effect on the Effective Date); provided that Consolidated Net Income of the referenced Person shall be increased by the amount of dividends or other distributions or other payments paid in cash to the referenced Person or a Restricted Subsidiary thereof during such period, to the extent not already included therein;

(3)            the cumulative effect of a change in accounting principles will be excluded;

(4)            non-cash gains and losses due solely to fluctuations in currency values will be excluded;

(5)            in the case of a successor to the referenced Person by consolidation or merger or as a transferee of the referenced Person's assets, any earnings (or losses) of the successor corporation prior to such consolidation, merger or transfer of assets will be excluded;

(6)            the effects resulting from the application of purchase accounting in relation to any acquisition that is consummated after the Effective Date will be excluded;

(7)            any unrealized gain (or loss) in respect of Hedging Obligations will be excluded;

(8)            non-cash charges or expenses with respect to the grant of stock options, restricted stock or other equity compensation awards will be excluded;

(9)            goodwill write-downs or other non-cash impairments of assets, or restructuring charges or severance costs associated with acquisitions or dispositions will be excluded;

(10)            drydock, shipyard stay and special survey expenses (other than Drydock, Shipyard Stay and Special Survey Amortization Expense for the applicable period) will be excluded; and

(11)            non-cash or non-recurring charges will be excluded.

Notwithstanding the foregoing, the calculation of Consolidated Net Income for any period during which a Qualified DOV MLP IPO is consummated shall be calculated solely with respect to the Borrower and its Restricted Subsidiaries and shall be calculated on a pro forma basis after giving effect to such Qualified DOV MLP IPO as if it had occurred on the first day of such period.

"Consolidated Net Leverage Ratio" shall mean, with respect to any specified Person, as of any date of determination, the ratio of (1) (a) Consolidated Total Indebtedness of such Person minus (b) the amount of Unrestricted Cash of such Person and its Restricted Subsidiaries, in each case as of the date of determination to (2) Consolidated Cash Flow of such

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Person for the most recently ended four full fiscal quarters, in each case with such pro forma adjustments to Consolidated Total Indebtedness and Consolidated Cash Flow as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Consolidated Interest Coverage Ratio; provided, however, that in calculating the Consolidated Cash Flow of ParentUDW for purposes of this Consolidated Net Leverage Ratio, ParentUDW shall be permitted to include or add back (without duplication) the Consolidated Cash Flow for each of the four full fiscal quarters (and, when applicable, partial fiscal quarter) ended immediately prior to the date of determination that is attributable to the assets transferred during the applicable period to Non-DOV MLP Entities and that would otherwise be excluded from Consolidated Cash Flow as a result of such Non-DOV MLP Asset Transfers (or as a result of the applicable Non-DOV MLP Entities being Unrestricted Subsidiaries); provided, further, however, that (i) the percentage of such Consolidated Cash Flow included or added back pursuant to the foregoing proviso shall not exceed the percentage of economic interest in such transferred assets held directly or indirectly by ParentUDW and its Restricted Subsidiaries after giving effect to such Non-DOV MLP Asset Transfer (and related transactions) and (ii) such Consolidated Cash Flow included or added back pursuant to the foregoing proviso shall only be included or added back if the applicable Non-DOV MLP Entities meet the requirements of clause (4) in the definition of Non-DOV Qualified MLP Asset Transfer.

"Consolidated Total Indebtedness" shall mean, with respect to any Person as of any date of determination, the sum, without duplication, of:

(1)            the total amount of Indebtedness (other than Hedging Obligations) of such Person and its Restricted Subsidiaries; plus 

(2)            the aggregate liquidation value of all Disqualified Stock of such Person and all Preferred Stock of the Restricted Subsidiaries of such Person, in each case, determined on a consolidated basis in accordance with GAAP.

For the avoidance of doubt, Consolidated Total Indebtedness shall be calculated on a pro forma basis to exclude any Indebtedness which is redeemable pursuant to its terms and which has been unconditionally called for redemption (or otherwise defeased or satisfied and discharged pursuant to its terms) with a scheduled redemption date within 180 days of the date of determination.

"Consolidated Total Leverage Ratio" shall mean, with respect to any Person, as of any date of determination, the ratio of (1) Consolidated Total Indebtedness of such Person as of the date of determination to (2) Consolidated Cash Flow of such Person for the most recently ended four full fiscal quarters, in each case with such pro forma adjustments to Consolidated Total Indebtedness and Consolidated Cash Flow as are appropriate and consistent with the pro forma adjustment provisions set forth in the definition of Consolidated Interest Coverage Ratio.

"Contracted Drilling Equipment Value" shall mean the aggregate contract price for the acquisition of all uncompleted Drilling Equipment (with the contract price of each uncompleted Drilling Equipment as determined on the date on which the agreement for construction of such Drilling Equipment was entered into by the Parent or the applicable Restricted Subsidiary), plus any Ready for Sea Cost of such Drilling Equipment.

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"Contracted Vessel" shall mean a Vessel for which Parent or a Restricted Subsidiary has entered into a contract for the construction or acquisition of such Vessel but which has not yet been delivered or acquired and which Vessel will constitute a Qualified Vessel upon completion and delivery, as determined in good faith by a Financial Officer.

"Conversion," "Convert" and "Converted" each refer to a conversion of Loans of one Type into Loans of the other Type pursuant to Section 2.07.

"Credit Facilities" shall mean one or more debt facilities or agreements (including loan agreements and indentures) or commercial paper facilities of the Parent or any Restricted Subsidiary with banks, other institutional lenders, commercial finance companies or other lenders or investors providing for revolving credit loans, Capital Lease Obligations, term loans, bonds, debentures or letters of credit, pursuant to agreements or indentures, in each case, as amended, restated, modified, renewed, refunded, replaced, increased or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time (and without limitation as to amount, terms, conditions, covenants and other provisions, including increasing the amount of available borrowings thereunder, changing or replacing agent banks and lenders thereunder or adding, removing or reclassifying Subsidiaries of the Parent as borrowers, issuers or guarantors thereunder).

"Creditor" shall have the meaning provided in Section 9.12.

"Custodian" shall mean any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law.

"Debt Fund Affiliate" shall mean any Affiliate of a competitor of the Parent that is a bona fide debt fund or an investment vehicle that is primarily engaged in or advises debt funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course and with respect to which Affiliates of competitors of the Parent and investment vehicles managed or advised by such Affiliates that are not engaged primarily in making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit in the ordinary course of business do not make the investment decisions for such entity.

"Default" shall mean any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

"Defaulting Creditor" shall have the meaning provided in Section 8.03(d).

"Defaulting Lender" shall mean, subject to Section 2.16(b), any Lender, as reasonably determined by the Administrative Agent, that (a) has failed to (i) fund any portion of its Loans required to be funded by it hereunder within two Business Days of the date required to be funded by it hereunder unless such Lender notifies the Administrative Agent and the Borrowers in writing that such failure is the result of such Lender's determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two Business Days of the date when due, (b) has notified the Administrative

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Agent, any Lender, the Borrowers, or any of them, in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to that effect (unless such writing or public statement relates to such Lender's obligation to fund a Loan hereunder and states that such position is based on such Lender's determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after request by the Administrative Agent or Borrowers, to confirm that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrowers), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Bankruptcy Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.21(b)) upon delivery of written notice of such determination to the Borrowers and each Lender.

"Disqualified Stock" shall mean any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of such Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable (in each case other than in exchange for or conversion into Capital Stock that is not Disqualified Stock) at the option of the holder of such Capital Stock, in whole or in part, on or prior to the date that is 91 days after the Term Maturity Date (as such date is set forth on the date of any determination). Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of such Capital Stock have the right to require the Parent or the Borrower, as applicable, to repurchase or redeem such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Parent or the Borrower, as applicable, may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 7.15. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Agreement will be the maximum amount that the Parent and the Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock.

"Dollar Equivalent" shall mean, with respect to any monetary amount in a currency other than Dollars, at any time of determination thereof, the amount of Dollars obtained by converting such other currency involved in such computation into Dollars at the spot rate for

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the purchase of Dollars with such other currency as published in the Financial Times in the section entitled "Currencies, Bonds & Interest Rates" (or, if the Financial Times is no longer published, or if such information is no longer available in the Financial Times, such source as may be selected in good faith by the Borrower) on the date of such determination. Except as expressly provided otherwise, whenever it is necessary to determine whether the Parent or any of the Restricted Subsidiaries has complied with any covenant or other provision in this Agreement or if there has occurred an Event of Default and an amount is expressed in a currency other than Dollars, such amount will be treated as the Dollar Equivalent determined as of the date such amount is initially determined in such non-dollar currency.

"Dollars" and the sign "$" shall each mean lawful money of the United States.

"DOV MLP" shall mean a limited partnership, limited liability company or other business entity to be formed in connection with the DOV MLP Formation Transactions.

"DOV MLP Entities" shall mean the DOV MLP and its direct and indirect Subsidiaries and other Persons, which may include Subsidiaries of ParentUDW (including Unrestricted Subsidiaries, if applicable), reasonably related to the formation, operation or governance of the DOV MLP.

"DOV MLP Formation Transactions" shall mean the transactions in connection with the initial creation and capitalization of the DOV MLP prior to, concurrent with or otherwise in connection with a Qualified DOV MLP IPO, including (i) the legal formation of the DOV MLP, the DOV MLP's general partner or managing member, the DOV MLP's direct and indirect Subsidiaries (including any Successor Borrower and successor Finco) and other DOV MLP Entities and Persons reasonably related to the formation, operation or governance of the DOV MLP, (ii) the acquisition, from time to time, directly or indirectly, by the DOV MLP or DOV MLP Entities, whether through a sale, conveyance or other disposition, including any conveyance by means of a contribution, transfer, merger, consolidation or similar transaction, of Equity Interests of, or assets of (which initially shall include, among other assets, the Ocean Rig Mylos, the Ocean Rig Skyros, the Ocean Rig Athena and Related Assets), any Person, including a Restricted Subsidiary (or a successor thereto), or the conversion of any Person, including a Restricted Subsidiary (or a successor thereto), into a limited partnership, limited liability company or other non-corporate Person in accordance with applicable law, (iii) any distributions, payments or other transfers to ParentUDW, the Borrower or any of their Subsidiaries of any portion of the actual or anticipated gross proceeds of a Qualified DOV MLP IPO, (iv) any transactions or other arrangements (including tax sharing arrangements) directly related to the Qualified DOV MLP IPO and customary for such transactions (including, for the avoidance of doubt, the exercise of the underwriter's over-allotment option to purchase Equity Interests and transactions related thereto) and (v) any transaction, from time to time, reasonably related thereto that has been determined in good faith by the Board of Directors of ParentUDW not to have a material adverse effect on the Lenders in their capacity as such. The consummation of a Permitted DOV Equity Sale Transaction shall be deemed to constitute a DOV MLP Formation Transaction for purposes of this Agreement.

"DRH Existing Notes" shall mean the 6.5% Senior Secured Notes due 2017 issued by Drill Rigs Holdings Inc. under the DRH Existing Notes Indenture.

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 "DRH Existing Notes Indenture" shall mean the Indenture dated as of September 20, 2012, among Drill Rigs Holdings Inc., the Parent, each of the other guarantors party thereto, U.S. Bank National Association, as trustee and Deutsche Bank Trust Company Americas, as noteholder collateral agent, registrar and paying agent.

"DRH Existing Notes Issuer" shall mean the "Issuer" (as defined in the DRH Existing Notes Indenture) of the DRH Existing Notes, as the same may be amended from time to time.

"DRH Issuer Subsidiary" shall mean, during such time as the DRH Existing Notes are outstanding, any "Subsidiary" (as defined in the DRH Existing Notes Indenture) of the DRH Existing Notes Issuer.

"DRH Unrestricted Subsidiary" shall mean a DRH Issuer Subsidiary that has been properly designated as an "Unrestricted Subsidiary" (as defined in the DRH Existing Notes Indenture) under the DRH Existing Notes Indenture.

"Drilling Equipment" shall mean one or more drilling rigs or drillships or other Vessels, together with all related spares, equipment and any additions or improvements.

"Drillships Financing" shall mean Drillships Financing Holding Inc., a Marshall Islands corporation and, as of the date of this Agreement, a wholly-owned Subsidiary of ParentUDW.

"Drillships Financing Term Loan Agreement" shall mean that certain Credit Agreement, dated as of July 12, 2013, as amended and restated on February 7, 2014, among Drillships Financing, Drillships Projects Inc., Ocean Rig UDW, the lenders from time to time party thereto and Deutsche Bank AG New York Branch, in its capacity as the administrative agent and the collateral agent, as amended, restated, modified, renewed, refunded, replaced or refinanced, from time to time, including to increase the amount permitted to be borrowed thereunder or to add or change agents or lenders.

"Drydock, Shipyard Stay and Special Survey Amortization Expense" shall mean, for any period, the amortized amount of all drydock, shipyard stay and special survey expenses in respect of Vessels of the Parent and the Restricted Subsidiaries for such period. Drydock, Shipyard Stay and Special Survey Amortization Expense with respect to any Vessel of the Parent or any Restricted Subsidiary will be amortized over a period commencing with the fiscal quarter in which any such expense is incurred and ending with the fiscal quarter in which the next drydock, shipyard stay or special survey, as applicable, with respect to such Vessel is scheduled to occur.

"Earnings" shall mean (i) all freight, hire and passage moneys payable to the Parent or any of its Subsidiaries as a consequence of the operation of a Vessel owned by the Parent or any of its Subsidiaries, including without limitation payments of any nature under any charterparty, pool agreement, drilling contract or other contract for use of such Vessel, (ii) any claim under any guarantee in respect of any charterparty, pool agreement, drilling contract or other contract for use of a Vessel owned by the Parent or any of its Subsidiaries or otherwise related to freight, hire or passage moneys payable to the Parent or any of its Subsidiaries as a

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consequence of the operation of any of the Vessels owned by the Parent or any of its Subsidiaries; (iii) compensation payable to the Parent or any of its Subsidiaries in the event of any requisition of any of the Vessels owned by the Parent or any of its Subsidiaries; remuneration for salvage, towage and other services performed by any of the Vessels owned by the Parent or any of its Subsidiaries and payable to the Parent or any of its Subsidiaries; demurrage and retention money receivable by the Parent or any of its Subsidiaries in relation to any of the Vessels owned by the Parent or any of its Subsidiaries; (vi) all moneys which are at any time payable under the insurances in respect of loss of Earnings; (vii) if and whenever any Vessel owned by the Parent or any of its Subsidiaries is employed on terms whereby any moneys falling within clauses (i) through (vi) above are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the relevant Vessel; and (viii) other money whatsoever due or to become due to any of the Parent or any of its Subsidiaries in relation to any of the Vessels owned by the Parent or any of its Subsidiaries.

"Earnings Accounts" shall mean any interest bearing account into which all Earnings derived from each Collateral Vessel Contract (other than any such Earnings payable to a Local Content Subsidiary) shall be deposited or forwarded that is subject to an account control agreement (or other comparable arrangements under U.K. laws or other laws acceptable to the Pari Passu Collateral Agent), except to the extent prohibited by applicable law.

"Earnings Assignment" shall mean, collectively, the first-priority assignments of Earnings in favor of the Pari Passu Collateral Agent given by the Borrower and the applicable Guarantor in respect of all Earnings derived from the Collateral Vessels and their respective operations, substantially in the form of Exhibit E hereto as the same may be amended, supplemented or modified from time to time.

"Effective Date" shall have the meaning provided in the first paragraph of Section 5.01.

"Eligible Transferee" shall mean and include a commercial bank, an insurance company, a finance company, a financial institution, any fund that invests in loans or any other "accredited investor" (as defined in Regulation D of the Securities Act); provided that none of the Parent or its Subsidiaries shall be an Eligible Transferee other than in connection with an assignment to a Borrower in accordance with the terms and subject to the conditions set forth in Section 2.13; provided further that no competitor of the Parent, or any Affiliate of a competitor of the Parent that controls such competitor (other than a Debt Fund Affiliate), shall be an Eligible Transferee.

"Eligible Purchaser" shall have the meaning provided in Section 8.03(a).

"Environmental Claims" shall mean any and all administrative, regulatory or judicial actions, suits, demands, demand letters, directives, claims, Liens, notices of noncompliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereafter, "Claims"), including (a) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response or remedial actions or damages pursuant to any

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Environmental Law, and (b) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief arising out of alleged injury or threat of injury to health, safety or the environment to the extent due to the Release of or exposure to Hazardous Materials.

"Environmental Law" shall mean any applicable federal, state, foreign, national, international or local statute, law, treaty, rule, regulation, ordinance, code, convention legally binding and enforceable guideline or written policy and rule of common law now or hereafter in effect and in each case as amended, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment relating to the pollution, the environment, natural resources, or health and safety, including CERCLA; OPA; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Hazardous Material Transportation Act, 49 U.S.C. § 1801 et seq.; the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. (to the extent it regulates occupational exposure to Hazardous Materials); and any state and local or foreign counterparts or equivalents, in each case as amended from time to time.

"Environmental Liability" shall mean any liability, obligation, loss, claim, action, order, fine, penalty or cost, contingent or otherwise (including natural resource damages, costs of environmental remediation and indemnities), resulting from, arising out of or based upon (a) non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

"Equity Interests" shall mean Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security or loan that is convertible into, or exchangeable for, Capital Stock).

"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA, as in effect at the Effective Date and any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor.

"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of ERISA) which together with the Borrowers or a domestic Subsidiary of the Borrowers would be deemed to be a "single employer" within the meaning of Section 414(b), (c), (m) or (o) of the Code or any substantially similar provision of foreign law.

"ERISA Event" shall mean (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) a failure by any Plan to satisfy the minimum funding standards (as defined in Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each instance, whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) a determination that any Plan is, or is expected to be, in "at-risk" status (as defined in Section 430(i)(4) of the Code or Section 303(i)(4) of ERISA);

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(e) the incurrence by the Borrower, the Parent (but only prior to the consummation of a Qualified DOV MLP IPO) or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan; (f) the receipt by the Borrower, the Parent (but only prior to the consummation of a Qualified DOV MLP IPO) or any ERISA Affiliate from the PBGC or a Plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan; (g) the incurrence by the Borrower, the Parent (but only prior to the consummation of a Qualified DOV MLP IPO) or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; (h) the receipt by the Borrower, the Parent (but only prior to the consummation of a Qualified DOV MLP IPO) or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower, the Parent (but only prior to the consummation of a Qualified DOV MLP IPO) or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA or in "endangered" or "critical" status, within the meaning of Section 432 of the Code or Section 305 of ERISA; or (i) the occurrence of any event or condition with respect to any Foreign Pension Plan that, under any applicable foreign law, is substantially similar to any of subsections (a) through (h) hereof.

"Eurodollar Rate" shall mean with respect to each Interest Period for any Eurodollar Rate Loan, a rate of interest per annum equal to the higher of (a) the offered rate (rounded upward to the nearest 1/16 of one percent) for deposits of Dollars for a period equivalent to such period at or about 11:00 A.M. (London time) on the Interest Determination Date for such Interest Period as is displayed on Reuters Screen LIBOR01 Page (or on any successor or substitute page on such screen), provided that if on such Interest Determination Date no such rate is so displayed, the Eurodollar Rate for such period shall be determined by reference to such other comparable publicly available service for displaying interest rates applicable to dollar deposits in the London interbank market as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at or about 11:00 A.M. (London Time) on the Interest Determination Date for such Interest Period, in each case divided (and rounded upward to the nearest 1/16 of 1%) by a percentage equal to 100% minus the then stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves required by applicable law) applicable to any member bank of the Federal Reserve System in respect of Eurocurrency funding or liabilities as defined in Regulation D (or any successor category of liabilities under Regulation D), and (b) solely in the case of Term Loans, 1.00%.

"Eurodollar Rate Loan" shall mean a Loan that bears interest as provided in Section 2.06(a)(ii).

"Event of Default" shall have the meaning provided in Section 8.

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"Event of Loss" shall mean any of the following events:

(a)            the actual or constructive total loss of a Collateral Vessel or the agreed or compromised total loss of a Collateral Vessel;

(b)            the destruction of a Collateral Vessel;

(c)            damage to a Collateral Vessel to an extent, determined in good faith by a Financial Officer within 90 days after the occurrence of such damage, as shall make repair thereof uneconomical or shall render such Collateral Vessel permanently unfit for normal use (other than obsolescence); or

(d)            the condemnation, confiscation, requisition for title, seizure, forfeiture or other taking of title to or use of a Collateral Vessel that shall not be revoked within six months.

An Event of Loss shall be deemed to have occurred:

(i)            in the event of the destruction or other actual total loss of a Collateral Vessel, on the date of such loss, or if such date is unknown, on the date such Collateral Vessel was last reported;

(ii)            in the event of a constructive, agreed or compromised total loss of a Collateral Vessel, on the date of determination of such total loss;

(iii)            in the case of any event referred to in clause (c) above, upon the date of determination; or

(iv)            in the case of any event referred to in clause (d) above, on the date that is six months after the occurrence of such event.

"Event of Loss Offer" has the meaning set forth in Section 4.02(d).

"Event of Loss Proceeds" shall mean all compensation, damages and other payments (including insurance proceeds), net of any taxes or fees and expenses required to be paid in connection with the applicable Event of Loss, received by the Parent, the Borrower or a Subsidiary of either of the Parent or the Borrower, or the Pari Passu Collateral Agent, from any Person, including any governmental authority, with respect to or in connection with an Event of Loss.

"Excess Loss Proceeds" has the meaning provided in Section 4.02(d).

"Excess Non-Collateral Vessel Proceeds" shall mean the lesser of (A) (1) 25% multiplied by (2) the excess of the Net Proceeds from a Non-Collateral Vessel Sale over the amount, if any, of such Net Proceeds included in ParentUDW's Consolidated Net Income and (B) (1) any Net Proceeds from a Non-Collateral Vessel Sale less (2) the amount of such Net Proceeds included in ParentUDW's Consolidated Net Income less (3) Indebtedness required to be purchased, repaid or prepaid as set forth in clauses (z)(i) and (z)(ii) of the proviso to Section 7.22(III).

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"Excess Proceeds" shall have the meaning set forth in Section 7.22(V).

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder.

"Excluded Property" shall mean the following, whether now owned or at any time hereafter acquired by the Borrower or any Borrower Subsidiary Guarantor or in which the Borrower or any such Borrower Subsidiary Guarantor now has or at any time in the future may acquire any right, title or interest and whether now existing or hereafter coming into existence: (i) all leasehold real property and all fee simple real property; (ii) all Collateral Vessel Contracts; (iii) equipment or inventory; (iv) any general intangibles, governmental approvals or other rights arising under any contracts, instruments, permits, licenses or other documents if (but only to the extent that) the grant of a security interest therein would constitute a breach of a valid and enforceable restriction on the granting of a security interest therein or assignment thereof in favor of a third party (other than (A) to the extent that any such restriction or prohibition would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) or any other applicable law (including bankruptcy law) or principles of equity, (B) to the extent that the other party has consented to the granting of a security interest therein or assignment thereof pursuant to the terms hereof or pursuant to a grant or assignment for security purposes generally or (C) proceeds and receivables thereof, the assignment of which is expressly deemed effective under the UCC or other applicable law notwithstanding any such prohibition); (v) all deposit accounts other than Earnings Accounts; (vi) cash and Cash Equivalents securing letters of credit, bank guarantees or similar instruments to the extent any Lien thereon constitutes a Permitted Lien; (vii) any and all proceeds of any of the Excluded Property to the extent constituting Excluded Property described in clauses (i) through (vi) above (other than proceeds of a Collateral Vessel Contract assigned pursuant to an Earnings Assignment). For the avoidance of doubt, the term Excluded Property shall include the assets of the Angolan and Brazilian Local Content Subsidiaries.

"Excluded Swap Guarantor" shall mean ParentUDW or any other Guarantor all or a portion of whose Loan Guarantee of, or grant of a security interest to secure, any Swap Obligation (or any Loan Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof).

"Excluded Swap Obligations" shall mean, with respect to ParentUDW or any other Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Loan Guarantee of ParentUDW or such Guarantor of, or the grant by ParentUDW or such other Guarantor of a security interest to secure, such Swap Obligation (or any Loan Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof). If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Loan Guarantee or security interest is or becomes illegal.

"Excluded Taxes" shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient,

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(a) Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, a resident for tax purposes in by reason of maintaining a fixed place of business in, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. Federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrowers under Section 2.11) or (ii) such Lender changes its lending office (other than pursuant to Section 2.10), except in each case to the extent that, pursuant to Section 4.08, amounts with respect to such Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient's failure to comply with Section 4.08(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.

"Existing Indebtedness" shall mean Indebtedness of ParentUDW and its Subsidiaries in existence on the Effective Date (other than Indebtedness under this Agreement), after giving effect to use of proceeds of the borrowing of the Term Loans and the Revolving Loans (if any) under this Agreement and the repayment of all the Indebtedness outstanding under the Ventures Facilities Agreement on (or substantially concurrently with) the Effective Date; provided that, following the consummation of a Qualified DOV MLP IPO, "Existing Indebtedness" shall mean only such Existing Indebtedness that was, on the Effective Date, Indebtedness of the Borrower and its Subsidiaries.

"Existing Commitment" shall have the meaning provided in Section 2.14(a). 

 

"Existing Loans" shall have the meaning provided in Section 2.14(a). 

 

"Extended Commitments" shall have the meaning provided in Section 2.14(a). 

 

"Extended Loans" shall have the meaning provided in Section 2.14(a). 

 

"Extending Lender" shall have the meaning provided in Section 2.14(b). 

 

"Extension Amendment" shall have the meaning provided in Section 2.14(c). 

 

"Extension Date" shall have the meaning provided in Section 2.14(d). 

 

"Extension Election" shall have the meaning provided in Section 2.14(b). 

 

"Extension Request" shall have the meaning provided in Section 2.14(a).

"Extension Series" shall mean all Extended Loans that are established pursuant to the same Extension Amendment (or any subsequent Extension Amendment to the extent such Extension Amendment expressly provides that the Extended Loans provided for therein are intended to be a part of any previously established Extension Series) and that provide for the same interest margins, extension fees, maturity and other terms.

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"Fair Market Value" shall mean the value that would be paid by an informed and willing buyer to an unaffiliated, informed and willing seller in a transaction not involving distress or necessity of either party, as determined in good faith by the Board of Directors of the Parent (unless otherwise provided in this Agreement).

"FATCA" shall mean Sections 1471 through 1474 of the Code, as of the Effective Date, any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreements pursuant to Sections 1471 through 1474 of the Code entered into by the United States as of the Effective Date.

"FCPA" shall mean the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.

"Federal Funds Rate" shall mean, for any period, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal Funds brokers of recognized standing selected by the Administrative Agent.

"Fee Letters" shall mean (a) that certain Arranger Fee Letter dated as of July 8, 2014, by and among the Arrangers and ParentUDW, as amended by that certain Supplement dated July 25, 2014, (b) that certain Agency Fee Letter dated as of July 8, 2014 between the Administrative Agent and ParentUDW and (c) to the extent such document relates to the fees of the Pari Passu Collateral Agent and its legal counsel, that certain Global Debt Services Fee Proposal dated as of June 23, 2014, as accepted by ParentUDW on June 26, 2014.

"Fees" shall mean all amounts payable pursuant to or referred to in Section 3.01 (including any Commitment Fee).

"Financial Officer" shall mean the chief executive officer, president, chief financial officer, chief accounting officer, executive vice president, vice president of accounting or treasurer of, prior to the consummation of a Qualified DOV MLP IPO, ParentUDW, and after the consummation of a Qualified DOV MLP IPO, the Borrower.

"Finco" means Drillships Ventures Projects Inc., a Delaware corporation; provided that, in connection with the consummation of a Qualified DOV MLP IPO in which there is a successor Finco as provided under Section 7.14, references to "Finco" shall mean such successor Finco.

"Foreign Lender" shall mean a Lender that is not a U.S. Person.

"Foreign Pension Plan" shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States of America by the Borrower or any one or more of its Restricted Subsidiaries primarily for

29

the benefit of employees of the Borrowers or such Restricted Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made on termination of employment, and which plan is not subject to ERISA or the Code.

"GAAP" shall mean generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession in the United States, which were in effect on the Effective Date in the United States.

"Governmental Authority" shall mean the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

"Guarantee" shall mean a guarantee other than by endorsement of negotiable instrument for collection in the ordinary course of business, direct or indirect, in any manner, including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement obligations in respect thereof, of all or any part of any Indebtedness.

"Guarantee Agreement" shall mean that certain Guarantee Agreement dated as of the Effective Date among the Borrowers, the Guarantors party thereto, the Pari Passu Collateral Agent and the Administrative Agent, substantially in the form of Exhibit B hereto, as amended or supplemented from time to time in accordance with its terms.

"Guarantors" shall mean (a) prior to the consummation of a Qualified DOV MLP IPO, ParentUDW, each existing Subsidiary of the Borrower that (i) holds any Collateral Vessel,

(ii)    holds any Related Assets with respect to any Collateral Vessel or (iii) is party to a Collateral Vessel Contract (other than, in the case of clauses (ii) and (iii) and subject to the limitations provided in Section 7.21, a Local Content Subsidiary) and certain other Subsidiaries of ParentUDW that execute a Loan Guarantee in accordance with this Agreement and (b) following the consummation of a Qualified DOV MLP IPO, each existing Subsidiary of the Borrower that (i) holds any Collateral Vessel, (ii) holds any Related Assets with respect to any Collateral Vessel or (iii) is party to a Collateral Vessel Contract (other than, in the case of clauses (ii) and

(iii)        and subject to the limitations provided in Section 7.21, a Local Content Subsidiary) and certain other Subsidiaries of the Borrower that execute a Loan Guarantee in accordance with this Agreement, in each case, together with their respective successors and assigns, until the Loan Guarantee of such Person has been released in accordance with the provisions of this Agreement and the other Loan Documents.

"Hazardous Materials" shall mean (a) any petroleum or petroleum products, radioactive materials, asbestos in any form, ureaformaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing levels of polychlorinated biphenyls, and

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radon gas, (b) any chemicals, materials or substances regulated as "hazardous substances," "hazardous waste," "hazardous materials," "extremely hazardous substances," "restricted hazardous waste," "toxic substances," "toxic pollutants," "contaminants," or "pollutants," or words of similar import, under any Environmental Law, and (c) any other chemical, material or substance which is regulated under Environmental Laws.

"Hedging Obligations" shall mean, with respect to any specified Person, the obligations of such Person under:

(1)            interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

(2)            other agreements or arrangements designed to manage interest rates or interest rate risk; and

(3)            other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates or commodity prices (including prices of bunkers or lubricants) or freight rates.

Notwithstanding the foregoing, in the case of any Excluded Swap Guarantor, "Hedging Obligations" shall not include any Excluded Swap Obligations of such Excluded Swap Guarantor.

"Incremental Commitment Amount" shall mean, at any time of determination, $150,000,000 minus the aggregate principal amount of Other Term Loans made prior to such time.

"Incremental Lender" shall mean a Lender with an Incremental Commitment or

an outstanding Other Term Loan.

"Incremental Maturity Date" shall mean the final maturity date of any Other Term Loan, as set forth in the applicable Incremental Term Loan Amendment, which date shall be on or after the Term Maturity Date.

"Incremental Repayment Amount" shall have the meaning provided in Section 4.05(c).

"Incremental Repayment Dates" shall mean the dates scheduled for the repayment of principal of any Other Term Loan, as set forth in the applicable Incremental Term Loan Amendment.

"Incremental Revolving Credit Amendment" shall mean an Incremental Revolving Credit Amendment, in form and substance reasonably satisfactory to the Administrative Agent, among the Parent, the Borrowers, the Administrative Agent and one or more Revolving Lenders establishing a Class of Revolving Commitments hereunder.

"Incremental Term Loan Amendment" shall mean an Incremental Term Loan Amendment, in form and substance reasonably satisfactory to the Administrative Agent, among

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the Parent, the Borrowers, the Administrative Agent and one or more Incremental Lenders establishing a Class of Other Term Loans hereunder. "Incremental Commitment" shall mean the commitment of any Lender, established pursuant to Section 2.12, to make Other Term Loans to the Borrowers.

"Incur" shall have the meaning provided in Section 7.16(a).

"Indebtedness" shall mean, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether recourse is to all or a portion of the assets of such Person and whether or not contingent:

(1)            in respect of borrowed money;

(2)            evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

(3)            in respect of all reimbursement obligations of such Person in respect of letters of credit, bankers' acceptances or other similar instruments, other than such reimbursement obligations that relate to trade payables or other obligations that are not themselves Indebtedness, in each case, that were entered into in the ordinary course of business of such Person to the extent such reimbursement obligations are satisfied within 10 Business Days following payment on the letter of credit, bankers' acceptance or similar instrument;

(4)            representing Capital Lease Obligations of such Person;

(5)            representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed;

(6)            representing Hedging Obligations of such Person; or

(7)            representing Attributable Indebtedness,

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by the specified Person of any Indebtedness of any other Person.

"Indemnified Party" shall have the meaning provided in Section 10.01.

"Indemnified Taxes" shall mean (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

"Independent Assets or Operations" shall have the meaning provided in Section 7.05(II)(C).

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 "Insolvency or Liquidation Proceeding" shall mean: (a) any voluntary or involuntary case or proceeding under any bankruptcy law with respect to the Borrower, Finco or any Guarantor, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to the Borrower, Finco or any Guarantor or with respect to any of its assets, (c) any liquidation, dissolution, reorganization or winding up of the Borrower, Finco or any Guarantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy (other than any liquidation, dissolution, reorganization or winding up of any Subsidiary of the Borrower permitted by the Pari Passu Documents), (d) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of the Borrower, Finco or any Guarantor or (e) any other proceeding of any type or nature in which substantially all claims of creditors of the Borrower, Finco or any Guarantor are determined and any payment or distribution is or may be made on account of such claims.

"Insurance Assignment" shall mean, collectively, the first-priority assignments of insurance in favor of the Pari Passu Collateral Agent given by the Borrower and the applicable Guarantor in respect of all insurance covering the Collateral Vessels or their respective operations, substantially in the form of Exhibit D hereto as the same may be amended, supplemented or modified from time to time.

"Intercreditor Agreement" shall mean (i) the intercreditor agreement to be entered into among the Pari Passu Collateral Agent, the Administrative Agent, the holders (or their agent or other representative) of the Other Pari Passu Obligations, ParentUDW, the Borrowers, each other Guarantor and the other parties from time to time party thereto, substantially in the form of Exhibit L hereto, as it may be amended, restated, supplemented or otherwise modified from time to time in accordance with its terms and this Agreement and (ii) any replacement thereof that contains terms not materially less favorable to the Lenders than the Intercreditor Agreement referred to in clause (i) of this definition.

"Interest Determination Date" shall mean, with respect to any Eurodollar Rate Loan, the second Business Day prior to the commencement of any Interest Period relating to such Loan.

"Interest Period" shall mean, for each Eurodollar Rate Loan comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Loan or the date of the Conversion of any Base Rate Loan into such Eurodollar Rate Loan, and ending on the last day of the period selected by the Borrowers pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrowers pursuant to the provisions below. The duration of each such Interest Period shall be one-, two-, three- or six-months (or such other period that is twelve months or less, if requested by the Borrowers and consented to by the Administrative Agent and all the Lenders), as the Borrowers may, upon notice received by the Administrative Agent not later than 11:00 a.m. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:

(a)            if the Borrowers fail to select an Interest Period, then that Interest Period will be three months;

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(b)            all Eurodollar Rate Loans comprising a Borrowing shall at all times have the same Interest Period;

(c)            if any Interest Period for a Eurodollar Rate Loan begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of such calendar month;

(d)            if any Interest Period would otherwise expire on a day which is not a Business Day, such Interest Period shall expire on the first succeeding Business Day; provided, however, that if any Interest Period for a Loan would otherwise expire on a day which is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the immediately preceding Business Day;

(e)            no Interest Period in respect of any Borrowing of Loans shall be selected which extends beyond the Maturity Date of such Loan; and

(f)            the selection of Interest Periods shall be subject to the provisions of Section 2.06.

"Investment Grade Rating" shall mean ratings equal to or higher than both Baa3 (or equivalent) by Moody's and BBB- (or equivalent) by S&P.

"Investments" shall mean, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Parent or any of the Restricted Subsidiaries sells or otherwise disposes of any Equity Interests of any Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, the Parent will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Parent's Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in Section 7.15(IV). The acquisition by the Parent or any of the Restricted Subsidiaries of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Parent or such Restricted Subsidiary in such third Person that is not a Subsidiary of such Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in Section 7.15(IV). Except as otherwise provided in this Agreement, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value.

"Involuntary Transfer" shall mean, with respect to any property or asset of the Parent or any Restricted Subsidiary, (a) any damage to such asset that results in an insurance settlement with respect thereto on the basis of a total loss or a constructive or compromised total loss, (b) the confiscation, condemnation, requisition, appropriation or similar taking regarding such asset by any government or instrumentality or agency thereof, including by deed in lieu of

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condemnation, or (c) foreclosure or other enforcement of a Lien or the exercise by a holder of a Lien of any rights with respect to it.

"IRS" shall mean the United States Internal Revenue Service.

"Joint Bookrunners" shall mean Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, ABN AMRO Capital USA LLC and their respective successors.

"Joint Global Coordinators" shall mean Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC and their respective successors.

"Leaseholds" of any Person shall mean all the right, title and interest of such Person as lessee or licensee in, to and under leases or licenses of land, improvements and/or fixtures.

"Lender" shall mean each financial institution listed on Annex I, as well as any Person which becomes a "Lender" hereunder pursuant to Section 2.11 or 10.04(b) or pursuant to an Incremental Term Loan Amendment or an Incremental Revolving Credit Amendment.

"Lender Creditors" shall mean the Lenders holding from time to time outstanding Loans and/or Commitments, the Agents, the Pari Passu Collateral Agent and any Secured Non-Lender Hedge/Cash Management Providers, each in their respective capacities.

"Lien" shall mean with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in such asset and any filing of or agreement to give any financing statement under the UCC (or equivalent statutes) of any jurisdiction.

"Loan" shall mean the Term Loans and, unless the context shall otherwise require, any Other Term Loans.

"Loan Document Obligations" shall mean all advances to, and debts, liabilities, obligations, covenants, duties and indebtedness (including, without limitation, all principal, premium, interest, penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees and other liabilities or amounts payable or arising thereunder (including, without limitation, all interest that accrues after the commencement of any case, proceeding or other action relating to the bankruptcy, insolvency, reorganization or similar proceeding of any Loan Party at the rate provided for in the respective documentation, whether or not a claim for post-petition interest is allowed in any such proceeding)) of each Loan Party to the Lender Creditors, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter incurred under, arising out of, or in connection with this Agreement and the other Loan Documents to which such Loan Party is a party and the due performance and compliance by such Loan Party with all of the terms, conditions and agreements contained in this Agreement and in such other Loan Documents. Notwithstanding the foregoing, in the case of the Restricted Subsidiaries of ParentUDW, the Loan Document Obligations shall not include the Loan Document Obligations of ParentUDW.

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 "Loan Documents" shall mean this Agreement, each Extension Amendment, the Intercreditor Agreement, each Incremental Term Loan Amendment, each Incremental Revolving Credit Amendment, each Note, each Fee Letter, each Collateral Agreement, the Guarantee Agreement, and, after the execution and delivery thereof, each additional guarantee agreement or additional security document executed pursuant to Section 7.07 and any amendments and waivers to any of the foregoing.

"Loan Guarantees" shall mean, collectively, the guarantees of the Loan Document Obligations, the Secured Cash Management Obligations and the Secured Hedging Obligations made by each Guarantor of the Loan Document Obligations pursuant to the Guarantee Agreement.

"Loan Parties" shall mean, collectively, the Borrowers and each Guarantor.

"Local Content Subsidiary" shall mean any Subsidiary of ParentUDW that is a party to a Collateral Vessel Contract or otherwise holds the right to receive Earnings attributable to a Collateral Vessel or any Related Assets with respect to such Collateral Vessel for the purpose of satisfying any local content law, regulation or requirement or similar law, regulation or requirement.

"Lost Mortgaged Collateral Vessel" has the meaning provided in Section 4.02(a).

"Margin Regulations" shall mean Regulations U, T and X of the Board of Governors of the Federal Reserve System.

"Margin Stock" shall have the meaning provided in Regulation U.

"Market Disruption Event" shall occur if before close of business in New York on the Interest Determination Date for the relevant Interest Period, the Administrative Agent receives notifications from Lenders holding outstanding Loans at such time (but excluding any Loans purchased by the Borrowers pursuant to Section 2.13) equal to at least 66 2/3% of the outstanding amount of all Loans at such time that (a) the cost to such Lenders of obtaining matching deposits in the London interbank Eurodollar market for the relevant Interest Period would be in excess of the Eurodollar Rate for such Interest Period or (b) such Lenders are unable to obtain funding in the London interbank Eurodollar market.

"Material Adverse Effect" shall mean (a) a material adverse effect on the operations, business, properties, or financial condition of the Parent and its Restricted Subsidiaries, taken as a whole, (b) a material impairment of the rights and remedies of the Pari Passu Collateral Agent, the Administrative Agent or any Lender under any Loan Document, or of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

"Maturity Date" shall mean the Term Maturity Date, the Revolving Maturity Date, the Incremental Maturity Date or any maturity date related to any Extension Series of Extended Loans, as applicable.

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"MD&A" shall have the meaning provided for in Section 7.05.

"Moody's" shall mean Moody's Investors Service, Inc., or any successor to the rating agency business thereof.

"Mortgage" shall mean each Ship Mortgage, each other mortgage, deed of trust, deed to secure debt and any other document or instrument under which any Lien on property owned or leased by the Borrower or any Guarantor is granted to secure the Secured Obligations or under which rights or remedies with respect to any such Liens are governed, as the same may be amended, supplemented or modified from time to time. Notwithstanding the foregoing, no Mortgage granted by the Borrower or any Guarantor (other than the Parent) shall secure the Secured Obligations of the Parent.

"Multiemployer Plan" shall mean any "multiemployer plan" as defined in Section 3(37) or Section 4001(a)(3) of ERISA or any Foreign Pension Plan subject to substantially similar provisions of non-U.S. law.

"Net Income" shall mean, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: (1) any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with (a) any Asset Sale or other asset dispositions (other than in the ordinary course of business) or (b) the disposition of any securities by such Person, the Borrower or any of the Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss.

Notwithstanding the foregoing, the calculation of Net Income for any period during which a Qualified DOV MLP IPO is consummated shall be calculated solely with respect to the Borrower and its Restricted Subsidiaries and shall be calculated on a pro forma basis after giving effect to such Qualified DOV MLP IPO as if it had occurred on the first day of such period.

"Net Proceeds" shall mean the aggregate cash proceeds and Cash Equivalents received by the Parent or any of the Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of (1) the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, sales commissions, relocation expenses Incurred as a result of such Asset Sale, and taxes paid or payable as a result of such Asset Sale after taking into account any available tax credits or deductions and any tax-sharing arrangements, and (2) any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP.

"Net Tangible Assets" shall mean, as of any date, total assets, less goodwill and other intangible assets and liabilities, in each case as shown on the most recent consolidated balance sheet of the Parent and its Restricted Subsidiaries prepared in accordance with GAAP for

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which internal financial statements are available immediately preceding the date on which any calculation of Net Tangible Assets is being made.

"Non-Collateral Vessel Sale" shall have the meaning provided in Section 7.22(III).

"Non-DOV MLP" shall mean a limited partnership, limited liability company or other business entity formed as part of Non-DOV MLP Formation Transactions in order to undertake a Non-DOV Qualified MLP IPO intended to acquire, from time to time, directly or indirectly, Equity Interests of, or assets of, any Person, including a Restricted Subsidiary (or a successor thereto) but excluding the Borrowers (or a Successor Borrower) and its Subsidiaries, as part of Non-DOV MLP Formation Transactions.

"Non-DOV MLP Asset Transfer" shall mean, prior to the consummation of a Qualified DOV MLP IPO, the initial transfer of assets by ParentUDW or any Restricted Subsidiary (which may include Equity Interests) other than the Borrower and its Subsidiaries (or any of their respective assets), to a Non-DOV MLP or other Non-DOV MLP Entities in connection with Non-DOV MLP Formation Transactions and any subsequent transfer of assets (which may include Equity Interests) other than the Borrower and its Subsidiaries (or any of their respective assets) to such Non-DOV MLP or other Non-DOV MLP Entities.

