--------------------------------------------------------------------------------

 
EXHIBIT 10.1
 
 
CREDIT AGREEMENT
 
among
 

 
ATWOOD OCEANICS, INC.,
 
 
ATWOOD OFFSHORE WORLDWIDE LIMITED,
 
 
VARIOUS LENDERS
 

 
and
 

NORDEA BANK FINLAND PLC, NEW YORK BRANCH,
as Administrative Agent,
 
Lead Arranger and Book Runner
 

__________________________________
 

Dated as of May 6, 2011
 

__________________________________
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
 
TABLE OF CONTENTS
 
Page
 
 
SECTION 1. Amount and Terms of Credit Facility
 
 
1
 
    1.01      Defined Terms
 
 
1

 
SECTION 2.  Amount and Terms of Credit Facility
 
 
29
  
    2.01      The Commitments
 
 
29

    2.02      Minimum Amount of Each Borrowing; Limitation on Number of
Borrrowings
 
29
    2.03      Notice of Borrowing
 
30

    2.04      Disbursement of Funds
 
30

    2.05      Notes
 
31
    2.06      Pro Rata Borrowing
 
32

    2.07      Interest
 
32

    2.08      Interest Periods
 
33
    2.09      Increased Costs, Illegality, Market Disruption, etc.
 
34

    2.10      Compensation
 
36

    2.11      Change of Lending Office; Limitation on Additional Amounts
 
36
    2.12      Replacement of Lenders
 
36

    2.13      Incremental Commitments
 
38

  
SECTION 3. Letters of Credit
 
 
40
 
    3.01      Letters of Credit
 
 
41

    3.02      Maximum Letters of Credit Outstanding; Maturities
 
42

    3.03      Letter of Credit Requests; Minimum Stated Amount
 
42
    3.04      Letter of Credit Participations
 
42

    3.05      Agreement to Repay Letter of Credit Drawings
 
44

    3.06         Increased Costs
 
45

 
SECTION 4. Commitment Commission; Fees; Reductions of Commitment
 
 
46
 
    4.01      Fees
 
46

    4.02      Voluntary Termination of Total Unutilized Commitments
 
47

    4.03         Mandatory Reduction of Commitments
 
48

   
SECTION 5. Prepayments; Payments; Taxes
 
 
49
 
    5.01      Voluntary Prepayments
 
 
49

    5.02      Mandatory Repayments
 
50

    5.03      Method and Place of Payment
 
51

    5.04      Net Payments; Taxes
 
51

       5.05      Application of Proceeds
 
51

 
 
 
 
 

--------------------------------------------------------------------------------

 
 
 
 
TABLE OF CONTENTS
(continued)
 
 
 
 

Page
 
 
SECTION 6. Conditions Precedent to Credit Events on the Initial Borrowing Date
 
 
53
 
    6.01      Effective Date; Notes
 
 
53

    6.02      Fees, etc.
 
53
    6.03      Officer's Certificate
 
53

    6.04      Collateral and Guaranty Requirements
 
54

    6.05      Consummation of the Refinancing
 
54
    6.06      Outstanding Indebtedness
 
54

    6.07      No Conflict
 
54

    6.08      Drilling Contracts
 
54
    6.09      Adverse Change; Approvals
 
55

    6.10      Litigation
 
55

    6.11      Solvency Certificate
 
55
    6.12      Financial Statements; Projections
 
55

    6.13      Intercompany Subordination Agreement
 
55

  
SECTION 7. Conditions Precedent to All Credit Events
 
 
56
 
    7.01      No Default; Representations and Warranties
 
 
56

    7.02      Notice of Borrowing; Letter of Credit Request
 
56

    7.03      Margin Regulations
 
56
    7.04      Collateral Maintenance Test.  At the time of each Credit Event,
the Administrative Agent shall have received evidence from the Parent reasonably
satisfactory to the Administrative Agent demonstrating that after
                   giving effect to such Credit Event, the Aggregate Collateral
Rig Value is at least 150% of the sum of the aggregate outstanding amount of
Loans at such time
 
56

 
SECTION 8. Representations, Warranties and Agreements
 
 
57
 
    8.01         Corporate/Limited Liability Company/Limited Partnership Status 
 
 
57

    8.02      Corporate Power and Authority
 
57

    8.03         No Violation
 
57

    8.04         Governmental Approvals 
 
58

    8.05         Financial Statements; Financial Condition; Undisclosed
Liabilities; Projections; etc. 
 
58

    8.06      Litigation
 
59

    8.07      True and Complete Disclosure
 
59

       8.08         Use of Proceeds; Margin Regulations 
 
60

    8.09         Tax Returns and Payments 
 
60

    8.10      Compliance with ERISA
 
60

    8.11         The Security Documents 
 
61

    8.12      Capitalization
 
61

    8.13        Subsidiaries 
 
62

    8.14      Compliance with Statutes, etc.
 
62

    8.15         Investment Company Act 
 
62

 
 
 

 
 
 

--------------------------------------------------------------------------------

 

 

 
TABLE OF CONTENTS
(continued)
 
 
 
 

Page
 
      8.16      Legal Names; Type of Organization (and Whether a Registered
Organization); Jurisdiction of Organization; etc.
 
62

    8.17         Environmental Matters 
 
62

    8.18         Labor Relations 
 
63

    8.19         Patents, Licenses, Franchises and Formulas 
 
64

    8.20      Indebtedness 
 
64

    8.21      Insurance
 
64

    8.22      Collateral Rigs
 
64

       8.23      Properties
 
64

    8.24     Anti-Terrorism
 
65

    8.25      Form of Documentation
 
65

    8.26         Place of Business
 
66

    8.27         No Undisclosed Commissions
 
66

    8.28         Pari Passu or Priority Status
 
66

    8.29      No Immunity
 
66

    8.30      Winding up, etc.
 
66

 
SECTION 9. Affirmative Covenants
 
 
66
 
    9.01        Information Covenants
 
 
66

    9.02         Books, Records and Inspections 
 
70
    9.03         Maintenance of Property; Insurance   
 
71

    9.04      Existence; Franchises
 
71

    9.05      Compliance with Statutes, etc.
 
72
    9.06      Compliance with Environmental Laws
 
72

    9.07      ERISA
 
73

    9.08      End of Fiscal Years; Fiscal Quarters
 
73
    9.09      Performance of Obligations
 
73

    9.10      Payment of Taxes
 
74

    9.11      Additional Security; Additional Guarantors; Further Assurances
 
74
    9.12      Use of Proceeds
 
76

    9.13      Ownership
 
76

    9.14      Letter of Credit Back-Stop Arrangements
 
76

    9.15      New York Stock Exchange
 
76

 
SECTION 10. Negative Covenants
 
 
76
 
    10.01       Liens
 
 
76

    10.02       Consolidation, Merger, or Sale of Assets, etc.
 
78

    10.03       Dividends
 
80

    10.04       Indebtedness
 
80

    10.05      Advances, Investments and Loans
 
82

    10.06       Transactions with Affiliates
 
84

    10.07       Maximum Leverage Ratio
 
84

       10.08       Interest Expense Coverage Ratio
 
85

 
 
 
 
 
 

--------------------------------------------------------------------------------

 
 

 
 
TABLE OF CONTENTS
(continued)
 
 
 
 

Page
 
       10.09      Collateral Maintenance    
 
85

    10.10       Maximum Debt to Capitalization Ratio
 
85

    10.11       Certificate of Incorporation, By-Laws and Certain Other
Agreements, etc.
 
85

    10.12      Limitation on Certain Restrictions on Subsidiaries 
 
86

    10.13      Limitation on Issuance of Capital Stock 
 
86

    10.14       Change of Ownership; Registry; Class; Management; Legal Names;
Type of Organization (and whether a Registered Organization); Jurisdiction of
Organization; etc.
 
87

    10.15       Business
 
88

       10.16      ERISA 
 
88

 
SECTION 11. Events of Default
 
 
89
 
    11.01       Payments 
 
 
89

    11.02       Representations, etc.
 
89
    11.03       Covenants
 
89

    11.04       Default Under Other Agreements
 
89

    11.05       Bankruptcy, etc.
 
89
    11.06       ERISA
 
90

    11.07       Security Documents
 
90

    11.08       Guaranties
 
90
    11.09    Judgments
 
91

    11.10    Change of Control
 
91

    11.11    Revocation of Consents
 
91
    11.12    Unlawfulness
 
91

    11.13    Insurance
 
92

    11.14    Disposals
 
92

    11.15    Cessationof Business
 
92

       11.15    Government Intervention
 
92

 
SECTION 12. The Administrative Agent
 
 
93
 
    12.01       Appointment
 
 
93

    12.02    Nature of Duties
 
94

    12.0         Lack of Reliance on the Administrative Agent 
 
95

    12.04      Certain Rights of the Administrative Agent 
 
95

    12.05    Reliance
 
95

    12.06      Indemnification 
 
96

    12.07      The Administrative Agent in its Individual Capacity  
 
96

       12.08    Holders
 
96

    12.09    Resignation by the Administrative Agent
 
96

    12.10    Co-Collateral Agent; Separate Collateral Agent
 
97

 
 
 

 

 

 
 
 

--------------------------------------------------------------------------------

 

 

 

TABLE OF CONTENTS
(continued)
 
 
 
 

Page
 

 
SECTION 13. Parent Guaranty
 
 
97
 
    13.01      Guaranty 
 
 
98

    13.02      Bankruptcy 
 
98
    13.03       Nature of Liability
 
98

    13.04       Independent Obligation
 
99

    13.05       Authorization
 
99
    13.06       Reliance
 
100

    13.07       Subordination
 
100

    13.08       Waiver
 
100
    13.09    Payment
 
101

 
SECTION 14. Miscellaneous
 
 
101
 
    14.01       Payment of Expenses, etc.
 
 
101

    14.02    Right of Setoff
 
102

    14.03       Notices
 
103

    14.04    Benefit of Agreement; Assignments; Participations
 
103

    14.05      No Waiver; Remedies Cumulative 
 
105

    14.06       Payments Pro Rata 
 
105

    14.07       Calculations; Computations  
 
106

       14.08    GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL
 
106

    14.09    Conterparts
 
108

    14.10    Effectiveness
 
108

       14.11    Headings Descriptive
 
108

    14.12       Amendment or Waiver; etc.
 
108

    14.13    Survival
 
111

    14.14    Domicile of Loans
 
111

    14.15       Register
 
111

    14.16       Confidentiality
 
112

       14.17    Insurance Proceeds
 
113

    14.18    Rights Plan
 
113

    14.19    USA PATRIOT Act Notice
 
113

 
 
 
 
 
 

--------------------------------------------------------------------------------

 
 

 
             CREDIT AGREEMENT, dated as of May 6, 2011, among ATWOOD OCEANICS,
INC., a Texas corporation (the “Parent”), ATWOOD OFFSHORE WORLDWIDE LIMITED, an
exempted company incorporated under the laws of the Cayman Islands and a Wholly
Owned Subsidiary of the Parent (the “Borrower”), the Lenders party hereto from
time to time, and NORDEA BANK FINLAND PLC, NEW YORK BRANCH, a national banking
association organized under the laws of the Republic of Finland, as
Administrative Agent (in such capacity, the “Administrative Agent”).  All
capitalized terms used herein and defined in Section 1 are used herein as
therein defined.
 
W I T N E S S E T H:
 
WHEREAS, the Parent, AOPL, the lenders from time to time party thereto, and the
Administrative Agent, as administrative agent, are parties to that certain
Credit Agreement, dated as of dated October 26, 2007 (as amended, amended and
restated, supplemented and/or otherwise modified, the “Existing 2007 Credit
Agreement”) pursuant to which the lenders agreed to make revolving loans to AOPL
and participate in letters of credit for account of AOPL as provided therein;
 
WHEREAS, the Parent, AOPL, the lenders from time to time party thereto, and the
Administrative Agent, as administrative agent, are parties to that certain
Credit Agreement, dated as of dated November 25, 2008 (as amended, amended and
restated, supplemented and/or otherwise modified, the “Existing 2008 Credit
Agreement”) pursuant to which the lenders agreed to make revolving loans to AOPL
and participate in letters of credit for account of AOPL as provided therein;
 
WHEREAS, the parties hereto have agreed to enter into this Agreement to
refinance the Existing 2007 Credit Agreement and the Existing 2008 Credit
Agreement (the “Refinancing”);
 
WHEREAS, the Borrower has requested that the Lenders extend credit to the
Borrower in the form of Loans and Letters of Credit at any time on or after the
Effective Date and from time to time prior to the Maturity Date, in an aggregate
principal amount of the Initial Commitments equal to $750,000,000 (plus
Incremental Commitments, if any); and
 
WHEREAS, subject to and upon the terms and conditions herein set forth, the
Lenders are willing to make available to the Borrower the credit facility
provided for herein;
 
NOW, THEREFORE, IT IS AGREED:
 
 
SECTION 1. Definitions and Accounting Terms
 
1.01 Defined Terms .  As used in this Agreement, the following terms shall have
the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
 
 
 
2

--------------------------------------------------------------------------------

 
“Acquired Entity or Business” shall mean either (x) the assets constituting a
business, division or product line of any Person not already a Subsidiary of the
Parent or (y) at least 51% of the capital stock or other equity interests of any
such Person, which Person shall, as a result of such stock acquisition, become a
Subsidiary of the Parent (or shall be merged with and into the Parent (so long
as the Parent is the surviving corporation) or a Subsidiary of the Parent). For
clarity, an Acquired Entity or Business does include the construction of a Rig.
 
 “Administrative Agent” shall have the meaning provided in the first paragraph
of this Agreement, and shall include any successor thereto.
 
“Affiliate” shall mean, with respect to any Person, any other Person directly or
indirectly controlling (including, but not limited to, all directors and
officers of such Person), controlled by, or under direct or indirect common
control with, such Person.  A Person shall be deemed to control another Person
if such Person possesses, directly or indirectly, the power (i) to vote 10% or
more of the shares of securities having ordinary voting power for the election
of directors (or equivalent governing body) of such Person or (ii) to direct or
cause the direction of the management and policies of such other Person, whether
through the ownership of voting shares of securities, by contract or otherwise;
provided, however, that neither the Administrative Agent nor any Affiliate
thereof shall be considered an Affiliate of the Parent or any Subsidiary
thereof.
 
“Aggregate Collateral Rig Value” shall have the meaning set forth in
Section 10.09.
 
“Agreement” shall mean this Credit Agreement, as modified, supplemented,
amended, restated, extended or renewed from time to time.
 
“AOPL” shall mean Atwood Oceanics Pacific Limited, an exempted company
incorporated under the laws of the Cayman Islands which is a Wholly-Owned
Subsidiary of the Parent.
 
“Applicable Margin” shall mean (x) with respect to the Initial Facility, 2.50%
per annum and (y) with respect to any Tranche under the Incremental Facility,
the interest margin set forth in the relevant Incremental Commitment Agreement.
 
“Approved Appraiser” shall mean RS Platou Shipbrokers AS, Fearnleys Ltd., ODS
Petrodata, Pareto Offshore AS, H. Clarksons & Company Limited or such other
independent appraisal firm nominated by the Borrower and consented to by the
Administrative Agent.
 
“Assignment and Assumption Agreement” shall mean the Assignment and Assumption
Agreement substantially in the form of Exhibit N (appropriately completed).
 
“Assignment of Earnings” shall have the meaning provided in the definition of
“Collateral and Guaranty Requirements”.
 
“Assignment of Insurances” shall have the meaning provided in the definition of
“Collateral and Guaranty Requirements”.
 
 
 
 
3

--------------------------------------------------------------------------------

 
 
“ATWOOD CONDOR” shall mean the Rig to be named the “ATWOOD CONDOR”, a
dynamically-positioned, 10,000 foot water depth semisubmersible, to be delivered
from the Jurong Shipyard Pte. Ltd. shipyard during the third quarter of fiscal
year 2012.
 
 “Authorized Representative” shall mean, with respect to (i) delivering Notices
of Borrowing, Letter of Credit Requests and similar notices, any Person or
Persons that has or have been authorized by the board of directors of the
Borrower to deliver such notices pursuant to this Agreement and that has or have
appropriate signature cards on file with the Administrative Agent and each
Issuing Lender, (ii) delivering financial information and officer's certificates
relating to financial matters pursuant to this Agreement, the chief financial
officer, the treasurer or controller of such Person or, if there is no chief
financial officer, treasurer or controller of such Person, any other senior
executive officer of such Person designated by the president or the board of
directors of such Person or such Person’s general partner as being a financial
officer authorized to deliver and certify financial information under this
Agreement and (iii) any other matter in connection with this Agreement or any
other Credit Document, any officer (or a person or persons so designated by any
two officers) of such Person or of such Person’s general partner, if applicable.
 
“Bankruptcy Code” shall have the meaning provided in Section 11.05.
 
“Base Rate” shall mean, for any day, a rate of interest per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of the Federal Funds
Rate for such day plus ½ of 1%.
 
“Borrower” shall have the meaning set forth in the first paragraph of this
Agreement.
 
“Borrowing” shall mean the borrowing of Loans from all the Lenders under a
single Tranche (other than any Lender which has not funded its share of a
Borrowing in accordance with this Agreement) having Commitments under such
Tranche on a given date having the same Interest Period.  It is understood that
there may be more than one Borrowing outstanding.
 
“Business Day” shall mean (i) for all purposes other than as covered by the
following clause (ii), any day except Saturday, Sunday and any day which shall
be in New York, New York a legal holiday or a day on which banking institutions
are authorized or required by law or other government action to close and (ii)
with respect to all notices and determinations in connection with, and payments
of principal and interest on, Loans, any day which is a Business Day described
in clause (i) above and which is also a day for trading by and between banks in
U.S. dollar deposits in the applicable interbank Eurodollar market.
 
“Capital Stock” shall mean (i) in the case of a corporation or company,
corporate stock or shares, (ii) in the case of an association or business
entity, any and all shares, interests, participations, rights or other
equivalents of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distribution of
assets of, the issuing Person.
 
 
4

--------------------------------------------------------------------------------

 
 
“Capitalized Lease Obligations” shall mean, with respect to any Person, all
rental obligations of such Person which, under GAAP, are or will be required to
be capitalized on the books of such Person, in each case taken at the amount
thereof accounted for as indebtedness in accordance with such principles.
 
“Cash Equivalents” shall mean, as to any Person, (i) (x) Dollars and (y) in the
case of any Foreign Subsidiary of the Parent, Euros and such local currencies
held by any such Foreign Subsidiary from time to time in the ordinary course of
its business, (ii) securities issued or directly and fully guaranteed or insured
by (x) in the case of a Foreign Subsidiary of the Parent organized in Norway,
Norway or any agency of instrumentality thereof (provided that the full faith
and credit of Norway is pledged in support thereof) and (y) in all cases, the
United States or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof), in either
case having maturities of not more than six months from the date of acquisition,
(iii) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof maturing within six months from the date of acquisition thereof and, at
the time of acquisition, having one of the two highest ratings obtainable from
either S&P or Moody’s, (iv) time deposits, certificates of deposit and bankers
acceptances of any Lender or any commercial bank organized under the laws of the
United States, any State thereof or any other country which is a member of the
Organization for Economic Cooperation and Development and, in each case, having
total assets in excess of $10,000,000,000 (or an equivalent amount in the
currency of any member country), (v) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clause
(ii)(y) above entered into with any bank meeting the qualifications specified in
clause (iv) above, (vi) commercial paper issued by any Person incorporated in
the United States rated at least A-1 or the equivalent thereof by S&P or at
least P-1 or the equivalent thereof by Moody’s and in each case maturing not
more than six months after the date of acquisition by such Person, (vii)
investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (vi) above
and (viii) in the case of Foreign Subsidiaries of the Parent, overnight deposits
and demand deposit accounts (in the respective local currencies) maintained in
the ordinary course of business.
 
“CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as the same has been amended and may hereafter be amended
from time to time, 42 U.S.C. § 9601 et seq.
 
“Change of Control” shall mean (i) any “Person” or “Group” (within the meaning
of Sections 13(d) and 14(d) under the Exchange Act, as in effect on the Initial
Borrowing Date) is or shall (A) be the “beneficial owner” (as so defined in
Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of 35% or more on a fully
diluted basis of the voting and/or economic interest in the Parent’s Capital
Stock or other Capital Stock or (B) have obtained the power (whether or not
exercised) to elect a majority of the Parent’s directors, (ii) the Board of
Directors of the Parent shall cease to consist of a majority of Continuing
Directors, (iii) the Parent shall cease to own on a fully diluted basis,
directly or indirectly, in the aggregate 100% of the economic and voting
interest in the Borrower’s Capital Stock or (iv) the adoption of a plan by the
holder of Capital Stock relating to the liquidation or dissolution of the
Parent.
 
 
 
5

--------------------------------------------------------------------------------

 
 
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder.  Section
references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
 
“Collateral” shall mean all property (whether real or personal) with respect to
which any security interests have been granted (or purported to be granted)
pursuant to any Security Document, including, without limitation, all Pledge
Agreement Collateral, all Security Agreement Collateral, all Insurance
Collateral, all Earnings Collateral, all Collateral Rigs, and all cash and Cash
Equivalents at any time delivered as collateral hereunder.
 
“Collateral and Guaranty Requirements” shall mean with respect to each
Collateral Rig or Credit Party, the requirement that:
 
(i)           (I) each Subsidiary that is required to be a Subsidiary Guarantor
in accordance with the definition thereof shall have duly authorized, executed
and delivered to the Administrative Agent the U.S. Subsidiaries Guaranty or a
counterpart thereof, substantially in the form of Exhibit F (as modified,
supplemented or amended from time to time, the “U.S. Subsidiaries Guaranty”),
and the U.S. Subsidiaries Guaranty shall be in full force and effect, provided
that this requirement shall not apply to any Foreign Subsidiary as to which the
Administrative Agent shall have determined, based on advice of local counsel,
and given written notice of such determination to the Borrower, that it would be
preferable for such Foreign Subsidiary not to execute and deliver the U.S.
Subsidiaries Guaranty, but only to execute and deliver a Foreign Subsidiaries
Guaranty as contemplated in clause (II) below or (II) each Foreign Subsidiary of
the Parent that is required to be a Subsidiary Guarantor in accordance with the
definition thereof shall have duly authorized, executed and delivered a guaranty
governed by the law of the jurisdiction in which such Foreign Subsidiary is
organized (any such non-U.S. law governed guaranty to be executed and delivered
by a Foreign Subsidiary of the Parent pursuant to this clause (II), as modified,
amended or supplemented from time to time, a “Foreign Subsidiaries Guaranty”);
provided that (a) no Foreign Subsidiary shall be required to guarantee the
obligations of the Parent or any Guarantor that is not a Foreign Subsidiary at
any time, and (b) each Foreign Subsidiaries Guaranty shall be prepared by local
counsel satisfactory to the Administrative Agent, shall be in form and substance
satisfactory to the Administrative Agent, and shall conform as nearly as
possible (as to the obligations guaranteed and the rights intended to be granted
thereunder) to the U.S. Subsidiaries Guaranty, taking into account such
variations as shall be necessary or desirable under applicable local law as
reasonably determined by the Administrative Agent.  Schedule III sets forth a
list of all Subsidiaries of the Parent which shall have executed and delivered a
Subsidiaries Guaranty on or prior to the Initial Borrowing Date;
 
(ii)           (I) each Pledgor shall have (x) duly authorized, executed and
delivered the U.S. Pledge Agreement substantially in the form of Exhibit G (as
modified, supplemented or amended from time to time, the “U.S. Pledge
Agreement”) or a joinder thereto, pursuant to which all of the Capital Stock of
the Credit Party that owns such Collateral Rig (or the Capital Stock of the
Subsidiary that owns, directly or indirectly, the Capital Stock in such Credit
Party) shall have been pledged to secure the Obligations, and such Pledgor shall
have (A) delivered to the Collateral Agent, as pledgee, all the Pledged
Securities and other Pledge Agreement Collateral referred to therein, together
with executed and undated stock powers in the case of capital stock constituting
Pledged Securities and (B) otherwise complied with all of the requirements set
forth in the U.S. Pledge Agreement, and (y) duly authorized, executed and
delivered any other related documentation necessary or advisable as reasonably
determined by the Administrative Agent to perfect the Lien on the Pledge
Agreement Collateral referred to therein in the respective jurisdictions of
formation or of the chief executive office, as the case may be, of the Borrower
or the respective Subsidiary Guarantor, as the case may be or as otherwise
provided by applicable law, and the U.S. Pledge Agreement shall be in full force
and effect, provided that this requirement shall not apply to any Foreign
Pledgor as to which the Administrative Agent reasonably determines, based on
advice of local counsel, and gives written notice of such determination to the
Borrower, that it would be preferable for such Foreign Pledgor not to execute
and deliver the U.S. Pledge Agreement, but only to execute and deliver one or
more Foreign Pledge Agreements as contemplated in clause (II), (II) (A) each
Foreign Pledgor specified in a written notice by the Administrative Agent to the
Borrower and (B) each Pledgor (whether or not a Foreign Pledgor) that shall own
equity interests in one or more Persons organized under the laws of a
jurisdiction other than the jurisdiction of organization of such Pledgor, shall
have authorized, executed and delivered a pledge agreement or agreements
governed by the laws of the jurisdiction where such Pledgor and/or the Person or
Persons whose equity interests are to be pledged shall be organized, if (in the
case of (A) and (B)) the Administrative Agent determines (based on advice of
local counsel), and gives written notice to the Borrower of such determination,
that it would be in the interests of the Lenders that such Pledgor authorize,
execute and deliver such additional pledge agreements (each such non-U.S. law
governed pledge agreement to be executed and delivered by one or more Credit
Parties pursuant to this clause (II), as modified, amended or supplemented from
time to time, the “Foreign Pledge Agreements” and each, a “Foreign Pledge
Agreement”), and (III) each Pledgor pledging the Capital Stock of an entity
formed in the Republic of Malta shall have executed a letter to be filed with
the Registry of Companies in Malta informing them of the pledge; provided that
(x) each such Foreign Pledge Agreement shall be prepared by local counsel, shall
be in form and substance satisfactory to the Administrative Agent, and shall
conform as nearly as possible (as to the obligations secured thereby and the
rights intended to be granted thereunder) to the U.S. Pledge Agreement, taking
into account such variations as shall be necessary or desirable under applicable
local law as reasonably determined by the Administrative Agent and (y) in
connection with the execution and delivery of any such Foreign Pledge Agreement,
the respective Credit Parties shall have taken such actions as may be necessary
or desirable under local law (as advised by local counsel) to create, maintain,
effect, perfect, preserve, maintain and protect the security interests granted
(or purported to be granted) thereby as reasonably determined by the
Administrative Agent.  The U.S. Pledge Agreement and each Foreign Pledge
Agreement listed on Section A of Schedule IV shall be in full force and
effect.  Each Pledgor is listed on Section B of Schedule IV;
 
 
6

--------------------------------------------------------------------------------

 
 
(iii)           the Credit Party that owns such Collateral Rig shall have duly
authorized, executed and delivered (x) an Assignment of Insurances substantially
in the form of Exhibit H (each, as amended, modified or supplemented from time
to time, an “Assignment of Insurances” and, together with any additional
assignment of insurances executed and delivered pursuant to Section 9.11(c), the
“Assignments of Insurances”) covering all such Credit Party’s present and future
Insurance Collateral, and each Assignment of Insurances shall be in full force
and effect, (y) an Assignment of Charter Hire, Drilling Contract, Revenue and
Earnings in the form of Exhibit I (each, as amended, modified or supplemented
from time to time, an “Assignment of Earnings” and, together with any additional
assignment of charter hire, drilling contract, revenues and earnings executed
and delivered pursuant to Section 9.11(c), the “Assignment of Earnings”),
covering all of such Credit Party’s Earnings Collateral, and each Assignment of
Earnings shall be in full force and effect, and (z) a Security Agreement in the
form of Exhibit J (each, as amended, modified or supplemented from time to time,
a “U.S. Security Agreement” and, together with any additional security
agreements executed and delivered pursuant to Section 9.11(c), the “U.S.
Security Agreements”), and each U.S. Security Agreement shall be in full force
and effect, in each case together with:
 
 (a)           proper Financing Statements (Form UCC-1) in form for filing under
the UCC or in other appropriate filing offices of each jurisdiction as may be
necessary, or in the reasonable opinion of the Collateral Agent desirable, to
perfect the security interests purported to be created by the Pledge Agreements,
Assignment of Earnings, the Assignment of Insurances and the U.S. Security
Agreements;
 
(b)           certified copies of requests for information or copies (Form
UCC-11), or equivalent reports as of a recent date, listing all effective
financing statements that name any Credit Party as debtor and that are filed in
Washington D.C. and any other relevant jurisdiction, together with copies of
such other financing statements (none of which shall cover the Collateral unless
the Collateral Agent shall have received Form UCC-3 Termination Statements (or
such other termination statements as shall be required by local law) fully
executed for filing if required by applicable laws in respect thereof); and
 
 (c)           in the case of the Pledge Agreements, evidence that all other
actions necessary or, in the reasonable opinion of the Collateral Agent
desirable, to perfect and protect the security interests purported to be created
by the respective Pledge Agreement have been taken.
 
(iv)           the Credit Party that owns such Collateral Rig shall have duly
authorized, executed and delivered in form for filing in the appropriate rig
registry a first preferred mortgage (as modified, amended or supplemented from
time to time in accordance with the terms thereof and hereof, a “Collateral Rig
Mortgage” and, together with any additional collateral rig mortgages executed
and delivered pursuant to Section 9.11(c) or (d), the “Collateral Rig
Mortgages”), substantially in the form of Exhibit K, with respect to such
Collateral Rig, and such Collateral Rig Mortgage shall be effective upon filing
to create in favor of the Collateral Agent, for the benefit of the Lenders, a
legal, valid and enforceable first priority security interest, in and Lien upon
such Collateral Rig, subject only to Permitted Liens, and each Collateral Rig
Mortgage shall be in full force and effect;
 
 
7

--------------------------------------------------------------------------------

 
 
(v)           all filings, deliveries of instruments and other actions necessary
or desirable in the reasonable opinion of the Collateral Agent to perfect and
preserve the security interests described in clauses (ii) through (iv) above
shall have been duly effected and the Collateral Agent shall have received
evidence thereof in form and substance reasonably satisfactory to the Collateral
Agent;
 
(vi)           the Administrative Agent shall have received two appraisal
reports of recent date (and in no event dated earlier than 90 days prior to the
Initial Borrowing Date) from two Approved Appraisers in scope, form and
substance reasonably satisfactory to the Administrative Agent stating the then
current fair market value of each such Collateral Rig (it being understood and
agreed that the appraisal reports delivered on February 25, 2011 from Fearnleys
Ltd. and February 22, 2011 from Pareto Offshore AS shall be satisfactory), and
the results of such appraisal reports shall demonstrate that the Aggregate
Collateral Rig Value on the Initial Borrowing Date is equal to or greater than
150% of the Initial Commitment;
 
(vii)           the Administrative Agent shall have received each of the
following:
 
(a)           certificates of ownership from appropriate authorities showing (or
confirmation updating previously reviewed certificates and indicating) the
registered ownership of such Collateral Rig by the relevant Subsidiary
Guarantor; and
 
(b)           (i) prior to the Initial Borrowing Date, the results of maritime
registry searches with respect to such Collateral Rig, indicating no record
liens other than Permitted Liens and Liens in favor of Nordea Bank Finland plc,
New York Branch, as collateral agent, to be released on the Initial Borrowing
Date in connection with the Refinancing and (ii) immediately after the
registration of the Collateral Rig Mortgage referred to in clause (iv) above on
such Collateral Rig, the results of maritime registry searches with respect to
such Collateral Rig indicating no record liens other than the Permitted Liens
and Liens in favor of the Collateral Agent and/or the Lenders  ; and
 
(c)           class certificates from a classification society recognized by the
United States Coast Guard or another classification society indicating that such
Collateral Rig meets the criteria specified in Section 8.22; and
 
(d)           if applicable, certified copies of all ISM and ISPS Code
documentation for each Collateral Rig; and
 
(f)           a report, in form and scope reasonably satisfactory to the
Administrative Agent, from BankAssure Insurance Services Inc. or such other firm
of independent marine insurance brokers as is reasonably acceptable to the
Administrative Agent with respect to the insurance maintained by the Credit
Parties in respect of such Collateral Rig, together with a certificate from such
broker certifying that such insurances, (i) are placed with such insurance
companies and/or underwriters and/or clubs, in such amounts, against such risks,
and in such form, as are customarily insured against by companies operating in
the offshore drilling industry for the protection of the Collateral Agent and/or
the Lenders as secured party and mortgagee, (ii) otherwise conform with the
insurance requirements of each respective Collateral Rig Mortgage and (iii)
include, without limitation, the Required Insurance;
 
 
 
8

--------------------------------------------------------------------------------

 
(viii)           the Administrative Agent shall have received from (a) US
counsel to each of the Credit Parties (which shall be Strasburger & Price,
L.L.P. or another law firm reasonably acceptable to the Administrative Agent),
an opinion addressed to the Administrative Agent and each of the Lenders and
dated as of the Initial Borrowing Date covering the matters set forth in Exhibit
D-I, (b) Cayman Islands counsel to the Credit Parties (which shall be Maples &
Calder or another law firm qualified to render an opinion as to Cayman Islands
law reasonably acceptable to the Administrative Agent), an opinion addressed to
the Administrative Agent and each of the Lenders and dated as of the Initial
Borrowing Date covering the matters set forth in Exhibit D-II, (c) special
maritime counsel to the Administrative Agent (which shall be Gardere Wynne
Sewell, LLP or another law firm qualified to render an opinion as to maritime
law reasonably acceptable to the Administrative Agent), an opinion addressed to
the Administrative Agent and each of the Lenders and dated as of the Initial
Borrowing Date covering the matters set forth in Exhibit D-III and (d) Maltese
counsel to the Credit Parties (which shall be Ganado & Associates or another law
firm qualified to render an opinion as to Maltese law reasonably acceptable to
the Administrative Agent), an opinion addressed to the Administrative Agent and
each of the Lenders and dated as of the Initial Borrowing Date covering the
matters set forth in Exhibit D-IV; and
 
(ix)           the Administrative Agent shall have received (a) a certificate,
dated the Initial Borrowing Date and reasonably acceptable to the Administrative
Agent, signed by the chief executive officer, the president, any vice president,
director, or any other Authorized Representative of each Credit Party, and
attested to by the secretary, any assistant secretary or any other Authorized
Representative of such Credit Party (other than the Authorized Representative of
such Credit Party signing the certificate of such Credit Party), as the case may
be, substantially in the form of Exhibit E, with appropriate insertions,
together with copies of the certificate of incorporation and by-laws (or
equivalent organizational documents), as applicable, of such Credit Party and
the resolutions of such Credit Party (or, where applicable, the general partner
of such Credit Party) referred to in such certificate; (b) copies of all
corporate, limited liability company, partnership and legal proceedings, and all
instruments and agreements in connection with the Transaction, which shall be
reasonably satisfactory in form and substance to the Administrative Agent; and
(c) all information and copies of all documents and papers, including records of
corporate, limited liability company and partnership proceedings, governmental
approvals, good standing certificates and bring-down telegrams or facsimiles, if
any, which the Administrative Agent may have reasonably requested in connection
therewith, such documents and papers, where appropriate, to be certified by
proper partnership, corporate or governmental authorities.
 
 
9

--------------------------------------------------------------------------------

 
 
 “Collateral Agent” shall mean the Administrative Agent acting as collateral
agent and security trustee for the Secured Creditors pursuant to the Security
Documents.
 
“Collateral Disposition” shall mean (i) the sale, lease, transfer or other
disposition of any Collateral Rig (it being understood that a charter is not a
Disposition) by the Parent or any of its Subsidiaries to any Person other than a
Credit Party or an entity to which such sales, lease, transfer or other
disposition is being made that becomes a Credit Party upon such Collateral
Disposition or (ii) any Event of Loss of in respect of any Collateral Rig.  The
Parties expressly agree that the transfer of Collateral Rigs pursuant to the
Reorganization are not Collateral Dispositions.
 
“Collateral Rig” shall mean each Rig listed on Schedule X and upon the
incurrence of Incremental Commitments and compliance with the requirements set
forth in Section 9.11(c), the ATWOOD CONDOR.
 
“Collateral Rig Mortgages” shall have the meaning provided in the definition of
“Collateral and Guaranty Requirements”.
 
“Commitment” shall mean an Initial Commitment and/or an Incremental Commitment
(if any) under any Tranche, as the context may require.
 
“Commitment Commission” shall have the meaning provided in Section 4.01(a).
 
“Consolidated EBIT” shall mean, for any period, Consolidated Net Income for such
period, before deducting therefrom Consolidated Interest Expense of the Parent
and its Subsidiaries for such period and provision for taxes based on income
that were included in arriving at Consolidated Net Income for such period and
without giving effect (x) to any extraordinary gains or extraordinary non-cash
losses (except to the extent that any such extraordinary non-cash losses require
a cash payment in a future period) and (y) to any gains or losses from sales of
assets other than from sales of inventory in the ordinary course of business.
 
“Consolidated EBITDA” shall mean, for any period, Consolidated EBIT for such
period, adjusted by adding thereto the amount of all amortization of intangibles
and depreciation to the extent that same was deducted in arriving at
Consolidated EBIT for such period; it being understood that in determining the
Leverage Ratio only, Consolidated EBITDA for any period shall be calculated on a
pro forma basis to give effect to (i) any Acquired Entity or Business acquired
during such period and not subsequently sold or otherwise disposed of  by the
Parent or any of its Subsidiaries during such period and (ii) any Significant
Disposition by the Parent or any of its Subsidiaries during such period.
 
“Consolidated Indebtedness” shall mean, as at any date of determination, without
duplication, the sum of (I) the aggregate stated balance sheet amount of all
Indebtedness (but including, in any event, without limitation, the then
outstanding principal amount of all Loans, all Capitalized Lease Obligations and
all purchase money Indebtedness) of the Parent and its Subsidiaries at such time
determined on a consolidated basis, (II) the aggregate amount of all
Indebtedness of the Parent and its Subsidiaries of the type described in clause
(ii) of the definition of “Indebtedness” contained herein at such time
determined on a consolidated basis and (III) the aggregate amount of all
Contingent Obligations of the Parent and its Subsidiaries in respect of
Indebtedness described in preceding clauses (I) and (II) at such time determined
on a consolidated basis; it being understood that in determining compliance with
Section 10.07 only, and in any event, at the date of such determination of
Consolidated Indebtedness, the amount of cash and Cash Equivalents held by the
Parent and its Subsidiaries at such time and which would appear on a
consolidated balance sheet of the Parent and its Subsidiaries as part of the
consolidated assets of the Parent and its Subsidiaries shall be deducted from
the calculation of Consolidated Indebtedness.
 
 
10

--------------------------------------------------------------------------------

 
 
“Consolidated Interest Expense” shall mean, for any period, the sum of the total
consolidated interest expense of the Parent and its Subsidiaries for such period
(calculated without regard to any limitations on the payment thereof) plus,
without duplication, that portion of Capitalized Lease Obligations of the Parent
and its Subsidiaries representing the interest factor for such period; provided
that the amortization of deferred financing, legal and accounting costs with
respect to this Agreement shall be excluded from Consolidated Interest Expense
to the extent same would otherwise have been included therein.
 
“Consolidated Net Income” shall mean, for any period, the net income (or loss)
of the Parent and its Subsidiaries for such period, determined on a consolidated
basis (after any deduction for minority interests), provided that (i) in
determining Consolidated Net Income, the net income of any other Person which is
not a Subsidiary of the Parent or is accounted for by the Parent by the equity
method of accounting shall be included only to the extent of the payment of cash
dividends or cash distributions by such other Person to the Parent or a
Subsidiary thereof during such period, (ii) the net income of any Subsidiary of
the Parent shall be excluded to the extent that the declaration or payment of
cash dividends or similar cash distributions by that Subsidiary of that net
income is not at the date of determination permitted by operation of its charter
or any agreement, instrument or law applicable to such Subsidiary and (iii) the
net income (or loss) of any other Person acquired by the Parent or a Subsidiary
of the Parent in a pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded.
 
“Consolidated Net Worth” shall mean, as at any date of determination, the Net
Worth of the Parent and its Subsidiaries determined on a consolidated basis in
accordance with GAAP after appropriate deduction for any minority interests in
Subsidiaries.
 
“Consolidated Total Capitalization” shall mean, as at any date of determination,
the sum of Consolidated Indebtedness of the Parent and its Subsidiaries on such
date and Consolidated Net Worth of the Parent and its Subsidiaries on such date.
 
