Common use of Primary covenants Clause in Contracts

Primary covenants. So long as Guarantees are in effect the Company shall not, without our prior written consent: (i) Make any distribution of earnings, except as may be permitted as follows: (A) From retained earnings in an amount specified in paragraph (b)(1)(i)(C) of this section, provided that, in the fiscal year in which the distribution of earnings is made there is no operating loss to the date of such payment of such distribution of earn- ings, and there was no operating loss in the immediately preceding three fiscal years, or there was a one-year oper- ating loss during the immediately pre- ceding three fiscal years, but such loss was not in the immediately preceding fiscal year, and there was positive net income for the three year period; (B) If distributions of earnings may not be made under paragraph (b)(1)(i)(A) of this section, a distribu- tion can be made in an amount equal to the total operating net income for the immediately preceding three fiscal year period, provided that: (1) There were no two successive years of operating losses; (2) There is no operating loss to the date of such distribution in the fiscal year in which such distribution is made; and (3) The distribution of earnings made would not exceed an amount specified in paragraph (b)(1)(i)(C) of this section; (C) Distributions of earnings may be made from earnings of prior years in an aggregate amount equal to 40 percent of the Company’s total net income after tax for each of the prior years, less any distributions that were made in such years; or the aggregate of the Company’s total net income after tax for such prior years, provided that, after making such distribution, the Company’s Long-Term Debt does not exceed its Net Worth. In computing net income for purposes of this paragraph (b)(1)(i)(C), extraordinary gains, such as gains from the sale of assets, will be excluded; (ii) Enter into any service, manage- ment or operating agreement for the operation of the Vessel or the Shipyard Project (excluding husbanding type agreements), or appoint or designate a managing or operating agent for the operation of the Vessel or the Shipyard Project (excluding husbanding agents) unless approved by us; (iii) Sell, mortgage, transfer, or de- mise charter the Vessel or the Ship- yard Project or any assets to any non- Related Party except as permitted in paragraph (b)(1)(vii) of this section or sell, mortgage, transfer, or demise charter the Vessel or any assets to a Related Party, unless such transaction is at a fair market value as determined by an independent appraiser acceptable to us, and is a total cash transaction; (iv) Enter into any agreement for both sale and leaseback of the same as- sets so sold unless the proceeds from such sale are at least equal to the fair market value of the property sold; (v) Guarantee, or otherwise become liable for the obligations of any other Person, except with respect to any un- dertakings as to the fees and expenses of the Indenture Trustee, except en- dorsement for deposit of checks and other negotiable instruments acquired in the ordinary course of business and except as otherwise permitted in this section; (vi) Directly or indirectly embark on any new enterprise or business activity not directly connected with the busi- ness of shipping or other activity in which the Company is actively en- gaged; (vii) Enter into any merger or con- solidation or convey, sell, demise char- ter, or otherwise transfer, or dispose of any portion of its properties or assets (any and all of which acts are encom- passed within the words ‘‘sale’’ or ‘‘sold’’ as used in this section), pro- vided that, the Company will not be deemed to have sold such properties or assets if the net book value of the ag- gregate of all the assets sold by the Company during any period of 12 con- secutive calendar months does not ex- ceed ten percent of the total net book value of all of the Company’s assets; the Company retains the proceeds of the sale of assets for use in accordance with the Company’s regular business activities; and the sale is not otherwise prohibited by paragraph (b)(1)(iii) of this section. The Company may not consummate such sale without our prior written consent if the Company has not, prior to the time of such sale, submitted to us, as required, its most recently audited financial statements referred to in § 298.42(a) and any at- tempt to consummate a sale absent such approval will be null and void ab initio.