"Non-DOV MLP Entities" shall mean the Non-DOV MLP and its direct and indirect Subsidiaries and other Persons, which may include Subsidiaries of ParentUDW (including Unrestricted Subsidiaries) other than the Borrower and its Subsidiaries, reasonably related to the formation, operation or governance of the Non-DOV MLP.

"Non-DOV MLP Formation Transactions" shall mean, prior to the consummation of a Qualified DOV MLP IPO, the transactions in connection with the initial creation and capitalization of a Non-DOV MLP prior to, concurrent with or otherwise in connection with a Non-DOV Qualified MLP IPO, including (i) the legal formation of the Non-DOV MLP, the Non-DOV MLP's general partner or managing member, the Non-DOV MLP's direct and indirect Subsidiaries and other Non-DOV MLP Entities and Persons reasonably related to the formation, operation or governance of the Non-DOV MLP, (ii) the acquisition, from time to time, directly or indirectly, by the Non-DOV MLP or Non-DOV MLP Entities, whether through a sale, conveyance or other disposition, including any conveyance by means of a contribution, transfer, merger, consolidation or similar transaction, of Equity Interests of, or assets of (other than the Ocean Rig Mylos, the Ocean Rig Skyros, the Ocean Rig Athena and Related Assets), any Person, including a Restricted Subsidiary (or a successor thereto) other than the Borrower and its Subsidiaries, or the conversion of any Person, including a Restricted Subsidiary (or a successor thereto) other than the Borrower and its Subsidiaries, into a limited partnership, limited liability company or other non-corporate Person in accordance with applicable law, (iii) any distributions, payments or other transfers to ParentUDW, the Borrower or any of their Subsidiaries of any portion of the actual or anticipated gross proceeds of a Non-DOV Qualified MLP IPO, (iv) any transactions or other arrangements (including tax sharing arrangements) directly related to the Non-DOV Qualified MLP IPO and customary for such transactions (including, for the avoidance of doubt, the exercise of the underwriter's over-allotment option to purchase Equity Interests and transactions related thereto) and (v) any transaction, from time to time, reasonably related thereto

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that has been determined in good faith by the Board of Directors of ParentUDW not to have a material adverse effect on the holders of the notes.

"Non-DOV Qualified MLP Asset Transfer" shall mean a Non-DOV MLP Asset Transfer that is consummated prior to the consummation of a Qualified DOV MLP IPO and that satisfies each of the following five conditions:

(1)            ParentUDW or the Restricted Subsidiary, as the case may be, receives consideration at the time of the Non-DOV MLP Asset Transfer at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of;

(2)            after giving effect to the Non-DOV MLP Asset Transfer, including the application of proceeds therefrom, the Consolidated Net Leverage Ratio of ParentUDW shall not exceed 5.5 to 1.0;

(3)            immediately after giving effect to the Non-DOV MLP Asset Transfer, ParentUDW shall, directly or indirectly, control the general partner, managing member or similar controlling Person of the Non-DOV MLP that directly or indirectly receives the assets or Equity Interests issued or sold or otherwise disposed of in respect of the Non-DOV MLP Asset Transfer;

(4)            the Non-DOV MLP and other Non-DOV MLP Entities (that receive, directly or indirectly, the assets or Equity Interests issued, sold or otherwise disposed of in the Non-DOV MLP Asset Transfer) shall have been structured to provide for reasonably customary master limited partnership related distributions to ParentUDW or a Restricted Subsidiary to the extent of and pursuant to the terms of their Equity Interests in such Non-DOV MLP Entities (or if such distributions will be made initially to an Unrestricted Subsidiary, such Unrestricted Subsidiary shall be subject to a contractual or other arrangement that requires such Unrestricted Subsidiary to make reasonably regular distributions of such amounts to ParentUDW or a Restricted Subsidiary), in either case, without duplication, in proportion to the economic ownership of ParentUDW in such Non-DOV MLP Entities and in all cases subject to and in accordance with (including any subordination on the right to receive distributions and other limitations in) the organizational or other relevant governing documents of such relevant Non-DOV MLP Entities; and

(5)            immediately before and after giving effect to the Non-DOV MLP Asset Transfer, no Default or Event of Default under any instrument governing Indebtedness of ParentUDW, the Borrower or any of its Restricted Subsidiaries shall have occurred or be continuing.

"Non-DOV Qualified MLP IPO" shall mean, in connection with a Non-DOV MLP Formation Transaction, an initial offer and sale of common units of the Non-DOV MLP in an underwritten public offering for cash pursuant to a registration statement that has been declared effective by the SEC pursuant to the Securities Act (other than a registration statement on Form S-4, Form F-4 and Form S-8 or otherwise relating to Equity Interests of the Non-DOV MLP issuable under any employee benefit plan).

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"Non-Recourse Debt" shall mean Indebtedness:

(1)            as to which neither the Parent nor any of the Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable as a guarantor or otherwise;

(2)            no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Parent or any of the Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and

(3)            as to which the lenders have been notified in writing, or the governing documentation provides that the lenders will not have any recourse to the stock or assets of the Parent or any of the Restricted Subsidiaries.

"Note" shall have the meaning provided in Section 2.04.

"Notice of Borrowing" shall have the meaning provided in Section 2.02(a).

"Notice Office" shall mean the office of the Administrative Agent located at 60 Wall Street, 2nd Floor, New York, New York 10005, Attn: Agency Transactions, (646) 461­8448, or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

"Ocean Rig UDW" shall mean Ocean Rig UDW Inc., a Marshall Islands corporation.

"Ocean Rig UDW Existing Notes" shall mean the 7.25% Senior Notes due 2019 issued by ParentUDW under the Ocean Rig UDW Existing Notes Indenture.

"Ocean Rig UDW Existing Notes Indenture" shall mean the Indenture dated as of March 26, 2014, among ParentUDW, each of the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee.

"Officer's Certificate" shall mean a certificate signed on behalf of any Person by an officer, whom must be the Chief Executive Officer, the Chief Financial Officer, President, Executive Vice President, Vice President or Treasurer or another executive officer or another Person serving in a similar function of such Person.

"OPA" shall mean the Oil Pollution Act of 1990, as amended, 33 U.S.C. § 2701 et seq.

"Other Agents" shall have the meaning provided in Section 9.11

"Other Connection Taxes" shall mean, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

 

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"Other Pari Passu Obligations" shall mean Indebtedness of the Borrowers or the Borrower Subsidiary Guarantors that is equally and ratably secured with the other Pari Passu Obligations (subject to the Intercreditor Agreement) as permitted by the Pari Passu Documents and is designated by the Borrower as an "Other Pari Passu Obligation" pursuant to the Intercreditor Agreement; provided that the trustee, agent or representative of the holders or lenders of such Indebtedness shall have become a party to the Intercreditor Agreement (either directly or by joinder thereto) on behalf of such holders or lenders.

"Other Taxes" shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, other than any such Taxes that are Other Connection Taxes imposed with respect to a Lender's assignment of all or a portion of its rights and obligations under this Agreement (other than an assignment made at the request of the Borrowers pursuant to Section 2.11).

"Other Term Loans" shall have the meaning provided in Section 2.12(a).

"Parallel Debt" shall mean any amount which a Loan Party owes to the Pari Passu Collateral Agent under Section 10.22.

"Parent" shall mean (i) prior to the consummation of a Qualified DOV MLP IPO, Ocean Rig UDW, and (ii) following the consummation of a Qualified DOV MLP IPO, the Borrower. Except as otherwise indicated, following the consummation of a Qualified DOV MLP IPO, references to "the Parent and the Borrower", "the Parent or the Borrower", "the Parent, the Borrower" and similar references shall thereafter be deemed to be references only to "the Borrower".

"Parent Restricted Information" shall mean material non-public information with respect to the Parent or its Subsidiaries or with respect to the securities of any such Person.

"ParentUDW" shall have the meaning provided in the introductory paragraph.

"Pari Passu Collateral Agent" shall mean Deutsche Bank AG New York Branch in its capacity as collateral agent for its benefit, for the benefit of the Lenders under the Collateral Agreements and for the benefit of the holders of all other Pari Passu Obligations, together with its successors in such capacity.

"Pari Passu Documents" shall mean, collectively, the Loan Documents and any document or instrument evidencing or governing any Other Pari Passu Obligations.

"Pari Passu Obligations" shall mean (a) the Secured Obligations, (b) all Other Pari Passu Obligations and (c) all other obligations of the Borrowers and the Guarantors in respect of, or arising under, the applicable Pari Passu Documents, in respect of the obligations

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described in clauses (a) through (c) of this definition, (including, all principal, premium, interest, penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees, and other liabilities or amounts payable or arising thereunder), whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrowers or any Guarantor of an Insolvency or Liquidation Proceeding naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such Insolvency or Liquidation Proceeding. The Pari Passu Obligations shall be subject to the terms of the Intercreditor Agreement.

"PATRIOT Act" shall mean the USA PATRIOT Act (Title III of Pub.L. 107-56 (signed into law October 26, 2001)), as amended.

"Payment Default" shall have the meaning provided in Section 8(b).

"Payment Office" shall mean the office of the Administrative Agent located at 60 Wall Street, New York, New York 10005, or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.

"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA (or any successor).

"Percentage" of any Lender in respect of any Class of Commitments or Loans at any time shall mean a fraction (expressed as a percentage) the numerator of which is the amount of such Commitment (or, after the termination thereof, the outstanding principal amount of such Loans) of such Lender and the denominator of which is the aggregate amount of the Commitments (or, after the termination thereof, the aggregate outstanding principal amount of all such Loans) of all of the Lenders at such time; provided that, for the avoidance of doubt, if the Borrower or any of its Affiliates purchases any Loans pursuant to Section 2.13, such Loans so purchased shall be excluded for the purposes of making a determination of the Percentage of any Lender.

"Perfection Certificate" shall mean a certificate in the form of Exhibit F or any other form approved by the Pari Passu Collateral Agent and the Administrative Agent.

"Permitted Business" shall mean a business in which ParentUDW or any of its Restricted Subsidiaries were engaged on the Effective Date and any business reasonably related or complimentary thereto.

"Permitted Collateral Liens" shall mean Liens described in clauses (2), (3), (4), (5)(a), (6), (7), (8), (9), (10) (but only in connection with the refinancing of Indebtedness secured by Liens Incurred or permitted to exist pursuant to clauses (2), (3) and (5)(a) of the definition of "Permitted Liens"), (11), (12), (14), (16), (17), (18), (20), (21) (but only in connection with Permitted Refinancing Indebtedness Incurred in respect of Pari Passu Obligations), (22), (23) and (24) of the definition of "Permitted Liens."

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"Permitted Debt" shall have the meaning provided in Section 7.16(b).

"Permitted DOV Equity Sale Transaction" means the sale or other disposition of at least 15% of the Voting Stock of the Borrower (measured by voting power rather than number of shares) to a Non-DOV MLP (or a Non-DOV MLP Entity that is a Subsidiary of such Non-DOV MLP) that has consummated, or in connection with such Permitted DOV Equity Sale Transaction will consummate, a Non-DOV Qualified MLP IPO; provided that, after giving effect to any such sale or disposition, (a) no Default or Event of Default under any instrument governing Indebtedness of ParentUDW or any of its Subsidiaries (including the Borrower) has occurred and is continuing and (b) the Consolidated Net Leverage Ratio of the Borrower shall not exceed 4.25 to 1.0 (which shall be certified to the Administrative Agent by a Financial Officer of the Borrower).

"Permitted Equipment Lien" shall mean any Lien Incurred and permitted to exist pursuant to clause (18) of the definition of "Permitted Lien".

"Permitted Holder" shall mean DryShips Inc., a Marshall Islands company, Mr. George Economou, Mr. Anthony Kandylidis, or any spouse, former spouse or member of their respective immediate families, any of his or their Affiliates, or any Person that is controlled, directly or indirectly, by any such Permitted Holder.

"Permitted Investments" shall mean:

(1)            any Investment in the Parent or in any Restricted Subsidiary;

(2)            any Investment in Cash Equivalents;

(3)            any Investment by the Parent or any Restricted Subsidiary in a Person, if as a result of such Investment:

(a)          such Person becomes a Restricted Subsidiary; or

(b)          such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Parent or a Restricted Subsidiary;

(4)            any Investment made as a result of the receipt of non-cash consideration from (a) an Asset Sale that was made pursuant to and in compliance with Section 7.22 or (b) prior to the consummation of a Qualified DOV MLP IPO, a Non-DOV Qualified MLP Asset Transfer or an other disposition of properties or assets that does not constitute an Asset Sale;

(5)            any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Parent;

(6)            any Investments received in compromise or resolution of obligations of trade creditors or customers that were Incurred in the ordinary course of business of the Parent or any of the Restricted Subsidiaries, including pursuant to any plan of reorganization or similar

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arrangement upon the bankruptcy or insolvency of any trade creditor or customer and any Investments obtained in exchange for any such Investments;

(7)            Investments represented by Hedging Obligations permitted by Section 7.16(b)(5);

(8)            any guarantee of Indebtedness or other obligations of the Parent or any Restricted Subsidiary permitted to be incurred under this Agreement;

(9)            Investments that are in existence on the Effective Date, and any extension, modification or renewal thereof, but only to the extent not involving additional advances, contributions or other Investments of cash or other assets or other increases thereof (other than as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities, in each case, pursuant to the terms of such Investment as in effect on the Effective Date);

(10)            Investments acquired after the Effective Date as a result of the acquisition by the Parent or any Restricted Subsidiary of another Person, including by way of a merger, amalgamation or consolidation, to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;

(11)            loans or advances referred to in Section 7.12(c)(6);

(12)            Investments in any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers' compensation, performance and other similar deposits made in the ordinary course of business by the Parent or any of its Restricted Subsidiaries;

(13)            prior to the consummation of a Qualified DOV MLP IPO, other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (13) that are at the time outstanding, not to exceed the greater of (x) $125,000,000 and (y) 4.0% of Net Tangible Assets;

(14)            prior to the consummation of a Qualified DOV MLP IPO, any Non-DOV MLP Formation Transactions or Non-DOV MLP Asset Transfer consummated in compliance with Section 7.22 or that otherwise constitutes a Non-DOV Qualified MLP Asset Transfer; and

(15)            prior to the consummation of a Qualified DOV MLP IPO, loans by Ocean Rig UDW to Non-DOV MLP Entities pursuant to one or more revolving credit facilities in an aggregate principal amount not to exceed $100,000,000.

"Permitted Jurisdiction" shall mean: any of the Republic of the Marshall Islands, the United States of America, any State of the United States or the District of Columbia, the Commonwealth of the Bahamas, the Republic of Liberia, the Republic of Panama, the Commonwealth of Bermuda, the British Virgin Islands, the Cayman Islands, the Isle of Man, Cyprus, Norway, Greece, Hong Kong, the United Kingdom, Malta, any Member State of the

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European Union and any other jurisdiction generally acceptable to institutional lenders in the shipping and offshore drilling industries, as determined in good faith by the Board of Directors of the Parent.

"Permitted Liens" shall mean:

(1)            Liens in favor of the Borrowers or the Guarantors;

(2)            Liens on property of a Person existing at the time such Person is merged with or into or amalgamated or consolidated with the Parent or any Restricted Subsidiary; provided that such Liens were in existence prior to the contemplation of such merger, amalgamation or consolidation, were not Incurred in contemplation thereof and do not extend to any assets other than those of the Person merged into or amalgamated or consolidated with the Parent or such Restricted Subsidiary;

(3)            Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Parent or any Restricted Subsidiary; provided that such Liens were in existence prior to, and not Incurred in contemplation of, such acquisition;

(4)            Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature Incurred in the ordinary course of business;

(5)            Liens existing on the Effective Date, after giving effect to the use of proceeds of the Loans on the Effective Date (and the related release of any Liens securing any Indebtedness so repaid);

(6)            Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

(7)            Liens imposed by law, such as necessaries suppliers', carriers', warehousemen's, landlords' and mechanics' Liens, in each case, Incurred in the ordinary course of business, for amounts not more than thirty (30) days past due or which are being contested in good faith;

(8)            survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not Incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(9)            Liens on the Collateral created for the benefit of (or to secure) the Loan Document Obligations pursuant to Section 7.16(b)(2)(a) and Permitted Refinancing Indebtedness in respect thereof; provided, that the holders of such Liens are subject to the Intercreditor Agreement;

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(10)            Liens to secure any Indebtedness permitted to be Incurred under this Agreement to refinance any Indebtedness secured by Liens Incurred or permitted to exist pursuant to clauses (2), (3) and (5) or this clause (10) of this definition; provided, however, that:

(a)            the new Lien is limited to all or part of the same property and assets that secured the original Indebtedness (plus improvements and accessions to such property, or proceeds or distributions thereof) or any related after-acquired property that, pursuant to any after-acquired property clauses in written agreements pursuant to which the original Lien arose, is required to be pledged to secure the original Indebtedness (plus improvements and accessions to such property, or proceeds or distributions thereof); and

(b)            the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (i) the outstanding principal amount, or, if greater, committed amount, of the original Indebtedness and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;

(11)            Liens arising by reason of any judgment, attachment, decree or order of any court or other governmental authority not giving rise to an Event of Default that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made thereof;

(12)            Liens securing cash management obligations and rights of setoff in favor of a bank, imposed by law, by such bank's policies and procedures or by the general banking conditions (algemene bankvoorwaarden) and incurred in the ordinary course of business on deposit accounts maintained with such bank and cash and Cash Equivalents in such accounts;

(13)            Liens Incurred in the ordinary course of business on assets that do not constitute Collateral in respect of Indebtedness permitted to be Incurred pursuant to Section 7.16 not exceeding $50,000,000 at any time outstanding;

(14)            Liens to secure Hedging Obligations permitted to be Incurred pursuant to Section 7.16;

(15)            prior to the consummation of a Qualified DOV MLP IPO, Liens on Equity Interests held by ParentUDW in any Restricted Subsidiary (other than the Borrowers or any Borrower Subsidiary Guarantor) that secure guarantees by ParentUDW of Indebtedness of its Restricted Subsidiaries or Indebtedness of ParentUDW guaranteed by such Restricted Subsidiaries;

(16)            Liens arising from precautionary UCC financing statements filings or other applicable similar filings regarding operating leases and vessel charters entered into by the Borrower or a Guarantor in the ordinary course of business;

(17)            Liens Incurred in the ordinary course of business of the Borrower or a Guarantor arising from Vessel operating, chartering, drydocking, maintenance, repair, refurbishment or replacement, the furnishing of supplies and bunkers to Vessels and related

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assets, repairs and improvements to Vessels and related assets, masters', officers' or crews' wages and maritime Liens, in the case of each of the foregoing, which were not Incurred or created to secure the payment of Indebtedness and which in the aggregate do not materially adversely affect the value of the properties subject to such Lien or materially impair the use for the purposes of which such properties are held by the Borrower and the Guarantors;

(18)            Liens on Collateral constituting fixed or capital assets acquired or constructed by the Borrower or a Borrower Subsidiary Guarantor and securing Indebtedness Incurred in the ordinary course of business for the purpose of financing or refinancing such acquisition or construction; provided that (a) each such Lien does not extend to or cover any other asset of the Borrower or a Guarantor other than such acquired or constructed assets and additions, improvements or other assets affixed or appurtenant thereto, (b) the Incurrence of such Indebtedness is permitted pursuant to Section 7.16, (c) the Indebtedness secured by each such Lien does not exceed the cost of acquiring or constructing the applicable fixed or capital asset and (d) the aggregate Indebtedness at any time outstanding secured by all Liens Incurred pursuant to this clause (18) shall not exceed $25,000,000;

(19)            Liens arising under a contract over goods, documents of title to goods and related documents and insurances and their proceeds, in each case in respect of documentary credit transactions entered into with customers of the Parent and its Subsidiaries in the ordinary course of business; provided that no such Liens shall extend to any assets or property constituting Collateral;

(20)            Liens arising under any retention of title, hire, purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied in the ordinary course of business;

(21)            Liens representing the interest in title of a lessor;

(22)            Liens on cash, Cash Equivalents or other property arising in connection with the defeasance, discharge or redemption of Indebtedness (so long as such defeasance, discharge or redemption is permitted under Section 7.15) or Liens arising under this Agreement in favor of the Administrative Agent or the Pari Passu Collateral Agent, as the case may be, for its own benefit and similar Liens in favor of agents, trustees and representatives arising under instruments governing Indebtedness permitted to be incurred under this Agreement, provided that such Liens are solely for the benefit of the agents, trustees or representatives in their capacities as such and not for the benefit of the holders of such Indebtedness;

(23)            with respect to each of the Collateral Vessels, Liens for crew's wages remaining unpaid in accordance with reasonable commercial practices or for collision or salvage, or other similar Liens arising in the ordinary course of business, for amounts not more than thirty (30) days past due (unless any such Lien is being contested in good faith and by appropriate proceedings or other acts and the owner of the applicable Collateral Vessel shall have set aside on its books adequate reserves with respect to such amounts and so long as such deferment in payment shall not subject such Collateral Vessel to forfeiture or loss); and

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(24)            with respect to each of the Collateral Vessels, Liens for loss, damage or expense which are fully covered by insurance or in respect of which a bond or other security has been posted by or on behalf of the owner of the applicable Collateral Vessel with the appropriate court or other tribunal to prevent the arrest or secure the release of such Collateral Vessel from arrest.

"Permitted Refinancing Indebtedness" shall mean any Indebtedness of the Parent or any of the Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge, in whole or in part, other Indebtedness of the Parent or any of the Restricted Subsidiaries (other than intercompany Indebtedness) (the "Refinanced Indebtedness"); provided that:

(1)            the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Refinanced Indebtedness (plus all accrued interest on the Refinanced Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith);

(2)            such Permitted Refinancing Indebtedness has a final maturity date that is either no earlier than the final maturity date of the Refinanced Indebtedness, or more than 90 days after the Term Maturity Date (as in effect on the date of determination), and has a Weighted Average Life to Maturity that is (i) equal to or greater than the Weighted Average Life to Maturity of, the Refinanced Indebtedness or (ii) more than 90 days after the Term Maturity Date (as in effect on the date of determination);

(3)            if the Refinanced Indebtedness is (i) subordinated in right of payment to the Loan Document Obligations, then such Permitted Refinancing Indebtedness is subordinated in right of payment to the Loan Document Obligations, (ii) pari passu in right of payment to the Loan Document Obligations, then such Permitted Refinancing Indebtedness is subordinated or pari passu in right of payment to the Loan Document Obligations, in the case of each of (i) and (ii), on terms at least as favorable to the Lenders as those contained in the documentation governing the Refinanced Indebtedness or (iii) subject to the Intercreditor Agreement then the trustee, agent or other representative of the holders of lenders of such Permitted Refinancing Indebtedness has become a party to the Intercreditor Agreement (either directly or by joinder thereto) on behalf of such holders or lenders; and

(4)            in the case of Indebtedness of the Borrower or any Borrower Subsidiary Guarantor, such Indebtedness is Incurred either by the Borrower or by the Borrower Subsidiary Guarantor or both the Borrower and the Borrower Subsidiary Guarantor who is the obligor on the Refinanced Indebtedness.

"Permitted Repairs" shall mean, with respect to any Substitute Vessel, repairs which, in the reasonable judgment of the Parent, are required to be made to such Substitute Vessel upon acquisition and which are made within 120 days of the acquisition thereof.

"Person" shall mean any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, limited liability company or government or other entity.

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"Plan" shall mean any pension plan as defined in Section 3(2) of ERISA, excluding any pension plan that is not subject to Title IV of ERISA, which is maintained or contributed to by (or to which there is an obligation to contribute of) the Borrowers or a Subsidiary of the Borrowers or any ERISA Affiliate, and each such plan for the five-year period immediately following the latest date on which the Borrowers, or a Subsidiary of the Borrowers or any ERISA Affiliate maintained, contributed to or had an obligation to contribute to such plan.

 

"Platform" shall have the meaning provided in Section 10.03(d)(i).

"Pledged Securities" shall mean physical stock certificates representing the Equity Interests of each Borrower Subsidiary Guarantor, Finco and, prior to the consummation of a Qualified DOV MLP IPO, the Borrower, to the extent such Equity Interests are certificated.

"Preferred Stock" as applied to the Capital Stock of any Person, shall mean the Capital Stock of such Person of any class or classes (however designated) that ranks prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to shares of Capital Stock of any other class of such Person.

"Prime Rate" shall mean the rate which the Administrative Agent publicly announces from time to time as its prime lending rate. The Prime Rate shall change when and as such prime lending rate changes. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer.

"Projections" shall mean the detailed projected consolidated financial statements of the Parent and its consolidated Subsidiaries for the five fiscal years ending after the Effective Date, which projections shall (a) reflect the forecasted consolidated financial condition of the Parent and its consolidated Subsidiaries after giving effect to the financing hereof, and (b) be prepared and approved by an Authorized Representative of the Parent or the Borrower.

"Purchase Offer" shall have the meaning provided in Section 2.13(a).

"Qualified DOV MLP IPO" shall mean, upon satisfaction of the Qualified DOV MLP IPO Conditions (which shall be certified to the Administrative Agent by an authorized signatory of the Borrower) and in connection with the DOV MLP Formation Transactions, an initial offer and sale of common units of the DOV MLP in an underwritten public offering for cash pursuant to a registration statement that has been declared effective by the SEC pursuant to the Securities Act (other than a registration statement on Form S-4, Form F-4 and Form S-8 or otherwise relating to Equity Interests of the DOV MLP issuable under any employee benefit plan). In addition, a Qualified DOV MLP IPO shall be deemed to occur upon the consummation of a Permitted DOV Equity Sale Transaction.

"Qualified DOV MLP IPO Conditions" shall mean, in connection with a potential Qualified DOV MLP IPO, that upon the consummation of such Qualified DOV MLP IPO and the DOV MLP Formation Transactions (and after giving pro forma effect thereto, including the application of the net proceeds therefrom), (a) no Default or Event of Default under any instrument governing Indebtedness of ParentUDW or any of its Subsidiaries (including the

49

Borrower) has occurred and is continuing and (b) the Consolidated Net Leverage Ratio of the Borrower shall not exceed 4.25 to 1.0.

"Qualified DOV MLP IPO Date" has the meaning set forth in Section 7.15.

"Qualified Services Contract" shall mean, with respect to any Additional Drilling Unit acquired by, or committed to be delivered to, the Parent or any of its Restricted Subsidiaries, a bona fide contract or series of contracts, together with any amendments, supplements or modifications thereto, that the Board of Directors of the Parent, acting in good faith, designates as a "Qualified Services Contract" pursuant to a resolution of the Board of Directors of the Parent, which contract or contracts:

(1)            are between the Parent or one of its Restricted Subsidiaries, on the one hand, and a Person that is not an Affiliate of the Parent and (a) such Person has a rating (or a Person whose parent has such a rating) of either BBB- or higher from S&P or Baa3 or higher from Moody's, or if such ratings are not available, then a similar investment grade rating from another nationally recognized statistical rating agency, or (b) such contract is supported by letters of credit, performance bonds or guarantees from such Person or its parent that has an investment grade rating as described in the preceding subclause (a) of this clause (1), or (c) such contract provides for a lockbox or similar arrangements or direct payment to the Parent or its Restricted Subsidiary, as the case may be, for the full amount of the contracted payments due over the four-quarter reference period considered in calculating Consolidated Cash Flow;

(2)            provide for services to be performed by the Parent or one or more of its Restricted Subsidiaries involving the use of such Additional Drilling Unit by the Parent or one or more of its Restricted Subsidiaries, in either case for a minimum aggregate period of at least one year;

(3)            provide for a fixed or minimum day rate or fixed rate for such Additional Drilling Unit covering all the period in clause (2) above; and

(4)            for purposes of Section 7.16, provide that revenues from such Qualified Services Contract are to be received by the Parent or any of its Restricted Subsidiaries within one year of (a) delivery of the related Additional Drilling Unit and (b) the Incurrence of any Indebtedness pursuant to such clause.

"Qualified Vessels" shall mean, at any time, the completed and delivered Vessels owned by Parent and its Restricted Subsidiaries at such time that are of substantially comparable (or better) quality and value as (or than) the quality and value at such time of the Vessels owned on the Effective Date by ParentUDW and its Restricted Subsidiaries, as determined in good faith by a Financial Officer.

"Qualifying Holder" shall mean, any of (i) any Permitted Holder and (ii) so long as not more than 50% of the Voting Stock of the DOV MLP is Beneficially Owned, directly or indirectly, by any "person" (as that term is used in Section 13(d) of the Exchange Act), other than by one or more Permitted Holders, the DOV MLP; provided that the DOV MLP shall not cease to be a Qualifying Holder solely as a result of the DOV MLP (or its general partner) being or becoming a Subsidiary of ParentUDW or any of its Subsidiaries so long as no "person" (as

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defined above), other than one or more Permitted Holders, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of ParentUDW. As used in this definition, Beneficial Ownership shall be measured by voting power rather than number of shares, units or other equity securities. In the event a Permitted DOV Equity Sale Transaction is consummated, the Non-DOV MLP and each of the other Non-DOV MLP Entities shall be deemed to be a DOV MLP and a DOV MLP Entity, as applicable, for purposes of this definition and the definition of "Change of Control."

"Quarterly Payment Date" shall mean the last Business Day of each March, June, September and December occurring after the Effective Date, commencing on September 30, 2014.

"Ready for Sea Cost" shall mean, with respect to a Vessel to be acquired or leased by the Parent or any Restricted Subsidiary, the aggregate amount of all expenditures Incurred to acquire or construct and bring such Vessel to the condition and location necessary for its intended use, including any and all inspections, appraisals, repairs, modifications, additions, permits and licenses in connection with such acquisition or lease.

"Real Property" of any Person shall mean all the right, title and interest of such Person in and to land, improvements and fixtures, including Leaseholds.

"Recipient" shall mean (a) the Administrative Agent and (b) any Lender, as applicable.

"Reference Date" shall mean March 26, 2014 (the issuance date of the Ocean Rig UDW Existing Notes).

"Register" shall have the meaning provided in Section 10.15.

"Regulation D" shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.

"Regulation T" shall mean Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

"Regulation U" shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

"Regulation X" shall mean Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

"Related Assets" shall mean, with respect to any Collateral Vessel and its owner, (i) any insurance policies and contracts from time to time in force with respect to such Collateral Vessel, (ii) the Capital Stock of any Restricted Subsidiary owning such Collateral Vessel and related assets, (iii) any requisition compensation payable in respect of any compulsory

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acquisition of such Collateral Vessel, (iv) any Earnings (other than Earnings payable to a Local Content Subsidiary) derived from the use or operation of such Collateral Vessel and/or any account to which such Earnings are deposited, (v) any charters, operating leases, Vessel purchase options and related agreements with respect to such Collateral Vessel entered into and any security or guarantee in respect of the charterer's or lessee's obligations under such charter, lease, Vessel purchase option or agreement, (vi) any cash collateral account established with respect to such Collateral Vessel pursuant to the financing arrangement with respect thereto, (vii) any building, conversion or repair contracts relating to such Collateral Vessel and any security or guarantee in respect of the builder's obligations under such contract and (viii) any security interest in, or agreement or assignment relating to, any of the foregoing or any mortgage in respect of such Collateral Vessel and any asset reasonably related, ancillary or complementary thereto; provided that Related Assets shall not include Excluded Property.

"Related Parties" shall mean, with respect to any Person, the directors, officers, employees, agents, trustees, managers, advisors, representatives and controlling persons of such Person.

"Release" shall mean any disposing, discharging, injecting, spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring, seeping, migrating, into, or upon the environment, including any land or water or air.

"Replaced Lender" shall have the meaning provided in Section 2.11. 

"Replacement Lender" shall have the meaning provided in Section 2.11.

"Required Lenders" shall mean, at any time, Lenders the sum of whose outstanding Loans and unused Commitments at such time represent an amount greater than 50% of the aggregate outstanding Loans and unused Commitments at such time; provided that (i) for the avoidance of doubt, if the Borrowers purchase any Loans pursuant to Section 2.13, such purchased Loans shall be excluded for the purposes of making a determination of Required Lenders and (ii) the unused Revolving Commitment of, and the portion of the total outstanding amount of Revolving Loans held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

"Required Revolving Lenders" shall mean, at any time, Lenders having more than 50% of the sum of the (a) total outstanding amount of all Revolving Loans and (b) aggregate unused Revolving Commitments; provided that the unused Revolving Commitment of, and the portion of the total outstanding amount of Revolving Loans held or deemed held by, any Defaulting Lender or by any Affiliate of any Borrower shall be excluded for purposes of making a determination of Required Revolving Lenders.

"Required Secured Parties" shall mean, at any time, the Lenders and Secured Counterparties the sum of whose (x) in the case of Lenders, outstanding Loans and unused Commitments at such time and (y) in the case of Secured Counterparties, outstanding Ship Mortgage Swap Obligations (if any) at such time, represent an amount greater than 50% of the sum of the aggregate outstanding Commitments (or after the termination thereof, outstanding principal amount of Loans) and Ship Mortgage Swap Obligations of all Lenders and Secured

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Counterparties at such time; provided that for the avoidance of doubt, if the Borrowers purchase any Loans pursuant to Section 2.13, such purchased Loans shall be excluded for the purposes of making a determination of Required Secured Parties.

"Required Term Lenders" shall mean, at any time, Lenders having more than 50% of the sum of the (a) total outstanding amount of all Term Loans and (b) aggregate unused Term Commitments; provided that the unused Term Commitment of, and the portion of the total outstanding amount of Term Loans held or deemed held by, any Defaulting Lender or by any Borrower or any Affiliate of a Borrower shall be excluded for purposes of making a determination of Required Term Lenders.

"Requirement of Law" shall mean, with respect to any Person, (a) the charter, articles or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person and (b) any law (including common law), statute, ordinance, treaty, rule, regulation, order, decree, writ, injunction, settlement agreement or determination of any arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

"Restricted Investment" shall mean any Investment other than a Permitted Investment.

"Restricted Payments" shall have the meaning provided in Section 7.15.

"Restricted Subsidiary" shall mean (a) prior to the consummation of a Qualified DOV MLP IPO, any Subsidiary of ParentUDW that is not then an Unrestricted Subsidiary and (b) following the consummation of a Qualified DOV MLP IPO, any Subsidiary of the Borrower that is not then an Unrestricted Subsidiary; provided, however, that in each case, (i) upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of "Restricted Subsidiary" and (ii) notwithstanding anything to the contrary, neither the Borrower nor Finco shall at any time be an Unrestricted Subsidiary.

"Returns" shall have the meaning provided in Section 6.08.

"Revolving Availability Period" shall have the meaning provided in an Incremental Revolving Credit Amendment.

"Revolving Commitment" shall mean, with respect to each Revolving Lender, the commitment of such Revolving Lender to make Revolving Loans hereunder during the Revolving Availability Period, expressed as an amount representing the maximum principal amount of such Revolving Lender's Revolving Exposure hereunder at any time, as such commitment may be increased or reduced from time to time in accordance with the terms of this Agreement. The amount of each Revolving Lender's Revolving Commitment shall be set forth in an Incremental Revolving Credit Amendment. The initial amount of the Revolving Lenders' Revolving Commitments is $0.

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"Revolving Exposure" shall mean, with respect to any Revolving Lender at any time, the outstanding principal amount of such Lender's Revolving Loans at such time.

"Revolving Lender" shall mean a Lender with a Revolving Commitment or an outstanding Revolving Loan.

"Revolving Loan" shall mean a Loan made pursuant to Section 2.01(b).

"Revolving Maturity Date" shall have the meaning provided in an Incremental Revolving Credit Amendment.

"Revolving Obligations" shall mean all Loan Document Obligations relating to the Revolving Loans and the Revolving Commitments. For the avoidance of doubt, the term "Revolving Obligations" includes all interest and fees in respect of Revolving Loans that accrue after the commencement by or against any Loan Party of any Insolvency or Liquidation Proceeding naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding (including claims disallowed as a result of Revolving Obligations and the other Secured Obligations being treated as part of the same class in any Insolvency or Liquidation Proceeding).

"S&P" shall mean Standard & Poor's Rating Services or any successor to the rating agency business thereof.

"Sale and Lease-Back Transaction" shall mean any arrangement with any Person providing for the leasing by the Parent or any of the Restricted Subsidiaries of any real or tangible personal property, which property has been or is to be sold or transferred by the Parent or such Restricted Subsidiary to such Person in contemplation of such leasing.

"SEC" shall mean the U.S. Securities and Exchange Commission.

"Section 2.14 Additional Amendment" shall have the meaning provided in Section 2.14(c).

"Secured Cash Management Obligations" shall mean the due and punctual payment of any and all obligations of the Parent and each Restricted Subsidiary of the Parent (whether absolute or contingent and however and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor)) arising in respect of cash management services that (a) are in effect on the Effective Date with a counterparty that was an Agent or an Affiliate of an Agent as of the Effective Date, (b) are owed to an Agent or an Affiliate thereof, or to any Person that, at the time such obligations were incurred, was an Agent or an Affiliate thereof (provided that any such Agent or Affiliate shall have executed a Secured Non-Lender Hedge/Cash Management Provider Appointment Letter), (c) are owed on the Effective Date to a Person that was a Lender or an Affiliate of a Lender as of the Effective Date or (d) are owed to a Person that is a Lender or an Affiliate of a Lender at the time such obligations are incurred (provided that any such Affiliate shall have executed a Secured Non-Lender Hedge/Cash Management Provider Appointment Letter). Notwithstanding the foregoing, in the case of the Restricted Subsidiaries of ParentUDW,

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Secured Cash Management Obligations shall not include the Secured Cash Management Obligations of ParentUDW.

"Secured Counterparties" shall have the meaning provided in Section 9.01.

"Secured Hedging Obligations" shall mean the due and punctual payment of any and all obligations of the Parent and each Restricted Subsidiary of the Parent arising under each hedging agreement that (a) is in effect on the Effective Date with a counterparty that is an Agent or an Affiliate of an Agent as of the Effective Date, (b) is with (i) a counterparty that is an Agent or an Affiliate thereof or (ii) a counterparty that is a Secured Non-Lender Hedge/Cash Management Provider, or in each case, any Person that, at the time such hedging agreement was entered into, was an Agent or an Affiliate thereof (provided that, in each case, any such Agent or Affiliate shall have executed a Secured Non-Lender Hedge/Cash Management Provider Appointment Letter), (c) is in effect on the Effective Date with a counterparty that was a Lender or an Affiliate of a Lender as of the Effective Date or (d) is entered into after the Effective Date with a counterparty that is a Lender or an Affiliate at the time such hedging agreement is entered into (provided that any such Affiliate shall have executed a Secured Non-Lender Hedge/Cash Management Provider Appointment Letter). Notwithstanding the foregoing, (i) in the case of any Excluded Swap Guarantor, "Secured Hedging Obligations" shall not include Excluded Swap Obligations of such Excluded Swap Guarantor and (ii) in the case of the Restricted Subsidiaries of ParentUDW, Secured Hedging Obligations shall not include the Secured Hedging Obligations of ParentUDW.

"Secured Non-Lender Hedge/Cash Management Provider" shall mean a counterparty to any agreement with a Loan Party resulting in Secured Cash Management Obligations, Secured Hedging Obligations, or Swap Obligations that is designated as a "Secured Non-Lender Hedge/Cash Management Provider" with respect to such agreement in a writing from the Borrower to the Administrative Agent (it being acknowledged and agreed that the Borrower hereby designates ABN AMRO Bank NV and Nordea Bank Finland plc as such), provided that such Loan Party shall have delivered a Secured Non-Lender Hedge/Cash Management Provider Appointment Letter.

"Secured Non-Lender Hedge/Cash Management Provider Appointment Letter" shall mean a letter agreement from a Secured Non-Lender Hedge/Cash Management Provider delivered to the Administrative Agent reasonably satisfactory to the Administrative Agent (A) appointing the Pari Passu Collateral Agent and the Administrative Agent as its agent(s) under the applicable Loan Documents, (B) appointing the Security Trustee as its security trustee to act as specified herein and in the Ship Mortgages and other Loan Documents, and (C) agreeing to be bound by Section 8, Section 9 and Sections 10.01, 10.02, 10.08, 10.17 and 10.23 of this Agreement as if it were a Lender hereunder.

"Secured Obligations" shall mean (a) the Loan Document Obligations, (b) any and all sums advanced by the Pari Passu Collateral Agent or the Administrative Agent in order to preserve the Collateral or preserve its security interest in the Collateral, (c) the Secured Hedging Obligations, (d) the Secured Cash Management Obligations and (e) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations or liabilities of the Loan Parties referred to in clause (a) above, after an Event of Default shall have occurred and be

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continuing, the reasonable expenses of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Collateral, or of any exercise by the Pari Passu Collateral Agent of its rights hereunder or under any Collateral Agreement, together with reasonable attorneys' fees and court costs. Notwithstanding the foregoing, in the case of the Restricted Subsidiaries of ParentUDW, Secured Obligations shall not include the Secured Obligations of ParentUDW.

"Secured Parties" shall mean, collectively, (a) the Lenders, (b) the Agents, (c) each holder of other Pari Passu Obligations that has executed, or has caused to be executed on its behalf, a joinder agreement to the Security Agreement, (d) each provider of cash management services the obligations under which constitute Secured Cash Management Obligations, (e) each counterparty to any hedging agreement the obligations under which constitute Secured Hedging Obligations, (f) the beneficiaries of each indemnification obligation undertaken by any Borrower, any Borrower Subsidiary Grantor or, prior to the consummation of a Qualified DOV MLP IPO, the Parent under any Pari Passu Document and (g) the successors and assigns of each of the foregoing.

"Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder.

"Security Agreement" shall mean the Pledge and Security Agreement dated as of the Effective Date among ParentUDW, the Borrowers, the other Grantors (as defined therein) from time to time party thereto and the Pari Passu Collateral Agent in favor of the Pari Passu Collateral Agent for the benefit of the Lender Creditors and the holders of other Pari Passu Obligations (if any), substantially in the form of Exhibit C hereto, as amended or supplemented from time to time in accordance with its terms.

"Ship Mortgage" shall mean, collectively, the first naval mortgages and other instruments such as deeds over the Collateral Vessels, each duly registered in the Marshall Islands ship registry in favor of the Pari Passu Collateral Agent, substantially in the form of Exhibit N hereto, as the same may be amended, supplemented or modified from time to time.

"Ship Mortgage Swap Obligations" shall mean, at any time and with respect to any Secured Counterparty that is a Swap Bank under and as defined in any Ship Mortgage, the maximum amount that may be payable by any Loan Party to such Secured Counterparty at such time pursuant to Transactions (which shall have the meaning ascribed thereto in the Ship Mortgages) entered into under any Interest Rate Agreement (as defined in the Ship Mortgages); provided that, with respect to any such Secured Counterparty, such amount may not, at any time, exceed the portion of the Swap Liability that is apportioned to such Secured Counterparty pursuant to any Ship Mortgage at such time.

"Significant Subsidiary" shall mean, at the date of determination, any Restricted Subsidiary that together with its Subsidiaries that are Restricted Subsidiaries (i) for the most recent fiscal year, accounted for more than 10% of the Parent's consolidated revenues or (ii) as of the end of the most recent fiscal quarter, was the owner of more than 10% of the Parent's consolidated assets; provided, however, that notwithstanding anything to the contrary in this

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Agreement, each Borrower Subsidiary Guarantor that owns a Collateral Vessel or a Substitute Vessel, the Borrower and Finco shall be Significant Subsidiaries at all times.

"Specified Default" shall mean any Default or Event of Default under clause (1), (2), (4) (solely with respect to a failure to comply with Section 7.18) or (9) of Section 8.01(a).

"Specified Existing Loan Class" shall have the meaning provided in Section 2.14(a).

"Stated Maturity" shall mean, with respect to any installment of interest or principal on any item or series of Indebtedness, the date on which the payment of interest or principal scheduled to be paid in the documentation governing such Indebtedness as of the Effective Date or, if such item or series is Incurred after the Effective Date, the date such item or series is Incurred.

"Subsidiary" shall mean, with respect to any specified Person:

(1)            any corporation, limited liability company, association or other business entity (other than a partnership) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, limited liability company, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2)            any partnership of which (a) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof), whether in the form of general, special or limited partnership interests or otherwise, or (b) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

"Substitute Vessel" shall mean a drilling rig or drillship that is used or useful in the Permitted Business.

