EX-4.1 4 tm2114630d1_ex4-1.htm EXHIBIT 4.1

 

EXHIBIT 4.1

 

 

 

 

VALARIS LIMITED

 

SENIOR SECURED FIRST LIEN NOTES DUE 2028

 

INDENTURE

 

Dated as of April 30, 2021

 

WILMINGTON SAVINGS FUND SOCIETY, FSB,

 

as Trustee and First Lien Collateral Agent

 

 

 

 

 

RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939

AND INDENTURE, DATED AS OF APRIL 30, 2021

 

CROSS-REFERENCE TABLE

 

Trust
Indenture
Act
Section
  Indenture
Section
310(a)(1)   7.10
(a)(2)   7.10
(a)(3)   N.A.
(a)(4)   N.A.
(a)(5)   7.10
(b)   7.03; 7.08; 7.10
(c)   N.A.
311(a)   7.11
(b)   7.11
(c)   N.A.
312(a)   2.05
(b)   12.02
(c)   12.02
313(a)   7.06
(b)(1)   11.03
(b)(2)   11.03
(c)   7.06
(d)   7.06
314(a)   4.03; 4.04
    4:13
(b)   11.03
(c)(1)   12.03
(c)(2)   12.03
(c)(3)   N.A.
(d)   11.03
(e)   12.04
(f)   4.13
315(a)   7.01
(b)   7.05; 
(c)   7.01
(d)   7.01
(e)   6.11
316(a)(last sentence)   2.09
(a)(1)(A)   6.05
(a)(1)(B)   6.04
(a)(2)   N.A.
(b)   6.07
317(a)(1)   6.08
(a)(2)   6.09
(b)   2.04
318(a)   1.05

N.A. means Not Applicable.

 

 

Note:  This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture.

 

 

 

  Contents  
     
Article 1 DEFINITIONS AND INCORPORATION BY REFERENCE 1
Section 1.01 Definitions 1
Section 1.02 Other Definitions 46
Section 1.03 Rules of Construction 47
Section 1.04 Incorporation by Reference of Trust Indenture Act 47
Section 1.05 Conflict With Trust Indenture Act 48
     
Article 2 THE NOTES 48
Section 2.01 Form and Dating 48
Section 2.02 Execution and Authentication 48
Section 2.03 Registrar and Paying Agent 49
Section 2.04 Paying Agent to Hold Money and PIK Notes in Trust 50
Section 2.05 Holder Lists 50
Section 2.06 Transfer and Exchange 50
Section 2.07 Replacement Notes 51
Section 2.08 Outstanding Notes 51
Section 2.09 Treasury Notes 51
Section 2.10 Temporary Notes 51
Section 2.11 Cancellation 52
Section 2.12 Defaulted Interest 52
Section 2.13 CUSIP and ISIN Numbers 52
Section 2.14 Issuance of Additional Notes 52
     
Article 3 REDEMPTION AND PREPAYMENT 53
Section 3.01 Notices to Trustee 53
Section 3.02 Selection of Notes to Be Redeemed 53
Section 3.03 Notice of Redemption 54
Section 3.04 Effect of Notice of Redemption 55
Section 3.05 Deposit of Redemption Price 55
Section 3.06 Notes Redeemed in Part 55
Section 3.07 Optional Redemption 56
Section 3.08 [Reserved] 58
Section 3.09 Offer to Purchase by Application of Excess Proceeds 58
Section 3.10 No Mandatory Sinking Fund 59
     
Article 4 COVENANTS 60
Section 4.01 Payment of Notes 60
Section 4.02 Maintenance of Office or Agency 60
Section 4.03 Reports 61
Section 4.04 Compliance Certificate 62
Section 4.05 Taxes 63
Section 4.06 Stay, Extension and Usury Laws 63
Section 4.07 Limitation on Restricted Payments 63

 

 

 

Section 4.08 Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries 66
Section 4.09 Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock 69
Section 4.10 Limitation on Asset Sales 75
Section 4.11 Limitation on Transactions with Affiliates 78
Section 4.12 Limitation on Liens 80
Section 4.13 Further Assurances; Additional Guarantees 80
Section 4.14 Existence 81
Section 4.15 Offer to Repurchase Upon Change of Control 81
Section 4.16 Designation of Restricted and Unrestricted Subsidiaries 83
Section 4.17 Business Activities 84
Section 4.18 Payment of Additional Amounts 84
Section 4.19 Suspended Covenants 87
Section 4.20 Maintenance of Insurance 88
Section 4.21 [Reserved] 88
Section 4.22 ARO JV Shareholder and ARO Indebtedness 88
     
Article 5 SUCCESSORS 89
Section 5.01 Merger, Consolidation, or Sale of Assets 89
Section 5.02 Successor Substituted 91
     
Article 6 91
   
DEFAULTS AND REMEDIES 91
Section 6.01 Events of Default 91
Section 6.02 Acceleration 94
Section 6.03 Other Remedies 94
Section 6.04 Waiver of Past Defaults 94
Section 6.05 Control by Majority 95
Section 6.06 Limitation on Suits 95
Section 6.07 Rights of Holders of Notes to Receive Payment 95
Section 6.08 Collection Suit by Trustee 96
Section 6.09 Trustee is Authorized to File Proofs of Claim 96
Section 6.10 Priorities 96
Section 6.11 Undertaking for Costs 97
Section 6.12 The First Lien Collateral Agent 97
     
Article 7 TRUSTEE 97
Section 7.01 Duties of Trustee 97
Section 7.02 Rights of Trustee 98
Section 7.03 Individual Rights of Trustee 99
Section 7.04 Trustee’s Disclaimer 100
Section 7.05 Notice of Defaults 100
Section 7.06 Reports by Trustee to Holders 100
Section 7.07 Compensation and Indemnity 100
Section 7.08 Replacement of Trustee 102

 

 

 

Section 7.09 Successor Trustee by Merger, etc. 103
Section 7.10 Eligibility; Disqualification 103
Section 7.11 Preferential Collection of Claims Against the Issuer 103
     
Article 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE 103
Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance 103
Section 8.02 Legal Defeasance and Discharge 103
Section 8.03 Covenant Defeasance 104
Section 8.04 Conditions to Legal or Covenant Defeasance 105
Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions 106
Section 8.06 Repayment to the Company 106
Section 8.07 Reinstatement 107
Section 8.08 Discharge 107
     
Article 9 AMENDMENT, SUPPLEMENT AND WAIVER 108
Section 9.01 Without Consent of Holders of Notes 108
Section 9.02 With Consent of Holders of Notes 110
Section 9.03 Compliance with Trust Indenture Act 111
Section 9.04 Consents in Connection with Purchase, Tender or Exchange 112
Section 9.05 Revocation and Effect of Consents 112
Section 9.06 Notation on or Exchange of Notes 112
Section 9.07 Trustee to Sign Amendments, etc. 112
Section 9.08 Acts of Holders 113
     
Article 10 GUARANTEES OF NOTES 114
Section 10.01 Subsidiary Guarantees 114
Section 10.02 Releases of Guarantees 115
Section 10.03 Limitation on Guarantor Liability 116
Section 10.04 “Trustee” to Include Paying Agent 116
Section 10.05 Execution and Delivery 116
Section 10.06 Subrogation 116
Section 10.07 Jurisdiction Specific Riders 117
     
Article 11 SECURITY 136
Section 11.01 Collateral Documents; Additional Collateral 136
Section 11.02 Letters of Quiet Enjoyment 145
Section 11.03 Releases of Collateral 145
Section 11.04 Release Documentation 147
Section 11.05 [Reserved]. 147
Section 11.06 First Lien Collateral Agent. Subject to Section 12.10 147
Section 11.07 Purchaser Protected 149
Section 11.08 [Reserved]. 149
Section 11.09 Authorization of Receipt of Funds by the Trustee Under the Collateral Documents 149

 

 

 

Section 11.10 Powers Exercisable by Receiver or Trustee 149
Section 11.11 Compensation and Indemnification 149
Section 11.12 Negative Pledge 149
Section 11.13 Floater Restructuring Transaction. 150
     
Article 12 MISCELLANEOUS 152
Section 12.01 Notices 152
Section 12.02 Communications by Holders with Other Holders 153
Section 12.03 Certificate and Opinion as to Conditions Precedent 153
Section 12.04 Statements Required in Certificate or Opinion 154
Section 12.05 Rules by Trustee and Agents 154
Section 12.06 No Personal Liability of Directors, Officers, Employees and Stockholders 154
Section 12.07 Governing Law 155
Section 12.08 Jurisdiction 155
Section 12.09 WAIVER OF JURY TRIAL 155
Section 12.10 Intercreditor Agreement and Collateral Agency Agreement Control. 156
Section 12.11 No Adverse Interpretation of Other Agreements 156
Section 12.12 Successors 156
Section 12.13 Severability 156
Section 12.14 Table of Contents, Headings, etc. 156
Section 12.15 Counterparts 156
Section 12.16 Language of Notices, Etc. 156
Section 12.17 U.S.A. PATRIOT Act 157
Section 12.18 Force Majeure 157
Section 12.19 Foreign Sanction Regulations 157

 

RULE 144A/REGULATION S APPENDIX1
   
EXHIBIT I TO RULE 144A/REGULATION S APPENDIX1

 

ANNEX A - FOrm of Supplemental indenture

 

annex b-1 - issue date collateral documents

 

annex b-2 - post-issue date specified collateral documents

 

annex c - lQe provisions

 

annex d - form of intercreditor agreement

 

annex e-1 - unrestricted floater subsidiary credit facility term sheet

 

annex e-2 - unrestricted floater subsidiary iP license term sheet

 

Schedule a - vessels operating in kingdom of saudi arabia

 

 

 

This INDENTURE, dated as of April 30, 2021, is among Valaris Limited, an exempted company incorporated under the laws of Bermuda with registration number 56245 (the “Company”), the Guarantors listed on the signature pages hereto and Wilmington Savings Fund Society, FSB, as Trustee and as First Lien Collateral Agent.

 

The Company, the Guarantors 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 (a) the Company’s Senior Secured First Lien Notes due 2028 issued on the Issue Date (the “Initial Notes”) and (b) any PIK Notes (as defined herein) and Additional Notes (as defined herein) that may be issued after the Issue Date (all such Notes in clauses (a) and (b) being referred to collectively as the “Notes”):

 

Article 1
DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01      Definitions.

 

20K Contract” means a contract requiring upgrades to an Other Vessel to enable the Other Vessel to work on wells where the anticipated reservoir pressures require well control equipment whose pressure rating exceeds 15K PSI.

 

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

 

(1)           Indebtedness (including Permitted Refinancing Indebtedness in respect thereof) 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 Subsidiary) or expressly assumed in connection with the acquisition of assets from any other such Person, provided that such Indebtedness is not 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 the acquisition of assets from such other Person; and

 

(2)           Indebtedness (including Permitted Refinancing Indebtedness in respect thereof) secured by a Lien encumbering any asset acquired by such specified Person, provided that such Indebtedness is not Incurred in connection with, or in contemplation of, such acquisition. Acquired Debt will be deemed to be Incurred on the date the acquired Person becomes a Restricted Subsidiary of such Person or the date of the acquisition of assets from such Person, as applicable.

 

Additional Notes” means Notes issued under this Indenture after the Issue Date and in compliance with Sections 2.14, 4.01, and 4.09 and 4.12, it being understood that any Notes issued in replacement of any Initial Note shall not be an Additional Note.

 

1

 

 

Additional Secured Debt Designation” means the written agreement of the First Lien Representative of holders of any series of First Lien Debt or the Junior Lien Representative of holders of any series of Junior Lien Debt, as applicable, as set forth in the indenture, credit agreement or other agreement governing such series of First Lien Debt or series of Junior Lien Debt, for the benefit of (i) all holders of existing and future First Lien Debt, the First Lien Collateral Agent and each existing and future holder of First Liens, in the case of each additional series of First Lien Debt and (ii) all holders of each existing and future series of Junior Lien Debt, the applicable Junior Lien Collateral Agent and each existing and future holder of Junior Liens, in the case of each series of Junior Lien Debt:

 

(1)           in the case of any additional series of First Lien Debt, that all such First Lien Obligations will be and are secured equally and ratably by all First Liens at any time granted by the Company or any Guarantor to secure any Obligations in respect of such series of First Lien Debt, whether or not upon property otherwise constituting collateral for such series of First Lien Debt, and that all such First Liens will be enforceable by the First Lien Collateral Agent for the benefit of all holders of First Lien Obligations, equally and ratably, in each case subject to the exceptions that are applicable to Indebtedness incurred pursuant to clause (3)(a) of Section 4.09(b);

 

(2)           in the case of any additional series of Junior Lien Debt, that all such Junior Lien Obligations will be and are secured equally and ratably by all Junior Liens at any time granted by the Company or any Guarantor to secure any Obligations in respect of such series of Junior Lien Debt, whether or not upon property otherwise constituting collateral for such series of Junior Lien Debt, and that all such Junior Liens will be enforceable by the Junior Lien Collateral Agent for the benefit of all holders of Junior Lien Obligations, equally and ratably;

 

(3)           that such First Lien Representative or Junior Lien Representative, as applicable, and the holders of Obligations in respect of such series of First Lien Debt or series of Junior Lien Debt, as applicable, are bound by the provisions of the Intercreditor Agreement, including the provisions relating to the ranking of First Liens and Junior Liens and the order of application of proceeds from the enforcement of First Liens and Junior Liens; and

 

(4)           appointing the First Lien Collateral Agent or the Junior Lien Collateral Agent, as applicable, and consenting to the terms of the Intercreditor Agreement and, in the case of any additional series of First Lien Debt, the Collateral Agency Agreement, including terms relating to the direction of the First Lien Collateral Agent or the Junior Lien Collateral Agent, as applicable, and the performance by the First Lien Collateral Agent or the Junior Lien Collateral Agent, as applicable, of its obligations under the Collateral Agency Agreement (if applicable) and any other applicable security documents and the Intercreditor Agreement, including its obligations to comply with directions given in accordance therewith, together with all such powers as are reasonably incidental thereto.

 

Additional Subject Jurisdictions” means any jurisdiction (other than any Initial Subject Jurisdiction) in which a Required Guarantor (i) owns at least $50 million of assets (based on the book value thereof), or (ii) has at least $50 million of operations (based on annual net revenues of such Required Guarantor).

 

Adjusted Interest Coverage Ratio” means, as of any date of determination, the ratio of (i) Consolidated EBITDA of the Company and the Restricted Subsidiaries, plus 50% of the Consolidated EBITDA of ARO, for the most recently completed four quarter period for which internal financial statements of the Company are available to (ii) Consolidated Interest Expense of the Company and the Restricted Subsidiaries (with the interest expense for these Notes calculated assuming such interest was paid in cash), plus 50% of the Consolidated Interest Expense of ARO (excluding interest accruing on the Shareholder Instruments held by the ARO JV Shareholder), for such period, subject to the Calculation Principles.

 

2

 

 

 

Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided that no Person will constitute an Affiliate of the Company or any parent of the Company solely because such Person owns up to 25% of the Equity Interests of the Company or such parent. For the purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

 

Agent Members” has the meaning provided in the Appendix.

 

Agents” shall mean, collectively, the Trustee, the First Lien Collateral Agent, the Registrar, the Paying Agent and any other agents under the Note Documents from time to time.

 

Applicable Materiality Percentage” means in the case of a Subsidiary located in a Subject Jurisdiction in which the Company or any Guarantor has executed and filed documentation for the perfection of Liens on the Collateral, 0.5% and otherwise 2.5%.

 

Applicable Premium” means, with respect to any Note on any redemption date, the present value at such redemption date of all required interest payments due on such Note (assuming cash interest payments) through April 30, 2023, computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points.

 

Calculation of the Applicable Premium shall be made by the Company or on behalf of the Company by such Person as the Company shall designate; provided that such calculation or the correctness thereof shall not be a duty or obligation of the Trustee and the Company will notify the Trustee of the Applicable Premium promptly after the calculation thereof.

 

ARO” means Saudi Aramco Rowan Offshore Drilling Company, a limited liability company incorporated under the laws of the Kingdom of Saudi Arabia.

 

ARO JV Agreement” means the Shareholders’ Agreement, dated as of November 21, 2016, by and between Mukamala Oil Field Services Limited (as successor to Saudi Aramco Development Company) and Valaris ARO Shareholder relating to ARO.

 

ARO JV Related Assets” means collectively, (i) the Equity Interests of ARO owned, directly or indirectly, by the Company or its Subsidiaries, (ii) the “Shareholder Instruments” (as defined in the ARO JV Agreement) and any other loans, notes or other obligations of ARO to the Company or any of its Subsidiaries, (iii) all right, title and interest of the Company or any of its Subsidiaries in and to the ARO JV Agreement, (iv) the rights of the Company or any of its Subsidiaries under (x) any Drilling Contract or agreement to operate between the Company or any of its Subsidiaries and ARO in respect of any Vessel and (y) any agreement pursuant to which the Company or any of its Subsidiaries manages a Third Party Vessel for ARO.

 

3

 

 

Asset Sale” means:

 

(1)          any sale, assignment, transfer, lease, conveyance, any Sale and Lease-Back Transaction or other disposition (including by means of amalgamation, merger, consolidation or similar transaction), whether in a single transaction or a series of related transactions, of property or assets of the Company or any of the Restricted Subsidiaries; provided that the sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company and the Restricted Subsidiaries, taken as a whole, will not be an “Asset Sale,” but will be governed by the provisions of Section 4.15 and/or the provisions of Section 5.01 and not by the provisions of Section 4.10;

 

(2)          the issuance or sale of Equity Interests of any Restricted Subsidiary, other than directors’ qualifying shares and/or other Equity Interests that are required to be held by any Persons other than the Company or another Restricted Subsidiary under applicable law or regulation (including local content regulations or requirements), whether in a single transaction or a series of related transactions; and

 

(3)          an Involuntary Transfer.

 

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale under clause (1) or (2) above:

 

(1)          any single transaction or series of related transactions that involves assets having a Fair Market Value of less than $5 million (and the sale of such assets generates Net Proceeds of less than $5 million), but not more than $25 million in the aggregate for all such transactions or series of related transactions during the term of this Indenture;

 

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

 

(3)          an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary; provided that, in the case of such an issuance by a non-wholly owned Restricted Subsidiary, such issuance may also be made to any other owner of Capital Stock of such non-wholly owned Restricted Subsidiary based on such owner’s relative ownership interests (or lesser share) of the relevant class of Capital Stock);

 

(4)          (x) the sale or discount, in each case without recourse and in the ordinary course of business, of overdue accounts receivable and similar obligations arising in the ordinary course of business, but only in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale or financing transaction) and (y) the use or hire of a Vessel and any related assets in the ordinary course of business, including pursuant to a Drilling Contract;

 

(5)          any Disposition in a single transaction or series of related transactions of assets, including damaged, worn-out or obsolete assets in the ordinary course of business, the sale of which assets generates Net Proceeds of less than $1.5 million;

 

(6)          sales of assets to any customer purchased on behalf of or at the request of such customer and for which payment has been made in cash by such customer and dispositions of inventory, in each case, in the ordinary course of business;

 

4

 

 

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

 

(8)          non-exclusive licenses and sublicenses by the Company or any of the Restricted Subsidiaries of software or intellectual property in the ordinary course of business, provided that such licenses and sublicenses do not interfere in any material respect with the conduct of the business of the Company and the Restricted Subsidiaries;

 

(9)          a Restricted Payment that does not violate Section 4.07 or a Permitted Investment;

 

(10)        the creation or perfection of any Permitted Lien, and any disposition of assets constituting Collateral resulting from foreclosure under any such Lien by the First Lien Collateral Agent, or any disposition of assets not constituting Collateral resulting from foreclosure under any such Lien;

 

(11)        any surrender or waiver of contract rights or the settlement, release, recovery on or surrender of contract, tort or other claims, in each case when undertaken or entered into in the ordinary course of business or when consistent with the Company’s past practice;

 

(12)        any Permitted Asset Swap that complies with Section 4.10(a)(1) as if such Permitted Asset Swap constituted an Asset Sale;

 

(13)        leases of real or personal property in the ordinary course of business

 

(14)        the sale of Equity Interests of a Restricted Subsidiary issued as consideration for the acquisition, including by way of merger, of Capital Stock, assets, or property of any Person primarily engaged in a Permitted Business, provided that such transaction is otherwise permitted pursuant to this Indenture; and

 

(15)        abandoning, failing to maintain, allowing to lapse or otherwise Disposing of intellectual property rights that are not material to the conduct of the business of the Company and the Restricted Subsidiaries, taken as a whole.

 

Attributable Indebtedness” in respect of a Sale and Lease-Back Transaction means, at the time any determination is to be made, 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 that if such Sale and Lease-Back Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capital Lease Obligation.”

 

Bankruptcy Law” means 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.

 

5

 

 

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” will 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 terms “Beneficially Owns” and “Beneficially Owned” have corresponding meanings.

 

Board of Directors” means:

 

(1)          with respect to a corporation or company, the board of directors of the corporation or company 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 (or other managing body) of the general partner of the partnership;

 

(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 any day other than a Saturday, Sunday or any other day on which banking institutions in New York, New York, London, United Kingdom or any place of payment under this Indenture are authorized or required by law to close.

 

Calculation Principles” means, with respect to calculations under this Indenture for any period, the following principles:

 

(1)          if the Company or any of the Restricted Subsidiaries has Incurred any Indebtedness since the beginning of such period that remains outstanding on the date a determination under this Indenture to which the Calculation Principles apply is to be made, or if the transaction giving rise to the need to make such determination is an Incurrence of Indebtedness, or both (in each case other than working capital borrowings under a revolving credit facility), Consolidated Cash Flow, Consolidated EBITDA 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 Company or any of the Restricted Subsidiaries has repaid, repurchased, defeased, converted or otherwise discharged any Indebtedness since the beginning of such period that is no longer outstanding on such date of determination, or if any Indebtedness is to be repaid, repurchased, defeased, converted or otherwise discharged (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and the related commitment has been terminated) on the date of the transaction giving rise to the occasion to apply the Calculation Principles, Consolidated Cash Flow, Consolidated EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such repayment, repurchase, defeasance, conversion or discharge had occurred on the first day of such period;

 

6

 

 

(3)          if, since the beginning of such period, the Company or any Restricted Subsidiary shall have made any Asset Sale, Consolidated Cash Flow and Consolidated EBITDA for such period shall be reduced by an amount equal to the Consolidated Cash Flow or Consolidated EBITDA, as the case may be (in each case, if positive), directly attributable to the assets that are the subject of such Asset Sale for such period, or increased by an amount equal to the Consolidated Cash Flow (if negative) directly attributable thereto for such period;

 

(4)          if, since the beginning of such period, any Person that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period shall have made any Asset Sale, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) above or clause (7) or (8) below if made by the Company or a Restricted Subsidiary during such period, Consolidated Cash Flow, Consolidated EBITDA, Consolidated Fixed Charges and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Sale, 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, Consolidated EBITDA, Consolidated Fixed Charges and Consolidated Interest Expense shall be calculated as if such event had occurred on the first day of such period;

 

(6)          Consolidated Cash Flow, Consolidated EBITDA, Consolidated Fixed Charges 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;

 

(7)          if, since the beginning of such period, (i) by merger or otherwise, any Person becomes a Restricted Subsidiary or is merged with or into the Company or a Restricted Subsidiary or there is otherwise an Investment into the Company or any Restricted Subsidiary, or (ii) the Company or any Restricted Subsidiary shall have made an Investment, acquired a Qualified Vessel, sold, transferred or otherwise disposed of a Vessel, or acquired, sold, transferred or otherwise disposed of assets constituting all or substantially all of an operating unit of a business, Consolidated Cash Flow, Consolidated EBITDA, Consolidated Fixed Charges and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto, as determined in good faith by a Financial Officer of the Company (including, without limitation, the Incurrence of any Indebtedness) as if such merger, Investment, acquisition, sale, transfer or other disposition had occurred on the first day of such period; and

 

(8)          if the Company or any Restricted Subsidiary shall have entered into an agreement to acquire a Qualified Vessel or to sell, transfer or otherwise dispose of a Vessel, in each case that is scheduled for delivery no later than the date that is one year from the time of calculation, then Consolidated Cash Flow, Consolidated EBITDA, Consolidated Fixed Charges and Consolidated Interest Expense for such period shall be calculated giving pro forma effect to the delivery of such acquired Qualified Vessel or such sold, transferred or otherwise disposed of Vessel as of the first day of such period.

 

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Any pro forma calculations giving effect to the acquisition of a Qualified Vessel or sale, transfer or other disposition of a Vessel or to a committed construction contract with respect to a Qualified Vessel shall be made as follows:

 

(a)          the amount of Consolidated Cash Flow, Consolidated EBITDA and Consolidated Fixed Charges attributable to such Qualified Vessel or Vessel shall be calculated in good faith by a Financial Officer of the Company;

 

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

 

(c)          with respect to any Qualified Vessels, the amount of Consolidated Cash Flow and Consolidated EBITDA shall be the lesser of the Consolidated Cash Flow or Consolidated EBITDA, as the case may be, 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 or Consolidated EBITDA, as the case may be, of each year of such Qualified Services Contract for the term of the Qualified Services Contract; and

 

(d)          with respect to any expenses attributable to a Qualified Vessel or Vessel, if the actual expenses differ from the estimate, the actual amount shall be used in such calculation.

 

Capital Expenditures” means expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto that have a useful life of more than one year and that are capitalized in accordance with GAAP.

 

Capital Lease Obligation” 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 as in effect on the Issue Date, 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; provided that in no event will any lease that would have been categorized as an operating lease as determined in accordance with GAAP as of the Issue Date be considered a capital lease, regardless of any change in GAAP following the Issue Date that would otherwise require such obligations to be recharacterized (on a prospective or retroactive basis or otherwise) as a capital lease.

 

Capital Stock” means:

 

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

 

(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

 

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(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” means:

 

(1)          securities issued or directly and fully guaranteed or insured by the government of the United States or any other country whose sovereign debt has a rating of at least A3 from Moody’s and at least A- from S&P or any agency or instrumentality thereof having maturities of not more than 12 months from the date of acquisition;

 

(2)          certificates of deposit, demand deposits and Eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank organized under the laws of any country that is a member of the Organization for Economic Cooperation and Development having capital and surplus in excess of $500 million (or the equivalent thereof in any other currency or currency unit);

 

(3)          marketable general obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition thereof, having a credit rating of “A” or better from either S&P or Moody’s;

 

(4)          repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (1), (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (2) above;

 

(5)          commercial paper having a rating not less than “P1” from Moody’s or “A1” from S&P, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings or investments, and, in each case, maturing within one year after the date of acquisition;

 

(6)          money market funds that comply with SEC rules applicable to all money market funds, including Rule 2a-7 under the Investment Company Act of 1940, that have a rating of AAA by Moody’s, S&P or Fitch, and that have portfolio assets of at least $1,000,000,000;

 

(7)          in the case of the Company or any Subsidiary of the Company organized or having its principal place of business outside the United States, investments denominated in the currency of the jurisdiction in which such Person is organized or has its principal place of business or conducts business which are similar to the items specified in clauses (1) through (6) of this definition; and

 

(8)          investments in Foreign Deposit Accounts and cash management obligations maintained at one of the three largest banks in the jurisdiction in which the Company or any Restricted Subsidiary maintains its local office.

 

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Cash Management Arrangement” means with respect to any Person, any obligations of such person in respect of treasury management arrangements including any of the following products, services or facilities: (a) demand deposit or operating account relationships or other cash management services including, without limitation, any services provided in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, zero balance accounts, including automated clearinghouse fund transfer services, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, automated clearinghouse transactions, return items, overdrafts, interstate depository network services, lockbox and stop payment services; and (b) treasury management line of credit, commercial card, merchant card services, purchase or debit cards, including, without limitation, stored value cards and non-card e-payables services.

 

Cash Management Obligations” means obligations with respect to any Cash Management Arrangement.

 

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

 

(1)          the direct or indirect sale, assignment, transfer, conveyance or other disposition (other than by means of amalgamation, merger or consolidation and other than operating leases arising as a result of a Drilling Contract or Internal Charter 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 Company and the Restricted Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d) of the Exchange Act);

 

(2)          the Company is liquidated or dissolved, or a plan relating to the liquidation or dissolution of the Company is adopted; or

 

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

 

Notwithstanding the foregoing, the following shall be deemed not to be a Change of Control,

 

(x) a transaction or series of related transactions as to which the Company delivers to the Trustee an opinion from an Independent Financial Advisor stating that following such transaction or transactions, the aggregate fair market value of the Collateral will equal at least 200% of the then outstanding aggregate Obligations under the Notes, and

 

(y) transactions pursuant to which assets of the Company and any of its Subsidiaries are exchanged with another strategic purchaser for Related Business Assets whose fair market value is reasonably equivalent to the exchanged assets as evidenced by an opinion from an Independent Financial Advisor delivered to the Trustee;

 

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provided that any transaction or series of transactions described in clause (x) or (y) above shall be deemed to be a Change of Control if (I) the Guarantees and the Collateral are materially and adversely affected by such transaction or series of transactions; or (II) in the case of an amalgamation, consolidation, merger or sale, or assignment, transfer, conveyance or otherwise disposition of all or substantially all of the properties or assets of the Company, such transaction does not comply with the provisions of Article 5.

 

Clearstream” means Clearstream Banking, Société Anonyme, or any successor securities clearing agency.

 

Collateral Agency Agreement” means that certain Collateral Agency Agreement, dated as of the Issue Date, among the Company, as a grantor, the Guarantors and other grantors from time to time party thereto, the Trustee, as the First Lien Representative of the Holders, and the other First Lien Representatives from time to time party thereto, and the First Lien Collateral Agent, as the same may be amended, supplemented, restated, renewed, replaced or otherwise modified from time to time in accordance with the terms thereof.

 

Collateral Documents” means, collectively, any Security Agreement, each Mortgage, the Vessel Security Agreement, the Intercreditor Agreement, the Collateral Agency Agreement, and each other instrument, document or agreement, including any assignment, security document or Pledge Agreement, creating Liens in favor of the First Lien Collateral Agent as required by this Indenture, any of the Collateral Documents or the Intercreditor Agreement, in each case, as the same may be in effect from time to time.

 

Collateral Grantor” means the Company and each Guarantor party hereto from time to time.

 

Collateral Vessels” has the meaning provided in Section 11.01(a).

 

Company” has the meaning provided in the recitals hereto.

 

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

 

(1)          provision for taxes based on income or profits of the Company 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)          Consolidated Interest Expense of the Company and the Restricted Subsidiaries for such period to the extent that such Consolidated Interest Expense was 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) of the Company 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

 

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(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.

 

Consolidated EBITDA” means, with respect to any specified Person for any period without duplication, the sum of Consolidated Net Income, plus in each case to the extent deducted in computing Consolidated Net Income for such period:

 

(1)          provision for taxes based on income, profits or capital of such Person and its Restricted Subsidiaries for such period; plus

 

(2)          the Consolidated Interest Expense of such Person and its Restricted Subsidiaries for such period; plus

 

(3)          any expenses, charges or other costs related to any equity offering, acquisition (including amounts paid in connection with the acquisition or retention of one or more individuals comprising part of a management team retained to manage the acquired business; provided that such payments are made at the time of such acquisition and are consistent with the customary practice in the industry at the time of such acquisition), Joint Venture, disposition, recapitalization, Indebtedness permitted to be incurred by this Indenture, or the refinancing of any other Indebtedness of such Person or any of its Restricted Subsidiaries (whether or not successful); plus

 

(4)          depreciation, amortization (including, without limitation, amortization of intangibles and deferred financing fees), and other non-cash expenses (including without limitation write-downs and impairment of property, plant, equipment and intangibles and other long-lived assets and the impact of purchase accounting on such Person and its Restricted Subsidiaries for such period), but excluding any non-cash items for which a future cash payment will be required and for which an accrual or reserve is required by GAAP to be made; plus

 

(5)          the minority interest expense consisting of subsidiary income attributable to minority equity interests of third parties in any non-wholly owned Subsidiary in such period or any prior period, except to the extent of dividends declared or paid on Capital Stock held by third parties; plus

 

(6)          any charge (or minus any income) attributable to a post-employment benefit scheme other than the current service costs attributable to the scheme; minus

 

(7)          non-cash items increasing such Consolidated Net Income for such period, other than (i) any items which represent the reversal in such period of any accrual of, or cash reserve for, anticipated charges in any prior period where such accrual or reserve is no longer required; or (ii) items related to percentage of completion accounting;

 

in each case, on a consolidated basis and determined in accordance with GAAP.

 

Consolidated Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio of (i) Consolidated Cash Flow for the Company’s most recently completed four quarter period for which internal financial statements are available to (ii) Consolidated Fixed Charges of the Company and the Restricted Subsidiaries for such period, subject to the Calculation Principles.

 

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Consolidated Fixed Charges” 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, and

 

(2)          all Capital Expenditures (if a positive number) made by such Person and its Restricted Subsidiaries during such period.

 

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 (including PIK interest), the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Indebtedness, 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 interest rate 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 Restricted Subsidiaries that was capitalized during such period; and

 

(3)          all dividends, whether paid or accrued and whether or not in cash, in respect of any Preferred Stock of any Restricted Subsidiary or any Disqualified Stock of the Company or any Restricted Subsidiary, other than (x) dividends payable solely in Equity Interests (other than Disqualified Stock) and (y) dividends payable to the Company or any Restricted Subsidiary.

 

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 wholly owned Restricted Subsidiary or that is accounted for by the equity method of accounting will 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 of the specified Person during such period;

 

(2)          [Reserved]

 

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

 

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(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 transaction gain (or loss) in relation to any acquisition that is consummated after the Issue Date will be excluded;

 

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

 

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

 

Consolidated Secured Leverage Ratio” means, as of any date of determination, the ratio of (i) the aggregate amount of Consolidated Total Indebtedness of the Company and its Restricted Subsidiaries as of such date (determined on a combined, consolidated basis in accordance with GAAP) that is secured by a Lien to (ii) Consolidated EBITDA of the Company for the most recently completed four quarter period for which internal financial statements of the Company are available as of such date, subject to the Calculation Principles.

 

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) consisting of Capitalized Lease Obligations and Indebtedness for borrowed money of such Person and its Restricted Subsidiaries outstanding on such date, 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.

 

Consolidated Total Leverage Ratio” means, as of any date of determination, the ratio of (i) the aggregate amount of Consolidated Total Indebtedness of the Company and its Restricted Subsidiaries as of such date (determined on a combined, consolidated basis in accordance with GAAP) to (ii) Consolidated EBITDA of the Company for the most recently completed four quarter period for which internal financial statements of the Company are available as of such date, subject to the Calculation Principles.