Primary covenants. So long as Guarantees are in effect the The Company shall not, not without our the Secretary's prior written consent: (i) Make : Except as hereinafter provided, make any distribution of earnings, except as may be permitted as followsby (A) or (B) below: (A) From retained earnings in an amount specified in paragraph subsection (b)(1)(i)(CC) of this sectionbelow, provided that, in the fiscal year in which the distribution of earnings is made there is no operating loss to the date of such payment of such distribution of earn- ingsearnings, and (i) there was no operating loss in the immediately preceding three fiscal years, or (ii) there was a one-year oper- ating operating loss during the immediately pre- ceding preceding three fiscal years, but (a) such loss was not in the immediately preceding fiscal year, and (b) there was positive net income for the three year period; (B) If distributions of earnings may not be made under paragraph (b)(1)(i)(AA) of this sectionabove, a distribu- tion distribution can be made in an amount equal to the total operating net income for the immediately preceding three fiscal year period, provided that: , (1i) There there were no two successive years of operating losses; , (2ii) There is no operating loss to the date of such distribution in the fiscal year in which such distribution is made; and , there is no operating loss to the date of such distribution, and (3iii) The the distribution of or earnings made would not exceed an amount specified in paragraph (b)(1)(i)(CSection 8(a)(1)(C) of this sectionbelow; (C) Distributions of earnings may be made from earnings of prior years in an aggregate amount equal to (i) 40 percent of the Company’s 's total net income after tax for each of the prior years, less any distributions that were made in such years; or (ii) the aggregate of the Company’s 's total net income after tax for such prior years, provided that, after making such distribution, the Company’s Long-'s Long Term Debt does not exceed its Net Worth. In computing net income for the purposes of this paragraph (b)(1)(i)(C)Section, extraordinary gains, such as gains from the sale of assets, will shall be excluded;. (ii1) Enter into any service, manage- ment management or operating agreement for the operation of the Vessel or the Shipyard Project (excluding husbanding type agreements), or appoint or designate a managing or operating agent for the operation of the Vessel or the Shipyard Project (excluding husbanding agents) unless approved by usthe Secretary; (iiiA) Sell, mortgage, transfer, or de- mise charter the Vessel or the Ship- yard Project or any assets to any non- Related Party except as permitted in paragraph (b)(1)(vii) of this section or sell, mortgage, transfer, or demise charter the Vessel or any assets to any non-Related Party except as permitted in subsection 8(a)(6) below, or (B) sell, mortgage, transfer, or demise charger the Vessel or any assets to a Related Party, unless such transaction is (i) at a fair market value as determined by an independent appraiser acceptable to usthe Secretary, and is (ii) a total cash transaction;transaction or, in the case of demise charter, the charter payments are cash payments. (iv3) Enter into any agreement for both (A) sale and (B) leaseback of the same as- sets assets so sold unless the proceeds from such sale are at least equal to the fair market value of the property sold; (v4) Guarantee, or otherwise become liable for the obligations of any other Person, except with in respect to of any un- dertakings undertakings as to the fees and expenses of the Indenture Trustee, except en- dorsement endorsement for deposit of checks and other negotiable instruments acquired in the ordinary course of business and except as otherwise permitted in this sectionSection 8(b); (vi5) Directly or indirectly embark on any new enterprise or business activity not directly connected with the busi- ness business of shipping or other activity in which the Company is actively en- gagedengaged; (vii6) Enter into any merger or con- solidation consolidation or convey, sell, demise char- tercharter, or otherwise transfer, or dispose of any portion of its properties or assets (any and all of which acts are encom- passed encompassed within the words ‘‘"sale’’ " or ‘‘"sold’’ " as used in this sectionherein), pro- vided provided that, the Company will shall not be deemed to have sold such properties or assets if (A) the net Net Book Value (defined as the original book value of an asset less depreciation calculated on a straight line basis over its useful life) of the ag- gregate aggregate of all the assets sold by the Company during any period of 12 con- secutive consecutive calendar months does not ex- ceed ten percent exceed 10% of the total net book value Net Book Value of all the Company's assets (the assets which are the basis for the calculation of the Company’s assets10% of the Net Book Value are those indicated on the most recent audited annual financial statement required to be submitted pursuant to Section 9 hereof prior to the date of the sale); (b) the Company retains the proceeds of the sale of assets for use in accordance with the Company’s 's regular business activities; and (C) the sale is not otherwise prohibited by paragraph (b)(1)(iiisubsection 8(a)(3) above. Notwithstanding any other provision of this section. The subsection, the Company may not consummate such sale without our the Secretary's prior written consent if the Company has not, prior to the time of such sale, submitted to usthe Secretary the financial statement in clause (A) of this subsection, as required, its most recently audited financial statements referred to in § 298.42(a) and any at- tempt attempt to consummate a sale absent such approval will shall be null and void ab initio.