"Successor Borrower" shall have the meaning set forth in Section 7.14(b)(1). 

"Successor Parent UDW" shall have the meaning set forth in Section 7.14(a)(1). 

"Suspended Covenants" shall have the meaning set forth in Section 7.23(a). 

"Suspension Event" has the meaning set forth in Section 7.23(a).

"Swap Obligations" shall mean, with respect to the Parent, the Borrower or any Borrower Subsidiary Guarantor, an obligation to pay or perform under any agreement, contract or transaction that constitutes a "swap" within the meaning of § 1a(47) of the Commodity Exchange Act.

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"Taxes" shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

"Term Commitments" shall mean the Incremental Commitments, if any (and any Extended Commitments in respect of any such Class of Term Commitments).

"Term Lender" shall mean a Lender with an outstanding Term Loan.

"Term Loans" shall mean the Loans made pursuant to clause (i) of Section 2.01(a).

"Term Loan Repayment Amount" shall have the meaning provided in Section 4.05(a).

"Term Maturity Date" shall mean July 25, 2021 as the same may be extended pursuant to Section 2.14.

"Transactions" shall mean, collectively, (a) the entering into of the Loan Documents, (b) the consummation of the 2014 Refinancing and (c) the payment of fees and expenses in connection with the foregoing.

"Type" shall mean a Base Rate Loan or a Eurodollar Rate Loan.

"U.S. Person" shall mean a "United States person" within the meaning of Section 7701(a)(30) of the Code.

"U.S. Tax Compliance Certificate" has the meaning assigned to such term in Section 4.08(g)(ii)(B)(c).

"UCC" shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction.

"United States" and "U.S." shall each mean the United States of America.

"Unrestricted Cash" shall mean, with respect to any Person, as of any date of determination, cash and Cash Equivalents owned by such Person and its Restricted Subsidiaries (without regard to any cash or Cash Equivalents of any Persons other than such Person and its Restricted Subsidiaries) that would be reflected as cash or Cash Equivalents on a consolidated balance sheet of such Person and its Restricted Subsidiaries prepared on such date in accordance with GAAP (less any portion of such cash and Cash Equivalents that would be reflected as "restricted cash" on such balance sheet).

"Unrestricted Subsidiary" shall mean (1) any Subsidiary of the Parent (other than the Borrowers) which at the time of determination is an Unrestricted Subsidiary (as designated by the Parent pursuant to Section 7.19); (2) any Subsidiary of an Unrestricted Subsidiary and (3) prior to the consummation of a Qualified DOV MLP IPO, any Non-DOV MLP Entity, unless ParentUDW elects to maintain such Subsidiary as a Restricted Subsidiary.

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The Parent may designate any Subsidiary of the Parent (other than the Borrowers) as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors of the Parent (as permitted pursuant to Section 7.19) unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, the Parent or any Restricted Subsidiary (other than (x) Equity Interests or property of a Restricted Subsidiary as a result of a Non-DOV MLP Asset Transfer that is consummated prior to the consummation of a Qualified DOV MLP IPO and (y) any Subsidiary of the Subsidiary to be so designated); provided that the Subsidiary to be so designated and each Subsidiary of such Subsidiary:

(1)            has no Indebtedness other than Non-Recourse Debt;

(2)            except as permitted by Section 7.12 is not party to any agreement, contract, arrangement or understanding with the Parent or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Parent or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Borrower;

(3)            is a Person with respect to which neither the Parent nor any of the Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results;

(4)            has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Parent or any of the Restricted Subsidiaries;

(5)            is not the owner of any interests in a Collateral Vessel; and

(6)            is not a DRH Issuer Subsidiary or, if any such Subsidiary is a DRH Issuer Subsidiary, it is also a DRH Unrestricted Subsidiary at all times that it is an Unrestricted Subsidiary under this Agreement.

"Ventures Facilities Agreement" shall mean the facilities agreement, dated as of February 28, 2013, as amended and restated on August 30, 2013 and as supplemented on December 10, 2013, by and among the Borrower, as borrower, and Ocean Rig UDW, as parent and guarantor, the other guarantors party thereto and the banks and financial institutions named therein, as mandated lead arrangers, with the banks and financial institutions named therein, as lenders under the commercial facilities, Eksportkreditt Norge AS, as lender under the Eksportkreditt/GEIK Facilities, The Export-Import Bank of Korea, as lender under the Kexim Facilities, and DNB Bank ASA, as facility agent and security agent.

"Vessel" shall mean one or more shipping or drilling vessels or drilling rigs, whose primary purpose is the maritime transportation of cargo or the exploration and production drilling for crude oil or hydrocarbons, or which are otherwise engaged, used or useful in a Permitted Business, in each case together with all related spares, equipment and any additions or improvements; provided that for the purposes of any provision related to the acquisition or disposition of a Vessel, such acquisition or disposition may be conducted through the transfer of all of the Capital Stock of any special purpose entity that owns a Vessel as described above.

 

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"Voting Stock" of any specified Person as of any date shall mean the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors (or persons performing similar functions) of such Person; provided that with respect to a limited partnership or other entity which does not have directly a board of directors, Voting Stock means such Capital Stock of the general partner of such limited partnership or other business entity with the ultimate authority to manage the business and operations of such Person.

"Weighted Average Life to Maturity" shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness.

"Withdrawal Liability" shall mean any liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA or any liability to a Foreign Pension Plan that is subject to any substantially similar provision of non-U.S. law.

1.02            Modification to Parties Upon a Qualified DOV MLP IPO.  Upon the consummation of a Qualified DOV MLP IPO, Ocean Rig UDW will no longer be a Guarantor, and the covenants, defaults and definitions set forth herein will apply only to the Borrower and its Restricted Subsidiaries and will no longer apply to Ocean Rig UDW and its other Subsidiaries. In this Agreement, the terms "the Parent" and "ParentUDW" each refers to, prior to the consummation of a Qualified DOV MLP IPO, Ocean Rig UDW Inc., a Marshall Islands corporation. Following the consummation of a Qualified DOV MLP IPO, except as otherwise indicated, (a) all references to "the Parent" shall be deemed to be references to "the Borrower" and (b) references to "the Parent and the Borrower", "the Parent or the Borrower", "the Parent, the Borrower" and similar references shall be deemed to be references only to "the Borrower".

1.03            Terms Generally; Accounting Terms; GAAP.

(a)            Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the other Loan Documents or any certificate or other document made or delivered pursuant hereto or thereto.

(b)            Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Parent or any of its Subsidiaries at "fair value", as defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.

 

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(c)            The words "include," "includes" and "including" as used herein shall be deemed to be followed by the phrase, "without limitation."

(d)            The words "hereof", "herein" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

(e)            The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

(f)            Unless otherwise expressly provided herein, (a) references to formation documents, governing documents, agreements (including the Loan Documents) and other contractual instruments shall be deemed to include all subsequent refinancings, replacements, amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are not prohibited by any Loan Document; and (b) references to any law, statute or regulation shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law, statute or regulation.

SECTION 2.        Amount and Terms of Loans.

2.01            The Loans.

(a)            The Term Loans.  Subject to the terms and conditions set forth herein, each Lender severally agrees to make a Term Loan to the Borrowers on the Effective Date in an aggregate principal amount equal to the amount set forth on Annex I. The Term Loans (x) are denominated in Dollars and (y) bear interest in accordance with Section 2.06. The Borrowers may make only one borrowing of Term Loans which shall consist of Term Loans made simultaneously by the Lenders on the Effective Date in accordance with their respective Percentages. Amounts borrowed under this Section 2.01 and repaid or prepaid may not be reborrowed. Notwithstanding anything to the contrary contained herein (and without affecting any other provision hereof), the funded portion of the Term Loans made on the Effective Date by the Lenders was equal to 99.00% of the principal amount thereof (it being agreed that the full principal amount of each such Term Loan is deemed outstanding on the Effective Date and the Borrowers shall be obligated to repay 100% of the principal amount of each Term Loan as provided hereunder).

 

(b)            Revolving Loans.  Subject to the terms and conditions set forth herein and in any Incremental Revolving Credit Amendment, if the Borrowers shall obtain Revolving Commitments, each Revolving Lender will severally make Revolving Loans to the Borrowers from time to time during the applicable Revolving Availability Period, in an aggregate principal amount that will not result in such Revolving Lender's Revolving Exposure exceeding such Revolving Lender's Revolving Commitment or the Aggregate Revolving Exposure exceeding the Aggregate Revolving Commitment. Each borrowing of Revolving Loans shall consist of Revolving 

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Loans made simultaneously by the Revolving Lenders on the applicable borrowing date in accordance with their respective Percentage. The Revolving Loans: (x) shall be denominated in Dollars and (y) shall bear interest in accordance with Section 2.06. Within the foregoing limits and subject to the terms and conditions set forth herein and in any Incremental Revolving Credit Amendment, the Borrowers may borrow, prepay and reborrow Revolving Loans.

(c)            The obligations of the Borrowers hereunder and under the other Loan Documents with respect to any Term Loans or any Revolving Loans (including any interest, fees and other amounts in respect thereof) and the repayment or prepayment thereof shall be joint and several.

2.02            Notice of Borrowing.

(a)            When the Borrowers desire to incur Loans hereunder, an Authorized Representative of the Borrowers shall give the Administrative Agent at the Notice Office at least (x) in the case of the borrowing of Eurodollar Rate Loans, three Business Days' prior written notice (or telephonic notice promptly confirmed in writing) or (y) in the case of the borrowing of Base Rate Loans, one Business Day's prior written notice (or telephonic notice promptly confirmed in writing), in each case, of the Loans to be incurred hereunder, provided that such notice shall be deemed to have been given on a certain day only if given before 11:00 a.m. (New York time) on such day. Such written notice or written confirmation of telephonic notice (a "Notice of Borrowing"), except as otherwise expressly provided in Section 2.08, shall be irrevocable and shall be given in writing by the Borrowers in the form of Exhibit G, appropriately completed to specify (i) the Class of the Loans to be incurred pursuant to the Borrowing, (ii) the aggregate principal amount of the Loans to be incurred pursuant to the Borrowing, (iii) the date of the Borrowing (which shall be a Business Day), (iv) the Type of Loans comprising the Borrowing, (v) in the case of Eurodollar Rate Loans, the initial Interest Period to be applicable to such Eurodollar Rate Loans and (vi) to which accounts the proceeds of such Loans are to be deposited. The Administrative Agent shall promptly give each applicable Lender notice of the Borrowing, of such Lender's proportionate share thereof and of the other matters required by the immediately preceding sentence to be specified in the Notice of Borrowing. If the Borrowers fail to specify a Type of Loan in the Notice of Borrowing, then the Loans shall be made as Base Rate Loans.

(b)            Without in any way limiting the obligation of the Borrowers to confirm in writing any telephonic notice of any Borrowing or prepayment of Loans, the Administrative Agent may act without liability upon the basis of telephonic notice of the Borrowing or a prepayment, as the case may be, believed by the Administrative Agent in good faith to be from an Authorized Representative of the Borrowers prior to receipt of written confirmation. In each such case, the Borrowers hereby waive the right to dispute the Administrative Agent's record of the terms of such telephonic notice of the Borrowing or prepayment of Loans, as the case may be, absent manifest error.

 

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(c)            Each Borrowing of Eurodollar Rate Loans shall be in an aggregate principal amount that is an integral multiple of $1,000,000 and not less than $5,000,000, and each Borrowing of Base Rate Loans shall be in an aggregate principal amount that is an integral multiple of $100,000 and not less than $500,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of twelve (12) Borrowings of Eurodollar Rate Loans outstanding. Notwithstanding the foregoing, a Borrowing of Revolving Loans that are Base Rate Loans may be in an aggregate amount that is equal to the entire unused balance of the applicable Commitments.

(d)            Notwithstanding any other provision of this Agreement, the Borrowers shall not be entitled to request, or to elect to Convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date applicable thereto.

2.03            Disbursement of Funds.  No later than 11:00 a.m. (New York time) on the date specified in the Notice of Borrowing, each Lender will make available its Percentage of the Borrowing. All such amounts will be made available in Dollars and in immediately available funds at the Payment Office and the Administrative Agent will make available to the Borrowers (prior to 1:00 p.m. (New York time) to the extent of funds actually received by the Administrative Agent prior to 11:00 a.m. (New York time) on such day) at the Payment Office, in the accounts specified in the Notice of Borrowing, the aggregate of the amounts so made available by the Lenders. Unless the Administrative Agent shall have been notified by any Lender prior to the date of the Borrowing that such Lender does not intend to make available to the Administrative Agent such Lender's portion of the Borrowing, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on the date of the Borrowing and the Administrative Agent may in its sole discretion (but shall not, for the avoidance of doubt, be obligated to), in reliance upon such assumption, make available to the Borrowers a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender and such amount is advanced to the Borrowers by the Administrative Agent, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent's demand therefor, the Administrative Agent shall promptly notify the Borrowers and the Borrowers shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent also shall be entitled to recover on demand from such Lender or the Borrowers, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrowers until the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (i) if recovered from such Lender, the overnight Federal Funds Rate for the first three days and at the interest rate otherwise applicable to such Loans for each day thereafter and (ii) if recovered from the Borrowers, the rate of interest applicable to the Borrowing, as determined pursuant to Section 2.06. Nothing in this Section 2.03 shall be deemed to relieve any Lender from its

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obligation to make Loans hereunder or to prejudice any rights which the Borrowers may have against any Lender as a result of any failure by such Lender to make Loans hereunder.

2.04            Notes.  (a) The Borrowers' obligation to pay the principal of, and interest on, the Loans of any Class made by each Lender shall be joint and several and shall be evidenced in the Register maintained by the Administrative Agent pursuant to Section 10.15 and shall, if requested by such Lender as provided below, also be evidenced by a promissory note duly executed and delivered by the Borrowers substantially in the form of Exhibit H-1 or Exhibit H-2, as applicable, with blanks appropriately completed in conformity herewith (each a "Note" and, collectively, the "Notes").

(b)            The Note issued to each Lender that has made a Loan shall (i) be executed by the Borrowers, (ii) be payable to such Lender or its registered assigns, (iii) be in a stated principal amount equal to the Class of Loan made by such Lender and be payable in the outstanding principal amount of the Loan evidenced thereby, (iv) mature on the applicable Maturity Date or the Incremental Maturity Date, as applicable, (v) bear interest as provided in Section 2.06, (vi) be subject to voluntary prepayment and mandatory repayment as provided in Sections 4.01 and 4.02 and (vii) be entitled to the benefits of this Agreement and the other Loan Documents.

(c)            Each Lender will note on its internal records the amount of the Loan of each Class made by it and each payment in respect thereof and, prior to the surrender of a Note pursuant to Section 10.15, will endorse on the reverse side thereof the outstanding principal amount of Loans of such Class evidenced thereby. Failure to make any such notation or any error in such notation or endorsement shall not affect the Borrowers' obligations in respect of such Loans.

(d)            Notwithstanding anything to the contrary contained above in this Section 2.04 or elsewhere in this Agreement, Notes shall only be delivered to Lenders which at any time specifically request the delivery of such Notes. No failure of any Lender to request or obtain a Note evidencing its Loans to the Borrowers of any Class shall affect or in any manner impair the obligations of the Borrowers to pay the Loans (and all related Loan Document Obligations) incurred by the Borrowers which would otherwise be evidenced thereby in accordance with the requirements of this Agreement, and shall not in any way affect the security or guarantees therefor provided pursuant to the various Loan Documents. Any Lender which does not have a Note evidencing its outstanding Loans shall in no event be required to make the notations otherwise described in the preceding clause (b). At any time when any Lender requests the delivery of a Note to evidence any of its Loans of any Class, the Borrowers shall (at its expense) promptly execute and deliver to the respective Lender the requested Note in the appropriate amount or amounts to evidence such Loans.

2.05            Pro Rata Borrowings.  The Borrowings of Loans of any Class under this Agreement shall be incurred from the Lenders pro rata on the basis of their Commitments in respect of such Class. It is understood that no Lender shall be responsible for any default by any other Lender of its obligation to make a Loan hereunder and that each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to make its Loans hereunder.

 

 

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2.06            Interest.

(a)            The Borrowers agree to pay interest in respect of the unpaid principal amount of each Loan from the date of Borrowing thereof until such principal amount shall be paid in full, at the following rates per annum:

(i)            Base Rate Loans. During such periods as such Loan is a Base Rate Loan, a rate per annum equal at all times to the sum of (x) the Base Rate in effect from time to time plus (y) the Applicable Margin in effect from time to time, payable in arrears (1) quarterly on each Quarterly Payment Date, (2) on the date such Base Rate Loan shall be Converted, (3) on the date of any repayment or prepayment (on the amount repaid or prepaid), except in the case of a prepayment of Revolving Loans without a permanent reduction in the applicable Commitments, (4) at maturity (whether by acceleration or otherwise) and (5) after such maturity, on demand.

(ii)            Eurodollar Rate Loans. During such periods as such Loan is a Eurodollar Rate Loan, a rate per annum equal at all times during each Interest Period for such Loan to the sum of (x) the Eurodollar Rate for such Interest Period for such Loan plus (y) the Applicable Margin in effect from time to time, payable in arrears (1) on the last day of such Interest Period and, if such Interest Period has a duration of more than three (3) months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period, (2) on the date such Eurodollar Rate Loan shall be Converted, (3) on the date of any repayment or prepayment (on the amount repaid or prepaid), (4) at maturity (whether by acceleration or otherwise) and (5) after such maturity, on demand.

(b)            Upon the occurrence and during the continuance of an Event of Default, the Borrowers shall pay interest on (i) the overdue outstanding principal amount of each Loan, payable in arrears on the dates referred to in clause (i) or (ii) of Section 2.06(a), as applicable, and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Loan pursuant to clause (i) or (ii) of Section 2.06(a), as applicable and (ii) to the fullest extent permitted by applicable law, the amount of any overdue interest, fee or other amount payable under this Agreement or any other Loan Document to any Agent or any Lender Creditor that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Loans pursuant to clause (i) of Section 2.06(a).

(c)            Promptly after receipt of a Notice of Borrowing pursuant to Section 2.02, a notice of Conversion pursuant to Section 2.07 or a notice of selection of an Interest Period pursuant to the definition thereof, the Administrative Agent shall give notice to the Borrowers and each applicable Lender of the applicable Interest Period and the applicable interest rate determined by the Administrative Agent for purposes of clause (i) or (ii) of Section 2.06(a), and the applicable rate, if any, furnished by the Administrative Agent for the purpose of determining the applicable interest rate under clause (a)(ii) above. Each such determination shall, absent manifest error, be final and conclusive and binding on all parties hereto.

 

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2.07            Conversion of Loans.

(a)            Optional. The Borrowers may on any Business Day, upon notice given to the Administrative Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.06 and 2.08, Convert all or any portion of the Loans of one Type comprising the same Borrowing into Loans of the other Type; provided, however, that any Conversion of Eurodollar Rate Loans into Base Rate Loans shall be made only on the last day of an Interest Period for such Eurodollar Rate Loans, any Conversion of Base Rate Loans into Eurodollar Rate Loans shall be in an amount not less than (i) with respect to Eurodollar Rate Loans, $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii) with respect to Base Rate Loans, $500,000 or an integral multiple of $100,000 in excess thereof, no Conversion of any Loans shall result in more separate Borrowings than permitted under Section 2.01 or 2.12, as applicable, and each Conversion of Loans comprising part of the same Borrowing shall be made ratably among the Lenders in accordance with their Commitments. Each such notice of Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the identity, amount and Class of the Loans to be Converted and (iii) if such Conversion is into Eurodollar Rate Loans, the duration of the initial Interest Period for such Loans. Each notice of Conversion shall be irrevocable and binding on the Borrowers.

(b)            Mandatory. Upon the occurrence and during the continuance of any Event of Default, (in the case of an Event of Default under Section 8.01(a)(9), automatically, and in the case of any other Event of Default, upon the request of the Required Lenders), (1) each Eurodollar Rate Loan will on the last day of the then existing Interest Period therefor, Convert into a Base Rate Loan and (2) the obligation of the Lenders to make, or to Convert Loans into, Eurodollar Rate Loans shall be suspended.

2.08            Increased Costs, Illegality, Market Disruption, etc.  (a) (i) In the event that any Recipient shall have determined (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) at any time, that such Recipient shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to any Loan because of, without duplication, the introduction of or effectiveness of or any change since the Effective Date in any applicable law, treaty or governmental rule, regulation, order, guideline, directive or request (whether or not having the force of law) concerning capital adequacy, liquidity requirements or changes therein or otherwise or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation, order, guideline or request, such as, for example, but not limited to: (1) any such introduction, effectiveness or change subjecting any Recipient to any Tax, duty or other charge 

 

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with respect to any Loan or Notes, Commitment, or deposits, reserves, other liabilities or capital attributable thereto or its obligation to make such Loan or a change in the basis of taxation of payment to any Recipient of the principal of or interest on the Loans or the Notes or any other amounts payable hereunder (other than any change in the rate or basis of taxation of any Excluded Tax), but without duplication of any amounts payable in respect of Taxes or Indemnified Taxes pursuant to Section 4.08, (2) a change in official reserve requirements but, in all events, excluding reserves required under Regulation D to the extent included in the computation of the Eurodollar Rate or (3) a change that will have the effect of increasing the amount of capital adequacy or liquidity required or requested by an applicable governmental regulatory authority to be maintained by such Lender, or any corporation controlling such Lender, based on the existence of such Lender's Commitments or Loans made hereunder or its obligations hereunder.

(ii)            at any time, that the making or continuance of any Eurodollar Rate Loan has been made unlawful by any law or governmental rule, regulation or order or any central bank or other governmental body or authority shall assert that it is unlawful; then, and in any such event, such Recipient shall promptly give notice (by telephone confirmed in writing) to the Borrowers and, in the case of this clause (ii), to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the Lenders). Thereafter (1) in the case of clause (i) above, the Borrowers agree (to the extent applicable), to pay to such Recipient, upon its written demand therefor, such additional amounts as shall be required to compensate such Recipient or such other corporation for the increased costs or reductions to such Recipient or such other corporation and (2) in the case of the first sentence of this clause (ii), the Borrowers shall take one of the actions specified in Section 2.08(b). In determining such additional amounts, each Recipient will act reasonably and in good faith and will use averaging and attribution methods which are reasonable; provided that such Recipient's determination of compensation owing under this Section 2.08(a) shall, absent manifest error, be final and conclusive and binding on all the parties hereto. Each Recipient, upon determining that any additional amounts will be payable pursuant to this Section 2.08(a), will give prompt written notice thereof to the Borrowers, which notice shall show in reasonable detail the basis for the calculation of such additional amounts. In the case of the circumstances described in the first sentence of this clause (ii), the obligation of the Lenders to make, or to Convert Loans into, Eurodollar Rate Loans shall be suspended until the Administrative Agent shall notify the Borrowers that such Lender has determined that the circumstances causing such suspension no longer exist.

(b)            At any time that any Loan is affected by the circumstances described in Section 2.08(a)(i) or (ii), the Borrowers may (and in the case of a Loan affected by the circumstances described in Section 2.08(a)(ii) shall) either (i) if the affected Loan is then being made initially, cancel the Borrowing by giving the Administrative Agent telephonic notice (confirmed in writing) on the same date or the next Business Day that the Borrowers were notified by the affected Lender or the Administrative Agent pursuant to Section 2.08(a)(i) or (ii) or (ii) if the affected Loan is then outstanding, upon at least three Business Days' written notice to the Administrative Agent, in the case of any Loan, repay the Borrowing (within the time period required by the applicable law or governmental rule, governmental regulation 

 

 

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or governmental order) in full in accordance with the applicable requirements of Section 4.02; provided that prior to such repayment, in the case of any Eurodollar Rate Loan that is affected by the circumstances described in Section 2.08(a)(ii), such Loans will automatically, upon delivery of such notice, Convert into a Base Rate Loan; provided, further, that if more than one Lender is affected at any time, then all affected Lenders must be treated the same pursuant to this Section 2.08(b).

(c)            If a Market Disruption Event occurs in relation to a Eurodollar Rate Loan for any Interest Period, then the Administrative Agent shall forthwith so notify the Borrowers and the Lenders, whereupon (i) each such Eurodollar Rate Loan will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Loan and (ii) the obligation of the Lenders to Convert Loans into, Eurodollar Rate Loans shall be suspended until the Administrative Agent shall notify the Borrowers that such Lenders have determined that the circumstances causing such suspension no longer exist.

(d)            [Reserved].

(e)            Notwithstanding anything in this Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a change after the Effective Date in an applicable law or governmental rule, regulation or order, regardless of the date enacted, adopted, issued or implemented for all purposes under or in connection with this Agreement (including this Section 2.08).

2.09            Compensation.  The Borrowers agree to compensate each Lender, upon its written request (which request shall set forth in reasonable detail the basis for requesting such compensation), for all reasonable and documented losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund its Eurodollar Rate Loans but excluding loss of anticipated profits) which such Lender may sustain: (i) if for any reason (other than a default by such Lender or the Administrative Agent) a Eurodollar Rate Borrowing, Conversion or continuation does not occur on a date specified therefor in the applicable Notice of Borrowing or notice of Conversion or continuation (whether or not withdrawn by the Borrowers or deemed withdrawn pursuant to Section 2.08(a)); (ii) if any prepayment or repayment (including any prepayment or repayment made pursuant to Section 2.08(a), Section 4.01, Section 4.02 or as a result of an acceleration of the Loans pursuant to Section 8) or assignment of any of its Eurodollar Rate Loans pursuant to Section 2.11, occurs on a date which is not the last day of an Interest Period with respect thereto; (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by the Borrowers; or (iv) as a consequence of any other default by the Borrowers to repay Eurodollar Rate Loans or make payment on any Note held by such Lender when required by the terms of this Agreement. Such loss, expense or liability to any Lender 

 

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shall be deemed to include an amount determined by such Lender to be the amount (if any) by which (x) the amount of interest that would have accrued on the principal amount of such Loan had such event not occurred, at the Eurodollar Rate that would have been applicable to such Loan (which, for the avoidance of doubt, will not include the Applicable Margin applicable thereto), for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, Convert or continue, for the period that would have been the Interest Period for such Loan) exceeds (y) the amount of interest that would accrue on such principal amount for such period at the interest rate that such Lender would bid were it to bid, at the commencement of such period for Dollar deposits of a comparable amount and period from other banks in the London interbank market. A certificate of any Lender setting forth any amount or amounts such Lender is entitled to receive pursuant to this Section 2.09 shall be delivered to the Borrowers and shall be conclusive absent manifest error.

2.10            Change of Lending Office; Limitation on Additional Amounts.  Each Lender agrees that upon the occurrence of any event giving rise to the operation of Section 2.08(a), 2.08(b), 4.08(b) or 4.08(d) with respect to such Lender, it will, if requested by the Borrowers, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event, provided that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of such Section. Nothing in this Section 2.10 shall affect or postpone any of the obligations of the Borrowers or the right of any Lender provided in Sections 2.08 and 4.08.

2.11            Replacement of Lenders.  (a) If any Lender becomes a Defaulting Lender, upon the occurrence of any event giving rise to the operation of Section 2.08(a), Section 4.08(b) or 4.08(d) with respect to any Lender which results in such Lender charging to the Borrowers increased costs in excess of those being generally charged by the other Lenders, or as provided in Section 10.12(b) in the case of certain refusals by a Lender to consent to certain proposed changes, waivers, discharges or terminations with respect to this Agreement which have been approved by the Required Lenders, the Borrowers shall have the right, if no Default or Event of Default then exists (or, in the case of preceding clause (ii), will exist immediately after giving effect to the respective replacement), to replace such Lender (the "Replaced Lender") with one or more other Eligible Transferee or Eligible Transferees (collectively, the "Replacement Lender") and each of whom shall be required to be reasonably acceptable to the Administrative Agent if such replacement would (in the case of the preceding clause (i)) result in a reduction of the increased costs charged to the Borrowers, provided that:

(i)            at the time of any replacement pursuant to this Section 2.11, the Replacement Lender shall enter into one or more Assignment and Assumption Agreements pursuant to Section 10.04(b) (and with all fees payable pursuant to said Section 10.04(b) to be paid by the Replacement Lender) pursuant to which the Replacement Lender shall acquire all of the Commitments and outstanding Loans of the Replaced Lender and, in connection therewith, shall pay to the Replaced Lender in respect thereof an amount equal to the principal of, and all accrued and unpaid interest and fees on, all Commitments and outstanding Loans of the Replaced Lender with respect to which such Replaced Lender is being replaced; and

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(ii)            all obligations of the Borrowers due and owing to the Replaced Lender at such time (other than those specifically described in clause (i) above in respect of which the assignment purchase price has been, or is concurrently being, paid) shall be paid in full to such Replaced Lender concurrently with such replacement (including, if applicable, Section 2.15).

(b)            Upon the execution of the respective Assignment and Assumption Agreement, the payment of amounts referred to in clauses (i) and (ii) above and, if so requested by the Replacement Lender, delivery to the Replacement Lender of the appropriate Note or Notes executed by the Borrowers, the Replacement Lender shall become a Lender hereunder and the Replaced Lender shall cease to constitute a Lender hereunder, except with respect to indemnification provisions under this Agreement (including, without limitation, Sections 2.08, 2.09, 4.08, 9.06 and 10.01), which shall survive as to such Replaced Lender.

2.12            Incremental Commitments.

(a)            The Borrowers may on one or more occasions, by written notice to the Administrative Agent, request Incremental Commitments from one or more Incremental Lenders, which may include any existing Lender; provided that (i) no Lender shall be required to provide any Incremental Commitment, (ii) each Incremental Lender (other than a Lender) shall be subject to the approval of the Administrative Agent and the Borrowers (which approvals shall not be unreasonably withheld or delayed) and (iii) the aggregate amount of Incremental Commitments shall not exceed the Incremental Commitment Amount. Such notice shall set forth (i) the amount of the Incremental Commitments being requested (which shall not exceed the then-current Incremental Commitment Amount and shall be in minimum increments of $5,000,000 and a minimum amount of $20,000,000 or equal to the remaining Incremental Commitment Amount) and (ii) the date on which such Incremental Commitments are requested to become effective (which shall not be less than five (5) Business Days nor more than 60 days after the date of such notice (which time periods for notice may be modified or waived at the discretion of the Administrative Agent)). All loans made pursuant to any Class of Incremental Commitments established under this Section 2.12(a) are referred to herein as "Other Term Loans" and will rank pari passu or junior in right of payment and security with the Term Loans and will, if pari passu in right of security with the Term Loans, benefit equally and ratably from the Liens under the Collateral Agreements. Each Class of Other Term Loans will have terms and conditions substantially identical to the Term Loans (other than with respect to pricing, amortization and maturity) and otherwise will be on terms and subject to conditions reasonably satisfactory to the Administrative Agent.

(b)            The Borrowers and each Incremental Lender shall execute and deliver to the Administrative Agent an Incremental Term Loan Amendment and such other documentation as the Administrative Agent shall reasonably specify to evidence the Incremental Commitment of such Incremental Lender. Each Incremental Term Loan Amendment shall specify the terms of the Other Term Loans to be made thereunder; provided that, without the prior written consent of Lenders holding a 

 

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majority of the principal amount of the outstanding Term Loans, (i) the Other Term Loans shall mature no earlier than the Term Maturity Date and will have a Weighted Average Life to Maturity no shorter than the remaining Weighted Average Life to Maturity of the Term Loans, (ii) if the interest rate spread applicable to any Other Term Loans (which, for this purpose, shall be deemed to include all upfront or similar fees or original issue discount (collectively, "Upfront Payments") and any pricing "floor" applicable to such Other Term Loans), but excluding any underwriting, arrangement, structuring or other fees payable in connection therewith that are not generally shared with the Lenders, in each case, paid to the Incremental Lenders in respect of such Other Term Loans, exceeds the interest rate spread applicable to the Term Loans (taking into account Upfront Payments made in respect of the establishment of the Term Loans and any pricing "floor" applicable to the Term Loans) by more than 0.50%, then the interest rate spread applicable to the Term Loans (after taking into account the Upfront Payments paid to the Lenders in respect of the establishment of the Term Loans on the Effective Date and any pricing "floor" applicable to the Term Loans) shall be increased so that it equals the interest rate spread applicable to the Other Term Loans (after taking into account Upfront Payments made in respect of the establishment of the Term Loans and any pricing "floor" applicable to the Term Loans) less 0.50%. Any increase in the interest rate spread required pursuant to this Section 2.12 and resulting from the application of any pricing "floor" on any Other Term Loans will be effected solely through an increase in such pricing "floor" in respect of the Term Loans. For purposes of the foregoing, any original issue discount associated with the Term Loans or any Other Term Loans will be converted to an interest rate spread equivalent by dividing the percentage amount of such original issue discount by the lesser of (A) the Weighted Average Life to Maturity of such Loans and (B) four.

(c)            The Borrowers may on one or more occasions, by written notice to the Administrative Agent, request Revolving Commitments from one or more Revolving Lenders, which may include any existing Lender; provided that (i) no Lender shall be required to provide any Revolving Commitment, (ii) each Revolving Lender shall be subject to the approval of the Administrative Agent and the Borrowers and (iii) the aggregate amount of Revolving Commitments shall not exceed $50,000,000. Such notice shall set forth (i) the amount of the Revolving Commitments being requested (which shall not exceed, together with all existing Revolving Commitments, $50,000,000 and shall be in minimum increments of $5,000,000 and a minimum amount of $20,000,000) and (ii) the date on which such Revolving Commitments are requested to become effective (which shall not be less than five (5) Business Days nor more than 60 days after the date of such notice (which time periods for notice may be modified or waived at the discretion of the Administrative Agent)).

(d)            The Borrowers and each Revolving Lender shall execute and deliver to the Administrative Agent an Incremental Revolving Credit Amendment, a joinder to the Security Agreement and such other documentation as the Administrative Agent shall reasonably specify to evidence the Revolving Commitment of such Revolving Lender. Each Incremental Revolving Credit Amendment shall specify the terms of the Revolving Commitments and the Revolving Loans to be made thereunder (including the Revolving Commitment of each Revolving Lender party thereto, the Applicable Margin with respect to the Revolving Loans thereunder and the Revolving Availability Period, the Revolving Maturity Date and the Commitment Fees with respect to the Revolving Commitments thereunder).

 

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(e)            Each Incremental Term Loan Amendment or Incremental Revolving Credit Amendment shall require the consent of only the Parent, the Borrowers, the Administrative Agent and the Incremental Lenders providing the applicable Other Term Loans or the Revolving Lenders providing the applicable Revolving Commitments, as the case may be, but, in each case, not the consents of any other Lenders. Each of the parties hereto hereby agrees that, upon the effectiveness of any Incremental Term Loan Amendment or Incremental Revolving Credit Amendment, this Agreement and the other Loan Documents (other than the Intercreditor Agreement) shall be deemed amended to the extent (but only to the extent) necessary to reflect the existence and terms of the Other Term Loans or Revolving Commitments evidenced thereby (as applicable), including the amount and final maturity thereof, any provisions relating to amortization and the interest to accrue and be payable thereon and any fees to be payable in respect thereof, and to effect such other changes (including changes to the provisions of Sections 4.08, 10.06 and 10.12, the definition of "Required Lenders" and any other provisions of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights under the Loan Documents or make any determination or grant any consent under the Loan Documents) as the Borrowers and the Administrative Agent shall deem necessary or advisable in connection with the establishment of such Other Term Loans or Revolving Commitments (as applicable); provided, however, that, in the event that any Revolving Commitments are available or any Revolving Loans are outstanding, the foregoing provisions of this paragraph shall not override (or be construed to override) the requirements of clause (b) of Section 10.12(a)(iv), with any additional credit facilities intended to share ratably in the benefits of this Agreement and the other Loan Documents with such Revolving Loans and related Revolving Obligations to be subject to the prior consent of the Required Revolving Lenders and the Required Term Lenders in the circumstances contemplated by such clause (b). Any such deemed amendment may be memorialized in writing by the Administrative Agent with the Borrowers' consent (not to be unreasonably withheld or delayed) and furnished to the other parties hereto.

(f)            Notwithstanding the foregoing, no Incremental Term Loan Amendment or Incremental Revolving Credit Amendment shall become effective under this Section 2.12 unless (i) on the date of such effectiveness and after giving effect to the making of any Other Term Loans or any Revolving Loans (as applicable) contemplated thereby the conditions set forth in Section 5.02 shall be satisfied, (ii) all fees owing in respect of such Incremental Commitments or Revolving Commitments (as applicable) to the Administrative Agent and the Lenders and all expenses in respect of such Incremental Commitments or Revolving Commitments (as applicable) that the Borrowers are required to reimburse have been paid in full and (iii) the Administrative Agent shall have received legal opinions, board resolutions and other closing certificates and documentation as it shall reasonably request relating to such Other Term Loans or Revolving Commitments (as applicable), consistent with those delivered on the Effective Date. The Administrative Agent shall promptly notify each Lender as to the effectiveness of each Incremental Term Loan Amendment or Incremental Revolving Credit Amendment.

 

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2.13            Loan Repurchases.

(a)            Subject to the terms and conditions set forth or referred to below, the Borrowers may from time to time, at their discretion, conduct modified Dutch auctions in order to purchase outstanding Loans or Other Term Loans of one or more Classes (as determined by the Borrowers) (each, a "Purchase Offer"), each such Purchase Offer to be managed by an investment bank of recognized standing selected by the Borrowers that is reasonably acceptable to the Administrative Agent (in such capacity, the "Auction Manager"), so long as the following conditions are satisfied:

(i)            each Purchase Offer shall be conducted in accordance with the procedures, terms and conditions set forth in this Section 2.13 and the Auction Procedures;

(ii)            no Default or Event of Default shall have occurred and be continuing on the date of the delivery of each Auction Notice and at the time of purchase of any of the Loans in connection with any Purchase Offer;

(iii)            the proceeds from Revolving Loans may not be used to consummate any such purchase of Term Loans;

(iv)            the aggregate principal amount (calculated on the face amount thereof) of all Loans or Other Term Loans of the applicable Class or Classes so purchased by the Borrowers or any Subsidiary of the Borrowers shall automatically be cancelled and retired by the Borrowers on the settlement date of the relevant purchase (and will thereafter no longer be outstanding hereunder) (it being agreed that any gains or losses by the Borrowers upon the purchase and cancelation of Loans or Other Term Loans shall not be taken into account in the calculation of Consolidated Cash Flow or Consolidated Net Income);

(v)            no more than one (1) Purchase Offer with respect to any Class may be ongoing at any one time and no more than four (4) Purchase Offers may be made in any one year;

(vi)            the Borrowers represent and warrant that no Loan Party shall have any Parent Restricted Information that (1) has not been previously disclosed in writing to the Administrative Agent and the Lenders (other than because such Lender does not wish to receive such Parent Restricted Information) prior to such time and (2) could reasonably be expected to have a material effect upon, or otherwise be material to, a Lender's decision to participate in the Purchase Offer; and

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(vii)            at the time of each purchase of any Loans or Other Term Loans through a Purchase Offer, the Borrowers shall have delivered to the Auction Manager an officer's certificate of an Authorized Representative of the Borrowers certifying as to compliance with the preceding clause (vi).

(b)            The Borrowers must terminate any Purchase Offer if they fail to satisfy one or more of the conditions set forth above or cannot reasonably be expected to satisfy such conditions at the time set for purchase of any Loans or Other Term Loans pursuant to such Purchase Offer. If the Borrowers commence any Purchase Offer (and all relevant requirements set forth above which are required to be satisfied at the time of the commencement of such Purchase Offer have in fact been satisfied), and if at such time of commencement the Borrowers reasonably believe that all required conditions set forth above which are required to be satisfied at the time of the consummation of such Purchase Offer shall be satisfied, then the Borrowers shall have no liability to any Lender or Incremental Lender for any termination of such Purchase Offer as a result of its failure to satisfy one or more of the conditions set forth above which are required to be met at the time which otherwise would have been the time of consummation of such Purchase Offer, and any such failure shall not result in any Default or Event of Default hereunder. With respect to all purchases of Loans or Other Term Loans of any Class or Classes made by the Borrowers pursuant to this Section 2.13, (i) the Borrowers shall pay on the settlement date of each such purchase all accrued and unpaid interest (except to the extent otherwise set forth in the relevant offering documents), if any, on the purchased Loans or Other Term Loans of the applicable Class or Classes up to the settlement date of such purchase and (ii) such purchases (and the payments made by the Borrowers and the cancellation of the purchased Loans or Other Term Loans, in each case in connection therewith) shall not constitute voluntary or mandatory payments or prepayments for purposes of Section 4.01 or Section 4.02 hereof.

(c)            The Administrative Agent and the Lenders hereby consent to the Purchase Offers and the other transactions effected pursuant to and in accordance with the terms of this Section 2.13 (provided that no Lender shall have an obligation to participate in any such Purchase Offer). For the avoidance of doubt, it is understood and agreed that the provisions of Sections 4.08, 10.04 and 10.06 will not apply to the purchases of Loans or Other Term Loans pursuant to Purchase Offers made pursuant to and in accordance with the provisions of this Section 2.13. The Auction Manager acting in its capacity as such hereunder shall be entitled to the benefits of the provisions of 9.06 to the same extent as if each reference therein to the "Administrative Agent" were a reference to the Auction Manager, and the Administrative Agent shall cooperate with the Auction Manager as reasonably requested by the Auction Manager in order to enable it to perform its responsibilities and duties in connection with each Purchase Offer.

2.14            Extension Offers.

(a)            The Borrowers may at any time and from time to time request that all or a portion of the Commitments or Loans of any Class, in each case existing at the 

 

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time of such request (each, an "Existing Commitment" or an "Existing Loan", as applicable) be converted to extend the termination date thereof and the scheduled maturity date(s) of any payment of principal with respect to all or a portion of any principal amount of Existing Loans (any Commitments which have been so extended, "Extended Commitments", and any Loans which have been so extended, "Extended Loans") and to provide for other terms consistent with this Section 2.14. Prior to entering into any Extension Amendment (as defined below) with respect to any Extended Commitments or Extended Loans, the Borrowers shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of the Lenders in respect of the applicable Existing Commitments and/or Existing Loans and which such request shall be offered equally to all such Lenders) (an "Extension  Request") setting forth the proposed terms of the Extended Commitments and/or Extended Loans to be established thereunder, which terms shall be substantially similar to those applicable to the Existing Commitments and/or Existing Loans from which they are to be extended (the "Specified Existing Loan Class") except that (i) all or any of the final maturity dates of such Extended Commitments and/or Extended Loans may be delayed to later dates than the final maturity dates of the Existing Commitments and/or Existing Loans of the Specified Existing Loan Class, (ii)(x) the interest rates, interest margins, rate floors, upfront fees, funding discounts, original issue discounts and premiums with respect to the Extended Commitments and/or Extended Loans may be different from those for the Existing Commitments and/or Existing Loans of the Specified Existing Loan Class and/or (y) additional fees and/or premiums may be payable to the Lenders providing such Extended Commitments and/or Extended Loans in addition to or in lieu of any of the items contemplated by the preceding clause (x), and (iii) the Extension Amendment may provide for other covenants and terms that apply to any period after the Maturity Date in respect of the Specified Existing Loan Class (as such date is set forth on the date of any determination); provided that, notwithstanding anything to the contrary in this Section 2.14 or otherwise, (A) the borrowing and repayment of the Extended Loans shall be made on a pro rata basis with any borrowings and repayments of the Existing Loans of the Specified Existing Loan Class (the mechanics for which may be implemented through the applicable Extension Amendment (as defined below) and may include technical changes related to the borrowing and replacement procedures of the Specified Existing Loan Class), except with respect to any such repayment of the Existing Loans of the Specified Existing Loan Class on the applicable Maturity Date in respect thereof, and (B) assignments and participations of Extended Commitments and Extended Loans shall be governed by the assignment and participation provisions set forth in Section 10.04. No Lender shall have any obligation to agree to have any of its Commitments or Loans converted into Extended Commitments or Extended Loans, as applicable, pursuant to any Extension Request. Any (1) Extended Commitments shall constitute a separate Class of Commitments from Existing Commitments of the Specified Existing Loan Class and from any other Existing Commitments and (2) Extended Loans shall constitute a separate Class of Loans from Existing Loans of the Specified Existing Loan Class and from any other Existing Loans.