 

Corporate Trust Office of the Trustee” means the office of the Trustee in the United States at which at any time its corporate trust business shall be administered, which office at the date hereof is located at 500 Delaware Avenue, Wilmington, Delaware, 19801, Attention: Corporate Trust Administration , or such other address in the United States as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office in the United States of any successor Trustee (or such other address as a successor Trustee may designate from time to time by notice to the Holders and the Company).

 

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Custodian” means any receiver, trustee, assignee, liquidator, provisional liquidator, provisional supervisor, administrator, compulsory manager, administrative receiver, 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.

 

Depository” has the meaning provided in the Appendix.

 

Discretionary Guarantor” means each Immaterial Subsidiary of the Company, if any, that elects to provide a Guarantee.

 

Disposition” means the sale, transfer, license, lease, assignment, conveyance, exchange, alienation or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a division or otherwise) of any property by any Person (including any Sale-Leaseback Transaction) and any issuance of Capital Stock by a direct Subsidiary of such Person), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith. The terms “Disposal”, “Dispose” and “Disposed of” have the correlative meaning thereto.

 

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 the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable (in each case other than in exchange for or conversion into Capital Stock that is not Disqualified Stock), pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder of the 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 the Capital Stock have the right to require the Company 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 Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Indenture will be the maximum amount that the Company 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 by the Company, 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 “Currency Rates” section of the Financial Times 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 Company) on the date of such determination. Except as expressly provided otherwise, whenever it is necessary to determine whether the Company or any of the Restricted Subsidiaries has complied with any covenant or other provision in this Indenture 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.

 

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Drilling Contract” means any drilling contract in respect of any Vessel or other contract for the use or hire of any Vessel, including charters, bareboat charters, sub-charters, pool agreements, leases and other contracts of employment (except Internal Charters).

 

DS-13” means the vessel, expected to be named “ATWOOD ARCHER”, which as of the date hereof is under construction pursuant to that certain Contract for the Construction and Sale of Drillship dated September 2012 between Alpha Admiral Company and Daewoo Shipbuilding & Marine Engineering Co., Ltd.

 

DS-14” means the vessel, expected to be name “ATWOOD ADMIRAL”, which as of the date hereof is under construction pursuant to that certain Contract for the Construction and Sale of Drillship dated June 24, 2013 between Alpha Admiral Company and Daewoo Shipbuilding & Marine Engineering Co., Ltd.

 

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 Company, or any parent thereof, made for cash on a primary basis by the Company, or any parent thereof, after the Issue Date, other than (1) public offerings with respect to the Company’s, or any parent thereof, common stock registered on Form S-8 and (2) issuances to any Subsidiary of the Company, or any parent thereof.

 

Euroclear” means the Euroclear System or any successor securities clearing agency.

 

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

 

Excluded Accounts” means (a) deposit accounts specially and exclusively used in the ordinary course of business for payroll, payroll taxes and other employee wage and benefit payments (or the equivalent thereof in non-U.S. jurisdictions) to or for the benefit of the Company and any of its Subsidiaries’ salaried employees, which accounts are funded only in the ordinary course of business, (b) pension fund accounts, 401(k) accounts and trust accounts (or the equivalent thereof in non-U.S. jurisdictions), (c) withholding tax and other tax accounts (including sales tax accounts), fiduciary accounts, trust accounts, escrow accounts, and other accounts, in each case, in which the Company or any Subsidiary holds funds on behalf of any third party, (d) accounts (which may be subject to an account control agreement (or equivalent)) that hold cash collateral to secure letters of credit issued in connection with regulatory, tax or customs liabilities or contract performance, and (e) deposit accounts subject to a deposit account control agreement (or equivalent) pursuant to a cash collateralized letter of credit facility that is permitted under this Indenture; provided that the aggregate amount of cash held in all deposit accounts referred to in this clause (e) shall at no time exceed $25 million.

 

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Excluded Property” means:

 

(1)          the ARO JV Related Assets if and to the extent any restrictions on assignments and/or the creation of Liens with respect thereto remain outstanding;

 

(2)          to the extent that the Company is not able, using its commercially reasonable efforts, to obtain any consent necessary to grant the First Lien Collateral Agent a Lien on the same, the Other JV Related Assets;

 

(3)          any motor vehicles and other assets (other than, for the avoidance of doubt, Vessels and any associated equipment) subject to certificates of title;

 

(4)          rental equipment the title to which is held by a third party (but, for the avoidance of doubt, rights in respect of or arising in connection with any rental equipment agreement for such rental equipment that does not constitute Excluded Property under another clause of this definition shall not constitute Excluded Property);

 

(5)          all commercial tort claims equal to or less than $7,500,000;

 

(6)          any accounts, contracts, licenses or other general intangibles, or any permits, instruments, promissory notes or chattel paper, if and to the extent such account, contract, license, general intangible, permit, instrument, promissory note or chattel paper contains restrictions on assignments and/or the creation of Liens, or under which such an assignment or Lien would cause a default to occur under, or a termination pursuant to the terms of, such account, contract, license, general intangible, permit, instrument, promissory note or chattel paper (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of Article 9 of the Uniform Commercial Code of any relevant jurisdiction or any other applicable law or principles of equity); provided that (i) immediately upon the ineffectiveness, invalidity, lapse or termination of any such provisions, such accounts, contracts, licenses, general intangibles, permits, instruments, promissory notes or chattel paper, as applicable, shall no longer constitute Excluded Property, and (ii) the assignment of the proceeds of such accounts, contracts, licenses, general intangibles, permits, instruments, promissory notes or chattel paper and receivables thereof is expressly deemed effective under the UCC (or similar provisions under applicable foreign law) notwithstanding any prohibition or restriction referred to above);

 

(7)          any governmental licenses or state or local franchises, charters and authorizations, to the extent a security interest in any such license, franchise, charter or authorization is prohibited or restricted thereby after giving effect to the applicable anti-assignment provisions of the UCC (or similar provisions under applicable foreign law), other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the UCC (or similar provisions under applicable foreign law) notwithstanding such prohibition or restriction;

 

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(8)          any particular asset, if the pledge thereof or the security interest therein is prohibited by applicable law (including the requirement to obtain the consent of any governmental authority or third party (other than a Collateral Grantor) to the extent such consent has not been obtained after giving effect to the applicable anti-assignment provisions of the UCC (or similar provisions under applicable foreign law), other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the UCC (or similar provisions under applicable foreign law) notwithstanding such prohibition or restriction);

 

(9)          (i) Equity Interests in Restricted Subsidiaries that are subject to Liens that secure only Indebtedness (including Permitted Refinancing Indebtedness in respect thereof) Incurred pursuant to clause (19)(i) of Section 4.09(b) and (ii) other property and assets owned by such Restricted Subsidiaries that are used in the operation, maintenance or repair of assets acquired with the proceeds of such Indebtedness, or which are incidental thereto; provided that such Restricted Subsidiaries do not own any assets that are not Excluded Property (including, for the avoidance of doubt, Excluded Property referred to in this clause (ii));

 

(10)        margin stock;

 

(11)        any lease, license or agreement or any property subject to a purchase money security interest or similar arrangement, in each case entered into in accordance with or otherwise permitted under this Indenture and to the extent that a grant of a security interest therein would violate or invalidate such lease, license or agreement or purchase money arrangement or create a right of termination in favor of any other party thereto after giving effect to the applicable anti-assignment provisions of the UCC (or similar provisions under applicable foreign law), other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the UCC (or similar provisions under applicable foreign law) notwithstanding such violation or invalidation; provided that immediately upon the ineffectiveness, invalidity, lapse or termination of any relevant provisions, such lease, license, agreement or property, as applicable, shall no longer constitute Excluded Property;

 

(12)        any assets (other than Vessels) to the extent a security interest in such assets would result in material adverse tax consequences to the Company or any of its direct or indirect Subsidiaries, as reasonably determined by the Company;

 

(13)        letter of credit rights, except to the extent constituting a supporting obligation for other Collateral as to which perfection of the security interest in such other Collateral may be accomplished by the filing of a UCC financing statement (it being understood that no actions shall be required to perfect a security interest in letter of credit rights, other than the filing of a UCC financing statement);

 

(14)        any intent-to-use trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto, to the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable federal law;

 

(15)        any Excluded Accounts and any funds and other property held in or maintained in any such accounts;

 

(16)        any (A) leasehold real property and (B) any fee simple real property (owned in fee) with a Fair Market Value equal to or less than $10,000,000;

 

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(17)        any other assets mutually agreed by the Company and the First Lien Collateral Agent;

 

(18)        Excluded Vessels; and

 

(19)        any and all proceeds of any of the Excluded Property to the extent constituting Excluded Property described in clauses (1) through (18) above, but expressly excluding any and all proceeds of any of the Excluded Property that are not themselves Excluded Property.

 

Excluded Subsidiary” means:

 

(a)          any Subsidiary with respect to which, and only for so long as, the provision of a Guarantee of the Obligations by such Subsidiary would be prohibited or restricted by: (i) any governmental authority with authority over such Subsidiary, (ii) applicable law or regulation or analogous restriction, including general statutory limitations, “thin capitalization” rules, fraudulent preference, fraudulent conveyance, illegality, criminal liability, personal liability of any officer or directors (or equivalent) and analogous principles that would restrict a Restricted Subsidiary from providing a Guarantee, or such Subsidiary’s Guarantee would result in substantial risk to the officers or directors (or equivalent) of such Subsidiary of civil or criminal liability, or (iii) contractual restrictions not entered into in contemplation of such Subsidiary providing a Guarantee (and not entered into in contemplation of, or following entry of, this Indenture); provided that the Company or applicable Subsidiary shall use its commercially reasonable efforts to obtain any relevant governmental consent or other authority that would permit such Subsidiary to become a Guarantor, to mitigate any risk of liability in connection therewith or to lift any such contractual restriction;

 

(b) (i) any non-wholly owned Subsidiary that is a Joint Venture (provided that no Subsidiary that is wholly owned at any time shall be or be deemed to be an “Excluded Subsidiary” pursuant to this clause (b)(i) solely because a portion (but not all) of the Capital Stock in such Subsidiary is sold or otherwise transferred to any Person that is not the Company or a Guarantor, and, notwithstanding such sale or other transfer of a portion (but not all) of the Capital Stock in such Subsidiary, such Subsidiary shall remain a Guarantor to the extent it does not otherwise constitute an Excluded Subsidiary); (ii) any Unrestricted Subsidiary; and (iii) any Immaterial Subsidiary;

 

(c) (i) any wholly owned Restricted Subsidiary acquired with pre-existing Indebtedness (or any Permitted Refinancing Indebtedness in respect thereof) (to the extent not created in contemplation of such acquisition), the terms of which prohibit the provision of a Guarantee of the Obligations by such Restricted Subsidiary, and (ii) any wholly owned Restricted Subsidiary that has incurred Indebtedness (or any Permitted Refinancing Indebtedness in respect thereof) permitted by this Indenture in order to finance the acquisition of a Vessel, directly or indirectly, the terms of which prohibit the provision of a Guarantee of the Obligations by such Restricted Subsidiary; in each case of clause (i) and (ii) only for so long as such Indebtedness (or any Permitted Refinancing Indebtedness in respect thereof) remains outstanding; and

 

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(d)          (i) the ARO JV Shareholder and (ii) any Restricted Subsidiary that is the direct owner of an interest in any Joint Venture if, notwithstanding its use of commercially reasonable efforts to obtain the same, such Restricted Subsidiary has not obtained any consent necessary to provide a Guarantee; provided that, in each case, the direct parent of the ARO JV Shareholder or any such Restricted Subsidiary that is the direct owner of an interest in a Joint Venture (so long as such Restricted Subsidiary is not otherwise excluded pursuant to the terms of clause (a) through (c) of this definition) provides a Guarantee.

 

Excluded Vessels” means:

 

(a) the DS-13 and the DS-14 (in each case only until the relevant Vessel is delivered to the Company or any of its Restricted Subsidiaries, unless such Vessel constitutes an Excluded Vessel at the time of such delivery pursuant to a different clause of this definition);

 

(b) the ENSCO DS-10 (IMO No. 9698666), ENSCO 110 (IMO No. 9692404), Rowan Stavanger (IMO No. 8769793) and Rowan Norway (IMO No. 8770077) (in each case, only for so long as such Vessel is subject to an existing (or the modification or extension of an existing) Drilling Contract that prohibits encumbrances on such Vessel);

 

(c) up to two Other Vessels to be identified for the purposes of 20K Contracts (in each case, only for so long as such Other Vessels are subject to an existing (or the modification or extension of an existing) Drilling Contract or preliminary bid or award agreement that prohibits encumbrances on such Other Vessels and the Company is not able, using its commercially reasonable efforts, to obtain the consent of its counterparty to such Drilling Contract or agreement to the pledge of such Other Vessels to secure the First Lien Obligations;

 

(d) each Vessel that is purchased, acquired or constructed with the proceeds of Indebtedness (including Permitted Refinancing Indebtedness in respect thereof) permitted under this Indenture, and pledged in accordance with this Indenture to secure such Indebtedness, if and so long as such Indebtedness prohibits the pledge of the Vessel to secure the First Lien Obligations;

 

(e) no more than two Vessels, each of which is improved, repaired, renovated or upgraded with the proceeds of Indebtedness that has an initial aggregate principal amount of at least $10 million (including Permitted Refinancing Indebtedness in respect thereof), which Indebtedness is otherwise permitted under this Indenture, and pledged in accordance with this Indenture to secure such Indebtedness, if and so long as (i) such Indebtedness is outstanding, (ii) the Company is not able, using its commercially reasonable efforts, to limit the Lien on such Vessels to the relevant improvements, repairs, renovations and upgrades, and (iii) the lenders of such Indebtedness have required the release of the Lien of the First Lien Collateral Agent as a condition for providing such financing and the Company is not able, using its commercially reasonable efforts, to obtain the consent of such lenders to such Lien of the First Lien Collateral Agent becoming a second lien on the relevant Vessel;

 

(f) Other Vessels not required to be subject to a Vessel Mortgage pursuant to Section 11.01(b) as certified by the Company in an Officers’ Certificate delivered to the Trustee and the First Lien Collateral Agent;

 

(g) any Other Vessel contributed or otherwise transferred to the Unrestricted Floater Subsidiary pursuant to the Floater Restructuring Transaction or clause (18) of the definition of Permitted Investments;

 

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(h) any Vessel contributed to a Joint Venture pursuant to clause (13) of the definition of Permitted Investments; and

 

(i) any Other Vessel that is subject to a Drilling Contract, provided that (i) the Drilling Contract is entered into in the ordinary course and consistent with past practice, (ii) such counterparty has required the release of the Lien of the First Lien Collateral Agent as a condition for entering into the Drilling Contract and the Company is not able, using its commercially reasonable efforts, to obtain the consent of such counterparty to the pledge of such Other Vessel to secure the First Lien Obligations, and (iii) the Board has approved such Drilling Contract and the release of such Lien.

 

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 a Financial Officer of the Company, or, solely with respect to such values in excess of $20 million, the Board of Directors of the Company (unless otherwise provided in this Indenture), and in all cases where relevant, appropriately discounting the value of any idle Vessel based on the length and nature of its inactivity.

 

Financial Officer” means, with respect to any Person, the chief executive officer, chief financial officer, chief accounting officer or treasurer of such Person.

 

“First Lien” means a Lien granted by the Company or any other Guarantor in favor of the First Lien Collateral Agent, at any time, upon any property of the Company or such other Guarantor to secure First Lien Obligations.

 

First Lien Cash Management Obligations” means Cash Management Obligations owed to any provider or arranger of, or agent with respect to, any First Lien Debt to the extent secured by First Liens.

 

First Lien Collateral Agent” means Wilmington Savings Fund Society, FSB, in its capacity as collateral agent and/or security trustee under this Indenture and the Collateral Documents, and its successors and permitted assigns in such capacity.

 

First Lien Debt” means (a) the Notes issued on the date of this Indenture and any PIK Notes and the related Guarantees thereof and (b) any other Indebtedness incurred under clause (3)(a) of Section 4.09(b) secured by a Lien on Collateral that is pari passu with the Liens securing the Notes and that is permitted to be incurred and so secured under the Note Documents (including any Additional Notes); provided that:

 

(1)          on or prior to the date of incurrence of such Indebtedness by the Company or any Guarantor, such Indebtedness (other than the Notes (including any Additional Notes)) is designated by the Company, in an Officers’ Certificate delivered to each First Lien Representative and the First Lien Collateral Agent, as “First Lien Debt” for the purposes of the First Lien Documents, and

 

(2)          a First Lien Representative is designated with respect to such Indebtedness (other than the Notes (including any Additional Notes)) and executes and delivers to the First Lien Collateral Agent (i) an Additional Secured Debt Designation on behalf of itself and all holders of such Indebtedness and (ii) a joinder to the Collateral Agency Agreement on behalf of itself and all holders of such Indebtedness.

 

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First Lien Documents” means the Note Documents and any additional indenture, credit agreement or other agreement pursuant to which any other First Lien Debt is incurred and secured in accordance with the terms of each applicable First Lien Document and the Collateral Documents related thereto.

 

First Lien Hedging Obligations” means Hedging Obligations owed to any provider or arranger of, or agent with respect to, any First Lien Debt to the extent secured by First Liens.

 

First Lien Obligations” means all First Lien Debt and all other Obligations in respect thereof (including Notes Obligations, First Lien Hedging Obligations and First Lien Cash Management Obligations).

 

First Lien Representative” means (i) in the case of the Notes, the Trustee, and (ii) in the case of any other First Lien Obligations, the trustee, administrative agent, collateral agent, security agent or similar agent that is named as the First Lien Representative in respect of such First Lien Obligations in the applicable joinder agreement to the Intercreditor Agreement (each, in the case of this clause (ii), together with its successors and assigns in such capacity, an “Additional First Lien Representative”).

 

Fitch” means Fitch Ratings Inc. and any successor to its rating agency business.

 

Foreign Deposit Account” means any account opened to (i) satisfy the requirement of any local law, statute, rule or regulation or the requirements of any contract or (ii) establish a subsidiary or a local branch office in any jurisdiction.

 

GAAP” means generally accepted accounting principles set forth in the Accounting Standards Codification of the Financial Accounting Standards Board (or successor codifications, opinions, pronouncements or statements thereto) in the United States, which are in effect from time to time.

 

Global Intercompany Note” means that certain Global Intercompany Note entered into by the Company and certain of its Subsidiaries and Joint Ventures as lenders and certain of its Subsidiaries and Joint Ventures as borrowers, pursuant to which each borrower agrees to repay any intercompany claims owed by it to the applicable lender(s), as the same may be amended, supplemented, restated, renewed, replaced or otherwise modified from time to time.

 

Global Note” has the meaning provided in the Appendix.

 

Governmental Authority” means the government of the United States 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 inter-governmental or supra-national bodies such as the European Union or the European Central Bank).

 

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Government Securities” means direct obligations of, or obligations guaranteed by, the United States of America and the payment for which the United States pledges its full faith and credit, including U.S. Treasury strips.

 

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 or other Obligations.

 

Guarantee” means a guarantee of the Notes Obligations granted pursuant to the provisions of this Indenture.

 

Guarantor” means each Required Guarantor and each Discretionary Guarantor. “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 designed to protect the Person or any of its Restricted Subsidiaries entering into the agreement against, or manage exposure to, fluctuations in interest rates, or to otherwise reduce the cost of borrowing of such Person or any of such Restricted Subsidiaries, with respect to Indebtedness Incurred;

 

(2)          foreign exchange contracts and currency protection agreements designed to protect the Person or any of its Restricted Subsidiaries entering into the agreement against, or manage exposure to, fluctuations in currency exchanges rates;

 

(3)          any commodity futures contract, commodity swap, commodity option, commodity forward sale or other similar agreement or arrangement designed to protect against, or manage exposure to, fluctuations in the price of commodities used by that Person or any of its Restricted Subsidiaries at the time; and

 

(4)          other agreements or arrangements designed to protect such Person or any of its Restricted Subsidiaries against, or manage exposure to, fluctuations in interest rates, commodity prices or currency exchange rates.

 

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

 

Immaterial Subsidiary” means any Restricted Subsidiary which, as of the last day of the most recent recently completed four quarter period for which internal financial statements are available, both (a) contributed less than the Applicable Materiality Percentage of Consolidated EBITDA of the Company for such period and (b) contributed less than the Applicable Materiality Percentage of the Total Assets as of the last day of such period; provided that as of such day, the combined (i) Consolidated EBITDA attributable to all Immaterial Subsidiaries for such four quarter period shall not exceed 3.0% of Consolidated EBITDA of the Company for such period and (ii) Total Assets of all Immaterial Subsidiaries shall not exceed 3.0% of the Total Assets as of the last day of such period, in each case, as determined in accordance with GAAP (each of Consolidated EBITDA and Total Assets to be determined after eliminating intercompany obligations); provided further that no Restricted Subsidiary shall be an Immaterial Subsidiary if such Restricted Subsidiary (1) owns and/or charters a Vessel, (2) has any direct or indirect Subsidiary that owns and/or charters a Vessel, (3) has any direct or indirect Subsidiary that owns Equity Interests in a Joint Venture that owns and/or charters a Vessel, (4) owns any Indebtedness for borrowed money of any owner and/or charterer of any Vessel, (5) is party to any Drilling Contract or is entitled to receive earnings thereunder, or (6) is integral to the operation or maintenance of one or more Vessels.

 

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Indebtedness” means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent:

 

(1)            in respect of borrowed money;

 

(2)           evidenced by bonds, notes, debentures or similar instruments;

 

(3)           representing reimbursement obligations 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 of such Person in respect of Sale and Lease-Back Transactions, if and to the extent any of the preceding items (other than letters of credit, Hedging Obligations and Attributable Indebtedness) 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.

 

Notwithstanding the foregoing, “Indebtedness” shall not include trade payables and accrued expenses (or intercompany reimbursement obligations in respect thereof) arising in the ordinary course of business, deferred taxes, obligations assumed or liabilities incurred under any Drilling Contract, Internal Charter, stacking agreements or other forms of service agreement in the ordinary course of business (e.g., bid bonds and performance guaranties), prepayments for property or services under any Drilling Contract, Internal Charter, stacking agreements or other forms of service agreement in the ordinary course of business or any indebtedness with respect to which cash or cash equivalents in an amount sufficient to repay in full the principal and accrued interest on such indebtedness has been escrowed with the trustee or other depository for the benefit of the holders in respect of such indebtedness but only to the extent the foregoing constitutes a complete defeasance of such indebtedness pursuant to the applicable agreement governing such indebtedness.

 

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Indenture” means this Indenture, as amended or supplemented from time to time.

 

Independent Financial Advisor” means 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, including in respect of determining Fair Market Value and the fairness of Affiliate Transactions.

 

Initial Notes” has the meaning provided in the recitals hereto.

 

Initial Subject Jurisdictions” means each of the United States of America (or any political subdivision thereof), the United Kingdom, Malta, the British Virgin Islands, the Cayman Islands, Gibraltar, Bermuda, Hong Kong, Mexico, Australia, Luxembourg and Switzerland.

 

Intercreditor Agreement” means an intercreditor agreement between the Trustee, the First Lien Collateral Agent, the Junior Lien Collateral Agent, the Company, the Guarantors and the other parties from time to time party thereto, which agreement shall be substantially in the form of Annex D, with modifications that are not material in any respect to the holders of any First Lien Debt or the First Lien Collateral Agent, to the extent necessary in order to conform to the specific circumstances of the Junior Debt, or in a form reasonably agreed to by the First Lien Collateral Agent, in each case as may be amended, restated, amended and restated, replaced, supplemented, or otherwise modified from time to time.

 

Interest Payment Date” has the meaning provided in Exhibit 1 to the Appendix.

 

Internal Charter” means any charter or other contract respecting the use or operations of any Vessel between any Restricted Subsidiary that is a Vessel owner (or an Internal Charterer of such Vessel) and any Internal Charterer.

 

Internal Charterer” means the Company or any Subsidiary that is not the owner of the relevant Vessel and that is a party to any Drilling Contract in respect of a Vessel.

 

Investment Grade Rating” means any two of the following: (i) a rating of “Baa1” or higher by Moody’s, (ii) a rating of “BBB+” or higher by S&P or (iii) a rating of “BBB+” or higher by Fitch; or the equivalent of such rating by such rating organization.

 

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), cash advances or capital contributions, 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 Company or any of the Restricted Subsidiaries sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Company’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in the last paragraph of Section 4.07. The acquisition by the Company or any of its Subsidiaries of a Person that holds an Investment in a third Person shall be deemed to be an Investment by the Company or such 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 the second-to-last paragraph of Section 4.07. Except as otherwise provided in this Indenture, the amount of an Investment shall 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 Company or any Restricted Subsidiary, (a) any damage to such property or asset that results in an insurance settlement with respect thereto on the basis of a total loss or a constructive or compromised total loss, or receives any proceeds of any insurance coverage placed through a captive insurer as a result of any such total loss or constructive or compromised total loss, the Fair Market Value of such property or asset, (b) the confiscation, condemnation, requisition, appropriation or similar taking of such property or asset by any government or instrumentality or agency thereof, including by deed in lieu of 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. An Involuntary Transfer shall be deemed to have occurred (i) in the event of an actual loss of a Vessel, at the time and on the date of such loss or if that is not known at noon Greenwich Mean Time on the date which such Vessel was last heard from, (ii) in the event of damage which results in a constructive or compromised or arranged total loss of a Vessel, at the time and on the date of the event giving rise to such damage, or (iii) in the case of an event referred to in clause (b) above, at the time and on the date on which such event is expressed to take effect by the Person making the same.

 

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

 

Jackup Rig” means any mobile offshore drilling unit, the legs of which can be lowered to the seabed from the hull or platform thereof.

 

Joint Venture” means (x) any bona fide operating joint venture that owns, operates and/or charters Vessels or (y) any joint venture established in accordance with local law or custom of the applicable jurisdiction of organization of such Joint Venture for the purposes of the Permitted Business, in each case with any Person that is not an Affiliate of the Company through which the business of the Company and its Restricted Subsidiaries is conducted, and in each case which (i) exists on the Issue Date (including each Person in which the Company owns, directly or indirectly, any Equity Interests as of the Issue Date that is not a wholly-owned Subsidiary) or (ii) is formed or created in the ordinary course of business, consistent with the Company’s past practice and for a legitimate business purpose; provided that commencement of operations by the Company in a jurisdiction where the Company previously did not operate shall not, by itself, be deemed to be outside of the ordinary course of business and not consistent with the Company’s past practice.

 

Junior Debt” means any Indebtedness of the Company or any Guarantor that is contractually subordinated in right of payment to the Notes or any Guarantee or that is unsecured or secured on a junior lien basis to the Notes or any Guarantee (excluding any intercompany Indebtedness between or among the Company and any of the Restricted Subsidiaries).

 

Junior Lien” means a Lien granted by the Company or any Guarantor in favor of the Junior Lien Collateral Agent, at any time, upon any Collateral to secure Junior Lien Obligations.

 

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Junior Lien Collateral Agent” means the collateral agent or agents or other representative or representatives of lenders or holders of Junior Lien Obligations designated pursuant to the terms of the Junior Lien Documents and the Intercreditor Agreement, in each case, together with its successors and assigns.

 

Junior Lien Debt” means Indebtedness secured by a Lien that is (x) junior in priority to First Lien Debt and (y) incurred pursuant to clause (3)(b) of Section 4.09(b), that is permitted to be incurred and so secured under the Note Documents; provided that:

 

(1)            on or before the date on which such Indebtedness is incurred by the Company or any Guarantor, the Company shall deliver to each First Lien Representative and Junior Lien Representative complete copies of each applicable Junior Lien Document (which shall provide that each secured party with respect to such Indebtedness shall be subject to and bound by the Intercreditor Agreement), along with an Officers’ Certificate identifying the obligations constituting Junior Lien Obligations;

 

(2)            on or before the date on which any such Indebtedness is incurred by the Company or any Guarantor, such Indebtedness is designated by the Company, in an Officers’ Certificate delivered to the Junior Lien Representative and Junior Lien Collateral Agent as “Junior Lien Debt,” and such Officers’ Certificate also certifies that such Indebtedness is permitted and with respect to any other requirements set forth in the Intercreditor Agreement; and

 

(3)            a Junior Lien Representative is designated with respect to such Indebtedness and executes and delivers an Additional Secured Debt Designation on behalf of itself and all holders of such Indebtedness.

 

Junior Lien Documents” means, collectively, any indenture, credit agreement or other agreement or instrument pursuant to which Junior Lien Debt is incurred and secured.

 

Junior Lien Obligations” means Junior Lien Debt and all other Obligations in respect thereof.

 

Junior Lien Representative” means, in the case of any series of Junior Lien Debt, the trustee, agent or representative of the holders of such series of Junior Lien Debt who is appointed as a representative of the Junior Lien Debt (for purposes related to the administration of the security documents) pursuant to the indenture, credit agreement or other agreement governing such series of Junior Lien Debt, in each case together with its successors in such capacity.

 

KSA Commercial Maritime Law” means Royal Decree no. M/33, dated December 12, 2018 Maritime Law, or any successor legislation thereto, as in effect from time to time in the Kingdom of Saudi Arabia.

 

Legal Requirement” means, as to any Person, any law, statute, ordinance, decree, award, requirement, order, writ, judgment, injunction, rule, regulation (or official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority which is binding on such Person.

 

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Letter of Quiet Enjoyment” means: (i) a letter of quiet enjoyment that includes provisions consistent with those provisions listed in Part 1 of Annex C, so long as the Company or the applicable Guarantor uses its commercially reasonable efforts to also include in such letter of quiet enjoyment the provisions consistent with those listed in Part 2 of Annex C, and otherwise does not include any material obligations or material restrictions on the First Lien Collateral Agent other than such obligations or restrictions contained in the provisions listed in Part 1 or Part 2 of Annex C, as certified by the Company in an Officers’ Certificate delivered to the First Lien Collateral Agent; or (ii) a letter of quiet enjoyment substantially in the form of any letter of quiet enjoyment, subordination and non-disturbance agreement or similar agreement in effect on the date hereof or approved in writing (including electronic mail) by the First Lien Collateral Agent in its capacity as the DIP agent under that certain Senior Secured Superpriority Debtor in Possession Credit Agreement, dated September 25, 2020, entered into by the First Lien Collateral Agent as the DIP Agent, Valaris plc, as lead borrower, certain other Subsidiaries of Valaris plc party thereto from time to time and certain lenders party thereto from time to time (the “DIP Credit Agreement”), as certified by the Company in an Officers’ Certificate delivered to the First Lien Collateral Agent; provided, that each such letter of quiet enjoyment, subordination and non-disturbance agreement or similar agreement referred to in this clause (ii) shall only be approved for use with the applicable counterparty for which it was approved under the DIP Credit Agreement.

 

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.

 

Limited Recourse Debt” means Indebtedness Incurred by a Restricted Subsidiary for the purpose of financing a portion of the purchase price of one or more Vessels, as and to the extent permitted pursuant to clause (19) of Section 4.09(b), which Indebtedness may be secured by Liens on such Vessels and on any other assets acquired with the proceeds of such Indebtedness pursuant to clause (28) of the definition of Permitted Liens, and the sole recourse of the holder of such Indebtedness shall be to such pledged Vessels and such other pledged assets, and such holder shall have no recourse to the borrower of such Indebtedness or to the Company or any other Restricted Subsidiary, or to any other of their respective assets.

 

Management Incentive Plan” means the 2021 Management Incentive Plan of the Company, as the same may be amended, supplemented or modified from time to time, together with any applicable award agreement issued thereunder.

 

Management Incentive Plan Award” means any award granted under the Management Incentive Plan to any current or former officer, director, employee or independent contractor of the Company or any Restricted Subsidiary.

 

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Material Adverse Effect” means any event or occurrence which could reasonably be expected to result in a material adverse effect on (a) the operations, business, assets or financial condition of the Company and the Guarantors taken as a whole; (b) the rights and remedies of the Trustee or any holder of any Note under any Note Document; or (c) on the legality, validity, binding effect or enforceability against any of the Company or a Guarantor of any Note Document to which it is a party.

 

Maturity Date” means April 30, 2028.

 

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

 

Mortgage” means each Vessel 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 any Collateral Grantor is granted to secure First Lien Obligations under any First Lien Document 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.

 

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 or any of the Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of the 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 Company or any Restricted Subsidiary in respect of any Asset Sale (including, without limitation, any cash or Cash Equivalents received as dividends, distributions or other returns 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 the Asset Sale, and taxes paid or payable as a result of the Asset Sale after taking into account any available tax credits or deductions and any tax-sharing arrangements, (2) amounts required to be applied to the repayment of Indebtedness secured by a Permitted Lien on the properties or assets that were the subject of such Asset Sale (which Permitted Lien is and is permitted to be senior to the Liens securing the Notes and the Guarantees or is on property or assets that do not constitute Collateral), or Indebtedness (other than Indebtedness that is subordinated in right of payment to the Notes or the Guarantees or that is secured by a Lien that is junior in priority to the Liens securing the Notes) which must by its terms, in order to obtain a necessary consent to such Asset Sale or by applicable law, be repaid out of the proceeds from such Asset Sale, and (3) any amounts to be set aside in any reserve established in accordance with GAAP or any amount placed in escrow, in either case for adjustment in respect of the sale price of such properties or assets, for indemnification obligations of the Company or any Restricted Subsidiaries in connection with such Asset Sale or for other liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiaries until such time as such reserve is reversed or such escrow arrangement is terminated, in which case Net Proceeds shall include only the amount of the reserve so reversed or the amount returned to the Company or the Restricted Subsidiaries from such escrow arrangement, as the case may be.

 

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Non-Recourse Debt” means Indebtedness:

 

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

 

(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 Company 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 governing documentation provides that the lenders will not have any recourse to the stock or assets of the Company or any of the Restricted Subsidiaries.

 

Note Documents” means this Indenture, the Notes, the Collateral Documents, the Guarantees and any agreement, instrument or other document evidencing or governing any Notes Obligations.

 

Notes” has the meaning provided in the recitals hereto.

 

Notes Custodian” has the meaning provided in the Appendix.

 

Notes Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Company or any Guarantor arising under this Indenture, the Notes, the Guarantees or the Collateral Documents (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 Company or any Guarantor of any proceeding in bankruptcy or insolvency law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

 

Obligations” means any principal, premium, if any, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization, whether or not a claim for post-filing interest is allowed or allowable in such proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees, and other liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereto.

 

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Officer” means, with respect to any Person, the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, the Controller, the Secretary, any Manager, any Director, any Managing Director, or any Senior Vice President, Executive Vice President or Vice President of such Person; provided that any Guarantor shall be permitted to authorize an Officer of the Company to act as its Officer (including its Financial Officer) regardless of whether such Officer holds one of the foregoing positions with such Guarantor.

 

Officers’ Certificate” means a certificate signed on behalf of any Person by two Officers and/or directors, one of whom must be a Financial Officer of such Person.

 

Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 12.04. The counsel may be an employee of, or counsel to, the Company or any Subsidiary of the Company.