Primary covenants. So long as Guarantees are in effect the The Company shall not, not without our the Secretary's prior written consent: (i) Make : Except as hereinafter provided, make any distribution of earnings, except as may be permitted as followsby (A) or (B) below: (A) From retained earnings in an amount specified in paragraph subsection (b)(1)(i)(CC) of this sectionbelow, provided that, in the fiscal year in which the distribution of earnings is made there is no operating loss to the date of such payment of such distribution of earn- ingsearnings, and (i) there was no operating loss in the immediately preceding three fiscal years, or (ii) there was a one-year oper- ating operating loss during the immediately pre- ceding preceding three fiscal years, but (a) such loss was not in the immediately preceding fiscal year, and (b) there was positive net income for the three year period; (B) If distributions of earnings may not be made under paragraph (b)(1)(i)(AA) of this sectionabove, a distribu- tion distribution can be made in an amount equal to the total operating net income for the immediately preceding three fiscal year period, provided that: , (1i) There there were no two successive years of operating losses; , (2ii) There is no operating loss to the date of such distribution in the fiscal year in which such distribution is made; and , there is no operating loss to the date of such distribution, and (3iii) The the distribution of or earnings made would not exceed an amount specified in paragraph (b)(1)(i)(CSection 8(a)(1)(C) of this sectionbelow; (C) Distributions of earnings may be made from earnings of prior years in an aggregate amount equal to (i) 40 percent of the Company’s 's total net income after tax for each of the prior years, less any distributions that were made in such years; or (ii) the aggregate of the Company’s 's total net income after tax for such prior years, provided that, after making such distribution, the Company’s Long-'s Long Term Debt does not exceed its Net Worth. In computing net income for the purposes of this paragraph (b)(1)(i)(C)Section, extraordinary gains, such as gains from the sale of assets, will shall be excluded;. (ii1) Enter into any service, manage- ment management or operating agreement for the operation of the Vessel or the Shipyard Project (excluding husbanding type agreements), or appoint or designate a managing or operating agent for the operation of the Vessel or the Shipyard Project (excluding husbanding agents) unless approved by usthe Secretary; (iiiA) Sell, mortgage, transfer, or de- mise charter the Vessel or the Ship- yard Project or any assets to any non- Related Party except as permitted in paragraph (b)(1)(vii) of this section or sell, mortgage, transfer, or demise charter the Vessel or any assets to any non-Related Party except as permitted in subsection 8(b)(9) below, or (B) sell, mortgage, transfer, or demise charger the Vessel or any assets to a Related Party, unless such transaction is (i) at a fair market value as determined by an independent appraiser acceptable to usthe Secretary, and is (ii) a total cash transaction;transaction or, in the case of demise charter, the charter payments are cash payments. (iv3) Enter into any agreement for both (A) sale and (B) leaseback of the same as- sets assets so sold unless the proceeds from such sale are at least equal to the fair market value of the property sold; (v4) Guarantee, or otherwise become liable for the obligations of any other Person, except with in respect to of any un- dertakings undertakings as to the fees and expenses of the Indenture Trustee, except en- dorsement endorsement for deposit of checks and other negotiable instruments acquired in the ordinary course of business and except as otherwise permitted in this sectionSection 8(b); (vi5) Directly or indirectly embark on any new enterprise or business activity not directly connected with the busi- ness business of shipping or other activity in which the Company is actively en- gagedengaged; (vii6) Enter into any merger or con- solidation consolidation or convey, sell, demise char- tercharter, or otherwise transfer, or dispose of any portion of its properties or assets (any and all of which acts are encom- passed encompassed within the words ‘‘"sale’’ " or ‘‘"sold’’ " as used in this sectionherein), pro- vided provided that, the Company will shall not be deemed to have sold such properties or assets if (A) the net Net Book Value (defined as the original book value of an asset less depreciation calculated on a straight line basis over its useful life) of the ag- gregate aggregate of all the assets sold by the Company during any period of 12 con- secutive consecutive calendar months does not ex- ceed ten percent exceed 10% of the total net book value Net Book Value of all the Company's assets (the assets which are the basis for the calculation of the Company’s assets10% of the Net Book Value are those indicated on the most recent audited annual financial statement required to be submitted pursuant to Section 9 hereof prior to the date of the sale); (b) the Company retains the proceeds of the sale of assets for use in accordance with the Company’s 's regular business activities; and (C) the sale is not otherwise prohibited by paragraph (b)(1)(iiisubsection 8(a)(3) above. Notwithstanding any other provision of this section. The subsection, the Company may not consummate such sale without our the Secretary's prior written consent if the Company has not, prior to the time of such sale, submitted to usthe Secretary the financial statement in clause (A) of this subsection, as required, its most recently audited financial statements referred to in § 298.42(a) and any at- tempt attempt to consummate a sale absent such approval will shall be null and void ab initio.