“Contingent Obligation” shall mean, as to any Person, any obligation of such
Person as a result of such Person being a general partner of any other Person,
unless the underlying obligation is expressly made non-recourse as to such
general partner, and any obligation of such Person guaranteeing or intended to
guarantee any Indebtedness (a “primary obligation”) of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(i) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the holder
of such primary obligation against loss in respect thereof; provided, however,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business.  The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
 
 
11

--------------------------------------------------------------------------------

 
 
 “Continuing Directors” shall mean the directors of the Parent on the Initial
Borrowing Date and each other director, if such other director’s nomination for
election to the Board of Directors of the Parent is recommended by a majority of
the then Continuing Directors or is recommended by a committee of the Board of
Directors of the Parent a majority of which is composed of the then Continuing
Directors.
 
 “Credit Documents” shall mean this Agreement, each Note, each Security
Document, each Subsidiaries Guaranty, the Intercompany Subordination Agreement,
each Joinder Agreement, each Incremental Commitment Agreement and, after the
execution and delivery thereof, each additional guaranty or additional security
document executed pursuant to Section 9.11 and any amendments and waivers to any
of the foregoing.
 
“Credit Event” shall mean the making of any Loan or the issuance of any Letter
of Credit.
 
“Credit Party” shall mean the Parent, the Borrower, each Subsidiary Guarantor
and each Pledgor.
 
“Debt to Capitalization” shall mean, at any date of determination, the ratio of
Consolidated Indebtedness of the Parent and its Subsidiaries determined on a
consolidated basis on such date to Consolidated Total Capitalization of the
Parent and its Subsidiaries on such date.
 
 “Default” shall mean any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default.
 
“Defaulting Lender” shall mean any Lender with respect to which a Lender Default
is in effect.
 
 “Disqualified Stock” shall mean, with respect to any Person, any Capital Stock
of such Person that, by its terms (or by the terms of any security or other
Capital Stock into which it is convertible or for which it is exchangeable), or
upon the happening of any event or condition, (a) matures or is mandatorily
redeemable (other than solely for Qualified Capital Stock of such Person),
pursuant to a sinking fund obligation or otherwise (except as a result of a
change of control or asset sale so long as any rights of the holders thereof
upon the occurrence of a change of control or asset sale event shall be subject
to the prior repayment in full of the Loans and all other Obligations that are
accrued and payable and the termination of the Commitments), (b) is redeemable
at the option of the holder thereof (other than solely for Qualified Capital
Stock of such Person), in whole or in part, (c) provides for the scheduled
payments of dividends in cash or (d) is or becomes convertible into or
exchangeable for Indebtedness or any other Capital Stock that would constitute
Disqualified Stock of such Person, in each case, prior to the date that is
ninety-one (91) days after the Maturity Date; provided, however, that only the
portion of the Capital Stock of such Person that so matures or is mandatorily
redeemable, is so convertible or exchangeable or is so redeemable at the option
of the holder thereof prior to such date shall be deemed to be Disqualified
Stock; provided, further, however, that if such Capital Stock of such Person is
issued to any employee or to any plan for the benefit of employees of such
Person or by any such plan to such employees, such Capital Stock shall not
constitute Disqualified Stock of such Person solely because it may be required
to be repurchased by such Person in order to satisfy applicable statutory or
regulatory obligations or as a result of such employee's termination, death or
disability.
 
 
12

--------------------------------------------------------------------------------

 
 
 “Dividend” shall mean, with respect to any Person, that such Person has
declared or paid a dividend, distribution or returned any equity capital to its
stockholders, partners or members or authorized or made any other distribution,
payment or delivery of property (other than common equity of such Person) or
cash to its stockholders, partners or members as such, or redeemed, retired,
purchased or otherwise acquired, directly or indirectly, for a consideration
(other than common equity of such Person) any shares of any class of its capital
stock or any partnership or membership interests outstanding on or after the
Initial Borrowing Date (or any options or warrants issued by such Person with
respect to its capital stock or other equity interests), or set aside any funds
for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for a consideration (other than
common equity of such Person) any shares of any class of the capital stock of,
or other equity interests in, such Person outstanding on or after the Initial
Borrowing Date (or any options or warrants issued by such Person with respect to
its capital stock or other equity interests).  Without limiting the foregoing,
“Dividends” with respect to any Person shall also include all payments made or
required to be made (other than common equity of such Person) by such Person
with respect to any stock appreciation rights, plans, equity incentive or
achievement plans or any similar plans or setting aside of any funds for the
foregoing purposes.  For the purposes of clarity, “Dividends” shall specifically
not include distributions of equity necessary to effectuate a stock split or
made in accordance with the Rights Plan.
 
“Dollars” and the sign “$” shall each mean lawful money of the United States.
 
“Domestic Subsidiary” shall mean, as to any Person, each Subsidiary of such
Person that is organized under the laws of the United States, any state thereof
or the District of Columbia.
 
“Drawing” shall have the meaning provided in Section 3.05(b).
 
“Earnings Collateral” shall mean, collectively, all “Collateral” as defined in
each Assignment of Earnings.
 
“Effective Date” shall have the meaning provided in Section 14.10.
 
 
13

--------------------------------------------------------------------------------

 
 
“Eligible Transferee” shall mean and include a commercial bank, an insurance
company, a finance company, a financial institution, any fund that invests in
loans or any other “accredited investor” (as defined in Regulation D of the
Securities Act); provided that neither the Borrower nor any of its Affiliates
shall be an Eligible Transferee at any time.
 
“Environmental Claims” shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims, Liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any Environmental Law or any permit issued, or any approval given,
under any such Environmental Law (hereafter, “Claims”), including, without
limitation, (a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (b) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief in connection with alleged injury or threat of
injury to health, safety or the environment due to the presence of Hazardous
Materials.
 
“Environmental Law” shall mean any applicable Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy and rule of common law now or
hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on the Borrower or any
of its Subsidiaries, relating to the environment, employee health and safety or
Hazardous Materials, including, without limitation, CERCLA; OPA; the Federal
Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. § 1801 et seq.; the Occupational Safety and Health
Act, 29 U.S.C. § 651 et seq. (to the extent it regulates occupational exposure
to Hazardous Materials); and any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.
 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.  Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
 
“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA)
which together with the Parent or a Domestic Subsidiary of the Parent would be
deemed to be a “single employer” within the meaning of Section 414(b), (c), (m)
or (o) of the Code.
 
“Eurodollar Rate” shall mean with respect to each Interest Period for a Loan,
(a) the offered rate (rounded upward to the nearest 1/16 of one percent) for
deposits of Dollars for a period equivalent to such period at or about 11:00
A.M. (London time) on the Interest Determination Date for such Interest Period
as is displayed on Reuters LIBOR 01 Page (or such other service as may be
nominated by the British Bankers’ Association as the information vendor for
displaying the London Interbank Offered Rates of major banks in the London
Interbank Market) (the “Screen Rate”), provided that if on such Interest
Determination Date no such rate is so displayed, the Eurodollar Rate for such
period shall be the arithmetic average (rounded upward to the nearest 1/16th of
1%) of the rates quoted to the Administrative Agent by the Reference Banks for
deposits of Dollars in an amount approximately equal to the amount in relation
to which the Eurodollar Rate is to be determined for a period equivalent to such
applicable Interest Period in the London interbank Eurodollar market at or about
11:00 A.M. (London time) on such Interest Determination Date, in each case
divided (and rounded upward to the nearest 1/16 of 1%) by (b) a percentage equal
to 100% minus the then stated maximum rate of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves required by applicable law) applicable to any member bank of
the Federal Reserve System in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
 
 
 
14

--------------------------------------------------------------------------------

 
 
 “Event of Default” shall have the meaning provided in Section 11.
 
“Event of Loss” shall mean any of the following events:  (x) the actual or
constructive total loss of a Collateral Rig or the agreed or compromised total
loss of a Collateral Rig; or (y) the capture, condemnation, confiscation,
requisition, purchase, seizure or forfeiture of, or any taking of title to, a
Collateral Rig.  An Event of Loss shall be deemed to have occurred (i) in the
event of an actual loss of a Collateral Rig, 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
Collateral Rig was last heard from; (ii) in the event of damage which results in
a constructive or compromised or arranged total loss of a Collateral Rig, 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 (y) above, at the time and on the date on
which such event is expressed to take effect by the Person making the same.
 
“Exchange Act” shall mean the Securities Exchange Act of 1934, as in effect on
the Initial Borrowing Date.
 
“Existing 2007 Credit Agreement” shall have the meaning provided in the Recitals
hereto.
 
“Existing 2008 Credit Agreement” shall have the meaning provided in the Recitals
hereto.
 
“Existing Indebtedness” shall have the meaning provided in Section 8.20.
 
“Facing Fee” shall have the meaning provided in Section 4.01(c).
 
“Federal Funds Rate” shall mean, for any period, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three Federal Funds brokers of
recognized standing selected by the Administrative Agent.
 
“Fees” shall mean all amounts payable pursuant to or referred to in Section
4.01.
 
 
15

--------------------------------------------------------------------------------

 
 
“Foreign Pension Plan” shall mean any plan, fund (including, without limitation,
any superannuation fund) or other similar program established or maintained
outside the United States of America by the Parent or any one or more of its
Subsidiaries primarily for the benefit of employees of the Parent or such
Subsidiaries residing outside the United States of America, which plan, fund or
other similar program provides, or results in, retirement income, a deferral of
income in contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the Code.
 
“Foreign Pledge Agreement” shall have the meaning provided in the definition of
“Collateral and Guaranty Requirements”.
 
“Foreign Pledgor” shall mean each Foreign Subsidiary of the Parent which is a
Pledgor, in each case for so long as such Persons remain organized under the
laws of a jurisdiction other than the United States and the States and
territories thereof.
 
“Foreign Subsidiaries Guaranty” shall have the meaning provided in the
definition of “Collateral and Guaranty Requirements”.
 
“Foreign Subsidiary” shall mean, as to any Person, each Subsidiary of such
Person which is not a Domestic Subsidiary.
 
“GAAP” shall mean generally accepted accounting principles in the United States
consistently applied in accordance with Section 14.07(a).
 
“Guaranteed Creditors” shall mean and include each of the Lender Creditors and,
in the case of any Interest Rate Protection Agreement or Other Hedging Agreement
entered into by the Borrower with an Other Creditor, even if such Other Creditor
subsequently ceases to be a Lender under this Agreement, each of the Other
Creditors.
 
“Guaranteed Obligations” shall mean (i) the principal and interest on each Note
issued by, and all Loans made to, the Borrower under this Agreement and all
reimbursement obligations and Unpaid Drawings with respect to Letters of Credit,
together with all the other obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), indebtedness and liabilities (including, without limitation, indemnities,
fees and interest (including any interest accruing after the commencement of any
bankruptcy, insolvency, receivership or similar proceeding at the rate provided
for herein, whether or not such interest is an allowed claim in any such
proceeding) thereon) of the Borrower to the Lenders, each Issuing Lender, the
Administrative Agent and the Collateral Agent now existing or hereafter incurred
under, arising out of or in connection with this Agreement and each other Credit
Document to which the Borrower is a party and the due performance and compliance
by the Borrower with all the terms, conditions and agreements contained in this
Agreement and in each such other Credit Document and (ii) all obligations
(including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due), liabilities and indebtedness (including
any interest accruing after the commencement of any bankruptcy, insolvency,
receivership or similar proceeding at the rate provided for herein, whether or
not such interest is an allowed claim in any such proceeding) of the Borrower or
any of its Subsidiaries owing under any Interest Rate Protection Agreement or
Other Hedging Agreement entered into by the Borrower or any of its Subsidiaries
with any Lender or any Affiliate thereof (even if such Lender subsequently
ceases to be a Lender under this Agreement for any reason) so long as such
Lender or Affiliate participates in such Interest Rate Protection Agreement or
Other Hedging Agreement, as the case may be, and their subsequent assigns, if
any, whether now in existence or hereafter arising, and the due performance and
compliance by the Borrower and its Subsidiaries with all terms, conditions and
agreements contained therein.
 
 
 
16

--------------------------------------------------------------------------------

 
 
“Guarantors” shall mean, collectively, the Parent and each Subsidiary Guarantor.
 
“Guaranties” shall mean, collectively, the Parent Guaranty and each Subsidiaries
Guaranty, each thereof individually being a “Guaranty”.
 
 “Hazardous Materials” shall mean (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
ureaformaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas,
(b) any chemicals, materials or substances defined as or included in the
definition of “hazardous substances,” “hazardous waste,” “hazardous materials,”
“extremely hazardous substances,” “restricted hazardous waste,” “toxic
substances,” “toxic pollutants,” “contaminants,” or “pollutants,” or words of
similar import, under any applicable Environmental Law, and (c) any other
chemical, material or substance, exposure to which is prohibited, limited or
regulated by any governmental authority under Environmental Laws.
 
“Inactive Subsidiary” shall mean, at any time, each Subsidiary of the Parent
which (i) is not a Material Subsidiary or the Borrower, (ii) does not own assets
with an aggregate fair market value (as determined in good faith by the
management of the Parent) in excess of $1,000,000 and (iii) which at such time
is inactive (i.e., does not conduct any business).
 
“Incremental Availability Date” shall mean the date occurring on or after the
Initial Borrowing Date up to and including March 31, 2013, on which the
following conditions shall have been satisfied:
 
(i) the ATWOOD CONDOR shall have been delivered to Alpha Condor Company, a
company organized under the laws of the Cayman Islands and a Wholly-Owned
Subsidiary of the Borrower, and shall have been pledged as a Collateral Rig, and
the Collateral and Guaranty Requirements with respect to thereto shall have been
satisfied (including, without limitation, the delivery of updated Schedules III,
IV, VII, X, XI and XIV to this Agreement) or waived by the Administrative Agent,
and each Credit Document with respect to the ATWOOD CONDOR shall be in full
force and effect;
 
(ii) (x) the Alpha Condor Company or any Affiliate thereof shall have entered
into a Satisfactory Drilling Contract with respect to the ATWOOD CONDOR and (y)
the ATWOOD OSPREY shall have been contracted pursuant to the drilling contracts
described in Schedule XIV or contracts substantially equivalent thereto, and the
Administrative Agent shall have received evidence thereof in the case of both
clauses (x) and (y); and
 
 
 
17

--------------------------------------------------------------------------------

 
 
(iii) the Borrower shall have furnished to the Administrative Agent a detailed
report signed by a firm of marine insurance brokers acceptable to the Collateral
Agent with respect to P & I entry, the hull and machinery and war risk insurance
carried and maintained on each Collateral Rig, together with their opinion as to
the adequacy thereof and its compliance with the provisions of Schedule IX.
 
“Incremental Commitment” shall mean, for any Lender under any Tranche of the
Incremental Facility, the amount of its commitment under such Tranche provided
pursuant to an Incremental Commitment Agreement as same may be (x) reduced from
time to time or terminated pursuant to Sections 4.02, 4.03 and/or 11, as
applicable or (y) adjusted from time to time as a result of assignments to or
from such Lender pursuant to Section 2.12 or 14.04.
 
“Incremental Commitment Agreement” shall have the meaning provided in Section
2.13(b)(i).
 
“Incremental Commitment Increase” shall have the meaning provided in Section
2.13(a).
 
“Incremental Facility” shall have the meaning provided in Section 2.13.
 
 “Incremental Lender” shall have the meaning provided in Section 2.13(b)(i).
 
“Incremental Loan” shall have the meaning provided in Section 2.01(b).
 
“Indebtedness” shall mean, as to any Person, without duplication, (i) all
indebtedness (including principal, interest, fees and charges) of such Person
for borrowed money or for the deferred purchase price of property or services
which have been received but not yet paid for in full, (ii) the maximum amount
available to be drawn under all letters of credit, bankers’ acceptances and
similar obligations issued for the account of such Person and all unpaid
drawings in respect of such letters of credit, bankers’ acceptances and similar
obligations, (iii) all Indebtedness of the types described in clause (i), (ii),
(iv), (v) or (vi) of this definition secured by any Lien on any property owned
by such Person, whether or not such Indebtedness has been assumed by such Person
(provided that if the Person has not assumed or otherwise become liable in
respect of such Indebtedness, such Indebtedness shall be deemed to be in an
amount equal to the fair market value of the property to which such Lien relates
as determined in good faith by such Person), (iv) the aggregate amount of all
Capitalized Lease Obligations of such Person, (v) all Contingent Obligations of
such Person, and (vi) all obligations under any Interest Rate Protection
Agreement, any Other Hedging Agreement or under any similar type of
agreement.  Notwithstanding the foregoing, Indebtedness shall not include trade
payables and accrued expenses incurred by any Person in accordance with
customary practices and in the ordinary course of business of such Person.
 
“Initial Borrowing Date” shall mean the date occurring on or after the Effective
Date on which the initial Credit Event hereunder occurs.
 
 
 
18

--------------------------------------------------------------------------------

 
 
“Initial Commitment” shall mean, for each Lender, the amount set forth opposite
such Lender’s name in Schedule I directly below the column entitled “Initial
Commitment,” as same may be (x) reduced from time to time or terminated pursuant
to Sections 4.02, 4.03 and/or 11, as applicable or (y) adjusted from time to
time as a result of assignments to or from such Lender pursuant to Section 2.12
or 14.04.
 
“Initial Facility” shall have the meaning provided in Section 2.01(a).
 
“Initial Loan” shall have the meaning provided in Section 2.01(a).
 
“Insurance Collateral” shall mean, collectively, all “Insurances” as defined in
each Assignment of Insurances.
 
“Intercompany Loan” shall have the meaning provided in Section 10.05(vii).
 
“Intercompany Subordination Agreement” shall have the meaning provided in
Section 6.13.
 
“Interest Determination Date” shall mean, with respect to any Loan, the second
Business Day prior to the commencement of any Interest Period relating to such
Loan.
 
“Interest Expense Coverage Ratio” shall mean, for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.
 
“Interest Period” shall have the meaning provided in Section 2.08.
 
“Interest Rate Protection Agreement” shall mean any interest rate swap
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging agreement or other similar agreement or arrangement.
 
“Investments” shall have the meaning provided in Section 10.05.
 
“Issuing Lender” shall mean (i) Nordea Bank Finland plc, New York Branch (which,
for purposes of this definition, shall include any banking affiliate of Nordea
Bank Finland plc, New York Branch) and (ii) any other Lender which at the
request of the Borrower and with the consent of the Administrative Agent (which
consent shall not be unreasonably withheld) agrees (in such Lender’s sole
discretion) to become an Issuing Lender for the purpose of issuing Letters of
Credit pursuant to Section 3.
 
“Joinder Agreement” shall mean a Joinder Agreement substantially in the form of
Exhibit O (appropriately completed).
 
“Joint Venture” shall mean any Person other than an individual or a Wholly-Owned
Subsidiary of the Parent (i) in which the Parent or any of its Subsidiaries
holds or acquires an ownership interest (by way of ownership of equity interests
or other evidence of ownership) and (ii) which is engaged in a business
permitted by Section 10.15.
 
 
 
19

--------------------------------------------------------------------------------

 
 
“Leaseholds” of any Person shall mean all the right, title and interest of such
Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
 
“Lender” shall mean each financial institution listed on Schedule I, as well as
any Person which becomes a “Lender” hereunder pursuant to Section 2.12, 2.13 or
14.04(b).
 
“Lender Creditors” shall mean the Lenders holding from time to time outstanding
Loans and/or Commitments, any Issuing Lender, the Administrative Agent and the
Collateral Agent, each in their respective capacities.
 
“Lender Default” shall mean, as to any Lender, (i) the wrongful refusal of such
Lender (which has not been retracted) or the failure of such Lender (which has
not been cured within 3 Business Days) to make available its portion of any
Borrowing or to fund its portion of any unreimbursed payment with respect to a
Letter of Credit, (ii) such Lender having been deemed insolvent or having become
the subject of a bankruptcy or insolvency proceeding or a takeover by a
regulatory authority, or (iii) such Lender having notified the Administrative
Agent, any Issuing Lender and/or any Credit Party (x) that it does not intend to
comply with its obligations under Sections 2 or 3, as the case may be, in
circumstances where such non-compliance would constitute a breach of such
Lender’s obligations under the respective Section or (y) of the events described
in the preceding clause (ii); provided that, for purposes of (and only for
purposes of) Sections 2.12 (with respect to clause (a) below) and any
documentation entered into pursuant to the Letter of Credit Back-Stop
Arrangements (and the term “Defaulting Lender” as used therein), the term
“Lender Default” shall also include, as to any Lender, (a) any Affiliate of such
Lender that has “control” (within the meaning provided in the definition of
“Affiliate”) of such Lender having been deemed insolvent or having become the
subject of a bankruptcy or insolvency proceeding or a takeover by a regulatory
authority, (b) any previously cured “Lender Default” of such Lender under this
Agreement, unless such Lender Default has ceased to exist for a period of at
least 90 consecutive days, (c) any default by such Lender with respect to its
funding obligations under any other credit facility to which it is a party and
which any Issuing Lender or the Administrative Agent reasonably believes in good
faith has occurred and is continuing, and (d) the failure of such Lender to make
available its portion of any Borrowing or to fund its portion of any
unreimbursed payment with respect to a Letter of Credit pursuant to Section
3.04(c) within 3 Business Days of the date (x) the Administrative Agent (in its
capacity as a Lender) has funded its portion thereof or (y) Lenders constituting
the Required Lenders with Commitments have funded their portion thereof.
 
 “Letter of Credit” shall have the meaning provided in Section 3.01(a).
 
“Letter of Credit Back-Stop Arrangements” shall have the meaning provided in
Section 3.01(b)(iii).
 
 “Letter of Credit Fee” shall have the meaning provided in Section 4.01(b).
 
“Letters of Credit Outstanding” shall mean, at any time, the sum of (i) the
Stated Amount of all outstanding Letters of Credit under any Tranche and (ii)
the aggregate amount of all Unpaid Drawings in respect of all Letters of Credit
under such Tranche.
 
 
 
20

--------------------------------------------------------------------------------

 
 
“Letter of Credit Request” shall have the meaning provided in Section 3.03(a).
 
“Leverage Ratio” shall mean, at any date of determination, the ratio of
Consolidated Indebtedness on such date to Consolidated EBITDA for the Test
Period last ended on or prior to such date.
 
“Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority or
other security agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any other
similar recording or notice statute, and any lease having substantially the same
effect as any of the foregoing).
 
“Loan” shall mean an Initial Loan and/or an Incremental Loan (if any) of any
Tranche of Incremental Commitments, as the context may require.
 
“Majority Lenders” of any Tranche shall mean those Non-Defaulting Lenders under
such Tranche which would constitute the Required Lenders under, and as defined
in, this Agreement if all outstanding Obligations under the other Tranches under
this Agreement were repaid in full and all Commitments with respect thereto were
terminated.
 
 “Margin Regulations” shall have the meaning provided in Section 7.03.
 
“Margin Stock” shall have the meaning provided in Regulation U.
 
“Market Disruption Event” shall mean either of the following events:
 
 
(i)
at or about noon on the Interest Determination Date for the relevant Interest
Period the Screen Rate is not available and none or, if there are three or more
Lenders, only one of the Reference Banks supplies a rate to the Administrative
Agent to determine the Eurodollar Rate for the relevant Interest Period; or

 
 
(ii)
before close of business in New York on the Interest Determination Date for the
relevant Interest Period, the Administrative Agent receives notifications from
Lenders the sum of whose Commitments at such time equal at least 50% of the
Total Commitment that (i) the cost to such Lenders of obtaining matching
deposits in the London interbank Eurodollar market for the relevant Interest
Period would be in excess of the Eurodollar Rate for such Interest Period or
(ii) such Lenders are unable to obtain funding in the London interbank
Eurodollar market.

 
“Material Adverse Effect” shall mean a material adverse effect (v) on the rights
or remedies of the Lenders, (w) on the ability of the Parent, the Borrower or
any Subsidiary Guarantor, or the Parent and its Subsidiaries taken as a whole,
to perform its or their obligations to the Lenders, (x) with respect to the
Transaction or (y) on the property, assets, nature of assets, operations,
liabilities, financial condition or prospects of the Parent, the Borrower or any
Subsidiary Guarantor, or the Parent and its Subsidiaries taken as a whole.
 
 
 
21

--------------------------------------------------------------------------------

 
 
“Material Subsidiary” shall mean each Subsidiary of the Parent (other than the
Borrower) which holds at any time (x) an ownership interest in one or more
Collateral Rigs or (y) a direct or indirect equity interest in any company or
Person which holds an ownership interest in one or more Collateral Rigs,
provided that a Material Subsidiary which no longer holds either an ownership
interest in any Collateral Rig or in any entity which holds an ownership
interest in a Collateral Rig, such Material Subsidiary shall thereafter cease to
be a Material Subsidiary.
 
 “Maturity Date” shall mean May 6, 2016.
 
“Moody’s” shall mean Moody’s Investors Service, Inc.
 
“NAIC” shall mean the National Association of Insurance Commissioners.
 
“Newbuilding Rigs” shall mean the ATWOOD ADVANTAGE, the ATWOOD MAKO, the ATWOOD
ORCA, the ATWOOD MANTA, and any other Rigs to be built for or on behalf of
Wholly-Owned Subsidiaries of the Parent or the Borrower.
 
“Net Worth” shall mean, as to any Person, the sum of its capital stock, capital
in excess of par or stated value of shares of its capital stock, retained
earnings and any other account which, in accordance with GAAP, constitutes
stockholders’ equity, but excluding treasury stock and the effect of any
impairment of intangible assets on and after the Effective Date.
 
“Non-Defaulting Lender” shall mean and include each Lender other than a
Defaulting Lender.
 
“Note” shall have the meaning provided in Section 2.05(a).
 
“Notice of Borrowing” shall have the meaning provided in Section 2.03(a).
 
“Notice Office” shall mean the office of the Administrative Agent located at 437
Madison Avenue, New York, New York 10022, or such other office as the
Administrative Agent may hereafter designate in writing as such to the other
parties hereto.
 
“Obligations” shall mean, except to the extent consisting of obligations,
liabilities or indebtedness with respect to Interest Rate Protection Agreements
or Other Hedging Agreements, all obligations, liabilities and indebtedness
(including, without limitation, principal, premium, interest, fees and
indemnities (including, without limitation, all interest that accrues after the
commencement of any case, proceeding or other action relating to the bankruptcy,
insolvency, reorganization or similar proceeding of any Credit Party at the rate
provided for in the respective documentation, whether or not a claim for
post-petition interest is allowed in any such proceeding)) of each Credit Party
to the Lender Creditors (provided, in respect of the Lender Creditors which are
Lenders, such aforementioned obligations, liabilities and indebtedness shall
arise only for such Lenders (in such capacity) in respect of Loans and/or
Commitments), whether now existing or hereafter incurred under, arising out of,
or in connection with this Agreement and the other Credit Documents to which
such Credit Party is a party (including, in the case of each Credit Party that
is a Guarantor, all such obligations, liabilities and indebtedness of such
Credit Party under any Guaranty to which such Guarantor is a party) and the due
performance and compliance by such Credit Party with all of the terms,
conditions and agreements contained in this Agreement and in such other Credit
Documents.
 
 
 
22

--------------------------------------------------------------------------------

 
 
 “OPA” shall mean the Oil Pollution Act of 1990, as amended, 33 U.S.C. § 2701 et
seq.
 
“Other Creditors” shall mean any Lender or any affiliate thereof and their
successors and assigns if any (even if such Lender subsequently ceases to be a
Lender under this Agreement for any reason), with which the Parent or the
Borrower enters into any Interest Rate Protection Agreements or Other Hedging
Agreements from time to time.
 
“Other Hedging Agreement” shall mean any foreign exchange contracts, currency
swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency or
commodity values.
 
“Other Obligations” shall mean all obligations, liabilities and indebtedness
(including, without limitation, all interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency,
reorganization or similar proceeding of any Credit Party at the rate provided
for in the respective documentation, whether or not a claim for post-petition
interest is allowed in any such proceeding, but excluding, for the avoidance of
doubt, any Obligations) owing by any Credit Party to the Other Creditors under,
or with respect to (including, in the case of each Credit Party that is a
Guarantor, all such obligations, liabilities and indebtedness of such Credit
Party under any Guaranty  to which such Guarantor is a party), any Interest Rate
Protection Agreement or Other Hedging Agreement, whether such Interest Rate
Protection Agreement or Other Hedging Agreement is now in existence or hereafter
arising, and the due performance and compliance by such Credit Party with all of
the terms, conditions and agreements contained therein.
 
“Parent” shall have the meaning provided in the first paragraph of this
Agreement.
 
“Parent Guaranty” shall mean the guaranty of the Parent pursuant to Section 13.
 
“Participant” shall have the meaning provided in Section 3.04(a).
 
“PATRIOT Act” shall have the meaning provided in Section 14.19.
 
“Payment Office” shall mean the office of the Administrative Agent located at
437 Madison Avenue, New York, New York 10022, or such other office as the
Administrative Agent may hereafter designate in writing as such to the other
parties hereto.
 
“Percentage” of any Lender at any time shall mean a fraction (expressed as a
percentage) the numerator of which is the Commitment of such Lender under any
Tranche at such time and the denominator of which is the Total Initial
Commitment or Total Incremental Commitment under the relevant Tranche of
Incremental Commitments, as the case may be, at such time, provided that if the
Percentage of any Lender is to be determined after the relevant Total Commitment
has been terminated, then the Percentage of such Lender shall be determined
immediately prior (and without giving effect) to such termination.
 
 
 
23

--------------------------------------------------------------------------------

 
 
“Permitted Liens” shall have the meaning provided in Section 10.01.
 
“Person” shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
 
“Plan” shall mean any pension plan as defined in Section 3(2) of ERISA,
excluding any pension plan that is not subject to Title I or Title IV of ERISA,
which is maintained or contributed to by (or to which there is an obligation to
contribute of) the Parent or a Subsidiary of the Parent or any ERISA Affiliate,
and each such plan for the five-year period immediately following the latest
date on which the Parent, or a Subsidiary of the Parent or any ERISA Affiliate
maintained, contributed to or had an obligation to contribute to such plan.
 
“Pledge Agreement” shall mean, collectively, the U.S. Pledge Agreement, each
Foreign Pledge Agreement and any other pledge agreement executed and delivered
by any Subsidiary of the Parent pursuant to the definition of “Collateral and
Guaranty Requirements” or any of Section 9.11 or 10.14.
 
“Pledge Agreement Collateral” shall mean, collectively, all “Collateral” as
defined in each Pledge Agreement.
 
“Pledged Securities” shall mean “Pledged Securities” as defined in the Pledge
Agreement.
 
“Pledgor” shall mean the Parent and/or any Subsidiary of the Parent to the
extent that such Person owns any equity interest in the Borrower or any Material
Subsidiary, in either case, on the Initial Borrowing Date or thereafter.
 
“Prime Rate” shall mean the rate which the Administrative Agent announces from
time to time as its prime lending rate, the Prime Rate to change when and as
such prime lending rate changes.  The Prime Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to any
customer.  The Administrative Agent may make commercial loans or other loans at
rates of interest at, above or below the Prime Rate.
 
“Projections” shall mean the detailed projected consolidated financial
statements of the Parent and its Subsidiaries for the five fiscal years ending
after the Effective Date, which projections shall (x) reflect the forecasted
consolidated financial condition of the Parent and its Subsidiaries after giving
effect to the financing hereof, and (y) be prepared and approved by an
Authorized Representative of the Parent.
 
 “Pro Rata Share” shall have the meaning provided in Section 5.05(b).
 
“Qualified Capital Stock” shall mean any Equity Interest other than Disqualified
Stock.
 
 
 
24

--------------------------------------------------------------------------------

 
 
“Qualified Preferred Interests” shall mean any preferred stock of the Parent so
long as the terms of any such preferred stock (i) do not contain any mandatory
put, redemption, repayment, sinking fund or other similar provision occurring
prior to one year after the Maturity Date, (ii) do not require the cash payment
of dividends, (iii) do not contain any covenants other than financial reporting
requirements and (iv) do not grant the holder thereof any voting rights except
for voting rights on fundamental matters such as mergers, consolidations, sales
or all or substantially all of the assets of the issuer thereof, or liquidations
involving the issuer thereof.
 
“Quarterly Payment Date” shall mean the last Business Day of each March, June,
September and December occurring after the Initial Borrowing Date, commencing on
June 30, 2011.
 
“Real Property” of any Person shall mean all the right, title and interest of
such Person in and to land, improvements and fixtures, including Leaseholds.
 
“Reference Banks” shall mean the Administrative Agent, DnB NOR Bank ASA and
Wells Fargo Bank, N.A.
 
 “Refinancing” shall have the meaning provided in the Recitals hereto.
 
“Register” shall have the meaning provided in Section 14.15.
 
“Regulation D” shall mean Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing reserve requirements.
 
“Regulation T” shall mean Regulation T of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
 
“Regulation U” shall mean Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
 
“Regulation X” shall mean Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof.
 
“Release” shall mean actively or passively disposing, discharging, injecting,
spilling, pumping, leaking, leaching, dumping, emitting, escaping, emptying,
pouring, seeping, migrating or the like, into or upon any land or water or air,
or otherwise entering into the environment.
 
“Reorganization” shall mean each transaction described in Annex A hereto
relating to the reorganization of the ownership structure of certain
Subsidiaries of the Parent, including, without limitation, the transfer of
assets in connection therewith, provided that (i) any modifications to the
transactions set forth in Annex A not otherwise permitted hereunder shall be
satisfactory to the Administrative Agent, (ii) each Material Subsidiary which
holds an ownership interest in a Collateral Rig shall at all times comply with
the Collateral and Guaranty Requirements and (ii) the Parent shall give the
Administrative Agent at least 10 Business Days’ prior notice of the occurrence
of any component of the Reorganization that affects the security interests of
the Secured Creditors in any way.
 
 
 
25

--------------------------------------------------------------------------------

 
 
“Replaced Lender” shall have the meaning provided in Section 2.12.
 
“Replacement Lender” shall have the meaning provided in Section 2.12.
 
“Representative” shall have the meaning provided in Section 5.05(d).
 
“Required Insurance” shall have the meaning provided in Section 8.21.
 
“Required Lenders” shall mean, at any time, Non-Defaulting Lenders the sum of
whose outstanding Commitments (or, after the termination thereof, outstanding
Loans and Percentages of Letters of Credit Outstanding) represent an amount
greater than 50% of the Total Commitment less the outstanding Commitments of all
Defaulting Lenders (or after the termination thereof, the sum of then total
outstanding Loans of Non-Defaulting Lenders and the aggregate Percentages of all
Non-Defaulting Lenders of the total Letters of Credit Outstanding at such time).
 
 “Returns” shall have the meaning provided in Section 8.09.
 
“Rig” shall mean, collectively, offshore drilling rigs, including, without
limitation, semisubmersibles, drillships, jack-ups, semisubmersible tender
assist vessels and submersible rigs, owned by the Parent and/or any Subsidiary
of the Parent, and, individually, any of such rigs.
 
“Rights Plan” shall mean that certain Rights Agreement between the Parent and
Continental Stock Transfer & Trust Company, as rights agent, dated as of October
18, 2002, as such Rights Plan is in effect on the Effective Date and without
giving effect to any amendments, modifications, supplements or terminations
thereof or thereto after the Effective Date (including, without limitation, any
such amendments, modifications or supplements to the defined terms used therein)
unless, and to the extent, the Required Lenders specifically agree that the
respective change will be given effect to for purposes of this Agreement.
 
“Satisfactory Drilling Contract” shall mean drilling contracts, in form and
substance that are customary in the offshore drilling market, to reputable major
oil companies, reputable independent oil and gas companies, and national oil
companies, at a rate of at least $375,000 per day with a term of at least two
years (or reasonably equivalent thereto).
 
 “Scheduled Commitment Reduction” shall mean any reduction or termination, as
the case may be, of the Total Initial Commitment and/or the Total Incremental
Commitment under any Tranche, as the context may require, pursuant to Section
4.03(b) and/or Section 4.03(c).
 
“Screen Rate” shall have the meaning specified in the definition of Eurodollar
Rate.
 
 
 
26

--------------------------------------------------------------------------------

 
 
 
“SEC” shall have the meaning provided in Section 9.01(g).
 
“Secured Creditors” shall mean collectively the Other Creditors together with
the Lender Creditors.
 
“Secured Obligations” shall mean (i) the Obligations, (ii) the Other
Obligations, (iii) any and all sums advanced by the Collateral Agent in order to
preserve the Collateral or preserve its security interest in the Collateral,
(iv) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations or liabilities of the Credit Parties referred to in
clauses (i) and (ii) above, after an Event of Default shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Collateral, or of
any exercise by the Collateral Agent of its rights hereunder, together with
reasonable attorneys’ fees and court costs, and (v) all amounts paid by any
Secured Creditor as to which such Secured Creditor has the right to
reimbursement under Section 11 of the U.S. Pledge Agreement.
 
“Securities Act” shall mean the Securities Act of 1933, as amended.
 
“Security Agreement Collateral” shall mean, collectively, all “Collateral” as
defined in each U.S. Security Agreement.
 
“Security Documents” shall mean each Pledge Agreement, each U.S. Security
Agreement, each Assignment of Insurances, each Assignment of Earnings, each
Collateral Rig Mortgage and each additional security document delivered pursuant
to Section 9.11 or 10.14.
 
“Series A Junior Participating Preferred Stock” shall mean the “Preferred
Shares” as defined in the Rights Plan.
 
“Significant Disposition” means each disposition of assets of the Parent and its
Subsidiaries that generates net cash proceeds of $10,000,000 or more.
 
“S&P” shall mean Standard & Poor’s Ratings Services.
 
“Stated Amount” of each Letter of Credit shall mean, at any time, the maximum
amount available to be drawn thereunder (in each case determined without regard
to whether any conditions to drawing could then be met).
 
“Subsidiaries Guaranty” shall mean and include the U.S. Subsidiaries Guaranty,
each Foreign Subsidiaries Guaranty and any other guaranty executed and delivered
by any Subsidiary of the Parent pursuant to the definition of “Collateral and
Guaranty Requirements” or any of Section 9.11 or 10.14.
 
“Subsidiary” shall mean, as to any Person, (i) any corporation more than 50% of
whose stock of any class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time owned by such Person and/or one or more Subsidiaries
of such Person and (ii) any partnership, limited liability company, association,
joint venture or other entity in which such Person and/or one or more
Subsidiaries of such Person has more than a 50% equity interest at the time.
 
 
 
27

--------------------------------------------------------------------------------

 
 
“Subsidiary Guarantor” shall mean each direct and indirect Subsidiary of the
Parent which is a Material Subsidiary on the Initial Borrowing Date or becomes a
Material Subsidiary thereafter.
 
“Taxes” shall have the meaning provided in Section 5.04.
 
“Test Period” shall mean, at any time, each period of four consecutive fiscal
quarters then last ended, in each case taken as one accounting period.
 
“Total Commitment” shall mean, at any time, the sum of the Total Initial
Commitment and the aggregate of the Total Incremental Commitments under all
Tranches at such time.
 
“Total Incremental Commitment” shall mean, at any time, the sum of the
Incremental Commitments of all of the Lenders under any Tranche at such time.
 
“Total Initial Commitment” shall mean, at any time, the sum of the Initial
Commitments of all of the Lenders at such time.
 
 “Total Unutilized Commitment” shall mean, at any time, an amount equal to the
remainder of the then Total Commitment, less the sum of the aggregate principal
amount of Loans then outstanding under all Tranches and the aggregate amount of
all Letters of Credit Outstanding under all Tranches at such time.
 
 “Tranche” shall mean the respective facility and Commitments utilized in making
Loans hereunder, which shall include the Tranche of Initial Commitments under
the Initial Facility and each Tranche of Incremental Commitments under the
Incremental Facility.
 
“Transaction” shall mean, collectively, (i) the consummation of the Refinancing,
(ii) the entering into of the Credit Documents and (iii) the payment of fees and
expenses in connection with the foregoing.
 
“UCC” shall mean the Uniform Commercial Code as from time to time in effect in
the relevant jurisdiction.
 
“United States” and “U.S.” shall each mean the United States of America.
 
“Unpaid Drawing” shall have the meaning provided in Section 3.05(a).
 
 “U.S. Pledge Agreement” shall have the meaning provided in the definition of
“Collateral and Guaranty Requirements”.
 
“U.S. Security Agreement” shall have the meaning provided in the definition of
“Collateral and Guaranty Requirements”.
 
 
 
28

--------------------------------------------------------------------------------

 
 
“U.S. Subsidiaries Guaranty” shall have the meaning provided in the definition
of “Collateral and Guaranty Requirements”.
 