 

Other JV Related Assets” means collectively, (i) the Equity Interests of any Joint Venture (other than ARO), owned, directly or indirectly, by the Company or its Subsidiaries, (ii) any loans, notes or other obligations of any such Joint Venture (other than ARO) to the Company or any of its Subsidiaries, (iii) all right, title and interest of the Company or any of its Subsidiaries in and to any joint venture, shareholder or similar agreement in respect of any such Joint Venture, (iv) the rights of the Company or any of its Subsidiaries under (x) any Drilling Contract or agreement to operate between the Company or any of its Subsidiaries and any such Joint Venture in respect of any Vessel owned by the Company or any of its Subsidiaries and (y) any agreement pursuant to which the Company or any of its Subsidiaries manages a Third Party Vessel.

 

Other Vessel” means any drilling rig, drillship, semisubmersible drilling unit, mobile offshore drilling unit or vessel, the primary purpose of which is the exploration and production drilling for crude oil or hydrocarbons, excluding any Jackup Rig.

 

Permitted Asset Swap” means the substantially concurrent purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and cash or Cash Equivalents between the Company or any of the Restricted Subsidiaries, on the one hand, and another Person, on the other hand; provided that (i) the aggregate amount of cash and Cash Equivalents received by the Company and the Restricted Subsidiaries in any such purchase and sale or exchange shall be no more than 10% of the Fair Market Value of the Related Business Assets sold or exchanged by the Company and the Restricted Subsidiaries, and (ii) the aggregate amount of cash and Cash Equivalents received by the Company and the Restricted Subsidiaries in all such purchases and sales or exchanges shall not exceed $50 million.

 

Permitted Business” means a business in which the Company and the Restricted Subsidiaries were engaged on the Issue Date, and any business reasonably related or complementary thereto.

 

Permitted Investments” means:

 

(1)          any Investment in the Company or in any Guarantor;

 

(2)          any Investment in cash or Cash Equivalents;

 

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(3)          any Investment by the Company or any Guarantor in a Person, if as a result of such Investment:

 

(a)          such Person becomes a Guarantor; 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 Company or a Guarantor;

 

(4)          any Investment made as a result of the receipt of non-cash consideration from (a) an Asset Sale, whether in a single transaction or a series of related transactions, of property or assets of the Company or any of the Restricted Subsidiaries, that was made pursuant to and in compliance with Section 4.10 or (b) a 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 Company;

 

(6)          any Investments received in compromise or resolution of obligations of trade creditors or customers and any other settlement of amounts due that were incurred in the ordinary course of business of the Company 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 clause (6) of Section 4.09(b);

 

(8)          any guarantee of Indebtedness or other obligations of the Company or any Guarantor 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 Company or any Restricted Subsidiary of another Person in compliance with this Indenture, 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 clause (5) of Section 4.11(b);

 

(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 Company or any of the Restricted Subsidiaries;

 

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(13)            Investments in any Joint Ventures (but not in any Unrestricted Subsidiary) of:

 

(x) Vessels and direct or indirect Equity Interests of Vessel owners, with an aggregate value not to exceed (A) with respect to any Investment of any Jackup Rigs or Equity Interests of Jackup Rig owners, 20% of the combined book value of all Jackup Rigs (calculated on the basis of the book value as of the Issue Date, with respect to any Jackup Rigs owned by the Company and any of its Subsidiaries as of the Issue Date, and as of the date of its acquisition, with respect to any Jackup Rig acquired after the Issue Date) owned by the Company and its wholly-owned Subsidiaries as of the date of any such Investment, and (B) with respect to any Investment of any Other Vessels or Equity Interests of Other Vessel owners, 20% of the combined book value of all Other Vessels (calculated on the basis of the book value as of the Issue Date, with respect to any Other Vessels owned by the Company and any of its Subsidiaries as of the Issue Date, and as of the date of its acquisition, with respect to any Other Vessels acquired after the Issue Date) owned by the Company and its wholly-owned Subsidiaries on the date of any such Investment, but in each case excluding the book value of all Vessels that constitute Excluded Vessels as of such date;

 

(y) cash and Cash Equivalents, in an amount not to exceed $175 million at any time outstanding or, following the Floater Restructuring Transaction, $125 million (at any such time, calculated on a net basis taking into account prepayments or repayments of loans or advances, but not payments of interest, fees, costs, expenses or premium, in each case with respect to any intercompany Indebtedness, and dividends and distributions in the form of cash or Cash Equivalents); and

 

(z) any Vessels on Schedule A operating in the Kingdom of Saudi Arabia as of the Issue Date in addition to four other Vessels identified by the Company in an Officers’ Certificate delivered to the Trustee, in each case as and to the extent required pursuant to the KSA Commercial Maritime Law, but only to the extent that (i) the Company is not able, using its commercially reasonable efforts, to obtain an exemption from such law as to any such Vessel, and (ii) compliance with such law as to any such Vessel cannot be achieved by any other means that do not require the payment of material costs or expenses or the incurrence of material additional obligations, which are materially adverse to the Company and the Collateral, taken as whole, as compared with transfer of any such Vessel to a Joint Venture, including through the use of a bareboat charter of such Vessel to a joint venture controlled or majority-owned by a Saudi national; and provided that in the event of any such Investment of any such Vessels, (A) any cash and Cash Equivalents received by the Company or any of its Subsidiaries in respect thereof shall be treated as Net Proceeds and shall be subject to the provisions of Section 4.10(c), and (B) for the avoidance of doubt, any Equity Interests or Indebtedness received by the Company or any of its Subsidiaries in respect thereof shall be deemed to constitute Other JV Related Assets;

 

provided that the Company or the applicable Restricted Subsidiary shall use its commercially reasonable efforts to ensure that all Other JV Related Assets related to the applicable Joint Venture are included in the Collateral;

 

(14)            Investments in the ordinary course of business and consistent with past practice (x) in Restricted Subsidiaries, consisting of inventory, spare parts and equipment, and cash or Cash Equivalents to fund operating and administrative expenses (including taxes), maintenance capital expenditures and intercompany interest of the transferee Restricted Subsidiary, and (y) in Joint Ventures, consisting of spare parts and equipment; provided that in each case, and notwithstanding anything in the Agreed Security Principles to the contrary, except for Investments of inventory and assets with a book value equal to or less than $100,000, such Investments shall be subject to the Global Intercompany Note, which shall be deemed to be an Instrument as defined under the U.S. Security Agreement, provided that no such Investments may be made pursuant to this clause (14) unless they are subject to the Global Intercompany Note;

 

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(15)            Investments of cash and Cash Equivalents (i) in any Joint Venture in existence as of the Issue Date, to the extent required by the applicable joint venture agreement (as such joint venture agreement exists on the Issue Date); (ii) in any other Joint Venture described in clause (x) of the definition thereof (other than a Joint Venture that is the owner of a Silo Vessel (or a Vessel that would be a Silo Vessel if it were owned by a Subsidiary), in an amount not to exceed $5 million at any time outstanding in respect of such Investments in such other Joint Venture, to the extent required by the applicable joint venture agreement; or (iii) in any other Joint Venture described in clause (y) of the definition thereof, in an amount not to exceed $100,000 at any time outstanding in respect of such Investments in such other Joint Venture, to the extent required by the applicable joint venture agreement;

 

(16)            Investments of cash and Cash Equivalents in Restricted Subsidiaries that are not Guarantors in an aggregate amount not to exceed $1 million at any time outstanding;

 

(17)            the Investments contemplated by Sections 11.13(c) and (d) as and to the extent permitted therein;

 

(18)            following the consummation of the Floater Restructuring Transaction in accordance with Section 11.13, Investments by the Company or any of its Restricted Subsidiaries in the Unrestricted Floater Subsidiary of Other Vessels; provided that immediately after giving pro forma effect to any such Investment, the Adjusted Interest Coverage Ratio for the Company and its Restricted Subsidiaries would be equal to or greater than 2.0 to 1.0;

 

(19)            any repurchase, redemption, defeasance or other acquisition or retirement for value of the Notes; and

 

(20)            any Investment (excluding Investment of any Vessel and any Equity Interest or Indebtedness of any owner of any Vessel) by the Company or a Restricted Subsidiary in an amount not to exceed the greater of (x) $100 million (or, following the Floater Restructuring Transaction, $50 million) and (y) 4% of Total Assets, at any time outstanding;

 

provided that notwithstanding anything to the contrary contained in this Indenture, neither the Company nor any of its Restricted Subsidiaries may make any Investment of any (v) accounts receivable, (w) promissory notes or other intercompany Indebtedness, (x) ARO JV Related Assets, (y) Other JV Related Assets, or (z) any Equity Interest or Indebtedness of any owner of any of such assets, in or to any Unrestricted Subsidiary, Joint Venture or any other non-wholly owned Subsidiary.

 

Permitted Jurisdiction” means any of England, Wales, Scotland, Jersey, Bermuda, Cayman Islands, Ireland, Switzerland, Singapore, United States, Netherlands, Luxembourg and Denmark.

 

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Permitted Liens” means:

 

(1)            Liens on assets of the Company or the Guarantors securing the Notes (excluding Additional Notes issued in accordance with this Indenture) and the Guarantees thereof, and any other First Lien Debt;

 

(2)            Liens in favor of the Company or any Guarantor;

 

(3)            Liens on property of a Person existing at the time such Person is merged with or into or amalgamated or consolidated with the Company or any Restricted Subsidiary; provided that such Liens were in existence prior to 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 Company or any Restricted Subsidiary;

 

(4)            Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Company or any Restricted Subsidiary, provided that such acquisition is made in compliance with this Indenture; and provided further that such Liens were in existence prior to such acquisition and were not incurred in contemplation thereof, and do not extend to any other property (including Capital Stock);

 

(5)            Liens to secure the performance of statutory obligations, workers’ compensation claims, unemployment insurance, old age pensions, social security retirement benefits, other forms of governmental insurance, self-insurance obligations, surety bonds, importation bonds or other obligations of a like nature incurred in the ordinary course of business;

 

(6)            Liens existing on the Issue Date (other than Liens referred to in clause (1) of this definition);

 

(7)            Liens for taxes, assessments or governmental charges or claims (i) that are not yet delinquent or (ii) that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which any reserve or other appropriate provision if required by GAAP has been made therefor;

 

(8)            Liens imposed by law, such as suppliers’, carriers’, warehousemen’s, landlords’ and mechanics’ Liens, in each case, incurred in the ordinary course of business, for amounts (i) not more than 45 days past due or (ii) that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which any reserve or other appropriate provision as required in conformity with GAAP has been made therefor;

 

(9)            minor defects, irregularities and deficiencies in title to, and 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, including with respect to the physical placement and location of pipelines, 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 the applicable Person;

 

(10)          Liens on the Collateral securing Junior Lien Debt;

 

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(11)          Liens to secure Indebtedness permitted to be Incurred under this Indenture to refinance any Indebtedness secured by Liens permitted to exist pursuant to clause (3), (4), (6), (10) or this clause (11) of this definition (or Liens that otherwise replace Liens referred to in such clauses); provided that;

 

(a)            the new Lien is limited to all or part of the same property and assets covered by the initial Lien (plus improvements and accessions to such property, or proceeds or distributions thereof) or any 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);

 

(b)            the Indebtedness or other obligation 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 or obligation and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;

 

(c)            if the initial Lien secured Indebtedness that is subordinated in right of payment to the Notes or a Guarantee, then the Indebtedness secured by the new Lien shall be so subordinated on terms at least as favorable to the Holders; and

 

(d)            the new Liens securing the refinancing Indebtedness have a Lien priority equal to or junior to the Liens securing the Refinanced Indebtedness.

 

(12)          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, and prejudgment liens created by or existing as a result of any litigation or legal proceeding, in each case that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and for which any reserve or other appropriate provision as required in conformity with GAAP has been made therefor;

 

(13)          Liens securing Cash Management Obligations owing to a bank and rights of setoff in favor of a bank, imposed by law or granted in the ordinary course of business on deposit accounts maintained with such bank and cash and Cash Equivalents in such accounts;

 

(14)            Liens securing Hedging Obligations entered into in the ordinary course of business and not for speculative purposes;

 

(15)          Liens to secure liabilities in respect of reimbursement or indemnification obligations of insurance carriers providing property, casualty or liability insurance or any other insurance required to be maintained pursuant to any Securities Document to the Company or any Restricted Subsidiary;

 

(16)          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 Company and the Restricted Subsidiaries in the ordinary course of business;

 

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(17)            Liens incurred in the ordinary course of business to secure performance of tenders, bids, contracts, performance guarantees, leases, letters of credit that are issued in connection with regulatory, tax or customs liabilities or contract performance, statutory obligations, performance bonds, bid bonds, customs bonds and similar obligations entered into in the ordinary course of business, including without limitation any rights of offset or liquidated damages, penalties, or other fees that may be contractually agreed to in conjunction with any tender, bid, or contract entered into by the Company or its Subsidiaries in the ordinary course of business;

 

(18)            any supersedeas bonds, appeal bonds, return-of-money or payment bonds and similar obligations related to judgments or litigation; provided that the aggregate amount of such bonds and obligations (other than such bonds and obligations in respect of tax assessments or liabilities) does not exceed $75 million at any time, and provided further that such bond or obligation secured is not for Indebtedness for borrowed money and is not overdue, or if overdue, is being contested in good faith by appropriate proceedings and reserves in conformity with GAAP have been provided therefor;

 

(19)            Permitted Rig Liens;

 

(20)            legal or equitable Liens deemed to exist by reason of negative pledge covenants and other covenants or undertakings of a like nature;

 

(21)            Liens encumbering inventory, work-in-process and related property in favor of customers or suppliers securing obligations and other liabilities to such customers or suppliers to the extent such Liens are granted in the ordinary course of business and are consistent with past business practices;

 

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

 

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

 

(24)            (a) 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 4.07) or (b) Liens arising under this Indenture in favor of the Trustee for its own benefit and for the benefit of the First Lien Collateral Agent 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;

 

(25)            Liens securing Indebtedness (including Permitted Refinancing Indebtedness) Incurred pursuant to clause (13) or clause (20) of Section 4.09(b); provided that such Liens extend only to (i) the assets purchased with the proceeds of such Indebtedness, (ii) Excluded Vessels described in clause (e) of the definition thereof whose renovations, repairs, improvements or updates are financed with the proceeds of such Indebtedness, or (iii) the renovations, repairs, improvements and upgrades financed with the proceeds of such Indebtedness;

 

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(26)            Liens Incurred by the Company or any Restricted Subsidiary with respect to obligations that do not exceed the greater of (x) $150 million (or, following the Floater Restructuring Transaction, $100 million) and (y) 6% of Total Assets, at any one time outstanding; provided that any such Liens upon Collateral shall be Junior Liens;

 

(27)            Liens securing Indebtedness Incurred pursuant to clauses (14) and (15) of Section 4.09(b); and

 

(28)            Liens on assets acquired with the proceeds of Indebtedness (including Permitted Refinancing Indebtedness in respect thereof) Incurred pursuant to clause (19) of Section 4.09(b) and, with respect to Indebtedness described in clause (19)(i) of Section 4.09(b), (i) Liens on the Equity Interests of the Restricted Subsidiary that directly owns such assets and (ii) Liens on other assets and property owned by any such Restricted Subsidiary that are used in the operation, maintenance or repair of such assets acquired with the proceeds of such Indebtedness, or which are incidental thereto, which Liens, in each case, secure only such Indebtedness; provided that such Restricted Subsidiary does not hold any assets that are not Excluded Property or property of the type referred to in clause (ii) above.

 

For purposes of determining compliance with this definition, (x) a Lien need not be Incurred solely by reference to one category of Permitted Liens described in this definition but may be Incurred under any combination of such categories (including in part under one such category and in part under any other such category), and (y) in the event that a Lien (or any portion thereof) meets the criteria of one or more of such categories of Permitted Liens, the Company shall, in its sole discretion, divide, classify or reclassify such Lien (or any portion thereof) in any manner that complies with this definition.

 

Permitted Prior Lien” has the meaning provided in the Collateral Agency Agreement.

 

Permitted Refinancing Indebtedness” means any Indebtedness of the Company 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 Company 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 of the Refinanced Indebtedness (or, if the Refinanced Debt is exchanged or acquired for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration thereof, such lesser amount) (plus all accrued and unpaid interest on the Refinanced Indebtedness and the amount of all cash fees and expenses, including premiums, reasonably 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 is no earlier than the date that is 91 days after the Maturity Date, the terms of such Permitted Refinancing Indebtedness shall not provide for any scheduled repayment, mandatory redemption or sinking fund obligation prior to the date that is 91 days after the Maturity Date, and the Weighted Average Life to Maturity of such Permitted Refinancing Indebtedness at the time of its issuance is equal to or greater than the Weighted Average Life to Maturity of the Refinanced Indebtedness;

 

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

 

(4)            the obligors with respect to such Permitted Refinancing Indebtedness do not include any Persons that were not obligors of such Refinanced Debt; and

 

(5)            in the case of Permitted Refinancing Indebtedness in respect of secured indebtedness, the Liens securing such Permitted Refinancing Indebtedness (a) have a Lien priority equal to or junior to the Liens securing the Refinanced Indebtedness and (b) do not extend to any assets other than assets that secured the Refinanced Indebtedness or any after-acquired assets that, pursuant to any after-acquired property clauses in written agreements pursuant to which the original Lien arose, are required to be pledged to secure the Refinanced Indebtedness (plus improvements and accessions to such property, or proceeds or distributions thereof in accordance with the terms of the Refinanced Indebtedness).

 

Permitted Rig Liens” means, at any time with respect to a Vessel:

 

(a) Liens for crews’ wages (including the wages of the master of the Vessel that are discharged in the ordinary course of business and have accrued for not more than sixty (60) days (or such longer period provided for under any First Lien Documents) unless any such Lien is being contested in good faith and by appropriate proceedings or other acts by the Company or relevant Restricted Subsidiary, and the Company or relevant Restricted Subsidiary shall have set aside on its books adequate reserves with respect to such Lien and so long as such deferment in payment shall not subject the Vessel to sale, forfeiture or loss;

 

(b) Liens for salvage (including contract salvage) or general average, and Liens for wages of stevedores employed by the owner of the Vessel, the master of the Vessel or a charterer or lessee of such Vessel, which in each case have accrued for not more than sixty (60) days (or such longer period provided for under any First Lien Documents), unless any such Lien is being contested in good faith and by appropriate proceedings or other acts by the Company or relevant Restricted Subsidiary, and the Company or relevant Restricted Subsidiary shall have set aside on its books adequate reserves with respect to such Lien and so long as such deferment in payment shall not subject the Vessel to sale, forfeiture or loss;

 

(c) shipyard Liens and other Liens arising by operation of law arising in the ordinary course of business in operating, maintaining, repairing, modifying, refurbishing, or rebuilding the Vessel (other than those referred to in clauses (a) and (b) above), including maritime Liens for necessaries, which in each case have accrued for not more than sixty (60) days (or such longer period provided for under any First Lien Documents), unless any such Lien is being contested in good faith and by appropriate proceedings or other acts by the Company or relevant Restricted Subsidiary, and the Company or relevant Restricted Subsidiary shall have set aside on its books adequate reserves with respect to such Lien and so long as such deferment in payment shall not subject the Vessel to sale, forfeiture, or loss;

 

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(d) Liens for damages arising from maritime torts which are unclaimed or are covered by insurance (subject to reasonable deductibles), or in respect of which a bond or other security has been posted on behalf of the Company or relevant Restricted Subsidiary with the appropriate court or other tribunal to prevent the arrest or secure the release of the Vessel from arrest, unless any such Lien is being contested in good faith and by appropriate proceedings or other acts by the Company or relevant Restricted Subsidiary, and the Company or relevant Restricted Subsidiary shall have set aside on its books adequate reserves with respect to such Lien, and so long as such deferment in payment shall not subject the Vessel to sale, forfeiture, or loss;

 

(e) Liens that, as indicated by the written admission of liability therefor by an insurance company, are covered by insurance (subject to reasonable deductibles); and

 

(f) Liens for Drilling Contracts or subcharters or subleases that are effective as of the Issue Date or are subordinate to the lien of any relevant Vessel Mortgage, and not otherwise prohibited under this Indenture.

 

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

 

PIK Interest” means interest payable by increasing the principal amount of the Notes or by issuing PIK Notes.

 

PIK Notes” means Notes issued in the form of PIK Interest.

 

Pledge Agreement” means each pledge agreement, share charge, share mortgage or similar instrument pursuant to which a Collateral Grantor grants to the First Lien Collateral Agent a Lien in Equity Interests in a Subsidiary directly owned by such Collateral Grantor, in each case, as amended, restated, supplemented or otherwise modified from time to time.

 

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.

 

Public Company” means any Person whose equity securities are listed on a national securities exchange or interdealer quotation system in the United States or on a Designated Offshore Securities Market (as defined in Rule 902(b) of Regulation S).

 

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

 

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Qualified Services Contract” means, as of any date of determination, with respect to any Vessel acquired by, or committed to be delivered to, the Company or any of the 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 Company, acting in good faith, designates as a “Qualified Services Contract” pursuant to a resolution of the Board of Directors of the Company, which contract or contracts:

 

(1)            are between the Company or one of the Restricted Subsidiaries, on the one hand, and a Person that is not an Affiliate of the Company, on the other hand;

 

(2)            provide for services to be performed by the Company or one or more of the Restricted Subsidiaries involving the use of such Vessel by the Company or one or more of the Restricted Subsidiaries, in either case for a minimum aggregate period of at least one year from (i) the date of determination or (ii) a future date that is no later than the date that is three months from the date of determination (the period during which such services are to be performed, the “Active Service Period”); and

 

(3)            provide for a fixed or minimum day rate or fixed rate for such Vessel covering the entire Active Service Period contemplated by clause (2) above.

 

For the avoidance of doubt, neither a letter of intent nor a letter of award with respect to a Vessel is a Qualified Services Contract.

 

Qualified Vessel” means a Vessel that is subject to a Qualified Services Contract.

 

Rating Agencies” means S&P, Moody’s and Fitch or if no rating of S&P, Moody’s or Fitch is publicly available, as the case may be, the equivalent of such rating selected by the Company by any other nationally recognized statistical ratings organization.

 

Ready for Sea Cost” means, with respect to a Vessel to be acquired by the Company 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.

 

Refinanced Indebtedness” has the meaning provided in the definition of “Permitted Refinancing Indebtedness”.

 

Regulation S” has the meaning provided in the Appendix.

 

Related Business Assets” means assets (other than cash or Cash Equivalents) used or useful in a Permitted Business; provided that any assets received by the Company or a Restricted Subsidiary in exchange for assets transferred by the Company or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless upon receipt of the securities of such Person, such Person would become a Restricted Subsidiary.

 

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Relevant Business Day” means, when used in connection with the creation of a Lien on any asset, any Business Day that is not a day on which banking institutions in any jurisdiction the laws of which are relevant to the creation of such Lien are authorized or required by law to close.

 

Required Guarantor” means any Restricted Subsidiary that is not an Excluded Subsidiary.

 

Responsible Officer” when used with respect to the Trustee, means any officer within the corporate trust department of the Trustee having direct responsibility for the administration of this Indenture.

 

Restricted Global Note” has the meaning provided in the Appendix.

 

Restricted Investment” means an Investment other than a Permitted Investment.

 

Restricted Notes Legend” has the meaning provided in the Appendix.

 

Restricted Subsidiary” means any Subsidiary of the Company that is not then an Unrestricted Subsidiary; provided that (i) upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be a Restricted Subsidiary and (ii) notwithstanding anything to the contrary in this Indenture, each Collateral Grantor shall at all times be a Restricted Subsidiary.

 

Rule 144A” has the meaning provided in the Appendix.

 

S&P” means Standard & Poor’s Rating Services, or any successor to the rating agency business thereof.

 

Sale and Lease-Back Transaction” means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers such property to a Person and leases it from such Person.

 

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.

 

Security Agreement” means, collectively, the U.S. Security Agreement and each other security agreement or similar instrument executed by a Collateral Grantor pursuant to which such Person grants to the First Lien Collateral Agent a Lien on the assets owned by such Person, in each case, as amended, amended and restated, or supplemented from time to time in accordance with its terms.

 

Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date, provided that notwithstanding anything to the contrary in this Indenture, each Restricted Subsidiary that owns a direct or indirect interest in a Vessel shall be a Significant Subsidiary at all times.

 

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Silo Vessel” means a Vessel that (a) is owned by a Subsidiary that does not directly or indirectly own any Vessel that is not a Silo Vessel, and (b) is acquired, or is owned by an Unrestricted Subsidiary that is acquired, with consideration that consists at least primarily of Equity Interests of the Company or a Subsidiary; provided that (i) any Indebtedness Incurred in connection with any such acquisition is and remains an obligation only of the acquiring Unrestricted Subsidiary (and any of its Subsidiaries), and neither the Company nor any Restricted Subsidiary will have any liability in respect of such Indebtedness, and no Lien on any of their respective assets to secure such Indebtedness will be granted, created or permitted to exist; and (ii) any Restricted Subsidiary that issues any Equity Interests in connection with any such acquisition must be or must become an obligor on the Notes.

 

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 Issue Date or, if such item or series is Incurred after the Issue Date, the date such item or series is Incurred.

 

Subsidiary” means, with respect to any specified Person, any corporation, company, partnership, joint venture, or other entity of which more than 50% of the outstanding capital stock or other Equity Interests having ordinary voting power (irrespective of whether or not at the time capital stock or other Equity Interest of any other class or classes of such corporation, partnership, joint venture, or other entity shall or might have voting power upon the occurrence of any contingency) is at the time owned directly or indirectly by such Person and, in respect of an entity incorporated in Jersey, means a subsidiary within the meaning of Articles 2 and 2A of the Companies (Jersey) Law 1991. Unless otherwise provided or the context otherwise requires, the terms “Subsidiary” and “Subsidiaries” refer to a Subsidiary or Subsidiaries of the Company.

 

Subject Jurisdictions” means each Initial Subject Jurisdiction and each Additional Subject Jurisdiction.

 

Third Party Vessel” means any Vessel that is now or hereafter managed by the Company or any Subsidiary but is not owned by the Company or any Subsidiary.

 

Total Assets” means the total assets of the Company and the Restricted Subsidiaries on a consolidated basis determined in accordance with GAAP, as shown on the most recent consolidated balance sheet of the Company (with adjustments to exclude assets of any Unrestricted Subsidiary).

 

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 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 30, 2023; provided that if the period from the redemption date to April 30, 2023 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

 

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Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939 as in force on the date as of which this instrument was executed; provided that, in the event the Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act” or ‘TIA” means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

 

Trustee” means Wilmington Savings Fund Society, FSB, in its capacity as trustee under this Indenture, until a successor replaces it in accordance with the applicable provisions of this Indenture, and thereafter “Trustee” means each Person who is then a Trustee thereunder.

 

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

 

U.S. Security Agreement” means that certain U.S. Security Agreement, dated as of the Issue Date, entered into by the Company, the other grantors party thereto from time to time and the First Lien Collateral Agent.

 

Unrestricted Subsidiary” means:

 

(1)            any Subsidiary of the Company that at the time of determination is an Unrestricted Subsidiary (as properly designated by the Company, as provided below); and

 

(2)            any Subsidiary of an Unrestricted Subsidiary.

 

The Company may designate any Subsidiary of the Company as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors 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 Company or any Restricted Subsidiary (other than solely any Subsidiary of the Subsidiary to be so designated); provided that:

 

(1)            to the extent any Indebtedness of such Subsidiary is not Non-Recourse Debt, any Guarantee or other credit support thereof by the Company or any Restricted Subsidiary is permitted by Section 4.07 and Section 4.09;

 

(2)            the Subsidiary to be so designated and each Subsidiary of such Subsidiary has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of the Restricted Subsidiaries;

 

(3)            the Subsidiary to be so designated and each Subsidiary of such Subsidiary are Persons with respect to which neither the Company nor any of the Restricted Subsidiaries has any direct or indirect obligation to subscribe for additional Capital Stock or to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results;

 

(4)            neither the Subsidiary to be so designated nor any Subsidiary of such Subsidiary is (x) the owner, directly or indirectly, of any interests in any Vessel or a Joint Venture that is the owner of a Vessel nor (y) a party to a Drilling Contract, except for (i) Other Vessels and related contracts that are contributed or otherwise transferred to the Unrestricted Floater Subsidiary pursuant to the Floater Restructuring Transaction or clause (18) of the definition of Permitted Investments, or (ii) a Silo Vessel or a Joint Venture that is the owner a Silo Vessel (or a Vessel that would be a Silo Vessel if it were owned by a Subsidiary that is not a Joint Venture);

 

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(5)            neither the Subsidiary to be so designated nor any Subsidiary of such Subsidiary is a “restricted subsidiary” (or equivalent) under the definitive documentation for any Indebtedness of the Company or any Restricted Subsidiary (other than this Indenture); and

 

(6)            except to the extent not prohibited by Section 4.11, is not a party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary, unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company.

 

Valaris ARO Shareholder” means Rowan Rex Limited, a limited company organized and existing under the laws of the British Overseas Territory of the Cayman Islands, for so long as it holds any of the Equity Interests in ARO, and any other Restricted Subsidiary that holds any of the Equity Interests in ARO.

 

Vessel” means any Jackup Rig or Other Vessel.

 

Vessel Mortgage” means each first preferred or first priority mortgage and any other instruments, such as statutory mortgages and deeds, over any Collateral Vessel, each duly registered in the relevant registry in favor of the First Lien Collateral Agent, in its capacity as security trustee, as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

Vessel Security Agreement” means that certain Vessel Security Agreement, dated as of the date hereof, by and among the Guarantors from time to time party thereto and the First Lien Collateral Agent.

 

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 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.

 

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Section 1.02      Other Definitions.

 

Term Defined in Section
“Act” Section 9.08(a)
“Additional Amounts” Section 4.18(a)
“Agreed Security Principles” Section 11.01(f)
“Affiliate Transaction” Section 4.11(a)
“Appendix” Section 2.01
“Asset Sale Offer” Section 4.10(e)
“Asset Sale Offer Amount” Section 3.09(b)
“Asset Sale Offer Period” Section 3.09(b)
“Asset Sale Offer Settlement Date” Section 3.09(b)
“Asset Sale Offer Termination Date” Section 3.09(c)(i)
“Authorized Agent” Section 12.08
“Change of Control Offer” Section 4.15(a)
“Change of Control Payment” Section 4.15(a)
“Change of Control Payment Date” Section 4.15(a)
“Code” Section 4.18(a)(8)
“Collateral” Section 11.01(a)
“Collateral Vessel” Section 11.01(a)(iii)
“Covenant Defeasance” Section 8.03
“Discharge” Section 8.08(5)
“Event of Default” Section 6.01
“Excess Proceeds” Section 4.10(e)
“Excluded Assets” Section 11.12(2)
“Floater Restructuring Transaction” Section 11.13(a)
“Incur” Section 4.09(a)
“Indemnified Taxes” Section 4.18(a)
“Intercompany Transfers” Section 4.08(a)(3)
“Legal Defeasance” Section 8.02
“MD&A” Section 4.03(a)(1)
“Paying Agent” Section 2.03
“Payment Default” Section 6.01(e)(1)
“Permitted Debt” Section 4.09(b)
“Principal Collateral" Section 11.01(f)(ii)(4)
“Principal Jurisdiction" Section 11.01(d)
“Register” Section 2.03
“Registrar” Section 2.03
“Restricted Payments” Section 4.07(a)(4)
“Reversion Date” Section 4.19(b)
“Shareholder Instruments” Definition of ARO JV Related Assets
“Specified Tax Jurisdiction” Section 4.18(a)
“Successor Company” Section 5.01(a)(1)
“Successor Guarantor” Section 5.01(b)(1)(A)
“Suspended Covenants” Section 4.19(a)
“Suspension Period” Section 4.19(b)
“Taxes” Section 4.18(a)
“Unrestricted Floater Subsidiary” Section 11.13(a)
“Unrestricted Floater Subsidiary Credit Facility” Section 11.13(d)

 

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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)            the meanings of the words “will” and “shall” are the same when used to express an obligation;

 

(6)            references to sections of or rules under the Securities Act, the Exchange Act or the Trust Indenture Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;

 

(7)            “herein,” “hereof” and other words of similar import refer to this Indenture as a whole (as amended or supplemented from time to time) and not to any particular Article, Section or other subdivision of this Indenture;

 

(8)            “including” means “including, without limitation”;

 

(9)            references herein to Articles, Sections and Exhibits are to be construed as references to articles of sections of, and exhibits to, this Indenture, unless the context otherwise requires; and

 

(10)            unless otherwise expressly qualified herein, the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts, contract rights and real property.

 

Section 1.04        Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is incorporated by reference in and made a part of this Indenture. The following Trust Indenture Act terms used in this Indenture have the following meanings:

 

(1)            “indenture securities” means the Notes and the Guarantees.

 

(2)            “indenture securityholder” means a Holder.

 

(3)            “indenture to be qualified” means this Indenture.

 

(4)            “indenture trustee” or “institutional trustee” means the Trustee.

 

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(5)            “obligor on the indenture securities” means the Company, the Guarantors or any other obligor on the Securities.

 

(6)            All terms used in this Indenture that are defined by the Trust Indenture Act, defined by a Trust Indenture Act reference to another statute or defined by Commission rule under the Trust Indenture Act and not otherwise defined herein have the meanings assigned to them therein.

 

Section 1.05        Conflict With Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with any provision of the Trust Indenture Act or another provision hereof required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such provision of the Trust Indenture Act shall control to the extent so required. The preceding sentence shall not apply to any provision of this Indenture that modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded.

 

Article 2
THE NOTES

 

Section 2.01        Form and Dating.

 

Provisions relating to the Notes are set forth in the Rule 144A/Regulation S Appendix attached hereto (the “Appendix”), which is hereby incorporated in and expressly made part of this Indenture. The Notes and the Trustee’s certificate of authentication therefor shall be substantially in the form of Exhibit 1 to the Appendix, which is hereby incorporated in and expressly made a part of this Indenture. The Notes may have other notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The terms of the Notes set forth in the Appendix are part of the terms of this Indenture. The Notes shall be in minimum denominations of $1,000 and integral multiples thereof; provided that after any initial PIK Payment, the Notes shall be in minimum denominations of $1.00 and any integral multiple of $1.00 in excess thereof.

 

The terms and provisions contained in the Appendix and the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture or a supplemental indenture hereto, as applicable, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any such provision conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

 

Section 2.02        Execution and Authentication.

 

At least one Officer of the Company shall sign the Notes on behalf of the Company by manual or facsimile signature.

 

If an 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.