Primary covenants. So long as Guarantees are in effect the The Company shall not, not without our the Secretary's prior written consent: (i1) Make Except as hereinafter provided, make any distribution of earnings, except as may be permitted as followsby (A) or (B) below: (A) From retained earnings in an amount specified in paragraph (b)(1)(i)(CSection 8(a)(1)(C) of this sectionbelow, provided thatPROVIDED THAT, in the fiscal year in which the distribution of earnings is made there is no operating loss to the date of such payment of such distribution of earn- ingsearnings, and (i) there was no operating loss in the immediately preceding three fiscal years, or (ii) there was a one-year oper- ating operating loss during the immediately pre- ceding preceding three fiscal years, but (a) such loss was not in the immediately preceding fiscal year, and (b) there was positive net income for the three year period; (B) If distributions of earnings may not be made under paragraph (b)(1)(i)(AA) of this sectionabove, a distribu- tion distribution can be made in an amount equal to the total operating net income for the immediately preceding three fiscal year period, provided that: PROVIDED THAT, (1i) There there were no two successive years of operating losses; , (2ii) There is no operating loss to the date of such distribution in the fiscal year in which such distribution is made; and , there is no operating loss to the date of such distribution, and (3iii) The the distribution of or earnings made would not exceed an amount specified in paragraph (b)(1)(i)(CSection 8(a)(1)(C) of this sectionbelow; (C) Distributions of earnings may be made from earnings of prior years in an aggregate amount equal to (i) 40 percent of the Company’s 's total net income after tax for each of the prior years, less any distributions that were made in such years; or (ii) the aggregate of the Company’s 's total net income after tax for such prior years, provided thatPROVIDED THAT, after making such distribution, the Company’s Long-'s Long Term Debt does not exceed its Net Worth. In computing net income for purposes of this paragraph (b)(1)(i)(C)subsection, extraordinary gains, such as gains from the sale of assets, will shall be excluded; (ii2) Enter into any service, manage- ment management or operating agreement for the operation of the Vessel or the Shipyard Project (excluding husbanding type agreements), or appoint or designate a managing or operating agent for the operation of the Vessel or the Shipyard Project (excluding husbanding agents) unless approved by usthe Secretary; (iiiA) Sell, mortgage, transfer, or de- mise demise charter the Vessel or the Ship- yard Project or any assets to any non- nn-Related Party except as permitted in paragraph subsection 8(a)(7) below, or (b)(1)(viiB) of this section or sell, mortgage, transfer, or demise charter the Vessel or any assets to a Related Party, unless such transaction is (i) at a fair market value as determined by an independent appraiser acceptable to usthe Secretary, and is (ii) a total cash transactiontransaction or, in the case of demise charter, the charter payments are cash payments; (iv4) Enter into any agreement for both (A) sale and (B) leaseback of the same as- sets assets so sold unless the proceeds from such sale are at least equal to the fair market value of the property sold; (v5) GuaranteeExcept as necessary to avoid arrest or the threat of arrest of the Vessel or the Vessel of PETRODRILL FIVE LIMITED, or to arrange for the release of the Vessel or the Vessel of PETRODRILL FIVE LIMITED, guarantee, or otherwise become liable for the obligations of any other Person, except with in respect to of any un- dertakings undertakings as to the fees and expenses of the Indenture Trustee, except en- dorsement endorsement for deposit of checks and other negotiable instruments acquired in the ordinary course of business and except as otherwise permitted in this sectionSection 8(b); (vi6) Directly or indirectly embark on any new enterprise or business activity not directly connected with the busi- ness business of shipping or other activity in which the Company is actively en- gagedengaged; (vii7) Enter into any merger or con- solidation consolidation or convey, sell, demise char- tercharter, or otherwise transfer, or dispose of any portion of its properties or assets (any and all of which acts are encom- passed encompassed within the words ‘‘"sale’’ " or ‘‘"sold’’ " as used in this sectionherein), pro- vided thatPROVIDED THAT, the Company will shall not be deemed to have sold such properties or assets if (A) the net Net Book Value (defined as the original book value of an asset less depreciation calculated on a straight line basis over its useful life) of the ag- gregate aggregate of all the assets sold by the Company during any period of 12 con- secutive consecutive calendar months does not ex- ceed ten percent exceed 10% of the total net book value Net Book Value of all of the Company’s assets's assets (the assets which are the basis for the calculation of the 10% of the Net Book Value are those indicated on the most recent audited annual financial statement required to be submitted pursuant to Section 9 hereof prior to the date of the sale); (B) the Company retains the proceeds of the sale of assets for use in accordance with the Company’s 's regular business activities; and (C) the sale is not otherwise prohibited by paragraph (b)(1)(iii) subsection 8(a)(3). Notwithstanding any other provision of this section. The subsection, the Company may not consummate such sale without our the Secretary's prior written consent if the Company has not, prior to the time of such sale, submitted to usthe Secretary the financial statement in clause A of this subsection, as required, its most recently audited financial statements referred to in § 298.42(a) and any at- tempt attempt to consummate a sale absent such approval will shall be null and void ab initioAB INITIO.