“Wholly-Owned Subsidiary” shall mean, as to any Person, (i) any corporation 100%
of whose capital stock (other than, in the case of a Foreign Subsidiary,
director’s qualifying shares and/or other nominal amounts of shares required to
be held other than by such Person under applicable law or held by a nominee in
trust) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, limited liability company,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time.  Unless otherwise indicated herein, or the context otherwise requires, all
references herein to any Wholly-Owned Subsidiary or Wholly-Owned Subsidiaries
shall mean and be deemed to be references to a Wholly-Owned Subsidiary or
Wholly-Owned Subsidiaries, as the case may be, of the Parent.
 
 
SECTION 2. Amount and Terms of Credit Facility
 
 
2.01 The Commitments    (a)  Subject to and upon the terms and conditions set
forth herein, each Lender with an Initial Commitment severally agrees to make,
at any time and from time to time on or after the Initial Borrowing Date and
prior to the Maturity Date, a revolving loan or revolving loans (each, an
“Initial Loan” and, collectively, the “Initial Loans”) to the Borrower (the
“Initial Facility”), which Initial Loans: (i) shall be denominated in Dollars,
(ii) shall bear interest in accordance with Section 2.07, (iii) may be repaid
and reborrowed in accordance with the provisions hereof, and (iv) shall not
exceed for any such Lender at any time outstanding that aggregate principal
amount which, when added to the product of (x) such Lender’s Percentage under
the Initial Facility and (y) the aggregate amount of all Letters of Credit
Outstanding under the Initial Facility (exclusive of Unpaid Drawings under the
Initial Facility which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Initial Loans) at such time
equals the Initial Commitment of such Lender under the Initial Facility at such
time.
 
(b)           Subject to and upon the terms and conditions set forth herein,
each Lender with an Incremental Commitment under any Tranche severally agrees to
make a revolving loan or revolving loans under such Tranche (each, an
“Incremental Loan” and, collectively, the “Incremental Loans”) to the Borrower,
which Incremental Loans: (i) shall be denominated in Dollars, (ii) shall bear
interest in accordance with Section 2.07, (iii) may be repaid and reborrowed in
accordance with the provisions hereof, and (iv) shall not exceed for any such
Lender at any time outstanding that aggregate principal amount which, when added
to the product of (x) such Lender’s Percentage under such Tranche and (y) the
aggregate amount of all Letters of Credit Outstanding under such Tranche
(exclusive of Unpaid Drawings under such Tranche which are repaid with the
proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Incremental Loans) at such time equals the Incremental Commitment
of such Lender under such Tranche at such time.
 
2.02 Minimum Amount of Each Borrowing; Limitation on Number of Borrowings.  The
aggregate principal amount of each Borrowing of Loans shall not be less than
$1,000,000 in each case.  More than one Borrowing may occur on the same date,
but at no time shall there be outstanding more than ten (10) Borrowings of Loans
under all Tranches.
 
 
 
29

--------------------------------------------------------------------------------

 
 
2.03 Notice of Borrowing.  (a)  Whenever the Borrower desires to incur Loans
hereunder, an Authorized Representative of the Borrower (or, in the case of a
Notice of Borrowing delivered prior to the Initial Borrowing Date, an Authorized
Representative of the Parent) shall give the Administrative Agent at the Notice
Office at least four Business Days’ prior written notice (or telephonic notice
promptly confirmed in writing) of each Loan to be incurred hereunder, provided
that (in each case) any such notice shall be deemed to have been given on a
certain day only if given before 11:00 a.m. (New York time) on such day.  Each
such written notice or written confirmation of telephonic notice (each, a
“Notice of Borrowing”), except as otherwise expressly provided in Section 2.09,
shall be irrevocable and shall be given in writing by the Borrower (or, on the
Initial Borrowing Date, the Parent) in the form of Exhibit A, appropriately
completed to specify (i) the aggregate principal amount of the Loans to be
incurred pursuant to such Borrowing, (ii) the date of such Borrowing (which
shall be a Business Day), (iii) the initial Interest Period to be applicable to
such Borrowing, (iv) to which account the proceeds of such Loans are to be
deposited and (v) the Tranche under which such Borrowing shall occur.  The
Administrative Agent shall promptly give each Lender which is required to make
Loans of the Tranche specified in the notice of such proposed Borrowing, of such
Lender’s proportionate share thereof and of the other matters required by the
immediately preceding sentence to be specified in the Notice of Borrowing.
 
(b) Without in any way limiting the obligation of the Borrower to confirm in
writing any telephonic notice of any Borrowing or prepayment of Loans, the
Administrative Agent may act without liability upon the basis of telephonic
notice of such Borrowing or prepayment, as the case may be, believed by the
Administrative Agent in good faith to be from an Authorized Representative of
the Borrower prior to receipt of written confirmation.  In each such case, the
Borrower hereby waives the right to dispute the Administrative Agent’s record of
the terms of such telephonic notice of such Borrowing or prepayment of Loans, as
the case may be, absent manifest error.
 
2.04 Disbursement of Funds.  No later than 12:00 Noon (New York time) on the
date specified in each Notice of Borrowing, each Lender with a Commitment of the
respective Tranche will make available its pro rata portion (determined in
accordance with Section 2.06) of each such Borrowing requested to be made on
such date.  All such amounts will be made available in Dollars and in
immediately available funds at the Payment Office and the Administrative Agent
will make available to the Borrower (prior to 1:00 p.m. (New York time) on such
day to the extent of funds actually received by the Administrative Agent prior
to 12:00 Noon (New York time) on such day) at the Payment Office, in the account
specified in the applicable Notice of Borrowing, the aggregate of the amounts so
made available by the Lenders under the respective Tranche.  Unless the
Administrative Agent shall have been notified by any Lender prior to the date of
Borrowing that such Lender does not intend to make available to the
Administrative Agent such Lender’s portion of any Borrowing to be made on such
date, the Administrative Agent may assume that such Lender has made such amount
available to the Administrative Agent on such date of Borrowing and the
Administrative Agent may in its sole discretion (but shall not, for the
avoidance of doubt, be obligated to), in reliance upon such assumption, make
available to the Borrower a corresponding amount.  If such corresponding amount
is not in fact made available to the Administrative Agent by such Lender and
such amount is advanced to the Borrower by the Administrative Agent, the
Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender.  If such Lender does not pay such corresponding amount
forthwith upon the Administrative Agent’s demand therefor, the Administrative
Agent shall promptly notify the Borrower and the Borrower shall immediately pay
such corresponding amount to the Administrative Agent.  The Administrative Agent
also shall be entitled to recover on demand from such Lender or the Borrower, as
the case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the Administrative
Agent to the Borrower until the date such corresponding amount is recovered by
the Administrative Agent, at a rate per annum equal to (i) if recovered from
such Lender, the overnight Federal Funds Rate for the first three days and at
the interest rate otherwise applicable to such Loans for each day thereafter and
(ii) if recovered from the Borrower, the rate of interest applicable to the
respective Borrowing, as determined pursuant to Section 2.07.  Nothing in this
Section 2.04 shall be deemed to relieve any Lender from its obligation to make
Loans hereunder or to prejudice any rights which the Borrower may have against
any Lender as a result of any failure by such Lender to make Loans hereunder.
 
 
 
30

--------------------------------------------------------------------------------

 
 
2.05 Notes.  (a)  The Borrower’s obligation to pay the principal of, and
interest on, the Loans made by each Lender shall be evidenced in the Register
maintained by the Administrative Agent pursuant to Section 14.15 and shall, if
requested by such Lender as provided below, also be evidenced by a promissory
note duly executed and delivered by the Borrower substantially in the form of
Exhibit B, with blanks appropriately completed in conformity herewith (each a
“Note” and, collectively, the “Notes”).  Coincident with the delivery of an
Incremental Commitment Agreement for acceptance and registration of the
provision of an Incremental Commitment, or as soon thereafter as practicable,
new Notes, as the case may be, shall be issued to the respective Incremental
Lender at the request of such Incremental Lender.
 
(b) The Note issued to each Lender that has a Commitment or outstanding Loans
shall (i) be executed by the Borrower, (ii) be payable to the order of such
Lender or its registered assigns and be dated the Initial Borrowing Date (or, in
the case of Notes issued after the Initial Borrowing Date, be dated the date of
the issuance thereof), (iii) be in a stated principal amount equal to the
Commitment of such Lender (or, if issued after the termination thereof, be in a
stated principal amount equal to the outstanding Loans of such Lender at such
time) and be payable in the outstanding principal amount of the Loans evidenced
thereby, (iv) mature on the Maturity Date, (v) bear interest as provided in
Section 2.07, (vi) be subject to voluntary prepayment and mandatory repayment as
provided in Sections 5.01 and 5.02 and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
 
(c) Each Lender will note on its internal records the amount of each Loan made
by it and each payment in respect thereof and, prior to any transfer of any of
its Notes, will endorse on the reverse side thereof the outstanding principal
amount of Loans evidenced thereby.  Failure to make any such notation or any
error in such notation or endorsement shall not affect the Borrower’s
obligations in respect of such Loans.
 
(d) Notwithstanding anything to the contrary contained above in this Section
2.05 or elsewhere in this Agreement, Notes shall only be delivered to Lenders
which at any time specifically request the delivery of such Notes.  No failure
of any Lender to request or obtain a Note evidencing its Loans to the Borrower
shall affect or in any manner impair the obligations of the Borrower to pay the
Loans (and all related Obligations) incurred by the Borrower which would
otherwise be evidenced thereby in accordance with the requirements of this
Agreement, and shall not in any way affect the security or guaranties therefor
provided pursuant to the various Credit Documents.  Any Lender which does not
have a Note evidencing its outstanding Loans shall in no event be required to
make the notations otherwise described in preceding clause (c).  At any time
when any Lender requests the delivery of a Note to evidence any of its Loans,
the Borrower shall (at its expense) promptly execute and deliver to the
respective Lender the requested Note in the appropriate amount or amounts to
evidence such Loans.
 
 
 
31

--------------------------------------------------------------------------------

 
 
2.06 Pro Rata Borrowings.  Except as provided in Section 2.13, all Borrowings of
Loans under a Tranche under this Agreement shall be incurred from the Lenders
under such Tranche pro rata on the basis of their Commitments under such
Tranche.  It is understood that no Lender shall be responsible for any default
by any other Lender of its obligation to make Loans hereunder and that each
Lender shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Lender to make its Loans hereunder.
 
2.07 Interest.  (a)  The Borrower agrees to pay interest in respect of the
unpaid principal amount of each Loan under a Tranche from the date of Borrowing
thereof until the maturity (whether by acceleration or otherwise) of such Loan
at a rate per annum which shall, during each Interest Period applicable thereto,
be equal to (except as otherwise provided in Section 2.09(a)) the sum of the
Applicable Margin applicable to such Tranche plus the Eurodollar Rate for such
Interest Period.
 
(b) If the Borrower fails to pay any amount payable by it under a Credit
Document on its due date, interest shall accrue on the overdue amount (in the
case of overdue interest to the extent permitted by law) from the due date up to
the date of actual payment (both before and after judgment) at a rate which is,
subject to paragraph (c) below, 2% plus the rate which would have been payable
if the overdue amount had, during the period of non payment, constituted a Loan
for successive Interest Periods, each of a duration selected by the
Administrative Agent.  Any interest accruing under this Section 2.07(b) shall be
immediately payable by the Borrower on demand by the Administrative Agent.
 
(c) If any overdue amount consists of all or part of a Loan which became due on
a day which was not the last day of an Interest Period relating to such Loan:
 
(i) the first Interest Period for that overdue amount shall have a duration
equal to the unexpired portion of the current Interest Period relating to that
Loan; and
 
(ii) the rate of interest applying to the overdue amount during that first
Interest Period shall be 2% plus the rate which would have applied if the
overdue amount had not become due.
 
 
 
32

--------------------------------------------------------------------------------

 
 
(d) Default interest (if unpaid) arising on an overdue amount will be compounded
with the overdue amount at the end of each Interest Period applicable to that
overdue amount but will remain immediately due and payable.
 
(e) Accrued (and theretofore unpaid) interest shall be payable (x) on the last
day of each Interest Period applicable thereto and, in the case of an Interest
Period in excess of three months, on each date occurring at three month
intervals after the first day of such Interest Period, and (y) on the date of
any repayment or prepayment (on the amount repaid or prepaid), at maturity
(whether by acceleration or otherwise) and, after such maturity, on demand.
 
(f) Upon each Interest Determination Date, the Administrative Agent shall
determine the Eurodollar Rate for each Interest Period applicable to the
respective Loans and shall promptly notify the Borrower and the Lenders
thereof.  Each such determination shall, absent manifest error, be final and
conclusive and binding on all parties hereto.
 
2.08 Interest Periods.  At the time the Borrower gives any Notice of Borrowing
in respect of the making of any Loan (in the case of the initial Interest Period
applicable thereto) or prior to 11:00 a.m. (New York time) on the fourth
Business Day prior to the expiration of an Interest Period applicable to such
Loan (in the case of any subsequent Interest Period), the Borrower shall have
the right to elect, by having an Authorized Representative of the Borrower give
the Administrative Agent notice thereof, the interest period (each an “Interest
Period”) applicable to such Loan, which Interest Period shall, at the option of
the Borrower, be a one-, two-, three- or six-month period, with additional
periods available with the consent of the Administrative Agent and all the
Lenders under such Tranche (it being understood, that (i) if the Borrower fails
to select an Interest Period, then that Interest Period will be three months and
(ii) during the one-month period preceding the Maturity Date, the Borrower, with
the consent of the Administrative Agent, may select an Interest Period of less
than one month so long as such Interest Period ends no later than the Maturity
Date); provided that:
 
(i) all Loans comprising a Borrowing shall at all times have the same Interest
Period;
 
(ii) the initial Interest Period for any Loan shall commence on the date of
Borrowing of such Loan and each Interest Period occurring thereafter in respect
of such Loan shall commence on the day immediately following the day on which
the immediately preceding Interest Period applicable thereto expires;
 
(iii) if any Interest Period for a Loan begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period, such Interest Period shall end on the last Business Day of such calendar
month;
 
(iv) if any Interest Period would otherwise expire on a day which is not a
Business Day, such Interest Period shall expire on the first succeeding Business
Day; provided, however, that if any Interest Period for a Loan would otherwise
expire on a day which is not a Business Day but is a day of the month after
which no further Business Day occurs in such month, such Interest Period shall
expire on the immediately preceding Business Day;
 
 
 
33

--------------------------------------------------------------------------------

 
 
(v) no Interest Period longer than three months may be selected at any time when
a Default or an Event of Default is then in existence;
 
(vi) no Interest Period in respect of any Borrowing of Loans shall be selected
which extends beyond the Maturity Date; and
 
(vii) the selection of Interest Periods shall be subject to the provisions of
Section 2.02.
 
2.09 Increased Costs, Illegality, Market Disruption, etc.  (a)  In the event
that any Lender shall have determined (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
 
(i) at any time, that such Lender shall incur increased costs or reductions in
the amounts received or receivable hereunder with respect to any Loan because
of, without duplication, the introduction of or effectiveness of or any change
since the Effective Date in any applicable law or governmental rule, regulation,
order, guideline, directive or request (whether or not having the force of law)
concerning capital adequacy or otherwise or in the interpretation or
administration thereof and including the introduction of any new law or
governmental rule, regulation, order, guideline or request, such as, for
example, but not limited to:  (A) a change subjecting any Lender to any tax,
duty or other charge with respect to any Loan, Notes or Letter of Credit, of its
obligation to make such Loan or issue such Letter of Credit, or change in the
basis of taxation of payment to any Lender of the principal of or interest on
the Loans or the Notes or any other amounts payable hereunder (except for
changes in the rate of tax on, or determined by reference to, the net income or
net profits of such Lender pursuant to the laws of the jurisdiction in which
such Lender is organized or in which such Lender’s principal office or
applicable lending office is located or any subdivision thereof or therein), but
without duplication of any amounts payable in respect of Taxes pursuant to
Section 5.04, (B) a change in official reserve requirements but, in all events,
excluding reserves required under Regulation D to the extent included in the
computation of the Eurodollar Rate, or (C) a change that will have the effect of
increasing the amount of capital adequacy required or requested by an applicable
governmental regulatory authority to be maintained by such Lender, or any
corporation controlling such Lender, based on the existence of such Lender’s
Commitments hereunder or its obligations hereunder; or
 
(ii) at any time, that the making or continuance of any Loan has been made
unlawful by any law or governmental rule, regulation or order;
 
then, and in any such event, such Lender shall promptly give notice (by
telephone confirmed in writing) to the Borrower and, in the case of clause (ii)
above, to the Administrative Agent of such determination (which notice the
Administrative Agent shall promptly transmit to each of the
Lenders).  Thereafter (x) in the case of clause (i) above, the Borrower agrees
(to the extent applicable), to pay to such Lender, upon its written demand
therefor, such additional amounts as shall be required to compensate such Lender
or such other corporation for the increased costs or reductions to such Lender
or such other corporation and (y) in the case of clause (ii) above, the Borrower
shall take one of the actions specified in Section 2.09(b) as promptly as
possible and, in any event, within the time period required by law.  In
determining such additional amounts, each Lender will act reasonably and in good
faith and will use averaging and attribution methods which are reasonable,
provided that such Lender’s determination of compensation owing under this
Section 2.09(a) shall, absent manifest error be final and conclusive and binding
on all the parties hereto.  Each Lender, upon determining that any additional
amounts will be payable pursuant to this Section 2.09(a), will give prompt
written notice thereof to the Borrower, which notice shall show in reasonable
detail the basis for the calculation of such additional amounts.
 
 
 
34

--------------------------------------------------------------------------------

 
 
(b) At any time that any Loan is affected by the circumstances described in
Section 2.09(a)(i) or (ii), the Borrower may (and in the case of a Loan affected
by the circumstances described in Section 2.09(a)(ii) shall) either (x) if the
affected Loan is then being made initially, cancel the respective Borrowing by
giving the Administrative Agent telephonic notice (confirmed in writing) on the
same date or the next Business Day that such Borrower was notified by the
affected Lender or the Administrative Agent pursuant to Section 2.09(a)(i) or
(ii) or (y) if the affected Loan is then outstanding, upon at least three
Business Days’ written notice to the Administrative Agent, in the case of any
Loan, repay all outstanding Borrowings (within the time period required by the
applicable law or governmental rule, governmental regulation or governmental
order) which include such affected Loans in full in accordance with the
applicable requirements of Section 5.02; provided that if more than one Lender
is affected at any time, then all affected Lenders must be treated the same
pursuant to this Section 2.09(b).
 
(c) If a Market Disruption Event occurs in relation to a Loan for any Interest
Period, then the rate of interest on each Lender’s share of such Loan for the
relevant Interest Period shall be the percentage rate per annum which is the sum
of:
 
(i) the Applicable Margin; and
 
(ii) the rate determined by the Administrative Agent and notified to the
Borrower as being the actual blended cost to all Lenders (based on the rate
determined by each Lender and notified to the Administrative Agent as being the
actual cost to such Lender) of funding their participations in such Loan for a
period equivalent to such Interest Period from whatever source they may
reasonably select.
 
(d) If a Market Disruption Event occurs and the Administrative Agent or the
Borrower so requires, the Administrative Agent and the Borrower shall enter into
negotiations (for a period of not more than thirty days) with a view to agreeing
a substitute basis for determining the rate of interest.  Any alternative basis
agreed pursuant to the immediately preceding sentence shall, with the prior
consent of all the Lenders and the Borrower, be binding on all parties.  If no
agreement is reached pursuant to this clause (d), the rate provided for in
clause (c) above shall apply for the entire Interest Period.
 
(e) If any Reference Bank ceases to be a Lender under this Agreement, (x) it
shall cease to be a Reference Bank and (y) the Administrative Agent shall, with
the approval (which shall not be unreasonably withheld) of the Borrower,
nominate as soon as reasonably practicable another Lender to be a Reference Bank
in place of such Reference Bank.
 
 
 
35

--------------------------------------------------------------------------------

 
 
(f) Notwithstanding anything in this Agreement to the contrary, (x) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives thereunder or issued in connection therewith and
(y) all requests, rules, guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or the United States regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a change
after the Effective Date in an applicable law or governmental rule, regulation
or order, regardless of the date enacted, adopted, issued or implemented for all
purposes under or in connection with this Agreement (including this Section
2.09).
 
2.10 Compensation.  The Borrower agrees to compensate each Lender, upon its
written request (which request shall set forth in reasonable detail the basis
for requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Lender to fund its Loans but excluding loss of anticipated
profits) which such Lender may sustain:  (i) if for any reason (other than a
default by such Lender or the Administrative Agent) a Borrowing does not occur
on a date specified therefor in a Notice of Borrowing (whether or not withdrawn
by the Borrower or deemed withdrawn pursuant to Section 2.09(a)); (ii) if any
prepayment or repayment (including any prepayment or repayment made pursuant to
Section 2.09(a), Section 5.01, Section 5.02 or as a result of an acceleration of
the Loans pursuant to Section 11) of any of its Loans, or assignment of any of
its Loans pursuant to Section 2.12, occurs on a date which is not the last day
of an Interest Period with respect thereto; (iii) if any prepayment of any of
its Loans is not made on any date specified in a notice of prepayment given by
the Borrower; or (iv) as a consequence of any other default by the Borrower to
repay Loans or make payment on any Note held by such Lender when required by the
terms of this Agreement.
 
2.11 Change of Lending Office; Limitation on Additional Amounts.  Each Lender
agrees that upon the occurrence of any event giving rise to the operation of
Section 2.09(a)(i) or (ii), Section 2.09(b), Section 3.06 or Section 5.04 with
respect to such Lender, it will, if requested by the Borrower, use reasonable
efforts (subject to overall policy considerations of such Lender) to designate
another lending office for any Loans or Letters of Credit affected by such
event, provided that such designation is made on such terms that such Lender and
its lending office suffer no economic, legal or regulatory disadvantage, with
the object of avoiding the consequence of the event giving rise to the operation
of such Section.  Nothing in this Section 2.11 shall affect or postpone any of
the obligations of the Borrower or the right of any Lender provided in
Sections 2.09, 3.06 and 5.04.
 
2.12 Replacement of Lenders.  (x)  If any Lender becomes a Defaulting Lender or
otherwise defaults in its obligations to make Loans or fund Unpaid Drawings, (y)
upon the occurrence of any event giving rise to the operation of Section
2.09(a)(i) or (ii), Section 2.09(b) or Section 5.04 with respect to any Lender
which results in such Lender charging to the Borrower increased costs in excess
of those being generally charged by the other Lenders, or (z) as provided in
Section 14.12(b) in the case of certain refusals by a Lender to consent to
certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Lenders, the Borrower
shall have the right, if no Default or Event of Default then exists (or, in the
case of preceding clause (z), will exist immediately after giving effect to the
respective replacement), to replace such Lender (the “Replaced Lender”) with one
or more other Eligible Transferee or Eligible Transferees, none of whom shall
constitute a Defaulting Lender at the time of such replacement (collectively,
the “Replacement Lender”) and each of whom shall be required to be reasonably
acceptable to the Administrative Agent, provided that:
 
 
 
36

--------------------------------------------------------------------------------

 
 
(i) at the time of any replacement pursuant to this Section 2.12, the
Replacement Lender shall enter into one or more Assignment and Assumption
Agreements pursuant to Section 14.04(b) (and with all fees payable pursuant to
said Section 14.04(b) to be paid by the Replacement Lender) pursuant to which
the Replacement Lender shall acquire all of the Commitments and outstanding
Loans (or, in the case of the replacement of only (a) the Initial Commitment,
the Initial Commitment and outstand­ing Initial Loans and participations in
Letters of Credit Outstanding under the Initial Facility and/or (b) the
Incremental Commitment under any Tranche or Tranches of Incremental Commitments,
the Incremental Commitment and outstand­ing Incremental Loans and participations
in Letters of Credit Outstanding under such Tranche or Tranches with respect to
which such Lender is being replaced) of, and in each case participations in
Letters of Credit by, the Replaced Lender and, in connection therewith, shall
pay to (x) the Replaced Lender in respect thereof an amount equal to the sum of
(I) an amount equal to the principal of, and all accrued and unpaid interest on,
all outstanding Loans of the Replaced Lender under each Tranche with respect to
which such Replaced Lender is being replaced, (II) an amount equal to all Unpaid
Drawings (unless there are no Unpaid Drawings with respect to the Tranche being
replaced) that have been funded by (and not reimbursed to) such Replaced Lender,
together with all then accrued and unpaid interest with respect thereto at such
time, and (III) an amount equal to all accrued, but theretofore unpaid, Fees
owing to the Replaced Lender (but only with respect to the relevant Tranche, in
the case of the replacement of less than all Tranches of Loans then held by the
respective Replaced Lender) pursuant to Section 4.01 and (y) each Issuing Lender
an amount equal to such Replaced Lender’s Percentage of any Unpaid Drawing
(which at such time remains an Unpaid Drawing) to the extent such amount was not
theretofore funded by such Replaced Lender to such Issuing Lender, together with
all then accrued and unpaid interest with respect thereto at such time; and
 
(ii) all obligations of the Borrower due and owing to the Replaced Lender at
such time (other than those specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Lender concurrently with
such replacement.
 
Upon the execution of the respective Assignment and Assumption Agreement, the
payment of amounts referred to in clauses (i) and (ii) above and, if so
requested by the Replacement Lender, delivery to the Replacement Lender of the
appropriate Note or Notes executed by the Borrower, the Replacement Lender shall
become a Lender hereunder and the Replaced Lender shall cease to constitute a
Lender hereunder, except with respect to indemnification provisions under this
Agreement (including, without limitation, Sections 2.09, 2.10, 3.06, 5.04, 12.06
and 14.01), which shall survive as to such Replaced Lender.
 
 
 
37

--------------------------------------------------------------------------------

 
 
2.13 Incremental Commitments.  (a)  The Borrower shall have the right at any
time or from time to time on or after the Incremental Availability Date, upon
written notice to and consent of the Administrative Agent, and in coordination
with the Administrative Agent as to all matters set forth in this Section 2.13,
but without requiring the consent of any of the Lenders, to request that one or
more Lenders (and/or one or more other Eligible Transferees which will become
Lenders) provide Incremental Commitments pursuant to (x) one or more new
Tranches of Incremental Commitments or (y) an increase in the amount of
Incremental Commitments under one or more existing Tranches on the same terms as
such existing Tranches (the “Incremental Commitment Increase” and, together with
any additional Tranche of Incremental Commitments, the “Incremental Facility”),
provided that:
 
(i) no Lender shall be obligated to provide an Incremental Commitment as a
result of any such request by the Borrower;
 
(ii) any Lender (including any Eligible Transferees which will become a Lender)
may so provide an Incremental Commitment without the consent of any other
Lender;
 
(iii) the provision of Incremental Commitments pursuant to this Section 2.13 on
a given date pursuant to a particular Incremental Commitment Agreement shall be
in a minimum aggregate amount (for all Lenders and other Eligible Transferees
who will become Lenders pursuant thereto) of not less than $20,000,000 (or such
lesser amount as agreed to by the Borrower) and shall be in integral multiples
of $5,000,000;
 
(iv) such Incremental Commitments shall not exceed an aggregate principal amount
of $350,000,000;
 
(v) the Administrative Agent shall promptly notify each Lender as to the
effectiveness of each Incremental Commitment Agreement;
 
(vi) the Borrower shall not obtain Incremental Commitment Increases or new
Tranches of Incremental Commitments pursuant to this Section 2.13 more than
three times and each notice thereof from the Borrower shall set forth the
requested amount and proposed terms of the relevant Incremental Commitment
Increase or new Tranche of Incremental Commitments;
 
(vii) the upfront fees payable to each Incremental Lender in respect of each
Incremental Commitment shall be separately agreed to by the Borrower and each
such Incremental Lender; and
 
(viii) the Incremental Loans incurred under any Tranche and the Letters of
Credit issued pursuant to an Incremental Commitment under such Tranche shall
constitute Loans and Letters of Credit for all purposes of this Agreement and
the other Credit Documents and as a consequence all such Incremental Loans and
Letters of Credit (and all interest, fees and other amounts payable thereon)
shall be Obligations under this Agreement and the other applicable Credit
Documents and shall be secured by the Security Documents, and receive the
benefit of the Guaranties, on a pari passu basis with all other Obligations
secured by the Security Documents and receiving the benefit of the Guaranties.
 
 
 
38

--------------------------------------------------------------------------------

 
 
(b) On or prior to the Incremental Availability Date, at the time of any
provision of Incremental Commitments under any Tranche pursuant to this Section
2.13, the following conditions shall have been satisfied:
 
(i) the Borrower and each such Lender or other Eligible Transferee (each an
“Incremental Lender”) which agrees to provide an Incremental Commitment shall
execute and deliver to the Administrative Agent an Incremental Commitment
Agreement substantially in the form of Exhibit Q (appropriately completed) (each
an “Incremental Commitment Agreement”), with the effectiveness of such
Incremental Lender’s Incremental Commitment to occur on the date set forth in
such Incremental Commitment Agreement, provided that the Administrative Agent
shall have consented (such consent not to be unreasonably withheld) to such
Eligible Transferee providing such Incremental Commitment if such consent would
be required under Section 14.04 for an assignment of Loans or Commitments, as
applicable, to such Eligible Transferee;
 
(ii) the Borrower and each Credit Party shall have delivered such amendments,
modifications and/or supplements to the Credit Documents as are necessary or in
the reasonable opinion of the Administrative Agent, desirable to insure that the
additional Obligations to be incurred pursuant to the Incremental Commitments
are secured by, and entitled to the benefits of, the Security Documents and the
Guaranties;
 
(iii) the Administrative Agent shall have received evidence satisfactory to it
that the additional Obligations to be incurred on such date pursuant to the
Incremental Commitments are permitted by the terms of the outstanding
Indebtedness of the Borrower and its Subsidiaries;
 
(iv) if reasonably requested by the Administrative Agent, the Borrower shall
deliver to the Administrative Agent an opinion or opinions, in form and
substance reasonably satisfactory to the Administrative Agent, from counsel to
the Borrower reasonably satisfactory to the Administrative Agent covering such
matters as the Administrative Agent may reasonably request;
 
(v) the Borrower and the other Credit Parties shall deliver to the
Administrative Agent such other officers’ certificates, board of director
resolutions and evidence of existence and good standing, where applicable, as
the Administrative Agent shall reasonably request;
 
(vi) the Parent shall be in compliance with the covenants set forth in Sections
10.07 through and including 10.10, in each case determined on a pro forma basis
as of the most recently ended Test Period (or, if no Test Period cited in
Sections 10.07 through and including 10.10 has concluded, the covenants in
Sections 10.07 through and including 10.10 for the first Test Period cited in
such Sections shall be satisfied as of the last four quarters then ended), in
each case, as if such Incremental Commitments had been outstanding and fully
utilized on the last day of such fiscal quarter of the Parent for testing
compliance therewith, certified as such by the Parent in writing, and the
Administrative Agent shall have received evidence of such compliance;
 
 
 
39

--------------------------------------------------------------------------------

 
 
(vii) the Administrative Agent shall have received a certificate, dated the
Incremental Availability Date, and signed on behalf of the Borrower by the chief
executive officer, the president or any vice president of the Borrower
certifying on behalf of the Borrower that all of the conditions set forth in
Sections 6.09, 6.10 and 7.01 have been satisfied on such date;
 
(viii) no Default or Event of Default shall exist at the time of a request for
Incremental Commitments under any Tranche, upon the effectiveness of any
Incremental Commitment Agreement or at the time that an Incremental Loan is made
or a Letter of Credit is issued pursuant to such Tranche (and after giving
effect thereto); and
 
(ix) all of the representations and warranties of each Credit Party set forth in
Section 8 and in each other Credit Document shall be true and correct in all
material respects at the time of a request for Incremental Commitments under any
Tranche, upon the effectiveness of any Incremental Commitment Agreement and at
the time that an Incremental Loan is made or a Letter of Credit is issued
pursuant to such Tranche (and after giving effect thereto) (in each case, except
to the extent such representations and warranties expressly relate to an earlier
date, in which case they shall be true and correct in all material respects as
of such earlier date).
 
(c) Other than as set forth in this Agreement, Incremental Loans made pursuant
to any Tranche of Incremental Commitments shall have the same terms as the
Initial Loans; provided that the “Applicable Margin” with respect to a Tranche
of Incremental Commitments and Letters of Credit issued under such Tranche shall
be a percentage per annum agreed to by the Borrower and the Lender providing
such Incremental Commitments as set forth in the relevant Incremental Commitment
Agreement.
 
(d) On the effective date of any Incremental Commitment Increase pursuant to
this Section 2.13, the Borrower shall, in coordination with the Administrative
Agent, repay outstanding Incremental Loans of the existing Lenders under each
Tranche of Incremental Commitments and incur additional Loans under each such
Tranche from certain other new Lenders, in each case to the extent necessary so
that all of the Lenders under such Tranche participate in each outstanding
Borrowing of Incremental Loans and issuance of Letters of Credit under such
Tranche pro rata on the basis of their respective Incremental Commitments under
such Tranche (after giving effect to any increase in the Total Commitment
pursuant to this Section 2.13). The Borrower shall be obligated to pay to the
respective Lenders the costs of the type referred to in Section 2.10 in
connection with any such repayment and/or Borrowing.  The Administrative Agent
and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and
pro rata payment requirements contained elsewhere in this Agreement shall not
apply to the transactions effected pursuant to the immediately preceding
sentence to the extent such requirements are inconsistent with such sentence.
 
 
SECTION 3. Letters of Credit
 
 
 
40

--------------------------------------------------------------------------------

 
 
 
.
 
3.01 Letters of Credit. (a)  Subject to and upon the terms and conditions set
forth herein, the Borrower and/or any of its Subsidiaries may request that an
Issuing Lender issue, at any time and from time to time on and after the Initial
Borrowing Date and prior to the 30th day prior to the Maturity Date, for the
account of the Borrower and/or any of its Subsidiaries, a bank guarantee or an
irrevocable standby letter of credit under a particular Tranche, in a form
customarily used by such Issuing Lender or in such other form as is reasonably
acceptable to such Issuing Lender to support obligations (other than obligations
related to (x) any indebtedness that is subordinated to the Obligations and (y)
equity interests) of the Borrower and/or any of its Subsidiaries which are
reasonably satisfactory to the Issuing Lender (each such bank guarantee or
letter of credit, a “Letter of Credit” and, collectively, the “Letters of
Credit”).  All Letters of Credit shall be denominated in Dollars and shall be
issued on a sight basis only.
 
(b) Subject to and upon the terms and conditions set forth herein, each Issuing
Lender agrees that it will, at any time and from time to time on and after the
Initial Borrowing Date and prior to the 30th day prior to the Maturity Date,
following its receipt of the respective Letter of Credit Request, issue for the
account of the Borrower and/or any of its Subsidiaries, one or more Letters of
Credit as are permitted to remain outstanding hereunder without giving rise to a
Default or an Event of Default.  Notwithstanding the foregoing, no Issuing
Lender shall be under any obligation to issue any Letter of Credit of the types
described above if at the time of such issuance:
 
(i) any order, judgment or decree of any governmental authority or arbitrator
shall purport by its terms to enjoin or restrain such Issuing Lender from
issuing such Letter of Credit or any requirement of law applicable to such
Issuing Lender or any request or directive (whether or not having the force of
law) from any governmental authority with jurisdiction over such Issuing Lender
shall prohibit, or request that such Issuing Lender refrain from, the issuance
of letters of credit generally or such Letter of Credit in particular or shall
impose upon such Issuing Lender with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which such Issuing Lender is
not otherwise compensated hereunder) not in effect with respect to such Issuing
Lender on the date hereof, or any unreimbursed loss, cost or expense which was
not applicable or in effect with respect to such Issuing Lender as of the date
hereof and which such Issuing Lender reasonably and in good faith deems material
to it;
 
(ii) such Issuing Lender shall have received from the Borrower, any other Credit
Party or the Required Lenders prior to the issuance of such Letter of Credit
notice of the type described in the second sentence of Section 3.03(b); or
 
(iii) any Lender is a Defaulting Lender, unless such Issuing Lender has entered
into arrangements with the Borrower or such Defaulting Lender satisfactory to
such Issuing Lender and the Borrower to eliminate such Issuing Lender’s risk
with respect to such Defaulting Lender, including by requiring the Borrower to
cash collateralize such Defaulting Lender’s Percentage of Letters of Credit
Outstanding under the relevant Tranche (any such arrangements, the “Letter of
Credit Back-Stop Arrangements”).
 
 
 
41

--------------------------------------------------------------------------------

 
 

3.02 Maximum Letters of Credit Outstanding; Maturities.  Notwithstanding
anything to the contrary contained in this Agreement, (i) no Letter of Credit
shall be issued the Stated Amount of which, when added to the Letters of Credit
Outstanding under any Tranche (exclusive of Unpaid Drawings under such Tranche
which are repaid on the date of, and prior to the issuance of, the respective
Letter of Credit) at such time would exceed, when added to the aggregate
principal amount of all Loans then outstanding under such Tranche, an amount
equal to the Total Initial Commitment or the Total Incremental Commitment under
the relevant Tranche of Incremental Commitments at such time, (ii) no Letter of
Credit shall be issued the Stated Amount of which, when added to the Letters of
Credit Outstanding under all Tranches (exclusive of Unpaid Drawings under all
Tranches which are repaid on the date of, and prior to the issuance of, the
respective Letter of Credit) at such time would exceed either (x) $20,000,000 or
(y) when added to the aggregate principal amount of all Loans then outstanding
under any Tranche, an amount equal to the aggregate of the Total Commitment at
such time, and (iii) each Letter of Credit shall by its terms terminate on or
before the earlier of (A) the date which occurs 12 months after the date of the
issuance thereof (although any such standby Letter of Credit shall be extendible
for successive periods of up to 12 months, but, in each case, not beyond the
tenth Business Day prior to the Maturity Date, on terms acceptable to the
respective Issuing Lender) and (B) 10 Business Days prior to the Maturity Date.
 
3.03 Letter of Credit Requests; Minimum Stated Amount
 
.  (a)  Whenever the Borrower desires that a Letter of Credit be issued for its
account, the Borrower shall give the Administrative Agent and the respective
Issuing Lender at least three Business Days’ (or such shorter period as is
acceptable to such Issuing Lender) written notice thereof (including by way of
facsimile).  Each notice shall be in the form of Exhibit C, appropriately
completed (each a “Letter of Credit Request”).
 
(b) The making of each Letter of Credit Request shall be deemed to be a
representation and warranty by the Borrower to the Lenders that such Letter of
Credit may be issued in accordance with, and will not violate the requirements
of, Section 3.02.  Unless the respective Issuing Lender has received notice from
the Borrower, any other Credit Party or the Required Lenders before it issues a
Letter of Credit that one or more of the conditions specified in Section 6 or 7
are not then satisfied, or that the issuance of such Letter of Credit would
violate Section 3.02, then such Issuing Lender shall, subject to the terms and
conditions of this Agreement, issue the requested Letter of Credit for the
account of the Borrower in accordance with such Issuing Lender’s usual and
customary practices.  Upon the issuance of or modification or amendment to any
Letter of Credit, each Issuing Lender shall promptly notify the Borrower and the
Administrative Agent, in writing of such issuance, modification or amendment and
such notice shall be accompanied by a copy of such Letter of Credit or the
respective modification or amendment thereto, as the case may be.  Promptly
after receipt of such notice the Administrative Agent shall notify the
Participants, in writing, of such issuance, modification or amendment.
 
(c) The initial Stated Amount of each Letter of Credit shall not be less than
$20,000 or such lesser amount as is acceptable to the respective Issuing Lender.
 
3.04 Letter of Credit Participations.  (a)  Immediately upon the issuance by an
Issuing Lender of a Letter of Credit under any Tranche, such Issuing Lender
shall be deemed to have sold and transferred to each Lender under such Tranche,
and each such Lender under such Tranche (in its capacity under this Section
3.04, a “Participant”) shall be deemed irrevocably and unconditionally to have
purchased and received from such Issuing Lender, without recourse or warranty,
an undivided interest and participation, to the extent of such Participant’s
Percentage, in such Letter of Credit, each drawing or payment made thereunder
and the obligations of the Borrower under this Agreement with respect thereto,
and any security therefor or guaranty pertaining thereto.  Upon any change in
the Commitments or Percentages of the Lenders under the relevant Tranche
pursuant to Section 2.12 or 14.04(b), it is hereby agreed that, with respect to
all outstanding Letters of Credit and Unpaid Drawings relating thereto, there
shall be an automatic adjustment to the participations pursuant to this Section
3.04 to reflect the new Percentages of the assignor and assignee Lender, as the
case may be.
 