 

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A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

  

On the Issue Date, the Trustee shall authenticate and deliver Notes in an aggregate principal amount of $550,000,000 and, at any time and from time to time thereafter, the Trustee shall authenticate and deliver Notes for original issue in an aggregate principal amount specified in an authentication order of the Company, including PIK Notes and Additional Notes. Such order shall specify the aggregate principal amount of the Notes to be authenticated, the date on which the original issue of Notes is to be authenticated and to whom the Notes shall be registered and delivered and, in the case of an issuance of Additional Notes pursuant to Section 2.14 after the Issue Date, shall certify that such issuance is in compliance with Sections 4.09 and 4.12.

 

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

 

Section 2.03        Registrar and Paying Agent.

 

The Company shall at all times maintain an office or agency in the United States where Notes may be presented for registration of transfer or for exchange (the “Registrar”) and an office or agency in the contiguous United States where Notes may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Notes and of their transfer and exchange (the “Register”). The Company may have 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 Company shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture, which shall incorporate the terms of the Trust Indenture Act. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee in writing of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such. Other than for purposes of effecting a redemption or an offer to purchase described in Sections 3.07, 3.09, 4.10 or 4.15 or in connection with Legal Defeasance, Covenant Defeasance or Discharge, the Company or any of its domestically organized wholly-owned Subsidiaries may act as Paying Agent or Registrar.

 

The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Notes at the Corporate Trust Office of the Trustee.

 

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Section 2.04        Paying Agent to Hold Money and PIK Notes in Trust.

 

Prior to 11:00 a.m. New York City time, on each date on which any principal, premium, if any, or interest on any Note is due and payable, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal, premium, if any, and cash interest, and increase the principal amount of the Notes or issue PIK Notes to pay PIK Interest pursuant to an Authentication Order delivered to the Trustee specifying the PIK Note amount to be issued on the applicable interest payment date, when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of, or premium, if any, cash interest, if any, or Additional Amounts, if any, on, the Notes and shall notify the Trustee of any default by the Company in making any such payment. If the Company or any of its Subsidiaries acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund for the benefit of the Holders. The Company at any time may require a Paying Agent (other than the Trustee) to pay all money held by it to the Trustee, and the Trustee may at any time during the continuance of any Event of Default under Section 6.01(a) or (b), upon written request to a Paying Agent, require such Paying Agent to forthwith pay to the Trustee all sums so held in trust by such Paying Agent and, in each case, to account for any funds disbursed by such Paying Agent. Upon complying with this Section, the Paying Agent (if other than the Company or any of its Subsidiaries) shall have no further liability for the money delivered to the Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect to the Company, 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 and shall otherwise comply with Section 312(a) of the Trust Indenture Act. If the Trustee is not the Registrar, or to the extent otherwise required under the Trust Indenture Act, the Company shall furnish to the Trustee in writing, at least five 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. The Company shall otherwise comply with Section 312(a) of the Trust Indenture Act.

 

Section 2.06        Transfer and Exchange.

 

The Notes shall be issued in registered form and shall be transferable only upon the surrender of a Note for registration of transfer and in compliance with the Appendix. When a Note is presented to the Registrar or a co-registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the requirements of this Indenture are met. When Notes are presented to the Registrar with a request to exchange them for an equal principal amount of Notes of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. The Company may require payment of a sum sufficient to cover any taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant to this Section 2.06 (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.04, 3.07, 3.09, 4.10, 4.15 or 9.06).

 

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Section 2.07        Replacement Notes.

 

If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall, upon its receipt of an authentication order from the Company, authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies any other reasonable requirements of the Trustee. If required by the Registrar or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee to protect the Registrar, Paying Agent and the Trustee and in the judgment of the Company to protect the Company from any loss which any of them may suffer if a Note is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Note.

 

Every replacement Note is an additional obligation of the Company.

 

Section 2.08        Outstanding Notes.

 

The Notes outstanding at any time are all Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in interests in a Global Note effected by the Trustee in accordance with the provisions hereof and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09, a Note does not cease to be outstanding because the Company, any Guarantor or an Affiliate of the Company or any Guarantor holds the Note.

 

If the Paying Agent (other than the Company or a Subsidiary thereof) holds in trust, in accordance with this Indenture, by 11:00 a.m. New York City time, on a redemption date or other maturity date money sufficient to pay all principal, interest, premium, if any, and Additional Amounts, if any, payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, then on and after that date such Notes (or portions thereof) shall cease to be outstanding and interest on them shall cease to accrue.

 

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, and for purposes of the payment or reimbursement of expenses of the Holders of a majority in aggregate principal amount of the outstanding Notes pursuant to Section 7.07, Notes owned by the Company or any Guarantor, or by any Affiliate of the Company or any Guarantor, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Notes that the Trustee actually knows are so owned will be so disregarded. Notwithstanding anything in this Indenture to the contrary, no Person shall be deemed or presumed to have any such controlling interest, or to be under common control of any other Person with the Company or any Guarantor, solely as a result of such Person and/or such other Person being a Beneficial Owner of more than 10% of the Company’s outstanding Voting Stock, unless, such Person and/or such other Person (as determined in good faith by the Board of Directors of the Company) has the power, directly or indirectly, to direct or cause the direction of the management and policies of the Company, whether through the ownership of the Voting Stock of the Company, by contract, or otherwise.

 

Section 2.10       Temporary Notes.

 

Until definitive Notes are ready for delivery, the Company may prepare and the Trustee shall, upon its receipt of an authentication order from the Company, authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes and deliver them in exchange for Temporary Notes. Holders of temporary Notes shall be entitled to all of the benefits under this Indenture.

 

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Section 2.11        Cancellation.

 

The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange, replacement or payment. The Trustee and no one else shall cancel and destroy (subject to the record retention requirements of the Exchange Act) all Notes surrendered for registration of transfer, exchange, replacement, payment or cancellation. Upon written request, the Trustee will deliver a certificate of such cancellation to the Company. The Company may not issue new Notes to replace Notes it has redeemed, paid or delivered to the Trustee for cancellation.

 

Section 2.12        Defaulted Interest.

 

If the Company defaults in a payment of interest on the Notes, the Company shall pay defaulted interest at the rate specified in the second paragraph of Section 4.01 (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the Persons who are Holders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date (which special record date shall not be less than 10 days prior to the related payment date) to the reasonable satisfaction of the Trustee and shall promptly mail to each Holder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.

 

Section 2.13        CUSIP and ISIN Numbers.

 

The Company in issuing the Notes may use “CUSIP” numbers and corresponding “ISINs” (if then generally in use) and, if so, the Trustee shall use “CUSIP” numbers and corresponding “ISINs” in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee of any changes in “CUSIP” or “ISIN” numbers.

 

Section 2.14        Issuance of Additional Notes.

 

The Company shall be entitled, subject to its compliance with Sections 4.09 and 4.12, to issue not more than $150 million aggregate principal amount of Additional Notes under this Indenture, which Additional Notes shall have identical terms and conditions as the Initial Notes issued on the Issue Date, other than with respect to the date of issuance, issue price and the date from which interest will accrue. The Initial Notes issued on the Issue Date, and any PIK Notes and Additional Notes, will be equally and ratably secured by the Liens granted to the First Lien Collateral Agent on the Collateral and shall be treated as a single class for all purposes under this Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase; provided that in the event any Additional Notes are not fungible with the Notes for U.S. federal income tax purposes, such non-fungible Notes will be issued with a separate CUSIP or ISIN number so they are distinguishable from the Notes issued on the Issue Date.

 

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With respect to any Additional Notes, the Company shall set forth in an Officers’ Certificate, which shall be delivered to the Trustee, the following information:

 

(1)            the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture and the provision of Sections 4.09 and 4.12 that the Company is relying on to issue such Additional Notes; and

 

(2)          the issue price, the issue date (and the corresponding date from which interest shall accrue thereon and the first Interest Payment Date therefor) and the CUSIP number and any corresponding ISIN of such Additional Notes.

 

Article 3
REDEMPTION AND PREPAYMENT

 

Section 3.01               Notices to Trustee.

 

If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 or is required to redeem, or offer to redeem, Notes pursuant to Section 3.09, it shall furnish to the Trustee, at least five Business Days (unless a shorter period shall be agreeable to the Trustee) before the date of giving notice of the redemption pursuant to Section 3.03, an Officers’ Certificate setting forth (i) either the clause of Section 3.07 pursuant to which the redemption shall occur or that such redemption shall occur pursuant to Section 3.09, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed, (iv) the redemption price or the method by which it will be determined, and (v) whether the Company requests that the Trustee give notice of such redemption.

 

Section 3.02               Selection of Notes to Be Redeemed.

 

If less than all of the Notes are to be redeemed at any time, the Trustee will select the Notes to be redeemed on a pro rata basis, unless otherwise required by law or applicable stock exchange or Depository requirements, from the outstanding Notes not previously called for redemption. In the event of partial redemption other than on a pro rata basis, the particular Notes to be redeemed shall be selected, not less than five Business Days (unless a shorter period shall be agreeable to the Trustee) prior to the giving of notice of the redemption pursuant to Section 3.03, by the Trustee from the outstanding Notes not previously called for redemption.

 

The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. No Notes of $1.00 or less can be redeemed in part. Notes and portions of Notes selected shall be in amounts of $1.00 or whole multiples of $1.00 in excess thereof; except that if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder shall be redeemed. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.

 

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Section 3.03               Notice of Redemption.

 

At least 30 days but not more than 60 days before a redemption date (except that redemption notices may be delivered more than 60 days prior to a redemption date if the notice is issued in connection with a Legal Defeasance, Covenant Defeasance or Discharge), the Company shall mail or cause to be mailed, by first class mail, or otherwise given in accordance with the procedures of the Depository, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address (with a copy to the Trustee). Notices of redemption may be subject to one or more conditions specified in the notice of redemption.

 

The notice shall identify the Notes to be redeemed and shall state:

 

(a)           the redemption date;

 

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

 

(c)           if any Note is to be redeemed in part only, the portion of the principal amount of such Note that is to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in a principal amount equal to the unredeemed portion of the original Note will be issued in the name or transferred by book entry to the applicable Holder upon cancellation of the original Note;

 

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

 

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

 

(f)            that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption shall cease to accrue on and after the redemption date and the only remaining right of the Holders of such Notes is to receive payment of the redemption price upon surrender to the Paying Agent of the Notes redeemed;

 

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

 

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

 

(i)            a description of any conditions to the Company’s obligations to complete the redemption.

 

If any of the Notes to be redeemed is in the form of a Global Note, then the Company shall modify such notice to the extent necessary to accord with the procedures of the Depository applicable to redemption.

 

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At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense; provided that the Company shall have delivered to the Trustee, as provided in Section 3.01, an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the second preceding paragraph.

 

Section 3.04                Effect of Notice of Redemption.

 

Once notice of redemption is delivered in accordance with Section 3.03, Notes (or portions thereof) called for redemption become irrevocably due and payable on the applicable redemption date at the applicable redemption price, subject to the satisfaction of any conditions to the redemption specified in the notice of redemption. If delivered in the manner provided for in Section 3.03, the notice of redemption shall be conclusively presumed to have been given whether or not a Holder receives such notice. Failure to give timely notice or any defect in the notice shall not affect the validity of the redemption.

 

Section 3.05               Deposit of Redemption Price.

 

Prior to 11:00 a.m., New York City time, on any redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary thereof is acting as Paying Agent, segregate and hold in trust as provided in Section 2.04) money sufficient in same day funds to pay the redemption price of and accrued interest (including accrued and unpaid PIK Interest which for the avoidance of doubt shall be paid in cash) on all Notes to be redeemed on that date. The Paying Agent shall promptly return to the Company any money deposited with the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of and accrued interest on all Notes to be redeemed.

 

If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption whether or not such Notes are presented for payment, and the only remaining right of the Holders of such Notes shall be to receive payment of the redemption price upon surrender to the Paying Agent of the Notes redeemed. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption 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.

 

Section 3.06                Notes Redeemed in Part.

 

Upon surrender of a Note that is redeemed in part, the Company shall issue in the name of the applicable Holder and the Trustee shall, upon its receipt of an authentication order from the Company, authenticate and mail to such Holder (or cause to be transferred by book entry) at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered representing the same Indebtedness to the extent not redeemed; provided that each new Note shall be in a principal amount of $1.00 and integral multiples of $1.00 in excess thereof. It is understood that, notwithstanding anything in this Indenture to the contrary, only an authentication order and not an Opinion of Counsel or Officers’ Certificate is required for the Trustee to authenticate such new Note.

 

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Section 3.07               Optional Redemption.

 

(a)            At any time prior to April 30, 2023, the Company may, at its option, redeem up to 35% of the aggregate principal amount of Notes (including any Additional Notes) issued under this Indenture, at one time or from time to time, at a redemption price equal to 104.00% of the principal amount thereof, plus accrued and unpaid cash interest, together with an amount of cash equal to all accrued and unpaid PIK Interest on the Notes, and Additional Amounts, if any, to, but not including, the applicable redemption date (subject to the rights of Holders of record 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 Company from one or more Equity Offerings; provided that:

 

(1)            at least 65% of the aggregate principal amount of Notes (including any Additional Notes) issued under this Indenture (excluding any Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and

 

(2)            the redemption occurs within 120 days after the date of the closing of such Equity Offering.

 

(b)           At any time prior to April 30, 2023, the Company may, at its option, redeem the Notes, in whole or in part, at one time or from time to time, upon at least 30 days (but not more than 60 days) prior written notice to Holders, at a redemption price equal to 104.00% of the principal amount of the Notes redeemed, plus the Applicable Premium as of, and accrued and unpaid cash interest, together with an amount of cash equal to all accrued and unpaid PIK Interest, and Additional Amounts, if any, to, but not including, the applicable redemption date, subject to the rights of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date. The Company shall calculate, or cause the calculation of, the Applicable Premium and the Trustee shall have no duty to calculate or verify the Company’s calculations thereof.

 

(c)           On or after April 30, 2023, the Company may, at its option, redeem the Notes, in whole or in part, at one time or from time to time, upon at least 30 days (but not more than 60 days) prior written notice to Holders, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid cash interest, together with an amount of cash equal to all accrued and unpaid PIK Interest, and Additional Amounts, if any, on the Notes redeemed, to, but not including, the applicable redemption date, subject to the rights of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date, if redeemed during the twelve-month period beginning on April 30 of the years indicated below:

 

Year  Percentage 
2023   104.00%
2024   103.00%
2025   102.00%
2026 and thereafter   100.00%

 

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(d)           The Company may redeem the Notes, at its option, at any time in whole but not in part, at a redemption price equal to 100% of the outstanding principal amount of Notes, plus accrued and unpaid cash interest, together with an amount of cash equal to all accrued and unpaid PIK Interest (if any) to, but not including, the applicable redemption date, plus all Additional Amounts, if any, then due and which will become due as a result of the redemption or otherwise (subject to the rights of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date), in the event that the Company determines in good faith that the Company or any Guarantor 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 Guarantees, Additional Amounts, and such obligation cannot be avoided by taking reasonable measures available to the Company or the relevant Guarantor, as applicable (including making payment through a Paying Agent located in another jurisdiction but not, for the avoidance of doubt, changing the jurisdiction of incorporation of the Company or the relevant Guarantor ), as a result of:

 

(1)            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 Issue Date (or, if the Specified Tax Jurisdiction was not a Specified Tax Jurisdiction on the Issue Date, the date on which such Specified Tax Jurisdiction became a Specified Tax Jurisdiction); or

 

(2)            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 (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 Issue Date (or, if the Specified Tax Jurisdiction was not a Specified Tax Jurisdiction on the Issue Date, the date on which such Specified Tax Jurisdiction became a Specified Tax Jurisdiction);

 

provided that in the case of Additional Amounts required to be paid as a result of the Company or relevant Guarantor conducting business other than in the place of its incorporation or organization, such amendment or change must be announced or become effective on or after the date in which it begins to conduct business giving rise to the relevant withholding or deduction.

 

Notwithstanding the foregoing, no such notice of redemption may be given earlier than 60 days prior to the earliest date on which the Company or the relevant Guarantor, as applicable, would be obligated to pay Additional Amounts if a payment in respect of the Notes or the Guarantees were then due, and at the time such notice is given, the obligation to pay Additional Amounts must remain in effect. Before the Company mails or delivers notice of redemption of the Notes as described above, the Company shall deliver to the Trustee and Paying Agent (a) an Officers’ Certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company to so redeem have occurred and (b) an opinion of independent legal counsel of recognized standing that the Company or any Guarantor has or will become obligated to pay Additional Amounts as a result of the circumstances referred to in clause (1) or (2) of the preceding paragraph.

 

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The Trustee and Paying Agent will 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 will be conclusive and binding on the Holders.

 

(e)            Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through Section 3.05.

 

Section 3.08               [Reserved].

 

Section 3.09               Offer to Purchase by Application of Excess Proceeds.

 

(a)           In the event that, pursuant to Section 4.10, the Company shall be required to commence an Asset Sale Offer, it shall follow the additional procedures specified below.

 

(b)           Each 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 five Business Days after the termination of the Asset Sale Offer Period (the “Asset Sale Offer Settlement Date”), the Company shall apply all Excess Proceeds (the “Asset Sale Offer Amount”) to the purchase of the Notes and other Indebtedness of the Company or the applicable Restricted Subsidiary as specified in Section 4.10 or, if less than the Asset Sale Offer Amount has been validly tendered (and not validly withdrawn), all Notes and other Indebtedness of the Company or such Restricted Subsidiary, as applicable, validly tendered (and not validly withdrawn) in response to the Asset Sale Offer.

 

(c)         Upon the commencement of an Asset Sale Offer, the Company shall send, by first class mail, or otherwise in accordance with the requirements of the Depository, a notice to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice, which shall govern the terms of the Asset Sale Offer, shall state:

 

(i)          that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 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 Asset Sale Offer Amount, the purchase price and the Asset Sale Offer Settlement Date;

 

(iii)        that any Note not tendered or accepted for payment shall continue to accrue interest;

 

(iv)        that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrue interest on and after the Asset Sale Offer Settlement Date;

 

(v)         that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, properly endorsed for transfer, together with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed and such customary documents as the Company may reasonably request, to the Company or a Paying Agent at the address specified in the notice, before the Asset Sale Offer Termination Date;

 

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(vi)        that Holders shall be entitled to withdraw their election if the Company or the Paying Agent, as the case may be, receives, prior to the Asset Sale Offer Termination Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing its election to have such Note purchased;

 

(vii)       that, if the aggregate principal amount of Notes or other First Lien Debt surrendered by Holders and holders of such other First Lien Debt, collectively, exceeds the Asset Sale Offer Amount, the Company shall select the Notes and such other First Lien Debt to be purchased from the amount allocated therefor on a pro rata basis unless otherwise required by law or applicable stock exchange or Depository requirements (with such adjustments as may be deemed appropriate by the Company so that only Notes and First Lien Debt in denominations of $1.00 and integral multiples of $1.00 in excess thereof will be outstanding after such purchase); and

 

(viii)      that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1.00 in principal amount or an integral multiple of $1.00 in excess thereof.

 

Promptly after the Asset Sale Offer Termination Date, the Company shall, to the extent lawful, accept for payment Notes or portions thereof tendered pursuant to the Asset Sale Offer in the aggregate principal amount required by Section 4.10. Prior to 11:00 a.m., New York City time, on the Asset Sale Offer Settlement Date, the Company, the Depository or the Paying Agent, as the case may be, shall mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee shall, upon its receipt of an authentication order from the Company, authenticate and mail or deliver (or cause to be transferred by book-entry) such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof.

 

Section 3.10               No Mandatory Sinking Fund.

 

Except as set forth under Sections 3.09, 4.10 and 4.15, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes or to repurchase the Notes at the option of the Holders.

 

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Article 4
COVENANTS

 

Section 4.01               Payment of Notes.

 

The Company shall pay or cause to be paid the principal of, cash interest, premium, if any, and increase the principal amount of the Notes or issue PIK Notes to pay the PIK Interest, on, the Notes on the dates and in the manner provided in the Notes.

 

In the event that the Company determines to pay PIK Interest for any interest period, then Company will deliver a notice (a “PIK Election”) to the Trustee no later than thirty days prior to the beginning of the relevant interest period, which notice will state the total amount of interest to be paid on the Interest Payment Date in respect of such interest period and the amount of such interest to be paid as PIK Interest. The Trustee, on behalf of the Company, will promptly deliver a corresponding notice provided by the Company to the Holders. For the avoidance of doubt, interest on the Notes in respect of any interest period for which a PIK Election is not timely delivered must be paid entirely in cash. Notwithstanding anything to the contrary herein, the payment of accrued interest in connection with any purchase of Notes pursuant to Sections 4.10 and 4.13 hereof shall be made solely in cash.

 

Principal, cash interest and premium, if any, and any PIK Notes or any increased principal amount of Notes sufficient to pay all PIK Interest shall be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 11:00 a.m., New York City time, on the due date money deposited by the Company or a Guarantor in immediately available funds and designated for and sufficient to pay all principal, cash interest and premium, if any, then due, and upon delivery of an Authentication Order to the Trustee on or prior to the date the payment is due of any PIK Notes to be authenticated and delivered or any increased principal amount of the applicable Global Notes sufficient to pay all PIK Interest. Subject to Section 4.18, all payments made by the Company under or with respect to the Notes will be made free and clear of and without withholding or deduction for, or on account of, any Taxes, unless the withholding or deduction of such Taxes is then required by law.

 

The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at a rate equal to the then-applicable interest rate on the Notes; and it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest, if any (without regard to any applicable grace period), at the same rate as on overdue principal to the extent lawful.

 

Section 4.02               Maintenance of Office or Agency.

 

The Company shall maintain an office or agency (which may be an office of the Trustee, an affiliate of the Trustee, the Registrar or the Paying Agent) in the contiguous United States where Notes may be presented or surrendered for payment and shall maintain an office or agency in the contiguous United States (which may be an office of the Trustee, an affiliate of the Trustee, the Registrar or the Paying Agent) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company 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 Company shall fail to maintain any such required office or agency or shall fail 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; provided that no office of the Trustee shall be an office or agency for the purpose of service of legal process against the Company or any Guarantor.

 

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The Company 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; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the contiguous United States for such purposes. The Company 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 Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03.

 

Section 4.03               Reports.

 

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

 

(1)            within 45 days after the end of each of the first three fiscal quarters of each fiscal year (or, for so long as the Company is then subject to Section 13(a) or 15(d) of the Exchange Act, such date as is required under the rules of the SEC for the filing of any quarterly reports for such fiscal quarter (which shall include any extension as the result of any applicable U.S. securities laws or SEC rules, regulations, guidance or guidelines), reports on Form 10-Q or (in the event the Company is a “foreign private issuer” subject to Section 13(a) or 15(d) of the Exchange Act) Form 6-K (or, in each case, any successor form) containing, whether or not required, the Company’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 90 days after the end of each fiscal year (or, for so long as the Company is then subject to Section 13(a) or 15(d) of the Exchange Act, by such date as is required under the rules of the SEC for the filing of an annual report for each fiscal year (which shall include any extension as the result of any applicable U.S. securities laws or SEC rules, regulations, guidance or guidelines), an annual report on Form 10-K or (in the event the Company is a “foreign private issuer” subject to Section 13(a) or 15(d) of the Exchange Act) Form 20-F (or, in each case, any successor form) containing, whether or not required, the Company’s audited consolidated financial statements, a report thereon by the Company’s certified independent accountants and an MD&A for such fiscal year); and

 

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(3)            (i) at such times as would be required to be filed or furnished to the SEC if the Company was subject to Section 13(a) or 15(d) of the Exchange Act (whether or not the Company is then subject to such requirements), current reports on Form 8-K that the Company would have been required to file or furnish pursuant thereto; or (ii) in the event that the Company is a “foreign private issuer” subject to Section 13(a) or 15(d) of the Exchange Act, all such other reports and information that the Company is required to file or furnish pursuant thereto.

 

All such reports shall be prepared in all material respects in accordance with all of the rules and regulations applicable to such reports.

 

(b)           The Company 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) in paragraph (a) above with the SEC for public availability within the time periods specified therein at any time the Company is then subject to Section 13(a) or 15(d) of the Exchange Act and make such information available to the Holders, and if the Notes are represented by one or more Global Notes, the beneficial owners, of the Notes and prospective investors upon request.

(c)           The Company shall be deemed to have furnished such reports referred to in paragraph (a) above to the Trustee and the Holders if the Company 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 Company’s filings for any reason, the Company will post the reports referred to in paragraph (a) above on its website within the time periods that would apply to non-accelerated filers if the Company were required to file those reports with the SEC. The Trustee shall have no obligation whatsoever to determine whether or not such information, documents or reports have been filed pursuant to the EDGAR filing system (or its successor) or postings to any website have occurred.

 

(d)           In addition, for so long as any Notes remain outstanding and are subject to restrictions on transfer by non-Affiliates under U.S. federal securities laws, the Company will furnish to the Holders and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the U.S. Securities Act.

 

(e)           Delivery of reports, information and documents to the Trustee pursuant to this Section 4.03 is for informational purposes only, and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with the covenants hereunder (as to which the Trustee is entitled to conclusively rely exclusively on an Officers’ Certificate).

 

Section 4.04               Compliance Certificate.

 

(a)            The Company shall deliver to the Trustee, within 30 days of the delivery of the information required by Section 4.03(a)(2), an Officers’ Certificate stating (i) that a review of the activities of the Company and the Restricted Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and the other Note Documents, and further stating, as to each such Officer signing such certificate, that, to the best of his or her knowledge, the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and the other Note Documents applicable to the Company and is 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 Company is taking or proposes to take with respect thereto), (ii) either (x) that all action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture and all amendments, supplemental indentures, financing statements, continuation statements and other documents, as are necessary to maintain the perfected Liens created under the Collateral Documents under applicable law, subject to the Agreed Security Principles and reciting the details of such action or referring to prior Officers’ Certificates in which such details are given or (y) that no such action is necessary to maintain such Liens and (iii) whether the Company is in compliance with Section 11.01(b)(ii) as of the date of delivery of the information required by Section 4.03(a)(2). The Issuer also shall comply with Section 314(a)(4) of the Trust Indenture Act.

 

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(b)            The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, within 10 Business Days of any of its Officers becoming aware of any Default or Event of Default, a written statement specifying the nature of such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.

 

Section 4.05               Taxes.

 

The Company 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.

 

Each of the Company and the Guarantors covenants (to the extent that it may lawfully do so) that it shall 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 each of the Company and the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.

 

Section 4.07               Limitation on Restricted Payments.

 

(a)           The Company will not, and will 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 Company or any Restricted Subsidiary (including, without limitation, any payment in connection with any merger, consolidation or amalgamation involving the Company or any of the Restricted Subsidiaries) or to the direct or indirect holders of the Company’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 Company and excluding dividends or distributions payable to the Company or any Guarantor, including through the payment of dividends or distributions to a non-Guarantor or a series of non-Guarantors if such dividend or distribution is immediately distributed to another Guarantor or the Company upon receipt (and, if such Guarantor has holders of Equity Interests other than the Company or other Restricted Subsidiaries, to its other holders of Equity Interests on a pro rata basis or on a basis that is more favorable to the Company and the Restricted Subsidiaries than pro rata));

 

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(2)            purchase, repurchase, redeem, retire or otherwise acquire for value (including, without limitation, in connection with any merger, consolidation or amalgamation involving the Company) any Equity Interests of the Company held by any Person (other than any such Equity Interests held by the Company or any Guarantor ) or any Equity Interests of any Restricted Subsidiary held by an Affiliate of the Company (other than Equity Interests held by the Company or any Guarantor) (in each case other than in exchange for Equity Interests of the Company that do not constitute Disqualified Stock);

 

(3)            make any principal or premium payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value, any Junior Debt (excluding (a) interest payments on any Indebtedness, (b) any intercompany Indebtedness between or among the Company and any of the Restricted Subsidiaries, (c) any such Indebtedness repaid, acquired or retired for value in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of payment, acquisition or retirement, (d) a payment of principal at the Stated Maturity of any such Indebtedness) and (e) payments with respect to revolving Credit Facilities entered into after the Issue Date in accordance with the terms of this Indenture and as to which the Indebtedness outstanding thereunder was at the time of its Incurrence permitted by the terms of this Indenture to be so Incurred); or

 

(4)           make any Restricted Investment (all such payments and other actions set forth in these clauses (1) through (4) being collectively referred to as “Restricted Payments”).

 

(b)            The provisions of 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 the date 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)            so long as no Default or Event of Default has occurred and is continuing or would occur as a result thereof, 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 Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to the Company;

 

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(3)            the repurchase, redemption, defeasance or other acquisition or retirement for value of Junior Debt with the net cash proceeds from a substantially concurrent Incurrence of Permitted Refinancing Indebtedness;

 

(4)            so long as no Default or Event of Default has occurred and is continuing or would occur, the repurchase, redemption, cancellation, or other acquisition or retirement for value of, or agreement to do any of the foregoing with respect to, any Equity Interests of the Company or any Restricted Subsidiary granted pursuant to any Management Incentive Plan Award; provided that the aggregate price paid for all such repurchased, redeemed, cancelled, acquired or retired Equity Interests may not exceed $2 million in any twelve-month period (with any portion of such $2 million that is unused in any twelve-month period to be carried forward to successive twelve-month periods and added to such amount, but with an overall limit in any twelve-month period of $3 million);

 

(5)          (a) 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, and (b) the purchase, redemption, net-settlement, or other acquisition or retirement for value of Equity Interests of the Company or any Restricted Subsidiary held by any current or former officer, director or employee of the Company or any Restricted Subsidiary in connection with the exercise, vesting or settlement of any equity compensation (including, without limitation, any Management Incentive Plan Awards or other stock option, restricted stock or phantom stock award), in each case in this clause (b), solely in order to satisfy any tax withholding obligation with respect to such exercise, vesting or settlement;

 

(6)            any purchase, redemption, defeasance or other acquisition or retirement of any Junior Debt 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 Company or a Restricted Subsidiary has made the Asset Sale Offer or Change of Control Offer, as applicable, as provided in this Indenture and has completed the repurchase 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;

 

(7)            so long as no Default or Event of Default has occurred and is continuing or would occur as a result thereof, the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Company or any Preferred Stock of any Restricted Subsidiary of the Company issued on or after the Issue Date in accordance with Section 4.09;

 

(8)            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; and

 

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(9)            so long as no Default or Event of Default has occurred and is continuing or would occur as a result thereof, any Restricted Payment (excluding the Investment of any Vessel and any Equity Interest or Indebtedness of any owner of any Vessel) so long as the amount of such Restricted Payment, together with the aggregate amount of all other Restricted Payments made under this clause (9) since the Issue Date, does not exceed $100 million (or, following the Floater Restructuring Transaction, does not exceed $50 million).

 

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 Company or any Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. 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 categories of Restricted Payments described in the preceding clauses (1) through (9) of this Section 4.07(b) or as a Permitted Investment, the Company 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. For the avoidance of doubt, this Section 4.07 will not restrict the making of any “AHYDO catch up payment” with respect to, and required by the terms of, any Indebtedness of the Company or any Restricted Subsidiary permitted to be incurred under the terms of this Indenture.

 

Section 4.08               Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries.

 

(a)            The Company will not, and will 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 Company 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 Company or any of the Restricted Subsidiaries; provided that the priority that any series of preferred stock of a Restricted Subsidiary has in receiving dividends or liquidating distributions before dividends or liquidating distributions are paid in respect of common stock of such Restricted Subsidiary shall not constitute a restriction on the ability to make dividends or distributions on Capital Stock for purposes of this Section 4.08;

 

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

 

(3)            sell, or transfer any of its properties or assets to the Company or any of the Restricted Subsidiaries (all such actions set forth in these clauses (1) through (3) being collectively referred to as “Intercompany Transfers”).

 

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(b)           The restrictions in Section 4.08(a) will not apply to encumbrances or restrictions on the ability of any of the Restricted Subsidiaries to make Intercompany Transfers existing under or by reason of:

 

(1)           agreements governing Indebtedness outstanding, and any other limitations or restrictions contained in contracts and agreements, in each case as such agreements and contracts are in effect on the Issue Date;

 

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

 

(3)            this Indenture, the Intercreditor Agreement, the other Collateral Documents, the Notes and the Guarantees;

 

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

 

(5)           any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company 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, leases 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, mortgaged or leased of the nature described in clause (3) of Section 4.08(a);

 

(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 the provisions of Section 4.12 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, providers of Cash Management Arrangements, in each case, under contracts entered into in the ordinary course of business;

 

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(12)         encumbrances or restrictions of the nature described in clause (3) of Section 4.08(a) with respect to property under a charter, lease, sub-lease or other agreement (including any Drilling Contracts, charterparty agreements, rig operating, service or management agreements or pool agreements) that has been entered into in the ordinary course for the employment, charter or other hire of such property;

 

(13)          instruments governing Indebtedness, Disqualified Stock or Preferred Stock that is permitted to be Incurred subsequent to the Issue Date pursuant to Section 4.09; provided that, at the time such Indebtedness, Disqualified Stock or Preferred Stock is Incurred, either (a) such encumbrances or restrictions would not reasonably be expected to materially impair the Company’s ability to make scheduled payments of interest and principal on the Notes when due or any Guarantor’s ability to make payment under its Guarantee, as determined in good faith by the Board of Directors of the Company or a Financial Officer of the Company, or (b) the restrictions therein are not materially more restrictive, taken as a whole, than those contained in this Indenture and the Notes, as determined in good faith by the Board of Directors or a Financial Officer of the Company;

 

(14)          restrictions contained in Hedging Obligations permitted under this Indenture;

 

(15)          any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (14) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company, 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;

 

(16)          with respect to Section 4.08(a)(3), (i) Drilling Contracts with respect to any Vessels; provided that such encumbrance or restriction only extends to the Vessel or other such asset (other than cash or Cash Equivalents) subject to such Drilling Contract and (ii) any joint venture agreement or similar arrangement with respect to any Joint Venture that imposes restrictions on the transfer or assignment of the Equity Interests in such Joint Venture; and

 

(17)         any Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements or instruments governing such Permitted Refinancing Debt are not materially more restrictive, taken as a whole, than those contained in the agreements or instruments governing the Refinanced Indebtedness.

 

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Section 4.09               Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock.

 

(a)            The Company will not, and will 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,” and “Incurrence,” “Incurred” and “Incurring” shall have meanings correlative to the foregoing) any Indebtedness (including Acquired Debt) or issue any Disqualified Stock, and the Company will not permit any of the Restricted Subsidiaries to issue any shares of Preferred Stock; provided that the Company or any Guarantor may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock or Preferred Stock in an amount such that, after giving effect to such Incurrence or issuance and the application of the proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio would have been at least 2.0 to 1.0; and provided further, that (x) any such Indebtedness shall be unsecured and shall be guaranteed only by a Guarantor and (y) the final maturity date of such Indebtedness shall be no earlier than the date that is 91 days after the Maturity Date, the terms of such Indebtedness shall not provide for any scheduled repayment, mandatory redemption or sinking fund obligation prior to the date that is 91 days after the Maturity Date, and the Weighted Average Life to Maturity of such Indebtedness at the time such Indebtedness is incurred shall not be less than 91 days after the Weighted Average Life to Maturity at such time of the Notes issued on the Issue Date.