Primary covenants. So long as Guarantees are in effect the Company shall not, without our prior written consent: (i) Make any distribution of earnings, except as may be permitted as follows:: aworley on LAPBH6H6L3 with DISTILLER (A) From retained earnings in an amount specified in paragraph (b)(1)(i)(C) of this section, provided that, in the fiscal year in which the distribution of earnings is made there is no operating loss to the date of such payment of such distribution of earn- ings, and there was no operating loss in the immediately preceding three fiscal years, or there was a one-year oper- ating loss during the immediately pre- ceding three fiscal years, but such loss was not in the immediately preceding fiscal year, and there was positive net income for the three year period; (B) If distributions of earnings may not be made under paragraph (b)(1)(i)(A) of this section, a distribu- tion can be made in an amount equal to the total operating net income for the immediately preceding three fiscal year period, provided that: (1) There were no two successive years of operating losses; (2) There is no operating loss to the date of such distribution in the fiscal year in which such distribution is made; and (3) The distribution of earnings made would not exceed an amount specified in paragraph (b)(1)(i)(C) of this section; (C) Distributions of earnings may be made from earnings of prior years in an aggregate amount equal to 40 percent of the Company’s total net income after tax for each of the prior years, less any distributions that were made in such years; or the aggregate of the Company’s total net income after tax for such prior years, provided that, after making such distribution, the Company’s Long-Term Debt does not exceed its Net Worth. In computing net income for purposes of this paragraph (b)(1)(i)(C), extraordinary gains, such as gains from the sale of assets, will be excluded; (ii) Enter into any service, manage- ment or operating agreement for the operation of the Vessel or the Shipyard Project (excluding husbanding type agreements), or appoint or designate a managing or operating agent for the operation of the Vessel or the Shipyard Project (excluding husbanding agents) unless approved by us; (iii) Sell, mortgage, transfer, or de- mise charter the Vessel or the Ship- yard Project or any assets to any non- Related Party except as permitted in paragraph (b)(1)(vii) of this section or sell, mortgage, transfer, or demise charter the Vessel or any assets to a Related Party, unless such transaction is at a fair market value as determined by an independent appraiser acceptable to us, and is a total cash transaction; (iv) Enter into any agreement for both sale and leaseback of the same as- sets so sold unless the proceeds from such sale are at least equal to the fair market value of the property sold; (v) Guarantee, or otherwise become liable for the obligations of any other Person, except with respect to any un- dertakings as to the fees and expenses VerDate Sep<11>2014 09:57 Nov 02, 2023 Jkt 259213 PO 00000 Frm 00158 Fmt 8010 Sfmt 8010 Q:\46\46V8.TXT PC31 of the Indenture Trustee, except en- dorsement for deposit of checks and other negotiable instruments acquired in the ordinary course of business and except as otherwise permitted in this section; (vi) Directly or indirectly embark on any new enterprise or business activity not directly connected with the busi- ness of shipping or other activity in which the Company is actively en- gaged; (vii) Enter into any merger or con- solidation or convey, sell, demise char- ter, or otherwise transfer, or dispose of any portion of its properties or assets (any and all of which acts are encom- passed within the words ‘‘sale’’ or ‘‘sold’’ as used in this section), pro- vided that, the Company will not be deemed to have sold such properties or assets if the net book value of the ag- gregate of all the assets sold by the Company during any period of 12 con- secutive calendar months does not ex- ceed ten percent of the total net book value of all of the Company’s assets; the Company retains the proceeds of the sale of assets for use in accordance with the Company’s regular business activities; and the sale is not otherwise prohibited by paragraph (b)(1)(iii) of this section. The Company may not consummate such sale without our prior written consent if the Company has not, prior to the time of such sale, submitted to us, as required, its most recently audited financial statements referred to in § 298.42(a) and any at- tempt to consummate a sale absent such approval will be null and void ab initio.