 
 
42

--------------------------------------------------------------------------------

 
 
(b) In determining whether to pay under a Letter of Credit, no Issuing Lender
shall have any obligation relative to the other Lenders other than to confirm
that any documents required to be delivered under such Letter of Credit appear
to have been delivered and that they appear to substantially comply on their
face with the requirements of such Letter of Credit.  Any action taken or
omitted to be taken by an Issuing Lender under or in connection with any Letter
of Credit issued by it shall not create for such Issuing Lender any resulting
liability to the Borrower, any other Credit Party, any Lender or any other
Person unless such action is taken or omitted to be taken with gross negligence
or willful misconduct on the part of such Issuing Lender (as determined by a
court of competent jurisdiction in a final and non-appealable decision).
 
(c) In the event that any Issuing Lender makes any payment under any Letter of
Credit issued by it and the Borrower shall not have reimbursed such amount in
full to such Issuing Lender pursuant to Section 3.05(a), such Issuing Lender
shall promptly notify the Administrative Agent, which shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay to such Issuing Lender the amount of such Participant’s
Percentage of such unreimbursed payment in Dollars and in same day funds.  If
the Administrative Agent so notifies, prior to 11:00 a.m. (New York time) on any
Business Day, any Participant required to fund a payment under a Letter of
Credit, such Participant shall make available to the respective Issuing Lender
in Dollars such Participant’s Percentage of the amount of such payment on such
Business Day in same day funds.  If and to the extent such Participant shall not
have so made its Percentage of the amount of such payment available to the
respective Issuing Lender, such Participant agrees to pay to such Issuing
Lender, forthwith on demand such amount, together with interest thereon, for
each day from such date until the date such amount is paid to such Issuing
Lender at the overnight Federal Funds Rate for the first three days and at the
Base Rate plus 2.00% for each day thereafter.  The failure of any Participant to
make available to an Issuing Lender its Percentage of any payment under any
Letter of Credit issued by such Issuing Lender shall not relieve any other
Participant of its obligation hereunder to make available to such Issuing Lender
its Percentage of any payment under any Letter of Credit on the date required,
as specified above, but no Participant shall be responsible for the failure of
any other Participant to make available to such Issuing Lender such other
Participant’s Percentage of any such payment.
 
(d) Whenever an Issuing Lender receives a payment of a reimbursement obligation
as to which it has received any payments from the Participants pursuant to
clause (c) above, such Issuing Lender shall pay to each such Participant which
has paid its Percentage thereof, in Dollars and in same day funds, an amount
equal to such Participant’s share (based upon the proportionate aggregate amount
originally funded by such Participant to the aggregate amount funded by all
Participants) of the principal amount of such reimbursement obligation and
interest thereon accruing after the purchase of the respective participations.
 
 
 
43

--------------------------------------------------------------------------------

 
 
(e) Upon the request of any Participant, each Issuing Lender shall furnish to
such Participant copies of any standby Letter of Credit issued by it and such
other documentation as may reasonably be requested by such Participant.
 
(f) The obligations of the Participants to make payments to each Issuing Lender
with respect to Letters of Credit shall be irrevocable and not subject to any
qualification or exception whatsoever and shall be made in accordance with the
terms and conditions of this Agreement under all circumstances, including,
without limitation, any of the following circumstances:
 
(i) any lack of validity or enforceability of this Agreement or any of the other
Credit Documents;
 
(ii) the existence of any claim, setoff, defense or other right which the Parent
or any of its Subsidiaries may have at any time against a beneficiary named in a
Letter of Credit, any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Administrative Agent, any Participant,
or any other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated transactions
(including any underlying transaction between the Parent or any Subsidiary of
the Parent and the beneficiary named in any such Letter of Credit);
 
(iii) any draft, certificate or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;
 
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Credit Documents; or
 
(v) the occurrence of any Default or Event of Default.
 
3.05 Agreement to Repay Letter of Credit Drawings.  (a)  The Borrower agrees to
reimburse each Issuing Lender, by making payment to the Administrative Agent in
immediately available funds at the Payment Office, for any payment or
disbursement made by such Issuing Lender under any Letter of Credit issued by it
under any Tranche (each such amount, so paid until reimbursed, an “Unpaid
Drawing”), not later than one Business Day following receipt by the Borrower of
notice of such payment or disbursement (provided that no such notice shall be
required to be given if a Default or an Event of Default under Section 11.05
shall have occurred and be continuing, in which case the Unpaid Drawing shall be
due and payable immediately without presentment, demand, protest or notice of
any kind (all of which are hereby waived by the Borrower)), with interest on the
amount so paid or disbursed by such Issuing Lender, to the extent not reimbursed
prior to 12:00 Noon (New York time) on the date of such payment or disbursement,
from and including the date paid or disbursed to but excluding the date such
Issuing Lender was reimbursed by the Borrower therefor at a rate per annum equal
to the Base Rate, as in effect from time to time, plus the Applicable Margin as
in effect from time to time minus 1.00%; provided, however, to the extent such
amounts are not reimbursed prior to 12:00 Noon (New York time) on the third
Business Day following the receipt by the Borrower of notice of such payment or
disbursement or following the occurrence of a Default or an Event of Default
under Section 11.05, interest shall thereafter accrue on the amounts so paid or
disbursed by such Issuing Lender (and until reimbursed by the Borrower) at a
rate per annum equal to the Base Rate in effect from time to time plus the
Applicable Margin as in effect from time to time plus 1%, with such interest to
be payable on demand.  Each Issuing Lender shall give the Borrower prompt
written notice of each Drawing under any Letter of Credit issued by it, provided
that the failure to give any such notice shall in no way affect, impair or
diminish the Borrower’s obligations hereunder.
 
 
 
44

--------------------------------------------------------------------------------

 
 
(b) The obligations of the Borrower under this Section 3.05 to reimburse each
Issuing Lender with respect to drafts, demands and other presentations for
payment under Letters of Credit issued by it (each a “Drawing”) (including, in
each case, interest thereon) shall be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against any Lender (including in
its capacity as an Issuing Lender or as a Participant), including, without
limitation, any defense based upon the failure of any drawing under a Letter of
Credit to conform to the terms of the Letter of Credit or any nonapplication or
misapplication by the beneficiary of the proceeds of such Drawing; provided,
however, that the Borrower shall not be obligated to reimburse any Issuing
Lender for any wrongful payment made by such Issuing Lender under a Letter of
Credit issued by it as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of such Issuing Lender (as determined
by a court of competent jurisdiction in a final and non-appealable decision).
 
3.06 Increased Costs.  If at any time after the Effective Date, the introduction
or effectiveness of or any change in any applicable law, rule, regulation,
order, guideline or request or in the interpretation or administration thereof
by the NAIC or any governmental authority charged with the interpretation or
administration thereof, or compliance by any Issuing Lender or any Participant
with any request or directive by the NAIC or by any such governmental authority
(whether or not having the force of law), shall either (i) impose, modify or
make applicable any reserve, deposit, capital adequacy or similar requirement
against letters of credit issued by any Issuing Lender or participated in by any
Participant, or (ii) impose on any Issuing Lender or any Participant any other
conditions relating, directly or indirectly, to this Agreement or any Letter of
Credit; and the result of any of the foregoing is to increase the cost to any
Issuing Lender or any Participant of issuing, maintaining or participating in
any Letter of Credit, or reduce the amount of any sum received or receivable by
any Issuing Lender or any Participant hereunder or reduce the rate of return on
its capital with respect to Letters of Credit (except for changes in the rate of
tax on, or determined by reference to, the net income or net profits of such
Issuing Lender or such Participant pursuant to the laws of the jurisdiction in
which it is organized or in which its principal office or applicable lending
office is located or any subdivision thereof or therein), then, upon the
delivery of the certificate referred to below to the Borrower by any Issuing
Lender or any Participant (a copy of which certificate shall be sent by such
Issuing Lender or such Participant to the Administrative Agent), the Borrower
agrees to pay to such Issuing Lender or such Participant such additional amount
or amounts as will compensate such Issuing Lender or such Participant for such
increased cost or reduction in the amount receivable or reduction on the rate of
return on its capital.  Any Issuing Lender or any Participant, upon determining
that any additional amounts will be payable pursuant to this Section 3.06, will
give prompt written notice thereof to the Borrower, which notice shall include a
certificate submitted to the Borrower by such Issuing Lender or such Participant
(a copy of which certificate shall be sent by the Issuing Lender or such
Participant to the Administrative Agent), setting forth in reasonable detail the
basis for the calculation of such additional amount or amounts necessary to
compensate such Issuing Lender or such Participant.  The certificate required to
be delivered pursuant to this Section 3.06 shall, absent manifest error, be
final and conclusive and binding on the Borrower.
 
 
 
 
45

--------------------------------------------------------------------------------

 
 
SECTION 4. Commitment Commission; Fees; Reductions of Commitment
 
.
 
4.01 Fees.  (a)  The Borrower agrees to pay to the Administrative Agent for
distribution to (x) each Non-Defaulting Lender with an Initial Commitment, a
commitment commission for the period from and including the Effective Date to
and including the Maturity Date (or such earlier date on which the Total Initial
Commitment has been terminated), computed at a rate per annum equal to 40% of
the Applicable Margin with respect to the Initial Facility multiplied by the
unutilized Initial Commitment of such Non-Defaulting Lender as in effect from
time to time and (y) each Non-Defaulting Lender with an Incremental Commitment
under a Tranche, a commitment commission for the period from and including the
Incremental Availability Date for such Tranche to and including the Maturity
Date (or such earlier date on which the Total Incremental Commitment under such
Tranche of Incremental Commitments has been terminated), computed at a rate per
annum equal to 40% of the Applicable Margin for such Tranche multiplied by the
unutilized Incremental Commitment of such Non-Defaulting Lender under such
Tranche as in effect from time to time (the commitment commissions payable
pursuant to clauses (x) and (y), the “Commitment Commission”).  Accrued
Commitment Commission shall be due and payable quarterly in arrears on each
Quarterly Payment Date and on the Maturity Date (or such earlier date upon which
the Total Commitment is terminated).
 
(b) The Borrower agrees to pay to the Administrative Agent for distribution to
each Lender (based on each such Lender’s respective Percentage), a fee in
respect of each Letter of Credit (the “Letter of Credit Fee”) for the period
from and including the date of issuance of such Letter of Credit to and
including the date of termination or expiration of such Letter of Credit,
computed at a rate per annum equal to the Applicable Margin for the relevant
Tranche then in effect from time to time on the daily Stated Amount of each such
Letter of Credit.  Accrued Letter of Credit Fees shall be due and payable
quarterly in arrears on each Quarterly Payment Date and on the Maturity Date (or
such earlier date upon which the Total Commitment is terminated and upon which
no Letters of Credit remain outstanding).
 
(c) The Borrower agrees to pay directly to each Issuing Lender, for its own
account, a facing fee in respect of each Letter of Credit issued by it (the
“Facing Fee”) for the period from and including the date of issuance of such
Letter of Credit to and including the date of termination or expiration of such
Letter of Credit, computed at a rate per annum equal to 1/8 of 1% on the daily
Stated Amount of such Letter of Credit, provided that in any event the minimum
amount of Facing Fees payable in any twelve-month period for each Letter of
Credit shall be not less than $500; it being agreed that, on the day of issuance
of any Letter of Credit and on each anniversary thereof prior to the termination
or expiration of such Letter of Credit, if $500 will exceed the amount of Facing
Fees that will accrue with respect to such Letter of Credit for the immediately
succeeding twelve-month period, the full $500 shall be payable on the date of
issuance of such Letter of Credit and on each such anniversary thereof.  Except
as otherwise provided in the proviso to the immediately preceding sentence,
accrued Facing Fees shall be due and payable quarterly in arrears on each
Quarterly Payment Date and upon the first day on or after the termination of the
Total Commitment upon which no Letters of Credit remain outstanding.
 
 
 
46

--------------------------------------------------------------------------------

 
 
(d) The Borrower agrees to pay to each Issuing Lender, for its own account, upon
each payment under, issuance of, or amendment to, any Letter of Credit issued by
it, such amount as shall at the time of such event be the customary
administrative charge and the reasonable expenses which such Issuing Lender is
generally imposing in connection with such occurrence with respect to letters of
credit.
 
(e) The Borrower agrees to pay to the Administrative Agent such fees as may be
agreed to in writing from time to time by the Parent and/or the Borrower and the
Administrative Agent.
 
4.02 Voluntary Termination of Total Unutilized Commitments.  (a)  Upon at least
three Business Days’ prior written notice from an Authorized Representative of
the Borrower to the Administrative Agent at the Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), the
Borrower shall have the right, at any time or from time to time, without premium
or penalty, to terminate the Total Unutilized Commitment on a pro rata basis in
whole, or reduce it in part, pursuant to this Section 4.02(a), in an amount
equal to an integral multiple of $1,000,000, provided that each such reduction
shall apply proportionately to permanently reduce the Commitment of each Lender
under each Tranche and shall be applied to reduce the Scheduled Commitment
Reductions as of the date of such reduction in direct order of maturity.
 
(b) In the event of a refusal by a Lender to consent to certain proposed
changes, waivers, discharges or terminations with respect to this Agreement
which have been approved by the Required Lenders as (and to the extent) provided
in Section 14.12(b), the Borrower may, subject to its compliance with the
requirements of Section 14.12(b) and upon five Business Days’ prior written
notice to the Administrative Agent at the Notice Office (which notice the
Administrative Agent shall promptly transmit to each of the Lenders), terminate
all of the Commitments of such Lender, so long as all Loans, together with
accrued and unpaid interest, Fees and all other amounts, owing to such Lender
(including all amounts, if any, owing pursuant to Section 2.10) are repaid
concurrently with the effectiveness of such termination pursuant to Section
5.01(b) (at which time Schedule I shall be deemed modified to reflect such
changed amounts) and such Lender’s Percentage of all outstanding Letters of
Credit is cash collateralized in a manner satisfactory to the Administrative
Agent and the respective Issuing Lenders, and at such time, such Lender shall no
longer constitute a “Lender” for purposes of this Agreement, except with respect
to indemnification provisions under this Agreement (including, without
limitation, Sections 2.09, 2.10, 3.06, 5.04, 12.06 and 14.01), which shall
survive as to such repaid Lender.
 
 
 
47

--------------------------------------------------------------------------------

 
 
4.03 Mandatory Reduction of Commitments.  (a)  In addition to any other
mandatory commitment reductions pursuant to this Section 4.03, the Total
Commitment (and the Commitment of each Lender under each Tranche) shall
terminate in its entirety on the Maturity Date.
 
(b) In addition to any other mandatory commitment reductions pursuant to this
Section 4.03, the Total Initial Commitment shall be reduced by (x) $80,000,000
on December 31, 2014 and (y) $80,000,000 on December 31, 2015, which Scheduled
Commitment Reductions (i) shall be applied proportionately to reduce or
terminate, as the case may be, the Initial Commitment of each Lender under such
Tranche and (ii) shall be reduced in accordance with Section 4.03(g).
 
(c) In addition to any other mandatory commitment reductions pursuant to this
Section 4.03, the Total Incremental Commitment under each Tranche of Incremental
Commitments (if any) shall be reduced on a pro rata basis by an aggregate amount
of (x) $20,000,000 for all such Tranches of the Incremental Facility on December
31, 2014 and (y) $20,000,000 for all such Tranches of the Incremental Facility
on December 31, 2015, which Scheduled Commitment Reductions (i) shall be applied
proportionately to reduce or terminate, as the case may be, the Incremental
Commitment of each Lender under each such Tranche and (ii) shall be reduced in
accordance with Section 4.03(g).
 
(d) In addition to any other mandatory commitment reductions pursuant to this
Section 4.03, on the date of any Collateral Disposition, the Total Commitment
shall be permanently reduced by a percentage thereof, expressed as a fraction,
equal to (x) the appraised value (as determined in accordance with the most
recent appraisal report delivered to the Administrative Agent (or obtained by
the Administrative Agent) pursuant to Section 9.01(c)) of the Collateral Rig or
Collateral Rigs which is/are the subject of such Collateral Disposition divided
by (y) the Aggregate Collateral Rig Value (as determined by the sum of the
appraisals set forth in the most recent appraisal report related to each
respective Collateral Rig and delivered to the Administrative Agent (or obtained
by the Administrative Agent) pursuant to Section 9.01(c) before giving effect to
such Collateral Disposition).
 
(e) In addition to any other mandatory commitment reductions pursuant to this
Section 4.03, upon the occurrence of a violation under Section 10.09, the Total
Commitment may be permanently reduced in accordance with the requirements of
Sections 4.03(g) and 10.09 in an amount required so that the Parent and its
Subsidiaries shall be in compliance with the requirements set forth in Section
10.09, provided that it is understood and agreed that the requirement to repay
Loans as a result of a permanent reduction of the Total Commitment under this
Section 4.03(e) shall not be deemed to be a waiver of any other right or remedy
that any Lender may have as a result of an Event of Default under Section 10.09.
 
(f) Each mandatory commitment reduction or termination pursuant to Sections
4.03(d) and (e) shall be applied to proportionately reduce or terminate, as the
case may be, the Commitment under each Tranche and each such reduction to, or
termination of, the Total Commitment shall be applied to proportionately reduce
or terminate, as the case may be, the Commitment of each Lender under each such
Tranche.
 
 
 
48

--------------------------------------------------------------------------------

 
 
(g) Each reduction to, or termination of, the Total Commitment pursuant to
Sections 4.03(b), (c), (d) and (e) shall be applied to proportionately reduce
future Scheduled Commitment Reductions as provided in the proviso of Section
4.02(a).
 
 
SECTION 5. Prepayments; Payments; Taxes
 
.
 
5.01 Voluntary Prepayments.  (a)  The Borrower shall have the right to prepay
the Loans, without premium or penalty, in whole or in part at any time and from
time to time on the following terms and conditions:
 
(i) an Authorized Representative of the Borrower shall give the Administrative
Agent prior to 12:00 Noon (New York time) at the Notice Office at least three
Business Days prior written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay such Loans, which notice (in each case) shall
specify the amount of such prepayment and, if no Event of Default has occurred
or is continuing, the specific Tranche or Tranches and Borrowing or Borrowings
pursuant to which such Loans were made, and which notice the Administrative
Agent shall promptly transmit to each of the Lenders;
 
(ii) each prepayment shall be in an aggregate principal amount of at least
$1,000,000 (or such lesser amount as is acceptable to the Administrative Agent),
provided that no partial prepayment of Loans made pursuant to any Borrowing
shall reduce the outstanding Loans made pursuant to such Borrowing to an amount
less than $1,000,000;
 
(iii) at the time of any prepayment of Loans pursuant to this Section 5.01(a) on
any date other than the last day of the Interest Period applicable thereto, the
Borrower shall pay the amounts required to be paid pursuant to Section 2.10; and
 
(iv) (a) if no Event of Default has occurred or is continuing, each prepayment
pursuant to this Section 5.01(a) in respect of any Loans made pursuant to a
Borrowing under a particular Tranche shall be applied pro rata among such Loans
and (b) if an Event of Default has occurred and is continuing, each prepayment
of Loans pursuant to this Section 5.01(a) shall be applied to the outstanding
principal amount of Loans under each Tranche on a pro rata basis; provided that,
in each case at the Borrower’s election, such prepayment shall not, so long as
no Default or Event of Default then exists, be applied to any Loan of a
Defaulting Lender under any Tranche until all other Loans of Non-Defaulting
Lenders have been repaid in full.
 
(b) In the event of a refusal by a Lender to consent to certain proposed
changes, waivers, discharges or terminations with respect to this Agreement
which have been approved by the Required Lenders as (and to the extent) provided
in Section 14.12(b), the Borrower may, upon five Business Days’ prior written
notice by an Authorized Representative of the Borrower to the Administrative
Agent at the Notice Office (which notice the Administrative Agent shall promptly
transmit to each of the Lenders) repay all Loans (including all amounts, if any,
owing pursuant to Section 2.10), together with accrued and unpaid interest, Fees
and all other amounts owing to such Lender in accordance with, and subject to
the requirements of, said Section 14.12(b), so long as (A) all Commitments of
such Lender are terminated concurrently with such prepayment pursuant to Section
4.02(b) (at which time Schedule I shall be deemed modified to reflect the
changed Commitments), (B) such Lender’s Percentage of all outstanding Letters of
Credit is cash collateralized in a manner satisfactory to the Administrative
Agent and the respective Issuing Lenders, and (C) the consents, if any, required
under Section 14.12(b) in connection with the prepayment pursuant to this clause
(b) have been obtained.
 
 
 
49

--------------------------------------------------------------------------------

 
 
5.02 Mandatory Repayments.  (a)  On any day on which the sum of (I) the
aggregate outstanding principal amount of Initial Loans (after giving effect to
all other repayments thereof on such date) and (II) the aggregate amount of all
Letters of Credit Outstanding under the Initial Facility exceeds the Total
Initial Commitment at such time, the Borrower shall repay on such date the
principal of Initial Loans in an amount equal to such excess.  If, after giving
effect to the repayment of all outstanding Initial Loans, the aggregate amount
of the Letters of Credit Outstanding under the Initial Facility exceeds the
Total Initial Commitment at such time, the Borrower shall pay to the
Administrative Agent at the Payment Office on such day an amount of cash and/or
Cash Equivalents equal to the amount of such excess (up to a maximum amount
equal to the Letters of Credit Outstanding under the Initial Facility at such
time), such cash and/or Cash Equivalents to be held as security for all
obligations of the Borrower to the Issuing Lenders and the Lenders under such
Tranche in a cash collateral account to be established by the Administrative
Agent.
 
(b) On any day on which the sum of (I) the aggregate outstanding principal
amount of Incremental Loans under any Tranche (after giving effect to all other
repayments thereof on such date) and (II) the aggregate amount of all Letters of
Credit Outstanding under such Tranche exceeds the Total Incremental Commitment
under such Tranche at such time, the Borrower shall repay on such date the
principal of Incremental Loans under such Tranche in an amount equal to such
excess.  If, after giving effect to the repayment of all outstanding Incremental
Loans under the relevant Tranche, the aggregate amount of the Letters of Credit
Outstanding under such Tranche exceeds the Total Incremental Commitment under
such Tranche at such time, the Borrower shall pay to the Administrative Agent at
the Payment Office on such day an amount of cash and/or Cash Equivalents equal
to the amount of such excess (up to a maximum amount equal to the Letters of
Credit Outstanding under such Tranche at such time), such cash and/or Cash
Equivalents to be held as security for all obligations of the Borrower to the
Issuing Lenders and the Lenders under such Tranche in a cash collateral account
to be established by the Administrative Agent.
 
(c) With respect to each repayment of Loans required by this Section 5.02, the
Borrower may designate the specific Borrowing or Borrowings to which such
repayment shall apply, provided that (i) repayments of Loans under any Tranche
pursuant to this Section 5.02 may only be made on the last day of an Interest
Period applicable thereto unless all Loans under such Tranche with Interest
Periods ending on such date of required repayment have been paid in full and
(ii) each repayment of Loans under any Tranche made pursuant to a Borrowing
shall be applied pro rata among such Loans.  In the absence of a designation by
the Borrower as described in the preceding sentence, the Administrative Agent
shall, subject to the above, make such designation in its sole discretion.
 
 
 
 
50

--------------------------------------------------------------------------------

 
 
(d) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, all then outstanding Loans shall be repaid in full on the Maturity
Date.
 
5.03 Method and Place of Payment.  Except as otherwise specifically provided
herein, all payments under this Agreement and under any Note shall be made to
the Administrative Agent for the account of the Lender or Lenders entitled
thereto not later than 12:00 Noon (New York time) on the date when due and shall
be made in Dollars in immediately available funds at the Payment Office.  Any
payments under this Agreement or under any Note which are made later than 12:00
Noon (New York time) on any day shall be deemed to have been made on the next
succeeding Business Day.  Whenever any payment to be made hereunder or under any
Note shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable at the applicable
rate during such extension.
 
5.04 Net Payments; Taxes.  All payments made by any Credit Party hereunder or
under any other Credit Document will be made without setoff, counterclaim or
other defense.  All such payments will be made free and clear of, and without
deduction or withholding for, any present or future taxes, levies, imposts,
duties, fees, assessments or other charges of whatever nature now or hereafter
imposed by any jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding, except as
provided in the second succeeding sentence, any tax imposed on or measured by
the net income or net profits of a Lender pursuant to the laws of the
jurisdiction in which it is organized or the jurisdiction in which the principal
office or applicable lending office of such Lender is located or any subdivision
thereof or therein) and all interest, penalties or similar liabilities with
respect hereto (all such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges being referred to collectively as “Taxes”).  If any
Taxes are so levied or imposed, the Borrower agrees to pay the full amount of
such Taxes, and such additional amounts as may be necessary so that every
payment of all amounts due under this Agreement or under any Note, after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein or in such Note.  If any amounts are payable in
respect of Taxes pursuant to the preceding sentence, the Borrower shall be
obligated to reimburse each Lender, upon the written request of such Lender, for
taxes imposed on or measured by the net income or net profits of such Lender
pursuant to the laws of the jurisdiction in which such Lender is organized or in
which the principal office or applicable lending office of such Lender is
located or under the laws of any political subdivision or taxing authority of
any such jurisdiction in which such Lender is organized or in which the
principal office or applicable lending office of such Lender is located and for
any withholding of taxes as such Lender shall determine are payable by, or
withheld from, such Lender, in respect of such amounts so paid to or on behalf
of such Lender pursuant to the preceding sentence and in respect of any amounts
paid to or on behalf of such Lender pursuant to this sentence.  The Borrower
will furnish to the Administrative Agent within 45 days after the date the
payment of any Taxes is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by the Borrower.  The Borrower agrees to
indemnify and hold harmless each Lender, and reimburse such Lender upon its
written request, for the amount of any Taxes so levied or imposed and paid by
such Lender.
 
5.05 Application of Proceeds.  (a)  All monies collected by the Collateral Agent
upon any sale or other disposition of the Collateral of each Credit Party,
together with all other monies received by the Collateral Agent under and in
accordance with this Agreement and the other Credit Documents (including,
without limitation, as a result of any distribution in respect of the Collateral
in any bankruptcy, insolvency or similar proceeding) (except to the extent
released in accordance with the applicable provisions of this Agreement or any
other Credit Document), shall be applied to the payment of the Secured
Obligations as follows:
 
 
 
51

--------------------------------------------------------------------------------

 
 
(i) first, to the payment of all amounts owing to the Collateral Agent of the
type described in clauses (iii) and (iv) of the definition of “Secured
Obligations”;
 
(ii) second, to the extent proceeds remain after the application pursuant to the
preceding clause (i), an amount equal to the outstanding Obligations shall be
paid to the Lenders as provided in Section 5.05(d) hereof, with each Lender
Creditor receiving an amount equal to the outstanding Obligations owing to such
Lender Creditor or, if the proceeds are insufficient to pay in full all such
Obligations, its Pro Rata Share of the amount remaining to be distributed;
 
(iii) third, to the extent proceeds remain after the application pursuant to the
preceding clauses (i) and (ii), an amount equal to the outstanding Other
Obligations shall be paid to the Other Creditors as provided in Section 5.05(d)
hereof, with each Other Creditor receiving an amount equal to such outstanding
Other Obligations owing to such Other Creditor or, if the proceeds are
insufficient to pay in full all such Other Obligations, its Pro Rata Share of
the amount remaining to be distributed; and
 
(iv) fourth, to the extent proceeds remain after the application pursuant to the
preceding clauses (i) through (iii), inclusive, and following the termination of
this Agreement and the Credit Documents in accordance with their terms, to the
relevant Credit Party or to whomever may be lawfully entitled to receive such
surplus.
 
(b) For purposes of this Agreement, “Pro Rata Share” shall mean, when
calculating a Secured Creditor’s portion of any distribution or amount, that
amount (expressed as a percentage) equal to a fraction the numerator of which is
the then unpaid amount of such Secured Creditor’s Obligations or Other
Obligations, as the case may be, and the denominator of which is the then
outstanding amount of all Obligations or Other Obligations, as the case may be.
 
(c) When payments to Secured Creditors are based upon their respective Pro Rata
Shares, the amounts received by such Secured Creditors hereunder shall be
applied (for purposes of making determinations under this Section 5.05 only) (i)
first, to their Obligations and (ii) second, to their Other Obligations.  If any
payment to any Secured Creditor of its Pro Rata Share of any distribution would
result in overpayment to such Secured Creditor, such excess amount shall instead
be distributed in respect of the unpaid Obligations or Other Obligations, as the
case may be, of the other Secured Creditors, with each Secured Creditor whose
Obligations or Other Obligations, as the case may be, have not been paid in full
to receive an amount equal to such excess amount multiplied by a fraction the
numerator of which is the unpaid Obligations or Other Obligations, as the case
may be, of such Secured Creditor and the denominator of which is the unpaid
Obligations or Other Obligations, as the case may be, of all Secured Creditors
entitled to such distribution.
 
 
 
52

--------------------------------------------------------------------------------

 
 
(d) All payments required to be made hereunder shall be made (x) if to the
Lender Creditors, to the Administrative Agent under this Agreement for the
account of the Lender Creditors, and (y) if to the Other Creditors, to the
trustee, paying agent or other similar representative (each a “Representative”)
for the Other Creditors or, in the absence of such a Representative, directly to
the Other Creditors.
 
(e) For purposes of applying payments received in accordance with this Section
5.05, the Collateral Agent shall be entitled to rely upon (i) the Administrative
Agent under this Agreement and (ii) the Representative for the Other Creditors
or, in the absence of such a Representative, upon the Other Creditors for a
determination (which the Administrative Agent, each Representative for any Other
Creditors and the Secured Creditors agree (or shall agree) to provide upon
request of the Collateral Agent) of the outstanding Obligations and Other
Obligations owed to the Lender Creditors or the Other Creditors, as the case may
be.  Unless it has actual knowledge (including by way of written notice from an
Other Creditor) to the contrary, the Collateral Agent, shall be entitled to
assume that no Interest Rate Protection Agreements or Other Hedging Agreements
are in existence.
 
(f) It is understood and agreed that the Credit Parties shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral pledged and Liens granted by it under and pursuant to
the Security Documents and the aggregate amount of the Secured Obligations of
such Credit Party.
 
 
SECTION 6. Conditions Precedent to Credit Events on the Initial Borrowing
Date.  The obligation of each Lender to make Initial Loans, and the obligation
of each Issuing Lender to issue Letters of Credit under the Initial Facility, on
the Initial Borrowing Date, is subject at the time of the making of such Initial
Loans or the issuance of such Letters of Credit under the Initial Facility to
the satisfaction or waiver of the following conditions:
 
6.01 Effective Date; Notes.  On or prior to the Initial Borrowing Date, (i) the
Effective Date shall have occurred and (ii) there shall have been delivered to
the Administrative Agent, for the account of each of the Lenders that has
requested same, a Note executed by the Borrower, in each case in the amount,
maturity and as otherwise provided herein.
 
6.02 Fees, etc.  On the Initial Borrowing Date, the Borrower shall have paid to
(i) the Administrative Agent and each Lender all costs, fees and expenses
(including, without limitation, legal fees and expenses) and other compensation
contemplated hereby payable to the Administrative Agent or such Lender to the
extent then due and (ii) BankAssure Insurance Services Inc. or such other firm
of independent marine insurance brokers that produces an insurance report
pursuant to in clause (f) of the definition of “Collateral and Guaranty
Requirements” all fees and expenses and other compensation as shall have been
invoiced to the Borrower by BankAssure Insurance Services Inc. or such other
firm of independent marine insurance brokers on or before such date.
 
6.03 Officer’s Certificate.  On the Initial Borrowing Date, the Administrative
Agent shall have received a certificate, dated the Initial Borrowing Date, and
signed on behalf of the Borrower by the chief executive officer, the president
or any vice president of the Borrower certifying on behalf of the Borrower that
all of the conditions set forth in Sections 6.08, 6.09, 6.10 and 7.01 have been
satisfied on such date.
 
 
 
53

--------------------------------------------------------------------------------

 
 
6.04 Collateral and Guaranty Requirements.  On or prior to the Initial Borrowing
Date, the Collateral and Guaranty Requirements with respect to each Collateral
Rig shall have been satisfied, and each Credit Document shall be in full force
and effect, or the Administrative Agent shall have waived such requirements
and/or conditioned such waiver on the satisfaction of such requirements within a
specified period of time.
 
6.05 Consummation of the Refinancing.  (a)  On or prior to the Initial Borrowing
Date (or substantially concurrently therewith), all outstanding loans and other
Indebtedness then due and owing of the Parent, AOPL, and the other Subsidiaries
of the Parent under the Existing 2007 Credit Agreement and the Existing 2008
Credit Agreement and the credit documentation relating thereto shall have been
repaid in full, together with all fees and other amounts owing thereon, and all
commitments thereunder shall have been terminated and any letter of credit
issued pursuant thereto and outstanding shall have been designated as a Letter
of Credit hereunder.
 
(b) On the Initial Borrowing Date, all security interests in respect of, and
Liens securing, the Indebtedness under the Existing 2007 Credit Agreement and
the Existing 2008 Credit Agreement created pursuant to the security
documentation relating thereto shall have been terminated and released (or
releases in respect of such Liens shall have been delivered to the
Administrative Agent), and the Administrative Agent shall have received all such
releases as may have been reasonably requested by the Administrative Agent,
which releases shall be in form and substance reasonably satisfactory to the
Administrative Agent.  Without limiting the foregoing, there shall have been
delivered to the Administrative Agent (i) the Form UCC-3 Termination Statements
required pursuant to the definition of “Collateral and Guaranty Requirements”,
(ii) terminations or releases of all mortgages and (iii) reassignments of
insurances and charter hire, drilling contracts, revenues and earnings, as
applicable, in each case, to secure the obligations under the Existing 2007
Credit Agreement and the Existing 2008 Credit Agreement, all of which shall be
in form and substance reasonably satisfactory to the Administrative Agent.
 
6.06 Outstanding Indebtedness.  After giving effect to the consummation of the
Transaction, neither the Parent nor any of its Subsidiaries shall have any
outstanding Indebtedness except (i) the Obligations and (ii) such other
Indebtedness as is permitted to remain outstanding pursuant to Section 10.04.
 
6.07 No Conflict.  On the Initial Borrowing Date, after giving effect to the
Transaction and incurrence of Loans on the Initial Borrowing Date, there shall
be no conflict with, or default under, any material agreement of the Parent or
any of its Subsidiaries or any of the drilling contracts described in Schedule X
for each of the Collateral Rigs.
 
6.08 Drilling Contracts.  On the Initial Borrowing Date, the Collateral Rigs
shall be contracted pursuant to the drilling contracts described in Schedule XIV
or contracts substantially equivalent thereto.
 
 
 
54

--------------------------------------------------------------------------------

 
 
6.09 Adverse Change; Approvals.  (a)  Since December 31, 2010, nothing shall
have occurred (and neither the Administrative Agent nor any of the Lenders shall
have become aware of any facts or conditions not previously known to it or them)
which the Administrative Agent or the Lenders shall determine has had, or would
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
 
(b) On or prior to the Initial Borrowing Date, all necessary governmental
(domestic and foreign) and third party approvals and/or consents in connection
with the Transaction and the other transactions contemplated hereby shall have
been obtained and remain in effect, and all applicable waiting periods with
respect thereto shall have expired without any action being taken by any
competent authority which, in the judgment of the Administrative Agent,
restrains, prevents or imposes materially adverse conditions upon the
consummation of the Transaction or the other transactions contemplated by the
Credit Documents or otherwise referred to herein or therein.  On the Initial
Borrowing Date, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon the Transaction or the other transactions contemplated by the
Credit Documents or otherwise referred to herein or therein.
 
6.10 Litigation.  On the Initial Borrowing Date, there shall be no actions,
suits, investigations or proceedings pending or threatened by any entity
(private or governmental) (i) with respect to the Transaction, this Agreement or
any other Credit Document or (ii) which the Administrative Agent or the Required
Lenders shall determine has had, or would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
 
6.11 Solvency Certificate.  On or before the Initial Borrowing Date, the
Administrative Agent shall have received a solvency certificate from the chief
financial officer of the Parent, in the form of Exhibit L, which shall be
addressed to the Administrative Agent and each of the Lenders and dated the
Initial Borrowing Date, setting forth the conclusion that, after giving effect
to the Transaction and the incurrence of all the financings contemplated hereby,
the Parent and its Subsidiaries, taken as a whole, and the Borrower and its
Subsidiaries, taken as a whole, are not insolvent and will not be rendered
insolvent by the incurrence of such indebtedness, and will not be left with
unreasonably small capital with which to engage in their respective businesses
and will not have incurred debts beyond their ability to pay such debts as they
mature.
 
6.12 Financial Statements; Projections.  On or prior to the Initial Borrowing
Date, the Administrative Agent and the Lenders shall have received copies of the
(i) audited consolidated financial statements of the Parent and its Subsidiaries
for the fiscal year ending September 30, 2010 and (ii) Projections, referred to
in Sections 8.05(a) and (d), respectively.
 
6.13 Intercompany Subordination Agreement.  On or before the Initial Borrowing
Date, the obligor and obligee in respect of any loan, advance or other extension
of credit (including, without limitation, pursuant to guarantees thereof or
security thereof) which are made to a Credit Party by the Parent or any
Subsidiary of the Parent shall have duly authorized, executed and delivered to
the Administrative Agent the Intercompany Subordination Agreement in the form of
Exhibit P (as modified, supplemented or amended from time to time, the
“Intercompany Subordination Agreement”), and the Intercompany Subordination
Agreement shall be in full force and effect.
 
 
 
55

--------------------------------------------------------------------------------

 
 
SECTION 7. Conditions Precedent to All Credit Events.  The obligation of each
Lender to make Loans (including Initial Loans made on the Initial Borrowing Date
and any Incremental Loans), and the obligation of each Issuing Lender to issue
Letters of Credit (including Letters of Credit issued on the Initial Borrowing
Date and under the Incremental Facility) is subject, at the time of each such
Credit Event (except as hereinafter indicated), to the satisfaction of the
following conditions:
 
7.01 No Default; Representations and Warranties.  At the time of each Credit
Event and also after giving effect thereto (i) there shall exist no Default or
Event of Default and (ii) all representations and warranties contained herein
and in each other Credit Document shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on the date of such Credit Event (it being understood and agreed that
any representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date).
 
7.02 Notice of Borrowing; Letter of Credit Request.  (a)  Prior to the making of
each Loan, the Administrative Agent shall have received the Notice of Borrowing
meeting the requirements of Section 2.03(a).
 
(b) Prior to the issuance of each Letter of Credit, the Administrative Agent and
the respective Issuing Lender shall have received a Letter of Credit Request
meeting the requirements of Section 3.03(a).
 
7.03 Margin Regulations.  At the time of each Credit Event and after giving
effect thereto, all Loans and other financing to be made pursuant to this
Agreement shall be in full compliance with all applicable requirements
(including without limitation the collateral valuation requirements) of law,
including, without limitation, the provisions of Regulations U, T and X of the
Board of Governors of the Federal Reserve System (the “Margin Regulations”) and
the collateral valuation requirements thereunder, and each Lender shall be able
in good faith to complete the relevant forms establishing compliance with the
Margin Regulations.
 
7.04 Collateral Maintenance Test.  At the time of each Credit Event, the
Administrative Agent shall have received evidence from the Parent reasonably
satisfactory to the Administrative Agent demonstrating that after giving effect
to such Credit Event, the Aggregate Collateral Rig Value is at least 150% of the
sum of the aggregate outstanding amount of Loans at such time.
 
The acceptance by each of the Parent and the Borrower of the benefits of each
Credit Event shall constitute a representation and warranty by each of them to
the Administrative Agent and each of the Lenders that all the conditions
specified in Section 6 (with respect to Credit Events occurring on the Initial
Borrowing Date) and in this Section 7 (with respect to Credit Events occurring
on or after the Initial Borrowing Date) and applicable to such Credit Event are
satisfied as of that time.  All of the Notes, certificates, legal opinions and
other documents and papers referred to in Section 6 and in this Section 7,
unless otherwise specified, shall be delivered to the Administrative Agent at
the Notice Office for the account of each of the Lenders and, except for the
Notes, in sufficient counterparts or copies for each of the Lenders and shall be
in form and substance reasonably satisfactory to the Administrative Agent.
 
 
 
56

--------------------------------------------------------------------------------

 
 
 
SECTION 8. Representations, Warranties and Agreements.  In order to induce the
Lenders to enter into this Agreement and to make the Loans and issue and/or
participate in the Letters of Credit as provided herein, each of the Parent and
the Borrower makes the following representations, warranties and agreements, in
each case after giving effect to the Transaction as consummated on the Initial
Borrowing Date, all of which shall survive the execution and delivery of this
Agreement and the Notes and the making of the Loans and the issuance of the
Letters of Credit, with the occurrence of each Credit Event on or after the
Initial Borrowing Date being deemed to constitute a representation and warranty
that the matters specified in this Section 8 are true and correct in all
material respects on and as of the Initial Borrowing Date and on the date of
each such other Credit Event (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date).
 