(b)            The Borrowers shall provide the applicable Extension Request at least three (3) Business Days (or such shorter period as the Administrative Agent may 

 

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determine in its reasonable discretion) prior to the date on which Lenders holding Existing Commitments and/or Existing Loans are requested to respond, and shall agree to such procedures, if any, as may be established by, or acceptable to, the Administrative Agent, in each case acting reasonably, to accomplish the purpose of this Section 2.14. Any Lender (an "Extending Lender") wishing to have all or a portion of its Commitments and/or Loans (or any earlier Extended Commitments and/or Extended Loans) subject to such Extension Request converted into Extended Commitments and/or Extended Loans shall notify the Administrative Agent (an "Extension Election") on or prior to the date specified in such Extension Request of the amount of its Commitments and/or Loans (and/or any earlier Extended Commitments and/or Extended Loans) which it has elected to convert into Extended Commitments and/or Extended Loans. In the event that the aggregate amount of Commitments and/or Loans (and any earlier Extended Commitments and/or Extended Loans) subject to an Extension Election exceeds the amount of Extended Commitments and/or Extended Loans requested pursuant to the applicable Extension Request, Commitments and/or Loans (and any earlier Extended Commitments and/or Extended Loans) subject to such Extension Election shall be converted to Extended Commitments and/or Extended Loans on a pro rata basis based on the amount of Commitments and/or Loans (and any earlier Extended Commitments and/or Extended Loans) included in such Extension Election or as may be otherwise agreed to in the applicable Extension Amendment.

(c)            Extended Commitments and Extended Loans shall be established pursuant to an amendment (an "Extension Amendment") to this Agreement (which, notwithstanding anything to the contrary set forth in Section 10.12, shall not require the consent of any Lender other than the Extending Lenders with respect to the Extended Commitments and/or Extended Loans established thereby) executed by the Loan Parties, the Administrative Agent and the Extending Lenders. It is understood and agreed that each Lender hereunder has consented, and shall at the effective time thereof be deemed to consent, to each amendment to this Agreement and the other Loan Documents authorized by this Section 2.14 and the arrangements described above in connection therewith. Notwithstanding anything to the contrary in this Section 2.14(c) and without limiting the generality or applicability of Section 10.12 to any Section 2.14 Additional Amendments (as defined below), any Extension Amendment may provide for additional terms and/or additional amendments other than those referred to or contemplated above (any such additional amendment, a "Section 2.14 Additional Amendment") to this Agreement and the other Loan Documents; provided that such Section 2.14 Additional Amendments are within the requirements of Section 2.14(a) and do not become effective prior to the time that such Section 2.14 Additional Amendments have been consented to (including pursuant to consents applicable to holders of any Extended Loans provided for in any Extension Amendment) by such of the Lenders, Loan Parties and other parties (if any) as may be required in order for such Section 2.14 Additional Amendments to become effective in accordance with Section 10.12.

(d)            Notwithstanding anything to the contrary contained in this Agreement, (i) on any date on which any class of Existing Commitments and/or

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Existing Loans is converted to extend the related scheduled maturity date(s) in accordance with paragraph (a) above (an "Extension Date"), (A) in the case of the Existing Commitments of each Extending Lender under any Specified Existing Loan Class, the aggregate amount of such Existing Commitments shall be deemed reduced by an amount equal to the aggregate amount of Extended Commitments so converted by such Lender on such date, and such Extended Commitments shall be established as a separate Class of Commitments from the Specified Existing Loan Class and from any other Existing Commitments (together with any other Extended Commitments so established on such date) and (B) in the case of the Existing Loans of each Extending Lender under any Specified Existing Loan Class, the aggregate principal amount of such Existing Loans shall be deemed reduced by an amount equal to the aggregate principal amount of Extended Loans so converted by such Lender on such date, and such Extended Loans shall be established as a separate Class of Loans from the Specified Existing Loan Class and from any other Existing Loans (together with any other Extended Loans so established on such date) and (ii) if, on any Extension Date, any Existing Loans of any Extending Lender are outstanding under the Specified Existing Loan Class, such Existing Loans (and any related participations) shall be deemed to be allocated as Extended Loans (and related participations) in the same proportion as such Extending Lender's Existing Loans under the Specified Existing Loan Class to Extended Loans.

(e)            No exchange of Loans pursuant to any Extension Amendment in accordance with this Section 2.14 shall constitute a voluntary or mandatory payment or prepayment for purposes of this Agreement.

(f)            In connection with any extension of the Revolving Commitments of any Class pursuant to this Section 2.14, the applicable Section 2.14 Additional Amendment shall provide that the allocation with respect to any borrowings, repayments or prepayments of Revolving Loans or reductions of Revolving Commitments (other than repayments or reductions made in connection with the occurrence of the final Maturity Date of any Class of Revolving Loans or Revolving Commitments) shall be made on a ratable basis as between each Class of Revolving Loans and Revolving Commitments

2.15            Term Loan Refinancing Protection.  In the event that, on or prior to the third anniversary of the Effective Date, the Borrowers prepay any Term Loans pursuant to Section 4.01, such voluntary prepayments shall be accompanied by a fee equal to (i) in the case of voluntary prepayments made on or prior to the first anniversary of the Effective Date, 3.0% of the principal amount so prepaid, (ii) in the case of voluntary prepayments made after the first anniversary but on or prior to the second anniversary of the Effective Date, 2.0% of the principal amount so prepaid and (iii) in the case of voluntary prepayments made after the second anniversary but on or prior to the third anniversary of the Effective Date, 1.0% of the principal amount so prepaid. Any prepayments of Term Loans after the third anniversary of the Effective Date may be made without premium or penalty.

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2.16            Defaulting Lenders.

(a)            Adjustments.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(i)            Waivers and Amendments.  The Commitments and Loans of that Defaulting Lender shall not be included in determining whether the Required Lenders or any other requisite Lenders have taken or may take any action hereunder or under any other Loan Document (including any consent to any amendment, waiver or other modification pursuant to Section 10.12); provided that any amendment, waiver or other modification requiring the consent of all Lenders affected thereby shall, except as otherwise provided in Section 10.12, require the consent of that Defaulting Lender in accordance with the terms hereof.

(ii)            Reallocation of Payments.  Any payment of principal, interest, fees or other amounts received by Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, or otherwise), shall be applied at such time or times as may be determined by Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to Administrative Agent hereunder; second, as Borrowers may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by Administrative Agent; third, if so determined by Administrative Agent and Borrowers, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; fourth, to the payment of any amounts owing to Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a result of that Defaulting Lender's breach of its obligations under this Agreement; fifth, so long as no Default or Event of Default exists, to the payment of any amounts owing to any Borrower as a result of any judgment of a court of competent jurisdiction obtained by that Borrower against that Defaulting Lender as a result of that Defaulting Lender's breach of its obligations under this Agreement; and sixth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans were made at a time when the conditions set forth in Section 5.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of that Defaulting Lender. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 2.16(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

(iii)            Certain Fees. That Defaulting Lender shall not be entitled to receive any Commitment Fee pursuant to Section 3.01 for any period during which that Lender is a Defaulting Lender (and the Borrowers shall not be required to pay any such Commitment Fee that otherwise would have been required to have been paid to that Defaulting Lender during such period).

 

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(b)            Defaulting Lender Cure. If the Borrowers and the Administrative Agent agree in writing in their discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as Administrative Agent may determine to be necessary to cause the Loans to be held on a pro rata basis by the Lenders in accordance with their applicable Percentage, whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender's having been a Defaulting Lender. The rights and remedies against a Defaulting Lender under this Section 2.16 are in addition to other rights and remedies that the Borrowers, the Administrative Agent and the non-Defaulting Lenders may have against such Defaulting Lender. The arrangements permitted or required by this Section 2.16 shall be permitted under this Agreement, notwithstanding any limitation on Liens or otherwise.

SECTION 3.      Fees.

3.01            Commitment Fee.  If the Borrowers obtain Revolving Commitments, the Borrowers will pay to the Administrative Agent for the account of each Revolving Lender commitment fees (the "Commitment Fee") as provided in an Incremental Revolving Credit Amendment. Except as otherwise provided in an Incremental Revolving Credit Amendment, accrued commitment fees shall be payable in arrears on each Quarterly Payment Date and on the date on which the Revolving Commitments terminate, commencing on the first such date to occur after the Effective Date. For purposes of computing commitment fees, a Revolving Commitment of a Revolving Lender shall be deemed to be used to the extent of the outstanding Revolving Loans.

3.02            Other Fees.  The Borrowers agree to pay the fees set forth in the Fee Letters.

3.03            General.  All Fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of Commitment Fees, to the Revolving Lenders entitled thereto. Fees paid hereunder shall not be refundable under any circumstances. The fees paid hereunder shall not be subject to reduction by way of set-off or counterclaim and shall be payable free and clear of and without deduction for any and all present and future applicable taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto (with appropriate gross-up for withholding taxes).

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SECTION 4.           Prepayments; Payments; Taxes.

4.01            Voluntary Prepayments.

The Borrowers shall have the right to prepay the Loans, without premium or penalty (except, if applicable, pursuant to Section 2.15 or as set forth in the applicable Incremental Term Loan Amendment) in whole or in part, at any time and from time to time on the following terms and conditions:

(a)            an Authorized Representative of the Borrowers shall give the Administrative Agent prior to 12:00 Noon (New York time) at the Notice Office at least three (3) Business Days prior written notice (or telephonic notice promptly confirmed in writing) of its intent to prepay such Loans;

(b)            voluntary prepayments of any Class of Loans made by the Borrowers pursuant to this Section shall be allocated among such Class of Loans (and to the remaining scheduled installments of principal with respect to such Class of Loans) in a manner determined at the discretion of the Borrowers;

(c)            partial prepayments shall be in an aggregate amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof and shall be applied on a pro rata basis to the outstanding amount of the Loans;

(d)            any notice of prepayment pursuant to this Section 4.01 shall specify (1) the amount of such prepayment, (2) the prepayment date, (3) the Class of Loans to be prepaid and (4) the allocation of the amount specified pursuant to clause (1) among the Loans specified pursuant to clause (3) and which notice the Administrative Agent shall promptly transmit to each of the Lenders; and

(e)            at the time of any prepayment of the Loans pursuant to this Section 4.01 on any date other than the last day of the Interest Period applicable thereto, the Borrowers shall pay the amounts required to be paid pursuant to Section 2.09.

(f)            Notwithstanding the foregoing (and as provided in clause (A) of the proviso to Section 2.14(a)), the Borrowers may not prepay Extended Loans of any Extension Series unless such prepayment is accompanied by a pro rata repayment of Existing Loans of the Specified Existing Loan Class of the Existing Loans from which such Extended Loans were converted (or such Existing Loans have otherwise been repaid and terminated in full).

4.02            Event of Loss.

(a)            Upon the occurrence or happening of any Event of Loss in respect of a Collateral Vessel (such Collateral Vessel, the "Lost Mortgaged Collateral Vessel"), and the receipt of Event of Loss Proceeds in respect thereof, the Borrower shall cause all such Event of Loss Proceeds to be deposited into a deposit account controlled by the Pari Passu Collateral Agent within five (5) Business Days of receipt thereof and held as Collateral subject to a Lien under the Collateral Agreements pending the application of such funds in accordance with the terms of this Section 4.02 and the Intercreditor Agreement.

 

 

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(b)            Within 365 days (subject to extension as provided in Section 4.02(c)) after the receipt of any Event of Loss Proceeds (or such fewer number of days as are necessary to ensure that such Event of Loss Proceeds are not required to be utilized in respect of an asset sale offer or similar offer to repay, repurchase or redeem Indebtedness pursuant to the DRH Existing Notes Indenture or any other instrument governing Indebtedness of the Parent and its Restricted Subsidiaries), the Borrower or the applicable Borrower Subsidiary Guarantor, as the case may be, shall apply such Event of Loss Proceeds at its option to any combination of the following:

(1)            to substitute one or more Substitute Vessels (and to make any Permitted Repairs with respect thereto) for such Lost Mortgaged Collateral Vessel and make each such Substitute Vessel subject to a Mortgage pursuant to which the Pari Passu Collateral Agent shall obtain a Lien, on a first-priority basis, on such Substitute Vessel for the benefit of itself, the Administrative Agent, the Lenders and the holders of other Pari Passu Obligations; or

(2)            make an Event of Loss Offer in accordance with the terms hereof.

(c)            A binding commitment to apply Event of Loss Proceeds from an Event of Loss in accordance with clause (1) above shall toll the 365-day period in respect of such Event of Loss Proceeds for a period not to exceed 365 days from the expiration of the aforementioned 365-day period so long as such Event of Loss Proceeds are actually used within the later of 365 days from their receipt from such Event of Loss or 365 days from the date of such binding commitment.

(d)            (i)            Any Event of Loss Proceeds that have not been previously applied or invested as provided in Section 4.02(b) will constitute "Excess Loss Proceeds". When the aggregate amount of Excess Loss Proceeds exceeds $15,000,000, the Borrower shall, or shall cause the applicable Borrower Subsidiary Guarantor to, within 10 Business Days thereof, make an offer (an "Event of Loss Offer"), solely to the Term Lenders and other holders of Pari Passu Obligations, to repay or purchase the maximum principal amount of Term Loans and other Pari Passu Obligations out of the Excess Loss Proceeds. The offer price for the Loans in any Event of Loss Offer shall be equal to 100% of the outstanding principal amount, plus accrued and unpaid interest, if any, on the Loans repaid to the applicable repayment date, payable in cash.

(ii)            In the event that, pursuant to this Section 4.02, the Borrower or a Borrower Subsidiary Guarantor is required to commence an Event of Loss Offer, each such Event of Loss Offer shall remain open for a period of at least 20 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the "Event of Loss Offer Period"); provided that such Event of Loss Offer Period shall be extended in order to terminate substantially contemporaneously with the comparable time periods provided to holders of other Pari Passu Obligations participating in such Event of Loss Offer, if any. No later than five (5) Business Days after the termination of the Event of Loss Offer Period (the "Event of Loss Offer Settlement Date"), the Borrower shall apply all Excess Loss Proceeds as set forth in this Section 4.02.

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(iii)            Upon the commencement of an Event of Loss Offer, the Borrower shall deliver a notice to the Administrative Agent at the Notice Office, which the Administrative Agent shall promptly deliver to each Lender. The notice shall state:

(1)            that the Event of Loss Offer is being made pursuant to this Section 4.02 and the length of time the Event of Loss Offer shall remain open, including the time and date the Event of Loss Offer will terminate (the "Event of Loss Offer Termination Date");

(2)            the amount of Excess Loss Proceeds, the offer price (as set forth above) and the Event of Loss Offer Settlement Date;

(3)            that the Lenders electing to have any Loans purchased pursuant to any Event of Loss Offer shall be required to notify the Borrowers and the Administrative Agent at least one Business Day before the Event of Loss Offer Termination Date; and

(4)            that Lenders shall be entitled to withdraw their election if the Administrative Agent receives, not later than the Business Day prior to the Event of Loss Offer Termination Date, a facsimile transmission or letter setting forth the name of the Lender, a statement that such Lender is withdrawing its election to have its Loans purchased and the principal amount of the Loans with respect to which such Lender is withdrawing its election.

(e)            The aggregate principal amount of Loans repaid pursuant to an Event of Loss Offer shall be applied to the remaining scheduled installments of principal with respect to the applicable Class of Loans on a pro rata basis. If the aggregate principal amount of Indebtedness tendered, or repaid pursuant to, such Event of Loss Offer exceeds the amount of Excess Loss Proceeds, the Loans shall be repaid or repurchased on a pro rata basis and, if applicable, the Parent shall select such other Indebtedness for purchase based on amounts tendered or prepaid. For the purposes of calculating the principal amount of any such Indebtedness not denominated in dollars, such Indebtedness shall be calculated by converting any such principal amounts into their Dollar Equivalent determined as of the Business Day immediately prior to the date on which the Event of Loss Offer is announced. If any Excess Loss Proceeds remain after consummation of an Event of Loss Offer, such Excess Loss Proceeds shall no longer constitute Collateral and, at the Parent's or the applicable Restricted Subsidiary's sole cost and expense, the Lien over such Excess Loss Proceeds shall be released and the Parent and the Restricted Subsidiaries may use such Excess Loss Proceeds for any purpose not otherwise prohibited by the Loan Documents. Upon completion of each Event of Loss Offer required by this Section 4.02(e), the amount of Excess Loss Proceeds will be reset at zero.

4.03            Change of Control.

(a)            Upon the occurrence of a Change of Control, each Lender shall have the right to require the Borrower to repurchase all or any part, equal to a minimum amount of $1,000,000 and integral multiples of $1,000,000 in excess thereof, of that Lender's Loans pursuant to a change of control offer (a "Change of Control Offer") in an amount equal to 101% of the outstanding principal amount thereof, plus accrued and unpaid interest (if any) to the repayment date, except to the extent the Borrowers have previously or concurrently elected to prepay the Loans in accordance with Section 4.01.

 

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(b)            No later than 30 Business Days following any Change of Control, except to the extent the Borrowers have elected to prepay the Loans in accordance with Section 4.01, the Borrower will give the Administrative Agent notice (the "Change of Control Notice") of the Change of Control at the Notice Office, which the Administrative Agent shall promptly deliver to each Lender. The Change of Control Notice shall:

(i)            state that a Change of Control has occurred and that each Lender has the right to require the Borrower to repay such Lender's Loans in an amount equal to 101% of the outstanding principal amount thereof, plus accrued and unpaid interest to the repayment date;

(ii)            state the circumstances and relevant facts and financial information regarding such Change of Control;

(iii)            state the repayment date (which shall be no earlier than 30 days nor later than 60 days from the date on which the Administrative Agent is notified) (the "Change of Control Payment Date");

(iv)            state that Lenders electing to have any Loans repaid pursuant to a Change of Control Offer will be required to notify the Administrative Agent prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(v)            state that Lenders will be entitled to withdraw their election to require the Borrowers to repay such Loans; provided that the Administrative Agent receives, not later than the close of business on the Business Day prior to the expiration date of the Change of Control Offer, a facsimile transmission, electronic mail or letter setting forth the name of such Lender, the principal amount of Loans to be repaid, and a statement that such Lender is withdrawing its election to have such Loans repaid; and

(vi)            provide the other instructions determined by the Borrower or as reasonably requested by the Administrative Agent, consistent with this Section 4.03, that a Lender must follow in order to have its Loans repaid.

The notice, if delivered in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Lender receives such notice. If (1) the notice is delivered in a manner herein provided and (2) any Lender fails to receive such notice or a Lender receives such notice but it is defective, such Lender's failure to receive such notice or such defect shall not affect the validity of the proceedings for the repayment of the Loans as to all other Lenders that properly received such notice without defect.

(c)            On or before the Change of Control Payment Date, the Borrower will repay all Loans or portions of Loans properly elected to be repaid and not withdrawn pursuant to the Change of Control Offer in an amount equal to 101% of the outstanding principal amount thereof, plus accrued and unpaid interest (if any) to the repayment date.

 

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(d)            A Change of Control Offer may be made in advance of a Change of Control, and conditioned upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

(e)            The Borrower will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Agreement and repays all Loans properly elected to be repaid and not withdrawn under such Change of Control Offer and the Borrower shall instruct the Administrative Agent to accept repayments made by such third party.

(f)            The aggregate principal amount of Loans repaid pursuant to a Change of Control Offer shall be applied to the remaining scheduled installments of principal with respect to the applicable Class of Loans on a pro rata basis.

(g)            For the avoidance of doubt, any Change of Control Offer made by the Borrower pursuant to this Section 4.03 shall be deemed to be made on behalf of the Borrower and Finco.

4.04            Prepayment of Revolving Loans.  In the event and on each occasion that the aggregate outstanding principal amount of Revolving Loans of any Class exceeds the aggregate Revolving Commitments of such Class, the Borrowers shall prepay Borrowings of Revolving Loans of such Class in an aggregate amount equal to such excess.

4.05            Termination and Reduction of Commitments.

(a)            Unless previously terminated, any Revolving Commitments shall be automatically and permanently reduced to zero on the applicable Revolving Maturity Date.

(b)            The Borrowers may at any time terminate, or from time to time permanently reduce, the Commitments of any Class; provided that (i) each partial reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 (unless the Commitments of such Class are less than $5,000,000, in which case the Borrowers may terminate such Class of Commitments) and (ii) the Borrowers shall not terminate or reduce the Revolving Commitments of any Class if, after giving effect to any concurrent prepayment of the Revolving Loans of such Class in accordance with Section 4.04, the aggregate principal amount of Revolving Loans of such Class outstanding at such time would exceed the aggregate amount of Revolving Commitments of such Class at such time.

The Borrowers shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section 4.05 at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the

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effective date thereof. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the applicable Class of the contents thereof. Each notice delivered by the Borrowers pursuant to this Section 4.05 shall be irrevocable; provided that a notice of termination or reduction of the Revolving Commitments delivered under this paragraph may state that such notice is conditioned upon the occurrence of one or more events specified therein, in which case such notice may be revoked by the Borrowers (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.

4.06            Repayment of the Loans.

(a)            Subject to Section 4.10, the Borrowers shall repay to the Administrative Agent, for the account of the applicable Term Lender, Term Loans in quarterly installments, each in an aggregate amount equal to $3,250,000 (such amounts, as adjusted from time to time pursuant to Sections 4.01, 4.02 and 4.03, the "Term Loan Repayment Amount"), which repayments will begin on the date which is three (3) months following the Effective Date, with the balance payable on the Term Maturity Date.

(b)            [Reserved.]

(c)            The Borrowers shall pay to the Administrative Agent, for the account of the applicable Incremental Lenders, on each Incremental Repayment Date, including the Incremental Maturity Date, a principal amount of the Other Term Loans (such amounts, as adjusted from time to time pursuant to Sections 4.01, 4.02 and 4.03, the "Incremental Repayment Amount") equal to the amount set forth for such date in the applicable Incremental Term Loan Amendment.

(d)            The Borrowers shall repay to the Administrative Agent, for the account of the applicable Revolving Lender, the then unpaid principal amount of any Revolving Loan of such Revolving Lender on the applicable Revolving Maturity Date.

(e)            All repayments pursuant to this Section 4.06 shall be accompanied by accrued and unpaid interest on the principal amount paid to but excluding the date of payment, but shall otherwise be without premium or penalty. In the event that any Loans are purchased or acquired by the Borrowers pursuant to Purchase Offers under Section 2.13 or any portion of any Loans are converted into a new Extension Series pursuant to an Extension Amendment effected pursuant to Section 2.14, then the Term Loan Repayment Amount and the Incremental Repayment Amount attributable to each Term Loan or Other Term Loan of each Class or Extension Series, as applicable, that was outstanding prior to and remains outstanding after such Purchase Offer or Extension Amendment, as the case may be, will not be reduced or otherwise affected by such transaction.

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4.07            Method and Place of Payment.

Except as otherwise specifically provided herein, all payments under this Agreement and under any Note shall be made to the Administrative Agent for the account of the Lender or Lenders entitled thereto not later than 12:00 Noon (New York time) on the date when due and shall be made in Dollars in immediately available funds at the Payment Office. Any payments under this Agreement or under any Note which are made later than 12:00 Noon (New York time) on any day shall be deemed to have been made on the next succeeding Business Day. Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension.

4.08            Net Payments; Taxes.

(a)            All payments made by any Loan Party hereunder or under any other Loan Document will be made without setoff, counterclaim or other defense.

(b)            Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law. If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 4.08) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(c)            The Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(d)            The Loan Parties shall jointly and severally indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 4.08) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrowers by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

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(e)            Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender's failure to comply with the provisions of Section 10.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e).

(f)            As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 4.08, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(g)            (i)            Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrowers and the Administrative Agent, at the time or times reasonably requested by the Borrowers or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrowers or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrowers or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrowers or the Administrative Agent as will enable the Borrowers or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation shall not be required if in the Lender's reasonable judgment, exercised in good faith, such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrowers and the Administrative Agent in writing of its legal inability to do so.

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(ii)            Without limiting the generality of the foregoing, in the event that any Borrower is a U.S. Person,

(A)            any Lender that is a U.S. Person shall deliver to the Borrowers and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under any Loan Document (and from time to time thereafter upon the reasonable request of any Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. Federal backup withholding tax;

(B)            any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under any Loan Document (and from time to time thereafter upon the reasonable request of any Borrower or the Administrative Agent), whichever of the following is applicable:

(a)            in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the "interest" article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the "business profits" or "other income" article of such tax treaty;

(b)            executed originals of IRS Form W-8ECI;

(c)            in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit M-1 to the effect that such Foreign Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, a "10 percent shareholder" of any Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a "controlled foreign corporation" described in Section 881(c)(3)(C) of the Code (a "U.S. Tax Compliance Certificate") and (y) executed originals of IRS Form W-8BEN; or

(d)            to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit M-2 or Exhibit M-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit M-4 on behalf of each such direct and indirect partner;

 

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(C)            any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. Federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrowers or the Administrative Agent to determine the withholding or deduction required to be made; and

(D)            If a payment made to a Recipient under any Loan Document would be subject to U.S. Federal withholding Tax imposed by FATCA if such Recipient were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Recipient shall deliver to the Borrowers and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrowers or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrowers or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine that such Recipient has complied with such Recipient's obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), "FATCA" shall include any amendments made to FATCA after the Effective Date.

(h)            If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 4.08 (including by the payment of additional amounts pursuant to this Section 4.08), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 4.08 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (h) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this paragraph (h), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving 

 

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rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(i)            Each party's obligations under this Section 4.08 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all Loan Document Obligations.

(j)            For purposes of this Section 4.08, the term "applicable law" includes FATCA.

4.09            Application of Proceeds.  All monies collected by the Administrative Agent (whether received from the Pari Passu Collateral Agent or otherwise) upon any sale or other disposition of the Collateral of each Loan Party, together with all other monies received by the Administrative Agent (whether received from the Pari Passu Collateral Agent or otherwise) under and in accordance with this Agreement and the other Loan Documents (including, without limitation, as a result of any distribution in respect of the Collateral in any bankruptcy, insolvency or similar proceeding) (except to the extent released in accordance with the applicable provisions of this Agreement or any other Loan Document), shall be applied to the payment of the Secured Obligations, subject to the terms of the Intercreditor Agreement, pursuant to and in accordance with the terms of the Security Agreement.

4.10            Priority of Revolving Loans.  Notwithstanding anything to the contrary set forth in this Agreement or any other Loan Document, unless the Required Revolving Lenders otherwise agree, (x) if any Revolving Lender has any Revolving Obligations then outstanding and any Default or Event of Default has occurred and is continuing, no voluntary prepayment of any Term Loans shall be permitted pursuant to Section 4.01 and (y) if any Specified Default exists at the time that any mandatory repayment or prepayment of Term Loans is otherwise required to be made (or an offer therefor is required to be made) under Section 4.02, Section 4.03, Section 4.06 or Section 7.22, then (i) the Revolving Loans shall first be repaid in the amount otherwise required to be applied to the repayment or prepayment of Term Loans under such Section (or, in the case of Section 4.02, in the amount otherwise required to be offered to the Term Lenders under such Section) in the absence of this Section 4.10 and (ii) after application pursuant to the preceding clause (i), any excess portion of such mandatory repayment or prepayment of Term Loans not so applied shall be applied to the repayment or prepayment of Term Loans as otherwise required under such Section (or, in the case of Section 4.02, offered to the Term Lenders as provided in such Section) in the absence of this Section 4.10. If any Lender collects or receives any amounts on account of the Loan Document Obligations to which it is not entitled as a result of the application of this Section 4.10, then such Lender shall hold the same in trust for the Revolving Lenders and shall forthwith deliver the same to the Administrative Agent, for the account of the Revolving Lenders, to be applied in accordance with this Section 4.10 or, if then applicable, Section 8.02. Without limiting the generality of the foregoing, this Section 4.10 is intended to constitute and shall be deemed to constitute a "subordination agreement" within the meaning of Section 510(a) of the Bankruptcy Code and is intended to be and shall be

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interpreted to be enforceable to the maximum extent permitted pursuant to applicable non-bankruptcy law.

SECTION 5.        Conditions Precedent.

5.01            Conditions Precedent to Effective Date.

The obligation of each Lender to make its Loans shall become effective on and as of the first date (the "Effective Date") on which the following conditions have been satisfied or waived in accordance with Section 10.12.

(a)            Loan Documents.  The Administrative Agent and/or the Pari Passu Collateral Agent, as applicable, shall have received duly authorized, executed and delivered counterparts of the Agreement, (ii) Notes executed by the Borrower, for the account of each of the Lenders that has requested same, in each case in the amount, maturity and as otherwise provided herein and (iii) each other applicable Loan Document, in each case in form reasonably satisfactory to the Administrative Agent.

(b)            Fees, etc.  The Borrowers shall have paid all accrued costs, fees and expenses that are due and payable hereunder and under the other Loan Documents (or under any other agreement entered into by the Administrative Agent, the Arrangers and the Parent or any of their respective Affiliates).

(c)            Officer's Certificate.  The Administrative Agent shall have received a certificate, dated the Effective Date and signed on behalf of the Borrowers by an Authorized Representative of the Borrowers, certifying on behalf of the Borrowers that all of the conditions set forth in clause (f) of this Section 5.01 have been satisfied on such date.

(d)            Collateral and Guarantee Requirement.  The Collateral and Guarantee Requirement shall have been satisfied (subject to the last paragraph of this Section 5.01) and each Loan Document that is contemplated to be in effect on the Effective Date shall be in full force and effect. The Pari Passu Collateral Agent shall have received a completed Perfection Certificate, dated the Effective Date and signed by a Financial Officer or other Authorized Representative of each Borrower, together with all attachments contemplated thereby.

(e)            Consummation of the 2014 Refinancing.  The Administrative Agent shall have received satisfactory evidence that the 2014 Refinancing has been, or substantially simultaneously with the Effective Date will be, consummated and that all security interests in respect of, and Liens securing, the Indebtedness under the Ventures Facilities Agreement created pursuant to the security documentation relating thereto shall have been terminated and released (or releases in respect of such Liens shall have been delivered to the Administrative Agent in escrow to be released immediately upon the receipt of funds by the applicable agents for the Ventures Facilities Agreement), and the Administrative Agent shall have received all such releases as may have been reasonably requested by the Administrative Agent, which releases shall be in form and substance reasonably satisfactory to the Administrative 

 

 

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Agent, including Form UCC-3 Termination Statements (or such other termination statements pursuant to local law, as applicable), terminations or releases of all mortgages and reassignments of insurances and charter hire, drilling contracts, revenues and earnings, as applicable, all of which shall be in form and substance reasonably satisfactory to the Administrative Agent.

 

(f)            Approvals.  All necessary governmental (domestic and foreign) and third party approvals and/or consents in connection with the transactions contemplated hereby and by the other Loan Documents shall have been obtained and remain in effect, and all applicable waiting periods with respect thereto shall have expired without any action being taken by any competent authority which, in the reasonable judgment of the Administrative Agent, restrains, prevents or imposes materially adverse conditions upon the consummation of the Transactions or the other transactions contemplated by the Loan Documents or otherwise referred to herein or therein. On the Effective Date, there shall not exist any judgment, order, injunction or other restraint issued or filed or a hearing seeking injunctive relief or other restraint pending or notified prohibiting or imposing materially adverse conditions upon the Transactions or the other transactions contemplated by the Loan Documents or otherwise referred to herein or therein.

(g)            Certificate of Financial Officer.  The Administrative Agent shall have received a certificate from the chief financial officer or chief executive officer of the Parent, in form and substance reasonably acceptable to the Administrative Agent, addressed to the Administrative Agent and each of the Lenders and dated the Effective Date, certifying that, on and as of the Effective Date, and after giving effect to the Transactions and the Liens created by the Loan Parties in connection therewith, (i) the sum of the assets, at a fair valuation, of the Loan Parties on a consolidated basis will exceed the debts and liabilities, direct, subordinated, contingent or otherwise, of the Loan Parties on a consolidated basis, (ii) the Loan Parties on a consolidated basis have not incurred and do not intend to incur, and do not believe that they will incur, debts beyond their ability to pay such debts as such debts mature, (iii) the Loan Parties on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Effective Date and (iv) the Loan Parties, taken as a whole, are not otherwise insolvent under the standards set forth in applicable law.

(h)            Financial Statements.  The Lenders shall have received (i) audited consolidated financial statements of the Parent for each of the three (3) fiscal years immediately preceding the Effective Date, consisting of a consolidated balance sheet and related consolidated statements of comprehensive income (loss), shareholders' equity and cash flows for such fiscal years; and (ii) unaudited consolidated financial statements for any interim period or periods of the Parent ended after the date of the most recent audited consolidated financial statements and more than 60 calendar days prior to the Effective Date, consisting of a consolidated balance sheet and related consolidated statements of comprehensive income (loss), shareholders' equity and cash flows for the three-, six-, or nine-month period, as applicable, which financial statements described in clauses (i) and (ii) shall not be materially inconsistent with the financial statements or forecasts previously provided to the Lenders.

 

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(i)            Pro Forma Balance Sheet.  The Lenders shall have received a pro forma consolidated balance sheet of the Parent and its Subsidiaries as of the last day of the most recent fiscal period for which financial statements were delivered under clause (h) above, after giving effect to the Transactions, which balance sheet shall have been prepared in good faith by the Parent and shall not be materially inconsistent with the forecasts previously provided to the Lenders.

(j)            Business Plan.  The Lenders shall have received a detailed business plan of the Parent, the Borrower and its Subsidiaries for the fiscal years 2014 through 2018 (including but not limited to quarterly projections for the first four fiscal quarters ending after the Effective Date and monthly cash flow projections for the first 12 months ending after the Effective Date).

(k)            Secretary's or Assistant Secretary's Certificates.  The Administrative Agent shall have received a certificate, dated the Effective Date and reasonably acceptable to the Administrative Agent, signed by an Authorized Representative of each Loan Party, certifying (i) as to the incumbency and genuineness of the signature of each Loan Party executing Loan Documents to which it is a party and (ii) that attached thereto are true, correct and complete copies of (1) the articles or certificate of incorporation, formation or other organizational document, as applicable, of such Loan Party, and all amendments thereto, certified by the appropriate governmental officials in its jurisdiction of incorporation or formation, as applicable, (2) the bylaws or other governing documents, as applicable, of such Loan Party as in effect on the Effective Date and (3) resolutions duly authorized by the board of directors (or other governing body) of such Loan Party authorizing and approving the execution and delivery of, and performance under, this Agreement and the other Loan Documents to which such Loan Party is a party.

(l)            Certificates of Good Standing.  The Administrative Agent shall have received certificates as of a recent date of the good standing (or similar status) of each Loan Party under the laws of its jurisdiction of organization, except with respect to any Loan Party organized under the laws of a jurisdiction where no such certificates are provided for by the laws of such jurisdiction.

(m)            Opinions of Counsel.  The Administrative Agent shall have received from (i) New York counsel to the Loan Parties (which shall be Seward & Kissel LLP or another law firm reasonably acceptable to the Administrative Agent), an opinion covering such matters as the Administrative Agent may reasonably request (including certain matters of Delaware law), (ii) Marshall Islands counsel to the Loan Parties (which shall be Seward & Kissel LLP or another law firm qualified to render an opinion as to Marshall Islands law reasonably acceptable to the Administrative Agent), an opinion covering such matters as the Administrative Agent may reasonably request, (iii) Netherlands counsel to the Loan Parties (which shall be Loyens & Loeff N.V. or another law firm qualified to render an opinion as to the law of the 

 

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Netherlands reasonably acceptable to the Administrative Agent), an opinion covering such matters as the Administrative Agent may reasonably request, (iv) Greece counsel to the Loan Parties (which shall be Deverakis Law Office or another law firm qualified to render an opinion as to the law of Greece reasonably acceptable to the Administrative Agent), an opinion covering such matters as the Administrative Agent may reasonably request, (v) U.K. counsel to the Loan Parties (which shall be Cameron McKenna LLP or another law firm qualified to render an opinion as to the law of the U.K. reasonably acceptable to the Administrative Agent), an opinion covering such matters as the Administrative Agent may reasonably request (including payoff opinions and accounts charge opinions), (vi) Norway counsel to the Loan Parties (which shall be Advokatfirmaet Wiersholm AS or another law firm qualified to render an opinion as to the law of Norway reasonably acceptable to the Administrative Agent), an opinion covering such matters as the Administrative Agent may reasonably request, (vii) Brazil counsel to the Loan Parties (which shall be Felsberg, Pedretti & Mannrich or another law firm qualified to render an opinion as to the law of Brazil reasonably acceptable to the Administrative Agent), an opinion covering such matters as the Administrative Agent may reasonably request, and (viii) Angola counsel to the Loan Parties (which shall be AVM Advogados or another law firm qualified to render an opinion as to the law of Angola reasonably acceptable to the Administrative Agent), an opinion covering such matters as the Administrative Agent may reasonably request, each such opinion to be addressed to the Pari Passu Collateral Agent, the Administrative Agent and the Lenders (and expressly permitting reliance by permitted successors and assigns of the addressees thereof) and dated as of the Effective Date.

(n)            PATRIOT Act.  Each Loan Party shall have provided the documentation and other information to the Administrative Agent that are required by regulatory authorities under the applicable "know your customer" and anti-money laundering rules and regulations, including the PATRIOT Act, at least three (3) Business Days in advance of the Effective Date.

(o)            [Reserved].

(p)            No Default or Event of Default.  At the time of and immediately after the Borrowing on the Effective Date, no Default or Event of Default shall have occurred and be continuing.

(q)            No Outstanding Indebtedness.  After giving effect to the Transactions, the Parent and its Subsidiaries shall have no outstanding Indebtedness or preferred stock other than (a) the Loans, (b) the obligations, as remain outstanding as of the Effective Date, in respect of (x) the DRH Existing Notes, (y) the Ocean Rig UDW Existing Notes, and (z) the Drillships Financing Term Loan Agreement, and (c) the Hedging Obligations, as remain outstanding as of the Effective Date, in respect of (i) the Parent, (ii) Drillships Holdings Inc., Drillships Hydra Shareholders Inc., Drillship Paros Shareholders Inc., Drillship Hydra Owners Inc. and Drillship Paros Owners Inc. pursuant to the hedging agreement outstanding with Nordea Bank Finland PLC, (iii) Drillships Kithira Owners Inc. and Drillships Skopelos Owners Inc., pursuant to the hedging agreements outstanding with Deutsche Bank AG, LondonBranch and (iv) the Borrower pursuant to the hedging agreements outstanding with ABN AMRO Bank N.V. and Nordea Bank Finland plc.

 

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(r)            Lien Searches. The Administrative Agent or the Pari Passu Collateral Agent shall have received the results of a recent lien search in each of the jurisdictions where the Loan Parties are organized or where assets of the Loan Parties are located (except with respect to any jurisdiction the laws of which do not provide for any such lien searches), and such search shall reveal no Liens on any of the assets of the Loan Parties except for Liens permitted by Section 7.13 or discharged on or prior to the Effective Date pursuant to documentation reasonably satisfactory to the Administrative Agent.

(s)            Evidence of Insurance. The Administrative Agent shall have received evidence of the insurance required by Section 7.01.

Notwithstanding the foregoing, if ParentUDW, the Borrower and the Borrower Subsidiary Guarantors are unable to complete the actions required of them pursuant to the Collateral Agreements prior to the Effective Date in order to perfect the first-priority security interest in the Collateral in favor of the Pari Passu Collateral Agent for the benefit of the Lender Creditors and the holders of other Pari Passu Obligations, the satisfaction of the Collateral and Guarantee Requirement in respect of such actions shall not be a condition to the obligation of the Lenders to make Loans hereunder; provided that ParentUDW, the Borrower and the Borrower Subsidiary Guarantors use their commercially reasonable efforts to complete such actions and such Collateral as promptly as reasonably practicable, but in no event later than 60 days after the Effective Date.

5.02            Each Borrowing.  The obligation of each Lender to make a Loan on the occasion of any Borrowing is subject to receipt of the request therefor in accordance herewith and to the satisfaction of the following conditions:

(a)            Representations and Warranties.  The representations and  warranties set forth in Section 6 hereof and in the other Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing with the same effect as though made on and as of such date, except to the extent that such representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date; provided that any representation and warranty that is qualified as to "materiality," "Material Adverse Effect" or similar language shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates.

(b)            No Default or Event of Default.  At the time of and immediately after the Borrowing on the Effective Date, no Default or Event of Default shall have occurred and be continuing.

Each Borrowing (provided that a conversion or a continuation of a Borrowing shall not constitute a "Borrowing" for purposes of this Section) shall be deemed to constitute a

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representation and warranty by the Borrowers on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.

SECTION 6.        Representations, Warranties and Agreements.

In order to induce the Lenders to enter into this Agreement and to make the Loans as provided herein, ParentUDW, the Borrowers and each Loan Party make the following representations, warranties and agreements, in each case on the Effective Date, all of which shall survive the execution and delivery of this Agreement and the Notes and the making of the Loans.

6.01            Corporate/Limited Liability Company/Limited Partnership Status.  Each of the Parent and its Restricted Subsidiaries (a) is a duly organized or incorporated and validly existing corporation, limited liability company, limited partnership, company or other business entity, as the case may be, in good standing (or, if applicable in a foreign jurisdiction, enjoys the equivalent status under the laws of such jurisdiction of organization outside the United States) under the laws of the jurisdiction of its organization or incorporation, (b) has the corporate or other applicable power and authority to own, lease and operate its properties and assets and to transact the business in which it is engaged and presently proposes to engage in all material respects and (c) is duly qualified and is authorized to do business and is in good standing in each jurisdiction where the ownership, leasing or operation of its properties or the conduct of its business requires such qualifications, except for failures to be so qualified or in good standing which, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Except to the extent permitted by this Agreement, neither the Parent nor any of its Restricted Subsidiaries has taken any corporate action nor have any other steps been taken or legal proceedings been started or (to the best of its knowledge and belief) threatened in writing against any of them for winding up, or dissolution or for the appointment of a liquidator, administrator, receiver, administrative receiver, trustee or similar officer of any of them or any or all of their assets or revenues nor have they sought any other relief under any applicable insolvency or bankruptcy law.

6.02            Corporate Power and Authority.  Each Loan Party has the corporate or other applicable power and authority to execute, deliver and perform its obligations under each of the Loan Documents to which it is party and has taken all necessary corporate or other applicable action to authorize the execution, delivery and performance by it of each such Loan Documents. Each Loan Party has duly executed and delivered each of the Loan Documents to which it is party, and each of such Loan Documents constitutes its legal, valid and binding obligation enforceable in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws generally affecting creditors' rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).

6.03            No Violation.  The Transactions, including the entrance into each applicable Loan Document and the performance of obligations thereunder, (a) will not contravene in any material respect any applicable provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or governmental instrumentality, (b) will not conflict with or result in any breach of any terms, covenants, conditions or provisions of, or constitute a default under (nor would it, with notice or passage of time or both, constitute a

 

 

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violation of or default under), or result in the creation or imposition of (or the obligation to create or impose) any Lien (except pursuant to the Collateral Agreements) upon any of the properties or assets of the Parent or its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement or loan agreement, or any other agreement, contract or instrument, in each case to which the Parent or any of its Subsidiaries is a party or by which it or any of its properties or assets is bound or to which it may be subject other than, solely with respect to this Clause (b), any violation, default or Lien which would not, individually or in the aggregate, have a Material Adverse Effect or (c) will not violate any provision of the certificate or articles of incorporation or by-laws (or equivalent organizational documents) of the Parent or any of its Subsidiaries.

6.04            Governmental Approvals.  No order, consent, approval, license, authorization or validation of, or filing, recording, qualification or registration with (except for those that have otherwise been obtained or made on or prior to the Effective Date and are in full force and effect), or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to be obtained or made by, or on behalf of, any Loan Party to authorize, or is required to be obtained or made by, or on behalf of, any Loan Party in connection with the execution, delivery and performance of any Loan Document other than any such order, consent, approval, license, authorization or valuation of, or filing, recording, qualification or registration where the failure to so obtain would, individually or in the aggregate, have a Material Adverse Effect.