Primary covenants. So long as Guarantees are in effect the The Company shall not, not without our the Secretary's prior written consent: (i1) Make Except as hereinafter provided, make any distribution of earnings, except as may be permitted as followsby (A) or (B) below: (A) From retained earnings in an amount specified in paragraph (b)(1)(i)(CSection 8(a)(1)(C) of this sectionbelow, provided that, in the fiscal year in which the distribution of earnings is made there is no operating loss to the date of such payment of such distribution of earn- ingsearnings, and (i) there was no operating loss in the immediately preceding three fiscal years, or (ii) there was a one-year oper- ating operating loss during the immediately pre- ceding preceding three fiscal years, but (a) such loss was not in the immediately preceding fiscal year, and (b) there was positive net income for the three year period; (B) If distributions of earnings may not be made under paragraph (b)(1)(i)(AA) of this sectionabove, a distribu- tion distribution can be made in an amount equal to the total operating net income for the immediately preceding three fiscal year period, provided that: , (1i) There there were no two successive years of operating losses; , (2ii) There is no operating loss to the date of such distribution in the fiscal year in which such distribution is made; and , there is no operating loss to the date of such distribution, and (3iii) The the distribution of or earnings made would not exceed an amount specified in paragraph (b)(1)(i)(CSection 8(a)(1)(C) of this sectionbelow; (C) Distributions of earnings may be made from earnings of prior years in an aggregate amount equal to (i) 40 percent of the Company’s 's total net income after tax for each of the prior years, less any distributions that were made in such years; or (ii) the aggregate of the Company’s 's total net income after tax for such prior years, provided that, after making such distribution, the Company’s Long-'s Long Term Debt does not exceed its Net Worth. In computing net income for purposes of this paragraph (b)(1)(i)(C)subsection, extraordinary gains, such as gains from the sale of assets, will shall be excluded; (ii2) Enter into any service, manage- ment management or operating agreement for the operation of the Vessel or the Shipyard Project (excluding husbanding type agreements), or appoint or designate a managing or operating agent for the operation of the Vessel or the Shipyard Project (excluding husbanding agents) unless approved by usthe Secretary; (iiiA) Sell, mortgage, transfer, or de- mise demise charter the Vessel or the Ship- yard Project or any assets to any non- non-Related Party except as permitted in paragraph subsection 8(a)(7) below, or (b)(1)(viiB) of this section or sell, mortgage, transfer, or demise charter the Vessel or any assets to a Related Party, unless such transaction is (I) at a fair market value as determined by an independent appraiser acceptable to usthe Secretary, and is (ii) a total cash transactiontransaction or, in the case of demise charter, the charter payments are cash payments; (iv4) Enter into any agreement for both (A) sale and (B) leaseback of the same as- sets assets so sold unless the proceeds from such sale are at least equal to the fair market value of the property sold; (v5) Guarantee, or otherwise become liable for the obligations of any other Person, except with in respect to of any un- dertakings undertakings as to the fees and expenses of the Indenture Trustee, except en- dorsement endorsement for deposit of checks and other negotiable instruments acquired in the ordinary course of business and except as otherwise permitted in this sectionSection 8(b); (vi6) Directly or indirectly embark on any new enterprise or business activity not directly connected with the busi- ness business of shipping shipping, oil field drilling or other activity in which the Company is actively en- gagedengaged; (vii7) Enter into any merger or con- solidation consolidation or convey, sell, demise char- tercharter, or otherwise transfer, or dispose of any portion of its properties or assets (any and all of which acts are encom- passed encompassed within the words ‘‘"sale’’ " or ‘‘"sold’’ " as used in this sectionherein), pro- vided provided that, the Company will shall not be deemed to have sold such properties or assets if (A) the net Net Book Value (defined as the original book value of an asset less depreciation calculated on a straight line basis over its useful life) of the ag- gregate aggregate of all the assets sold by the Company during any period of 12 con- secutive consecutive calendar months does not ex- ceed ten percent exceed 10% of the total net book value Net Book Value of all of the Company’s assets's assets (the assets which are the basis for the calculation of the 10% of the Net Book Value are those indicated on the most recent audited annual financial statement required to be submitted pursuant to Section 9 hereof prior to the date of the sale); (B) the Company retains the proceeds of the sale of assets for use in accordance with the Company’s 's regular business activities; and (C) the sale is not otherwise prohibited by paragraph (b)(1)(iii) subsection 8(a)(3). Notwithstanding any other provision of this section. The subsection, the Company may not consummate such sale without our the Secretary's prior written consent if the Company has not, prior to the time of such sale, submitted to usthe Secretary the financial statement in clause A of this subsection, as required, its most recently audited financial statements referred to in § 298.42(a) and any at- tempt attempt to consummate a sale absent such approval will shall be null and void ab initio.