8.01 Corporate/Limited Liability Company/Limited Partnership Status.  Each of
the Parent and its Subsidiaries (other than any Inactive Subsidiary) (i) is a
duly organized or incorporated and validly existing corporation, limited
liability company, limited partnership, company or other business entity, as the
case may be, in good standing under the laws of the jurisdiction of its
organization or incorporation, (ii) has the corporate or other applicable power
and authority to own its property and assets and to transact the business in
which it is engaged and presently proposes to engage and (iii) is duly qualified
and is authorized to do business and is in good standing in each jurisdiction
where the ownership, leasing or operation of its property or the conduct of its
business requires such qualifications, except for failures to be so qualified
which, either individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
 
8.02 Corporate Power and Authority.  Each Credit Party has the corporate or
other applicable power and authority to execute, deliver and perform the terms
and provisions of each of the Credit Documents to which it is party and has
taken all necessary corporate or other applicable action to authorize the
execution, delivery and performance by it of each of such Credit
Documents.  Each Credit Party has duly executed and delivered each of the Credit
Documents to which it is party, and each of such Credit Documents constitutes
its legal, valid and binding obligation enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws generally affecting creditors’ rights and by
equitable principles (regardless of whether enforcement is sought in equity or
at law).
 
8.03 No Violation.  Neither the execution, delivery or performance by any Credit
Party of the Credit Documents to which it is a party, nor compliance by it with
the terms and provisions thereof, (i) will contravene in any material respect
any applicable provision of any law, statute, rule or regulation or any order,
writ, injunction or decree of any court or governmental instrumentality, (ii)
will conflict with or result in any breach of any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien
(except pursuant to the Security Documents) upon any of the properties or assets
any Credit Party pursuant to the terms of any indenture, mortgage, deed of
trust, credit agreement or loan agreement, or any other agreement, contract or
instrument, in each case to which any Credit Party is a party or by which it or
any of its property or assets is bound or to which it may be subject or (iii)
will violate any provision of the certificate or articles of incorporation or
by-laws (or equivalent organizational documents) of any Credit Party.
 
 
 
57

--------------------------------------------------------------------------------

 
 
8.04 Governmental Approvals.  No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except for those that have otherwise been obtained or made on or prior to the
Initial Borrowing Date), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to be obtained or made by, or
on behalf of, any Credit Party to authorize, or is required to be obtained or
made by, or on behalf of, any Credit Party in connection with, (i) the
execution, delivery and performance of any Credit Document or (ii) the legality,
validity, binding effect or enforceability of any Credit Document.
 
8.05 Financial Statements; Financial Condition; Undisclosed Liabilities;
Projections; etc.  (a)  The consolidated balance sheet of the Parent and its
Subsidiaries for the Parent’s fiscal year ended on September 30, 2010, and the
consolidated balance sheet of the Parent and its Subsidiaries for the Parent’s
fiscal quarter ended on December 31, 2010, and (in each case) the related
consolidated statements of income, cash flows and shareholders’ equity of the
Parent and its Subsidiaries for such fiscal year or fiscal quarter ended on such
dates, as the case may be, copies of which have been furnished to the
Administrative Agent and the Lenders prior to the Initial Borrowing Date,
present fairly in all material respects the consolidated financial position of
the Parent and its Subsidiaries at the dates of such balance sheets and the
consolidated results of the operations of the Parent and its Subsidiaries for
the periods covered thereby.  All of the foregoing historical financial
statements have been prepared in accordance with GAAP (except, in the case of
the aforementioned quarterly financial statements, for normal year-end audit
adjustments and the absence of footnotes).
 
(b) On and as of the Initial Borrowing Date, and after giving effect to the
Transaction and to all Indebtedness (including the Loans) being incurred or
assumed and Liens created by the Credit Parties in connection therewith, (i) the
sum of the assets, at a fair valuation, of each of the Parent and the Borrower,
on an individual basis, of the Parent and its Subsidiaries, taken as a whole,
and of the Borrower and its Subsidiaries, taken as a whole, will exceed their
respective debts, (ii) each of the Parent and the Borrower, on an individual
basis, the Parent and its Subsidiaries, taken as a whole, and the Borrower and
its Subsidiaries, taken as a whole, have not incurred and do not intend to
incur, and do not believe that they will incur, debts beyond their respective
ability to pay such debts as such debts mature, and (iii) each of the Parent and
the Borrower, on an individual basis, the Parent and its Subsidiaries, taken as
a whole, and the Borrower and its Subsidiaries, taken as a whole, will have
sufficient capital with which to conduct their respective businesses.  For
purposes of this Section 8.05(b), “debt” means any liability on a claim, and
“claim” means (x) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.  The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
 
 
 
58

--------------------------------------------------------------------------------

 
 
(c) Except as fully disclosed in the financial statements referred to in Section
8.05(a), there were as of the Initial Borrowing Date no liabilities or
obligations with respect to the Parent or any of its Subsidiaries of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether or
not due) which, either individually or in the aggregate, could reasonably be
expected to be material to the Parent and its Subsidiaries taken as a whole.  As
of the Initial Borrowing Date, the Credit Parties know of no reasonable basis
for the assertion against it or any of its Subsidiaries of any liability or
obligation of any nature whatsoever that is not fully disclosed in the financial
statements or referred to in Section 8.05(a) which, either individually or in
the aggregate, could reasonably be expected to be material to the Parent and its
Subsidiaries taken as a whole.
 
(d) On and as of the Initial Borrowing Date, the Projections which have been
delivered to the Administrative Agent and the Lenders prior to the Initial
Borrowing Date have been prepared in good faith and are based on reasonable
assumptions, and there are no statements or conclusions in any of the
Projections which are based upon or include information known to the Parent or
the Borrower to be misleading in any material respect or which fail to take into
account material information known to the Parent or the Borrower regarding the
matters reported therein; it being recognized by the Lenders, however, that
projections as to future events are not to be viewed as facts and that the
actual results during the period or periods covered by the Projections may
differ from the projected results.
 
(e) Since December 31, 2010, there has been no change in the property, assets,
nature of assets, operations, liabilities, financial condition or prospects of
the Parent or any of its Subsidiaries taken as a whole that has had, or would
reasonably be expected to have a Material Adverse Effect.
 
8.06 Litigation.  There are no actions, suits or proceedings pending or, to the
knowledge of the Parent or the Borrower, threatened (i) with respect to the
Transaction or any Credit Document or (ii) that would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect.
 
8.07 True and Complete Disclosure.  All factual information (taken as a whole)
furnished by or on behalf of the Parent or the Borrower in writing to the
Administrative Agent or any Lender (including, without limitation, all
information contained in the Credit Documents) for purposes of or in connection
with this Agreement, the other Credit Documents or any transaction contemplated
herein or therein is, and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of the Parent or the Borrower in writing to
the Administrative Agent or any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading in any material respect at such
time in light of the circumstances under which such information was provided.
 
 
 
59

--------------------------------------------------------------------------------

 
 
8.08 Use of Proceeds; Margin Regulations.  (a)  All proceeds of all Loans shall
be used and all Letters of Credit shall be issued for, and the proceeds of all
Drawings under all Letters of Credit shall be utilized in connection with (i)
the refinancing of all indebtedness under the Existing 2007 Credit Agreement,
(ii) the refinancing of all indebtedness under the Existing 2008 Credit
Agreement and (iii) the Parent’s and its Subsidiaries’ general corporate and
working capital purposes, including the construction of the ATWOOD CONDOR and
the Newbuilding Rigs.
 
(b) No part of any Credit Event (or the proceeds thereof) will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock.  Neither the making of any Loan nor the
use of the proceeds thereof nor the occurrence of any other Credit Event will
violate or be inconsistent with the provisions of the Margin Regulations.
 
8.09 Tax Returns and Payments.  The Parent and each of its Subsidiaries have
timely filed with the appropriate taxing authority all material returns,
statements, forms and reports for taxes or an extension therefor (the “Returns”)
required to be filed by, or with respect to the income, properties or operations
of, the Parent and/or any of its Subsidiaries.  The Returns accurately reflect
in all material respects all liability for taxes of the Parent and its
Subsidiaries as a whole for the periods covered thereby.  Each of the Parent and
each of its Subsidiaries have paid all taxes and assessments payable by it,
other than those that are being contested in good faith and adequately disclosed
and fully provided for on the financial statements of the Parent and its
Subsidiaries in accordance with GAAP.  There is no action, suit, proceeding,
investigation, audit or claim now pending or, to the best knowledge of the
Parent or any of its Subsidiaries, threatened by any authority regarding any
taxes relating to the Parent or any of its Subsidiaries that would have, or
would reasonably be expected to have, a Material Adverse Effect.  Neither the
Parent nor any of its Subsidiaries have entered into an agreement or waiver or
been requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of the Parent or any
of its Subsidiaries, or is aware of any circumstances that would cause the
taxable years or other taxable periods of the Parent or any of its Subsidiaries
not to be subject to the normally applicable statute of limitations.  Except as
set forth on Schedule V, neither the Parent nor any of its Subsidiaries have
incurred, or will incur, any material tax liability in connection with the
Transaction or any other transactions contemplated hereby (it being understood
that the representation contained in this sentence does not cover any future tax
liabilities of the Parent or any of its Subsidiaries arising as a result of the
operation of their businesses in the ordinary course of business).
 
8.10 Compliance with ERISA.  (a)  Schedule VI sets forth, as of the Initial
Borrowing Date, the name of each Plan.  Neither the Parent nor any Subsidiary of
the Parent nor any ERISA Affiliate has ever sponsored, maintained, made any
contributions to or has any liability in respect of any Plan which is subject to
Title IV of ERISA or Section 302 of ERISA or Section 412 of the Code; each Plan
has been maintained and operated in compliance in all materials respects with
the provisions of ERISA and, to the extent applicable, the Code, including but
not limited to the provisions thereunder respecting prohibited transactions
except for any noncompliance which would not reasonably be expected to result in
a Material Adverse Effect. No action, suit, proceeding, hearing, audit or
investigation with respect to the administration, operation or the investment of
assets of any Plan (other than routine claims for benefits) is pending, expected
or threatened except for any noncompliance which would not reasonably be
expected to result in a Material Adverse Effect.  Except as would not result in
a Material Adverse Effect, each group health plan (as defined in Section 607(1)
of ERISA or Section 4980B(g)(2) of the Code) which covers or has covered
employees or former employees of the Parent, any Subsidiary of the Parent, or
any ERISA Affiliate has at all times been operated in compliance with the
provisions of Part 6 of subtitle B of Title I of ERISA and Section 4980B of the
Code.  Under each employee welfare benefit plan within the meaning of
Section 3(1) or Section 3(2)(B) of ERISA covering employees of the Parent or any
Subsidiary of the Parent, no benefits are due thereunder unless the event giving
rise to the benefit entitlement occurs prior to termination of employment
(except as required by Title I, Subtitle B, Part 6 of ERISA) except for any
noncompliance which would not reasonably be expected to result in a Material
Adverse Effect.  Any of the Parent, any Material Subsidiary of the Parent or any
ERISA Affiliate, as appropriate, may terminate each Plan at any time (or at any
time subsequent to the expiration of any applicable bargaining agreement) in the
discretion of such Person without liability to any Person.  Each of the Parent
and each of its Subsidiaries may cease contributions to or terminate any
employee benefit plan maintained by any of them without incurring any material
liability.
 
 
 
60

--------------------------------------------------------------------------------

 
 
(b) Each Foreign Pension Plan has been maintained in substantial compliance with
its terms and with the requirements of any and all applicable laws, statutes,
rules, regulations and orders and has been maintained, where required, in good
standing with applicable regulatory authorities except for any noncompliance
which would not reasonably be expected to result in a Material Adverse
Effect.  All contributions required to be made with respect to a Foreign Pension
Plan have been timely made except for any noncompliance which would not
reasonably be expected to result in a Material Adverse Effect.  Neither the
Parent nor any of its Subsidiaries have incurred any obligation in connection
with the termination of, or withdrawal from, any Foreign Pension Plan, except
that which would not reasonably be expected to result in a Material Adverse
Effect.  The present value of the accrued benefit liabilities (whether or not
vested) under each Foreign Pension Plan, determined as of the end of the
Parent's most recently ended fiscal year on the basis of then current actuarial
assumptions, each of which is reasonable, did not materially exceed the current
value of the assets of such Foreign Pension Plan allocable to such benefit
liabilities.
 
8.11 The Security Documents.  Each of the Security Documents creates in favor of
the Collateral Agent for the benefit of the Secured Creditors a legal, valid and
enforceable first priority security interest and, upon any necessary filings and
compliance with applicable law by the Collateral Agent, a perfected security
interest, in and Lien on all right, title and interest of the Credit Parties in
the Collateral described therein, subject to no other Liens other than Permitted
Liens.  Subject to Sections 6.04 and 8.04 and the definition of “Collateral and
Guaranty Requirements,” no filings or recordings are required in order to
perfect the security interests created under any Security Document except for
filings or recordings which shall have been made on or prior to the Initial
Borrowing Date or, with respect to the Collateral Rigs, filings or recordings
which shall have been made on or prior to the Initial Borrowing Date or promptly
thereafter.
 
8.12 Capitalization.  All of the Capital Stock, as set forth on Schedule IV, of
the Borrower and each other Credit Party (other than the Parent) is legally and
beneficially owned directly or indirectly by the Parent, and, except as
permitted by Section 9.11 and the Reorganization, such structure shall remain so
until the Maturity Date. All such outstanding equity interests have been duly
and validly issued, are fully paid and non-assessable and have been issued free
of preemptive rights.  Except for (x) rights in respect of the equity interests
of the Parent that are convertible at the option of the holder thereof into
common stock of the Parent and (y) rights to receive equity interests of the
Parent in accordance with the Rights Plan, neither the Parent nor the Borrower
has any outstanding securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreement providing for the issuance (contingent or
otherwise) of, or any calls in respect of, the capital stock of the Parent or
the Borrower, as the case may be.
 
 
 
61

--------------------------------------------------------------------------------

 
 
8.13 Subsidiaries.  On the Initial Borrowing Date, the Parent will have no
Material Subsidiaries other than those Material Subsidiaries listed on Schedule
VII (which Schedule identifies the correct legal name, direct owner, percentage
ownership and jurisdiction of organization of each such Material Subsidiary on
the Initial Borrowing Date).
 
8.14 Compliance with Statutes, etc.  Each of the Parent and each of its
Subsidiaries is in compliance, in all material respects, with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including, without limitation,
applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls), except such noncompliance as would not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
 
8.15 Investment Company Act.  Neither the Parent nor any of its Subsidiaries are
an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended.
 
8.16 Legal Names; Type of Organization (and Whether a Registered Organization);
Jurisdiction of Organization; etc.  Schedule XI sets forth, as of the Initial
Borrowing Date, the legal name of the Parent, the Borrower and each Subsidiary
Guarantor, the type of organization of the Parent, the Borrower and each
Subsidiary Guarantor, whether or not the Parent and each Subsidiary Guarantor
that is a Domestic Subsidiary is a registered organization, the jurisdiction of
organization of the Parent, the Borrower and each Subsidiary Guarantor and the
organizational identification number (if any) of the Parent and each Subsidiary
Guarantor that is a Domestic Subsidiary.
 
8.17 Environmental Matters.  (a)  Each of the Parent and its Subsidiaries is in
compliance with all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws except for such failures which
would not reasonably be expected to have a Material Adverse Effect.  There are
no pending or, to the knowledge of the Parent or the Borrower, threatened
Environmental Claims against the Parent or any of its Subsidiaries or any Rig,
Real Property or other facility owned, leased or operated by the Parent or any
of its Subsidiaries (including any such claim arising out of the ownership,
lease or operation by the Parent or any of its Subsidiaries of any Rig, Real
Property or other facility formerly owned, leased or operated by the Parent or
any of its Subsidiaries but no longer owned, leased or operated by the Parent or
any of its Subsidiaries).  All licenses, permits, registrations or approvals
required for the business of the Parent and each of its Subsidiaries under any
Environmental Law have been secured and the Parent and each of its Subsidiaries
is in compliance therewith except such noncompliance as would not reasonably be
expected to have a Material Adverse Effect.  There are no facts, circumstances,
conditions or occurrences in respect of the business or operations of the Parent
or any of its Subsidiaries (or, to the knowledge of the Parent or any of its
Subsidiaries, any of their respective predecessors) or any Rig, Real Property or
other facility at any time owned or operated by the Parent or any of its
Subsidiaries (or, to the knowledge of the Parent or any of its Subsidiaries, any
of their respective predecessors) that are reasonably likely (i) to form the
basis of an Environmental Claim against the Parent, any of its Subsidiaries or
any Rig, Real Property or other facility owned by the Parent or any of its
Subsidiaries, or (ii) to cause such Rig, Real Property or other facility to be
subject to any restrictions on its ownership, occupancy, use or transferability
under any Environmental Law, except for such claims or restrictions that would
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
 
 
 
62

--------------------------------------------------------------------------------

 
 
(b) Hazardous Materials have not at any time been generated, used, treated or
stored on, or transported to or from, or Released on or from, any Rig, Real
Property or other facility owned, leased or operated by the Parent or any of its
Subsidiaries during the time of such ownership, lease or operation by the Parent
or any of its Subsidiaries or, to the knowledge of the Parent or any of its
Subsidiaries, prior or subsequent to the time of such ownership, lease or
operation by the Parent or any of its Subsidiaries, in each case where such
occurrence or event, either individually or in the aggregate, would not
reasonably be likely to have a Material Adverse Effect.  Hazardous Materials
have not at any time been generated, used, treated or stored on, or transported
to or from, or Released on or from, any property adjoining or adjacent to any
Real Property or other facility, where such generation, use, treatment, storage,
transportation or Release has violated or could be reasonably expected to
violate any applicable Environmental Law or give rise to an Environmental Claim
except such noncompliance as would not reasonably be expected to have a Material
Adverse Effect.
 
(c) All of the Rigs comply with all applicable international conventions,
national, federal, state and other governmental laws and regulations except such
noncompliance as would not reasonably be expected to have a Material Adverse
Effect.  The Parent and its Subsidiaries have made all required payments and
contributions to statutory environmental insurance schemes and other
environmental insurance schemes applicable to the Parent and its Subsidiaries
and customary for the business and operations conducted by them except such
noncompliance as would not reasonably be expected to have a Material Adverse
Effect.
 
8.18 Labor Relations.  Neither the Parent nor any of its Subsidiaries are
engaged in any unfair labor practice that, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect.  There is (i) no unfair labor practice complaint pending against the
Parent or any of its Subsidiaries or, to the Parent’s or the Borrower’s
knowledge, threatened against any of them before the National Labor Relations
Board, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Parent or any of its
Subsidiaries or, to the Parent’s or the Borrower’s knowledge, threatened against
any of them, (ii) no strike, labor dispute, slowdown or stoppage pending against
the Parent or any of its Subsidiaries or, to the Parent’s or the Borrower’s
knowledge, threatened against the Parent or any of its Subsidiaries and (iii) no
union representation proceeding pending with respect to the employees of the
Parent or any of its Subsidiaries, except (with respect to the matters specified
in clauses (i), (ii) and (iii) above) as would not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
 
 
 
63

--------------------------------------------------------------------------------

 
 
8.19 Patents, Licenses, Franchises and Formulas.  Each of the Parent and each of
its Subsidiaries owns, or has the right to use, all material patents,
trademarks, trade secrets, service marks, trade names, copyrights, licenses,
franchises and formulas, and has obtained assignments of all leases and other
rights of whatever nature, necessary for the present conduct of its business,
without any known conflict with the rights of others, except for such failures
and conflicts which would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
 
8.20 Indebtedness.  Schedule VIII sets forth a list of all Indebtedness
(excluding the Obligations and other items of Indebtedness that are
independently justified under Section 10.04 (other than under clause (iii)
thereof)) of the Parent and its Subsidiaries as of the Initial Borrowing Date
and which is to remain outstanding after giving effect to the Transaction which
in the case of each item of Indebtedness, equals or exceeds a principal amount
of $5,000,000, provided that, all Indebtedness not scheduled on the basis that
it does not equal or exceed $5,000,000 shall not exceed an aggregate principal
amount of $20,000,000 (the “Existing Indebtedness”), in each case (other than in
the case of loans made by the Parent to its Subsidiaries) showing the aggregate
principal amount thereof and the name of the borrower and any other entity which
directly or indirectly guarantees such debt.
 
8.21 Insurance.  Schedule IX sets forth a list of all insurance maintained by
each Credit Party as of the Initial Borrowing Date, with the amounts insured
(and any deductibles) set forth therein (the “Required Insurance”).
 
8.22 Collateral Rigs.  (a)  The name, registered owner and official number, and
jurisdiction of registration and flag of each Collateral Rig is set forth on
Schedule X.  Each Collateral Rig is operated in all material respects in
compliance with all applicable law, rules and regulations (applicable to each
Collateral Rig in accordance with Section 8.22(c) and as required by the United
States Coast Guard or other internationally recognized classification society
acceptable to the Administrative Agent).  Each Collateral Rig is covered by all
such insurance as is required in accordance with the requirements of the
respective Collateral Rig Mortgage and Section 9.03.
 
(b) Each Credit Party which owns or operates or which will own or operate one or
more Collateral Rigs is qualified to own and operate such Collateral Rig under
the laws of its jurisdiction of incorporation and Republic of the Marshall
Islands.
 
(c) Each Collateral Rig is classified in the highest class available for rigs of
its age and type with the United States Coast Guard or another internationally
recognized classification society acceptable to the Administrative Agent, free
of any conditions or recommendations, other than as permitted under the
Collateral Rig Mortgage related thereto.
 
8.23 Properties.  The Parent and each of its Subsidiaries have good and
marketable title to all properties owned by them, including all property
reflected in Schedule X and in the balance sheets referred to in Section 8.05(a)
(except as sold or otherwise disposed of since the date of such balance sheet in
the ordinary course of business or as permitted by the terms of this Agreement),
and the Collateral is free and clear of all Liens, other than Permitted Liens.
 
 
 
64

--------------------------------------------------------------------------------

 
 
8.24 Anti-Terrorism.  The Parent and its Subsidiaries are in compliance in all
material respects with United States laws relating to terrorism or money
laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and
the PATRIOT Act.
 
(a) Neither the Parent nor any of its Subsidiaries acting or benefiting in any
capacity in connection with the Loans is any of the following:
 
(i) a Person or entity that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order;
 
(ii) a Person or entity that is majority-owned or controlled by, or acting for
or on behalf of, any Person or entity that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order;
 
(iii) a Person or entity with which a Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;
 
(iv) a Person or entity that commits, threatens or conspires to commit or
supports “terrorism” as defined in the Executive Order; or
 
(v) a Person or entity that is included on the Specially Designated Nationals
and Blocked Persons List maintained by the Treasury Department’s Office of
Foreign Assets Control (“OFAC”) or any list of Persons issued by OFAC pursuant
to the Executive Order at its official website or any replacement website or
other replacement official publication of such list (collectively, the “OFAC
Lists”).
 
 
(b) Neither the Parent nor, to its knowledge, any of its Subsidiaries acting in
any capacity in connection with the Loans (i) conducts any business or engages
in making or receiving any contribution of funds, goods or services to or for
the benefit of any Person described in subsection (a)(ii) above, (ii) deals in,
or otherwise engages in any transaction relating to, any property or interests
in property blocked pursuant to the Executive Order or (iii) engages in or
conspires to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any United States Anti-Terrorism Law.
 
8.25 Form of Documentation.  Each of the Credit Documents is or, when executed,
will be in proper legal form under the laws of the Republic of the Marshall
Islands, the Cayman Islands, the Republic of Malta, and any other applicable
permitted jurisdiction for the enforcement thereof under such laws, as
applicable, subject only to such matters which may affect enforceability arising
under the law of the State of New York.  To ensure the legality, validity,
enforceability or admissibility in evidence of each such Credit Document in the
Republic of the Marshall Islands, the Cayman Islands, the Republic of Malta, and
any other applicable permitted jurisdiction, it is not necessary that any Credit
Document or any other document be filed or recorded with any court or other
authority in any other applicable permitted jurisdiction, except as have been
made, or will be made, in accordance with the definition of “Collateral and
Guaranty Requirements”.
 
 
 
65

--------------------------------------------------------------------------------

 
 
8.26 Place of Business.  None of the Credit Parties has a place of business in
any jurisdiction which requires any of the Security Documents to be filed or
registered in that jurisdiction to ensure the validity of the Security Documents
to which it is a party unless all such filings and registrations have been made
or will be made, in accordance with the definition of “Collateral and Guaranty
Requirements”.
 
8.27 No Undisclosed Commissions.  There are and will be no commissions, rebates,
premiums or other payments by or to or on account of any Credit Party, their
shareholders or directors in connection with the financings of the Transaction
as a whole other than as disclosed to the Administrative Agent in writing.
 
8.28 Pari Passu or Priority Status.  Neither the Parent nor any other Credit
Party has taken any action, or failed to take any action, which would cause
the claims of unsecured creditors of the Parent or of any other Credit Party, as
the case may be (other than claims of such creditors to the extent that they are
statutorily preferred or Permitted Liens), to have priority over the claims of
the Administrative Agent, the Collateral Agent and the Lenders against the
Parent and such other Credit Party under this Agreement or the other Credit
Documents.

8.29 No Immunity.  Neither the Parent, nor any other Credit Party is a sovereign
entity or has immunity on the grounds of sovereignty or otherwise from setoff or
any legal process under the laws of any jurisdiction.  The execution and
delivery of the Credit Documents by the Credit Parties and the performance by
them of their respective obligations thereunder constitute commercial
transactions.
 
8.30 Winding up, etc.  Subject to Section 10.02, neither the Parent nor any
other Credit Party has taken any corporate action nor have any other steps been
taken or legal proceedings been started or (to the best of its knowledge and
belief) threatened against any of them for winding up, or dissolution or for the
appointment of a liquidator, administrator, receiver, administrative receiver,
trustee or similar officer of any of them or any or all of their assets or
revenues nor have they sought any other relief under any applicable insolvency
or bankruptcy law.
 
 
SECTION 9. Affirmative Covenants.  The Parent and the Borrower hereby covenant
and agree that on and after the Initial Borrowing Date and until the Total
Commitment has been terminated and no Letters of Credit or Notes are outstanding
and all Loans, together with interest, Fees and all other Obligations (other
than indemnities described in Section 14.13 which are not then due and payable)
incurred hereunder and thereunder, are paid in full:
 
9.01 Information Covenants.  The Parent and the Borrower will furnish to the
Administrative Agent, with sufficient copies for each of the Lenders:
 
 
 
66

--------------------------------------------------------------------------------

 
 
(a) Quarterly Financial Statements.  Within 45 days after the close of the first
three quarterly accounting periods in each fiscal year of the Parent, (i) the
consolidated unaudited balance sheet of the Parent and its Subsidiaries as at
the end of such quarterly accounting period and the related unaudited
consolidated statements of income and retained earnings and statement of cash
flows for such quarterly accounting period and for the elapsed portion of the
fiscal year ended with the last day of such quarterly accounting period, in each
case setting forth comparative figures for the corresponding quarterly
accounting period in the prior fiscal year and comparable budgeted figures for
such quarterly accounting period as set forth in the respective budget delivered
pursuant to Section 9.01(e), all of which shall be certified by an Authorized
Representative of the Parent that they fairly present in all material respects
in accordance with GAAP the financial condition of the Parent and its
Subsidiaries as of the dates indicated and the results of their operations for
the periods indicated, subject to normal year-end audit adjustments and the
absence of footnotes, and (ii) management’s discussion and analysis of the
important operational and financial developments during such quarterly
accounting period.
 
(b) Annual Financial Statements.  (i) Within 90 days after the close of each
fiscal year of the Parent, (A) the consolidated balance sheet of the Parent and
its Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and statement of cash flows for such
fiscal year setting forth comparative figures for the preceding fiscal year and
certified by an independent certified public accountants of recognized national
standing reasonably acceptable to the Administrative Agent, together with a
report of such accounting firm stating that in the course of its regular audit
of the financial statements of the Parent and its Subsidiaries, which audit was
conducted in accordance with generally accepted auditing standards, such
accounting firm obtained no knowledge of any Default or Event of Default
relating to financial or accounting matters, which has occurred and is
continuing or, if in the opinion of such accounting firm such a Default or Event
of Default has occurred and is continuing, a statement as to the nature and
period of existence thereof (it being understood that such accounting firm shall
not be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violations), and (B) management’s discussion and analysis
of the important operational and financial developments during such fiscal year.
 
(ii) Within 120 days after the close of each fiscal year of the Borrower,  (A)
the consolidated balance sheet of the Borrower and its Subsidiaries as at the
end of such fiscal year and the related consolidated statements of income and
retained earnings and statement of cash flows for such fiscal year setting forth
comparative figures for the preceding fiscal year and certified by an
independent certified public accountants of recognized national standing
reasonably acceptable to the Administrative Agent, together with a report of
such accounting firm stating that in the course of its regular audit of the
financial statements of the Borrower and its Subsidiaries, which audit was
conducted in accordance with generally accepted auditing standards, such
accounting firm obtained no knowledge of any Default or Event of Default
relating to financial or accounting matters, which has occurred and is
continuing or, if in the opinion of such accounting firm such a Default or Event
of Default has occurred and is continuing, a statement as to the nature and
period of existence thereof (it being understood that such accounting firm shall
not be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violations), and (B) management’s discussion and analysis
of the important operational and financial developments during such fiscal year.
 
 
 
67

--------------------------------------------------------------------------------

 
 
(c) Appraisal Reports.  Together with the delivery of the financial statements
described in Section 9.01(a) for the first and third fiscal quarters of the
Parent (beginning with the fiscal quarter ending December 31, 2011), and, upon a
Default or Event of Default and during the continuance thereof, within 30 days
after the written request of the Administrative Agent, appraisal reports of
recent date in form and substance, and from two Approved Appraisers, stating the
then current fair market value (and each current fair market value used in such
determination) of each of the Collateral Rigs on an individual charter-free
basis.  All such appraisals shall be arranged by, and made at the expense of,
the Borrower.
 
(d) Management Letters.  Promptly after the Parent or any of its Subsidiaries’
receipt thereof, a copy of any material “management letter” received from its
certified public accountants and management’s response thereto.
 
(e) Budgets.  No later than 60 days following the first day of each fiscal year
of the Parent (beginning with the Parent’s fiscal year commencing on October 1,
2011), a budget for capital expenditures for the Parent and its Subsidiaries on
a consolidated basis) (i) for each of the four quarters of such fiscal year
prepared in detail and (ii) for the three immediately succeeding fiscal years
prepared in summary form, in each case setting forth, with appropriate
discussion, the principal assumptions upon which such budget is based.
 
(f) Officer’s Certificates.  (I)  At the time of the delivery of the financial
statements provided for in Sections 9.01(a) and (b), a compliance certificate
from an Authorized Representative of the Parent in the form of Exhibit M
certifying on behalf of the Parent and the Borrower that, to the best of such
Authorized Representative’s knowledge after due inquiry, no Default or Event of
Default has occurred and is continuing or, if any Default or Event of Default
has occurred and is continuing, specifying the nature and extent thereof, which
certificate shall (i) set forth in reasonable detail the calculations required
to establish whether the Parent and its Subsidiaries were in compliance with the
provisions of Sections 10.02(ix)(B)(III), 10.04(vi), 10.05(x) and 10.07 through
and including 10.10, at the end of such fiscal quarter or year, as the case may
be, (ii) set forth the obligor, the obligee and the principal amount outstanding
of each performance bond, surety bond, appeal bond or custom bond permitted
under Section 10.04(vi) with a principal amount outstanding of $1,000,000 or
more, and (iii) certify that there have been no changes to any of Schedule XI,
Annexes A through E, inclusive, of the U.S. Pledge Agreement or any equivalent
annexes or schedules to any other Security Document, in each case since the
Initial Borrowing Date or, if later, since the date of the most recent
certificate delivered pursuant to this Section 9.01(f), or if there have been
any such changes, a list in reasonable detail of such changes (but, in each case
with respect to this clause (iii), only to the extent that such changes are
required to be reported to the Collateral Agent pursuant to the terms of such
Security Documents) and whether the Parent and the other Credit Parties have
otherwise taken all actions required to be taken by them pursuant to such
Security Documents in connection with any such changes.
 
(II)           At the time of any Collateral Disposition, a certificate of an
Authorized Representative of the Parent, which certificate shall (i) certify on
behalf of the Parent and the Borrower that a copy of the most recent appraisal
report was delivered to the Lenders pursuant to Section 9.01(c) setting forth
the (x) appraised value of the Collateral Rig or Collateral Rigs subject to such
Collateral Disposition and (y) the Aggregate Collateral Rig Value after giving
effect to such Collateral Disposition and (ii) set forth the calculations
required to establish compliance with the provisions of Sections 4.03(d) and
10.09 after giving effect to such Collateral Disposition.
 
 
 
68

--------------------------------------------------------------------------------

 
 
(g) Notice of Default, Litigation or Event of Loss.  Promptly, and in any event
within three Business Days after the Parent or any of its Subsidiaries obtains
knowledge thereof, notice of (i) the occurrence of any event which constitutes a
Default or an Event of Default, which notice shall specify the nature thereof,
the period of existence thereof and what action the Parent and the Borrower
propose to take with respect thereto, (ii) any litigation or governmental
investigation or proceeding pending or threatened (x) against the Parent or any
of its Subsidiaries which, either individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect or (y) with respect to
the Transaction or any Credit Document, (iii) any Event of Loss in respect of
any Collateral Rig and (iv) any other event, change or circumstance that has
had, or would reasonably be expected to have, a Material Adverse Effect.
 
(h) Other Reports and Filings.  All financial information, financial statements,
proxy materials, proxy statements, and other notices, information and reports,
if any, which the Parent or any of its Subsidiaries shall file with or furnish
to the Securities and Exchange Commission or any successor thereto (the “SEC”)
shall be deemed delivered to the Administrative Agent.  The Borrower shall
promptly provide hard copies of any such documentation to the Administrative
Agent upon written request.
 
(i) Environmental Matters.  Promptly upon, and in any event within five Business
Days after, the Parent or any of its Subsidiaries obtains knowledge thereof,
written notice of any of the following environmental matters occurring after the
Initial Borrowing Date, except to the extent that such environmental matters
would not, either individually or when aggregated with all other such
environmental matters, reasonably be expected to have a Material Adverse Effect:
 
(i) any Environmental Claim pending or threatened in writing against the Parent
or any of its Subsidiaries or any Rig, Real Property or other facility owned,
leased, operated or occupied by the Parent or any of its Subsidiaries;
 
(ii) any condition or occurrence on or arising from any Rig or property owned,
leased, operated or occupied by the Parent or any of its Subsidiaries that
(a) results in noncompliance by the Parent or such Subsidiary with any
applicable Environmental Law or (b) would reasonably be expected to form the
basis of an Environmental Claim against the Parent or any of its Subsidiaries or
any such Rig, Real Property or other facility;
 
(iii) any condition or occurrence on any Rig, Real Property or other facility
owned, leased, operated or occupied by the Parent or any of its Subsidiaries
that would reasonably be expected to cause such Rig, Real Property or other
facility to be subject to any restrictions on the ownership, occupancy, use or
transferability by the Parent or such Subsidiary of such Rig, Real Property or
other facility under any Environmental Law; and
 
 
 
69

--------------------------------------------------------------------------------

 
 
(iv) the taking of any removal or remedial action in response to the actual or
alleged presence of any Hazardous Material at, on or under any Rig, Real
Property or other facility owned, leased, operated or occupied by the Parent or
any of its Subsidiaries as required by any Environmental Law or any governmental
or other administrative agency; provided that in any event the Parent shall
deliver to the Administrative Agent all notices received by the Parent or any of
its Subsidiaries from any government or governmental agency under, or pursuant
to, CERCLA or OPA which identify the Parent or any of its Subsidiaries as
potentially responsible parties for remediation costs or otherwise notify the
Parent or any of its Subsidiaries of potential liability under CERCLA or OPA,
and which, with respect to the Parent or Subsidiary, individually or when
aggregated, are reasonably expected to have a Material Adverse Effect.
 
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and the
Parent’s or such Subsidiary’s response thereto.  In addition, the Parent will
provide the Administrative Agent with copies of all communications with any
government or governmental agency and all communications with any other Person
relating to any Environmental Claim of which notice is required to be given
pursuant to this Section 9.01(i), and such detailed reports of any such
Environmental Claim as may reasonably be requested by the Administrative Agent
or the Required Lenders.
 
(j) Other Information.  The Borrower shall deliver such other information or
documents (financial or otherwise) as the Administrative Agent on its own behalf
or on behalf of the Required Lenders may reasonably request from time to time.
 
9.02 Books, Records and Inspections.  (a)  The Parent will, and will cause each
of its Subsidiaries to, keep proper books of record and account in which full,
true and correct entries, in conformity in all material respects with GAAP and
all requirements of law, shall be made of all dealings and transactions in
relation to its business.  The Parent will, and will cause each of its
Subsidiaries to, permit officers and designated representatives of the
Administrative Agent and the Lenders as a group to visit and inspect, under
guidance of officers of the Parent or any of its Subsidiaries, any of the
properties of the Parent or its Subsidiaries, and to examine the books of
account of the Parent or such Subsidiaries and discuss the affairs, finances and
accounts of the Parent or such Subsidiaries with, and be advised as to the same
by, its and their officers and independent accountants, all upon reasonable
advance notice and at such reasonable times and intervals and to such reasonable
extent as the Administrative Agent or such Lender may request.  For the
avoidance of doubt, unless (i) an Event of Default shall have occurred and be
continuing or (ii) due to an action or omission of the Parent or its
Subsidiaries, the Administrative Agent or any Lender shall have determined that
a visitation or inspection is necessary in order to protect the interests of the
Lender Creditors and shall have provided written notice to Parent specifying the
reasons for such determination, the costs and expenses of the Administrative
Agent and the Lenders for such visits and inspections shall be for the account
of the Lender or Lenders requesting such visits and inspections. 
Notwithstanding anything in the foregoing to the contrary, visits and
inspections of Rigs shall be limited to Collateral Rigs. 
 
(b) At a date to be mutually agreed upon between the Administrative Agent and
the Parent occurring on or prior to the 120th day after the close of each fiscal
year of the Parent, the Parent will, at the request of the Administrative Agent,
hold a meeting with all of the Lenders at which meeting will be reviewed the
financial results of the Parent and its Subsidiaries for the previous fiscal
year and the budgets presented for the current fiscal year of the Parent.
 
 
 
70

--------------------------------------------------------------------------------

 
 
9.03 Maintenance of Property; Insurance.  (a)  The Parent will, and will cause
each of its Subsidiaries to, (i) keep all material property necessary to the
business of the Parent and its Subsidiaries in good working order and condition
(ordinary wear and tear and loss or damage by casualty or condemnation excepted)
with such exceptions as would not reasonably be expected to have a Material
Adverse Effect, (ii) maintain with financially sound and reputable insurance
companies insurance on the Collateral Rigs and other properties of the Parent
and its Subsidiaries in at least such amounts and against all such risks as is
consistent and in accordance with normal industry practice for similarly
situated insureds and (iii) furnish to the Administrative Agent, at the written
request of the Administrative Agent or any Lender, a complete description of the
material terms of insurance carried on the Collateral Rigs.  In addition to the
requirements of the immediately preceding sentence, the Parent will at all times
cause the Required Insurance to (i) be maintained and (ii) comply with the
insurance requirements of each Collateral Rig Mortgage and the other Security
Documents.
 
(b) The Parent will, and will cause the Borrower and each of the Material
Subsidiaries to, at all times keep the Collateral Rigs insured in favor of the
Collateral Agent, and all policies or certificates (or certified copies thereof)
with respect to such insurance (and any other insurance maintained by the Parent
and/or such Subsidiaries) (i) shall be endorsed to the Collateral Agent’s
satisfaction for the benefit of the Collateral Agent (including, without
limitation, by naming the Collateral Agent as loss payee and/or additional
insured), (ii) shall state that such insurance policies shall not be canceled
without at least 30 days’ prior written notice thereof by the respective insurer
to the Collateral Agent, (iii) shall provide that the respective insurers
irrevocably waive any and all rights of subrogation with respect to the
Collateral Agent and the other Secured Creditors, and (iv) shall be deposited
with the Collateral Agent.
 
(c) If the Parent, the Borrower, or any of the Material Subsidiaries shall fail
to maintain insurance in accordance with this Section 9.03, or if the Parent,
the Borrower, or any of the Material Subsidiaries shall fail to so endorse and
deposit all policies or certificates with respect thereto, the Administrative
Agent shall have the right (but shall be under no obligation) to procure such
insurance and the Borrower agrees to reimburse the Administrative Agent for all
reasonable costs and expenses of procuring such insurance.
 