 

(b)           The provisions of Section 4.09(a) will not, however, prohibit the Incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

 

(1)            the Incurrence by the Company or any Guarantor of Indebtedness under the Notes (including the issuance of Notes as PIK Interest) and the Guarantees thereof, in each case issued on the Issue Date;

 

(2)            Indebtedness existing on the Issue Date and any guarantees thereof (other than Indebtedness described in clause (1) of this Section 4.09(b));

 

(3)            the Incurrence by the Company or any Guarantor of (a) Indebtedness consisting of First Lien Debt, the amount of which does not exceed $275 million plus the amount of any future reduction in the outstanding principal amount of the Notes, and (b) Indebtedness consisting of Junior Lien Debt or unsecured Indebtedness up to the greater of (A) $200 million and (B) 8% of Total Assets; provided that (I) any such Indebtedness incurred under this clause (3) shall be guaranteed only by a Guarantor and shall be secured only by assets that constitute Collateral, and (II) (x) if such Indebtedness constitutes First Lien Debt, then except as to Indebtedness constituting revolving credit loans and subject to the last paragraph of this Section 4.09(b), the final maturity date of such Indebtedness shall be no earlier than the Maturity Date, the terms of such Indebtedness shall not provide for any scheduled repayment, mandatory redemption or sinking fund obligation prior to the Maturity Date (other than on account of customary asset sale, casualty event and change of control provisions), and the Weighted Average Life to Maturity of such Indebtedness at the time such Indebtedness is incurred shall not be less than the Weighted Average Life to Maturity at such time of the Notes issued on the Issue Date, and (y) if such Indebtedness constitutes Junior Lien Debt, then, subject to the last paragraph of this Section 4.09(b), except for up to $50 million of such Indebtedness, the final maturity date of such Indebtedness shall be no earlier than the date that is 91 days after the Maturity Date, the terms of such Indebtedness shall not provide for any scheduled repayment, mandatory redemption or sinking fund obligation prior to the date that is 91 days after the Maturity Date (other than on account of customary asset sale, casualty event and change of control provisions), and the Weighted Average Life to Maturity of such Indebtedness at the time such Indebtedness is incurred shall not be less than 91 days after the Weighted Average Life to Maturity at such time of the Notes issued on the Issue Date;

 

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(4)            the Incurrence by the Company 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, in whole or in part, any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be Incurred under Section 4.09(a) or clause (2) or (11) of this Section 4.09(b) or this clause (4);

 

(5)            the Incurrence by the Company or any Restricted Subsidiary of intercompany Indebtedness between or among the Company and any of the Subsidiaries or Joint Ventures; provided that;

 

(A)            if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Company, or the applicable Guarantees, in the case of a Guarantor, including, for the avoidance of doubt, in accordance with the Global Intercompany Note; and

 

(B)             upon any (i) subsequent issuance or transfer of Equity Interests or any other event that results in any such Indebtedness being held by a Person other than the Company, a Subsidiary or a Joint Venture, or (ii) sale or other transfer of any such Indebtedness to a Person that is not the Company, a Subsidiary or a Joint Venture, the exception provided by this clause (5) 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, sale or transfer;

 

(6)            the Incurrence by the Company or any Restricted Subsidiary of Hedging Obligations in the ordinary course of business and not for speculative purposes:

 

(7)            the guarantee by the Company or any Guarantor of Indebtedness of the Company or a Guarantor that was permitted to be Incurred by another provision of this covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes or a Guarantee, then the guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness guaranteed;

 

(8)            (a) the Incurrence by the Company or any Restricted Subsidiary of Indebtedness in respect of bids, trade contracts, statutory obligations, workers’ compensation claims, self-insurance obligations, surety, customs, importation or appeal bonds (other than surety or appeal bonds related to judgments or litigation), performance bonds, bid bonds, performance guarantees, leases, letters of credit, or other Indebtedness of a like nature, in each case in the ordinary course of business and (b) surety or appeal bonds, supersedeas bonds or payment bonds and similar obligations related to judgments or litigation, provided that the aggregate amount of such bonds (other than such bonds in respect of tax assessments or liabilities) under this clause (b) does not exceed $75 million at any time;

 

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(9)            the Incurrence by the Company 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;

 

(10)          the Incurrence by the Company 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 Company 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 or any Person, 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 or any Person for the purpose of financing such acquisition; provided that, in the case of a disposition, the maximum aggregate 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 Company and the Restricted Subsidiaries in connection with such disposition;

 

(11)          Acquired Debt of the Company or any Restricted Subsidiary in an amount equal to the greater of (x) $300 million in the aggregate and (y) the amount that could be incurred (provided, after giving pro forma effect to the relevant transaction, no Default or Event of Default shall exist) in satisfaction of the following leverage ratio tests:

 

(A)            if such Acquired Debt is secured, then (x) the Liens are only of the type that are permitted pursuant to clause (3) or (11) of the definition of Permitted Liens, and (y) the Consolidated Secured Leverage Ratio shall be less than or equal to the greater of (I) 3.5:1.0 and (II) the Consolidated Secured Leverage Ratio immediately prior to the Incurrence of such Acquired Debt, calculated after giving pro forma effect (which shall assume that any Indebtedness that is in the nature of a revolving or asset-based nature is deemed to be fully drawn for purposes of such calculation, to the extent available to be drawn under such facility) to the acquisition or merger and the Incurrence of such Acquired Debt; and

 

(B)            if such Acquired Debt is unsecured, then the Consolidated Total Leverage Ratio shall be less than or equal to the greater of (x) 4.0:1.0 and (y) the Consolidated Total Leverage Ratio immediately prior to the Incurrence of such Acquired Debt, calculated after giving pro forma effect (which shall assume that any Indebtedness that is in the nature of a revolving or asset-based nature is deemed to be fully drawn for purposes of such calculation, to the extent available to be drawn under such facility) to the acquisition or merger and the Incurrence of such Acquired Debt;

 

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(12)          the Incurrence by the Company or any Guarantor of Indebtedness, together with any other Indebtedness Incurred pursuant to this clause (12) then outstanding, not in excess of the greater of $175 million and 7% of Total Assets; provided that (x) any such Indebtedness shall be unsecured and shall be guaranteed only by a Guarantor, and (y) subject to the last paragraph of this Section 4.09(b), the final maturity date of such Indebtedness shall be no earlier than the date that is 91 days after the Maturity Date, the terms of such Indebtedness shall not provide for any scheduled repayment, mandatory redemption or sinking fund obligation prior to the date that is 91 days after the Maturity Date (other than on account of customary asset sale, casualty event and change of control provisions), and the Weighted Average Life to Maturity of such Indebtedness at the time such Indebtedness is incurred shall not be less than 91 days after the Weighted Average Life to Maturity at such time of the Notes issued on the Issue Date;

 

(13)          Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations (or any guarantee thereof or indemnity with respect thereto), in each case, (i) Incurred by the Company or any Guarantor in order to (x) renovate, repair, improve, install or upgrade any Vessel or any other fixed or capital property, equipment or other assets, in each case used in the business of the Company or any Guarantor, and Permitted Refinancing Indebtedness in respect thereof, or (y) acquire, lease, construct or otherwise finance the purchase price of any fixed or capital property, equipment or other assets of the Company or any Guarantor, or (ii) Incurred by any Restricted Subsidiary to (x) renovate, repair, improve, install or upgrade any Vessel or any other fixed or capital property, equipment or other assets of such Restricted Subsidiary or (y) acquire, lease, construct or otherwise finance the purchase price of any fixed or capital property, equipment or other assets of such Restricted Subsidiary, and Permitted Refinancing Indebtedness in respect thereof, in an aggregate amount, together with any other Indebtedness Incurred pursuant to this clause (13) and Permitted Refinancing Indebtedness in respect thereof then outstanding, not to exceed the greater of $75 million and 3% of Total Assets;

 

(14)          Cash Management Obligations and obligations in respect of any agreement providing for credit cards or purchase cards;

 

(15)          Indebtedness Incurred in the ordinary course of business to finance take-or-pay obligations contained in supply arrangements;

 

(16)          the issuance of shares of Preferred Stock of a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided that any subsequent issuance or transfer of Equity Interests or any other event that results in any Restricted Subsidiary that holds such shares of Preferred Stock ceasing to be a Restricted Subsidiary or any other transfer of any such shares of Preferred Stock (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of shares of Preferred Stock not permitted by this clause (16);

 

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(17)            Indebtedness Incurred on behalf of, or representing guarantees of Indebtedness of, or Disqualified Stock or Preferred Stock of, Joint Ventures of the Company or any of its Restricted Subsidiaries, and Permitted Refinancing Indebtedness in respect thereof, so long as the amount of such Indebtedness, Disqualified Stock or Preferred Stock, together with any other Indebtedness, Disqualified Stock and Preferred Stock Incurred or issued pursuant to this clause (17) then outstanding, does not exceed $25 million;

 

(18)            Indebtedness Incurred or Disqualified Stock issued by the Company or any Restricted Subsidiary or Preferred Stock issued by any of the Restricted Subsidiaries to the extent that the net proceeds thereof are promptly deposited with the Trustee to satisfy and discharge the Notes in accordance with this Indenture;

 

(19)            the Incurrence by the Company or any Restricted Subsidiary of (i) Indebtedness, together with any other Indebtedness Incurred pursuant to this clause (19) and Permitted Refinancing Indebtedness in respect thereof then outstanding, not to exceed $700 million, which may be secured but only pursuant to clause (28) of the definition of Permitted Liens and (ii) Limited Recourse Debt, which may be secured but only pursuant to clause (28) of the definition of Permitted Liens; in each case for the purpose of financing a portion of the purchase price of one or more Vessels (including for the avoidance of doubt the DS-13 and the DS-14) in a single transaction or series of related transactions, so long as the Indebtedness (including the Limited Recourse Debt) Incurred in such transaction or series of related transactions pursuant to this clause (19) (other than such Indebtedness Incurred to finance a portion of the purchase price of the DS-13 and the DS-14) is not more than 85% of the purchase price for such acquired Vessel;

 

(20)            Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations (or any guarantee thereof or indemnity with respect thereto) Incurred by the Company or any Guarantor in order to fund the cost of up to two 20K Contracts in respect of Other Vessels owned by the Company or such Guarantor, in an aggregate amount, together with any other Indebtedness Incurred pursuant to this clause (20) then outstanding, not to exceed $300 million; and

 

(21)            to the extent constituting Indebtedness, prepayments for property or services under any Drilling Contract in the ordinary course of business.

 

For purposes of determining compliance with this Section 4.09, 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 (20) above or could be Incurred pursuant to Section 4.09(a), the Company 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 4.09. The accrual of interest or dividends on Preferred Stock or Disqualified Stock, 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 (including the payment of paid-in-kind interest), 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 covenant; provided, in each such case, that the amount of any such accrual, accretion or payment (including the payment of paid-in-kind interest) is included in Consolidated Interest Expense of the Company as accrued.

 

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For the avoidance of doubt, for purposes of determining compliance with this Section 4.09, if any such Indebtedness is issued or incurred in reliance on Total Assets and any Permitted Refinancing Indebtedness issued or incurred to refinance such Indebtedness would cause the percentage of Total Assets (as measured at the time of incurrence) to be exceeded if calculated based on the Total Assets on the date of such refinancing, such percentage of Total Assets will be deemed to not be exceeded, solely with respect to the Incurrence of such Permitted Refinancing Indebtedness, to the extent such Permitted Refinancing Indebtedness does not exceed the amount permitted under clause (i) of the definition of Permitted Refinancing Indebtedness.

 

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; and

 

(4)            in the case of Hedging Obligations, the termination value of the agreement or arrangement giving rise to such Hedging Obligations that would be payable by the specified Person at such date.

 

Notwithstanding anything to the contrary in this Indenture, the Company will not, and will not permit any Guarantor to, directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness) that is subordinated or junior in right of payment to any Indebtedness of the Company or such Guarantor, as the case may be, unless such Indebtedness is expressly subordinated in right of payment to the Notes or such Guarantor’s Guarantee to the extent and in the same manner as such Indebtedness is subordinated to other Indebtedness of the Company or such Guarantor, as the case may be.

 

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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 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.

 

Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or the applicable Restricted Subsidiary may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values

 

Notwithstanding the provisos regarding the final maturity date, scheduled repayment, mandatory redemption or sinking fund obligations and the Weighted Average Life to Maturity set forth in (i) Section 4.09(b)(3) as to First Lien Debt and Junior Lien Debt permitted thereunder and (ii) Section 4.09(b)(12) as to Indebtedness permitted thereunder, the Company or the Guarantors may Incur up to $50 million of such First Lien Debt, such Junior Lien Debt or such Indebtedness, in the aggregate, which First Lien Debt, Junior Lien Debt or Indebtedness does not comply with such provisos.

 

Section 4.10      Limitation on Asset Sales.

 

(a)            The Company will not, and will not permit any of the Restricted Subsidiaries to, directly or indirectly, consummate any Asset Sale unless:

 

(1)            the Company 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% of the consideration received in such Asset Sale by the Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents;

 

provided that the foregoing requirements shall not apply with respect to any Involuntary Transfer.

 

(b)            For purposes of Section 4.10(a), each of the following will be deemed to be cash:

 

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

 

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(2)            any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are, within 180 days after receipt thereof, converted by the Company or such Restricted Subsidiary into cash or Cash Equivalents, to the extent of the cash or Cash Equivalents received in that conversion.

 

(c)            Within 365 days after the receipt of any Net Proceeds (including, without limitation, an Involuntary Transfer), the Company 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 First Lien Debt; provided that if any such purchase, repayment or prepayment is made pursuant to this clause (1), the Company or the applicable Restricted Subsidiary shall equally and ratably repay or offer to repay Notes as provided in Section 3.07 through open-market purchases (to the extent such purchases are at or above 100% of the principal amount there-of) or by making an offer to Holders in accordance with the procedures set forth in Section 3.09 and this Section 4.10 for an Asset Sale Offer;

 

(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 as a result of such acquisition;

 

(3)            to make a capital expenditure (other than a maintenance capital expenditure) that is used or useful in a Permitted Business; 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 the payment of any related Ready for Sea Costs) 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 Company or the applicable Restricted Subsidiary to apply Net Proceeds in accordance with clauses (2), (3) and/or (4) above shall satisfy the requirements of such clauses with respect to such Net Proceeds so long as such Net Proceeds are actually so applied within 545 days from the receipt thereof from such Asset Sale and (y) if all or any portion of the assets sold or transferred in such Asset Sale constituted Collateral, in the case of any application of Net Proceeds pursuant to clause (2), (3) or (4) above, the Company shall, or shall cause the applicable Restricted Subsidiary to, as provided in Section 11.01(f)(ii), subject to the Agreed Security Principles, pledge any assets (including, without limitation, any acquired Capital Stock) acquired with such Net Proceeds to secure the Notes Obligations on a first-priority secured basis pursuant to the Collateral Documents in accordance with this Indenture.

 

(d)            Pending the final application of any Net Proceeds, the Company or the applicable Restricted Subsidiary may apply the Net Proceeds to temporarily reduce outstanding revolving credit Indebtedness of the Company or any of the Restricted Subsidiaries, respectively, or invest the Net Proceeds in cash and Cash Equivalents.

 

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(e)            Any Net Proceeds that are not applied or invested as provided in Section 4.10(c) will constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds $25 million, the Company shall, within 10 Business Days thereof, make an offer (an “Asset Sale Offer”) in accordance with Section 3.09 to all Holders and holders of any other First Lien Debt containing provisions similar to those set forth in this Indenture with respect to offers to purchase, prepay or redeem such First Lien Debt with the proceeds of sales of assets to purchase, prepay or redeem the Notes and such other First Lien Debt on a pro rata basis in an aggregate principal amount equal to the Excess Proceeds. The repurchase date in any Asset Sale Offer shall be specified by the Company, which date will be no earlier than 30 days and no later than 60 days from the date the notice of such Asset Sale Offer is delivered. The offer price in any Asset Sale Offer will be equal to 100% of the aggregate principal amount of the Notes, plus accrued and unpaid cash interest and Additional Amounts, if any, together with an amount of cash equal to all accrued and unpaid PIK Interest to, but not including, the date of purchase, subject to the rights of Holders of record on the relevant record date to receive interest due on the relevant Interest Payment Date, and will be payable in cash; provided that if the Asset Sale Offer is occurring as the result of an Asset Sale involving any of the ARO JV Related Assets or any of the Equity Interests held by the Valaris ARO Shareholder, then the applicable offer price will instead be equal to the sum of (i) the lesser of (A) 103% of the aggregate principal amount of the Notes and (B) the applicable redemption price for the Notes (expressed as percentages of principal amount) pursuant to Section 3.07 that the Company would have had to pay if it had elected to redeem Notes at such time, plus (ii) accrued and unpaid cash interest and Additional Amounts, if any, together with an amount of cash equal to all accrued and unpaid PIK Interest to, but not including, the date of purchase. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company and the Restricted Subsidiaries may use those Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes or other First Lien Debt tendered in such Asset Sale Offer exceeds the amount of Excess Proceeds, the Company will select the Notes and other First Lien Debt for purchase on a pro rata basis unless otherwise required by law or applicable stock exchange or Depository requirements (with such adjustments as may be deemed appropriate by the Company so that only Notes and other First Lien Debt in denominations of $1.00 and integral multiples of $1.00 in excess thereof will be outstanding after such purchase). For the purposes of calculating the principal amount of any such Indebtedness not denominated in U.S. 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.

 

(e)            The Company shall 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 Company shall comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.10 by virtue of such compliance.

 

(f)            The provisions of this Section 4.10 with respect to the Company’s obligation to make an Asset Sale Offer as a result of an Asset Sale may be waived or modified at any time with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding.

 

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(g)            Anything in this Indenture to the contrary notwithstanding, in no event shall (i) the Company or any Restricted Subsidiary sell, transfer or otherwise dispose of a Vessel to (x) an Unrestricted Subsidiary, other than the transfer of Other Vessels to the Unrestricted Floater Subsidiary as and to the extent permitted by this Indenture, or (y) an Excluded Subsidiary that is an Excluded Subsidiary pursuant to clause (a) of the definition thereof or (ii) any Restricted Subsidiary that is an Excluded Subsidiary pursuant to clause (a) of the definition thereof acquire a Vessel.

 

Section 4.11      Limitation on Transactions with Affiliates.

 

(a)            The Company will not, and will not permit any of the Restricted Subsidiaries to, make any payment to, or lease, sell, 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 Company (each, an “Affiliate Transaction”), unless:

 

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

 

(2)            with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10 million, the Company delivers to the Trustee a resolution adopted in good faith by the majority of the disinterested directors of the Board of Directors approving such Affiliate Transaction or series of related Affiliate Transactions and set forth in an Officers’ Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with clause (1) of this Section 4.11(a); and

 

(3)            with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $100 million, the Company delivers to the Trustee a letter from an Independent Financial Advisor stating that such Affiliate Transaction or series of related Affiliate Transactions complies with clause (1) of this Section 4.11(a).

 

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

 

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

 

(2)            payment of reasonable directors’ fees to directors of the Company or any Restricted Subsidiary;

 

(3)            transactions solely between or among the Company and/or any of the Restricted Subsidiaries;

 

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

 

(5)            loans or advances to employees of the Company or any Restricted Subsidiary in the ordinary course of business not to exceed $5 million in the aggregate at any one time outstanding;

 

(6)            transactions with a Person (other than an Unrestricted Subsidiary) that is an Affiliate of the Company that would otherwise constitute an Affiliate Transaction solely because the Company owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;

 

(7)            Restricted Payments that do not violate the provisions of Section 4.07;

 

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

 

(9)            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 materially less favorable, taken as a whole, to the Holders); and

 

(10)            transactions with customers, clients, suppliers, Joint Venture partners or purchasers or sellers of goods or services, in each case in the ordinary course of business of the Company and the Restricted Subsidiaries and otherwise in compliance with the terms of this Indenture; provided that such transactions are on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that could have been obtained at the same time of such transactions in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person.

 

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Section 4.12      Limitation on Liens.

 

The Company will not, and will not permit any of the Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien of any kind on any of its property or assets, except for Permitted Liens.

 

Section 4.13      Further Assurances; Additional Guarantees. Subject to the Agreed Security Principles:

 

(a)            If, after the Issue Date, (i) the Company acquires or creates any Restricted Subsidiary that is not an Excluded Subsidiary, (ii) any Subsidiary that is not an Excluded Subsidiary acquires any direct or indirect ownership interest in a Vessel, whether in use, idle or otherwise, or any Equity Interests or Indebtedness of any owner of a Vessel, (iii) a Restricted Subsidiary or Subsidiary that was previously an Excluded Subsidiary has ceased to meet the definition thereof or (iv) any Immaterial Subsidiary elects to provide a Guarantee, then the Company shall or shall cause such Person to, (x) within 30 Business Days after the date on which such Restricted Subsidiary is acquired or formed, the date of such acquisition, the date such Restricted Subsidiary ceases to meet the definition of Excluded Subsidiary or the date on which such Immaterial Subsidiary elects to provide a Guarantee, as applicable, execute and deliver to the Trustee a supplemental indenture substantially in the form of Annex A hereto pursuant to which such Person will become a Guarantor; provided that such form may be modified as necessary or advisable to comply with applicable local law or otherwise modified in a manner consistent with the Agreed Security Principles, and (y) use its commercially reasonable efforts to execute all applicable Collateral Documents (and/or supplements or joinder agreements thereto, as applicable) pursuant to which it will grant a Lien on any Collateral held by it in favor of the First Lien Collateral Agent, for the benefit of the Parity Lien Secured Parties (as defined in the Collateral Agent Agreement), and become a Collateral Grantor thereunder, and cause such Liens to be perfected as required thereby.

 

(b)            The Company and the Guarantors will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. The Company and the Guarantors will do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, as applicable, any and all such further acts, deeds, conveyances, security agreements, assignments, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments as may be reasonably required by the First Lien Collateral Agent from time to time, or that the First Lien Collateral Agent from time to time may reasonably request (but shall have no duty to), in order to:

 

(i)            create and perfect a Lien on any asset required to be Collateral;

 

(ii)           execute, deliver and perform under each Collateral Document to which such Person is required to be a party;

 

(iii)          carry out the terms and provisions of the Collateral Documents to which such Person is required to be a party;

 

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(iv)          maintain the validity, enforceability and priority of any of the required Collateral Documents and the Liens on the Collateral required to be created thereby; and

 

(v)           assure, convey, grant, assign, transfer, preserve, protect and confirm to the First Lien Collateral Agent any of the rights granted now or hereafter intended by the parties thereto to be granted to the First Lien Collateral Agent (and the Security Trustee) under the required Collateral Documents with respect to any asset required to be Collateral or under any other instrument executed in connection herewith.

 

In addition, subject to the Agreed Security Principles, each Restricted Subsidiary organized in any Subject Jurisdiction will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to create or perfect a Lien on the Equity Interests of such Restricted Subsidiary.

 

Notwithstanding anything set forth herein or in any other Note Documents, the parties hereto agree that each of Rowan Financial Holdings S.à.r.l. and ROWAN 240C#3, Inc. shall be joined as a Guarantor within sixty (60) days of the Issue Date, regardless of whether it constitutes a “Required Guarantor” as of the Issue Date.

 

Section 4.14      Existence.

 

Subject to Article 5, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence.

 

Section 4.15      Offer to Repurchase Upon Change of Control.

 

(a)            If a Change of Control occurs, the Company shall make an offer (a “Change of Control Offer”) to each Holder to repurchase all or any part (equal to a minimum amount of $1.00 and integral multiples of $1.00 in excess thereof) of that Holder’s Notes at a purchase price in cash (the “Change of Control Payment”) equal to 101% of the aggregate principal amount of Notes repurchased (including any PIK Notes or any increased principal amount of Notes as payment for PIK Interest), plus accrued and unpaid cash interest and Additional Amounts, if any, together with an amount of cash equal to all accrued and unpaid PIK Interest, on the Notes repurchased to, but not including, the date of purchase (the “Change of Control Payment Date”), subject to the rights of Holders of record 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 Company shall deliver a notice to the Trustee and paying agent and each Holder describing the Change of Control and the related transaction or transactions and stating:

 

(1)            that the Change of Control Offer is being made pursuant to this Section 4.15 and that all Notes properly tendered and not withdrawn pursuant to the Change of Control Offer will be accepted for payment;

 

(2)            the Change of Control Payment and the Change of Control Payment Date, which will be no earlier than 30 days and no later than 60 days from the date such notice is delivered;

 

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

 

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(4)            that, unless the Company 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 on and 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, properly endorsed for transfer, together with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes completed and such customary documents as the Company may reasonably request, 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 Change of Control Payment Date;

 

(6)            that Holders will be entitled to withdraw their election if the Paying Agent receives, prior to the close of business on the third Business Day preceding the Change of Control Payment Date, a facsimile transmission 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

 

(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 $1.00 in principal amount or an integral multiple of $1.00 in excess thereof.

 

The Company shall 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 laws or regulations conflict with the provisions of this Section 4.15, the Company shall comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.15 by virtue of such compliance.

 

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

 

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

 

(2)            deposit with the paying agent an amount equal to the Change of Control Payment in respect of all Notes or portions Notes properly tendered and not withdrawn; and

 

(3)            deliver or cause to be delivered to the Trustee and 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 Company.

 

(c)            The paying agent shall deliver to each Holder of Notes properly tendered and not withdrawn the Change of Control Payment for such Notes (including cash in an amount equal to accrued and unpaid PIK Interest) (or, if all the Notes are then in global form, make such payment through the facilities of the Depository) and the Trustee will 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.

 

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(d)            Notwithstanding anything to the contrary in this Section 4.15, the Company shall 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 Company and purchases all Notes properly tendered and not withdrawn under such Change of Control Offer, or (2) notice of redemption of all Notes has been given pursuant to Section 3.07, unless there is a default in payment of the applicable redemption price.

 

(e)            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.

 

(f)            The provisions of this Section 4.15 relating to the Company’s obligation to make a Change of Control Offer, including the definition of “Change of Control,” may be waived or modified at any time (including after a Change of Control) with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding.

 

Section 4.16      Designation of Restricted and Unrestricted Subsidiaries.

 

(a)            The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if:

 

(1)            the Company would be permitted to make (i) a Permitted Investment or (ii) an Investment pursuant to Section 4.07, in either case, in an amount equal to the Fair Market Value of all outstanding Investments owned by the Company and the Restricted Subsidiaries in such Subsidiary at the time of such designation;

 

(2)            such Restricted Subsidiary may be so designated in accordance with the definition of “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 Company delivers to the Trustee a certified copy of a resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions.

 

If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Company 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 or under the definition of Permitted Investments, as determined by the Company.

 

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If, at any time, any Unrestricted Subsidiary designated as such would fail to meet the preceding requirements as 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, and any Liens on the assets of such Subsidiary will be deemed to be Incurred by a Restricted Subsidiary as of such date and, if such Indebtedness or Liens are not permitted to be Incurred as of such date under Section 4.09 or 4.12, the Company or the applicable Restricted Subsidiary will be in default of such applicable Section.

 

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

 

(1)            the Company and the Restricted Subsidiaries may Incur the Indebtedness and Liens (and the Company and the Restricted Subsidiaries shall be deemed to Incur such Indebtedness and Liens upon such designation) of such Subsidiary under Sections 4.09 and 4.12;

 

(2)            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

 

(3)            the Company delivers to the Trustee a certified copy of a resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions.

 

Section 4.17      Business Activities.

 

The Company will not, and will not permit any of the Restricted Subsidiaries to, engage in any business other than Permitted Businesses and ownership of Persons engaged in Permitted Businesses, except to such extent as would not be material to the Company and the Restricted Subsidiaries taken as a whole.

 

Section 4.18      Payment of Additional Amounts.

 

(a)            All payments made by or on behalf of the Company or any Guarantor under or with respect to the Notes or the Guarantees 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 of whatever nature (including penalties, additions to tax, 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 any jurisdiction in which the Company or any Guarantor (including any successor entity) is incorporated, organized, carrying on a business through a branch, agency or permanent establishment or is or is treated as resident for tax purposes or any political subdivision thereof or therein or any jurisdiction by or through which payment is made by or on behalf of the Company or any Guarantor (including any successor entity) under or with respect to the Notes or Guarantees or any political subdivision thereof or therein (each a “Specified Tax Jurisdiction” and such Taxes, “Indemnified Taxes”), will at any time be required to be made from any payments made under or with respect to the Notes or the Guarantees, the Company, the relevant Guarantor 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 each Holder after such withholding or deduction (including any withholding or deduction from Additional Amounts) will not be less than the amount such Holder would have received if such Indemnified Taxes had not been withheld or deducted; provided that Indemnified Taxes do not include:

 

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(1)            any Taxes to the extent such Taxes would not have been so imposed but for the Holder (or a fiduciary, settlor, beneficiary, member or shareholder of such Holder, if such Holder is an estate, a trust, a partnership, or a corporation) having any present or former connection with the Specified Tax Jurisdiction, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member or shareholder) being or having been a citizen or resident thereof or being or having been engaged in a trade or business or present therein or having, or having had, a permanent establishment therein (other than the mere acquisition, ownership, holding, enforcement, exercise of rights or receipt of payment in respect of the Notes or the Guarantees);

 

(2)            any estate, inheritance, gift, sales, excise, transfer, capital gains, personal property Tax or similar Taxes;

 

(3)            any Taxes to the extent such Taxes are imposed as a result of the failure of the Holder or beneficial owner of the Notes to complete, execute and deliver to the Company or the relevant Guarantor, as applicable, any form or document that such Holder or beneficial owner is legally entitled to complete, execute, and deliver, that may be required by law or by reason of administration of such law and that is reasonably requested in writing to be delivered to the Company or the relevant Guarantor in order to enable the Company or the relevant Guarantor 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 Company or the relevant Guarantor;

 

(4)            any Taxes to the extent such Taxes 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);

 

(5)            any Taxes to the extent such Taxes are 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;

 

(6)            any Taxes to the extent such Taxes are payable other than by deduction or withholding at source;

 

(7)            Taxes imposed pursuant to sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), any regulations thereunder or official interpretations thereof, any intergovernmental agreement between the United States and another jurisdiction facilitating the implementation thereof (or any fiscal or regulatory legislation, rules or practices implementing such an intergovernmental agreement), or any agreement entered into pursuant to section 1471(b)(1) of the Code; or

 

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(8)            any combination of items (1) through (7) above.

 

(b)            If the Company or any Guarantor, as applicable, becomes obligated to pay Additional Amounts with respect to any payment under or with respect to the Notes or the Guarantees, the Company or the relevant Guarantor, 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 Company or the relevant Guarantor, as applicable, will deliver to the Trustee and Paying Agent promptly thereafter but in no event later than five 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 as to the amount of such payments and that such payments are necessary. The Company or the relevant Guarantor, 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 Company or the relevant Guarantor or applicable withholding agent, 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 Company or the relevant Guarantor or applicable withholding agent, as applicable, 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 Company to the 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 the Guarantees, such reference will be deemed to include payment of Additional Amounts as described in this Section 4.18 to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof. For the avoidance of doubt, with respect to Notes represented by a Global Note, a Holder with respect to Additional Amounts and the related provisions of this Indenture shall be deemed to include a Holder representing the interests of a beneficial owner of the Notes or acting on behalf of a beneficial owner of the Notes.

 

(e)            The Company or the relevant Guarantor, as applicable, will pay any present or future stamp, issue, registration, value added, court or documentary taxes or any other excise or property taxes, charges or similar levies (including penalties, additional amounts, interest and any other liabilities and reasonable expenses related thereto) that arise in any Specified Tax Jurisdiction from the execution, delivery, enforcement or registration of the Notes, the Guarantees, this Indenture or any other document or instrument in relation thereof, or the receipt of any payments with respect to the Notes or the Guarantees, and the Company or the relevant Guarantor, as applicable.

 

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(f)            The obligations of the Company and the Guarantors under this Section 4.18 will survive any termination, defeasance or discharge of this Indenture and any transfer by a Holder of its Notes, and will apply mutatis mutandis to any jurisdiction in which any successor person to the Company or any Guarantor is organized, incorporated, engaged in business or is otherwise resident or treated as resident for tax purposes or any jurisdiction from or through which payment is made or any political subdivision or authority or agency thereof or therein.

 

Section 4.19      Suspended Covenants.

 

(a)            During any period of time (1) the Notes have an Investment Grade Rating and (2) no Default or Event of Default has occurred and is continuing under this Indenture, the Company and the Restricted Subsidiaries will not be subject to the provisions of Sections 4.07, 4.09, 4.10 and 5.01(a)(3) of this Indenture (collectively, the “Suspended Covenants”).

 

(b)            In the event that the Company and the Restricted Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of Section 4.19(a) and, subsequently, Moody’s, S&P or Fitch, as applicable, withdraws its rating or downgrades the rating 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 “Reversion Date”), then the Company and the Restricted Subsidiaries shall, on and after the Reversion Date, be subject to the Suspended Covenants. The period of time between the date the Suspended Covenants become suspended and the Reversion Date is referred to herein as the “Suspension Period.” During the Suspension Period, the Board of Directors of the Company may not designate any of the Restricted Subsidiaries as Unrestricted Subsidiaries pursuant to Section 4.16. Notwithstanding that the Suspended Covenants may be reinstated, no Default, Event of Default or breach of any kind under this Indenture or the Notes will be deemed to have occurred as a result of a failure of the Company and the Restricted Subsidiaries to comply with a Suspended Covenant during the Suspension Period.

 

(c)            Calculations made on and after the Reversion Date of the amount available to be made as Restricted Payments under Section 4.07 will be made as if Section 4.07 had been in effect at all times since the Issue Date, but not during the Suspension Period, and no Default or Event of Default will be deemed to have occurred solely by reason of a Restricted Payment made during the Suspension Period. On the Reversion Date, all Indebtedness Incurred during the continuance of the Suspension Period will be classified as having been incurred pursuant to clause (2) of Section 4.09(b).

 

(d)            The Company shall provide the Trustee and Holders with prompt written notice of any event or events giving rise to a Suspension Period or a Reversion Date, the date thereof and identifying the Suspended Covenants. The Trustee shall have no duty to monitor the ratings of the Notes or the occurrence of a Suspension Period or a Reversion Date, or to notify Holders of the same.

 

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(e)            Notwithstanding that the Suspended Covenants may be reinstated, without causing a Default or Event of Default, following a Reversion Date the Company and the Restricted Subsidiaries shall be permitted to honor any contractual commitments entered into during the Suspension Period; provided that such contractual commitments were entered into during the Suspension Period and not in contemplation of a reversion of the Suspended Covenants.