Primary covenants. So long as Guarantees are in effect the The Company shall not, not without our the Secretary's prior written consent: (i1) Make Except as hereinafter provided, make any distribution of earnings, except as may be permitted as followsby (A) or (B) below: (A) From retained earnings in an amount specified in paragraph subsection (b)(1)(i)(CC) of this sectionbelow, provided that, in the fiscal year in which the distribution of earnings is made there is no operating loss to the date of such payment of such distribution of earn- ingsearnings, and (i) there was no operating loss in the immediately preceding three fiscal years, or (ii) there was a one-year oper- ating operating loss during the immediately pre- ceding preceding three fiscal years, but (a) such loss was not in the immediately preceding fiscal year, and (b) there was positive net income for the three year period; (B) If distributions of earnings may not be made under paragraph (b)(1)(i)(AA) of this sectionabove, a distribu- tion distribution can be made in an amount equal to the total operating net income for the immediately preceding three fiscal year period, provided that: , (1i) There there were no two successive years of operating losses; , (2ii) There is no operating loss to the date of such distribution in the fiscal year in which such distribution is made; and , there is no operating loss to the date of such distribution, and (3iii) The the distribution of or earnings made would not exceed an amount specified in paragraph (b)(1)(i)(CSection 9(a)(1)(C) of this sectionbelow; (C) Distributions of earnings may be made from earnings of prior years in an aggregate amount equal to (i) 40 percent of the Company’s 's total net income after tax for each of the prior years, less any distributions that were made in such years; or (ii) the aggregate of the Company’s 's total net income after tax for such prior years, provided that, after making such distribution, the Company’s Long-'s Long Term Debt does not exceed its Net Worth. In computing net income for purposes of this paragraph (b)(1)(i)(C)subsection, extraordinary gains, such as gains from the sale of assets, will shall be excluded;. (iiD) Irrespective of the limitations in subsections (A), (B), and (C), distributions may be made for tax payment purposes in an aggregate amount not to exceed the amount which would constitute the taxes payable by the Company under the Internal Revenue Code of 1986, as amended, if the Company were a corporation utilizing all tax deductions, including, but not limited to, net operating loss carryforwards; provided that no Default under the Security Agreement has occurred and is continuing. (2) Enter into any service, manage- ment management or operating agreement for the operation of the Vessel or the Shipyard Project (excluding husbanding type agreements), or appoint or designate a managing or operating agent for the operation of the Vessel or the Shipyard Project (excluding husbanding agents) unless approved by usthe Secretary; (iiiA) Sell, mortgage, transfer, or de- mise demise charter the Vessel or the Ship- yard Project or any assets to any non- non-Related Party except as permitted in paragraph subsection 9(a)(6) below, or (b)(1)(viiB) of this section or sell, mortgage, transfer, or demise charter the Vessel or any assets to a Related Party, unless such transaction is (i) at a fair market value as determined by an independent appraiser acceptable to usthe Secretary, and is (ii) a total cash transactiontransaction or, in the case of demise charter, the charter payments are cash payments; (iv4) Enter into any agreement for both (A) sale and (B) leaseback of the same as- sets assets so sold unless the proceeds from such sale are at least equal to the fair market value of the property sold; (v5) Guarantee, or otherwise become liable for the obligations of any other Person, except with in respect to of any un- dertakings undertakings as to the fees and expenses of the Indenture Trustee, except en- dorsement endorsement for deposit of checks and other negotiable instruments acquired in the ordinary course of business and except as otherwise permitted in this sectionSection 9(b); (vi6) Directly or indirectly embark on any new enterprise or business activity not directly connected with the busi- ness business of shipping or other activity in which the Company is actively en- gagedengaged; (vii7) Enter into any merger or con- solidation consolidation or convey, sell, demise char- tercharter, or otherwise transfer, or dispose of any portion of its properties or assets (any and all of which acts are encom- passed encompassed within the words ‘‘"sale’’ ' or ‘‘"sold’’ " as used in this sectionherein), pro- vided provided that, the Company will shall not be deemed to have sold such properties or assets if (A) the net Net Book Value (defined as the original book value of an asset less depreciation calculated on a straight line basis over its useful life) of the ag- gregate aggregate of all the assets sold by the Company during any period of 12 con- secutive consecutive calendar months does not ex- ceed ten percent exceed 10% of the total net book value Net Book Value of all of the Company’s assets's assets (the assets which are the basis for the calculation of the 10% of the Net Book Value are those indicated on the most recent audited annual financial statement required to be submitted pursuant to Section 10 hereof prior to the date of the sale); (B) the Company retains the proceeds of the sale of assets for use in accordance with the Company’s 's regular business activities; and (C) the sale is not otherwise prohibited by paragraph (b)(1)(iii) subsection 9(a)(3). Notwithstanding any other provision of this section. The subsection, the Company may not consummate such sale without our the Secretary's prior written consent if the Company has not, prior to the time of such sale, submitted to usthe Secretary the financial statement in clause A of this subsection, as required, its most recently audited financial statements referred to in § 298.42(a) and any at- tempt attempt to consummate a sale absent such approval will shall be null and void ab initio.