9.04 Existence; Franchises.  The Parent will, and will cause each of its
Subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence (except to the extent that to do so
would result in any Subsidiary of the Parent forgoing any right or power which,
under applicable law, it may not forgo) and its material rights, franchises,
licenses, permits, copyrights, trademarks and patents (if any) used in its
business except where such existence would not reasonably be expected to have a
Material Adverse Effect; provided, however, that nothing in this Section 9.04
shall prevent (i) sales or other dispositions of assets, consolidations,
mergers, dissolutions or liquidations by or involving the Parent or any of its
Subsidiaries which are permitted in accordance with Section 10.02 or (ii) the
withdrawal by the Parent or any of its Subsidiaries of its qualification as a
foreign corporation, partnership or limited liability company, as the case may
be, in any jurisdiction if such withdrawal would not, either individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
 
 
 
71

--------------------------------------------------------------------------------

 
 
9.05 Compliance with Statutes, etc.  The Parent will, and will cause each of its
Subsidiaries to, comply with all applicable statutes, regulations and orders of,
and all applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property (including applicable statutes, regulations, orders and restrictions
relating to environmental standards and controls), and all applicable rules and
regulations of the American Bureau of Shipping or other international
classification society  (in accordance with Section 8.22(c)), except such
noncompliances as would not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.  The Parent will, and will cause
each of its Subsidiaries to, obtain and maintain all applicable certifications
of compliance available with respect to the foregoing.
 
9.06 Compliance with Environmental Laws.  (a)  The Parent will, and will cause
each of its Subsidiaries to, comply in all material respects with all
Environmental Laws and permits applicable to, or required by, the ownership,
lease, or use of any Rig, Real Property or other facility now or hereafter
owned, operated, leased, or occupied by the Parent or any of its Subsidiaries,
and will pay or cause to be paid all costs and expenses incurred in connection
with such compliance (except to the extent being contested in good faith), and
will keep or cause to be kept the Collateral Rigs free and clear of any Liens
imposed pursuant to such Environmental Laws.  Neither the Parent nor any of its
Subsidiaries will generate, use, treat, store, Release or dispose of, or permit
the generation, use, treatment, storage, Release or disposal of, Hazardous
Materials at, on or from any Rig, Real Property or other facility now or
hereafter owned, operated, leased or occupied by the Parent or any of its
Subsidiaries, or transport or permit the transportation of Hazardous Materials
to or from any ports, Rigs, Real Properties or other facilities except in
compliance in all respects with all applicable Environmental Laws and as
reasonably required by the trade in connection with the operation, use and
maintenance of any such property or otherwise in connection with their
businesses, except if such non-compliance would not reasonably be expected to
have a Material Adverse Effect.
 
(b) At the written request of the Administrative Agent or the Required Lenders,
which request shall specify in reasonable detail the basis therefor, the
Borrower will provide, at the Borrower’s sole cost and expense, an environmental
assessment of any Rig by an environmental consultant acceptable to the
Administrative Agent, which shall assess the Rig’s compliance with Environmental
Law, the presence, Release or threatened Release of Hazardous Materials, and the
potential costs of addressing any non-compliance or Hazardous
Materials;  provided that such request may be made only if (i) there has
occurred and is continuing a Default or an Event of Default, (ii) circumstances
exist that reasonably would be expected to form the basis of a material
Environmental Claim against any Credit Party or any Collateral Rig, or (iii)
with regard to any Subsidiary of the Parent which is not a Credit Party or with
regard to a Rig which is not a Collateral Rig, circumstances exist that
reasonably would be expected to have a Material Adverse Effect.  If the Parent
fails to provide the same within 90 days after such request was made, the
Administrative Agent may order the same, and the Parent shall grant and hereby
grants to the Administrative Agent and the Lenders and their agents access to
such Rig and specifically grants the Administrative Agent and the Lenders an
irrevocable non-exclusive license, subject to the rights of tenants, to
undertake such an assessment, all at the Borrower’s expense.
 
 
 
72

--------------------------------------------------------------------------------

 
 
9.07 ERISA.  As soon as possible and, in any event, within ten (10) days after
the Parent, any Subsidiary of the Parent or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following, the Parent will
deliver to each of the Lenders a certificate of an Authorized Representative of
the Parent setting forth the full details as to such occurrence and the action,
if any, that the Parent, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given or
filed by the Parent, such Subsidiary, the Plan administrator or such ERISA
Affiliate to or with any government agency, or a Plan participant and any
notices received by the Parent, such Subsidiary or ERISA Affiliate from any
government agency, or a Plan participant with respect thereto:  that any
contribution required to be made with respect to a Plan or Foreign Pension Plan
has not been timely made; or that the Parent or any Subsidiary of the Parent may
incur any material liability pursuant to any employee welfare benefit plan (as
defined in Section 3(1) of ERISA) that provides benefits to retired employees or
other former employees (other than as required by Section 601 of ERISA) or any
Plan or any Foreign Pension Plan except such noncompliance as would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  Upon request by the Administrative Agent or any Lender, the
Parent will deliver to the Administrative Agent or each such Lender, as the case
may be, a complete copy of the annual report (on Internal Revenue Service Form
5500-series) of each Plan (including, to the extent required, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information) required to be filed with the
Internal Revenue Service.  In addition to any certificates or notices delivered
to the Lenders pursuant to the first sentence hereof, copies of any records,
documents or other information required to be furnished to any government
agency, and any notices received by the Parent, any Subsidiary of the Parent or
any ERISA Affiliate with respect to any Plan or Foreign Pension Plan from any
government or governmental agency shall be delivered to the Lenders no later
than ten (10) days after the date such records, documents and/or information has
been furnished to any government agency or such notice has been received by the
Parent, the Subsidiary or the ERISA Affiliate, as applicable.  The Parent and
each of its applicable Subsidiaries shall ensure that all Foreign Pension Plans
administered by it obtains or retains (as applicable) registered status under
and as required by applicable law and is administered in a timely manner in all
respects in compliance with all applicable laws except where the failure to do
any of the foregoing would not be reasonably likely to result in a Material
Adverse Effect.
 
9.08 End of Fiscal Years; Fiscal Quarters.  The Parent will cause (i) its, and
each of its Subsidiaries’, fiscal years to end on September 30 of each year and
(ii) its and each of its Subsidiaries’ fiscal quarters to end on March 31, June
30, September 30 and December 31 of each year.
 
9.09 Performance of Obligations.  The Parent will, and will cause each of its
Subsidiaries to, perform all of its obligations under the terms of each
mortgage, indenture, security agreement, loan agreement or credit agreement and
each other agreement, contract or instrument by which it is bound, except such
non-performances as would not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
 
 
 
73

--------------------------------------------------------------------------------

 
 
9.10 Payment of Taxes.  The Parent will pay and discharge, and will cause each
of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, in each case on a timely basis, and all
lawful claims which, if unpaid, might become a Lien or charge upon any
properties of the Parent or any of its Subsidiaries not otherwise permitted
under Section 10.01(i) except such noncompliance as would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect; provided that neither the Parent nor any of its Subsidiaries
shall be required to pay any such tax, assessment, charge, levy or claim which
is being contested in good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with GAAP.
 
9.11 Additional Security; Additional Guarantors; Further Assurances.  (a)  The
Parent will, and will cause each of its Subsidiaries to, at any time and from
time to time, (x) at the expense of the Parent or such other Subsidiary,
promptly execute and deliver all further instruments and documents, and take all
further action, that may be reasonably necessary, or that the Administrative
Agent may reasonably require, to perfect and protect any Lien granted or
purported to be granted hereby or by the other Credit Documents, or to enable
the Collateral Agent to exercise and enforce its rights and remedies with
respect to any Collateral and (y) at the time of the Reorganization or any
portion thereof, at the expense of the Parent or any other Subsidiary, promptly
execute any further documents, agreements and instruments, file any further
financing statements, and take any further actions that may be required under
applicable law, which the Collateral Agent may reasonably request, in order to
comply with the Collateral and Guaranty Requirements and preserve, protect and
maintain the security interests created or intended to be created by the
Security Documents.  Without limiting the generality of the foregoing, the
Parent will execute and file, or cause to be filed, such financing or
continuation statements under the UCC (or any non-U.S. equivalent thereto), or
amendments thereto, such amendments or supplements to any Collateral Rig
Mortgage, and such other instruments or notices, as may be reasonably necessary,
or that the Administrative Agent may reasonably require, to protect and preserve
the Liens granted or purported to be granted hereby and by the Credit Documents.
 
(b) The Parent and the Borrower hereby authorize the Collateral Agent to file
one or more financing or continuation statements under the UCC (or any non-U.S.
equivalent thereto), and amendments thereto, relative to all or any part of the
Collateral without the signature of the Parent or any other Credit Party, where
permitted by law.  The Collateral Agent will promptly send the Parent a copy of
any financing or continuation statements which it may file without the signature
of the Parent or any other Credit Party and the filing or recordation
information with respect thereto.
 
(c) In the event that (x) the ATWOOD CONDOR becomes a Collateral Rig pursuant to
the terms of Section 2.13 or (y) a Collateral Rig is transferred to a
Wholly-Owned Subsidiary of the Borrower in accordance with Section 10.02(xiii),
the Borrower will cause the appropriate Subsidiary (and any Subsidiary which
directly or indirectly owns the Capital Stock of such Subsidiary to the extent
not already a Credit Party) to satisfy the Collateral and Guaranty Requirements
with respect to each relevant Collateral Rig that such Subsidiary would have
been required to satisfy pursuant to Section 6.04 and take such other actions in
connection therewith as would otherwise have been required to be taken pursuant
to Section 6 had such Subsidiary been a Credit Party on the Initial Borrowing
Date.
 
 
 
74

--------------------------------------------------------------------------------

 
 
(d)  (I) If at any time any Subsidiary of the Parent becomes a Material
Subsidiary, such Material Subsidiary shall be required to execute and deliver
counterparts of (or, if requested by the Administrative Agent or the Collateral
Agent, a Joinder Agreement in respect of) the U.S. Subsidiaries Guaranty
(and/or, in the case of Foreign Subsidiaries of the Parent, upon the request of
the Administrative Agent and based on advice of local counsel, such Foreign
Subsidiaries Guaranties as would have been entered into by the respective
Material Subsidiary if same had been a Subsidiary Guarantor on the Initial
Borrowing Date (determined in accordance with the criteria described in the
definition of “Collateral and Guaranty Requirements”)), and in each case shall
take all actions in connection therewith as would otherwise have been required
to be taken pursuant to Section 6 if such Subsidiary had been a Credit Party on
the Initial Borrowing Date.  The Parent and the Borrower agree that each action
required above by this Section 9.11(d)(I) shall be completed contemporaneously
with (or within 10 days of) such Subsidiary becoming a Material Subsidiary.
 
(II)           If at any time any Subsidiary of the Parent becomes a Pledgor,
such Pledgor shall be required to execute and deliver counterparts of (or, if
requested by the Administrative Agent or the Collateral Agent, a Joinder
Agreement in respect of) the U.S. Pledge Agreement (and/or, in the case of
Foreign Subsidiaries of the Parent, upon the request of the Administrative Agent
and based on advice of local counsel, such Foreign Pledge Agreements as would
have been entered into by the respective Pledgor if same had been a Pledgor on
the Initial Borrowing Date (determined in accordance with the criteria described
in the definition of “Collateral and Guaranty Requirements”)), and in each case
shall take all actions in connection therewith as would otherwise have been
required to be taken pursuant to Section 6 if such Subsidiary had been a Pledgor
on the Initial Borrowing Date.  The Parent and the Borrower agree that each
action required above by this Section 9.11(d)(II) shall be completed
contemporaneously with (or within 10 days of) such Subsidiary becoming a
Pledgor.
 
(e) The Parent will cause each obligor and obligee of any loan, advance or other
extension of credit (including, without limitation, pursuant to guarantees
thereof or security thereof), in each case, made to a Credit Party by the Parent
or any Subsidiary of the Parent prior to the extension or incurrence of such
loan, advance or other extension of credit, to execute and deliver to the
Administrative Agent the Intercompany Subordination Agreement (or, if requested
by the Administrative Agent, a Joinder Agreement in respect of the Intercompany
Subordination Agreement) and, in connection therewith, promptly execute and
deliver all further instruments, and take all further action, that the
Administrative Agent may reasonably require.
 
(f) At the reasonable written request of any counterparty to an Interest Rate
Protection Agreement or an Other Hedging Agreement entered into after the
Effective Date (to the extent permitted under this Agreement to be entered into
and secured) by one or more Lenders or any Affiliate thereof (even if, after the
entry into such Interest Rate Protection Agreement or Other Hedging Agreement,
the respective Lender subsequently ceases to be a Lender for any reason), with
any Credit Party that shall be a party to a Collateral Rig Mortgage and, at the
written direction of the Collateral Agent, such Credit Party shall agree with
the mortgagee thereunder to an amendment to such Collateral Rig Mortgage that
shall result in the obligations under such Interest Rate Protection Agreement or
Other Hedging Agreement becoming additional secured obligations under each
Collateral Rig Mortgage (and causing such obligations to be secured on such
basis as set forth in this Agreement or in the U.S. Pledge Agreement), and cause
the same to be promptly and duly recorded, and such amendment shall be in form
and substance reasonably satisfactory to the Collateral Agent.
 
 
 
75

--------------------------------------------------------------------------------

 
 
(g) The Parent will cause the ATWOOD CONDOR to be owned by a Wholly-Owned
Subsidiary of the Borrower prior to or simultaneously with the incurrence of
Incremental Commitments.
 
9.12 Use of Proceeds.  The Borrower and its Subsidiaries will use Letters of
Credit and the proceeds of the Loans only as provided in Section 8.08.
 
9.13 Ownership(a) . (a) The Borrower and each Subsidiary Guarantor shall be
direct or indirect Wholly-Owned Subsidiaries of the Parent.
 
(b) The Parent shall cause the Borrower and each Subsidiary Guarantor to, at all
times, be a direct Wholly-Owned Subsidiary of one or more Credit Parties.
 
(c) The Borrower will cause each Collateral Rig to be owned at all times by a
single Subsidiary Guarantor that shall own no other Collateral Rig.
 
9.14 Letter of Credit Back-Stop Arrangements.  If any Lender becomes a
Defaulting Lender at any time that a Letter of Credit is outstanding, the
Borrower shall enter into Letter of Credit Back-Stop Arrangements (including,
for the avoidance of doubt, the cash collateralization of such Defaulting
Lender’s Percentage of Letters of Credit Outstanding under the relevant Tranche)
with the relevant Issuing Lender within two (2) Business Days of such Lender
becoming a Defaulting Lender.
 
9.15 New York Stock Exchange.  The Parent (or such parent company of the Parent)
shall be a listed company on the New York Stock Exchange.
 
 
SECTION 10. Negative Covenants.  The Parent and the Borrower hereby covenant and
agree that on and after the Initial Borrowing Date and thereafter for so long as
this Agreement is in effect and until the Total Commitment has been terminated,
no Letters of Credit or Notes are outstanding and all Loans, together with
interest, Fees and all other Obligations (other than any indemnities described
in Section 14.13 which are not then due and payable) incurred hereunder and
thereunder, are paid in full:
 
10.01 Liens.  The Parent will not, and will not permit any of its Subsidiaries
to, create, incur, assume or suffer to exist any Lien upon or with respect to
any Collateral, whether now owned or hereafter acquired, or sell any such
Collateral subject to an understanding or agreement, contingent or otherwise, to
repurchase such Collateral (including sales of accounts receivable with recourse
to the Parent or any of its Subsidiaries), or, with respect to any Collateral,
assign any right to receive income or permit the filing of any financing
statement under the UCC or any other similar notice of Lien under any similar
recording or notice statute; provided that the provisions of this Section 10.01
shall not prevent the creation, incurrence, assumption or existence of the
following with respect to any Collateral (Liens described below are herein
referred to as “Permitted Liens”):
 
 
 
76

--------------------------------------------------------------------------------

 
 
(i) inchoate Liens for taxes, assessments or governmental charges or levies not
yet due or Liens for taxes, assessments or governmental charges or levies being
contested in good faith and by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP;
 
(ii) Liens in respect of property or assets of the Parent or any of its
Subsidiaries imposed by law, incurred in the ordinary course of business and do
not secure Indebtedness for borrowed money, such as maritime privileges,
carriers’, warehousemen’s, materialmen’s and mechanics’ Liens and other similar
Liens arising in the ordinary course of business and which are in existence less
than 120 days from the date of creation thereof, including, but not limited to,
those arising under construction or repair contracts for the Rigs from time to
time, and (x) which do not in the aggregate materially detract from the value of
the Parent’s or such Subsidiary’s property or assets or materially impair the
use thereof in the operation of the business of the Parent or such Subsidiary or
(y) which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the property
or assets subject to any such Lien;
 
(iii) Liens in existence on the Initial Borrowing Date which are listed, and the
property subject thereto described, in Schedule XII, and any renewals,
replacements and extensions thereof, provided that the aggregate principal
amount of the Indebtedness, if any, secured by such Liens does not increase from
that amount outstanding (or in the case of a revolving credit facility, from
that aggregate amount committed by the respective lenders thereunder) on the
Initial Borrowing Date, less any repayments of principal thereof (and, in the
case of a revolving credit facility, less any reduction in the commitments
thereunder) made (or effected) on or after the Initial Borrowing Date;
 
(iv) Liens created pursuant to the Security Documents;
 
(v) easements, rights-of-way, restrictions, encroachments and other similar
charges or encumbrances, and minor title deficiencies, in each case not securing
Indebtedness and not materially interfering with the ordinary conduct of the
business of the Parent or any of its Subsidiaries;
 
(vi) Liens arising from precautionary UCC financing statement filings regarding
operating leases entered into in the ordinary course of business;
 
(vii) Liens arising out of the existence of judgments or awards in respect of
which the Parent or any of its Subsidiaries shall in good faith be prosecuting
an appeal or proceedings for review and in respect of which there shall have
been secured a subsisting stay of execution pending such appeal or proceedings,
provided that the aggregate amount of all cash (including the stated amount of
all letters of credit) and the fair market value of all other property subject
to such Liens does not exceed $10,000,000 at any time outstanding;
 
 
 
77

--------------------------------------------------------------------------------

 
 
(viii) statutory and common law landlords’ Liens under leases to which the
Parent or any of its Subsidiaries is a party; and
 
(ix) Liens (other than Liens imposed under ERISA) incurred in the ordinary
course of business in connection with, workmen’s compensation claims,
unemployment insurance, and social security benefits and Liens securing the
performance of bids, tenders, leases and contracts in the ordinary course of
business, statutory obligations, surety bonds, performance bonds, maritime Liens
and other obligations of a like nature incurred in the ordinary course of
business and consistent with past practice (exclusive of obligations in respect
of the payment for borrowed money), provided that the aggregate amount of all
cash and the fair market value of all other property subject to all Liens
permitted by this clause (xi) shall not at any time exceed $500,000.
 
In connection with the granting of Liens described in this Section 10.01 by the
Parent or any of its Subsidiaries, the Administrative Agent and the Collateral
Agent shall be authorized to take any actions deemed appropriate by it in
connection therewith (including, without limitation, by executing appropriate
Lien releases or Lien subordination agreements in favor of the holder or holders
of such Liens, in either case solely with respect to the item or items of
equipment or other assets subject to such Liens).
 
10.02 Consolidation, Merger, or Sale of Assets, etc.  The Parent will not, and
will not permit any of its Subsidiaries to (x) wind up, liquidate or dissolve
its affairs, (y) convey, sell, lease, charter or otherwise dispose of all or any
part of the Collateral or (z) convey, sell, lease, charter or otherwise dispose
of all or substantially all, or any substantial part of, the assets (i.e. taken
as a whole) of the Parent and its Subsidiaries on a consolidated basis, except
that:
 
(i) Investments by the Parent and its Subsidiaries shall be permitted in
accordance with Section 10.05;
 
(ii) any Subsidiary of the Parent may lease (as lessee) or license (as licensee)
real or personal property (so long as any such lease or license does not create
a Capitalized Lease Obligation except to the extent permitted by
Section 10.04(vii));
 
(iii) any Subsidiary of the Parent may sell or discount, in each case without
recourse and in the ordinary course of business, overdue accounts receivable
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);
 
(iv) any Credit Party may sell or otherwise transfer all or any part of the
Collateral to any other Credit Party, in each case so long as the Collateral and
Guaranty Requirements shall be fully satisfied after giving effect thereto;
 
 
 
78

--------------------------------------------------------------------------------

 
 
(v) any Subsidiary of the Parent (other than the Borrower) may merge with and
into, or be dissolved or liquidated into, the Borrower, any Subsidiary Guarantor
or any other Subsidiary of the Parent, so long as (w) in the case of any such
merger, dissolution or liquidation involving the Borrower, the Borrower is the
surviving corporation of any such merger, dissolution or liquidation, (x) except
as provided in preceding clause (w), in the cases of any such merger,
dissolution or liquidation involving a Subsidiary Guarantor, a Subsidiary
Guarantor is the surviving corporation of any such merger, dissolution or
liquidation, and (y) in all cases, the Collateral and Guaranty Requirements
shall be fully satisfied after giving effect thereto (to at least the same
extent as in effect immediately prior to such merger, dissolution or
liquidation);
 
(vi) the Parent may (x) merge or consolidate with any other Person so long as
the Parent is the surviving entity, no Default or Event of Default then exists
or is continuing at such time, the Parent shall continue to be organized in the
United States or another jurisdiction acceptable to the Administrative Agent,
there is no Change of Control and the Collateral and Guaranty Requirements shall
be satisfied after giving effect thereto and (y) merge or consolidate with a
Wholly-Owned Subsidiary of the Parent so long as there is no Change of Control;
 
(vii) any Subsidiary of the Parent may enter into demise, bareboat, time, voyage
and other charter or lease arrangements pursuant to which any such Subsidiary
charters or leases out a Rig to another Subsidiary of the Parent or to a third
Person, in each case so long as (x) such arrangements are entered into in the
ordinary course of business and consistent with past practices, (y) such
arrangements do not materially impair the value of the Rig or Rigs subject to
such arrangements and (z) such arrangements involving any Collateral Rigs do not
impair the security interest of the Collateral Agent in such Collateral Rigs (or
the ability of the Collateral Agent to foreclose on each Collateral Rig or
exercise its remedies in respect thereof, in each case free of such
arrangements) and such arrangements are subject in all respects to the
Collateral Agent’s Lien on such Collateral Rigs;
 
(viii) any Subsidiary of the Parent that is not a Credit Party may sell or
otherwise transfer all or any part of its business, properties or assets (other
than a Rig) to any Wholly-Owned Subsidiary of the Parent;
 
(ix) so long as no Default or Event of Default then exists or would result
therefrom, Inactive Subsidiaries of the Parent may be liquidated or dissolved
from time to time, so long as (x) the Parent determines that such liquidation is
not adverse to the interests of the Lenders and (y) the security interests
granted to the Collateral Agent for the benefit of the Secured Creditors
pursuant to the Security Documents shall remain in full force and effect (to at
least the same extent as in effect immediately prior to such dissolution or
liquidation);
 
(x) each of the Parent and any of its Subsidiaries may transfer any Rig from the
Parent or any of its Subsidiaries, to the Parent or a Wholly-Owned Subsidiary of
the Parent, provided that in the case of Collateral Rigs, the Collateral and
Guaranty Requirements shall be fully satisfied after giving effect thereto; and
 
 
 
79

--------------------------------------------------------------------------------

 
 
(xi) the Reorganization shall be permitted.
 
To the extent the Required Lenders waive the provisions of this Section 10.02
with respect to the sale of any Collateral, or any Collateral is sold as
permitted by this Section 10.02, such Collateral (unless sold to the Parent or a
Subsidiary of the Parent) shall be sold free and clear of the Liens created by
the Security Documents, and the Administrative Agent and Collateral Agent shall
be authorized to take any actions deemed appropriate in order to effect the
foregoing.
 
10.03 Dividends.  The Parent will not, and will not permit any of its
Subsidiaries to, authorize, declare or pay any Dividends with respect to the
Parent or any of its Subsidiaries, except that:
 
(i) any Subsidiary of the Parent (other than the Borrower) which is a Credit
Party may pay Dividends to the Parent, to the Borrower or to any other
Wholly-Owned Subsidiary of the Parent which is a Credit Party, and any
Subsidiary of the Parent which is not a Credit Party also may pay Dividends to
the Parent or a Wholly-Owned Subsidiary;
 
(ii) any non-Wholly-Owned Subsidiary of the Parent may pay cash Dividends to its
shareholders generally so long as the Parent or its respective Subsidiary which
owns the equity interest in the Subsidiary paying such Dividends receives at
least its proportionate share thereof (based upon its relative holding of the
equity interest in such Subsidiary paying such Dividends and taking into account
the relative preferences, if any, of the various classes of equity interests of
such Subsidiary); and
 
(iii) so long as (x) no Default or Event of Default exists or would result
therefrom and (y) after giving effect to such Dividend, the Parent will be in
pro forma compliance with each of the covenants set forth in Sections 10.07,
10.08 and 10.10, the Parent and the Borrower may pay cash Dividends.
 
10.04 Indebtedness.  The Parent will not, and will not permit any of its
Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
 
(i) Indebtedness incurred or deemed incurred pursuant to this Agreement and the
other Credit Documents;
 
(ii) Indebtedness under (x) Interest Rate Protection Agreements which are
nonspeculative in nature and are entered into with respect to other Indebtedness
permitted to remain outstanding or be incurred, as the case may be, pursuant to
this Section 10.04 and (y) Indebtedness evidenced by Other Hedging Agreements
entered into pursuant to Section 10.05(vi);
 
(iii) (A)  Existing Indebtedness outstanding on the Effective Date and listed on
Schedule VIII (as reduced by any repayments thereof (and, in the case of a
revolving credit facility, any reductions in the commitments thereunder) on or
after the Initial Borrowing Date) and (B) Indebtedness issued to refinance or
replace any such Existing Indebtedness, provided that (I) the obligor or
obligors on the Existing Indebtedness so refinanced or replaced is the obligor
or obligors on such refinancing or replacement Indebtedness, (II) the principal
amount of the Indebtedness issued to refinance or replace such Existing
Indebtedness is not increased beyond the sum of (x) the amount outstanding
thereunder on the date of such refinancing or replacement (and, in the case of
revolving credit facilities, the maximum amount available for borrowing
thereunder is not increased above the amount in place on the Initial Borrowing
Date (as such amount may have been reduced as provided in preceding clause (A)))
plus (y) reasonable fees and expenses incurred in connection with such
refinancing or replacement, (III) such refinancing or replacement Indebtedness
has a final maturity date no earlier than six months after the fifth anniversary
of the Initial Borrowing Date, (IV) such Indebtedness is on terms and conditions
taken as a whole (including, without limitation, terms relating to interest
rate, fees, covenants, defaults, amortization and mandatory prepayments) not
materially more onerous to the Parent or any of its Subsidiaries than the terms
and conditions of the Existing Indebtedness being refinanced or replaced (but
taking into account any changes to the terms thereof as permitted by Section
10.11), (V) such Indebtedness is not secured other than by Liens on the assets
of the Parent or any Subsidiary of the Parent which were previously subject to
Liens securing the Existing Indebtedness being refinanced or replaced as
permitted by Section 10.01(iii), (VI) such refinancing or replacement
Indebtedness is not guaranteed by any Credit Party and no Credit Party has any
liability or obligation with respect thereto (other than guaranties of
refinancing or replacement Indebtedness to the same extent (and by the same
Credit Parties) that the Existing Indebtedness being refinanced or replaced was
guaranteed, so long as such guaranties are on terms and conditions taken as a
whole that are not materially more onerous to the Parent or any of its
Subsidiaries than the terms and conditions of the guaranties in respect of the
Existing Indebtedness being refinanced or replaced) and (VII) at the time of,
and immediately after giving effect to, the incurrence of such refinancing or
replacement Indebtedness, no Default or Event of Default shall be in existence;
 
 
 
80

--------------------------------------------------------------------------------

 
 
(iv) intercompany Indebtedness to the extent permitted by Sections 10.05(iii),
(vii) and (viii);
 
(v) (x) Contingent Obligations of any Subsidiary of the Parent (other than the
Borrower and the Subsidiary Guarantors) with respect to Indebtedness and lease
obligations of any other Subsidiary of the Parent otherwise permitted under this
Agreement and (y) Contingent Obligations of the Parent of obligations of its
Subsidiaries under operating leases entered into in the ordinary course of
business;
 
(vi) Indebtedness of any Subsidiary of the Parent with respect to performance
bonds, bid bonds, surety bonds, appeal bonds or customs bonds required in the
ordinary course of business or in connection with the enforcement of rights or
claims of the Parent or any of its Subsidiaries, provided that the aggregate
outstanding amount of (x) all Indebtedness incurred by the Credit Parties in
respect of such performance bonds, surety bonds, appeal bonds and customs bonds
permitted by this subsection (vi) and (y) any Letter of Credit issued pursuant
to Section 10.04(i) shall not at any time exceed $20,000,000;
 
 
 
81

--------------------------------------------------------------------------------

 
 
(vii) so long as no Default or Event of Default then exists or would result
therefrom, additional Indebtedness of Subsidiaries of the Parent (other than the
Borrower and the Subsidiary Guarantors), provided that both before and after
giving effect to such additional Indebtedness, the Parent and its Subsidiaries
shall be in pro forma compliance with the financial covenants contained in
Sections 10.07, 10.08 and 10.10, which Indebtedness shall be unsecured unless
otherwise permitted under Section 10.01;
 
(viii) Indebtedness of any Subsidiary Guarantor to the extent permitted under
Section 10.15; and
 
      (ix)           Existing Indebtedness not required to be scheduled on
Schedule VIII to the extent the principal amount of such Indebtedness does not
exceed $5,000,000 or $20,000,000 in the aggregate at any one time outstanding.

10.05 Advances, Investments and Loans.  The Parent will not, and will not permit
any of its Subsidiaries to, directly or indirectly, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any other Person, or purchase or own a futures contract or otherwise become
liable for the purchase or sale of currency or other commodities at a future
date in the nature of a futures contract, or hold any cash or Cash Equivalents
(each of the foregoing an “Investment” and, collectively, “Investments”), except
that the following shall be permitted:
 
(i) the Parent and any of its Subsidiaries may acquire and hold accounts
receivables owing to any of them, if created or acquired in the ordinary course
of business and payable or dischargeable in accordance with customary trade
terms of such Subsidiary of the Parent;
 
(ii) the Parent and any of its Subsidiaries may acquire and hold cash and Cash
Equivalents;
 
(iii) the Parent and its Subsidiaries may hold the Investments held by them on
the Initial Borrowing Date and described on Schedule XIII, provided that any
additional Investments made with respect thereto shall be permitted only if
permitted under the other provisions of this Section 10.05;
 
(iv) the Parent and any of its Subsidiaries may acquire and own Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in good faith settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;
 
(v) the Parent and any of its Subsidiaries may make loans and advances to their
officers and employees for moving, relocation and travel expenses and other
similar expenditures, in each case in the ordinary course of business in an
aggregate amount not to exceed $250,000 at any time (determined without regard
to any write-downs or write-offs of such loans and advances);
 
 
 
82

--------------------------------------------------------------------------------

 
 
(vi) (x) the Parent and its Subsidiaries may enter into Interest Rate Protection
Agreements to the extent permitted by Section 10.04(ii) and (y) the Subsidiaries
of the Parent may enter into and perform their obligations under Other Hedging
Agreements entered into in the ordinary course of business so long as each such
Other Hedging Agreement is non-speculative in nature;
 
(vii) (A) each of the Parent, the Borrower and the Subsidiary Guarantors may
make intercompany loans and advances between and among one another, (B) the
Parent and its Subsidiaries (other than the Borrower and the Subsidiary
Guarantors) may make intercompany loans and advances to each of the Parent, the
Borrower and/or the Subsidiary Guarantors, (C) Wholly-Owned Subsidiaries of the
Parent that are not Credit Parties may make intercompany loans and advances
between or among one another and (D) to the extent that the Borrower may pay
cash Dividends to the Parent pursuant to Section 10.03, the Borrower may, in
lieu of paying such cash Dividends, make an intercompany loan or advance to the
Parent for the purposes, and subject to the limitations, set forth in
Section 10.03 (such intercompany loans and advances referred to in the preceding
clauses (A) through (D), inclusive, of this Section 10.05 are collectively
referred to herein as “Intercompany Loans”), in each case so long as each
Intercompany Loan made to a Credit Party is subject to the provisions of the
Intercompany Subordination Agreement (which Intercompany Subordination Agreement
must have been executed by the obligor and obligee of each such Intercompany
Loan);
 
(viii) (a) the Parent, the Borrower and the Subsidiary Guarantors that are
Wholly-Owned Subsidiaries may make capital contributions to the Borrower or any
Subsidiary Guarantor and (b) the Borrower may make capital contributions to and
acquire Capital Stock in any of its other Wholly-Owned Subsidiaries;
 
(ix) (a) the Parent and any of its Subsidiaries may make Investments in the
Borrower or any Subsidiary Guarantor and (b) the Borrower may make Investments
in any of its other Wholly-Owned Subsidiaries;
 
(x) so long as no Default or Event of Default then exists or would result
therefrom, the Credit Parties may make cash capital contributions and/or loans
to Joint Ventures in an aggregate amount not to exceed $5,000,000 in any fiscal
year of the Parent;
 
(xi) so long as no Default or Event of Default then exists or would result
therefrom, the Credit Parties may acquire Investments in an Acquired Entity or
Business; provided that, both before and after giving effect to such additional
Investments, the Parent and its Subsidiaries shall be in pro forma compliance
with the financial covenants set forth in Sections 10.07 through 10.10,
inclusive;
 
 
 
83

--------------------------------------------------------------------------------

 
 
(xii) the Parent and any of its Subsidiaries may make Investments that have
maturities under three years; provided that, both before and after giving effect
to such additional Investments, the Parent and its Subsidiaries shall be in pro
forma compliance with the financial covenants set forth in Sections 10.07
through 10.10, inclusive;
 
(xiii) so long as no Default or Event of Default then exists or would result
therefrom, the Subsidiaries of the Parent (other than the Borrower and the
Subsidiary Guarantors) may make other Investments; provided that, both before
and after giving effect to such additional Investments, the Parent and its
Subsidiaries shall be in pro forma compliance with the financial covenants set
forth in Sections 10.07 through 10.10, inclusive; and
 
(xiv) the Reorganization shall be permitted.
 
10.06 Transactions with Affiliates.  The Parent will not, and will not permit
any of its Subsidiaries to, enter into any transaction or series of related
transactions with any Affiliate of the Parent or any of its Subsidiaries, other
than in the ordinary course of business and on terms and conditions
substantially as favorable to the Parent or such Subsidiary as would reasonably
be obtained by the Parent or such Subsidiary at that time in a comparable
arm’s-length transaction with a Person other than an Affiliate, except that the
following in any event shall be permitted:
 
(i) Dividends may be paid to the extent provided in Section 10.03;
 
(ii) loans may be made and other transactions may be entered into by the Parent
and its Subsidiaries to the extent permitted by Sections 10.02, 10.04 and 10.05;
 
(iii) customary fees may be paid to non-officer directors of the Parent and its
Subsidiaries;
 
(iv) the Parent and its Subsidiaries may enter into, and may make payments
under, employment agreements, employee benefits plans, stock option plans,
indemnification provisions and other similar compensatory arrangements
(including arrangements made with respect to bonuses) with officers, employees
and directors of the Parent and its Subsidiaries in the ordinary course of
business;
 
(v) the Parent and its Subsidiaries may make Investments in a Person engaged in
a business permitted pursuant to Section 10.15 so long as such Person becomes a
Subsidiary of the Parent; and
 
(vi) the Parent and its Subsidiaries may enter into employment agreements or
arrangements with their respective officers and employees in the ordinary course
of business.
 
10.07 Maximum Leverage Ratio.  The Parent will not permit the Leverage Ratio to
be greater than 4.00:1.00 on the last day of any fiscal quarter of the Parent.
 
 
 
84

--------------------------------------------------------------------------------

 
 
10.08 Interest Expense Coverage Ratio.  The Parent will not permit the Interest
Expense Coverage Ratio for any Test Period to be less than 3.00:1.00 on the last
day of any fiscal quarter of Parent.
 
10.09 Collateral Maintenance.  The Parent will not permit the sum of the fair
market value of all Collateral Rigs which have not been sold, transferred, lost
or otherwise disposed of, on an individual charter-free basis, at any time (such
value, the “Aggregate Collateral Rig Value”), as determined by calculating the
appraised value set forth in the most recent appraisal report related to each
respective Collateral Rig and delivered by the Borrower to the Administrative
Agent or obtained by the Administrative Agent in accordance with Section
9.01(c), to equal less than 150% of the aggregate outstanding principal amount
of the Loans at such time; provided that, (x) for the avoidance of doubt, it is
understood and agreed that the appraisal reports delivered on February 25, 2011
from Fearnleys Ltd. and February 22, 2011 from Pareto Offshore AS shall be
satisfactory for the purpose of making the calculation in this Section 10.09
from the Initial Borrowing Date until the next required date of delivery of
appraisal reports under this Agreement; (y) so long as any violation of this
Section 10.09 is not caused by any voluntary Collateral Disposition, such
violation shall not constitute a Default or an Event of Default so long as
within 60 days of the occurrence of such violation, the Borrower shall either
(i) post additional collateral (at the expense of the Borrower) satisfactory to
the Required Lenders, pursuant to the Collateral and Guaranty Requirements and
otherwise satisfactory in form and substance to the Collateral Agent, sufficient
to cure such violation (and shall at all times during such period and prior to
satisfactory completion thereof, be diligently carrying out such actions) or
(ii) make such reductions to the Total Commitment (and any required repayments
of outstanding Loans of any relevant Tranche resulting therefrom) in an amount
sufficient to cure such violation (it being understood that any action taken in
respect of this proviso shall only be effective to cure such violation pursuant
to this Section 10.09 to the extent that no Default or Event of Default exists
hereunder immediately after giving effect thereto) and (z) the value of any
Collateral Rig shall not be included in the Aggregate Collateral Rig Value until
such time as such Collateral Rig has been delivered to the Borrower or a
Wholly-Owned Subsidiary of the Borrower and the Collateral and Guaranty
Requirements have been fully satisfied.
 
10.10 Maximum Debt to Capitalization Ratio.  The Parent will not permit the Debt
to Capitalization to be greater than 0.50 to 1.00 on the last day of any fiscal
quarter of the Parent.
 
10.11 Certificate of Incorporation, By-Laws and Certain Other Agreements,
etc.  The Parent will not, and will not permit any of its Material Subsidiaries
to (or, in the case of the following clause (i) of this Section 10.11, the
Parent will exercise its rights in relation to each Material Subsidiary (whether
as shareholder, stockholder, partner, and arising under contract, statute or
howsoever) so that each Material Subsidiary shall not):
 
(i) amend, modify or change its certificate or articles of incorporation
(including, without limitation, by the filing or modification of any certificate
or articles of designation), certificate of formation, limited liability company
agreement or by-laws (or the equivalent organizational documents), as
applicable, or any agreement entered into by it with respect to its capital
stock or other equity interests, or enter into any new agreement with respect to
its capital stock or other equity interests, unless such amendment,
modification, change or other action contemplated by this clause (i) would not
reasonably be expected to be adverse to the interests of the Lenders; provided
that (x) amendments, modifications or changes to the relevant organizational
documents of any Material Subsidiary shall be permitted to reflect any Liens
permitted pursuant to Section 10.01 and (y) notwithstanding the foregoing, the
Reorganization shall be permitted; or
 
 
 
85

--------------------------------------------------------------------------------

 
 
(ii) amend, modify or change any provision governing any Existing Indebtedness
(including any refinancings or replacements thereof) permitted to remain
outstanding pursuant to Section 10.04(iii), unless such amendments,
modifications or changes contemplated by this clause (iii) (taken as a whole
with respect to any single issue of Existing Indebtedness) are on terms and
conditions not materially more onerous to the Parent or any of its Subsidiaries
than the terms and conditions applicable thereto on the Initial Borrowing Date.
 