 

Section 4.20      Maintenance of Insurance. The Company shall maintain, with financially sound and reputable insurance companies, insurance (subject to customary deductibles and retentions) in such amounts and against such risks as are customarily maintained by similarly situated companies engaged in the same or similar businesses operating in the same or similar locations or as is appropriate, as such customary industry practices change from time to time, and cause the Company and the Guarantors to be listed as insured and shall use its best efforts (it being acknowledged and agreed that such standard shall not require the Company to change its insurer unless it is commercially reasonable to do so) to: (x) cause the First Lien Collateral Agent to be listed as loss payee on property and property casualty policies with respect to the Collateral Vessels; and (y) cause the First Lien Collateral Agent to be listed as an additional insured (or equivalent) on liability policies with respect to the Collateral Vessels, or as loss payee on liability policies, in the format customary for the applicable market, with respect to the Collateral Vessels; provided that in the case of each of the foregoing clause (x) and clause (y), so long as the relevant insurer has not received notice of a Notified Parity Lien Default (as defined in the Collateral Agency Agreement), any insurance proceeds payable by such insurer pursuant to any such insurance policy shall be paid to the Company or the relevant Guarantor; provided, further that any such proceeds received by the Company or any Guarantor shall be applied in accordance with Section 4.10. Notwithstanding the foregoing, self-insurance by the Company or any Subsidiary, through deductibles, self-insured retentions or coinsurance, coverage placed through captive insurance or otherwise, shall not be deemed a violation of this Section 4.20 so long as such self-insurance is reasonable and prudent considering the Company’s and the Guarantors’ business, properties and loss history, applicable governmental requirements, and applicable customary industry practices (including without limitation those in connection with deepwater operations), in each case as they change from time to time; provided that any proceeds of any insurance coverage placed through a captive insurer shall be treated in the same manner as the proceeds of insurance maintained with an insurance company. The Company may maintain its Guarantors’ insurance on behalf of them.

 

Section 4.21      [Reserved].

 

Section 4.22      ARO JV Shareholder and ARO Indebtedness.

 

(a)            The Company shall not permit ARO JV Shareholder to engage in any material business other than as incidental to its ownership of ARO JV Related Assets.

 

(b)            In the event that the Company or any of its Subsidiaries receives cash or Cash Equivalents in respect of any repayment or prepayment of any Indebtedness of ARO, such cash and Cash Equivalents shall be treated as Net Proceeds and shall be subject to the provisions of Section 4.10(c).

 

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Article 5
SUCCESSORS

 

Section 5.01      Merger, Consolidation, or Sale of Assets.

 

(a)            The Company will not, directly or indirectly: (A) amalgamate, consolidate or merge with or into another Person (whether or not the Company is the Person formed by or surviving any such amalgamation, consolidation or merger); or (B) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company 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)            either (x) the Company will be the surviving or continuing Person or (y) 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 is a Person organized or existing under the laws of a Permitted Jurisdiction (the Company or such Person, as the case may be, being herein called the “Successor Company”);

 

(2)            the Successor Company (if other than the Company) assumes all the obligations of the Company under the Notes and the other Notes Obligations and the Collateral Documents to which the Company is a party, if any, and agrees to be bound by all the provisions of this Indenture and such Collateral Documents pursuant to a supplemental indenture or an amendment thereto, as applicable;

 

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

 

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

 

(5)            if applicable, the Successor Company causes such amendments, supplements or other instruments with respect to the Collateral Documents 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 First Lien Collateral Agent on any Collateral owned by or transferred to the Successor Company and delivers an opinion of counsel as to the enforceability thereof and such other matters as the Trustee may reasonably request;

 

(6)            any Collateral owned by or transferred to the Successor Company shall (a) continue to constitute Collateral under this Indenture and the Collateral Documents, (b) be subject to the Lien in favor of the First Lien Collateral Agent for the benefit of the Parity Lien Secured Parties (as defined in the Collateral Agency Agreement), and (c) not be subject to any other Lien other than Permitted Liens; and

 

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(7)            the Company or Successor Company delivers to the Trustee an Officers’ Certificate and Opinion of Counsel, in each case, stating that such amalgamation, consolidation, merger or transfer and any supplemental indentures and each amendment comply with this Section 5.01(a).

 

For purposes of the foregoing, entry by the Company or any Subsidiary of the Company into one or more Drilling Contracts with respect to any Vessels entered into in the ordinary course of business will be deemed not to constitute a sale, assignment, transfer, conveyance or other disposition subject to this Section 5.01(a).

 

(b)            The Company shall not permit any Guarantor to, directly or indirectly, amalgamate, consolidate or merge with or into (whether or not such Guarantor is the surviving Person), another Person or sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of such Guarantor, in one transaction or a series of related transactions, including by way of liquidation or dissolution, to another Person, unless:

 

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

 

(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, assignment, transfer, conveyance or other disposition has been made is a Person organized or existing under the laws of a Permitted Jurisdiction (such Guarantor or such Person, as the case may be, being herein called the “Successor Guarantor”), if other than such Guarantor, expressly assumes all the obligations of such Guarantor under this Indenture and its Guarantee and any Collateral Documents pursuant to a supplemental indenture or other documents or instruments;

 

(B)            in the event that the Successor Guarantor is organized in a jurisdiction that is different from the jurisdiction in which such Guarantor was organized immediately before giving effect to such transaction, the Successor Guarantor has delivered to the Trustee and Collateral Agent an opinion of counsel stating that the obligations of the Successor Guarantor under this Indenture, the Notes and the Collateral Documents are enforceable under the laws of such Permitted Jurisdiction, subject to customary exceptions;

 

(C)            if applicable, the Successor Guarantor causes such amendments, supplements or other instruments with respect to the Collateral Documents 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 First Lien Collateral Agent on any Collateral owned by or transferred to the Successor Guarantor and delivers an Opinion of Counsel as to the enforceability thereof and such other matters as the Trustee may reasonably request;

 

(D)            any Collateral owned by or transferred to the Successor Guarantor shall (a) continue to constitute Collateral under this Indenture and the Collateral Documents, (b) be subject to the Lien in favor of the First Lien Collateral Agent for the benefit of the holders of the First Lien Obligations, and (c) not be subject to any other Lien other than Permitted Liens; and

 

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(E)            the Company delivers to the Trustee an Officers’ Certificate and Opinion of Counsel, each stating that such amalgamation, merger, consolidation or transfer and any supplemental indentures and amendments delivered in connection therewith comply with this Section 5.01(b); or

 

(2)            such amalgamation, consolidation, merger or transfer does not violate the provisions of Section 4.10;

 

provided that, notwithstanding the foregoing, any Guarantor may, directly or indirectly, amalgamate, consolidate or merge with or into the Company or another Guarantor and any Guarantor may sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of such Guarantor, in one transaction or a series of related transactions, including by way of liquidation or dissolution, to the Company or another Guarantor, provided that the Company or the applicable Guarantor(s) shall comply with the Agreed Security Principles.

 

Section 5.02      Successor Substituted.

 

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 Company or a Guarantor in accordance with Section 5.01 in which the Company or such Guarantor is not the surviving entity, the Successor Company or Successor Guarantor shall succeed to, and be substituted for (so that from and after the date of such amalgamation, consolidation or merger, sale, assignment, transfer, conveyance or other disposition, the provisions of this Indenture referring to the “Company” or the “Guarantor” shall refer instead to the Successor Company or Successor Guarantor and not to the Company or such Guarantor, respectively), and may exercise every right and power of, the Company or the Guarantor under this Indenture with the same effect as if the Successor Company or Successor Guarantor had been named as the Company or a Guarantor in this Indenture; provided that the Company or such Guarantor shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale, assignment, transfer, conveyance or other disposition of all or substantially all of the Company’s assets that meets the requirements of this Indenture.

 

Article 6

DEFAULTS AND REMEDIES

 

Section 6.01      Events of Default.

 

Each of the following is an “Event of Default:

 

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

 

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(b)            default in the payment when due (at maturity, upon optional redemption, upon declaration of acceleration or otherwise) of the principal of, or premium, if any, on, the Notes or failure by the Company to redeem or repurchase the Notes when required pursuant to this Indenture or the Notes;

 

(c)            failure by the Company or any Guarantor to comply with Section 5.01;

 

(d)            failure by the Company or any of the Restricted Subsidiaries for 60 days after notice to the Company 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 (a) and (b) above) contained in this Indenture, the Collateral Documents or the Notes;

 

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

 

(1)            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

 

(2)            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 $50 million or more; provided 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;

 

(f)            failure by the Company or any of the Restricted Subsidiaries to pay final judgments entered by a court or courts of competent jurisdiction aggregating in excess of $50 million, which judgments are not paid, discharged or stayed for a period of 60 days and, in the event such judgments are covered by insurance (and the applicable insurance provider has been notified of such judgments and has not denied coverage), an enforcement action proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed;

 

(g)            (1) the Collateral Documents shall for any reason cease to create a valid and perfected first-priority Lien (except to the extent creation of such perfected first-priority Lien is not required under the Agreed Security Principles) on any portion of the Collateral having a Fair Market Value in excess of $25 million (in each case, other than in accordance with the terms of this Indenture, the Intercreditor Agreement or the terms of the Collateral Documents) or (2) the Company or any Restricted Subsidiary asserts in writing that any Lien created under the Collateral Documents is invalid or unenforceable;

 

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(h)           except as permitted by this Indenture or any Guarantee, any Guarantee of a Significant Subsidiary 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 that is a Significant Subsidiary, or any Person duly acting on behalf of any such Guarantor, denies or disaffirms its obligations under its Guarantee;

 

(i)            the Company, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, pursuant to or within the meaning of Bankruptcy Law:

 

(1)            commences a voluntary case,

 

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

 

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

 

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

 

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

 

(j)            a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(1)            is for relief against the Company, 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;

 

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

 

(3)            orders the liquidation of the Company, 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

 

(4)            and the order or decree remains unstayed and in effect for 60 consecutive days; or

 

(k)            an event of default shall occurred under the Unrestricted Floater Subsidiary Credit Facility by reason of (i) a change of control (as provided in Annex E-1) or (ii) a violation of the anti-hoarding provisions thereof (as described in Annex E-1) and either the lender(s) thereunder shall fail to terminate the Unrestricted Floater Subsidiary Credit Facility and accelerate the Indebtedness thereunder or, having accelerated such Indebtedness, shall fail to undertake all commercially reasonable efforts to collect such Indebtedness.

 

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Section 6.02      Acceleration.

 

Subject to the succeeding sentence, if any Event of Default occurs and is continuing, the Trustee, by written notice to the Company, or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes, by written notice to the Company and the Trustee, may declare all the Notes to be due and payable immediately. Notwithstanding the preceding sentence, if an Event of Default specified in clause (i) or (j) of Section 6.01 occurs, all outstanding Notes shall become due and payable immediately without further action or notice.

 

The 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 and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except with respect to nonpayment of principal, interest, premium or Additional Amounts, if any, that have become due solely because of the acceleration) have been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereon.

 

Section 6.03      Other Remedies.

 

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of and interest, premium, if any, and Additional Amounts, if any, 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. All remedies are cumulative to the extent permitted by law.

 

Section 6.04      Waiver of Past Defaults.

 

The 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, waive any existing Default or Event of Default and its consequences under this Indenture except a continuing Default or Event of Default in the payment of principal of, premium, if any, interest, if any, or Additional Amounts, if any, on, the Notes (other than a Payment Default or payment Event of Default that resulted from an acceleration that has been rescinded). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

 

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Section 6.05      Control by Majority.

 

The Holders of a majority in aggregate principal amount of the then outstanding Notes have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or the First Lien Collateral Agent or of exercising any trust or power conferred on the Trustee or the First Lien Collateral Agent, including arising under or in connection with this Indenture, the Collateral Documents or applicable law. However, the Trustee or the First Lien Collateral Agent, as the case may be, may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee or First Lien Collateral Agent, as the case may be, determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in any financial or personal liability. In case an Event of Default has occurred and is continuing, prior to taking any action hereunder, the Trustee and First Lien Collateral Agent shall be entitled to indemnification or security (or both) satisfactory to the Trustee and First Lien Collateral Agent, respectively, against all loss, liability and expenses caused by the taking or not taking of such action.

 

Section 6.06      Limitation on Suits.

 

Except to enforce the right to receive payment of principal, premium, if any, or interest or Additional Amounts, if any, when due, pursuant to Section 6.07, no Holder may pursue any remedy with respect to this Indenture or the Notes unless:

 

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

 

(b)            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;

 

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

 

(d)            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

 

(e)            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.

 

A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.

 

Section 6.07      Rights of Holders of Notes to Receive Payment.

 

Notwithstanding any other provision of this Indenture, the rights of any Holder to receive payment of principal of, premium, if any, interest, if any, or Additional Amounts, if any, on, the Notes, on or after the respective due dates expressed in the Notes (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.

 

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Section 6.08      Collection Suit by Trustee.

 

If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company and the Guarantors for the whole amount of principal of, interest, premium, if any, and Additional Amounts, if any, remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and Additional Amounts, if any, 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, its agents and counsel.

 

Section 6.09      Trustee is Authorized to 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 and First Lien Collateral Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, First Lien Collateral Agent, and each of their agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (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 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 and First Lien Collateral Agent any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee and First Lien Collateral Agent under Section 7.07. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, First Lien Collateral Agent, and each of their agents and counsel, and any other amounts due the Trustee and First Lien Collateral Agent under Section 7.07 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 pursuant to this Article 6, subject to the Intercreditor Agreement and the Collateral Agency Agreement, it shall pay out the money in the following order:

 

(a)            First: to the Trustee and its agents and attorneys for amounts due under Section 7.07, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and costs and expenses of collection incurred by the Trustee;

 

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

 

(c)            Third: to the Company or to such other Person as a court of competent jurisdiction shall direct.

 

The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10.

 

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, 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 pursuant to Section 6.07, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.

 

Section 6.12      The First Lien Collateral Agent.

 

Whenever in the exercise of any remedy available to the Trustee or the exercise of any trust or power conferred on it with respect to the Notes, the Trustee may also direct the First Lien Collateral Agent in the exercise of any of the rights and remedies available to the First Lien Collateral Agent pursuant to the Collateral Documents.

 

Article 7
TRUSTEE

 

Section 7.01      Duties of Trustee.

 

(a)            If an Event of Default has occurred and is continuing, the Trustee shall exercise such of 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:

 

(i)            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, as modified or supplemented by a supplemental indenture, if any, and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

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(ii)            in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

 

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

 

(i)            this clause (c) does not limit the effect of clause (b) of this Section 7.01;

 

(ii)           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 grossly negligent in ascertaining the pertinent facts; and

 

(iii)          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.

 

(d)            Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to clauses (a), (b), (c) and (f) 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 Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

 

(f)            No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability.

 

(g)            The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its rights to be indemnified, are extended to, and shall be enforceable by, the Trustee, the First Lien Collateral Agent and the other Agents, in each of its capacities hereunder and in its capacity as Trustee and First Lien Collateral Agent under any other agreement executed in connection with this Indenture to which the Trustee or First Lien Collateral Agent is a party.

 

(h)            Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of the Trust Indenture Act.

 

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 own selection and the written advice of such counsel or any Opinion of Counsel shall 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.

 

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(c)            The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed by it 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 that the Trustee’s conduct does not constitute willful misconduct or gross negligence.

 

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

 

(f)            If an Event of Default occurs and is continuing, the Trustee shall 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 the Trustee against any loss, liability or expense that might be incurred by it in compliance with such request or direction.

 

(g)            The Trustee shall not be deemed to have knowledge of any Default or Event of Default except: (1) any Event of Default occurring pursuant to Section 6.01(a) or 6.01(b), if the Trustee is also the Paying Agent; or (2) any Default or Event of Default of which a Responsible Officer of the Trustee shall have received written notification.

 

(h)            The permissive rights of the Trustee to act hereunder shall not be construed as a duty.

 

(i)            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.

 

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

 

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 Company, any Guarantor or any of their Affiliates with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest (as defined in the Trust Indenture Act of 1939, amended), it must eliminate that conflict within 90 days or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Section 7.10.

 

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Section 7.04      Trustee’s Disclaimer.

 

The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Notes or any other Note Document, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall 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 if, in accordance with Section 7.02(g), the Trustee has knowledge thereof, the Trustee shall deliver to the Holders a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, or interest, premium, or Additional Amounts, if any, on, any Note, the Trustee may withhold the notice if and so long as the Trustee in good faith determines that withholding the notice is in the interests of the Holders.

 

Section 7.06      Reports by Trustee to Holders.

 

Within 60 days after each December 31 beginning December 31, 2021, the Trustee shall mail to each Holder a brief report dated as of such December 31 that complies with Section 313(a) of the Trust Indenture Act if and to the extent required thereby. The Trustee also shall comply with Section 313(c) of the Trust Indenture Act.

 

A copy of each report at the time of its mailing to Holders shall be filed with the SEC and each stock exchange (if any) on which the Notes are listed. The Company agrees to notify the Trustee promptly in writing whenever the Notes become listed on any stock exchange and of any delisting thereof and the Trustee shall comply with Section 313(d) of the Trust Indenture Act.

 

Section 7.07      Compensation and Indemnity.

 

The Company shall pay to the Trustee from time to time such reasonable compensation as the Company and the Trustee may agree in writing for the Trustee’s acceptance of this Indenture and services hereunder. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

 

The Company and the Guarantors shall indemnify the Trustee, jointly and severally, against any and all losses, liabilities, damages, claims or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses (including, without limitation, fees and expenses of counsel) of enforcing this Indenture against the Company and the Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Company, any Guarantor or 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, damage, claim or expense may be attributable to its gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final, nonappealable judgment. The Trustee shall notify the Company and the Guarantors promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company and the Guarantors shall not relieve the Company or the Guarantors of their obligations hereunder. The Company and the Guarantors shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Company and the Guarantors shall pay the reasonable fees and expenses of such counsel. Neither the Company nor any Guarantor need pay for any settlement made without its consent, which consent shall not be unreasonably withheld.

 

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The Company and the Guarantors, jointly and severally, agree: (i) to pay to agents, counsel, accountants and experts retained by the Holders of a majority in aggregate principal amount of the outstanding Notes (as a single group) compensation for their respective services to the Holders of a majority in aggregate principal amount of the outstanding Notes incurred in connection with the negotiations, preparation, execution and delivery of the Collateral Documents, and (ii) to reimburse the Holders of a majority in aggregate principal amount of the outstanding Notes (as a single group) upon request for all reasonable out-of-pocket expenses that they Incur or pay in connection with the enforcement or protection of their rights under or in connection with this Indenture and the other Collateral Documents, including costs of collection (such expenses shall include the reasonable compensation and expenses, disbursements and advances of, as applicable, agents, counsel, accountants and experts), including, in each case, the costs and expenses of enforcing this Indenture or other Collateral Documents against the Company and the Guarantors (including this Section 7.07) and defending themselves against any claim asserted by the Company, the Guarantors or any other Person (other than a Holder in its capacity as such)) or liability in connection with this Indenture or any other Collateral Documents.

 

The obligations of the Company and the Guarantors under this Section 7.07 shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee.

 

To secure the Company’s and the Guarantors’ payment obligations in this Section 7.07, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal, premium, if any, and interest or Additional Amounts, if any, on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee.

 

When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(i) or 6.01(j) 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.

 

The immunities, protections and exculpations available to the Trustee under this Indenture shall also be available to the First Lien Collateral Agent and each other Agent, and the Company’s and each Guarantor’s obligations under this Section 7.07 to compensate and indemnify the Trustee shall extend likewise to the First Lien Collateral Agent and each other Agent.

 

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Section 7.08      Replacement of Trustee.

 

A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08.

 

The Trustee may resign in writing upon thirty (30) days’ notice at any time and be discharged from the trust hereby created by so notifying the Company. 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 Company in writing and may appoint a successor trustee. The Company may remove the Trustee if:

 

(a)            the Trustee fails to comply with Section 7.10;

 

(b)            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;

 

(c)            a receiver, Custodian or public officer takes charge of the Trustee or its property; or

 

(d)            the Trustee becomes incapable of acting.

 

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor trustee; provided that if such Holders do not reasonably promptly appoint a successor Trustee, then the Company shall appoint a successor Trustee.

 

If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% of the aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction, at the expense of the Company, for the appointment of a successor Trustee.

 

If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. 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 its succession to the Holders. The retiring Trustee shall 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. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company’s and the Guarantors’ obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

 

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Section 7.09      Successor Trustee by Merger, etc.

 

If the Trustee consolidates with, or merges or converts into, or transfers or sells all or substantially all of its corporate trust business or assets to, another corporation or banking association, the successor corporation or banking association without any further act shall be the successor Trustee. As soon as practicable, the successor Trustee shall mail a notice of its succession to the Company and the Holders.

 

Section 7.10      Eligibility; Disqualification.

 

There shall at all times be a Trustee hereunder that satisfies the requirements of Section 310(a)(1), (2) and (5) of the Trust Indenture Act in every respect. The Trustee shall be 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 that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. No obligor upon the Notes shall serve as a Trustee. The Trustee shall comply with Section 310(b) of the Trust Indenture Act; provided that there shall be excluded from the operation of Section 310(b)(1) of the Trust Indenture Act any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Issuer are outstanding if the requirements for such exclusion set forth in Section 310(b)(1) of the Trust Indenture Act are met.

 

Section 7.11      Preferential Collection of Claims Against the Issuer.

 

The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent indicated.

 

Article 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE

 

Section 8.01      Option to Effect Legal Defeasance or Covenant Defeasance.

 

The Company may, at any time, elect to have either Section 8.02 or Section 8.03 be applied with respect to all outstanding Notes and all obligations of the Guarantors upon compliance with the conditions set forth below in this Article 8.

 

Section 8.02      Legal Defeasance and Discharge.

 

Upon the Company’s exercise under Section 8.01 of the option applicable to this Section 8.02, subject to the satisfaction of the conditions set forth in Section 8.04, the Company shall be deemed to have discharged its obligations with respect to all outstanding Notes and, to the extent related to the Notes and the Guarantees, the Collateral Documents to which it is a party, each Guarantor shall be deemed to have discharged its obligations with respect to its Guarantee and, to the extent related to the Notes and the Guarantees, the Collateral Documents to which it is a party and each other Collateral Grantor shall be deemed to have discharged its obligations with respect to the Collateral Documents, to the extent related to the Notes and the Guarantees, to which it is a party, on the date the conditions set forth in Section 8.04 below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, Legal Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, and each Guarantor shall be deemed to have paid and discharged its Guarantee (which in each case shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 and the other Sections of this Indenture referred to in clauses (a) and (b) below) and to have satisfied all its other obligations under the Notes or such Guarantees and this Indenture, and the Company and the other Collateral Grantors shall be deemed to have satisfied all of their obligations under the Collateral Documents, to the extent related to the Notes and the Guarantees (and the Trustee, on demand of and at the expense of the Company, shall execute such instruments reasonably requested by the Company acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:

 

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(a)            the rights of Holders of outstanding Notes to receive payments in respect of the principal of, and premium, interest (including PIK Interest) and Additional Amounts, if any, on, such Notes when such payments are due from the trust referred to in Section 8.04;

 

(b)            the Company’s obligations with respect to the Notes under Sections 2.03, 2.04, 2.06, 2.07, 2.10 and 4.02 and the Appendix;

 

(c)            the rights, powers, trusts, duties, indemnities and immunities of the Agents, and the Company’s and the Guarantors’ obligations in connection therewith and under Section 7.07; and

 

(d)            the Legal Defeasance and Covenant Defeasance provisions of this Article 8.

 

Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03.

 

Section 8.03      Covenant Defeasance.

 

Upon the Company’s exercise under Section 8.01 of the option applicable to this Section 8.03, the Company and each of the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04, be released from their respective obligations under the covenants contained in Article 4 (other than those in Sections 4.01, 4.02, 4.04, 4.06, 4.14, and 4.18) and in Article 11 and under all Collateral Documents, to the extent related to the Notes and the Guarantees, to which it is a party on and after the date the conditions set forth in Section 8.04 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 (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes and Guarantees, the Company and any Guarantor may omit to comply with and shall 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 shall not constitute a Default or an Event of Default under Section 6.01, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company’s exercise under Section 8.01 of the option applicable to this Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04, Sections 6.01(e) through 6.01(h) shall not constitute Events of Default.

 

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Section 8.04      Conditions to Legal or Covenant Defeasance.

 

In order to exercise either Legal Defeasance or Covenant Defeasance:

 

(a)            the Company must irrevocably deposit with the Trustee, 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 such amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants, to pay the principal of, and premium, if any, and cash interest and Additional Amounts, if any, on, the outstanding Notes (including an amount of cash equal to all accrued and unpaid PIK Interests to the applicable date) on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to such stated date for payment or to a particular redemption date;

 

(b)            in the case of an election under Section 8.02, the Company shall have delivered to the Trustee, the Registrar and the Paying Agent an Opinion of Counsel confirming that:

 

(1)            the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or

 

(2)            since the Issue Date, there has been a change in the applicable U.S. 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 U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. 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;

 

(c)            in the case of an election under Section 8.03, the Company shall have delivered to the Trustee, the Registrar and the Paying Agent an Opinion of Counsel confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. 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;

 

(d)            no Default or Event of Default shall have occurred and be 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 pursuant to this Section 8.04 (and any similar concurrent deposit relating to other Indebtedness) or the grant of any Lien securing such borrowing);

 

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(e)            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 Company or any of the Restricted Subsidiaries is a party or by which the Company or any of the Restricted Subsidiaries is bound;

 

(f)            the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders over the other creditors of the Company or any Guarantor with the intent of defeating, hindering, delaying or defrauding any creditors of the Company, any Guarantor or others; and

 

(g)            the Company shall have delivered to the Trustee 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.

 

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

 

Subject to Section 8.06, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee pursuant to Section 8.04 or 8.08 in respect of the outstanding Notes shall be held in trust and 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 Company or any of its Subsidiaries 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, interest, premium, if any, and Additional Amounts, if any, but such money need not be segregated from other funds except to the extent required by law.

 

The Company shall 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 or 8.08 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.

 

Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the written request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 or 8.08 which, in the opinion of a nationally recognized investment banking, appraisal firm or 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(a)), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance, Covenant Defeasance or Discharge, as the case may be.

 

Section 8.06      Repayment to the Company.

 

Subject to applicable escheat and abandoned property laws, any money or non-callable Government Securities deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, or interest, premium, if any, or Additional Amounts, if any, on, any Note and remaining unclaimed for two years after such principal, interest, premium, if any, or Additional Amounts, if any, has become due and payable shall be paid to the Company on its written request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter be permitted to look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money or non-callable Government Securities, and all liability of the Company as trustee thereof, shall thereupon cease; provided that the Trustee or such Paying Agent, before being required to make any such repayment, shall at the written request and expense of the Company cause to be published once, in the New York Times or The Wall Street Journal (national edition), 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 Company.

 

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Section 8.07      Reinstatement.

 

If the Trustee or the Paying Agent is unable to apply any money or non-callable Government Securities in accordance with Section 8.05, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s and the Guarantors’ obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 until such time as the Trustee or the Paying Agent is permitted to apply all such money in accordance with Section 8.05; provided that, if the Company or any Guarantor makes any payment of principal of, interest, premium, if any, or Additional Amounts, if any, on, any Note following the reinstatement of its obligations, the Company or such Guarantor, as applicable, shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities deposited with or held by the Trustee or the Paying Agent.

 

Section 8.08      Discharge.

 

This Indenture, the Guarantees and, to the extent related to the Notes and the Guarantees, all Collateral Documents shall be discharged and shall cease to be of further effect as to all Notes issued hereunder (except as to (x) the rights of Holders of outstanding Notes to receive solely from the trust fund described in clause (1)(b) of this Section 8.08, and as more fully set forth in such clause (1)(b), payments in respect of the principal of and interest, premium, if any, and Additional Amounts, if any, on, such Notes when such payments are due, (y) the Company’s obligations with respect to such Notes under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.10 and 4.02 and the Appendix and (z) the rights of the Trustee and each Agent under Section 7.07 and the Company’s obligations in connection therewith), and the Trustee, at the expense of the Company, shall execute such instruments reasonably requested by the Company acknowledging satisfaction and discharge of this Indenture with respect to all the Notes, 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 Company, have been delivered to the Trustee for cancellation; or

 

(b)            all Notes that have not been delivered to the Trustee for cancellation 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 Company 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 Trustee for cancellation of principal, premium and Additional Amounts, if any, and accrued interest, if any, on the Notes to the date of maturity or redemption;

 

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(2)            in respect of clause (1)(b) of this Section 8.08, the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company 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 such other instrument, and in each case the granting of Liens to secure such borrowings);

 

(3)            the Company or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture;

 

(4)            the Company has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be; and

 

(5)            the Company has delivered (a) an Officers’ Certificate to the Trustee stating that all conditions precedent to satisfaction and discharge of this Indenture (“Discharge”) have been satisfied and (b) an Opinion of Counsel to the Trustee stating that all conditions precedent to Discharge have been satisfied.

 

Article 9
AMENDMENT, SUPPLEMENT AND WAIVER

 

Section 9.01      Without Consent of Holders of Notes.

 

Notwithstanding the provisions of Section 9.02, without the consent of any Holder, the Company, the Guarantors, the Trustee and, if any amendment relates to any Collateral Document, the First Lien Collateral Agent, may amend or supplement this Indenture, the Notes, the Guarantees and the Collateral Documents in the following circumstances:

 

(a)            to cure any ambiguity, defect or inconsistency;

 

(b)            to provide for uncertificated Notes in addition to or in place of certificated Notes;

 

(c)            to provide for the assumption of the Company’s or a Guarantor’s obligations to the Holders in the case of a merger or consolidation or sale of all or substantially all of the Company’s or such Guarantor’s assets, as applicable;

 

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(d)           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;

 

(e)           [reserved];

 

(f)            to evidence and provide for the acceptance of the appointment under this Indenture and the Collateral Documents of a successor Trustee or First Lien Collateral Agent;

 

(g)           to enter into additional or supplemental Collateral Documents and to add additional assets as Collateral to secure the Notes and the Guarantees;

 

(h)           to release Collateral or any Guarantee when permitted or required by this Indenture, the other Collateral Documents, or to amend or supplement any Collateral Document in accordance its terms;

 

(i)            to allow any Guarantor to execute a supplemental indenture and/or a Guarantee with respect to the Notes and to add any additional Guarantor;

 

(j)            to provide for the issuance of Additional Notes in accordance with the limitations set forth in this Indenture;

 

(k)           to provide for the issuance of PIK Notes or the increase of the principal amount of the Notes to pay PIK Interest in accordance with the terms of this Indenture;

 

(l)            in the event that any PIK Notes are issued as Definitive Notes, to make appropriate amendments to this Indenture to reflect a minimum denomination of certificated PIK Notes of $1.00 and establish minimum redemption amounts for certificated PIK Notes;

 

(m)          to enter into any and all Collateral Documents and the transactions contemplated thereby respecting the registration and mortgaging of any of the Collateral Vessels and to perfect the security interests and Liens granted therein;

 

(n)           to accept and consent to, and to take, any and all steps to perfect a security interest in any of the Collateral Vessels and other Collateral granted pursuant to the Collateral Documents; or

 

(o)           to comply with 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.

 

In addition, the Intercreditor Agreement and the Collateral Agency Agreement may be amended in accordance with their terms and without the consent of any Holder or the Trustee with the consent of the parties thereto or otherwise in accordance with their terms, including to add additional Indebtedness as First Lien Obligations or Junior Lien Obligations and to add as parties thereto persons holding such Indebtedness (or any authorized agent thereof or trustee therefor) and to establish that the Liens on any Collateral securing such Indebtedness shall rank equally with the Liens on such Collateral securing the First Lien Obligations or Junior Lien Obligations, as applicable, then outstanding, in each case to the extent permitted by the First Lien Documents.

 

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Upon the request of the Company, and upon receipt by the Trustee of the documents described in Section 9.07, the Trustee shall join with the Company and the Guarantors in the execution of any amendment 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 neither the Trustee nor the First Lien Collateral Agent shall be obligated to enter into any such amendment or supplemental indenture that affects the Trustee and/or First Lien Collateral Agent’s own rights, duties or immunities under this Indenture or otherwise.

 

Section 9.02      With Consent of Holders of Notes.

 

Except as provided above in Section 9.01 and below in this Section 9.02, the Company, the Guarantors, the Trustee and the First Lien Collateral Agent may amend or supplement this Indenture, the Notes and the Collateral Documents by the execution of a supplemental indenture or, in the case of any amendment or supplement to the Collateral Documents, by the execution of an appropriate amendment or supplement thereto, 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, subject to Sections 6.04 and 6.07, any existing Default or Event of Default or compliance with any provision of this Indenture, the Notes, the Guarantees or any Collateral Document 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, Notes), in each case in addition to any required consent of holders of other First Lien Obligations that may be required with respect to an amendment of or waiver under a Collateral Document. However, without the consent of each Holder of an outstanding Note affected thereby, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting Holder):

 

(a)            reduce the percentage of principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

 

(b)            reduce the principal of, or change the fixed maturity of, any Note or alter the premium payable upon any redemption or repurchase of the Notes pursuant to Sections 3.07, 3.09, 4.10 or 4.15;

 

(c)            reduce the rate of or change the time for payment of interest, including default interest, on any Note;

 

(d)            waive a Default or Event of Default in the payment of principal of, or premium, if any, interest, if any, or Additional Amounts, 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);

 

(e)            make any Note payable in money other than that stated in the Notes;

 

(f)            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 premium, if any, interest, if any, or Additional Amounts, if any, on, the Notes;

 

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(g)            waive a redemption or repurchase payment with respect to any Note (other than a payment required by Section 3.07, 3.09, 4.10 or 4.15);

 

(h)            release any Guarantor from any of its obligations under its Guarantee or this Indenture, except in accordance with the terms of this Indenture;

 

(i)            subordinate the Notes or the Guarantees in right of payment to any other Indebtedness;

 

(j)            amend or impair the contractual right of any Holder to institute suit for the enforcement of any payment due in respect of Notes on or after the Maturity Date (or, in the case of redemption or repurchase, on or after the redemption or repurchase date); or

 

(k)            make any change in the preceding amendment, supplement and waiver provisions.

 

In addition, except as otherwise provided in this Indenture or any Collateral Document, and subject to the Requirements of the Trust Indenture Act, the consent of Holders of at least two-thirds in aggregate principal amount of the then outstanding Notes will be required to release Liens for the benefit of the Holders on all or substantially all of the Collateral, other than in accordance with this Indenture, the Intercreditor Agreement and the other Collateral Documents.

 

Upon the request of the Company and upon the receipt by the Trustee of evidence satisfactory to the Trustee of the consent of the Holders as aforesaid, and upon receipt by the Trustee of the documents described in Section 9.07, the Trustee shall join with the Company and the Guarantors in the execution of such amendment, supplement or waiver, unless such amendment, supplement or waiver affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amendment, supplemental indenture or waiver.