 

6.05            Financial Statements; Financial Condition; Undisclosed Liabilities; etc.

(a)            The unaudited pro forma consolidated balance sheet of the Parent and its consolidated Subsidiaries as at March 31, 2014 (including the notes thereto) (the "Pro Forma Balance Sheet"), a copy of which have heretofore been furnished to each Lender, has been prepared giving effect (as if such events had occurred on such date) to (i) the 2014 Refinancing, (ii) the Loans to be made on the Effective Date and the use of proceeds thereof and (iii) the payment of fees and expenses in connection with the foregoing. The Pro Forma Balance Sheet has been prepared based on the best information available to the Parent as of the date of delivery thereof, and presents fairly, on a pro forma basis the estimated financial position of the Parent and its consolidated Subsidiaries as at March 31, 2014, assuming that the events specified in the preceding sentence had actually occurred at such date.

(b)            The audited and unaudited financial statements delivered pursuant to Section 5.01(h) present fairly in all material respects the consolidated financial position and the results of operations and cash flows of the Parent at the dates and for the periods to which they relate. All of the foregoing historical financial statements have been prepared in accordance with GAAP, consistently applied throughout the periods involved, except as otherwise discussed therein and all adjustments necessary for a fair presentation of results for such periods have been made (except, in the case of the aforementioned quarterly financial statements, for normal year-end audit adjustments and the absence of footnotes).

(c)            On and as of the Effective Date, and after giving effect to the Transactions and the Liens created by the Loan Parties in connection therewith, (i) the

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sum of the assets, at a fair valuation, of the Loan Parties on a consolidated basis will exceed the sum of the stated liabilities and identified contingent liabilities, of the Loan Parties on a consolidated basis; (ii) the Loan Parties on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Effective Date, or (2) be able to pay their debts (contingent or otherwise) as they mature and (iv) the Loan Parties, taken as a whole, are not otherwise insolvent under the standards set forth in applicable law.

(d)                Except as fully disclosed in the financial statements referred to in Section 6.05(b), there were as of the Effective Date no liabilities or obligations with respect to the Parent or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, could reasonably be expected to be material to the Parent and its Subsidiaries taken as a whole. As of the Effective Date, the Parent does not know of any reasonable basis for the assertion against it or any of its Subsidiaries of any liability or obligation of any nature whatsoever that is not fully disclosed in the financial statements referred to in Section 6.05(b) which, either individually or in the aggregate, could reasonably be expected to be material to the Parent and its Subsidiaries taken as a whole.

(e)                On and as of the Effective Date, the Projections which have been delivered to the Lenders prior to the Effective Date have been prepared in good faith and are based on assumptions believed by the Parent to be reasonable, and there are no statements or conclusions in any of the Projections which are based upon or include information known to the Parent to be misleading in any material respect or which fail to take into account material information known to the Parent regarding the matters reported therein; it being recognized by the Lenders, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections may differ from the projected results.

(f)            Since December 31, 2013, there has been no change in the operations, business, properties, or financial condition of the Parent or any of its Subsidiaries taken as a whole that, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect.

6.06            True and Complete Disclosure.  All information (taken as a whole), other than Projections and forward-looking information, furnished by or on behalf of the Parent or any of its Subsidiaries in writing to the Administrative Agent or any Lender (including, without limitation, all information contained in the Loan Documents) for purposes of or in connection with this Agreement, the other Loan Documents or any transaction contemplated herein or therein is, and all other such factual information (taken as a whole), other than Projections and forward-looking information, hereafter furnished by or on behalf of the Parent or any of its Subsidiaries in writing to the Administrative Agent or any Lender will, be true and accurate in all material respects on the date as of which such information is dated or certified, not contain any untrue statement of a material fact and not be incomplete by omitting to state any fact necessary

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to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided.

6.07            Use of Proceeds; Margin Regulations.

(a)            All proceeds of the Term Loans shall be used to consummate the 2014 Refinancing and for general corporate purposes of the Borrowers, the Guarantors and their respective Subsidiaries.

(b)            All proceeds of any Revolving Loans shall be used for general corporate purposes of the Borrowers, the Guarantors and their respective Subsidiaries.

(c)            Neither the Parent nor any of the Restricted Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock. No proceeds of any Loan will be used for any purpose which will violate or be inconsistent with the provisions of the Margin Regulations.

6.08            Tax Returns; Payments; Tax Treatment.  The Parent and each Subsidiary has timely filed with the appropriate taxing authority all material returns, statements, forms and reports for taxes or an extension therefor (the "Returns") required to be filed by, or with respect to the income, properties or operations of, the Parent and/or any Subsidiaries. The Returns accurately reflect in all material respects all liability for taxes of the Parent and the Subsidiaries as a whole for the periods covered thereby. Each of the Parent and its Subsidiaries have paid all taxes and assessments required to be paid by it, other than those that are being contested in good faith and for which an adequate reserve for accrual has been established in accordance with GAAP. All tax liabilities of the Parent and its Subsidiaries have been adequately provided for in the financial statements of the Parent and the Parent does not know of any actual or proposed additional material tax assessments. There is no action, suit, proceeding, investigation, audit or claim now pending or, to the knowledge of the Parent or any Subsidiary, threatened by any authority regarding any taxes relating to the Parent or any Subsidiary that, if determined adversely to the Parent or the Subsidiary would, individually or in the aggregate, have, a Material Adverse Effect. The Parent is treated as a corporation for U.S. federal income tax purposes. No payment by or on account of any obligation of any Loan Party under any Loan Document shall be treated as income from sources within the United States for U.S. federal income tax purposes by reason of Section 884(f) of the Code or the Treasury Regulations promulgated thereunder, other than any payment identified as U.S. source in a written notice provided to the Administrative Agent by the applicable Loan Party at least 35 days prior to the date such payment is made.

6.09            Compliance with ERISA.

(a)            No ERISA Event has occurred which would reasonably be expected to have a Material Adverse Effect, nor has any event, condition or underfunding occurred with respect to any (i) Plan (whether or not terminated), (ii) "Multiemployer Plan" or (iii) plan or arrangement, whether or not terminated, which provides medical, health, life insurance or other welfare-type benefits to any retiree or other former employee (except for continued medical benefit coverage 

 

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required to be provided under Section 4980B of the Code or as required under applicable state, local or other law) which, in any case, would reasonably be expected to have a Material Adverse Effect. Neither the Borrower, the Parent (but only prior to the consummation of a Qualified DOV MLP IPO) nor any Subsidiary is an entity whose underlying assets are "plan assets" (as defined in Section 3(42) of ERISA) subject to ERISA; no "reportable event" (as defined in ERISA) has occurred with respect to any Plan for which the Borrower, the Parent (but only prior to the consummation of a Qualified DOV MLP IPO) or any Subsidiary would have any liability which would reasonably be expected to have a Material Adverse Effect; neither the Borrower, the Parent (but only prior to the consummation of a Qualified DOV MLP IPO) nor any Subsidiary has incurred, nor expects to incur, liability under Sections 412 or 4971 of the Code which would reasonably be expected to have a Material Adverse Effect; and each Plan for which the Borrower, the Parent (but only prior to the consummation of a Qualified DOV MLP IPO) or any Subsidiary would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would reasonably be expected to cause the loss of such qualification resulting in a Material Adverse Effect.

(b)            Each Foreign Pension Plan has been maintained in compliance in all material respects with its terms and with the requirements of any and all applicable laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities except for any noncompliance which would not reasonably be expected to result in a Material Adverse Effect. No liability to any applicable governmental authority or any Foreign Pension Plan or any related trust has been or is expected to be incurred by the Borrower, any Subsidiary of the Borrower, the Parent (but only prior to the consummation of a Qualified DOV MLP IPO), any Subsidiary of the Parent (but only prior to the consummation of a Qualified DOV MLP IPO) or any ERISA Affiliate. All contributions required to be made with respect to a Foreign Pension Plan have been timely made except for any noncompliance which would not reasonably be expected to result in a Material Adverse Effect. Neither the Borrower, any Subsidiary of the Borrower, the Parent (but only prior to the consummation of a Qualified DOV MLP IPO) nor any of the Parent's Subsidiaries (but only prior to the consummation of a Qualified DOV MLP IPO) have incurred any obligation in connection with the termination of, or withdrawal from, any Foreign Pension Plan, except that which would not reasonably be expected to result in a Material Adverse Effect. The present value of the accrued benefit liabilities (whether or not vested) under each Foreign Pension Plan, determined as of the end of the Borrower's most recently ended fiscal year on the basis of then current actuarial assumptions, each of which is reasonable, did not (i) materially exceed the current value of the assets of such Foreign Pension Plan (other than a severance plan or similar arrangement providing for payments on termination of employment) allocable to such benefit liabilities, or (ii) exceed the current value of the assets of a Foreign Pension Plan that is a severance plan or similar arrangement providing for payments on termination of employment, except that would not reasonably be expected to result in a Material Adverse Effect.

6.10            Collateral; the Security Agreements.

(a)            Each of the Parent, the Borrower and each Borrower Subsidiary Guarantor owns the Collateral pledged by it under the Collateral Agreements, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim, other than Permitted Collateral Liens. The Collateral Agreements, when duly executed and delivered in accordance with their terms by the parties thereto, will represent all of the collateral agreements, security agreements, guarantee agreements, pledge agreements and other similar agreements necessary to grant a valid, legally binding and enforceable first-priority security interest in the Collateral, subject to the terms of the Intercreditor Agreement, in favor of the Pari Passu Collateral Agent, for the benefit of the Lender Creditors.

 

 

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(b)            The Security Agreement is effective to create in favor of the Pari Passu Collateral Agent for the benefit of the Lender Creditors legal, valid and enforceable Liens on, and security interests in, the Collateral governed thereby and, (i) when financing statements are filed in the offices specified on Schedule 6.10 and (ii) upon the taking of possession or control by the Pari Passu Collateral Agent of the Pledged Securities with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Pari Passu Collateral Agent, to the extent possession or control by the Pari Passu Collateral Agent is required by the Security Agreement), the Liens created by the Security Agreement shall constitute fully perfected first-priority Liens on, and security interests in, all right, title and interest of the grantors in such Collateral (other than such Collateral in which a security interest cannot be perfected under the UCC as in effect at the relevant time in the relevant jurisdiction by the filing of a financing statement or by possession or control by the Pari Passu Collateral Agent), in each case subject to no Liens other than Permitted Collateral Liens.

(c)            Upon proper filing in the appropriate filing offices or recording at the Marshall Islands Shipping Registry, the Ship Mortgages will create valid, perfected and enforceable first-priority mortgages on the Ocean Rig Mylos, the Ocean Rig Skyros and the Ocean Rig Athena securing the payment of the Secured Obligations in accordance with the terms thereof and upon such filing, Ocean Rig Mylos, the Ocean Rig Skyros and the Ocean Rig Athena will be free and clear of all security interests, mortgages, pledges, liens, encumbrances and claims of record, except for the Ship Mortgages and Permitted Collateral Liens.

(d)            Each other Collateral Agreement delivered on the Effective Date or pursuant to Section 7.07 will, upon execution and delivery thereof, be effective to create in favor of the Pari Passu Collateral Agent for the benefit of the Lender Creditors legal, valid and enforceable first-priority Liens on, and security interests in all of the Loan Parties' right, title and interest in and to the Collateral governed thereby, and (i) when all appropriate filings or recordings are made in the appropriate offices as may be required under applicable law and (ii) upon the taking of possession or control by the Pari Passu Collateral Agent of such Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Pari Passu Collateral Agent, to the extent required by any Collateral Agreements), in each case as and to the extent required by the Collateral Agreements, the Liens created by such Collateral Agreements will constitute fully perfected first-priority Liens on, and security interests in, all right, title and interest of the Loan Parties in such Collateral (other than such Collateral in which a security interest cannot be perfected under the UCC as in effect at the relevant time in the relevant jurisdiction by the filing of a financing statement or by possession or control by the Pari Passu Collateral Agent), in each case subject to no Liens other than the applicable Permitted Collateral Liens.

 

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6.11            Capitalization.  As of the Effective Date, all of the Capital Stock of each Loan Party (other than the Parent) is legally and beneficially owned as set forth on Schedule 6.11. Except as set forth on Schedule 6.11, all such outstanding Equity Interests have been duly and validly issued, are fully paid and non-assessable and have been issued free of preemptive rights.

6.12            Subsidiaries.  On the Effective Date, (a) the Parent shall have no Subsidiaries other than the Subsidiaries listed on Schedule 6.12 (which Schedule identifies the correct legal name, direct owner, percentage ownership and jurisdiction of organization of each such Subsidiary of the Parent on the Effective Date) and (b) all of the Parent's Subsidiaries are Restricted Subsidiaries.

6.13            Compliance with Statutes, etc.  Each of the Parent and its Subsidiaries is in compliance with all applicable material statutes, regulations, judgments, international treaties or conventions and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its property.

6.14            Investment Company Act.  None of the Parent, the Borrowers nor any of their Subsidiaries is an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended and the rules and regulations thereunder.

6.15            Legal Names; Type of Organization (and Whether a Registered Organization); Jurisdiction of Organization; etc.  Schedule 6.15 sets forth, as of the Effective Date, the legal name of the Loan Parties, the type of organization of the Loan Parties, whether or not each Loan Party is a registered organization, the jurisdiction of organization of each Loan Party and the organizational identification number (if any) of each Loan Party.

6.16            Environmental Matters.

(a)            Except for instances that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) each of the Parent and its Subsidiaries is and has been in compliance with all Environmental Laws and has obtained and complied with all the permits, licenses, registrations and approvals required under Environmental Laws, (ii) there are no pending or, to the knowledge of the Parent, threatened Environmental Claims against or affecting the Parent, any of its Subsidiaries or any Vessel, Real Property or other facility owned, leased or operated by the Parent or any of its Subsidiaries (including any such claim to the extent known by the Parent to exist and arising out of the ownership, lease or operation by the Parent or any of its Subsidiaries of any Vessel, Real Property or other facility formerly owned, leased or operated by the Parent or any of its Subsidiaries but no longer owned, leased or operated by the Parent or any of its Subsidiaries),

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(iii) neither the Parent nor any of its Subsidiaries has become subject to any liability, obligation or cost pursuant to Environmental Law and (iv) there are no facts, circumstances, conditions or occurrences in respect of the business or operations of the Parent or any of its Subsidiaries as currently conducted or planned (or, to the knowledge of the Borrowers, any of the Borrowers' or any of their Subsidiaries' respective predecessors) or any Vessel, Real Property or other facility currently owned or operated by the Borrowers or any of their Subsidiaries (or, to the knowledge of the Borrowers, any of the Borrowers' or any of their Subsidiaries' formerly owned or operated Vessel, Real Property or other facility) that could form the basis of an Environmental Claim against the Parent or any of its Subsidiaries with respect to the Parent, any Subsidiary or any Vessel, Real Property or other facility owned or operated by the Parent or any of its Subsidiaries, or to cause such Vessel, Real Property or other facility owned or operated by the Parent or any of its Subsidiaries to be subject to any restrictions on its ownership, occupancy, use or transferability under any Environmental Law.

(b)            Hazardous Materials have at all times been generated, used, treated or stored on, or transported to or from, or Released on, under, to or from, any Vessel, Real Property or other facility owned, leased or operated by the Parent or any of its Subsidiaries in a manner so as not to result in liability under Environmental Laws applicable to the country in which each Vessel operates against the Parent or any of its Subsidiaries, except where such liability, either individually or in the aggregate, would not reasonably be likely to have a Material Adverse Effect.

(c)            All of the Vessels comply with all Environmental Laws, and no cost is required to maintain such compliance or, to the knowledge of the Parent, to achieve compliance with pending requirements under Environmental Laws except such noncompliance or costs as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. The Parent and its Restricted Subsidiaries have made all required payments to statutory environmental insurance schemes required under Environmental Law and other environmental insurance schemes applicable to the Parent and its Restricted Subsidiaries except such failure to make payments as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

6.17            No Default.  Neither the Parent nor any of its Subsidiaries is in default under or with respect to any indenture, mortgage, deed of trust, charter, credit agreement or loan agreement, or any other agreement, permit, contract or instrument, in each case to which the Parent or such Subsidiary is a party or by which it or any of its property or assets is bound or to which it may be subject, except for such defaults as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing.

6.18            Patents, Licenses, Franchises and Formulas.  The Parent and its Subsidiaries own, or have the right to use, all patents, trademarks, trade secrets, service marks, trade names, copyrights, licenses, franchises, know-how (including trade secrets and other unpatented and unpatentable proprietary or confidential information, systems or procedures) and

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other intellectual property rights necessary to carry on their business in all material respects; the Parent has not received any written communications alleging that the Parent or any Subsidiary has violated, infringed or conflicted with or, by conducting its business as currently conducted would violate, infringe or conflict with, any intellectual property of any other person or entity.

6.19            Anti-Corruption Laws.  Neither the Parent nor any of its Subsidiaries or, to the Parent's knowledge, any director, officer, employee, affiliate or agent of either the Parent or any of its Subsidiaries, has taken any action, directly or indirectly, that would result in a violation by any such Persons of the FCPA, including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any "foreign official" (as such term is defined in the FCPA) or any non-U.S. political party or official thereof or any candidate for non-U.S. political office, in contravention of the FCPA and the Parent, its Subsidiaries and its affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to promote and achieve, and which are reasonably expected to continue to promote and achieve, continued compliance therewith.

6.20            Insurance.  The Parent and each of the Subsidiaries carry, or are covered by, insurance (which term as used herein shall include membership in Protection & Indemnity clubs) in such amounts and covering such risks as is adequate for the conduct of their respective businesses and the value of their respective Vessels and properties and as is customary for companies engaged in similar businesses, and all such insurance is in full force and effect. There are no material claims by the Parent or any Subsidiary under any insurance policy or instrument as to which any insurance company is denying liability or defending under a reservation of rights clause. Neither the Parent nor any Subsidiary has received written notice from any insurer or agent of such insurer that any material capital improvements or other material expenditures are required or necessary to be made in order to continue such insurance. The Parent has no reason to believe that any insurer providing coverage to the Parent or any Subsidiary is not financially sound or that it or any Subsidiary will not be able (i) to renew its existing insurance coverage as and when such policies expire, or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Effect. Neither the Parent nor any Subsidiary has been denied any insurance coverage which it has sought or for which it has applied in any material respect.

6.21            Collateral Vessels.

(a)            The name, registered owner and official number, and jurisdiction of registration and flag of each Collateral Vessel are set forth on Schedule 6.21. Each Collateral Vessel is operated in all material respects in compliance with all applicable laws, rules and regulations. Each Collateral Vessel has been duly registered under the laws and regulation and flag of the jurisdiction set forth opposite its name on Schedule  6.21, and no other action is necessary to establish and perfect such entity's title to and interest in such vessel as against any employment contractor or third party. Each Collateral Vessel is covered by all such insurance as is required in accordance with the requirements of the respective Ship Mortgage and Section 7.01.

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(b)            Each Loan Party which owns or operates or which will own or operate one or more Collateral Vessels is qualified to own and operate such Collateral Vessel under the laws of its jurisdiction of incorporation and its relevant flag state. Each Collateral Vessel is classed by any of Lloyd's Register of Shipping, American Bureau of Shipping, Det Norske Veritas, Bureau Veritas or a classification society that is a full member of the International Association of Classification Societies and each Collateral Vessel is in class with valid class and trading certificates, without any overdue recommendations.

6.22            Properties.  Except as described on Schedule 6.22, the Parent and each of its Subsidiaries has good and marketable title to all the properties and assets reflected in the balance sheets referred to in Section 6.05(a), including any leasehold interests in such property (except as sold or otherwise disposed of since the date of such balance sheet in the ordinary course of business or as permitted by the terms of this Agreement) are subject to no Lien except Permitted Liens (or, in the case of any Lien on Collateral, Permitted Collateral Liens). All of the leases, subleases, employment contracts, charters, newbuilding contracts and options to acquire additional contracts that are material to the business of the Parent and the Subsidiaries, and under which the Parent or any of the Subsidiaries holds properties reflected in the financial statements are valid, enforceable and in full force and effect, and neither the Parent nor any Subsidiary has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Parent or any Subsidiary under any of the leases or contracts mentioned above, or affecting or questioning the rights of the Parent or such Subsidiary to the continued possession of the lease, subleased or contracted property under any such lease, sublease, employment contract, charter, newbuilding contract or option to acquire additional contracts.

6.23            Anti-Terrorism.

(a)            The operations of the Parent and the Subsidiaries are and have been conducted at all times in compliance with all applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the Bank Secrecy Act, as amended by the PATRIOT Act, and the applicable anti-money laundering statutes of jurisdictions where the Parent and its Subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the "Anti-Money Laundering Laws"), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Parent or any of its Subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best knowledge of the Parent, threatened.

(b)            (i)            Neither the Parent nor any of the Subsidiaries or, to the Parent's knowledge, any director, officer, employee, affiliate, agent or representative of the Parent or any of the Subsidiaries, is a Person that is, or is controlled by a Person that is:

(1)            the subject of any sanctions administered or enforced by the U.S. Department of Treasury's Office of Foreign Assets Control, the United Nations Security

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Council, the European Union, Her Majesty's Treasury or other relevant sanctions authority (collectively, "Sanctions"), or

(2)            located, organized or resident in a country or territory that is the subject of Sanctions (including, without limitation, Burma/Myanmar, Cuba, Iran, North Korea, Sudan and Syria).

(ii)            The Parent represents and covenants that it has not knowingly engaged in, is not now knowingly engaged in and will not knowingly engage in any dealings or transactions with any Person, or in any country or territory, that at the time of the dealing or transaction was, to the Parent's knowledge, the subject of Sanctions.

6.24            Form of Documentation.  Each of the Loan Documents is or, when executed, will be in proper legal form under the laws of the jurisdiction which governs such documents for the enforcement thereof under such laws, as applicable, subject only to such matters which may affect enforceability arising under the law of the State of New York. To ensure the legality, validity, enforceability or admissibility in evidence of each such Loan Document under the laws of the jurisdiction which governs such document, it is not necessary that any Loan Document or any other document be filed or recorded with any court or other authority in such applicable permitted jurisdiction, except as have been made, or will be made.

6.25            Place of Business.  None of the Loan Parties has a place of business in any jurisdiction which requires any of the Collateral Agreements to be filed or registered in that jurisdiction to ensure the validity of the Collateral Agreements to which it is a party unless all such filings and registrations have been made or will be made.

6.26            No Immunity.  Neither the Parent, nor any Subsidiary is a sovereign entity or has immunity on the grounds of sovereignty or otherwise has any immunity from the jurisdiction of any court or from any legal process under the laws of the United States, or the Republic of the Marshall Islands or any political subdivisions thereof. A final and conclusive judgment for a sum of money obtained in a court in any jurisdiction inside or outside the United States arising out of or in connection with any Loan Document would be enforceable against the Parent and its Subsidiaries in the courts of the Republic of the Marshall Islands.

6.27            Labor Matters.  No labor dispute with the employees of the Parent or any Subsidiary exists or, to the knowledge of the Parent, is imminent, and the Parent is not aware of any existing or imminent labor disturbance by the employees of any of its or any Subsidiary's principal suppliers, manufacturers, customers or contractors, which, in either case, would result in a Material Adverse Effect.

6.28            Existence.  Each of the Parent, the Borrower and each Borrower Subsidiary Guarantor that is incorporated under the laws of the Republic of the Marshall Islands is a "non­resident corporation" under the laws of the Republic of the Marshall Islands, as such term is utilized in The Business Corporations Act and the Secured Transactions Act of 2007.

6.29            Litigation.  There is no action, suit, claim, investigation or proceeding pending or, to the knowledge of the Parent, threatened against the Parent or any of its Subsidiaries or to which any of the properties or assets of the Parent or any of its Subsidiaries is

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subject before any court, arbitrator or administrative or governmental agency that, if determined adversely to the Parent or any of its Subsidiaries, would, individually or in the aggregate, have a Material Adverse Effect.

SECTION 7.         Covenants.  Prior to the consummation of a Qualified DOV MLP IPO, the Parent and the Borrowers, and from and after a Qualified DOV MLP IPO, the Borrowers, covenant and agree that from and after the Effective Date and until all Loans, together with interest, Fees and all other Loan Document Obligations (other than indemnities described in Section 10.13 which are not then due and payable) incurred hereunder and thereunder, are paid in full:

7.01            Maintenance of Property; Insurance.

(a)            The Parent will, and will cause each of its Restricted Subsidiaries to, (i) keep all material property necessary to the business of the Parent and its Restricted Subsidiaries in good working order and condition (ordinary wear and tear and loss or damage by casualty or condemnation excepted) with such exceptions as would not reasonably be expected to have a Material Adverse Effect and (ii) furnish to the Administrative Agent, at the written request of the Administrative Agent, copies of the insurance carried on the Collateral Vessels.

(b)            The Parent will, and will cause each of its Restricted Subsidiaries to:

(i)            insure and keep each Collateral Vessel insured or cause or procure each Collateral Vessel to be insured and to be kept insured at no expense to the Administrative Agent or the Pari Passu Collateral Agent in regard to (collectively, the "Insurances"):

(a)            hull and machinery (including increased value insurance and freight interest insurances, if any);

(b)            war risks (including common conditions and exclusions);

(c)            protection and indemnity risks (including vessel pollution risks);

(d)            mortgagee's interest risks (including additional perils pollution);

(e)            loss of hire, to the extent reasonably deemed prudent by the Parent in light of the cost of obtaining such insurance; and

(f)            such other insurances as a prudent owner of similar vessels of the same age and type would obtain or would legally be required to obtain when operating in the same trade and geographic area as such Collateral Vessel, as well as any insurances required to meet

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the requirements of the jurisdiction where such Collateral Vessel is employed;

provided that neither the Parent nor any of its Restricted Subsidiaries shall be required to procure or maintain any insurance otherwise required to be procured or maintained under this clause (i), if such insurance is not commercially available in the commercial insurance market; provided further that the Insurances referred to in Section 7.01(b)(i)(a) shall not be required to exceed, in the aggregate for all Collateral Vessels, 125% of the outstanding principal amount of the Loans and unused Commitments (i.e. the Insurances referred to in Section 7.01(b)(i)(a) for any Collateral Vessel shall not be required to exceed an amount that is equal to the quotient of (x) 125% of the outstanding amount of the Loans and unused Commitments, divided by (y) the number of Collateral Vessels that are subject to a Ship Mortgage at the time of determination); provided further that the Insurances referred to in Sections 7.01(b)(i) shall be maintained in a manner consistent with the applicable Insurances in place on the Effective Date and consistent with insurance obtained by similarly situated vessel owners engaged in the same or similar business;

(ii)            effect the Insurances or cause or procure the same to be effected:

(a)            in such amounts and upon such terms and with such deductibles as shipowners engaged in the same or similar business and similarly situated would deem commercially prudent under the circumstances; and

(b)            through the owner's approved broker (the "Owner's Insurance Broker") and reputable independent insurance companies and/or underwriters (including mutual insurance schemes and /or captive insurance schemes) in Europe, North America, the Far East and other established insurance markets except that the insurances against protection and indemnity risks may be effected by the entry of the Collateral Vessels with protection and indemnity associations which are members of the IGA or, if the IGA has disbanded and there is no successor or replacement body of associations, other leading protection and indemnity associations and the insurances against war risks may be effected by the entry of the Collateral Vessel with leading war risks associations (hereinafter called the "Insurers");

(iii)            renew or replace all such Insurances or cause or procure the same to be renewed or replaced before the relevant policies or contracts expire and to procure that the Owner's Insurance Broker and/or the relevant protection and indemnity association or war risks association shall promptly confirm in writing to the Pari Passu Collateral Agent, upon its request, as and when each such renewal or replacement is effected;

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(iv)            duly and punctually pay, or cause duly and punctually to be paid, all premiums, calls, contributions or other sums payable in respect of all such Insurances, to produce or to cause to be produced all relevant receipts when so required by the Pari Passu Collateral Agent and duly and punctually to perform and observe or to cause duly and punctually to be performed and observed any other obligations and conditions under all such Insurances;

(v)            procure that all policies, binders, cover notes or other instruments

 of the Insurances referred to in Section 7.01(b)(i)(a), (b) and (e) above shall be taken out in the name of the Parent, the Borrower or any Borrower Subsidiary Guarantor or a Restricted Subsidiary, with the Pari Passu Collateral Agent being covered under such policies as a co-assured, and shall incorporate a loss payable clause naming the Pari Passu Collateral Agent as loss payee prepared in compliance with the terms of the Insurance Assignment;

(vi)            procure that, upon request of the Pari Passu Collateral Agent, copies of all original such instruments of Insurances shall be from time to time delivered to the Pari Passu Collateral Agent after receipt by the Parent or a Restricted Subsidiary thereof;

(vii)            not employ any Collateral Vessel or suffer any Collateral Vessel to be employed otherwise than in conformity with the terms of all policies, bindings, cover notes or other instruments of the Insurances (including any warranties express or implied therein) without first obtaining the written consent of the Insurers to such employment (if required by such Insurers) and complying with such requirements as to extra premiums or otherwise as the Insurers may prescribe;

(viii)            cause any proceeds in respect of the Insurances referred to in paragraph (i) above (except clause (d) and, if an Event of Default has occurred and is continuing, clause (c) and, as applicable, (f) of such paragraph) to be paid to the Borrower or any Borrower Subsidiary Guarantor that then owns the Collateral Vessel (subject to provisions as to named insureds, additional insureds and loss payees in favor of the Pari Passu Collateral Agent as required by this Section 7.01(b)); and

(ix)            upon the request of the Pari Passu Collateral Agent, do all reasonable things necessary, proper and desirable, and execute and deliver all documents and instruments, to enable the Pari Passu Collateral Agent to collect or recover any moneys to become due in respect of the Insurances.

7.02            Existence; Conduct of Business.  The Parent shall, and shall cause each Restricted Subsidiary to, do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of the business of (a) Parent and its Restricted Subsidiaries, taken as a whole or (b) the Borrower and the Borrower Subsidiary Guarantors, taken as a whole; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 7.14 or any Qualified

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DOV MLP IPO, DOV MLP Formation Transactions or Non-DOV MLP Qualified Asset Transfer.

7.03            Operation of Collateral Vessels.  The Parent shall cause each Restricted Subsidiary that owns or operates, or will own or operate, one or more Collateral Vessels to, at all times while owning or operating such Collateral Vessels, operate or cause such Collateral Vessel to be operated in a manner consistent with reasonable industry practice.

7.04            Payment of Obligations.  The Parent shall, and shall cause each Restricted Subsidiary to, pay its material obligations (other than Indebtedness and any Hedging Obligations), including Tax liabilities, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Parent or such Restricted Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (c) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation and (d) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

7.05            Reports.

(I)                  (A)            Prior to the consummation of a Qualified DOV MLP IPO, whether or not ParentUDW or the Borrower is then subject to Section 13(a) or 15(d) of the Exchange Act, ParentUDW or the Borrower shall furnish to the Administrative Agent for distribution to the Lenders, so long as any Loans are outstanding:

(1)          within 75 days after the end of each of the first three fiscal quarters in each fiscal year, quarterly reports on Form 6-K (or any successor form) containing ParentUDW's unaudited quarterly consolidated financial statements (including a balance sheet and statement of income, changes in stockholders' equity and cash flow) and a Management's Discussion and Analysis of Financial Condition and Results of Operations (the "MD&A") (or equivalent disclosure) for and as of the end of such fiscal quarter (with comparable financial statements for the corresponding fiscal quarter of the immediately preceding fiscal year);

(2)          within 135 days after the end of each fiscal year, an annual report on Form 20-F (or any successor form) containing the information required to be contained therein (including ParentUDW's audited consolidated financial statements, a report thereon by ParentUDW's certified independent accountants and an MD&A) for such fiscal year; and

(3)          at or prior to such times as would be required to be filed or furnished to the SEC if ParentUDW or the Borrower was then a "foreign private issuer" subject to Section 13(a) or 15(d) of the Exchange Act (whether or not ParentUDW or the Borrower is then subject to such requirements), all such other reports and information that ParentUDW would have been required to file or furnish pursuant thereto.

(B)            All such reports will be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports. The quarterly and annual reports will 

 

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include a reasonably detailed presentation (consistent with such information provided in the confidential information memorandum provided in connection with the syndication of the Term Loans), either in the MD&A or otherwise, of the financial condition and results of operations of the Borrower and the Borrower Subsidiary Guarantors separate from the financial condition and results of operations of ParentUDW and the Restricted Subsidiaries, and shall include information regarding the adjustments, if any, to the calculation of Consolidated Net Income in connection with drydock, shipyard stay and special survey expenses, as applicable. In addition, ParentUDW or the Borrower shall electronically file or furnish, as the case may be, a copy of all such information and reports referred to in clauses (1) through (3) of Section 7.05(I)(A) with the SEC for public availability within the time periods specified therein at any time ParentUDW or the Borrower is then subject to Section 13(a) or 15(d) of the Exchange Act and make such information available to the Lenders upon request. ParentUDW and the Borrower shall be deemed to have furnished such reports referred to above to the Administrative Agent and the Lenders if ParentUDW has filed such reports with the SEC via the EDGAR filing system and such reports are publicly available. If, notwithstanding the foregoing, the SEC will not accept ParentUDW's or the Borrower's filings for any reason, ParentUDW or the Borrower will post the reports referred to in Section 7.05(I)(A) on its website within the time periods that would apply to non-accelerated filers if ParentUDW or the Borrower were required to file those reports with the SEC, provided that the Administrative Agent will have no responsibility to monitor whether such posting has occurred. ParentUDW and the Borrower agree that, for so long as any Loans remain outstanding, they will hold and participate in quarterly conference calls with the Lenders relating to the financial condition and results of operations of ParentUDW and the Restricted Subsidiaries.

(II)              (A)          Following the consummation of a Qualified DOV MLP IPO, whether or not the Borrower is then subject to Section 13(a) or 15(d) of the Exchange Act, the Borrower shall furnish to the Administrative Agent and the Lenders, so long as any Loans are outstanding:

(1)            within 75 days after the end of each of the first three fiscal quarters in each fiscal year, quarterly reports containing all the information that would have been required to be contained on Form 6-K (or any successor form) if the Borrower had been a reporting company under the Exchange Act, including the Borrower's unaudited quarterly financial statements on a combined or consolidated basis, as the case may be, and as otherwise consistent with GAAP (including a balance sheet and statement of income, changes in stockholders' equity and cash flow) and MD&A (or equivalent disclosure) for and as of the end of such fiscal quarter (with comparable financial statements for the corresponding fiscal quarter of the immediately preceding fiscal year);

(2)            within 135 days after the end of each fiscal year, an annual report containing all the information that would have been required to be contained on Form 20­F (or any successor form) if the Borrower had been a reporting company under the Exchange Act, including the Borrower's audited financial statements on a combined or consolidated basis, as the case may be, and as otherwise consistent with GAAP, a report thereon by the Borrower's certified independent accountants and an MD&A for such fiscal year; and

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(3)            at or prior to such times as would be required to be filed or furnished to the SEC if the Borrower was then a "foreign private issuer" subject to Section 13(a) or 15(d) of the Exchange Act (whether or not the Borrower is then subject to such requirements), all such other reports and information that the Borrower would have been required to file or furnish pursuant thereto.

(B)            All such reports will be prepared in all material respects in accordance with all of the rules and regulations that would be applicable to such reports if they were to be filed with the SEC, and shall include information regarding the adjustments, if any, to the calculation of Consolidated Net Income in connection with drydock, shipyard stay and special survey expenses, as applicable. In addition, the Borrower shall electronically file or furnish, as the case may be, a copy of all such information and reports referred to in clauses (1) through (3) of Section 7.05(II)(A) with the SEC for public availability within the time periods specified therein at any time the Borrower is then subject to Section 13(a) or 15(d) of the Exchange Act and make such information available to the Lenders upon request. The Borrower shall be deemed to have furnished such reports referred to above to the Administrative Agent and the Lenders if it has filed such reports with the SEC via the EDGAR filing system and such reports are publicly available. If, notwithstanding the foregoing, the SEC will not accept the Borrower's filings for any reason or the Borrower is not then subject to Section 13(a) or 15(d) of the Exchange Act, the Borrower will post the reports referred to in Section 7.05(II)(A) on its website (or the website of one of its parent companies) within the time periods that would apply to non-accelerated filers if the Borrower were required to file those reports with the SEC. The Borrower agrees that, for so long as any Loans remain outstanding, it will hold and participate in quarterly conference calls with the Lenders relating to the financial condition and results of operations of the Borrower and the Restricted Subsidiaries.

(C)            Following the consummation of a Qualified DOV MLP IPO in which the direct or indirect parent company of the Borrower is a reporting company subject to Section 13(a) or 15(d) of the Exchange Act, the Borrower may satisfy its obligations in this covenant with respect to financial information and other information relating to the Borrower by furnishing consolidated financial information relating to such reporting parent company; provided that, if and so long as such parent company shall have Independent Assets or Operations, such financial information shall be accompanied by consolidating information that explains in reasonable detail the differences between the information relating to such parent company, on the one hand, and the information relating to the Borrower and the Restricted Subsidiaries on a standalone basis, on the other hand. For purposes of this paragraph, "Independent Assets or Operations" means, with respect to any such parent company, that such parent company's total assets, revenues, income from continuing operations before income taxes and cash flows from operating activities (excluding in each case amounts related to its investment in the Borrower and the Restricted Subsidiaries), determined in accordance with GAAP and as shown on the most recent balance sheet of such parent company, is more than 5.0% of such parent company's corresponding consolidated amount.

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7.06            Notices of Material Events.  The Parent shall furnish to the Administrative Agent, which shall furnish to each Lender and Secured Counterparty, to the extent applicable, prompt written notice of the following:

(i)            the occurrence of any Default;

(ii)            the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or, to the knowledge of a Financial Officer or another executive officer of the Parent or any Subsidiary, affecting the Parent or any Affiliate thereof, or any adverse development in any such pending action, suit or proceeding not previously disclosed in writing by the Parent to the Administrative Agent, that in each case could reasonably be expected to result in a Material Adverse Effect or that in any manner questions the validity of this Agreement or any other Loan Document;

(iii)            the occurrence of any ERISA Event which would reasonably be expected to have a Material Adverse Effect;

(iv)            any change in the ratings of the credit facilities made available under this Agreement by S&P or Moody's, or any notice from either such agency indicating its intent to effect such a change or to place the Parent or such credit facilities on a "CreditWatch" or "WatchList" or any similar list, in each case with negative implications, or its cessation of, or its intent to cease, rating such credit facilities;

(v)            any casualty or other damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any material portion of or any material interest in the Collateral under power of eminent domain or by condemnation or similar proceeding (and will ensure that the Net Proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied in accordance with the applicable provisions of this Agreement and the Collateral Agreements); and

(vi)            any other development (including notice of any Environmental Liability) that has resulted, or could reasonably be expected to result, in a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a written statement of a Financial Officer or other executive officer of the Parent setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

7.07            Filings; Additional Guarantors; Further Assurances.

(a)            The Borrower and the other Loan Parties hereby authorize the Pari Passu Collateral Agent to file one or more financing or continuation statements under the UCC (or any non-U.S. equivalent thereto), and amendments thereto, relative to all or any part of the Collateral, at the sole cost and expense of the Loan Parties, without the signature of the Borrower or any other Loan Party, where permitted by law. The Pari Passu Collateral Agent will promptly send the Borrower a copy of any financing or continuation statements that it may file without the signature of the Borrower or any other Loan Party and the filing or recordation information with respect thereto. None of the Borrower, Finco or any Guarantor will take any action or omit to take any action, which action or omission might or would have the result of materially impairing the security interest with respect to the Collateral for the benefit of the Lender Creditors except as expressly set forth herein or in any Collateral Agreement.

 

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(b)            If, after the Effective Date, any Subsidiary of the Borrower and, prior to the consummation of a Qualified DOV MLP IPO, any Subsidiary of ParentUDW, is formed, acquired or otherwise becomes subject to the Collateral and Guarantee Requirement, the Parent will take all steps necessary, within 45 days of the date on which such Subsidiary is formed, acquired or otherwise becomes subject to the requirements of the Collateral and Guarantee Requirement, to cause the Collateral and Guarantee Requirement in respect of such Subsidiary to be and remain satisfied at all times, including the execution and delivery of supplements to the Guarantee Agreement and the Security Agreement, as applicable, and the delivery of legal opinions reasonably requested by the Administrative Agent or the Pari Passu Collateral Agent, as applicable.

(c)            If property constituting Collateral is acquired by the Borrower or any Borrower Subsidiary Guarantor and such property is not automatically subject to a first-priority perfected Lien in favor of the Pari Passu Collateral Agent under the Collateral Agreements, then the Borrower or such Borrower Subsidiary Guarantor will, as soon as practicable after the acquisition of such property (and, in any event, within 45 days thereafter), (i) grant to the Pari Passu Collateral Agent a first-priority perfected Lien over such property, (ii) deliver certain certificates to the Pari Passu Collateral Agent in respect thereof as required by the Collateral and Guarantee Requirement or by the Collateral Agreements and (iii) take all other necessary steps to perfect the first-priority perfected Lien in favor of the Pari Passu Collateral Agent as and to the extent required by the Collateral Agreements.

(d)            The Borrower shall furnish to the Administrative Agent and the Pari Passu Collateral Agent prompt written notice of any change (i) in the legal name of the Parent, either Borrower or any Borrower Subsidiary Guarantor, as set forth in its organizational documents, in the jurisdiction of organization or the form of organization of the Parent, either Borrower or any Borrower Subsidiary Guarantor (including as a result of any merger or consolidation), or in the organizational identification number, if any, or, with respect to the Parent, either Borrower or any Borrower Subsidiary Guarantor organized under the laws of a jurisdiction that requires such information to be set forth on the face of a UCC financing statement, the Federal Taxpayer Identification Number of such person. The Parent shall not, and shall not permit either Borrower or any Borrower Subsidiary Guarantor to, effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Pari Passu Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral.

(e)            Neither the Borrower nor any Guarantor shall enter into any agreement that requires the proceeds received from any sale of Collateral to be applied to repay, redeem, defease or otherwise acquire or retire any Indebtedness of any Person, other than (i) the Loans, (ii) solely with respect to the sale of Collateral subject to a Permitted Equipment Lien, the agreements 

 

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governing Indebtedness secured by such Permitted Equipment Lien, (iii) any other Pari Passu Obligations or (iv) otherwise as may be permitted or required by this Agreement, the Intercreditor Agreement or the other Collateral Agreements, including with respect to any Permitted Collateral Liens; provided that, for the avoidance of doubt, any such agreement may be entered into to the extent that such agreement permits such proceeds to be applied to Pari Passu Obligations prior to or instead of such other Indebtedness.

(f)            If the Parent, the Borrower or any Borrower Subsidiary Guarantor becomes organized, through a merger or otherwise, in a jurisdiction other than a Permitted Jurisdiction, then the Parent, the Borrower or such Borrower Subsidiary Guarantor, as applicable, shall take all further action to continue and maintain the Pari Passu Collateral Agent's first-priority perfected security interest in the Collateral.

7.08            Compliance Certificate.

(a)            The Parent shall deliver to the Administrative Agent, within 135 days after the end of each fiscal year ending after the Effective Date, a certificate from an Authorized Representative of the Parent (i) stating that a review of the activities of the Parent and the Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Authorized Representative with a view to determining whether the Parent and the Restricted Subsidiaries have kept, observed, performed and fulfilled their obligations under this Agreement and the other Loan Documents, and further stating, as to each such Authorized Representative signing such certificate, that, to the best of his or her knowledge, the Parent and the Restricted Subsidiaries have kept, observed, performed and fulfilled each covenant contained in this Agreement and the other Loan Documents applicable to them and are not in default in the performance or observance of any of the terms, provisions and conditions thereof (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Parent is taking or propose to take with respect thereto); in addition, such certificate shall include a reasonably detailed calculation of the Consolidated Net Leverage Ratio for such period and confirming compliance with Section 7.18 and (ii) (A) setting forth, in a manner reasonably satisfactory to the Pari Passu Collateral Agent, any changes in any information contained in the Perfection Certificate delivered on the Effective Date (or, following delivery of the first such compliance certificate, from the date of the most recently completed compliance certificate) or (B) certifying that there has been no change in such information from the Perfection Certificate delivered on the Effective Date (or, following delivery of the first such compliance certificate, from the date of the most recently completed compliance certificate).