10.12 Limitation on Certain Restrictions on Subsidiaries.  The Parent will not,
and will not permit any of its Subsidiaries to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Subsidiary to (a) pay Dividends or make
any other distributions on its capital stock or any other interest or
participation in its profits owned by the Parent or any of its Subsidiaries, or
pay any Indebtedness owed to the Parent or any of its Subsidiaries, (b) make
loans or advances to the Parent or any of its Subsidiaries or (c) transfer any
of its properties or assets to the Parent or any of its Subsidiaries, except for
such encumbrances or restrictions existing under or by reason of:
 
(i) applicable law;
 
(ii) this Agreement and the other Credit Documents;
 
(iii) customary provisions restricting subletting or assignment of any lease
governing any leasehold interest of the Parent or any of its Subsidiaries;
 
(iv) customary provisions restricting assignment of any agreement entered into
by the Parent or any of its Subsidiaries in the ordinary course of business;
 
(v) restrictions on the transfer of any asset pending the close of the sale of
such asset;
 
(vi) restrictions on the transfer of any asset subject to a Lien permitted by
Section 10.01(iii), (v), and (vi); and
 
(vii) restrictions which are not more restrictive than those contained in this
Agreement contained in any documents governing any Indebtedness incurred after
the Initial Borrowing Date in accordance with the provisions of this Agreement.
 
10.13 Limitation on Issuance of Capital Stock.  (a)  The Parent will not, and
will not permit any of its Material Subsidiaries to, issue (i) any preferred
stock or other preferred equity interests, other than Qualified Preferred
Interests of the Parent or (ii) any redeemable common stock or other redeemable
common equity interests other than common stock or other redeemable common
equity interests that is redeemable at the sole option of the Parent or such
Material Subsidiary, as the case may be.
 
 
 
86

--------------------------------------------------------------------------------

 
 
(b) The Parent will not permit any of its Material Subsidiaries to issue any
capital stock or other equity interests (including by way of sales of treasury
stock) or any options or warrants to purchase, or securities convertible into,
capital stock or other equity interests, except (i) for transfers and
replacements of then outstanding shares of capital stock or other equity
interests, (ii) for stock splits, stock dividends and issuances which do not
decrease the percentage ownership of the Parent or any of its Material
Subsidiaries in any class of the capital stock or other equity interests of such
Subsidiary, (iii) to qualify directors to the extent required by applicable law
and (iv) for issuances by newly created or acquired Subsidiaries in accordance
with the terms of this Agreement.
 
(c) Notwithstanding clause (a) and (b) above, the Parent and its Material
Subsidiaries may issue (i) Series A Junior Participating Preferred Stock to the
extent contemplated by the Rights Plan, (ii) capital stock or other equity
interests (other than preferred equity interests issued to Persons other than
the Parent, the Borrower or any Subsidiary Guarantor) in connection with the
Reorganization and (iii) capital stock or other equity interests to the Parent,
the Borrower or any Subsidiary Guarantor, provided that, in the case of each
issuance pursuant to subsection (i), (ii) or (iii) above, the Administrative
Agent shall have received notice of each such issuance from the Parent or the
Borrower at least ten days prior to such issuance.  For purposes of clarity, the
Parent may issue capital stock or other equity interests (other than
Disqualified Stock) in order to raise capital, effectuate stock splits, stock
dividends, and other similar issuances and may issue capital stock, options or
other equity interests in accordance with its stock incentive plans in effect
from time to time.
 
10.14 Change of Ownership; Registry; Class; Management; Legal Names; Type of
Organization (and whether a Registered Organization); Jurisdiction of
Organization; etc.  (a)  Neither the Parent, the Borrower nor any Subsidiary
Guarantor shall transfer or change the flag, registry, class, or management or
control to a party other than the Parent or a Subsidiary of the Parent (other
than as set forth in this Agreement), of any Collateral Rig without the written
consent of the Administrative Agent, such consent not to be unreasonably
withheld, provided that the Reorganization shall be permitted.
 
(b) Neither the Parent, the Borrower nor any Subsidiary Guarantor shall change
its legal name, its type of organization, its status as a registered
organization (in the case the Parent and each Subsidiary Guarantor that is a
Domestic Subsidiary), its jurisdiction of organization, its location, or its
organizational identification number (in the case of the Parent and each
Subsidiary Guarantor that is a Domestic Subsidiary), except that any such
changes shall be permitted (so long as not in violation of the applicable
requirements of the Security Documents and so long as same do not involve (w) in
the case of the Parent or any Subsidiary Guarantor that is a Domestic
Subsidiary, a registered organization ceasing to constitute the same, (x) the
Borrower ceasing to constitute a corporation organized under the laws of the
Cayman Islands and (y) the Parent or any Subsidiary Guarantor that is a Domestic
Subsidiary changing its jurisdiction of organization or location from the United
States or a State thereof, to a jurisdiction of organization or location, as the
case may be, outside the United States or a State thereof) if (i) it shall have
given to the Collateral Agent not less than 15 days’ prior written notice of
each change to the information listed on Schedule XI (as adjusted for any
subsequent changes thereto previously made in accordance with this sentence),
together with a supplement to Schedule XI which shall correct all information
contained therein for the Parent or such Subsidiary of the Parent, and (ii) in
connection with the respective such change or changes (I) such Person shall have
taken all action reasonably requested by the Collateral Agent to maintain the
security interests of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect and
(II) the Administrative Agent is satisfied that the rights of the Lenders under
such Guaranty to which such Person is a party are not impaired in any respect.
 
 
 
87

--------------------------------------------------------------------------------

 
 
10.15 Business.  (a)  The Parent will not, and will not permit any of its
Subsidiaries to, engage in any business other than any business conducted by the
Parent and its Subsidiaries on the Initial Borrowing Date and any other business
or activities as may be substantially similar, incidental or related thereto.
 
(b) Notwithstanding the foregoing or anything else in this Agreement to the
contrary, the Parent will not engage in any business or own any significant
assets or have any material liabilities other than (i) the guarantees referred
to in Sections 10.04(iii) and (v), (ii) its ownership of the equity interests of
any of its direct Subsidiaries, (iii) Investments made by the Parent in
accordance with Section 10.05 and (iv) those liabilities which it is responsible
for under this Agreement and the other Credit Documents to which it is a party,
provided that the Parent may engage in those activities that are incidental to
(x) the maintenance of its existence in compliance with applicable law and (y)
legal, tax and accounting matters in connection with any of the foregoing
activities.
 
(c) Notwithstanding the foregoing or anything else in this Agreement to the
contrary, the Parent will not permit any Subsidiary Guarantor (other than AOPL)
to (I) engage in any business or own any significant assets or have any material
liabilities other than (i) its ownership of the capital stock of the Credit
Parties and the ownership and chartering of the Collateral Rigs to other
Subsidiaries of the Parent, (ii) those liabilities which it is responsible for
under this Agreement and the other Credit Documents to which it is a party and
(iii) ordinary course liabilities, provided that the Credit Parties may also
engage in those activities that are incidental to (x) the maintenance of its
existence in compliance with applicable law or (y) legal, tax and accounting
matters in connection with any of the foregoing activities and (II) issue or
enter into any guarantee or indemnity or otherwise become directly or
contingently liable for the obligations of any other person, other than (i) in
the ordinary course of its business as owner of its Collateral Rig, including
any guarantee of the obligations of any Credit Party in favor of any manager,
(ii) in the ordinary course of its business as owner of a Collateral Rig,
performance guarantees of performance of drilling contracts and financial
guarantees of obligations such as those relating to taxes, customs, duties and
importation regulation or (iii) as contemplated by the Credit Documents.
 
10.16 ERISA.  The Parent will not, and will not permit any of its Subsidiaries,
nor any ERISA Affiliate to, (i) engage in any “prohibited transaction” within
the meaning of Section 406 of ERISA or Section 4975 of the Code which would
result in a material liability for the Parent or any of its Subsidiaries; or
(ii) sponsor, maintain, make contributions to or incur liabilities in respect of
any Plan which is subject to Title IV of ERISA or Section 302 of ERISA or
Section 412 of the Code.
 
 
 
 
88

--------------------------------------------------------------------------------

 
 
SECTION 11. Events of Default.  Upon the occurrence of any of the following
specified events (each an “Event of Default”):
 
11.01 Payments.  The Borrower shall (i) default in the payment when due of any
principal of any Loan or any Note or (ii) default, and such default shall
continue unremedied for three or more Business Days, in the payment when due of
any interest on any Loan or Note, any Unpaid Drawing or any Fees or any other
amounts owing hereunder or under any other Credit Document; or
 
11.02 Representations, etc.  Any representation, warranty or statement made or
deemed made by any Credit Party herein or in any other Credit Document or in any
certificate delivered to the Administrative Agent or any Lender pursuant hereto
or thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
 
11.03 Covenants.  The Parent or any of its Subsidiaries shall (i) default in the
due performance or observance by it of any term, covenant or agreement contained
in Section 9.01(g), 9.04 (solely with respect to the Parent and the Borrower),
9.08, 9.12, 9.13 or 10 or (ii) default in the due performance or observance by
it of any other term, covenant or agreement (other than those referred to in
Section 11.01, 11.02 or clause (i) of this Section 11.03) contained in this
Agreement and, in the case of this clause (ii), such default shall continue
unremedied for a period of 30 days after written notice to the defaulting party
by the Administrative Agent or the Required Lenders; or
 
11.04 Default Under Other Agreements.  (i)  The Parent or any of its
Subsidiaries shall default in any payment of any Indebtedness (other than the
Obligations) beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness was created or (ii) the Parent or any of
its Subsidiaries shall default in the observance or performance of any agreement
or condition relating to any Indebtedness (other than the Obligations) or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause (determined without regard to whether any notice is required),
any such Indebtedness to become due prior to its stated maturity or (iii) any
Indebtedness (other than the Obligations) of the Parent or any of its
Subsidiaries shall be declared to be due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment, prior to the stated
maturity thereof, provided that it shall not be a Default or Event of Default
under this Section 11.04 if a waiver of any of the defaults described in the
preceding clauses (i) through (iii) has been obtained or if the aggregate
principal amount of all Indebtedness as described in preceding clauses (i)
through (iii), inclusive, is less than $10,000,000.
 
11.05 Bankruptcy, etc.  The Parent or any of its Subsidiaries shall commence a
voluntary case concerning itself under Title 11 of the United States Code
entitled “Bankruptcy,” as now or hereafter in effect, or any successor thereto
(the “Bankruptcy Code”); or an involuntary case is commenced against the Parent
or any of its Subsidiaries and the petition is not controverted within 10 days
after service of summons, or is not dismissed within 60 days, after commencement
of the case; or a custodian (as defined in the Bankruptcy Code) is appointed
for, or takes charge of, all or substantially all of the property of the Parent
or any of its Subsidiaries or the Parent or any of its Subsidiaries commences
any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Parent or any of
its Subsidiaries or there is commenced against the Parent or any of its
Subsidiaries any such proceeding which remains undismissed for a period of 60
days, or the Parent or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Parent or any of its Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or the
Parent or any of its Subsidiaries makes a general assignment for the benefit of
creditors; or any petition is presented (and in the case of a petition presented
by a Person other than the Parent or any of its Subsidiaries remains
undischarged or unstayed for a period of 60 days); or any order is made by any
competent court for winding up, dissolution or the appointment of a liquidator;
or any resolution is passed by any of the Parent or any of its Subsidiaries for
its winding up or dissolution or the appointment of a liquidator of any of the
Parent or any of its Subsidiaries; or any corporate action is taken by the
Parent or any of its Subsidiaries for the purpose of effecting any of the
foregoing; or
 
 
 
89

--------------------------------------------------------------------------------

 
 
11.06 ERISA.  (a)  A contribution required to be made with respect to a Plan or
a Foreign Pension Plan is not timely made, or the Parent or any of its
Subsidiaries has incurred or is reasonably likely to incur liabilities pursuant
to one or more employee welfare benefit plans (as defined in Section 3(1) of
ERISA) that provide benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or Plans or Foreign Pension
Plans; (b) there shall result from any such event or events the imposition of a
Lien, the granting of a security interest, or a liability or a material risk of
incurring a liability; and (c) such Lien, security interest or liability,
individually and/or in the aggregate, in the opinion of the Required Lenders,
has had, or could reasonably be expected to have, a Material Adverse Effect; or
 
11.07 Security Documents.  At any time after the execution and delivery thereof,
any of the Security Documents shall cease to be in full force and effect, or
shall cease to give the Collateral Agent for the benefit of the Secured
Creditors the Liens, rights, powers and privileges purported to be created
thereby (including, without limitation, a perfected security interest in, and
Lien on, all of the Collateral), in favor of the Collateral Agent, superior to
and prior to the rights of all third Persons (except in connection with
Permitted Liens), and subject to no other Liens (except Permitted Liens), or any
Credit Party shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to any of
the Security Documents and such default shall continue beyond any grace period
(if any) specifically applicable thereto pursuant to the terms of such Security
Document; or
 
11.08 Guaranties.  Any Guaranty or any provision thereof shall cease to be in
full force and effect, or any Guarantor or any Person acting by or on behalf of
such Guarantor shall deny or disaffirm such Guarantor’s obligations under the
relevant Guaranty or any Guarantor shall default in the due performance or
observance of any term, covenant or agreement on its part to be performed or
observed pursuant to any Guaranty; or
 
 
 
90

--------------------------------------------------------------------------------

 
 
11.09 Judgments.  One or more judgments or decrees shall be entered against the
Parent or any of its Subsidiaries involving in the aggregate for the Parent and
its Subsidiaries a liability (not paid or fully covered by a reputable and
solvent insurance company) and such judgments and decrees either shall be final
and non-appealable or shall not be vacated, discharged or stayed or bonded
pending appeal for any period of 30 consecutive days, and the aggregate amount
of all such judgments, to the extent not covered by insurance, equals or exceeds
$10,000,000; or
 
11.10 Change of Control.  A Change of Control shall occur; or
 
11.11 Revocation of Consents.  Any authorization, approval, consent, license,
exemption, filing, registration or other requirement necessary to enable any
Credit Party to comply with any of its obligations under any of the Credit
Documents to which it is a party shall be materially adversely modified, revoked
or withheld or shall not remain in full force and effect and within 90 days of
the date of Borrower’s receipt of written notice of the same such event is not
remedied to the satisfaction of the Required Lenders, and the Required Lenders
consider in their sole discretion that such failure is or could reasonably be
expected to become materially prejudicial to the interests, rights or position
of the Administrative Agent, the Collateral Agent and the Lenders or any of
them; provided that the Borrower shall not be entitled to the benefit of the
aforesaid 90 day period if the modification, revocation or withholding of the
authorization, approval or consent shall be due to the gross negligence or
willful misconduct of any Credit Party and the Required Lenders shall determine
in their sole discretion that the interests of the Administrative Agent, the
Collateral Agent or the Lenders might reasonably be expected to be materially
adversely affected; or
 
11.12 Unlawfulness.  At any time it shall be unlawful or impossible for:
 
(i) any Credit Party to perform any of its obligations under any Credit Document
to which it is a party; or
 
(ii) the Administrative Agent, the Collateral Agent or the Lenders, as
applicable, to exercise any of their rights under any of the Credit Documents;
 
provided that no Event of Default shall be deemed to have occurred (x) (except
where the unlawfulness or impossibility adversely affects any Credit Party’s
payment obligations under this Agreement and/or the other Credit Documents (the
determination of which shall be in the Administrative Agent’s sole discretion)
in which case the following provisions of this Section 11.12 shall not apply)
where the unlawfulness or impossibility prevents any Credit Party from
performing its obligations (other than its payment obligations under this
Agreement and the other Credit Documents) and is cured within a period of 21
days of the occurrence of the event giving rise to the unlawfulness or
impossibility and the relevant Credit Party, within the aforesaid period,
performs its obligation(s), and (y) where the Administrative Agent and/or the
Lenders, as applicable, could, in its or their sole discretion, mitigate the
consequences of unlawfulness or impossibility in the manner described in Section
2.11 (it being understood that the costs of mitigation shall be determined in
accordance with Section 2.11); or
 
 
 
91

--------------------------------------------------------------------------------

 
 
11.13 Insurances.  The Borrower shall fail to insure any Collateral Rig in the
manner specified in this Agreement or fail to renew the Required Insurance at
least 10 Business Days prior to the date of expiry thereof or, if requested by
the Administrative Agent, fail to produce prompt confirmation of such renewal to
the Administrative Agent; or
 
11.14 Disposals.  The Borrower or any Credit Party shall conceal, remove, or
permit to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them, or make or suffer a
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or make any transfer of its property to or
for the benefit of a creditor with the intention of preferring such creditor
over any other creditor; or
 
11.15 Cessation of Business.  Subject to Section 10.02, any Credit Party shall
cease to carry on all or a substantial part of its business and no other Credit
Party is a successor thereto; or
 
11.16 Government Intervention.  The authority of any Credit Party in the conduct
of its business shall be wholly or substantially curtailed by any seizure or
intervention by or on behalf of any governmental authority and within 90 days of
the date of its occurrence any such seizure or intervention is not relinquished
or withdrawn and the Administrative Agent reasonably considers that the relevant
occurrence is or could reasonably be expected to become materially prejudicial
to the interests, rights or position of the Administrative Agent, the Collateral
Agent and/or the Lenders with respect to their ability to enforce the payment or
performance of the Obligations; provided that the Borrower shall not be entitled
to the benefit of the aforesaid 90 day period if the seizure or intervention
executed by any governmental authority is due to the gross negligence or willful
misconduct of any Credit Party and the Administrative Agent is satisfied, in its
sole discretion, that the interests of the Administrative Agent, the Collateral
Agent  and/or the Lenders could reasonably be expected to be materially
adversely affected;
 
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Lenders, shall by written notice to the Borrower, take any or all
of the following actions, without prejudice to the rights of the Administrative
Agent, any Lender or the holder of any Note to enforce its claims against any
Credit Party (provided that if an Event of Default specified in Section 11.05
shall occur, the result which would occur upon the giving of written notice by
the Administrative Agent to the Borrower as specified in clauses (i) and (ii)
below shall occur automatically without the giving of any such
notice):  (i) declare the Total Commitment terminated, whereupon all Commitments
of each Lender shall forthwith terminate immediately and any accrued and unpaid
Commitment Commission shall forthwith become due and payable without any other
notice of any kind; (ii) declare the principal of and any accrued interest in
respect of all Loans and the Notes and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Credit Party; (iii) terminate any Letter of Credit
which may be terminated in accordance with its terms; (iv) direct the Borrower
to pay (and the Borrower agrees that upon receipt of such notice, or upon the
occurrence of Event of Default specified in Section 11.05 with respect to the
Borrower, to pay) to the Collateral Agent at the Payment Office such additional
amount of cash or Cash Equivalents, to be held as security by the Collateral
Agent, as is equal to the aggregate Stated Amount of all Letters of Credit
issued for the account of the Borrower then outstanding; (v) enforce, as
Collateral Agent, all of the Liens and security interests created pursuant to
the Security Documents; and (vi) apply any cash collateral held by the
Administrative Agent pursuant to Section 5.02 repayment of the Obligations.
 
 
 
92

--------------------------------------------------------------------------------

 
 
 
SECTION 12. The Administrative Agent.
 
12.01 Appointment.  (a) The Lenders in their capacity as Lenders and Other
Creditors hereby irrevocably designate and appoint Nordea Bank Finland plc, New
York Branch, as Administrative Agent (for purposes of this Section 12 and
Section 14.01, the term “Administrative Agent” also shall include Nordea Bank
Finland plc, New York Branch (and/or any of its affiliates) in its capacity as
Collateral Agent and assignee pursuant to the Security Documents (including as
mortgagee and security trustee under the Collateral Rig Mortgages) and in its
capacity as lead arranger and book runner in connection with this Agreement and
the financings contemplated hereby) to act as specified herein and in the other
Credit Documents.  Each Lender hereby irrevocably authorizes, and each holder of
any Note by the acceptance of such Note shall be deemed irrevocably to
authorize, the Administrative Agent to take such action on its behalf under the
provisions of this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Administrative Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto.  The
Administrative Agent may perform any of its respective duties hereunder by or
through its officers, directors, agents, employees or affiliates.
 
(b) The Lenders in their capacity as lenders and Other Creditors hereby
irrevocably designate and appoint Nordea Bank Finland plc, New York Branch as
Security Trustee in order to satisfy applicable requirements of Maltese law for
the purpose of holding a security interest in the Collateral Rigs pursuant to
the Collateral Rig Mortgages and in the Collateral pursuant to the other
Security Documents, as applicable, on behalf of the applicable Lenders, from
time to time, with regard to the (i) security, powers, rights, titles, benefits
and interests (both present and future) constituted by and conferred on the
Lenders or any of them or for the benefit thereof under or pursuant to the
Collateral Rig Mortgages and the other Security Documents (including, without
limitation, the benefit of all covenants, undertakings, representations,
warranties and obligations given, made or undertaken by any Lender in the
Collateral Rig Mortgages and the other Security Documents), (ii) all money,
property and other assets paid or transferred to or vested in any Lender or any
agent of any Lender or received or recovered by any Lender or any agent of any
Lender pursuant to, or in connection with the Collateral Rig Mortgages and the
other Security Documents, whether from the Borrower or any Subsidiary Guarantor
or any other Person and (iii) all money, investments, property and other assets
at any time representing or deriving from any of the foregoing, including all
interest, income and other sums at any time received or receivable by any Lender
or any agent of any Lender in respect of the same (or any part thereof);
provided that, for the avoidance of doubt, the scope of such designation and
appointment shall not be greater than the scope of the designation and
appointment of Nordea Bank Finland plc, New York Branch as Collateral Agent
under any Credit Document except to the extent required by Maltese law.  Nordea
Bank Finland plc, New York Branch hereby accepts such appointment as Security
Trustee.
 
 
 
93

--------------------------------------------------------------------------------

 
 
12.02 Nature of Duties.  (a) The Administrative Agent shall not have any duties
or responsibilities except those expressly set forth in this Agreement and in
the other Credit Documents.  Neither the Administrative Agent nor any of its
officers, directors, agents, employees or affiliates shall be liable for any
action taken or omitted by it or them hereunder or under any other Credit
Document or in connection herewith or therewith, unless caused by its or their
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non–appealable decision).  The duties of the
Administrative Agent shall be mechanical and administrative in nature; the
Administrative Agent shall not have by reason of this Agreement or any other
Credit Document a fiduciary relationship in respect of any Lender or the holder
of any Note; and nothing in this Agreement or in any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose upon
the Administrative Agent any obligations in respect of this Agreement or any
other Credit Document except as expressly set forth herein or therein.
 
(b)  It is understood and agreed that the use of the term “agent” herein or in
any other Credit Documents (or any other similar term) with reference to the
Administrative Agent in such capacity is not intended to connote any fiduciary
or other implied (or express) obligations arising under agency doctrine of any
applicable law. Instead such term is used as a matter of market custom, and is
intended to create or reflect only an administrative relationship between
contracting parties.
 
(c)  The Administrative Agent, in such capacity, shall not have any duties or
obligations except those expressly set forth herein and in the other Credit
Documents, and its duties hereunder shall be administrative in nature.  Without
limiting the generality of the foregoing, the Administrative Agent:
 
(i)    shall not be subject to any fiduciary or other implied duties, regardless
of whether a Default or an Event of Default has occurred and is continuing;

(ii)   shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Credit Documents that the Administrative
Agent is required to exercise as directed in writing by the Required Lenders (or
such other number or percentage of the Lenders as shall be expressly provided
for herein or in the other Credit Documents); provided that the Administrative
Agent shall not be required to take any action that, in its opinion or the
opinion of its counsel, may expose the Administrative Agent to liability or that
is contrary to any Credit Document or applicable law, including for the
avoidance of doubt any action that may be in violation of the automatic stay
under any law for the general relief of debtors or that may effect a forfeiture,
modification or termination of property of a Defaulting Lender in violation of
any law for the general relief of debtors; and
 
 
 
94

--------------------------------------------------------------------------------

 

(iii)     shall not, except as expressly set forth herein and in the other
Credit Documents, have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its
Affiliates that is communicated to or obtained by the Person serving as the
Administrative Agent or any of its Affiliates in any capacity.

12.03 Lack of Reliance on the Administrative Agent.  Independently and without
reliance upon the Administrative Agent, each Lender and the holder of each Note,
to the extent it deems appropriate, has made and shall continue to make (i) its
own independent investigation of the financial condition and affairs of the
Parent and its Subsidiaries in connection with the making and the continuance of
the Loans and the taking or not taking of any action in connection herewith and
(ii) its own appraisal of the creditworthiness of the Parent and its
Subsidiaries and, except as expressly provided in this Agreement, the
Administrative Agent shall not have any duty or responsibility, either initially
or on a continuing basis, to provide any Lender or the holder of any Note with
any credit or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times
thereafter.  The Administrative Agent shall not be responsible to any Lender or
the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectability, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of the Parent and its Subsidiaries or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any other Credit Document, or the financial
condition of the Parent and its Subsidiaries or the existence or possible
existence of any Default or Event of Default.
 
12.04 Certain Rights of the Administrative Agent.  If the Administrative Agent
requests instructions from the Required Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or any other
Credit Document, the Administrative Agent shall be entitled to refrain from such
act or taking such action unless and until the Administrative Agent shall have
received instructions from the Required Lenders; and the Administrative Agent
shall not incur liability to any Lender by reason of so refraining.  Without
limiting the foregoing, neither any Lender nor the holder of any Note shall have
any right of action whatsoever against the Administrative Agent as a result of
the Administrative Agent acting or refraining from acting hereunder or under any
other Credit Document in accordance with the instructions of the Required
Lenders.
 
12.05 Reliance.  The Administrative Agent shall be entitled to rely, and shall
be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that the Administrative Agent believed to be the proper Person, and,
with respect to all legal matters pertaining to this Agreement and any other
Credit Document and its duties hereunder and thereunder, upon advice of counsel
selected by the Administrative Agent.
 
 
 
95

--------------------------------------------------------------------------------

 
 
12.06 Indemnification.  To the extent the Administrative Agent (or any affiliate
thereof) is not reimbursed and indemnified by the Parent or the Borrower, the
Lenders will reimburse and indemnify the Administrative Agent (and any affiliate
thereof), in proportion to their respective “percentage” as used in determining
the Required Lenders determined as if there were no Defaulting Lenders, for and
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, costs, expenses or disbursements of whatsoever kind
or nature which may be imposed on, asserted against or incurred by the
Administrative Agent (or any affiliate thereof) in performing its duties
hereunder or under any other Credit Document, or in any way relating to or
arising out of this Agreement or any other Credit Document; provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, claims, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent’s (or such affiliate’s)
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final and non-appealable decision).
 
12.07 The Administrative Agent in its Individual Capacity.  With respect to its
obligation to make Loans, or issue or participate in Letters of Credit, under
this Agreement, the Administrative Agent shall have the rights and powers
specified herein for a “Lender” and may exercise the same rights and powers as
though it were not performing the Administrative Agent duties specified herein;
and the term “Lender,” “Majority Lenders,” “Required Lenders” or any similar
terms shall, unless the context clearly indicates otherwise, include the
Administrative Agent in its respective individual capacities.  The
Administrative Agent and its affiliates may accept deposits from, lend money to,
and generally engage in any kind of banking, investment banking, trust or other
business with, or provide debt financing, equity capital or other services
(including financial advisory services) to any Credit Party or any Affiliate of
any Credit Party (or any Person engaged in a similar business with any Credit
Party or any Affiliate thereof) as if they were not performing the duties
specified herein, and may accept fees and other consideration from any Credit
Party or any Affiliate of any Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Lenders.
 
12.08 Holders.  The Administrative Agent may deem and treat the payee of any
Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment, transfer or endorsement thereof, as the case may be,
shall have been filed with the Administrative Agent.  Any request, authority or
consent of any Person who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee, assignee or endorsee, as the case may be,
of such Note or of any Note or Notes issued in exchange therefor.
 
12.09 Resignation by the Administrative Agent.  (a)  The Administrative Agent
may resign from the performance of all its respective functions and duties
hereunder and/or under the other Credit Documents at any time by giving 15
Business Days’ prior written notice to the Lenders and, unless a Default or an
Event of Default under Section 11.05 then exists, the Borrower.  Any such
resignation by an Administrative Agent hereunder shall also constitute its
resignation as an Issuing Lender, in which case the resigning Administrative
Agent (x) shall not be required to issue any further Letters of Credit hereunder
and (y) shall maintain all of its rights as Issuing Lender with respect to any
Letters of Credit issued by it, prior to the date of such resignation.  Such
resignation shall take effect upon the appointment of a successor Administrative
Agent pursuant to clauses (b) and (c) below or as otherwise provided below.
 
 
 
96

--------------------------------------------------------------------------------

 
 
(b) Upon any such notice of resignation by the Administrative Agent, the
Required Lenders shall appoint a successor Administrative Agent hereunder or
thereunder who shall be a commercial bank or trust company reasonably acceptable
to the Borrower, which acceptance shall not be unreasonably withheld or delayed
(provided that the Borrower’s approval shall not be required if an Event of
Default then exists).
 
(c) If a successor Administrative Agent shall not have been so appointed within
such 15 Business Day period, the Administrative Agent, with the consent of the
Borrower (which consent shall not be unreasonably withheld or delayed, provided
that the Borrower’s consent shall not be required if an Event of Default then
exists), shall then appoint a successor Administrative Agent who shall serve as
Administrative Agent hereunder or thereunder until such time, if any, as the
Required Lenders appoint a successor Administrative Agent as provided above.
 
(d) If no successor Administrative Agent has been appointed pursuant to
clause (b) or (c) above by the 30th Business Day after the date such notice of
resignation was given by the Administrative Agent, the Administrative Agent’s
resignation shall become effective and the Required Lenders shall thereafter
perform all the duties of the Administrative Agent hereunder and/or under any
other Credit Document until such time, if any, as the Required Lenders appoint a
successor Administrative Agent as provided above.
 
(e) If the Administrative Agent, in its capacity as a Lender, becomes a
Defaulting Lender hereunder, the Administrative Agent, upon the written request
of (x) the Borrower and (y) the Required Lenders, shall resign in its role as
Administrative Agent pursuant to clause (a), above.
 
12.10 Co-Collateral Agent; Separate Collateral Agent.  At any time or from time
to time, in order to comply with any applicable requirement of law, the
Administrative Agent may appoint another bank or trust company or one or more
other persons, either to act as co-agent or agents on behalf of the
Administrative Agent and the other Secured Creditors with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and which may be specified in the instrument of appointment (which may,
in the discretion of the Administrative Agent, include provisions for
indemnification and similar protections of such co-agent or separate agent
substantially the same as those contained herein).  Notwithstanding anything to
the contrary contained herein, every such agent, sub-collateral agent and every
co-agent shall, to the extent permitted by law, be appointed and act and be
such, subject to the condition that no power given hereby, or which is provided
herein or in any other Credit Document to any such co- agent, sub-collateral
agent or agent shall be exercised hereunder or thereunder by such co-agent or
agent except jointly with, or with the consent in writing of, the Administrative
Agent.
 
 
 
97

--------------------------------------------------------------------------------

 
 
SECTION 13. Parent Guaranty
 
.
 
13.01 Guaranty.  In order to induce the Administrative Agent, the Issuing
Lenders and the Lenders to enter into this Agreement and to extend credit
hereunder, and to induce the other Guaranteed Creditors to enter into Interest
Rate Protection Agreements and Other Hedging Agreements, and in recognition of
the direct benefits to be received by Parent from the proceeds of the Loans and
the issuance of the Letters of Credit, the Parent hereby agrees with the
Guaranteed Creditors as follows:  the Parent hereby and unconditionally and
irrevocably guarantees to the Guaranteed Creditors the full and prompt payment
when due, whether upon maturity, acceleration or otherwise, of any and all of
the Guaranteed Obligations to the Guaranteed Creditors.  This is a guaranty of
payment and not of collection.  If any or all of the Guaranteed Obligations
becomes due and payable hereunder, the Parent, unconditionally and irrevocably,
promises to pay such indebtedness to the Administrative Agent and/or the other
Guaranteed Creditors, or order, on demand, together with any and all expenses
which may be incurred by the Administrative Agent and the other Guaranteed
Creditors in collecting any of the Guaranteed Obligations.  If claim is ever
made upon any Guaranteed Creditor for repayment or recovery of any amount or
amounts received in payment or on account of any of the Guaranteed Obligations
and any of the aforesaid payees repays all or part of said amount by reason of
(i) any judgment, decree or order of any court or administrative body having
jurisdiction over such payee or any of its property or (ii) any settlement or
compromise of any such claim effected by such payee with any such claimant
(including the Borrower), then and in such event the Parent agrees that any such
judgment, decree, order, settlement or compromise shall be binding upon the
Parent, notwithstanding any revocation of this Parent Guaranty or other
instrument evidencing any liability of the Borrower, and the Parent shall be and
remain liable to the aforesaid payees hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by any such payee.
 
13.02 Bankruptcy.  Additionally, the Parent unconditionally and irrevocably
guarantees to the Guaranteed Creditors the payment of any and all of the
Guaranteed Obligations whether or not due or payable by the Borrower upon the
occurrence of any of the events specified in Section 11.05, and unconditionally,
irrevocably, jointly and severally promises to pay such indebtedness to the
Guaranteed Creditors, or order, on demand.
 
13.03 Nature of Liability.  The liability of the Parent hereunder is exclusive
and independent of any security for or other guaranty of the Guaranteed
Obligations, whether executed by the Parent, any other guarantor or by any other
party, and the liability of the Parent hereunder shall not be affected or
impaired by (a) any direction as to application of payment by the Borrower or by
any other party, or (b) any other continuing or other guaranty, undertaking or
maximum liability of a guarantor or of any other party as to the Guaranteed
Obligations, or (c) any payment on or in reduction of any such other guaranty or
undertaking, or (d) any dissolution, termination or increase, decrease or change
in personnel by the Borrower, or (e) any payment made to any Guaranteed Creditor
on the Guaranteed Obligations which any such Guaranteed Creditor repays to the
Borrower or any other Subsidiary of the Parent pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and the Parent waives any right to the deferral or modification of
its obligations hereunder by reason of any such proceeding, or (f) any action or
inaction of the type described in Section 13.05.
 
 
 
98

--------------------------------------------------------------------------------

 
 
13.04 Independent Obligation.  The obligations of the Parent hereunder are
independent of the obligations of any other guarantor, any other party or the
Borrower, and a separate action or actions may be brought and prosecuted against
the Parent whether or not action is brought against any other guarantor, any
other party or the Borrower and whether or not any other guarantor, any other
party or the Borrower be joined in any such action or actions.  The Parent
waives, to the fullest extent permitted by law, the benefit of any statute of
limitations affecting its liability hereunder or the enforcement thereof.  Any
payment by the Borrower or other circumstance which operates to toll any statute
of limitations as to the Borrower shall operate to toll the statute of
limitations as to the Parent.
 
13.05 Authorization.  The Parent authorizes the Guaranteed Creditors without
notice or demand (except as shall be required by applicable statute and cannot
be waived), and without affecting or impairing its liability hereunder, from
time to time to:
 
(a) change the manner, place or terms of payment of, and/or change or extend the
time of payment of, renew, increase, accelerate or alter, any of the Guaranteed
Obligations (including any increase or decrease in the principal amount thereof
or the rate of interest or fees thereon), any security therefor, or any
liability incurred directly or indirectly in respect thereof, and this Parent
Guaranty made shall apply to such Guaranteed Obligations as so changed,
extended, renewed or altered;
 
(b) take and hold security for the payment of the Guaranteed Obligations and
sell, exchange, release, impair, surrender, realize upon or otherwise deal with
in any manner and in any order any property by whomsoever at any time pledged or
mortgaged to secure, or howsoever securing, the Guaranteed Obligations or any
liabilities (including any of those hereunder) incurred directly or indirectly
in respect thereof or hereof, and/or any offset against any thereof;
 
(c) exercise or refrain from exercising any rights against the Borrower, any
other Credit Party or others or otherwise act or refrain from acting;
 
(d) release or substitute any one or more endorsers, guarantors, the Borrower,
other Credit Parties or other obligors;
 
(e) settle or compromise any of the Guaranteed Obligations, any security
therefor or any liability (including any of those hereunder) incurred directly
or indirectly in respect thereof or hereof, and may subordinate the payment of
all or any part thereof to the payment of any liability (whether due or not) of
the Borrower to its creditors other than the Guaranteed Creditors;
 
(f) apply any sums by whomsoever paid or howsoever realized to any liability or
liabilities of the Borrower to the Guaranteed Creditors regardless of what
liability or liabilities of the Borrower remain unpaid;
 
(g) consent to or waive any breach of, or any act, omission or default under,
this Agreement or any other Credit Document or any of the instruments or
agreements referred to herein or therein, or otherwise amend, modify or
supplement this Agreement or any other Credit Document or any of such other
instruments or agreements; and/or
 
 
 
99

--------------------------------------------------------------------------------

 
 
(h) take any other action which would, under otherwise applicable principles of
common law, give rise to a legal or equitable discharge of the Parent from its
liabilities under this Parent Guaranty.
 
13.06 Reliance.  It is not necessary for any Guaranteed Creditor to inquire into
the capacity or powers of the Parent or any of its Subsidiaries or the officers,
directors, partners or agents acting or purporting to act on their behalf, and
any Guaranteed Obligations made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
 
13.07 Subordination.  Any indebtedness of the Borrower now or hereafter owing to
the Parent is hereby subordinated to the Guaranteed Obligations of the Borrower
owing to the Guaranteed Creditors; and if the Administrative Agent so requests
at a time when an Event of Default exists, all such indebtedness of the Borrower
to the Parent shall be collected, enforced and received by the Parent for the
benefit of the Guaranteed Creditors and be paid over to the Administrative Agent
on behalf of the Guaranteed Creditors on account of the Guaranteed Obligations,
but without affecting or impairing in any manner the liability of the Parent
under the other provisions of this Parent Guaranty.  Prior to the transfer by
the Parent of any note or negotiable instrument evidencing any such indebtedness
of the Borrower to the Parent, the Parent shall mark such note or negotiable
instrument with a legend that the same is subject to this
subordination.  Without limiting the generality of the foregoing, the Parent
hereby agrees with the Guaranteed Creditors that it will not exercise any right
of subrogation which it may at any time otherwise have as a result of this
Parent Guaranty (whether contractual, under Section 509 of the Bankruptcy Code
or otherwise) until all Guaranteed Obligations have been irrevocably paid in
full in cash.
 
13.08 Waiver.  (a)  The Parent waives any right (except as shall be required by
applicable statute and cannot be waived) to require any Guaranteed Creditor to
(i) proceed against the Borrower, any other guarantor or any other party, (ii)
proceed against or exhaust any security held from the Borrower, any other
guarantor or any other party or (iii) pursue any other remedy in any Guaranteed
Creditor’s power whatsoever.  The Parent waives any defense based on or arising
out of any defense of the Borrower, any other guarantor or any other party,
other than payment in full in cash of the Guaranteed Obligations, based on or
arising out of the disability of the Borrower, any other guarantor or any other
party, or the validity, legality or unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower other than payment in full in cash of the
Guaranteed Obligations.  The Guaranteed Creditors may, at their election,
foreclose on any security held by the Administrative Agent or any other
Guaranteed Creditor by one or more judicial or nonjudicial sales, whether or not
every aspect of any such sale is commercially reasonable (to the extent such
sale is permitted by applicable law), or exercise any other right or remedy the
Guaranteed Creditors may have against the Borrower, or any other party, or any
security, without affecting or impairing in any way the liability of the Parent
hereunder except to the extent the Guaranteed Obligations have been paid in
cash.  The Parent waives any defense arising out of any such election by the
Guaranteed Creditors, even though such election operates to impair or extinguish
any right of reimbursement or subrogation or other right or remedy of the Parent
against the Borrower, or any other party or any security.
 
 
 
100

--------------------------------------------------------------------------------

 
 
(b) The Parent waives all presentments, demands for performance, protests and
notices, including, without limitation, notices of nonperformance, notices of
protest, notices of dishonor, notices of acceptance of this Parent Guaranty, and
notices of the existence, creation or incurring of new or additional Guaranteed
Obligations.  The Parent assumes all responsibility for being and keeping itself
informed of the Borrower’s financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations
and the nature, scope and extent of the risks which the Parent assumes and
incurs hereunder, and agrees that neither the Administrative Agent nor any of
the other Guaranteed Creditors shall have any duty to advise the Parent of
information known to them regarding such circumstances or risks.
 
13.09 Payment.  All payments made by the Parent pursuant to this Section 13
shall be made in Dollars.  All payments made by the Parent pursuant to this
Section 13 will be made without setoff, counterclaim or other defense.
 
 
SECTION 14. Miscellaneous
 
.
 