Primary covenants. So long as Guarantees are in effect the The Company shall not, not without our the Secretary's prior written consent: (i1) Make Except as hereinafter provided, make any distribution of earnings, except as may be permitted as followsby (A) or (B) below: (A) From retained earnings in an amount specified in paragraph (b)(1)(i)(CSection 8(a)(1)(C) of this sectionbelow, provided thatPROVIDED THAT, in the fiscal year in which the distribution of earnings is made there is no operating loss to the date of such payment of such distribution of earn- ingsearnings, and (i) there was no operating loss in the immediately preceding three fiscal years, or (ii) there was a one-year oper- ating operating loss during the immediately pre- ceding preceding three fiscal years, but (a) such loss was not in the immediately preceding fiscal year, and (b) there was positive net income for the three year period; (B) If distributions of earnings may not be made under paragraph (b)(1)(i)(AA) of this sectionabove, a distribu- tion distribution can be made in an amount equal to the total operating net income for the immediately preceding three fiscal year period, provided that: PROVIDED THAT, (1i) There there were no two successive years of operating losses; , (2ii) There is no operating loss to the date of such distribution in the fiscal year in which such distribution is made; and , there is no operating loss to the date of such distribution, and (3iii) The the distribution of or earnings made would not exceed an amount specified in paragraph (b)(1)(i)(CSection 8(a)(1)(C) of this sectionbelow; (C) Distributions of earnings may be made from earnings of prior years in an aggregate amount equal to (i) 40 percent of the Company’s 's total net income after tax for each of the prior years, less any distributions that were made in such years; or (ii) the aggregate of the Company’s 's total net income after tax for such prior years, provided thatPROVIDED THAT, after making such distribution, the Company’s Long-'s Long Term Debt does not exceed its Net Worth. In computing net income for purposes of this paragraph (b)(1)(i)(C)subsection, extraordinary gains, such as gains from the sale of assets, will shall be excluded; (ii2) Enter into any service, manage- ment management or operating agreement for the operation of the Vessel or the Shipyard Project (excluding husbanding type agreements), or appoint or designate a managing or operating agent for the operation of the Vessel or the Shipyard Project (excluding husbanding agents) unless approved by usthe Secretary; (iiiA) Sell, mortgage, transfer, or de- mise demise charter the Vessel or the Ship- yard Project or any assets to any non- non-Related Party except as permitted in paragraph subsection 8(a)(7) below, or (b)(1)(viiB) of this section or sell, mortgage, transfer, or demise charter the Vessel or any assets to a Related Party, unless such transaction is (i) at a fair market value as determined by an independent appraiser acceptable to usthe Secretary, and is (ii) a total cash transactiontransaction or, in the case of demise charter, the charter payments are cash payments; (iv4) Enter into any agreement for both (A) sale and (B) leaseback of the same as- sets assets so sold unless the proceeds from such sale are at least equal to the fair market value of the property sold; (v5) GuaranteeExcept as necessary to avoid arrest or the threat of arrest of the Vessel or the Vessel of PETRODRILL FOUR LIMITED, or to arrange for the release of the Vessel or the Vessel of PETRODRILL FOUR LIMITED, guarantee, or otherwise become liable for the obligations of any other Person, except with in respect to of any un- dertakings undertakings as to the fees and expenses of the Indenture Trustee, except en- dorsement endorsement for deposit of checks and other negotiable instruments acquired in the ordinary course of business and except as otherwise permitted in this sectionSection 8(b); (vi6) Directly or indirectly embark on any new enterprise or business activity not directly connected with the busi- ness business of shipping or other activity in which the Company is actively en- gagedengaged; (vii7) Enter into any merger or con- solidation consolidation or convey, sell, demise char- tercharter, or otherwise transfer, or dispose of any portion of its properties or assets (any and all of which acts are encom- passed encompassed within the words ‘‘"sale’’ " or ‘‘"sold’’ " as used in this sectionherein), pro- vided thatPROVIDED THAT, the Company will shall not be deemed to have sold such properties or assets if (A) the net Net Book Value (defined as the original book value of an asset less depreciation calculated on a straight line basis over its useful life) of the ag- gregate aggregate of all the assets sold by the Company during any period of 12 con- secutive consecutive calendar months does not ex- ceed ten percent exceed 10% of the total net book value Net Book Value of all of the Company’s assets's assets (the assets which are the basis for the calculation of the 10% of the Net Book Value are those indicated on the most recent audited annual financial statement required to be submitted pursuant to Section 9 hereof prior to the date of the sale); (B) the Company retains the proceeds of the sale of assets for use in accordance with the Company’s 's regular business activities; and (C) the sale is not otherwise prohibited by paragraph (b)(1)(iii) subsection 8(a)(3). Notwithstanding any other provision of this section. The subsection, the Company may not consummate such sale without our the Secretary's prior written consent if the Company has not, prior to the time of such sale, submitted to usthe Secretary the financial statement in clause A of this subsection, as required, its most recently audited financial statements referred to in § 298.42(a) and any at- tempt attempt to consummate a sale absent such approval will shall be null and void ab initioAB INITIO.