 

It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

 

After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company shall deliver to the Holders a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver.

 

Section 9.03      Compliance with Trust Indenture Act.

 

Every amendment or supplement to this Indenture, any Guarantee or the Notes will be set forth in an amended or supplemental indenture that complies with the Trust Indenture Act as then in effect.

 

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Section 9.04      Consents in Connection with Purchase, Tender or Exchange.

 

A consent to any amendment, supplement or waiver under this Indenture by any Holder given in connection with a purchase, tender or exchange of such Holder’s Notes shall not be rendered invalid by such purchase, tender or exchange.

 

Section 9.05      Revocation and Effect of Consents.

 

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of such Note 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 of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and, except as provided in the second succeeding paragraph, thereafter binds every Holder.

 

The Company 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 second to last sentence of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to consent to such amendment, supplement or waiver or revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No consent shall be valid or effective for more than 90 days after such record date except to the extent that the requisite number of consents to the amendment, supplement or waiver have been obtained within such 90-day period or as set forth in the next paragraph of this Section 9.05.

 

After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (a) through (j) of Section 9.02, in which case, the amendment, supplement or waiver shall bind only each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same indebtedness as the consenting Holder’s Note.

 

Section 9.06      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 Company, in exchange for all Notes, may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

 

Section 9.07      Trustee to Sign Amendments, etc.

 

The Trustee shall sign any amendment or supplemental indenture or grant any waiver authorized pursuant to this Article 9 if the amendment or supplemental indenture or waiver does not adversely affect its rights, duties, liabilities or immunities. If any such amendment, supplemental indenture or waiver does adversely affect the rights, duties, liabilities or immunities of the Trustee, the Trustee may, but need not, sign such amendment, supplemental indenture or grant such waiver. In executing any such amendment, supplemental indenture or waiver, the Trustee shall be entitled to receive and (subject to Section 7.01) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such amendment, supplemental indenture or waiver is authorized or permitted by this Indenture and the Collateral Documents, constitutes the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms and that all conditions precedent to such supplemental indenture have been complied with, subject to customary assumptions and qualifications.

 

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Section 9.08     Acts of Holders.

 

(a)           Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given, made or taken by Holders shall be in writing may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.

 

Without limiting the generality of this Section, unless otherwise provided in or pursuant to this Indenture, (i) a Holder, including the Depository or its nominee that is a Holder of a Global Note, may give, make or take, by an agent or agents duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in or pursuant to this Indenture to be given, made or taken by Holders, and the Depository or its nominee that is a Holder of a Global Note may duly appoint in writing as its agent or agents members of, or participants in, the Depository holding interests in such Global Note in the records of the Depository; and (ii) with respect to any Global Note, any consent or other action given, made or taken by an Agent Member by electronic means in accordance with the “Automated Tender Offer Procedures” system or other customary procedures of, and pursuant to authorization by, the Depository shall be deemed to constitute the Act of the Holder of such Global Note, and such Act shall be deemed to have been delivered to the Company and the Trustee upon the delivery by the Depository of an “agent’s message” or other notice of such consent or other action having been so given, made or taken in accordance with the applicable policies and procedures of the Depository.

 

(b)            The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a Person acting in a capacity other than such Person’s individual capacity, such certificate or affidavit shall also constitute sufficient proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

 

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(c)            The ownership of Notes shall be proved by the Register.

 

(d)            Without limiting the foregoing, a Holder entitled hereunder to give, make or take any action hereunder with regard to any particular Note may do so, or duly appoint in writing any Person or Persons as its agent or agents to do so, with regard to all or any part of the principal amount of such Note.

 

Article 10
GUARANTEES OF NOTES

 

Section 10.01     Subsidiary Guarantees.

 

Subject to this Article 10, each of the Guarantors hereby absolutely and unconditionally guarantees, jointly with the other Guarantors and severally, as primary obligor and not merely as surety, on a senior basis 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 validity and enforceability of this Indenture, the Notes or the Obligations of the Company hereunder and thereunder, that:

 

(a)            the principal of, and premium, if any, interest, if any, on, or Additional Amounts, if any, on, the Notes will be promptly paid in full when due, whether at Stated Maturity, by acceleration, upon repurchase or redemption or otherwise, and interest on the overdue principal of, and premium, if any, and (to the extent permitted by law) interest, if any, on, and Additional Amounts, if any, on, the Notes, and all other payment Obligations of the Company to the Holders, the Trustee or the First Lien Collateral Agent under this Indenture or the Notes will be promptly paid in full and performed, all in accordance with the terms hereof and thereof; and

 

(b)            in case of any extension of time of payment or renewal of any Notes or any of such other Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at Stated Maturity, by acceleration, upon repurchase or redemption or otherwise.

 

Failing payment when so due of any amount so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is an absolute, unconditional, present and continuing guarantee of payment and performance (and not a guarantee of collection) and is in no way conditioned upon any attempt to collect from the Company or any other Guarantor or any other action, occurrence or circumstance whatsoever.

 

The Guarantors hereby agree that their obligations hereunder 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 with respect to any provisions hereof or thereof, the recovery of any judgment against the Company which does not satisfy in full the Guaranteed Obligations, any action to enforce the same or any other circumstance (other than complete performance) which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Each Guarantor further, to the extent permitted by law, hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that its Subsidiary Guarantee will not be discharged except by complete performance of the Obligations contained in the Notes and this Indenture.

 

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If any Holder, the Trustee or the First Lien Collateral Agent is required by any court or otherwise to return to the Company, the Guarantors, or any Custodian, trustee or other similar official acting in relation to any of the Company or the Guarantors, any amount paid by the Company or any Guarantor to the Trustee, First Lien Collateral Agent or such Holder, the Subsidiary Guarantees, to the extent theretofore discharged, shall be reinstated in full force and effect.

 

Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders, the Trustee and the First Lien Collateral Agent, on the other hand, (a) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of its Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed thereby, and (b) in the event of any declaration of acceleration of such Obligations as provided in Article 6, such Obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purpose of its Subsidiary Guarantee. The Guarantors 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 Guarantees.

 

Section 10.02     Releases of Guarantees.

 

The Guarantee of a Guarantor will be automatically and unconditionally released: (1) in connection with any sale, transfer or other disposition (including by merger, consolidation, amalgamation, distribution, dividend or otherwise) of all or substantially all of the assets of such Guarantor to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary, if the sale or other disposition is conducted in accordance with Sections 4.10 and 5.01(b), as applicable; (2) in connection with any sale, transfer or other disposition (including by merger, consolidation, amalgamation, distribution, dividend or otherwise) of all of the Capital Stock of such Guarantor, following which such Guarantor is no longer a Restricted Subsidiary of the Company, if the sale or other disposition is conducted in accordance with Sections 4.10 and 5.01(b), as applicable; (3) upon Legal Defeasance, Covenant Defeasance or Discharge in accordance with Article 8 or all amounts due and payable by the Company under this Indenture or the Notes shall have been paid in full; (4) unless an Event of Default has occurred and is continuing, upon the dissolution or liquidation of such Guarantor in compliance with Section 5.01(b); or (5) if the Company designates such Guarantor as an Unrestricted Subsidiary in accordance with this Indenture.

 

Upon delivery by the Company to the Trustee of an Officers’ Certificate and an Opinion of Counsel to the effect that any of the conditions described in the foregoing clauses (1) through (5) has occurred, the Trustee shall execute any documents reasonably requested by the Company at the Company’s expense in order to evidence the release of any Guarantor from its obligations under its Guarantee. Any Guarantor not released from its obligations under its Guarantee shall remain liable for the full amount of principal of and interest, premium, if any, and Additional Amounts, if any, on, the Notes and for the other obligations of such Guarantor under this Indenture as provided in this Article 10.

 

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Section 10.03     Limitation on Guarantor Liability.

 

Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Guarantee of such Guarantor 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 or foreign law to the extent applicable to any Guarantee. The obligations of each Guarantor under its Guarantee will be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Indenture, result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state or foreign law and not otherwise being void or voidable under any similar laws affecting the rights of creditors generally. Each Guarantor that makes a payment under its Guarantee shall be entitled, upon payment in full of all guaranteed Obligations under this Indenture, to seek contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all Guarantors at the time of such payment determined in accordance with GAAP.

 

Section 10.04     “Trustee” to Include Paying Agent.

 

In case at any time any Paying Agent other than the Trustee shall have been appointed and be then acting hereunder, the term “Trustee” as used in this Article 10 shall in each case (unless the context shall otherwise require) be construed as extending to and including such Paying Agent within its meaning as fully and for all intents and purposes as if such Paying Agent were named in this Article 10 in place of the Trustee.

 

Section 10.05     Execution and Delivery.

 

The execution by each Guarantor of this Indenture (or a supplemental indenture hereto) evidences the Guarantee of such Guarantor, whether or not the person signing as an Officer of the Guarantor still holds that office at the time of authentication of any Note. The delivery of any Note by the Trustee after authentication constitutes due delivery of the Guarantee set forth in this Indenture on behalf of each Guarantor.

 

Section 10.06     Subrogation.

 

Each Guarantor shall be subrogated to all rights of Holders against the Company in respect of any amounts paid by the Guarantor pursuant to the provisions of Section 10.01; provided that no Guarantor shall be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Company under this Indenture or the Notes shall have been paid in full.

 

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Section 10.07     Jurisdiction Specific Riders.

 

(a)            Angola. Notwithstanding anything set out to the contrary in this Indenture and in any other Note Document:

 

(i)            Notwithstanding anything set out to the contrary in this Indenture or any other Note Document:

 

(1)            the obligation of any Guarantor incorporated under the laws of Angola (an “Angola Guarantor”) to grant any Guarantee and the obligations of any Angola Guarantor under this Indenture and any Guarantee Agreement and Collateral Document shall be subject to proper compliance with the Angolan law requirements and formalities and limited to what is legally permitted under Angolan laws and the articles of association of such Angola Guarantor;

 

(2)            the maximum secured amount of the obligations of any Guarantor incorporated under the laws of Angola to $7,500,000;

 

(3)            the capacity and authority of any Angola Guarantor are governed by Angolan laws are limited to what is legally permitted under Angolan laws and the articles of association of such Angola Guarantor;

 

(4)            the obligation of any Angola Guarantor to grant any Guarantee and the obligations of any Angola Guarantor under this Indenture and any Guarantee Agreement and Collateral Document are subject to compliance with any applicable foreign exchange licensing requirements and any applicable taxes under Angolan law;

 

(5)            any obligations in respect of (i) distribution of dividends of an Angola Guarantor and (ii) hedging agreements imposed on an Angola Guarantor are limited to what is legally permitted under Angolan laws and under the articles of association of such Angola Guarantor;

 

(6)            the choice of jurisdiction under any Collateral Document to which an Angola Guarantor is party is limited to what is legally permitted under the Angolan procedural courts; and

 

(7)            any judgment in respect of this Indenture or any Note Document or Collateral Document obtained in a foreign court on private law matters not subject to the exclusive jurisdiction of Angolan courts would be recognised and enforced by a court in Angola without re-litigation or re-examination of the merits of such judgment provided that (a) the party who wishes to have the award recognised and confirmed in Angola submits a request with the Supreme Court for such purpose.

 

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(b)           Australia.

 

For the purposes of this Section 10.07(b), “Australian PPSA” means the Personal Property Securities Act 2009 (Cth) and each reference to “Guarantor” shall be read as a reference to each Guarantor which is incorporated in Australia.

 

(i)            Each Guarantor represents and warrants to the Trustee that it does not enter into this document or hold any of the Collateral as trustee of any trust.

 

(ii)           Each Guarantor will perform the Obligations in the manner provided in this document or in any other Note Document.

 

(iii)          Each Guarantor will ensure that no Event of Default occurs. Without affecting the liability of any Guarantor or any power in any other respect (including where a breach of this Section 10.07(b)(iii) is a breach of any other provision of any Note Document), no Guarantor is liable in damages for a breach of its obligations under this Section 10.07(b)(iii) but the Trustee may exercise the powers following any breach of this Section 10.07(b)(iii) in accordance with the Note Documents during the period the Event of Default is continuing.

 

(iv)          Each Guarantor will notify the Trustee in writing:

 

(1)            promptly of any details necessary for the registration by the Collateral Agent of an effective financing statement including the serial numbers of any Collateral that must be described by serial number in a financing statement under the Australian PPSA acquired by it after the date of this document; and

 

(2)            promptly (and in any event within 5 Business Days (as defined in the Australian PPSA)) of an event in Section 10.07(b)(iv)(2)(A) or Section 10.07(b)(iv)(2)(B) occurring:

 

(A)            if it is allocated a new or different ARBN; or

 

(B)            if it does not have an ACN, ABN or ARBN, of any change to its name.

 

(v)           Each Guarantor will take all steps necessary to:

 

(1)            ensure that there are no provisions in its constitution that may restrict any transfer of the shares of the Equity Interests in that Guarantor in connection with the enforcement of any Lien granted under any Note Document; and

 

(2)            notwithstanding any provision contained in its constitution, approve any transfer of the shares of Equity Interests in that Guarantor where the transfer arises in connection with the enforcement of any Lien granted under any Note Document.

 

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(vi)          For the purposes of sections 115(1) and 115(7) of the Australian PPSA:

 

(1)            the Collateral Agent need not comply with sections 95, 118, 121(4), 125, 130, 132(3)(d) or 132(4); and

 

(2)            sections 142 and 143 are excluded.

 

(vii)         For the purposes of section 115(7) of the Australian PPSA, the Collateral Agent need not comply with sections 132 and 137(3).

 

(viii)        Each Guarantor agrees not to:

 

(1)            exercise its rights to make any request of the Collateral Agent under section 275 of the Australian PPSA;

 

(2)            authorise the disclosure of any information under that section; or

 

(3)            waive any duty of confidentiality that would otherwise permit non-disclosure under that section.

 

(ix)          Each Guarantor waives its rights to receive any notice that is required by any provision of the Australian PPSA (including a notice of a verification statement).

 

(x)           Nothing in Sections 10.07(b)(vi) to 10.07(b)(ix) prohibits the Collateral Agent from giving a notice under the Australian PPSA or any other law.

 

(xi)          Except as required by law, for purposes of section 275(6) of the Australian PPSA, each Guarantor and the Collateral Agent agrees not to disclose information of the kind mentioned in section 275(1) of the Australian PPSA except to the extent a party is permitted to disclose such information pursuant to this Agreement or any other Note Document.

 

(c)            Cayman Islands.

 

(i)            Each Guarantor incorporated in the Cayman Islands shall, subject to the Agreed Security Principles, immediately upon execution of this Indenture, make an entry of details of the security interests created by this Indenture on its Register of Mortgages and Charges maintained at its registered office in the Cayman Islands pursuant to section 54 of the Companies Act (as revised) in the Cayman Islands (the “Cayman Register of Mortgages and Charges”) and, provide a certified copy of such Cayman Register of Mortgages and Charges to the First Lien Collateral Agent within 14 Business Days from the execution of this Indenture.

 

(ii)           Each Guarantor which grants a security interest over Equity Interests issued by an exempted company incorporated in the Cayman Islands shall, within the timeframes set out in the relevant Pledge Agreement and subject to the Agreed Security Principles, deliver or procure to be delivered to the First Lien Collateral Agent, the ancillary documents set out in the relevant Pledge Agreement, including:

 

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(1)            a duly executed and undated instrument of transfer in respect of such Equity Interests;

 

(2)            share certificates representing the Equity Interests being secured (if applicable);

 

(3)            executed and dated irrevocable proxies in respect of such Equity Interests;

 

(4)            executed but undated resignation letters and executed authorisation letters signed by all the directors in respect of such company;

 

(5)            executed letter of undertaking in respect of such company;

 

(6)            shareholder resolutions amending its memorandum and articles of such company;

 

(7)            executed notice of mortgage to registered office provider in respect of such company; and

 

(8)            a certified copy of the register of members of such company which has been updated to include a notation acknowledging the security interests created hereby.

 

(iii)          Each Guarantor hereby irrevocably waives any right to require a proceeding first against the Company or any other Person, any right to request the division of their payment obligation among the Guarantors and any right to request that collateral be foreclosed upon, however such rights may be denominated under the laws of any jurisdiction.

 

(d)           Brazil. Notwithstanding anything to the contrary in this Indenture or any other Note Document, the obligation of any Guarantor incorporated under the laws of the Federative Republic of Brazil (“Brazilian Guarantor”) under any Guarantee and / or any Collateral Document shall be subject and / or limited to what is legally permitted under Brazilian law, including, but not limited to:

 

(i)            As the Guarantee and/or the Collateral granted by any Brazilian Guarantor is deemed to be an ancillary obligation, according to the Brazilian law, any judgment obtained in a court outside Brazil against the Brazilian Guarantor for the enforcement of such Guarantee and/or Collateral in respect to the underlying obligations arising from this Indenture or any Note Document which were declared or considered null, void or unenforceable, may not be confirmed by the Brazilian courts;

 

(ii)           any decision by a non-Brazilian court against the Brazilian Guarantor (except for a decision involving real estate located in Brazil, declaration of bankruptcy of a Brazilian entity or declaration of insolvency of any individual domiciled in Brazil, for which the Brazilian courts have exclusive jurisdiction) is enforceable in Brazil if previously confirmed by the Brazilian Superior Court of Justice (Superior Tribunal de Justiça);

 

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(iii)          even though the agreement which formalizes the Guarantee and/or the Collateral expressly stipulates that it is governed by any foreign law, such law will only be recognized and enforced in Brazil if not against Brazilian national sovereignty, human dignity, morality or public policy (soberania nacional, dignidade da pessoa humana, bons costumes or ordem pública);and

 

(iv)          the binding effect and enforceability of the obligations assumed by the Brazilian Guarantor under the Guarantee and / or the Collateral Documents are subject to all limitations arising from (1) bankruptcy (falência), insolvency (insolvência civil), liquidation, reorganization and judicial or extrajudicial recovery (recuperação judicial or extrajudicial); (2) certain credits, such as costs related to these proceedings (i.e., trustees' fees), credits granted to the Brazilian Guarantor after filing of judicial recovery (recuperação judicial), labor claims, secured credits by fiduciary or in rem guarantees up to the value of the secured assets, social security and tax claims (except for tax penalties) and other claims enjoying special or general privilege or statutorily preferred claims, which may have preference if any of the events described in item (1) occurs; (3) possible unavailability of remedies for specific performance or injunctive relief; (4) concepts of materiality, reasonableness, good faith, public policy and fair dealing, such as contractual conditions providing that a certain act or fact shall be determined solely by one party (condição potestativa); (5) other laws of general application relating to or affecting the rights of creditors generally, including (without limitation) fraudulent conveyance or intervention by the Brazilian governmental.

 

(e)            British Virgin Islands.

 

(i)            Each Guarantor incorporated in the British Virgin Islands shall, subject to the Agreed Security Principles, as soon as reasonably practicable and within 14 days after the date of any Collateral Document under which such Guarantor grants any security interest enter details of any such security interest created by such Guarantor in its register of charges in accordance with section 162 of the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands (the “BVI Act”) and shall provide the First Lien Collateral Agent with a certified copy of such register so updated.

 

(ii)           Each Guarantor incorporated in the British Virgin Islands shall, subject to the Agreed Security Principles, as soon as reasonably practicable and within 14 days after the date of any Collateral Document under which such Guarantor grants any security interest, effect registration, or assist the First Lien Collateral Agent in effecting registration, of the security interests created pursuant to each applicable Collateral Document with the Registrar of Corporate Affairs pursuant to section 163 of the BVI Act by making the required filing, in the approved form with the Registrar of Corporate Affairs and (if applicable) deliver or procure to deliver to the First Lien Collateral Agent, the certificate of registration of charge issued by the Registrar of Corporate Affairs evidencing the requirements of section 163 of the BVI Act as to registration of the security interests created pursuant to each applicable Collateral Document has been complied with and the filed stamped copy of the approved form containing the relevant particulars of the security interests created;

 

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(iii)          Each Guarantor which grants a security interest over Equity Interests issued by a company incorporated in the British Virgin Islands shall, within the timeframes set out in the relevant Pledge Agreement and subject to the Agreed Security Principles, deliver or procure to be delivered to the First Lien Collateral Agent, the ancillary documents set out in the relevant Pledge Agreement, including (subject to the terms of the relevant Pledge Agreement):

 

(1)            a duly executed and undated instrument of transfer in respect of such Equity Interests;

 

(2)            share certificates representing the Equity Interests being secured (if applicable and to the extent not already in the possession of the First Lien Collateral Agent);

 

(3)            executed irrevocable proxies in respect of such Equity Interests;

 

(4)            executed but undated resignation letters and executed authorisation letters signed by all the directors of such company;

 

(5)            shareholder resolutions amending the memorandum and articles of such company (where required by the terms of the applicable Pledge Agreement); and

 

(6)            notice of mortgage to registered agent in respect of such company

 

(iv)          Each Guarantor hereby irrevocably waives any right to require a proceeding first against the Company or any other Person, any right to request the division of their payment obligation among the Guarantors and any right to request that collateral be foreclosed upon, however such rights may be denominated under the laws of any jurisdiction.

 

(f)            Indonesia. For the purposes of this Section 10.07(f), each reference to “Guarantor” shall be read as a reference to each Guarantor which is incorporated in Indonesia.

 

(i)            Each Guarantor undertakes to each of the Holders that whenever the Company does not pay any amount when due under or in connection with the Notes, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor, in respect of that amount and for that purpose each Guarantor hereby waives, in favor of each of the Holders, any and all of its rights, protections, privileges and defenses provided by law to a guarantor and in particular waives the provisions in Articles 1402, 1430, 1439, 1831, 1833, 1837, 1838, 1843 and 1847 to 1850 (inclusive) of the Indonesian Civil Code (the “ICC”);

 

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(ii)           Each Guarantor confirms that its guarantee under this ‎Article 10 is binding on it as an indivisible debt under the ICC;

 

(iii)          Each Guarantor agrees that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify each of the Holders immediately on demand against any cost, loss or liability it incurs as a result of the Company not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under the Notes on the date when it would have been due. The amount payable by a Guarantor under this indemnity will not exceed the amount it would have had to pay under the Notes if the amount claimed had been recoverable on the basis of a guarantee. Such indemnity is an independent undertaking and constitutes that entity’s (as an Indonesian Guarantor) own debt and obligation, as meant by or in accordance with Article 1316 of the ICC, separate from the guarantee contained in paragraph (i) above; and

 

(iv)          Each Guarantor shall at its cost comply with all reporting requirements issued by Bank Indonesia and the Indonesian Ministry of Finance in respect of the guarantee issued under this ‎Article 10.

 

(g)            Jersey. In each Note Document, where it relates to a person, at any relevant time: (w) incorporated (or dissolved) under the Companies (Jersey) Law 1991; (x) established, constituted or formed in Jersey; (y) which carries on, or has carried on, business in Jersey; or (z) that has immovable property at such time in Jersey, a reference to:

 

(i)            a composition, compromise, assignment or arrangement with any creditor winding up, liquidation, administration, dissolution, insolvency event or insolvency includes, without limitation, “bankruptcy” (as that term is interpreted pursuant to Article 8 of the Interpretation (Jersey) Law 1954), a compromise or arrangement of the type referred to in Article 125 of the Companies (Jersey) Law 1991 and any procedure or process referred to in Part 21 of the Companies (Jersey) Law 1991;

 

(ii)           a “liquidator”, “receiver”, “administrative receiver”, “administrator” or the like includes, without limitation, the Viscount of the Royal Court of Jersey, Autorisés or any other person performing the same function of each of the foregoing;

 

(iii)          “Security” or a “security interest” includes, without limitation, any hypothéque whether conventional, judicial or arising by operation of law and any security interest created pursuant to the Security Interests (Jersey) Law 1983 or the SIJL and any related legislation; and

 

(iv)          any equivalent or analogous procedure or step being taken in connection with insolvency includes any corporate action, legal proceedings or other formal procedure or step being taken in connection with an application for a declaration of en désastre being made in respect of any property of such Person (or the making of such declaration).

 

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(h)            Gibraltar.

 

(i)            Each Guarantor incorporated in Gibraltar shall, subject to the Agreed Security Principles, immediately upon execution of this Indenture, make an entry of details of the security interests created by this Indenture on its Register of Mortgages and Charges maintained at its registered office in Gibraltar pursuant to section 177 of the Gibraltar Companies Act (the “Gibraltar Register of Mortgages and Charges”) and, provide a certified copy of such Gibraltar Register of Mortgages and Charges to the First Lien Collateral Agent within 14 Business Days from the execution of this Indenture.

 

(ii)           Each Guarantor which grants a security interest over Equity Interests issued by a company incorporated in Gibraltar shall, within the timeframes set out in the relevant Pledge Agreement and subject to the Agreed Security Principles, deliver or procure to be delivered to the First Lien Collateral Agent, the ancillary documents set out in the relevant Pledge Agreement, including:

 

(1)            a duly executed and undated instrument of transfer in respect of such Equity Interests;

 

(2)            share certificates representing the Equity Interests being secured (if applicable);

 

(3)            executed and dated irrevocable proxies in respect of such Equity Interests;

 

(4)            executed but undated resignation letters and executed authorisation letters signed by all the directors in respect of such company; and

 

(5)            a certified copy of the register of members of such company which has been updated to include a notation acknowledging the security interests created hereby.

 

(iii)          Each Guarantor incorporated in Gibraltar hereby irrevocably waives any right to require a proceeding first against the Company or any other Person, any right to request the division of their payment obligation among the Guarantors and any right to request that collateral be foreclosed upon, however such rights may be denominated under the laws of any jurisdiction.

 

(i)            Hong Kong.

 

(i)            Each Guarantor incorporated under the laws of Hong Kong shall promptly and in any event within the time period prescribed by law:

 

(1)            create and maintain a register of charges, to the extent this has not already been done, (the “Register of Charges”) and enter particulars of any registerable security interest created pursuant to any Collateral Document in such Register of Charges in accordance with the requirements of the laws of Hong Kong;

 

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(2)            deliver or procure to be delivered to the First Lien Collateral Agent a certified copy of the updated Register of Charges recording the particulars of any registerable security interest created pursuant to any Collateral Document;

 

(3)            effect the timely registration of the particulars of any registerable security interest created or intended to be created pursuant to any Collateral Document with all relevant public registers in Hong Kong which the First Lien Collateral Agent reasonably considers necessary or desirable to perfect, protect and/or preserve any such security interest (and/or the priority thereof) including, without limitation, the registers maintained by the Hong Kong Companies Registry, in accordance with the requirements under all applicable laws and regulations of Hong Kong and provide such assistance to the First Lien Collateral Agent in respect thereof which the First Lien Collateral Agent may reasonably require;

 

(ii)           Each Guarantor incorporated under the laws of Hong Kong hereby irrevocably authorises the First Lien Collateral Agent to make such filings and/or registrations of any registerable security interest created or intended to be created under any Collateral Document and to take any and all appropriate action and to complete and execute any and all documents and instruments which the First Lien Collateral Agent reasonably considers necessary or desirable (including, without limitation, the registrations described in Section 10.07(i)(i)(3) above) for the purposes of perfecting, protecting and/or preserving any such security interest (and/or the priority thereof).

 

(iii)          Each Collateral Grantor of a security interest over Equity Interests issued by a company incorporated under the laws of Hong Kong shall within 90 days from the Issue Date (or such later date as the First Lien Collateral Agent reasonably agree) deliver to the First Lien Collateral Agent valid and duly issued original share certificate(s) with respect to all of such Equity Interests, duly executed but undated original instruments of transfer and bought and sold notes in respect of such Equity Interests (in each case with the names of the transferees left blank) and such other instruments and documents as may be necessary, or as the First Lien Collateral Agent may reasonably request, subject to the Agreed Security Principles.

 

(j)             Luxembourg.

 

(i)            For the purposes of this Section 10.07(j),

 

(1)            “Luxembourg Guarantor” shall mean any Guarantor whose registered office, head office, place of effective management, domicile, establishment, habitual residence and/ or place of central administration is in Luxembourg and whose centre of main interest (as that term is used in Article 3(1) of the Regulation (EU) No 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast) is in Luxembourg.

 

(2)            “Group” shall mean the Company and its Subsidiaries from time to time.

 

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(ii)           Luxembourg legal concepts expressed in English terms in this Agreement and any other Note Document may not correspond to the original French or German terms relating thereto.

 

(iii)          In this Agreement and any other Note Document, where it relates to a Luxembourg Guarnator, a reference to:

 

(1)            a winding up, dissolution or administration includes:

 

A.            being declared bankrupt (faillite déclarée);

 

B.            being subject to liquidation judiciaire; and

 

C.            having filed for controlled management (gestion contrôlée);

 

D.            a trustee in bankruptcy includes a curateur;

 

E.            an administrator includes a commissaire or a juge délégué;

 

F.            a moratorium includes a reprieve from payment (sursis de paiements) or a concordat préventif de faillite;

 

G.            a receiver or an administrative receiver does not include a juge commissaire or a curateur;

 

H.            an attachment includes a saisie.

 

(iv)          Notwithstanding any provisions to the contrary in any Note Document, the aggregate obligations and liabilities of any Luxembourg Guarantor for the obligations of any Collateral Grantor or any other Person in which such Luxembourg Guarantor has no direct or indirect equity interest, shall be limited at any time to an amount not to exceed the greater of ninety-five percent (95%) of:

 

(1)            the sum of:

 

A.            such Luxembourg Guarantor’s “capitaux propres” (as referred to in Annex I to the Grand Ducal Regulation, dated December 18, 2015, setting out the form and content of the presentation of the balance sheet and profit and loss account, enforcing the Law of December 19, 2002 on the register of commerce and companies and the accounting and annual accounts of undertakings, as amended) (the “Own Funds”); and

 

B.            debt owed to such Luxembourg Guarantor by any other member of the Group, which is subordinated in right of payment (whether generally or specifically) to any claim of any Holder under any of the Note Documents (the “Lux Subordinated Debt”),

 

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each as determined on the basis of the then latest available annual accounts of such Luxembourg Guarantor duly established in accordance with applicable accounting rules, as at the date of this Agreement, and

 

(2)            the sum of:

 

A.            such Luxembourg Guarantor’s Own Funds and

 

B.            such Luxembourg Guarantor’s Lux Subordinated Debt,

 

each as determined on the basis of the then latest available annual accounts of such Luxembourg Guarantor duly established in accordance with applicable accounting rules, as at the date of this Agreement is called.

 

(v)           Where for the purpose of the determination to be made under clause (iv), no duly established annual accounts are available for the relevant reference period (which, for the avoidance of doubt, includes circumstances in which no final annual accounts have been established in due time in respect of the then most recently ended financial year) the relevant Luxembourg Guarantor shall, promptly, establish unaudited interim accounts (as of the date of the end of the then most recent financial quarter) or annual accounts (as applicable) duly established in accordance with applicable accounting rules, pursuant to which the relevant Luxembourg Guarantor’s Own Funds and Lux Subordinated Debt will be determined.

 

(vi)          Notwithstanding anything to the contrary, no Luxembourg Guarantor guarantees any amounts due under the Notes Documents if and to the extent the granting of a guarantee for such amounts would constitute an unlawful financial assistance violating article 1500-7 of the Luxembourg law dated August 10, 1915 on commercial companies, as amended, to the extent applicable.

 

(vii)         The limitation in sub-paragraph (iv) above shall not apply to any amounts borrowed by the Luxembourg Guarantor or by any of its direct or indirect Subsidiaries under this Agreement or any amounts borrowed, or made available, under any Note Document and on lent to the Luxembourg Guarantor or to any of its direct or indirect Subsidiaries.

 

(k)            Malta.

 

(i)            It is hereby expressly acknowledged that:

 

(1)            the choice of the law of the State of New York as the law in accordance with which this Agreement shall be governed is a valid choice of law under the laws of Malta, and should be recognised and applied by the courts of Malta to the extent that such laws are not deemed to be against Maltese public policy;

 

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(2)            A judgement enforcing this Agreement against any Guarantor incorporated under the laws of Malta (the “Maltese Guarantor”) is subject to procedural rules regulating the recognition and enforcement of judgements in Malta which allow the judgment debtor to challenge recognition and enforcement on a limited number of grounds including where the judgment is manifestly contrary to public policy in Malta;

 

(3)            notwithstanding anything to the contrary herein or in any other Note Document, it should be noted inter alia, that in the event of an enforcement of this Agreement in the Maltese Courts, (assuming that they have jurisdiction), the Maltese Courts can in particular instances be expected to apply Maltese law as the lex fori in respect of procedural matters and other particular matters such as those relating to prescription (time-bar) where the law of the forum is applicable under private international law rules. In terms of Maltese Law, the Maltese Courts may raise the plea of prescription ex officio despite waiver of such claim by the Maltese Guarantor;

 

(4)            notwithstanding anything to the contrary herein or in any other Note Document, it should be noted inter alia, in terms of Article 1926 of the Maltese Civil Code (Chapter 16 of the Laws of Malta) a guarantee can only exist in respect of a valid obligation. Moreover, in terms of Article 1927 of the Maltese Civil Code, the guarantee under this Agreement cannot exceed what is due by the Company and may not be enforced to the extent contracted under more onerous conditions;

 

(5)            the enforceability of the rights and remedies under this Agreement in the Maltese Courts is also limited and subject to:

 

A.            the plea of set-off which in terms of Section 1196(2) of the Maltese Civil Code, operates ipso jure and even without the knowledge of the debtors, unless otherwise agreed; and

 

B.            the laws of insolvency, bankruptcy and moratorium which generally affect the enforceability of creditors’ rights.

 

(ii)           The Maltese Guarantor hereby irrevocably waives and renounces any right to require a proceeding first against the Company or any other Person (the benefit of discussion) and any right to request the division of their payment obligation among the Guarantors (the benefit of division).

 

(l)            Mexico.

 

(i)            Notwithstanding any other provisions in this Indenture to the contrary, with respect to any action or proceedings arising out of or relating to this Indenture involving any Guarantor incorporated under the laws of Mexico, each of the parties hereto:

 

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(1)            expressly, irrevocably and unconditionally agrees to submit to the jurisdiction of the United States District Court for the Southern District of New York (or the state courts sitting in the Borough of Manhattan in the event the Southern District of New York lacks subject matter jurisdiction), and any appellate court from any thereof;

 

(2)            expressly, irrevocably and unconditionally waives any other jurisdiction to which it may be entitled by reason of its present or future domicile or otherwise; and

 

(3)            expressly, irrevocably and unconditionally waives any object to those courts on the ground of venue or forum non conveniens.

 

(m)          Switzerland.