14.01 Payment of Expenses, etc.  The Borrower hereby agrees to:  (i) whether or
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent (including, without
limitation, the reasonable fees and disbursements of White & Case LLP and the
Administrative Agent’s local maritime counsel and the Administrative Agent’s
consultants, including, without limitation, BankAssure Insurance Services Inc.
or such other firm of independent marine insurance brokers that produces an
insurance report pursuant to in clause (f) of the definition of “Collateral and
Guaranty Requirements”) in connection with the preparation, execution and
delivery of this Agreement and the other Credit Documents and the documents and
instruments referred to herein and therein and any amendment, waiver or consent
relating hereto or thereto, of the Administrative Agent in connection with its
syndication efforts with respect to this Agreement and of the Administrative
Agent and, after the occurrence of an Event of Default, each of the Issuing
Lenders and Lenders in connection with the enforcement of this Agreement and the
other Credit Documents and the documents and instruments referred to herein and
therein or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or
pursuant to any insolvency or bankruptcy proceedings (including, in each case
without limitation, the reasonable fees and disbursements of counsel and
consultants for the Administrative Agent and, after the occurrence of an Event
of Default, counsel for each of the Issuing Lenders and Lenders); (ii) pay and
hold the Administrative Agent, each of the Issuing Lenders and each of the
Lenders harmless from and against any and all present and future stamp,
documentary, transfer, sales and use, value added, excise and other similar
taxes with respect to the foregoing matters, the performance of any obligation
under this Agreement or any other Credit Document or any payment thereunder, and
save the Administrative Agent, each of the Issuing Lenders and each of the
Lenders harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
the Administrative Agent, such Issuing Lender or such Lender) to pay such taxes;
and (iii) indemnify the Administrative Agent, each Issuing Lender and each
Lender, and each of their respective officers, directors, employees,
representatives, agents, affiliates, trustees and investment advisors from and
hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys’ and consultants’ fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not the Administrative Agent, any Issuing Lender or
any Lender is a party thereto and whether or not such investigation, litigation
or other proceeding is brought by or on behalf of any Credit Party or any third
party) related to the entering into and/or performance of this Agreement or any
other Credit Document or the use of any Letter of Credit or the proceeds of any
Loans hereunder or the consummation of the Transaction or any other transactions
contemplated herein or in any other Credit Document or the exercise of any of
their rights or remedies provided herein or in the other Credit Documents, or
(b) the actual or alleged presence of Hazardous Materials in the air, surface
water or groundwater or on the surface or subsurface of any Rig or Real Property
at any time owned, leased, operated or occupied by the Parent, the Borrower, or
any of the Parent’s other Subsidiaries, the generation, storage, transportation,
handling, disposal or Release of Hazardous Materials by the Parent, the Borrower
or any of the Parent’s other Subsidiaries at any location, whether or not owned,
leased or operated by the Parent, the Borrower or any of the Parent’s other
Subsidiaries, the noncompliance of any Rig or Real Property and Environmental
Law (including applicable permits thereunder) applicable to any Rig or Real
Property, or any Environmental Claim asserted against the Parent, the Borrower
or any of the Parent’s other Subsidiaries, or any Rig or Real Property at any
time owned, leased, operated or occupied by the Parent, the Borrower or any of
the Parent’s other Subsidiaries, including, in each case, without limitation,
the reasonable fees and disbursements of counsel and other consultants incurred
in connection with any such investigation, litigation or other proceeding (but
excluding any losses, liabilities, claims, damages or expenses to the extent
incurred by reason of the gross negligence or willful misconduct of the Person
to be indemnified (as determined by a court of competent jurisdiction in a final
and non-appealable decision)).  To the extent that the undertaking to indemnify,
pay or hold harmless the Administrative Agent, any Issuing Lender or any Lender
set forth in the preceding sentence may be unenforceable because it is violative
of any law or public policy, the Borrower shall make the maximum contribution to
the payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law.
 
 
 
101

--------------------------------------------------------------------------------

 
 
14.02 Right of Setoff.  In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such rights,
upon the occurrence and during the continuance of an Event of Default, the
Administrative Agent, each Issuing Lender and each Lender is hereby authorized
at any time or from time to time, without presentment, demand, protest or other
notice of any kind to any Credit Party or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and apply any and
all deposits (general or special) and any other Indebtedness at any time held or
owing by the Administrative Agent, such Issuing Lender or such Lender
(including, without limitation, by branches and agencies of the Administrative
Agent, such Issuing Lender or such Lender wherever located) to or for the credit
or the account of the Parent or any of its Subsidiaries against and on account
of the Obligations and liabilities of the Credit Parties to the Administrative
Agent, such Issuing Lender or such Lender under this Agreement or under any of
the other Credit Documents, including, without limitation, all interests in
Obligations purchased by such Lender pursuant to Section 14.06(b), and all other
claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not the
Administrative Agent, such Issuing Lender or such Lender shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured.
 
14.03 Notices.  Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including
telegraphic, telex, telecopier or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered:  if to any Credit Party, at the
address specified opposite its signature below or in the other relevant Credit
Documents; if to any Lender, at its address specified on Schedule II; and if to
the Administrative Agent, at the Notice Office; or, as to any Credit Party or
the Administrative Agent, at such other address as shall be designated by such
party in a written notice to the other parties hereto and, as to each Lender, at
such other address as shall be designated by such Lender in a written notice to
the Borrower and the Administrative Agent.  All such notices and communications
shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by
overnight courier, be effective when deposited in the mails, delivered to the
telegraph company, cable company or overnight courier, as the case may be, or
sent by telex or telecopier, except that notices and communications to the
Administrative Agent and the Borrower shall not be effective until received by
the Administrative Agent or the Borrower, as the case may be.
 
14.04 Benefit of Agreement; Assignments; Participations.  (a)  This Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto; provided, however, that
neither the Parent nor the Borrower may assign or transfer any of its rights,
obligations or interest hereunder or under any other Credit Document without the
prior written consent of the Lenders, and provided, further that, although any
Lender may transfer, assign or grant participations in its rights hereunder,
such Lender shall remain a “Lender” for all purposes hereunder (and may not
transfer or assign all or any portion of its Commitments hereunder except as
provided in Sections 2.12 and 14.04(b)) and the transferee, assignee or
participant, as the case may be, shall not constitute a “Lender” hereunder and
provided, further, that no Lender shall transfer or grant any participation
under which the participant shall have rights to approve any amendment to or
waiver of this Agreement or any other Credit Document except to the extent such
amendment or waiver would (i) extend the final scheduled maturity of any Loan or
Note or Letter of Credit (unless such Letter of Credit is not extended beyond
the Maturity Date) in which such participant is participating, or reduce the
rate or extend the time of payment of interest or Fees thereon (except in
connection with a waiver of applicability of any post-default increase in
interest rates) or reduce the principal amount thereof (it being understood that
any amendment or modification to the financial definitions in this Agreement or
to Section 14.07(a) shall not constitute a reduction in the rate of interest or
Fees payable hereunder) or increase the amount of the participant’s
participation over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory reduction in the
Total Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Commitment (or the available portion
thereof) or Loan shall be permitted without the consent of any participant if
the participant’s participation is not increased as a result thereof), (ii)
consent to the assignment or transfer by the Parent or the Borrower of any of
its rights and obligations under this Agreement or (iii) release all or
substantially all of the Collateral under all of the Security Documents (except
as expressly provided in the Credit Documents) supporting the Loans or Letters
of Credit hereunder in which such participant is participating.  In the case of
any such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant’s rights against
such Lender in respect of such participation to be those set forth in the
agreement executed by such Lender in favor of the participant relating thereto)
and all amounts payable by the Borrower hereunder shall be determined as if such
Lender had not sold such participation.
 
 
 
102

--------------------------------------------------------------------------------

 
 
(b) Notwithstanding the foregoing, any Lender (or any Lender together with one
or more other Lenders) may (x) assign all or a portion of its Commitments and
related outstanding Obligations (or, if the Commitments with respect to the
relevant Tranche have terminated, outstanding Obligations) hereunder to (i) (A)
its parent company and/or any affiliate of such other Lender which is at least
50% owned by such Lender or its parent company or (B) to one or more other
Lenders or any affiliate of any such other Lender which is at least 50% owned by
such Lender or its parent company (provided that any fund that invests in loans
and is managed or advised by the same investment advisor of another fund which
is a Lender (or by an Affiliate of such investment advisor) shall be treated as
an affiliate of such other Lender for the purposes of this
sub-clause (x)(i)(B)), (ii) in the case of any Lender that is a fund that
invests in loans, any other fund that invests in loans and is managed or advised
by the same investment advisor of any Lender or by an Affiliate of such
investment advisor, or (iii) to one or more Lenders, provided that no assignment
under Section 14.04(b) may be made to any Person that is, or would at such time
constitute, a Defaulting Lender, or (y) with the consent of the Borrower (which
consent (i) shall not be unreasonably withheld or delayed and shall not be
required if any Default under Section 11.01 or 11.05 or any Event of Default is
then in existence and (ii) shall be deemed to have been given to any such
assignment unless it shall object thereto by written notice to the
Administrative Agent within five Business Days after having received notice
thereof), assign all, or if less than all, a portion equal to an amount which
shall not be less than $20,000,000 in the aggregate and in integral multiples of
$1,000,000 thereafter for the assigning Lender or assigning Lenders, of such
Commitments and related outstanding Obligations (or, if the Commitments with
respect to the relevant Tranche have terminated, outstanding Obligations)
hereunder to one or more Eligible Transferees (treating any fund that invests in
bank loans and any other fund that invests in bank loans and is managed or
advised by the same investment advisor of such fund or by an Affiliate of such
investment advisor as a single Eligible Transferee), each of which assignees
shall become a party to this Agreement as a Lender by execution of an Assignment
and Assumption Agreement, provided that (i) at such time, Schedule I shall be
deemed modified to reflect the Commitments and/or outstanding Loans, as the case
may be, of such new Lender and of the existing Lenders, (ii) upon the surrender
of the relevant Notes by the assigning Lender, new Notes will be issued, at the
Borrower’s expense, to such new Lender and to the assigning Lender upon the
request of such new Lender or assigning Lender, such new Notes to be in
conformity with the requirements of Section 2.05 (with appropriate
modifications) to the extent needed to reflect the revised Commitments and/or
outstanding Loans, as the case may be, (iii) the consent of the Administrative
Agent and, in the case of an assignment of Commitments, each Issuing Lender,
shall be required in connection with any such assignment pursuant to clause (y)
above (which consent shall not, in any case, be unreasonably withheld or
delayed), (iv) the Administrative Agent shall receive at the time of each such
assignment, from the assigning or assignee Lender, the payment of a
non-refundable assignment fee of $3,500 and (v) no such transfer or assignment
will be effective until recorded by the Administrative Agent on the Register
pursuant to Section 14.15.  To the extent of any assignment pursuant to this
Section 14.04(b), the assigning Lender shall be relieved of its obligations
hereunder with respect to its assigned Commitments and outstanding Loans.  To
the extent that an assignment of all or any portion of a Lender’s Commitments
and related outstanding Obligations pursuant to Section 2.12 or this Section
14.04(b) would, at the time of such assignment, result in increased costs under
Sections 2.09, 3.06 or 5.04 from those being charged by the respective assigning
Lender prior to such assignment, then the Borrower shall not be obligated to pay
such increased costs (although the Borrower, in accordance with and pursuant to
the other provisions of this Agreement, shall be obligated to pay any other
increased costs of the type described above resulting from changes after the
date of the respective assignment).
 
 
 
 
103

--------------------------------------------------------------------------------

 
(c) Nothing in this Agreement shall prevent or prohibit any Lender from pledging
its Loans and Notes hereunder to a Federal Reserve Bank or any central bank
having jurisdiction over such Lender in support of borrowings made by such
Lender from such Federal Reserve Bank or central bank and, with prior
notification to the Administrative Agent (but without the consent of the
Administrative Agent or the Borrower), any Lender which is a fund may pledge all
or any portion of its Loans and Notes to its trustee or to a collateral agent
providing credit or credit support to such Lender in support of its obligations
to such trustee, such collateral agent or a holder of such obligations, as the
case may be.  No pledge pursuant to this clause (c) shall release the transferor
Lender from any of its obligations hereunder.
 
14.05 No Waiver; Remedies Cumulative.  No failure or delay on the part of the
Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any other Credit Party
and the Administrative Agent, the Collateral Agent, any Issuing Lender or any
Lender shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder.  The rights, powers and
remedies herein or in any other Credit Document expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the
Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender
would otherwise have.  No notice to or demand on any Credit Party in any case
shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent, the Collateral Agent, any Issuing Lender or any Lender to
any other or further action in any circumstances without notice or demand.
 
14.06 Payments Pro Rata.  (a)  Except as otherwise provided in this Agreement,
the Administrative Agent agrees that promptly after its receipt of each payment
from or on behalf of the Borrower in respect of any Obligations hereunder, the
Administrative Agent shall distribute such payment to the Lenders entitled
thereto (other than any Lender that has consented in writing to waive its pro
rata share of any such payment) pro rata based upon their respective shares, if
any, of the Obligations with respect to which such payment was received.
 
(b) Each of the Lenders agrees that, if it should receive any amount hereunder
(whether by voluntary payment, by realization upon security, by the exercise of
the right of setoff or banker’s Lien, by counterclaim or cross action, by the
enforcement of any right under the Credit Documents, or otherwise), which is
applicable to the payment of the principal of, or interest on, the Loans, Unpaid
Drawings, or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, then such Lender receiving such excess payment shall purchase for cash
without recourse or warranty from the other Lenders an interest in the
Obligations of the respective Credit Party to such Lenders in such amount as
shall result in a proportional participation by all the Lenders in such amount;
provided that (x) if all or any portion of such excess amount is thereafter
recovered from such Lenders, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest and (y) any
payment received in consideration for an assignment of participation permitted
pursuant to Section 14.04 to a Person other than the Parent or an Affiliate
thereof shall not be subject to this 14.06(b).
 
 
 
104

--------------------------------------------------------------------------------

 
 
(c) Notwithstanding anything to the contrary contained herein, the provisions of
the preceding Sections 14.06(a) and (b) shall be subject to the express
provisions of this Agreement which require, or permit, differing payments to be
made to Non-Defaulting Lenders as opposed to Defaulting Lenders.
 
14.07 Calculations; Computations.  (a)  The financial statements to be furnished
to the Lenders pursuant hereto shall be made and prepared in accordance with
GAAP in the United States consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Lenders to the extent, in each case, permitted by the
terms of this Agreement); provided that except as otherwise specifically
provided herein, all computations of the Applicable Margin, and all computations
and all definitions (including accounting terms) used in determining compliance
with Sections 10.07 and 10.08, shall utilize generally accepted accounting
principles and policies in conformity with, and consistent with, those used to
prepare the historical audited consolidated financial statements of the Parent
and its Subsidiaries referred to in Section 8.05(a).
 
(b) All computations of interest, Commitment Commission and other Fees hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day; except that in the case of
Letter of Credit Fees and Facing Fees, the last day shall be included) occurring
in the period for which such interest, Commitment Commission or other Fees are
payable.
 
14.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL.  (a)  THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE
PROVIDED IN CERTAIN OF THE COLLATERAL RIG MORTGAGES AND OTHER SECURITY
AGREEMENTS AS DETERMINED BY THE ADMINISTRATIVE AGENT, BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.  ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF
NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT, EACH OF THE PARENT AND THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS.  THE PARENT AND THE BORROWER HEREBY
IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS THE PARENT AS ITS DESIGNEE,
APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF,
AND IN RESPECT OF THE PROPERTY OF THE PARENT AND THE BORROWER, SERVICE OF ANY
AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY
SUCH ACTION OR PROCEEDING, AND THE PARENT HEREBY ACCEPTS THE DESIGNATION,
APPOINTMENT AND EMPOWERMENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR ITSELF AND
EACH OTHER SUBSIDIARY OF THE PARENT, ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES
AND DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING INVOLVING ANY OF
ITS PROPERTY OR THE PROPERTY OF ITS SUBSIDIARIES.  EACH OF THE PARENT AND THE
BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK
PERSONAL JURISDICTION OVER EACH OF THE PARENT AND THE BORROWER, AND AGREES NOT
TO PLEAD OR CLAIM, IN ANY LEGAL ACTION PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER CREDIT DOCUMENTS BROUGHT IN ANY OF THE AFOREMENTIONED COURTS, THAT
SUCH COURTS LACK PERSONAL JURISDICTION OVER THE PARENT OR THE BORROWER.  EACH OF
THE PARENT AND THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO EACH OF THE PARENT AND THE BORROWER AT EACH ADDRESS SET FORTH
OPPOSITE EACH SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING.  EACH OF THE PARENT AND THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES
NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER
ANY OTHER CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR
INEFFECTIVE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT,
ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE PARENT OR THE BORROWER IN ANY OTHER JURISDICTION.
 
 
 
105

--------------------------------------------------------------------------------

 
 
(b) EACH OF THE PARENT AND THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
 
 
 
106

--------------------------------------------------------------------------------

 
 
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
 
14.09 Counterparts.  This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.  A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
 
14.10 Effectiveness.  This Agreement shall become effective on the date (the
“Effective Date”) on which (i) the Parent, the Borrower, the Administrative
Agent and each of the Lenders shall have signed a counterpart hereof (whether
the same or different counterparts) and shall have delivered the same to the
Administrative Agent at the Notice Office or, in the case of the Lenders, shall
have given to the Administrative Agent telephonic (confirmed in writing),
written or telex notice (actually received) at the Notice Office that the same
has been signed and mailed to it, (ii) the Credit Parties have provided, or
procured the supply of, the “know your customer” information required pursuant
to the PATRIOT Act, in each case as requested by any Lender or the
Administrative Agent in connection with its internal compliance regulations
thereunder or other information reasonably requested by such Lender or the
Administrative Agent to satisfy related checks under all applicable laws and
regulations pursuant to the transactions contemplated hereby and (iii) the
Parent or the Borrower shall have paid to the Administrative Agent for its own
account and/or the account of the Lenders, as the case may be, all fees and
expenses accrued and payable on or prior to the Effective Date.  The
Administrative Agent will give the Parent, the Borrower and each Lender prompt
written notice of the occurrence of the Effective Date.
 
14.11 Headings Descriptive.  The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
 
14.12 Amendment or Waiver; etc.  (a)  Except as provided in Section 2.13 with
respect to Incremental Commitments, neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the respective Credit Parties party hereto or thereto and the Required
Lenders, provided that:
 
(X)           additional parties may be added to (and annexes may be modified to
reflect such additions), and Subsidiaries of the Borrower may be released from,
the Subsidiaries Guaranty and the Security Documents in accordance with the
provisions hereof and thereof without the consent of the other Credit Parties
party thereto or the Required Lenders;
 
(Y)           no such change, waiver, discharge or termination shall, without
the consent of each Lender (other than a Defaulting Lender other than in the
case of clause (i) and (v) below) (with Obligations being directly and
negatively affected in the case of the following clauses (i) and (v), to the
extent (in the case of the following clause (v)) that any such Lender would be
required to make a Loan in excess of its pro rata portion provided for in this
Agreement or a payment under Section 3.04(c) in respect of a participation in
excess of its Percentage or would receive a payment or prepayment of Loans, a
payment of obligations under Section 3.04(d) or a commitment reduction that (in
any case) is less than its pro rata portion provided for in this Agreement, in
each case, as a result of any such amendment, modification or waiver referred to
in the following clause (v)):
 
 
 
107

--------------------------------------------------------------------------------

 
 
(i) extend the final scheduled maturity of any Loan or Note held by such Lender
or extend the stated expiration date of any Letter of Credit issued by such
Lender beyond the Maturity Date, or reduce the rate or extend the time of
payment of interest thereon, or reduce the amount, or extend the time of
payment, of any Fees thereon (except in connection with the waiver of
applicability of any post-default increase in interest rates), or extend the
timing of repayment of any such Loan, or reduce the principal amount of any such
Loan thereof (it being understood that any amendment or modification to the
financial definitions in this Agreement or to Section 14.07(a) shall not
constitute a reduction in the rate of interest or the amount of Fees for the
purposes of this clause (i)), or increase the Commitment of any Lender,
 
(ii) release all or substantially all of the Collateral (except as expressly
provided in the Credit Documents) under all the Security Documents,
 
(iii) amend, modify or waive any provision of this Section 14.12 (except for
technical amendments with respect to additional extensions of credit pursuant to
this Agreement which afford the protections to such additional extensions of
credit of the type provided to the Commitments on the Effective Date) or any
other Section which expressly requires the consent of all Lenders or all Lenders
directly and negatively affected thereby,
 
(iv) reduce the percentage specified in the definition of Required Lenders (it
being understood that, with the consent of the Required Lenders, additional
extensions of credit pursuant to this Agreement may be included in the
determination of the Required Lenders on substantially the same basis as the
extensions of the Commitments are included on the Effective Date),
 
(v) amend, modify or waive (I) Section 2.06, (II) the provisions of Section
3.04(c) to the extent relating to the obligation of a Participant to make a
payment in an amount equal to its Percentage or (III) any other provision in
this Agreement to the extent providing for payments or prepayments of Loans,
payments of obligations under Section 3.04(d) or reductions in Commitments, in
each case, to be applied pro rata among the Lenders entitled to such payments or
prepayments of Loans, payments of obligations under Section 3.04 or reductions
in Commitments (it being understood that the provision of additional extensions
of credit pursuant to this Agreement, or the waiver of any mandatory commitment
reduction or any mandatory prepayment of Loans by the Required Lenders shall not
constitute an amendment, modification or waiver for purposes of this clause
(v)),
 
 
 
108

--------------------------------------------------------------------------------

 
 
(vi) consent to the assignment or transfer by the Parent or the Borrower of any
of their respective rights and obligations under this Agreement or
 
(vii) substitute or replace any Subsidiary Guarantor from a Subsidiaries
Guaranty to the extent same constitutes a Material Subsidiary; and
 
(Z)           no such change, waiver, discharge or termination shall
(1) increase the Commitments of any Lender over the amount thereof then in
effect (including pursuant to any Incremental Commitments) without the consent
of such Lender (it being understood that waivers or modifications of conditions
precedent, covenants, Defaults or Events of Default or of a mandatory reduction
in the Total Commitment shall not constitute an increase of the Commitment of
any Lender, and that an increase in the available portion of any Commitment of
any Lender shall not constitute an increase of the Commitment of such Lender),
(2) without the consent of each Issuing Lender, amend, modify or waive any
provision of Section 3 or alter its rights or obligations with respect to
Letters of Credit, (3) without the consent of the Administrative Agent, amend,
modify or waive any provision of Section 12 or any other provision as same
relates to the rights or obligations of the Administrative Agent, (4) without
the consent of the Collateral Agent, amend, modify or waive any provision
relating to the rights or obligations of the Collateral Agent, (5) without the
consent of the Majority Lenders of each Tranche which is being allocated a
lesser prepayment, repayment or commitment reduction as a result of the actions
described below, alter the required application of any prepayments or repayments
(or commitment reduction) as between the various Tranches pursuant to Section 5
(it being understood, however, that the Required Lenders may waive, in whole or
in part, any such prepayment, repayment or commitment reduction, so long as the
application, as amongst the various Tranches, of any such prepayment, repayment
or commitment reduction which is still required to be made is not altered), (6)
without the consent of the Majority Lenders of the respective Tranche affected
thereby, amend the definition of Majority Lenders, (7) reduce the amount of, or
extend the date of, any Scheduled Commitment Reduction with­out the consent of
the Majority Lenders of the respective Tranche of Commitments affected thereby,
or (8) without the written consent of the Majority Lenders of the respective
Tranche of Commitments affected thereby, amend, modify or waive any Condition
Precedent set forth in Section 7 with respect to the making of Loans under such
Tranche or the issuance of Letters of Credit under such Tranche.
 
(b)                      If, in connection with any proposed change, waiver,
discharge or termination of any of the provisions of this Agreement as
contemplated by clauses (i) through (vii), inclusive, of Section 14.12(a), the
consent of the Required Lenders is obtained but the consent of one or more of
such other Lenders whose consent is required is not obtained, then the Borrower
shall have the right, so long as all non-consenting Lenders whose individual
consent is required are treated as described in either clauses (A) or (B) below,
to either (A) replace each such non-consenting Lender or Lenders (or, at the
option of the Borrower, if the respective Lender’s consent is required with
respect to less than all Tranches of Loans (or related Commitments), to replace
only the Commitments and/or Loans of the respective non-consenting Lender which
gave rise to the need to obtain such Lender’s individual consent) with one or
more Replacement Lenders pursuant to Section 2.12 so long as at the time of such
replacement, each such Replacement Lender consents to the proposed change,
waiver, discharge or termination or (B) terminate such non-consenting Lender’s
Commitments and/or repay each Tranche of outstanding Loans of such Lender in
accordance with Sections 4.02(b) and/or 5.01(b), provided that unless the
Commitments that are terminated, and the Loans repaid, pursuant to preceding
clause (B) are immediately replaced in full at such time through the addition of
new Lenders or the increase of the Commitments and/or outstanding Loans of
existing Lenders (who in each case must specifically consent thereto), then in
the case of any action pursuant to preceding clause (B) the Required Lenders
(determined after giving effect to the proposed action) shall specifically
consent thereto, provided, further, that in any event the Borrower shall not
have the right to replace a Lender, terminate its Commitments or repay its Loans
solely as a result of the exercise of such Lender’s rights (and the withholding
of any required consent by such Lender) pursuant to Section 14.12(a)(Z)(1).
 
 
 
109

--------------------------------------------------------------------------------

 
 
(c) Notwithstanding anything to the contrary contained in clauses (a) and (b)
above of this Section 14.12, the Borrower, the Administrative Agent and each
Incremental Lender may, in accordance with the provisions of Sections 2.13,
enter into an Incremental Commitment Agreement, provided that after the
execution, delivery and effectiveness of such Incremental Commitment Agreement,
the Incremental Lender party thereto, and any Incremental Commitment created
pursuant thereto, shall be treated for all purposes hereunder as a Lender and as
such Lender’s Commitment, respectively.
 
14.13 Survival.  All indemnities set forth herein including, without limitation,
in Sections 2.09, 2.10, 3.06, 5.04, 12.06 and 14.01 shall survive the execution,
delivery and termination of this Agreement and the Notes and the making and
repayment of the Obligations.
 
14.14 Domicile of Loans.  Each Lender may transfer and carry its Loans at, to or
for the account of any office, Subsidiary or Affiliate of such
Lender.  Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Loans pursuant to this Section 14.14 would, at the
time of such transfer, result in increased costs under Section 2.09, 2.10, 3.06
or 5.04 from those being charged by the respective Lender prior to such
transfer, then the Borrower shall not be obligated to pay such increased costs
(although the Borrower shall be obligated to pay any other increased costs of
the type described above resulting from changes after the date of the respective
transfer).
 
14.15 Register.  The Borrower hereby designates the Administrative Agent to
serve as its agent, solely for purposes of this Section 14.15, to maintain a
register (the “Register”) on which it will record the Commitments from time to
time of each of the Lenders, the Loans made by each of the Lenders and each
repayment in respect of the principal amount of the Loans of each
Lender.  Failure to make any such recordation, or any error in such recordation,
shall not affect the Borrower’s obligations in respect of such Loans.  With
respect to any Lender, the transfer of the Commitments of such Lender and the
rights to the principal of, and interest on, any Loan made pursuant to such
Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor.  The registration of assignment or transfer of all or part of
any Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
14.04(b).  Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Lender shall surrender the Note (if
any) evidencing such Loan, and thereupon one or more new Notes in the same
aggregate principal amount shall be issued to the assigning or transferor Lender
and/or the new Lender at the request of any such Lender.  The Borrower agrees to
indemnify the Administrative Agent from and against any and all losses, claims,
damages and liabilities of whatsoever nature which may be imposed on, asserted
against or incurred by the Administrative Agent in performing its duties under
this Section 14.15.
 
 
 
 
110

--------------------------------------------------------------------------------

 
 
14.16 Confidentiality.  (a)  Subject to the provisions of clause (b) of this
Section 14.16, each Lender agrees that it will use its reasonable efforts not to
disclose without the prior consent of the Parent (other than to its employees,
auditors, advisors or counsel or to another Lender if such Lender or such
Lender’s holding or parent company or board of trustees in its sole discretion
determines that any such party should have access to such information, provided
such Persons shall be subject to the provisions of this Section 14.16 to the
same extent as such Lender) any information with respect to the Parent or any of
its Subsidiaries which is now or in the future furnished pursuant to this
Agreement or any other Credit Document, provided that any Lender may disclose
any such information (i) as has become generally available to the public other
than by virtue of a breach of this Section 14.16(a) by the respective Lender,
(ii) as may be required or appropriate in any report, statement or testimony
submitted to any municipal, state, Federal or foreign regulatory body having or
claiming to have jurisdiction over such Lender or to the Federal Reserve Board
or the Federal Deposit Insurance Corporation or similar organizations (whether
in the United States or elsewhere) or their successors, (iii) as may be required
or appropriate with respect to any summons or subpoena or in connection with any
litigation, provided that such Lender will use reasonable efforts to notify the
Borrower prior to such disclosure to the extent practicable, (iv) in order to
comply with any law, order, regulation or ruling applicable to such Lender, (v)
to the Administrative Agent or the Collateral Agent, (vi) to any direct or
indirect contractual counterparty in any swap, hedge, securitization or similar
agreement (or to any such contractual counterparty’s professional advisor), so
long as such contractual counterparty (or such professional advisor) agrees to
be bound by the provisions of this Section 14.16, and (vii) to any prospective
or actual transferee or participant in connection with any contemplated transfer
or participation of any of the Notes or Commitments or any interest therein by
such Lender, provided that such prospective transferee agrees to be bound by the
confidentiality provisions contained in this Section 14.16.
 
(b) Each of the Parent and the Borrower hereby acknowledges and agrees that each
Lender may share with any of its affiliates, and such affiliates may share with
such Lender, any information related to the Parent or any of its Subsidiaries
(including, without limitation, any non-public customer information regarding
the creditworthiness of the Parent and its Subsidiaries), provided such Persons
shall be subject to the provisions of this Section 14.16 to the same extent as
such Lender.
 
(c) No Lender provides accounting, tax or legal advice.  Notwithstanding Section
14.16(a) of this Agreement, the Borrower, the Parent and each Lender hereby
agree and acknowledge that the Borrower, the Parent and each Lender (and each
employee, representative, or other agent of the Borrower, the Parent and each
Lender) may disclose to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the transaction (within the meaning of
Section 6011 and Section 6111 of the Code) and all materials of any kind
(including opinions or other tax analyses) that are provided to the Borrower,
the Parent and each Lender (and each employee, representative, or other agent of
the Borrower, the Parent and each Lender) relating to such tax treatment and tax
structure.  This authorization is effective without limitation of any kind from
the commencement of our discussions between the parties hereto.
 
 
 
111

--------------------------------------------------------------------------------

 
 
14.17 Insurance Proceeds.  Notwithstanding anything to the contrary contained in
this Agreement (but without limiting any rights of the Collateral Agent,
Administrative Agent or the other Secured Creditors under any Security
Document), the Parent and its Subsidiaries shall be required to pay to the
Administrative Agent for the benefit of the Secured Creditors insurance proceeds
payable to any such Person by reason of a single event or group of events
related to a Collateral Rig (except for any loss under any insurance on the
Collateral Rigs with respect to protection and indemnity risks which may be paid
directly to the owner of the Collateral Rig to reimburse it for any loss, damage
or expense incurred by it and covered by such insurance or to the person to whom
any liability covered by such insurance has been incurred) to the extent such
insurance proceeds received in respect of such event or events exceeds
$25,000,000 (which insurance proceeds shall be retained by the Administrative
Agent for the benefit of the Secured Creditors as cash collateral for the
Obligations or, at the direction of the Required Lenders, shall be applied to
repay outstanding Loans) (it being understood that such repayment of outstanding
Loans shall be applied on a pro rata basis among outstanding Loans); provided
that, notwithstanding the foregoing, if no Default or Event of Default then
exists and the Parent and its Subsidiaries are in compliance with Section 10.09,
in each case, after giving effect to any such event or events and receipt of
such insurance proceeds, the Parent or such Subsidiary shall be permitted to
retain such insurance proceeds; provided, further, that in the event that the
Administrative Agent retains any such insurance proceeds as cash collateral for
the Obligations and any such Default or Event of Default is cured or waived and
any violation of Section 10.09 is waived, such insurance proceeds shall be
permitted to be returned to the Parent or such Subsidiary.
 
14.18 Rights Plan.  Notwithstanding anything to the contrary contained in this
Agreement, the Parent shall be permitted to act in accordance with the terms of
the Rights Plan, so long as (x) no cash Dividends are paid in respect of any
Series A Junior Participating Preferred Stock or other preferred stock (if any)
referred to thereunder and (y) no Series A Junior Participating Preferred Stock
or other preferred stock (if any) referred to therein shall be redeemed by the
Parent at any time.
 
14.19 USA PATRIOT Act Notice.  Each Lender hereby notifies each Credit Party
that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub.:
107-56 (signed into law October 26, 2001)) (the “PATRIOT Act”), it is required
to obtain, verify, and record information that identifies each Credit Party,
which information includes the name of each Credit Party and other “know your
customer” information that will allow such Lender to identify each Credit Party
in accordance with the PATRIOT Act and anti-money laundering rules and
regulations, and each Credit Party agrees to provide such information from time
to time to any Lender.
 
 
 
112

--------------------------------------------------------------------------------

 
 
*          *          *
 
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.
 
Address:
 
15835 Park Ten Place Drive
Houston, Texas  77084
Attention:  Mark Mey
Tel. No.:  (281) 749-7800
Fax No.:  (281) 749-8203
ATWOOD OCEANICS, INC.
 
 
By: /s/ Mark L. Mey                                                  
     Name: Mark L. Mey
    Title: Senior Vice President and CFO
332A-11C, 11th Floor
Plaza Ampang City, Jalan Ampang
50450 Kuala Lumpur Malaysia,
Attention:  Noel Baldwin
Tel. No.:  603 2773-9755
Fax No.:  603 4256-8653
ATWOOD OFFSHORE WORLDWIDE LIMITED
 
 
By:/s/ Noel Baldwin                                                  
    Name: Noel Baldwin
    Title: Director

 
 

 
 
 

--------------------------------------------------------------------------------

 
 
 

 
NORDEA BANK FINLAND PLC,
NEW YORK BRANCH, as Administrative Agent
 
 
By: /s/ Martin Lunder                                    
      Name: Martin Lunder
      Title: Senior Vice President
 
By: /s/ Henning Lyche Christiansen   
                                                             
      Name: Henning Lyche Christiansen
      Title: First Vice President
 
 
NORDEA BANK FINLAND PLC, NEW YORK BRANCH,
as a Lender
 
 
By: /s/ Martin Lunder                                    
      Name: Martin Lunder
      Title: Senior Vice President
 
By: /s/ Henning Lyche Christiansen    
                                                            
      Name: Henning Lyche Christiansen
      Title: First Vice President

 
 
 
 
 

--------------------------------------------------------------------------------

 
 

 

     
SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE,
AMONG ATWOOD OCEANICS, INC., ATWOOD OFFSHORE WORLDWIDE LIMITED, THE LENDERS
PARTY HERETO FROM TIME TO TIME, NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS
ADMINISTRATIVE AGENT, AND AS LEAD ARRANGER
         
NAME OF INSTITUTION:
 
BARCLAYS BANK PLC
 
 
 
By:/s/ Vanessa A.
Kurbatskiy                                                       
    Name:  Vanessa A. Kurbatskiy
      Title: Vice President
 

 
 

 
NAME OF INSTITUTION:
 
WHITNEY NATIONAL BANK
 
 
 
By: /s/ Harry C. Stahel                                                       
    Name:  Harry C. Stahel
      Title: Senior Vice President

 
 
 

 
NAME OF INSTITUTION:
 
WELLS FARGO BANK, N.A.
 
 
 
By:/s/ T. Alan Smith                                                        
    Name:  T. Alan Smith
      Title: Managing Director

 
 
 
 
 

--------------------------------------------------------------------------------

 
 
 

     
SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE,
AMONG ATWOOD OCEANICS, INC., ATWOOD OFFSHORE WORLDWIDE LIMITED, THE LENDERS
PARTY HERETO FROM TIME TO TIME, NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS
ADMINISTRATIVE AGENT, AND AS LEAD ARRANGER
   

 
NAME OF INSTITUTION:
 
UNICREDIT BANK AG
 
 
 
By:/s/ Stephan Somitsch                                                      
    Name:  Stephan Somitsch
      Title: Vice President
 
By:/s/ Torsten Heise                                           
      Name: Torsten Heise
    Title: Associate Director

 

 
NAME OF INSTITUTION:
 
SKANDINAVISKA ENSKILDA BANKEN AB (publ.)
 
 
 
By: /s/ Per Olav Bucher-Johannessen             
    Name:  Per Olav Bucher-Johannessen
      Title: Head of Nordic Shipping Finance
 
By: /s/ Erling Amundsen                                   
      Name: Erling Amundsen
    Title: Head of Legal

 

 
NAME OF INSTITUTION:
 
REGIONS BANK
 
 
 
By: /s/ Randy Petersen                                      
    Name:  Randy Petersen
      Title: Senior Vice President

 

 
NAME OF INSTITUTION:
 
NIBC BANK N.V.
 
 
 
By: /s/ Jan Willem van Roggen                         
    Name:  Jan Willem van Roggen
      Title: Managing Director
 
By: /s/ Jeroen van der Putten                            
      Name: Jeroen van der Putten
    Title: Associate Director

 

 
NAME OF INSTITUTION:
 
NATIXIS
 
 
 
By: /s/ Carlos Quinteros                                    
    Name:  Carlos Quinteros
      Title: Managing Director
 
By: /s/ Louis P. Laville, III                                 
      Name: Louis P. Laville, III
    Title: Managing Director

 
 
 
 
 

--------------------------------------------------------------------------------

 
 
 

     
SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE,
AMONG ATWOOD OCEANICS, INC., ATWOOD OFFSHORE WORLDWIDE LIMITED, THE LENDERS
PARTY HERETO FROM TIME TO TIME, NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS
ADMINISTRATIVE AGENT, AND AS LEAD ARRANGER
   

 
NAME OF INSTITUTION:
 
ING CAPITAL LLC
 
 
 
By: /s/ Petra Van Woersec                                 
    Name:  Petra van Woersec
      Title: Director
 

 

 
NAME OF INSTITUTION:
 
ITF INTERNATIONAL TRANSPORT FINANCE SUISSE AG
 
 
 
By: /s/ Natalja Formuzala                                   
    Name:  Natalja Formuzala
      Title: Vice President
 
By: /s/ Alexander Schaffert                               
      Name: Alexander Schaffert
    Title: Vice President

 

 
NAME OF INSTITUTION:
 
HSBC BANK USA, N.A.
 
 
 
By: /s/ Bruce Robinson                                      
    Name:  Bruce Robinson
      Title: Vice President
 
By: /s/ Koby West                                              
      Name: Koby West
    Title: Assistant Vice President

 

 
NAME OF INSTITUTION:
 
DnB NOR BANK ASA
 
 
 
By: /s/ Cathleen Buckley                                   
    Name:  Cathleen Buckley
      Title: Senior Vice President
 
By: /s/ Stian Lovseth                                         
      Name: Stian Lovseth
    Title: Vice President

 

 
NAME OF INSTITUTION:
 
CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH
 
 
 
By: /s/ Mikhail Faybusovich                             
    Name:  Mikhail Faybusovich
      Title: Director
 
By: /s/ Vipul Dhadda                                          
      Name: Vipul Dhadda
    Title: Associate

 
 
 
 

--------------------------------------------------------------------------------

 
 
 

     
SIGNATURE PAGE TO THE CREDIT AGREEMENT DATED AS OF THE DATE FIRST WRITTEN ABOVE,
AMONG ATWOOD OCEANICS, INC., ATWOOD OFFSHORE WORLDWIDE LIMITED, THE LENDERS
PARTY HERETO FROM TIME TO TIME, NORDEA BANK FINLAND PLC, NEW YORK BRANCH, AS
ADMINISTRATIVE AGENT, AND AS LEAD ARRANGER
   

 
NAME OF INSTITUTION:
 
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
 
 
 
By: /s/ Roger Aamillom                                      
    Name:  Roger Aamillom
      Title: Attorney-In-Fact

 

 
NAME OF INSTITUTION:
 
CREDIT INDUSTREIL ET COMMERICAL
 
 
 
By: /s/ Andrew McKuin                                    
    Name:  Andrew McKuin
      Title: Vice President
 
By: /s/ Alex Aupoix                                            
    Name:  Alex Aupoix
      Title: Managing Director

 

 
NAME OF INSTITUTION:
 
BNP PARIBAS
 
 
 
By: /s/ Eric Chilton                                              
    Name:  Eric Chilton
      Title: Managing Director
 
By: /s/ Kevin O'Hara                                           
    Name:  Kevin O'Hara
      Title: Director