(b)            The Parent shall, so long as any of the Loans are outstanding, deliver to the Administrative Agent, within 10 Business Days of any of its Authorized Representatives becoming aware of any Default or Event of Default, a written statement specifying such Default or Event of Default and what action the Parent is taking or propose to take with respect thereto.

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7.09            Books and Records; Inspection and Audit Rights.  The Parent will, and will cause each Restricted Subsidiary to, keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law are made of all dealings and transactions in relation to its business and activities. The Parent will, and will cause each Restricted Subsidiary to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested; provided that the foregoing rights of the Administrative Agent and the Lenders shall not interfere in any material respect with the conduct of the business of the Parent or any Restricted Subsidiary.

7.10            Compliance with Laws.  The Parent will, and will cause each Subsidiary to, comply with all Requirements of Law (including Environmental Laws) with respect to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

7.11            Rated Credit Facilities.  The Parent shall use commercially reasonable efforts to cause the Term Loans made available under this Agreement to be continuously rated by S&P and Moody's and, in respect of the Parent, shall use commercially reasonable efforts to maintain a corporate rating from S&P and a corporate family rating from Moody's.

7.12            Transactions with Affiliates.

(a)            The Parent shall not, and shall not permit any of the Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Parent and any Restricted Subsidiary (each, an "Affiliate Transaction") involving, with respect to any such transaction or series of related transactions, payments or consideration in excess of $1,000,000, unless:

(1)          the Affiliate Transaction is on terms that are either (a) no less favorable to the Parent or the relevant Restricted Subsidiary than those that could have been obtained in a comparable arm's-length transaction by the Parent or such Restricted Subsidiary with a Person that is not an Affiliate of the Parent and any Restricted Subsidiary or (b) if in the good faith judgment of a Financial Officer, no comparable transaction is available with which to compare such Affiliate Transaction, such Affiliate Transaction is otherwise fair to the Parent or the relevant Restricted Subsidiary from a financial point of view; and

(2)          the Parent obtains and, at the request of the Administrative Agent, delivers to the Administrative Agent:

(a)            with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25,000,000, a resolution of the Board of Directors of the Parent

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set forth in an Officer's Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this Section 7.12 and that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the disinterested members of the Board of Directors of the Parent; and

(b)            with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $50,000,000, an opinion issued to the Board of Directors of the Parent by an accounting, appraisal or investment banking firm of international standing or generally recognized in the shipping or offshore drilling industries as qualified to perform the tasks for which such firm has been engaged as to the fairness to the Parent or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view or that the terms of such Affiliate Transaction are no less favorable to the Parent or the relevant Restricted Subsidiary than those that could have been obtained in a comparable arm's-length transaction by the Parent or such Restricted Subsidiary with a Person that is not an Affiliate of the Parent and any Restricted Subsidiary.

(b)            For the avoidance of doubt, with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration of $25,000,000 or less, the determination that such Affiliate Transaction or series of Affiliate Transactions complies with this Section 7.12 may be made by a Financial Officer.

(c)            The following items shall not be deemed to be Affiliate Transactions, as applicable, and, therefore, shall not be subject to this Section 7.12(a):

(1)            any management agreement for the provision of vessel management services in the ordinary course of business and in line with industry standards and any payments thereunder that shall have been approved by a majority of the disinterested members of the Board of Directors of the Parent or, following the consummation of a Qualified DOV MLP IPO or a Non-DOV Qualified MLP IPO, such arrangements are consistent with those that are customarily entered into with Affiliates by companies that have undertaken a transaction similar to a Qualified DOV MLP IPO or a Non-DOV Qualified MLP IPO, as applicable, as determined in good faith by the majority of the disinterested members of the Board of Directors of the Borrower;

(2)            any employment agreement, employee benefit plan, compensation plan or arrangement, officer or director indemnification agreement or any similar arrangement entered into by the Parent or any of its Restricted Subsidiaries in the ordinary course of business and payments pursuant thereto;

(3)            payment of reasonable directors' fees to directors of the Parent or any Restricted Subsidiary;

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(4)            transactions solely between or among the Parent and/or any of its Restricted Subsidiaries;

(5)            the issuance or sale of Equity Interests (other than Disqualified Stock) of the Parent to, or receipt of capital contributions from, Affiliates of the Parent;

(6)            loans or advances to employees of the Parent (including of any Restricted Subsidiary) in the ordinary course of business not to exceed $7,500,000 in the aggregate at any one time outstanding;

(7)            transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliate of the Parent solely because the Parent owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;

(8)            Restricted Payments (including as Permitted Investments) that do not violate Section 7.15;

(9)            transactions between the Parent or any of its Restricted Subsidiaries and any Person that would not otherwise constitute an Affiliate Transaction except for the fact that a director of such other Person is also a director of the Parent or such Restricted Subsidiary, as applicable; provided that such director abstains from voting as a director of the Parent or such Restricted Subsidiary, as applicable, on any matter involving such other Person;

(10)            any agreement as in effect on the Effective Date or any amendments, renewals or extensions of any such agreement (so long as such amendments, renewals or extensions are not, taken as a whole, less favorable in any material respect to the Lenders);

(11)            the Transactions and all fees and expenses paid or payable in connection therewith;

(12)            the granting and performance of registration rights for the Parent's securities;

(13)            transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Agreement that are fair to the Parent or the Restricted Subsidiaries or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated Person, in each case, as determined in good faith by the Board of Directors of the Parent or a member of the senior management of the Parent;

(14)            a Qualified DOV MLP IPO and transactions related thereto and the DOV MLP Formation Transactions and transactions related thereto, including the execution of any agreements or documents necessary to release (i) the Loan Guarantee of ParentUDW and any of ParentUDW's Subsidiaries that are not Subsidiaries of the

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Borrower and (ii) the related Liens on the Equity Interests of the Borrower in connection with a Qualified DOV MLP IPO;

(15)            prior to the consummation of a Qualified DOV MLP IPO, a Non-DOV Qualified MLP IPO and transactions related thereto and Non-DOV MLP Formation Transactions and transactions related thereto, so long as the Non-DOV MLP Asset Transfers related to the foregoing are consummated in compliance with Section 7.22 or otherwise constitute a Non-DOV Qualified MLP Asset Transfer; and

(16)            transactions in the ordinary course of business solely between the Borrower or a Borrower Subsidiary Guarantor and a Local Content Subsidiary.

7.13            Limitations on Liens.

The Borrower shall not, and shall not permit Finco or any of the Borrower Subsidiary Guarantors to, and prior to the consummation of a Qualified DOV MLP IPO, ParentUDW will not, directly or indirectly, create, Incur or assume (i) any Lien of any kind on any Collateral, except for Permitted Collateral Liens, or (ii) any Lien of any kind securing Indebtedness on any of its property or assets that are not Collateral, except for Permitted Liens.

7.14            Limitations on Merger, Consolidation or Sale of Assets.

For purposes of this Section 7.14, following the consummation of a Qualified DOV MLP IPO, Section 7.14(a) shall be deemed to be removed and replaced with "[Reserved]".

(a)            ParentUDW shall not, directly or indirectly: (1) amalgamate, consolidate or merge with or into another Person (whether or not ParentUDW is the Person formed by or surviving any such amalgamation, consolidation or merger); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of ParentUDW and the Restricted Subsidiaries, taken as a whole, in each case, in one transaction or a series of related transactions, including by way of liquidation or dissolution, to another Person, unless:

(1)          the Person formed by or surviving any such amalgamation, consolidation or merger or to which such sale, assignment, transfer, conveyance or other disposition has been made (the "Successor ParentUDW") is (if other than ParentUDW) a Person organized or existing under the laws of a Permitted Jurisdiction;

(2)          the Successor ParentUDW (if other than ParentUDW) assumes all the Secured Obligations of ParentUDW under the Loan Guarantee and the other Secured Obligations under this Agreement and the Collateral Agreements to which ParentUDW is a party, if any, and agrees to be bound by all the provisions of this Agreement and such Collateral Agreements pursuant to an amendment or supplement thereto or other documents or instruments, in form and substance reasonably satisfactory to the Administrative Agent or Pari Passu Collateral Agent, as applicable;

(3)          immediately before and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

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(4)            except with respect to a transaction solely between or among ParentUDW and any of the Restricted Subsidiaries, immediately after giving pro forma effect to such transaction, any related financing transactions and the use of proceeds therefrom and treating any Indebtedness that becomes an obligation of ParentUDW or any of the Restricted Subsidiaries as a result of such transaction as having been Incurred by ParentUDW or such Restricted Subsidiary, as the case may be, at the time of the transaction, either (a) ParentUDW or the Successor ParentUDW (if other than ParentUDW) would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in Section 7.16(a) or (b) ParentUDW or the Successor ParentUDW (if other than ParentUDW) would have a Consolidated Interest Coverage Ratio for the applicable four quarter period not lower than such ratio prior to giving effect to such transaction;

(5)            in the event that the Successor ParentUDW is organized in a jurisdiction that is different from the jurisdiction in which ParentUDW was organized immediately before giving effect to such transaction, the Successor ParentUDW has delivered to the Administrative Agent an opinion of counsel reasonably satisfactory to the Administrative Agent stating that the obligations of the Successor ParentUDW under this Agreement, the Guarantee Agreement and the Collateral Agreements to which it is a party are enforceable under the laws of such Permitted Jurisdiction, subject to customary exceptions; and

(6)            ParentUDW or the Successor ParentUDW (if other than ParentUDW) delivers to the Administrative Agent an Officer's Certificate and opinion of counsel, in each case, stating that such amalgamation, consolidation, merger or transfer and each such amendment and supplement or other documents or instruments comply with this Section 7.14.

(b)            The Borrower shall not, directly or indirectly: (1) amalgamate, consolidate or merge with or into another Person (whether or not the Borrower is the Person formed by or surviving any such amalgamation, consolidation or merger); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Borrower and the Borrower Subsidiary Guarantors taken as a whole, in each case, in one transaction or a series of related transactions, including by way of liquidation or dissolution, to another Person, unless:

(1)            either the Person formed by or surviving any such amalgamation, consolidation or merger or to which such sale, assignment, transfer, conveyance or other disposition has been made (the "Successor Borrower") is (if other than the Borrower) a Person organized or existing under the laws of a Permitted Jurisdiction;

(2)            the Successor Borrower (if other than the Borrower) assumes all the Secured Obligations of the Borrower under this Agreement and any Collateral Agreements to which the Borrower is a party, and agrees to be bound by all the provisions of this Agreement and such Collateral Agreements pursuant to an amendment or supplement thereto or other documents and instruments, as applicable, in form and substance reasonably satisfactory to the Administrative Agent (it being agreed that if, prior to the consummation of a Qualified DOV MLP IPO, the Borrower merges with or

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into ParentUDW, ParentUDW must assume all such obligations of the Borrower); provided that, if such Person is a limited liability company or a limited partnership, then the Borrower or such Person shall have the Loans assumed, to the extent not already the case, on a joint and several basis, with a corporation in which it owns 100% of the Equity Interests;

(3)            immediately before and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

(4)            following the consummation of a Qualified DOV MLP IPO (and not in connection with such Qualified DOV MLP IPO), except with respect to a transaction solely between or among the Borrower and any of the Restricted Subsidiaries, immediately after giving pro forma effect to such transaction, any related financing transactions and the use of proceeds therefrom and treating any Indebtedness that becomes an obligation of the Borrower or any of the Restricted Subsidiaries as a result of such transaction as having been Incurred by the Borrower or such Restricted Subsidiary, as the case may be, at the time of the transaction, either (a) the Borrower or the Successor Borrower (if other than the Borrower) would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to Section 7.16(a) or (b) the Borrower or the Successor Borrower (if other than the Borrower) would have a Consolidated Interest Coverage Ratio for the applicable four quarter period not lower than such ratio prior to giving effect to such transaction;

(5)            in the event that the Successor Borrower is organized in a jurisdiction that is different from the jurisdiction in which the Borrower was organized immediately before giving effect to such transaction, the Successor Borrower has delivered to the Administrative Agent an opinion of counsel satisfactory to the Administrative Agent stating that the obligations of the Successor Borrower under the Loans, this Agreement and the Collateral Agreements are enforceable under the laws of such Permitted Jurisdiction, subject to customary exceptions;

(6)            Finco (unless it is party to the transactions described above, in which case Section 7.14(e)(3) shall apply), shall have by documentation reasonably satisfactory to the Administrative Agent confirmed that it continues to be a co-borrower of the Loans; and

(7)            the Borrower or Successor Borrower (if other than the Borrower) delivers to the Administrative Agent an Officer's Certificate and opinion of counsel, in each case stating that such amalgamation, consolidation, merger or transfer and each such amendment and supplement or other documents or instruments comply with this Section 7.14.

(c)            Upon any amalgamation, consolidation or merger, or any sale, assignment, transfer, conveyance or other disposition of all or substantially all of the properties or assets of ParentUDW or the Borrower, as the case may be, in accordance with the paragraphs above in which ParentUDW or the Borrower, as applicable, is not the surviving entity, the Successor ParentUDW or the Successor Borrower, as the case may be, shall succeed to, and be substituted 

 

 

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for, and may exercise every right and power of, ParentUDW or the Borrower, as applicable, under the Loan Documents with the same effect as if the Successor ParentUDW or the Successor Borrower, as applicable, had been named as ParentUDW or the Borrower, as applicable, in the Loan Documents, and thereafter, ParentUDW or the Borrower, as the case may be, will be relieved of all obligations and covenants under the Loans and the Loan Documents (except to the extent the Borrower (if not the surviving entity) remains subject thereto as a Restricted Subsidiary of ParentUDW, if applicable). Notwithstanding the operation of any other provision in this Section 7.14, in connection with a Qualified DOV MLP IPO in which all or substantially all of the assets of the Borrower and its Restricted Subsidiaries are transferred to one or more DOV MLP Entities, the predecessor Borrower may, by notice to the Administrative Agent, designate a direct or indirect parent of the DOV MLP Entities holding such assets after such transfers as the "Successor Borrower," so long as, after giving effect to such Qualified DOV MLP IPO, (a) such Successor Borrower and its Restricted Subsidiaries hold, directly or indirectly, all or substantially all of the assets held by the Borrower and its Restricted Subsidiaries immediately prior to such transaction, including the Collateral Vessels and Collateral Vessel Contracts, (b) such Successor Borrower holds the same ownership interest, directly or indirectly, in such transferred assets as the Borrower held immediately prior to such transfers, (c) each DOV MLP Entity receiving any portion of such transferred assets in such transaction from a Borrower Subsidiary Guarantor becomes a Borrower Subsidiary Guarantor and (d) each Restricted Subsidiary that holds an ownership interest, directly or indirectly, in any DOV MLP Entity receiving any portion of such transferred assets in such transaction becomes a Borrower Subsidiary Guarantor.

(d)            The Borrower will not (and, prior to the consummation of a Qualified DOV MLP IPO, ParentUDW will not) permit any Guarantor (other than ParentUDW, as described above) to sell or otherwise dispose of all or substantially all its properties or assets to, or amalgamate, consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person other than the Borrower or another Guarantor, unless:

(1)            immediately after giving effect to such transaction or series of related transactions, no Default or Event of Default exists; and

(2)            either:

(a)(x) such Guarantor is the surviving Person or (y) the Person formed by or surviving any such amalgamation, consolidation or merger or to which such sale or disposition has been made is a Person organized or existing under the laws of a Permitted Jurisdiction and such Person expressly assumes all the Secured Obligations of such Guarantor under this Agreement and its Loan Guarantee pursuant to an amendment or supplement thereto or other documents or instruments in form and substance reasonably satisfactory to the Administrative Agent; or

(b) such amalgamation, consolidation, merger or disposition does not violate the provisions in Section 7.22 and is not otherwise consummated as part of a Qualified DOV MLP IPO;

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(3)            the Borrower delivers to the Administrative Agent an Officer's Certificate and an opinion of counsel, in each case stating that such amalgamation, consolidation, merger or transfer and each such amendment and supplement or other documents or instruments comply with this Section 7.14;

(4)            if applicable, the successor Guarantor causes such amendments, supplements or other instruments with respect to the Collateral Agreements to be executed, delivered, filed and recorded, as applicable, in such jurisdictions as may be required by applicable law to preserve and protect the Lien of the Pari Passu Collateral Agent on any Collateral owned by or transferred to such successor Guarantor and deliver an opinion of counsel as to the enforceability thereof and such other matters as the Administrative Agent may reasonably request; and

(5)            if applicable, any Collateral owned by or transferred to such successor Guarantor shall (a) continue to constitute Collateral under this Agreement and the Collateral Agreements to which it is a party, (b) be subject to the Lien in favor of the Pari Passu Collateral Agent for the benefit of the holders of the Pari Passu Obligations and (c) not be subject to any Lien other than Permitted Collateral Liens.

(e)            Subject to the provisions set forth in this Agreement governing the release of a Guarantor from its Loan Guarantee in certain circumstances, upon any amalgamation, consolidation or merger, or any sale, assignment, transfer, conveyance or other disposition of all or substantially all of the properties or assets of a Guarantor, in accordance with the paragraphs above in which such Guarantor is not the surviving entity, the successor Guarantor shall succeed to, and be substituted for, and may exercise every right and power of, such Guarantor under this Agreement with the same effect as if the successor Guarantor had been named as such Guarantor in this Agreement, and thereafter, such original Guarantor will be relieved of all obligations and covenants under this Agreement.

(f)            Finco will not, directly or indirectly: (1) amalgamate, consolidate or merge with or into another Person (whether or not Finco is the Person formed by or surviving any such amalgamation, consolidation or merger); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of its properties or assets, in each case, in one transaction or a series of related transactions, including by way of liquidation or dissolution, to another Person, unless:

(1)            (a) concurrently therewith, a corporate wholly-owned subsidiary that is a Restricted Subsidiary of the Borrower organized and validly existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof (which may be the continuing Person as a result of such transaction) expressly assumes all the obligations of Finco under the Loans and the Loan Documents, pursuant to an amendment or supplement thereto or other documents and instruments, as applicable, in form and substance reasonably satisfactory to the Administrative Agent or (b) after giving effect thereto, at least one Borrower of the Loans shall be a corporation organized and validly existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof;

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(2)            immediately before and after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and

(3)            Finco or such successor Person (if other than Finco) delivers to the Administrative Agent an Officer's Certificate and an opinion of counsel, in each case, stating that such amalgamation, consolidation, merger or transfer and such supplemental indenture, documents and instruments comply with this Section 7.14.

(g)            Upon any amalgamation, consolidation or merger, or any sale, assignment, transfer, conveyance or other disposition of all or substantially all of the properties or assets of Finco or other assumption of the obligations of Finco in accordance with the paragraphs above in which such successor Person becomes the successor Finco, the successor Finco shall succeed to, and be substituted for, and may exercise every right and power of, Finco under this Agreement with the same effect as if the successor Finco had been named as Finco in this Agreement, and thereafter, such original Finco will be relieved of all obligations and covenants under this Agreement.

(h)            For purposes of the foregoing, entry into one or more Collateral Vessel Contracts or other charters, pool agreements or drilling contracts with respect to any Vessels will be deemed not to be a sale, assignment, transfer, conveyance or other disposition subject to this Section 7.14.

7.15            Limitations on Restricted Payments.

(I)            Prior to the consummation of a Qualified DOV MLP IPO, ParentUDW shall not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly:

(A)            declare or pay any dividend or make any other payment or distribution on account of Equity Interests of ParentUDW or any Restricted Subsidiary (including, without limitation, any payment in connection with any merger, consolidation or amalgamation involving ParentUDW or any of the Restricted Subsidiaries) or to the direct or indirect holders of ParentUDW's or any of the Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of ParentUDW and other than dividends or distributions payable to ParentUDW or any Restricted Subsidiary);

(B)            purchase, repurchase, redeem, retire or otherwise acquire for value (including, without limitation, in connection with any merger, consolidation or amalgamation involving) any Equity Interests of ParentUDW or any direct or indirect parent of ParentUDW held by any Person (other than Equity Interests held by ParentUDW or any Restricted Subsidiary) or any Equity Interests of any Restricted Subsidiary held by an affiliate of ParentUDW (other than Equity Interests held by ParentUDW or any Restricted Subsidiary) (in each case other than in exchange for Equity Interests of ParentUDW that is not Disqualified Stock);

(C)            make any principal payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Borrower or any Guarantor that is contractually subordinated to the Loans or to any Loan Guarantee (excluding any intercompany Indebtedness between or among ParentUDW and any of the Restricted Subsidiaries), except the purchase, repurchase, redemption, defeasance or other acquisition of such Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year after the date of purchase, repurchase, redemption, defeasance or acquisition, and the payment of principal of such Indebtedness at the Stated Maturity thereof; or

 

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(D)            make any Restricted Investment (together with all such payments and other actions set forth in clauses (A) through (C) above, collectively, "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment:

(1)            no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;

(2)            ParentUDW could Incur, at the time of such Restricted Payment and after giving pro forma effect thereto, at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in Section 7.16(a); and

(3)            such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by ParentUDW and the Restricted Subsidiaries since the Reference Date (excluding Restricted Payments permitted by clauses (2) through (5) and (7) through (14) of Section 7.15(III)), is less than the sum, without duplication, of:

(a)      50% of ParentUDW's Consolidated Net Income on a consolidated basis for the period (taken as one accounting period) from the first day of the fiscal quarter during which the Reference Date occurred and ending on the last day of ParentUDW's most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus 

(b)      100% of the aggregate net cash proceeds or the Fair Market Value of assets other than cash, in each case received by ParentUDW or any Restricted Subsidiary from any Person other than ParentUDW or any of its Subsidiaries since the Reference Date as a contribution to its common equity capital or from the issue or sale of ParentUDW's Equity Interests (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of ParentUDW, in each case that have been converted into or exchanged for Equity Interests (other than Disqualified Stock) of ParentUDW (other than Equity Interests, Disqualified Stock or debt securities sold to a Restricted Subsidiary of ParentUDW); plus 

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(c)      to the extent that any Restricted Investment that was made after the Reference Date is sold or disposed of for cash or Cash Equivalents or otherwise cancelled, liquidated or repaid for cash or Cash Equivalents, the lesser of (i) the return of capital received in cash or Cash Equivalents with respect to such Restricted Investment (less the cost of disposition, if any) and (ii) the initial amount of such Restricted Investment; plus 

(d)      to the extent that any Unrestricted Subsidiary designated as such after the Reference Date is redesignated as a Restricted Subsidiary after the Reference Date, the lesser of (i) the Fair Market Value of the Restricted Investment made by ParentUDW or any of the Restricted Subsidiaries in such Subsidiary as of the date of such redesignation and (ii) such Fair Market Value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary after the Reference Date; plus

(e)      $50,000,000.

(II)            Upon the consummation of a Qualified DOV MLP IPO (the date of such consummation, the "Qualified DOV MLP IPO Date"), the Borrower and its Restricted Subsidiaries shall no longer be subject to Section 7.15(I) and instead the Borrower and its Restricted Subsidiaries shall be subject to this Section 7.15(II). The Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment (which, following the Qualified DOV MLP IPO Date, shall be defined as set forth in Section 7.15(I), but substituting the "Borrower" for each reference therein to "ParentUDW") unless, at the time of and after giving effect to such Restricted Payment, no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment and either:

(A)            if the Borrower's Consolidated Interest Coverage Ratio for the most recently ended four full fiscal quarters for which internal financial statements are available at the time of such Restricted Payment is not less than 2.0 to 1.0, such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Borrower and its Restricted Subsidiaries (excluding Restricted Payments permitted by clauses (2) through (5) and (7) through (14) of Section 7.15(III)) with respect to the quarter for which such Restricted Payment is made is less than the sum, without duplication, of:

(i)            Available Cash with respect to the Borrower's most recently ended fiscal quarter for which internal financial statements are available; plus 

(ii)            100% of the aggregate net cash proceeds or the Fair Market Value of assets other than cash, in each case, received by the Borrower or any Restricted Subsidiary from any Person other than the Borrower or any of its Subsidiaries since the Qualified DOV

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MLP IPO Date as a contribution to its common equity capital or from the issue or sale of the Borrower's Equity Interests (other than Disqualified Stock and other than cash contributed to, or purchases of Equity Interests of, the Borrower out of proceeds from the sale of Equity Interests to the DOV MLP in connection with a Qualified DOV MLP IPO) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Borrower, in each case that have been converted into or exchanged for Equity Interests (other than Disqualified Stock) of the Borrower (other than Equity Interests, Disqualified Stock or debt securities sold to a Restricted Subsidiary of the Borrower); plus 

(iii)            to the extent that any Restricted Investment that was made by the Borrower or any of its Restricted Subsidiaries after the Reference Date is sold or disposed of for cash or Cash Equivalents or otherwise cancelled, liquidated or repaid for cash or Cash Equivalents, in each case after the Qualified DOV MLP IPO Date, the lesser of (a) the return of capital received in cash or Cash Equivalents with respect to such Restricted Investment (less the cost of disposition, if any) and (b) the initial amount of such Restricted Investment; plus 

(iv)            to the extent that any Unrestricted Subsidiary designated as such after the Reference Date is redesignated as a Restricted Subsidiary after the Qualified DOV MLP IPO Date, the lesser of (a) the Fair Market Value of any Restricted Investment made by the Borrower or any of its Restricted Subsidiaries in such Subsidiary as of the date of such redesignation and (b) such Fair Market Value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary after the Qualified DOV MLP IPO Date, to the extent such amounts have not been included in Available Cash for any period commencing on or after the Qualified DOV MLP IPO Date (items (ii), (iii) and (iv) being referred to as "Incremental Funds"); minus

(v)            the aggregate amount of Incremental Funds previously expended pursuant to this clause (A) or clause (B) below; or

(B)            if the Borrower's Consolidated Interest Coverage Ratio for the most recently ended four full fiscal quarters for which internal financial statements are available at the time of such Restricted Payment is less than 2.0 to 1.0, such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Borrower and its Restricted Subsidiaries (excluding Restricted Payments permitted by clauses (2) through (5) and (7) through (14) of Section 7.15(III)) with respect to the quarter for which such Restricted Payment is made is less than the sum, without duplication, of:

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(i)            $50,000,000 less the aggregate amount of all Restricted Payments made by the Borrower and its Restricted Subsidiaries pursuant to this clause (B)(i) since the Qualified DOV MLP IPO Date; plus 

(ii)            Incremental Funds to the extent not previously expended pursuant to this clause (B) or clause (A) above.

(III)            The preceding paragraphs (I) and (II) will not prohibit (provided that, for the avoidance of doubt, following the Qualified DOV MLP IPO Date, all references in this Section 7.15(III) to the "Parent" shall be deemed to be references to the "Borrower"):

(1)            the payment of any dividend or distribution or the consummation of any irrevocable redemption within sixty (60) days after the date of declaration of the dividend or distribution or giving of the redemption notice, as the case may be, if at the date of declaration or notice, the dividend, distribution or redemption payment would have complied with the provisions of this Agreement;

(2)            the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary of the Parent) of, Equity Interests of the Parent (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to the Parent; provided that the amount of any such net cash proceeds that is utilized for any such Restricted Payment will be excluded from (a) Section 7.15(I)(3)(b) and (b) the calculation of Available Cash and Incremental Funds in Section 7.15(II);

(3)            the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Parent or any Restricted Subsidiary that is contractually subordinated to the Loan Document Obligations with the net cash proceeds from a substantially concurrent Incurrence of Permitted Refinancing Indebtedness;

(4)            the payment of any dividend (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary that is not a wholly-owned Subsidiary of the Parent to the holders of minority interests in its Equity Interests on a pro rata basis or on a basis more favorable to the Parent or its Restricted Subsidiaries;

(5)            so long as no Event of Default has occurred and is continuing, the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of Parent or Disqualified Stock or Preferred Stock of any Restricted Subsidiary issued after the Reference Date in accordance with the then-applicable Consolidated Interest Coverage Ratio test set forth in Section 7.16(a);

(6)            prior to the consummation of a Qualified DOV MLP IPO, so long as the aggregate principal amount of the Consolidated Total Indebtedness of ParentUDW and the Restricted Subsidiaries does not exceed 75% of the sum of the Completed Drilling Equipment Value and the Contracted Drilling Equipment Value at

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such time and no Default or Event of Default has occurred or is continuing, the making of any Restricted Payment in an aggregate amount, together with all other Restricted Payments made under this clause (6), not exceeding the aggregate amount of Excess Non-Collateral Vessel Proceeds;

(7)            cash payments in lieu of the issuance of fractional shares, or payments to dissenting stockholders (a) pursuant to applicable law or (b) in connection with the settlement or other satisfaction of legal claims made pursuant to or in connection with a consolidation, merger or transfer of assets in connection with a transaction that is not prohibited by this Agreement;

(8)            so long as no Event of Default has occurred and is continuing, the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Parent or any Restricted Subsidiary (or, following the consummation of a Qualified DOV MLP IPO, of any direct or indirect parent company of the Borrower) held by any current or former officer, director or employee of the Parent or any Restricted Subsidiary pursuant to any equity subscription agreement, employee stock ownership plan or similar trust, shareholders' agreement or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests may not exceed $5,000,000 in any calendar year (with any portion of such $5,000,000 amount that is unused in any calendar year to be carried forward to successive calendar years and added to such amount);

(9)            the purchase, redemption or other acquisition or retirement for value of Equity Interests deemed to occur upon the exercise or conversion of stock options, warrants, rights to acquire Equity Interests or other convertible securities, to the extent such Equity Interests represent a portion of the exercise or conversion price thereof or the purchase, redemption or other acquisition or retirement for value of Equity Interests of the Parent or any Restricted Subsidiary (or, following the consummation of a Qualified DOV MLP IPO, of any direct or indirect parent company of the Borrower) held by any current or former officers, directors or employees of the Parent or any Restricted Subsidiary in connection with the exercise or vesting of any equity compensation (including, without limitation, stock options, restricted stock and phantom stock) in order to satisfy any tax withholding obligation with respect to such exercise or vesting;

(10)            any purchase, redemption, defeasance or other acquisition or retirement of any Indebtedness subordinated to the Loan Document Obligations from proceeds of an Asset Sale or in the event of a Change of Control, in each case only if prior to or simultaneously with such purchase, redemption, defeasance or other acquisition or retirement, the Parent or any Restricted Subsidiary has made an Asset Sale Offer or Change of Control Offer, as applicable, as provided in this Agreement and has completed the repurchase or repayment of all Loans in connection with such Asset Sale Offer or Change of Control Offer in accordance with the requirements of this Agreement;

(11)            any Restricted Payment (other than a Restricted Payment made in cash or Cash Equivalents) deemed to be made in connection with or as a result of completing the (a) a DOV MLP Formation Transaction or (b) prior to the consummation

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of a Qualified DOV MLP IPO, a Non-DOV MLP Formation Transaction that is consummated in compliance with Section 7.22 or that otherwise constitutes a Non-DOV Qualified Asset Transfer;

(12)            so long as no Event of Default has occurred and is continuing or would result therefrom, any other Restricted Payments so long as, after giving effect thereto, including the use of proceeds therefrom, the Consolidated Total Leverage Ratio of the Parent shall not exceed 3.0 to 1.0;

(13)            prior to the consummation of a Qualified DOV MLP IPO, so long as no Event of Default has occurred and is continuing, any other Restricted Payment in an aggregate amount, together with all other Restricted Payments made under this clause (13), that does not exceed the greater of (x) $150,000,000 and (y) 5.0% of Net Tangible Assets at such time; and

(14)            prior to the consummation of a Qualified DOV MLP IPO, the payment of any dividend or distribution by a Restricted Subsidiary (other than the Borrower or any Subsidiary of the Borrower) to a Non-DOV MLP or Non-DOV MLP Entity in respect of Equity Interests of such Restricted Subsidiary that are held by such Non-DOV MLP or Non-DOV MLP Entity.

(IV)            The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Parent or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The Fair Market Value of any assets or securities that are required to be valued by this Section 7.15 will be determined by the Board of Directors of the Parent whose resolution with respect thereto will be delivered to the Administrative Agent. For purposes of determining compliance with this Section 7.15, in the event that a Restricted Payment meets the criteria of more than one of the applicable categories of Restricted Payments in Sections 7.15(I) and 7.15(II) or the clauses (1) through (14) of Section 7.15(III) or as a Permitted Investment, the Parent will be permitted to divide or classify (or later divide, classify or reclassify in whole or in part in its sole discretion) such Restricted Payment in any manner that complies with this Section 7.15.

7.16            Limitations on Indebtedness and Issuance of Preferred Stock.

(a)            The Parent shall not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "Incur," "Incurrence," "Incurred" and "Incurring" shall have meanings correlative to the foregoing), any Indebtedness (including Acquired Debt) or issue any Disqualified Stock, and the Parent will not permit any of the Restricted Subsidiaries to issue any shares of Preferred Stock; provided, however, that the Parent or any Restricted Subsidiary may Incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and any Restricted Subsidiary may issue Preferred Stock, if, immediately after giving pro forma effect to the Incurrence of such Indebtedness or the issuance of such Disqualified Stock or Preferred Stock and the receipt and application of the net proceeds thereof, the Consolidated Interest Coverage Ratio of the Parent for its most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is Incurred would have been at least 2.0 to 1.0.

 

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(b)            Section 7.16(a) will not prohibit the Incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"):

(1)            the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness under one or more Credit Facilities Incurred (a) in connection with the financing of the business and operations of the Parent and its Restricted Subsidiaries, including all or any part of the purchase price, lease expense, charter expense, rental payments or cost of design, construction, installation or improvement of Drilling Equipment used in the Permitted Business, whether through the charter of, leasing of or the direct purchase of, or of the Capital Stock of any Person owning, such Drilling Equipment (including any Indebtedness deemed to be Incurred in connection with such purchase) (it being understood that any such Indebtedness may be Incurred after the acquisition, purchase, charter or leasing or the construction, installation or the making of any improvement with respect to any such Drilling Equipment) or (b) to refinance Indebtedness in respect of Indebtedness otherwise Incurred pursuant to this clause (1); provided that, after giving pro forma effect to the Incurrence of such Indebtedness and the application of the proceeds thereof (including any related purchase of Drilling Equipment), the aggregate principal amount of the Consolidated Total Indebtedness of the Parent and its Restricted Subsidiaries shall not exceed the greater of (x) $550,000,000 multiplied by the number of Vessels that are either Qualified Vessels or Contracted Vessels and (y) the sum of (i) 75% of the Completed Drilling Equipment Value at such time and (ii) 75% of the Contracted Drilling Equipment Value at such time;

(2)            the Incurrence by (a) the Borrowers and any Guarantor of Indebtedness represented by the Loans and the related Loan Guarantees (including any Revolving Loans pursuant to an Incremental Revolving Credit Amendment not exceeding $50,000,000 and any Other Term Loans pursuant to an Incremental Term Loan Amendment not exceeding $150,000,000) and (b) the Parent or any Restricted Subsidiary of Existing Indebtedness;

(3)            the Incurrence by the Parent or any Restricted Subsidiary of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge, any Indebtedness (other than intercompany Indebtedness) that was permitted to be Incurred under Section 7.16(a) or clause (2), this clause (3) or clause (10) of Section 7.16(b);

(4)            the Incurrence by the Parent or any Restricted Subsidiary of intercompany Indebtedness between or among the Parent and the Restricted Subsidiaries; provided, however, that:

(a)        if the Borrower or any Borrower Subsidiary Guarantor is the obligor on such Indebtedness and the payee is not the Borrower, Finco or any Guarantor, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Loan

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Document Obligations then due with respect to the Loans or the relevant Loan Guarantee, as applicable; and

(b)        upon any (i) subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Parent or a Restricted Subsidiary, or (ii) sale or other transfer of any such Indebtedness to a Person that is not the Parent or a Restricted Subsidiary, the exception provided by this clause (4) shall no longer be applicable to such Indebtedness and such Indebtedness will be deemed to have been Incurred at the time of any such issuance or transfer;

(5)            the Incurrence by the Parent or any Restricted Subsidiary of Hedging Obligations in the ordinary course of business and not for speculative purposes (including the Hedging Obligations described in Section 5.01(q));

(6)            the guarantee by the Parent or any Restricted Subsidiary of Indebtedness of the Parent or a Restricted Subsidiary that was permitted to be Incurred by another provision of this Section 7.16; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Loans or a Loan Guarantee, then the guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;

(7)            the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness in respect of workers' compensation claims, self-insurance obligations, bankers' acceptances, and performance and surety bonds or other Indebtedness of a like nature, in each case in the ordinary course of business;

(8)            the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;

(9)            the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness arising from agreements providing for indemnification, earn-outs, adjustment of purchase price or similar obligations, or guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Parent or any Restricted Subsidiary pursuant to such agreements, in each case, Incurred in connection with the acquisition or disposition of any business, assets or the Capital Stock of a Subsidiary, other than guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or the Capital Stock of a Subsidiary for the purpose of financing such acquisition; provided, however, that, in the case of a disposition, the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds (including non-cash proceeds (the Fair Market Value of such non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value)) actually received by the Parent and the Restricted Subsidiaries in connection with such disposition;

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(10)            Indebtedness of any Person Incurred and outstanding on the date on which such Person becomes a Restricted Subsidiary or is merged, consolidated, amalgamated or otherwise combined with (including pursuant to any acquisition of assets and assumption of related liabilities) the Parent or any Restricted Subsidiary (other than Indebtedness Incurred (a) to provide all or any portion of the funds used to consummate the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was otherwise acquired by the Parent or a Restricted Subsidiary or (b) otherwise in connection with or contemplation of such acquisition); provided, however, with respect to this clause (10), that at the time of such acquisition or other transaction pursuant to which such Indebtedness is deemed to be Incurred, (x) the Parent could Incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set forth in Section 7.16(a), after giving pro forma effect to such acquisition or other transaction or (y) the Consolidated Interest Coverage Ratio would not be less than it was immediately prior to giving effect to such acquisition or other transaction;

(11)            the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness through the provision of bonds, guarantees, letters of credit or similar instruments required by the United States Federal Maritime Commission or any other governmental or regulatory agencies, foreign or domestic, including, without limitation, customs authorities; in each case, for Vessels owned, operated or chartered by, or in the ordinary course of business of, the Parent or any of its Restricted Subsidiaries;

(12)            the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness in the form of customer deposits and advance payments received in the ordinary course of business from customers for services purchased in the ordinary course of business; and

(13)            the Incurrence by the Parent or any Restricted Subsidiary of Indebtedness not otherwise permitted pursuant to clauses (1) through (12) above that, together with any other Indebtedness Incurred pursuant to this clause (13) and then outstanding, has an aggregate principal amount (or accreted value, as applicable) not to exceed the greater of (x) $100,000,000 and (y) 3.50% of Net Tangible Assets at such time.

(c)            For purposes of determining compliance with this Section 7.16, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (13) of Section 7.16(b), or is entitled to be Incurred pursuant to Section 7.16(a), the Parent or the applicable Restricted Subsidiary will be permitted to classify such item of Indebtedness (or any portion thereof) on the date of its Incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 7.16. The accrual of interest or Preferred Stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the obligation to pay commitment fees, the reclassification of Preferred Stock as Indebtedness due to a change in accounting principles, and the payment of dividends on Preferred Stock or Disqualified Stock in the form of additional shares of the same class of Preferred Stock or Disqualified Stock will not be deemed to be an Incurrence of Indebtedness or an issuance of Preferred Stock or Disqualified Stock for purposes of this Section 7.16. Further, the reclassification of any lease or other liability of the Parent, the Borrowers or any Restricted Subsidiary as Indebtedness due to a change of accounting principles after the Effective Date will not be deemed an incurrence of Indebtedness for purposes of this Section 7.16.

 

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(d)            For purposes of determining compliance with this Section 7.16, the amount of any Indebtedness outstanding as of any date will be:

(1)            the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(2)            the principal amount of the Indebtedness, in the case of any other Indebtedness; and

(3)            in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

		(a)	the Fair Market Value of such assets at the date of determination; and

		(b)	the amount of the Indebtedness of the other Person.

(e)            For purposes of determining compliance with any dollar-denominated restriction on the Incurrence of Indebtedness, the Dollar Equivalent of the principal amount of Indebtedness denominated in another currency will be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of Indebtedness Incurred under a revolving credit facility; provided that (1) if such Indebtedness is Incurred to refinance other Indebtedness denominated in a currency other than dollars, and such refinancing would cause the applicable dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such dollar-denominated restriction will be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced and (2) the Dollar Equivalent of the principal amount of any such Indebtedness outstanding on the Effective Date will be calculated based on the relevant currency exchange rate in effect on the Effective Date.

(f)            Notwithstanding any other provision of this Section 7.16, the maximum amount of Indebtedness that the Parent or the applicable Restricted Subsidiary may Incur pursuant to this Section 7.16 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.

7.17            Limitations on Dividends and Other Payment Restrictions Affecting Subsidiaries.

(a)            The Parent shall not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly, create or permit to become effective any consensual encumbrance or restriction on the ability of any of the Restricted Subsidiaries to:

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(1)            pay dividends or make any other distributions on its Capital Stock to the Parent or any of the Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Parent or any of the Restricted Subsidiaries;

(2)            make loans or advances to the Parent or any of the Restricted Subsidiaries; or

(3)            sell, lease or transfer any of its properties or assets to the Parent or any of the Restricted Subsidiaries.

(b)            However, Section 7.17(a) will not apply to encumbrances or restrictions existing under or by reason of:

(1)            agreements governing Indebtedness as in effect on the Effective Date;

(2)            restrictions contained in, or in respect of, Hedging Obligations permitted to be Incurred by this Agreement;

(3)            the Loan Documents, the Collateral Agreements and the other Pari Passu Documents;

(4)            applicable law, rule, regulation or order;

(5)            any instrument governing Indebtedness or Capital Stock of a Person acquired by the Parent or any of the Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was Incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of this Agreement to be Incurred;

(6)            customary non-assignment provisions in contracts and licenses entered into in the ordinary course of business;

(7)            purchase money obligations for property acquired in the ordinary course of business, mortgage financings and Capital Lease Obligations that impose restrictions on the property purchased or mortgaged or leased of the nature described in Section 7.17(a)(3);

(8)            any agreement for the sale or other disposition of the Capital Stock or all or substantially all of the assets of any Restricted Subsidiary that restricts distributions by that Restricted Subsidiary pending the sale or other disposition;

(9)            Liens permitted to be Incurred under Section 7.13 that limit the right of the debtor to dispose of the assets subject to such Liens;

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(10)            provisions limiting the disposition or distribution of assets or property in joint venture agreements, partnership agreements, asset sale agreements, sale-leaseback agreements, stock sale agreements and other similar agreements, which limitation is applicable only to the assets that are the subject of such agreements;

(11)            restrictions on cash or other deposits or net worth imposed by customers or suppliers or required by insurance, surety or bonding companies, in each case, under contracts entered into in the ordinary course of business;

(12)            any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1), (3), (5) and (7) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Parent, not materially more restrictive with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing;

(13)            any encumbrance or restriction contained in the terms of any Indebtedness that is permitted to be Incurred subsequent to the Effective Date pursuant to Section 7.16 or any agreement pursuant to which such Indebtedness was issued; provided that, at the time such Indebtedness is Incurred, either (1) such encumbrance or restriction is customary for financings of the same type, and such restrictions would not reasonably be expected to materially impair the Borrowers' ability to make scheduled payments of interest and principal on the Loans when due or, prior to the consummation of a Qualified DOV MLP IPO, ParentUDW's ability to make payment under its Loan Guarantee, as determined in good faith by a Financial Officer or (2) restrictions therein are not materially more restrictive, taken as a whole, than those contained in the Loan Documents or the agreements governing Existing Indebtedness as in effect on the Effective Date, as determined in good faith by a Financial Officer; and

(14)            encumbrances or restrictions of the nature described in Section 7.17(a)(3) with respect to property under a charter, lease or other agreement that has been entered into in the ordinary course for the employment, charter or other hire of such property.