 

(i)            If and to the extent that:

 

(1)            a Guarantor incorporated in Switzerland and/or having its registered office in Switzerland (a “Swiss Guarantor”) guarantees obligations other than obligations of one of its wholly owned direct or indirect subsidiaries (the “Restricted Obligations”); and

 

(2)            a payment in fulfilling such obligations would in accordance with applicable Swiss law constitute a repayment of capital (Einlagerückgewähr), a violation of the legally protected reserves (gesetzlich geschützte Reserven) or the payment of a (constructive) dividend (Gewinnausschüttung) by such Swiss Guarantor or would otherwise be restricted under then applicable mandatory Swiss law,

 

such Restricted Obligations (and the amount of any payment in relation thereto) shall from time to time be limited to the amount as determined in accordance with applicable Swiss law as then in effect (the “Swiss Available Amount”). This limitation shall not release the Swiss Guarantor from its obligations in excess of the Swiss Available Amount, but merely postpone the performance date thereof until such times as performance is again permitted under applicable Swiss law. Any and all indemnities and guarantees of such Swiss Guarantor contained in any Note Documents shall be construed in a manner consistent with this Section 10.07(m).

 

(ii)           In case a Swiss Guarantor who must make a payment in respect of Restricted Obligations under this Indenture is obliged to withhold Swiss Withholding Tax in respect of such payment, such Swiss Guarantor shall:

 

(1)            use its best efforts that such payments can be made without deduction of Swiss Withholding Tax, or with deduction of Swiss Withholding Tax at a reduced rate, by discharging the liability for such tax by notification pursuant to applicable law (including double tax treaties) rather than payment of the tax;

 

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(2)            if the notification procedure pursuant to the preceding sub-paragraph does not apply, deduct Swiss Withholding Tax at the rate of 35% (or such other rate as in force from time to time), or if the notification procedure pursuant to the preceding sub-paragraph applies for a part of the Swiss Withholding Tax only, deduct Swiss Withholding Tax at the reduced rate resulting after the discharge of part of such tax by notification under applicable law, from any payment made by it in respect of Restricted Obligations and promptly pay any such taxes to the Swiss Federal Tax Administration;

 

(3)            notify the First Lien Collateral Agent that such notification, or as the case may be, deduction has been made and provide the First Lien Collateral Agent with evidence that such a notification of the Swiss Federal Tax Administration has been made or, as the case may be, such taxes deducted have been paid to the Swiss Federal Tax Administration;

 

(4)            in the case of a deduction of Swiss Withholding Tax, use its best efforts to ensure that any person other than the First Lien Collateral Agent, which is entitled to a full or partial refund of the Swiss Withholding Tax deducted from such payment in respect of Restricted Obligations, will, as soon as possible after such deduction:

 

(A)          be in a position to apply for a refund of the Swiss Withholding Tax under applicable law (including tax treaties) and pay to the First Lien Collateral Agent upon receipt any amounts so refunded; or

 

(B)           if the First Lien Collateral Agent, the Trustee or a Holder is entitled to a full or partial refund of the Swiss Withholding Tax deducted from such payment and if requested by the First Lien Collateral Agent, provide the First Lien Collateral Agent, the Trustee or a Holder those documents that are required by law and applicable tax treaties to be provided by the payer of such tax in order to enable the First Lien Collateral Agent, the Trustee or a Holder to prepare a claim for refund of Swiss Withholding Tax. The First Lien Collateral Agent, the Trustee and any Holder shall co-operate with each other to secure such refund.

 

(iii)          If a Swiss Guarantor is obliged to withhold Swiss Withholding Tax in accordance with paragraph (ii) above, the First Lien Collateral Agent shall be entitled to further request payment under the Guarantee and other indemnity granted to it under this Indenture or any other Note Document and apply proceeds therefrom against the Restricted Obligations up to an amount which is equal to that amount which would have been obtained if no withholding of Swiss Withholding Tax were required, whereby such further payments shall always be limited to the Swiss Available Amount. In case the proceeds irrevocably received by the First Lien Collateral Agent, the Trustee or the Holder pursuant to paragraph (ii)(4) above and this paragraph (iii) have the effect that the proceeds received by the Frist Lien Collateral Agent, the Trustee and the Holder exceed the obligations, then the First Lien Collateral Agent, the Trustee or the Holder shall promptly return such overcompensation to the Swiss Guarantor.

 

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(iv)          If and to the extent requested by the First Lien Collateral Agent and if and to the extent this is from time to time permitted under applicable Swiss mandatory law notwithstanding the restrictions referred to in Section 10.07(m), in order to allow the First Lien Collateral Agent, the Holders and the Trustee to obtain a maximum benefit under the Note Documents and, in particular, the Guarantee, the Swiss Guarantor shall take all such measures and/or promptly procure the fulfilment of all such prerequisites, in each case to the extent within its power, as are necessary and appropriate to achieve, without delay, payment under the Guarantee towards the discharge of the Restricted Obligations and to enable it to promptly perform its obligations under this Indenture and make the (required) payment(s) thereunder from time to time, including the following:

 

(1)            the preparation of an up-to-date (interim) audited balance sheet of the Swiss Guarantor;

 

(2)            the confirmation of the auditors of the Swiss Guarantor that the relevant amount represents (the maximum of) freely distributable reserves;

 

(3)            the passing of unanimous written resolutions of the quotaholders of the Swiss Guarantor approving the (resulting) distribution;

 

(4)            the conversion of restricted reserves into profits and reserves freely available for the distribution as dividends (to the extent permitted by mandatory Swiss law);

 

(5)            to the extent permitted by applicable Swiss law, (A) write up or realize any of its assets shown in its balance sheet with a book value that is significantly lower than the market value of the assets, in case of a realization, however, only if such assets are not necessary for the Swiss Guarantor’s business (nicht betriebsnotwendig) and/or (B) reduce its quota capital; and

 

(6)            all such other measures necessary or useful and/or to promptly procure the fulfilment of all prerequisites reasonably necessary to allow the Swiss Guarantor to promptly make the payments and perform the obligations agreed hereunder from time to time with a minimum of limitations.

 

(n)           Thailand.

 

(i)            The Guarantors who shall enter into this Indenture in favor of the Holders are as follows:

 

(1)            Ensco (Thailand) Limited (“Thai Entity”);

 

(2)            All shareholders of the Thai Entity, namely (i) Ensco Oceanics Company LLC (ii) Ensco Offshore International Holdings Limited and (iii) Ensco Overseas Limited (“Shareholders of the Thai Entity”).

 

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(ii)           Notwithstanding anything set out to the contrary in this Indenture or any other Note Document to the contrary, the provisions in this Section (n) shall be applied to the Thai Entity to the extent not contrary of Thai laws.

 

(iii)          The Guarantee by the Thai Entity shall take effect from Issue Date of relevant Notes to the date on which all sum expressed to be payable by the Company under this Indenture or any other Note Document have been unconditionally and irrevocably paid and discharged in full or, alternatively, upon a defeasance or discharge as provided in Section 8.08.

 

(iv)          The Thai Entity’s obligations hereunder shall remain in full force and effect until the principal of, and premium, if any, interest, if any, on, or Additional Amounts, if any, on, the Notes is paid in full and interest on the overdue principal of, and premium, if any, and (to the extent permitted by law) interest, if any, on, and Additional Amounts, if any, on, the Notes, and all other payment Obligations of the Company to the Holders, the Trustee or the First Lien Collateral Agent under this Indenture or the Notes is paid in full. If at any time any payment of the principal of, and premium, if any, interest, if any, on, or Additional Amounts, if any, on, the Notes or any other amount payable by the Company under this Indenture or any other Note Document is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Company or otherwise, the Thai Entity’s obligations hereunder with respect to such payment will be reinstated as though such payment had been due but not made at such time.

 

(v)           To the extent permitted under applicable law, the Thai Entity irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any person against or any other person. In particular, the Thai Entity irrevocably waives its right to require the Trustee to pursue or exhaust the Trustee’s legal or equitable remedies against the Company prior to exercising the Trustee’s rights under the Guarantee.

 

(vi)          The Thai Entity irrevocably waives, to the extent permitted by applicable law, any rights which it may have under Sections 684, 687, 688, 689, 690, 697 or 701 of the Civil and Commercial Code of Thailand (“CCC”) or any other similar provisions.

 

(vii)         If acceleration of the time for payment of any amount payable by the Company under this Indenture or any other Note Document is stayed upon the insolvency, bankruptcy or reorganization of the Company, all such amounts otherwise subject to acceleration under the terms of this Indenture or any other Note Document are nonetheless payable by the Thai Entity hereunder forthwith on demand by the Trustee or the Holders.

 

(viii)        Notwithstanding anything to the contrary to this Article 10, the Thai Entity, and by its acceptance of a Note, each Holder, hereby confirms that it is the intention of all such parties for the Guarantee not to constitute a fraudulent conveyance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable law of any other jurisdiction. To effectuate that intention, the Trustee, the Holders and the Thai Entity hereby irrevocably agree that the obligations of the Thai Entity under this Guarantee are limited in an amount not to exceed the maximum amount that can be guaranteed by the Thai Entity without rendering the Guarantee voidable under applicable law relating to fraudulent conveyance or fraudulent transferor similar laws affecting the rights of creditors generally.

 

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(ix)          The maximum amount of liability of the Thai Entity under this Article 10 shall be capped at an amount equal to 125 percent of the outstanding aggregate principal amount of the Notes.

 

(x)           The Holders, the Trustee and the First Lien Collateral Agent, shall, within 60 days from the date the Company is in default, issue a written demand to the Thai Entity calling on the guarantee pursuant to Section 686 of the CCC.

 

(o)            Egypt.

 

(i)            Under Egyptian law, claims may become time-barred; limitation periods vary under Egyptian law depending on the nature of the claim in question, with 15 years being the maximum time period for claims to be brought. Egyptian law prohibits the waiver of any prescription right or the amendment of the prescription periods provided under Egyptian law.

 

(ii)           Under Egyptian law, a guarantee is only valid if the underlying guaranteed obligation is valid. In addition, a guarantor’s obligations towards a Holder cannot be more burdensome than the guaranteed obligation (i.e. the guaranteed obligation cannot be more onerous than the underlying debt). In addition to the above, a Holder (i.e. the beneficiary of a guarantee) cannot claim monies or enforce obligations under the guarantee from the guarantor, until the Holder has taken action against the Company, as the initial debtor. However, the guarantor may waive such right in the guarantee agreement. The guarantee of a future or contingent debt or obligation is null and void unless the guaranteed amount is determined or capped in advance.

 

(iii)          In addition, Egyptian or other applicable laws, including laws with respect to fraudulent conveyance or voidable preferences, necessary corporate power and the issuance of proper corporate resolutions, could render the guarantee partially or entirely voidable or otherwise ineffective.

 

(iv)         Under Egyptian law, the payment of interest and fees made by an Egyptian entity to a non-resident holder of the Notes may be subject to a withholding tax at the rate of 20%. That being said, there is no established precedent related to the applicable Egyptian tax regime to payments made by an Egyptian resident guarantor guaranteeing a foreign issuer of notes.

 

(v)          Further, this Agreement will be subject to stamp duty tax, in accordance with Egyptian law, to be paid when used in Egypt for a legal purpose, for example such as a claim by the Holders for payment in Egypt or any other legal procedures where the required stamp duty tax must be paid. Currently, the stamp duty tax amounts to approximately EGP 1 per page.

 

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(p)           Nigeria

 

(i)            Guarantor under this Section 10.07(p) shall refer to each Guarantor incorporated under the Laws of the Federal Republic of Nigeria (“Nigerian Guarantor”);

 

(ii)           Any obligation and security interest created by a Nigerian Guarantor under this Indenture or any Collateral Documents shall be subject to applicable Nigerian law;

 

(iii)          Where the Collateral provided by each Nigerian Guarantor under this Indenture and the Collateral Documents, represents 50% or more of the current book value of the Nigerian Guarantor’s assets, the shareholders of the Nigerian Guarantor must approve same by special resolution (i.e., three-fourths votes) or by simple majority, subject to its memorandum and articles of association;

 

(iv)         Each Nigerian Guarantor shall enter the particulars of all security interests created pursuant to this Indenture and the Collateral Documents, into its register of charges (the “Nigerian Register of Charges”) which particulars shall include the date of the creation of the security interest, the amount secured, description of the security i.e. mortgage, debenture or charge, the assets or interests subject to the security and the person(s) entitled to the same;

 

(v)          The Collateral Documents executed by each Nigerian Guarantor must be stamped at the applicable stamp duty rate at the relevant Stamp Duties Office of the Nigerian Federal Inland Revenue Service within forty (40) days, if executed in Nigeria, and if executed outside Nigeria, within 30 of the receipt of the Collateral Documents in Nigeria;

 

(vi)         Each Nigerian Guarantor shall within ninety (90) days of the creation of any registrable security interest over its property and/or assets, lodge the instrument in respect of the same for registration and the requisite statutory forms at the Corporate Affairs Commission of Nigeria, which shall upon payment of the applicable fees, issue a registration certificate constituting prima facie evidence of due compliance with the provisions of the Companies and Allied Matters Act 2020 on the registration of security interests;

 

(vii)        In respect of a Lien over Vessels pursuant to this Indenture and the Collateral Documents, each Nigerian Guarantor shall lodge and record at the Nigerian Central Ship Registry the particulars of any Liens by way of mortgage, debentures or charges or similar security created over any Nigerian registered Vessels wholly or part owned by it;

 

(viii)       Each Nigerian Guarantor shall deliver and procure to be delivered to the First Lien Collateral Agent, the updated Nigerian Register of Charges in Section 10.07(p)(iv), a certified true copy of the registration certificates in Section 10.07(p)(vi) and in Section 10.07(p)(vii).

 

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(q)            Kingdom of Saudi Arabia. For the purpose of this section 10.07(q), each reference to a “Guarantor” shall be read as reference to each Guarantor which is incorporated in the Kingdom of Saudi Arabia:

 

(i)            The Guarantors who shall enter into this Indenture in favor of the Holders are as follows:

 

(1)            ENSCO Arabia limited (“Saudi Entity”);

 

(2)            The shareholder of the Saudi Entity, namely Ensco Maritime Limited (the “Shareholder of the Saudi Entity”);

 

(ii)           The obligation of the Saudi Entity and/or the Shareholder of the Saudi Entity to grant any security to the Holder shall be limited to the extent permitted under the Saudi Laws.

 

(iii)          No security to be created or perfected over a property or any movable or immovable asset of the Saudi Entity in contrary of the Saudi Law.

 

(iv)          No security over the shares of the Saudi Entity shall be perfected without the registration of a pledge share agreement with the Ministry of Commerce.

 

(v)           The Saudi Entity will register the securities with the Ministry of Commerce and/or any other applicable authority within Saudi Arabia.

 

(vi)         The Saudi Entity will register the mortgage of assets and vessels with the relevant authorities within Saudi Arabia in accordance with the applicable rules.

 

(vii)        The Shareholders of the Saudi Entity shall take any action necessary to affect the transfer or sale of the shares or any other asset owned by the Saudi Entity in compliance with the Saudi Arabian laws.

 

(viii)       The Saudi Entity does not guarantee or promise issuance and/or registration of any mortgage over its vessels or otherwise in Saudi Arabia subject to any limitation applicable under the relevant regulations.

 

(ix)          The collateral shall be limited to what is permitted under the applicable law in Saudi Arabia.

 

(x)           The Saudi Entity may not be able to obtain insurance of indebtedness or insurance for failure to fulfil its obligation under the issued security note(s) for any pledge of shares or mortgage of its assets in Saudi Arabia.

 

(xi)          A pledge of shares in the Kingdom of Saudi Arabia and subsequent transfer of shares to a non-Saudi person may be subject to applicable tax.

 

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(r)            United Arab Emirates. Each Guarantor incorporated in the United Arab Emirates agrees that the provisions of Articles 1089, 1092, 1101 and 1105 of the UAE Federal Law No (5) of 1985 regarding the law of civil transactions (as amended) (the “UAE Civil Code”) shall not apply to the guarantee provided by such Guarantor pursuant to this Indenture and, without limiting the generality of the foregoing, each Guarantor further agrees that, in relation to Article 1092 of the UAE Civil Code, neither the Trustee nor any Holder (nor any person(s) acting on their behalf) shall be obliged to make any demand under the guarantee set forth in this Indenture within the six-month period mentioned in that Article.

 

Article 11
SECURITY

 

Section 11.01     Collateral Documents; Additional Collateral. Subject to the Agreed Security Principles:

 

(a)            The Obligations will be secured by the following (collectively, the “Collateral”):

 

(i)            a first-priority perfected Lien on 100% of the Equity Interests of each Restricted Subsidiary, the Unrestricted Floater Subsidiary and each other Unrestricted Subsidiary directly owned by the Company or any Guarantor; and

 

(ii)           a first-priority perfected Lien on substantially all other assets of the Company and each Guarantor, including (A) all Vessels owned by the Company or any Guarantor (other than any Excluded Vessel) (all such Vessels, the “Collateral Vessels”), (B) all accounts receivable, general intangibles, equipment, spare parts, Drilling Contracts and Internal Charters, and (C) all deposit accounts, securities accounts and commodity accounts in any Subject Jurisdiction (other than Excluded Accounts), which accounts shall be required to be subject to account control agreements (or other similar arrangements) to the extent provided in clause (v) of Section 11.01(f); provided that notwithstanding anything to the contrary herein or in any other Note Document, the Collateral shall not include any Excluded Property.

 

(b)            (i) At all times from and after the Issue Date, but subject to the time periods set forth in Section 11.01(b)(ii) with respect to any Jackup Rigs acquired after the Issue Date, all Jackup Rigs owned by the Company and its Subsidiaries (other than any Excluded Vessels) shall be subject to Vessel Mortgages, and (ii) as of the Issue Date, and as of each date that is sixty dates after the date of delivery of the Company’s most recent annual consolidated balance sheet in accordance with Section 4.03 during each year after the Issue Date, subject to Section 11.13, Other Vessels having an aggregate value, as reflected on the most recent annual consolidated balance sheet of the Company, of at least 70% of the aggregate value of all Other Vessels (excluding any Excluded Vessel described in clause (c) or (i) of the definition thereof) owned by the Company and its Subsidiaries on the Issue Date shall be subject to Vessel Mortgages.

 

(c)            [Reserved].

 

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(d)            After the Issue Date, the Company shall cause each Guarantor to make all filings in each Subject Jurisdiction (including, without limitation, filings of continuation statements and amendments to Uniform Commercial Code financing statements in the United States (or the applicable political subdivision, territory or possession thereof) that may be necessary to continue the effectiveness of such Uniform Commercial Code financing statements), and take all other actions as are reasonably necessary or required by the Collateral Documents to maintain (at the sole cost and expense of the Company and the Guarantors) the security interest created by the Collateral Documents in the Collateral as a first-priority perfected Lien; provided that, other than with respect to such filings (i) in the Principal Jurisdictions that are solely within the control of the Company or any Guarantor, and do not require the approval or countersignature of any other Person, including the First Lien Collateral Agent (except to the extent that the First Lien Collateral Agent has granted such approval or countersignature) and (ii) listed on Annex B-1, the Company shall be deemed to satisfy the requirements of this Section 11.01(d) if the Company shall use its commercially reasonable efforts to make such filings and take all other actions as are reasonably necessary or required by the Collateral Documents to maintain (at the sole cost and expense of the Company and the Guarantors) the security interest created by the Collateral Documents in the Collateral as a first-priority perfected Lien, in each case within the time periods set forth in this Section 11.01 and the Collateral Documents. “Principal Jurisdictions” means the United States, the United Kingdom and, if different, the jurisdiction of formation or organization of the Company.

 

(e)            [Reserved].

 

(f)             Notwithstanding anything else herein or in any other Note Documents to the contrary, in determining whether any Guarantee shall be given or any Lien or security interest shall be created or perfected, the obligations of the Company and any Subsidiary shall be subject to the following security principles in all respects (such principles, the “Agreed Security Principles”):

 

(i)            (1)           The Collateral Documents and perfection steps listed on Annex B-1 shall be entered into or completed, as applicable, prior to or on and substantially contemporaneously with the occurrence of the Issue Date.

 

(2)           The Collateral Documents and perfection steps listed on Annex B-2 shall be entered into or completed, as applicable, within sixty (60) days of the Issue Date.

 

(3)           With respect to any Collateral existing on the Issue Date and not subject to such initial Collateral Documents and perfection steps listed on Annex B-1 or Annex B-2, the Company and the Guarantors shall, within sixty (60) days of the Issue Date, use commercially reasonable efforts to deliver Collateral Documents, and take any required perfection steps, with respect to such Collateral in accordance with this Article 11; provided that if it is reasonably expected that such Collateral may be delivered or any such required perfection steps may be taken within a longer period of time, continue to use commercially reasonable efforts to do so, until such time as it is no longer reasonable to expect that such Collateral may be delivered or such perfection steps could be taken using commercially reasonable efforts.

 

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(ii)            In accordance with the provisions of Section 4.13 and this Article 11, if:

 

(1)           any asset of the type which is required to constitute Collateral pursuant to this Indenture or the Collateral Documents is acquired by the Company or any Guarantor, or any such asset no longer constitutes Excluded Property, and such asset is not automatically subject to a first-priority perfected Lien in favor of the First Lien Collateral Agent (excluding Vessels, which are covered by clause (2) of this Section 11.01(f)(ii)); or

 

(2)           a Subsidiary of the Company that is not already a Guarantor is required to become a Guarantor pursuant to Section 4.13,

 

then the Company, such Guarantor or such Subsidiary, as the case may be, shall use its commercially reasonable efforts to, within the applicable time period set forth in Section 11.01(f)(ii)(2) for Vessels, or otherwise, within sixty (60) days of (I) the date of acquisition of any such Collateral, or (II) the date on which a Subsidiary becomes a Guarantor pursuant to Section 4.13, as applicable, execute and deliver the necessary Collateral Documents in order to grant to the First Lien Collateral Agent a first-priority perfected Lien in all assets of such Guarantor or such other Subsidiary that are required to, but do not already, constitute Collateral. In each case described above, each Guarantor shall execute and deliver such other Collateral Documents, deliver any certificates (including in the case of real property (other than any Excluded Property), title insurance) to the First Lien Collateral Agent in respect of the applicable Collateral as required by this Indenture and the applicable Collateral Documents and take all other appropriate actions to ensure the First Lien Collateral Agent, for the benefit of the Holders and holders of other First Lien Obligations, has a first-priority perfected Lien therein in accordance with this Section 11.01.

 

(3)          Notwithstanding the foregoing, upon delivery of any Vessel under construction to the Company or any Guarantor as owner thereof after the Issue Date (to the extent such Vessel is not an Excluded Vessel), the acquisition by the Company or any Guarantor of any Vessel after the Issue Date (to the extent such Vessel is not an Excluded Vessel or already subject to a Vessel Mortgage), the Company shall within thirty (30) days for Vessels registered in Liberia and within ninety (90) days for all other Vessels of such delivery, acquisition (provided that such initial thirty (30) day period or ninety (90) day period, as applicable, referred to above with respect to any such Vessel shall be automatically extended by an additional thirty (30) days at the expiration thereof if the Company is diligently pursuing the applicable steps required by this clause (3)), use its commercially reasonable efforts to execute and deliver, or cause such Guarantor to execute and deliver, and cause to be filed for recording (or make arrangements for recording thereof) in the appropriate vessel or ship registry, a Vessel Mortgage or, if applicable, an assignment and assumption of an existing Vessel Mortgage as shall be necessary or appropriate to grant to the First Lien Collateral Agent a Lien over such Vessel owned by the Company or any of its Guarantors, as applicable.

 

(4)           Anything to the contrary in this Indenture or any Note Document notwithstanding, neither the Company nor any Guarantor shall (A) Dispose of (t) any Collateral Vessel, (u) any ARO JV Related Assets, (v) any Equity Interests of any Joint Venture that owns or charters any Vessel, or any Equity Interests of any Subsidiary of the Company or such Guarantor that owns any such Equity Interests in any such Joint Venture, (w) any deposit account, securities account or commodity account, (x) any accounts receivable, (y) any Drilling Contract with respect to a Collateral Vessel or (z) any insurance policy insuring any Collateral Vessel (collectively, “Principal Collateral”), in each case on which the First Lien Collateral Agent has a first priority perfected Lien, to any other Subsidiary of the Company, including in a transaction between the Company or any Guarantor permitted pursuant to Section 5.01(b), or (B) reflag any Collateral Vessel on which the First Lien Collateral Agent has a first priority perfected Lien, unless—

 

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(I)            such Subsidiary, if it is not already a Guarantor, becomes a Guarantor pursuant to Section 4.13, and

 

(II)           contemporaneously with any such Disposition of such Principal Collateral or reflagging of a Collateral Vessel, such Subsidiary shall grant to the First Lien Collateral Agent, a first priority perfected Lien on such Principal Collateral; provided that so long as the Company or any Subsidiary is using its commercially reasonable efforts to provide the First Lien Collateral Agent with such a first priority perfected Lien, failure to create or perfect such a first priority perfected Lien shall not constitute a Default or Event of Default if:

 

(A)           the Company or the relevant Guarantor is using commercially reasonable efforts to create and perfect such first priority perfected Lien as soon as reasonably practicable,

 

(B)            such first priority perfected Lien is created or perfected within sixty (60) days of such Disposition or reflagging, and

 

(C)            at any time, which for these purposes shall include a period of ninety (90) days after the time a relevant Lien is created and perfected, there shall not be more than three (3) Collateral Vessels and, in addition to any such Collateral Vessels, other Principal Collateral with an aggregate Fair Market Value, as reasonably determined by the Company, in excess of $100 million as to which a Lien remains uncreated or unperfected in reliance on this proviso and clause (C) of this Section 11.01(f)(ii)(4)(II), in the aggregate.

 

The provisions of this Section 11.01(f)(ii)(4) shall not apply to any transaction(s) permitted under Section 11.13 or any Investment made pursuant to clause (18) of the definition of Permitted Investments.

 

(5)           The provisions of Section 11.01(f)(ii)(4) shall apply mutatis mutandis to (x) Principal Collateral transferred to a Successor Company pursuant to clause (6) of Section 5.01(a); (y) Principal Collateral transferred to a Successor Guarantor pursuant to clause (D) of Section 5.01(b); and (z) any Principal Collateral acquired with Net Proceeds of an Asset Sale of Principal Collateral in accordance with Section 4.10.

 

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Notwithstanding anything to the contrary, and for the avoidance of doubt, failure to create or perfect any Lien or security interest in any Collateral in accordance with this Section 11.01(f)(ii) shall not constitute a Default or Event of Default so long as the Company or the applicable Subsidiary has used its commercially reasonable efforts to create or perfect such Lien or security interest within the time periods required herein or in the Collateral Documents, if and to the extent that any such time period is permitted herein or therein.

 

(iii)           The Note Documents shall not require any party to take steps to create or perfect any Lien in Excluded Property, and the Excluded Property shall be deemed to be excluded from the coverage of any representations, warranties or covenants in each Collateral Document. All references to a “first-priority perfected Lien” in this Section 11.01 shall be understood to be subject to Permitted Prior Liens, if any, and the terms of the Intercreditor Agreement.

 

(iv)           Perfection through account control agreements or other actions shall not be required for any deposit accounts, securities accounts or commodities accounts other than:

 

(1)          such accounts (other than Excluded Accounts) established and maintained by the Company or any Guarantor in any Principal Jurisdiction; and

 

(2)           any other deposit accounts, securities accounts or commodities accounts (other than Excluded Accounts) established and maintained by the Company or any Guarantor to the extent that, at any time in the last six months, such account, together with all other accounts established and maintained at the same branch of the relevant financial institution, has had an average balance over a 5-calendar day period in excess of $10 million;

 

provided that the aggregate amount maintained in all deposit accounts, securities accounts and commodities accounts established and maintained by the Company or any of its Restricted Subsidiaries outside of the Principal Jurisdictions that are not subject to account control agreements or other actions that perfect the Liens of the First Lien Collateral Agent in such accounts, may not exceed $50 million at any time; provided, however, that an additional $10 million in the aggregate may be held in deposit accounts, securities accounts and commodities accounts established and maintained by the Company or any of its Restricted Subsidiaries outside of the Principal Jurisdictions that are not subject to account control agreements or other actions that perfect the Liens of the First Lien Collateral Agent in such accounts to the extent that such amount is unable to be transferred to accounts established and maintained by the Company or any Guarantor in the Principal Jurisdictions or otherwise subject to account control agreements or other actions that perfect the Liens of the First Lien Collateral Agent in such accounts because such transfer would: (1) be prohibited by applicable laws, rules or regulations (but only to the extent of such prohibition); (2) have a material tax impact (but only to the extent of such impact); or (3) result in a material loss due to currency conversion requirements that cannot be avoided by the exercise of commercially reasonable efforts.

 

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(v)            None of the Company or the Guarantors shall be required to take any actions under the U.S. Security Agreement or otherwise with respect to the creation or perfection of Liens on any Collateral within or subject to the laws of the United States of America, other than actions relating to or arising in connection with:

 

(1)           the delivery of certificated securities and the delivery of debt instruments (including intercompany promissory notes, but only to the extent governed by the laws of the United States) with a value in excess of $5 million individually, or $10 million in the aggregate, and the Global Intercompany Note;

 

(2)           the execution and delivery of, and performance under, a security agreement governed by the laws of the United States and any required short-form intellectual property documentation with respect to any material intellectual property, if any;

 

(3)           to the extent the Collateral consists of deposit accounts, securities accounts or commodities accounts established and maintained in the United States, the execution and delivery of, and performance under, account control agreements for each such deposit account, each such securities account and each such commodities account;

 

(4)           the filing of UCC-1 financing statements and UCC-3 continuation statements;

 

(5)           to the extent the Collateral consists of a Collateral Vessel flagged in the United States, the execution, delivery and submission for filing of a Vessel Mortgage, to the extent required pursuant to clause (ii) of Section 11.01(a);

 

(6)           to the extent the Collateral consist of fee owned real property, the execution, delivery and filing of real estate mortgages and fixture filings;

 

(7)           any security interest filings in the U.S. Patent and Trademark Office and the U.S. Copyright Office required under the U.S. Security Agreement; and

 

(8)           other actions reasonably and mutually agreed between the First Lien Collateral Agent and the Company.

 

(vi)          None of the Company or the Guarantors shall be required to take any actions with respect to the creation or perfection of Liens on any Collateral that are within or subject to the laws of any jurisdiction other than:

 

(1)           the Subject Jurisdictions;

 

(2)           solely with respect to any Collateral Vessel, (I) execution of a Vessel Mortgage and registration thereof in the relevant jurisdiction in which such Collateral Vessel is flagged, to the extent required pursuant to clause (ii) of Section 11.01(a); and (II) (1) the filing of UCC-1 financing statements and UCC-3 continuation statements with respect to or including the Collateral Vessel, and (2) to the extent it may be done using commercially reasonable efforts in any other relevant Subject Jurisdiction, the filing of a similar charge (or the taking of similar action) with respect to or including the Collateral Vessel; and

 

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(3)           (I) solely with respect to the ARO JV Related Assets, if at any time the ARO JV Related Assets do not constitute Excluded Collateral, the jurisdiction of organization of the ARO JV Shareholder, to the extent it is possible to grant a security interest over such ARO JV Related Assets in such jurisdiction by the use of commercially reasonable efforts, and (II) with respect to the Equity Interests of the ARO JV Shareholder, to the extent it is possible to grant a security interest over such Equity Interests in such jurisdiction by the use of commercially reasonable efforts, the jurisdiction(s) of organization of the holder(s) of such Equity Interests;

 

(4)           (I) solely with respect to any Other JV Related Assets, if at any time such Other JV Related Assets do not constitute Excluded Collateral, the jurisdiction of organization of any applicable Restricted Subsidiary that owns such Other JV Related Assets, to the extent it is possible to grant a security interest over such Other JV Related Assets in such jurisdiction by the use of commercially reasonable efforts; and (II) with respect to the Equity Interests of any Other JV Related Assets, to the extent it is possible to grant a security interest over such Equity Interests in such jurisdiction by the use of commercially reasonable efforts, the jurisdiction(s) of organization of the holder(s) of such Equity Interests.

 

Except as set forth in clause (y) of the foregoing sentence, no Guarantee or Collateral Document shall be required to be delivered under the laws of any jurisdiction other than the Subject Jurisdictions.

 

(vii)          General statutory limitations, “thin capitalization” rules, fraudulent preference, fraudulent conveyance, illegality, criminal liability, personal liability of any officer or directors (or equivalent) and analogous principles may restrict a Restricted Subsidiary from providing a Guarantee or granting Liens on its assets or may require that any Guarantee and/or security be limited to a certain amount. To the extent that any such limitations, rules and/or principles referred to above require that the Guarantee and/or security is limited by an amount or otherwise in order to make such guarantee or security legal, valid, binding or enforceable or to avoid the relevant Restricted Subsidiary from breaching any applicable law or otherwise in order to avoid personal or criminal liability of the officers or directors (or equivalent) of the Company or any Guarantor, the limit shall be no less than the maximum limit required by those limitations, rules or principles. To the extent the maximum limit can be increased, or any such limitations, rules or principles avoided, by actions or omissions on the part of the Company or any Guarantor, the Company or such Guarantor, as applicable, shall use commercially reasonable efforts to take such actions or not to take actions (as appropriate) in order to increase the maximum limit permitted by those limitations, rules or principles.

 

(viii)         Subject to Section 11.01(f)(i) and Section 11.01(f)(ii), from and after the Issue Date, to the extent not otherwise completed concurrently with the Issue Date, the Company and any applicable Guarantors shall use their commercially reasonable efforts to register any Liens created under any Collateral Document and take other legal formalities and perfection steps, if required under applicable law or regulation or where customary or consistent with market practice in the relevant Subject Jurisdiction(s) as soon as reasonably practicable in line with applicable market practice after such security is granted and, in any event, within the time periods specified by applicable law or regulation (to the extent that if registration is made after the time period specified by applicable law or regulation, such Lien will not be perfected or enforceable), in order to ensure due priority, perfection and enforceability of the Liens on the Collateral required to be created by the relevant Collateral Document.

 

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(ix)            No security interest granted in motor vehicles and other assets (other than any Vessels) subject to certificates of title shall be required to be perfected (other than to the extent such rights can be perfected by filing a UCC-1 financing statement (or the local equivalent in any Subject Jurisdiction)).

 

(x)            Subject to Section 11.01(f)(ii), Section 11.01(f)(iii), Section 11.01(f)(vi) and Section 11.01(f)(xi), the Company and the Guarantors shall pledge, or cause to be pledged, the Equity Interests of each Subsidiary (other than a Subsidiary that is a Joint Venture) that—

 

(1)           is a Guarantor;

 

(2)           owns a Vessel or becomes the owner of a Vessel;

 

(3)           is a party to a Drilling Contract;

 

(4)           is the owner, directly or indirectly, of an interest in any Joint Venture to which the Company or any Subsidiary is a party;

 

(5)           is the Unrestricted Floater Subsidiary; or

 

(6)           has assets, as reflected in the most recent annual consolidated balance sheet of the Company delivered pursuant to Section 4.03, of in excess of $50 million,

 

except in each case to the extent that and for so long as such Equity Interests secure, and are expres