7.18            Consolidated Net Leverage Ratio. The Borrower will not permit its Consolidated Net Leverage Ratio as of the last day of any period of four consecutive fiscal quarters ending with any fiscal quarter set forth below to exceed the ratio set forth opposite such fiscal quarter:

	 	
Fiscal Quarter Ending

		
Consolidated Net

Leverage Ratio

	 
	 	
 September 30, 2014

		
5.50 to 1.00

	 
	 	
 December 31, 2014

		
5.50 to 1.00

	 
	 	
 March 31, 2015

		
5.50 to 1.00

	 
	 	
 June 30, 2015

		
5.50 to 1.00

	
	 	
September 30, 2015

		
5.50 to 1.00

	 

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Fiscal Quarter Ending

		
Consolidated Net

Leverage Ratio

	 
	 	
December 31, 2015

		
5.50 to 1.00

	 
	 	
March 31, 2016 and thereafter

		
5.00 to 1.00

	 

7.19            Designation of Restricted and Unrestricted Subsidiaries.

(I)            The Board of Directors of the Parent may designate any Restricted Subsidiary (other than the Borrowers and any Subsidiary that holds an interest in any Collateral Vessel or any Related Assets with respect to any Collateral Vessel or is party to any Collateral Vessel Contract) to be an Unrestricted Subsidiary if:

(a)            The Parent could make the Restricted Payment (including as a Permitted Investment) which is deemed to occur upon such designation by Section 7.15 equal to the Fair Market Value of all outstanding Investments owned by the Parent and the Restricted Subsidiaries in such Subsidiary at the time of such designation;

(b)            such Restricted Subsidiary meets the definition of an "Unrestricted Subsidiary";

(c)            the designation would not constitute or cause (with or without the passage of time) a Default or Event of Default or no Default and Event of Default would be in existence following such designation; and

(d)            the Borrower delivers to the Administrative Agent a certified copy of a resolution of the Board of Directors of the Parent giving effect to such designation and an Officer's Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 7.15.

(II)            If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Parent and the Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 7.15 or under one or more clauses of the definition of Permitted Investments, as determined by the Borrower.

(III)            If, at any time, any Unrestricted Subsidiary designated as such would fail to meet the preceding requirements as an Unrestricted Subsidiary or any other Unrestricted Subsidiary would fail to meet the definition of an "Unrestricted Subsidiary", then such Subsidiary shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Indebtedness of such Subsidiary will be deemed to be Incurred by a Restricted Subsidiary as of such date.

(IV)            The Board of Directors of the Parent may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary if:

(a)            the Parent and the Restricted Subsidiaries could Incur the Indebtedness which is deemed to be Incurred upon such designation under Section 7.16, equal to the total Indebtedness of such Subsidiary calculated on a pro forma basis as if such designation had occurred on the first day of the four-quarter reference period;

 

 

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(b)            the designation would not constitute or cause a Default or Event of Default; and

(c)            the Borrower delivers to the Administrative Agent a certified copy of a resolution of the Board of Directors of the Parent giving effect to such designation and an Officer's Certificate certifying that such designation complied with the preceding conditions, including the Incurrence of Indebtedness under Section 7.16.

7.20            Business Activities.

The Parent shall not, and shall not permit any of the Restricted Subsidiaries to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Parent and the Restricted Subsidiaries taken as a whole.

7.21            Rights to Earnings from Collateral Vessels and Ownership of Collateral Vessels.

Prior to the consummation of a Qualified DOV MLP IPO, ParentUDW shall not, and shall not permit any of its Subsidiaries (other than the Borrower or any Borrower Subsidiary Guarantor), and following the consummation of a Qualified DOV MLP IPO, the Borrower shall not permit any of its Subsidiaries (other than a Borrower Subsidiary Guarantor) to, be or become party to any Collateral Vessel Contract (including as a charterer of any Collateral Vessel) or otherwise hold the right to directly receive any Earnings attributable to any Collateral Vessel or any other Related Assets with respect to any Collateral Vessel; provided, that a Local Content Subsidiary may be a party to a Collateral Vessel Contract in respect of a Collateral Vessel or otherwise hold the right to receive Earnings attributable to a Collateral Vessel or any Related Assets with respect to any Collateral Vessel (other than any Capital Stock of any Restricted Subsidiary that owns a Collateral Vessel) to the extent required by any law, regulation or requirement of any applicable jurisdiction, so long as such Local Content Subsidiary does not (a) receive more than 40% of the Earnings or Related Assets (other than any Capital Stock of any Restricted Subsidiary that owns a Collateral Vessel) with respect to such Collateral Vessel and (b) Incur Indebtedness that exceeds $30,000,000 in the aggregate at any one time outstanding; provided further that each Local Content Subsidiary (other than the Angolan and Brazilian Local Content Subsidiaries) shall be a direct or indirect Subsidiary of the Borrower (other than as may be required pursuant to local laws, regulations and requirements). The Borrower shall, or shall cause one or more of the Borrower Subsidiary Guarantors to, at all times maintain the Earnings Accounts, and each Earnings Account shall at all times be in the name of the Borrower or a Borrower Subsidiary Guarantor and be subject to an account control agreement (or other comparable arrangements under U.K. law or other laws acceptable to the Pari Passu Collateral Agent).

Prior to the consummation of a Qualified DOV MLP IPO, ParentUDW shall not directly own, and shall not permit any Restricted Subsidiary that is not the Borrower or a Borrower Subsidiary Guarantor to directly own, a Collateral Vessel. Following the

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consummation of a Qualified DOV MLP IPO, the Borrower will not permit any Restricted Subsidiary that is not a Borrower Subsidiary Guarantor to directly own a Collateral Vessel.

7.22            Limitation on Asset Sales.

(I)            The Parent shall not, and shall not permit any of the Restricted Subsidiaries to, directly or indirectly, consummate any Asset Sale (other than an Involuntary Transfer) unless:

(1)            the Parent or the Restricted Subsidiary, as the case may be, receives consideration at the time of consummation of such Asset Sale at least equal to the Fair Market Value of the assets or Equity Interests issued or sold or otherwise disposed of; and

(2)            at least 75% (or in the case of a Non-DOV MLP Asset Transfer that is not a Non-DOV Qualified MLP Asset Transfer, at least 50%) of the consideration received in such Asset Sale by the Parent or such Restricted Subsidiary is in the form of cash or Cash Equivalents; provided, however, to the extent that any disposition in such Asset Sale was of Collateral, the non-cash consideration received is pledged as Collateral under the Collateral Agreements within 20 Business Days, in accordance with the requirements set forth in this Agreement;

(II)            For purposes of this provision, each of the following will be deemed to be cash:

 

(a)            any Indebtedness or other liabilities, as shown on the Parent's most recent consolidated balance sheet, of the Parent or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Loan Document Obligations) that are assumed, repaid or retired by the transferee of any such assets so long as the Parent or such Restricted Subsidiary is released from further liability;

(b)            any securities, notes or other obligations received by the Parent or any such Restricted Subsidiary from such transferee that are, subject to ordinary settlement periods, converted by the Parent or such Restricted Subsidiary into cash or Cash Equivalents within one year following the closing of such Asset Sale, to the extent of the cash or Cash Equivalents received in that conversion; and

(c)            any stock or assets of the kind referred to in Section 7.22(III)(2) or (4).

(III)            Within 365 days after the receipt of any Net Proceeds from an Asset Sale (including, without limitation, an Involuntary Transfer), the Parent or the applicable Restricted Subsidiary, as the case may be, may apply such Net Proceeds at its option to any combination of the following:

(1)            to purchase, repay or prepay Pari Passu Obligations or other secured Indebtedness of the Borrower or any Borrower Subsidiary Guarantor or, in the case of an Asset Sale other than of Collateral, any Indebtedness (other than Indebtedness

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that is subordinated in right of payment to the Loan Document Obligations, whether or not secured (including, without limitation, prepayments of Term Loans)) of the Parent or any Restricted Subsidiary (and, in the case of revolving obligations, to correspondingly reduce commitments with respect thereto);

(2)          to acquire all or substantially all of the assets of, or any Capital Stock of, any Person primarily engaged in a Permitted Business, if, in the case of any such acquisition of Capital Stock, such Person is or becomes a Restricted Subsidiary after giving effect to such acquisition;

(3)          to make a capital expenditure for the Parent or any of its Restricted Subsidiaries; or

(4)          to acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business (including, without limitation, Vessels, related assets and any related Ready for Sea Costs) for the Parent or any of the Restricted Subsidiaries or make any deposit, installment or progress payment in respect of such assets or payment of any related Ready for Sea Costs;

provided that (x) a binding commitment made within the 365-day period described above by the Borrowers or the applicable Restricted Subsidiary to apply Net Proceeds from an Asset Sale in accordance with clauses (2) through (4) above shall toll the 365-day period in respect of such Net Proceeds for a period not to exceed 180 days from the expiration of the aforementioned 365-day period, provided that such Net Proceeds are actually used within the later of 365 days from their receipt from such Asset Sale or 180 days from the date of such binding commitment; provided further that

(A)          a binding commitment to apply Net Proceeds from an Asset Sale to the purchase or acquisition of an Additional Drilling Unit shall instead toll the 365-day period in respect of such Net Proceeds for a period not to exceed 365 days from the expiration of the aforementioned 365-day period so long as such Net Proceeds are actually used within the later of 365 days from their receipt from such Asset Sale or 365 days from the date of such binding commitment; and

(B)          a binding commitment to apply Net Proceeds from an Asset Sale to the construction of an Additional Drilling Unit shall instead toll the 365-day period in respect of such Net Proceeds until the later of 365 days from the expiration of the aforementioned 365-day period and the date on which Parent or the applicable Restricted Subsidiary is required to complete its payment obligations under the applicable construction contract so long as such Net Proceeds are actually used by the latest of such final contracted payment date (giving effect to modifications, extensions and amendments to the related construction contract or delivery and payment schedule), 365 days from their receipt from such Asset Sale or 365 days from the date of such binding commitment;

(y)      if the assets sold or transferred in such Asset Sale constituted Collateral, the Parent shall pledge or cause the applicable Restricted Subsidiary to pledge any assets (including

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without limitation any acquired Capital Stock) acquired with the Net Proceeds of such Asset Sale pursuant to clauses (2) and (4) above to secure the Secured Obligations and other Pari Passu Obligations on a first-priority basis (subject to the payment priority in favor of the Revolving Lenders as set forth in Section 8.02 and subject to Permitted Collateral Liens) pursuant to the Collateral Agreements and

(z)      prior to the consummation of a Qualified DOV MLP IPO, if the assets sold or transferred in such Asset Sale include a Vessel that does not constitute Collateral, then ParentUDW or the applicable Restricted Subsidiary, as the case may be, may with respect to the Net Proceeds of up to two Vessels elect to, in lieu of the application or investment provided in clauses (1) through (4) above, apply such Net Proceeds within 30 days following the receipt of proceeds from such Asset Sale to (i) repay all Indebtedness secured by such assets and (ii) purchase, repay or prepay any other Indebtedness of ParentUDW or any of the Restricted Subsidiaries so that the aggregate principal amount of the Consolidated Total Indebtedness of ParentUDW and its Restricted Subsidiaries does not exceed 75% of the sum of the Completed Drilling Equipment Value and the Contracted Drilling Equipment Value at such time (an Asset Sale of a Vessel whose Net Proceeds are applied pursuant to this clause (z), a "Non-Collateral  Vessel Sale"). Notwithstanding the foregoing, and subject to Section 7.22(IX), upon the consummation of a Qualified DOV MLP IPO, any Net Proceeds from an Asset Sale completed prior to such Qualified DOV MLP IPO will cease to be Net Proceeds unless such Asset Sale was completed by, and the related Net Proceeds were retained by, the Borrower or its Restricted Subsidiaries.

(IV)            Pending the final application of any Net Proceeds, the Parent or the applicable Restricted Subsidiary may apply the Net Proceeds to temporarily reduce outstanding revolving credit Indebtedness of the Parent or any of the Restricted Subsidiaries, respectively, or otherwise invest the Net Proceeds in (i) cash and Cash Equivalents or (ii) in the case of Net Proceeds from an Asset Sale that was not a sale of Collateral, any manner that is not prohibited by this Agreement.

(V)            Any Net Proceeds from Asset Sales that are not applied or invested as provided in Section 7.22(III) will constitute "Excess Proceeds." For the avoidance of doubt, the application of Net Proceeds relating to a Vessel that does not constitute Collateral in accordance with clause (z) in Section 7.22(III) will be deemed to have fully satisfied the application of all Net Proceeds from the applicable Asset Sale of such Vessel. Subject to Section 4.10, when the aggregate amount of Excess Proceeds exceeds $50,000,000, the Parent will, or will cause the applicable Restricted Subsidiary to, within 10 Business Days thereof, make an offer (the "Asset Sale Offer") to all Term Lenders and holders (other than Revolving Lenders) of unsubordinated Indebtedness of the Parent or any Restricted Subsidiary containing provisions similar to those set forth in this Agreement with respect to offers to repay, purchase or redeem such Indebtedness with the proceeds of sales of assets to repay, purchase or redeem the maximum principal amount of Term Loans and such unsubordinated Indebtedness that may be repaid, purchased or redeemed out of the Excess Proceeds; provided, that to the extent such Excess Proceeds were received in respect of the sale or transfer of assets that constituted Collateral, then the Parent will, or will cause the applicable Restricted Subsidiary to, make such Asset Sale Offer solely to holders (other than Revolving Lenders) of Pari Passu Obligations (and, to the extent such Excess Proceeds were received in respect of the sale or transfer of assets that did not constitute

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Collateral, but secured such other unsubordinated Indebtedness, such Asset Sale Offer may be made, to the extent required by the terms thereof, first or instead to holders of such other secured unsubordinated Indebtedness to the extent of those Excess Proceeds, in accordance with the terms of such Indebtedness). The offer price in any Asset Sale Offer will be equal to 100% of the outstanding principal amount of the Loans, plus accrued and unpaid interest, if any, to the date of purchase, and will be payable in cash. The aggregate principal amount of Loans repaid pursuant to an Asset Sale Offer shall be applied to the remaining scheduled installments of principal with respect to the applicable Class of Loans on a pro rata basis. If the aggregate principal amount of Indebtedness tendered in or required to be repaid pursuant to such Asset Sale Offer exceeds the amount of Excess Proceeds, the applicable Loans will be purchased on a pro rata basis and, if applicable, the Parent shall select such other Indebtedness for purchase or redemption based on amounts tendered or required to be prepaid. For the purposes of calculating the principal amount of any such Indebtedness not denominated in Dollars, such Indebtedness shall be calculated by converting any such principal amounts into their Dollar Equivalent determined as of the Business Day immediately prior to the date on which the Asset Sale Offer is announced. If any Excess Proceeds remain after consummation of an Asset Sale Offer, such Excess Proceeds shall not constitute Collateral and the Parent and the Restricted Subsidiaries may use those Excess Proceeds for any purpose not otherwise prohibited by the Loan Documents. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.

(VI)            Notwithstanding anything to the contrary contained in this Section 7.22 with respect to any Asset Sale that is an Event of Loss, such Event of Loss and the Event of Loss Proceeds in respect thereof will be governed by Section 4.02(a) and not this Section 7.22.

(VII)            In the event that, pursuant to this Section 7.22, the Borrower is required to commence an Asset Sale Offer, each such Asset Sale Offer shall remain open for a period of at least 20 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the "Asset Sale Offer Period"); provided that such Asset Sale Offer Period shall be extended in order to terminate substantially contemporaneously with the comparable time periods provided to holders of other Pari Passu Obligations participating in such Asset Sale Offer, if any. No later than five (5) Business Days after the termination of the Asset Sale Offer Period (the "Asset Sale Offer Settlement Date"), the Borrower shall apply all Excess Proceeds as set forth above.

(VIII)            Upon the commencement of an Asset Sale Offer, the Borrower shall deliver a notice to the Administrative Agent at the Notice Office, which the Administrative Agent shall promptly deliver to each Lender. The notice shall state:

(1)            that the Asset Sale Offer is being made pursuant to this Section 7.22 and the length of time the Asset Sale Offer shall remain open, including the time and date the Asset Sale Offer will terminate (the "Asset Sale Offer Termination Date");

(2)            the amount of Excess Proceeds, the offer price (as set forth above) and the Asset Sale Offer Settlement Date;

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(3)          that the Lenders electing to have any Loans purchased pursuant to any Asset Sale Offer shall be required to notify the Borrowers and the Administrative Agent at least one Business Day before the Asset Sale Offer Termination Date; and

(4)          that Lenders shall be entitled to withdraw their election if the Administrative Agent, receives, not later than the Business Day prior to the Asset Sale Offer Termination Date, a facsimile transmission or letter setting forth the name of the Lender, a statement that such Lender is withdrawing its election to have its Loans purchased and the principal amount of the Loans with respect to which such Lender is withdrawing its election.

(IX)            Notwithstanding anything herein to the contrary, in the event that any Asset Sale Offer, Change of Control Offer or Event of Loss Offer has been commenced but not yet completed prior to the consummation of a Qualified DOV MLP IPO, ParentUDW or the applicable Restricted Subsidiary making such offer shall complete the repayment, repurchase or redemption of all Loans and other Pari Passu Obligations validly tendered for payment in connection with such Asset Sale Offer, Change of Control Offer or Event of Loss Offer prior to the consummation of such Qualified DOV MLP IPO to the extent otherwise required by the terms of such offer.

7.23            Suspension of Covenants.

(a)            During any period of time that the Loans have an Investment Grade Rating and no Default or Event of Default has occurred and is continuing (a "Suspension Event"), then, beginning on that day, the Parent and the Restricted Subsidiaries will not be subject to the covenants set forth in the following Sections of this Agreement (collectively, the "Suspended Covenants"):

(1)          Section 7.12;

(2)          Section 7.15;

(3)          Section 7.16;

(4)          Section 7.17; and

(5)          Section 7.22;

provided, however, that if the Parent and the Restricted Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of the preceding sentence and, subsequently, Moody's or S&P withdraws its ratings or downgrades the ratings assigned to the Loans so that the Loans do not have an Investment Grade Rating, or an Event of Default (other than with respect to the Suspended Covenants) occurs and is continuing, the Suspension Event shall cease to be in effect and the Suspended Covenants will come back into effect, subject to the terms, conditions and obligations set forth in this Agreement.

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(b)            During any period that the foregoing covenants have been suspended, the Board of Directors of the Parent shall not designate any of the Restricted Subsidiaries as Unrestricted Subsidiaries pursuant to Section 7.19.

(c)            Prior to the consummation of a Qualified DOV MLP IPO, upon the occurrence of a Suspension Event, the amount of Excess Non-Collateral Vessel Proceeds shall be reset at zero.

(d)            The Suspended Covenants will be reinstituted and apply according to their terms as of and from the first day on which a Suspension Event ceases to be in effect. The Suspended Covenants will not, however, be of any effect with respect to actions properly taken in compliance with the provisions of this Agreement during the continuance of such Suspension Event, and, following reinstatement, the calculations under Section 7.15 shall be made as if such covenant had been in effect since the Effective Date except that no Default or Event of Default will be deemed to have occurred solely by reason of a Restricted Payment made while that covenant was suspended. Except to the extent Parent otherwise properly classifies such Indebtedness as having been incurred under a specific clause of Section 7.16, all Indebtedness Incurred during the continuance of the suspension period will be classified as having been incurred pursuant to Section 7.16(b)(2)(c).

7.24            Activities of Finco.

Finco may not hold assets (other than nominal assets), become liable for any obligations or engage in any business activities; provided that it may be a co-borrower or co-issuer with respect to the Loan Document Obligations or any other Indebtedness issued or Incurred by the Borrower and may engage in any activities directly related thereto or in connection therewith. Finco shall be a Restricted Subsidiary that is a wholly-owned Subsidiary of the Borrower at all times.

7.25            [Reserved.]

7.26            Use of Proceeds.

The proceeds of the Term Loans made hereunder shall be either utilized to consummate the 2014 Refinancing or shall be utilized to finance offshore drilling rigs and drillships or for any other purposes permitted under the Parent's Existing Indebtedness, including the DRH Existing Notes Indenture and the Ocean Rig UDW Existing Notes Indenture. The proceeds of any Revolving Loans will be used by the Borrowers from time to time for general corporate purposes of the Borrowers and their Subsidiaries.

SECTION 8.          Events of Default and Remedies.

(a)            Each of the following specified events shall constitute an "Event of Default":

(1)            default in any payment of interest with respect to Loan Document Obligations any Loan or Note when due and continued for 30 days;

 

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(2)            default in the payment when due (at maturity, upon redemption or required repurchase, upon declaration of acceleration or otherwise) of the principal of, or premium, if any, on, any Loan or Note or any other amounts owing hereunder or under any other Loan Document;

(3)            failure by ParentUDW, the Borrower, Finco or any Guarantor to comply with Section 7.14; or

(4)            failure by the Parent or any of the Restricted Subsidiaries for 60 days after notice to the Borrower by the Administrative Agent to comply with any covenant or agreement (other than a default referred to in clauses (1), (2) and (3) above) (provided that, in the case of Section 7.05, such period of continuance to such default or breach shall be 120 days after written notice described in this clause (4) has been given);

(5)            default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Parent or any of the Restricted Subsidiaries (or the payment of which is guaranteed by the Parent or any of the Restricted Subsidiaries), whether such Indebtedness or guarantee now exists or is created after the Effective Date, if that default:

(a)            is caused by a failure to pay principal of, or interest or premium, if any, on, such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or

(b)            results in the acceleration of such Indebtedness prior to its Stated Maturity,

and, in either case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $25,000,000 or more; provided, however, that if any such default is cured or waived or any such acceleration rescinded, or such Indebtedness is repaid, within a period of 60 days from the continuation of such default beyond the applicable grace period or the occurrence of such acceleration, as the case may be, such Event of Default and any consequential acceleration of the Loans shall be automatically rescinded, so long as such rescission does not conflict with any judgment or decree;

(6)            failure by the Parent, any of the Restricted Subsidiaries or any other Guarantor to pay final judgments entered by a court or courts of competent jurisdiction aggregating in excess of $25,000,000, which judgments are not paid, discharged or stayed for a period of 60 days after the due date thereof;

(7)            breach by the Borrowers or any Guarantor of any material representation or warranty or agreement in the Collateral Agreements, the repudiation by either of the Borrowers or any Guarantor of any of its obligations under the Collateral Agreements or the unenforceability of the Collateral Agreements against either Borrower or any Guarantor for any reason; (i) the Collateral Agreements shall for any reason cease to create a valid and perfected first-priority Lien on any portion of the Collateral having a Fair Market Value in excess of $25,000,000 (in each case, other than in accordance with the terms of this Agreement, the Intercreditor Agreement or the terms of the Collateral Agreements) or (ii) the Parent or any Restricted Subsidiary asserts in writing that any Lien created under the Collateral Agreements is invalid or unenforceable;

 

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(8)            except as permitted by this Agreement or any Loan Guarantee, any Loan Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or any Guarantor, or any Person duly acting on behalf of any Guarantor, denies or disaffirms its obligations under its Loan Guarantee;

(9)            the Parent or any Restricted Subsidiary that is a Significant Subsidiary, or any group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary, takes any of the following actions, pursuant to or within the meaning of any Bankruptcy Law:

(a)            commences a voluntary case,

(b)            consents in writing to the entry of an order for relief against it in an involuntary case,

(c)            consents in writing to the appointment of a Custodian of it or for all or substantially all of its property,

(d)            makes a general assignment for the benefit of its creditors, or

(e)            admits in writing it generally is not paying its debts as they become due; or

(f)            a court of competent jurisdiction enters an order or decree under any Bankruptcy Law, which order or decree remains unstayed and in effect for 60 consecutive days, that:

		(i)	is for relief against the Parent, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, in an involuntary case;

		(ii)	appoints a Custodian (1) of the Parent, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, or (2) for all or substantially all of the property of the Parent, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; or

		(iii)	orders the liquidation of the Parent, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary; and

 

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(10)            any representation, warranty or statement made by or on behalf of the Parent or any of its Subsidiaries in any Loan Document or in any report, certificate or financial statement provided pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder shall prove to have been untrue in any material respect on the date made.

(b)            In the case of an Event of Default described in clause (9) above, with respect to the Parent, the Borrowers or any Restricted Subsidiary that is a Guarantor, all outstanding Loan Document Obligations will become due and payable, and all Commitments will automatically terminate, immediately without further action or notice. If any other Event of Default occurs and is continuing, the Administrative Agent or the Required Lenders may (and the Administrative Agent will, if directed by the Required Lenders) declare all the Loans to be due and payable immediately (and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrowers under the Loan Documents shall become due and payable) and may terminate all Commitments (and thereupon the Commitments shall terminate immediately).

 

8.02            Application of Funds.

(a)            After the exercise of remedies (including rights of setoff) provided for in Section 8.01 (or after the Loans have automatically become immediately due and payable), any amounts received on account of the Secured Obligations (whether as a result of a payment under a Guarantee Agreement, any realization on the Collateral, any setoff rights, any distribution in connection with any proceedings or other action of any Loan Party in respect of Bankruptcy Laws or otherwise and whether received in cash or otherwise) shall be applied by the Administrative Agent and/or the Pari Passu Collateral Agent in the following order:

First, to payment of that portion of the Secured Obligations constituting fees, indemnities, expenses and other amounts (other than principal and interest) payable to the Administrative Agent and the Pari Passu Collateral Agent in their respective capacities as such;

Second, to payment of that portion of any Revolving Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the applicable Secured Parties, ratably among them in proportion to the amounts described in this clause Second payable to them;

Third, to payment of that portion of any Revolving Obligations constituting accrued and unpaid interest on the Revolving Loans (including post-petition interest, whether or not an allowed claim in any Insolvency and Liquidation Proceeding), ratably among the applicable Secured Parties in proportion to the respective amounts described in this clause Third payable to them;

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Fourth, to payment of that portion of any Revolving Obligations constituting unpaid principal of the Revolving Loans, ratably among the applicable Secured Parties in proportion to the respective amounts described in this clause Fourth held by them;

Fifth, to the payment of all other Revolving Obligations of the Loan Parties that are due and payable to the Administrative Agent and the other applicable Secured Parties on such date, ratably based upon the respective aggregate amounts of all such Revolving Obligations owing to the Administrative Agent and the other applicable Secured Parties on such date;

Sixth, to payment of that portion of the Secured Obligations (other than Revolving Obligations) constituting fees, indemnities and other amounts (other than principal and interest) payable to the applicable Secured Parties, ratably among them in proportion to the amounts described in this clause Sixth payable to them;

Seventh, to payment of that portion of the Secured Obligations (other than Revolving Obligations) constituting accrued and unpaid interest on the Term Loans, the Secured Hedging Obligations and the Secured Cash Management Obligations, ratably among the applicable Secured Parties in proportion to the respective amounts described in this clause Seventh payable to them;

Eighth, to payment of that portion of the Secured Obligations (other than Revolving Obligations) constituting unpaid principal of, or the termination or close-out amount of, the Term Loans, the Secured Hedging Obligations and the Secured Cash Management Obligations, ratably among the applicable Secured Parties in proportion to the respective amounts described in this clause Eighth held by them;

Ninth, to the payment of all other Secured Obligations (other than Revolving Obligations) of the Loan Parties that are due and payable to the Administrative Agent and the other applicable Secured Parties on such date, ratably based upon the respective aggregate amounts of all such Secured Obligations (other than Revolving Obligations) owing to the Administrative Agent and the other applicable Secured Parties on such date; and

Last, the balance, if any, after all of the Secured Obligations have been indefeasibly paid in full, to the Borrowers or as otherwise required by applicable law.

(b)            The parties to each Loan Document (including each Loan Party) irrevocably agree that (i) this Agreement (including the provisions of this Section 8.02) constitutes a "subordination agreement" within the meaning of Section 510(a) of the Bankruptcy Code and is intended to be and shall be interpreted to be enforceable to the maximum extent permitted pursuant to applicable non-bankruptcy law, and that the terms hereof will survive, and will continue in full force and effect and be binding upon each of the parties hereto, in any Insolvency or Liquidation Proceeding and (ii) to the maximum extent permitted by law, the Revolving Obligations (and the security therefor) constitute a separate and distinct class and separate and distinct claims from the other Secured Obligations (and the security therefor). If any Secured Party collects or receives any 

 

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amounts on account of the Secured Obligations to which it is not entitled under Section 8.02(a) or otherwise by the terms hereof, such Secured Party shall hold the same in trust for the applicable Secured Parties entitled thereto and shall forthwith deliver the same to the Pari Passu Collateral Agent, for the account of such Secured Parties, to be applied in accordance with Section 8.02(a), in each case until the prior payment in full in cash of the applicable Secured Obligations of such Secured Parties.

8.03            Replacement of Revolving Lenders under Certain Circumstances.

(a)            Any of the Term Lenders (each an "Eligible Purchaser") shall have the right to purchase by way of assignment, at any time during the exercise period described in Section 8.03(c) below, all, but not less than all, of the outstanding Revolving Loans and Revolving Commitments of the Revolving Lenders including all principal of and accrued and unpaid interest and fees on and all prepayment or acceleration penalties and premiums in respect of such Secured Obligations outstanding at the time of purchase. Upon receipt of a notice in accordance with Section 8.03(b) from an Eligible Purchaser, the Administrative Agent will promptly notify each other Term Lender of the contents of such notice. Each such Term Lender may elect to participate in such purchase of the outstanding loans and commitments of the Revolving Lenders by providing written notice to the Administrative Agent no later than 5:00 p.m. (New York time) three (3) Business Days after the date of such Lender's receipt of notice from the Administrative Agent regarding such purchase. Unless otherwise agreed to by the Eligible Purchasers, the obligations to be purchased shall be allocated among the participating Eligible Purchasers ratably on the basis of the relative amount of the sum of each participating Eligible Purchaser's outstanding Term Loans. Any purchase pursuant to this Section 8.03(a) shall be made as follows:

(i)            for a purchase price equal to the sum of (A) in the case of all credit extensions that constitute outstanding Revolving Loans and Revolving Commitments of the Revolving Lenders, as applicable, 100% of the principal amount thereof and all accrued and unpaid interest thereon through the date of purchase plus (B) all accrued and unpaid fees, expenses, indemnities and other amounts through the date of purchase;

(ii)            with the purchase price described in preceding clause (a)(i) payable in cash on the date of purchase;

(iii)            with all amounts payable in respect of the assignments described above to be distributed to them by the Administrative Agent ratably among the Revolving Lenders in proportion to the respective amounts described in Section 8.03(a)(i) held by them; and

(iv)            with such purchase to be made pursuant to an Assignment and Assumption Agreement; it being understood and agreed that each Revolving Lender shall retain all rights to indemnification as provided in the relevant Loan Documents for all periods prior to any assignment by them pursuant to the provisions of this Section 8.03.

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(b)            The right to exercise the purchase option described in Section 8.03(a) above shall be exercisable and legally enforceable upon at least ten (10) Business Days' prior written notice of exercise (which notice, once given, shall be irrevocable and fully binding on the respective Eligible Purchaser or Eligible Purchasers) given to the Administrative Agent by an Eligible Purchaser. Neither the Administrative Agent nor any Revolving Lender shall have any disclosure obligation to any Eligible Purchaser in connection with any exercise of such purchase option.

(c)            The right to purchase the outstanding Revolving Loans and Revolving Commitments of the Revolving Lenders, as applicable, as described in this Section 8.03 may be exercised (by giving the irrevocable written notice described in preceding clause (b)) during each of the periods that (1) begins on the date first to occur of (x) the exercise of remedies provided for in Section 8.01 (or upon the Loans automatically becoming immediately due and payable), (y) the occurrence of the final maturity of the Revolving Loans under this Agreement or (z) the occurrence of an Event of Default pursuant to clause (9) of Section 8.01(a) and (2) ends on the 60th day after the start of the applicable period described above.

(d)            The obligations of the Revolving Lenders to sell their respective Revolving Loans and Revolving Commitments under this Section 8.03 are several and not joint and several. To the extent any Revolving Lender (a "Defaulting Creditor") breaches its obligation to sell its Revolving Loans and Revolving Commitments under this Section 8.03, nothing in this Section 8.03 shall be deemed to require the Administrative Agent or any other Revolving Lender to purchase such Defaulting Creditor's Revolving Loans and Revolving Commitments for resale to the participating Eligible Purchasers and in all cases, the Administrative Agent, each Revolving Lender complying with the terms of this Section 8.03 shall not be deemed to be in default of this Agreement or otherwise be deemed liable for any action or inaction of any Defaulting Creditor.

(e)            Each Loan Party irrevocably consents to any assignment effected to one or more Eligible Purchasers pursuant to this Section 8.03 for purposes of all Loan Documents and hereby agrees that no further consent from such Loan Party shall be required.

SECTION 9.          The Administrative Agent.

9.01            Appointment.  The Lenders in their capacities as Lenders and the counterparties (other than the Parent or any Subsidiary of the Parent) to any agreement the obligations under which constitute Secured Cash Management Obligations or Secured Hedging Obligations in their capacities as such (the "Secured Counterparties") hereby irrevocably designate and appoint Deutsche Bank AG New York Branch as Administrative Agent and Pari Passu Collateral Agent to act as specified herein and in the other Loan Documents (including executing and delivering such Loan Documents on the Lenders' behalf). Each Lender hereby irrevocably authorizes, and each holder of any Note by the acceptance of such Note shall be deemed irrevocably to authorize, the Administrative Agent and the Pari Passu Collateral Agent to take such action on its behalf under the provisions of this Agreement, the other Loan

 

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Documents and any other instruments and agreements referred to herein or therein and to exercise such powers and to perform such duties hereunder and thereunder as are specifically delegated to or required of the Administrative Agent or the Pari Passu Collateral Agent, as the case may be, by the terms hereof and thereof and such other powers as are reasonably incidental thereto. The Administrative Agent and the Pari Passu Collateral Agent may perform any of its respective duties hereunder by or through its officers, directors, agents, employees or affiliates. For purpose of this Article 9, the term "Administrative Agent" shall be deemed to also refer to the Pari Passu Collateral Agent.

9.02            Nature of Duties.

(a)            The Administrative Agent shall not have any duties or responsibilities except those expressly set forth in this Agreement and in the other Loan Documents. Neither the Administrative Agent nor any of its officers, directors, agents, employees or affiliates shall be liable for any action taken or omitted by it or them hereunder or under any other Loan Document or in connection herewith or therewith, unless caused by its or their gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non–appealable decision). The duties of the Administrative Agent shall be mechanical and administrative in nature; the Administrative Agent shall not have by reason of this Agreement or any other Loan Document a fiduciary relationship in respect of any Lender or the holder of any Note, and nothing in this Agreement or in any other Loan Document, expressed or implied, is intended to or shall be so construed as to impose upon the Administrative Agent any obligations in respect of this Agreement or any other Loan Document except as expressly set forth herein or therein.

(b)            It is understood and agreed that the use of the term "agent" herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent in such capacity is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

(c)            The Administrative Agent, in such capacity, shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:

(i)            shall not be subject to any fiduciary or other implied duties, regardless of whether a Default or an Event of Default has occurred and is continuing;

(ii)            shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and

 

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(iii)            shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Parent or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

9.03            Lack of Reliance on the Administrative Agent.  Independently and without reliance upon the Administrative Agent, each Lender and the holder of each Note, to the extent it deems appropriate, has made and shall continue to make (a) its own independent investigation of the financial condition and affairs of the Parent and its Subsidiaries in connection with the making and the continuance of the Loans and the taking or not taking of any action in connection herewith and (b) its own appraisal of the creditworthiness of the Parent and its Subsidiaries and, except as expressly provided in this Agreement, the Administrative Agent shall not have any duty or responsibility, either initially or on a continuing basis, to provide any Lender or the holder of any Note with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter. The Administrative Agent shall not be responsible to any Lender or the holder of any Note for any recitals, statements, information, representations or warranties herein or in any document, certificate or other writing delivered in connection herewith or for the execution, effectiveness, genuineness, validity, enforceability, perfection, collectability, priority or sufficiency of this Agreement or any other Loan Document or the financial condition of the Parent and their Subsidiaries or be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any other Loan Document, or the financial condition of the Parent and their Subsidiaries or the existence or possible existence of any Default or Event of Default.

9.04            Certain Rights of the Administrative Agent.  If the Administrative Agent requests instructions from the Required Lenders with respect to any act or action (including failure to act) in connection with this Agreement or any other Loan Document, the Administrative Agent shall be entitled to refrain from such act or taking such action unless and until the Administrative Agent shall have received instructions from the Required Lenders; and the Administrative Agent shall not incur liability to any Lender by reason of so refraining. Without limiting the foregoing, neither any Lender nor the holder of any Note shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent acting or refraining from acting hereunder or under any other Loan Document in accordance with the instructions of the Required Lenders.

9.05            Reliance.  The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, statement, certificate, telex, teletype or telecopier message, cablegram, radiogram, order or other document or telephone message signed, sent or made by any Person that the Administrative Agent believed to be the proper Person, and, with respect to all legal matters pertaining to this Agreement and any other Loan Document and its duties hereunder and thereunder, upon advice of counsel selected by the Administrative Agent.

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9.06            Indemnification.  To the extent the Administrative Agent (or any affiliate thereof) is not reimbursed and indemnified by the Borrowers or the Guarantors, the Lenders will reimburse and indemnify the Administrative Agent (and its Affiliates and their respective partners, members, directors, officers, agents, employees and controlling persons (if any)) in proportion to their respective Percentages (in respect of all Classes of Commitments and Loans, on a combined basis), for and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, judgments, costs, expenses or disbursements of whatsoever kind or nature which may be imposed on, asserted against or incurred by the Administrative Agent (or any affiliate thereof) in performing its duties hereunder or under any other Loan Document, or in any way relating to or arising out of this Agreement or any other Loan Document; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, claims, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent's (or such affiliate's) gross negligence or willful misconduct (as determined by a court of competent jurisdiction in a final and non-appealable decision); provided, further, that nothing in this Section 9.06 shall serve to relieve any Loan Party of its indemnification obligations under this Agreement and the other Loan Documents.

9.07            The Administrative Agent in its Individual Capacity.  With respect to its obligation to make Loans under this Agreement, Deutsche Bank AG New York Branch shall have the rights and powers specified herein for a "Lender" and may exercise the same rights and powers as though it were not performing the Administrative Agent duties specified herein; and the term "Lender," "Required Lenders" or any similar terms shall, unless the context clearly indicates otherwise, include Deutsche Bank AG New York Branch in its respective individual capacities. The Administrative Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, investment banking, trust or other business with, or provide debt financing, equity capital or other services (including financial advisory services) to any Loan Party or any Affiliate of any Loan Party (or any Person engaged in a similar business with any Loan Party or any Affiliate thereof) as if they were not performing the duties specified herein, and may accept fees and other consideration from any Loan Party or any Affiliate of any Loan Party for services in connection with this Agreement and otherwise without having to account for the same to the Lenders.

9.08            Holders.  The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment, transfer or endorsement thereof, as the case may be, shall have been filed with the Administrative Agent. Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee, assignee or endorsee, as the case may be, of such Note or of any Note or Notes issued in exchange therefor.

9.09            Resignation by the Administrative Agent.

(a)            The Administrative Agent may resign from the performance of all its respective functions and duties hereunder and/or under the other Loan Documents at any time by giving written notice to the Lenders and, unless a Default or an Event of Default under Section 8(a)(9) then exists, the Borrowers. Such resignation shall take effect upon the appointment of a successor Administrative Agent pursuant to clauses (b) and (c) below or as otherwise provided below.

 

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(b)            Upon any such notice of resignation by the Administrative Agent, the Required Lenders shall appoint a successor Administrative Agent hereunder or thereunder who shall be a commercial bank or trust company reasonably acceptable to the Borrowers, which acceptance shall not be unreasonably withheld or delayed (provided that the Borrowers' approval shall not be required if an Event of Default then exists).

(c)            If a successor Administrative Agent shall not have been so appointed within 15 days of the date of the applicable notice of resignation, the Administrative Agent may then (but is not obligated to) appoint a successor Administrative Agent who shall serve as Administrative Agent hereunder or thereunder until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above.

(d)            The Administrative Agent's resignation will, to the fullest extent permitted by applicable law, be effective on the earlier of (i) the date a replacement Administrative Agent is appointed and (ii) the date 30 days after the giving of such notice of resignation by the Administrative Agent (regardless of whether a replacement Administrative Agent has been appointed pursuant to clauses (b) and (c) above). If no successor Administrative Agent has been appointed pursuant to clause (b) or (c) by the date on which the Administrative Agent's resignation becomes effective, the Required Lenders shall thereafter perform all the duties of the Administrative Agent hereunder and/or under any other Loan Document until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided above. With respect to the Security Trustee, its resignation will, to the fullest extent permitted by applicable law, only become effective on the date a replacement Security Trustee is appointed and such replacement Security Trustee has accepted such appointment.

9.10            Co-Collateral Agent; Separate Collateral Agent.  At any time or from time to time, in order to comply with any applicable requirement of law, the Administrative Agent may appoint another bank or trust company or one or more other persons, either to act as co-agent or agents on behalf of the Administrative Agent and the other Lender Creditors with such power and authority as may be necessary for the effectual operation of the provisions hereof and which may be specified in the instrument of appointment (which may, in the discretion of the Administrative Agent, include provisions for indemnification and similar protections of such co-agent or separate agent substantially the same as those contained herein). Notwithstanding anything to the contrary contained herein, every such agent, sub-collateral agent and every co-agent shall, to the extent permitted by law, be appointed and act and be such, subject to the condition that no power given hereby, or which is provided herein or in any other Loan Document to any such co- agent, sub-collateral agent or agent shall be exercised hereunder or thereunder by such co-agent or agent except jointly with, or with the consent in writing of, the Administrative Agent. The Pari Passu Collateral Agent shall have no responsibility whatsoever for the actions of such co-agent.

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9.11            Other Agents.  Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, none of the Joint Global Coordinators, Joint Bookrunners or Co-managers (collectively, the "Other Agents") shall have any powers, duties or responsibilities, nor shall the Other Agents have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against any Other Agent.

9.12            Security Trustee.  The Lenders in their capacities as Lenders, the Administrative Agent, the Pari Passu Collateral Agent and the Secured Counterparties hereby irrevocably designate and appoint Deutsche Bank AG New York Branch, as Security Trustee to act as specified herein and in the Ship Mortgages and other Loan Documents. Each Lender hereby irrevocably authorizes, each holder of any Note by the acceptance of such Note shall be deemed irrevocably to authorize or to have authorized, as the case may be, and each Secured Counterparty by the entrance into the applicable hedging agreement or agreement to provide cash management services shall be deemed irrevocably to authorize or to have authorized (collectively, the "Creditors"), the Security Trustee with regard to (i) the security, powers, rights, titles, benefits and interests (both present and future) constituted by and conferred on the Creditors or any of them or for the benefit thereof under or pursuant to any of the Ship Mortgages or any other Loan Document (including, without limitation, the benefit of all covenants, undertakings, representations, warranties and obligations given, made or undertaken to any Creditor in any Ship Mortgage or other Loan Document), (ii) all moneys, property and other assets paid or transferred to or vested in any Creditor or any agent of any Creditor or received or recovered by any Creditor or any agent of any Creditor pursuant to, or in connection with, any Ship Mortgage or other Loan Document whether from any Loan Party or any other Person and (iii) all money, investments, property and other assets at any time representing or deriving from any of the foregoing, including all interest, income and other sums at any time received or receivable by any Creditor or any agent of any Creditor in respect of the same (or any part thereof). The Security Trustee hereby declares that it will hold as such trustee in trust for the benefit of the Creditors those of the Ship Mortgages and other Loan Documents to be executed in favor of the Security Trustee, from and after execution thereof, and the Security Trustee hereby accepts its appointment as trustee and agrees to hold, receive, administer and enforce the Ship Mortgages and other Loan Documents and the Collateral covered thereby, which Ship Mortgages and the other Loan Documents and Collateral shall constitute the corpus of the trust, for the benefit of the Creditors in accordance with the terms hereof and thereof, but the Security Trustee shall have no obligations hereunder or under any of the Ship Mortgages and the other Loan Documents except those obligations of the Security Trustee expressly set forth herein and therein The Security Trustee may perform any of its respective duties hereunder by or through its officers, directors, agents, employees or affiliates. For purposes of the reliance, indemnification and resignation provisions in this Article 9, the term "Administrative Agent" shall, except with respect to Section 9.09(d), be deemed to also refer to the Security Trustee.

SECTION 10.      Miscellaneous.

10.01            Payment of Expenses, etc.  The Borrowers hereby agree to: (a) pay all reasonable and documented out-of-pocket costs and expenses of the Administrative Agent and the Pari Passu Collateral Agent (including the reasonable fees and disbursements of Cravath, 

 

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Swaine & Moore LLP and, if reasonably necessary, maritime counsel and a single local counsel in each appropriate jurisdiction, and, in the case of a conflict of interest, one additional counsel in each jurisdiction to such affected parties similarly situated) in connection with the administration of this Agreement and the other Loan Documents and the documents and instruments referred to herein and therein and in connection with the preparation, negotiation, execution, delivery and administration of any amendment, waiver or consent relating hereto or thereto, and each of the Agents and Lenders in connection with the enforcement of this Agreement and the other Loan Documents and the documents and instruments referred to herein and therein or protection of their rights hereunder or thereunder or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings; (b) pay and hold the Administrative Agent, the Pari Passu Collateral Agent and each of the Lenders harmless from and against any and all present and future stamp, documentary, transfer, sales and use, value added, excise and other similar taxes with respect to the foregoing matters, the performance of any obligation under this Agreement or any other Loan Document or any payment thereunder, and save the Administrative Agent, the Pari Passu Collateral Agent and each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to the Administrative Agent, the Pari Passu Collateral Agent or such Lender) to pay such taxes; and (c) indemnify the Agents, the Pari Passu Collateral Agent and each Lender, and each of their respective Affiliates and Related Parties (each, an "Indemnified Party") from and hold each of them harmless against any and all liabilities, obligations (including removal or remedial actions), losses, damages, penalties, claims, actions, judgments, suits, costs, expenses and disbursements (including, without limitation, the fees, charges and disbursements of one firm of counsel for all such Indemnified Parties, taken as a whole (other than the Pari Passu Collateral Agent, which shall be entitled to separate counsel), and, if necessary, of a single firm of maritime counsel and a single firm of local counsel in each appropriate jurisdiction (which may include a single firm of special counsel acting in multiple jurisdictions) for all such Indemnified Parties, taken as a whole (and, in the case of an actual or perceived conflict of interest where the Indemnified Party affected by such conflict informs the Borrowers of such conflict and thereafter retains its own counsel, of another firm of counsel for such affected Indemnified Party and, if necessary, of a single firm of maritime counsel and a single firm of local counsel in each appropriate jurisdiction (which may include a single firm of special counsel acting in multiple jurisdictions) for such affected Indemnified Party)) incurred by, imposed on or assessed against any of them as a result of, or arising out of, or in any way related to, or by reason of, (i) any claim, investigation, litigation or other proceeding (whether or not any Indemnified Party is a party thereto and whether or not such investigation, litigation or other proceeding is brought by or on behalf of any Loan Party or any third party) related to the entering into and/or performance of this Agreement or any other Loan Document or the proceeds of any Loans hereunder or the consummation of the Transactions or any other transactions contemplated herein or in any other Loan Document or the exercise of any of their rights or remedies provided herein or in the other Loan Documents, or (ii) the actual or alleged presence or Release of Hazardous Materials in the air, surface water or groundwater or on the surface or subsurface of any Vessel or Real Property at any time owned, leased or operated by any of the Borrowers or any of their Subsidiaries, the generation, storage, transportation, handling, disposal or Release of Hazardous Materials by any of the Borrowers or any of their Restricted Subsidiaries at any location, whether or not owned, leased or operated by

 

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any of the Borrowers or any of their Subsidiaries, the noncompliance with Environmental Law (including applicable permits thereunder) applicable to any Vessel or Real Property at any time owned, leased, operated or occupied by any of the Borrowers or any of their Subsidiaries, or any Environmental Claim related to the Borrower or any of its Subsidiaries, or any Vessel or Real Property at any time owned, leased, operated or occupied by any of the Borrowers or any of their Subsidiaries, including, in each case, the reasonable fees and disbursements of counsel and other consultants incurred in connection with any such investigation, litigation, claim or other proceeding, or any other liability or obligation under Environmental Law relating in any way to the Borrower or its Subsidiaries; provided that no such Indemnified Party will be indemnified for costs, expenses, losses, claims, damages, penalties or liabilities (a) to the extent determined by a final, non-appealable judgment of a court of competent jurisdiction to have resulted from the fraud, gross negligence or willful misconduct of such Indemnified Party, (b) to the extent resulting from a claim brought by the Parent or any of its Subsidiaries against such Indemnified Party for material breach in bad faith of such Indemnified Party's obligations hereunder, if the Parent or such Subsidiary has obtained a final and non-appealable judgment in its or its Subsidiary's favor on such claim, as determined by a court of competent jurisdiction or (c) to the extent resulting from a proceeding that does not involve an act or omission by the Parent or any of its Affiliates and that is brought by an Indemnified Party against any other Indemnified Party (other than claims against any Joint Global Coordinator, Joint Bookrunner, arranger, bookrunner or agent in its capacity as, or in fulfilling its role as, Joint Global Coordinator, Joint Bookrunner, arranger, bookrunner or agent, or any similar role, under this Agreement). To the extent that the undertaking to indemnify, pay or hold harmless any Indemnified Party set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Borrowers shall make the maximum contribution to the payment and satisfaction of each of the indemnified liabilities which is permissible under applicable law.

Without limiting the Borrowers' reimbursement, indemnification and contribution obligations set forth in this Section 10.01, in no event will such Indemnified Party have any liability for any indirect, consequential, special or punitive damages in connection with or as a result of such Indemnified Party's activities related to this Agreement or the other Loan Documents. In no event will the Borrowers have any liability to the Indemnified Parties for any indirect, consequential, special or punitive damages in connection with or as a result of the Borrowers' activities relating to this Agreement or the other Loan Documents, other than reimbursement, indemnity and contribution obligations set forth in this Section 10.01 relating to indirect, consequential, special or punitive damages for which an Indemnified Party is liable.

10.02            Right of Setoff.  In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence and during the continuance of an Event of Default, the Administrative Agent, the Pari Passu Collateral Agent and each Lender is hereby authorized at any time or from time to time, without presentment, demand, protest or other notice of any kind to any Loan Party or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and apply any and all deposits (general or special) and any other Indebtedness at any time held or owing by the Administrative Agent, the Pari Passu Collateral Agent or such Lender (including, without limitation, by branches and agencies of the Administrative Agent, the Pari Passu Collateral Agent or such Lender wherever located) to or for the credit or the account of the Parent or any of its Subsidiaries against and on account of the Loan Document Obligations and liabilities of the Loan Parties to the Administrative Agent, the Pari Passu Collateral Agent or such Lender under this Agreement or under any of the other Loan Documents, including, without limitation, all interests in the Loan Document Obligations purchased by such Lender pursuant to Section 10.06(b), and all other claims of any nature or description arising out of or connected with this Agreement or any other Loan Document, irrespective of whether or not the Administrative Agent, the Pari Passu Collateral Agent or such Lender shall have made any demand hereunder and although said Loan Document Obligations, liabilities or claims, or any of them, shall be contingent or unmatured. Any recovery by any Lender pursuant to its setoff rights under this Section 10.02 is subject to the provisions of Section 8.02.

 

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10.03            Notices.

(a)            Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 10.03(b)), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows: if to the Borrowers, at the addresses specified opposite their signatures below or in the other relevant Loan Documents; if to any Lender, at the address it last provided to the Administrative Agent, if any; and if to the Administrative Agent, at the Notice Office; or, as to the Borrowers or the Administrative Agent, at such other address as shall be designated by such party in a written notice to the other parties hereto and, as to each Lender, at such other address as shall be designated by such Lender in a written notice to the Borrowers and the Administrative Agent.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications, to the extent provided in Section 10.03(b), shall be effective as provided in such Section.

(b)            Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Section 2 if such Lender has notified the Administrative Agent that it is incapable of receiving notices under Section 2 by electronic communication. Each of the Administrative Agent and the Borrowers may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

 

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(c)            Change of Address, etc.  Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.

(d)            Platform.

(i)            Each Loan Party agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the other Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the "Platform").

(ii)            The Platform is provided "as is" and "as available." Neither the Administrative Agent nor any of its Affiliates warrants the adequacy of the Platform and each of the Administrative Agent and its Affiliates expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Administrative Agent or any of its Affiliates in connection with the Communications or the Platform. In no event shall the Administrative Agent or any of its Affiliates have any liability to the Borrowers or the other Loan Parties, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrowers', any Loan Party's or the Administrative Agent's transmission of communications through the Platform. "Communications" means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Administrative Agent or any Lender by means of electronic communications pursuant to this Section, including through the Platform.

10.04            Benefit of Agreement; Assignments; Participations.

(a)            This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided, however, that none of the Parent or the 

 

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Borrowers may assign, delegate or otherwise transfer any of its rights, obligations or interest hereunder or under any other Loan Document without the prior written consent of the Administrative Agent and each Lender (and any attempted assignment, delegation or transfer by the Parent or the Borrowers without such consent shall be null and void), and provided, further, that, no Lender may assign, delegate or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in Section 10.04(c)), the Joint Global Coordinators and, to the extent expressly contemplated hereby, the sub-agents of the Administrative Agent and the related parties of the Administrative Agent, the Joint Global Coordinators, any Lender and any Secured Non-Lender Hedge/Cash Management Provider) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b)            (i)            Subject to the conditions set forth in Section 10.04(b)(ii), any Lender (or any Lender together with one or more other Lenders) may assign and delegate to one or more Eligible Transferees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of (A) the Borrowers; provided that no consent of the Borrowers shall be required (1) (a) for an assignment and delegation to a Lender or an Affiliate of a Lender or (b) during the primary initial syndication of the Term Loans arranged prior to the Effective Date and agreed by the Borrowers (not be unreasonably withheld or delayed) and (2) if an Event of Default has occurred and is continuing, for any other assignment and delegation; provided further that the Borrowers shall be deemed to have consented to any such assignment and delegation unless the Borrowers have objected thereto by written notice to the Administrative Agent within 10 Business Days after having received notice thereof, (B) the Administrative Agent; provided that no consent of the Administrative Agent shall be required for an assignment and delegation of all or any portion of a Loan to a Lender or an Affiliate of a Lender or to a Borrower or Subsidiary pursuant to Section 2.13.

(ii)            Assignments and delegations shall be subject to the following additional conditions: (A) except in the case of an assignment and delegation to a Lender or an Affiliate of a Lender or an assignment and delegation of the entire remaining amount of the assigning Lender's Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment and delegation (determined as of the trade date specified in the Assignment and Assumption Agreement with respect to such assignment and delegation or, if no trade date is so specified, as of the date the Assignment and Assumption Agreement with respect to such assignment and delegation is delivered to the Administrative Agent) shall not be less than $5,000,000 with respect to Revolving Commitments and $1,000,000 with respect to Term Loans, unless each of the Borrowers and the Administrative Agent otherwise consent (such consent not to be unreasonably withheld or delayed); provided that no such consent of the Borrowers shall be required if an Event of Default has occurred and is continuing, (B) [Reserved], (C) the parties to each assignment and delegation shall execute and deliver to the Administrative Agent an Assignment and Assumption Agreement, together with a processing and recordation fee of $3,500; provided that the parties hereto agree that such assignment and delegation may be effected pursuant to an Assignment and Assumption Agreement executed by the Borrower, the Administrative Agent and the assignee and that the Lender required to make such assignment and delegation need not be a party thereto, (D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent any tax forms required by Section 4.08(g), (E) no such transfer or assignment will be effective until recorded by the Administrative Agent on the Register pursuant to Section 10.15; (F) Annex I shall be deemed modified to reflect the outstanding Commitments and/or Loans of such new Lender and of the existing Lenders and (G) upon the surrender of the relevant Notes by the assigning Lender, new Notes will be issued, at the Borrowers' expense, to such new Lender and to the assigning Lender upon the request of such new Lender or assigning Lender, such new Notes to be in conformity with the requirements of Section 2.04 (with appropriate modifications) to the extent needed to reflect the revised outstanding Loans.

 

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(iii)            To the extent of any assignment pursuant to this Section 10.04, from and after the effective date specified in each Assignment and Assumption Agreement, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned and delegated by such Assignment and Assumption Agreement, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned and delegated by such Assignment and Assumption Agreement, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption Agreement covering all the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of (and subject to the obligations and limitations of) Sections 2.07, 2.08, 4.08, 9.06 and 10.01 and to any fees payable hereunder that have accrued for such Lender's account but have not yet been paid). Any assignment, delegation or other transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.04(c).

(c)            Any Lender may, without the consent of the Parent, the Borrowers or the Administrative Agent, sell participations to one or more Eligible Transferee (each, a "Participant") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitments and Loans of any Class); provided that (A) such Lender's obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Parent, the Borrowers, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement or any other Loan Document; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that requires the approval of all the Lenders, or that requires the approval of all affected Lenders and the Participant is affected thereby. In the case of any such participation, the participant shall not have any rights under this Agreement or any of the other Loan Documents 

 

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(the participant's rights against such Lender in respect of such participation to be those set forth in this Agreement executed by such Lender in favor of the participant relating thereto), except as provided in this Section 10.04(c). The Borrowers agree that each participant shall be entitled to the benefits of Sections 2.08, 2.09 and 4.08 (subject to the requirements and limitations therein, including the requirements under Section 4.08(g) (it being understood that the documentation required under Section 4.08(g) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such participant (1) agrees to be subject to the provisions of Sections 2.10 and 2.11 as if it were an assignee under paragraph (b) of this Section; and (2) shall not be entitled to receive any greater payment under Sections 2.08 or 4.08 with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a change in law, rule, regulation, treaty, order, guideline, or directive (or in the interpretation or administration thereof) that occurs after the participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrowers' request and expense, to use reasonable efforts to cooperate with the Borrowers to effectuate the provisions of Section 2.11 with respect to any participant. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant's interest in the Loans or other obligations under this Agreement or any other Loan Document (the "Participant Register"); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant's interest in any Loans or its other obligations under this Agreement or any other Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(d)            Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank or any central bank having jurisdiction over such Lender in support of borrowings made by such Lender from such Federal Reserve Bank or central bank and, with prior notification to the Administrative Agent (but without the consent of the Administrative Agent or the Borrowers), any Lender which is a fund may pledge all or any portion of its Loans and Notes to its trustee or to a collateral agent providing credit or credit support to such Lender in support of its obligations to such trustee, such collateral agent or a holder of such obligations, as the case may be. No pledge pursuant to this clause (c) shall release the transferor Lender from any of its obligations hereunder.

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10.05            No Waiver; Remedies Cumulative.  No failure or delay on the part of the Administrative Agent, the Pari Passu Collateral Agent or any Lender in exercising any right, power or privilege hereunder or under any other Loan Document and no course of dealing between the Borrowers or any other Loan Party and the Administrative Agent, the Pari Passu Collateral Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights, powers and remedies herein or in any other Loan Document expressly provided are cumulative and not exclusive of any rights, powers or remedies which the Administrative Agent, the Pari Passu Collateral Agent or any Lender would otherwise have. No notice to or demand on any Loan Party in any case shall entitle any Loan Party to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent, the Pari Passu Collateral Agent or any Lender to any other or further action in any circumstances without notice or demand.

10.06            Payments Pro Rata.

(a)            Except as otherwise provided in this Agreement, the Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrowers in respect of any Loan Document Obligations or Class of Loans hereunder, the Administrative Agent shall distribute such payment to the Lenders entitled thereto (other than any Lender that has consented in writing to waive its pro rata share of any such payment) pro rata based upon their respective shares, if any, of the Loan Document Obligations or Class of Loans with respect to which such payment was received.

(b)            Each of the Lenders agrees that, except as otherwise provided in this Agreement, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker's Lien, by counterclaim or cross action, by the enforcement of any right under the Loan Documents, or otherwise), which is applicable to the payment of the principal of, or interest on, the Loans or Fees, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Loan Document Obligation then owed and due to such Lender bears to the total of such Loan Document Obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Loan Document Obligations of the respective Loan Party to such Lenders in such amount as shall result in a proportional participation by all the Lenders in such amount; provided that (i) if all or any portion of such excess amount is thereafter recovered from such Lenders, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest and (ii) any payment received in consideration for an assignment of participation permitted pursuant to Section 10.04 shall not be subject to this Section 10.06(b). Nothing in this Section 10.06 shall be construed to limit the applicability of Section 8.02 in the circumstances where Section 8.02 is applicable in accordance with its terms.

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10.07            Calculations; Computations.

(a)            Subject to the provisions of Section 1.03(b), the financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with GAAP in the United States consistently applied throughout the periods involved (except as set forth in the notes thereto or as otherwise disclosed in writing by the Borrowers to the Lenders to the extent, in each case, permitted by the terms of this Agreement).

(b)            All computations of interest and Fees hereunder shall be made on the basis of a year of 360 days (except for computations of interest with respect to Base Rate Loans when the Base Rate is determined by reference to clause (a) of the definition thereof, which shall be calculated on the basis of a year of 365 or 366 days) for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or Fees are payable.

10.08            GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL.

(a)            THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN CERTAIN OF THE SHIP MORTGAGES AND OTHER COLLATERAL AGREEMENTS, BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, EACH PARTY HEREUNDER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES HEREUNDER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER ANY PARTY HEREUNDER, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS BROUGHT IN ANY OF THE AFOREMENTIONED COURTS, THAT SUCH COURTS LACK PERSONAL JURISDICTION OVER ANY PARTY HEREUNDER. EACH OF THE PARTIES HEREUNDER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.03, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH DELIVERY. EACH OF THE PARTIES HEREUNDER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, THE PARI PASSU COLLATERAL AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY HEREUNDER IN ANY OTHER JURISDICTION.

 

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(b)            EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c)            EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

10.09            Counterparts.

(a)            Counterparts; Integration.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic (i.e., "pdf" or "tif") format shall be effective as delivery of a manually executed counterpart of this Agreement.

(b)            Electronic Execution of Assignments.  The words "execution," "signed," "signature," and words of like import in any Assignment and Assumption Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

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10.10            Effectiveness.  This Agreement shall become effective on the date on which it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.

10.11            Headings Descriptive.  The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

10.12            Amendment or Waiver; etc.

(a)            Neither this Agreement nor any other Loan Document nor any terms hereof or thereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by (x) the Parent, the Borrower, Finco, the Pari Passu Collateral Agent and the Administrative Agent to cure any ambiguity, omission, defect or inconsistency, so long as, in each case, the Lenders shall have received at least five (5) Business Days' prior written notice thereof and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment or (y) the respective Loan Parties party hereto or thereto and the Required Lenders, provided that:

(i)            additional parties may be added to (and annexes may be modified to reflect such additions), and the Parent and Subsidiaries of the Parent may be released from, the Loan Guarantees and the Collateral Agreements in accordance with the provisions hereof and thereof without the consent of the other Loan Parties party thereto or the Required Lenders;

(ii)            no such change, waiver, discharge or termination shall (A) increase the aggregate Revolving Commitments or the aggregate amount of any other Obligations hereunder entitled to priority treatment in the same manner as Revolving Obligations for purposes of Sections 4.10 and/or 8.02 to an aggregate amount in excess of $100,000,000 without the written consent of the Required Revolving Lenders and the Required Term Lenders, (B) reduce the percentage specified in the definition of "Required Revolving Lenders" without the written consent of the Required Revolving Lenders or (C) reduce the percentage specified in the definition of "Required Term Lenders" without the written consent of the Required Term Lenders;

(iii)            the Parent may be released from its Loan Guarantee and the Collateral Agreements in accordance with the provisions hereof and thereof without the consent of the other Loan Parties party thereto or the Required Lenders;

(iv)            no such change, waiver, discharge or termination shall, without the consent of each Lender (with Loan Document Obligations being directly and negatively affected in the case of the following clause (a) and (d), to the extent (in the case of the following clause (d)) that any such Lender would be required to make a Loan in excess of its pro rata portion provided for in this Agreement or would receive a payment or prepayment of Loans or a commitment reduction that (in any case) is less than its pro rata portion provided for in this Agreement, in each case, as a result of any such amendment, modification or waiver referred to in the following clause (d)):

 

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(a)          extend the final scheduled maturity of any Loan or Note held by such Lender, or reduce the rate or extend the time of payment of interest thereon, or reduce the amount, or extend the time of payment, of any Fees thereon (except in connection with the waiver of applicability of any post-default increase in interest rates), or extend the timing of repayment of any such Loan, or reduce the principal amount of any such Loan thereof, or increase the Commitment of any Lender, or postpone the scheduled date of expiration of any Commitment of any Lender,

(b)          amend, modify or waive any provision of this Section 10.12 (except for technical amendments with respect to additional extensions of credit pursuant to this Agreement which afford the protections to such additional extensions of credit of the type provided to the Commitments on the Effective Date) or any other Section which expressly requires the consent of all Lenders or all Lenders directly and negatively affected thereby,

(c)          reduce the percentage specified in the definition of Required Lenders,

(d)          amend, modify or waive (x) Section 2.05 or (y) any other provision in this Agreement to the extent providing for payments or prepayments of Loans to be applied pro rata among the Lenders entitled to such payments or prepayments of Loans (it being understood that the waiver of any mandatory prepayment of Loans by the Required Lenders shall not constitute an amendment, modification or waiver for purposes of this clause (d)),

(e)          consent to the assignment or transfer by the Borrowers of any of their rights and obligations under this Agreement, or

(f)          substitute, replace or release any Guarantor from a Loan Guarantee (other than as permitted by the Loan Documents) or release substantially all the value of the Loan Guarantees (except as expressly provided in the Loan Documents);

(v)            no such change, waiver, discharge or termination shall change the provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of one Class differently from the rights of Lenders holding Loans of any other Class without the prior written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each adversely affected Class;

 

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(vi)            no such change, waiver, discharge or termination shall (1) increase

(vii)            the Commitments of any Lender without the consent of such Lender or (2) without the consent of the Administrative Agent, amend, modify or waive any provision of Section 9 or any other provision as same relates to the rights or obligations of the Administrative Agent;

(viii)            no such change, waiver, discharge or termination shall, without the consent of each Lender and each Secured Counterparty:

(a)      release any Ship Mortgage or all or substantially all of the Collateral (except as expressly provided in the Loan Documents) under the Collateral Agreements or permit any sale, lease, transfer or other disposition of any Collateral Vessel (it being understood that a Collateral Vessel Contract shall not constitute any such sale, lease, transfer or other disposition) not otherwise permitted under this Agreement and the Collateral Agreements,

(b)      amend, modify or waive any provision of this Section 10.12(a)(vi),

(ix)            no such change, waiver, discharge or termination shall, without the consent of the Required Revolving Lenders, amend, modify or waive (A) any condition precedent set forth in Section 5.02 with respect to the making of Revolving Loans (it being understood that a general waiver of an existing Default by the Required Lenders or an amendment approved by the Required Lenders that has the effect of "curing" an existing Default and permitting the making of Loans shall constitute a waiver of a condition precedent governed under this clause (viii)) and (B) any provision of Section 4.10 in a manner adversely affecting the priority status of the Revolving Obligations, and

(x)            no such change, waiver, discharge or termination shall, without the consent of the Required Secured Parties, amend, modify or waive Section 7.06 hereof or Sections 5.3, 5.5, 5.8, 5.9, 5.12, or 5.14, in each case, of the Ship Mortgages in effect as of the Effective Date.

(b)            If, in connection with any proposed change, waiver, discharge or termination of any of the provisions of this Agreement as contemplated by clauses (a) through (g), inclusive, of Section 10.12(a), the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then the Borrowers shall have the right to replace each such non-consenting Lender or Lenders with one or more Replacement Lenders pursuant to Section 2.11 so long as at the time of such replacement, each such Replacement Lender consents to the proposed change, waiver, discharge or termination, provided that in any event the Borrowers shall not have the right to replace a Lender or repay its Loans solely as a result of the exercise of such Lender's rights (and the withholding of any required consent by such Lender) pursuant to Section 10.12(a)(iv).

 

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(c)            Notwithstanding any of the foregoing, no consent with respect to any waiver, amendment or other modification of this Agreement or any other Loan Document shall be required of any Defaulting Lender, except with respect to any waiver, amendment or other modification referred to in clause (iv)(a) of Section 10.12(a) and then only in the event such Defaulting Lender shall be affected by such waiver, amendment or other modification.

10.13            Survival.  All indemnities set forth herein including, without limitation, in Sections 2.08, 2.09, 4.08, 9.06 and 10.01 shall survive the execution, delivery and termination of this Agreement and the Notes and the making and repayment of the Loan Document Obligations.

10.14            Domicile of Loans.  Each Lender may transfer and carry its Loans at, to or for the account of any office, Subsidiary or Affiliate of such Lender. Notwithstanding anything to the contrary contained herein, to the extent that a transfer of Loans pursuant to this Section 10.14 would, at the time of such transfer, result in increased costs under Section 2.07, 2.08 or 4.08 in excess of those being charged by the respective Lender immediately prior to such transfer, then the Borrowers shall not be obligated to pay such increased costs to the extent of such excess (although the Borrowers shall be obligated to pay any other increased costs of the type described above resulting from changes after the date of the respective transfer).

10.15            Register.  The Borrowers hereby designate the Administrative Agent to serve as their non-fiduciary agent, solely for purposes of this Section 10.15, to maintain a register (the "Register") on which it will record the Commitments of each of the Lenders, the Loans made by each of the Lenders, the principal amount (and stated interest) of such Loans, and each repayment in respect of the principal amount of the Loans of each Lender. Failure to make any such recordation, or any error in such recordation, shall not affect the Borrowers' obligations in respect of such Loans. With respect to any Lender, the transfer of the Commitments of such Lender and the rights to the principal of, and interest on, any Loan made pursuant to such Commitments shall not be effective until such transfer is recorded on the Register maintained by the Administrative Agent with respect to ownership of such Commitments and Loans and prior to such recordation all amounts owing to the transferor with respect to such Commitments and Loans shall remain owing to the transferor. The registration of assignment or transfer of all or part of any Commitments and Loans shall be recorded by the Administrative Agent on the Register only upon the acceptance by the Administrative Agent of a properly executed and delivered Assignment and Assumption Agreement pursuant to Section 10.04(b). Coincident with the delivery of such an Assignment and Assumption Agreement to the Administrative Agent for acceptance and registration of assignment or transfer of all or part of a Loan, or as soon thereafter as practicable, the assigning or transferor Lender shall surrender the Note (if any) evidencing such Loan, and thereupon one or more new Notes in the same aggregate principal amount shall be issued to the assigning or transferor Lender and/or the new Lender at the request of any such Lender.

10.16            Confidentiality.  Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information

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may be disclosed (a) to its Affiliates and to its and its Affiliates' respective managers, administrators, trustees, partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective party (or its managers, administrators, trustees, partners, directors, officers, employees, agents, advisors and other representatives) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrowers and their obligations, this Agreement or payments hereunder, (iii) any rating agency, or (iv) the CUSIP Service Bureau or any similar organization, (g) with the consent of the Borrowers or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrowers.

For purposes of this Section, "Information" means all information received from the Borrowers or any of their Subsidiaries relating to the Borrowers or any of their Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrowers or any of their Subsidiaries, provided that, in the case of information received from the Borrowers or any of their Subsidiaries after the Effective Date, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

10.17            Intercreditor Agreement.  Each of the Loan Parties, the Pari Passu Collateral Agent, the Administrative Agent and the Lenders (a) consents to and ratifies the execution by the Administrative Agent of the Intercreditor Agreement in connection with the Incurrence of Other Pari Passu Obligations and any amendments or supplements expressly contemplated thereby, (b) hereby agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement following its execution and (c) acknowledges that it has received a copy of the Intercreditor Agreement and that the exercise of certain of the Pari Passu Collateral Agent's or the Administrative Agent's rights and remedies hereunder may be subject to, and restricted by, the provisions of the Intercreditor Agreement following its execution. NOTWITHSTANDING ANY OTHER PROVISION CONTAINED IN THIS AGREEMENT, IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND THE INTERCREDITOR AGREEMENT, THE INTERCREDITOR AGREEMENT SHALL CONTROL.

 

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10.18            Currency Conversion Shortfall.

(a)            If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or under any other Loan Document in Dollars into another currency, the rate of exchange used shall be that at which, in accordance with normal, reasonable banking procedures, the Administrative Agent could purchase Dollars with such other currency in New York City on the Business Day preceding that on which final judgment is given.

(b)            The Loan Document Obligations of the Loan Parties in respect of any sum due to the Administrative Agent or any Lender hereunder or under any other Loan Document shall, notwithstanding any judgment in a currency other than Dollars, be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in such currency, the Administrative Agent may, in accordance with normal, reasonable banking procedures, purchase Dollars with such other currency. If the amount of Dollars so purchased is less than the sum originally due, in Dollars, the Borrowers agree, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or the Person to whom such Loan Document Obligation was owing against such loss. If the amount of Dollars so purchased is greater than the sum originally due, the Administrative Agent agrees to return the amount of any excess to the Borrowers (or to any other Person who may be entitled thereto under applicable law).

10.19            Releases.  Subject to the Intercreditor Agreement, without further written consent or authorization from any Lender Creditor, the Administrative Agent or Pari Passu Collateral Agent, as applicable, may (a) execute any documents or instruments necessary in connection with an Asset Sale permitted by this Agreement, (b) release any Lien encumbering any item of Collateral that is the subject of such Asset Sale permitted by this Agreement or with respect to which Required Lenders (or such other Lenders as may be required to give such consent under Section 10.12) have otherwise consented or (c) release any Borrower Subsidiary Guarantor that is the subject of such Asset Sale permitted by this Agreement from its obligations under the Loan Documents or with respect to which Required Lenders (or such other Lenders as may be required to give such consent under Section 10.12) have otherwise consented.

10.20            Release of Guarantees.  The Loan Guarantee of a Guarantor (other than ParentUDW, except with respect to clauses (d) and (g) below) shall be automatically released:

(a)            in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger, consolidation or amalgamation) to a Person that is not (either immediately before or after giving effect to such transaction) the Parent or a Restricted Subsidiary, if the sale or other disposition does not violate Section 7.22 and Section 7.14, as applicable, and complies with the Loan Documents;

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(b)            in connection with any sale or other disposition of Capital Stock of such Guarantor following which such Guarantor is no longer a Restricted Subsidiary, if the sale or other disposition does not violate Section 7.22 and Section 7.14, as applicable, and complies with the Loan Documents;

(c)            if any Restricted Subsidiary that is a Guarantor becomes or is properly designed as an Unrestricted Subsidiary in accordance with Section 7.19 and the definition of "Unrestricted Subsidiary";

(d)            upon discharge of the Loan Document Obligations in accordance with the terms of this Agreement;

(e)            in the case of any Guarantor that is not a Borrower Subsidiary Guarantor, unless the Borrower notifies the Administrative Agent that it elects to maintain such Loan Guarantee, upon the contemporaneous release or discharge of all guarantees of such Guarantor that would have required such Guarantor to become a Guarantor hereunder, or at such time as such Guarantor would otherwise no longer be required to be a Guarantor, in each case, pursuant to the definition of "Collateral and Guarantee Requirement" and Section 7.07 or release by or as a result of payment in full by such Guarantor under such guarantee;

(f)            unless an Event of Default has occurred and is continuing, upon the dissolution or liquidation of the Guarantor in compliance with Section 7.14; or

(g)            in the case of ParentUDW and any Subsidiary of ParentUDW that is not a Subsidiary of the Borrower, upon the consummation of a Qualified DOV MLP IPO.

In the case of a release of Loan Guarantees pursuant to clause (g) of this Section 10.20, the release of ParentUDW (and any other Loan Guarantor that will not, after giving effect to such Qualified DOV MLP IPO, be a Subsidiary of the Borrower) shall be deemed to be effective immediately prior to the consummation of such Qualified DOV MLP IPO.

10.21            Keepwell.  Each of the Guarantors and the Borrowers that is not an Excluded Swap Guarantor at the time the Loan Guarantee or the grant of the security interest under the Collateral Agreements, in each case, by any Loan Party, becomes effective with respect to any Swap Obligation, hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide such funds or other support to each Loan Party with respect to such Swap Obligation as may be needed by such Loan Party from time to time to honor all of its obligations under its Loan Guarantee and the other Loan Documents in respect of such Swap Obligation (but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Guarantor's obligations and undertakings under the Loan Guarantee voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations and undertakings of each such Guarantor under this Section shall remain in full force and effect until the Secured Obligations have been paid in full. Each such Guarantor intends this Section to constitute, and this Section shall be deemed to constitute, a guarantee of the obligations of, and a "support or other agreement" for the benefit of, each Loan Party for all purposes of § 1a(18)(A)(v)(II) of the Commodity Exchange Act. Notwithstanding anything to the contrary herein, the foregoing shall not apply to any Loan Party that is a subsidiary of the Parent in respect of Swap Obligations of the Parent.

 

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10.22            Parallel Debt.

(a)            Each Loan Party irrevocably and unconditionally undertakes to pay to the Pari Passu Collateral Agent amounts equal to, and in the currency or currencies of, its Pari Passu Obligations.

(b)            The Parallel Debt of each Loan Party (i) shall become due and payable at the same time as its Pari Passu Obligations and (ii) is independent and separate from, and without prejudice to, its Pari Passu Obligations.

(c)            For purposes of this Section 10.22, the Pari Passu Collateral Agent: (i) is the independent and separate creditor of the Parallel Debt, (ii) acts in its own name and not as agent, representative or trustee of the Lenders or other Secured Parties and its claims in respect of the Parallel Debt shall not be held in trust, and (iii) shall have the independent and separate right to demand payment of the Parallel Debt in its own name (including through any suit, execution, enforcement of security, recovery of guarantees and applications for and voting in any kind of insolvency proceeding).

(d)            The Parallel Debt of a Loan Party shall be (i) decreased to the extent that its Pari Passu Obligations have been irrevocably and unconditionally paid or discharged, and (ii) increased to the extent to that its Pari Passu Obligations have increased, and the Pari Passu Obligations of a Loan Party shall be (A) decreased to the extent that its Parallel Debt has been irrevocably and unconditionally paid or discharged, and (B) increased to the extent that its Parallel Debt has increased, in each case provided that the Parallel Debt of a Loan Party shall never exceed its Pari Passu Obligations.

(e)            This Section 10.22 applies for the purpose of determining the Secured Obligations in the Collateral Agreements governed by Dutch law.

10.23            Relative Rights of Secured Parties.

(a)            Enforcement of Remedies.  Anything to the contrary in any of the Loan Documents notwithstanding, the parties hereto (and each other Secured Party) hereby agree that no Secured Party (other than the Administrative Agent and the Pari Passu Collateral Agent) shall have any right individually to realize upon any of the Collateral or to enforce any Loan Guarantee, it being understood and agreed that, except as provided in the last sentence of Section 10.22, all powers, rights and remedies under or with respect to the Loan Documents or the amounts due thereunder may be exercised solely by the Administrative Agent and the Pari Passu Collateral Agent (or their applicable designees or sub-agents) on behalf of the Secured Parties as the Administrative Agent and the Pari Passu Collateral Agent may be directed by the Required Lenders and in accordance with the terms hereof and thereof and applicable law. Notwithstanding any 

 

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other provision of this Agreement or any other Loan Document, if directed by the Required Lenders, each of the Administrative Agent and the Pari Passu Collateral Agent is hereby irrevocably authorized to release any Liens created under any Loan Document and to release any Loan Guarantee, in each case in connection with the exercise of remedies hereunder or under any other Loan Document so long as such release applies to all of the Loans and any proceeds thereof are shared in accordance with Section 8.02. If so directed by the Required Lenders, each of the Administrative Agent and the Pari Passu Collateral Agent is hereby irrevocably authorized to exercise any remedies hereunder or under any other Loan Document in accordance with the terms of the applicable Loan Document and applicable law. No Secured Party (other than the Pari Passu Collateral Agent) shall instruct the Pari Passu Collateral Agent to commence any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its security interest in or realize upon, or take any other action available to it in respect of, any Collateral, whether under any Loan Document, applicable law or otherwise, it being agreed that only the Pari Passu Collateral Agent, acting at the direction of the Required Lenders or as otherwise authorized herein, shall be entitled to take any such actions or exercise any remedies with respect to any Collateral at such time. Notwithstanding the foregoing, if so directed by the Required Lenders, each of the Administrative Agent and the Pari Passu Collateral Agent is irrevocably authorized, in connection with an Event of Default under Section 8.01 resulting from the failure to pay Secured Obligations owing to the Lenders, to sue for payment of, or to initiate any suit, action or proceedings against any Loan Party to enforce payment of or to collect such Secured Obligations.

(b)            Objection to Enforcement Actions.  No Secured Party (other than the Pari Passu Collateral Agent) will contest, protest or object to any foreclosure proceeding or action brought by the Pari Passu Collateral Agent (at the direction of the Required Lenders or as otherwise authorized under the Loan Documents) or any other exercise by the Pari Passu Collateral Agent of any rights or remedies relating to the Collateral.

(c)            Credit Bidding.  The Pari Passu Collateral Agent (at the direction of the Required Lenders) shall have the exclusive right on behalf of all Secured Parties in any Insolvency or Liquidation Proceeding to credit bid for the Collateral using all or a pro rata portion of the Secured Obligations as consideration so long as the equity and/or assets distributed to the Secured Parties as a result of an successful credit bid, or any proceeds thereof, are distributed in accordance with Section 8.02. In any Insolvency or Liquidation Proceeding or other transaction involving the sale or other disposition of Collateral, except as provided in the immediately preceding sentence, no Secured Party (other than the Pari Passu Collateral Agent) may credit bid for Collateral.

(d)            No Interference; Payment Over.  Each Secured Party (other than the Pari Passu Collateral Agent) agrees that (i) it will not (and hereby waives any right to) challenge or question in any proceeding the validity or enforceability of any Secured Obligations of any Class or any Loan Document or the validity, attachment, perfection or priority of any Lien under any Loan Document or the validity or enforceability of the 

 

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priorities, rights or duties established by or other provisions of this Agreement; (ii) it will not take or cause to be taken any action the purpose or intent of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of the Collateral or other exercise of remedies by the Pari Passu Collateral Agent (acting at the direction of the Required Lenders or as otherwise authorized under the Loan Documents); (iii) it will not institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against the Pari Passu Collateral Agent or any other Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to any Collateral, and none of the Pari Passu Collateral Agent or any other Secured Party shall be liable for any action taken or omitted to be taken by the Pari Passu Collateral Agent (at the direction of the Required Lenders or as otherwise authorized under the Loan Documents) with respect to any Collateral in accordance with the provisions of this Agreement; and (iv) it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Section 10.23.

(e)            DIP Financing.  If any Loan Party shall become subject to a case (a "Bankruptcy Case") under any Bankruptcy Law and shall, as debtor(s)-in-possession, move for approval of financing ("DIP Financing") to be provided by one or more lenders (the "DIP Lenders") under Section 364 of the Bankruptcy Code or the use of cash collateral under Section 363 of the Bankruptcy Code, and such motion has the consent of the Required Lenders, each Lender agrees that it will raise no objection to any such financing or to the Liens on the Collateral securing the same ("DIP Financing Liens") or to any use of cash collateral that constitutes Collateral so long as (A) the Secured Parties of each class retain the benefit of their Liens on all such Collateral pledged to the DIP Lenders, including proceeds thereof arising after the commencement of such proceeding, with the same priority vis-à-vis all the other Secured Parties (other than any Liens of the Secured Parties constituting DIP Financing Liens) as existed prior to the commencement of the Bankruptcy Case (giving effect to the payment priorities set forth in Section 8.02), (B) the Secured Parties of each class are granted Liens on any additional collateral pledged to any other Secured Parties as adequate protection or otherwise in connection with such DIP Financing or use of cash collateral or sale of Collateral, with the same priority vis-à-vis the Secured Parties as set forth in this Agreement (giving effect to the payment priorities set forth in Section 8.02), (C) if any amount of such DIP Financing or cash collateral is applied to repay any of the Secured Obligations, such amount is applied pursuant to Section 8.02, (D) no Secured Party of any class is granted a DIP Financing Lien as part of a "roll up" of its Secured Obligations in any such DIP Financing unless all Secured Parties are provided the opportunity to participate pro rata in any such DIP Financing involving a "roll up" of Secured Obligations and that such "roll up" is provided on a pro rata basis; provided, however, that notwithstanding the foregoing, any such opportunity to participate in any such "roll up" shall be provided first to Revolving Lenders only and (E) if any Secured Parties are granted adequate protection, including in the form of periodic payments, in connection with such DIP Financing or use of cash collateral or sale of Collateral, the proceeds of such adequate protection are applied pursuant to Section 8.02; provided that the Secured Parties receiving adequate protection shall not object to any other Secured Party receiving adequate protection comparable to any adequate protection granted to such Secured Parties in connection with a DIP Financing or use of cash collateral.

 

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(f)            363-Sales.  In any Insolvency or Liquidation Proceeding, none of the Secured Parties shall be entitled to oppose (or shall oppose) (i) any sale or disposition of any assets of any of the Loan Parties or (ii) any procedure governing the sale or disposition of any assets of any of the Loan Parties, in each case that has the consent of the Required Lenders, and the Secured Parties will be deemed to have consented under Section 363 of the Bankruptcy Code to any sale, and any procedure for sale (and in each case any motion in support hereof), to which the Required Lenders have consented.

(g)            Plans of Reorganization.  Each Secured Party agrees that it shall not be entitled (i) to take any action or vote in any way that supports any Non-Conforming Plan of Reorganization or (ii) to object to a Plan of Reorganization to which the Required Lenders have consented on the grounds that any sale of Collateral thereunder or pursuant thereto is for inadequate consideration, or that the sale process in respect thereof was inadequate. Without limiting the generality of the foregoing or of the other provisions of this Agreement, any vote to accept, and any other act to support the confirmation or approval of, any Non-Conforming Plan of Reorganization by any Secured Party, in such capacity, shall be inconsistent with and accordingly, a violation of the terms of this Agreement, and the Pari Passu Collateral Agent shall be entitled (and hereby authorized by the Lenders) to have any such vote to accept a Non-Conforming Plan of Reorganization changed and any such support of any such Non-Conforming Plan of Reorganization withdrawn.

(h)            Sponsoring of Plans of Reorganization. None of the Lenders, in such capacity, will sponsor any Plan of Reorganization that does not contemplate the payment in full, in cash of the Revolving Obligations upon the effective date of such Plan of Reorganization, unless the Required Revolving Lenders shall have otherwise consented in writing.

10.24            Revolving Obligations Payment Priority.  EACH LENDER WITH OUTSTANDING TERM LOANS ACKNOWLEDGES AND AGREES THAT THE REVOLVING OBLIGATIONS (INCLUDING OUTSTANDING REVOLVING LOANS) ARE ENTITLED TO DISTRIBUTIONS PURSUANT TO SECTION 8.02 (INCLUDING DISTRIBUTIONS PURSUANT TO AN INSOLVENCY OR LIQUIDATION PROCEEDINGS) PRIOR TO ANY DISTRIBUTIONS BEING APPLIED TO THE OBLIGATIONS IN RESPECT OF OUTSTANDING TERM LOANS.

*            *            *

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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the date first above written.

	 	 	
DRILLSHIPS OCEAN VENTURES INC.,

as the Borrower

 

	 	 	
By:

	 
	 	 	 	
/s/ Solon Drakoulis

	 	 	 	
Name:  Solon Drakoulis

	 	 	 	
Title:  Attorney-in-fact

	 	 	
DRILLSHIPS VENTURES PROJECTS INC.,

as Finco

 

	 	 	
By:

	 
	 	 	 	
/s/ Solon Drakoulis

	 	 	 	
Name:  Solon Drakoulis

	 	 	 	
Title:  Attorney-in-fact

	 	 	
OCEAN RIG UDW INC., as Parent

 

	 	 	
By:

	 
	 	 	 	
/s/ Solon Drakoulis

	 	 	 	
Name:  Solon Drakoulis

	 	 	 	
Title:  Attorney-in-fact

[Signature Page to the Credit Agreement]

177

	 	 	
DRILLSHIPS BANK AG NEW YORK BRANCH, as Administrative Agent, Pari Passu Collateral Agent, Lender and Security Trustee,

 

	 	 	
By:

	 
	 	 	 	
/s/ Dusan Lazarov

	 	 	 	
Name:  Dusan Lazarov

	 	 	 	
Title:  Director

	 	 	 	 
	 	 	
By:

	 
	 	 	 	
/s/ Lisa Wong

	 	 	 	
Name:  Lisa Wong

	 	 	 	
Title:  Vice President

	 	 	 	 

[Signature Page to the Credit Agreement]

SK 26497 0001 6394087

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